Atty.

Rabuya Audio Notes (ObliCon)

Obligtion

Part 1
Basic principles of obligation:
Juridical necessity to give, to do, and not to do.

The Basic Concept of Obligation:

It is unitary but it has two aspects (passive, w/c is the debt; and active sides,
w/c is the right); not limited only to debts (fulfillment of duty).

Basic elements of obligation:

a. objective- the object of every obligation is always a prestation (in object of
obligation only, not in object of a contract).

*Do not be confused with the object of obligation (always a prestation) with the
object of a contract, because the object of obligation is a particular conduct
required of the debtor, either that of giving, doing, and not doing.

b. subjective element- either,

-passive subject (debtor)
depends on the action active subject (creditor); the action of the debtor will
simply rely on the action of the creditor. If the creditor will n ot actively
pursue his credit, pwedeng tumahimik na lang si debtor, and possibly, the
obligation may extinguished by way of prescription (?).

-active subject (creditor)

c. juridical or legal tie- aka "binculum juris(?)

binds the object and the subject. binds both elements, the Object and Subject
elements.
-came from 5 sources of obligation (Basic, must know, because it must be a
fatal mistake pag di nyo alam):

1. Law
2. Contract
3. Quasi-contract (favorite topic of every bar examiner)
- a juridical relation w/c arises from a (l.u.v) lawful, unitary, and
voluntary act for the purpose of preventing unjust enrichment.
-no consent because the juridical relationship arises out of unitary
action of a certain person.
- the basis of the contract is the law (no person shall unjustly
enriched at the expense of the other).
- 2 Forms:
a. Negotiorum Gestio(?)
-the officous(?) manager voluntarily assumes the management
or agency of a certain business or property which has been abandoned and
belonging to another person.
- only arise when the following elements are present:
1. There is voluntary assumption of the management or
agency of a certain business or property belonging to another person.
2. It is important that the property or a business
has been neglected or abandoned. (If not neglected or abandoned and someone
voluntarily assumed the property or business, there
is no Negotiorum Gestio. What will arise is Unauthorized Agency).
3. It is necessary that the assumption of management
or agency must not been authorized by the owner, either expressly or
impliedly. (Otherwise, if there is authorization coming from the
owner, it is not the case of N.G. but a case of Express Agency).
4. (Most importantly) The assumption of the agency or
management of the business or property was done in good faith.

-What are the obligations created in N.G.?

*The one who assumes the agency or management of a

business or of a property belonging to another is referred to as the "gestor" or
officious manager (pakialamero). He has not been
authorized. So, what are the obligation in his part (gestor)?

Answer:
Once the gestor assumes the agency or management of the
business or property belonging to another person, he has the obligation to
continue the management or agency until the termination of its
affairs. He can only ask the owner to substitute for him of the owner is in
position to do so, otherwisem, he has no obligation to continue
the management or agency.

Q: If the gestor entered into a contract to a 3rd person in

the course of his management or agency of the propery, who will be liable for the
obligation arising from the contract in relation to the 3rd
person? Is it the owner of the property or business, or the gestor.

A: The law provides that it is still the gestor who is

personally and directly liable to the 3rd person. So, there is no direct
relationship b/w the 3rd person and the owner of the
business or property. There will be no cause of action b/w the two. But of course,
any liabilities incured by he gestor out of that
contract, he can demand reimbursement from the owner. That is the general rule,
unless: (1) The owner ratifies the contract expressly or
impliedly, or; (2) If the object of the contract is a thing pertaining to the
owner.

On the other hand, the owner has the liability to: (1)
reimburse the gestor for any obligations incurred by the gestor in relation to
contracts the gestor had entered into with the 3rd
person; (2) refund a usefull and nacessary expenses incured by the gestor and any
damages suffered by the gestor in the performance
of his obligation as such.

b. Solutio Indibeti- arises when a person, by mistake, delivers

something to another without any legal or just ground.
-Two (2) Elements:
1. There must be no relationship between the giver
and the recipient (the giver has no obligation to pay and the recepient has no
right to receive what has been unduly delivered to him).
2. The delivery has without legal or justifiable
ground or cause and it must be by reason of mistake.
-Obligation: To return what has been delivered through
mistake. (with interest? Yes, if it was delivered in bad faith)
-Sample Question: Teng have a rich Tita residing in US na
nagpapaaral sa kanya. Every semester, she deposit 1k US dollar a money in Teng's
local bank account. The problem is, the US court put 1M US
dollar instead of 1k US dollar. It was deposited to Teng's account and withdrew it.
Can the US Bank directly sue you? Is there any existing
relationship between you and Us Bank?
 Held: Yes, US Bank can direcly sue Teng. There is a direct
relationship by reason juridical relation created by S.I. (due to mistake). Teng is
now the debtor and the Us Banks is the creditor.
There is now a direct relationship b/w the two by reason of quasi-contract of S.I.,
and that can be the basis of action to be filed by US
BAnk directly against Teng. Take note that contract is only 1 of the 5 sources of
liabilities, there are other 4. If the basis of the
recovery of the bank is not SI, that contract, deffinitely there is no brevity of
contracts b/w the two. But if the cause of action will
based on SI, that action will definitely proper.

In Rem Versu- can be found in Art. 22 of New Civil Code.

