Week 6

KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City

Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: John Jay A. Locsin, JD A.Y. 2nd SEMESTER, 2021-2022
WEEK 6
Sources of Obligation (LCQAQ)
OBLIGATION
Concept 1. Law
Definition a. Must be Expressly provided
An Obligation is a juridical necessity to give, to do

or not to do. It is also defined as juridical relation Obligations derived from law are not presumed.
whereby person (creditor) may demand from Hence, only those expressly determined by the
another (debtor) the observance of a determinate Civil Code or in special laws are demandable.
conduct and in case of breach may obtain

satisfaction from assets of the latter. b. When source of obligation
Essential Elements (JOAP) Law is the source of obligation when it does not
merely limit itself to enforcing compliance with an
1. Juridical tie or vinculum juris obligation originating from the acts of the parties
The efficient cause established by the various but by itself establishes the obligation, making the
sources of obligation (law, contracts, quasi- act of the party or parties, only a moment, or
contracts, delicts and quasi-delict). determining the occasion in order that the
obligation contained in the legal precept may
2. Object begin to be demandable.
The prestation or the particular conduct required

to be observed by the debtor (to give, to do or not 2. Contracts
to do).
Definition
3. Active Subject (Obligee or Creditor)

The person who can demand full payment of the Contract is defined as “meeting of minds between
obligation. two or more persons whereby one binds himself

with respect to other to give something or to
4. Passive Subject (Obligor or Debtor) render some service”. The definition lays stress
The person from whom the obligation is juridically on the meeting of minds of the contracting
demandable. parties, for consent is the essence of the

contracts. It is the element forwhich distinguishes
contracts from other sources of obligations.
Contact No. 228-1996/887-2051
Business Department
OBLIGATIONS OF A GESTOR
Obligatory force of contracts
(1) Perform his duties with all the diligence of a
good father of a family
Obligations arising from contracts have the force
(2) Pay the damages which through his fault and
of law between the contracting parties and should negligence may be suffered by the owner of the
be complied with in good faith. In contract law, property/business under his management [Art.
2145]
this principle is known as obligatory force of
(3) Be liable for the acts of the persons to whom
contract.
he delegated all or some of his duties. This is
without prejudice to the direct obligation of the
delegate to the owner of the business. [Art. 2146]
3. Quasi-Contracts
Definition: (4) Be liable for any fortuitous event
(5) Be personally liable for contracts which he
A quasi-contract is that juridical relation resulting entered into with third persons, even though he
from a lawful, voluntary and unilateral act, and acted in the name of the owner, and there shall
which has for its purpose the payment of be no right of action between the owner and third
indemnity to the end that no one shall be unjustly persons
enriched or benefited at the expense of another
[Art. 2142].
OBLIGATIONS OF THE OWNER OF THE
Examples of Quasi-Contract PROPERTY OR BUSINESS
1. NEGOTIORUM GESTIO (UNAUTHORIZED Although the management was not expressly
MANAGEMENT) ratified, the owner who enjoys the advantages of
takes place when a person voluntarily takes the same shall:
charge of another’s abandoned business or
property without the owner’s authority [Art. 2144].
(1) Be liable for the obligations incurred in his
As a rule, reimbursement must be made to the interest
gestor (i.e., one who carried out the business) for
necessary and useful expenses. (2) Reimburse the gestor for the necessary and
useful expenses and for the damages the latter
Requisites: may have suffered in the performance of his
1. A person (gestor) voluntarily assumes duties
management or agency of the business or
property of another. 2. SOLUTIO INDEBITI (UNDUE PAYMENT)
2. The property must be neglected or abandoned

or otherwise what results is a case of Takes place when something is received when
unauthorized/unenforceable contract and not
negotiorumgestrio there is no right to demand it, and it was unduly
3. There is no authorization from the owner delivered through mistake. The recipient has the
whether express or implied duty to return it [Art. 2154].
4. The assumption of agency or management
must be done in good faith.
Contact No. 228-1996/887-2051
Business Department
This situation covers payment by reason of a 3. Connection of cause and effect between the
mistake in the construction or application of a fault or negligence of defendant and the damage
doubtful or difficult question of law [Art. 2155] incurred by the plaintiff
Requisites for Solution indebiti: The enumeration is exclusive
Kinds of Obligations: Civil and natural

