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CHAPTER 1: OBLIGATIONS
OBLIGATION - An obligation is a juridical necessity to give, to do, or not to do. (Art. 1156)
REQUISITES:
1.
2.
3.
4.
be licit
be possible, physically or juridically
be determinate or determinable
have an equivalent in money
Law
Contracts
Quasi-contracts
Delicts
Quasi-delicts
QUASI-CONTRACT
-Those juridical relations arising from lawful, voluntary, and unilateral acts, by virtue of which the parties become
bound to each other, based on the principle that no one shall be unjustly enriched or benefitted at the expense of
another.
KINDS OF QUASI-CONTRACTS:
1.
2.
NEGOTIORIUM GESTIO arises whenever a person voluntarily takes charge of the agency or management of
the business or property of another without any power of authority from the latter.
SOLUTIO INDEBITI arises whenever a person unduly delivers a thing through mistake to another who has no
right to demand it.
QUASI-DELICTS
an act or omission by a person which causes damage to another giving rise to an obligation to pay for the damage
done, there being no fault or negligence and there being no pre-existing contractual relations between the parties (Art.
2176, NCC)
REQUISITES:
1.
2.
3.
4.
5.
There
There
There
There
There
2.
to be not done
a. Positive - obligation to do
b. Negative - obligation not to do
Real Obligations - obligations to give, the subject matter is a thing which the obligor must deliver to the
obligee
a. Determinate or specific - the object is particularly designated or physically segregated from all other
things of the same class
b. Generic - object is designated by its genus or class
c. Limited Generic - when the generic objects are confined to a particular class
Ex. An obligation to deliver one of my horses (Tolentino, Volume IV, p. 91)
EFFECT OF OBLIGATIONS
DUTIES OF A DEBTOR IN AN OBLIGATION TO DELIVER A DETERMINATE THING (Arts. 1163, 1164, 1166)
1.
To preserve and take care of the thing due with the diligence of a good father of a family.
DILIGENCE OF A GOOD FATHER OF A FAMILY - ordinary care or that diligence which an average or reasonably
prudent person would exercise over his own property
Rule on Standard of Care:
1)
2)
3)
2.
To deliver the fruits of the thing from the time the obligation to deliver it arises
WHEN THE OBLIGATION TO DELIVER ARISES
GENERAL RULE: From the time of the perfection of the contract (meeting of the minds between the parties)
EXCEPTION:
1)
2)
When the parties stipulate regarding the right of the creditor to the fruits of the thing
When the obligation is subject to a suspensive condition; the obligation to deliver arises upon the
fulfillment of the condition or the arrival of the period.
4.
5.
To deliver the thing which should be neither of superior nor of inferior quality.
To pay damages in case of breach of the obligation by reason of delay, fraud, negligence, contravention of the
tenor of the obligation.
REMEDIES
Specific Performance
Equivalent
Performance
REAL OBLIGATIONS
Determinate
Generic
X
X
X
Substitute
Performance
Rescission/Cancellatio
n
PERSONAL OBLIGATIONS
Not To Do
Undo the things
already done
Can only be
X
demanded if
obligation is not
based on personal
qualifications of the
obligor
X
Undo the things
already done the
obligors expense
X
To Do
X
BREACH OF OBLIGATIONS
1.
2.
c. Delay
d. Contravention of the tenor
*Debtor is liable for damages
Involuntary debtor is unable to comply with his obligation because of fortuitous event
*Debtor is not liable for damages
KINDS OF DELAY
1.
EFFECTS:
1)
2)
3)
*If he can prove that the loss would have resulted just the same even if he had not incurred in delay, the
court may equitably mitigate or reduce the damages. (Art. 2215 [4])
3)
2.
Mora Accipiendi - default on the part of the creditor when he unjustifiably refuses to accept the performance
of the obligation
REQUISITES:
1)
2)
3)
EFFECTS:
1)
2)
3)
4)
5)
6)
3.
Compensatio Morae - both parties are in default (in reciprocal obligations); the delay of the obligor cancels
the delay of the obligee and vice versa. Legally speaking, there is no default or delay on the part of both
parties.
RULE ON RECIPROCAL OBLIGATIONS: 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.
Performance must be simultaneous unless different dates for the performance of the obligation were fixed by
the parties.