- something has been unduly delivered which has without
legal or justifiable grounds (almost same as S.I. but different).
- the difference is that, in action In Rem Versu can only
prosper if there is no other legal remedy under the sources of obligation.
- not based on mistake. (Ex. If the delivery is by reason
by mistake, the remedy is S.I. You cannot resort to action In Rem Versu)

Implied Contact- there is still consent although given impliedly.

- the basis of the contract is the will of the parties.

4. Delict or Crime-
-Element (Same as Quasi-delicts)
- Q: when do we know that there is a civil liability in a crime?

A: If there is a private offended party who will be indemnified,

that is the time that there is a civil liability i a commission of the crime.
5. Quasi-Delict - there is an act or omission characterized by fault or
negligence.
-In order to recover, the following elements must be present:
a. someone must suffered damages.
b. the reason for that damages is an act or omission commited by
another person w/c is characterized either by fault or negligence.
c. There must be a causal connection b/w the act or omission and
the damage suffered.
- The act is unlawful (unlike quasi-contract as distinguished)
- If you have private offended party, to recover, there are possible
two sources of obligation (delicts or quasi-delicts). But you cannot recover the
damages twice.
-civil liability is not totally extinguished because Q-D is an
institution that is distinct and separate from the delict

Part 2

Different Kinds of Obligation

1. Civil Obligation
-concept: gives a rightbof action to demand for its performance. You can go
to court to demand for its perfomance).

2. Natural Obligation
-does not give you aright of action. You cannot go to court for its
performance, but, there is still a juridical tie. ( May juridical tie pala, bakit
can't go to court? because there has something happened to juridical tie)
Ex: The right of action is extinguised by way of prescription.
 -not legally compellable.
-the performance resides on the conscience of the debtor, but still recognize
as an obligation under our law (there is still a juridical tie).
-Is natural obligation a moral obligation? No!
-Free from coersion and free from error or mistake.
-produces legal consequences (unlike by Purely Moral Obligation). This are
the following:
a. can be ratified and can be converted agsin into a civil obligation.
b. if the N.O. has been voluntarily fulfilled by the debtor, the
creditor, under our law is authorized to retain the payment.

In other words, if the debtor has been bothered by his conscience and
he chooses to voluntarily fulfill or perform his obligation, although it
is now a natural one, he can no longer change his mind and recover the
payment. Once fulfilled, the creditor is now authorized to retain the
payment, wala ng saulian. (In order that the creditor may authorized the
payment, it must be done VOLUNTARILY). Voluntarily means that it is free
from coersion and freedom from error or mistake.

See Art. 1956 of the civil code. It states that the agreement with respect to
the payment of interest must be stipulated in writing,otherwise, it is not
due. Meaning, even it there is an agreement in the payment of interest but
it is not stipulated in writing, the creditor cannot demand legally to the
debtor for the interest, even if he goes to court.

Q: The agreement of payment of interest was made verbally. Is the agreement

cosidered void?
A: No. The interest is simple not due.

Q: What if the interest has already been paid, although it was not stipulated
in writing? What will be the legal consequence?

A: The answer is provided under Art. 1960. It is the case of Solutio Indebiti
or Natural Obligation.

If the interest is paid by mistake or unintentionally, it is the case of

Solutio Indebiti under Quasi- contract. The obligation is to return.
If the payment of the interest is on then will of the debtor, although he
knows that he can pay without interest and was not stipulated in writing, he can
no longer reimbused the interest to the creditor. This is the case of Natural
Obligation.

Ex.from civil to natural obligation. (Natural Obligation, stated in Art.

1424). If the right of action has already prescribed and extinguished (the civil
obligation) by way of "extinctive prescription", the concept of civil obligation is
already lost but nonetheless, there is still obligation which is converted into a
natural one.

*May utang ka sa isang tao with a promisory note with a prescriptive period
of 10 years (10 years to pay). There is no collection of payment after 10 years.
(this the part of civil obligation). After 15 years, may utang ba ba sya? Does he
has still an obligation? Civil, wala na, but you have still a natural obligation.
Because it was already lapsed, the creditor can no longer go to court to demand for
the performance of that obligation. Ang pwede na lang nyang gawin is mangonsensya
sa fb. If the debtor is nakonsensya and voluntarily payed for the obligation, that
is now the case of natural fulfillment of obligation.

Q: How can you know that a situation is a Natural Obligation or Purely Moral
Obligation?
A: If it is not found in the civil code, then it is purely moral obligation.
If it is found in the civil code, then it is Natural Obligation.
The enumeration of Natural Obligation can be found in different articles of
the civil code (FRom Art. 1424-1430), and in other art. (scattered)

Purely Moral Obligation- not reconizable by law (unlike by Natural Obligation)

because it does not produce any legal consequence.
- no juridical tie, no legal cosequence.

