OBLICON
QUIZ 2 Reviewer
Article 1207-1304
ARTICLE NOTES
1207 JOINT obligation
- Each obligor answers ONLY FOR A PART of the whole liability and to each
Joint and obligee belongs ONLY A PART of the correlative rights
Solidary - “To each his own”
Obligations - Example:
- A and B are joint debtors of C to the amount of 1M. C can only
demand 500k from A and only 500k from B.
SOLIDARY obligation
- Relationship between the active and the passive subjects is so close that each of
the former or of the latter may demand the fulfillment of or must comply with the
whole obligation
- “One for all, all for one”
- Example:
- A and B are solidary debtors of C to the amount of 1M. C can
demand the whole 1M from A. A in turn, after paying, can ask
reimbursement from B to the amount of 500k.
GENERAL RULE: when there are 2 or more debtors or 2 or more creditors the obligation
is JOINT
Exceptions:
a. Stipulation in the contract that the obligation is solidary
b. Nature of the obligation requires solidary liability
c. Law declares the obligation to be solidary
i. Tort
ii. Quasi-contracts
iii. Legal provisions of devisees and legatees
iv. Liability of principals, accomplices and accessories of a felony
v. Bailees in commodatum
● Obligation may be joint on the side of the creditors and solidary on the side of the
debtors or vice versa
○ Example: A and B are joint debtors of C, D, E and F, solidary creditors to
the amount of 1M. How much can C collect from A?
■ Answer: C is a solidary creditor, so presumably he can collect the
whole debt. But since A is only a joint debtor, C is entitled to collect
only 500k from A.
● If three persons sign a contract under the provisions of the CC, and no words are
used to make each liable for the full amount, each is only liable for the
proportionate amount of the contract.
● If several persons jointly commit a tort, the plaintiff or the person injured has his
election to sue all or some of the parties jointly, or one of them separately because
of the parties jointly, or one of them separately because the tort is in its nature a
separate act of each individual.
● Rules concerning joint and solidary obligations require a plurality of subjects and
have NO APPLICATION when there is ONLY ONE creditor and ONE debtor.
1208 ● PRESUMPTION: When there are 2 or more debtors, or 2 or more creditors, the
obligation is JOINT
Presumption ○ A. debt shall be divided into as many shares as there are creditors or
that obligation is debtors
JOINT ○ B. credits or debts will be distinct from one another but regarding the
bringing of action in court, the rules of court governing multiplicity of suits
will be followed
● Consequences of joint liability:
○ Vitiated consent on the part of one debtor does not affect the others
■ Ex. A and B are joint debtors of C for 1M. A’s consent was obtained
by C through fraud. B would still be liable for 500k, while A will not
be liable SINCE THE TWO DEBTS ARE CONSIDERED DISTINCT
FROM EACH OTHER.
○ Insolvency of one debtor does not make others responsible for his share
○ Demand by the creditor on one joint debtor puts him in default but not the
others since the debts are distinct
○ When a creditor interrupts the running of the prescriptive period by
demanding judicially from one, the others are NOT AFFECTED.
■ Possible that the share of one debtor has prescribed while those of
the others have not
○ Defenses of one debtor are not necessarily available to the others
1209 Indivisible - Object
Joint - tie between the parties
Indivisible joint
obligation Example: A and B are jointly liable to give C this particular car. (The car is indivisible)
● The obligation is in a sense midway joint and solidary
● Preserves the 2 characteristics of Joint obligations
○ No creditor can do an act prejudicial to the others
○ No debtor can be made to answer for the others
● Fulfillment requires the CONSENT OF ALL THE DEBTORS although each for his
part
Characteristics:
1. Obligation is JOINT but since the object is indivisible (ex. car), the creditor must
proceed against all the joint debtors for compliance is possible only if all the joint
debtors would act TOGETHER
2. Demand = made on all the joint debtors
3. If any of the joint debtors is insolvent, others shall NOT be liable for his share
4. Joint creditors = delivery must be made to all (xpn: one be specifically authorised
by the others)
5. Joint creditor = allowed to renounce his proportionate credit
1210 Indivisibility - refers to the SUBJECT MATTER
Solidarity - refers to the TIE between the parties
Indivisibility as
distinguished
from solidarity
1211 Different ways by which two debtors may be bound:
a. Uniform - when the debtors are bound by the same stipulations and clauses
Solidarity b. Otherwise - where the obligors though liable for the same prestation, are
despite TnCs/ nevertheless not subject to the same stipulations and clauses
not bound in the
same manner Examples:
1. A and B solidarily bound themselves to pay a total of 1M to C, D and E subject to
the following terms and conditions: C’s share will be due at the end of the year; D
will get his share only if he passes the bar and E will get his share after E has
painted the house of X. The obligation is STILL SOLIDARY.