FRAUD (DOLO)
The deliberate and intentional evasion of the normal fulfillment of an obligation. (8 Manresa 72)
TYPES OF FRAUD:
1) Causal Fraud (Dolo Causante) - fraud employed in the execution of the contract under Art. 1338
2) Incidental Fraud (Dolo Incidente) - committed in the performance of an obligation already existing because of
a contract. (Art. 1170)
NOTE: Future fraud cannot be waived for it would result to illusory obligation.
REMEDIES OF DEFRAUDED PARTY:
1.
2.
3.
NEGLIGENCE
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 of the place.
KINDS OF DILIGENCE REQUIRED (ART. 1173):
1.
2.
3.
NOTE: Negligence can be waived unless the nature of the obligation or public policy requires extraordinary diligence as
in a common carrier.
KINDS OF NEGLIGENCE
1.
2.
CULPA AQUILIANA
Negligence is substantive and independent
There may or may not be a pre-existing contractual
obligation
Source of the obligation is the negligence itself
Negligence must be proved
Diligence in the selection and supervision of
employees is a defense
CULPA CONTRACTUAL
Negligence is merely an incident of the performance
of the obligation
There is a pre-existing contractual relation
Source of the obligation is the breach of the
contractual obligation
Proof of existence of the contract and its breach is
prima facie sufficient to warrant recovery
Diligence in the selection and supervision of
employees is not available as defense
NEGLIGENCE
There is no such deliberate intent
Liability may be mitigated
Waiver for future negligence may be allowed in
certain cases
TEST OF NEGLIGENCE
The test of negligence can be determined by this standard: If the defendant, in committing or causing the negligent
act, has used reasonable care and vigilance which a man of ordinary prudence would have employed under the same
situation, he is not guilty of negligence. Otherwise, he is guilty.
FORTUITOUS EVENT - An event which cannot be foreseen, or which though foreseen, is inevitable.
REQUISITES:
1.
2.
3.
4.
The debtor must be free from any participation in, or the aggravation of, the injury to the creditor.
When expressly specified by law (bad faith, object of the obligation is generic, debtor is in delay)
When expressly declared by stipulation or by contract
When the nature of the obligation requires the assumption of risk
When the obligor is in default or has promised to deliver the same thing to two or more persons who do not
have the same interest
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.
PRINCIPLE: Before the presumption that a prior instalment had been paid may arise, the receipt must specify the
instalment for which payment is made.
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 in his person; they may also impugn the acts
which the debtor may have done to defraud them.
Exact fulfillment of the obligation by specific or substitute performance with a right to damages in either case;
In case of reciprocal obligations, petition the court to resolve the contract;
Pursue the leviable (not exempt from attachment under the law) property of the debtor;
Accion Subrogatoria - to be subrogated to all the rights and actions of the debtor save those which
Requisites:
The debtor to whom the right of action properly pertains must be indebted to the creditor;
The creditor must be prejudiced by the inaction or failure of the debtor to proceed against the third
person;
The creditor must have pursued first or exhausted all the properties of the debtor which are not
exempt from execution;
The debtor's assets are insufficient to satisfy his claims; and
The right of account is not purely personal
Accion Pauliana asking the court to rescind or to impugn all the acts which the debtor may have done to
defraud the creditors (Arts. 1380-1389)
a.
b.
c.
d.
Requisites:
There is a credit in favor of the plaintiff
The debtor has performed an act subsequent to the contract, giving advantage to other persons
The creditor is prejudiced by the debtors act which are in favour of 3 rd parties and rescission will
benefit the creditor
The creditor has no other legal remedy
e.
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.
GENERAL RULE: Rights acquired by virtue of an obligation are transmissible in character.
EXCEPTIONS:
1. When they are not transmissible by their very nature e.g. purely personal right
2. When there is a stipulation of the parties that they are not transmissible
3. Not transmissible by operation of law
CHAPTER 3
DIFFERENT KINDS OF OBLIGATIONS
(ARTS. 1179-1230)
CLASSIFICATION OF OBLIGATIONS
As to demandability:
1. Pure
2. Conditional
3. With a period
As to plurality of object:
1. Simple
2. Alternative
3. Facultative
As to plurality of subject:
1. Simple
2. Joint
3. Solidary
As to performance:
1. Divisible
2. Indivisible
As to sanctions for breach:
1. With a penal clause
2. Without a penal clause
KINDS OF CONDITION:
1.
