Cyrus A. Meneses- David Ateneo Law School
Obligations and Contracts Reviewer 2011- 2012
Book IV: Obligations and Contracts Title I OBLIGATIONS Chapter
1: General Provisions Article 1156 An obligation is a juridical
necessity to give, to do or not to do Requisites: 1. 2. 3.
Juridical tie which is the efficient cause established by the
various sources of obligations (Enumerated in Art. 1157) The object
required (to give, to do or not to do) Subject-persons who are the
active and the passive subjects. Persons Both Natural and Juridical
Persons. Elements of object/ prestation: 1. Must be possible,
physically and judicially; 2. Must be determinate; 3. Have a
possible equivalent in money. Juridical necessity = Legal Bind No
other sources of obligations other than those enumerated in this
title. Contracts 2 or more parties having a meeting of minds, in
good faith; the will of the parties is the force that creates the
obligation.
Article 1157 Obligations arise from: 1. 2. 3. 4. 5. Law;
Contracts; Quasi-contracts; Acts and omissions punished by law; and
Quasi-delicts.
Civil obligations give a right of action to compel their
performance. Natural obligations not being based on positive law
but on equity and natural law, do not grant a right of action to
enforce their performance, but after voluntary fulfillment by the
obligor, they authorize the retention of what has been delivered or
rendered by reason thereof. (Art. 1423 - 1430) Among the sources of
obligations, the law is the most important. It is imposed by the
State and is generally imbued with some public considerations.
Existing law enters into and forms part of a valid contract without
need for the parties expressly making reference thereto,
Article 1158 Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are
demandable, and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the
provisions of this Book.
A contract is understood to incorporate therein the provision/s
of law specifying the obligations of the parties under the
contract.
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Obligations and Contracts Reviewer 2011- 2012
Article 1159 Obligations arising from contracts have the force
of law between the contracting parties and should be complied with
in good faith.
Contract a meeting of minds between two persons whereby on binds
himself, with respect to the other, to give something or to render
some service. -- Contracts may likewise involve more than two
persons, whereby a right is acquired by at least one of them to an
act or acts, or to forbearance, on the part of other or others. A
contract may likewise involve mutual and reciprocal obligations and
duties between and among the parties.
Contracts, having the force of law between parties, stresses the
obligatory nature of a binding and valid agreement. In effect, non-
fulfillment may involve sanctions. As long as they are not contrary
to law, morals, good customs, public policy or public order, such
contract is the law between the parties. From the moment the
contract is perfected, the parties are bound not only to fulfill
what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good
faith, usage and the law. Negotiorum Gestio -(officious manager)
when somebody takes charge of the agency or management of the
business or property of another without any power form the latter.
The owner shall reimburse the gestor for the necessary and useful
expenses incurred by the latter, and for the damages suffered by
him in the performance of his functions. Solutio Indebiti a
juridical relation which takes place when somebody received
something from another without any right to demand for it, and the
thing was unduly delivered through mistake (compared to Art. 22 or
unjust enrichment wherein there was no mistake). Obligation to
return the thing arises on the part of the recipient.
Article 1160 Obligations derived from quasi-contracts shall be
the subject to the provisions of Chapter 1, title XVII of this
Book.
Arises from certain lawful, voluntary and unilateral acts give
rise to the juridical relation of quasi-contract to the end that no
one shall be unjustly enriched or benefited at the expense of the
other.
Article 1161 Civil Obligations arising from Criminal offenses
shall be governed by the penal laws, subject to the provisions of
Article 2177, and of the pertinent provisions of Chapter
Civil liability attaches to any individual who is found to be
criminally liable. A person who commits a crime may be penalized by
incarceration or payment of a fine or both.
Reason: Crime causes not only moral evil but also material
damage. (J. Mariano A. Albert) In contrast with penalty, civil
liability may apply to those exempt from criminal liability.
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2, Preliminary Title on Human Relations, and of Title XVII of
this Book, regulating damages. Article 1162 Obligations derived
from quasi-delicts shall be governed by the provisions of Chapter
2, Title XVII of this Book and by special laws. Whoever by act or
omission causes dame to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this
chapter. Basis: Principle of Equity Requisites of Liability: 1.
There exists a wrongful act or omission imputable to the defendant
by reason of his fault or negligence; 2. There exists a damage or
injury (proved by person claiming); 3. The must be a direct casual
connection or a relation between the fault/ negligence to the
damage/ injury.
Chapter 2: Nature and effect of Obligations Article 1163 Every
person obliged to give something is also obliged to take care of it
with the proper diligence of a good father of a family, unless the
law or the stipulation of the parties require another standard of
care. A generic thing/ indeterminate thing one that is indicated by
its kinds, without being designated and distinguished from the
others of the same kind. Something which is not particularized or
specified but has reference to a class or genus. Determinate thing
something which is susceptible of particular designation or
specification. It is one which is individualized and can be
identified or distinguished form the others of its kind. Article
1164 The creditor has a right to the fruits of the thing from the
time the obligation to deliver arises. However; he shall acquire no
real right over it until the same has been delivered to him. The
right to the fruits of the thing shall only be personal, and only
upon the delivery of the thing, its fruits, accessory and accession
shall the creditor acquire a real right over it. Real right direct
and immediate juridical power over a thing (rights of ownership
& possession) When does Obligation to deliver arise? a.
Perfection of contract if no term/condition; b. From the moment the
term/condition arrives if there is a term The creditor has a right
to the fruits of the thing from the time to deliver it arises. The
fruits referred involve only
Refers to an obligation to give Either determinate object/ thing
or generic thing diligence of a good father, since a father will
always do everything to take care of his concerns.
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determinate things. Personal rights power to demand of another
(passive subject) Article 1165 When what is to be delivered is a
determinate thing, the creditor, in addition to the right granted
him by Article 1170, may compel the debtor to make the delivery. If
the thing is indeterminate or generic, he may ask that the
obligation be compiled with at the expenses of the debtor. If the
obligor delays, or has promised to deliver the same thing or two or
more persons who do not have the same interest, he shall be
responsible for any fortuitous event until he has effected the
delivery. In non-delivery of a generic thing, the creditor may have
it accomplished or delivered in any reasonable and legal way
charging all expenses in connection with such fulfillment to the
debtor. Non-delivery of a determinate thing, creditor may compel
the debtor to make the delivery REMEDIES OF CREDITOR a.) Demand for
specific performance - This action presupposes that it is based on
a contractual relationship between the contending parties. Specific
performance is available even if the thing to be delivered is
indeterminate. b.) Rescission of the obligation, which is under
Art. 1380. c.) Resolution of the contract under Art. 1191 if it is
a reciprocal obligation. d.) Damages exclusively or in addition to
either of the first actions. Accessories item/s that come with
something Accessions something that is an addition to the thing.
General Rule: Obligation to deliver a specific thing is
extinguished by fortuitous event; Indeterminate thing is however
not extinguished. Exceptions: 1. If obligor delays or in default;
2. Obligor is guilty of bad faith.
Article 1166 The obligation to give a determinate thing includes
that of delivering all its accessories, even though they may not
have been mentioned. Article 1167 If the person obliged to do
something fails to do it, the same shall be executed at his
cost.
Coverage: a. The obligor failed to fulfill a positive personal
obligation, that is TO DO something; b. He fulfilled the obligation
but in contravention of the
Note: if any of the above happens, the creditor is entitled to
have the thing done in a proper manner, by himself or by a third
person, at the expense of the debtor. The court has no discretion
to merely award damages to the creditor when the act can be done in
spite of the refusal
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This same rule shall be observed if he does it in contravention
of the tenor of the obligations. Furthermore, it may be decreed
that what has been poorly done be undone. Article 1168 When the
obligation consists in not doing and the obligor does what has been
forbidden, it shall also be undone at his expense. Article 1169
Those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extra judicially demands from them
the fulfillment of their obligation. However, the demand by the
creditor shall not be necessary in order that delay may exist: (1)
When the obligation or the law expressly so declares; (2) When from
the nature and the circumstances of the obligation it appears that
the designation of the time when the thing is to be delivered or
the service is to be rendered was a controlling motive for the
establishment of the contract; or (3) When demand would be useless,
as when the obligor has rendered it beyond his power to perform. In
reciprocal obligations, neither party incurs in delay if the other
does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. From the moment one of the parties
fulfills his obligation delay by the other begins.
agreement; c. There was fulfillment but the same was poor or
inadequate.
or failure of the debtor to do so.