Rule: whole solidary obligations can be recovered from ANY of the solidary debtors
MINUS the share of those with UNMATURED conditions or terms.
1212 Solidary Creditors may do USEFUL but NOT PREJUDICIAL ACTS.
1213 Solidary creditor CANNOT assign his rights WITHOUT the CONSENT of the others.
General Rule
about
non-assignment
of rights by
solidary creditor
1214 To Whom Debtor Must Pay:
1. To any of the solidary creditors
To Whom 2. XPN: payment must be made to solidary creditor WHO MADE A DEMAND (judicial
Debtor Must pay or extrajudicial).
Examples:
● A and B are solidary debtors of C, D and E, solidary creditors. May A pay C the
WHOLE obligation?
○ YES. Provided no judicial or extrajudicial demand has been made by either
D and E.
1215 ● Novation, compensation confusion or remission made by any of the solidary
creditors or with any of the solidary debtors = EXTINGUISHES the obligation
Effect of (without prejudice to the provisions of 1219)
Novation
● Creditor who executed the acts = liable to the others for the share in the
obligation corresponding to them
NOVATION - modification of an obligation by changing its object or principal
conditions, or by substituting the person of the debtor or by subrogating the person of the
debtor or by subrogating a third person in the rights of creditor.
Example:
● If a co-creditor modifies the obligation, he must reimburse the other for his part in
the obligation.
COMPENSATION - which takes place when 2 persons in their own rights are creditors
and debtors of each other (1278 CC)
● Total compensation automatically extinguishes the obligation, whether known or
unknown to the parties
CONFUSION OR MERGER - takes place when the characters of creditor and debtor
are merged in the same person (1275 CC)
REMISSION OR WAIVER - act of liberality whereby a creditor condones the obligation
of the debtor; that where the creditor tells the debtor to “forget about the whole thing” (
1270 CC) May be total or partial.
1216 Against whom creditor may proceed:
● Any
Against whom ● Some
creditor may ● All of the solidary debtors
proceed ● SIMULTANEOUSLY
If the creditor only sues one = there is NO WAIVER against those not yet sued. They may
be proceeded against later.
Applies only to SOLIDARY obligations
1217 ● Payment by one of solidary debtors = extinguishes obligation
● If one or more solidary debtors offer to pay = creditor may choose which offer to
Payment in accept
Solidary ● He who made the payment may claim from his co-debtors only the share which
Obligations corresponds to each (with the interests for the payment already made)
○ Example: A, B, C and D are solidary debtors of E to the amount of 1.2M. A
pays E the whole 1.2M. Is A entitled to reimbursement from B, C and D?
■ YES. Reimbursement plus interest from the payment. Except when
debt is paid before due.
● Insolvency of one must in the meantime be shouldered by the rest
● Obligation of the others to reimburse him arises only from the time PAYMENT IS
MADE.
PAYMENT - one of the ways by which an obligation is extinguished and consists of the
thing or the rendition of the service which is the object of the obligation
Nature of Liability for Reimbursement:
Solidary obligation which has been extinguished has now been converted into a JOINT
OBLIGATION FOR REIMBURSEMENT. Liability is not the ordinary joint one for the
insolvency of one must in the meantime be shouldered by the rest.
1218 Payment by solidary debtor = not entitle him to reimbursement from his co-debtors if such
payment is made after the obligation has prescribed or become illegal
Effect of
Payment of
Prescribed Debt
1219 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
Effect of DEBT HAD BEEN TOTALLY PAID BY ANYONE OF THEM BEFORE THE REMISSION
Remission WAS EFFECTED.
Example: A and B solidarily owe X 1M. A paid X the whole amount. Later, X remitted B’s
share. Can A still recover reimbursement of 500k from B?
● YES. This article prevents fraud and gives justice to the paying debtor.
Reason for provision: since payment extinguishes the obligation, there is nothing more to
remit.
1220 Remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors.
Remission of the
whole obligation
1221 LOST or IMPOSSIBILITY:
Effect of Loss or a. If without fault - no liability
Impossibility b. With fault - liability (damages and interest)
c. Loss because of a fortuitous event after default - liability because of the default
1222 Kinds of Defenses:
1. Derived from the NATURE of the obligation (complete defense)
Defenses in a. Lack of consideration of cause
Actions Filed b. Fictitious contract
c. Extinguishment of obligation
d. Vices of consent
2. PERSONAL to the debtor sued (complete defense generally except if the defense
is non-fulfillment yet of a condition or non-arrival of a term)
a. Vitiated consent - complete defense
b. Incapacity to give consent (minor) - complete
c. Non-fulfillment of condition - partial
d. Non-arrival of term - partial
3. PERSONAL to the others
1223 ● Divisible Obligation - one capable of PARTIAL performance (ex. To deliver 200
kgs of sugar)
Divisible and ● Indivisible Obligation - one NOT capable of partial performance (ex. To deliver a
Indivisible specific car)
Obligations
SOLIDARITY INDIVISIBILITY
1. Refers to TIE between parties 1. Refers to NATURE of the
2. Needs at least 2 debtors and obligation
creditors 2. May exist even if there is only one
3. The fault of one is the fault of the debtor and only one creditor
others 3. The fault of one is not the fault of
the others
1224 Joint indivisible obligation - givesr rise to INDEMNITY FOR DAMAGES from the time
anyone of the debtors does not comply with his undertaking.
