Art. 1167: If a person obliged to do
Negative Personal Obligation (not
something fails to do it, the same shall be
executed at his cost.
• This same rule shall be observed if he
does it in contravention of the tenor of
the obligation. Furthermore, it may be
decreed that what has been poorly
done be undone.
Personal Obligations
1. Negative personal obligation – not
doing and the obligor does what has
been forbidden him, it shall also be
undone at his expense.
2. Positive personal obligation – to do
something what he is asked to do
Different types of Civil Obligations
• Contracts
• Quasi-contract – no one should be
unjustifiably rich because of an unjust
action.
• Delicts – violation of the law;
intentional
• Quasi-delicts – a juridical relation
created when there is an act or
omission that causes damage to
another, there being fault or
negligence.
Negotorium Gestio – goodwill
Solutio Indebiti – payment by mistake
Types of Obligation according to its
Prestation
1. Real Obligation (to give)
a. Specific thing (unique; not
replicable)
b. Generic thing (replaceable)
2. Personal Obligation (to do or not to
do)
a. Positive Personal Obligation (to do)
– obligation to fulfil an obligation
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b.
to do) – e.g., building any structure
outside the boundaries of your
property
Required Degree Diligence in Obligations
1. Required by law
2. Required by stipulations of the parties
3. Diligence of a good father of a family
Extraordinary diligence – utmost diligence
as far as human care can provide
Rights of Creditor over a thing
a. Personal right – a specific passive
subject
b. Real right – anyone
Obligation of the debtor to deliver (specific
thing)
a. To deliver the thing
b. To take care of the thing before
delivery (Art. 1163)
c. To deliver the fruits of the thing
(Art.1164)
d. To deliver accessions and accessories
although they were not mentioned
e. To pay damages if guilty of fraud,
delicence or contravention of the terms
of the obligation (Art. 1170)
Obligation of the debtor to deliver (generic
thing)
a. To deliver the thing
b. To bear the expenses of having
someone else comply with the
obligation (Art. 1165 par. 2)
c. To pay damages if guilty of fraud,
delicence or contravention of the terms
of the obligation (Art. 1170)
Obligation of the debtor to do
a. To do the obligation
b. To bear the expenses of having
someone else comply with the
obligation
c. To undo what has been poorly done
d. To bear the expenses of having some
else undo
e. To pay damages if guilty of fraud,
delicence or contravention of the terms
of the obligation (Art. 1170)
Obligation of the debtor not to do
a. Not to do what has been forbidden
 b. To undo what has been done that is
forbidden
c. To bear the expenses of having some
else undo what has been done that is
forbidden
d. To pay damages if guilty of fraud,
delicence or contravention of the terms
of the obligation (Art. 1170)
Rights of the Creditor
1. Principle Rights/ Remedies
a. ask specific performance -
obligation to give specific thing
b. ask performance – generic thing
c. ask substituted performance –
generic thing
d. ask damages – all obligations
e. recession – specific scenarios
f. attachment and execution of
Debtor’s Properties – usually the
last remedy
2. Subsidiary Rights/ Remedies
a. Accion Subrogatoria – exercise all
the rights of the debtor
b. Accion Pauliana – to impugn
contracts that were entered to
defraud the creditor
Different types of breaches in Obligations
Art 1170: Those who in the performance of
their obligation are guilty of fraud, negligence,
or delay, and those who in any manner
contravene the tenor thereof, are liable for
damages.
1. Fraud – intentional
a. Casual Fraud (dolo causante) –
Fraud in obtaining consent
b. Incidental Fraud (dolo incidente) –
Fraud in the performance of the
obligation
2. Negligence – non-intentional
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a. Cupla aquiliana (quasi delicts) –
civil damages that are punished by
indemnification, without death
b. Cupla contractual (contract)
c. Culpa criminal (delict) – criminal
charges
3. Delay
a. Mora solvendi – delay of debtor
b. Mora accipiendi – delay of creditor
c. Compensatio Morae – delay of
both in reciprocal obligation
Different kinds of Delay
• Ordinary delay – arises when the
deadline is reached
• Legal delay – only arises when it is
demanded
A demand should be assertive.
2 different of Judicial
1. Judicial demand – issued by the
court
2. Extrajudicial demand – it is
necessary to vest the court for
jurisdiction. It is prerequisite to file a
case.
Judicial demand is not necessary when
1. Stipulated
2. The law so provides
3. The time is of the essence
4. Demand would be useless.
Gross Negligence – carelessness which is
in reckless disregard for the safety or lives of
others, and is so great it appears to be a
conscious violation of other people’s rights to
safety.
Art. 1171: Responsibility arising from fraud is
demandable in all obligations. Any waiver of
an action for future fraud is void.
Article 1172: Responsibility arising from
negligence in the performance of every kind
of obligation is also demandable, but such
liability may be regulated by the courts,
according to the circumstances.
