Civil Code of the Philippines | Obligations and Contracts

CHAPTER 1 General Provisions

Article 1156. An obligation is a juridical necessity to

give, to do or not to do. (n)

Article 1157. Obligations arise from: CHAPTER 2 Nature and Effect of

Obligations
(1) Law;

(2) Contracts; Article 1163. Every person obliged to give

(3) Quasi-contracts; something is also obliged to take care of it with the
(4) Acts or omissions punished by law; and proper diligence of a good father of a family, unless
(5) Quasi-delicts. (1089a) the law or the stipulation of the parties requires
Article 1158. Obligations derived from law are not another standard of care. (1094a)
presumed. Only those expressly determined in this Article 1164. The creditor has a right to the fruits of
Code or in special laws are demandable, and shall the thing from the time the obligation to deliver it
be regulated by the precepts of the law which arises. However, he shall acquire no real right over
establishes them; and as to what has not been it until the same has been delivered to him. (1095)
foreseen, by the provisions of this Book. (1090) Article 1165. When what is to be delivered is a
Article 1159. Obligations arising from contracts determinate thing, the creditor, in addition to the
have the force of law between the contracting right granted him by article 1170, may compel the
parties and should be complied with in good faith. debtor to make the delivery.
(1091a) If the thing is indeterminate or generic, he may ask
Article 1160. Obligations derived from quasi- that the obligation be complied with at the expense
contracts shall be subject to the provisions of of the debtor.
Chapter 1, Title XVII, of this Book. (n) If the obligor delays, or has promised to deliver the
Article 1161. Civil obligations arising from criminal same thing to two or more persons who do not have
offenses shall be governed by the penal laws, the same interest, he shall be responsible for any
subject to the provisions of article 2177, and of the fortuitous event until he has effected the delivery.
pertinent provisions of Chapter 2, Preliminary Title, (1096)
on Human Relations, and of Title XVIII of this Book, Article 1166. The obligation to give a determinate
regulating damages. (1092a) thing includes that of delivering all its accessions
Article 1162. Obligations derived from quasi-delicts and accessories, even though they may not have
shall be governed by the provisions of Chapter 2, been mentioned. (1097a)
Title XVII of this Book, and by special laws. (1093a) Article 1167. If a person obliged to do something

fails to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in

contravention of the tenor of the obligation.

Furthermore, it may be decreed that what has been Article 1171. Responsibility arising from fraud is

poorly done be undone. (1098) demandable in all obligations. Any waiver of an

Article 1168. When the obligation consists in not action for future fraud is void. (1102a)

doing, and the obligor does what has been Article 1172. Responsibility arising from negligence

forbidden him, it shall also be undone at his in the performance of every kind of obligation is also

expense. (1099a) demandable, but such liability may be regulated by

the courts, according to the circumstances. (1103)

Article 1173. The fault or negligence of the obligor

Article 1169. Those obliged to deliver or to do consists in the omission of that diligence which is

something incur in delay from the time the obligee required by the nature of the obligation and

judicially or extrajudicially demands from them the corresponds with the circumstances of the persons,

fulfillment of their obligation. of the time and of the place. When negligence

However, the demand by the creditor shall not be shows bad faith, the provisions of articles 1171 and

necessary in order that delay may exist: 2201, paragraph 2, shall apply.

(1) When the obligation or the law expressly so If the law or contract does not state the diligence

declare; or which is to be observed in the performance, that

(2) When from the nature and the circumstances of which is expected of a good father of a family shall

the obligation it appears that the designation of the be required. (1104a)

time when the thing is to be delivered or the service Article 1174. Except in cases expressly specified

is to be rendered was a controlling motive for the by the law, or when it is otherwise declared by

establishment of the contract; or stipulation, or when the nature of the obligation

(3) When demand would be useless, as when the requires the assumption of risk, no person shall be

obligor has rendered it beyond his power to responsible for those events which could not be

perform. foreseen, or which, though foreseen, were

In reciprocal obligations, neither party incurs in inevitable. (1105a)

delay if the other does not comply or is not ready to Article 1175. Usurious transactions shall be

comply in a proper manner with what is incumbent governed by special laws. (n)

upon him. From the moment one of the parties Article 1176. The receipt of the principal by the

fulfills his obligation, delay by the other begins. creditor without reservation with respect to the

(1100a) interest, shall give rise to the presumption that said

Article 1170. Those who in the performance of their interest has been paid.

obligations are guilty of fraud, negligence, or delay, The receipt of a later installment of a debt without

and those who in any manner contravene the tenor reservation as to prior installments, shall likewise

thereof, are liable for damages. (1101) raise the presumption that such installments have

been paid. (1110a)