Joint Indivisible
Obligation Effect of non-compliance: Obligation is CONVERTED into a MONETARY one for
INDEMNITY.
1225 Obligations that are deemed indivisible:
a. To give definite things (specific car)
Obligations that b. Not susceptible of partial performance
are deemed c. May be indivisible if provided by law
indivisible and d. Maybe be indivisible if it was the intention of the parties concerned
divisible
Obligations that are deemed divisible:
a. Object of the obligation is the execution of a certain number of days at work
b. Obligation is the accomplishment of work by metrical units
c. Purpose of obligation is to pay a certain amount in installments
d. Object of the obligation is the accomplishment of work susceptible of partial
performance
General rule: a contract to do several things at several times is divisible.
1226 General Rule: in obligations with penal clause, the penalty shall SUBSTITUTE the
indemnity for damages and the payment of interests in case of non-compliance.
Obligations with ● Nevertheless, damages shall be paid if obligor REFUSES to pay the penalty or is
a penal clause guilty of FRAUD
● EXCEPTIONS:
○ When there is an express stipulation to the effect that damages or interest
may still be recovered, despite the presence of the penalty clause
○ Debtor refuses to pay the penalty
○ Guilty of fraud or dolo in the fulfillment of the obligation
PENAL CLAUSE - coercive means to obtain from the debtor compliance from the debtor;
an accessory undertaking to assume GREATER LIABILITY in case of breach. It is
attached to obligations in order to INSURE THE PERFORMANCE.
Insistence upon receiving satisfaction of the penal clause operates as a renunciation of
the right to the other damages
1227 General rule: debtor is NOT ALLOWED to just pay the penalty instead of fulfilling the
obligation. He can only do so if the right has been EXPRESSLY reserved. Implied
Debtor cannot reservation is not allowed.
substitute
penalty for the General rule: creditor does NOT have the right to demand the fulfillment of the obligation
principal and the penalty at the same time. The exception arises when such a right has been
obligation CLEARLY granted to him.
1229 When penalty may be reduced by the court:
a. When the obligation has been PARTLY complied with by the debtor
When penalty b. Obligation has been IRREGULARLY complied with by the debtor
may be reduced c. Penalty is iniquitous or unconscionable, even if there has been NO
by the court PERFORMANCE at all
Penal clause cannot be enforced if:
a. Breach is the fault of the creditor
b. Fortuitous event intervened unless the debtor expressly agreed on his liability in
case of fortuitous events
c. The debtor is not yet in default
1230 Effect of nullity:
● If principal obligation is null and void, the penal clause will have no more use and
Effect of nullity will also be considered null and void.
of the penalty ● But if the penal clause is not valid, it does not mean that its nullity will make the
clause principal obligation null and void.
● REASON: the principal obligation can stand alone and the void penal clause will
just be disregarded
1231 Obligations are extinguished:
a. By payment or performance
Extinguishment b. By the loss of the thing due
of Obligation c. By the condonation or remission of the debt
d. By the confusion or merger of the rights of creditor and debtor
e. By compensation
f. By novation
g. Annulment
h. Rescission
i. Fulfillment of a resolutory condition
j. Prescription
1232 PAYMENT - mode of extinguishing obligations which consists of:
a. Delivery of money
Payment or b. Performance in any other manner of an obligation
Performance
● For payment to exist = creditor has to ACCEPT the same, expressly or impliedly
● Judgment = void; payment = void.
1233 Requisites for valid payment:
a. The very thing or service contemplated must be paid
Completeness of b. Fulfillment must be complete
Payment
1234 ● If the obligation has been substantially performed in GOOD FAITH = obligor may
recover as though there has been STRICT AND COMPLETE fulfillment; less
Substantial damages suffered by the obligee
performance in ● Applies only when obligor admits breaching the contract after honestly and
good faith faithfully performing all the material elements thereof except for some technical
aspects that cause no serious harm to the obliges.
1235 Obligee = accepts the performance knowing its INCOMPLETENESS or IRREGULARITY
= without pressing any protest or objection = obligation will be deemed COMPLIED with.
