TITLE I

OBLIGATIONS

1177 Satisfaction of Claims

1178 Transmissibility of Rights

(Arts. 1156-1304)
CHAPTER 3 DIFFERENT KINDS OF
OBLIGATIONS

CHAPTER 1 GENERAL PROVISONS

1156 Obligations

Section 1 Pure and Conditional

Obligations

1157 Sources of Obligations

1158 Arising from Law; Not Presumed
1159 Contracts
1160 Quasi-Contracts
1161 Delicts
1162 Quasi-Delicts

CHAPTER 2 NATURE AND EFFECT OF

OBLIGATIONS
1163 Diligence of a good father

1179 Pure Obligation; Demandable at

Once;

1180 Duration of Period; Will of the

Debtor;
1181 Conditional Obligation
1182 Classification of Conditions

1164 Right to the Fruits; No Real Right

1165 Remedies of Creditor
1166 Obligation to Give; Accession and
Accessories
1167 Obligation to do; Poorly done
1168 Obligation not to do; Undone
1169 Delay;

Obligation or Law;
Time is of the Essence;
Useless;
Reciprocal Obligations;

1170 Damages;

Fraud;
Negligence;
Delay;
Contravention of the Tenor;

1171 Waiver of future fraud

1174 Fortuitous Event

1175 Usurious Transaction; Simple Loan
1176 Presumption; Interest; Principal

Suspensive Condition; Resolutory

Condition
o Potestative
o Casual
o Mixed
Purely Potestative Suspensive
Condition;

1183 Impossible Conditions

1184 Positive Condition
1185 Negative Condition
1186 Prevention of the Fulfillment of the
Condition
1187 Retroactive Effects of the Condition
1188 Rights Pending Fulfillment of
Condition
1189 Improvement; Loss; Deterioration;
Loss:

1172 Negligence
1173 Diligence (A)

Conditional Obligation;
Suspensive Condition;
Resolutory Condition;

Without fault of Debtor; Extinguished

Fault of the Debtor; Damages
Deterioration:

Without Fault of Debtor; Impairment

borne to Creditor
Fault of Debtor; Creditor choose
between: Rescission; SP with
Damages

Improvement

Conjunctive; All Prestations are required

Improved by its nature; Benefit of

Creditor
Improved at the expense of Debtor;
Usufruct;

Alternative; Multiple Prestations;

1190 Effects of Fulfillment of Condition

1191 Resolution

Injured Party
o Rescission
o Fulfillment
Rescission
Judicial Resolution

1192 Compensatio morae;

First Infractor; Mitigate Liability

Indeterminable First Infractor;
Extinguished
Section 2 Obligation with a Period

1193 Period

Resolutory Period
Certain
Uncertain = Conditional

1194 Loss; Deterioration; Improvement;

Same 1189
1195 Payment before the Period;

Recovery of the fruits before period

Obligation to give ONLY

1196 Presumption as to the Benefit of

Period;

GR: for the benefit of the parties

Exception: Stipulation of the parties

1197 No fix Period; Courts may Fix

Once fixed by the Courts, cannot be

changed

1198 Debtor loses right to make use of

the period:

Default;
Becomes Insolvent;
Attempts to abscond;

Section 3 Alternative Obligations

Kinds of Obligation

Performs only one;

Facultative; Multiple Prestations;

Some Principal, Some Subsidiary

1199 - Meaning of Alternative Obligation

Cannot Part of one and part of the

other.

1200 GR: Right of Choice belongs to

Debtor

Except: Expressly granted to

Creditor
Debtor; no right to choose if
Impossible; unlawful; = void
prestation.

1201 Communication of Notice that

Choice has been made;
1202 lose the right to choose if only one
prestation is practicable
1203 Through Creditors Acts; if Debtor
cannot make a choice; Debtor may Rescind;
1204 Through Debtors Fault; Creditor
shall have the right to indemnity for
damages; value before it disappeared.
1205 Choice given to Creditor;
Loss before Creditor has made a
choice;

Fortuitous Event; Creditor

should Choose from remainder
Fault of the Debtor; Cr may
claim any plus damages
All things are lost through fault
of Debtor; any choice plus
damages

1206 Facultative Obligation

Section 4 Joint and Solidary Obligations

1207 & 1208

GR: Presumed to be Joint
Except: Law, Contract, Nature or Wording

1209 Joint Indivisible Obligation

1226 1230
Penal Clause; Extra-Prestation

Between Debtors & Creditors (Active

Solidary)

Debtor can pay any Creditor

If there is a demand, payment should
be to demanding creditor
Each creditor can extinguish the
obligation by any possible means
Mutual Agency: each Creditor
represent the other

Among Creditors (Active Solidary)

Mutual Representation
Assignment cannot be made without
consent of other creditors
Prejudicial Act Reimburse other
creditor
Collecting creditor has to account

Between Debtors & Creditors (Passive

Solidary)

Each or All debtor shall be liable to

the creditor
Mutual Representation

Among Debtors (Passive Solidary)

If a debtor pays, other debtor should

reimburse
NO reimbursement if theres
remissions

To Ensure/Compel Performance
Serves as Liquidated Damages

Principal Obligation; Alternative Obligation

GR: If the Principal is Void or Unenforceable
then Accessory is also Void (1230)
Except:

When Penalty is Triggered by the

Nullity of the Obligation

Kinds of Penalty

Subsidiary/Alternative
o Penalty replaces the
Obligation
Joint/Cumulative
o Addition to Principal Obligation

GR: Penalty substitute all damages in case

of breach
Except:

Parties Agreed otherwise

Dr. Defaulted in the Payment of
Penalty
Dr. is guilty of Fraud

Court can Reduce Penalty:

Section 5 Divisible and Indivisible

Obligations

Partial or Irregular Performance

Penalty is unconscionable or
iniquitous

CHAPTER 4 EXTINGUISHMENT OF
OBLIGATIONS

1223 1225
GR: An Obligation should be performed
completely. The
Rule of Integrity of Payment. Presumed
Indivisible.

