OLBIGATIONS AND CONTRACTS
Law;
Art. 1156. An Obligation is a juridical necessity to
give, to do or not to do.
Elements of an Obligation:
1. An active Subject (Obligee or Creditor) – the
possessor of a right; he in whose favor the obligation
is constituted.
2. A passive Subject (Obligor or Debtor) – he who
has the duty of giving, doing, or not doing.
3. The object or prestation – the subject matter of the
obligation.
4. The efficient cause (the vinculum or juridical tie) –
the reason why the obligation exists.
Example:
A promises to paint B’s picture as an result of an
agreement
A – obligor, B – obligee, B’s picture - prestation,
agreement/contract – efficient cause
Prestation – is an obligation; more specifically, it is the
subject matter of the obligation – may consist of
giving a thing, doing or not doing a certain act.
KINDS OF OBLIGATIONS
a. viewpoint of sanctions
1. Civil Obligation – that defined in Art. 1156. The
sanction is juridical process.
2. Natural Obligation – the duty not to recover what
has voluntarily been paid although payment was no
longer required.
3. Moral Obligation - the duty of a Catholic to hear
mass on Sundays and holy days of obligation. The
Sanction is conscience or morality.
b. viewpoint of subject matter
1. real obligation – the obligation to give
2. personal obligation – the obligation to do or not to
do
c. viewpoint of affirmativeness and negativeness of
obligation
1. positive or affirmative obligation – the obligation to
give or to do.
2. negative obligation – the obligation not to do
includes not to give.
d. viewpoint of persons obliged
1. unilateral – where only one party is bound
2. bilateral - where both parties are bound
Ex. Contract of sale: the buyer is obliged to pay; seller
obliged to pay.
2.1. reciprocal
2.2 non reciprocal
Art. 1157. Obligations arise from:
1.
2. Contracts;
3. Quasi-contracts
4. Acts or omissions punished by law; and
5. Quasi-delicts
Sources of Obligation
a. Law (obligation ex lege) – like the duty to pay
taxes and support ones family
b. Contracts (obligation ex contracto) – duty to
repay a loan by virtue of an agreement
c. Quasi-contracts (obligation quasi-contractu) –
like the duty to refund an “over change” of
money because of the “solutio indebiti”
d. Crimes or Acts or Omissions Punishable by
Law (obligation ex maleficio or ex delicto) –
like the duty to return a stolen carabao
e. Quasi delicts or Torts (obligation ex quasi-
delicto or ex quasi maleficio) – like the duty to
repair damage due to negligence.
Art. 1158. Obligations derived from law are not
presumed. Only those expressly determined in
this Code or in special laws are demandable, and
shall be regulated by the precepts of the law
which establishes them; and as to what has not
been foreseen , by the provisions of this Book.
Obligation Ex Lege
Examples:
1. Duty to support
2. The duty to pay taxes
Art. 1159. Obligations arising from contracts have
the force of law between the contracting parties
and should be complied with in good faith.
Difference between an Obligation and Contract
Obligation is a result of a contract, while a Contract, if
valid, always results in obligations, not all obligations
come from contracts.
The so-called Innominate Contracts
“contratos innominados”
a. Do ut des- I give that you may give
b. Du ut facias – I give that you may do
c. Facio ut des – I do that you may give
d. Facio ut facas – I do that you may do
Art. 1160. Obligations derived from quasi-
contracts shall be subject to the provisions of
Chapter 1, Title XVII, of this Book.
Quasi-Contract is a juridical relations resulting foma
lawful, voluntary and unilateral act, and which has for
its purpose the payment of indemnidty to the end that
no one shall be ujustly enriched or benefited at the
expense of another
2 Principal Kinds
1. Negotiorum Gestio; whena person voluntarily
takes charge of anothers abandoned
business of property without the owners
authority.
2. Solutio Indebiti; when something is received
when there is no right to demand it, and it
was unduly delivered thru mistake. The
recipient has the duty to return.
Art. 1161. Civil obligations arising fromcriminal
offenses should be governed by the penal laws,
subject to the provisions of Articile 2177, and of
the pertinent provisions of Chapter 2, Preliminary
Title, on Human Relations, and of Title XVIII of this
Book regulationg damages.
Pertinent Provisions of the Revised Penal Code:
Art. 100, RPC says: “Every person criminally liable