Suspensive the happening or fulfillment of the condition gives rise to the obligation
EFFECTS:
1) Before fulfilment of the condition, the demandability as well as the acquisition of the rights arising
from the obligation is suspended.
2) After the fulfilment of the condition, the obligation arises or becomes effective.
3) 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
4) When the obligation imposes reciprocal prestations upon the parties, the fruits and interests shall be
deemed to have been mutually compensated.
5) If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless
from the nature and circumstances it should be inferred that the intention of the persons constituting
the same was different.
6) In obligations to do or not to do, the court shall determine the retroactive effect or the conditions
that have been complied with.
CONSTRUCTIVE FULFILLMENT OF SUSPENSIVE CONDITION: The condition shall be deemed fulfilled
when the obligor actually prevented the obligee from complying with the condition and such
prevention must have been voluntary and wilful in character
Obligation is extinguished
DETERIORATION
IMPROVEMENTS
Impairment to be borne by
creditor
BY NATURE OR BY TIME
It perishes;
It goes out of commerce of men;
Disappears in such a way that its existence is unknown or it cannot be recovered.
Resolutory fulfilment of the condition results in the extinguishment of rights arising out of the obligation.
3.
EFFECTS:
1) Before the fulfilment of the condition, the right which the creditor has already acquired by
virtue of the obligation is subject to a threat of extinction
2) If condition is not fulfilled, rights are consolidated; they become absolute
3) Upon fulfilment of the condition, the parties shall return to each other what they received
including the fruits
Potestative - fulfillment of the condition depends upon the will of a party to the obligation.
1)
2)
4.
5.
6.
7.
8.
Causal - fulfilment of the condition depends upon chance and/or the will of a third person
Mixed fulfilment of the condition depends partly upon chance and/or the will of a third person
Possible condition is capable of realization according to nature, law, public policy and good customs
Impossible condition is not capable of realization according to nature, law, public policy and good customs
Positive condition involves the performance of an act
9.
Pre-existing obligations
If obligation is divisible
In simple or remuneratory donations
Testamentary dispositions
Conditions not to do an impossible thing
RECIPROCAL OBLIGATIONS
Those which are created or established at the same time, out of the same cause, and which result in mutual
relationships of creditor and debtor between the parties.
NOTE:
Article 1191 refers to judicial rescission. It does not apply if there is an express stipulation to rescind, in which
case such stipulation must prevail. There is nothing in the law which prohibits the parties from entering into
an agreement that violation of the terms of the contract would cause its cancellation without court
intervention. Said stipulation is in the nature of facultative resolutory condition (Angeles vs. Calasanz, 135
SCRA 323).
The injured party may choose between fulfillment and rescission of the obligations, with the payment of
damages in either case. These remedies are alternative, not cumulative. However, should fulfillment become
impossible, the injured party may also seek rescission.
The right to rescind belongs exclusively to the injured party.
A. Suspensive (ex die) obligation becomes demandable only upon arrival of a day certain
B. Resolutory (in diem) arrival of day certain terminates the obligation
2.
3.
TERM
Interval of time which is future and certain
Time which must necessarily come although it may
not be known when
Exerts an influence upon the time of demandability or
extinguishment of an obligation
Does not have any retroactive effect unless there is
an agreement to the contrary
When it is left exclusively to the will of the debtor,
the existence of the obligation is not affected
WHEN COURTS MAY FIX PERIOD:
CONDITION
Fact or event which is future and uncertain
Future and uncertain fact or event which may or may
not happen
Exerts an influence upon the very existence of the
obligation itself
Has retroactive effect
When it is left exclusively to the will of the debtor,
the very existence of the obligation is affected
1.
2.
3.
4.
If the obligation does not fix a period, but from its nature and circumstances it can be inferred that a period
was intended by the parties.
If the duration of the period depends upon the will of the debtor
In case of reciprocal obligations, when there us a just cause for fixing a period.
If the debtor binds himself when his means permit him to do so.
GENERAL RULE: When a period is designated for the performance or fulfilment of an obligation, it is presumed to have
been established for the benefit of the both the creditor and the debtor.
EXCEPTION: When it appears from the tenor of the obligation or other circumstances that the period has been
established in favour of one or of the other.
REASON FOR FIXING THE PERIOD (ART 1197)
There can be no possibility of any breach of contract or failure to perform the obligation unless the period is fixed by
courts.
WHEN DEBTOR LOSES RIGHT TO MAKE USE OF THE PERIOD (IGIVA)
1.