1. Payment is made when there exists no binding
relation between the payor, who has no duty to
pay and the person who received the payment Civil Obligation
One which gives a right of action to compel its
performance. In other words, a civil obligation is
2. Payment is made thru mistake and not thru one which provides for a legal sanction in case of
liberality or other causes its breach.
Natural Obligation
Other Forms of Quasi-Contract: One which does not grant a right of action to
enforce its performance, but after voluntarily
fulfilment by the debtor, it authorizes the retention
There are several forms of quasi-contracts of what has been delivered or rendered by reason
enumerated in the Civil Code but the enumeration thereof. In other words, this kind of obligation
does not provide for a legal sanction in case of
is not exclusive. The obligation is not contractual non-performance.
in nature in the absence of element of consent, Legal Consequence of Natural Obligations:
whether
Effect of Voluntary Fulfilment
While it does not grant a right to action to enforce
4. Acts or Omission punished by Law (Delict) its performance, a natural obligation grants the
creditor the right to retain what has been
Basis of Civil Liability Ex Delicto delivered by reason thereof after the same has
been voluntarily fulfilled by the debtor.
Criminal liability gives rise to civil liability only if
the same felonious act or omission results in May be converted into Civil Obligation
damage or injury of another and is the direct and A natural Obligation may be converted into a civil
proximate cause thereof. Damage or injury to obligation, either by reason of novation or when it
another is evidently the foundation of the civil has been made the subject matter of a contract of
action. guaranty, pledge or mortgage.
5. Quasi-Delict Examples of Natural Obligation
Requisites for recovery 1. When the right to sue upon a civil obligation
has lapsed by prescription.
2. The debtor may not be compelled to pay
1. Damage suffered by the plaintiff
monetary interest on a loan unless the same has
2. Fault or negligence of the defendant been expressly stipulated in writing.
Contact No. 228-1996/887-2051
Business Department
3. The heir is not liable beyond the value of the Remedies in case of breach:
property he received from the decedent to pay
The creditor can compel the debtor to deliver the
legal obligation.
determinate thing due in an action for specific
performance, with a right to recover damages.
Kinds of Obligations: Real and Personal Susceptibility to Extinguishment by Way of
Loss:
Classification of obligations based on prestation
1. The loss is without the debtor’s fault and
Kinds of Obligations
2. It was lost before he has incurred in delay
A. Real Obligation- One which involves an
obligation to give or to deliver
Two kinds of Real Obligations 2. Indeterminate or Generic Obligation
1. Determinate or Specific Obligation One which involves the obligation to deliver an
indeterminate or generic thing. A thing is
One which involves an obligation to deliver a
considered determinate or specific when it has
determinate or specific thing
been particularly designated or physically
Legal Consequences of Determinate obligation segregated from all others of the same class or
species. A thing is generic if it has been
As to performance: designated merely by its class or genus.
Debtor of a thing cannot compel the creditor to Legal Consequences of Generic Obligation
receive a different one, although the latter may be
the same value, as or more valuable than that As to performance:
which is due
When the obligation consists in the delivery of an
Three accessory obligations: indeterminate or generic thing, whose quality and
circumstances have not been stated, the creditor
In every determinate obligation, there are three cannot demand a thing of superior quality. Neither
accessory obligations, in addition to the obligation can the debtor deliver a thing of inferior quality.
to deliver the specific thing due:
Remedies in case of breach:
1. To preserve the thing to be deliver with the
proper diligence of a good father of a family, The creditor can either:
unless the law or the stipulation of the parties
1. Ask another person to comply with the
requires another standard of care.
obligation at the expense of the debtor
2. To deliver also all the accessions and
2. To compel the debtor himself to make the
accessories even though they may not have been
delivery, plus damages in either case.
mentioned.
3. To deliver also the fruits if the creditor is
already entitled to the same. The creditor B. Personal Obligation – One which obligation
acquires a right to demand for the delivery of the to do or not to do
fruits of the determinate thing due from the time of
Two Kinds of Personal Obligation
obligations to deliver a determinate thing by
reason of contract, the obligation to deliver the 1. Positive Personal Obligation
principal thing arises at the time of perfection of
the contract unless the obligation is subject to a One which involves an obligation to do
suspensive condition, in which case, the 2. Negative personal Obligation
obligation arises only upon the happening of the
said condition. One which involves and obligation not to do
Contact No. 228-1996/887-2051
Business Department
Legal Consequences of Positive and Negative 1. Mora or delay