for a felony is also civilly liable”
Liability of an Insane Criminal
An insane criminal who commits a crime is exempted
from criminal liability, but his guardian can be held
civily liable unless the latter was diligent in his task of
taking care the insane.
Civil Liability arising from a Crime includes:
1. Restitution
2. Reparation of the damage caused;
3. Indemnification for consequential damages
Effects of acquittal in Criminal Case
a. If the reason why there was an acquittal was
because the accused could not have
committed the act, no civil action.
b. If the reason for the acquittal was because of
an exempting circumstatnce (insane) still
civily liable.
c. If there is an independent civil action allowed
by the law.
Art. 1162. Obligations derived from quasi-
delicts shall be governed by the provisions of
Chapter 2, Title XVII of this Book, and by
special laws.
Another name for quasi-delicts is “tort” or “culpa
aquiliana”.
Quasi-delicts is a fault or act of negligence (or
omission of care) which causes damagesto
another, there being no pre existing contractual
relations between the parties.
Examples:
a. While driving a car recklessly, I injured a
pedestrian
b. While cleaning my windows sill, cause the
flower pot to fall breaking the arms of my
neighbor.
Negligence (Culpa) is the failure to observe, for
the protection of the interests of another person,
that degree of care, precaution and vigilance
which circumstances justly demand.
Requisites Before a Person Can Be Held Liable
for a Quasi-Delict
1. There must be fault or negligence attributable
to the person charged;
2. There must be damage or injury;
3. There must be a direct relation of cause and
effect between the fault or negligence on the
one hand and the damage or injury on the
other.
NATURE AND EFFECT OF OBLIGATION
Art. 1163. Every person obliged to give something
is also obliged to take care of it with the proper
diligence of a good father of a family, unless the
law or the stipulations of the parties requires
another standard of care.
Determinate - specific
Indeterminate – on of class
Diligence Needed:
a. That which is required by the nature of the
obligatin and corresponds with the
circumstances of person, time, and place.
Diligence of a good father of a family.
b. If the law or contract provides a different
standard of care.
Ex: “A common carrier bound to carry the
passengers safely as far as human care and
foresight can provide.
Art. 1164. The creditor has a right to the fruits of
the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right
over it until the same has been delivered to him.
Personal right is also called jus in personam or jud ad
rem; it is the power demandable by one person to
another – to give, to do or not to do.
Real right is also called jus in re; power of the specific
thing like the right of ownership or possession and is
binding on the whole world.
Kinds of delivery:
a. Actual delivery (or traditio) – where physically,
the proper changes hands. Ex: if a sells B a
fountain pen, the giving by A to B of the pen
is actual delivery.
 b. Constructive delivery – that where the
physical transfer is implied. This may be don
by:
1. Traditio simbolica (symbolical tradition
(keys of the bodega are given)
2. Traditio longa manu (delivery by mere
consent or the pointing out of the object.
3. Traditio brevi manu (delivery by the short
hand)
4. Traditio constitutum possessorium – the
delivery whereby a possessor of a thing
as an owner, retains possession no
longer as an owner.
5. Traditio by execution of legal forms and
solemnities (like an execution of public
instrument selling land)
When does the Obligation to Deliver Arise
a. If there is no term or condition, from the
perfection of the contract.
b. If there is a condition or term, from the
moment the term arrives or the condition
happens.
Art. 1165. When what is to be delivered is a
determinate thing, the creditor, in addition to the
right granted him by Article 1170, may compel to
the debtor to make the delivery.
If the thing is indeterminate or generic
thing, he may ask that the obligation be complied
with at the expense of the debtor,
If the obligation delays, or has promised
to delvier the same thing to two or more persons
who do not have the same interest, he shall be
responsible for fortuitous event until has effected
the delivery.
Specific or Determinate things – when it is capable of
particular designation. Ex: this car, tha car owned by
A on Sept. 12, 2005, the care with the plate number
