CIVIL OBLIGATION AND NATURAL OBLIGATION

A COMPENDIUM: OBLIGATIONS
CIVIL OBLIGATION
 Based on positive law; hence it is enforceable by court action

OBLIGATION, CONCEPT NATURAL OBLIGATION

 Based on natural law; hence it is not enforceable by court action.
OBLIGATION The obligation exists in equity and moral justice, such that if the
 Is a juridical necessity to give, to do and not to do debtor voluntarily performs it, he can no longer recover what he
 Juridical necessity means that the court may be asked to order the has given.
performance of an obligation if the debtor does not fulfill it. If an
obligation cannot be performed through the courts, it may be
disregarded with impunity. SOURCES OF OBLIGATION
1. LAW
REQUISITES OF A VALID OBLIGATION:  A rule of conduct, just and obligatory, laid down by legitimate
1. PARTIES authority for common observance and benefit.
a. Passive Subject  Obligations derived from law are not presumed
 Also called the DEBTOR or OBLIGOR
 The party who is obliged to perform the obligation 2. CONTRACTS
b. Active Subject  Meeting of minds between two contracting parties whereby one
 Also called the CREDITOR or OBLIGEE binds himself with respect to the other, to give something or to
 The party who has the right to demand performance of the render some service
obligation  Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
2. PRESTATION
 The object or subject matter of the obligation. It may consist in 3. QUASI-CONTRACTS
giving, doing and not doing something  Refers to certain lawful, voluntary and unilateral acts giving rise
to a juridical relation to the end that no one shall be unjustly
3. EFFICIENT CAUSE enriched at the expense of another
 The vinculum juris, juridical tie or the legal tie which binds the
parties to an obligation. The efficient cause of an obligation may Examples:
be any of the five sources of obligation.
a. Negotiorum Gestio
 This refers to the voluntary administration of the property,
business or affairs of another without his consent or authority. It
 creates the obligation to reimburse the gestor for necessary and
useful expenses (Art. 2150)
b. Solutio Indebiti
 This refers to payment by mistake of an obligation which was not
due when paid. It creates the obligation to return the payment.
(Art. 2154)
c. Other examples of Quasi-contracts under the Civil Code of the
Philippines
1. Article 2164. When, without the knowledge of the person obliged to
give support, it is given by a stranger, the latter shall have a right to
claim the same from the former, unless it appears that he gave it out
of piety and without intention of being repaid.
2. Article 2165. When funeral expenses are borne by a third person,
without the knowledge of those relatives who were obliged to give
support to the deceased, said relatives shall reimburse the third
person, should the latter claim reimbursement.
3. Article 2166. When the person obliged to support an orphan, or an
insane or other indigent person unjustly refuses to give support to
the latter, any third person may furnish support to the needy
individual, with right of reimbursement from the person obliged to
give support. The provisions of this article apply when the father or
mother of a child under eighteen years of age unjustly refuses to
support him.
4. Article 2167. When through an accident or other cause a person is
injured or becomes seriously ill, and he is treated or helped while he
is not in a condition to give consent to a contract, he shall be liable
to pay for the services of the physician or other person aiding him,
unless the service has been rendered out of pure generosity.
5. Article 2168. When during a fire, flood, storm, or other calamity,
property is saved from destruction by another person without the
knowledge of the owner, the latter is bound to pay the former just
compensation.
6. Article 2169. When the government, upon the failure of any person
to comply with health or safety regulations concerning property,
undertakes to do the necessary work, even over his objection, he
shall be liable to pay the expenses.
7. Article 2170. When by accident or other fortuitous event, movables
separately pertaining to two or more persons are commingled or
confused, the rules on co-ownership shall be applicable.
8. Article 2174. When in a small community a majority of the
inhabitants of age decide upon a measure for protection against
lawlessness, fire, flood, storm or other calamity, anyone who objects
to the plan and refuses to contribute to the expenses but is benefited
by the project as executed shall be liable to pay his share of said
expenses.
9. Article 2175. Any person who is constrained to pay the taxes of
another shall be entitled to reimbursement from the latter.
4. DELICTS
 Acts or omissions punishable by law.
 These are crimes or felonies. The commission of a crime makes
the offender civilly liable (ART 100, RPC)
 Such civil liability includes restitution, reparation of damages
caused and indemnification of consequential damages
5. QUASI-DELICTS
 Tort or Culpa aquillana
 These are acts or omissions that cause damage to another, there
being no contractual relation between the parties (Art 2176)
IMPORTANT NOTES/REMINDERS: NATURE AND EFFECT OF OBLIGATIONS

SPECIFIC AND GENERIC THING

SPECIFIC (DETERMINATE)
 A thing is determinate when it is particularly designated and physically
segregated from all others of the same class (Art 1460)

GENERIC (INDETERMINATE)
 A thing is indeterminate when it is not particularly designated and
physically segregated from all others of the same class.