Reason for rule: prevent the debtor from taking his obligation
lightly.
Demand is generally necessary. Except when demand by Creditor
not necessary in order that delay may exist: a.) When there is an
express stipulation between the parties to that effect; b.) Where
the law so provides;
Kinds of delay: A. Mora Solvendi default on the part of the
debtor which may either be ex re (real obligations; obligations to
give) or ex persona (personal obligations; obligations to do) B.
Mora Accipiendi default on the part of the creditor
c.) When time or period is the controlling motive or the
principal inducement for the creation of the obligation; d.) When
demand would useless;
C. Compesatio Morae default on the part of both parties in
reciprocal obligations Commencement of a suit is a sufficient
demand.
e.) When the obligor admits he is in delay. Only two cases where
an extra-judicial demand should first be made prior to the filing
of a civil suit: i.) Ejectment cases ii.) Consignment cases
Requisites in order that the debtor may be in default: * in delay =
in default 1. 2. 3. That the obligation be demandable and already
liquidated; That the debtor delays performance; and That the
creditor requires the performance Obligor is liable for damages for
the delay not from the time the object of the prestation is to be
delivered but from the time of extra-judicial or judicial demand.
(This article is applicable only when the obligation is to do
something other than the payment of money)
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judicially and extra-judicially. (Default generally begins from
the moment the creditor demands the performance of the obligation.)
Article 1170 Those who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in any manner
contravene the tenor thereof, are liable for damages. Grounds for
Liability: 1. Fraud the voluntary execution of a wrongful act, or a
willful omission, knowing and intending the effect of such (malice/
dishonesty); 2. Negligence; 3. Default; and 4. Violation of terms
of obligations. Significantly, if any of the above co-exist with a
fortuitous event or aggravates the loss caused by a fortuitous
event, the obligor cannot be excused from being liable on his
obligation. Article 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. Article 1173 The fault or negligence of the obligor
consists in the omission of that diligence which is required by the
nature The dolo or fraud involved in Art. 1171 is a valid agreement
but, in the performance of the same, fraud is committed. Damages:
MENTAL (Moral, Exemplary, Nominal, Temperate, Actual, Liquidated)
Indemnity for damages consists of: a. That agreed upon; b. In
absence of agreement, legal rate of interest.
Kinds: 1. Culpa Contractual breach of contract 2. Culpa
Aquiliana civil negligence, tort or quasi-delict; 3. Culpa Criminal
criminal negligence that which results in commission of crime or a
delict. Negligence is the want of care required by the
circumstances. -- It is the omission of that diligence which is
required by
Prudential Bank vs. CA: Responsibility from negligence in the
performance of every kind of obligation is demandable. While in the
case at bar there was no bad faith, respondent still suffered
anxiety, embarrassment and humiliation. Hence, entitle to recover
(moral) damages Bad faith is a state of mind affirmatively
operating with furtive design or with some motive of ill will. It
is synonymous with fraud and involves a design to mislead or
deceive another, and/ or a sinister motive.
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of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad
faith, the provisions of articles 1171 and 2201, paragraph 2, shall
apply. If the law or contract does not state the diligence which is
to be observed in the performance, that which is expected of a good
father of a family shall be required. Article 1174 Except in cases
expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events
which could not be foreseen, or which, though foreseen, were
inevitable.
the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. General
rule: Negligence must always be proven. W/o stipulation of degree
of care required: Always be deemed to be diligence of a good father
General rule: No one should be held to account for fortuitous
cases. a.) The cause of the breach of the obligation must be
independent of the will of the debtor; b.) The event must be either
unforeseeable or unavoidable; c.) The event must be such as to
render it impossible for the debtor to fulfill his obligation in a
normal manner; and d.) The debtor must be free from any
participation in, or aggravation of the injury.
(Articles 1171 and 2
nd
paragraph of 2201 shall apply)
Negligence absence of due care required by the obligation.
Note: o An obligation consisting of the delivery of a specified
thing shall be extinguished when the said thing shall be lost or
destroyed without the fault of the obligor and before he is in
default. o The obligor is released from liability no only when the
non-performance of the obligation is due to fortuitous events, but
also when it is due to the act of the creditor himself, such as
defective packing Yobido v. CA: Defendants must still prove that it
was not negligent in causing the death or injury resulting from an
accident. Petitioners should have shown that it undertook
extraordinary diligence in the care of its carrier, such as
conducting daily routinely check-ups of the vehicle's parts.
Usurious transactions contracting for or receiving something in
excess of the amount allowed by law for the loan. Monetary interest
interest given for compensation or use of money Compensatory
interest interest given by way of damages
Article 1175 Usurious transactions shall be governed by special
laws.
A special law may either prohibit usurious interest, allow it,
or merely put a ceiling as to what can be the highest interest that
can be legally imposed.
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Article 1176 The receipt of the principal by the creditor
without reservation with respect to the interest, shall give rise
to the presumption that said interest has been paid. The receipt of
a later installment of a debt without reservation as to prior
installments shall likewise raise the presumption that such
installments have been paid. Article 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
in his person; they may also impugn the acts which the debtor may
have done to defraud them.
If an obligation consists in the payment of principal and
interest, the payment of the principal without reservation is the
fact that will give rise to the presumption that the interest on
the principal has already been paid. (Interest is normally paid
first) Burden of proof to the contrary lies to the creditor.
Example, mode of payment by installments.
The creditor after exhausting all means to satisfy his claim, is
given the opportunity to bring all actions which the obligor can
institute against his own debtors to protect and satisfy his claims
against the said obligor. Successive measures taken by a creditor
before he may bring an action for rescission of an allegedly
fraudulent sale: (1) Exhaust the properties of the debtor through
levying by attachment and execution upon all the property of the
debtor, except such as are exempt by law from execution; (2)
Exercise all the rights and actions of the debtor, save those
personal to him (accion subrogatoria); and (3) Seek rescission of
the contracts executed by the debtor in fraud of their rights
(accion pauliana)
Rights of Creditors: 1. Exact payment; 2. Exhaust debtors
properties generally by attachment; 3. Subrogatory action exercise
all rights and actions except inherent rights; 4. Impugn/rescind
acts or contracts done by debtor to defraud them.
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Article 1178 Subject to the laws, all rights acquired in virtue
of an obligation are transmissible, if there has been no
stipulation to the contrary.
The person who transmits the right cannot transfer greater
rights than he himself has by virtue of the obligation. The person
to whom the rights are transmitted can have no greater interest
that that possessed by the transmitter at the time of transmission
of the rights. The rights of the transferee do not rise higher than
the transferor. No transmission can be made of a particular right
if the personal qualifications or circumstances of the transferor
is a material ingredient attendant in the obligation.
General Rule: All rights acquired in virtue of an obligation are
transmissible. Exceptions: 1. If law provides otherwise; 2. If
contract provides otherwise; 3. If obligation is purely personal
Note: The exceptions refer to: a. Those not transmissible by their
nature, i.e. purely personal rights; and b. Those not transmissible
by law or by stipulation of the parties.
Chapter 3: Different Kinds of Obligations Section 1 Pure and
Conditional Obligations Article 1179 Every obligation whose
performance does not depend upon a future or uncertain event, or
upon a past event unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition shall also
be demandable, without prejudice to the effects of the happening of
the event. Pure obligation An unqualified obligation which is
demandable immediately. It is an obligation whose performance whose
performance does not depend upon a future or uncertain event, or
past event unknown to the parties. Conditional obligation
performance depends upon a future or uncertain event or upon a past
event unknown to the parties. Classifications of Conditions:
Suspensive upon happening of the future or condition, gives rise to
the performance of the obligation. Resolutory upon happening of
event/condition Condition an act or an event, other that a lapse of
time, which, unless the condition is excused, must occur before a
duty to perform a promise in the agreement arises or which
discharges a duty of performance that has already arisen. When an
Obligation is demandable at once: a. When it is pure; b. When it
has resolutory condition. (Because the once the condition is
established and acknowledged, the right immediately exists and
therefore the obligation concomitant to the right can be demanded
at once.