Article 1177. The creditors, after having pursued Article 1182. When the fulfillment of the condition

the property in possession of the debtor to satisfy depends upon the sole will of the debtor, the

their claims, may exercise all the rights and bring all conditional obligation shall be void. If it depends

the actions of the latter for the same purpose, save upon chance or upon the will of a third person, the

those which are inherent in his person; they may obligation shall take effect in conformity with the

also impugn the acts which the debtor may have provisions of this Code. (1115)

done to defraud them. (1111) Article 1183. Impossible conditions, those contrary

Article 1178. Subject to the laws, all rights acquired to good customs or public policy and those

in virtue of an obligation are transmissible, if there prohibited by law shall annul the obligation which

has been no stipulation to the contrary. (1112) depends upon them. If the obligation is divisible,

that part thereof which is not affected by the

impossible or unlawful condition shall be valid.

The condition not to do an impossible thing shall be

considered as not having been agreed upon.

(1116a)
CHAPTER 3 Different Kinds of
Article 1184. The condition that some event
Obligations
happen at a determinate time shall extinguish the

SECTION 1 Pure and Conditional obligation as soon as the time expires or if it has
Obligations become indubitable that the event will not take

Article 1179. Every obligation whose performance place. (1117)

does not depend upon a future or uncertain event,

or upon a past event unknown to the parties, is

demandable at once. Article 1185. The condition that some event will not

Every obligation which contains a resolutory happen at a determinate time shall render the

condition shall also be demandable, without obligation effective from the moment the time

prejudice to the effects of the happening of the indicated has elapsed, or if it has become evident

event. (1113) that the event cannot occur.

Article 1180. When the debtor binds himself to pay If no time has been fixed, the condition shall be

when his means permit him to do so, the obligation deemed fulfilled at such time as may have probably

shall be deemed to be one with a period, subject to been contemplated, bearing in mind the nature of

the provisions of article 1197. (n) the obligation. (1118)

Article 1181. In conditional obligations, the Article 1186. The condition shall be deemed

acquisition of rights, as well as the extinguishment fulfilled when the obligor voluntarily prevents its

or loss of those already acquired, shall depend fulfillment. (1119)

upon the happening of the event which constitutes Article 1187. The effects of a conditional obligation

the condition. (1114) to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the (4) If it deteriorates through the fault of the debtor,

obligation. Nevertheless, when the obligation the creditor may choose between the rescission of

imposes reciprocal prestations upon the parties, the the obligation and its fulfillment, with indemnity for

fruits and interests during the pendency of the damages in either case;

condition shall be deemed to have been mutually (5) If the thing is improved by its nature, or by time,

compensated. If the obligation is unilateral, the the improvement shall inure to the benefit of the

debtor shall appropriate the fruits and interests creditor;

received, unless from the nature and circumstances (6) If it is improved at the expense of the debtor, he

of the obligation it should be inferred that the shall have no other right than that granted to the

intention of the person constituting the same was usufructuary. (1122)

different. Article 1190. When the conditions have for their

In obligations to do and not to do, the courts shall purpose the extinguishment of an obligation to give,

determine, in each case, the retroactive effect of the the parties, upon the fulfillment of said conditions,

condition that has been complied with. (1120) shall return to each other what they have received.

Article 1188. The creditor may, before the In case of the loss, deterioration or improvement of

fulfillment of the condition, bring the appropriate the thing, the provisions which, with respect to the

actions for the preservation of his right. debtor, are laid down in the preceding article shall

The debtor may recover what during the same time be applied to the party who is bound to return.

he has paid by mistake in case of a suspensive As for the obligations to do and not to do, the

condition. (1121a) provisions of the second paragraph of article 1187

Article 1189. When the conditions have been shall be observed as regards the effect of the

imposed with the intention of suspending the extinguishment of the obligation. (1123)

efficacy of an obligation to give, the following rules Article 1191. The power to rescind obligations is

shall be observed in case of the improvement, loss implied in reciprocal ones, in case one of the

or deterioration of the thing during the pendency of obligors should not comply with what is incumbent

the condition: upon him.

(1) If the thing is lost without the fault of the debtor, The injured party may choose between the

the obligation shall be extinguished; fulfillment and the rescission of the obligation, with

(2) If the thing is lost through the fault of the debtor, the payment of damages in either case. He may

he shall be obliged to pay damages; it is understood also seek rescission, even after he has chosen

that the thing is lost when it perishes, or goes out of fulfillment, if the latter should become impossible.

commerce, or disappears in such a way that its The court shall decree the rescission claimed,

existence is unknown or it cannot be recovered; unless there be just cause authorizing the fixing of a

(3) When the thing deteriorates without the fault of period.

the debtor, the impairment is to be borne by the This is understood to be without prejudice to the

creditor; rights of third persons who have acquired the thing,

in accordance with articles 1385 and 1388 and the circumstances it should appear that the period has

Mortgage Law. (1124) been established in favor of one or of the other.