GENERAL PROVISIONS
1231 Obligations are Extinguished:

Except: Law, Contract, Nature

Joint Indivisible Obligation (Ex. Engine and
Body)

Section 6 Obligation with Penal Clause

Payment or Performance
o Application of Payment
o Payment by Cession
o Tender of Payment and
Consignation
Loss of the Thing Due
Remission
Merger of Rights
Compensation
Novation

*Waiver

Subsection 1 Application of Payment

1252 1254

Section 1 Payment or Performance

Payment; not only delivery of Money; But
also Performance
Tender of Payment; an offer to Pay; Ability
to pay; show money
Valid Payment:

Integrity of Payment
o Complete payment

Application of Payment is when debtor has

several obligations to Creditor.
(1) Debtor has right to choose
(2) If debtor doesnt choose, Creditor
may choose with the consent of the
debtor
(3) By operation of Law
a. Interest then principal
Dacion en Pago Payment of obligation in
other form

Exception: (1) Debtors substantial

performance in good faith. (2) waiver
of incomplete performance

Identity of Payment
o Exact performance of
Obligation

*Payment should be in the domicile of the

debtor (monetary obligation)
Debtor pays the cost for extrajudicial
expense
Creditor will shoulder the cost of
collection
(obligation to give) Place where the
obligation was constituted
Creditor accepts incomplete obligation =
waiver
** there must be an information to be
considered as waiver
Quantum meruit; compensation of the
actual work done.
Refusal to accept payment (third party)
GR: payment should be made to creditor

Monetary Obligation
Conveyance of ownership of a
thing as an accepted equivalent
or of performance
Govern by the law on sales

Subsection 2 Payment by Cession

1255
Cession debtor assigns all the assets to
the creditor and authorizes them to
liquidate the assets and convert them into
cash.

The obligation will be extinguished

inly to the extent of the liquidated or
sold assets (no outstanding liability)

Dacion v. Cession
Dacion
-

Ownership transfer debtor to

creditor

Cession
-

Its only an authorization to

dispose

Benefit of Payment to incapacitated person.

Legal Tender and Tender of Payment
Extraordinary Inflation:
-

Proclamation of BSP
Contractual Relation bet. Two
parties
Parties stipulate that they
recognize Extraordinary Inflation
or deflation

Subsection 3 Tender of Payment or

Consignation
1256 1261
Check payment
Tender of Payment becomes payment
when:
-

It is accepted
There is consignation, if refuse

Valid Consignation:

Debt due
Consignation because;
o Creditor refuse
o Payment cant be made
First or prior notice
Action/ complaint for consignation
Second or subsequent notice
Court decision (just an extra)

Follow the law on donations

Section 4 Confusion or Merger or Rights

1275 - 1277
Merger the meeting in one person of the
qualities of the creditor and the debtor with
regard to the same obligation

Acceptance with reservation

Section 5 Compensation
Section 2 loss of the Thing Due
1262 1269
Loss of the thing due the impossibility of
performing the obligation after creation of
obligation
Lost through fortuitous event; becomes
illegal;
Presumption of person in possession is at
fault
Reformation one party wants the court to
express the true agreement of the parties
REBUS SIC STANTIBUS Change of
circumstances, which makes it Extremely
difficult to perform the obligation.
(International Law Concept)
Requisites of RSS:

Could not be foreseen

Performance extremely difficult but
not impossible
Event must not be due to the act of
the parties
For future prestation

Fortuitous Event v. Rebus

FE = Impossibility or performance
RSS = Extremely difficult to perform

Section 3 Condonation or Remission

1278 1290
Compensation one obligations offsets the
other
Kinds of Obligation:
(1) Legal Compensation
(2) Facultative Compensation
(3) Judicial
(4) Conventional or Voluntary
Requisites of Legal Compensation (NO
PLDT)

NO retention or controversy is
commenced by third party over the
debts
Parties are Principal Creditors and
Debtors of each other (Two
Transactions)
debts are Liquidated and
demandable
both Debts consist in sum of money
or of things of the same kind and
quality
Two debts are due

Obligations that cannot be Compensated

Deposit
Commodatum
Support
o Except arrears

Assignment will be effective from the

moment of notice or when the other party
consent

Condonation Gratuitous abandonment by

the Creditor of his right against the Debtor
-

A party renouncing entitlement in

favor of the Debtor

Can be Express or Implied

Section 6 Novation
1291
Novation

Changing their object or principal

condition
Substituting the person of Debtor
Subrogating a third person in the
rights of the creditor

Even without the knowledge of the

debtor, a person interested in
fulfillment of obligation pays. w/o
prejudice to the effects of confusion.

Implied Novation

OBJECTIVE NOVATION
SUBJECTIVE NOVATION

TITLE II CONTRACTS

Expromission v. Delegacion

CHAPTER 1

E= third person assuming the obligation.

(with or without consent of Debtor)
D= debtor offers and creditor accepts a
third person that constitute substitution.
(Consent of All parties)
SUBROGATION presumed when:

Creditor pay a preferred creditor,

even without consent or knowledge
of the debtor
Third person not interested in the
obligation, pays with express
approval of Debtor

GENERAL PROVISIONS

Element of Contract:

Consent of the Contracting Parties

Object
Cause or Consideration

Stages of Contract

Negotiation
Perfection
Consummation