3. Real or Personal Obligation - the basis of classification is from the point of

view of the kind of PRESTATION that is involved in an obligation.
A. Real Obligation
-the prestation is to TO GIVE.
-what is to be delivered is a DETERMINATE/SPECIFIC THING (TO GIVE).
Generally, the principal obligation is to deliver what is due.
-In D/S obligation, the standard of care that is to be observe by the
debtor is that of BONUS PATER FAMILIA (Diligence of the good father of a
family). How it has been observed?
This is how:Ex, what would be the action of a prudent and reasonable person
if he is confronted with a given situation? Eh di gawa ka ng way para maalagaan
mo yung hiniram mo. Hal, may hiniram kang sasakyan tapos pinark mo sa binabaha na
lugar. tapos umulan. ano gagawin mo? Eh d alisin mo at ilagay sa safe na lugar!
Concept: ALAGAAN MO NA SINUBLIAN MO MAN SANA! That the concept of
Diligence of the Good Father of a Family.
- Is the degree of diligence can be valid by agreement or by law?
a. if an agreement in which the debtor is liable when fortuituous
event happen? YES, the debtor is liable, if the agreement so
provided for it! (Art. 1174)
b. can the parties agree on the kind of diligence is lower than
that of agood father of a family (agreed to observe slight care)?
is it legal? YES, expressly provided in Art. 1163.
c. can the parties agree on the kind of diligence that will make
the debtor absolutely free or exempt from liability for any damages
arising from his own negligence? NO! It will violate public policy.
-In case of breach in the obligation to deliver a indeterminate thing,
what are the remidies to the creditor?
A: To compel the debtor to deliver what is due, and compel to pay
damages.

B. Personal Obligation
-the prestation is TO DO, and NOT TO DO?
-the INDETERMINATE/GENERIC THING
-What are the remedies to creditor if Indeterminate/Generic is
delivered in breach?
A: a. the creditor can ask a person to make the delivery and
charge the cost to the debtor.
-2 kinds:
1. Positive PO- involves that of doing.
-in case of breach, what is the remedy of the creditor?
(Simple ask another person of the obligation to do (to make
the delivery) and charge the debtor about the cost of
delivery. The creditor cannot compel the debtor to deliver
it by himself because it is tantamount to invloluntary
servitude which is against the constitution.(stopped at 30 min)
2. Negative PO- involves that of not doing.
-Legal Consequences:
a. If the obligation is Determinate or Specific, then there is 3
accessories of obligations.
 1. (Art 1163)-
2. If the creditor already acquired the right to the fruits, then
the debtor also obliged to deliver the fruits.
3. The debtor has the obligation to deliver the accession and
accessories even it has not mentioned (art. 1166)

3. Pure and Conditional Obligation

A. Pure Ob- not subjected toany condition or term or period
- Legal consequence: immediately demandable.
B. Conditional Ob- subject to a condition.
- future and the happening of the event is a certain event.
-Elements: futurity and uncertainty. (ex: passing the bar, not sure if
will pass)
-can be:
a. Suspensive- rights in obligationwill be created or dependent
orwill only come in the existence upon the happening of the
event.
-the affected one is merely the existence of an obligation.
-rights and obligation are not yet inexistence upon the
happening of the event.
-if the obligation is to give and the obligation is
reciprocal with respect to the fruits and interest, then
wala ng sulian or deemed mutualy compensated (Art. 1187).
- if the obligation is to deliver determinate thing ad the
obligation is reciprocal, the obligation to deliver the
fruits and the interest are deemed mutually compensated. The
purpose is to avoid accounting (Magkano ang fruits, magkano
ang interest. In the law they are equal). (Art. 1187)
-effects of happening(affects merely the existence of
obligation): will not go bact to zero because there are
effects that will remain such as the fruits and interst will
not touch and return.
- prior to the happening of the event, there in not yet a
actual debtor and actual creditor, because the obligation is
not created. What we have is a case of an expectant debtor/
creditor. The rights of the expectant creditor is simply that
of expectancy. He is expecting that the event will fulfilled
and that is the time that his right will come into an
existence.
-prior to fulfillment of the event, what is the nature of
interest of the expectant creditor?
A: Simple a hope or expectation. This enjoys
protection under our law (Art. 1188). But, as provided for
in Art. 1187, upon the happening or effects of a
suspensive obligation, the rights in oblgation will
retroact to the day the constitution of the obligation.
This will only become important when creditor was able to
protect his hope and expectancy.

b. Resolutory- rights and obligation already exist, but the

obligation is subject to extinguishment upon the happening
or fulfillment of an event.
-rights and obligation is extinguished (as if there was no
obligation was created in the first place). No efects will be
reconized.
-effects upon the happening of resolutory: everything will
be returned. Why? Because there was no obligation that
was created in the first place. You cannot produce
something out of nothing. The thigs that has been
produce will wipe out by retuning everything that was
produced byb the obligation.
- the previous debtor who has already delivered to the
creditor, he (debtor) will become the expectant debtor,
because if the resolutory condition is fulfilled, the
previous debtor will entitled to the return of what he had
delivered (thats why may nakatagong suspensive in every
resolutory), and also entitled to avail of the benefits provided in
Art. 1188 which is to bring the appropriate action for the perfection of
his hpo and expectancy.
-There is always a suspensive obligation in every
resolutory.

c. Potestative Con- the fulfillment of that condition made to

depend upon the will of either the debtor or creditor.
-we have:
1. Potestative upon the debtor- if the condition is
subject to the debtors will.

2. Potestative upon the creditor- upon or depend the

creditors will.

d. Casual Con- the fulfillment of the condition does not depend

upon the will of the parties but either upon chance or upon the
3rd person.

e. Mixed Con- partly potestative and partly casual.