 As a rule, loss of a determinate thing through a fortuitous event

extinguishes the obligation (Art. 1262)

OBLIGATIONS OF ONE OBLIGED TO GIVE A DETERMINATE THING

1. To take care of the thing with the proper diligence of a good father of a
family, unless the law or the stipulation of the parties requires another
standard of care. (Art 1163).

Diligence of a good father of family means the ordinary care that an

average person exercises in taking care of his property.

2. To deliver the thing (Art.1163)

This involves placing the thing in the possession or control of the creditor
either actually or constructively.

3. To deliver the fruits of the thing (Art 1164)

a. Kinds of fruits

1. Natural Fruits

 They are the spontaneous products of the soil and the young and other
products of animals. (Art 442)
 2. Industrial Fruits the creditor over the thing and its fruits when they have been
delivered to him. This is also called jus in re.
 They refer to those produced by land of any kind through cultivation or
labor. (Art 442) 4. To deliver its accessions and accessories even if they have not been
mentioned. (Art. 1166)
3. Civil Fruits
o Accessions- the include everything that is produced by a thing
 They refer to the fruits which are the result of a juridical relation. or is incorporated or attached thereto, either naturally or
artificially.
b. When creditor has a right to the fruits of a determinate thing.
o Accessories- those joined to or included with the principal thing
Article 1164. The creditor has a right to the fruits of the thing from the for the latter’s better use, perfection or enjoyment.
time the obligation to deliver it arises. However, he shall acquire no real
right over it until the same has been delivered to him. When obligation
IMPORTANT NOTES/REMINDERS:
to deliver the thing arises

c. When obligation to deliver the thing arises

If the obligation is a pure obligation or one whose performance is not

subject to a suspensive period or suspensive condition, the obligation to
deliver arises from perfection.

If the obligation is subject to a suspensive period or suspensive

condition, the obligation to deliver arises from the arrival of the term or
upon fulfillment of the condition.

d. Rights of the creditor

1. Personal Right

o This is the right that may be enforced by one person to another.