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Art. 1173: The fault or negligence of the
obligor consists in the omission of that
diligence which is required by the nature of
the obligation and corresponds with the
circumstances of the persons, of the time and 1. Ordinary Fortuitous events –
of the place. common where the contacting parties
could reasonably foresee
What is negligence according to the 2. Extraordinary Fortuitous events –
Supreme Court? uncommon which the contracting
Negligence is conduct that creates undue risk parties could have not reasonably
or harm to another forseen

Tests to determine if the person is Prerequisites of a fortuitous events

negligent 1. Independent of human will
1. Reasonable care and caution of an 2. Could not be foreseen
ordinary prudent person. 3. Events must be impossible to render
2. No hard and fast rule for measuring for the obligor to comply
degree of care 4. Obligor must be free from any
participation
Factors to be considered
1. Nature of the obligation – e.g. smoking 2 types of impossibilities
while in possession of highly 1. Legal Impossibility
flammable materials
2. Circumstances of the person – e.g. a Exceptions
security guard on duty who is 1. Law or stipulation so declare
physically capable of protecting failed 2. Nature of the obligation requires the
to perform his obligation assumption of risk
3. Circumstances of time – driving 3. Obligation is other than obligation to
without headlights give a specific thing
4. Circumstances of the place – e.g. 4. Debtor is already in delay –
driving recklessly fast where hravy
traffic is present. Damages
1. Actual or Compensatory – requires
Fortuitus events exempts everyone for proof of pecuniary loss
accountability 2. Moral
3. Nominate
Art. 1174: Except in cases expressly 4. Temperate or Moderate
specified by the law, or when it is otherwise 5. Exemplary or Corrective
declared by stipulation, or when the nature of 6. Liquidated
the obligation requires the assumption of risk,
no person shall be responsible for those Note: If the loss or injury could have been
events which could not be foreseen, or which, avoided by human precaution, the defence of
though foreseen, were inevitable. (1105a) fortuitous event cannot be successfully
invoked.
Fortuitous Event – any extraordinary event
which cannot be foreseen, or which, Loan Sharking
foreseen, is inevitable. It is impossible to
avoid. Art. 1175: Usurious transactions shall be
governed by special laws.
Fortuitous events vs Force majeure
Usury – charging of exorbitant and
• Fortuitous events – unforeseeable conscionable rate of interest. Aka loan
events induced by acts of man. sharking.
• Force majeure – inevitable events
induced by acts of God. Does the usuary law still exist?
No, it is suspended by the Bangko Sentral.
Kinds of Fortuitous events

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You can attach any interest as long as you
will not enslave the borrows due to an
exacerbated interest of debt.
Kinds of Interest
1. Simple Interest
2. Compound Interest
3. Legal Interest
4. Lawful Interest
5. Unlawful Interest
Instalments
Art. 1176: The receipt of the principal by the
creditor without reservation with respect to
the interest, shall give rise to the presumption
that said interest has been paid.
The receipt of a later instalment of a debt
without reservation as to prior instalments,
shall likewise raise the presumption that such
instalments have been paid.
• Interest has been paid if a receipt was
already issued.
• In order to prevent this from
happening, state that an instalment is
still unpaid.
Presumption – an inference of fact not
actually knowing arising from its usual
connection with another which is known or
proved
Kinds of presumption
1. Conclusive Presumption – cannot be
contradicted
2. Disputable Presumption – can be
contradicted by presenting proof to the
court
If it is not indicated that ion the contract which
one to pay whether principal or interest first, it
will assume that the instalments are already
paid.
NOTE: Art 1776 is not applicable for tax
payments
Art 1177: The creditors, after having pursued
the property in possession of the debtor to
satisfy their claims, may exercise all the rights
and bring all the actions of the latter for the
same purpose, save those which are inherent
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in his person; they may also impugn the acts
which the debtor may have done to defraud
them.
The creditors have the right to the property if
the debt is not paid. The creditor has all the
rights except in the violation of one’s human
rights.
Rights of creditor
• Exact payment or fulfilment
• Exhaust debtor’s properties by
attachment
• Accion Subrogatoria – an action
where the creditor whose claims had
not been fully satisfied, may go further
after the debtors. The debtor of my
debtor is my debtor.
• Accion Pauliana – an action where
the creditor files an action in court for
the recission of acts or contracts
entered by the debtor designed to
defraud the former
Art. 1178: Subject to the laws, all rights
acquired in virtue of an obligation are
transmissible if there has been no stipulation
to the contrary.
Rights that do not fall under the exceptions
are considered assignable or alienable, but in
general, rights are transmissible except the
following:
a. Those not transmissible by their nature
like purely personal rights
b. Those not transmission by provision of
law
Natural Obligation - A natural obligation is
an obligation that has no legal basis and
hence does not give a right of action to
enforce its performance. It is based on equity,
morality, and natural law, and should be
voluntary.