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extinguishes the obligation. Article 1180 When the debtor binds
himself to pay when his means permit him to do so, the obligation
shall be deemed to one with a period, subject to the provisions of
Article 1197 (Courts determination) Article 1181 In conditional
obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon
the happening of the event which constitutes the condition. Should
the creditor file an action it should be prior to the courts
affixing of its demandability.
Time when payment is to be made depends upon the debtor The
moment of payment is dependent upon the will of he debtor but not
the payment.
This provision provides that a condition, whether suspensive or
resolutory, can do to the existence or extinguishment of a
right.
Suspensive (Condition precedent/ antecedent) An act or an event,
other that a lapse of time, which must exist or occur before a duty
to perform a promised performance, arises. Resolutory (Condition
subsequent) An event, the existence of which, by agreement of the
parties, operates to discharge a duty of performance that has
arisen.
Article 1182 When the fulfillment of the condition depends upon
the sole will of the debtor, the conditional obligation shall be
void. If it depends upon a chance or upon the will of a third
person, the obligation shall take effect in conformity with the
provisions of this Code.
Is a potestative resolutory condition Void? No, because a
resolutory condition is always potestative. Is a potestative
suspensive condition Void? It is always void, no exception. Is the
obligation Void? It depends. If the potestative condition refers to
the birth of the obligation, then it is always Void. If the
potestative condition refers to the performance of the obligation,
obligation is valid because in this case, the obligation becomes
simple. What then should the creditor do in case of a potestative
suspensive condition which refers to the performance of the
contract? He must go to court
Potestive conditions depends on the exclusive will of one of the
parties
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to have the period fixed (Patente v. Omega) Article 1183
Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which
depends upon them. If the obligation is divisible, that part
thereof is not affected by the impossible or unlawful condition
shall be valid. The condition not to do an impossible thing shall
be considered as not having been agreed upon. 1. If condition is to
do an impossible or illegal thing CONDITION & OBLIGATION ARE
VOID. Ex: Ill sell you my land if you can make a dead man live
again 2. If condition is negative (not to do) DISREGARD CONDITION
BUT OBLIGATION REMAINS. Ex: Ill sell you my land if you cannot make
a circle that is at the same time a square 3. If condition is
negative (not to do an illegal thing) BOTH CONDITION &
OBLIGATION ARE VALID. Ex: Ill sell you my land if you do not kill
X. Article 1184 The condition that some event happen at a
determinate time shall extinguish the obligation as soon as the
time expires or if it has become indubitable that the event will
not take place. Article 1185 The condition that some event will not
happen at a determinate time shall render the obligation effective
from the moment the time indicated has elapsed, or if it has become
evident that the event cannot occur. If no time has been fixed, the
condition shall be deemed fulfilled at such time as may have
probably been contemplated, bearing in mind the nature of the This
article deals with the existence of an obligation as soon as the
condition happens at a particular time and it is extinguished
should the condition not happen. Impossible Conditions physically
not possible Ex: to make a dead man live Illegal Conditions
Prohibited by good customs, public policy, and law Ex: killing a
person
This article deals with the effectivity of an obligation in case
the condition does not happen at a particular time. 2nd
paragraph talk of a condition which has no time fixed
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obligation. Article 1186 The condition shall be deemed fulfilled
when the obligor voluntarily prevents its fulfillment. Also known
as, Constructive fulfillment, it is considered to constitute a
breach of contract therefore are unwarranted and unlawful. There is
constructive fulfillment only if the act of the debtor had in fact
prevented compliance with the condition. Requisites: 1. Voluntarily
made either malicious or not, the intent to prevent must be present
2. Actual Prevention Intention and prevention must come together
otherwise, this article will not apply Article 1187 The effects of
a conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the
obligation. Nevertheless, when the obligation imposes reciprocal
prestations upon the parties, the fruits and interests during the
pendency of the condition shall be deemed to have been mutually
compensated. If the obligation is unilateral, the debtor shall
appropriate the fruits and interests received, unless from the
nature and circumstances of the obligation it should be inferred
that the intention of the person constituting the same was
different. In obligations to do and not to do, the courts shall
determine, in each case, the retroactive effect of the condition
that has been complied with. Applies only to obligations subject to
a suspensive condition. In conditional obligation, to give, once
fulfilled, shall retroact to the day of the constitution of
obligation. In reciprocal obligations the fruits and interests
during the pendency of condition shall be deemed to have been
mutually compensated In unilateral obligations the debtor shall
appropriate the fruits and interests received UNLESS from the
nature of the obligation it should be inferred that the intention
of person was different. In Obligation to do or not to do the Court
shall determine the retroactive effect of condition that has been
complied with. General Rule: effects of a fulfilled conditional
obligation shall retroact to the day the obligation was
constituted. Exceptions: 1. No retroactivity for fruits and
interests 2. Period of prescription (the period shall only be
counted from the day the condition was fulfilled) Example on
suspensive condition: A must give B a car when the latter shall
pass the bar. On the day of the exams, A caused B to be poisoned
and hospitalized. A (debtor) is still liable. Example on resolutory
condition: A gave a car to B revocable when the latter shall fail
the bar. On the day of the exams, A caused B to be poisoned and
hospitalized. A(debtor) cannot revoke the donation
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Article 1188 The creditor may, before the fulfillment of the
condition, bring the appropriate actions for the preservation of
his right. The debtor may recover what during the same time he has
paid by mistake in case of a suspensive condition.
Appropriate actions for the creditor to preserve his rights: 1.
Action for prohibition restraining the alienation of the thing
pending the happening of the condition 2. Petition for the
annotation of the creditors right, if real property is involved; 3.
Action to demand security in case the debtor becomes insolvent; 4.
Action to set aside alienations made by the debtor in fraud of the
creditors 2nd Par: a case of solutio indebiti (undue payment) if
creditor is in bad faith, debtor is entitled to fruits and
interests.
General Rule: Recovery is allowed of payment was made mistakenly
Exception: 1. When the payment was made knowingly and the condition
is already fulfilled, there is no recovery 2. When the payment was
made knowingly but the condition is not yet fulfilled, there can be
recovery because the creditor cannot be unjustly enriched
Article 1189 When the conditions have been imposed with the
intention of suspending the efficacy of an obligation to give, the
following rules shall be observed in case of the improvement, loss
or deterioration of the thing during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the
obligation shall be extinguished; (2) If the thing is lost through
the fault of the debtor, he shall be obliged to pay damages; It is
understood that the thing is lost when it perishes or goes out of
commerce or disappears in such a way that its existence is unknown
or it cannot be recovered; (3) When the thing deteriorates without
the fault of the debtor, the impairment is to be borne by the
creditor;
This article applies only if: i. ii. the suspensive condition is
fulfilled; and the object is specific and not generic
Loss -
When the improvement is partly because of nature and debtor, the
creditor shall enjoy the fruits by nature and the debtor will have
rights of a usufrustuary over those benefits caused at his
expense
-
When it perishes When it goes out of commerce of man (when the
thing becomes illegal) When it disappears in such a way that its
existence is unknown (missing in action) When it disappears in such
a way that it cannot be recovered (when a ring got lost in the
middle of the ocean)
Partial Loss - if substantial, would amount to complete loss -
if not substantial, would only be considered as deterioration
Remedies of the Creditor: 1. Rescission plus damages 2. Specific
Performance plus damages Usufruct the right to the enjoyment of the
use and the
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(4) If it deteriorates through the fault of the debtor, the
creditor may choose between the rescission of the obligation and
its fulfillment, with indemnity for damages in either case; (5) If
the thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor; (6) If it is improved
at the expense of the debtor, he shall have no other right than
that granted to the usufructuary. Article 1190 When the conditions
have for their purpose the extinguishment of an obligation to give,
the parties, upon the fulfillment of said conditions, shall return
to each other what they have received. In case of the loss,
deterioration or improvement of the thing, the provisions which,
with respect to the debtor, are laid down in the preceding article
shall be applied to the party who is bound to return. As for the
obligations to do and not to do, the provisions of the second
paragraph of article 1187 shall be observed as regards the effect
of the extinguishment of the obligation. Article 1191 The power to
rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him. The
injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case. He
may also seek rescission, Characteristics of the Right to Rescind:
1. 2. It exists only in reciprocal obligations It can be demanded
only if the plaintiff is ready, willing and able to comply with his
own obligation and the other is not. (he who comes to equity must
come with clean hands) Trivial causes or slight breaches will not
cause rescission Once a resolutory condition is fulfilled, the
obligation is extinguished. There must be a restitution of what has
been obtained. Effects when the resolutory condition is fulfilled:
1. The obligation is extinguished 2. Mutual Restitution of actual
benefits 3. Mutual restitution of fruits and interests 4. Court
shall determine the retroactivity of the fulfilment of the
resolutory conditions 5. Article 1189 shall govern losses,
deteriorations and improvements if any
fruits of a thing
In obligations to do and not to do, the court shall determine
the effect of the extinguishment of the obligation.