Article 1192. In case both parties have committed a (1127)

breach of the obligation, the liability of the first Article 1197. If the obligation does not fix a period,

infractor shall be equitably tempered by the courts. but from its nature and the circumstances it can be

If it cannot be determined which of the parties first inferred that a period was intended, the courts may

violated the contract, the same shall be deemed fix the duration thereof.

extinguished, and each shall bear his own The courts shall also fix the duration of the period

damages. (n) when it depends upon the will of the debtor.

In every case, the courts shall determine such

SECTION 2 Obligations with a Period
period as may under the circumstances have been

probably contemplated by the parties. Once fixed by

Article 1193. Obligations for whose fulfillment a day
the courts, the period cannot be changed by them.
certain has been fixed, shall be demandable only
(1128a)
when that day comes.

Obligations with a resolutory period take effect at

once, but terminate upon arrival of the day certain.

A day certain is understood to be that which must

Article 1198. The debtor shall lose every right to
necessarily come, although it may not be known
make use of the period:
when.
(1) When after the obligation has been contracted,
If the uncertainty consists in whether the day will
he becomes insolvent, unless he gives a guaranty
come or not, the obligation is conditional, and it
or security for the debt;
shall be regulated by the rules of the preceding
(2) When he does not furnish to the creditor the
Section. (1125a)
guaranties or securities which he has promised;
Article 1194. In case of loss, deterioration or
(3) When by his own acts he has impaired said
improvement of the thing before the arrival of the
guaranties or securities after their establishment,
day certain, the rules in article 1189 shall be
and when through a fortuitous event they disappear,
observed. (n)
unless he immediately gives new ones equally
Article 1195. Anything paid or delivered before the
satisfactory;
arrival of the period, the obligor being unaware of
(4) When the debtor violates any undertaking, in
the period or believing that the obligation has
consideration of which the creditor agreed to the
become due and demandable, may be recovered,
period;
with the fruits and interests. (1126a)
(5) When the debtor attempts to abscond. (1129a)
Article 1196. Whenever in an obligation a period is

designated, it is presumed to have been established

for the benefit of both the creditor and the debtor,

unless from the tenor of the same or other SECTION 3 Alternative Obligations
Article 1199. A person alternatively bound by alternative from the day when the selection has

different prestations shall completely perform one of been communicated to the debtor.

them. Until then the responsibility of the debtor shall be

The creditor cannot be compelled to receive part of governed by the following rules:

one and part of the other undertaking. (1131) (1) If one of the things is lost through a fortuitous

Article 1200. The right of choice belongs to the event, he shall perform the obligation by delivering

debtor, unless it has been expressly granted to the that which the creditor should choose from among

creditor. the remainder, or that which remains if only one

The debtor shall have no right to choose those subsists;

prestations which are impossible, unlawful or which (2) If the loss of one of the things occurs through the

could not have been the object of the obligation. fault of the debtor, the creditor may claim any of

(1132) those subsisting, or the price of that which, through

Article 1201. The choice shall produce no effect the fault of the former, has disappeared, with a right

except from the time it has been communicated. to damages;

(1133) (3) If all the things are lost through the fault of the

Article 1202. The debtor shall lose the right of debtor, the choice by the creditor shall fall upon the

choice when among the prestations whereby he is price of any one of them, also with indemnity for

alternatively bound, only one is practicable. (1134) damages.

Article 1203. If through the creditor's acts the The same rules shall be applied to obligations to do

debtor cannot make a choice according to the terms or not to do in case one, some or all of the

of the obligation, the latter may rescind the contract prestations should become impossible. (1136a)

with damages. (n) Article 1206. When only one prestation has been

Article 1204. The creditor shall have a right to agreed upon, but the obligor may render another in

indemnity for damages when, through the fault of substitution, the obligation is called facultative.

the debtor, all the things which are alternatively the The loss or deterioration of the thing intended as a

object of the obligation have been lost, or the substitute, through the negligence of the obligor,

compliance of the obligation has become does not render him liable. But once the substitution

impossible. has been made, the obligor is liable for the loss of

The indemnity shall be fixed taking as a basis the the substitute on account of his delay, negligence or

value of the last thing which disappeared, or that of fraud. (n)

the service which last became impossible.

Damages other than the value of the last thing or

service may also be awarded. (1135a)

Article 1205. When the choice has been expressly

given to the creditor, the obligation shall cease to be

 SECTION 4 Joint and Solidary not anything which may be prejudicial to the latter.

