BAR TIPS:

1. Focus on Oblicon: Kinds and modes of Extinguishment (Payment)

- Joint and solidary obligations
- Payment
- Novation
2. Persons is also a favorite
3. Special Contracts

1156
Memorize definitions

Civil vs Natural Obligations

1423

Example:
1. A and B are heirs of X. X is indebted to Y. Y demanded payment upon death of X. A and B paid
5M to Y. They later found out that the value of X’s estate was only 2M.
a. Is there a natural obligation? Yes. 3M was a natural obligation.
b. Can heirs demand from Y for the excess of the value of the estate? No, Y has the right to
retain. However, it cannot be said
1429 in relation to 1123

2. 2016 Julia Sarah bar question.

a. No demand. immediately after demand, she paid.. so there was no delay. Creditor was not
entitled to interest. Solutio Indebiti..
b. Civil vs. Natural Obligations (cannot be compelled to pay)

SOURCES OF OBLIGATIONS

Metrobank vs. Rosales & Yo Yuk To

- “Hold Out” clause applies only if there is a valid and existing obligation arising from any of the
sources of obligation.

Saludado vs FEU
- Guard will be liable under delict. Employer (security agency) will also be liable under delict for
subsidirialy liable (exhaust the guard’s assets first before recovering from employer)
- School was liable under contract. Contract provides that students peaceful environment
conducive to learning. Gross negligence - no participation in evaluating guards

Went to Boracay.. House on fire.. palit lock?

2168
- Other quasi-contract

X fled went to Europe. Y harvested fish in X’s land and sold the fish to Z. Y borrowed money from
W to buy new supplies to prepare the fishpond for the next crop.
- Negotiorium gestio
- b.
- c. Yes, under negotiorium gestio..
- d. Governed by law on agency

DPO went to a store to buy a pack of cigarrtes worth P225.00 only. He gave the vendor, RRA, a
P500 bill. The vendor gave him the pack plus P375 change. How is the situational relationship
between DPO and RRA denominated?
- Solutio Indebiti. Buyer is unjustly enriched
- Donor-donee relationship?
CBK Power vs. CIR 15 Jan 2014
Solutio Indebiti applies? - 1. no binding relation 2. mistake in payment
1. Binding relation? right to demand - BIR has the right to demand taxes
2. payment made by mistake? No

KINDS OF OBLIGATIONS

1. Pure Obligations
2. Conditional Obligations
3. Obligations with a Period

A. Distinguish: Suspensive vs. Resolutory conditions upon an obligation

B. Pedro promised to give his grandson a car if he will pass the bar. When he passed, Pedro
refused to give the car on the ground that it was a purely potestative one. Is he correct or not?
- No. Not dependent solely on the will of the debtor. 1182 not applicable. Pedro

To sell House and lot to Eva when she passes to 1998 Bar exams
A.
B. Rentals? 1187

Agree to pay loan on Dec 2017. In exchange, debtor gives his car as collateral. Debtor wants to
pay in Oct 2017 but he wants his car back. Can he compel?
- No, he may not compel.. Why?

A loaned from B payable within a year. A mortgaged his house. 3 months after loan, house was
gutted by an accidental fire. B demanded payment from A but refused to pay because of 1-year
period. Valid?
- No. one of the instances where debtor may lose right to a period

As to plurality of prestations:
Facultative Obligation

Alternative Obligation
Arco Pulp and Paper Co vs. Santos
WON debtor can still perform the other prestation after having communicated his choice?

Joint and Solidary Obligations

4 medical students rented apartment of Thelma for 1 yr. Left after 1 sem, left unpaid telephone bills
of P80,000. Thelma demanded from 1 student (since the 3 are out of the country). Student only
wants to pay 1/4 of it. Who is correct? Why?

Ruks vs. Perlas Bernable 2015 case

Solidary liable

Effect of Insolvency of the one of the debtors

Effect of Minority of the one of the debtors

A B & C solidarily promised to pay D P3,000. C became insolvent. What recourse does D have
against A and B? What are the rights of A and B as against each other?
-

A, B & C solidarily liable to pay P300k. C condoned. B insolvent.

1. How much can A be liable to pay? P200,000
2. How much can A collect from C? P50,000
Solidary creditors - First Demand has right to collect

A-E problem
a. P40000.. Invoke defense of minority only as to the share of the minor, B

Iya and Betty owed Jun P500,000 - solidarily. Iya and Jun became sweethearts so Jun condoned

Obligation with a penal clause

Compliance with Obligations: Breach

Fraud - 1170-71 (waiver before fraudulent act)
**different from dolo incidente/causante

1173: Negligence
Alighting from the train while it is still moving is not a negligent act (Canco case)

1156: Delay due to Fortuitous event

1942: bailee may be held liable for the loss even for a fortuitous event

Fil-Estate vs. Sps Conrado and Ronquillo

Asian financial crisis a fortuitous event justifying delay in constructing bldg as agreed upon in the
contract? NO. Real estate is a concededly a master in projections on commodities and currency
movements.

REMEDIES
(Will the action prosper?)

1545

1191: Rescission (should have been RESOLUTION)

- 1381, 1383 discusses Rescission
- lesion (economic prejudice)

accion pauliana - subsdiary remedy

Contract to Sell: Rescission?

Olivares Realty vs. Castillo
Designated as a conditional sale but Not yet paid. Rescission?
- SC held this is not a conditional sale but a Contract to Sell
- No. Rescission is not the appropriate remedy because the conditions were not fulfilled so the
obligation to sell did not arise
- Proper remedy: Cancellation of Sale

Swire Realty vs. Jayne Yu

Condo. Fully failed price. Seller was not able to put up the bldg. Buyer invoked rescission.
- Yes. 1191, citing Reciprocal Obligations, rescission was proper.

Fulfillment
Action for substitute performance - when you want an obligation to do to be fulfilled

1460

A bound himself to deliver to B a 21-inch 1983 model TV set, and the 13 cubic fee White W ref,
with Motor No. WERT-285 and to repair the piano. he doesnt want to. Can he be compelled?
TV -
Ref - Yes. Determinate
Repair - No. Involuntary servitude

MODES OF EXTINGUISHMENT

1. Rescission
2. Fulfillment of a Resolutory Condition
3. Prescription
4. Annulment (under voidable contracts)
5. Payment

1231

Death
Does death extinguish an obligation?
If source of obligation is law, then death may extinguish an obligation. In contracts, death does not
extinguish.

X and Y are partners in a shop offering portrait painting. Kyla paid P50k to do her portrait but Y, the
artist, died. Can Kyla demand delivery of portrait?
- Yes.
- If Kyla transacted only for Y to do the portrait, then the obligation is extinguished. (Purely
personal obligation)

Payment
payor/payer

Creditor may be compelled to accept payment from a 3rd person - if the 3rd person has an interest
in the fulfillment of the obligation. eg. guarantors, sureties, mortgagors

1236 / 1237: 3rd person pays without the knowledge or against the will of the debtor.. he may
collect only so far as the debtor has been benefitted

payee

1240: persons enumerated may receive payment

1. Creditor
2. Successors-in-interest
3. Any person authorized to receive payment (may come from creditor or may be by operation of
law)
**XPN: 1242

Napocor vs. Ibrahim