Different Kinds of Obligations
Art 1179
Pure obligations – no condition or a term;
immediately demandable
Conditional Obligation – consequences are
subject in one way or another to the fulfilment
of a condition.
• Future and uncertain event
• Past event unknown to the parties
Two principal kinds of condition
a. Suspensive – birth of an obligation
b. Regulatory – extinguishes the
obligation
When is an obligation demandable?
1. When it is pure
2. When it has a resolutory condition
3. When it has a resolutory period
Art. 1180
Not conditional. It should be certain.
He is asking the court to fix the date.
Art 1181
It reiterates the difference between resolutory
and suspensive condition.
Suspensive Condition – acquisition of rights
Resolutory COndition – extinguishment or
loss of those already acquired
Art 1182
Types of conditions
a. Protestive – sole will of the debtor;
VOID (suspensive), VALID (resolutory)
- Potestative on debtor + Suspensive
= VOID
- Potestative on debtor + resolutory
= VALID
- Postestative in part of creditor =
VALID
b. Casual – depends on chance; VALID
c. Mixed – both; VALID
Art 1183
It is void if the conditions are impossible or
illegal.
Classification
a. Physically impossible conditions –
make a dead mind alive
b. Legally Impossible conditions –
prohibited by law
Art 1184
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2 types of conditions
a. Positive Conditions – to do
b. Negative Conditions – not to do
Art 1185
The obligation is deemed fulfilled if:
a. Time indicated has elapsed
b. Become evident that the event cannot
occur
c. No time has been fixed
Art 1186
Constructive fulfilment – voluntarily prevents
an obligation, it is deemed to be fulfilled.
Art 1187
Retroacts – the day of the obligation was
constituted.
Retroactive effect – extending in scope or
effect to a prior time or to conditions that
existed or originated in the past.
No retroactive effects on fruits and interests
a. Unilateral obligations – debtor gets
the fruits and interests
b. Reciprocal obligations – fruits and
interests should be deemed to
compensate each other
Art 1188
Rights pending fulfilment of suspensive
a. Rights of creditor – may take
appropriate actions for the
preservation of his right
b. Rights of debtor – entitled to recover
what he paid by mistake
Art. 1189 – loss deterioration and
improvement
Only applies if:
a.) Obligation is a real obligation
b.) Suspensive condition is fulfilled
c.) Object is specific not generic
d.) There is loss, deterioration, or
improvement of the thing
Loss – when something perishes; it refers to
the consumability or the life and the use of
the thing to be delivered; the purpose of the
contract is lost
a.) When it perishes
b.) Goes out of commerce (legal loss)
 c.) disappears in such a way that its
existence is unknown (civil loss)
d.) cannot be recovered (civil loss)
Deterioration
• value decreased or impaired
• Only affects an impairment on a thing
or a fixed asset
• The use of a thing only deteriorates
but the primary function still exists
Improvement – the value increased
• By nature
• Expense of the debtor
Legal implications
• Despite fortuitous event, he will still
fulfil the obligation since it is a generic
thing
• If something was lost due to
negligence, he/she will pay for the
damages
• For deterioration without the fault of
the debtor, the impairment is to be
borne by the creditor not the debtor.
• If deterioration due to negligence,
creditor may choose (a) recission +
damages; (b) fulfilment of the
obligation + damages
• For improvement due to nature and
time creditor will benefit
• For improvement due to the expense
of the debtor, the debtor can remove
the improvement if it will not cause
destruction or injury
Note:
- It is only when the thing
deteriorates the creditor has a
choice
- The creditor has no choice when
the thing is lost because the
specific thing was already lost
Usufructuary – the right to use someone
else’s property temporarily and to keep any
profit made from it.
Art 1190
When resolutory condition is fulfilled
a. Obligation is fulfilled
b. The parties should return or restore to
each other what they have received
including the fruits and interest
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Note: The effects for real obligations the court
are given the power to determine the
retroactivity effects of the fulfilment of the
condition.
Reciprocal obligation – both parties are
debtor and creditor to one another
Art 1191
The right to rescind of a contract.
Characteristics for the right to rescind
1. It exists only in reciprocal obligations
(both parties are obliged to perform an
obligation)
2. Can be demanded if the party is
ready, willing, and able to comply
with his obligations and the other is
not.
3. The right to rescind is implied
4. The right is not absolute. Apply to the
court for decree of recession.
o When the object is not
delivered, judicial
approval is not
necessary
o if it is in the stipulations
in the contract, judicial
approval is not
necessary
5. The remedies of the injured or
aggrieved party are alternative and not
cumulative.
o recission + damages
o fulfilment + damages
Fencing – an act of any person who, with
intent to gain for himself buys, receive, or
sells an item that a person knows, of should
know, was derived from the proceeds of
robbery or theft.