(1141a)
Obligations
Article 1213. A solidary creditor cannot assign his

Article 1207. The concurrence of two or more rights without the consent of the others. (n)

creditors or of two or more debtors in one and the Article 1214. The debtor may pay any one of the

same obligation does not imply that each one of the solidary creditors; but if any demand, judicial or

former has a right to demand, or that each one of extrajudicial, has been made by one of them,

the latter is bound to render, entire compliance with payment should be made to him. (1142a)

the prestation. There is a solidary liability only when Article 1215. Novation, compensation, confusion or

the obligation expressly so states, or when the law remission of the debt, made by any of the solidary

or the nature of the obligation requires solidarity. creditors or with any of the solidary debtors, shall

(1137a) extinguish the obligation, without prejudice to the

Article 1208. If from the law, or the nature or the provisions of article 1219.

wording of the obligations to which the preceding The creditor who may have executed any of these

article refers the contrary does not appear, the acts, as well as he who collects the debt, shall be

credit or debt shall be presumed to be divided into liable to the others for the share in the obligation

as many shares as there are creditors or debtors, corresponding to them. (1143)

the credits or debts being considered distinct from Article 1216. The creditor may proceed against any

one another, subject to the Rules of Court one of the solidary debtors or some or all of them

governing the multiplicity of suits. (1138a) simultaneously. The demand made against one of

Article 1209. If the division is impossible, the right them shall not be an obstacle to those which may

of the creditors may be prejudiced only by their subsequently be directed against the others, so long

collective acts, and the debt can be enforced only as the debt has not been fully collected. (1144a)

by proceeding against all the debtors. If one of the Article 1217. Payment made by one of the solidary

latter should be insolvent, the others shall not be debtors extinguishes the obligation. If two or more

liable for his share. (1139) solidary debtors offer to pay, the creditor may

Article 1210. The indivisibility of an obligation does choose which offer to accept.

not necessarily give rise to solidarity. Nor does He who made the payment may claim from his co-

solidarity of itself imply indivisibility. (n) debtors only the share which corresponds to each,

Article 1211. Solidarity may exist although the with the interest for the payment already made. If

creditors and the debtors may not be bound in the the payment is made before the debt is due, no

same manner and by the same periods and interest for the intervening period may be

conditions. (1140) demanded.

Article 1212. Each one of the solidary creditors When one of the solidary debtors cannot, because

may do whatever may be useful to the others, but of his insolvency, reimburse his share to the debtor

paying the obligation, such share shall be borne by

all his co-debtors, in proportion to the debt of each. belong to the others, he may avail himself thereof

(1145a) only as regards that part of the debt for which the

Article 1218. Payment by a solidary debtor shall not latter are responsible. (1148a)

entitle him to reimbursement from his co-debtors if

such payment is made after the obligation has

prescribed or become illegal. (n)

SECTION 5 Divisible and Indivisible
Article 1219. The remission made by the creditor of

the share which affects one of the solidary debtors Obligations

does not release the latter from his responsibility
Article 1223. The divisibility or indivisibility of the
towards the co-debtors, in case the debt had been
things that are the object of obligations in which
totally paid by anyone of them before the remission
there is only one debtor and only one creditor does
was effected. (1146a)
not alter or modify the provisions of Chapter 2 of
Article 1220. The remission of the whole obligation,
this Title. (1149)
obtained by one of the solidary debtors, does not
Article 1224. A joint indivisible obligation gives rise
entitle him to reimbursement from his co-debtors.
to indemnity for damages from the time anyone of
(n)
the debtors does not comply with his undertaking.
Article 1221. If the thing has been lost or if the
The debtors who may have been ready to fulfill their
prestation has become impossible without the fault
promises shall not contribute to the indemnity
of the solidary debtors, the obligation shall be
beyond the corresponding portion of the price of the
extinguished.
thing or of the value of the service in which the
If there was fault on the part of any one of them, all
obligation consists. (1150)
shall be responsible to the creditor, for the price and
Article 1225. For the purposes of the preceding
the payment of damages and interest, without
articles, obligations to give definite things and those
prejudice to their action against the guilty or
which are not susceptible of partial performance
negligent debtor.
shall be deemed to be indivisible.
If through a fortuitous event, the thing is lost or the
When the obligation has for its object the execution
performance has become impossible after one of
of a certain number of days of work, the
the solidary debtors has incurred in delay through
accomplishment of work by metrical units, or
the judicial or extrajudicial demand upon him by the
analogous things which by their nature are
creditor, the provisions of the preceding paragraph
susceptible of partial performance, it shall be
shall apply. (1147a)
divisible.
Article 1222. A solidary debtor may, in actions filed
However, even though the object or service may be
by the creditor, avail himself of all defenses which
physically divisible, an obligation is indivisible if so
are derived from the nature of the obligation and of
provided by law or intended by the parties.
those which are personal to him, or pertain to his

own share. With respect to those which personally

In obligations not to do, divisibility or indivisibility and the payment of interests in case of

shall be determined by the character of the noncompliance, if there is no stipulation to the

prestation in each particular case. (1151a) contrary. Nevertheless, damages shall be paid if the

obligor refuses to pay the penalty or is guilty of

fraud in the fulfillment of the obligation.