Estoppel on the
creditor’s part in
view of his
acceptance
1236 General Rule: 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
Right of creditor to the contrary
to refuse
payment by third XPN: whoever pays for another may demand from the debtor what he has paid except
person 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.
Can refuse payment by a stranger EXCEPT:
a. If there is a stipulation allowing this
b. If said third person has an interest in the fulfillment of the obligation (co-debtor,
guarantor, joint debtor)
THE THIRD PERSON MAY PAY:
a. With the knowledge and consent of the debtor (payor is entitled to
reimbursement and subrogation to such rights as guaranty, penalty clause or
mortgage)
b. Without the debtor’s knowledge or against his will (he is only allowed BENEFICIAL
REIMBURSEMENT)
Other instances when recovery can be had from the creditor and not from the
innocent debtor:
a. Debt had prescribed
b. Debt had been completely remitted
c. Debt has already been paid
d. Legal compensation had already taken place
EXAMPLE:
A owes B 1M. Later, A paid 700k to B leaving a balance of 300k. C, the classmate of A
and intending to surprise A, paid 1M to B thinking that A still owed B that amount. He did
this without the knowledge of A. How much can C recover from A?
Answer: C can only recover 300k from A because it is only up to this amount that A has
been benefited. C can recover the 700k from B, who should not have accepted the
complete payment for a debt that has been partially paid.
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
When no from mortgage, guaranty or penalty.
subrogation
exists SUBROGATION - act of putting somebody into the shoes of the creditor hence enabling
the former to exercise all the rights and actions that could have been exercised by the
latter
*** if A cannot pay, C cannot foreclose the mortgage on A’s land. It is true that the original
creditor B had the right to foreclose in case of non-payment BUT in this case THE NEW
CREDITOR C HAD NOT BEEN SUBROGATED IN THE RIGHTS OF B, inasmuch as C
paid without the knowledge of A. The only right of C therefore is reimbursement up to the
amount A had benefited, but NOT the right of subrogation.
1238 ● Payment made by 3rd person = does not intend to be reimbursed = deemed to be
a donation = which REQUIRES the debtor’s consent.
When payment ● But payment is VALID as to the creditor who has ACCEPTED it
by stranger is ● REASON WHY DEBTOR HAS TO CONSENT: no one should be compelled to
deemed a accept the generosity of another
donation
1239 General Rule: If person paying has no capacity to give:
a. Payment is not valid - if accepted
Payment by an b. Creditor cannot even be compelled to accept it
incapacitated c. Remedy of sonsignation would not be proper
person
1240 To whom payment must be made:
a. To the person in whose favor the obligation has been constituted (creditor)
To whom b. Successor-in-interest (heirs)
payment must c. Any person authorized to receive it (may be by agreement or law)
be made
1241 Payment to an Incapacitated Person
● Payment to a person incapacitated to manage or administer his property valid?
Payment to ○ YES.
incapacitated or ■ If the incapacitated person has KEPT the thing delivered
unauthorized ■ Insofar as the payment has been BENEFICIAL to him
persons
Payment to an unauthorized person
● General Effect: payment is VALID but only to the extent of benefit (financial, moral
or intellectual) to the creditor.
● Not presumed except when:
○ A. After the payment the 3rd person acquires the creditor’s rights
○ B. If the creditor ratifies the payment to the 3rd person
○ C. If by the creditor’s conduct, the debtor has been led to make the
payment. (a case of estoppel)
1242 Requisites:
1. Payment by payor must be made in good faith
Payment made 2. Payee must be in possession of the credit itself
in Good faith to
a person in
possession of
the credit
1243 Payment made after judicial order to retain = NOT VALID
Payment made Judicial order may have been prompted by an order of:
after judicial 1. Attachment
order to retain 2. Injunction
3. Garnishment - the proceeding by which a debtor’s creditor is subjected to the
payment of his own debt to another. Consists in the citation of some stranger to
the litigation, who is the debtor of one of the parties to the action.
INTERPLEADER - technical name of the action in which a certain person in possession of
certain property wants claimants to litigate among themselves for the same.
INJUNCTION - process by virtue of which a person is generally ordered to REFRAIN from
doing something
1244 Debtor of a THING ---> cannot COMPEL the creditor to RECEIVE a DIFFERENT one
although the latter may be of the SAME VALUE or more valuable.
Debtor cannot
compel creditor In obligations TO DO OR NOT TO DO ---> an act cannot be SUBTITUTED by another act
to accept a against the obligee’s will
different object
Instances when 1244 does not apply:
1. Facultative obligations
2. In case there is another agreement resulting in either:
a. Dation in payment
b. Novation
3. Waiver by the creditor (expressly or impliedly)
1245 DATION in payment - mode of extinguishing an obligation whereby the debtor
ALIENATES in favor of the creditor, property for the satisfaction of monetary debt.