Art. 1192
Both parties are guilty of breach of obligation.
1. Infractor is known – damages to the
1st who violates is reduced
2. Infractor is unknown – obligation is
extinguished; both to shoulder
damages
Art 1193
• It must be fixed
 • Must take effect at once, but
terminates upon arrival of the day
certain
• Understood to be that which must
necessarily come, although it may be
unknown
• Uncertainty in whether the day will
come or not, the obligation is
conditional, and it shall be regulated by
the rules of the succeeding section
2 types of periods
1. Suspensive period (Ex die) – period
that makes the obligation demandable
2. Resolutory period (In die) – period
that terminates an obligation
Art 1194
Art 1195
• No recovery in personal obligations
Art 1196
General rule: if an obligation is designated by
a period, it should be for the benefit of both
unless otherwise stipulated.
Art 1197
When the court may fix a period
1. When the duration depends upon the
will of the debtor, if the period is void.
2. When although the obligation does not
fix a period, it can be inferred that a
period was intended from its nature
and circumstances
3. If the debtor binds himself when is
means permit him to do so (Art. 1180)
When the court may not fix a period
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1. When no term was specified by the
parties because no term was intended
2. When the obligation or note is payable
on demand
3. When the creditor fails to perform an
obligation which was has no period
indicated, he lost whatever right he
originally had to have the period fixed
4. When specific periods are provided for
in the law
Art 1198
Instances the debtor losses the benefit of the
period
1. Obligation has been contracted, he
becomes insolvent, unless he gives a
guaranty or security for the debt
2. He does not furnish 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 their
establishment, and when through a
fortuitous event they disappear, unless
he immediately fives new ones equally
satisfactory
4. When the debtor violates any
undertaking, in consideration of which
the creditor agreed to the period
5. When the debtor attempts to abscond
Alternative Obligation
Art 1199
Alternative – an alternative (or facultative)
obligation is one where out of the two or more
prestation which may be given, only one is
due.
• The creditor cannot forced the debtor
to accept alternatives
Art 1200
• The right of choice belongs to the
debtor, unless it has been granted to
the creditor
Limitation of the Debtor’s Choice
(a) Impossible
(b) Unlawful
(c) Not an object of the obligation (Art.
1200, par 2)
Art. 1201
 • The choice can be communicated Debtor or creditor Only the debtor
orally or in writing, expressly or may have the right
impliedly of choice
• Once the choice is made, the Illegality/ Illegality/
obligation becomes a simple obligation impossibility of one impossibility of the
• An election once made is binding on prestation does not prestation
the person who makes it. invalidate the whole invalidates the
Renouncement of his choice is not obligation whole obligation
permitted.

Art. 1202 Effects of loss

• The debtor will lose its right of choice if
only one of the choices is practicable
Art. 1203
• Rescission creates the obligation to
return the things which were the object
of the contract together with its fruits
and interest.
Art. 1204
Alternative rights of creditor when loss if
impossibility occurs before debtor’s choice
1. The right to choose belonged to the
debtor
2. Loss or impossibility happened before
selection was made
1. Fortuitous event – creditor can
choose among the remainder of the
alternative
2. Lost due to debtor’s fault – choose
among the remainder with claims of
damages or the price of the lost item
3. Everything is lost through debtor’s
fault – demand for payment with a
right to indemnity for damages
4. All lost due to fortuitous event –
obligation is extinguished. Art 1174
shall apply.
Joint and Solidary Obligation
Art. 1207

Art. 1205 Ordinary claim – 400k above

Rules when choice has been given to creditor
1. The article gives the rules. It cannot
just be implied.
2. The creditor loses the right to choose if
only one of the prestation id
practicable
3. Art 1205 does not apply when the
contract does not state to whom the
right to choose is given
Effect if creditor delays in making a choice
1. He cannot hold the debtor in default
despite the lapse of maturity
2. Debtor may petition to the court to
relieve himself
Art. 1206
Facultative Obligation – where only one
prestation has been agreed upon but the
obligor may render another in substitution
Alternative v Facultative
Alternative Facultative
2 or more Only one
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Small claims case – 400k below
Kinds of Obligation
1. Individual obligation – one obligor and
one obligee
2. Collective obligation – 2 or more
debtors
Joint & Solidary Obligation
1. Joint Obligation – to each his own
(obligation is to be paid or fulfilled
partially)
2. Solidary Obligation – one for all, all
for one (has a right to demand from
any of the debtors, entire compliance
with the prestation)
General Rule: When there are two or more
debtors or two creditors, the obligation is joit
therefore:
a. The debt shall be divided
b. The credits or debts shall be distinct
from one another
Exceptions:
 a. When there is stipulation in the
contract that the obligation is solidary
b. The nature of the obligation requires
liability to be solidary
c. When the law declares the obligation
to be solidary
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Instances when the law imposes solidary
liability
1. Obligation arising from tort/ quasi-
delict
2. Obligations arising from quasi
contracts
3. Legal provisions regarding the
obligation of devisees (d. real estate is
left by the terms of a will) and legatees
(d. a person who receives from legacy)
4. Liability of principals, accomplices, and
accessories of a felony
5. Bailees in commodatum (d. gartious
loan of movable property to be used
and returned by the borrower).