Reciprocal obligations those which arise from the same cause and
in which each party is both debtor and a creditor of the other,
such that the obligation of one is dependent upon the obligation of
the other. Rescission power to cancel a contract or reciprocal
obligations predicated not on injury to economic interests but on
breach of faith. Rescission Nullifies (as opposed to annul) the
obligation and entails mutual
3.
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even after he has chosen fulfillment, if the latter should
become impossible. The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing of a period. This
is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with articles
1385 and 1388 and the Mortgage Law.
4. 5. 6. 7. 8.
If there be just cause for fixing the period within which the
debtor can comply, the court will not decree a rescission If the
property is now in the hands of an innocent third party who has
lawful possession of the same, rescission will not prosper The
right to rescind needs judicial approval when there is already
delivery of the object. Otherwise, there is no need for judicial
approval The right to rescind is implied to exist and therefore
need not expressly stipulated on. The right to rescind may be
waived, expressly or impliedly
restitution of benefits. For rescission to prosper, the breach
should be Substantial Padilla v. Paredes: The right of rescission
of a party to an obligation under Article 1191 of the Civil Code is
predicated on a breach of faith by the other party who violates the
reciprocity between them. The breach contemplated in the said
provision is the obligors failure to comply with an existing
obligation. When the obligor cannot comply with what is incumbent
upon it, the obligee may seek rescission and, in the absence of any
just cause for the court to determine the period of compliance, the
court shall decree the rescission. Note: Where both parties have
committed a breach of obligation, and it cannot be determined who
was the first infractor, the contract shall be deemed extinguished
and each shall bear his own damages. Remedies of the Creditor: 1.
Rescission plus damages OR 2. Specific Performances plus damages 3.
Rescission plus damages when Specific Performance fails or becomes
impossible *Damages must be sought in the same action for specific
performance, otherwise, it is deemed waived.
Breaches in Lease Contracts: 1. 2. If the creditor selects
specific performance, he can collect the accrued rent (arrears)
plus the future rent of the unexpired term If the creditor selects
rescission, he gets only the arrears and the ejectment of the
debtor plus damages but not the future rents of the unexpired
term.
Article 1192 In case both parties have committed a breach of the
obligation, the liability of the first infractor shall be equitably
tempered by the courts. If it cannot be determined which of the
parties first violated the contract, the same shall be deemed
extinguished, and each shall bear his own damages.
Also known as: Pari delicto
Offset equitably where both parties are in default, their
respective liability for damages shall be offset equitably.
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Section 2 Obligations with a Period Article 1193 Obligations for
whose fulfilment a day certain has been fixed, shall be demandable
only when that day comes. Obligations with a resolutory period take
effect at once, but terminate upon arrival of the day certain. A
day certain is understood to be that which must necessarily come,
although it may not be known when. If uncertainty consists in
whether the day will come or not, the obligation is conditional and
it shall be regulated by the rules of the preceding section. Period
A certain length of time, which determines the effectivity or the
extinguishments of obligations. It consists in a space of time
which has an influence on obligations as a result of a judicial
act, and either suspends their demandableness, or produces their
extinguishment. Period v. Condition: A. As to their fulfillment 1.
A condition is an uncertain event; 2. A period is an event which
must happen sooner or later at a date known beforehand or a time
which cannot be determined. B. With reference to time 1. Period
refers to future; 2. Condition may under the law refer to past. C.
As to Influence on the obligation 1. Condition causes an obligation
to arise or to cease; 2. Period merely fixes the time or the
efficaciousness of an obligation. Kinds of Period: A. 1. Definite
the exact time or date is known and given 2. Indefinite something
that will surely happen, but the date of happening is not known B.
1. LEGAL period granted under the provisions of the law 2.
CONVENTIONAL/VOLUNTARY period agreed upon or stipulated by the
parties A day certain understood to be that which must necessarily
come, although it may not be known when. Requisites of a Valid
Period or Term: 1. 2. 3. It must refer to the future It must be
certain (sure to come) but can be extended It must be physically
and legally possible, otherwise the obligation is void
When does Prescription begin? - The period of prescription
begins from the time the term in the obligation arrives, for it is
only from that date that it is due and demandable. When can
extensions of period be appreciated? - Evidences of extension of
period, if any be given, must be shown by the debtor
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3. JUDICIAL the period or term fixed by the courts for the
performance of an obligation or for its termination C. 1. EX DIE a
period with a suspensive effect (Ex: I will support you starting
January 1) 2. IN DIEM a period with a resolutory effect (Ex: I will
support you until Janurary 1) Article 1194 In case of loss,
deterioration or improvement of the thing before the arrival of the
day certain, the rules in article 1189 shall be observed.
Applicable in case there is loss, deterioration or improvement of
the thing which is the object of the prestation during the pendency
if the condition suspending the efficacy of an obligation to give.
Thing Is Lost When: 1. It perishes. 2. It goes out of commerce. 3.
It disappears in such a way that its existence is unknown. 4. It
disappears in such a way that it cannot be recovered. Note: Genus
nunquam perit in an obligation to deliver generic thing the loss or
destruction of anything of the same kind does not extinguish the
obligation. If the thing is lost through the fault of the debtor,
he shall be obliged to pay damages. If the thing deteriorates
through the fault of the debtor, the creditor may choose between
(1) rescission of the agreement or obligation plus damages, or (2)
fulfillment of the obligation plus damages. If the thing is
improved by nature, or by time, the creditor gets the benefit. If
the thing has improved through the expense of the debtor, he shall
have the rights granted to a usufructuary for improvements on a
thing held in usufruct. Example: A was supposed to pay B P1million
on Dec. 31, 2005. But believing that the obligation was due and
demandable on Dec. 31, 2004, A paid B the P1million on said date.
How much may A recover from b, say on Jun. 30, 2005? A may recover
from B on jun. 30, 2005 the amount of P1million which has been
prematurely paid plus interest (legal rate of 6%= P30,000 the
interest for only half a year). So A may recover a total of
P1million from B. Of course, when Dec. 31, 2005 finally arrives, a
is supposed to give B the P1million. Here A is allowed to recover
what has been prematurely paid, plus interest of
Article 1195 Anything paid or delivered before the arrival of
the period, the obligor being unaware of the period or believing
that the obligation has become due and demandable, may be
recovered, with the fruits and interests.
This article applies only to obligation TO GIVE. It is similar
to Article 1188, par. 2, which allows the recovery of what has been
paid by mistake before the fulfillment of a suspensive condition.
The creditor cannot unjustly enrich himself by retaining the thing
or money received before the arrival date of the period. (De Leon)
This article has no application to obligations To do or Not to do
because as to the former, it is physically impossible to recover
the service rendered, and as to the latter, as the obligor performs
by not doing, he
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cannot, of course recover what he has not done. (Manresa) Debtor
has the burden of proving that he was unaware of the period. The
debtor may not recover the thing or money once the period has
arrived but he can recover the fruits or the interests thereof from
the date of premature performance to the date of maturity of the
obligation. (De Leon) (RECOVERY MUST BE MADE BEFORE THE DEBT
MATURES)
course. Q: Suppose in the preceding problem, A had paid
prematurely knowing fully well of the existence of the term, how
much can A recover? A: A can recover nothing. The reason is the law
does not give him such right. To be able to recover, A: 1. Must
have been unaware of the period; or 2. Must have believed that the
obligation has become due and demandable.
Article 1196 Whenever in an obligation a period is designated,
it is presumed to have been established for the benefit of both the
creditor and the debtor, unless from the tenor of the same or other
circumstances it should appear that the period has been established
in favor of one or of the other.