Personal Obligations:
2. Dolo or Fraud
a) To Do
3. Culpa or negligence and
When Considered breach:
4. Contravention of the tenor of the obligation
Not only in case of non-performance but also
1. Mora or Delay
when the performance is either poor or in
contravention of the tenor of the obligation Kinds of Delay
Remedies: a. Mora Solvendi
In case of non-performance, the remedy is to ask Delay on the part of Debtor
another person to ask another person to execute
the act at the cost of debtor, plus damages. Requisite:
However, if the obligation is personal only to the 1. The obligation be demandable and already
debtor, they only remedy is to recover damages. liquidated
The debtor may not be compelled to execute the
act against his will because the same is 2. The debtor delays performance and
tantamount to involuntary servitude, which is
3. The creditor requires the performance judicially
prohibited by constitution. If the obligation to do
or extrajudicially. Once the creditor makes
was done poorly or in contravention of the tenor
demand, whether judicial or extra-judicial, the
of the obligation, there is an additional remedy of
debtor incurs mora or delay. Hence, absent any
demanding for the undoing of what has been
demand from oblige, the debtor does not incur
done at the expense of the debtor.
delay.
b. Not to do
Exception to requirement of demand
When considered breach:
1. When the obligation expressly so declares
Of the obligor does what he forbidden to do
2. When the law declares so
Remedies:
3. When from the nature and the circumstances
To demand for the undoing of what has been of the obligation it appears that the time was the
done at the expense of the obligor. If it becomes controlling motive for the establishment of
physically or legally impossible to exercise the contract
right to demand the undoing of what has been
4. When demand would be useless, as when the
done, the remedy of the creditor is simply to
obligor has rendered it beyond his power to
recover damages from the debtor.
perform
Effects of mora solvendi
Breach of obligations
1. The debtor becomes liable for damages
Causes of Non-Performance of Obligations:
2. The debtor remains liable if the thing was loss
Involuntary Cause: without his fault or by reason of fortuitous event
and
A cause which is without the debtor’s fault or
independent of his will, such as fortuitous event or 3. The prescriptive period within which the oblige
force majeure or fault of someone else may bring an action against the obligor does not
commence to run until a demand is made.
Voluntary Cause:
Causes which are due to the debtor’s fault or by
reason of his will, such as:
Contact No. 228-1996/887-2051
Business Department
b. Mora Accipiendi Fortuitous Event (Caso Fortuito)

Requisites: Definition
1. An offer of performance by the debtor who has Extraordinary events not foreseeable or
the required capacity avoidable. It is therefore not enough that the
event should not have been foresee or to avoid.
2. The offer must be to comply with the prestation
The mere difficulty to foresee the happening is
as it should be perform
not impossibility to foresee the same. It may
3. The creditor refuses the performance without a either be an act of God, or natural occurrences
cause such as floods or typhoons or act of man (force
majure) such as riots, strikes or wars.
c. Compensation Morae
Effect and Requisites
Concept of reciprocal obligations
The obligor as a rule is not liable for any loss or
Reciprocal obligations are those which arise from deterioration caused by fortuitous event.
the same cause and which party is debtor and However, to exempt the obligor from liability of
creditor of the other, such that the obligation of breach of an obligation by reason of fortuitous
one is dependent upon the obligation of the other. event, the following must concur:
When delayed exist 1. The cause of the breach of the obligation must
If both did not perform, the delay of one is be independent of the will of the debtor
cancelled out by delay of the other. Hence, there 2. The event must be either unforeseeable or
is no delay. But from the moment one of the unavoidable
parties’ fullfill his obligation delay by the other
begins without demand. 3. The event must be free from any participation
in or aggravation of, the injury to the creditor. If
2. Dolo (Fraud) the negligence or fault of the obligor coincided
Concept with the occurrence of the fortuitous event and
caused by the loss or damage or the aggravation
It is the deliberate and intentional evation of the thereof, the fortuitous event cannot shield the
normal fullfimnet of obligations obligor from liability for his negligence.
Prohibited Waiver Exception to Fortuitous Event:
Any waiver of an action for future fraud is void 1. When the law expressly so specifies
2. When it is otherwise declared by the parties
3. Culpa (Negligence) 3. When the nature of the obligation requires the
assumption of risk
Concept
It is the fault or negligence incident in the
performance of an obligation which already Kinds of Obligations: Pure, Conditional and
existed and which increases the liability from such with a Term
already existing obligation.
1. Pure Obligation
Prohibited Waiver
Obligation is not subject to any condition or term
When negligence shows bad faith is tantamount (period)
to fraud. Hence, any waiver of an action for future
negligence showing bad faith is also void.
Contact No. 228-1996/887-2051
Business Department
Effect 2. Potestative, Casual or Mixed