Bailee – a person or party whom goods are
delivered for a purpose, such as custody or
repair without transfer of ownership (e.g. valet
car services, banks, dry cleaners).
Art. 1208
• Shares or debt of the credit are
considered distinct
• Still subject to the rules of court
governing the municipality
• One creditor may sue one of the
debtors despite the plurality of the
obligor or oblige involved
• However, in light of the rules of court
to obtain a just, speedy, and
inexpensive trial, it is better to sue all
of them at once.
Synonyms
Joint Obligation
• Mancomunada
• Mancomunada simple
• Proportionate
• Pro rata
• We promise to pay – Joint Liab
Solidary Obligation
• Joint and several
• In solidum
• Mancomunada solidaria
• Juntos o separadamente
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• Individually and collectively
• Each will pay the whole value
• I promise to pay – Solidary Liab
Kinds of Solidary Liability
1. According to the parties bound
a. Passive Solidary – solidary on the
part of the debtors; anyone of them
can be made liable
b. Active Solidary – solidary on the
part of the creditors; anyone of
them can demand the fulfilment of
the entire obligation
2. According to Source
a. Conventional Solidary – solidary
agreed upon by the parties
b. Legal Solidary – solidary imposed
by law
c. Real Solidary – solidary imposed
by the nature of the obligation
Consequences of Joint Liability
1. Vitiated consent on the part of one
debtor does not affect the others
2. Insolvency of one debtor does not
make others responsible for his share
3. Demand by the creditor on one joint
debtor puts him in default, but not the
others since the debts are distinct
4. When the creditor interrupts the
running of the prescription period by
demanding judicially from one, the
others are not affected.
5. Defences of one debtor are not
necessarily available to the others
Liabilities of Partners
1. If it arises out of contract, the liability is
joint or pro rata
2. If it arises out of a crime or a quasi-
delict, the liability is solidary
Liabilities of Agents
• Joint unless stipulated by the
agreement
Liabilities of Co-principals (in Agency)
• Solidary
Liabilities of Husband and Wife
• After the conjugal funds are
exhausted, they are jointly liable
Liabilities of Human Relations Violators of stipulate that any solidary debtor
the Civil Code already bound may be made liable for
• The law does not state the nature of the entire obligation
the liability
• However, due to the violations are Art. 1212
either penal in nature or contrary to Solidary Creditors may do useful, not
morals, it is presumed to be in prejudicial acts
solidum. 1. Example of Beneficial Acts –
• It is due to the nature of the obligation - the prescription of the actions is
interrupted when they are filed before
Liabilities of the Employer and Employee the courts
for the Latter’s Tortious Act - either of the creditor demands the
• The liability of an employer is primary obligation from the debtor
and solidary with that of the 2. Prejudicial acts
employees. - should be performed otherwise there
• If the injured party does not appeal, will be liability for damages
the obligation ceases to be solidary. - if either of the creditor renounces the
obligation
Art. 1209
Indivisible Joint Obligation Art. 1213
• Indivisible referring to the object General Rule: The solidary creditor cannon
• Joint referring to the tie between the assign his rights.
parties
Transfer of rights to others is not permitted.
• What differentiates this from the other
obligation: Fulfilment requires the
Exception
consent of all the debtors, although
If the others consent
each for his part
Art. 1214
Art. 1210
To whom debtor must pay
Indivisibility – refers to the subject matter
a.) Any of the solidarity creditors
Solidarity – refers to the ties between the
parties
Exception: payment must be made to
solidary creditor who made a demand
Art. 1211
Kinds of Solidary Obligation according to
Art. 1215
legal tie
Effects:
1. Uniform – when the parties are bound
1. Novation – modification of an
by the same stipulations
obligation by changing its objects or
2. Non-uniform or varied – when the
principal conditions.
parties are not the subject to the same
– replaces the old obligation with a
stipulations
new obligation
Solidarity not affected by diverse stipulations
2. Compensation – takes place when
1. Essence of solidarity – consists in
two persons in their own right, are
the right of each creditor to enforce the
creditors and debtors of each other.
rights of all and the liabilities of each
- remedy that is awarded to an
debtor to answer for the liabilities of all
individual who has sustained an injury
2. Action against any of the solidary
in order to replace the loss caused by
debtors – creditor may bring his action
said injury
in to against any of the solidary
- off-sets the obligation against another
debtors less the shares of the other
obligation
debtors
3. Liability of any solidary debtor for
entire obligation – parties may • May be total or partial
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 • Total compensation extinguishes the
obligation
3. Confusion or Merger – the characters
of creditor and debtor are merged in
the same person
- creates a situation where the debtor
and creditor is the same person
4. Remission or Waiver – act of
liberality whereby a creditor condones
the obligation of the debtor, that where
the creditors tells the debtor to “forget
about the whole thing”.