1815, th particular picture of Mayela in my notebook.
Generic or Indeterminate Things – refers only to
class, to a genus, and cannot be pointed out with
particularity.
Ex.: A car, a 2005 BMW, the sum of P5 Million, a
kilo of sugar.
Remedies of the Creditor When Debtor Fails to
Comply with his Obligations:
a. Demand for specific performance of the
obligation.
b. Demand for rescission or cancellation
c. Demand for damages either with or without
either of the first two. (a or b)
Effect of Fortuitous Events:
a. To deliver a Determinate thing; obligation is
extinguished.
b. To deliver an Indeterminate thing; obligation
is not extinguished.
Fortuitous Event does not Exempt;
a. Of the obligor delays
b. Of the obligor is guilty of BAD FAITH
Ordinary Delay – merely non-performance at the
stipulated time;
Legal Delay (default) – which amounts to a virtual
nonfulfillment of the obligation.
Art. 1156. The Obligation to give a determinate
thing includes that of deliviering all its accession
and accessories even though they may not have
been mentioned.
Accessories – those joined to or included with the
principal for the latters better use, perfection or
enjoyment. (Ex: keys of a house, dishes on a
restaurant.)
Acessions – additions to or improvements of a thing.
(ex: soil river bank, whatever is built, planted or sown
on a persons parcel of land.
Art. 1167. If a person obliged to do something fails
to do it, the same shall be executed at his cost
This same rule shall be observed if he
does it in contravention if the tenor of the
obligation. Furthermore, it may be decreed that
what has been poorly undone.
Article 1167 - Positive Personal Obligation (TO DO)
Remedies of the Creditor if Debtor fails to do
1. To have the obligation performed (by himself
or by another) at debtors expense.
2. Also – to obtain damages
Art.1168. When the obligation consists in not
doing, and the obligor does what has been
forbidden him, it shall also be undone at his
expense.
Negative Personal Obligation
Remedies: Undoing of the prohibited thing and
damages.
Art. 1169. Those obliged to deliver or to do
something incur in delay from the time the obligee
juridically or extrajudicially demands from them
the fulfillment of their obligation.
However, the demand by the creditor shall
not be necessary in order that delay may exist:
1. When the obligation or the law expressly
so declares
2. Or when from the nature and the
circumstances of the obligation it appears
that the designation of the time when the
 thing is to be delivered of the service to be
rendered was a controlling motive for the
establishment of the contract; or
3. When demand would be useless, as when
the obliger has rendered it beyond his
power to perform.
In reciprocal obligations, neither party incurs in
delay if the other does not comply or is in ready to
comply in a proper manner with what is
incumbent upon him. From the moment one of the
parties fulfill his obligation, delay by the other
begins.
When Demand is Not Needed to Put the Debtor in
Default;
a. When the law so provides
b. When the obligation so provides
c. When time is essence of the contract
d. When demand would be useless
e. When the obligor has expressly acknowledge
that he really is in default.
Different Kinds of Mora (default)
a. Mora Solvendi (default on the part of the
debtor)
1. Mora solvendi ex re (debtors default in
real obligations)
2. Mora solvendi ex persona (debtors
default in personal obligations)
b. Mora accippiendi (default on the part of the
creditor)
c. Compensatio Morae (when in reciprocal
obligation both parties ar in default)
Mora Solvendi
Requisites:
a. Obligation must be due, enforceable and
already liquidated or determinate in amount.
b. There must be non-performance
c. There must be demand, unless the demand is
not required.
d. The demand must be for the obligation that is
due.
Effects:
a. Debtors default, liable for interest or
damages.
b. Bear the risk of loss,
c. Liable even for a fortuitous event.
Mora Accipiendi
The creditor is guilty of default when he unjustifiably
refuses to accept payment or performance at the time
said payment or performance can be done.
Reciprocal Obligations
Depend upon each other for performance
Art. 1170. Those who in the performance of their
obligation are guilty of fraud, negligence, or delay
and those in any manner contravene the tenor
thereof, are liable for damages.
Grounds for Liability in the Performance of
Obligations;
a. Fraud (deceit or dolo)
b. Negligence (fault or culpa)