The obligation already exists and it is already Protestative Condition
demandable. In other words, the obligation is
When the fulfilment of the condition is exclusively
immediately demandable.
dependent upon the will of either the debtor or the
creditor.
2. Conditional Obligation Casual Condition
One which is subject to a condition. When the fulfilment of the condition is entirely
dependent upon chance or upon the will of a third
Definition
person.
It is an uncertain event which wields an influence
Mixed Condition
on a legal relation. It is also defined as every
future and uncertain event upon which an When the fulfilment of the condition is partly
obligation or provision is made to depend. dependent upon the will of a third person, in
which case the obligation is valid.
Kinds of Conditions
3. Possible and Impossible
1. Suspensive or Resolutory
Possible Condition
Effect is on the existence of the obligation
When the condition is not contrary to law of
Suspensive Condition
nature, or not contrary to good customs or public
Obligation arises only upon the fulfilment of the policy or not prohibited by law
condition. If the condition is not fulfilled, the
Impossible condition
obligation does not arise.
When the condition is contrary to the law of
Effect of the fulfilment of condition
nature (Physically impossibility) or contrary to
The effects in an obligation to give shall retroact good customs or public policy or prohibited by law
to the day of the constitution of the obligation. (legal impossibility).
However, when the obligation imposes reciprocal
4. Positive and Negative
prestations, the fruits and interests are deemed
mutually compensated. Positive Condition
Resolutory Condition A condition that a certain event will happen within
a specific period has the effect of extinguishing
Obligation already exists but the same is
the obligation dependent upon such condition
extinguished upon the fulfilment of the condition.
from the moment that the said period lapses
Hence, it is immediately demandable. Upon
without the condition having been fulfilled or when
performance of the obligation by the debtor, the
it becomes certain that the event will not take
condition becomes a suspensive condition as to
place, even before said period expires.
him.
Negative Condition
Effect of the fulfilment of condition
A condition that some event will not happen at a
Obligation is extinguished. The obligation to give,
determinate time has the effect of rendering the
the parties shall return to each other what they
obligation effective from the moment the period
have received.
indicated has elapsed or if it has become evident
that the event cannot occur.
Contact No. 228-1996/887-2051
Business Department
3. Obligation with a Term consequence, the creditor cannot demand

payment and the debtor cannot make effective
Definition
tender and consignation of payment before the
A term or period consists of a space of time which period lapses.
having an influence on obligations as a result of a
Exception:
judicial act and either suspend their demandability
or produces their extinguishment. It may also 1. Contrary agreement
refer to a future event, the happening of which is
If the period is for the benefit of the creditor alone,
certain.
he may demand performance at any time, even
Kinds of Terms before the arrival of the certain day but the debtor
in such a case cannot compel him to accept
a. Suspensive Term
payment before such period lapses.
One that must lapse before the performance of
2. Debtor loses the right to use period in the
the obligation can be demanded. Before the
following instances
arrival of the period, the obligation already exist
but is not yet demandable. a. debtor becomes insolvent, unless he gives a
security
b. Resolutory Term
b. debtor does not furnish the promised security
The period after which the period is terminated.
The obligation is valid up to a certain date. Upon c. By his acts, debtor impaired the security or it
araival of the said date, the obligation is disappears by reason of fortuitous event, unless
terminated he gives a new security.
Definite Term d. Debtor violates any undertaking by reason
which the creditor agreed to the period
Refers to a known date or time
e. Debtor attempt to abscond
Indefinite Term
Refers to an event which will necessarily happen
but the date of its happening is unknown, such as Kinds of Obligations: Alternative and
the death of a person. Facultative Obligations
Legal Term 1. Simple Obligation
It is the period Granted by law When there is only one presation agreed upon
Voluntary Term 2. Conjunctive obligation
It is the period stipulated by the parties When there are several prestations which are due
and the debtor is required to perform all
Judicial Term
prestations in order for the obligation to be
It is the period allowed by the courts extinguished.
3. Alternative Obligation
Benefit of Term When there are several prestation which are due
but the debtor is required to perform only one
Rule: prestation in order for the obligation to be
Whenever in an obligation a period is designated, extinguished.
it is presumed to have been established for the
benefit of both the debtor and the creditor. It
means both can use the period. As a
Contact No. 228-1996/887-2051
Business Department
Right to Choice 4. By reason of creditor’s fault but the right to

choice is with him, he can simply choose from the
Rule: It belongs to the debtor, unless expressly
remaining prestations.
granted to the creditor
5. By reason of creditor’s fault but the right of
Limitation:
choice is with the debtor, the latter may either
1. The creditor cannot be compelled to receive rescind the contract with damages because he
part of one and part of the undertaking cannot make a choice according to the terms of
obligation or e may choose from the remaining
2. The debtor cannot choose prestations which without a right to damages.
are impossible, unlawful, or which could not have
been the object of obligation
3. When only one prestation is practicable 4. Facultative Obligation
Effectivity of Choice Concept
Choice becomes effective from the time it has Only one prestation has been agreed upon due
been communicated to the other or when the (called “original prestation”), but the debtor may
other gains knowledge of such choice instead perform in substitution another prestation
which has already been agreed upon (called
Once choice is effective, it becomes irrevocable. “substitute prestation”). The choice to substitute
Hence, the obligation ceases to be alternative prestation is always with the debtor. The loss of
and becomes a simple one of performing that the substitute prestation does not produce any
which has been chosen legal effect. However, the loss of the original
Effect of Loss of Prestation prestation by fortuitous event will result in
extinguishment of the obligation
a. If all were lost
1. By reason of fortuitous event or by reason of
creditor’s fault, the obligation is extinguished Kinds of Obligations: Joint and Solidary
Obligations
2. By reason of the debtor’s fault but the right of
choice is with him, he is bound to pay the value of
the last prestation which he lost, plus damages. Simple Obligation
3. By reason of debtor’s fault but the right of When there is only one debtor and one creditor
choice is with the creditor, the latter can demand
for the payment of the price of any of the Joint or Solidary obligation
prestations, with indemnity for damages.
In case of plurality of subjects, the obligation is
b. If not all were lost either joint or solidary. A join obligation is one in
which each debtor is liable only for a
1. By reason of fortuitous event, the choice may proportionate part of the debt, and each creditor
still be exercised from those remaining is entitled to demand only a proportionate part of
2. By reason of the debtor’s fault but the right of the credit of each debtor. On the other hand,
choice is with him, he can simply choose from the solidary obligation is one in which each of the
remaining prestation debtors is liable for the entire obligation and each
of the creditors is entitled to demand satisfaction
3. By reason of debtor’s fault but the right of of the whole obligation from any or all of the
choice is with the creditor, the latter may claim debtors
any of those subsisting (without right to damages)
or price of that which has disappeared (with a
right to damages)
Contact No. 228-1996/887-2051
Business Department
Presumption in favor of Joint Obligation debtors specified their respective liabilities or