- Forgiveness/condonation/waiver
the obligation
a. Total Remission
b. Partial Remission
Art. 1216
Right of Creditor to proceed against any
solidary debtor
• Not applicable to a joint obligation
• Choice is left to the solidary creditor to
determine against whom he will
enforce collection
Art. 1217
Payment – one of the ways by which an
obligation is extinguished in the delivery of
the thing or the rendition of the service which
is the object of obligation.
Effects of payment by a solidary debtor
1. Between the solidary debtors and
creditors – payment made by one of
the solidary debtors extinguished the
obligation.
2. Among the solidary debtors – after
payment of the debt, the paying
solidary debtor can request
reimbursement.
3. Among the solidary creditors – the
receiving creditor is jointly liable to the
others for their corresponding shares.
Art. 1218
• Reimbursement is not possible if the
obligation prescribes or becomes
illegal.
What is Prescription
- Through prescription rights are
either acquired or lost through the
lapse of time
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- The extinction of a right due to
lapse of time
a. Acquisitive Prescription –
through the lapse of time you
acquire rights
b. Extinctive Prescription –
through the lapse of time your
rights is extinguished
Reimbursement is not possible if either of
the two pre-requisites are met:
1. Obligation has already prescribed
2. Becomes illegal
The obligation will prescribe if a certain
time is reached by the following time
frame:
10 years:
1. Upon a written contract
2. Obligation created by law
3. Upon a judgment
Within 6 years
1. Upon an oral contract
2. Upon a quasi-contract
The following actions must be instituted
within 4 years
1. Upon an injury to the rights of the
plaintiff
2. Upon a quasi-delict
Art. 1219
The article is designed to prevent fraud.
• The remission made by the creditor of
the share does not release the other
debtor from fulfilling the obligation in
case either of them had totally paid.
• In case of remission, he will not have
to pay anything, but the creditor can
still ask him to collect the remaining
balance.
Art. 1220
Remission of the whole obligation
• Only applies when the whole obligation
is remitted.
• Remission is essentially gratuitous. It
is really a donation.
Art. 1221
Effects of loss or impossibility
a. If without fault – no liability
 b. If with fault – liability exists +
damages + interests
c. Due to fortuitous event AFTER
default – liability arises due to default
Art. 1222
Defences available to a solidary debtor
1. From nature of obligation – complete
defence because it nullifies the
obligation or renders it ineffective.
a. lack of consideration or cause
b. absolute simulation (as when the
contract is totally fictitious)
c. illegal consideration
d. extinguishment of the obligation
e. non-fulfilment of the suspensive
condition
f. Statue of Frauds
g. All debtors were incapacitated to
give consent (unemancipated
minors, insane idiots, persons
under a hypnotic spell)
h. Vices of consent is present (vitiated
consent) of all the debtors (e.g.
forced or intimidated)
2. Personal to debtor sued – complete
defence generally but if non-fulfilment
it is partial defence as it can be set by
the involved party with respect to his
share.
a. Vitiated consent (forced) -
COMPLETE
b. Incapacity to give consent (e.g.
minor) - COMPLETE
c. Non-fulfilment of condition imposed
regarding his share – PARTIAL
unless provided otherwise
d. Non-arrival of term – PARTIAL
NOTE: For minors 15 years of age under,
COMPLETE DEFENSE. This is known as
Child in Conflict with the Law (RA 9344
Sec. 6 – age; Sec 20 – release the child or
take to DSWD)
- For civil case, the parents will be
liable since the minor has no legal
capacity to represent himself to the
court.
3. Personal to other solidary debtors –
does not excuse him from his liability;
PARTIAL
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Art. 1223
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Art. 1226
Purposes of penal cause
- Ensure performance of the
obligation
- Substitute the indemnity for
damages and the payment of
interests in case of noncompliance
- Punish the debtor for the non-
fulfilment of his obligation
Note: You need to specify that the obligation
should not be prejudiced from other damages
so that the creditor will benefit.