-effects on obligation:
1. if the condition or fulfillment of obligation is
potestative or exclusively dependent upon the debtor and
at the same time suspensive, then the obligation will
become void.
2. if the condition or fulfillment of the obligation
is potestative or exclusively dependent upon the debtor
and at the same time resolutory, the obligation is valid.
3. If condition is casual, whether dependent upon
chance or 3rd person, it will not affect the validity of
obligation. The obligation is valid.
4. If the condition is mixed, the obligation is
valid.
-Ex:(partly upon the will of the debtor and partly upon
chance)Don (debtor) will give Bebot(creditor) a cellphone if it
will rain tomorrow, and while it is raining, Don will kiss
Bebot.
It rained (chance is fulfilled), but Don as a debtor,
did not kiss Bebot out of the rain (solely upon the
will of the debtor). From this, the condition is not
fulfilled. Then the condition is VOID. (Apply Art. 1186
only when the condition is mixed. constructive
fulfillment of the condition)
f. Impossible Condition-physically or legally impossible.
-impossibility: must be physical and legal
-Ex: Don give Bong a book if the sun will rise from the
south. It is impossible because the sun rises from the east,
not south.
-tip to know the effect of IC: where is the impossible
condition attached?
1. if it is attached to simple or remunatory donation
(under Art. 727), disregard the IC, then it will not affect the validity of an
obligation.
2. If attached to the provision of the will, simply
disregard the provision, then it will not affect the validity of the obligation.
3. If attached to an ordinary obligation w/c is not a
donation and not a testamentary provision, then it will invalidate or void the
obligation (Art. 1183)

4. Obligation with a Term or Period-future and the happening in which certain

event.
-Elements: futurity and certainty. (Ex: death)
-can be:
A. Suspensive Term-something that we are sure that it will happened.
-there is already the existence, but not yet demandable.
-does not affect the existence of an obligation.
-effects upon the happening( affects merely the demandability of
obligation)
-demadable only upon the arrival of the suspensive term.
B. Resolutory Term (vise versa of ST)- Effect: upon its arrival is the
termination of the obligation.
-does not affect the obligation (as distinguished to ST). The
obligation is simply terminated (simply cut the juridical tie or
relationship existing between the Cr and Deb withou affecting the
effects that were produced).

5. Aternative Ob- the classification of obligation is the number of prestation

involved or plurality of prestation in one and the same obligation.
-Concept: there are several prestation involved in one and the same
obligation but the debtor is not required to perform all of them before the
obligation is considered to be extinguished.
-can be:
A. Conjunctive- there are several prestation (no problem); before the
oblgation of the debtor is extinguished, he is required to perform all
prestation.
B. Distributive- if there are several prestation involved and the
debtor is not required to perform all obligation (perform only one, or
some, but not all obligations), several questions may arise such as:
1. Which of the prestation is he required to perform in order to
his obligation to be extinguished?

2. Who has the right of choice, the debtor or the creditor?

A: Generally, to the debtor, but the right can be given to
the creditor by way of AGREEMENT.
- The creditor or debtor cannot choose partly from one of the prestations and
partly from another.
-Effects of loss of one, or some, or all of the prestation? (ans will depends
on two things)
-When was the choice be effective (very important)? A: From the moment that
it has been duly communicated to the other party. So, if the right of choice
belongs to the debtor, it will be effective/ binding upon the creditor from the
moment the creditor gain knowledge of that choice, and vise versa.

1. Who has the right of choice?

(Creditor: yung bibigyan ng thing/ prestation)???
(Debtor: yung magbibigay ng thing /prestation)???
A. If the right of choice belongs to the debtor:
a. all prestation are lost by fortuituous event.
-legal consequence: debtor's obligation will be
extinguished Because as general rule, no person shall
be responsible for fortuituous event, unless the law
or agreement or stipulation is provided otherwise.
b. all prestation are lost due to creditor's fault:
obligation is extinguished (the debtor cannot exercise
the right to choose because all the prestation were
lost).
c. all prestations were lost due to debtors fault:
obligation is not extinguished.
-remedy: the creditor is entitled to recover the
value of the prestation which was the LAST to
disappear (if the right of choice belongs to the
debtor). Meaning, the debtor is liable to pay the
prestation w/c was last to disappear.
d. only one prestation is left, others were lost: since the
right of choice belongs to the debtor, he will probably choose
the prestation that was left, not the prestation that was
already lost. The obligation is converted into a simple one
of performing that prestation which subsists.
e. only one or two prestation was left due to creditors
fault: Is the debtor limited to choose if others were lost by reason of creditors
fault? NO. Pursuant to our law, if the right of choice of the debtor can no longer
be exercise by him, for reasons attributable to the creditor bacause it was the
creditor was responsible for the loss of other prestations, the law gives the
debtor another right to recind the contract plus damages or to choose from the
remaining.
f. two prestation were left, others were lost.
-Effect: None. The debtor can still choose among the
remaining (may pagpipilin pa eh).

B. The right of choice belongs the creditor.

a. all prestation were lost due to creditor's fault: will
result to the extinguishment of an obligation. (nawala ko
lahat, hindi ako makapili. makakaangal ba ako? syempre dai ta
ako man sana ang nakawara)
b. lost by fortuituous event: obligation of debtor will
extinguished.
c. all prestations were lost due to debtor's fault: The
creditor may recover the price or value of any of the
prestations which was lost by reason of debtor's fault.
(common sense na lang)???
d. one prestation was left, others were lost due to
creditors fault: (sisisihin ba nya ang sarili nya for the loss
of others? of course not). He will have to choose the
remaining prestation, w/c obligation is converted in a simple
obligation of performing that w/c is still subsisting.
e. one prestation was left due to debtor's fault: Is the
creditor limited to that w/c is subsisting? NO. He could have choosen the others,
so the creditor may choose either any of the prestation w/c was lost plus he may
recover damages from the debtor. But of course the creditors may choose the
fulfillment of that prestation w/c are still subsisting. If kung ito ang pipiliin
nya, he cannot recover the damages from the debtor.
2. What was the reason for the loss?