when the creditors specified the sum which each
In case of plurality of subjects, the law presumes
of them is entitled.
the obligation to be merely joint. For example the
instrument containing the word “we promise to Each Share Distinct from Others
pay” is signed by 2 or more persons, they are
The most essential and characteristic effect of a
presumed to be merely joint debtors.
joint obligation is that the share of each the joint
When obligation becomes solidary creditors or debtors in the credit or debt is
considered distinct from one another
1. When the obligation expressly so states
Solidary Obligation
Solidarity by Stipulation/Agreement
Kinds of Solidarity
The obligation may expressly state, for example,
that each one of the debtors can be compelled to a. Active Solidarity
pay the totality of the debt, or that each one of
It is the solidarity existing among the creditors of
them is obligated to pay for the entire value of the
the same obligation, by virtue of which, each of
obligation, or the word “solidary” may be used or
them, as regards his co-creditors, is a creditor
the parties may simply use words indicating an
only as to his share in the obligation and in
agreement for solidary such as “jointly and
regards to the common debtor, he represents all
severally”, “junto o separadamente”, “individually
of them.
and collectively” or “individually and jointly liable”.
b. Passive Solidarity
It is the solidarity existing among the debtors of
2. When the law so provides
the same obligation, by virtue of which they are
Solidary by Provision of Law bound to the payment of the whole credit.
1. Where an instrument containing the word “I c. Mixed Solidarity
promise to pay” is signed by 2 or more persons
It is the solidarity existing on the part of both
2. If 2 or more heirs take possession of the creditors and debtors
estate, they shall be solidary liable
3. The principal is solidary liable with the agent
Solidarity among Creditors
Mutual Agency
3. When the nature of obligation requires so
Each one of the creditors can represent all of
When several heirs of a deceased partner them in regards to their common debtors.
continued with the business and management of
Effect of demand
the partnership against the will of the other
partner, the obligation of said heirs to undertake The debtor may pay any one of the solidary
an inventory, render an accounting of partnership creditors but if any demand has been made by
assest, and to wind up the partnership affairs is one of the solidary creditor’s payment must be
solidary by its nature. made only to such creditor.
Extinguishment of Obligation
Joint Obligation One of the solidary creditors may extinguish the
debtor’s obligaton even without the consent of the
Division of Joint Debts or Credit
others.
The division of joint credits or debts may be
established in the obligation itself, as when the
Contact No. 228-1996/887-2051
Business Department
Assignment of creditor’s right Kinds of Obligation: Divisible and Indivisible

Obligation
A solidary creditor cannot assign his rights to a
stranger without consent of the others. Divisible Obligation
The obligation is susceptible of division and
partial performance
Solidary Among Debtors
Indivisible Obligation
Mutual Guaranty
The obligation is not susceptible of partial
The creditor may proceed against any one of the
performance
solidary debtor or some or all of them
simultaneously. Test
Who may pay The test of divisibility of an obligation is whether
or not it is susceptible of partial performance. This
Any one of the solidary debtors may extinguished
susceptibility does not mean that it is possible or
the entire obligation
not to fulfil the obligations by parts, but rather,
Right of solidary debtor who paid the entire whether or not it is opposed to the ends or
obligation purpose of the obligation.
He may demand reimbursement from his co- Rules in determining Indivisibility