General Rule: term is for the benefit of either the debtor or
the creditor. (The debtor cannot pay prematurely and the creditor
cannot demand prematurely) Exception: (if there be such intent,
express stipulation of the parties) Term is for the benefit of the
debtor alone he cannot be compelled to pay prematurely, but he can,
if he desires to do so. Term is for the benefit of the creditor
alone he may demand fulfillment even before the arrival of the term
but the debtor cannot require him to accept payment before the
expiration of the stipulated period. When the Court may not fix the
term: 1. When no term was specified because no term was ever
intended; 2. When the obligation or not is payable on demand; 3.
When specific periods are provided for in the law; 4. When what
appears to be a term is really a condition;
Article 1197 If the obligation does not fix a period, but from
its nature and the circumstances it can be inferred that a period
was intended, the courts may fix the duration thereof.
General Rule: The courts cannot fix a period. Exception: when
the courts may fix a period. 1. If it depends upon the will of the
debtor. Example: when my means permit me to do so; Ill pay you
little by little 2. Although the obligation does not fix a period,
it can be inferred that a period was intended.
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The courts shall also fix the duration of the period when it
depends upon the will of the debtor. In every case the courts shall
determine such period as may under the circumstances have been
probably contemplated by the parties. Once fixed by the courts, the
period cannot be changed by them. Article 1198 The debtor shall
lose every right to make use of the period: 1. 2. 3. When after the
obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt; When he does not furnish
to the creditor the guaranty or securities which he has promised;
When by his own acts he has impaired said guaranty or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new ones equally
satisfactory. When the debtor violates any undertaking, in
consideration of which the creditor agreed to the period; When the
debtor attempts to abscond.
Example: A contract to construct a house where the period was
not stated.
5. When the period w/in which to ask the court to have the
period fixed has itself already prescribed.
When obligation can be demanded before the lapse of the period
General Rule: Obligation is not demandable before the lapse of the
period. However, in any cases mentioned in Article 1198, the debtor
shall lose every right to make use of the period, that is, the
period is disregarded and the obligation becomes pure and,
therefore demandable at once. The exceptions are based on the fact
that the debtor might not be able to comply with his obligation.
(INIVA) 1. When debtor becomes insolvent. 2. When debtor does not
furnish guaranties or securities promised. 3. When guaranties or
securities given have been impaired or have disappeared. 4. When
debtor violates an undertaking. 5. When debtor attempts to
abscond.
Note: the insolvency referred to does not have to be judicially
declared; it is sufficient for him to find a hard time paying off
his obligations because of financial reverses that have made his
assets less than his liabilities.
4. 5.
Section 3 Alternative Obligations Article 1199 A person
alternatively bound by different prestations shall completely
perform one of them. The creditor cannot be compelled to receive
part of one Alternative(Facultative) Obligation one where out of
the two or more prestations which may be given, only one is due.
Example: A will give B this car or this ring or this pen. A is not
obliged to give all three things. The giving of one object shall
satisfy the obligation.
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and part of the other undertaking.
*A cannot compel B to accept half the car and half the pen
(thus, establishing a co-ownership) Who has the right of Choice?
General Rule: Right belongs to the Debtor Exception: It may belong
to the creditor when such right has expressly been granted to him.
Limitation on the debtors choice - the debtor shall have no right
to choose those prestations which are: 1. Impossible 2. Unlawful 3.
Which could not have been the object of the obligation
Article 1200 The right of choice belongs to the debtor, unless
it has been expressly granted to the creditor. The debtor shall
have no right to choose those prestations which are impossible,
unlawful or which could not have been the object of the obligation.
Article 1201 The choice shall produce no effect except from the
time it has been communicated.
Means of notification or communication to other party of choice:
1. Orally or in writing; 2. Expressly or impliedly Effect of notice
that choice has been made: Once notice has been made that a choice
has been done, the obligation becomes a simple obligation to do or
deliver the object selected.
Requisites for making a choice: 1. Made properly so that
creditor or agent will know; 2. Made with full knowledge that a
selection is indeed being made (if there is error choice can be
annulled) 3. Made voluntarily and freely (no force, coercion etc. )
4. Made in due time and that is before or upon maturity; 5. Made to
all the proper persons; 6. Made w/o conditions unless agreed to by
the creditor; 7. May be waived, expressly/impliedly. Example:
Objects A, B, & C. A&B are destroyed; C can only be
delivered- if C is destroyed (fortuitous event) obligation is
extinguished.
Article 1202 The debtor shall lose the right of choice when
among the prestations whereby he is alternatively bound, only one
is practicable. Article 1203 If through the creditors acts the
debtor cannot make a choice according to the terms of the
obligation, the latter may rescind the contract with damages.
Example: For P200k D promised to teach C math for the year 2005
or to buy him a state-of-the-art computer notebook. If in 2005, C
goes to Germany, D obviously cannot teach him and since D is
deprived of the right to choose because of Cs own act, D may
either:
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Buy the state-of-the-art laptop; Or rescind the contract with
the right to recover whatever damages he has suffered. *Contract
not automatically rescinded. Article 1204 The creditor shall have a
right to indemnity for damages when, through the fault of the
debtor, all the things which are alternatively the object of the
obligation have been lost, or the compliance of the obligation has
become impossible. The indemnity shall be fixed taking as a basis
the value of the last thing which disappeared, or that of the
service which last became impossible. Damages other than the value
of the last thing or service may also be awarded. Article 1205 When
the choice has been expressly given to the creditor, the obligation
shall cease to be alternative from the day when the selection has
been communicated to the debtor. Until then the responsibility of
the debtor shall be governed by the following rules: (1) If one of
the things is lost through a fortuitous event, he shall perform the
obligation by delivering that which the creditor should choose from
among the remainder, or that which remains if only one subsists;
(2) If the loss of one of the things occurs through the fault of
the debtor, the creditor may claim any of those subsisting, or the
price of that which, through the fault of Effect if Creditor delays
in making the choice: He cannot hold the debtor in default for the
debtor does not know what to deliver; If debtor wants to relieve
himself from the obligation, he may petition the court to compel
Creditor to accept in the alternative, at the petitioners option
with damages. Alternative Rights of Creditor When Loss or
Impossibility Occurs Before the Debtors Choice This article applies
when: 1. The right to choose belonged to the debtor; 2. And the
loss or impossibility happened before selection was made.
1. 2.
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the former, has disappeared, with a right to damages; (3) If all
the things are lost through the fault of the debtor, the choice by
the creditor shall fall upon the price of any one of them, also
with indemnity for damages. The same rules shall be applied to
obligations to do or not to do in case one, some or all of the
prestations should become impossible. Article 1206 When only one
prestation has been agreed upon, but the obligor may render another
in substitution, the obligation is called facultative. The loss or
deterioration of the thing intended as a substitute, through the
negligence of the obligor, does not render him liable. But once the
substitution has been made, the obligor is liable for the loss of
the substitute on account of his delay, negligence or fraud.
Facultative Obligation it is one where only one prestation has been
agreed upon but the obligor may render another in substitution.
Example: D promised to give C his diamond ring but it was
stipulated that D could give his BMW as a substitute
ALTERNATIVE 1. Various things are due, but giving of one is
enough 2. If one prestation is illegal, others may be valid and the
obligation remains 3. If it is impossible to give all except one,
the one left must still be given 4. The right to choose may be
given either to debtor/creditor
FACULTATIVE 1. Only one thing is principally due but may be
substituted 2. If principal obligation is void, giving of the
substitute is no longer necessary. (Nullity of Principal Carries
with it the nullity of substitute) 3. If it is impossible to give
the principal, the substitute does not have to be given; if vice
versa, the principal must be given 4. The right to choose is given
only to the debtor
Section 4 Joint and Solidary Obligations Article 1207 Joint
obligation one in which each of the debtors is liable only for a
proportionate part of the debt, and each A solidary obligation
exists only when the obligation expressly so states, or when the
law or the nature of the
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The concurrence of two or more creditors or of two or more
debtors in one and the same obligation does not imply that each one
of the former has a right to demand, or that each one of the latter
is bound to render, entire compliance with the prestation. There is
a solidary liability only when the obligation expressly so states,
or when the law or the nature of the obligation requires
solidarity.
creditor is entitled only to a proportionate part of the credit.
Solidary obligation each debtor is liable for the entire
obligation, and each creditor is entitled to demand the while
obligation.
obligation requires solidarity. (Sesbreno v. CA) When solidary
exists: a. Stipulation of parties b. Nature of the obligation (Art
19- 22 Civil code) c. Law (Art. 94 and 121 of the Family Code) Some
instances where the law imposes solidary liability: 1. Obligations
arising from tort. 2. Obligations arising from quasi-contracts. 3.