The penalty may be enforced only when it is

demandable in accordance with the provisions of

this Code. (1152a)

Article 1227. The debtor cannot exempt himself

from the performance of the obligation by paying the

penalty, save in the case where this right has been

expressly reserved for him. Neither can the creditor

demand the fulfillment of the obligation and the

satisfaction of the penalty at the same time, unless

this right has been clearly granted him. However, if

after the creditor has decided to require the

fulfillment of the obligation, the performance thereof

should become impossible without his fault, the

penalty may be enforced. (1153a)

Article 1228. Proof of actual damages suffered by

the creditor is not necessary in order that the

penalty may be demanded. (n)

Article 1229. The judge shall equitably reduce the

penalty when the principal obligation has been

partly or irregularly complied with by the debtor.

Even if there has been no performance, the penalty

may also be reduced by the courts if it is iniquitous

or unconscionable. (1154a)

Article 1230. The nullity of the penal clause does

not carry with it that of the principal obligation.

SECTION 6 Obligations with a Penal The nullity of the principal obligation carries with it

that of the penal clause. (1155)

Clause

Article 1226. In obligations with a penal clause, the

penalty shall substitute the indemnity for damages

 CHAPTER 4 Extinguishment of Article 1236. The creditor is not bound to accept

Obligations payment or performance by a third person who has

no interest in the fulfillment of the obligation, unless

General Provisions
there is a stipulation to the contrary.
Article 1231. Obligations are extinguished:
Whoever pays for another may demand from the
(1) By payment or performance;
debtor what he has paid, except that if he paid
(2) By the loss of the thing due;
without the knowledge or against the will of the
(3) By the condonation or remission of the debt;
debtor, he can recover only insofar as the payment
(4) By the confusion or merger of the rights of
has been beneficial to the debtor. (1158a)
creditor and debtor;
Article 1237. Whoever pays on behalf of the debtor
(5) By compensation;
without the knowledge or against the will of the
(6) By novation.
latter, cannot compel the creditor to subrogate him
Other causes of extinguishment of obligations, such
in his rights, such as those arising from a mortgage,
as annulment, rescission, fulfillment of a resolutory
guaranty, or penalty. (1159a)
condition, and prescription, are governed elsewhere
Article 1238. Payment made by a third person who
in this Code. (1156a)
does not intend to be reimbursed by the debtor is

deemed to be a donation, which requires the

debtor's consent. But the payment is in any case

valid as to the creditor who has accepted it. (n)

SECTION 1 Payment or Performance
Article 1239. In obligations to give, payment made
Article 1232. Payment means not only the delivery
by one who does not have the free disposal of the
of money but also the performance, in any other
thing due and capacity to alienate it shall not be
manner, of an obligation. (n)
valid, without prejudice to the provisions of article
Article 1233. A debt shall not be understood to
1427 under the Title on "Natural Obligations."
have been paid unless the thing or service in which
(1160a)
the obligation consists has been completely
Article 1240. Payment shall be made to the person
delivered or rendered, as the case may be. (1157)
in whose favor the obligation has been constituted,
Article 1234. If the obligation has been substantially
or his successor in interest, or any person
performed in good faith, the obligor may recover as
authorized to receive it. (1162a)
though there had been a strict and complete
Article 1241. Payment to a person who is
fulfillment, less damages suffered by the obligee. (n)
incapacitated to administer his property shall be
Article 1235. When the obligee accepts the
valid if he has kept the thing delivered, or insofar as
performance, knowing its incompleteness or
the payment has been beneficial to him.
irregularity, and without expressing any protest or
Payment made to a third person shall also be valid
objection, the obligation is deemed fully complied
insofar as it has redounded to the benefit of the
with. (n)
creditor. Such benefit to the creditor need not be judicial costs, the Rules of Court shall govern.

proved in the following cases: (1168a)

(1) If after the payment, the third person acquires Article 1248. Unless there is an express stipulation

the creditor's rights; to that effect, the creditor cannot be compelled

(2) If the creditor ratifies the payment to the third partially to receive the prestations in which the

person; obligation consists. Neither may the debtor be

(3) If by the creditor's conduct, the debtor has been required to make partial payments.

led to believe that the third person had authority to However, when the debt is in part liquidated and in

receive the payment. (1163a) part unliquidated, the creditor may demand and the

Article 1242. Payment made in good faith to any debtor may effect the payment of the former without

person in possession of the credit shall release the waiting for the liquidation of the latter. (1169a)

debtor. (1164) Article 1249. The payment of debts in money shall

Article 1243. Payment made to the creditor by the be made in the currency stipulated, and if it is not

debtor after the latter has been judicially ordered to possible to deliver such currency, then in the

retain the debt shall not be valid. (1165) currency which is legal tender in the Philippines.