debtors only the share which corresponds to
1. Obligation to Give
each, with interest for the payment already made.
When one of the solidary debtors cannot, Obligations to deliver a definite thing, such as an
because of his insolvency, reimburse his share to animal or vehicle, are indivisible. However, even
the debtor paying the obligation, such shall be though the object may be physically divisible, an
borne by all his co-debtors in proportion to the obligation is indivisible if so provided by law or
debt of each. intended by the parties.
Solidarity not affected by varied terms and 2. Obligation to Do
conditions
Even though the service may be physically
Solidarity may exist although the creditors and divisible, an obligation is indivisible if so provided
debtors may not be bound in the same mmanner by law or intended by the parties. The obligations
and by the same periods and conditions. are divisible, however, when, 1. The obligation
has for its object the execution of a certain
number of days of work; 2. The obligation has for
Joint and Indivisible Obligation its object the accomplishment of work by metrical
units or 3. The obligation has for its object
Concept analogous the things which by their nature are
As to the object of obligation the same is susceptible of partial performance.
indivisible. As to the subjects, in case of plurality,
the same is a joint obligation. The indivisibility of
the obligation does not necessarily rise to Kinds of Obligation: Obligations with a Penal
solidarity, hence, even if the obligation is Clause
indivisible, it is presumed to be merely joint in
Concept of Penal Clause
case of plurality of subject
Definition
A penal clause is an accessory obligation which
the parties attach to a principal obligation for te
purpose of insuring the performance thereof by
Contact No. 228-1996/887-2051
Business Department
imposing on the debtor a special prestation b. A third person allowed to make payment by
(generally consisting in the payment of a sum of agreement of parties
money in case the obligation is not fulfilled or is
c. A third person interested in the fulfilment of the
irregularly or inadequately fulfilled.
obligation such as guarantors, sureties or third
As substitute for damages and Interest party mortgagors
The penalty takes the place of the indemnity for 3. The payor must have the capacity to make
damages and the payment of interest. payment
Not Replacement for Principal Obligation Where the person paying has no capacity to
make the payment, the creditor cannot be
Penalty is not a substitute for the performance of
compelled to accept it. In case of obligation to
the obligation. Hence, as a rule, the debtor cannot
give, payment to be valid must be made by a
exempt himself from the performance of the
person having free disposal of the thing due and
obligation by paying the penalty.
capacity to alienate it.
4. Payment must be made to the proper
Extinguishment of Obligations: Payment person
Importance of Compliance with Rules for Valid Who are considered proper persons to whom
Payment payment must be made:
If strictly complied a. A person in whose favor the obligation has

been constituted (or the original creditor)
Debtor may compel the creditor to accept
payment. If the creditor refuses to accept, the b. His successor-in-interest
refusal is without just cause, hence, the debtor
c. Persons authorized to received payment
may resort to valid consignation.
whether authorized by the creditor or any person
If not strictly complied authorized by law to do so
Creditor has just cause for refusing to accept If payment was made to wrong person, payment
payment. If the debtor resorts to aconsignation is invalid except if the payment has redounded tp
the same is not valid the benefit of the creditor or if the payment was
made in good faith to any person in possession of
the credit in the absence of assignment of the
Rules: creditor.
1. Payment must be complete 5. The person to whom payment is made must

have the capacity to receive it
Creditor cannot be compelled to accept partial
payments except if stipulated allowing partial Payment is invalid if payment was made to
payment or when debt is partly liquidated and incapacitated person except incapacitated has
partly unliquidated. Only when obligation is kept the thing delivered or insofar as the payment
completely delivered or rendered that it is has been beneficial to him.
extinguished 6. The very thing or service due must be
2. Payment is made by the proper person, delivered
otherwise, the creditor cannot compelled to If the obligation is a determinate thing the debtor
accept the same cannot compel the creditor to receive a different
Who are considered as proper persons: one, although the latter may be of the same value
as, or more valuable than that which is due. If the
a. The debtor or his authorized representative obligation is a generic thing and the quality and
circumstances have not been stated, the creditor
Contact No. 228-1996/887-2051
Business Department
cannot demand a thing of a superior quality and 2. There must be some difference between the
the debtor may not deliver a thing of inferior prestation due and that which is given it
quality. substitution
Obligation to pay in money 3. There must me an agreement between the
creditor and debtor that the obligation is
The creditor cannot be compelled to accept
immediately extinguished by reason of the
payment not in the currency stipulated or in the
performance of a prestation
absence of agreement, in the currency which is
legal tender in the Philippines. Effect:
The foregoing rule does not prevent a creditor The dation in payment extinguished the obligation
from accepting a check as payment. However, to the extent of the value of the thing delivered,
the delivery of checks (or promissory or payable either as agreed upon by the parties or as may be
to order or other mercantile documents) shall proved.
produce effect of payment only when they have
Cession
been encashed or they have been impaired
through the fault of the creditor Concept
7. Payment must be in proper place; Cession or assignment consists in the
otherwise, the creditor cannot be compelled to abandonment of the totality of the property of the
accept the payment debtor in favor of the creditors in order that the
same may be applied for the satisfaction of their
Payment must be made at the domicile of the
credits.
debtor. This rule applies even if the debtor
changes his domiciled in bad faith except Tender of payment and Consignation
additional expenses in collecting the credit shall
be borne by the debtor Rule:
Except if there is another place of payment Tender of payment even if valid does not by itself
designated in the obligation or in the absence of produce legal payment unless it is completed by
the agreement and when the obligation is to consignation. The effect of a valid tender of
deliver a determinate thing, the payment shall be payment is merely to exempt the debtor from
made wherever the thing might be at the moment payment of interest and/or damages.
the obligation was constituted. Tender of Payment
Is the antecedent of consignation that is the act
Special Forms of Payment preparatory to the consignation, which is the
principal and from which are derived the
Dation in Pament (Dacion en Pago) immediate consequences which the debtor
desires or seek to obtain.
Concept
Consignation
It is the alienation of property to the creditor in
satisfaction of the debt in money Is the act of depositing the thing die with the court
or judicial authorities whenever the creditor
Requisites:
cannot accept or refuses to accept payment.
1. There must be the performance of a prestation
in lieu of payment which may consist in the
delivery of corporeal things or real right or a credit
against the third person
Contact No. 228-1996/887-2051
Business Department
Extinguishment of Obligations: Loss