2.
3.
4.
When after the obligation has been contracted, he becomes insolvent, unless he gives guaranties or securities
for the debt (note: the insolvency need not be judicially declared)
When he does not furnish to the creditor the guaranties or securities he promised.
When by his own act he has impaired said guaranties or securities after their establishment, and when through
fortuitous event they disappear, unless he gives new ones equally satisfactory when debtor violates any
undertaking, in consideration of which the creditor agreed to the period or
When debtor attempts to abscond.
ALTERNATIVE OBLIGATIONS
Facultative Obligations - only one prestation has been agreed upon but another may be given in substitution
EFFECT OF LOSS OR DETERIORA0TION THROUGH NEGLIGENCE, DELAY OR FRAUD OF OBLIGOR:
1. Of thing intended as substitute - no liability
2. Of the substitute after substitution is made with liability
Alternative Obligations bound by different prestations but only one is due
RIGHT OF CHOICE IN ALTERNATIVE OBLIGATIONS
As a general rule the right of choice belongs to debtor
FACULTATIVE
Comprehends only one object or prestation which is
due, but it may be complied with by the delivery of
another object or performance of another prestation
in substitution
Fortuitous loss extinguishes the obligation
Culpable loss obliges the debtor to deliver the
substitute prestation without liability to debtor
Choice pertains only to debtor
ALTERNATIVE
Comprehends several objects or prestations which are
due but may be complied with by the delivery or
performance of only one of them
Fortuitous loss of all prestations will extinguish the
obligation
Culpable loss of any object due will give rise to
liability to debtor
Choice may pertain to creditor or even to third
persons
3.
4.
B.
If all things, except one, were lost, the debtor must comply by performing that which remain
If all were lost by fault of the debtor the latter is liable for the value of the last thing or service which
became impossible
If right of choice belongs to the creditor
1. If 1 of the things is lost through a fortuitous event, the debtor shall perform the obligation by delivering
that which the creditor should choose from among the remainder or that which remains if only 1 subsists
2. If the loss of 1 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 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
EFFECT OF BREACH
If one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfilled or performed.
Consequently, it is converted into one of indemnity for damages. Innocent joint debtors shall not contribute to the
indemnity beyond their corresponding share of the obligation.
EFFECT OF INSOLVENCY OF A DEBTOR
If one of the joint debtors should be insolvent, the others shall not be liable for his share.
INDIVISIBILITY
SOLIDARITY
KINDS OF SOLIDARITY:
1.
2.
3.
ACTIVE
Each creditor is empowered to exercise against the debtor not only the rights which correspond to him,
but also all the rights which correspond to the other creditors, with the consequent obligation to render
an accounting of his acts to such creditors
creates a relationship of mutual agency among solidary creditors
solidarity of creditors
PASSIVE
Solidarity of debtors
Liability of each debtor for the payment of the entire obligation, with the consequent right to demand
reimbursement from the others for their corresponding shares once payment has been made
MIXED
On the part of obligors and obliges; or debtors and creditors
The creditor causing the confusion or compensation is obliged to reimburse the other creditors.
The debtors benefited by the extinguishment of the obligation are obliged to reimburse the debtor who
made the confusion or compensation possible.
If the remission covers the entire obligation, the obligation is totally extinguished and the entire juridical
relation among the debtors is extinguished all together.
If the remission is for the benefit of one of the debtors and it covers his entire share in the obligation, he is
completely released from the creditors but is still bound to his co-debtors.
If the remission is for the benefit of one of the debtors and it covers only a part of his share in the obligation,
his character as a solidary debtor is not affected.
1.
2.
If it is not due to the fault of the solidary debtors, the obligation is extinguished.
If the loss or impossibility is due to the fault of one of the solidary debtors or due to a fortuitous event after
one of the solidary debtors had already incurred in delay, the obligation is converted into an obligation of
indemnity for damages but the solidary character of the obligation remains.
NOTES:
Divisibility or indivisibility of the obligation refers to the performance of the prestation and not to the
thing which is the object thereof.
The intention of parties should be taken into account to determine whether obligation is divisible or
not.
CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS
MODES OF EXTINGUISHMENT OF OBLIGATION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Payment of performance
Loss of the thing due
Condonation or remission of debt
Confusion or merger of rights
Compensation
Novation
Annulment
Rescission
Fulfillment of resolutory condition
Prescription
PAYMENT or PERFORMANCE
Payment or Performance - means not only the delivery of money but also the performance, in any other manner, of an
obligation.