6. Facultative Ob- the classification of obligation is the number of prestation

involved or plurality of prestation in one and the same obligation (same as AO).
-(to distinguished from alternative) There is only one prestation which is
due.
-who has the right of choice: the debtor, as always. Wheher he wants to
perform the original or substitute one.
A. If intends to perform original prestation:
 -the debtor is NOT required to notify the creditor that he will
performing the original prestation . BECAUSE THIS IH WHAT IS DUE.
B. If intends to perform SUBSTITUTE prestation:
-the debtor is REQUIRED to notify the creditor that he will
performing the substitute prestation in lieu of original.
-effect if lost: will not produce any effect. (ano man kung
nawara? ok lang.) Why? Because it is not what is due. What is due is the original
one.
-But if the substitute is no longer a substitute prestation
bacause it is now what is due (for the reason that the debtor already communicated
to the creditor that he is aware that it is a substitute one), it will become what
is due. The loss now of that substitute prestation will become material.

-When will the choice become effective:

A: from the moment the creditor gained knowledge of the choice that was
made by the debtor.
-cannot be given to the creditor, because if will, then it is not anymore a
facultative obligation and will destroy the character of obligation being a
facultative one.
-the debtor has the right to perform a substitute prestation in lieu of the
original one.
-magiging facultative lang ang ob if the parties are agreed that the debtor
offer a sustitute prestation otherwise is a simple ordinary obligation of
performing of that prestation w/c is due.

7. Joint and Solidary Obligation- will only come in place in case of plurality of
the subjects (two or more debtors or creditors).
-Basis of classification is based on subjects.
-referring to one and same obligation, but there are several subjects.
-How to know that it is Joint than Solidary?
a. the law presumes that it is joint if it has many subjects.

A. Joint Obligation- the credits and the debts are to be divided

proportionately.
-each debtors and / or each creditors are only liable for a portion of
the indebtedness.
- Important principle: The share of each of the debtors in the
indebtedness or share of each creditors is distinct and separate from
the others. Legal consequences:
1. if only one of the joint debtors was arecipient of a demand,
but the debtors do not receive any demand coming from the creditor,
only the recipient of the demand will be in default or in delay,
others will not (because distinct and separate from the shares of
others).
2. Likewise, in case of insolvency of one of the joint debtors,
that will not affect the liability of the other joint
debtors( because the shares of insolvency is distinct and
separate from the shares of the other debtors).
3. In the matter of prescription: if the one of the joint debts
had already prescribed, that will not effect upon the
shares of other debtors who's debts are not yet prescribed.
-How to apportion or divide the credits: the shares must be EQUAL,
unless there is proof to contrary.

B. Solidary Obligation- each one of the debtors is oblidge to pay the whole
obligation, while each one of the creditors are entitlied to collect
the entire credits.
-only exist when:
1. When the law so provides.
 2. When the agreement or stipulation of the parties provides for
solidarity.
3. In the absence of law or agreement of the parties, when the
nature of obligation requires solidarity.
-if the debtors are solidary, each one of them is lable to pay the
entire indebtedness.
-on the part of solidary creditors, each one has the right to demand
the entire credit.
- Words that indicates solidarity: (a) joint and several; (b) jointly
and severally; (c) in solidum; (d) individually and collectively.
Ex: (In a promisory note) I, promise to pay the amount of P100k
to the creditor Z, on or before April 3, 2020. (Then, below were
the signatures of the several makers (A, B, C), not only by him).

Q: What will be the nature obligation of A, B, and C?

A: According to Negotiable Instruments Law, if the pronoun I is
used in a promisory note followed by several signatures of several co makes, their
obligations will now become solidary instead of being joint (watch out for the I,
then many co makers). But, if the pronoun used is "We", with same co makers or
situation, then that is the case of a Joint Ob.
-PASSIVE SOLIDARITY- may only exist on the sides of the debtors
(creditors are not solidary but merely joint creditors).
-characteristics:
1. Each one of the solidary debtors does not represent as
agent of the other debtors.
2.There is NO mutual agency that exist among the solidary
debtors.
3. What only exist is a MUTUAL GUARANTEE, NOT a mutual
agency (each one of them guarantees the shares
of the others). Eac h one of them can pay the entire
obligation).
4. If solidary debtors, the creditors can choose anyone of
them, and one of them can be made of the entire obligation.
-3 available defenses on the part of solidarydebtors:
1. defense based on the nature of obligation itself. (Ex:
If the defense of obligation itself is void, unenforceable).
-Effect: A complete defense that is available to the
entire indebtedness and available to each one of solidary
debtors.
2. Defense that is personal to the solidary debtors he is
invoking (Ex: Pwede nyang sabihin na he is not liable to pay the entire
indebtedness. "I was mentally insane by the time the contract was made".
-Effect: Complete defense but only the part of the
solidary. debtor who put of that defense.
Defense that is personal to the debtor and yet the
effect of that is limited only to his share (when the share solidary debtor is
subject to a condition or term) in w/c that condition or term is not yet fulfilled
or not yet arrived.
-Effect: Only a partial defence available only in his
portion of indebtedness.
3. Defense w/c are personal to the others. (Ex. I will not
pay my obligation because by the time the debt was contracted, she is mentally
insane)

-ACTIVE SOLIDARITY- may only exist on the sides of the CREDITORS

(debtors are not solidary).
-characteristics:
1. Each one of the solidary debtors represents of the all
of them.
 2.There is a MUTUAL AGENCY OR REPRESENTATION that exist
among the solidary debtors. (Take note that the mutual
agency or representation is only for the benefit of the
solidarity, but not prejudicial to others. So, each one of
them can act or can be a representative or agent for the
others for so long as it will benefit others) as provided in
Art 1212.
But there is another provision in Art 1215, that in
novation, compensation, condonation, effected by one of the
solidary creditors, the solidary debtors will extinguished
the indebtedness.