Dation in
Payment Conditions under which a dation in payment would be valid:
1. If the creditor consents
2. If dation in payment will not prejudice the other creditors
3. If the debtor is not judicially declared insolvent
1246 Obligation to give generic things (whose quality and circumstances have not been
stated):
Obligation to ● CREDITOR cannot demand a thing of SUPERIOR quality (but if he desires, he
give generic may demand and accept one of inferior quality)
things ● DEBTOR cannot deliver a thing of INFERIOR quality (if he desires he can provide
one of superior quality provided that it is not a different kind)
1247 General rule: debtor has to pay for the extrajudicial expenses incurred during the
payment
Debtor pays XPN: when there is a stipulation to the contrary
generally for
extrajudicial
expenses
1248 Creditor = cannot be compelled partially to receive the prestations in which the obligation
consists.
Performance Debtor = cannot be required to make partial payments
should generally
be complete Exceptions: Where partial performance is allowed:
a. When there is stipulation to this effect
b. Different prestations are subject to different conditions or different terms
c. Debt is in part liquidated and in part unliquidated (example. Owing someone
3million plus damages. If the amount of damages is not yet ascertained, the 3
million is already known or liquidated. The 3 million is already demandable and
payable)
d. When a joint debtor pays his share or the creditor demands the same
e. When a solidary debtor pays only the part demandable because the rest are not
yet demandable on account of their being subject to different terms and conditions
f. Compensation, when one debt is larger than the other
g. When work is to be done by parts
1249 LEGAL TENDER - which a debtor may compel a creditor to accept in payment of the debt
Legal Tender
1250 In case of inflation or deflation of the currency stipulated should supervene = the
value of the currency at the time of the establishment of the obligation shall be the
Inflation basis of payment.
Inflation - sharp sudden increase of money or credit or both without a corresponding
increase in business transaction
Deflation - opposite of inflation
1251 Where payment must be made:
a. If there is a stipulation - in the place designated
Where payment b. If there is no stipulation:
must be made i. If determinate specific thing - in the place where the thing might be (usually
or habitually) at the time the obligation was constituted.
1. If merely temporary - shipped or in the ocean - domicile of debtor
ii. Any other thing/ generic - domicile of the debtor
1252 Special forms of payment:
a. Application of payments
Special forms of i. Definition: designation of the debt to which should be applied a payment
payment made by a debtor who owes several debts in favor of the same creditor/
phrase applied to show which debt out of 2 or more debts owing to
the same creditor is being paid
b. Dation in payment
c. Assignment in favor of creditors
d. Tender of payment and consignation
Requisites for Application of Payment to be made use of:
a. Must be 2 or more debts
b. Debts must be of the same kind
c. Debts are owed by the same debtor in favor of the same creditor
d. All debts must be due unless contrary has been stipulated
e. Payment is not enough to extinguish all the debts
Preferential rights: It is the debtor who is given BY LAW the right to select which of his
debts he is paying
If the creditor makes the application without the knowledge and consent of the debtor =
application is NOT VALID
Application is made = at the TIME PAYMENT IS MADE
1253 DEBTOR = cannot insist that his payment be credited to the PRINCIPAL instead of the
INTEREST.
Interest must be ● XPN: if the creditor agrees
paid first
General Rule: payment that is made to a creditor must be credited to interest ahead
of the principal. The interest can refer not only to interest on amounts already due but on
future installments.
What interest is supposed to be paid:
a. Interest by way of compensation
b. Interest by way of damages due to default
1254 Rules if no application of payment has been made:
a. Apply to the most ONEROUS (in case the due and demandable debts are of
Rules in case no different natures)
application of b. If debts are of the same nature and burden, application shall be MADE TO ALL
payment has PROPORTIONATELY.
been voluntarily
made
1255 Cession/ Assignment in favor of creditors:
● Process by which a debtor transfers all the properties not subject to execution
Cession or in favor of his creditors so that the latter may sell them, and thus apply the
assignment in proceeds to their credits.
favor of creditors
Requisites for Voluntary Assignment:
a. More than one debt
b. More than one creditor
c. Complete or partial insolvency of debtor
d. Abandonment of all debtor’s property not exempt from execution
e. Acceptance or consent on the part of the creditors
Effect of Voluntary Assignment
a. The creditors DO NOT become the owners, they are merely assignees with
authority to sell.
b. Debtor is RELEASED up to the amount of the net proceeds of the sale unless
there is a stipulation to the contrary. Balance remain collectible.