Also called jus in personam or jus ad rem

2. Real Right

o This refers to the right or power over a specific thing which is

enforceable against the whole world. This is the right acquired by
RIGHTS OF THE CREDITOR
1. If the debtor fails to perform his obligation to deliver a determinate thing
a. To compel the debtor to make delivery (Art 1165)
b. To demand damages from the debtor (Art 1170)
2. If the debtor fails to perform his obligation to deliver a generic thing
a. To ask that the obligation be complied with at the expense of the
debtor (Art 1165)
b. To demand damages from the debtor (Art 1170)
3. If the debtor fails to perform his obligation in obligations to do
a. If the debtor fails to perform the obligation or performs it but it
contravenes the tenor thereof-
1. The creditor may have the obligation executed at the expense of
the debtor
2. He may also demand damages from the debtor (Art 1170)
b. If the debtor performs the obligation but does it poorly (Art 1167)
1. Creditor may have the same undone at the debtor’s expense
2. Creditor may also demand damages from the debtor (Art 1170)
4. If the debtor does what is forbidden him
a. The creditor may demand that what has been done be undone
b. He may also demand damages from the debtor (Art 1168)
CIRCUMSTANCES AFFECTING OBLIGATIONS
RULE: A person in the performance of his obligation will be liable to pay
DAMAGES in case he will be guilty of: Delay, Fraud, Negligence, Contravention
of the tenor of the obligation
GROUNDS FOR LIABLITY TO PAY DAMAGES
DAMAGES
 Refers to the harm done and the sum of money that may be recovered
in reparation for the harm done.
Kinds of Damages: (MENTAL)
1. Moral
They include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury
2. Exemplary
Also called corrective damages
These are imposed by way of example or correction for public good, in
addition to the moral, temperate, liquidated or compensatory damages
3. Nominal
Adjudicated in order that a right of a person which has been violated or
invaded by another, may be vindicated or recognized. (Art 2221)
4. Temperate
Also called moderate damages.
More than nominal but less than compensatory damages. May be
recovered if the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with
certainty (Art 2224)
5. Actual
Compensatory damages
This refers to the pecuniary loss that may be recovered. It includes the
value of the loss suffered and profits not realized.
6. Liquidated
Those agreed upon by the parties to a contract, to be paid in case of
breach (Art 2226)
1. Delay or default or Mora
Non-fulfillment of the obligation with respect to time
KINDS:
a. Mora Solvendi-delay on the part of the debtor
1. Ex re- delay in real obligations (to give)
2. Ex persona- delay in personal obligations (obligations to do)
 b. Mora Accipiendi- delay on the part of the creditor  The contract is valid but the party employing it shall be
liable for damages.
c. Compensatio Morae- delay in reciprocal obligations
2. Fraud in the performance of the Obligation
GENERAL RULE:  This is the deliberate act of evading fulfillment of an obligation in
a normal manner.
Article 1169. Those obliged to deliver or to do something incur in delay from  This presupposes an existing obligation; hence, the fraud has no
the time the obligee judicially or extrajudicially demands from them the effect on the validity of the contract since it was employed after
fulfillment of their obligation. perfection. However, the party employing it is liable for damages.
(Art. 1170)
NO DEMAND, NO DELAY
b. According to time of commission
EXCEPTIONS: 1. Future Fraud
 A waiver of an action for future fraud cannot be made. If there
1. When the law provides; is an agreement for its waiver, the same if void.
2. When the obligation expressly so declares;  Thus the debtor will still be liable for damages if he commits
3. When time is of the essence of the contract fraud in the performance of his obligation despite any waiver
4. When demand would be useless by his creditor.
5. When there is performance by a party in reciprocal obligations
2. Past Fraud
 A waiver of an action for past fraud may be made, since the
2. Fraud (Dolo) commission of fraud can no longer be encouraged. Such
 is the deliberate or intentional evasion by the debtor of the normal waiver is an act of liberality on the part of the creditor.
compliance of his obligation.

3. Negligence (Culpa)
Kinds of Frauds in General:  It is the omission of that diligence required by the nature of the
a. According to meaning obligation and corresponds with the circumstances of the person,
1. Fraud in obtaining consent of the time and of the place.
a. Causal Fraud or dolo causante
 This refers to fraud without which consent would not have Test of Diligence:
been given. Whether the defendant in doing the alleged negligent act used that
 It renders the contract voidable reasonable care and caution which an ordinary person would have
used in the same situation.
b. Incidental Fraud or dolo incidente
 This refers to fraud without which consent would have still
been given but the person giving it would have agreed on
different terms.
Kinds:
1. Culpa contractual (contractual negligence)
o This is negligence in the performance of a contract
2. Culpa aquiliana (civil negligence or tort or qausi-delict or culpa
extra-contractual)
o These are acts or omissions that cause damage to another, there being
no contractual relation between the parties. (Art 2176)
3. Culpa criminal (criminal negligence)
o This is the negligence that result in the commission of a crime
4. Contravention of the tenor of the obligation
 Breach of contractual obligation
Kinds:
1. Voluntary
 Debtor is liable for damages if in the performance of his
obligation, he incurs:
a. Default (mora)
b. Fraud (dolo)
c. Negligence (culpa)
d. In any manner that contravene the nature thereof
FORTUITOUS EVENT
 Are those events that could be foreseen or which though foreseen, are
inevitable
 Examples:
Elements:
1. The cause must be independent of the debtor’s will
2. There must be impossibility of foreseeing the event or of avoiding it even
if it can be foreseen
3. The concurrence of the event must be of such character as to render it
impossible for the debtor to perform his obligation in a normal manner.
LIABILITY IN CASE OF FORTUITOUS EVENT
GENERAL RULE:
No person shall be liable for fortuitous events
EXCEPTIONS:
1. Expressly provided by law
2. When it is otherwise declared by stipulation
3. When the nature of the obligation requires the assumption of risk

RELATED RULES:
RIGHTS OF THE CREDITOR:
In determinate obligations: Article 1176.
a. Ask for specific performance
b. Damages, exclusive or in addition to performance 1. The receipt of the principal by the creditor without reservation with
respect to the interest, shall give rise to the presumption that said
In generic obligations: interest has been paid.
a. Ask for specific performance
b. Ask that the obligation be complied with at the debtor’s expense 2. The receipt of a later installment of a debt without reservation as to prior
c. Damages installments, shall likewise raise the presumption that such installments
have been paid.