Principal Obligation – can stand by itself
and does not depend for its validity
Accessory Obligation – attached to a
principal, obligation
Kinds of Penal clause
As to its origin
1. Legal Penal Clause – provided by law
2. Conventional penal clause - stipulated
by both parties
As to its purpose
1. Compensatory penal clause –
penalty takes the place of damages
2. Punitive penal clause – penalty us
imposed merely as punishment for
breach
As to demandability or effect
1. Subsidiary or alternative penal
clause – penalty can be enforced
2. Joint or cumulative penal clause –
both the principal obligation and the
penal clause can be enforced
When creditor may recover damages
(1) Stipulated by parties
(2) Obligor refuses to pay the penalty
(recover legal interest)
(3) Obligor is guilty of fraud in the
fulfilment of the obligation
Art. 1227
Purpose of the penal clause is to secure
compliance of the obligation. The debtor
cannot except himself from the performance
of the obligation by just paying the penalty.
Liquidated damages -
Art. 1228
Proof of actual damages suffered by the
creditor is not necessary in order that the
penalty may be demanded.
Art. 1229
When penalty may be reduced:
(1) When there is partial or irregular
performance
(2) When the penalty agreed upon is
iniquitous or unconcionable
Art. 1230
• If the penal clause is nullified, no effect
to the principal obligation
• If the principal obligation is nullified it
carries with it that of the penal clause
Extinguishment of Obligations
Art. 1231
Obligations are extinguished:
(1) By payment or performance
(2) By the loss of the thing due
(3) By the condonation or remission of
debt
(4) By the confusion or merger of the
rights if creditor and debtor
(5) By novation
Art. 1232
Payment may consist of not only in the
delivery of money but also the giving of a
thing
Art. 1233
When is the obligation paid
1. Integrity of the prestation
2. Identity of the prestation
Burden of proving payment
Creditor = obligation exist
Debtor = proving payment
Art. 1234
Recovery allowed in case of substantial
performance in good faith
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Requisites
(1) There must be substantial
performance
(2) The obligor must be in good faith
Art. 1235
When the oblige accepts performance,
knowing its incompleteness or irregularity,
and without expressing any protest or
objection, the obligation is deemed fully
complied with.
Principle of estoppel – a principle which
precludes a person from asserting something
contrary to what is implied by a previous
action or statement or by previous pertinent
judicial determination.
No particular manner is required for the
obligor to protest.
Art. 1236
Persons from whom the creditor must accept
payment
(1) The debtor
(2) Any person who has an interest in the
obligation
(3) A third person who has no intertest but
in the stipulation allows them to make
a payment
Effect of the payment from a third person
With the debtor’s knowledge and consent
(1) Reimbursement
(2) Subrogation – the payor steps into the
shoes of the creditor
Without the debtor’s consent or knowledge
(1) Beneficial reimbursement
Art. 1237
Whoever pays on behalf of the debtor w/o the
knowledge or against the will of the latter
cannot compel the creditor to subrogate him
in his rights
Subrogation – more than personal action;
debt is extinguished; recourse can be had to
the mortgage
Reimbursement – there is no recourse; new
creditor has different rights; only a personal
action to recover the amount.
Art. 1238
• Payment made by a 3rd person who
does not intend to be reimbursed by
the debtor is deemed to be a donation
• It requires the debtor’s consent
• No one should be compelled m to the
generosity of the other
Art. 1239
Effect of payment from a incapacitated
person
General Rule — if person has no capacity to
give:
(a) Payment is not valid – if accepeted
(b) Creditor cannot even be compelled to
accept it
(c) The remedy of consignation would not
be proper
Free disposal – thing to be delivered must not
be subject to any claim
Capacity to alienate – the person is not
incapacitated to enter contract
Art. 1240
To whom should the payment be made:
(1) Whose obligation has been
constituted/ creditor or obligee
(2) Successor in interest
(3) Person authorized by creditor and law
Art. 1241
First paragraph: deals with payment to an
incapacitated person
Second Paragraph: payment to an
unauthorized person
• Payment to a person incapacitated to
administer or manage his property is
not valid unless such incapacitated
person kept the thing paid.
Effect of payment to a third person
• Payment to a third person or wrong
part is not valid except it has
redounded to the benefit of the
creditor.
When benefit to creditor need not be proved
by debtor
(1) Subrogation of the prayer in the
creditor’s rights
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(2) Ratification by the creditor
(3) Estoppel on the part of the creditor
Art. 1242
Possession referred to under the above
provision is possession of the credit itself and
not merely of the document or instrument
• Payable to bearer – whoever have the
possession of the promissory note
shall release the debtor for his
obligation by acting in good faith.
• Payable to a specific person – only
one person can receive the payment
regardless who posseses the note.
Art. 1243
Garnishment – debtor of a debtor will not be
asked to pay to the 1st debtor.
Art. 1244
The debtor of a thing cannor compel the
creditor to receive a different one, although it
might be of the same value or greater.