c. Creditors will collect credits in order of preference agreed upon/in default of
agreement
i. Properties that should not be assigned:
1. Family home
2. Amount needed by the debtor to support himself and those he is
required by law to support
Dacion en Pago Cession
1. Does not affect all the properties 1. Affects all properties of the debtor
2. Does not require plurality of 2. Requires more than one creditor
creditors 3. Requires the consent of ALL
3. Only specific or concerned creditors
creditor’s consent is required 4. Requires full or partial insolvency
4. May take place during the solvency 5. Does not transfer ownership
of the debtor 6. Not an act of novation
5. Transfers ownership upon delivery
6. An act of novation
TENDER OF PAYMENT - act of offering the creditor what is due him together with a
demand that the creditor accept the same; notice
CONSIGNATION - act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment
1256 Creditor = whom tender of payment has been made = refuses without just cause to
accept it = debtor shall be released from responsibility by the consignation of the thing or
Effect of tender sum due.
without
consignation Consignation alone (even without tender of payment) shall produce the same effect
in the following cases:
a. When creditor is absent or unknown; does not appear at the place of payment
b. Incapacitated to receive the payment at the time it is due
c. When without just cause he refuses to give a receipt
d. When two or more persons claim the same right to collect
e. When the title of the obligation has been lost
f. When debtor has previously notified the creditor that the latter would not accept
any payment
VALID tender of payment requisites:
1. Must be made in legal tender
2. Include whatever interest is due
3. Must be unconditional
4. Obligation must already be DUE
Effect: DOES NOT extinguish the debt; consignation must follow
1257 Essential Requisites for Consignation:
1. Existence of a valid debt
Essential 2. Valid prior legal tender unless tender is excused
requisites for 3. Prior notice of consignation
Consignation 4. Actual consignation
5. Subsequent notice of consignation
Consignation will be VOID = if not made strictly in consonance with the provisions which
regulate payment
1258 How consignation is actually made
a. Things due must be deposited with the proper JUDICIAL AUTHORITIES
How b. There must be PROOF that:
consignation is i. Tender had been previously made (general rule)
made ii. Creditor had previously NOTIFIED the debtor that consignation will be
made (in case tender is NOT required)
1259 Expenses of Consignation = when done properly = charged against the CREDITOR
Creditor
generally to bear
expenses of
consignation
1260 If the consignation is DULY MADE:
a. Debtor may ask the judge to order the CANCELLATION of the obligation
Effects if b. Running of INTEREST is SUSPENDED
consignation c. Should be observed that before the creditor accepts or before the judge declares
has been duly that consignation has been properly made, obligation remains.
made
When debtor may WITHDRAW the thing or sum consigned:
a. As a matter of RIGHT
i. Before creditor has accepted the consignation
ii. Before there is a judicial declaration that the consignment has been
properly made
b. Matter of PRIVILEGE
i. When after the consignation has been properly made, the creditor
authorizes the debtor to withdraw the thing.
1261 If creditor = authorize debtor to withdraw the same = creditor loses every
preference which he may have over the thing
Withdrawal by
debtor after Effects:
consignation ● Obligation remains
has been made ● Creditor loses any preference over the thing
● Co-debtors, guarantors and sureties are released
1262 LOSS - Impossibility of performance
Loss of the thing When is there a loss?
due ● When the object perishes
● Goes out of commerce
● Disappears in such a way that
○ Existence is unknown
○ Cannot be recovered
What impossibility of performance includes
● Physical impossibility
● Legal impossibility
○ Directly caused as when prohibited by law
○ Indirectly caused as when the debtor is required to enter a military draft
● Moral impossibility
Two kinds of obligations “to give”
● To give a generic thing (this is not extinguished by loss or by fortuitous event
because genus never perishes)
● To give a specific thing
Effect of loss on an obligation to deliver a SPECIFIC thing:
● GENERAL RULE: obligation is EXTINGUISHED.
○ Lost must be after the obligation has been incurred
● EXCEPTIONS:
○ Debtor is at fault
○ Debtor is made liable of fortuitous event because:
■ Provision of law
■ Contractual stipulation
■ Nature of obligation requires the assumption of risk on the part of
the debtor
○ NOTE: obligation to deliver specific thing is extinguished for there is no
more thing to be given but said obligation is CONVERTED into a
MONETARY OBLIGATION for DAMAGES.
Examples of instances when the law requires liability even in the case of a
fortuitous event:
● Debtor is in default
● Debtor has promised to deliver the same thing to 2 or more persons who do not
have the same interest
● Obligation arises from a crime
● Borrower of an object has lent the thing to another who is not a member of his own
household
1263 Lost - Generic thing:
= Obligation continues to EXIST because a generic thing does not really perish.
