TITLE I.

OBLIGATION
CHAPTER 1.
GENERAL PROVISIONS

ARTICLE 1156
An obligation is a juridical necessity to give, to do or not to do.
Obligation- derived from the Latin word obligatio means tying or binding.
It is a tie or bond by virtue which one is bound in favor of another to render something (may
consist in giving a thing, doing certain act, or not doing a certain act.
ESSENTIAL REQUISITES OF AN OBLIGATION
(1) Passive Subject (debtor or obligor) the person who is bound to the fulfillment. (Siya ang may
duty sa fulfillment ng obligation)
(2) Active Subject (creditor or obligor) person who is entitled to demand the fulfillment (Siya ang
may right sa obligation)
(3) Object or prestation (subject matter of the obligation) it may consists in giving, doing or not
doing. Without the prestation, there is nothing to perform.
(4) Juridical or legal tie (called as efficient cause) which binds or connects the parties to the
obligation.

EXAMPLE: Si A bound himself na gawin yung bahay ni B for 1M Pesos.

Si A yung passive subject( obligor) ----- Si B yung active subject (obligee) ----- yung pag-build ng
bahay yung object or prestation ---- tapos yung agreement nilang dalawa yung juridical tie.
Suppose natapos na gawin ni A yung bahay ni B and nasa agreement nila na once matapos ni
A yung bahay ni B ay magbabayad si B ng 1M kay A. So after niya matapos, si B na ang
magiging passive subject (debtor) and si A naman ang active subject (creditor)
The form of an obligation refers to the manner in which an obligation is manifested or incurred. It
may be oral, in writing, or partly oral and partly in writing.

ARTICLE 1157: Obligation arise from

(1) Law- imposed by law itself
EXAMPLE: Obligation to pay taxes
(2) Contracts- arise from stipulation/condition of both parties
EXAMPLE: Obligation na magbayad ng loan or utang by virtue of an agreement.
(3) Quasi-Contracts- retroactive arrangement between two parties who have no previous
obligations to one another. (No meeting of minds)
EXAMPLE: Obligation na ibalik mo yung pera kapag nagkamaling naibigay or naibayad sa’yo or
hindi pa naman due.
(5) Quasi-delicts- there being fault or negligence, but no contractual relation exists between the
parties.
EXAMPLE: Naglalaro ka ng baseball sa isang field, tapos accidentally tumama yung bola sa
window glass ng kalapit na bahay, you are liable for the damages.
ARTICLE 1158
Obligations derived from law are not presumed. This provision refers to legal obligations arising
from law.
EXAMPLE: A private school has no legal obligation to provide clothing allowance to its teachers
because there is no law which imposes this obligation upon schools.

ARTICLE 1159
Obligations arising from contracts have the force of law between the parties and they should be
complied with in good faith.
CONTRACTUAL OBLIGATIONS: The above article speaks of CONTRACTUAL OBLIGATIONS
or obligations arising from contracts or VOLUNTARY AGREEMENTS OF THE PARTIES.
CONTRACT- is a meeting of minds between 2 persons wherein they bound himself for other to
give something or render services.
(1) Binding Force- Obligations arising from contracts have the force of law between the
contracting parties.
(2) Requirement of a valid contract- A contract is considered valid if it is not contrary to law,
morals, good customs, public ordered or public policy.
(3) Breach of contract- When one or all the parties fails or refuses to comply with his obligations,
without legal reasons or justification.
COMPLIANACE IN GOOD FAITH- Compliance or performance in accordance with the
stipulations/conditions or terms of the contract or agreement.

ARTICLE 1160
This provision talks about QUASI-CONTRACTS. “NO MEETING OF MINDS”
A quasi-contract is that juridical relation resulting from lawful, voluntary and unilateral acts by
virtue of which the parties become bound to each other to the end that no one will be unjustly
enriched at the expense of another.
KINDS OF QUASI-CONTRACT
(1) Negotiorum Gestio- voluntary management of the property or affairs of another without the
knowledge or consent of the latter.
EXAMPLE: Si A nagpunta sa province without leaving somebody to look after his house sa
Manila. While in prvince, biglang nagkaroon ng sunog na malapit sa bahay ni A. Through the
effort of B (neighbor) the house of A was saved from being burned. However, si B may mga
expenses from that.
In this case, si A may obligation siya na i-reimburse lahat ng nagastos ni B kahit na wala siyang
alam or walang consent from him, (on the principle of quasi-contract)
(2) Solutio Indebiti- juridical relation which is cerated when something is received when there is
no right to demand and was delivered only through mistake. (payment by mistake) a person
obliged na to return something through error or mistake.
EXAMPLE: Si A may utang kay B na 1k, ngayon si A binayaran niya si C sa pag-aakala na in-
authorized ni B si C na tanggapin yung bayad ni A (Debtor) obligation ni C na ibalik yung
binayad sakanya kasi nga payment by mistake ang nangyari.
ARTICLE 1161: Civil obligations arising from criminal offenses shall be governed by the penal
laws.
SCOPE OF CIVIL LIABILITY: The extent of the civil liability for damages arising from crimes
governed by the Revised Penal Code
(1) Restitution- Pagbabayad (2) Reparation for the damages caused (3) Indemnification
for consequential damages
EXAMPLE: A stole the car of B. If si B ay na-convict, the curt will order either (1) return the car
or to pay its value if it was lost or destroyed (2) pay for the damages (3) pay other damages
suffered by the creditor.

ARTICLE 1162: Obligations from quasi-delicts shall be governed by special law.

Quasi-delicts- there being fault or negligence, but no contractual relation exists between the
parties.
REQUISITES OF QUASI-DELICTS
(1) There must be an act or omission
(2) There must be fault or negligence
(3) There must be damaged caused
(4) There must be direct relation or connection of cause and effect between the act or omission
and the damage
(5) There is no pre-existing contractual relation between the parties.

DISTINCTION OF CRIME AND QUASI-DELICT

(1) In crime, there is a criminal or malicious intent, while in quasi–delict, there is only
negligence.
(2) In crime, the purpose is punishment, while in Quasi-delict, indemnification of the offended
party.
(3) Crime affects public interest, Quasi-delict concerns private interest
(4) In crime, there are generally 2 liabilities (criminal and civil), while in Quasi-delict, only civil
liability.
(5) Criminal liability cannot be compromised or settled by the parties, in Quasi-delict, it can be
settled as any other civil liability.
(6) In crime, the guilt of the accused must be proved beyond reasonable doubt, while in Quasi-
delict, the fault or negligence need only by proved.

CHAPTER 2. NATURE AND EFFECT OF OLIGATIONS

ARTICLE 1163: Every person obliged to give something is also obliged to take care of it with
proper diligence of a good father. This provision refers to an obligation specific or determinate
thing.
A thing is said to be determinate or specific when it is particularly or physically segregated
others of the same class.
A determinate thing is identified by its individuality. The debtor cannot substitute it with another
although the latter’s is of the same kind and quality without the consent of the creditor.
EXAMPLES: (1) The watch I am wearing (2) My dog name Cookie (3) This cavan of rice
A thing is said to be generic or indeterminate when it refers only to a class or genus to which it
pertains and cannot be pointed out with particularity. The debtor can give anything of the same
class as long as it is of the same kind.
EXAMPLES: (1) A cavan of rice (2) A police dog (3) A casio watch
DUTIES OF DEBTOR IN OBLIGATION TO GIVE A DETERMINATE THING
(1) Preserve the thing- In obligation to give, the obligor has the duty to take care of the thing
due with the diligence of a good father.
(a) Diligence of a good father of a family- equated with ordinary care.
(b) Another standard of care
(c) Factors to be considered
(2) Deliver the fruits of the things
(3) Deliver the accessions and accessories
(4) Deliver the thing itself
(5) Answer for damages in case of non-fulfillment or breach

ARTICLE 1164: The creditor has a right to the fruits of the thing from the time the obligation to
deliver it arises.
DIFFERENT KINDS OF FRUITS
(1) Natural Fruits- spontaneous products of the soil.
EXAMPLE: Grass, all trees, and plants on lands produced without interference of human labor.
(2) Industrial Fruits- Those produced by lands of any kind through labor. Products of lands
brought about by reason of human labor.
EXAMPLE: Sugar cane, vegetables, rice
(3) Civil fruits- those derived by virtue of a juridical relation
EXAMPLES: Rents of apartment, price of leases of lands and other properties

RIGHTS OF CREDITOR TO THE FRUITS

The creditor is entitled to the fruits of the thing to be delivered from the time the obligation arises
or constituted, the reason for this is to protect the interest of the obligee whenever the obligor
commit delay or default in fulfilling his obligation.
PERSONAL RIGHT- power or right of a person to demand from another, as a definite passive
subject, the fulfillment of latter’s obligation.
REAL RIGHT- right or interest of a person over a specific thing.
ARTICLE 1165: Remedies of Creditor in Real Obligation
(1) Specific real obligation- (obligation to deliver a determinate thing)
(a) Demand specific performance or fulfillment (if it is still possible) of the obligation with a right
to indemnity for damages
(b) Demand rescission or cancellation + a right to recover damages
(C) Demand payment of damages only, where it is the only feasible remedy.
EXAMPLE: A sells his phone to B for 20k. If si B refuses to comply in his obligation, B can bring
an action for fulfillment in the above remedies
(2) Generic real obligation- (obligation to deliver a generic thing)

ARTICLE 1166: The obligation to give a determinate thing includes that of delivering of all its
accessions and accessories.
ACCESSIONS- fruits of a thing or additions to or improvements upon a principal thing.
EXAMPLE: (1) AC in a car (2) trees on a land
ACCESSORIES- things joined to or included with the principal thing for the latter’s
embellishment (decorations)
EXAMPLE: (1) Key of a house (2) frame of picture

ARTICLE 1167: If the obligor fails to do his obligation, the same shall be executed at his cost.
This provision refers to an obligation to do, to perform an act or render a service.
(1) The debtor fails to perform an obligation to do
(2) The debtor performs an obligation but contrary to terms/stipulation
(3) The debtor perform an obligation but in poor manner.
REMEDIS OF CREDITOR IN POSITIVE PERSONAL OBLIGATION
(1) If the debtor fails to comply in his obligation to do, the creditor has the right:
(a) To have the obligation performed by himself or by another, unless there is a personal
consideration involved. At the debtor’s expenses.
(b) Recover damages
(2) In case the obligation is done in contravention/breach of the terms of the same or is poorly
done, it may be ordered by the court that it can be undone if it still possible to undo what has
done.
PERFORMANCE BY A THIRD PERSON
A personal obligation to do, like a real obligation to deliver a generic thing can be performed by
a third person.
EXAMPLE:
(1) A binds himself to construct a house of B. There is a stipulation that the house shall have 4
bedrooms, kitchen shall be painted all gray. If A does not construct the house of B. B may ask D
to construct the house at the expense of A (debtor)
(2) Pero if ginawa naman ni A yung bahay pero hindi nasunod yung stipulations, B can ask to
have it done according sa napag-usapan, if A refuses, the obligation may be performed by D at
the expense of A (Debtor)
(3) Now, if the kitchen was painted all gray but in a poor manner, B may ask A that it be undone,
if A refuses, B may ask D to paint the kitchen at the expense of A (debtor)
(BASTA IF EVER MAGKAROON NG NON-COMPLIANCE OR COMPLIED BUT IN A POOR
MANNER, IF TUMANGGI ANG DEBTOR NA GAWIN YUNG OBLIGATION NIYA
CONSIDERING ALL THE STIPULATIONS, PWEDENG IPAGAWA NI CREDITOR ‘YON KAY
THIRD PERSON PERO EXPENSE LAHAT NI DEBTOR)

ARTICLE 1168: When the obligations consists in not doing, and the obligor does what has been
disallowed him, it shall also be undone at his expense.
REMEDIES OF CREDITOR IN NEGATIVE PERSONAL OBLIGATION
In an obligation not to do, the duty of the obligor here is to refrain himself from an act. Therefore,
there is no specific performance here. The very obligation is fulfilled in not doing what is
disallowed to do. Therefore, the debtor cannot be guilty of delay.

ARTICLE 1169
Magkakaroon lang ng delay if nag-demand na yung creditor sa debtor. If walang demand, delay
will not exist. Pero may instances na hindi na kailangan magdemand ng creditor para masabi na
nadelay yung debtor.
(1) If nakasaad sa obligation nila
(2) If yung time sa agreement nila is ang magdedecide kung kelan dapat talagang ifulfill yung
obligation.
(3) If hindi kayang iperform ng obligor yung demand.

Sa reciprocal obligation naman, sinasabi na kapag sino man sa magkabilang party yung
nagfulfill na ng obligation nila, dun na magstart yung delay sa party na di pa nakabayad.
EXAMPLE: Si A may utang kay B tas si B may utang rin kay A. Ngayon nagbayad na si A kay
B, pero si B hindi nagbayad. Delay na si B non kasi tapos na yung obligation ni A.
2 TYPES OF DELAY
(1) Ordinary Delay – kapag hindi lang nafulfill yung obligation sa napagkasunduang time.
(2) Legal Delay – hindi pagfulfill ng obligation sa oras and nag result sa breach ng kasunduan.
KINDS OF DELAY
(1) Mora solvendi – failure sa part ng debtor dahil hindi niya natupad yung obligation
(2) Mora accipiendi – failure naman sa part ng creditor dahil hindi niya tinanggap yung
performance of the obligation
(3) Compensatio morae – kapag nagdelay yung obligor cancelled na yung delay ng obligee
and vice versa.
NO DELAY IN NEGATIVE PERSONAL OBLIGATION
Kapag yung obligation is not to do, possible pa yung non-fulfillment pero yung delay is
impossible kasi hindi niya naman pwedeng gawin yung what has forbidden him.
REQUSITES OF DELAY OR DEFAULT BY THE DEBTOR
Masasabi lang na nadelay yung isang debtor if:
(1) Kapag hindi niya tinupad yung obligation niya sa napagkasunduang date.
(2) Kapag nag-demand sa kanya yung creditor which is either judicial or extra judicial.
(3) Kapag hindi niya na perform yung demand.
EXAMPLE: Si A ay obliged himself na mag-deliver ng refrigerator kay B sa December 10.
Ngayon hindi nadeliver ni A yon. Ordinary delay lang ‘to kasi hindi naman nag-demand si B.
Kahit na may date of fulfillment ia-assume lang ng court na nagbigay ng extension si B para sa
pagdedeliver. So in the end walang breach of obligation na ginawa si A.
EFFECTS OF DELAY
(1) Mora solvendi
(A) Kapag guilty si debtor for breach of obligation
(B) Kapag liable siya kay creditor ng interest (kapag money yung obligation) or (damages kapag
ibang type ng obligation)
(C) Kapag fortuitous event, liable pa rin siya provided na determinate thing yung obligation.
Pero kung mapapatunayan ng debtor na ganon pa din mangyayari kahit di niya kasalanan,
babawasan ng court yung damages.
(2) Mora accipiendi
(A) Kapag guilty rin si creditor for breach of obligation.
(B) Liable si creditor for damages na nagawa ng debtor
(C) Siya yung may fault in case na mawala yung bagay
(D) Kapag money yung obligation hindi liable si debtor sa interest in case na ma-delay si
creditor
(E) Pwedeng alisin ni debtor yung sarili niya sa obligation kapag nadeposit na niya sa court
yung thing due.
(3) Compensatio morae
Delay sa creditor cancels the delay of the debtor or vice-versa.
Kapag naunang madelay yung isang party and sinundan nung kabila, yung unang nagdelay is
mababalance ng court. Pero kung hindi malaman kung sino yung naunang ma-delay, tapos na
yung obligation and sila yung magbebear ng mga kanya kanya nilang damages.

WHEN DEMAND IS NOT NECESSARY TO PUT IN DELAY

Mangyayari lang yung delay sa part ng debtor if nag-demand si creditor. Pero kung hindi,
walang mangyayaring delay.
EXCEPT:
(1) When the obligations so provides
EXAMPLE: May utang si A kay B na 10k to be paid on Dec 1 (without the need of demand).
Once na hindi nagbayad si A sa Dec 1, automatic delay siya.
(2) When the alw so provides
EXAMPLE: Sinasabi sa law na yung taxes daw are to be paid on the exact date or before non
dahil kapag hindi, may penalties na.
(3) When time is of the essence
EXAMPLE: Delivery of balloon in a birthday party:
Making of a wedding dress for a wedding scheduled at a particular time.
(4) When demand would e useless
EXAMPLE: Magdedeliver ng horse si A kay B sa Sunday. Namatay yung horse due to a
fortuitous event. Any demand would be pointless kasi patay na nga yung idedeliver.
(5) When there is performance by a party in reciprocal obligations
EXAMPLE: Si A magdedeliver ng tv kay B. Tapos si B dapat magbayad pagkadeliver. Since
wala namang napagkasunduang date, mangyayari lang yung delay if hindi nagbayad si B
pagkadeliver ni A.

ARTICLE 1170: Those who are guilty of fraud, negligence or delay for the performance of their
obligations are liable for damages.
4 GROUNDS FOR LIABILITY
(1) Fraud (deceit or dolo) - As a ground for damages, it implies some kind of malice or
dishonesty and it cannot cover cases of mistake and errors of judgment made in good faith.
EXAMPLE: S obliged na mag-deliver kay T ng 20 cavans of rice of a particular name. If si S
nag-deliver ng rice knowing that it is a cheaper rice at hindi kagaya ng napag-usapan, S is guilty
of fraud and he is liable for damages of T.
(2) Negligence (fault or culpa) any voluntary act or omission, no malice or bad faith, which
prevents the normal fulfillment of an obligation.
EXAMPLE: Si A pasahero ni B in a taxi. There is considered a contract of carriage between A
and B. In consideration sa fair fare na binayad ni A, the driver (B) agreed to safely bring A sa
pupuntahan niya. If dahil sa hindi pag-iingat ni B (driver) for example (mabilis siya masyado
mag-dive, or dumaan siya sa one-way street lang) na nag-cause ng pagka-aksidente nila, and if
si A (debtor) ay injured, si B (driver) yung liable for the damages. And if ever man na pati yung
sasakyan niya ay nagkarooon ng damages, siya rin yung liable na mag-bear ng expenses doon.
(3) Delay (Mora) - is the failure to perform an obligation on time which failure, constitutes a
breach of the obligation.
(4) Contravention of the terms of the obligation- Violation of the terms and conditions
stipulated in the obligation.
EXAMPLE: Si A tenant s apartment ni B for 5k a month na dapat bayaran every 1st week ng
month. Yung obligation ni A ditto ay yung pagbabayad ayon sa napagkasunduan and yung
obligation naman ni B dito ay to make sure na safe and peaceful yung apartment na ‘yon for A.
If si A nag-violate sa obligation niya, B is entitled to eject him from the apartment and recover
damages. If si B hindi niya ginawa yung obligation niya kay A, B may be held liable for the terms
of his obligation.
DISTINCTION OF FRAUD AND NEGLIGENCE
(1) In fraud, there is deliberate intention, while in negligence, there is no intention.
(2) Waiver of the liability for future fraud is void. While such waiver be allowed in negligence.
(3) Fraud must be clearly roved, negligence is presumed from the violation of a contractual
obligation
(4) Liability for fraud cannot reduced by the courts, while liability for negligence may be reduced
according to the circumstances.
ARTICLE 1171: Responsibility arising from fraud is demandable in all obligations. Any waiver
for future fraud is void.
RESPONSIBILITY ARISING FROM FRAUD DEMANDABLE
Responsibility arising from fraud can be demanded with respect to all kinds of obligation. The
court is not given the power to reduce the corresponding damages.
WAIVER OF AN ACTION FOR FUTURE VOID
Any waiver for future fraud is void as being against the law and public policy.
ANO YUNG REASON BAKIT VOID? --- Syempre if yung obligor alam niya na kahit gumawa
siya ng fraud or mag-violate siya, hindi siya magiging liable for it. And if valid yung fraud,
therefore magiging non sense na ang obligation kasi nga pwedeng hindi gawin.
WAIVER OF ACTION FOR PAST FRAUD VALID
Magiging valid ang past fraud if yung waiver na nangyari ay act of generosity on the part of the
party who is the victim of the fraud (obligee)
If yung aggrieved party ay hindi nag-file ng case against kay obligor, ibig sabihin yung past
fraud na ‘yon ay valid. But para maging valid nga yon, it must be expressed in clear language
which elaves no doubt as to the intention of the obligee to give up his rights against the obligor.
EXAMPE: A obliged na mag-deliver ng 240 cavans or rice kay B of a particular brand and
quality at the rate of 20 cavans kada month.
If si A cannot make an agreement kay B, and si B ay hindi naman nag-file ng case against kay
A. Considered ‘yon na past fraud and it is valid.
But if ang nangyari ay si A ay magco-commit palang ng fraud, considered ‘yon na Future fraud
and therefore void ‘yon and si B can still bring an action against A for damages arising from the
fraud.