Legal provisions regarding the obligations of devisees and
legatees. 4. Liability of principals, accomplices, and accessories
of a felony. 5. Bailees in commadatum.
Article 1208 If from the law, or the nature or the wording of
the obligations to which the preceding article refers the contrary
does not appear, the credit or debt shall be presumed to be divided
into as many shares as there are creditors or debtors, the credits
or debts being considered distinct from one another, subject to the
Rules of Court governing the multiplicity of suits.
Unless there is no specification as to their proportionate share
in the credit or in the debt, the creditors and debtors in a joint
obligation shall be entitled or shall make payment in equal
proportions.
Some consequences of Joint Liability 1. 2. 3. 4. 5. Vitiated
consent on the part of 1 debtor does not affect the others.
Insolvency of 1 debtor does not make others responsible for his
share. Demand by the creditor on 1 joint debtor puts him in
default, but not the others since the debts are distinct. When the
creditor interrupts the running of the prescription period by
demanding judicially from one, the others are not affected.
Defenses of 1 debtor are not necessarily available to the
others.
Article 1209 If the division is impossible, the right of the
creditors may be prejudiced only by their collective acts, and the
debt can be enforced only by proceeding against all the
Joint indivisible obligations when there are several debtors or
creditors, but the prestation is indivisible, the obligation is
joint unless otherwise stipulated. Plurality of creditors: The
obligation can be performed
Note: Obligation is joint but since it is indivisible, creditor
must proceed against all the joint debtors. Demand must be to all
joint debtors; In case of insolvency of one debtor; others are
not
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debtors. If one of the latter should be insolvent, the others
shall not be liable for his share.
only by delivering the object to all the creditors jointly
(failure to do so may be liable for damages unless allowed by the
other creditors) Plurality of debtors: They (debtors) can perform
the obligation only by acting together. All must be sued. If any
debtor is not willing to perform, the creditor can sue him for
damages on their respective shares. Indivisibility
liable for his share; If there are joint creditors, delivery
must be made to all unless authorized by others; Each joint
creditor may renounce his share
Solidarity Refers to the juridical or legal tie that binds
parties Solidary obligations all of the debtors are liable for the
breach of the obligation committed by a debtor. There must be at
least 2 debtors and 2 creditors Solidary obligations the other
debtors are proportionately liable Different kinds of Solidarity
First Classification: According to the parties bound 1. Active
Solidarity on the part of the creditors or obligees (where any one
of them can demand the fulfillment of the entire obligation) 2.
Passive Solidarity on the part of debtors or obligors (where any
one of them can be made liable for the fulfillment of the entire
obligation) 3. Mixed Solidarity on the part of the creditors and
debtors (where each one of the debtors is liable to render, and
each one of the creditors has a right to demand, entire compliance
with the obligation) Second Classification: According to source 1.
Conventional Solidarity When agreed upon by the parties. If nothing
is mentioned in the contract relating to solidarity, the obligation
is only joint.
Article 1210 The indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does solidarity of itself
imply indivisibility.
1. Refers to the prestation 2. Indivisible obligations - Only
the debtor is guilty of breach of obligation and is liable for
damages 3. Can exist although there is only 1 debtor and 1 creditor
4. Indivisible obligations the others are not liable in case of
insolvency of 1 debtor Kinds of solidary obligation according to
legal tie: 1. Uniform when the parties are bound by the same
stipulations; or 2. Non-uniform or varied when the parties are not
subject to the same stipulations
Article 1211 Solidarity may exist although the creditors and the
debtors may not be bound in the same manner and by the same periods
and conditions.
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2. Article 1212 Each one of the solidary creditors may do
whatever may be useful to the others, but not anything which may be
prejudicial to the latter. Beneficial Act: interrupt running of
prescription by making judicial demand. Prejudicial Act: Remission
or condonation which would result in extinguishment of obligation,
the creditor responsible shall be responsible to others for
damages. Reason for Article: Mutual agency (mutual trust) implies
mutual confidence. Each creditor represents the others and the
assignee may not have the confidence of the original solidary
creditors considering that the assignee, after receiving payment
may not give the shares of the others.
Legal Solidarity that imposed by the law.
Note: If their own co-creditor prejudiced them by means or
remission to the debtor/s, it will not invalidate the
extinguishment of the obligation. Their remedy is to collect their
share of the debt from the latter. They may also ask for
damages.
Article 1213 A solidary creditor cannot assign his rights
without the consent of the others.
Note: If the assignment is made to a co-creditor, the consent of
the other creditors is not necessary (De Leon).
Article 1214 The debtor may pay any one of the solidary
creditors; but if any demand, judicial or extrajudicial, has been
made by one of them, payment should be made to him.
To whom the debtor must pay: (1) Any of the solidary creditors
(2) Exception payment must be to the solidary creditor who made a
judicial or extrajudicial demand.
Reason: To avoid confusion and prejudice to the more diligent
creditor. Otherwise, the obligation will not be extinguished except
insofar as the creditor-payees share is concerned in case the
latter does not give to the other creditors their shares in the
payments (De Leon). Basis: The mutual representation of the
creditors with respect to each other. If payment was given to the
creditor not included who made the demand, the payment shall not be
considered as valid. If partial payment was given as an effect to
the demand, any of the creditors may then receive the remaining
balance. (Sta. Maria)
Article 1215
Novation the change of creditors, debtors, or the principal
condition of the contract.
Dation in payment the delivery of a specific object as a
substitute for the performance of the obligation.
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Novation, compensation, confusion or remission of the debt, made
by any of the solidary creditors or with any of the solidary
debtors, shall extinguish the obligation, without prejudice to the
provisions of article 1219. The creditor who may have executed any
of these acts, as well as he who collects the debt, shall be liable
to the others for the share in the obligation corresponding to
them.
Modification of an obligation by: 1. Changing its object or
principal conditions 2. Substituting the person of the debtor 3.
Subrogating a third person in the rights of the creditor
Compensation when two persons, in their own right, are creditors
and debtors of each other. Confusion when the characters of
creditor and debtor are merged in the same person (as when my check
in the course of negotiation is eventually endorsed to me).
Remission that act of liberality whereby a creditor condones the
obligation of the debtor, to forget about the whole thing.
Novation, compensation, confusion and remission are modes of
extinguishing an obligation.
Article 1216 The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The demand
made against one of them shall not be an obstacle to those which
may subsequently be directed against the others, so long as the
debt has not been fully collected.
Passive Solidarity and Suretyship: (Similarities) 1. Both the
solidary debtor and the surety guarantee for another person. 2.
Both can demand reimbursement
(Differences) 1. Solidary debtor is liable not only for his
co-debtors obligation but also of his own; hence he is both a
principal debtor and a surety; Surety is indebted only for the
share of the principal debtor 2. A solidary debtors responsibility
for his co-debtor is primary, not subsidiary. 3. An extension of
time given by the creditor to a debtor would not release a solidary
co-debtor but would release a solidary guarantor or surety.
Article 1217 Payment made by one of the solidary debtors
Payment by one of the solidary debtors and his subsequent
release from liability results in release from liability of the
other debtors to the creditor.
In case of partial payment: He can recover reimbursment from the
co-debtors only in so far as his payment exceeded his share of the
obligation.
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extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept. He who
made the payment may claim from his codebtors only the share which
corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest
for the intervening period may be demanded When one of the solidary
debtors cannot, because of his insolvency, reimburse his share to
the debtor paying the obligation, such share shall be borne by all
his codebtors, in proportion to the debt of each. Article 1218
Payment by a solidary debtor shall not entitle him to reimbursement
from his co- debtors if such payment is made after the obligation
has prescribed or become illegal. Article 1219 The remission made
by the creditor of the share which affects one of the solidary
debtors does not release the latter from his responsibility towards
the co-debtors, in case the debt had been totally paid by anyone of
them before the remission was effected.
Effect when the co-debtor pays the obligation gives birth to a
right to be reimbursed based on the payment made by him in
proportion to the co-debtors liability.
Note: In cases of Reimbursement, the resulting obligation of the
co-debtors to reimburse him becomes joint.
Two kinds of Prescription (1106): a. Acquisition of a right b.