Article 1244. The debtor of a thing cannot compel The delivery of promissory notes payable to order,

the creditor to receive a different one, although the or bills of exchange or other mercantile documents

latter may be of the same value as, or more shall produce the effect of payment only when they

valuable than that which is due. have been cashed, or when through the fault of the

In obligations to do or not to do, an act or creditor they have been impaired.

forbearance cannot be substituted by another act or In the meantime, the action derived from the original

forbearance against the obligee's will. (1166a) obligation shall be held in the abeyance. (1170)

Article 1245. Dation in payment, whereby property Article 1250. In case an extraordinary inflation or

is alienated to the creditor in satisfaction of a debt in deflation of the currency stipulated should

money, shall be governed by the law of sales. (n) supervene, the value of the currency at the time of

Article 1246. When the obligation consists in the the establishment of the obligation shall be the

delivery of an indeterminate or generic thing, whose basis of payment, unless there is an agreement to

quality and circumstances have not been stated, the the contrary. (n)

creditor cannot demand a thing of superior quality. Article 1251. Payment shall be made in the place

Neither can the debtor deliver a thing of inferior designated in the obligation.

quality. The purpose of the obligation and other There being no express stipulation and if the

circumstances shall be taken into consideration. undertaking is to deliver a determinate thing, the

(1167a) payment shall be made wherever the thing might be

Article 1247. Unless it is otherwise stipulated, the at the moment the obligation was constituted.

extrajudicial expenses required by the payment In any other case the place of payment shall be the

shall be for the account of the debtor. With regard to domicile of the debtor.
If the debtor changes his domicile in bad faith or SUBSECTION 2. Payment by Cession
after he has incurred in delay, the additional
Article 1255. The debtor may cede or assign his
expenses shall be borne by him.
property to his creditors in payment of his debts.
These provisions are without prejudice to venue
This cession, unless there is stipulation to the
under the Rules of Court. (1171a)
contrary, shall only release the debtor from

responsibility for the net proceeds of the thing

assigned. The agreements which, on the effect of

SUBSECTION 1. Application of
the cession, are made between the debtor and his

Payments creditors shall be governed by special laws. (1175a)

Article 1252. He who has various debts of the

same kind in favor of one and the same creditor,

may declare at the time of making the payment, to SUBSECTION 3. Tender of Payment and
which of them the same must be applied. Unless
Consignation
the parties so stipulate, or when the application of

payment is made by the party for whose benefit the Article 1256. If the creditor to whom tender of

term has been constituted, application shall not be payment has been made refuses without just cause

made as to debts which are not yet due. to accept it, the debtor shall be released from

If the debtor accepts from the creditor a receipt in responsibility by the consignation of the thing or

which an application of the payment is made, the sum due.

former cannot complain of the same, unless there is Consignation alone shall produce the same effect in

a cause for invalidating the contract. (1172a) the following cases:

Article 1253. If the debt produces interest, payment (1) When the creditor is absent or unknown, or does

of the principal shall not be deemed to have been not appear at the place of payment;

made until the interests have been covered. (1173) (2) When he is incapacitated to receive the payment

Article 1254. When the payment cannot be applied at the time it is due;

in accordance with the preceding rules, or if (3) When, without just cause, he refuses to give a

application can not be inferred from other receipt;

circumstances, the debt which is most onerous to (4) When two or more persons claim the same right

the debtor, among those due, shall be deemed to to collect;

have been satisfied. (5) When the title of the obligation has been lost.

If the debts due are of the same nature and burden, (1176a)

the payment shall be applied to all of them Article 1257. In order that the consignation of the

proportionately. (1174a) thing due may release the obligor, it must first be

announced to the persons interested in the

fulfillment of the obligation.