Effect of loss on
obligation to XPN:
deliver a 1. Generic thing is delimited (50 kgs of sugar from my 1999 harvest)
GENERIC thing 2. Generic thing has already been segregated or set aside = has now become
specific
1265 Lost = PRESUMPTION: Debtor’s fault.
Presumption Presumption of fault does not apply in the case of a natural calamity
that loss was
due to debtor’s
fault
1266 Debtor in obligations to do = released when the prestation becomes legally or
physically impossible = without fault of the obligor
Loss in personal
obligations Compliance without the debtor’s fault:
- Legal impossibility
- Physical impossibility
Impossibility = AFTER the constitution of the obligation
Effect of loss through a fortuitous event in reciprocal obligations:
● GENERAL RULE: obligation that was NOT extinguished by the event REMAINS
● XPNS:
○ In case of lease - if object is destroyed both the lease and obligation to pay
rent are extinguished
○ Contracts for piece of work
1267 PERSONAL OBLIGATION/ Service = difficult as to be manifestly beyond the
contemplation of the parties = obligor may also be released therefrom, in whole or in part
Effect of
difficulty beyond Effect of difficulty beyond the parties’ contemplation:
the parties’ - Moral impossibility or impracticability due to change of certain conditions
contemplation
REQUISITES:
1. Service must become so DIFFICULT that it was manifestly BEYOND the
contemplation of both parties/ difficulty could not possibly have been anticipated or
foreseen
2. One of the parties must ask for relief
3. Object must be a future service with future unusual change in conditions
1268 Debt of a thing certain and determinate = proceeds from criminal offense = debtor shall
not be exempted from the payment of its price
Effect of loss in
criminal offense Effect of loss in criminal offense:
- Gives one instance where a fortuitous event does not extinguish the obligation
- XPN: when the creditor is in mora accipiendi (refuses to accept without good
reason)
Example:
A commits the crime of theft and is asked to return the car stolen to its owner B. if before
the car is delivered to B, it is destroyed by a fortuitous event, is A’s liability extinguished?
● Answer: NO. A’s obligation to deliver the car arose from a criminal offense, and in
such case, the rule is, he is liable even if the loss occurs because of a fortuitous
event.
1270 Remission/ Condonation - abandonment by the creditor of his right
*debtor = must accept charity of creditor
Condonation or * if not accepted by debtor = not remission = but if creditor does not collect and action has
remission of the prescribed = debt may be said to have been extinguished by prescription
debt
REQUISITES:
1. There must be an agreement
2. Parties must be capacitated and must consent
3. There must be a subject matter
4. The cause or consideration must be liberality
5. Obligation remitted must have been demandable at the time of remission
6. Remission must not be inofficious
7. Formalities of a donation are required in the case of an express remission
8. Waivers or remissions are not to be presumed generally
Classes of Remission
a. Effect or extent
i. Total
ii. Partial
b. Date of effectivity
i. Inter vivos (during life)
ii. Mortis causa (after death)
c. Form
i. Implied
ii. express
1271 Effect:
- Article speaks of private document
Effect of delivery - With the delivery of the private instrument, a remission or renunciation is
of private presumed
document - Presumption is merely disputable and not conclusive
evidencing the
credit Conflict of presumption:
Remission prevails over payment
1275 MERGER OR CONFUSION - meeting in one person of the qualities of creditor and debtor
with respect to the SAME OBLIGATION
Confusion or
merger Obligation = extinguished = time the characters of creditors and debtor are merged in the
SAME PERSON
REQUISITES:
1. Should take place between the principal debtor and creditor
2. Merger must be clear and definite
3. Very obligation involved must be the same or identical
EXAMPLE:
A makes a check payable to bearer and hands the check to C who hands it to D who
finally hands it to A. Here A owes himself. This is a clear case of merger and hence the
obligation of A is extinguished.
REVOCATION: if the reason for the confusion CEASES, the obligation is REVIVED.
“Accessory follows the principal” - merger which takes place in the person of the
principal debtor/creditor benefits the guarantors. If other way around = does not extinguish
the obligation (1276 CC)
1278 COMPENSATION - take place when 2 persons in their own right are creditors and
debtors of each other
Compensation ● Sort of balancing - involves a figurative operation of weighing 2 obligations
simultaneously in order to extinguish them to the extent in which the amount of
one is covered by the other
● Extinguishment in the concurrent amount of the obligations of those persons who
are reciprocally debtors and creditors of each other
Compensation vs. Payment
- Payment must be complete and indivisible as a rule.
- Compensation = partial extinguishment is ALWAYS permitted
- Payment involves action or delivery
- Compensation = takes place by operation of law
Kinds or classes of compensation
a. Effect or extent
i. Total
ii. Partial
b. Origin or cause
i. Legal - takes place by operation of law and need not be pleaded
ii. voluntary/conventional - due to the agreement of the parties
iii. Judicial - must be pleaded; order from the court
iv. Facultative - one of the parties has the choice of claiming the
compensation or of opposing it
1279 ● Takes place by operation of law when all requisites are present
Legal Requisites for Legal Compensation:
compensation 1. Each one of the obligors be bound principally and that he be at the same time a
principal creditor of the other
a. Must be a relationship of debtor and creditor
b. Must be two debts and two credits
c. Must generally be bound as principals
2. Both debts consist in a sum of money or if the things due are consumable they be
the same kind and also of the same quality if the latter has been stated
3. Two debts are DUE
4. They be liquidated and demandable
5. Over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor (they are debtors and
creditors of each other undoubtedly)
EXAMPLE (given in class) - corn example A owes B, P500. B owes A, P1000. B pays A
P500 only instead of P1000.