c. Default (mora)
d. Violation of the terms of obligation
Kinds of Damages (MENTAL)
a. Moral – (mental and physical anguish)
b. Exemplary – (to set an example)
c. Nominal – (to vindicate a right)
d. Temperate – (when the exact amount of
damages cannot be determined)
e. Actual – (actual losses as well as unrealized
profit)
f. Liquidated – (predetermine d beforehand)
Art. 1171. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an
action for future fraud is void.
Art. 1172. Responsibility arising from negligence
in the performance of every kind of obligation is
also demandable, but such liability may be
regulated by the courts, according to the
circumstances.
Fraud Distinguished from Negligence
Fraud has deliberate intention to cause damage while
negligence has no deliberate intention.
Fraud Liability cannot be mitigated or reduced by
courts while negligence can be reduced.
Waiver of an action is void while negligence is
allowed.
4 Kinds of Culpa:
a. Culpa Contractual – that which results in a
breach of contract.
b. Culpa Aquiliana – Civil Negligence or tort or
quasi delict.
c. Culpa Criminal – that which results in the
commission of a crime or a delict.
Art. 1173. The fault or negligence of the obligor
consists on the omission of that diligence which
is required by the nature of the obligation and
corresponds with the circumstances of the
person, of the time and place. When the
negligence shows bad faith, the provisions of
Article 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the
diligence which is to be observed in the
performance, that which is expected of a good
father of a family shall be required.
Degrees of Culpa Under Roman Law:
 a. Culpa lata – grave negligence;
b. Culpa levis – ordinary negligence;
c. Culpa levissima – slight negligence
Kinds of Diligence Under the Civil Code:
a. That agreed by the parties
b. In absence of (a), that required by law
c. In absence of (b), that expected of a good
father of a family
Art. 1174. Except in cases expressly specified by
the law, or when it is otherwise declared by the
stipulation or when the nature of the obligation
requires the assumption of risk, no person shall
be responsible for those events which could not
be foreseen, or which though foreseen, where
inevitable.
No Liability for a fortuitous event
Exceptions:
a. When expressly declared by law
b. When expressly declared by stipulation or
contract
c. When the nature of the obligation requires the
assumption of risk
Equivalent Terms for Fortuitous Event
a. Caso fotuito
b. Act of God
c. Force majeure (like war or armed robbery)
d. Unavoidable accident (like a tire blow out)
Characteristics of Fortuitous events:
a. The cause must be independent of the will of
the debtor
b. Impossibility of foreseeing or impossibility of
avoiding it, even if foreseen
c. The occurrence must be such as to render it
impossible for the debtor to fulfill his
obligation in a normal manner.
Art. 1175. Usurious transactions shall be
governed by special laws.
Usury – it is contracting for or receiving something in
excess of the amount allowed by the law for the loan
or us of money, goods, chattels, or credits.
Kinds of Interest:
a. Given for compensation or use of the money
b. Given by way of damages
Art. 1176. The receipt of the Principal by the
creditor, without reservation with respect to the
interest, shall give rise to the presumption that
said interest has been paid.
The receipt of a later installment of a debt
withouth reservation as to prior installment, shall
likewise raise the presumption that such
installments have been paid.
Art. 1177. The creditors, after having pursued the
property in possession of the debtor to satisfy
their claims, may exercise all the rights and bring
all the actions of the latter for the same purpose,
save thoes which are inherent in the person; they
may also impugn the acts which the debtor may
have to defraud them.
Rights of Creditors:
a. Exact payment
b. Exhausts debtors properties, generally by
attachment
c. Accion subrogatoria
d. Accion pauliana
Art. 1178. Subject to the laws, all rights acquired
in virtue of an obligation are transmissible, if there
has been no stipulation to the contrary.
Transmissibility of Rights
Rights are transmissible.
Exeptions:
a. If the law provides otherwise;
b. If the contract provides otherwise;
c. If the obligation is purely persona
DIFFERENT KINDS OF OBLIGATIONS
Section 1
Art. 1179. Ever y obligation whose performance
does not depend upon a future or certain event, or