Art 1212 and 1215 has no consistency because:

-Art 1212 is directed or govern the relatinship
existing upon
only to the creditors themselves.
-Art 1215 seeks to govern the relationship existing
among the creditors disobey (???) their debtors. So if one of the solidary
creditors will condone the entire indebtedness of the debtors, that would be a
valid act in so far as the debtors are concerned( sol debtors will extinguished the
indebtedness). But in so far as the CREDITORS are concerned, THAT ACT IS NOT VALID
AMONG THEM. eACH ONE OF THE CREDITORS CAN go after the erring creditor for their
respective shares.
Ex # 1: ABC are sol debtors of XYZ as sol creditors.
Nagkasulubong sina A and X. X demanded to A ON HIS DEBT of P900k. Sabi ni X kay A,
"I am condoning the entire P900k."
Q: Is the liabilities of AB and C extinguished?
A: Yes, as expressly provided in 1215.
Ff. Q: What about the shares of Y and Z?
A: They can go to X, pursuant to Art. 1212, that each
one of the sol creditors may only do at what is benificial but not of w/c is
prejudicial.
Ff. Situation # 1: A is very happy. He informed B and
C about the condonation. He then required B and C to pay him of only P50k instead
of P300 each to the creditors.
Q: Is A right on his contention?
A: No, that was made in a pure liberality, A cannot
made any reimbursement from the other solidary debtors as provided Art. 1220 (???).
Situation # 2: Same on ex. # 1, but this time, X ask
a question on how much is the share of A in their debts. A responded, "P300k".
Then, X condoned the P300k debt of A.
Q: What will be the effect of that condonation of the
entire share of A (may balance pa na P600)?
A: He's liability is extinguished(wala na muna sya sa
pic).
fF. Q:What will be the effect of that condonation of
the entire share of A (may balance pa na P600) if B becomes insolvent (unable to
pay)?
A: Since B become unable to pay, A and C will pay the
remaining P600k (P300k), although A share was already condoned. (sinalo ni A su
reponsibilidad ni B).
Situation # 3: Same as on situation # 2, but this
time, X told that he will condoned half of A's share (P150k). (may balance pang
P750k)
Q: May the balance of P750 be still collected from A?
A: Yes. If only a portion of share has been condoned
by one of the sol creditors, he will remain to be a debtor even if so far as the
sol creditors are concerned.
-general rule: Each one of the solidary debtors can be made to
pay the entire obligation and each one of the solidary
creditors has the right to collect the entire credit, except
pagpapasok yung principle provided in Art 1214. What is that? A: If there has been
a demand made by one of the solidary creditors addressed to one of the solidary
debtors.
Ex: A, B, and C are solidary debtors of X,Y,and Z which are
solidary creditors for the amount of P900k. Gen. rule, A, B, And C can pay the
entire, and X, Y, Z can collect the entire credits. ?????d is that the relationship
for the meantime, fix b/w X and C. In so far as X and C are concerned (parang sila
lang ang deptor and creditor.
-Effect: If C was the recipient of that demand in so far a
C is concerned, only X is the creditor. If C will make a tender repayment to A,
then it will become an invalid payment made to a wrong party. So C will pay again.
In so far as X is concerned, only C is the debtor for the meantime (wala muna sa
picture si A and B). If X made a demand upon C, and it was B trying to pay X, then
X unjustly refuse the payment (the refusal is a just/ valid one). (Effect of Art
1214 w/c limited to the two, as stated).
-MIXED SOLIDARITY- exists on both debtors and creditors.