ARTILCE 1172: Responsibility arising from negligence in the performance of every kind of
obligation is also demandable.
RESPONSIBILITY ARISING FROM NEGLIGENCE DEMANDABLE
In the performance of every kind of obligation and according to general rule, yung debtor ay
liable pa rin for all the damages resulting from his negligence. Yung court ay binibigyan siya ng
rights or power in fixing the measure of damages. Since negligence nga lang ang nangyari and
wala namang intention doon, ibig sabihin the court may increases or decerases the damages
depending sa circumstances na nangyari. If ever man na both parties ay merong negligent sa
isa’t-isa, naka-depende sakanila kung paano yung magiging kasunduan nila doon sa mga
obligations nila sa isa’t-isa. It’s either i-cancel or maging neutral sila sa isa’t-isa.
VALIDITY OF WAIVER OF ACTION ARISING FROM NEGLIGENCE
(1) An action for future negligence may be renounced except where the nature of the obligation
requires the exercise of extraordinary diligence as in the acse of common carriers.
(2) If yung obligation na nagakroon ng negligence acted in bad faith, it is considered equivalent
to fraud.
ANY ACTION FOR FUTURE NEGLIGENCE NA NAG-ACT IN BAD FAITH AY CONSIDERED
AS VOID!!!
KINDS OF NEGLIGENCE ACCORDING TO SOURCE OF OBLIGATION
(1) Contractual Negligence (culpa contractual) – negligence in contracts resulting in
BREACH. The debtor is liable for damages in view of his negligence in the fulfillment of a PRE-
EXISTING OBLIGATION.
EXAMPLE: A entered into a contract of sale na mag-deliver ng specific horse kay B on a certain
day, tapos namatay yung horse through the negligence ni A. A (obligor) is liable for the
damages to B for having failed to fulfill a pre-existing obligation.
(2) Civil Negligence (culpa aquiliana) – negligence by itself is the source of an obligation
between the parties not so related before any pre-existing obligation.
EXAMPLE: (Same example kanina) Yung negligence ni A na nag-caused ng pagkamatay ng
horse is called CULPA AQUILIANA. In this case, walang pre-existing contractual relation
between A and B. The negligence itself is the source of liability.
(3) Criminal Negligence (culpa criminal) – negligence resulting in the commission of crime.

ARTICLE 1173
Kapag nagkaroon ng negligence sa part ng debtor, liable siya for damages and nakaakibat sa
circumstances of the person, the time and the place.
Kapag yung negligence is acted in good faith, liable pa rin pero hindi gano'n kalaki, pero kapag
bad faith liable doon sa pera na dapat kikitain ng obligee, tapos liable pa sa mga expenses niya
sa hospital.
FACTORS TO BE CONSIDERED
(1) Nature of the obligation
EXAMPLE: Flammable yung ide-deliver mo pero naninigarilyo ka pa rin.
(2) Circumstances of the person
EXAMPLE: Guard na healthy tapos nasa right age lang, natutulog on his time of duty is guilty of
negligence.
(3) Circumstances of the time
EXAMPLE: Gabing-gabi pero nakaoff yung headlight ng sasakyan mo.
(4) Circumstances of the place
EXAMPLE: Okay lang na mag-drive ng 100 km sa highway pero it is irresponsible to do it in the
city.
MEASURE OF LIABILITY FOR DAMAGES
Damages means yung money na ico-compensate mo for the failure of complying with the
obligation. Awarding damages is naka-based kung good or bad faith yung negligence.
EXAMPLE: Si A magdedeliver ng sugar worth 30k kay B. Tapos si B ibebenta niya yon kay C
for 35k, and alam naman yon ni A.
Pero si A hindi dineliver kaya napilitan si C na bumili sa iba. Dahil don nawalan ng 5k profit si B
na ikinagalit niya and nagresult ‘yon ng heart attack sakanya. So na-hospital si B for a week.
If good faith yung ginawa ni A, 5k lang yung babayaran niya.
Pero kung bad faith, kailangan niyang bayaran yung 5k plus kasama pa yung hospital expenses
ni B.

KINDS OF DILIGENCE REQUIRED

(1) Napagkasunduan ng both parties via oral or writing
(2) Required by law
(3) Kapag hindi napagkasunduan or hindi required by law, dapat yung diligence is expected of a
good father of a family.

ARTICLE 1174: A fortuitous event is any extra-ordinary event which cannot be foreseen,
though foreseen but it is inevitable.
In general rule, if there is fortuitous event, the obligor is not liable and obligation will be
extinguished. It will exempt the obligor from the fulfillment of his obligation when there is
fortuitous event.
DISTINCTION OF FORTUITOUS EVENT AND FORCE MAJEURE
FORTUITOUS EVENT
(1) ACTS OF MAN- independent upon the will of the obligor but not of other human wills.
EXAMPLE: War, Fire, Murder
FORCE MAJEURE
(2) ACTS OF GOD- Events which are totally independent will of every human being.
EXAMPLE: Earthquake, Typhoon, Rain

KINDS OF FORTUITOUS EVENT

(1) Ordinary fortuitous event- events which are common and which the contracting parties
could reasonably foresee. (RAIN)
(2) Extra-Ordinary event- events which are uncommon and which the contracting parties could
not have reasonably foresee. (EARTHQUAKE, FIRE, WAR)
REQUISITES OF A FORTUITOUS EVENT
1. The event must be independent of the human will or at least of the debtor’s will. It has nothing
to do with the obligor or any human being.
2. Event could not be foreseen, or if foreseen, is unavoidable.
3. The event must be such a character as to render it impossible for the obligor to comply with
his obligations in normal manner
4. The debtor must be free from any participation in, or the aggravation of, the injury to the
obligee.
The absence of any of the above requisites would prevent the obligor from being exempt from
liability.

ARTICLE 1175: Usurious transactions shall be governed by special laws. (USURY ALW)
USURY- It is the interest at unreasonably high rates being imposed from the loan or any use of
money. Pagpapatubo ng sobrang taas.
REQUISITES FOR RECOVERY OF INTEREST
In order that interest may be recovered, (1) the payment of interest must be expressly
stipulated, (2) it must be in writing; and (3) it must be lawful which means it is not
unconscionable or iniquitous.
ARTICLE 1176: This provision talks about PRESUMPTION
PRESUMPTION- inference of a fact not actually known arising from its usual connection with
another which is known or proved. (PAGPAPALAGAY)
1st PARAGRAPH- Kapag daw yung creditor tinanggap yung bayad for the principal without any
questions or complaints kung nasaan yung payment for the interest, mape-presumed na bayad
na yung interest.
2nd PARAGRAPH- If yung creditor is na-issue siya ng resibo ng utang without any complaints
as to prior installments, mape-presumed din na bayad na ‘yon.
But take note na PRESUMPTION lang ‘yon. Ibig sabihin it can be contradicted with sufficient
evidences na magpapatunay na hindi pa talaga bayad.
2 KINDS OF PRESUMPTION
(1) Conclusive Presumption- cannot be contradicted.
(2) Disputable Presumption- rebuttable siya, ibig sabihin it can be contradicted by proving
evidences or proof.

ARTICLE 1177: Remedies available to creditors for the satisfaction of their claims
EXAMPLE: Si A may utang kay B na 500k. If si A hindi siya makapag-comply sa obligation niya
na magabyad kay B tapos si A ay meron car worth 300k and si D (third person) ay may utang
sakanya na 50k pesos,before yung due date ng obligation niya, binenta ni A (debtor) yung land
niya worth 100k pesos.
In case na yung debtor ay mag-fail na gawin yung obligation niya, si creditor may avail himself
of the following remedies.
Under the circumstances, yung rights ay granted kay B (creditor)
(A) Exact fulfillment with the right of damages. (He may bring an action for the collection of
500kpesos with a right to damages.
(B) Pursue the leviable property of the debtor (Since nag-fail nga na magawa ni A yung
obligation niya na magbayad kay B, si B (creditor) pwede niyang kuhanin yung car ni A tapos
ibenta and yung mapagbebentahan no’n ay mapupunta sakanya.
(C) After having pursued the property ni debtor, si Creditor can bring all the actions of the debtor
(like the right to collect money doon sa may utang kay debtor0 except those inherent or
personal rights na meron siya like (right to vote, to receive legal support, etc…)
(Pwede niyang i-ask sa court na huwga bayaran ni D (third person) yung utang niya kay A kasi
nga hindi pa nakakabayad si A sakanya.
(D) ask the court to rescind or cancel acts or contracts whuch the debtor may have done to
defraud him.

ARTICLE 1178: All rights acquired in virtue of an obligation are transmittable. (IBIG SABIHIN
NATA-TRANSFER) But considering the general rule, there are exceptions.
(1) If the contract is prohibited by law, then there is no transmutability of rights.
(A) By the contract of partnership- syempre halimbawa sa isang business, partnerhip kayo,
tapos kunwari namatay yung isa sa mga tao doon, hindi niya pwedeng i-transfer yung rights
niya sa business na ‘yon sa kahit na kkanino (kahit anak niya pa) kasi nga partnership ‘yon.
Kahit na namatay siya, still meron pa ring tao na magma-manage nung business.
(B) By the contract of agency
(C) By the contract of commodatum
(2) Prohibited by stipulation of the parties, because stipulation or the contract is the law between
the parties.

ARTICLE 1179: Pure Obligation is one which the performance doesn’t have conditions and
terms or periods. There is no specific date for fulfillment, therefore, it is immediately
demandable.
Conditional obligation – Effectivity is subject to the fulfillment of a condition.
A condition is a future, unforeseeable or uncertain event that will cause certain rights under
a contract to be destroyed, created, or expanded upon.
2 PRINCIPA KINDS OF CONDITION
(1) Suspensive Condition is a condition which suspends rights and obligations or the validity of
the entire contract until a certain future event occurs. Which means, no fulfillment, no obligation.
If the Suspensive condition’s fulfilled, the obligation arises.
EXAMPLE: Bibigyan kita ng 10k if makapasa ka ng exam. Hangga’t hindi mo nagagawa yung
condition ko sa’yo, (to pass the exam) wala akong obligation na bigyan ka ng 10k.
(2) Resolutory Condition- once mangyari na ang condition, mawawala na ang obliation.
If it is the Resolutory condition that fulfilled, the obligation will be extinguishes.
EXAMPLE: Bibigyan kita ng monthly allowance na 5k hanggang sa maka-graduate ka ng
College. Yung obligation ko sa’yo sa pagbibigay ng 5k every month is demandable ngayon,
pero once na maka-graduate ka na, ibig sabihin wala na akong obligation sa’yo.

ARTICLE 1180: When the debtor binds himself to pay when his means permit him to do so, the
obligation is not conditional but with a period.
A period is a future and certain event upon the arrival of which the obligation subject to it
either arises or is extinguished.
(1) The debtor promises to pay when his means permit him to do so.
(2) As when the debtor binds himself to pay:
(a) “little by little” (b) “as soon as possible” (c) “from time to time”
If yung both parties ay hindi nagaksundo as to the specific time for payment, yung court yung
magfi-fix no’n.

ARTICLE 1181: It emphasizes and recreates the difference between Suspensive and
Resolutory condition.
The acquisition of rights under conditional obligation is a Suspensive Condition. While the
extinguishment or loss is a Resolutory Condition

ARTICLE 1182: Kapag daw yung fulfillment ng obligation ay naka-depende sa will ng debtor,
yung conditional obligation ay considered as VOID.
BAKIT? Syempre kung yung fulfillment ng obligation ay naka-depende lang sa debtor, may
chance na hindi niya gawin or hindi siya mag-comply doon sa obligation niya. So if ever
mangyari yon, matic void agad ‘yon.
(1) Potestative Condition- depends upon the sole will of one of the contracting parties. (It’s
either will ni debtor or will ni creditor)
Under Suspensive Condition, if yung Potestative Condition depends solely upon the will ni
obligor, the conditional obligation shall be void. Pero, if yung Potestative Condition is naka-
depende naman kay obligee, the conditional obligation is valid.
Under Resolutory Condition, if yung Potestative Condition depends upon the sole will of the
obligor, the conditional obligation is valid.
(2) Casual Condition is not within the control of either party to a contract. It is depend upon the
chance of a third person. If the Suspensive condition lies in this condition, the conditional
obligation is valid.
(3) Mixed Condition is a will of the other contracting parties and other circumstances, including
the will of a third person. If the Suspensive condition lies in this condition, the conditional
obligation is valid.

ARTICLE 1183: This provision talks about Impossible and Illegal Conditions
Impossible Condition- are those contrary to good customs or public policy and those
prohibited by law.
2 KINDS OF IMPOSSIBLE CONDITIONS:
(1) Physically Impossible Condition- nature of things, cannot exist or cannot be done. (Yung
mga bagay na physicaly imposibleng mangyari
EXAMPLE: I will pay you 20k kung hindi uulan ng buong isang taon.
(2) Legaly Impossible Condition- those contrary to law, morals, and good customs, public
ordered, public policy.
EXAMPLE: A will give B 500k if
(1) Will kill C (contrary to law)
(2) maging mistress ni T (Contrary to morals
(3) will slap his mother (against good customs
(4) Will publicly advocate the overthrow of the government (against public order)
(5) Will not appear as a witness of a criminal case (against public policy)

ARTICLE 1184: Positive Condition

Yung condition that happen at a determinate/specific time shall extinguish the obligation as
soon asmag-expired na yung time. Or kapag yung condition na ‘yon ay siguradong hindi na
mangyari.
The obligation is extinguished:
(1) as soon as the time expres without the event taking place
(2) as soon as it has become indubitable that the event will not take place although the time
specified has not expired.
EXAMPLE: Si A obliged himself na bigyan si B ng 20k if pakakasalan niya si C before B
reaches the age 23.
(a) Magiging liable si A if nagpakasal si B kay C before 23 years old.
(b) Hindi na magiging liable si A if si B ay nagpakasal at the age o 23 or after niya mag-23. In
this case, extinguished na ang obligation ni A kay B kasi nag-expired na ang time without the
condition.
(c) If si B ay namatay before siya mag-23, hindi na rin liable si A kasi nga very impossible to
happen na mafu-fulfill niya pa yung obligation niya kasi nga patay na siya.

ARTICLE 1185: This provision speaks of a negative condition that an event will not happen at a
determinate time. Accordingly from the moment the time indicated has elapsed without the
event taking place.
When the fulfillment happened through the said period, then yung obligor is responsible or liable
to render something or he is responsible of the obligation.
(1) From the moment the time indicated has elapsed without the event taking place
(2) From the moment it become evident, that the event cannot occur, or the time indicated has
not yet elapsed, the obligor is still obliged of the obligation.
EXAMPLE: A binds himself to give B 20k if si B ay hindi magpapakasal kay C on December 30
(a) Hindi liable si A kay B if si B ay nagpakasal kay C ng December 30.
(b) Liable si A kay B if si B ay hindi nagpakasal kay C ng December 30 and nagpakasal lang
siya after December 30
(c) If before December 30 ay namatay si B, ibig sabihin hindi na siya magkakaroon ng chance
na magpakasal kay C. So ibig sabihin si A ay liable pa rin sa obligation niya.

ARTICLE 1186: The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
REQUISITES FOR THE APPLICATION OF THIS ARTICLE:
(1) The condition is Suspensive
(2) The obligor actually prevents the fulfilment of the condition
(3) He acts voluntarily

ARTICLE 1187: Retroactive effects of fulfillment of suspensive condition

(1) In obligation to give- Sa suspensive condition, demandable lang yung obligation once na-
fulfill yung condition. Kapag na-fulfill na, yung epekto nito is magstart nung nacreate yung
obligation.
EXAMPLE: On January 1, 2020 sinabi ni A na ibebenta niya yung lupa niya kay B for 50k if
matatalo si B sa korte involving another piece of a land. Nung April 1 binenta ni A yung lupa kay
C. Tapos nung June 4 natalo sa korte si B.
Before matalo si B, wala siyang karapatang magdemand kay A na bibilhin na niya yung lupa.
Pero nung nafulfill yung condition nung June 4. May karapatan na si B sa lupa simula pa nung
June 1. So mas may karapatan si B kay C dun sa lupa.
(2) In obligation to do or not to do –There is no fixed rule. Pero it doesn’t mean na
retroactivity is not applicable, the courts are empowered to mind the intent of the parties.
EXAMPLE: Si A ay nagsabi kay B (lawyer niya), na kakalimutan na yung utang if nadefend ni B
yung case ni A sa supreme court. May retroactivity dito kasi pag na-fulfill ni B yung condition,
bayad na siya since nung time na sinabi ni A yon.
What if yung kasunduan is ipagtatayo ni A si B ng bahay if nafulfill yung condition?
There is no retroactivity here kasi yung nature ng obligation is hindi pwedeng mangyari sa date
kung kelan nangyari yung kasunduan.
Retroactive effects as to fruits and interest in obligations to give.
In reciprocal obligation – there is no retroactivity kasi yung fruits and interests na naggrow
during ng time ng obligation is compensated already.
EXAMPLE: On January 1, 2020 sinabi ni A na ibebenta niya yung lupa niya kay B for 50k if
matatalo si B sa korte involving another piece of a land. Nung June 4 natalo si B sa court. Hindi
responsible si A na ibigay yung fruits sa lupa before the fulfillment of the condition, and hindi rin
responsible si B na bayaran yung interest in the price kasi yung fruits and interests are deemed
mutually compensated.
In unilateral obligation– There is also no Retroactive effect kasi kadalasan gratuitous ‘to.
Walang matatanggap si debtor na kahit ano from creditor kaya yung fruits and interest ay kay
debtor mapupunta.
EXAMPLE: Si A ay magdo-donate ng lupa kay B. Kapag nadonate na niya, fulfilled na yung
obligation pero may rights siya para i-acquire yung fruits and interest ng lupa.

ARTICLE 1188: The creditor may, before the fulfillment of the condition, bring the appropriate
actions for the preservation of his rights.
The debtor may recover what during the same time he has paid by mistake in case of
Suspensive condition.
(1) RIGHTS OF CREDITOR- He may take or bring actions for the preservation of his rights, as
the debtor may render nugatory the obligation upon the happening of the condition. WHY?
Syempre para kumbaga ma-secured yung rights niya if ever na hindi mag-comply si debtor sa
obligation niya.
(2) RIGHTS OF DEBTOR- He is entitled to recover what he has paid by mistake prior to the
happening of the Suspensive condition. Yung rights ay granted kay debtor because the creditor
may or may not be able to fulfill the condition imposed and because of that, possible na hindi
mangyari yung obligation. This is of SOLUTIO INDEBITI which based on the principle that no
one shall enrich himself at the expense of another.

ARTICLE 1189
(1) Loss of thing without debtor’s fault
Kunwari si A nag- promise kay B na ibibigay niya yung only car niya (specific thing) if mapapasa
ni A yung bar exam. Pending the result of the exam, nasira yung car dahil lumindol (which is a
fortuitous event, which means without the fault of the debtor) since wala naman siya kasalanan,
the thing is loss without his fault so the obligation extinguished.
(Pero kapag pera naman ang pinromise niya tapos same scenario yung pera ay nasunog dahil
lumindol at nagkarooon ng sunog (again fortuitous event ulit) nang walang fault ni debtor, still
liable pa rin si A kay B kasi 'money is generic' sabi nga "genus never perishes"
(2) Loss of thing through debtor’s fault
Supposed the fault occurred due to the fault ni A, according to this article, the thing is loss due
to the fault of the debtor, he shall pay damages. So yung car ay nawala dahil may fault or
negligence sa part niya kailangan niya mag-pay ng damages kay B.
(3) Deterioration of thing without debtor’s fault
Pending sa result ng exam ni B, yung car ni A ay nag-deteriorate (without the fault of A) since
it's not the fault of the debtor, yung creditor yung magsu-suffer ng deterioration or impairment
(4) Deterioration of thing through debtor’s fault
Kapag na-deteriorate yung car dahil fault ni A, at hindi siya nag-exercise ng diligence of a good
father of a family, at hinayaan niya lang yung car, si creditor pwede mamili either
(1) Rescission (cancellation ng agreement) + damages (2) Fulfillment of the obligation +
damages IMPROVEMENT Kapag naman nag-improve yung car at Hindi naman nag-
deteriorate. Yung makakakuha ng benefit ay naka-dwpende if the thing is improved by its nature
or by time, si creditor pa rin yung magbe-benefit. This is to compensate the creditor kasi kapag
nag-deteriorate siya yung magsu-suffer so dapat kapag nag-improve siya rin yung magbe-
benefit.
(5) Improvement of thing by nature or by time
Kapag yung value ng bagay ay nag-appreciate or tumaas, yung magbe-benefit din doon ay si
Creditor.
(6) Improvement of thing at expense of debtor
Kapag naman yung improvement ay dahil sa expense ni debtor, (no other right than that
granted for the usufructuary (enjoyment) for example nagpakabit siya ng ac sa car, after
makapasa ni B sa exam, may right si A na alisin yung ac provided that it will not cause
destruction or injury to the car. Otherwise kung makaka-cause to ng damages sa car, si A ay
obliged to deliver the car with the improvement because his rights is only that usufructuary.