upon a past event unknown to the parties, is
demandable at one.
Every obligation which contains a
resolutory condition shall also be demandable,
without prejudice to the effects of the happening
of the event.
Pure Obligation – one without a condition or a term
Conditional Obligation – When there is a condition.
Condition – “it is an uncertain event which wields an
influence on a legal relationship”.
Term or Period – which necessarily must come
whether the parties know when it will happen or not.
When an obligation is Demandable at Once
a. When it is pure;
b. When it is a resolutory condition
Classification of Conditions
1. Suspensive – the happening of the condition
gives rise to the obligation.
2. Resolutory – the happening of the condtion
extinguishes the condition.
3. Protestative – depends upon the will of the
debtor.
4. Casual – depends the chance or hazard or
the will of a third person.
5. Mixed – depends partly on the will of one of
the parties and partly on chance or the will of
a third person.
6. Divisible – capable of partial performance.
7. Indivisible – not capable of partial
performance because of the nature of the
thing.
8. Positive – an act is to be performed.
9. Negative – something will be omitted.
10. Express – the condition is stated.
11. Implied – the condition is merely inferred.
12. Possible - capable of the fulfillment in nature
and in law.
13. Impossible – not capable of fulfillment due to
nature or due to the operation of the law or
morals or public policy.
14. Conjunctive – if all the conditions must be
performed.
15. Alternative – if only few of the conditions have
to be performed.
Art. 1180. When the debtor binds himself to
pay when his means permit him to do so, the
obligation shall be deemed to be one with a
period, subject to the provisions of Article
1197.
Art. 1181. In conditional obligations, the
acquistions of rights, as well as the
extinguishment or loss of those already
acquired, shall depend upon the happening of
the event which constitutes the condition.
Suspensive Condition - – the happening of the
condition gives rise to the obligation.
Resolutory Condition - – the happening of the
condtion extinguishes the condition.
Art. 1182. When the fulfillment of the
condition depends upon the sole will of the
debtor, the conditional obligation shall be
void. If it depends upon chance or upon the
will of a third person, the obligation shall take
effect in conformity with the provision of this
Code.
Protestative – depends on the exclusive will of
one parties.
Casual – depends on chance OR upon the will of
a third person.
Protestative on the Part of the DEBTOR:
If suspensive: void
If resolutory: valid
Protestative on the part of the CREDITOR: valid
Art. 1183. Impossible conditions, those
contrary to good customs or public policy and
those prohibited by law shall annul the
obligation which depends upon them. If the
obligation is divisible, that part thereof which
is not affected by the impossible or unlawful
condition shall be valid.
The condition no to do an impossible
thing shall be considered as not having been
agreed upon.
Classification:
a. Impossible: physical- to make a dead man
live
Logically – to make a circle that is the same
timesquare
b. Illegal – prohibited by good customs, public
policy, prohibited, directly or indirectly by law;
like killing X, a friend.
EFFECTS:
a. If condition is to do an IMPOSSIBLE or
ILLEGAL thing: VOID
b. If condition is NEGATIVE, not to do the
impossible, JUST REGARD the condition but
obligation REMAINS
c. If the condition is NEGATIVE, not to do the
illegal thing, condition and obligation are
VALID.
Art. 1184. The condition that some event happen
at a determinate time shall extinguish the
obligation as soon as the time expires or If it has
become indubitable that the event will not take
place. (Refers to POSITIVE Conditions)
Art. 1185. The condition that same event will not
happen at a determinate time shall render the
obligation effective from the moment the time
indicated has elapsed, or if it has become evident
that the event cannot occur.
If no time has been fixed, the condition
shall be deemed fulfilled at such time as may have
probably been contemplated bearing in mind the
nature of the obligation. (refers to NEGATIVE
Conditions)
Art. 1186. The condition shall be deemed fulfilled
when the obligor voluntarily prevents its
fulfillment.
Rule: CONSTRUCTIVE or PRESUMED
FULFILLMENT
Requisites:
a. VOLUNTARILY made
b. Actually PREVENTS
Art. 1187.