3. It must not be due to the act of any parties
Obligation to give
4. The contract is for future prestation
Only an obligation to deliver a determinate thing
can be extinguished by reason of loss. An
obligation to deliver a generic thing on the other Applicability
hand, cannot be extinguished by reason of loss The doctrine of unforeseen events should apply
because the genus of a thing can never perish.
only to risk that are manifestly beyond the
The thing is lost when it is perish, goes out of
contemplation of the parties or to those or to
commerce or disappears in such a way that its
existence is unknown or it cannot be recovered those absolutely exceptional changes of
It is presumed that the loss was due to the fault of circumstances where equity demands assistance
the debtor whenever the thing is lost in his for the debtor. It does not apply to risks that are
possession. However, the presumption does not
apply in case of earthquake, flood, storm or other already known, or should have been known to the
natural calamity. parties when they entered into their contractual
Requisites for loss of specific thing relations.
1. The loss occurs without the fault of debtor
2. The loss occurs prior to the debtor incurring Extinguishment of Obligations: Condonation
delay
or Remission
3. There is no law or stipulation holding the debtor
liable in case of fortuitous event, or that the
nature of the obligation does not require that Concept
assumption of risk. It is gratuitous on the part of the creditor, but it
requires acceptance by the debtor to be valid. Its
Applied to Obligation To Do
either in the form of donation inter vivos or legacy,
An obligation to do is lost when the prestation
depending on its effectivity.
becomes legally or physically impossible without
the fault of the debtor or when by reason of an
When condonation is Donation
unforeseen event the service as become so
difficult as to be manifestly beyond the
Either expressly or impliedly and acceptance by
contemplation of the parties.
the debtor must be made during the lifetime of the
creditor, otherwise the donation is not perfect.
Doctrine of Unforeseen Events
Requisites:
When private document evidencing a credit is
1. The event or change in circumstances could
found in the possession of the creditor, it gives
not have been foreseen at the time of the
rise to a presumption that the creditor voluntarily
execution of the contract
delivered the document to the debtor and such
2. It makes the performance of the contract
voluntary delivery gives rise to presumption of
extremely difficult but not impossible
Contact No. 228-1996/887-2051
Business Department
condonation of indebtedness. The presumption Extinguishment of Obligations: Compensation

can be rebutted by proving that there was no
voluntary delivery. Definition
It is a monde of extinguishing to the concurrent
When Condonation is Legacy amounts the obligation of persons who in their
own right as principals are reciprocally creditors
It complies with formalities in the last will and and debtors of each other
testament. The acceptance of the debtor can only
be made after the death of the creditor. Kinds of Compensation
Extinguishment of Obligations: Merger or 1. Legal

Confusion Takes place ipso jure when all requisites of law
are present.
Concept
Confusion or Merger is the meeting in one person Requisite:
of the qualities of creditor and debtor with respect 1. The parties must be creditors and debtors of
to the same obligation. It exists when the each other in their own right and as principals.
characters of creditors and debtor are merged in Hence, taxes cannot be subject to compensation
the same person for the simple reason that the government and the
taxpayer are not creditor and debtor to each
Requisites: other.
2. Both debts consist in a sum of money or if the
1. Must take place in the person of the principal things due are consumable, they be or the same
creditor and principal debtor, hence, if the merger kind and also of the same quality.
involves the creditor and the guarantor, the 3. That both debts are due
obligation is not extinguished. 4. That both debts be demandable and liquidated.
2. Must be complete and definite, because if it is 5. That neither of the debts be subject to any lien,
not complete the obligation still subsists. retention or suit instituted by third person.
Debts not subject of legal compensation