Exceptions:
(1) Facultative obligation
(2) Other agreement resulting in (a) dation
in payment (b) novation
Art. 1245
Dation in payment shall be governed by the
law of sales
Dation in payment is the conveyance of a
thing as an accepted equivalenbt of
performance.
Art. 1246
The delivery of a generate thing cannot
request for the following:
Creditor – cannot demand a thing of superior
quality but can accept inferior quality
Debtor – cannon deliver a thing of inferior
quality but can deliver superior quality
Art. 1247
Debtor has the obligation to pay for the
extrajudicial expenses unless there’s a
stipulation that the creditor is obliged
otherwise.
Art. 1248
Payment must be complete except:
(1) When there is an express stipulation to
that effect
(2) Debt is in part liquidated
(3) When the different prestation in which
the obligation consists are subject to
different terms or conditions.
Art. 1249
BSP Circular No. 537 series of 2006
- Coins in denomination of 1 peso, 5
peso, and 10 pesos shall be the
legal tender in an amount not
exceeding 1,000
- Coins in denomination of 1 cent, 5
cents, 10 cents, and 25 cents, shall
be legal tender in an amount not
exceeding 100.
Creditor has the right to refuse and you
cannot compel him to accept the following
because it is not a legal tender
• Promissory notes
• Checks
• Bills of exchange
• Other commercial documents
Art. 1250
Inflation – sharp drop of the value of money
which resulted in an increase in the process
of goods and services in an economy.
Deflation – decrease in price level of goods
and services
Art. 1251
Where should the payment be made
(1) Place designated in the obligation
(2) Specific thing – at the place where the
thing was at the time of perfection
(3) Generic thing – must be made at the
domicile of the debtor
– if the debtor changed his domicile in
bad faith and incurred delay. Additional
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expenses to go to his place will be
bared by him
It should be without prejudice to venue under
the rules of court.
Art. 1252
Requisites of application of payments:
(1) There must be one debtor and one
creditor
(2) There must be two or more debts
(3) The debuts must be of the same kind
(4) All the debts are due
(5) The payment is not enough to
extinguish all debts
Art. 1253
If the debt produces interest, payment of the
principal shall not be deemed to have been
made until the interests have been recovered.
Art. 1254
Onerous = burdensome
Example of more onerous debt
(1) An interest-bearing debt than a non-
interest-bearing debt
(2) A debt as a sole debtor than as a
solidary debtor
(3) Older debts
(4) Debts secured by a mortage or by
pledge
(5) An obligation with a penal clause
Art. 1255
Cession of Payment or Assignment
- In favour creditor 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 latter may sell the same and
apply the proceeds thereof to the
satisfaction of their credits
Requisites
1. There must be 2 or more creditors
2. The debtor must be insolvent
3. The assignment must involve all the
proprieties of the debtor
4. The cession must be accepted by the
creditors.
Effects
 Unless there is a stipulation to the
contrary,
1. The assignment does not make the
creditors the owner of the property of
the debtor
2. The debtor is released from his
obligation only ip to the amount of the
net proceeds of the sale of the
property assigned. Unless there is
stipulation to the contrary.
Art. 1256
Tender of payment – the 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 cannot accept or refuses to
accept payment
- if the person refuses to pay without
logical reasoning the debtor can
deposit the money to the court and
the court will give it to the creditor.
Requisites of a valid consignation
(1) Existence of a valid debt which is due
(2) Valid prior payment by the debtor and
refusal without justifiable reason by the
creditor to accept it
(3) Previous notice of consignation to
persons interested in the fulfilment of
the obligation
(4) Consignation of the thing or sum due
(5) Subsequent notice of consignation or
sum due
(6) Subsequent notice of consignation
made to the interested parties
Tender of payment must be
1. Legal tender
2. Include interest
3. Unconditional
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Consignation 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 at the time it is due
3. When, without just cause, he refuses
to give a receipt
4. When two or more persons claim the
same right to collect
5. When the title of the obligation has
been lost
Art. 1257
In order that the consignation of the thing due
may release the obligor, it must be first be
announced to the persons interested in the
fulfilment of the obligation.
Essential requisites of consignation
1. Existence of a valid debt
2. Valid prior tender, unless tender is
excused
3. Prior notice of consignation
4. Actual consignation
5. Subsequent notice of consignation
Art. 1258
Consignation must be with proper judicial
authority
Art. 1259
The expenses of consignation, when properly
made, shall be charged against the creditor.
Art. 1260
Once the consignatuon has been duly made
the debtor may:
1. Ask the judge to order the cancellation
of the obligation
Before the creditor has accepted the
consignation before a judicial declaration, the
debtor may withdraw the thing, or the sum
deposited.
Art. 1261
Effect of withdrawal with authority of creditor
Since consignation is for the benfit of the
creditor, he may authorize the debtor to
withdraw the deposit after he has accepted
the same or after the court has issued an
order cancelling the obligation.
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