ARTICLE 1190: talks about Resolutory condition lang din.

Kunwari si A ay binigyan niya ng parcel of land si B on condition na si B ay makakapasa sa
CPA exam sa Dec, tapos hindi nakapasa si B, matic yung obligation ni A kay B ay mawawala
na and therefore B will have to return both the land and the fruits he had received from A the
moment A has given him the land.
EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION
(1) In obligation to give- When the resolutory condition in an obligation to give is fulfilled, the
obligation is extinguished. And yung both parties ay obliged na ibalik lahat ng na-received nila
under the obligation.
(a) There is return to the status quo. Ibig sabihin yung effect ng fulfillment ng condition ay
RETROACTIVE.
(b) In case yung thing na ibabalik ay nasa possession ng third person who acted in good faith,
the remedy of the party entitled to restitution is against the other.
(c) The obligation of mutual restitution is absolute. It applies not only the thing received pati na
rin yung fruits and interests.
(d) In obligations to give subject to a Suspensive condition, the retroactivity admits exceptions
according as the obligation is bilateral or unilateral.

ARTICLE 1191: talks about the right na ipawalang bisa ang agreement in case na may isang
party na hindi mag-fulfilled sa condition.
Kinds of obligation according to the person obliged
1. Unilateral - one party is obliged to comply. Allow one person to make a promise to another.
EXAMPLE: Nawala yung aso mo, tapos sinabi mo na kung sino man yung makakahanap ay
bibigyan mo ng reward, by offering a reward, you are offering a unilateral contract. Nag-promise
ka na magbabayad ka sa kung sino man ang makakakita, so ikaw lang din yung may
responsibility na mag take action doon sa contract na yon.
2. Bilateral- both parties are mutually bound sa isa't-isa. Pareho kayong debtors and creditors
of each other.
EXAMPLE: Sa checkup, naka-receive ka ng treatment from doctor, in this case, yung doctor
yung obligor and ikaw naman yung obligee.
Sa kabilang banda naman, ikaw yung debtor (in terms sa pagbabayad ng doctor’s fee at yung
doctor naman yung obligee (makakatanggap)
(a) Reciprocal obligation - They are bound to each other.
Reciprocal- debtor and creditor sila ng isa't-isa.
EXAMPLE: Contract of sale. In terms sa price, si seller yung creditor kasi siya makakatanggap
ng pera tapos si buyer ang debtor dahil siya ang magbabayad.
In terms naman sa mismong bagay or thing na pinag-uusapan, si buyer naman ang creditor
(dahil siya ang makakatanggap) and si seller naman ang debtor (dahil siya ang magbibigay)
Ibig sabihin pareho silang bound to each other. Reciprocal ang obligation nila sa isa't-isa
(b) Non-reciprocal obligation- Yung performance ng isang party is not dependent upon the
other party.
EXAMPLE: Si A nangutang kay B ng 10k, Tapos si B naman hiniram yung car ni A. Hindi
pwedeng gawin ni B na kabayaran yung paghiram niya kay A ng car kasi magkaiba 'yon.
REMEDIES IN RECIPROCAL OBLIGATION
(1) Choice of remedies –In case na may isang obligor na hindi mag-comply sa kung ano man
yung tungkulin/pananagutan niya, pwedeng mamili yung naagrabyado na party kung
(a) Gagawin pa rin ng obligor yung obligation niya + magbabayad siya ng damages
(b) Pwedeng ipawalang-bisa yung obligation + magbabayad pa rin siya ng damages.

ARTICLE 1192: In case both aprties yung nag-comit ng breach or nag-violate, yung liability
nung naunang nag-violate shall be equitably tempered by the courts. If hind ma-determined
kung sino sakanila yung naunang nag-violate, the same shall be extinguished and each shall
bear his own damages.
Usually kasi kapag contract both parties ay merong obligation sa bawat isa. And hindi
impossible na sa isang contract ay may lumabag na party.
EXAMPLE: Contract of sale, meron buyer and seller
1st paragraph- Kapag unang lumabag or nag-violate si seller, syempre meron siyang liability,
meron siya babayaran na damages under the contract of sale, (pero if nagloko rin si buyer) ang
mangyayari is, ang ide-determined na magbabayad ng damages ay si Seller pa rin kasi siya
yung unang nagloko, tapos babawasan nalang siya based sa ginawang pag-violate ni buyer.
2nd paragraph- Kapag naman hindi ma-determine kung sino unang nagloko, yung obligation
ay mae-extinguished and yung obligation is bahala na sakanilang dalawa.
 SECTION 2. – Obligations with a Period

ARTICLE 1193
1st Yung obligation na naka-fixed or meron specific date, magiging demandable lang yung
obligation na ‘yon if dumating na yung certain date na ‘yon.
2nd Obligations with a Resolutory Condition take effect at once, but will be extinguish upon
arrival of the day certain.
3rd A day certain is understood to be that which must necessarily come, although it may not be
known when.
4th If yung obligation ay hindi sigurado if mangayyari ab or hindi, therefore it is considered as
conditional obligation.
An obligation with a period is one whose effects or consequences are subjected in one way or
another to the expiration or arrival of said period or term.
A period is a future and certain event upon the arrival of which the obligation will either arises or
terminated.
KIND OF PERIOD OR TERM
(A) Suspensive Period- period that makes the obligation demandable.
(B) Resolutory Period- period that terminates an obligation.

ARTICLE 1194 SAME SA ARTICLE 1189

ARTICLE 1195: If the obligor being unaware of the time or date believing that the obligation ay
due na, tapos nagbayad siya before tha maturity date, pwede niyang ma-recover yung binayad
niya na ‘yon including the fruits and interest.
Pero once na dumating na yung maturity date or lumagpas na, hindi na pwedeng i-recover ni
debtor yung binayad niya na ‘yon.
EXAMPLE: Si A may utang kay B na 10k to be paid on January 2021, due to his mistake,
binayaran niya ‘yon sa pag-aakala na due na, hangga’t hindi pa duarating yung maturity date,
pwede niya pang ma-recover yung binayad niya including the fruits and interests.

ARTICLE 1196: Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of both debtor and creditor.
Yung general rule is that everytime na merong period yung obligation, benefit ‘yon kay debtor
and creditor.
TERM IS FOR THE BENEFIT OF THE DEBTOR
Si debtor hindi siya pwedeng pilitin na magbayad na bago dumating yung date na
napagkasunduan nila.
(BAKIT MAGBE-BENEFIT SA PART NI DEBTOR) – Magbe-benefit sakanya kasi syempre
hangga’t hindi ap dumarating yung time ng pagabbayad niya or yung maturity date, pwede niya
pang magamit sa ibang purposes yung pera na ipambabayad niya.
TERM IS FOR THE BENFIT OF THE CREDITOR
Si creditor pwede siyang mag-demand ng performance any time.
(BAKIT MAGBE-BENEFIT KAY CREDITOR?) – Magbe-benefit sakanya kasi syempre habang
tumatagal yung utang nagkakaroon ‘yon ng interest.
ARTICLE 1197
1ST PARAGRAPH- If the obligation does not fixed a period, but from its nature and
circumstances ay meron siyang period, yung court yung magfi-fix no’n.
2ND PARAGRAPH- The court shall also fix the duration if it is the will of the obligor
3RD PARAGRAPH- Once ma-fixed nan g court yung duration, hindi na ‘yon pwedeng baguhin
pa.
Yung tawag diyan ay, JUDICIAL PERIOD.
Pero may EXCEPTIONS ‘yan, May instances na walang rights or power yung court na mag-
fixed ng duration kapag yung period fixed ay dahil sa contract ng both parties which is called as
CONTRACTUAL PERIOD. Hindi pwedeng i-set or i-fix ng court yung period kasi yung nangyari
ay CONTRACTUAL PERIOD, ibig sabihin law between the parties ‘yan and it cannot changed
by the court.

ARTICLE 1198: The debtor shall lose his right to make use of the period:
(1) When after the obligation has been contracted or constituted, he becomes insolvent.
(2) When he does not clearly express to the creditor the guaranties or securities which he has
promised.
(3) When by his own acts he has impaired said guaranties or securities after the establishment
of the obligation and when fortuitous event happened, he disappeared instead na ayusin yung
obligation niya.
(4) When the debtor violates any undertaking
(5) When the debtor attempts to abscond (tumakas)
Yung GENERAL RULE is that hindi pa demandable ang obligation if hindi pa dumarating or
hindi pa natatapos yung period pero may exceptions din ‘yon, if isa sa 5 na ‘yan yung ginawa ni
debtor, matic mawawalan siya ng rights to make the use of the period.

SECTION 3. – ALTERNATIVE OBLIGATION

ARTICLE 1199: A person alternatively bound by different prestations shall completely perform
one of them.
The creditor cannot compelled na tumanggap ng part of the other undertaing lang.
KINDS OF OBLIGATION ACCORDING TO OBJECT
(1) SIMPLE OBLIGATION- There is only 1 prestation.
EXAMPLES: A obliged to deliver B a phone.
(2) COMPOUND OBLIGATION- there are 2 or more prestations.
(a) Conjuctive Obligation- there are several prestations and lahat ‘yon ay due.
(b) Distributive Obligation- two or more of the prestations are due. It may be:
(1) Alternative Obligation- several prestations yung due pero kahit isa lang doon yung ma-
perform.
EXAMPLE: A promise to give B a house, or his ring, or his car. Kahit isa lang diyan yung ibigay
nid ebtor ay pwede na.
(2) Facultative Obligation- only one prestation lang yung due and yung debtor may substitute
another.
EXAMPLE: A promised na mag-deliver ng Vivo Phone kay B. Si A pwede siyang mag-deliver ng
ibang brand na phone as a substitute.
An ALTERNATIVE OBLIGATION is one wherein various prestations are due but the
performance of any one of those prestation is enough or sufficient.
EXAMPLE: Si A humiram kay B ng 10k. Napagkasunduan nila na si A kailangan niya mag-
comply sa obligation niya by paying 10k, or giving a karaoke set, or by painting the house ni B.
Yung performance ng sia sa mga prestation na ‘yon ay sufficient na apra ma-fulfill yung
obligation.
NOTE: PERFORMANCE MUST BE COMPLETE. MEANING, THE CREDITOR CANNOT
COMPELLED TO RECEIVE ONLY A PART.

ARTICLE 1200: This provision answers the question “WHO HAS THE RIGHT OF CHOICE?”
The rights of choice belongs to the debtor, unless it has been granted to creditor.
But the debtor shall have no rights to choose those prestations which are impossible, unlawful
or could not have been the object of the obligation.
RIGHT OF CHOICE OD DEBTOR NOT ABSOLUTE
(1) The debtor cannot choose those prestations which are impossible, unlawful or could not
have been the object of the obligation because obviously, these prestations are void.
(2) The debtor has no ore right of choice when among those prestations whereby he is
alternatively bound, only 1 is practicable.
EXAMPLE: May utang si A kay B ng 20k, meron silang napagkasunduan na if ever hindi
makapagbayad si A kay B, magde-deliver siya ng CAR NIYA, drugs, soil from Jupiter or specific
horse na equivalent sa value ng utang niya.
Obviously hindi wpedeng piliin ni debtor yung soil from Jupiter kasi IMPOSSIBLE ‘yon.
Hindi niya rin pwedeng piliin yung delivery of drugs kasi UNLAWFUL ‘yon.
Hindi niya rin pwedeng i-deliver yung horse na hindi naman equivalent nung utang niya kasi
COULD NOT HAVE BEEN THE OBJECT OF THE OBLIGATION.
So ibig sabihin yung pag-deliver ng car niya yung pwede niya nalang gawin kasi ayon anlang
yung PRACTICABLE.

ARTICLE 1201: The choice shall product no effect except from the time it has been
communicated.
Ibig sabihin, hangga’t hindi napapaalam ng debtor sa kabilang aprty yung choice na napili niya,
walang effect ‘yon. NOTICE BY THE OTHER APRTY IS ESSENTIAL!
(1) EFFECT OF NOTICE- Hangga’t hindi mo pa napapaalam sa kabilang party yung choice mo,
yung obligation remains alternative.
(a) Once maipalam na sa kabilang party yung choice, the alternative obligation becomes simple
obligation.
(b) Once properly made and communicated na yung choice na ‘yon sa kabilang party, hindi na
‘yon pwedeng baguhin pa without the consent of the other.
(2) PROOD AND FORM OF NOTICE- The burden of proving that such communication ay
kailangan gawin ng kung sino man yung gumawa ng choice na ‘yon.
EXAMPLE: A obliged himself to deliver B his car, or his race horse, if ang napili ni A ay yung
car, kailangan niya ‘yon ipaalam sa kabilang party. Therefore nagging simple obligation na ‘yon.

ARTICLE 1202: This provision answers the question “WHEN THE DEBTOR LSOE HIS
CHOICE?”
Mawawala yung right of choice ni debtor id among those prestations whereby he is alternatively
bound, isa lang yung practicable.
EFFECT WHEN ONLY ONE PRESTATION IS PRACTICABLE
If more than one yung practicable, ibig sabihin maco-considered na alternative obligation pa rin
‘yon. Pero if only 1 pretsation alng talaga yung practicable, ibig sabihin the obligation is
converted into simple obligation.
EXAMPLE: May utang si A kay B ng 20k, meron silang napagkasunduan na if ever hindi
makapagbayad si A kay B, magde-deliver siya ng CAR NIYA, drugs, soil from Jupiter or specific
horse na equivalent sa value ng utang niya.
Obviously, yung prestation alng na practicable diyan ay yung pag-deliver ng car and the rest ay
void na kasi impossible, unlawful and could not be the object of the obligation.

ARTICLE 1203: If through the fault of the creditor the chosen prestation was destroyed, may
rights si debtor na i0cancel yung contract.
EXAMPLE: Si A may utang kay B na 20k, napagkasunduan nila na instead paying 10k, magde-
deliver nalang si A ng phone, or ipad, or laptop kay B.
If through the fault of the creditor, nasira yung item na napili, si debtor pwede niyang i-cancel
yung contract if he wants. In case of rescission, si debtor kailangan niyang ibalik kay creditor
yung inutang niya na 20k and si creditor naman, kailangan niyang bayaran yung equivalent
amount na nasira + payment for damages.

ARTICLE 1204: The creditor shall have the right to indemnity for damages when through the
fault of the debtor, all the object of the obligation have been lost, or the compliance or fulfillment
of the obligation has become impossible.

ARTICLE 1205: May choices lang ulit na pipiliin yung creditor based sa communication with the
debtor
Rules in case of loss before creditor has made choice
(1) When a thing is lost through a fortuitous event- Pipili na lang sa natitirang choices yung
creditor
EXAMPLE: Obligado si A na magdeliver kay B ng item one, item two, item three and item four.
Kapag nawala yung isa sa mga item because of a fortuitous event, pipili si creditor sa remaining
3 choices. Pero kung 3 yung nawala, kung ano yung natira ayon na ang kukunin ni creditor.
(2) When a thing is lost through the fault of the debtor- Pipili pa rin sa natitirang choices si
creditor or pwede ding yung price mismo nung nasira with rights to damages.
EXAMPLE: If sa above example ay nawala yung item one dahil sa fault ni A. Pipili si B sa item
two, item three and item four plus right to damages. Or pede din yung price mismo nung item
one with right to damages rin.
(3) When all the things are lost through debtor’s fault- Ipapalit ng debtor is yung price ng
kahit ano sa choices with rights to damages rin.
EXAMPLE: If sa above ay nawala lahat ng item dahil kay debtor. Magde-demand si creditor ng
payment sa kahit ano sa mga items, plus right to damages rin.
(4) When all the things are lost through a fortuitous event- Mae-extinguish na yung
obligation dahil nga fortuitous event yung nangyari
EXAMPLE: If sa above ay nawala lahat ng items through fortuitous event, extinguished na yung
obligation ni debtor kay creditor.

ARTICLE 1206: Kapag isang prestation yung napag usapan, si obligor ay pwedeng magbigay
ng ibang bagay as substitute doon sa napag-usapan. Yung tawag is facultative or left to one
person’s choice
If yung bagay na ipangsasubstitute is nawala or nasira dahil sa kapabayaam ng obligor, hindi pa
siya liable until mapag usapan na yung magiging substitute and don pa lang siya magiging
liable.
EFFECT OF LOSS
(1) Before substitution- kung yung prestation dapat na ibibigay ng obligor sa obligee ay
nawala dahil sa fortuitous event, extinguished na yung obligation. If hindi naman, magiging
liable si debtor.
(2) After substitution- kung yung principal thing (yung naunang pinag-uusapan) yung nawala,
Hindi magiging liable si debtor kahit ano pa mang cause yung pagkawala no'n kasi nga After
substitution na yung usapan.
If yung substitute na bagay yung nawala, yung liability ni debtor ay depende kung may
kasalanan ba siya or wala.

ARTICLE 1207: Sinasabi lang sa provision na to na hindi porket may 2 or more creditors pwede
na magdemand yung bawat isa sa kanila, kapag meron ding 2 or more debtors hindi rin
required na mag-comply yung bawat isa. Nangyayari lang yung solidary liability kapag yung
nature ng obligation ay nagre-require ng solidarity (example: money)

ARTICLE 1208: This provision talks about joint and solidary obligation
KINDS OF OBLIGTAIONS ACCORDING TO THE NUMBER OF PARTIES
(1) Single or individual obligation- isa lang ang debtor or obligor and isa lang din si creditor.
(2) Collective Obligation- 2 or more debtor and creditor Joint- each debtor answers only for the
part of whole liability and each obligee part of the correlative right.
(1) Joint Obligation (To each his own) (Liable lang sila sa mga part nila)
EXAMPLE: Si A and B ay joint debtors kay C ng 10k, si C pwede lang mag-demand kay A ng
5k at 5k din kay B. It can be, Si A and B ay joint debtors ng joint creditors nila C, D, E, F sa
amount na 1k, so si C ay pwede lang mag-demand ng 125 kay A and B and gano'n din lahat ng
mga kasamahan nila.
(2) Solidary Obligation- one for all, all for one (yung creditors may right to demand any of the
creditors and debtors)
EXAMPLE: Si A and B ay solidary debtors ni C sa amount na 1k, si C pwede mag-demand
kahit kanino sakanika na kuhanin yung 1k. Kunwari kinuha niya kay B. Ngayon si B pwede mag-
demand kay A ng reimburse na 500 (which is yung share ni A) Si A and B solidary debtors ni C,
D, E, F ng 1k, kahit kahit sinong creditor owede mag-demand ng payment either kay A or B.
(Basta palaging may reimbursement/payment)
KINDS OF SOLIDARITY
(1) According to the parties bound
(a) Passive Solidarity (part of the debtors) kahit sino sakanika ay liable for the fulfillment ng
obligation.
(b) Active Solidarity (part ng creditor)
Anyone sa mga creditors ay pwedeng mag-demand para sa fulfillment ng obligation.
(c) Mixed solidarity (part of debtors or creditors
Each of of the debtor is liable and each one of the creditor ay pwedeng mag-demand for the
fulfillment of the obligation.
(2) According to source
(a) Conventional Solidarity- where solidarity ay agreed upon by the parties.
(b) Legal solidarity- solidarity ay imposed by the law.
(c) Real solidarity- imposed by nature of the obligation

ARTICLE 1209: This provision talks about Joint indivisible obligation

Yung obligation is joint dahil yung parties ay parehong liable sa obligation nila (same sila ng
liability) and indivisible naman kasi yung subject or object matter ay hindi physically divisible
into different parts.
Sa madaling salita, it is joint only sa liabilities nila pero indivisible sila sa compliance (Pag-
comply)
EXAMPLE: Si A, B, C jointly liable to give D a car valued at 240,000, kung si A at B ay willing
mag-deliver at si C naman ay Hindi. Si creditor (D) has no cause of action against kay C kasi
since joint debtor nga siya, liable lang siya doon sa proportionate na part niya which is 80,000.
Since yung cars is indivisible, hindi magiging possible yung compliance nung mga debtor unless
they act together.

ARTCLE 1210: This provision talks about indivisibility distinguished to solidarity.

Difference between solidary and indivisibility. Indivisibility of obligation ay hindi agad
nangangahulugan na solidarity. At porke indivisible ang object, solidarity na.
These 2 are not the same
Indivisibility-refers to the subject matter or object ng obligation
Solidarity- tie or unity between parties

DIFFERENCE BETWEEN SOLIDARITY AND INDIVISIBILITY

(1) Indivisibility ay tumutuloy doon sa prestation, while yung solidarity is yung juridical and
legal tie na nagba-bind sa obligation.
(2) Sa indivisible obligations, yung debtor lang na hindi sumunod sa obligation yung guilty. Sa
solidary obligation naman, lahat ng debtor ay magiging liable sa pagkakamali ng isang debtor.
(3) Indivisibility is only applicable kapag may isang debtor and isang creditor, yung solidary
obligation naman dapat may at least 2 creditors or 2 debtors.
(4) Sa indivisible obligation, kapag naging insolvent yung isang debtor hindi magiging liable
yung iba, sa solidary obligation naman, kapag naging insolvent yung isa proportionately liable
na rin lahat ng debtors.