2. Involuntary NOTE:
 Debtor is not liable for damages The above presumptions are disputable; hence they may be rebutted by the
 Example: creditor with contrary evidence.
The Creditor has the following remedies to satisfy his claims against his DIFFERENT KINDS OF OBLIGATIONS
debtor:

Article 1177. The creditors, after having pursued the property in possession of KINDS OF OBLIGATIONS:
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 a. Unilateral and Bilateral
person; they may also impugn the acts which the debtor may have done to
defraud them. b. Real and Personal (negative and positive)
a. Exact fulfillment/specific performance
b. Pursue the leviable properties of the debtor c. Determinate and Generic
c. Accion subrogatoria- exercise all rights and actions of the debtor
except those which are inherent in his person d. Civil and Natural
d. Accion pauliana- rescind contracts entered into by the debtor to
defraud the creditor e. Legal and Conventional

PRESUMPTIONS:

Article 1178. Subject to the laws, all rights acquired in virtue of an obligation PRIMARY CLASSIFICATION
are transmissible, if there has been no stipulation to the contrary.
1. Pure Obligation
General Rule: All rights acquired by virtue of an obligation are transmissible.
2. Conditional Obligation
Exceptions:
1. If the law prohibits transmission of the right 3. Obligation with a period
2. If the parties agreed against transmission
3. If the right is by nature not transmissible 4. Alternative Obligation

5. Facultative Obligation
IMPORTANT NOTES/REMINDERS
6. Joint Obligation

7. Solidary Obligation

8. Divisible Obligation

9. Indivisible Obligation

10. Obligation with a Penal Clause

PURE OBLIGATION c. Potestative
 One without a term or condition and is demandable at once.  A condition that depends upon the will of one of the
contracting parties
Example:
I promise to give you Php5,000.00  Potestative on the part of the debtor
If suspensive-the obligation is void
Example:
CONDITIONAL OBLIGATION D is to give C P50,000.00 if D goes to Baguio
 One whose demandability or extinguishment depends upon the
happening of a condition If resolutory-the obligation is valid
Example:
Example: D is to allow C use of his car until D returns from Baguio
I will give you my car if you pass the CPA Examination
 Potestative on the part of the creditor
I will let you use my car until you pass the CPA Examination The obligation is valid whether the condition is suspensive or
Condition resolutory
 It is an uncertain event which yields an influence on a legal relationship Example:
D is to give C P50,000.00 if C goes to Baguio
Classification:
a. Suspensive D is to allow C use of his car until C returns from Baguio
 A condition, the happening of which will give rise to the
obligation
 the demandability of the obligation is suspended until the d. Casual
happening of the condition  a condition that depends upon chance or upon the will of a
 Also called condition antecedent or condition precedent third person
Example: Example:
I will give you my car if you pass the CPA Examination D is to give C P50,000.00 if D wins first prize in the lotto
bet this morning
b. Resolutory
 A condition, the happening of which extinguished the D is to give C P50,000.00 if X goes to Baguio
obligation
 the obligation is demandable at once but it shall be
extinguished upon the happening of the condition e. Mixed
 also called condition subsequent  A condition that depends partly upon the will of one of the
Example: parties and partly upon chance or upon the will of a third
I will let you use my car until you pass the CPA Examination person
Example:
D is to give C P50,000.00 if C will marry X.
f. Possible D is to give C a car if C finished her accountancy course
 One that is capable of fulfillment in its nature and by law and P1,000,000.00 if C can get a copy of the test questions in the
licensure examination in advance
g. Impossible
 One that is not capable of fulfillment in its nature or by k. Indivisible
operation of law.  One that is not capable of partial performance by its nature or
 The obligation and the condition is void by law or by agreement of the parties
Example: Example:
By nature- If you can swim across the Pacific Ocean D is to give C a car if C finishes his accountancy course
By operation of law- If you kill X and tops the licensure examination.