Effects of Fulfillment of Suspensive Conditions:
a. RETROACTS (as general rule) to the day the
obligation was constituted.
b. No Retroactivity with reference only to:
1. Fruits or interest.
2. Period of Prescription
No Retroactive Effects as to Fruits and Interest;
a. Unilateral; debtors gets the fruits and interest
unless there is a contrary intent.
b. Reciprocal; the fruits and interest during the
pendency of the condition shall be deemed
to compensate each other.
SCOPE OF FRUITS:
Fruits here refer to natural, industrial, and civil fruits
(rent)
Art. 1188. The creditor may, before the fulfillment
of the condition, bring the appropriate actions for
the preservation of his right.
The debtor may recover what during the
same time he has paid by mistake in case of a
suspensive condition.
Bring appropriate actions – sue in court
Other appropriate actions:
a. Ask for security if the debtor is insolvent
b. Ask the court to prevent alienation or
concealment.
Art. 1189. When then conditions have been
imposed with the intention of suspending the
efficacy of an obligation to give, the following
rules shall be observed in case of the
improvement, loss, or deterioration;
1. If the thing is lost without the fault of the
debtor, the
Obligation shall be extinguished;
2. If the thing is lost through the fault of the
debtor, he
Shall be obliged to pay damages; it is understood
that the when the thing is lost when perishes, or
goes out of commerce, or disappear in such a
way that its existence is unknown or it cannot be
recovered;
3. When the thing deteriorates without the
fault of the
The fault of the debtor, the impairment is to be
bourne by the creditor;
4. If deteriorates through the fault of the
debtor, the
Creditor may choose between the rescission of
the obligation and its fulfillment, with indemnity
for damages in either case;
5. If the thing is improved at the expense of
the debtor,
He shall have no right than that granted to him
usufractuary.
Loss – it is understood that the thing is lost;
a. When it perishes
b. When it goes our of commerce
c. When it disappears In such a way that its
existence is unknown.
d. When it disappears in such a way that it
cannot be recovered.
Art. 1190:
Effects when Resolutory Condition is Fulfilled
a. The obligation is extinguished
b. Because the obligation had been
extinguished and considered to have had no
effect, the parties should restore to each
other what they received.
c. Aside from the actual things received, the
fruits or interests thereon should also be
return.
d. The rules given n Art. 1189. Will apply to
whoever has the duty to return in case of
loss, deterioration, or improvement of the
thing.
e. The courts are given power to determine the
retroactivity of the fulfillment of resolutory
conditions.
Art. 1191. The power to rescind obligations is
implied in reciprocal ones, in case on of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and rescission of the obligation, with
the payment of damages in either case. He may
also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the
thing, in accordance with Article 1385 and 1388
and the Mortgage Law.
Right to Rescind – right to cancel the contract or
reciprocal obligation in case of nonfulfillment on the
part of one.
Characteristic of the Right to Rescind or Resolve:
a. It exists only in reciprocal obligation.
b. It can be demanded only if plaintiff is ready,
willing and able to comly with his own
obligation
Section 2
OBLIGATIONS WITH A PERIOD
Art. 1193. Obligation for whose fulfillment a day
certain has been fixed, and shall be demandable
only when that day comes.
Obligations with a resolutory period take
effect at one, but terminate upon arrival of the day
certain.
A day certain is understood to be that
which must necessarily come, although it may not
to be known when.
If the uncertainty consists in whether the
day will come or not, the obligation is conditional
and it shall be regulated by the rules of the
preceding Section.
Period – is a certain length of time which determines
the effectivity or the extinguishmwnt of obligations
Period Distinguished from Condition
a. In their fulfillment
A condition is an uncertain event; but period is an
event which must happen sooner or later.
b. Reference to time;
A period always refers to the future, a condition may
under the law refer even to the past.
c. As to influence of obligation;
A condition causes an obligation arise or to cease,
but a period merely fixes the time or the
efficiaciousness of an obligation.
Art. 1196. Whenever in an obligation a period is
designated, it is presumed to have been
established for the benefit of both the creditor
anddebtor, unless from the tenor of the same or
other circumstances it should appear that the
period has been established in favor of one or of
the other.
Art. 1197. If the obligation does not fix period, but
from its nature and cirtcumstance it can be
inferred that a period was intended, the courts
may fix the duration therof,
The courts shall also fix the duration of
the period when it depends upon the will of the
debtor.
In every case the courts shall determine
such period as may under the crcumstances have
been probably contemplated by the parties, once
fixed by the courts, the period cannot be changed
by them.
Art. 1198. The debtor shall lose every right to
make use the of the period:
1. When after the obligation has been
contracted,