ARTICLE 1211: Sinasabi rito na nangyayari pa rin yung solidarity kahit na yung creditors and
yung debtors ay hindi naka-bind with the same manner of condition or period ng pagbabayad.
EXAMPLE: Si A, B, C and D ay solidary obliged na magbigay ng 20k kay E.
Si A ay magbabayad ng 1k per month starting July. Si B naman sa September, Si C sa
December tapos si D naman ay magbibigay kapag nakapasa si E sa CPA exam.
(a) Sa July kay A lang pede mag demand si E ng 1k or pede ding magdemand siya kay B, C or
D ng share nila kay A. Pero hindi siya pwede mag-demand kay B, C and D sa mga obligation
nila dahil hindi pa naman due or demandable
(b) Sa September pwede ng maningil si E sa kahit sinong debtor based sa share nila kay B
which is 5k dahil ¼ yon ng 20k. Pede ding singilin ni E si A ng 1k or 3k kung hindi pa to
nagbigay ng installments. Pero hindi niya pa din pedeng singilin si C and D sa mga obligation
nila
(c) Sa December pwede na singilin ni E yung lahat ng creditors, yung share nila kay C sa 5k
plus yung mga original share ni A and B. Yung kay D naman magmamature lang kapag
nakapasa na si E sa CPA examination.
(d) If nakapasa na si E, maga-arise na rin yung 5k na obligation ni D. Pwede ‘yon i-demand ni E
sa kahit sino sa debtors. And again pwede niya pa ring singilin yung mga share na hindi pa
nabigay ni A, B and C
(e) If ang napagusapan is pwedeng idemand ni E yung entire obligation kay B sa September,
kay C sa December or kay D kapag nakapasa siya sa exam,
* Then magiging liable si B kay E ng 20k sa September minus ng amount na nabayaran
na ni A and D, kung meron man.
* Magiging liable si C sa December ng 20k minus the amount na nabayad ni A, B and D,
kung meron man.
* And liable si D kay E kapag nakapasa to sa examination minus ng amount na
nabayaran ni A, B and C, kung meron man din.

ARTICLE 1212: Yung solidary creditor may make a move na makakapagbenefit sa other
solidary creditor, or sa kanila as a whole. Pero kung prejudicial yung ginawa ng isang solidary
debtor (like pagrenounce ng utang) siya yung magbebear ng damages.
EXAMPLE: Si A may utang kay B and C na 15k. So if nag-due na yung utang, pwede na
ngayong mag demand si B kay A dahil makaka-benefit sa kanila ni C yung interest na
madadagdag.
Pero kung sinabi ni B kay A na huwag na niyang bayaran, Prejudicial yon kase solidary
creditors sila ni C so dapat pareho silang papayag na huwag na bayaran. So in this case si A ay
kay C na lang magbabayad.

ARTICLE 1213: Sinasabi lang dito na hindi pwedeng i-assign ng isang solidary creditor yung
rights niya sa isang third person without the consent of his other co-creditors.
The reason is nire-represent ng isang creditor yung lahat ng creditors so may chance yung third
person na inassign niya ay hindi ibigay yung shares ng co-creditor upon payment.
ARTICLE 1214: Pwedeng magbayad yung debtor sa kahit sino sa mg solidary creditors, pero
kung may mag-demand sa kanya sa mga creditors, yung debtor ay magbabayad dapat sa
creditor na nagdemand.
EXAMPLE: Si A ay liable kay B and C ng 10k. Pede magbayad si A sa kahit sino sa kanila,
pero kung magdemand si B sa kanya, kay B niya dapat ibigay yung payment.

ARTICLE 1215: Kapag nagkaroon ng NOVATION, COMPENSATION, CONFUSION AND

REMISSION automatic, mae-extunguished na yung obligation.Tapos yung creditor na gumawa
ng extinguishment ng obligation na ‘yan, siya yung magiging liable sa mga co-debtors niya.
EXAMPLE: Si A may utang kay B,C and D ng 60k. Ngayon si B sinabi kay A na huwag nang
bayaran yung 40k na utang niya, so from that na-extinguished na yung obligation pero si B
(creditor) magiging liable siya sa mga co-debtors niya.
In a joint obligation consisting NOVATION, COMPENSATION, CONFUSION AND REMISSION,
hindi mae-extinguished yung obligation ng buo. Mae-extinguished lang doon sa creditor na nag
take action ng mga ‘yan.
EXAMPLE: Si A may utang kay B C and D ng 60 k. Tapos nagcondone na naman si B, 20K
lang maeextinguish kasi ayun lang share ni B. Tapos si A indebted pa rin kay C and D ng tig
20k.

ARTICLE 1216: Rights ng creditor na maningil sa kahit na isa, some or sa lahat ng solidary
debtors niya as long as hindi pa totally na fu-fully collected or singil yung utang.
EXAMPLE: Si A at B ay solidary debtor ni C sa amount na 1M, so pwedeng singilin ni C either
si A or B or pwede rin naman na singilin niya si A ng 500k (which is yung part niya) and another
500k si B. Pwede siya mamili against all of them for the balance as long as hindi niya pa
nasisingil lahat or yung utang has not been entirely satisfied.

ARTICLE 1217: It gives right to the effect of solidary debtors.

1. Payment made by one of the debtor, matic mae-extinguished na ang obligation. Kung sino
man sa mga solidary debtors yung nag-insist or offer na magbayad, si creditor yung may right of
choice kung kaninong bayad yung ia-accept niya.
2. Kung sino man sa isa sa kanila yung nagbayad, yung nagbayad na 'yon is may right na i-
claim niya sa co-debtors niya yung mga part nila (payment) kasama na doon yung interest sa
payment na 'yon if nagbayad sila after maturity date. Pero kung nakapagbayad naman sila
before pa man mag-due, walang interest 'yon.
3. Kung yung isa sa mga debtor ay wala nang kakayahan na magbayad because of insolvency
(kawalan ng ibabayad)
EXAMPLE: Si A, B, C, ay solidary debtors ni E. Si A binayaran niya si E ng full amount of 1M
pesos, so yung pagbabayad ni A kay E ay pwede siyang humingi ng reimbursement kay B, and
C, each with interest with the date of the payment, pero kung nagbayad naman si A before
maturity date, meaning walang interest 'yon. So maga-arise lang yung pagbabayad nila ng
interest if lagpas na sa date yung payment nila.
So after kunwari ng payment, kung si B ay naging insolvent or wala na siyang kakayahan na
magbayad, si A and C is sila na yung magsho-shoulder doon sa amount na dapat babayaran ni
B tapos pwede nalang nilang ma-recover yon if maging financially stable na ulit si B.
(Yung sa effects of payment pareho lang ng explanation sa 3 paragraph sa mismong provision
except sa number 3.)
3. Among the solidary creditors- after ma-receive ng one of the creditors yung utang sakanila,
yung one of the creditor is kailangan niya rin ibigay syempre yung part nung co-creditor niya.

ARTICLE 1218: Yung sabi kasi sa rule and previous provision, kapag yung isa sa mga solidary
debtor yung nagbayad sa utang nila, may right siya na mag-demand ng reimbursement from
his/her co-debtors, pero may instances na kapag one of those debtor ay naging illegal yung
obligation and already prescribed, hindi siya makakapag-reimburse from his/her co-debtors.
EXAMPLE: Si A and B ay solidary debtor indebted kay C na mag-deliver ng drugs worth 500K,
law was passed prohibiting the transaction of drugs kasi nga prohibited siya by law, kung si A ay
nag-deliver pa rin ng drugs knowing na illegal 'yon and prohibited by law, hindi siya pwedeng
mag-reimbursed sa co-debtor kasi yung payment was made after the obligation had become
illegal.

ARTICLE 1219: Effect of remission of share after payment

Naunang nagbayad/ginawa muna yung pagbabayad bago magkaroon ng remission or waiver.
Waiver is no effect kasi nga bayad na.
(Kasi yung pagka-extinguished ng obligation ay dahil nga sa bayad na) If yung remission is
made previous to the payment, and payment is paid, ang tawag doon ay solutio indebiti.
This article is designed to prevent fraud and give justice to the paying debtor.

EXAMPLE: A and B are solidarily bound themselves to give C 100k, then binayaran ni A yung
buong 100k.
After ng payment si, C ay nag-waive kay B at sinabi na huwag nang bayaran yung part niya. So
dito, since nauna nga yung payment kesa sa remission, A can still recover the reimbursement
from B. Si B ay may obligation pa rin na mag-reimburse or magbayad kay A under the principle
of solutio indebiti. (Unjust enrichment)

ARTICLE 1220: Yung remission of the whole obligation na na-obtained by one solitary debtor
ay hindi siya pwede mag-demand ng reimbursement from his/her co-debtors.
Yung reason dito ay dahil yung debtor WHO obtained remission ay wala namang binayaran sa
creditor. (So ibig sabihin, wala rin siyang rights na mag-demand or humingi ng reimbursement
sa kapwa debtor niya) Yung remission doon ay walang batayan.

EXAMPLE: Si A and B ay executed jointly and severally a promissory note for 2k in favor of C.
Si C, remitted the obligation out of regard of A.
Dito, Si A ay walang rights na mag-demand ng reimbursement kay B since wala namang
binayaran si A kay C.
Pero kung 1,300 pesos lang yung remitted ni creditor, still, magiging liable pa rin si B na
magbayad kay C ng 700 pesos.
Pero wala siyang obligation na mag-reimburse kay A sa natitirang balance which is (300 pesos)
kasi nga wala namang payment na ginawa si A kay C.
ARTICLE 1221: Effects of lost or impossibility
1. Kapag yung lost or impossibility without the fault ng mga solidary debtors, mae-extinguished
ang obligation.
2. Kapag naman yung lost and impossibility ay due to the fault of those solidary debtors or one
of them, magiging liable sila sa creditor. For the price + yung payment of damages.
3. Kapag naman yung lost or impossibility ay dahil sa fortuitous event, magkakaroon ng liability
because the default or delay happened bago pa man mangyari yung fortuitous event.

EXAMPLE: Si A and B obliged na mag-deliver ng car kay C, tapos yung car ay nawala dahil sa
fortuitous event (without any fault of debtors) –
Article 1221 first paragraph will apply (which means, mae-extinguished ang liability)
Supposed yung kotse ay nawala dahil sa fault ni A, and si C (creditor) ay nag-demand kay B,
even hindi naman si B ang may kasalanan, still liable pa rin siya dahil nga solidary debtors sila.
(Magiging liable siya for the price, damages and also sa interest that are expressly stipulated by
law) pero pwede niya naman ma-recover or singilin lahat ng mga nagastos niya kay A (co-
debtor niya)
Supposed solidary debtors nga si A and B sa pagdeliver ng car kay C, and before pa yung time
ng delivery is nakapag-demand na si C (creditor), kapag nawala yung car because of fortuitous
event, still liable pa rin sila and hindi mae-extinguished yung obligation kasi nga nauna nang
makapag-demand si C (creditor) bago pa man mawala yung car.
And kagaya rin ng kanina, kung sino man yung nagbayad sa isa mga debtors, pwede niya pa
rin marecover yung mga ginastos niya doon sa co-debtor niya.

NOTE: kahit isa lang sa mga debtors yung may kasalanan, still liable pa rin silang lahat dahil
nga solidary debtors sila meaning, mutual agency. Yung fault ng isa sa mga debtor shall be the
fault of all the solidary debtors.
(Yung rules in case thing has been lost... ay same lang din sa explanation ng mismomg
provision.)

ARTICLE 1222: Defenses available to solidary debtor

A complete defense will resolve an entire case in favor of the defendant because of the
interrelated nature of all claims.
1. Defenses derived from the nature of the obligation is a COMPLETE DEFENSE dahil
nagpapawalang-bisa siya ng obligation.
EXAMPLE: Fraud, prescription, remission, etc…
2. Defenses personal to, or which pertain to share of, debtor sued
Personal to debtor like incapacity, mistake, minor, violence
EXAMPLE: (a) If the action by C is against B, and that time si B ay insane or wala sa maayos
na pag-iisip nung time na yung obligation was contracted, si B pwede niyang gamitin yung
defense na ‘yon with respect to the entire obligation. This defense is personal to B alone.
(b) So since hindi pa nakapag-fulfill ng payment si B, let’s assume na yung obligation niya is
subject to a Suspensive condition, kasi nga yung condition ay hindi pa naman nangyayari.
In this case, yung non-fulfillment ng condition ni B ay tinatawag na PARTIAL DEFENSE (is
a defense that does not completely absolve the defendant of guilt.) as it can be set up by B only
para sa kabayaran nung part niya. C (as a creditor) can demand kay B the portion of the
obligation niya pertaining kay A kasi nga solidary liable silang dalawa.
3. Defenses personal to other solidary debtors
EXAMPLE: Si A and B ay solidarily indebted kay C for 200K, But A’s consent was obtain
through force and pananakot lang, therefore si A, ay walang babayaran dahil he has a complete
defense which is pwede niyang gamitin ‘yon as pananakot lang.
Now, kung si C naman ay kay B nag-file and action against kay B, si B ay liable pa rin na
magbayad ng 100K as his part.

ARTICLE 1223: Obligations may be DIVISIBLE or INDIVISIBLE

1. DIVISIBLE OBLIGATION- capable of partial fulfillment. Obligation kung saan yung prestation
ay pwedeng partial.
EXAMPLE: Si C ay umutang kay D ng 50k pesos at nangako na babayaran niya ito ng 10K
pesos monthly. (Divisible siya kasi nga pwedeng partial, since money ang pinag-uusapan)
2. INDIVISIBLE OBLIGATION- Incapable of partial fulfillment. Obligation kung saan yung
prestation niya ay hind pwedeng partial.
EXAMPLE: Si C ay nag-promised to deliver a motor kay B. (Since motor ‘yon, syempre hindi
naman pwedeng partial ang pag-deliver)
May mga instances naman na;
EXAMPLE:
(1) Si C ay pumayag na magbabayad kay D ng 100K in four equal monthly installments. Yung
obligation ni C ay divisible kasi nga capable of partial performance.
Pero kung ang agreement ay si C ay magbabayad kay D on a certain date the FULL AMOUNT
OF 10K, yung obligation ay magiging indivisible na (although money is divisible) still hindi niya
pwedeng partial lang yung ibigay kasi nga may kasunduan sila na dapat mabayaran niya sa
nasabing date.
(2) Si S obliged himself na mag-deliver ng car kay T on November 15. Yung obligation na ito ay
INDIVISIBLE kasi hindi siya capable sa partial performance. The car must be delivered at one
time and as a whole dahil definite thing ang car at hindi ito pwedeng hati-hatiin or paghiwa-
hiwalayin yung mga parts niya.
KINDS OF DIVISION
(1) QUALITATIVE DIVISION- nagba-based sa quality hindi sa quantity
EXAMPLE: (Inheritance – real & personal property)
Si D and E ay tagapagmana ni F, napagkasunduan nilang 2 na hatiin yung mga namana nila;
Kay A- bahay, lot, and home appliances, kay B- palayan, car and 20K
(2) QUANTITATIVE DIVISION- Nagba-based sa quantity hindi sa quality
EXAMPLE: 1000 hectares of land can divided into many parts.
A and B divided 300 cavans of rice
(3) IDEAL OR INTELLECTUAL DIVISION- non-material divisibility; only mental & intellectual.
Nage-exist lang sa minds ng both parties.
EXAMPLE: Suppose yung kotse at palayan were inherited by both A and B, as co-owners their
one-half share sa kotse ay hindi separable in a material but in minds. Gano’n din sa palayan,
neither one of them ay pwede magsabi na sila yung absolute-owner no’n.
KINDS OF INDIVISIBILITY
(1) LEGAL INDIVISIBILITY- being declared by the law
(2) CONVENTIONAL INDIVISIBILITY- kasunduan ng both parties
(3) NATURAL INDIVISIBILITY- nature of the object or prestation ay hindi pwedeng magkaroon
ng division or hindi sila divisible.
EXAMPLE: pag-deliver ng car, pagkanta

ARTICLE 1224: Ang joint indivisible obligation ay maaaring magbigay ng kaukulang bayad
pinsala or yung indemnity for damages from the time na yung nangutang ay hindi niya kayang
mag-comply doon sa utang niya.
Pero yung nangutang na may kakayahan nang magbayad ay hindi na magbibigay ng
kontribusyon para sa bayad doon sa kung ano ang halaga ng isang bagay o halaga ng serbisyo
sa obligation nila.
EXAMPLE: Si Phengs at Rovic promised jointly to give a specific car worth P2,400,000 kay
Hans. In the meantime, yung kotse ay nasa Honda Motors Co.pa. Yung share ni Phengs ay
1.2M. Kung si Phengs ay nawalan ng pera dahil sa gambling kunwari pero si Rovic naman ay
merong hawak na pera na 1.2M, it is clear na hindi nila makukuha yung kotse sa Honda Motors
Co. kasi ng kulang yung pera nila. And because of that, hindi rin sila makakapag-compy sa
obligation nila in delivering a car to Hans. Dito, yung obligation to give the car is converted to a
monetary obligation to give 2.4M si Hans. Since hindi naman kasalanan ni Rovic na mawalan
ng pera si Phengs, hindi siya responsible for the insolvency ni Phengs, so magiging liable lang
siya for her part na magbigay ng 1.2M, and si Phengs ay may utang kay Hans ng 1.2M for her
share.
NOTE: Kung isa man sa mga debtors yung hindi nag-comply in a joint indivisible obligation,
yung obligation nila is magiging converted to a monetary obligation (to pay money). And yung
creditor ay hindi siya pwede mag-ask or demand ng ibang specific performance bilang kapalit
doon sa obligation nila na napagkasunduan.

ARTICLE 1225: Obligations to give definite things and those which are not susceptible of partial
performance shall be deemed to be INDIVISIBLE.
OBLIGATIONS DEEMED INDIVISIBLE
(1) Obligations to give definite thing
EXAMPLE: A obliged himself na mag-deliver ng particular electric fan.
(2) Obligations which are not susceptible of partial performance
EXAMPLE: To sing a song, to dance
(3) Obligations provided by law to be indivisible even if thing or service is physically
divisible.
EXAMPLE: Yung pagbabayad ng tax, even if yung money is generic, kapag in-imposed ng
batas na kailangan bayran ‘yon ng one time only, magiging indivisible na yung obligation na
‘yan.
(4) Obligations intended by the aprties to be indivisible even if the thing or service is
physically divisible.
EXAMPLE: A obliged na mag-deliver ng 100 copies of book kay B na kailangan ma-fulfilled
within 4 months. So nag-decide si A na ide-deliver niya ‘yon 25 per month. If nagkaroon sila ng
agreement na kailangan ma-deliver ni debtor yung 100 copies of book na ‘yon on a certain date,
magiging indivisible na yung obligation na ‘yon.
OBLIGATIONS DEEMED DIVISIBLE
(1) Obligations which have for their object the execution of a certain number of days of
work.
EXAMPLE: Obligation of A na pinturahan yung bahay ni B within 10 days.
(2) Obligations which have for their object the accomplishment of work by metrical units.
EXAMPLE: The obligation of A to B to make a table with metrical units.
(3) Obligations which by their nature are susceptible of partial performance
EXAMPLE: The obligation of A na bayaran yung utang niya na 12k, 1k per month.

SECTION 6. – OBIGATIONS WITH A PENAL CLAUSE

ARTICLE 1226: PENAL CLAUSE- It is an accessory obligation attached to the principal

obligation to assure greater responsibility in case of breach. Yung obligation na may penal
clasue, in case of non-compliance the penalty shall substitute sa pagbabayad ng damages +
interest, kung walang stipulation or condition.
GENERAL RULE: Yung Penalty ay nagse-serve as substitution to damages and interest
PRINCIPAL OBLIGATION- Mismong prestation ng obligation
ACCESSORY OBLIGATION- one which is attached to the principal obligation
KINDS OF PENAL CLAUSE
(1) AS TO ITS ORIGIN
(A) Legal Penal Clause- provided by law
(B) Conventional Penal Clause- stipulation of both parties.
(2) AS TO ITS PURPOSE
(A) Compensatory Penal Clause- penalty for damages
(B) Punitive Penal Clause- penalty na ini-imposed dahil sa breach or paglabag
(3) AS TO ITS DEMANDABILITY OR EFFECT
(A) Subsidiary or Alternative Penal Clause- only the penalty will be compelled
(B) Joint or Cumulative Penal Clause- both the principal obligation and penalty clause can be
enforced.