The consignation shall be ineffectual if it is not responsible for damages. The same rule applies

made strictly in consonance with the provisions when the nature of the obligation requires the

which regulate payment. (1177) assumption of risk. (1182a)

Article 1258. Consignation shall be made by Article 1263. In an obligation to deliver a generic

depositing the things due at the disposal of judicial thing, the loss or destruction of anything of the

authority, before whom the tender of payment shall same kind does not extinguish the obligation. (n)

be proved, in a proper case, and the announcement Article 1264. The courts shall determine whether,

of the consignation in other cases. under the circumstances, the partial loss of the

The consignation having been made, the interested object of the obligation is so important as to

parties shall also be notified thereof. (1178) extinguish the obligation. (n)

Article 1259. The expenses of consignation, when Article 1265. Whenever the thing is lost in the

properly made, shall be charged against the possession of the debtor, it shall be presumed that

creditor. (1179) the loss was due to his fault, unless there is proof to

Article 1260. Once the consignation has been duly the contrary, and without prejudice to the provisions

made, the debtor may ask the judge to order the of article 1165. This presumption does not apply in

cancellation of the obligation. case of earthquake, flood, storm, or other natural

Before the creditor has accepted the consignation, calamity. (1183a)

or before a judicial declaration that the consignation Article 1266. The debtor in obligations to do shall

has been properly made, the debtor may withdraw also be released when the prestation becomes

the thing or the sum deposited, allowing the legally or physically impossible without the fault of

obligation to remain in force. (1180) the obligor. (1184a)

Article 1261. If, the consignation having been Article 1267. When the service has become so

made, the creditor should authorize the debtor to difficult as to be manifestly beyond the

withdraw the same, he shall lose every preference contemplation of the parties, the obligor may also

which he may have over the thing. The co-debtors, be released therefrom, in whole or in part. (n)

guarantors and sureties shall be released. (1181a) Article 1268. When the debt of a thing certain and

determinate proceeds from a criminal offense, the

debtor shall not be exempted from the payment of

SECTION 2 Loss of the Thing Due
its price, whatever may be the cause for the loss,

Article 1262. An obligation which consists in the unless the thing having been offered by him to the

delivery of a determinate thing shall be extinguished person who should receive it, the latter refused

if it should be lost or destroyed without the fault of without justification to accept it. (1185)

the debtor, and before he has incurred in delay.

When by law or stipulation, the obligor is liable even

for fortuitous events, the loss of the thing does not

extinguish the obligation, and he shall be

Article 1269. The obligation having been Article 1274. It is presumed that the accessory

extinguished by the loss of the thing, the creditor obligation of pledge has been remitted when the

shall have all the rights of action which the debtor thing pledged, after its delivery to the creditor, is

may have against third persons by reason of the found in the possession of the debtor, or of a third

loss. (1186) person who owns the thing. (1191a)

SECTION 3 Condonation or Remission SECTION 4 Confusion or Merger of

of the Debt Rights

Article 1270. Condonation or remission is Article 1275. The obligation is extinguished from

essentially gratuitous, and requires the acceptance the time the characters of creditor and debtor are

by the obligor. It may be made expressly or merged in the same person. (1192a)

impliedly. Article 1276. Merger which takes place in the

One and the other kind shall be subject to the rules person of the principal debtor or creditor benefits

which govern inofficious donations. Express the guarantors. Confusion which takes place in the

condonation shall, furthermore, comply with the person of any of the latter does not extinguish the

forms of donation. (1187) obligation. (1193)

Article 1271. The delivery of a private document Article 1277. Confusion does not extinguish a joint

evidencing a credit, made voluntarily by the creditor obligation except as regards the share

to the debtor, implies the renunciation of the action corresponding to the creditor or debtor in whom the

which the former had against the latter. two characters concur. (1194)

If in order to nullify this waiver it should be claimed

to be inofficious, the debtor and his heirs may

SECTION 5 Compensation
uphold it by proving that the delivery of the

document was made in virtue of payment of the Article 1278. Compensation shall take place when

debt. (1188) two persons, in their own right, are creditors and

Article 1272. Whenever the private document in debtors of each other. (1195)

which the debt appears is found in the possession Article 1279. In order that compensation may be

of the debtor, it shall be presumed that the creditor proper, it is necessary:

delivered it voluntarily, unless the contrary is (1) That each one of the obligors be bound

proved. (1189) principally, and that he be at the same time a

Article 1273. The renunciation of the principal debt principal creditor of the other;

shall extinguish the accessory obligations; but the (2) That both debts consist in a sum of money, or if

waiver of the latter shall leave the former in force. the things due are consumable, they be of the same

(1190)
kind, and also of the same quality if the latter has If the assignment is made without the knowledge of

been stated; the debtor, he may set up the compensation of all

(3) That the two debts be due; credits prior to the same and also later ones until he

(4) That they be liquidated and demandable; had knowledge of the assignment. (1198a)

(5) That over neither of them there be any retention Article 1286. Compensation takes place by

or controversy, commenced by third persons and operation of law, even though the debts may be

communicated in due time to the debtor. (1196) payable at different places, but there shall be an