8. Joint and Indivisible Obligation- (Art 1210) The indivisibility of an obligation

does not imply or give rise to solidarity neither solidarity will give rise to
indivisibility (Hindi porke indivisible ay solidary na at hindi porke solidary eh
indivisible na). Why? Because those concepts refer to two different situations.
-When we talk of solidarity, it has reference to JURIDICAL TIE/VINCULUM THAT
BINDs THE SUBJECTS (Yun yung tinitingnan natin).
-When we talk of indivisibility, we are looking to an object of
obligation/PRESTATION.
Q: Is prestation capable of partial performance?
A: If YES, then it is divisible.
If NO, then it is indivisible.
-Solidarity affects the juridical tie, but indivisibility affects the object
of obligation.
-Joint refers to the number of subjects; INDIVISIBLE refers to the nature of
prestations. This can now be DEFINED as: Law pressumes joint in case of plurality
of the subject even if the prestation is divisible, the law pressumes that
obligation is joint rather than solidary, because the indivisivility of an
obligation does not give rise to solidarity and neither solidarity imply
indivisibility.
Ex: A and B have the obligation to deliver a particular specific cow to
X (this is an example of joint indivisible obligation). Why? There is plurality of
the subjects (two debtors, A and B) w/c pressumes by the law as joint. At the same
time with respect to the object of obligation/prestation, is incapable of partial
performance. (hindi pwede yung ulo lang muna, or tung paa, etc) (joint on the side
of debtors)
Ex: (Baliktarin natin, pwede namang joint on the side of creditors) B
has the obligation to deliver a cow to X and Y. (In the absence of stipulations,
the law pressumes that X and Y are merely a joint creditors).
-The difficulty lies in: while the obligation is joint (a portion only ha),
the object is incapable of performance. So, even if one of the solidary creditors
is entitled only to recover his share, he cannot ask for the head of the
cow(correct?). Because prestation is incapable of partial performance.
- in order to perform J and I Ob: It will require acollective action of the
debtors and creditors.
Ex #1: A and B are oblidge to deliver a particular car to X (nagbili ng
car kay A and B, joint debtors). They were not deliverd the car on the agreed date
of delivery. X, as creditor, send a demand only to A compelling him to make the
delivery.
Q: Will that put A in delay?
A: NO, because that demand is not effective because it was only
adressed to A. A cannot perform the entire obligation. Why? Because the obligation
is joint. His liability is limited to a portion of indebtedness, not liable for
entire. X must demand to both A and B to fulfill the obligation.
Ex #2: (in the case of joint creditors) B is oblidge to deliver a
particular car to X and Y
Q: Will X incur delay? NO (same ans in ex. # 2).
-Dont forget to remember that the obligation is still joint, notwithstanding
the fact that the prestation is indivisible. Why? Because in case of insolvency,
the shae of one is distinct and separate from the others. So, in case of insolvency
of one joint debtors, the other joint debtors is not liable for the share of the
insolvent debtor.
- In case of breach:
A. (Remedy of creditor) Ex. There are A, B, and C (joint debtors)
oblidge to deliver a car to X, and were not able to deliver because C did not or
was not able to pay his share. What will be the remedy of X?
Anwer:
1. Since the thing to be delivered is a determinate or real
thing, X has the right to compel the AB and C to make t he delivery,
or, if the creditor choosed to perform a SPECIFIC PERFORMANCE, X has
the right or required to sue all (not just the one or two debtors)
the joint debtors. Why? Because the performance of obligation,
the delivery can only be made through a collective/ consolidated
actions of all joint debtors.

2. If the REMEDY choosed by thecreditor is to the RECOVERY OF

DAMAGES, he may convert to the payment of the damages. It will now become JOINT AND
DIVISIBLE OBLIGATION. He can recover:
a. P300k to A
b. P300k to B
c. P300k to C plus damages since C is the reason for not
delivering of the car.
-Since the remedy is recovery of damages, can X sue only one or
two of the debtors? A: Theorithecally YES (but subject to the Law of Procedure). In
civil law, you can sue one or anyone of them because the share of one is
differenrt/ distinct share from the others, and this time , the obligation is
divisible.

Modes of Extinguishing Obligations

1. Payment- performance
-Rules:
1. must be complete and regular. Exceptions:
A. although incomplete, it must be made in good faith (must not
made in fault).
a. must be substancial- meaning, must more than half.
B. although not complete, must have a waiver from the creditor.
a. But if the creditor just get the payment silently, then
it will not result to extinguishment of the obligation.
Silence merely not deduced to the acceptance of payment, must
insist a waiver by means of intention actions, words,
gestures, etc.
2. Must come from the proper party to compel the creditor to accept the
payment. Who are they?
A. If the payment is coming from the debtor himself or from his
authorized representative, the creditor may compel to accept the
payment.
B. If the payment is coming from the 3rd person? It depends:
a. If the 3rd peson has the interest in the fulfillment of
that obligation (Ex. the payment is coming from guarantor or
surety), the creditor may likewise accept the payment.

b. If the 3rd person has no interest at all in the

fulfillment of obligation, but with the CONSENT of the debtor,
the rule is that, the creditor may or may not compel to
receive or accept the payment. This time, the creditor has
valid reason to refuse the tender of payment.

Take note that the option has given to the creditor

(whether to accept the payment or not). If he accepts it,
although the 3rd person has no interest, still, it is a
valid one. The obligation of the debtor is
extinguished.

The 3rd person has the right to reimburse the payment

to the debtor (with or without interest).

c. If the 3rd person has no interest at all in the

fulfillment of obligation, but WITHOUT the CONSENT of
the debtor, the rule is that, the creditor, STILL, may or may
not compel to receive or accept the payment. This time, the
creditor has valid reason to refuse the tender of payment.
The 3rd person'S right to reimburse the payment is limited
in such a way that the payment is benefitial of the debtor
(with without interest).

3. The party paying must have the capacity to pay. (Dasion)

4. Payment must be made to a proper person. Who are they (Art. 1240)
1. Original creditor.
2. The successor in interest of the original creditor (The
original creditor is not now not entitled for the payment if this
successor is present).
3. Person authorized by the creditor or by law.
Outside of those enumerated, the payment is considered invalid.
Exemptions (to be considered valid again even if the payment was made
in a wrong person):
1. If the payment is benefitial to the creditor.
Q: Who has the burden to proof that the wrong payment has
redounded to the creditors benefit?
A: That is the problem of the debtor. Why? (1) He is the
one who is responsible for the mistake; (2) It is the debtor who
is interested in the extinguishment of his obligation.

But there are situations in the civil code, that the debtor
is no longer dound to proof that his wrong payment to a
wrong person has redounded to the creditors benefit. What are
they? (Enumerated in Art. 1241, read)
a. if after the payment made to a wrong person (if
the creditor has led the debtor or believed that the recipient
of the payment has the authority to accept the payment,
under our law, that payment is valid) (????)