ARTICLE 1227: Ang debtor ay hindi mae-exempt yung sarili niya sa performance sa obligation
niya sa pamamagitan ng pagbabayad ng penalty, depende nalang kung yung rights ay granted
sakanya.
Kahit yung mismong creditor ay hindi rin siya pwede mag-demand sa fulfillment ng obligation
and satisfaction ng penalty at the same time, maliban nalang kung yung right ay granted
sakanya.
After the creditor has decided sa fulfillment ng obligation, the performance became impossible
without his fault, pwedeng magkaroon ng penalty ‘yon.
RIGHT OF THE DEBTOR
The general rule is that, the debtor cannot substitute by paying the penalty and not fulfilling the
obligation, unless it is expressly granted to him.
RIGHT OF THE CREDITOR
As a general rule, the creditor cannot demand the penalty and the fulfillment of the obligation at
the same time, unless it is expressly granted to him.

ARTICLE 1228: Proof of actual damages suffered by the creditor is not necessary to demand
for the penalty.
EXAMPLE: Si G entered into a contract with building contractor R para gumawa ng resort-type
residential community sa hacienda niya. Under their deal, Si R ay kailangan niya ma-complete
yung project in 12 months, kung hindi man ma-complete within 12 months, si R ay magbabayad
kay G ng penalty of 1M for each month of delay in the project.
Tapos si R ay nag-failed na magawa yung project within sa napag-usapang time, and yung
naging result nito kay G ay hindi niya nagawa na maibenta yung properties niya doon sa
residential community nila. In this case, hindi na kailangan ni G na ma-prove pa sa court yung
actual damages na nangyari sa paglabag ni R sa kasunduan nila and ang kailangan niya lang
gawin is mapatunayan na si R ay nag-failed na magawa yung project within 12 months bilang
kasunduan sa kontrata nila so that he can obtain 1M per month of penalty kay R.

ARTICLE 1229: Kung meron namang nagawa ng konti yung debtor or may nabayad siya kahit
partial lang, pwedeng i-reduced or babaan ng judge yung penalty niya. Same as the usurious
interest, pwede rin babaan ng court ‘yon.
EXAMPLE is yung sa mga lending; Diba usually sa mga sanlaan grabe magpatubo. Kapag
masyadong mataas yung interest nila or hindi na fair, pwedeng babaan yon ng court. Dapat
meron lang maximum rate yung interest nila.
WHEN PENALTY MAY BE REDUCED BY THE COURTS?
(1) When there is partial or irregular performance- Gaya ng explanation sa provision na ‘to,
kahit partial palang yung binayad mo, pwedeng ma-reduced yung interest na ibabayad mo.
EXAMPLE: Si A agreed to construct the house of B within 3 months for 1M pesos, yung
contract na ‘to ay may kasunduan sila na within 3 months nga lang dapat and in case of non-
compliance, si A ay magbabayad ng 100k for penalty. Even hindi niya nagawa na matapos yung
bahay within 3 months, still meron pa rin naman siyang mga natapos. (partial performance)
So since B has been benefited by the partial performance ni A, yung court ay pwede niyang i-
reduce yung penalty and pwede niyang pagaanin ‘to, for paying 20K nalang.
Irregular performance to kasi natapos man ni A yung pag-construct ng bahay, pero hindi niya
naman nagawa according sa napag-usapan nila.
(2) When the penalty agreed upon is iniquitous or unconscionable- katulad lang din ng
explanation, kahit na hindi mo pa bayad, pwedeng babaan ng court yung interest kung
excessive masyado yung interest.
EXAMPLE: Same example lang. Suppose yung value lang naman ng bahay ay 1M lang,
pwedeng i-reduced ng court yung interest na binigay ni B kay A kasi excessive na masyado
yon.

ARTICLE 1230: The nullity (pagkawalang bisa) ng penal clause ay hindi nakaka-apekto sa
principal obligation.
EFFECT OF NULLITY OF THE PENAL CLAUSE
Kung yung penal clause lang naman yung void, the prinicipal obligation ay valid and
demandable pa rin.
EXAMPLE: Si A agreed na magbenta ng sasakyan kay B, provided sa agreement nila na in
case hindi magawa ni A yung obligation niya na ‘yon, A will deliver drugs as a penalty.
Yung principal obligation dito ay ang pag-benta ng sasakyan,
Penal Clause naman ay ang delivery of drugs.
Dito, yung pag-benta ng sasakyan ay valid pero yung penalty na mag-deliver ng drugs ay void
dahil prohibited by law.
EFFECT OF NULLITY OF THE PRINCIPAL OLIGATION
Kapag yung principal obligation ay void, yung penal clause ay also void dahil the clause cannot
stand alone without the principal obligation.
Pero kung yung nullity ng principal obligation ay dahil sa fault ni debtor, who acted in bad faith,
na nag-caused ng suffered of damages sa creditor, the penalty may be enforced.
EXAMPLE: A agreed na mag-deliver ng drugs kay B, meron silang kontrata or
napagkasunduan na in case hindi magawa ni A ‘yon, kailngan magbayad ni A ng 10K as
penalty.
Yung penal clause rito na pagbabayad ng 10k is valid on its own, however this penalty clause
ay naka-based sa principal obligation (which is yung pag-deliver nga ng drugs) ay invalid
(Contrary to morals and prohibited by law)
So kahit na valid pa yung penal clause, magiging invalid siya dahil nga invalid yung pinaka-
principal obligation.

CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS

ARTICLE 1231
Under this provision, Obligations are extinguished by the following:
(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusing or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation
Annulment, rescission. Fulfillment of a Resolutory condition, and prescription are the other
causes of extinguishment of obligations governed under the civil code (1156)
(7) Death of a party in case of an obligation) (8) Mutual Desistance or withdrawal) (9) Arrival of
Resolutory period (10) Compromise (11) Impossibility of fulfillment (12) Happening of a
fortuitous event, are the other causes of extinguishment of obligations.

SECTION 1. PAYMENT OR PERFORMANCE

ARTICLE 1232: Payment means not only in terms of paying money but also the performance of
an obligation.
ARTICLE 1233: A debt can’t considered paid unless the thing or the service subject to the
obligation has been completely delivered or rendered.
2 requirements for Payment:
(1) Integrity of prestation- The prestation must be fulfilled and complete.
(2) Identity of the prestation- The very prestation due must be delivered or performed. It must
be delivered and released.

ARTICLE 1234: If the obligation has been substantially performed and acted in good faith, the
obligor may recover as though there had been a strict complete fulfillment, less damages
suffered by the obligee.
Substantial Performance happened when the essential part of the contract has been
accomplished and only a bit therefore has not been fulfilled.
REQUISITES FOR THE APLICATION OF ARTICLLE 1234
(1) There must be Substantial Performance
(2) The obligor must be in good faith
EXAMPLE: A obliged an mag-deliver ng 200 hollow blocks kay B for a certain price. However
dahil sa shortage ng hollow blocks, 100 lang yung made-deliver ni A kay B. Si A (obligor gusto
niyang ma-fulfill yung obligation niya na makapag-deliver ng 200 hollow blocks pero for some
reason beyond his control ay hindi niya ‘yon magawa. Kahit na hindi totally fulfilled yung
obligation niya, as long as nag-act siya in good faith, pwede niya ma-recover yung equivalent
amount na bayad doon san a-deliver niya.

ARTICLE 1235: If yung obligee tinanggap niya yung performance ni obligor kahit na alam
niyang incomplete ‘yon without any objections or complaints, therefore the obligation is
considered fully satisfied with.
Recoveries allowed to creditor in order for him to recover when the performance is
incomplete.
(1) If the payment is incomplete, the creditor may properly reject it.
(2) In case of acceptance of the performance, the law considers that he renounced his right, the
whole obligation is extinguished.
REQUISITES FOR THE APPLICATION
(1) The obligee knows that the performance is incomplete or irregular.
(2) He accepts the performance without any objections.
EXAMPLE: A agreed na pinturahan yung bahay ni B. According to their stipulation, kailangan
gumamit na A ng particular brand ng pintura. If si A gumamit ng ibang brand na alam ni obligee
at hindi siya nag-express ng objections about that, therefore the obligation is deemed fully
complied with.

ARTICLE 1236: Yung creditor is not guaranteed na mag-accept ng payment by a third person
who has nothing to do with the fulfillment of the obligation, except merong napagkasunduan.
Kung sino man yung angbayad, yung nagbayad na ‘yon is entitled siya na magakroon ng
reimbursement for the full amount he paid. Pero if yung payment na nangyari was made without
the knowledge ni debtor, yung mare-reimburse lang nung nagbayad is up to extent amount by
which the debtor was benefited.
The creditor must accept the payment from:
(1) The Debtor (2) Any person who has an interest to the obligation (3) Third person who has no
interest in the obligation

ARTICLE 1237: If yung third person is binayaran niya yung utang ni debtor without the consent
and knowledge ni debtor, hindi siya entitled na i-subrogate yung lahat ng rights an meron yung
creditor.
RIGHT OF THIRD EPRSON TO SUBROGATION
(1) If the payment is with the consent of the latter, he is entitled to subrogation.
(2) If the payment is without the knowledge of the latter, he cannot compel the creditor to
subrogate him.
DISTINCTION OF SUBROGATION AND REIMBURSEMENT
(1) In subrogation, the payer or third person acquires the right to be reimbursed for he has paid
and also have the rights which the creditor could have. The third person is put into the shoes of
the creditor.
(2) In reimbursement, the third person entitled only to reimburse for the amount he has paid.
ARTICLE 1238: Payment made by a third person who does not intend to have a reimbursement
by the debtor is considered to be a donation which requires the debtor’s consent.
ARTICLE 1239: Payment by an incapacitated person.
If payment is made by a person who does not have any capacity to give (either because he has
no right or because he still has no legal capacity to dispose of such thing, it will considered to be
invalid.
EXAMPLE: Si A agree an ibebenta niya yung karaoke set kay B. If yung karaoke set nan a-
delivered na ‘yon ay pagmamay-ari pala ni C, pwedeng ma-recover ni C ‘yon kasi hindi naman
valid ‘yon. Ibig sabihin walang kakayahan yung debtor na ibigay or agwin yung obligation na
‘yon kasi hindi naman sakanya ‘yon.

ARTICLE 1240: Yung payment na ibabayad ay dapat ibayad sa kung kanino man dapat ibayad.
If ever na may mangyaring masama kay creditor yung payment from the debtor is pwede niyang
ibigay ‘yon sa mga tao na in-authorized ni creditor.
Payment shall be made to:
(1) The creditor or the obligee (2) His successor in interest (3) Any person authorized to
receive it

ARTICLE 1241: Effect of payment to an incapacitated person

Kapag yung tumanggap ng payment mo is incapacitated, hindi ito magiging valid unless yung
person na ‘yon ay nag-benefit dun sa binayad mo or kung naitago niya yung payment mo.
EXAMPLE: Nagbayad si A nagbayad kay B ng 5k. That time depress na depress si B. Tapos
may nangholdup sa kanya at kinuha yumg 5k. Hindi valid yung payment. Pero kung ginastos ni
B yon para sa sarili niya or naitago niya naman yung pera, macoconsider yung payment ni A as
valid.
Effect of payment to a third person
Hindi to magiging valid EXCEPT if the creditor will benefit from it.
Pano magbebenefit yung creditor?
EXAMPLE: May utang si D kay C, tapos nung nagmature na yung obligation kay T niya
ibininayad. Liable pa rin si D kay C, pero kung binayad naman yon ni T kay C. Magiging valid
yung payment ni D. Pero dapat may proof na ipapakita si D kay C, na kay T nga niya ibinayad.
When benefit to creditor need not be proved by the debtor?
If na-acquire na nung 3rd person yung rights ng creditor sa debtor
EXAMPLE: Na-acquire ni T yung rights ni C sa above example kaya hindi na kailangan iprove
ni D.
If may consent or ratification na yung creditor sa payment nung 3rd person
EXAMPLE: Nagbigay na ng consent si C sa pagbabayad ni T sa above example kaya di na rin
need na iprove ni B.
Pinaniwala ng creditor yung debtor niya na may authority nga yung 3rd person na yon para
tanggapin yung bayad niya kahit naman wala talaga.

ARTICLE 1242: Sinasabi rito na kapag yung debtor ay nagbayad in good faith sa third
person na may hawak nung credit, mare-release na siya sa obligation.
EXAMPLE: May utang si D kay C na 1k na yung evidence is nakalagay through
promissory note na pinirmahan ni D para maging in favor kay C. Ngayon nawala ni C
yung note and napulot yon or nakuha ni T (third person), kaya ngayon nagdemand si T
ng payment kay D.
Hindi valid yung payment kay T, kasi hindi naman talaga siya yung nagpautang, siya
lang yung may hawak nung note na nagsasabing may utang si D. Pero kung yung note
is payable sa may hawak, then mae-extinguish yung obligation if nagbayad si D in good
faith. If yung note naman ay nilipat ni C kay T and may agreement sila na hindi
pwedeng singilin ni T si D, tapos nagbayad pa rin si D kay T in good faith, extinguished
pa rin yung obligation.

ARTICLE 1243: Payment to be paid to the creditor by the debtor shall be invalid if the latter has
been judicially commanded to detain the debt.
Yung creditor pwede niyang i-ask yung court na itigil yung transaction ng pagbabayad ng utang
ni third person kay debtor. Pwede niyang ipatigil ‘yon hangga’t sa ma-resolved na ni debtor
yung obligation niya sakanya.
EXAMPLE: Si may utang kay B na 1k, tapos si C (third person) may utang din kay A na 1k.
Ngayon si B (creditor ni A) pwede siya mag-ask sa court to retain the debt ni C kay A hangga’t
hindi pa siya nababayaran neto. Any payment na ibabayad ni C kay A is considered invalid kasi
nga it’ violation of the judicial order.

ARTICLE 1244: A thing different from what has been stated cannot be offered or demanded
against the will of the creditor unless agreed upon or if the creditor consents. The creditor shall
be paid only what has been stipulated upon because the contract between the contracting
parties is the law between them.
The act to be performed or the act prohibited cannot substitute against the obligee’s will.
ARTICLE 1245: There is dation in payment when property is convey to the creditor in
satisfaction of a debt in money. Whatever thing the debtor will pay to his creditor as a
satisfaction of a debt in money should be with the same value as the first thing agreed upon.
A debt in terms of money is satisfied not only by payment of money but also by the detachment
of the property.

ARTICLE 1246: The debtor who is obliged to deliver a generic thing cannot be compelled to
deliver other thing. If the obligation consists in the delivery of specific or determinate thing, the
said thing due must be the one delivered.

ARTICLE 1247: If the parties have made a stipulation as to who will bear the expenses, then
their stipulation shall be followed.
Debtor pays generally for extrajudicial expenses. Because the payment is his duty and it inures
to his benefit that he is released from the burden of the obligation.
Kung merong napag-usapan kung sino yung sasagot ng extrajudicial expenses, kailangan
sundin 'yon. Pero kapag walang agreement or stipulation na nangyari sa pagitan ng both
parties, yung extrajudicial expenses matic yung debtor yung sasagot no'n.
BAKIT? Kasi diba sa isang obligation, kapag nakabayad na yung debtor matic mae-
extinguished na yung obligation niya, so siya yung magbe-benefit doon kasi wala na siyang
utang or obligation na kailangan ma-fulfill. Kaya kung may extra judicial expenses debtor dapat
sasagot kasi magiging unfair naman sa part ng creditor kung siya na nga yung parang na-
agrabyado, siya pa yung sasagot.
EXAMPLE: Si A yung may ari ng apartment, tapos nangupahan sakanya si B for the amount of
3k na kailangan bayaran every 15th day of the month, tapos si B nag-failed siya na mabayaran
yon in 2 months, so yung may ari ng apartment ay nag-send ng letter na kailangan niya na
umalis doon plus kailangan bayaran yung hindi niya nabayaran na rental fee, tapos si A nag-ask
siya sa Atty. for that problem, syempre may fee yung Atty. diba. So from that yung magiging
expenses na babayaran ni B ay yung hindj niya nabayaran na rental fee + yung fee nung Atty.
na hinire for legal service.

ARTICLE 1248: Since the creditor is not compelled to accept partial performance of an
obligation, they cannot be considered to incur delay if he refuses to accept partial prestation.
In order that payment may extinguish the obligation, it is necessary that there be complete
performance of the prestation.
Partial performance is allowed when:
(1) When there is an express stipulation
(2) When the debt is in part liquidated and in part of unliquidated
(3) When the different prestations in which the obligation consists are subject to different
terms or conditions which affect some of them.

ARTICLE 1249: The value of the currency at the time the obligation was established shall be
the basis of payment. The creditor has the right to refuse acceptance of these documents as
payment, even if they happen to be good. These papers shall produce the effect of payment
only when they have been en-cashed.
Legal tender refers to the currency which may be used for payments of debts whether public or
private, and which the creditor cannot refuse to accept.
Payment by means of instruments of credits
(1) Right of creditor to refuse or accept- Since those documents are not legal tender,
therefore the creditor cannot be impelled to accept it.
(2) Effect on obligation- Payment by means of those mercantile documents does not
extinguish the obligation.

ARTICLE 1250: The inflation or deflation stated in this case must be extraordinary, meaning it is
not a universal trend which did not spare the country.
The purchasing value of the currency at the time the obligation contracted shall be the basis of
payment, in case of any increase or decrease in the value of the currency.
This provision only applies in extraordinary deflation or inflation.
(1) Inflation- sharp sudden increase of money which led in the rise of the general price level.
(2) Deflation- reduction in money supply or credit availability resulting in a decline of the
general price level.

ARTICLE 1251: This provision talks about the designated place where the obligation shall be
made. If the subject of the subject matter is a specific thing, the payment shall be settled in
where the obligation was formed. If the debtor tried to escape with his obligation in bad faith, the
additional expenses shall be automatically bear by him.

SUBSECTION 1. APPLICATION OF PAYMENTS

ARTICLE 1252: If madaming utang yung isang debtor sa isang creditor pwede niya iapply yung
payment sa kahit anong debt don.

REQUISITES OF APPLICATION OF PAYMENTS

1. 1 debtor, 1 creditor
2. 2 or more debts
3. The debt must be of the same kind
4. The debt to which payment made by the debtor has been applied must be due
5. The payment made must not be sufficient to cover all the debts.

APPLICATIONS AS TO DEBTS NOT YET DUE

Hindi pwedeng i-apply yung payment sa debt na hindi pa nag-due unless:

1. There is a stipulation of payments that the debtor may so apply

2. Sinabi ng debtor or ng creditor kung sino sa kanila yung magbe-benefit

RULES ON APPLICATION OF PAYMENT

1. Nakay debtor yung first choice kung saang debt niya iaapply yung payment, kapag na-apply
na niya hindi niya pwedeng sabihin na ilipat sa ibang debt yon.
2. Once na magawa na ‘yon, hindi na pwedeng ibahin yung application ng payment unless
pumayag yung creditor
3. Kapag hindi naman nag-apply yung debtor sa kahit anong debt, choice na ng creditor kung
saan debt mapupunta yung binayad ni debtor.
4. Kapag hindi rin sinabi ng creditor kung saan ia-apply, yung pinakamalaking utang ni debtor
doon mace-cerdit or ma-apply yung payment.
5. If pare-pareho lang ng nature yung debt, pwedeng i-apply yung payment proportionally.

EXAMPLE: May utang si A kay B

(a) 2000 sa Nov 5

(b) 1800 sa Nov 10
(c) battery ng phone worth 2500 na idedeliver sa Nov 15
(d) 1500 sa Nov 20

1. Nagbayad si A ng 2000 Nov 10, pwede niyang sabihin na i-apply yon sa (a) and sa (b) pero
hindi pwede kay (c) kasi nga di pwede yung partial payment kasi it is not the same kind. At
lalong hindi pwede sa (d) dahil hindi pa nagdu-due yung utang.
2. If hindi in-apply ni A sa kahit ano, si B yung magde-decide.
3. If hindi rin in-apply ni B, yung pinakamalaking utang which is (a) yung masa-satisfy.
ARTICLE 1253: Kapag yung utang ay merong involved an interest, hindi maco-considered na
bayad na yung principal debt hangga’t hindi pa nababayaran yung interest. (INTEREST MUST
BE PAID FIRST)
Yung payment na ibabayad ay ia-apply muna sa interest and kung magkano yung matira ayon
yung ice-credit sa pinaka principa debt. And if ever man na kulang pa rin, of course liable pa rin
si debtor na bayaran yung natirang balance.
EXAMPLE: Si A nangutang kay B ng 10k with accrued interest na 1k. Si A nagbayad kay B ng
10k. Yung binayad niya na ‘yon will be applied first sa interest,a nd kung magkano yung matitira
ayon yung bayad for the principal debt. Since 9k nalang yung natira, ibig sabihin liable pa rin
siya na bayaran yung balance which is 1k.