 If the condition is not to do am impossible thing, it shall

be deemed as not having been agreed upon. IMPORTANT NOTES/REMINDERS

h. Positive
 The condition that some event happen at a determinate time
 The obligation is extinguished as soon as the time expires or
it become indubitable that the event will not take place
Example:
D is to give C P50,000.00 if C will marry X on or before
April 30, 2019

i. Negative
 This is a condition that some event will not happen at a
determinate time
 The obligation becomes effective as soon as the time
indicated has elapse or it has become evident that the event
will not occur
Example:
D is to give C P50,000.00 if C will not marry X on or before
April 30, 2019

j. Divisible
 One that is capable of partial performance
Example:
D is to give C a car if C finishes his accountancy course
and P1,000,000.00 if C tops the licensure examination.
OBLIGATION WITH A PERIOD Condition Period
 One whose demandability or extinguishment is subjected to the -an event that may or may not happen -an event that must necessarily come
expiration of a term which must necessarily come. at a date known beforehand or at a
 There is a day certain when the obligation will rise and cease. time that cannot be determined

Kinds of Period: -may refer to the future or to a past -always refers to the future
a. Ex Die event unknown to the parties
The period with a suspensive effect
The obligation becomes demandable upon the lapse of the period. -causes an obligation to arise or -merely fixes the time for the
Example: to cease efficaciousness of an obligation
D is obliged to give his car to C on May 1, 2019.
-A condition that depends upon the -a period that depends upon the will
b. In Diem Will of the debtor which is suspensive of the debtor authorizes the court to
The period with a resolutory effect Shall annul the obligation fix its duration.
The obligation is demandable at one but is extinguished upon the lapse
of the period.
Example: When the court may fix the period
On January 1, 2019, D allowed C to use his car until May 1, 2019 1. If the obligation does not fix a period, but from its nature and
circumstances it can be inferred that a period was intended.
c. Legal 2. When the duration of the period depends upon the will of the debtor
A period that is fixed by law a. “when my means permit me to do so”
b. “little by little”
d. Voluntary c. “as soon as I have the money”
A period that is fixed by the parties d. “as soon as possible”
e. “in partial payments”
e. Judicial
A period that is fixed by the court

IMPORTANT NOTES/REMINDERS

Period
 Is a space of time which determines the effectivity or
extinguishment of an obligation.

A day certain
 Is that which must necessarily come although it may not be
known when.
Kinds of Obligations according to the number of prestations
1. Simple
 One where there is only one prestation
2. Compound
 There are several prestations. It may either be:
a. Conjunctive
Several prestations are due but all must be performed.
Example:
D is to give C a specific book, a specific ballpen and a specific bag.
b. Distributive or disjunctive
This may either be alternative or facultative
ALTERNATIVE OBLIGATION
 One where several prestations are due but the complete performance
of one of them is sufficient to extinguish the obligation
Example:
D is obliged to give a specific book, a specific ballpen or a specific bag.
Limitations on the debtor’s right to choose
1. The debtor must completely perform the prestation chosen. He cannot
compel the creditor to receive part of one and part of another
undertaking (Article 1199)
2. He cannot choose those prestations which are impossible, unlawful or
which could not have been the object of the obligation. (Article 1199)
When obligation ceases to be alternative and becomes a simple
obligation
1. When the debtor has communicated his choice to the creditor (Article
1201)
2. When among the prestations whereby the debtor is alternatively bound,
only one is practicable (Article 1202)
3. When the creditor has communicated his choice to the debtor, if the
creditor has been expressly given the right of choice (Article 1205)
Rules in case of loss of things or impossibility of services which are
alternatively the objects of the obligation before the choice is
communicated
1. When right of choice is with the debtor (Article 1205)
a. If only one or some are lost through a fortuitous event or through the
debtor’s fault, the debtor may deliver any of the remainder, or that
which remains if only one subsists.
b. If all are lost through a fortuitous event, the obligation is extinguished.
c. If all are lost through the debtor’s fault, the debtor shall pay the value
of the last thing that was lost plus damages
d. If all except one are lost through the debtor’s fault, and the remaining
item is subsequently lost through a fortuitous event, then the debtor’s
obligation is extinguished
e. If all except one are lost through a fortuitous event, and the remaining
item is subsequently lost through the debtor’s fault, the debtor shall
pay damages.
When right of choice is expressly granted to the creditor (Article 1205)
a. If only one or some are lost through a fortuitous event, the debtor shall
deliver that which the creditor should choose among the remainder, or
that which remains if only one subsists.
b. If all are lost through a fortuitous event, the obligation shall be
extinguished
c. If only one or some are lost through the debtor’s fault, the creditor may
claim any of those subsisting, or the price of any of those which were
lost through the debtor’s fault plus damages.
d. If all are lost through the debtor’s fault, the creditor may claim the price
of any of them plus damages.
FACULTATIVE OBLIGATION
 An obligation where only one prestation is due but the debtor may
render another in substitution.
Example:
D is obliged to give a specific book to C with the agreement that D may
deliver a specific ballpen as a substitute.
Rules in case of loss of the principal thing and substitute
1. Before Substitution JOINT OBLIGATION
a. Principal Thing  Each debtor is liable only for a proportionate part of the debt, and each
If lost due to fortuitous event, the obligation is extinguished creditor is entitled only to a proportionate part of the credit.
If lost due to the debtor’s fault, the debtor shall pay damages Example:
1. A and B are indebted to W for Php10,000.00
b. Substitute A is liable only for Php5,000.00. B is liable only for Php5,000.00
The loss of the substitute whether through a fortuitous event or
through the debtor’s fault imposes no additional obligation on the 2. C owes X and Y Php8,000.00
debtor because it is not due. The debtor has still to deliver the X can collect only Php4,000.00. Y can collect only Php4,000.00
principal thing
Other terms for joint obligation
2. After Substitution 1. Proportionately
a. Principal Thing 2. Pro rata
The loss of the principal thing whether through a fortuitous event or 3. Mancomunada
through the debtor’s fault imposes no additional obligation on the 4. Mancomunada simple
debtor because the thing due is already the substitute. 5. We promise to pay