Negative Requisites:
1. Neither of the debts must there be any retention or controversy commenced by
third persons = no legal compensation when one’s claim against another is still the
subject of court litigation
2. Must be no waiver of the compensation
3. Compensation = not prohibited by law
1280 Guarantor may set up compensation with respect to principal debt.
- This is an exception to art 1279 because a guarantor is subsidiarily bound not
XPN to 1279 principally
Guarantor may
set up
compensation
with respect to
principal debt
1282 Conventional or voluntary compensation:
- Requisites in 1279 does not apply
Conventional or - Sufficient that the agreement is valid
voluntary - Parties must have legal capacity
compensation - Must freely give their consent
1285 If after compensation has taken place one of the extinguished debts is assigned to
a stranger, ordinarily this would be a useless act since there is nothing more to
Effect of assign. Defense of compensation could then be set up.
assignment on
compensation of XPN: assignment after compensation has taken place was made with the CONSENT OF
debts/ defense THE DEBTOR. Such consent operates as a waiver of rights to compensation.
of compensation
XPN to XPN: at the time he gave his consent, he reserved his right to the
compensation.
Three cases covered by the article:
1. Assignment may be made with the consent of the debtor
a. Reservation of right
2. Assignment may be made with the knowledge but without the consent (against the
will) of the debtor
a. Maturity of contract
i. If it has already matured, legal compensation has already taken
place. If assignment took place before maturity, no compensation
yet.
3. Assignment may be made without the knowledge of the debtor
a. Can set up defense for all debts prior to his knowledge of assignment
whether debts matured before or after the assignment
b. Crucial is the time of knowledge not time of assignment
1291 Obligations may be MODIFIED by:
a. Changing their object or principal conditions
Novation b. Substituting the person of the debtor
c. Subrogating a third person in the right of the creditor
NOVATION - substitution or change of an obligation by another which extinguishes or
modifies the first, either changing its object or principal condition or substituting another in
place of the debtor, or subrogating a third person in the right of the creditor.
** extinguishment of first and operation of second
Extinctive novation is never presumed; there must be an express intention to novate. In
cases where it is implied, the acts of the parties must clearly demonstrate their intent to
dissolve the old obligation as the moving consideration for the emergence of the new one.
REQUISITES:
1. Existence of a VALID old obligation
2. Intent to extinguish or modify the old obligation by a substantial difference
3. Capacity and consent of all the parties
4. Validity of new obligation
1293 Expromision - initiative comes from a third person
● Old debtor be released from his obligation (a must. If there is no agreement that
Passive the old debtor is released from his obligation, no novation)
subjective ● REQUISITES:
novation ○ Initiative from 3rd person
○ New debtor and creditor must consent
○ Old debtor must be released or excused from his obligation (his consent is
not required)
Delegacion - initiative comes from the debtor for it is he who delegates another to pay the
debt and thus he excuses himself (old debtor, new debtor and creditor MUST agree)
● Initiative comes from the old debtor himself
● Old debtor must be released from his obligation (have an agreement)
● REQUISITES:
○ Initiative from old debtor
○ All parties conerned must consent or agree
Rights of the new debtor - 1236 = reimbursement; 1237 = subrogation
1295 Insolvency of new debtor - SHALL NOT revive the action of the latter against the
original obligor
Effect of ● XPN: insolvency was already existing and of public knowledge
insolvency by ● Or known to the original debtor at time of delegation
new debtor in
delegacion
1296 - accessory obligations or stipulations made in favor of third persons remain unless
said third persons have their consent to the Novation
1300 Subrogation - may either be legal or conventional
● Former is NOT presumed
Subrogation of a ○ XPN: expressly mentioned; must clearly be established that it may take
third person effect
1302 Legal Subrogation is presumed when
● A. when a creditor pays another creditor who is preferred, even without the
Legal debtor’s knowledge
subrogation ● B. When a third person, not interested in the obligation, pays with the express or
tacit approval of the debtor
● C. When even without the knowledge of the debtor a person interested in the
fulfillment of the obligation pays without prejudice to the effects of confusion as to
the latter’s share
Example of subrogation:
D owes C 1M. G is the guarantor. A stranger Sarah paid C the 1M with the consent of D
and C. S is now subrogated in the place of C. If D cannot pay the 1M, Sarah can proceed
against the guarantor, G.