ARTICLE 1254: CONNECTED IN ARTICLE 1252

When the payment cannot be applied in accordance with the preceding rules, yung application
ng payment is mace-credit siya sa pinaka-onerous or mabigat na utang ni debtor.
If lahat ng utang niya nanaka-due ay pare-parehong onerous or mabigat, the payment shall be
applied to all of them proportionately.
WHEN A DEBT MORE ONEROUS THAN ANOTHER?
(1) Yung debt na may interest is amco-considered na ams mabigat kesa doon sa utang na
walang interest.
(2) Yung utang ng sole debtor is onerous kesa doon sa utang na consists of solidary debtors.
(3) Debts secured by a mortgage or by pledge ay ma onerous kesa doon sa mga utang na
unsecured. BAKIT? Syempre, may involve na pledged thing na doon, ibig sabihin mabigat
talaga yung utang kasi naka-secured siya.
(4) Kapag yung parehong utang ay parehong may interest, syempre kung ano yung ams
mataas yung interest ayon yung onerous.

SUBSECTION 2. PAYMENT BY CESSION

ARTICLE 1255: The debtor may assign his properties to his creditors in payment of his debts.
But the debtor may only release up to the net proceeds of the thing assigned.
Payment by Cession is another special form of payment. It is the assignment or abandonment
of all the properties of the debtor for the benefit of his creditors in order that the creditor may sell
to satisfy their claims.
REQUISITES OF PAYMENT BY CESSION
(1) There must be 2 or more creditors
(2) The debtor must be partially insolvent
(3) The assignment must involve all the properties of the debtor
(4) The cession must be accepted by the creditors.

EFFECT OF PAYMENT BY CESSION

Yung creditor hindi siya binibigyan ng rights na maging owner nung properties ni debtor and si
debtor naman ay mare-release lang up to the extent ng napagbentahan ng mga properties niya.
EXAMPLE: Si A may utang na 2m sa maraming creditors. Yung assets or properties niya ay
hindi enough para mabayaran niya lahat ng utang niya. With the consent of his creditors, Si A
in-assign niya yung mga properties niya para i-benta para mabayaran yung mga utang niya.
Kung yung total amount lang ng napagbentahan ng properties niya ay 1.5M lang ibig sabihin
liable ap rin siya na bayaran yung balance which is 500k unless napag-usapan ng both parties
na fully satisfied na yung utang niya.
DISTINCTION OF DATION AND CESSION
(1) In dation, meron lang one creditor, while sa cession maraming creditors
(2) In dation hindi nila pine-pre supposed yung insolvency ng debtor, while sa cession
insolvent yung debtor
(3) In dation, hindi involve alhat ng properties ngd ebtor, while in cession, involve lahat ng
properties.
(4) In dation, yung creditor na yung magiging owner ng property ng debtor, while in cession,
meron lang silang rights na i-acquired yung properties ni debtor apra ibenta para ma-satisfy
yung claims or yung utang sakanila.
(5) Dation is really an act of Novation, while cession is not an act of Novation.

SUBSECTION 3. TENDER OF PAYMENT AND CONSIGNATION

ARTICLE 1256: If yung creditor is nag-refused siya na tangapin yung payment ni debtor, si
debtor shall be released from responsibility by the CONSIGNATION of the thing or sum due.
Consignation alone shall produce the same effect in the following cases:
(1) When the creditor is absent or unknown or does not appear at the place of payment
(2) When he is incapacitated to receive the payment
(3) When without any reason, he refuses to give a receipt
(4) When 2 or more persons claim the same right to collect
(5) When the title of the obligation has been lost
Tender of Payment- an act on the part of the debtor of offering to the creditor the thing or
amount due.
Consignation- the act of depositing the thing or amount due with the proper court when the
creditor refuses to accept it from the debtor.
Consignation is yung pagde-deposit ng pera na ibabayad ng debtor if ever ayaw tanggapin ng
creditor yon. Kumbaga advantage yon sa part ng debtor para ma-secured siya sa mga actions
na pwedeng gawin ng creditor against him, kagaya ng dagdag interest.
REQUISITES OF A VALID CONSIGNATION
(1) Existence of a valid debt which is due
(2) Tender of payment by the debtor and refusal of the creditor to accept the payment without
any justifiable reason
(3) Previous notice of consignation to persons interested in the fulfillment of the obligation
(4) Consignation of the thing or sum due
(5) Subsequent notice of consignation made to the interested parties
EXAMPLE: Si A may utang kay B. On due date, nagbabayad na si A pero hindi tinanggap ni B
without any justifiable reason. In this case, hindi mare-released si A sa obligation niya if hindi
siya magkaroon ng valid or proper consignation. Yung pag-refuse ni creditor na tanggapin yung
bayad will not have the effect of payment but A will be relieved from payment of any interest
from the date of tender.

NOTE: Yung reason kung bakit merong consignation sa part ni debtor is kumbaga para ma-
secured siya sa any actions na pwedeng i-file ni creditor against him or para-secured siya na
magbayad ng interest. Kasi if ever man na “may personal interest yung creditor”, halimbawa
kaya ayaw niyang tanggapin yung bayad it’s because gusto niya pang tumaas or lumaki yung
interest ng utang mo, so from that mape-prevent ‘yon ni debtor if mag-consign siya.
But take note again na walang consignation na mangyayari if walang tender of payment. WHY?
Syempre wala ka namang ico-consign if wala ka pa palang balak na magbayad ng utang mo.
Meaning, Consignation and Tender of Payment are essential and connected to each other!

ARTICLE 1257: In order that the consignation made by the debtor released him from liability, it
must first be announced to the person interested in the fulfillment of the obligation.
PERSONS INTERESTED IN THE FULFILLMENT OF THE OBLIGATION ARE THE
FOLLOWING: (1) Guarantors (2) Mortgagees (3) Solidary debtors (4) Solidary creditors
If magkaroon ng absence sa notice sa mga taong ‘to, the consignation, as payment, SHALL BE
VOID.
Yung purpose neto is para mabigyan ng chance yung creditor na pag-isipan na i-accept na
yung binabayad sakanya and para rin maiwasan yung pagsasampa ng mga kaso or legal
actions or whatsoever.

ARTICLE 1258: Consignation shall be made by depositing the thing due at the disposal of
judicial authority before whom tender of payment shall be proved and the announcement of the
consignation in other cases.
To be able to have an effect of payment or to be valid, consignation must be with proper
JUDICIAL AUTHORITY.
NOTICE TO BE GIVEN TO INTERESTED PARTIES OF THE CONSIGNATION MADE
After the consignation has been made, the interested parties must also be notified thereof. The
purpose of the second notice is to enable the creditor to withdraw the thing or sum deposited in
case he accepts the obligation.
ARTICLE 1259: The expense of consignation, when properly made shall be charged or bear by
the creditor.
If the consignation is not properly made, the expenses should be charged against the debtor.
But if the consignation is properly made, the expenses should be charged against the creditor.
WHY? Because of the fault or unjust refusal of the creditor to the payment.

ARTICLE 1260: Once the consignation has been made, the debtor may ask to court to cancel
the obligation.
Hindi porke na-consignate mo na, automatically mae-extinguish na yung obligation, kailangan
mo rin iask yung cancellation ng obligation sa court.
Kasi syempre kumbaga yung debtor is pwede niya pa rin bawiin yung consignation na ginawa
niya na yon para hindi ma-extinguish yung obligation, so para nga ma-extinguished yon,
kailangan niya syempre i-ask sa court yon.

EFFECT OF VALID CONSIGNATION- Kapag yung consignation is properly effected, yung

court is magbibigay ng order for the cancellation ng obligation. Kapag yung validity ng
consignation na ‘yon ay na-state na ng court, yung obligation ay maco-consider na na-fulfilled
na. And yung running interest is mahihinto na rin at the same time.

EFFECT OF IMPROPER CONSIGNATION- hindi mae-extunguished ang obligation.

EFFECT OF DISMISSAL OF AN OBLIGATION- Kapag dinismissed ng court for any valid

reason, yung consignation na yon ay hindi magiging favorable or walang magiging epekto sa
debtor.

* Yung pag-withdraw naman or cancellation ng consignation na ginawa ng debtor ay

mangyayari lang if ever na hindi pa tinatanggap ng creditor yung payment or hindi nag-declared
yung court ng proper consignation.

* Yung reason naman kung bakit pwede pa i-withdraw or bawiin ng debtor yung ginawa niya is
because syempre pera niya pa rin yung dineposit na yon.

ARTICLE 1261: If nagbabayad yung debtor kay creditor tapos hindi tinanggap. Magaapply na
ng consignation si debtor. Pero kung may consent from the creditor si debtor pwede niya na i-
withdrew yung dineposit niya. And pwede na rin i-released yung guarantors.

EXAMPLE: May utang si A kay B na 25k tapos guarantor si C. Nung nag-due na yung
obligation nagbabayad na si A pero ayaw tanggapin ni B. Ngayon A made a consignation. Pero
winithdrew rin yon ni A after niyang ma-receive yung consent ni B.
Under Article 1261, mawawala na yung preference ni B sa utang na ‘yon and yung guarantor na
si C ay marerelease na rin.

Pero kung solidarily liable si A and C kay B, mare-release lang si C sa solidary liability niya pero
liable pa rin siya ng 12,500 kay B, dahil ayon yung share niya sa obligation.

SECTION 2. – LOSS OF THE THING DUE

ARTICLE 1262: Yung obligation which consist sa delivery ng specific or determinate thing ay
mae-extinguished kung yung lost or destroyed ng bagay na ‘yon ay nangyari without the fault ni
debtor.
 Kapag naaayon sa batas or merong stipulation, yung obligor ay liable pa rin even
because of fortuitous evet yung reason. Ibig sabihin, yung pagkawala ng bagay ay hindi mae-
extinguished yung obligation, therefore responsible pa rin si obligor for the damages.
WHEN A THING IS CONSIDERED LOST? It is understood that a thing is lost when it perishes,
goes out of commerce, or disappears in such a ways that its existence is unknown or it cannot
be recovered.
Loss of determinate thing is the equivalent of impossibility of performance in
obligations.
WHEN LOSS OF THINGS WILL EXTINGUISHE THE OBLIGATION TO GIVE?
In order that an obligation may be extinguished, the following requisites are
(1) Obligation is to deliver s apecific or determinate thing
(2) The loss of thing occurs without the debtor’s fault
(3) The debtor is not guilty of delay
WHEN LOSS OF THING WILL NOT EXTIGUISH LIABILITY?
(1) When the law so provides (2) When stipulation so provides (3) When the nature of the
obligation requires assumption of risk (4) When the obligation to deliver a specific thing arises
from crime.

ARTICLE 1263: In an obligation to deliver a generic thing, the loss and destruction of that thing
will not extinguished the obligation.
EFFECT OF LOSS OF GENERIC THING: The debtor can still be compelled to deliver a thing of
the same kind. The creditr however cannot deman a thing of superior quality, as well as the
debtor, he cannot deliver a thing of a inferior quality.
EXAMPLE: S promised na magde-deliver ng 100 cavans of rice kay B, yung 100 cavans of rice
na intended t deliver was lost in a flood. Kahit na fortuitous event yung reason, it can still be
paid from other sources.

ARTICLE 1264: Yung court yung magde-determine whether yung partial lost of the object of the
obligation is so important to extinguish the obligation.
EFFECT OF PARTIAL LOSS OF A SPECIFIC THING
There is a partial loss if only a portion or part of thing is lost or destroyed. Partial loss is the
equivalent of difficulty of performance in the obligation. In case there is a partial loss, the court
will determine whether that partial lost is so important in relation to the whole as to extinguish
the obligation.
EXAMPLE: A obliged na mag-deliver kay B ng specific race horse. The horse met an accident
as a result ng pagkabali ng lef niya. Here, the injury is permanent, the partial loss is so
important as to extinguish the obligation. If due to the fault of debtor, debtor shall be oblied to
pay the value with indemnity for damages.

ARTICLE 1265: Kapag naman yung bagay na pinag-uusapan sa obligation ay nawala sa

kamay or possession ni debtor, syempre ipe-presumed ‘yon na kasalanan niya yon, maliban
nalang kung meron siyang evidences or proof na magpapatunay na wala talaga siyang
kasalanan.

EXAMPLE: Si A hinriam niya yung motor ni B, tapos yung bahay ni A ay nasunog tapos
nandoon yung motor, so syempre since accidental lang naman yung nangyari na yon, pwedeng
sabihin ni A na wala siyang kasalanan doon sa nangyari so hindi siya liable unless
mapatunayna ni B na may kasalanan si A.

ARTICLE 1266: The debtor in an obligation to d shall also released when the prestation of the
obligation becomes legally or physically impossible without the debtor’s fault.
EFFECT OF IMPOSSIBILITY OF PERFORMANCE
Without the debtors fault, the obligation becomes legally or physically impossible, the
impossibility of performance wil result in the extinguishment of an obligation.
KINDS OF IMPOSSIBILITY
(1) Physical Impossibility takes place when the obligor becomes incapacitated to perform the
obligation.
EXAMPLE: A obliged na mag-paint ng picture ni B to be finished within a month. One week
after ng usapan, naaksidente si A na nag-caused ng pagka-putol ng kamay niya, so obviously
the performance of the obligation becomes physically impossible.
(2) Legal Impossibility occurs when the obligation cannot perform becaused it is considered
impossible by operation of law.
EXAMPLE: A agreed to construct a commercial building for B. the government refused to issue
a permit kasi nga yung area na ‘yon is for residential zone that has been declared by the law.

ARTICLE 1267: This article refers to the difficulty of service or performance manifestly beyond
the intention of the parties.
EFFECT OF DIFFICULTY OF PERFOMANCE
The general rule is that impossibility of performance releases the obligor.
Kapag yung performance ng service sa obligation is naging mahirap nang gawin dahil
nagkaroon ng sudden change na hindi kontrolado ng both parties, the court is authorized to
release the obligor in whole or in part.
EXAMPLE: A together with other construction workers, agreed to construct a road near a
mountain. A hurricane caused landslide making the construction of the road dangerous to
human lives. In this case, A may be released, in whole or in part, from his obligation to continue
with the construction.

ARTICLE 1268: When a debt of a determinate thing proceeds from a criminal offense. The
obligor shall not be released from his obligation whatever may be the caused for the loss of the
thing. Unless the thing having been offered by the obligor, the latter (obligee) refused to accept
without any justifiable reasons.
WHAT IS THE EFFECT OF FORTUITOUS EVENT WHERE OBLIGATION PROCEEDS FROM
A CRIMINAL OFFENSE?
This article is another case where a fortuitous event does not exempt the obligor from his
liability.
EXAMPLE: A stole the card of B. Here, yung obligation ni A is to return the car. The obligation
of A arises from a criminal offense. If yung car ay nasira because of fortuitous event and without
the fault of the debtor, he shall be liable for the equivalent amount or price of the car.
But take note na may exception din ‘yan: Kapag yung obligee hindi niya tinanggap yung bayad
ni obligor without any reason.
ARTICLE 1269: Kapag yung bagay sa obligation ay nawala dahil sa fault ni third person, yung
creditor is mabibigyan siya ng rights para mag file ng action against doon sa third person
responsible for the loss.
RIGHT OF CREDITOR TO PROCEED AGAINST THIR PERSON
The creditor is given the rights against the third person. There is no need for an assignment or
consent by the debtor, the rights of action of the debtor are transferred to the creditor from the
moment na ma-extinguished na ang obligation niya.
The right of action includes the insurance indemnity that may have been received from the third
person.
ANO YUNG REASON BAKIT MAY RIGHTS YUNG CREDITOR? The reason is to protect
interest of the latter by reason of loss.
EXAMPLE: A obliged himself to deliver to B a specific carabao. Without the permission of A, his
neighbor, C, kinuha yung carabao and used the same for plowing (pag-aararo). Later the
carabao was lost through third persons’s fault. Yung obligation ni A was extinguished na and si
B acquired the right to file an action against C (third person) to recover the damages for the lost
carabao.

SECTION 3. – CONDONATION OR REMISSION OF DEBT

ARTICLE 1270: The condonation of remission of debt is a mode extinguishment of an

obligation wherein yung creditor ay gratuitously renounced his rights against the debtor na
kailangan din ng acceptance syempre ng debtor.
It is thus a form of donation
REQUISITES OF CONDONATION OR REMISSION
(1) It must be gratuitous
(2) It must be accepted by the obligor (syempre kahit na ni-renounced ni creditor or nag-
condoned siya, kailangan i-accept ‘yon ni debtor. Kailangan para ma-condoned yung utang or
mag take effect yung condonation na ‘yon, it must be accepted by the debtor so kailangan ng
agreement ng both parties)
(3) The parties must have capacity
(4) It must not be inofficious
(5) If made expressly, it must comply with the froms of donation.
KINDS OF REMISSION
(1) AS TO ITS EXTENT
A. Complete- when it covers the entire obligation
B. Partial- when it does not cover the the entire obligation
(2) AS TO ITS FORMS
A. Express-when it is made either verbally or in writing (formality is required)
B. Implied- when it can only indicated conduct (no formality is required)
(3) AS TO ITS DATE OF EFFECTIVITY
A. Inter Vivos- when it will take effect during the lifetime of the donor
B. Mortis Causa- when it will become effective upon the death of the donor.
CONDONATION- Implied forgiveness of debt
REMISSION- A release from debt or claim
GRATUITOUS- given or done free of charge
INOFFICIOUS- Contrary to moral obligation
LEGITIME- forced share or force portion of inheritance

ARTICLE 1271: Kapag yung creditor ay voluntarily na binigay sa debtor yung private document
ng utang, ipe-presumed ‘yon na yung creditor is cino-condoned niya na yung utang ni debtor.
PRESUMPTION IN CASE OF VOLUNTARY DELIVERY OF DOCUMENT OF
INDEBTEDNESS BY CREDITOR
(1) Presumption of implied remission- If yung utang ay hindi pa naman talaga bayad. Yung
creditor is kailangan niya yung private document na ‘yon para mabayaran or ma-enforced pa rin
yung utang sakanya.
(2) Contrary Evidence- Yung presumption na ‘yon ay rebuttable kasi pwedeng mag-provide or
mag-present yung creditor ng evidence na magpapatunay na yung delivery ng private document
na ‘yon ay for other purposes like (for example: examination ng Atty.)
(3) Extent of remission- Kung yung obligation ay joint, yung presumption ng remission ay
magre-refer lang sa share ng debtor na may hawak ng document, pero kapag solidary
obligation ‘yon, yung total obligation yung tinutukoy doon.
(4) Presumption applicable only to private document

ARTICLE 1272: Kapag yung private document ng utang is nakita sa possession ni debtor,
mape-presumed ‘yon na dineliver ni creditor since siya yung nagpautang.
Kasi diba usually yung private document is dapat nasa possession ni creditor since siya nga
yung nagpautang, he has in favor the legal presumption in which yung utang ay hindi pa talaga
bayad unless ma-proved ni debtor na nabayaran niya na ‘yon. So if ever man na yung private
document of debt is nasa possession ni debtor, ang presumption doon is that dineliver ni
creditor ‘yon voluntarily.
That presumption of voluntarily delivery will result in presumption of remission.
EXAMPLE: Si A may utang kay B na 1k evidenced with a promissory note, yung note na ‘yon
was signed by the debtor and binigay niya kay creditor. If yung promissory note na ‘yon ay
voluntarily delivered to the debtor, yung presumption doon is bayad na yung utang. Pero kung
meron namang evidence si creditor na hindi pa talaga bayad si debtor, ipe-presumed na yung
obligation has been remitted by the creditor.
Supposed hindi nga alam kung paano napunta kay debtor ‘yon, the presumption is binigay ‘yon
ni creditor voluntarily unless mapatunayan niya na hindi.

ARTICLE 1273: This provision talsk about accessory obligation and principal debt
Sabi once na yung principal debt daw ay remitted, matic yung accessory obligation ay mae-
extinguished na rin. WHY? Dahil yung accessory obligation na ‘yon ay dependent sa principal
debt.
Pero kapag naman yung accessory obligation lang yung na-extinguished, still hindi pa rin
mawawala yung principal debt. WHY? Dahil yung principal debt ay hindi naka-depende sa
accessory obligation. Principal debt can stand alone.
EXAMPLE: Si A may utang kay B ng 1k, Tapos si C yung guarantor.
Principal debt- 1k
Accessory obligation- guaranty from the guarantor
If yung utang ni A ay remitted, ibig sabihin pati yung guaranty by C ay mae-extinguished na rin.
Pero if yung accessory obligation lang yung remitted, the principal debt still remains.