Different kinds of terms or Periods

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

Requisites for a Valid Period or Term;

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

Art. 1194. In case of loss, deterioration or

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

Art. 1195. Anything paid or delivered before

thearrival of the period, the obligor being un
nawware of the period or believeing that the
obligation has become due and demandable, may
be recovered, with the fruits and interests.

Art. 1231. Obligations are extinguished:
1. By Payment of Performance;
2. By the loss of the thing due;
3. By condonation or remission of the debt;
4. By the confusion or merger of the rights of
creditor and debtor;
5. By compensation;
6. By novation.
Other causes of extinguishment of obligation,
such as annulment, rescission, fulfillment of
a resolutory condition, and prescription, are
governed elsewhere in this Code.
SECTION 1
PAYMENT OR PERFORMANCE
Art. 1232. Payment means not only the delivery of
money but also the performance, in any other
manner, of an obligation.
Payment - mode of extinguishment of obligation
which consist of;
a. Delivery of money or
b. The performance in any manner of an
obligation.
Art. 1233. A debt shall not be understood to have
been paid unless the thing or service in which the
obligation consists has been completely delivered
or rendered, as the case may be.
Requisites of valid Payment:
a. The very thing or service contemplated must
be paid.
b. Fulfillment must be complete.
How Payment or Performance is Made
a. If the debt is a monetary obligation, by the
delivery of the money.
b. If the debt is the delivery of a thing or things,
by the delivery of the thing(s).
c. If the debt is the doing of a personal
undertaking, by the performance of said
personal undertaking.
d. If the debt is not doing of something, by
refraining from doing the action.
Presentation of Receipts – means of proving payment
Art. 1234. If the Obligation has been substantially
perfrormed in good faith, the obligor may recover
as though there has been strict and complete
fulfillment, less damages suffered by the obligee.
Substantial Performance – the obligee is benefited
Art. 1235. When the obligee accepts the
performance, knowing its incompeleteness or
irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied
with.
Art. 1236. The creditor is not bound to accept
payment or performance by a third person who
has no interest in the fulfillment of the obligation,
unless there is a stipulation to the contrary.
Whoever pays for another may demand
from the debtor what he has paid, except that if he
paid without the knowledge or against the will of
the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.
Right of Creditor to Refuse Payment by Third
Person:
The creditor can refuse payment by a stranger
except:
a. If there is a stipulation allowing this;
b. If the third person has an interest in the
fulfillment of the obligation.
Payment by the Third Person (BAR)
The third person may pay:
a. With the knowledge and consent of the debtor
The payor is entitled to REIMBURSEMENT
and SUBROGATION to such rights as
guaranty, penalty clause, or mortgage.
b. Without the debtors knowledge or against his
will. The payor is not entitled to subrogation;
moreover he is allowed only for BENEFICIAL
REIMBURSEMENT.
Art. 1237. Whoever pays on behalf of the debtor
without the knowledge or against the will of the
latter, cannot compel the creditor to subrogate
him in his rights, such as those arising from a
mortgage, guaranty, or penalty.
Subrogation – means the act of putting somebody
into the shoes of the creditor, hence, enabling the
former to exercise all the rights and actions that could
have been exercised by the latter.
3. If by the creditors conduct, the debtor has
been led to believe that the third person
had authority to receive the payment.
Effect in General: Payment to the third party, the
payment is valid BUT only to the extent of benefit to
the creditor.

Rights which may be Exercised by the Person
Subrogated in the Place of the Creditor:
a. Mortgage
b. Guaranty
c. A penalty or penal clause
Subrogation Distinguished from Reimbursement
Subrogation recourse can be had to guaranty or
pledge; Reimbursement there is no recourse.
Subrogation there is something more than personal
action of recovery; Reimbursement only a personal
action to recover the amount.
Art. 1238. Payments made by a third person who
does not intend to be reimbursed by the debtor is
deemed to be a donation, which requires the
debtors consent. But the payment is in any case
valid as to the creditor who has accepted it.
Art. 1239. In obligation to give, payment made by
one who does not have the free disposal of the
thing due and capacity to alienate it shall not be
valid, without prejudice to the provisions of
Article 1427 under the Title on “Natural
Obligations.”
Art. 1242. Payment made in good faith to any
person in possession of the credit shall release
the debtor.
Art. 1243. Payment made to the creditor by the
debtor after the latter has been judicially ordered
to retain the debt shall not be valid.
Garnishment – the proceeding by which a debtors
creditor is subjected to the payment of his own debt
to another
Interpleader – technical name of the action in which
a certain person in possession of certain property
wants claimants to litigate among themselves for the
same.
Injunction – it is a judicial process by virtue of which
a person is generally ordered to refrain from doing
something.

Payment by an Incapacitated Person;

a. Payment is not valid – if accepted;
b. Creditor cannot even be compelled to accept
it;
c. The remedy of consignation would not be
proper

Art. 1240. Payment shall be made to the person in

whose favor the obligation has been constituted,
or his successor in interest, or any person
authorized to receive it.

Art. 1241. Payment to a person who is

incapacitated to administer his property shall be
valid if he has kept the thing delivered, or insofar
as the payment has been beneficial to him.
Payment made to a third person shall also
be valid insofar as it has redounded to the benefit
of the creditor.such benefit to the creditor need to
be proved in the following cases;
1. If after payment, the third person requires
the creditors rights;
2. If the creditor ratifies the payment to the
third person;