REQUISITES FOR A VALID PAYMENT OR PERFORMANCE
1.
2.
THIRD PERSON
PAYMENT BY THIRD PERSON WITH BOTH DEBTOR AND
CREDITORS CONSENT
The third person takes the debtors place. There is
subrogation except if the 3rd person intended it to be a
donation.
b.
Application of payment
Dation in Payment
Payment by Cession
Tender of payment or consignation
1.
APPLICATION OF PAYMENT
-designation of debt to which the payment must be applied when the debtor has several obligations of the
same kind in favour of the same creditor
a.
b.
c.
d.
Requisites:
There must be only one debtor and only one creditor
There must be two or more debts of the same kinds
All of the debts must be due; except; if theres stipulation to the contrary; or application of payment
is made by the party for whose benefit the term has been constituted; and
Amount paid by the debtor must not be sufficient to cover the total amount of debts
GENERAL RULE: The right to designate the debt to which the payment shall be applied primarily
belongs to the debtor.
EXCEPTION: if the debtor does not avail of such right and he accepts from the creditor a receipt in
which the application is made.
Legal Application of Payment (Art. 1254)
i.
ii.
If neither the debtor nor the creditor makes any application of payment, or if it cannot be
inferred from other circumstances, the debt which is most onerous to the debtor, among
those which are due, shall be deemed to have been satisfied.
If the debts due are of the same nature and burden, payment shall be applied to all of them
proportionately.
2.
DATION IN PAYMENT delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of the obligation.
REQUISITES:
1)
2)
3)
3.
PAYMENT BY CESSION debtor abandons all of his property for the benefit of his creditors in order that from
the proceeds thereof, the latter may obtain payment of their credits.
REQUISITES:
1) Plurality of debts
2) Partial or relative insolvency of the debtor
3) Acceptance of the cession by the creditors
DATION IN PAYMENT
One creditor
Not necessarily in state of financial difficulty
The thing delivered is considered as equivalent of
performance
Payment extinguishes obligation to the extent of the value
of the thing delivered as agreed upon, proved or implied
from the conduct of the creditor
4.
PAYMENT BY CESSION
Plurality of creditors
Debtor must be partially or relatively insolvent
Universality of property of debtor is what is ceded
Merely releases debtor for net proceeds of things ceded or
assigned, unless there is contrary intention
1)
2)
Special Requisites:
The debt sought to be paid must be due;
There must be a valid and unconditional tender of payment or any of the causes stated by law for
effective consignation without previous tender of payment exists;
3)
The consignation of the thing due must first be announced to the persons interested in the fulfillment
of the obligation;
4)
Consignation shall be made by depositing the things due at the disposal of judicial authority; and
5)
The consignation having been made, the interested parties shall also be notified thereof.
Effects of Consignation:
1)
2)
If the creditor accepts the thing or amount deposited without contesting the validity or efficacy of
the consignation, the obligation is extinguished.
If the creditor contests the validity or efficacy of the consignation or if the creditor is not interested
or unknown or is absent, the result is litigation. If the debtor complied with all the requisites, the
obligation is extinguished.
GENERAL RULE: Consignation shall produce effects of payment only if there is a valid tender of payment.
EXCEPTIONS (TRAIT):
1) Creditor is absent or unknown, or does not appear at the place of payment
2) Creditor is incapacitated to receive payment at the time it is due
3) When two or more persons claim the right to collect
4) When the title of the obligation has been lost
5) When without just cause creditor refuses to give a receipt
there LOSS:
When the object perishes
When it goes out of commerce of men
When it disappears in such way that its existence is unknown or it cannot be recovered
When the service has become difficult as to be manifestly beyond the contemplation of the parties, the
obligor may also be released therefrom, in whole or in part.
Requisites:
1) The event or change in circumstances could not have been foreseen at the time of the execution of
the contract;
2) It makes the performance of the contract extremely difficult but not impossible;
3) The event must not be due to the act of any of the parties; and
4) The contract is for a future prestation.
a.
b.
c.
Requisites:
It must be gratuitous
It must be accepted by the debtor
The obligation must be demandable
COMPENSATION
- Extinguishment in the concurrent amount of the obligation of those persons who are reciprocally debtors and creditors
of each other.