ARTICLE 1274: Mape-presumed na yung accessory obligation na pinledged ni debtor ay

remitted na if after ng delivery net okay creditor is nasa possession na ulit ni debtor.
Yung contract na merong involved na pledge, dapat yung bagay na pinledge na ‘yon ay nasa
possession ni creditor. WHY? Syempre since siya yung nagpa-utang, kailangan ma-secured or
ma-assure niya na babayaran yung utang sakanya.
But if yung bagay nga na ‘yon ay nasa possession ulit ni debtor, yung presumption doon is that
remitted na yung accessory obligation na ‘yon.
BUT TAKE NOTE: Since yung bagay na pinledged na ‘yon ay considered as accessory
obligation lang, ibig sabihin hindi pa rin mae-extinguished yung principal debt.
EXAMPLE: Si A nangutang kay B, tapos dineliver niya kay B yung motor niya bilang pledge
para masiguro ni creditor na mababayaran yung utang sakanya, if alter on yung motor na ‘yon
ay nasa possession ulit ni debtor, yung presumption doon is that si B nag-agree na magkaroon
ng utang sakanya si A without the pledged thing.

SECTION 4. CONFUSION OR MERGER

ARTICLE 1275: The obligation will be extinguished from the time the debtor becomes the
creditor of himself through merger.
Confusion or Merger is the meeting in 1 person of the qualities of creditor and debtor.
REQUISITES OF CONFUSION
(1) It must take place between the principal debt and creditor
(2) It must be complete
EXAMPLE: Si A may utang kay B na 5k, tapos binayaran niya ‘yon kay B through check. Tapos
si B, ginamit yung check na ‘yon bilang pambayad din kay C para ma-extinguished rin yung
obligation niya. Tapos si C gano’n din ginawa kay D. And si D ayon din yung pinang-bayad niya
kay A. So ibig sabihin, si A na debtor ay nagging creditor din. From that extinguish na ang
obligation.

ARTICLE 1276
Merger takes place in the person of the principal debtor or creditor benefits the guarantors
Confusion takes place in the person of any of the latter does not extinguish the obligation.
Merger in the person of the principal debtor or creditor extinguishes the obligation, therefore, the
accessory obligation of guaranty is also extinguished becomes accessory follows the principal.
EFFECT OF MERGER IN THE PERSON OF PRINCIPAL DEBTOR OR CREDITOR
Merger in the person of the principal debtor or creditor extinguishes the obligation, therefore, the
accessory obligation of guaranty is also extinguished becomes accessory follows the principal.
So magbe-benefit ditto si guarantor.
EXAMPLE: Si A may utang kay B tapos si C yung guarantor, If yung merger ay nangyari kay A,
ibig sabihin siya na yung debtor and creditor, therefore mawawala na yung liability ni C as
guarantor.
Kung yung merger ay nangyari naman kay B, magbe-benefit pa rin si guarantor kasimawawala
na yung principal obligation which carries the accessory obligation (guaranty from the
guarantor)
EFFECT OF MERGER IN THE PERSON OF GUARANTOR
Kapag naman yung merger ay nangyari kay gurantor, accessory obligation lang yung
mawawala pero yung principal obligation ay nandoon pa rin.

ARTICLE 1277: Kapag joint obligation, hindi mawawala yung obligation na ‘yon through
confusion kasi nga maraming debtors and cerditors.
CONFUSION IN A JOINT OBLIGATION
Yung confusion na mangayayari rito is mae-extinguished lang kung sino yung debtor or creditor
na nag-take place sa merger.
EXAMPLE: A, B AND C may utang kay D na 6k evidenced by a promissory note, If si D
inindorsed kay E yung note, tapos si E naman inindorsed kay A. Ibig sabihin, wala na yung
obligation ni A. Pero si B and C liable pa rin na bayaran yung share nila. Yung nagbago lang is
kay A na sila magbabayad kasi si A na yung bagong creditor.
CONFUSION IN A SOLIDARY OBLIGATION
Kapag naman solidary obligation, extinguished na yung entire obligation. Tapos yung debtor na
nag-take place yung merger, meron siyang rights for the reimbursement from his co-debtor.

SECTION 5. COMPENSATION

ARTICLE 1278: Nangyayari or nagkakaroon ng compensation kapag yung 2 tao ay creditor and
debtor ng isa’t-isa. Ibig sabihin pareho silang may utang sa isa’t-isa.
COMPENSATION is the extinguishment to the concurrent amount ng utang kapag yung
dalawang tao ay may utang sa isa’t-isa.
EXAMPLE: Si A may utang kay B na 1k. Si B may utang kay A na 700
Both debts ay due and payable sa same date. Dito, yung compensation ay partial compensation
lang dahil hindi sila pareho ng amount na utang, ibig sabihin si A liable pa na magbayad kay B
ng 300. Pero kapag yung 2 utang ay same amount lang, ibig sabihin ayon yung total
compensation.
OBJECT OF COMPENSATION
The object of compensation is para ma-prevent yung mga unnecessary na mga legal action and
payment.
Yung compensation ay tinatawag din na SIMPLIFIED PAYMENT dahil mas convenient and less
expensive yung way ng pagbabayad ng utang kasi nga pareho naman kayong may utang sa
isa’t-isa.
COMPENSATION AND CONFUSION DISTINGUISHED
(1) Sa confusion, meron lang isang debtor and creditor sa kanilang dalawa, sa compensation
naman 2 tao yung involved and apreho sialng may utang sa isa’t-isa.
(2) Sa confusion, isa lang yung obligation, sa compensation, since pareho nga silang may
utang sa isa’t-isa ibig sabihin 2 yung obligations.
(3) Sa confusion, merong impossibility yung payment, while sa compensation naman indirect
payment.

KINDS OF COMPENSATION
(1) By its effect or extent
(a) TOTAL- Kapag same amount yung utang nila sa isa’t-isa, mae-extinguished na agad-agad
yung mga utang nila.
(2) PARTIAL- Kapag naman hindi same amount yung utang nila sa isa’t-isa, syempre liable na
bayaran yung balance ng kung sino man yung may mas malaki na utang.
(2) By its cause or origin
(a) LEGAL- Kapag dumaan sa proseso ng batas/
(b) VOLUNTARY- Kapag nangyari sa kasunduan or agreement ng both parties
(c) JUDICIAL- Kapag may mga legal actions/ligitation na involved, kapag nagkaroon ng
disagreement yung both parties
(d) FACULTATIVE- Kapag one party lang yung magse-setup between B and C kasi si B ay
principally liable kay C, tapos si C ay subsidiary liable rink ay B kasi nga siya yung guarantor ni
A, C can demand payment from B.
(c) A may utang kay B ng 1k. Si B may utang kay A na 1k, the latter (as guardian or
administrator)

ARTICLE 1279: Proper compensation happens when:

(1) Bawat isa sa mga may utang ay obligado principally, at siya din ay principal creditor nung
isa;
(2) Dapat yung utang ay parehong money, or kung hindi anman, dapat yung bagay ay
consumable, o kaya naman the same kind, o kaya same quality
(3) Yung parehong utang ay naka-due
(4) Yung utang ay liquidated/settled and demandable
(5) Dapat wala ni isa sakanila yung meron pang ibang atraso or liabilities sa ibang tao/ third
person.

REQUISITES OF LEGAL COMPENSATION

(1) Dapat yung both parties ay parehong debtor and creditor ng isa’t-isa
EXAMPLE:
(a) Si A may utang kay B na 1k. Si B may utang kay A na 1k
Compensation will take place kasi A and B ay parehong debtor and creditor ng isa’t-isa.
(b) Si A umutang kay B ng 1K, tapos si C yung guarantor. Tapos si B umutang kay C ng 1k
There will be no compensation between B and C kasi si B ay principally liable kay C, tapos si C
ay subsidiary liable rink ay B kasi nga siya yung guarantor ni A, C can demand payment from B.
(c) A may utang kay B ng 1k. Si B may utang kay A na 1k, the latter (as guardian or
administrator)
There will be no compensation din, kasi in this case, si A ay principally liable kay B, pero si B
naman ay not principally liable kay A. Yung real creditor ni B is yung tao under guardianship or
the estate administration. Ibig sabihin si A ay creditor ni B in a represtative capacity. (hindi siya
mismo)
(d) Si A may utang kay B, C and D (partners in partnership P) ng 1k pesos.
Tapos si P naman ay may utang din na 1k kay A
Si A hindi niya pwede sabihin na abswelto na siya kasi wala naman utang sakanya si B, C, D, si
P lang ay may utang sakanya
(e) A (stockholder) may utang kay B (corporation) sa amount na collected ni A as treasurer of B
B owes A amount representing overpayment by A of his stocks.
Compensation ay nangyari kasi si A and B are mutually debtors and creditors ng isa’t-isa.
(f) Si A may utang kay B na 1k in the latter’s capacity as administrator of his father’s estate.
Tapos si B naman ay may utang kay A na 1k representing debt of B’s father.
Nagkaroon din ng compensation kasi yung credit ni A ay nag-charge doon sa utang niya kay
B’s administrator.
(2) Dapat yung utang ay parehong money, or kung hindi anman, dapat yung bagay ay
consumable, o kaya naman the same kind, o kaya same quality
(a) Si A may utang kay B na 1K. Si B hiniram yung electric range worth 1k din.
No compensation will take place kasi hindi sila same kind.
(b) Si A obliged na mag-deliver ng 10 sacks ng rice kay B, Tapos si B naman obliged na amg-
deliver ng 10 sacks na corn kay A.
Wala ring compensation na nangyari kasi yung things due ksi hindi rin same kind, maliban
nalang, magkakaroon ng compensation kung pareho silang obliged na mag-deliver sa isa’t-isa
ng 10 sacks of rice na pareho yung quality.
(c) Si A may utang na 10 sacks of “dinurado” rice. Tapos si B naman ay any 10 sacks of rice.
Wala rin legal compensation na nangyari kasi although same kind which is parehong bigas,
magkaiba naman sila ng quality.
Compensation can be claimed by B since pwede siya mag-deliver ng any kind of rice. It wuld be
same as if si B ay makakatanggap ng quality na bigas from A and then returned the same to A
in payment of his debt.
Pero si A ay hindi pwedeng mag set ng compensation kung salungat naman kay B. This is an
example of FACULTATIVE COMPENSATION.
(d) A owes B a specific horse. Tapos si B naman owes A another specific horse.
Compensation cannot be set up by A or B unless magakroon sila ng agreement.
(e) A owes B any horse. B owes A any horse rin
Compensation will take place kasi kahit na hindi consumable yung bagay na yon, still same kind
and quality ap rin silang dalawa.
(f) A owes B 5k. Tapos si B naman owes A 5k or a cow.
Wala ring legal compensation kasi si B may prefer to deliver a cow. Pero yung right of choice
naman ay binigay kay A, pwedeng magakroon ng compensation.
(3) Yung parehong utang ay naka-due
EXAMPLE: A may utang kay B na 1k naka-due ngayon. Tapos si B naman may utang na 1k
due next month.
Compensation cannot atke place kasi yung 2 utang ay hindi parehong naka-due. Pero in case
na si A ay hindi makabayad sa duedate that the oogation of B becomes due, pwedeng
magkaroon ng compensation sa date na yon.
Kung yung utang ni B ay subject to a Suspensive Condition which has not yet happened, wala
rin compensation na mangayyari.
(4) Yung utang ay liquidated/settled and demandable
EXAMPLE: A may utang kay B na 1k. Tapos si B may utang nap era kay A which is share of
the latter in a business which is still to be ascertained (aalamin palang)
Compensation will not take place kasi yung utang ni B ay hindi liquidated. If yung part ng utang
ni B ay nagging liquidated, compensation will takes place with respect to the part without
waiting for the liquidation of the rest.
(5) Dapat wala ni isa sakanila yung meron pang ibang atraso or liabilities sa ibang tao/
third person.
EXAMPLE:
A owes B 10k.
B owes A 10K
B also owes C 10k din
Si C pwede niyangs sabihin kay A na huwag na bayaran yung utang niya kay B kasi kumbaga
hindi pa nare-resolved ni B yung utang kay C.
Si B may not owe C but the latter claims that he and not B is the creditor of A.
In this case, compensation cannot take place kay A and B kasi nga meron pabng ibang
obligation/utang si C na dapat bayaran.
If si C lsoes the case, compensation shall considered na nangyari na as of the date the
requsiites for legal compensation concurred.

ARTICLE 1280: Yung guarantor ay pwedeng mag-set ng compensation kung yung creditor ay
meron din utang sa debtor.
Although yung guarantor ay accessory obligation lang naman, (subsidiarily lang siya and hindi
totally bound) pwede pa rin siya mag set ng compensation.

EXAMPLE: Si A may utang kay B na 1K tapos si G yung guarantor, tapos si B din ay may utang
kay A na 1k. The obligation of guaranty is extinguished by the compensation, but if the
compensation is partial, yung guarantor ay liable pa rin for the balance.
Kung halimbawa na si B ang utang niya lang kay A ay 700, ibig sabihin liable pa rin si guarantor
na bayarn yung 300 pesos.

ARTICLE 1281: Yung compensation ay pwedeng complete/total or partial lang. Kapag yung
parehong utang ay same amount, edi ibig sabihin complete yon pero kung hind, edi patrial lang.
EXAMPLE: COMPLETE: A may utang kay B na 1k, tapos si B may utang din kay A na 1k
PARTIAL: A may utang kay B na 1k, tapos si B may utang na 700

ARTICLE 1282: Diba sa previous provision, ang sabi doon nagkaakroon ng compensation
kapag yung aprehong utang ay due, ‘tong provision naman na ‘to ay exception sa general rule
kasi naka-depende yon sa napagkasunduan or kung yung both parties ay nag-agree na
magkaroon nan g compensation kahit hindi pa naman due.
Voluntary or Conventional Compensation ay nangyayari kapag nagkaroon ng agreement
yung both parties even if yung mga requisites for legal compensation ay hindi present or wala.
Yung gantong klase ng compensation ay walang special requisites. Sapat na yung contract ng
both parties para magakroon ng compensation.

ARTICLE 1283: Kung halimabwa yung creditor nag-cause ng damage sa debtor, yung debtor
pwede niyang i-set off yung utang niya doon sa creditor bilang payment or equivalent doon sa
damages na nagaawa ni creditor.
EXAMPLE: Si A may utang kay B 1oK. Nung si B magdedemand ng payment kay A, tapos si A
ay nag-failed na magbayad, in anger, Si B ay sinira yung property ni A to the extent of 9k.
Si A pwede niyang i set off yung obligation ni B para bayaran siya for the payment of damages
which is 9K, against doon sa utang niya na 10K.

ARTICLE 1284: Kapag daw yung isa o dalawang utang ay pwedeng ipa-cancel or ipawalang
bisa, pwede na sila magbayaran before pa man mapawalang bisa or ma-cancel ‘yon.
Compensation of rescissible or voidable debts
Yung rescissible and voidable obligation ay magiging valid until they are judicially
rescinded/cancel or mapawalang bisa.
EXAMPLE: Si A may utang na 10k kay B. Tapos si A through fraud was able to make B sign a
promissory note na nagsasabi na si B ay meron din utang sakanya na 10K.
Yung utang ni A kay B ay valid, pero yung kay B naman ay voidable. Bago pa man mapawalang
bisa yung utang ni B, both debts may be compensated/magbayaran against each other kung
yung lahat ng requisites for legal compensation ay present.
Supposed yung utang ni B ay later on annulled by the court, Si A ay liable pa rin kasi yung
effect ng annulment ay retroactive (dati ng utang)

ARTICLE 1285: In order to have a proper compensation, consent and notification ni debtor ay
kailangan.
If the assignment was made with the consent ni debtor, yung third person can demand whole
payment from the debtor.

If the compensation has taken place after the assignment and the assignment is with the
knowledge but without the consent of the debtor, partial compensation lang yung mangayayari if
the assignment happened before its maturity date. Pero if yung utang ay lagpas na sa maturity
date, complete compensation na yung mangyayari.
If the assignment was made without the knowledge ni debtor, yung ico-compensate lang ni
debtor ay prior to his knowledge or kung magkano lang talaga yung utang niya.
ARTICLE 1286: Compensation by Operation of Law.
There is an indemnity for expenses of transportation.This apply for the transportation of goods
or of an object.
The indemnity contemplated does not refer to the difference in the value of thing in their
respective places bu to the expenses of monetary exchange and expenses of transportation.
The indemnity shall be paid by the person who raises the defense of compensation.
FOREIGN EXCHANGE is the conversion of one country's currency into another.
EXCHANGE RATE is the value of one country’s currency
EXAMPLE:
INDEMNITY FOR EXPENSES OF TRANSPORTATION
A obliged himself to deliver to B 100 sacks of rice in Cebu. B is also bound to deliver to A 100
sacks of rice of the same kind in Laguna.The expenses of transportation of rice to Cebu amount
to 10k and to Laguna is 5k.
If A claims compensation, B should indemnify A the amount of 5,000 for the expenses of
transportation.
INDEMNITY FOR EXPENSES OF EXCHANGE
A owes B $5,000 payable in California. B owes A 250,000 payable in Manila.If A claims
compensation, he must pay for the expenses of exchange.

ARTICLE 1287: Compensation shall not be proper when one of the debts arises from
depositum, or the obligations of a depositary or of a bailee in commodatum
INSTANCES WHEN LEGAL COMPENSATION IS NOT ALLOWEDE BY LAW
(1) Where one of the debts arises from a depositum
A deposit is constituted from the moment a person receives a thing belonging to another with
the obligation of safely keeping it and of returning the same.
EXAMPLE: Si A may utang kay B na 5k, B in turn, owes A the amount of 5k representing the
vaue of a necklace deposited by A with B which B failed to return. In this case, si B (depository)
cannot claim legal compensation even if mag-fail si A na magbayad ng utang sakanya. Yung
remedy na pwedeng agwin ni B is to file an action against kay C para ma-recover yug 5k na
utang sakanya.
(2) Where one of the debts arises from a commodatum
Commodatum is a gratuitous contract whereby one of the parties delivers to another something
not consumable so that the latter may use the same for a certain time and return it.
EXAMPLE: If si B hiniram nga yung necklace ni A, B cannot refuse na ibalik yung necklace
dahil walang compensation na mangayayari when one of the debts arises from a commodatum.

(3) Where one of the debts arises from claim for support due by gratuitous title
EXAMPLE: Si A sinabi na bibigyan niya ng allowance every month ng 2k for 5 years si B,
previous doon sa napag-usapan nila na ‘yan, si B already owes A 10k which was due and
unpaid.
Hindi pwedeng sabihin ni A na hindi niya bibigyan ng allowance si B for 5 months bilang
compensation doon sa utang ni A sakanya.
ARTICLE 1288: There shall be no compensation if one of the debts arises from a penal offense.
If one of the debts consist in civil liability arising rom a criminal offense, compensation will not
take place because it is improper and inadvisable because the satisfaction of obligation is
imperative.
The person with civil liability (Offender) arising from crime is the only party who cannot set up
the compensation.
The offended party who is entitled to indemnity can set up his claim in compensation of his debt.
EXAMPLE: Si A may utang kay B na 10k. Tapos si B ninakaw yung necklace ni A worth 10k
din. Yung compensation by B is improper kasi nga nag-arise siya from a criminal offense.
Pero si A, the offended party, can claim the right of compensation. The prohibition in this article
pertains only to the accused but not to the victim of the crime.

ARTICLE 1289: If yung debtor ay may several debts na pwedeng i-apply ng

compensation, kailangan niyang i-notify yung creditor kung alin sa mga utang niya na
‘yon yung a-applayan ng compensation. If hindi niya na-notify si creditor kung saan
utang ice-credit, kung ano yung pinakamalaki or pinaka-mabigat sa debts niya, ayon
yung aapplayan ng compensation.

EXAMPLE: May utang si A kay B ng

(1) 10K without interest na due today
(2 10 K with interest of 18% na due rin today
(3) 10K with 16% interest na nag-due kahapon
Dapat i-specify ni A kay B kung alin sa tatlo na yan yung applayan ng compensation. If
he failed to specify it to B, then pipiliin ni B (creditor) yung pinaka malaki which is yung
number 2 na due today with 18% interest.