b. Substitute NOTE:
If lost through a fortuitous event, the obligation is extinguished As a general rule, the obligation is presumed to be joint when there is
If lost through the debtor’s fault, the debtor shall pay damages. concurrence of two or more debtors and/or two or more creditors in one and
the same obligation.

Alternative Facultative
-Several prestations are due, -Only one prestation, the principal SOLIDARY OBLIGATION
but the performance of one obligation is due  Each debtor is liable for the whole obligation, and each creditor is entitled
is sufficient to extinguish the debt. to demand payment of the whole obligation.

-If there are void prestations, -If the principal obligation is void, the Kinds of Solidary Obligation
he others may still be valid, debtor is not required to give the 1. Passive Solidarity
hence the obligation remains substitute The solidarity of the part of the debtors

-The right of choice is with the
debtor, unless expressly given
to the creditor
-If all prestations are impossible
except one, that which is possible
must still be given
-The right of choice belongs to the
debtor only
-If all the principal obligation is
impossible, the debtor is not required
to give the substitute
Example:
A and B are solidary debtors, are indebted to X for P10,000.00
X can demand the payment of P10,000.00 from either A or B. If A pays
X, the obligation is extinguished. A can demand reimbursement of
P5,000.00 from B representing the latter’s share in the debt.
 2. Active Solidarity DIVISIBLE OBLIGATION
The solidarity on the part of the creditors  One capable of partial performance
Example:
A owes X and Y, solidary creditors P8,000.00 The following objects are deemed to be Divisible
1. When the obligation has for its object the execution of a certain number
Either X or Y may demand payment of P8,000.00 from A. If A pays X of days of work
P8,000.00, the obligation is extinguished. X must give P4,000.00 to Y 2. When the obligation has for its object the accomplishment of work by
representing the latter’s share in the credit. metrical units
3. Analogous things which by their nature are susceptible of partial
performance
3. Mixed Solidarity
The solidarity both on the part of the debtor and the creditor
Example: INDIVISIBLE OBLIGATION
A and B are solidary debtors, owe X and Y solidary creditors,  One not capable of partial performance
P12,000.00.
The following objects are deemed to be Indivisible
X and Y may collect from A or B the total sum of P12,000.00. 1. Obligation to give definite things
If A pays X P12,000.00, the obligation is extinguished. B must reimburse 2. Those not susceptible of partial performance
A P6,000.00. On the other hand, X must give P6,000.00 to Y. 3. Those where the objects or service is physically divisible but it is
indivisible by provision of law
4. Those where the object or service is physically divisible, but is
Other terms for joint obligation indivisible by the intention of the parties
1. Jointly and severally
2. Individually and collectively
3. In solidum Situations:
4. Mancumunada solidaria Solidary Debtors and Solidary Creditors
5. Juntos o Separadamante Example: A, B and C solidary debtors are obliged to give X, Y, and Z solidary
6. I promise to pay creditors, P18,000.00