Loss of a right
Note: If one of the debtors actually pays such an obligation, he
does not thereby revive the obligation as to the co-debtors.
Applies where a co-debtor has already paid the obligation in
full when the remission of the part affecting another co-debtor is
made.
Reason: to prevent fraud and to give justice to the paying
debtor. Since payment extinguishes the obligation, there is nothing
more to remit. *Note: Principle followed in cases of insolvency
still applies. So in the event of insolvency, the debtor whose
share has been remitted still has to bear part of the burden of his
co-debtors insolvency. Note: If the creditor or one of the
creditors declares a remission of one of the debtors obligation,
such remission extinguishes the whole obligation and benefits all
the debtors.
Article 1220 The remission of the whole obligation, obtained by
one of the solidary debtors, does not entitle him to reimbursement
from his co-debtors.
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Article 1221 If the thing has been lost or if the prestation has
become impossible without the fault of the solidary debtors, the
obligation shall be extinguished. If there was fault on the part of
any one of them, all shall be responsible to the creditor, for the
price and the payment of damages and interest, without prejudice to
their action against the guilty or negligent debtor. If through a
fortuitous event, the thing is lost or the performance has become
impossible after one of the solidary debtors has incurred in delay
through the judicial or extrajudicial demand upon him by the
creditor, the provisions of the preceding paragraph shall apply.
Article 1222 A solidary debtor may, in actions filed by the
creditor, avail himself of all defenses which are derived from the
nature of the obligation and of those which are personal to him, or
pertain to his own share. With respect to those which personally
belong to the others, he may avail himself thereof only as regards
that part of the debt for which the latter are responsible.
Effect of Loss or Impossibility 1. If without fault of the
solidary debtors obligation extinguished. 2. If there was fault on
the part of any one of then, all shall be responsible to the
creditor for the price and damages and interest (but those without
fault may bring an action to recover from those at fault). 3. If
lost through a fortuitous event after default by one of the
debtors, all will still be liable (but action may be brought
against the guilty debtor by the others).
Defenses of Solidary debtor: 1. Defenses derived from the nature
of the obligation. (Extinguishment, defects, nonarrival of period,
etc. 2. Defenses personal to the debtor defendant. (minority,
insanity, violence, etc.) 3. Defenses personal to the other
solidary debtors.
Section 5 Divisible and Indivisible Obligations Solidarity
Article 1223 The divisibility or indivisibility of the things that
are the object of obligations in which there is only one debtor and
only one creditor does not alter or modify the Divisible Obligation
capable of partial performance Indivisible Obligation not capable
of partial performance (ex. to delivers a specific car) 1. Refers
to the tie between parties; 2. Needs at least 2 debtors or
creditors; Indivisibility Refers to nature of obligation; May exist
even if there is one debtor and one creditor;
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provisions of Chapter 2 of this Title.
Kinds of Indivisibility: 1. Conventional by common agreement 2.
Natural/Absolute by nature of the object or undertaking 3. Legal if
so provided for by the law Kinds of Division: 1. Quantitative
depends on quantity (ex. 10 chairs equally divided) 2. Qualitative
depends on quantity, irrespective of quantity (ex. if one child
inherits land, and another inherits cash) 3. Intellectual/moral one
that exists mentally rather than physically (ex. my brother and I
own in common a car)
3. Fault of one is fault of others
Fault of one not fault of others
Article 1224 A joint indivisible obligation gives rise to
indemnity for damages from the time anyone of the debtors does not
comply with his undertaking. The debtors who may have been ready to
fulfill their promises shall not contribute to the indemnity beyond
the corresponding portion of the price of the thing or of the value
of the service in which the obligation consists.
(Indivisible Joint Obligation) Applies when one of the debtor/s
fail or refuses to fulfill the obligation. If it gives rise to
damages and fees, only such debtor is liable. The others will not
be liable for his share; the debtors who are ready to perform their
part do not become liable for more than the portions respectively
corresponding to them in the price of the subject matter of the
obligation. Test of divisibility: Whether or not it is susceptible
of partial performance. Indivisible Obligations: 1. To give
definite things 2. Not susceptible of partial performance 3. If so
provided by law 4. Such was the intention of the parties
In case of non-performance by any of the debtors, the obligation
is converted into a liability for losses and damages, which is
divisible. As effect of non-compliance the obligation is converted
into a monetary one for indemnity.
Article 1225 For the purposes of the preceding articles,
obligations to give definite things and those which are not
susceptible of partial performance shall be deemed to be
indivisible. When the obligation has for its object the execution
of a certain number of days of work, the accomplishment of
In obligations not to do, divisibility or indivisibility shall
be determined by the character of the prestation. They are
generally indivisible (De Leon). In case of a divisible contract,
if the illegal terms can be separated from the legal ones, the
latter shall be enforced. General Rule: a contract to do several
things at
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work by metrical units, or analogous things which by their
nature are susceptible of partial performance, it shall be
divisible. However, even though the object or service may be
physically divisible, an obligation is indivisible if so provided
by law or intended by the parties. In obligations not to do,
divisibility or indivisibility shall be determined by the character
of the prestation in each particular case.
concerned Divisible Obligations: 1. Execution of a certain
number of days of work 2. Accomplishment of work by metrical units
3. Purpose of obligation is to pay a certain amount in installments
4. Susceptible of partial performance Even though the object or
service may be physically divisible, an obligation is indivisible
if so provided by law or intended by the parties. Section 6
Obligations with a Penal Clause
several times is divisible, and a judgment for a single breach
of a continuing contract is not a bar to a suit for the subsequent
breach. A claim for damages for a breach is an indivisible demand,
and where a former final judgment was rendered, it is a bar to any
damages which the plaintiff may thereafter sustain.
Article 1226 In obligations with a penal clause, the penalty
shall substitute the indemnity for damages and the payment of
interests in case of noncompliance, if there is no stipulation to
the contrary. Nevertheless, damages shall be paid if the obligor
refuses to pay the penalty or is guilty of fraud in the fulfillment
of the obligation. The penalty may be enforced only when it is
demandable in accordance with the provisions of this Code.
Penal Clause accessory undertaking to assume greater liability
in case of breach. It is attached to an obligation to insure its
performance. It is a coercive means to obtain compliance. It may be
governed by the stipulation of the parties. Kinds of Penal Clause:
First classification: 1. Legal imposed by law 2. Conventional
agreed upon by the parties Second Classification: 1. Subsidiary
only the penalty may be asked 2. Joint both the principal contract
and the penal clause can be enforced. The penalty may be claimed
only when there is demand, whether judicial or extra-judicial,
unless the law, the stipulation of the parties or the nature of the
contract (time is of the essence) otherwise demands.
Penal Clause An obligation, though accessory Demandable in
default of the unperformed obligation
Condition Not an obligation Never demandable
A stipulation in the contract providing for the compounding of
interest in case of nonperformance partakes of the nature of a
penalty clause. If iniquitous or unconscionable, the interest may
be reduced.
Instances when Additional Damages may be recovered (exception to
the GR that penalty takes the place of indemnity for damages): 1.
2. Express stipulation to the effect that damages or interest may
still be recovered, despite the presence of the penalty clause When
the debtor refuses to pay the penalty
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3.
imposed in the obligation When the debtor is guilty of fraud or
dolo in the fulfillment of the obligation. (Reason: no waiver of
future action for fraud)
Article 1227 The debtor cannot exempt himself from the
performance of the obligation by paying the penalty, save in the
case where this right has been expressly reserved for him. Neither
can the creditor demand the fulfillment of the obligation and the
satisfaction of the penalty at the same time, unless this right has
been clearly granted him. However, if after the creditor has
decided to require the fulfillment of the obligation, the
performance thereof should become impossible without his fault, the
penalty may be enforced.
The payment of the penalty is merely an accessory obligation. It
is not the principal obligation. General Rule: Upon breach of the
obligation, the creditor has to choose whether to demand the
principal or the penalty. Exception: The principal obligation and
the penalty can be demanded when the penal clause is joint or
cumulative. This occurs when the creditor has been clearly granted
such right, either expressly or impliedly.
Note: The implied right must be one ascertainable from the
nature of the obligation. Example: In the construction industry
where the contractor must pay the penalty if the work is completed
after the stipulated time frame but mist also finish the agreed
construction.
Article 1228 Proof of actual damages suffered by the creditor is
not necessary in order that the penalty may be demanded.