Requisites:
a. There must be 2 parties, who, in their own right, are principal creditors & principal debtors of each other
(except in case of guarantor, Article 1280);
b. Both debts must consist in money, or if the things due are fungibles, they must be of the same kind & quality;
c. Both debts must be due;
d. Both debts must be liquidated & demandable;
e. There must be no retention or controversy commenced by 3rd persons over either of the debts &
communicated in due time to the debtor; and
f. Compensation must not be prohibited by law.
COMPENSATION
Two persons who are mutual creditors and debtors
of each other
There must be at least two obligations
CONFUSION
One person where qualities of debtor and creditor are
merged
There is only one obligation
COMPENSATION
PAYMENT
Kinds of Compensation
1) Legal takes effect by operation of law
2) Voluntary takes effect by judicial decree
3) Judicial takes effect by judicial decree
4) Facultative when it can be claimed by one of the parties who, however, has the right to object to it.
Debts NOT subject to Compensation:
1) Debts arising from contracts of deposit
2) Debts arising from contracts of commodatum
3) Claims for support due by gratuitous title
4) Obligations arising from criminal offenses
5) Certain obligations in favor of government
Facultative Compensation
This is compensation which can be set up only at the option of a creditor, when legal compensation cannot take place
because of want of some legal requisites for the benefit of the creditor. The latter can renounce his right to oppose the
compensation and he himself can set it up. It differs from conventional compensation because it is unilateral while the
latter depends upon the agreement of both parties. (Tolentino, Volume IV, p. 367)
NOVATION
- substitution or change of an obligation by another, resulting in its extinguishment or modification, either by changing
its object or principal conditions, or by substituting another in place of the debtor, or by subrogating a third person in
the rights of the creditor.
Requisites:
1) A previous valid obligation;
2) Agreement of the parties to the new obligation;
3) Extinguishment of the old obligation; and
4) Validity of the new obligation.
EFFECTS OF NOVATION:
1.
2.
3.
4.
5.
KINDS OF NOVATION:
A.
B.
Test of Compatibility
Whether or not the old and new obligations can stand together, each having its own independent existence. If they can
stand together, there is no incompatibility; consequently, there is no novation. If they cannot stand together, there is
incompatibility; consequently, there is novation.
Requisites:
Initiative for substitution must emanate from the new debtor
Consent of the creditor to the substitution
Delegacion - effected with the consent of the creditor at the instance of the old debtor, with the concurrence
of the new debtor.
a.
b.
c.
Requisites:
Initiative for substitution must emanate from the old debtor
Consent of the new debtor
Acceptance by the creditor
A.
B.
C.
Expromision the new debtors insolvency or nonfulfillment of the obligation shall not revive the original
debtors liability to the creditor whether the substitution is effected with or without the knowledge or against
the will of the original debtor.
2)
Delegacion the creditor can sue the old debtor only when the insolvency was prior to the delegation and
publicly known or when the old debtor knew of such insolvency at the time he delegated the obligation.
IMPORTANT: A change in the incidental elements of, or an addition of such elements to an obligation, unless otherwise
expressed by the parties, will not result in its extinguishment.
Change of Debtor
Debtor is released
needs consent of creditor express or implied
Two obligations; one is extinguished and new one
created
New debtor is obliged to pay
CONVENTIONAL SUBROGATION
Governed by Arts. 1300 to 1304
Debtors consent is required
Extinguishes the obligation and gives rise to a new one
Defects and vices in the old obligation are cured
Takes effect upon moment of novation or subrogation
ASSIGNMENT OF RIGHTS
Governed by arts. 1624 to 1627
Debtors consent is not required
Transmission of the right of the creditor to third person
without modifying or extinguishing the obligation
defects and vices in the old obligation are not cured
As far as the debtor is concerned, takes effect upon
notification
KINDS OF SUBROGATION
1. Conventional takes place by agreement of the parties; this kind of subrogation requires the intervention and
consent of 3 persons: the original creditor, the new creditor and the debtor.
2. Legal takes place without agreement but by operation of law because of certain acts (Article 1302).
GENERAL RULE: Legal subrogation cannot be presumed.
EXCEPTIONS:
1. Creditor pays another creditor who is preferred, without debtors knowledge;
2. A third person not interested in the obligation pays with the express or tacit approval of the debtor; or
3. Even without debtors knowledge, a person interested in the fulfillment of the obligation pays without
prejudice to the effects of confusion as to the latters share.