Solidarity Answer:
 Refers to the tie between the parties
Indivisibility
 Refers to the subject matter or object not being susceptible of partial Solidary Debtors and Joint Creditors
performance. Example: A, B and C solidary debtors are obliged to give X, Y, and Z joint
creditors, P18,000.00

Answer:
Joint debtors and Solidary Creditors EXTINGUISHMENT OF OBLIGATIONS
Example: A, B and C joint debtors are obliged to give X, Y, and Z solidary
creditors, P18,000.00
CAUSES OF EXTINGUISHEMENT OF OBLIGATION
Answer:
1. PAYMENT OR PERFORMANCE

2. LOSS OF THE THING DUE

Joint Debtors and Joint Creditor
Example: A, B and C joint debtors are obliged to give X, Y, and Z joint creditors, 3. CONDONATION OR REMISSION
P18,000.00
4. CONFUSION OR MERGER
Answer:
5. COMPENSATION

6. NOVATION

OBLIGATION WITH A PENAL CLAUSE

7. OTHER CAUSES:
 One which provides for a greater liability on the part of the debtor in
A. ANNULMENT
case of non-compliance. The accessory undertaking on the part of the
debtor is called a penal clause.
B. RESCISSION
 The penal clause is usually undertaken to ensure performance and
works of either, or both, punishment and reparation.
C. FULFILLMENT OF A RESOLUTORY CONDITION
Example:
D obliged to construct a commercial building for C within a period of
D. PRESCRIPTION
three months. The parties agreed that should D fail to finish the construction of
the building within the said period, D shall pay C P1,000.00 for every day of
delay as penalty.

IMPORATANT NOTES/REMINDERS:

PAYMENT OR PERFORMANCE
Not only delivery of money but also the performance, in any other
manner of an obligation.
How must payment be made?
1. There must be delivery of the thing or rendition of the service that was
contemplated.
2. The payment or performance must be complete
Legal Tender
 Is the money or currency which the debtor may compel his creditor to
accept in payment of his debt.
a. One thousand pesos (Php1,000.00) for denominations of 1-piso, 5-piso
and 10-piso coins
b. One Hundred pesos (Php100.00) for denominations of 1 centavo, 5
centavo, 10 centavo, 25 centavo and 50 centavo coins
c. All bills are legal tender up to any amount
Medium of payment
 Payments of debt in money must be made in the currency which is
legal tender in the Philippines.
NOTES:
o In case an extraordinary inflation or deflation of the currency should
supervene, the value of the currency at the time of the establishment of
the obligation shall be the basis of payment, unless there is an
agreement to the contrary. (Article 1250)
o The delivery of the promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the effect of
payment only when they have been cashed or when through the fault of
the creditor they have been impaired. (Article 1249)
o The creditor cannot be compelled to receive, and the debtor cannot be
compelled to make partial payments, except:
a. When there is an agreement to that effect
b. When the debt is in part liquidated and in part unliquidated, the
creditor may demand and the debtor may effect the payment of the
former without waiting for the liquidation of the latter.
Who must make payment?
Payment must be made by the debtor who must possess the following:
1. The free disposal of the thing due
2. The capacity to alienate the thing
Payment by a third person
1. Creditor not bound to accept payment or performance by a third person
except in the following cases:
a. When there is stipulation to that effect
b. When the third person has an interest in the fulfillment of the
obligation such as guarantor or co-debtor
2. Rights of the third person who makes the payment
a. Payment with knowledge and consent of the debtor
i. He can recover what he has paid (Article 1236)
ii. He is entitled to be subrogated in the rights of the creditor such
as those arising from mortgage, guaranty or penalty
b. Payment without the knowledge or against the will of the debtor
3. Payment by a third person who does not want to be reimbursed
a. The payment shall be deemed to be a donation which requires the
debtor’s consent
b. If the debtor does not consent, the payment shall nevertheless be
valid to the creditor who has accepted it. (Article 1238). In such case,
the third person can only recover insofar, as the payment has been
beneficial to the debtor; he is also not entitled to subrogation (Article
1236 and 1237)
To whom shall payment be made?
1. To the creditor (the person in whose favor the obligation has been
constituted)
 The creditor must be capacitated to receive the payment.
Payment to an incapacitated creditor is not valid except in the
following cases:
a. If he has kept the thing delivered
b. Insofar as payment has been beneficial to him (Article
1241)
2. To the creditor’s successor’s in interest, such as heirs or assigns
3. To any person authorized to receive payment
 As a general rule, payment to an unauthorized third person is
not valid except in the following cases:
a. If the payment has redounded to the benefit of the creditor,
which benefit need not be proved in the following cases
(Article 1241)
i. If after the payment , the third person acquires the
creditor’s rights (as when the third person becomes
the assignee of the instrument evidencing the
credit)
ii. If the creditor ratifies the payment to third person
iii. If by the creditor’s conduct, the debtor has been led
to believe that the third person had authority to
receive payment
b. If the payment is made in good faith to a third person in
possession of the credit (Article 1242)
Where payment must be made
1. If there is stipulation, then the place designated
2. If there’s no stipulation
a. If the obligation is to give a determinate thing, wherever the thing
might be at the time the obligation was constituted
b. If the obligation is to give a generic thing or an obligation to do, then
at the domicile of the debtor (Article 1251)
SPECIAL FROMS OF PAYMENT
1. Dation in payment
2. Application of payment
3. Payment by cession
4. Tender of payment and consignation
DATION IN PAYMENT
 Dacion en pago, adjudication en pago or datio in solutum
 Payment in kind
 A special form of payment where the ownership of property is
transferred to his creditor to pay a debt in money (Article 1245)
APPLICATION OF PAYMENT
 It is the designation of the debt to which payment shall be applied
when the debtor owes several debts in favor of the same creditor
(Article 1252)
Requisites of Application of Payment
a. There must be two or more debts
b. The debts must be of the same kind
c. The debts are owned by the same debtor to the same creditor
d. All debts are due, except:
1. When the parties have stipulated that payment may be applied to
a debt not yet due, or
2. When the application was made by a party for whose benefit the
term has been constituted (Article 1252)
PAYMENT BY CESSION
 Is the abandonment or assignment by the debtor or assignment by the
debtor of all his property in favor of the creditors so that the latter may
sell them and recover their claims out of the proceeds (Article 1255)
Kinds of payment by cession
a. Voluntary or Conventional- agreed upon by the parties
b. Legal- cession by operation of law
Requisites of payment by cession LOSS OF THE THING DUE
a. There must be two or more creditors
b. The debtor is insolvent Loss
c. The debtor abandons all his properties except those which are exempt  A Thing is lost when it perishes, it goes out of commerce or disappears
from execution in such a way that its existence is unknown or it cannot be recovered.
d. The creditors accept the abandonment

o Loss of a determinate thing extinguishes the obligation (Article 1262).

Payment by cession
- There must be two or more
creditors
- The debtor is insolvent
- Affects all the debtor’s properties, - Does not affect all the debtor’s
except those exempt from
execution
- The creditors are authorized to
sell only the debtor’s properties
- The debtor is not released as
a rule
TENDER OF PAYMENT AND CONSIGNATION
Tender of payment
 Act of the debtor of offering to his creditor what is due him
Dation in payment
- Plurality of creditors is not required
- The debtor may not be insolvent
properties
o Loss of a generic thing
- The creditor becomes the owner of
the properties given as payment
- The debtor is released as a rule
o Loss in personal obligations
The following are the exceptions:
a. When the loss is due to the fault of the debtor
b. When the debtor has incurred in delay
c. When so provided by law
d. When it is stipulated by the parties
e. When the nature of the obligation requires the assumption of risk
f. When the debt proceeds from a criminal offense
The loss or destruction of anything of the same kind does not extinguish
the obligation (Article 1263) because generic thing does not really perish
(genus nanquam perit)
a. When the prestation becomes legally or physically impossible
without the fault of the debtor, the obligation is extinguished (Article
1266)
b. When the service has become so difficult as to be manifestly beyond
the contemplation of the parties, the obligor may also be released in
whole or in part (Article 1267)

Consignation
 Act of disposing the sum or the thing due with the judicial authorities
whenever the creditor refuses without just cause to accept the same
or in the cases when the creditor cannot accept it.
CONDONATION OR REMISSION
 The gratuitous abandonment by the creditor of his right

Kinds of Condonaton
1. As to amount or extent
2. As to form

CONFUSION OR MERGER
 a

COMPENSATION
 a

NOVATION
 a