Article 1280. Notwithstanding the provisions of the indemnity for expenses of exchange or

preceding article, the guarantor may set up transportation to the place of payment. (1199a)

compensation as regards what the creditor may Article 1287. Compensation shall not be proper

owe the principal debtor. (1197) when one of the debts arises from a depositum or

Article 1281. Compensation may be total or partial. from the obligations of a depositary or of a bailee in

When the two debts are of the same amount, there commodatum.

is a total compensation. (n) Neither can compensation be set up against a

Article 1282. The parties may agree upon the creditor who has a claim for support due by

compensation of debts which are not yet due. (n) gratuitous title, without prejudice to the provisions of

Article 1283. If one of the parties to a suit over an paragraph 2 of article 301. (1200a)

obligation has a claim for damages against the Article 1288. Neither shall there be compensation if

other, the former may set it off by proving his right to one of the debts consists in civil liability arising from

said damages and the amount thereof. (n) a penal offense. (n)

Article 1284. When one or both debts are Article 1289. If a person should have against him

rescissible or voidable, they may be compensated several debts which are susceptible of

against each other before they are judicially compensation, the rules on the application of

rescinded or avoided. (n) payments shall apply to the order of the

Article 1285. The debtor who has consented to the compensation. (1201)

assignment of rights made by a creditor in favor of a Article 1290. When all the requisites mentioned in

third person, cannot set up against the assignee the article 1279 are present, compensation takes effect

compensation which would pertain to him against by operation of law, and extinguishes both debts to

the assignor, unless the assignor was notified by the concurrent amount, even though the creditors

the debtor at the time he gave his consent, that he and debtors are not aware of the compensation.

reserved his right to the compensation. (1202a)

If the creditor communicated the cession to him but

the debtor did not consent thereto, the latter may

set up the compensation of debts previous to the

cession, but not of subsequent ones.

SECTION 6 Novation Article 1297. If the new obligation is void, the

original one shall subsist, unless the parties

Article 1291. Obligations may be modified by:
intended that the former relation should be
(1) Changing their object or principal conditions;
extinguished in any event. (n)
(2) Substituting the person of the debtor;
Article 1298. The novation is void if the original
(3) Subrogating a third person in the rights of the
obligation was void, except when annulment may be
creditor. (1203)
claimed only by the debtor or when ratification
Article 1292. In order that an obligation may be
validates acts which are voidable. (1208a)
extinguished by another which substitute the same,
Article 1299. If the original obligation was subject to
it is imperative that it be so declared in unequivocal
a suspensive or resolutory condition, the new
terms, or that the old and the new obligations be on
obligation shall be under the same condition, unless
every point incompatible with each other. (1204)
it is otherwise stipulated. (n)
Article 1293. Novation which consists in
Article 1300. Subrogation of a third person in the
substituting a new debtor in the place of the original
rights of the creditor is either legal or conventional.
one, may be made even without the knowledge or
The former is not presumed, except in cases
against the will of the latter, but not without the
expressly mentioned in this Code; the latter must be
consent of the creditor. Payment by the new debtor
clearly established in order that it may take effect.
gives him the rights mentioned in articles 1236 and
(1209a)
1237. (1205a)
Article 1301. Conventional subrogation of a third
Article 1294. If the substitution is without the
person requires the consent of the original parties
knowledge or against the will of the debtor, the new
and of the third person. (n)
debtor's insolvency or non-fulfillment of the
Article 1302. It is presumed that there is legal
obligations shall not give rise to any liability on the
subrogation:
part of the original debtor. (n)
(1) When a creditor pays another creditor who is
Article 1295. The insolvency of the new debtor,
preferred, even without the debtor's knowledge;
who has been proposed by the original debtor and
(2) When a third person, not interested in the
accepted by the creditor, shall not revive the action
obligation, pays with the express or tacit approval of
of the latter against the original obligor, except when
the debtor;
said insolvency was already existing and of public
(3) When, even without the knowledge of the
knowledge, or known to the debtor, when the
debtor, a person interested in the fulfillment of the
delegated his debt. (1206a)
obligation pays, without prejudice to the effects of
Article 1296. When the principal obligation is
confusion as to the latter's share. (1210a)
extinguished in consequence of a novation,

accessory obligations may subsist only insofar as

they may benefit third persons who did not give their

consent. (1207)
Article 1303. Subrogation transfers to the persons

subrogated the credit with all the rights thereto

appertaining, either against the debtor or against

third person, be they guarantors or possessors of

mortgages, subject to stipulation in a conventional

subrogation. (1212a)

Article 1304. A creditor, to whom partial payment

has been made, may exercise his right for the

remainder, and he shall be preferred to the person

who has been subrogated in his place in virtue of

the partial payment of the same credit. (1213)