1. When one of the debts arises from a depositum
2. when debts arises from the obligation of a
depositary or a bailee in commodatum
Contact No. 228-1996/887-2051
Business Department
3. When one of the debts arises from claim for takes place of the former. It is merely modificator
support due to gratuitous title. or partial novation when the old obligation
4. When one of the debts consists in civil liability subsists to the extent that it remains compatible
arising from penal offense with the amendatory agreement.
5. When one of the debts consist claims of
Government for payment of tax. Extinctive Novation
Requisites
2. Voluntary 1. There must be a previous valid obligation
Occurs when the parties agree to the mutual 2. There must be an agreement of the parties
extinguishment of their credits or to compensate concerned to a new contract
their mutual obligations even in the absence of 3. There must be the extinguishment of the old
some of the legal requisites contract
4. There must be the validity of the new contract
3. Judicial
Takes place when the court allows the set off or Kinds of Novation
counterclaim of the defendant against the claims
of the plaintiff As to Essence
Objective Novation
Extinguishment of Obligations: Novation Also called real novation, occurs when there is a
change of the object, cause or principal
Concept conditions of an existing obligation. Hence, the
Definition novation is merely modificatory where the change
Novation is the extinguishment of an obligation by brought about by any subsequent agreement is
the substitution or change of the obligation by a merely incidental to the main obligation, such as a
subsequent one which extinguishes or modifies change in interest rate, an extension of time to
the first, either by changing the object or principal pay or a change in the period to comply with the
conditions or by substituting another in place of obligation.
the debtor or by subrogating a third person in the
rights of the creditor. Subjective Novation
Also called personal novation, occurs when there
Extinctive or Modificatory is a change of the object, cause, or principal
Novation is either extinctive or modificatory. It is conditions of an existing obligation
extinctive or total novation when an old obligation
is terminated by the creation of a new one that
Contact No. 228-1996/887-2051
Business Department
Mixed Novation Instances of Legal Subrogation

The change of the object, cause, or principal 1. When a creditor pays another creditor who is
conditions of an obligation occurs at the same preferred even without the debtors knowledge
time with the change of either in the person of the 2. When a third person not interested om the
debtor or creditor. obligation pays with the express or tacit approval
of the debtor
As to Form or Constitution 3. When even without the knowledge of te debtor
a person interest in the fulfilment of the obligation
Express to pays without prejudice to the effects of
When the new obligation declares in unequivocal confusion s to the latter.
terms that the old obligation extinguished. 2. Conventional Subrogation
Implied Takes place by agreement of parties, it requires
When the new obligation is incompatible with the the consent of the original parties and the third
old one on every point. person.
Substitution of Debtor
In order to change the person of the debtor the
old one must be expressly released from the
obligation and the third person or new debtor
must assume the former’s place in relation.
Without the express release of the debtor
obligation any third party who may thereafter
assume the obligation shall be considered as co-
debtor or surety.
Subrogation
The transfer of all rights of the creditor to a third
person
Kinds of Subrogation
1. Legal Subrogation
Takes place without agreement but by operation
of law because of certain acts.

Week 6

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week 6

Uploaded by

Copyright:

Available Formats

KORBEL FOUNDATION COLLEGE, INC.

Purok Spring 1, Brgy. Morales, Koronadal City

Definition a. Must be Expressly provided

An Obligation is a juridical necessity to give, to do

conduct and in case of breach may obtain

2. Object begin to be demandable.

The prestation or the particular conduct required

3. Active Subject (Obligee or Creditor)

obligation. two or more persons whereby one binds himself

demandable. parties, for consent is the essence of the

2. The property must be neglected or abandoned

Requisites for Solution indebiti: The enumeration is exclusive

Kinds of Obligations: Civil and natural

5. Quasi-Delict Examples of Natural Obligation

Legal Consequences of Positive and Negative 1. Mora or delay

b. Mora Accipiendi Fortuitous Event (Caso Fortuito)

Effect 2. Potestative, Casual or Mixed

3. Obligation with a Term consequence, the creditor cannot demand

Right to Choice 4. By reason of creditor’s fault but the right to

Effectivity of Choice Concept

Presumption in favor of Joint Obligation debtors specified their respective liabilities or

Assignment of creditor’s right Kinds of Obligation: Divisible and Indivisible

He may demand reimbursement from his co- Rules in determining Indivisibility

If strictly complied a. A person in whose favor the obligation has

1. Payment must be complete 5. The person to whom payment is made must

Extinguishment of Obligations: Loss

condonation of indebtedness. The presumption Extinguishment of Obligations: Compensation

Extinguishment of Obligations: Merger or 1. Legal

Debts not subject of legal compensation

Mixed Novation Instances of Legal Subrogation

You might also like