ARTICLE 1290: Kapag lahat ng requisites sa compensation under article 1279 ay present, ibig
sabihin yung compensation takes effect (magkakaroon ng bisa) dahil sa batas, so pati na rin
yung both debts ay mae-extinguished na even though hindi alam ng both parties.
This article is contrast to voluntary compensation where compensation takes effect from the
time agreed upon by the parties, or judicial compensation where compensation takes effect from
the moment judgement becomes final and executory.
CONSENT OF PARTIES NOT REQUIRED IN LEGAL COMPENSATION
1. Compensation takes place automatically by mere operation of law
Gaya nga ng explanation, kapag lahat ng requisites ay present, pwedeng magkaroon ng
compensation kahit without the knowledge and consent of the parties.
2. Full legal capacity of parties not required
Since operation by law nga, ibig sabihin kahit hindi required na yung both parties ay capacitated
(to give or to received)
ARTICLE 1291: Yung obligation ay pwedeng mabago by
1. Changing their object or principal condition (Pagbabago ng bagay o ng mismong principal
condition)
2. Substituting the person of the debtor (Paglilipat ng taong nangutang)
3. Subrogating (putting the place to another) a third person in the rights of the creditor (Yung
third party na yung may rights ng creditor)
NOVATION is yung partial extinction or extinguishment ng obligation through creating/replacing
a new one para i-substitute.
KINDS OF NOVATION
1) According to origin
(A) legal- nangyayari by operation of law
(B) Conventional (voluntary) - nangyayari sa agreement ng both parties
2) According to how it is constituted
(A) Express- kapag yung parties yung nag-declared in clear or malinaw na yung t old obligation
is extinguished na by the new obligation.
(B) Implied- kapag walang declaration na yung old obligation ay extinguished na by the new
one (kasi yung obligation na dapat ipapalit ay Hindi compatible sa naunang obligation)
(3) According to extent or effect
(A) Total or extinctive - kapag yung old obligation ay totally na-extinguished na.
(B) Partial/Modificatory - kapag yung original obligation ay hindi totally na-extinguished pero
nabago or nabawasan. (From the word partial, ibig sabihin hindi buo)
(4) According to the subject
(A) Real or objective- kapag object (or cause) or principal condition yung nabago
EXAMPLE: Si A nag-agree na magde-deliver ng car kay B. After ng napag-usapan na nila na
yon, gumawa ulit sila ng panibagaong contract wherein imbis na car ang ide-deliver ni A kay B
ay magiging 10 ac na. Yung obligation na pag-deliver ng car ay na+extinguished na by the
obligation to deliver 10 AC. Yung change na nanguari na yon ay involved yung pinaka principal
terms ng obligation.
(B) Personal or subjective - kapag naman person of the debtor yung sinubstitute O kaya
naman third person yung nag-subrogate ng rights ni creditor.
Example: if after mapag-ueapan yung obligation, yung both parties ay nag-agree na si B ay
magsa-substitute kay A (ibig sabihin si B na ang bagong debtor) Tapos si C naman ay isu-
subrogate yung rights ni D (creditor). Ibig sabihin si C na ang bagong creditor. Personal
obligation yung nangyari na yan kasi tao yung pinag-uusapan.
(C) Mixed- combination or real and personal obligation (object at tao)
EXAMPLE: sa above example, if yung naging agreement na ay si B ay magdedeliver kay D ng
10 ac. Mixed yon kasi diba dapat car yung ide-deliver Tapos naging AC. And then dapat kay B
niya ide-deliver pero naging kay D bigla. So ibig sabihin nagkaroon ng change yung obligation
sa principal object and mismong tao.

ARTICLE 1292: Para ma-extinguished yung obligation, by substituting another to the same,
dapat malinaw yon na ide-declared, or yung old obligation na i-substitute or ire-replace ay
incompatible sa isa't-isa.
REQUISITES OF NOVATION
(1) A previous valid obligation (syempre para maging valid yung Novation na gagawin, dapat
valid din yung previous obligation niyo)
(2) Capacities and intention of the parties to modify or extinguish the obligation (syenore dapat
capacitated silang dalawa kasi Hindi magkakaroon ng Novation if ayaw ng isang party)
(3) The modification or extinguishment of the obligation
(4) The creation of a new valid obligation (since valid yung previous obligation, dapat valid din
yung ipapalit para magkaroon ng tinatawag na Novation)
Novation is never presumed. Hindi presumption ang novation kasi it must be clearly and
dapat walang mistake na mangyayari sa pag-estbalish ng new obligation by the agreement ng
both parties.
TEST OF INCOMPATIBILITY BETWEEN 2 OBLIGATIONS OR CONTRACTS
Magkakaroon ng novation if yung 2 obligations (old and new) ay incompatible sa isa’-isa)
After mangyari or magakroon ng novation, yung old obligation ay mawawalan nan g effect kasi
nga may kapalit ng bago.
EXAMPLE: Si A nag-agree na mag-deliver ng car kay B sa Nov 1. After ng usapan nila na yon,
nagkaroon ulit sila ng agreement which is jeep na ang ide-deliver niya imbis na car. (May
novation ban a nangyari?)
ANSWER: Wala, dahil walang declaration by the parties at lalong wala dahil yung 2nd
agreement/obligation ay parang kapareho lang ng unang obligation. So ibig sabihin
COMPATIBLE SILA AND WALANG NOVATION NA MANGYAYARI.
(DAHIL SABI, MAGKAKAROON NG NOVATION KUNG INCOMPATIBLE YUNG 2)

ARTICLE 1293: Yung Novation which consists ng substitution ng bagong debtor in place of the
original one, ay pwedeng mangyari without the consent or knowledge nung latter (debtor) pero
dapat may consent ni creditor. (bakit dapat may consent ni creditor? --- syempre siya ang
nagpapautang, dapat alam niya kapag may mga changes na mangyayari)
Article 1293 speaks of passive subjective novation (substitution of the debtor), not active
subjective novation (substitution of the creditor)
KINDS OF PERSONAL NOVATION
(1) Substitution kapag yung debtor ay isu-substitute
(2) Subrogation - kapag yung third person ay isu-subrogate yung rights ni creditor
KINDS OF SUBSTITUTION
(1) Expromission- The act by which a creditor accepts a new debtor, who becomes bound
instead of the old, the latter being released. Dito, third person yung nag-insist or nag-approach
or nag-initiate ng sarili niya sa creditor na siya na yung papalit na bagong debtor.
EXAMPLE: Si A ang original debtor
Si B ang creditor
Si C yung third person
Si C (third person) fulfilled A’s obligation without the knowledge of A but with the consent of B
(creditor)
EXAMPLE: Si A ay may utang na 20 K kay B, tapos si C friend ni A nag-insist kay B and sinabi
na siya na yung magbabayad sa utang ni A and from that moment, siya na yung bagong debtor.
Tapos si A ay Hindi na magiging liable sa utang niya kay B, nag-agree si C (creditor)
Meron bang expromission na nangyari?
ANSWER: Oo, and if ever na si C (third person) ay Hindi bayaran si B (creditor) Si A (yung
dating debtor) ay Hindi na liable kasi nga yung obligation niya ay na-extinguished na from the
moment ba magkaroon ng agreement yung 2 na Hindi na siya yung debtor. Yung insolvency or
yung non-compliance ng bagong debtor ay Hindi makakaapekto or Hindi magiging liable yung
dating debtor kasi nga released na siya sa obligation niya na yon.
(2) Delegacion- kapag yung debtor offers and the creditor accept a third person to take place
for the satisfaction of the original debtors’ obligation. In this agreement they are called as a
Delegante(debtor) ,Delegatario(creditor) and delegado(third person).
Dito naman, yung mismong debtor yung nag-approach kay creditor na si third person yung
papalit sa kanya as new debtor.
Consent of creditor necessary para magkaroon ng bagong debtor, syempre kailangan alam at
may consent yon ng creditor. Yung reason dito ay since si creditor ang nagpautang, syempre
siya yung magi-imply/indicate ng waiver ng utang.
RIGHTS OF NEW DEBTOR WHO PAYS
(1) In Expromision, yung payment from new debtor ay nagkakaroon siya ng rights na
magkaroon ng reimbursement (gaya lang nung mga previous articles)
(2) In Delegacion, If yung payment naman ay with consent ng original debtor, yung new debtor
na yon ay entitled para magkaroon ng reimbursement and subrogation.
EXAMPLE: (1) Si A (debtor) sinabi kay B (creditor) na si C (third person) yung magbabayad ng
utang ni A. If si B pumayag, Hindi ibig sabihin ay meron ng delegacion na nangyari. Pero kung
si A sinabi niya kay B na si C yung magbabayad ng utang niya and he asks b para ma-release
na siya sa obligation niya, and pumayag naman si B (reditor) , ibig sabihin may delegacion na
nangyari.
(2) Supposed doon sa same example, sinabi ni C kay B na siya na yung magbabayad ng utang
ni A at pumayag naman si B. Wala rin expromision na nanguari, unless merong agreement na si
A ay mare-released na sa obligation niya kay B.

ARTICLE 1294: If yung substitution na nangyari na yon ay without the knowledge and consent
ni debtor, in case na maging insolvent or wala ng kakayahan na magbayad yung bagong debtor
or incase ng non-fulfillment nung bagong debtor na yon, Hindi magiging liable yung original
debtor kasi nga yung substitution ay nangyari nang wala siyang alam.

Effect of new debtor's insolvency or non-fulfillment of the obligation on EXPROMISION

Diba sabi kasi sa Expromision, yung insolvency nung bagong debtor ay Hindi makakaapekto
doon sa old debtor (ibig sabihin, incase na Hindi magbayad yung bagong debtor, Hindi na liable
yung old debtor kasi nga extinguished na yung obligation niya)
So same lang din siya dito sa provision na 'to, if Hindi na makabayaad yung new debtor, Hindi
na liable doon yung old debtor.
Kasi sa Expromision, yung substitution na nangyari ay hindi pagkukusa ng debtor kung Hindi
(ng third person/ibang tao)
EXAMPLE: A may utang kay B na 10k, Tapos ngayon si C (third person) nag-substitue siya
bilang new debtor nang hindi alam at walang consent ni A (debtor) if ever man na maging
insolvent si C or Hindi niya ma-fulfil yung obligation niya, Hindi na magiging liable si A doon kasi
nga released na siya from his obligation.
ARTICLE 1295: Yung pagiging insolvent nung new debtor na pin-roposed or substitute nung
original debtor na in-accept ni creditor, in case na magkaroon ng insolvency sa part nung new
debtor, Hindi mae-enforced ni creditor yung original debtor doon sa obligation na yon except
kung yung insolvency na nangyari na yon ay existing na or with public knowledge, or alam na
ng dating debtor from the time na nanguari yung assignment ng bagong debtor na yon.
EXAMPLE: Si A may utang na 10k kay B, si B pinroposed niya na si C yung magsu-substitute
para sa kanya bilang bagong debtor, tapos pumayag naman si B.
If, at the time of delegacion, naging insolvent si C (bagong debtor) and yung pagiging insolvent
niya ay (public knowledge) hindi magiging liable si A. Hindi rin magiging liable si A if yung
insolvency ni C ay nangyari after yung assignment (which is yung substitution ng bagong
debtor) (kasi nga nagkaroon nan g substitution, so hindi na siya laible)

ARTICLE 1296: Kapag yung principal obligation ay na-extinguished because of novation, yung
accessory obligation ay mananatili pa rin up to the extent if Hindi nagbigay yung third person ng
consent.
~ diba sabi once na na-extinguished ang principal obligation, matic pati accessory obligation
mawawala na rin. Pero ang exception dito ay kung yung accessory obligation na yon ay in favor
or merong consent ni third person.
EXAMPLE: Si A may utang kay B na 2k with interest na 14%. Tapos si B may utang kay C na
280 pesos.
Napagkasunduan nila na si A na yung magbabayad ng interest kay C na 280 pesos. (Since
yung amount ng interest ay equivalent naman sa utang ni B kay C. ) Yung obligation dito ay
yung (1) principal obligation ni A and yung (2) napagkasunduan nila na siya yung magbabsyad
kay C (third person- creditor ni B) if after non, nagkaroon ulit ng bagong contract si A and B in
which instead na pera yung ibabayad ni A kay B, ay magde-deliver nalang siya ng TV SET kay
B. (Dito na-extinguished na ang principal obligation niya since nagawa niya nga yon)
Pero yung accessory obligation niya which is yung pagbabayad ng interest kay C (third person)
ay mananatili pa rin as long as magbigay na ng consent si C na ina-accept na niya yung
novation or yung agreement na yon.

ARTICLE 1297: Kapag daw yung new obligation na ipapalit sa original obligation ay void, hindi
mae-extinguished yung original obligation kasi nga void yung papalit. Unless yung both parties
ay pumayag na ma-extinguished yon kahit ano pa man yung mangyari.
Yung general rule kasi ay walang novation na mangyayari if yung ipapalit mo na bagong
obligation ay void. Syempre matic if void yung ipapalit mo, hindi mae-extinguished yung original
obligation.
EXAMPLE: Si A may utang kay B na 10k. Since hindi na mababayarn ni A yung utang niya,
naggawa sila ng bagong contract in which si A (debtor) ay mangki-kidnap at papatayin yung
kaaway ni B (creditor) and from that, mae-extinguished na ang obligation niya. Syempre
obviously, void yung pinalit na obligation na yon dahil contrary to good customs and prohibited
by law yung pagpatay ng tao. In this case, yung principal or original obligation ni A ay mananatili
pa rin at hindi mae-extinguished.

ARTICLE 1298: Magiging void ang novation if yung mismong original obligation ay void.
Syempre, yung void obligation ay hindi naman magno-novate dahil wala namang ino-novate
(replace with a new contract)
EXAMPLE 1: Si A nag-agree na magde-deliver ng drugs kay B. (Delivery of drugs are
prohibited by law) later on, napagkasunduan nila na instead drugs ang ide-deliver ni A kay B ay
magbabayad nalang siya ng 50k bilang novation or kapalit. Kahit na valid ang 2nd obligation,
still void pa rin yung novation dahil nga void ang original obligation.
EXAMPLE 2: Halimbawa si A sapilitan na napa-pirma ni B sa contract wherein si A ay obliged
kay B na mag-deliver ng car. After non, napagkasunduan nila na si A ay magbibigay nalang ng
50k instead ng kotse. Yung original obligation ni A kay B ay void (kasi nga through
Fraud/sapilitan ang nangyari) but since hindi pa dine-declared na invalid yon, yung 2nd contract
ay magiging valid.
Same example, if si A ay nag-confirmed na mag-deliver ng car kay B, yung consent niya ay
magpapatunay doon sa contract nila and ginawa nalang valid yon, therefore magiging valid na
rin yung novation.
Kasi on one the requisite ng novation ay dapat valid ang obligation

ARTICLE 1299: If yung original obligation ay subject to a Suspensive or Resolutory Condition,

yung new obligation ay dapat same condition din, unless it is otherwise stipulated.
Yung reason dito ay dahil yung new obligation na ipapalit ay naka-depende siya if yung
condition which affects the obligation ay magagawa/comply or hindi.
If yung condition ay Suspensive, and nagkaroon ng non-compliance doon, ibig sabihin walang
mangyayaring obligation. If resolutory naman and nagkaroon ng compliance doon, yung old
obligation ay mae-extinguished na. (RULES NG SUSPENSIVE AND RESOLUTORY
CONDITION)

ARTICLE 1300: Yung subrogation ng rights ng creditor na mangyayari sa third person ay

pwedeng legal or conventional. Yung latter (creditor) dapat malinaw niya me-established para
magkaroon ng bisa/magkaroon ng effect yon)
Subrogation ay yung substitution or pagkuha ng third person sa lahat ng rights na meron yung
creditor.

KINDS OF SUBROGATION
(1) Conventional- ibig sabihin voluntary. Kapag nangyari dahil sa agreement ng lahat ng
parties (the debtor and the original creditor) and the yung third person (which is yung bagong
creditor)
(2) Legal- from the word legal, ibig sabihin operation by law at hindi dahil sa agreement ng
parties.
Yung conventional subrogation ay dapat clearly expressed siya sa lahat para magkaroon ng
epekto. And yung legal subrogation naman is not presumed except kung expressly provided
siya ng batas.

ARTICLE 1301: Yung Conventional Subrogation na mangyayari dapat meron siyang consent
ng original parties and third person. (Gaya nga ng explanation kanina, syempre dapat clearly
expressed siya para maging effective, so dapat may consent lahat ng parties)
(1) Consent ng debtor- bakit dapat may consent siya? ~ syempre since debtor siya, ibig
sabihin siya yung liable doon sa new obligation ng new creditor.
(2) Consent ng old creditor- bakit dapat may consent siya? ~ syempre kasi siya yung may
rights against doon sa extinguishment ng obligation ng debtor sa kanya.
(3) Consent ng new creditor- bakit kailangan pati siya may consent from himself? ~~~syempre
kasi para maiwasan yung misinterpret/misunderstood sa pagitan nila ni debtor if ever ayaw niya
doon sa debtor.

ARTICLE 1302: Mape-presumed na legal subrogation yon if

(1) Kapag yung creditor ay nagbayad ng bagong creditor na mas gusto niya, even without the
knowledge ni debtor.
EXAMPLE: Si A may utang na 20k kay B, which is yung utang na yon ni A ay naka-secured
siya by (mortgage) ng lupa ni A. Tapos si A meron pa siyang utang na 30k kay C, yung utang
niya na to ay unsecured. Under the law, obviously si B ang preferred creditor (dahil secured ang
Pinautang niya dahil nga may mortgage) against kay C which is ordinary creditor lang. If si C
binayaran niya yung utang ni A kay B, yung rights na meron si B at magsu-subrogate sa kanya
including na yung mortgage ng land ni A if ever hindi makabayad si A.
(2) Kapag yung third person without the interest sa obligation yung nagbayad with the approval
ni debtor
EXAMPLE: Si A may utang na 20k kay B. Tapos si C (third person) siya yung nagbayad ng
utang ni A na yon with consent ni A.
In this case, since si C ang nagbayad ng utang ni A kay B, ibig sabihin masu-subrogaye or
malikipat na lahat ng rights na meron si B as a creditor ni A. (Syempre sa kanya na
magbabayad si A)
(3) Kapag naman yung third person na may interest sa obligation na yon yung nagbayad even
hindi alam ni debtor. (Ibig sabihin guarantor)
EXAMPLE: (1) KAgaya ng example kanina, since si C yung naging guarantor ni A (dahil nga
siya yung nagbayad ng utang ni A) Siya yung person interested doon fulfillment ng obligation ni
A. If si C nagbayad kahit hindi alam ni A, C (third person) ay magsu-subrogate yung rights ni B
(creditor) Confusion takes place kay C. Dito, yung accessory obligation (guaranty) ay
extinguished na, still yung principal obligation remains.
(2) Si A and B joint debtors ni ng 20k. Tapos si B binayaran niya yung being 20k ma hindi alam
ni A. In this case, since si B ang nagbayad, therefore siya na yung magiging bagong creditor ni
A for 10k (yung corresponding share) yung obligation na yon ay na-extinguished by confusion of
merger of rights.

ARTICLE 1303 (legal subrogation din)

~~HALOS PAREHO LANG NG 1302 NUMBER 1
Lahat ng rights na meron yung creditor ay maliliPat sa kung Sino mang tao yung nag-fulfilled ng
obligation
EFFECT OF LEGAL SUBROGATION
Yung effect ng legal subrogation ay para ma-transfer lang ng rights na meron yung dating
creditor sa bagong creditor against sa debtor, or kahit sa third person.
Ibig sabihin yung legal subrogation na sinasabi rito sa 1303 ay hindi nagde-define or refer sa
agreement ng both parties. And yung effect naman ng Conventional subrogation ay between
stipulation ng both parties at Hindi ng batas.
EXAMPLE:
(1) Si A may utang kay B na 30k secured by mortgage ng land ni A. If si C (third person) yung
nagbayad ng utang ni A, magsu-subrogate si C ng lahat ng rights na meron si B so that may
possibility siya na makuha yung minortgage na land ni A na yon if ever hindi siya
makapagbayad ng utang niya.
(2) Si A may utang kay B na 50k tapos meron siyang guarantor which is si C. I'd si A mag-fail na
makabayad ng utang niya kay B, si C yung hahabulin ngayon ni B. If binayaran ni C, ibig sabihin
masu-subrogate sa kanya lahat ng rights na meron si B (creditor) against kay debtor para ma-
recover niya yung binayad niya na utang ni A.

ARTICLE 1304: Effect of Partial Subrogation

If ever yung third person yung nagbayad ng utang nung debtor pero partial lang, si creditor
pwede niya pa rin singilin yung balance or natutirang utang ni debtor. Ibig sabihin kahit na may
third person na involved as long as hindi pa fully bayad yung utang sa kanya creditor pa rin siya
and si creditor, pwede niyang i-subrogate kay third person yung partial payment na binayaran
non.
EFFECT OF PARTIAL SUBROGATION
Yung creditor remains creditor as long as hindi pa fully bayad yung utang sa kanya.
If ever maging insolvent si debtor, merong rights yung creditor na yon na ma-recovr yung
balance na utang doon sa bagong creditor (third person)
EXAMPLE: Si A may utang kay B na 5k. Tapos si C (third person) with the consent ni A,
binayaran niya yung utang ni K partially (3k) In this case, merong partial subrogation na
nangyari up to the extent of 3k. Si B remains creditor as long as ma-fully collected na yung
utang sa kanya. Ibig sabihin 2 credit na yung nangyari:
3k na ibabayad kay C at 2k (balance) na ibabayad kay B. In case maging insolvent si A, si B
(creditor) pwede niyang singilin si C (third person) that is he shall be paid from the assets of A
ahead of C.