The person is mandated to pay the amount or perform the penalty
specified in the agreement of the parties for as long as there is
irregular or no compliance with the principal obligation regardless
of whether or not the person seeking it suffers the damages.
Basis: Contracts are enforced as they are read, and parties who
are competent to contract may make such agreements within the
limitations of the law and public policy as they desire, and the
courts will enforce them according to their terms. Instances when a
penalty clause cannot be enforced: 1. 2. 3. Breach is the fault of
the creditor A fortuitous event intervened (unless debtor expressly
agreed on his liability in case of these events) Debtor is not yet
in default
Article 1229 The judge shall equitably reduce the penalty when
the principal obligation has been partly or irregularly complied
with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or
unconscionable. Article 1230
Even if the penalty is iniquitous or unconscionable, it is not
void but subject merely to equitable reduction. A fortuitous event
militates against the enforcement of a penalty clause against the
lessor and against the lessee. Construed against the one enforcing
it
General Rule: The nullity of the principal obligation also
nullifies the penal clause, which is only an accessory to
Exception:
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The nullity of the penal clause does not carry with it that of
the principal obligation. The nullity of the principal obligation
carries with it that of the penal clause.
the principal obligation. (The penal clause may be void because
it is contrary to law, morals, good customs, public order, public
policy)
1. 2.
When the penalty is under taken by a third person precisely for
an obligation, which is unenforceable, voidable, or natural.
(Guaranty) The nullity of the principal obligation itself gives
rise to liability of the debtor for damages.
Chapter 4: Extinguishment of Obligations General Provisions
Article 1231 Obligations are extinguished: (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 confusion or
merger of the rights of creditor and debtor; (5) By compensation;
(6) By novation. Other causes of extinguishment of obligations,
such as annulment, rescission, fulfillment of a resolutory
condition, and prescription, are governed elsewhere in this Code.
Classification of Cause of Extinguishment A. Voluntary 1.
Performance i. Payment ii. Consignation 2. Substitution of
Performance i. Compensation ii. Novation iii. Dacion en pago 3.
Agreement to Obligation a. Subsequent to Obligation i. Unilateral
waiver ii. Natural waiver iii. Remission iv. Mutual dissent v.
Compromise b. Simultaneous with Creation of Obligation i.
Resolutory term or extinctive period ii. Resolutory condition or
condition subsequent Question: Does death of a party extinguish an
obligation? Answer: No, unless the obligation is personal in nature
or in transmissible. B. Involuntary 1. By failure to bring an
action (prescription) 2. Resolutory/ condition subsequent
(merger/confusion; in personal obligation- death; change of civil
status) 3. By reason of object impossibility of performance; loss
of thing due
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Section 1 Payment or Performance Article 1232 Payment means not
only the delivery of money but also the performance, in any other
manner, of an obligation. Payment not only the delivery of money
but also the performance, in any other manner, of an obligation.
Payment is the satisfaction or fulfillment of a prestation that is
due, resulting in the extinguishment of the obligation of the
debtor. (Pineda) Requisites of Payment 1. Capacity of the person
paying; 2. Capacity of the person receiving the payment; 3.
Delivery of the full amount or the full performance of the
prestation; 4. Propriety of time, place and manner of payment; 5.
Acceptance of the payment by the creditor. Article 1233 A debt
shall not be understood to have been paid unless the thing or
service in which the obligation consists has been completely
delivered or rendered, as the case may be. Requisites of Valid
Payment: 1. The very thing/ service contemplated must be paid; 2.
Fulfillment must be complete. How Payment or Performance is made:
1. If monetary obligation by delivery of money in full payment
unless otherwise stipulated in contract 2. If debt is delivery of
thing/s by delivery of such thing/s 3. If debt is doing of a
personal undertaking by performance of said undertaking 4. If debt
is not doing of something by refraining from doing such. Article
1234 Note: 1. In 1234 there has been substantial performance Note:
A debtor cannot compel the creditor to accept partial payment. But,
he can accept partial payment. If he voluntarily accepts such
payments then he is deemed to have waived the requirements in Art.
1233 that the performance of the obligation is not considered
complete unless there is complete delivery or complete performance.
While it may be true that there is no payment if there is no
complete delivery or performance of the service, there are two
exceptions to the general rule. And those are Art. 1234 and 1235.
Kinds of Payment: A. B. Normal when the debtor voluntarily performs
the prestation stipulated. Abnormal when he is force by means of
judicial proceeding, either to comply with the prestation or to pay
indemnity.
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If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a strict
and complete fulfillment, less damages suffered by the obligee.
by the obligor in good faith. So, if there has been substantial
performance in good faith by the obligor, then the obligor can
recover as though there had been strict and complete fulfillment,
less of course the damages suffered by the creditor. 2. The
omission or defect must be slight and unimportant, that is, it must
not be so material as to frustrate the accomplishment of the
intended work. 3. There must be no willful or intentional deviation
from the contract or prestation by the debtor, and the omission or
defect must not be material, otherwise, the performance will not
amount to substantial compliance. The substantial compliance
contemplated in Article 1235 connotes the waiver of the obligee of
damages arising from the breach of contract, which resulted in the
incompleteness, or irregularity of the obligation. Obligee is in
estoppel barred from further action or claims The creditor can
refuse payment by a 3rd person, Except: 1. When stipulated; 2. If
said 3rd person has an interest in the fulfillment of the
obligation. (Ex. Guarantor, surety or codebtor) Reason: The
creditor cannot be compelled to accept performance by a third
person who isnt bound under the obligation, because whenever a
third person pays there is a modification of the prestation that is
due (Tolentino) Applies when: The creditor accepts the performance
despite knowledge of the incompleteness or irregularity and without
protest or objection accepts the performance. In effect, he is
deemed to have waived the irregularity because the law requires
that he must know the incompleteness or irregularity of the
performance and accept it without protest or objection. The law
limits his recovery to the amount by which the debtor has been
benefited, if the debtor has no know ledge of, or has expressed his
opposition to such payment. Instance when Recovery can be had from
Creditor and not from Debtor: 1. Prescription; 2. Remission; 3.
Paid/performed debt; 4. When legal compensation had already taken
place
Article 1235 When the obligee accepts the performance, knowing
its incompleteness or irregularity, and without expressing any
protest or objection, the obligation is deemed fully complied
with.
Article 1236 The creditor is not bound to accept payment or
performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to the
contrary. Whoever pays for another may demand from the debtor what
he has paid, except that if he paid without the knowledge or
against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.
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Article 1237 Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter, cannot compel the
creditor to subrogate him in his rights, such as those arising from
a mortgage, guaranty, or penalty.
In cases where subrogation takes place by virtue of the payment
of the credit, the payor actually steps into the shoes of the
creditor and becomes entitled, not only to recover what he has
paid, but also to exercise all the rights which the creditor could
have exercised. There is a change in the active subject and no
extinguishment of obligation.
Subrogation act of putting somebody into the shoes of the
Creditor, hence, enabling the former to exercise all the rights and
actions that could be exercised by the creditor. Rights w/c may be
exercised by Person subrogated in the Place of Creditor: 1. Arising
from mortgage; 2. Guaranty; 3. Penalty Note: If the payment made by
the third person who does not intend to be reimbursed exceeds
P5,000 the requirement of the law is that the payment must be in
writing.(to be considered as a valid donation) But the payment is
still valid since the consent of the debtor is immaterial as the
extinguishment of the obligation is concerned. Except: Art. 1427:
The minors who entered into a contract, without the consent of the
parents or the guardian, but voluntarily pays a sum of money or
delivers a fungible thing for the fulfillment of the obligation,
the minor cannot recover the same from the creditor who accepted it
or consumed it in good faith. (Applies persons 17 years of age and
below) Payment made to a third person even if though error and in
good faith: - Obligation is not extinguished - Loss resulting from
such shall be borne by the deceived debtor, unless there is a
stipulation for the wrongful payment.
Article 1238 Payment made by a third person who does not intend
to be reimbursed by the debtor is deemed to be a donation, which
requires the debtor's consent. But the payment is in any case valid
as to the creditor who has accepted it. Article 1239 In obligations
to give, payment made by one who does not have the free disposal of
the thing due and capacity to alienate it shall not be valid,
without prejudice to the provisions of article 1427 under the Title
on "Natural Obligations." Article 1240 Payment shall be made to the
person in whos