2. If the person is a possessor of the credit, and the payment

was made in good faith, the debtor also extinguished
his obligation.
Art 1242 (read) Sino yung tinatawag nating possessor of the
credit? He must not entitle for the payment, it is a wrong
payment.
 Ex. #1. The debtor to evidence the indebtedness executed a
promisory note, payable to specific creditor. Without any
assignment of the promisory note, that note was landed to a 3rd
person. If that person will demand from the debtor, and the
debtor pays, will the debtors obligation be extinguished?
A: No. That is the case of a wrong payment, because the one
who demanded payment is not a possessor of a credit. He is
merely in possession of the document evidencing the credit but
he is not a possessor of the credit. Therefore, that is an
invalid payment.

Ex. # 2: (This time, the promisory note is in Negotiable

Instrument w/c is payable to the order of creditor). The
creditor did was to negotiate by endorsing it and delivered
it to a 3rd person and he (3rd person) demanded payment from
the debtor. Is that payment valid?

A: Yes. Payment w/c does not falls under 1242. It will fall
under the payment of general rule. Why? Because the 3rd person
is now a successor in interest of the original creditor.

Ex. # 3: (This time, the promisory note is NON NEGOTIABLE

Instrument). tHIS TIME, THERE IS AN assignment of credit from
original creditor to the assignee, and the assignee demanded
payment from the debtor. Is that a valid payment?
A: Yes, but is NOT under exemption under 1242, but valid
pursuant under the general rule. Why? Because the assignee
will become successor in interest of the original creditor.

Examples that fall under of Art. 1242 (exceptions):

Ex. # 1. The promisory note is a negotiable instrument
because it is payable to bearer. The creditor hides the
instrument in his office. Unknowingly, it was seen by the
creditor's officemate, get it (payable to bearer), and he
presented it to the debtor for payment. Debtor knows that he
(officemate) was a creditor's friend. The happening is
not known to the creditor. The payment was then made. Is the 3rd
party (officemate) has the right to demand the payment to the
debtor? (This is an example in which the holder of the instrument
is a possessor of the credit, because the instrument is
payable to bearer. He is a possessor of the credit and the
payment by debtor was made in good faith. So that is an
example of example in aRT. 1242, WHERE THE PAYMENT was made to
awrong person but valid because that 3rd person is the
possesor of that credit and at the same time the debtor made
the payment in good faith).
A: NO. He is not the creditor, he is not a successor in
interest. In order to the instrument payable to bearer,
there must be an intentional delivery, which is not present in
this case.
3. If there was already an assignment of the credit, the original
creditor ceases (no longer) to entitled for the payment. It is
now the assignee is entitled for payment.(does not
require the debtors consent). Assignment of credit can be made
without the debtors knowledge/consent to be valid. You just need is the
assignor and assignee (new creditor). But of course, before the debtor
can be considered bound by the assignment, he must have the
knowledge of that assignment (???). The payment to
the wrong person is now valid although not known to original
creditor.

5. With respect to the identity of payment:

A. If the ob is determinate one, the creditor may not be compell
to accept any other thing EXCEPT w/c is due.
B. If the ob is GENERIC one, the creditor may not DEMAND for a
thing w/c is superior quality and neither may the debtor compel
the creditor to accept a thing of inferior quality. Dapat SAKTO
LANG.

-If payment is in a form of sum of money, the rule is that, the

payment was be made in the currency agreed upon by the parties,
otherwise, the creditors may not compelled to accept the payment.

- Even if there was an agreement (stipulations) or not, with

respect to the currency, but if it will already be impossible to
deliver the currency, the rule is that, the payment that should be
made by the creditor must be in LEGAL TENDER
- LEGAL TENDER (Coins and Notes)
a. the kind of money that the debtor can compel his
creditor to accept in a right amount.
b. a coins and notes issued by BSP and guaranted by the RP,
no more no less (pursuant to Sec. 52 of the New Central Bank
Act).
c. a note/ promissory note of the your gov't.
d. NOTES (perang papel) has no limitation, whatever the
deniminations are, they are considered as legal tender (WON P20
denominatios, P100, P500,etc.)
e. COINS have limited legal tender power or denominations.
-if denomination is less than P1 (yung mga centavos),
they are considered legal tender only up to a maximum
amount of P100.
-if denomination is P1, P5, P10, etc, they are
considered legal tender only up to a maximum amount of
P1000.
(Ex. You ordered a food that cost P120. You paid it
with a sampaguita worth P120. The casher will not
accept that payment (or pwede man, pero karapatan nya
na magrefuse for that payment) because it is not a
legal tender. Coin and notes lang ang legal tender.
-Cheque is not a legal tender (So, the creditor has the right to
refuse payment). Cash only. Not legal tender thing is invalid (as
general rule). EXCEPTIONS:
A. If the purpose of cheque was not for the extinguisment
of an obligation, but rather, for the purpose of exercising
a right (Ex: rights of redemption, purchase, first refusal,
etc) the concept of legal tender (Art 1249) does not
apply. (Art. 1249, extinguisment of obligation).
Ex: X pays in a form of cheque to a bank for his
right of purchase, but the bank refuse because of the
contention that it is not a legal tender. Will X be
resorted to consignation? What is the remedy?
A: No, consignation is a form extinguishment of
obligation w/c requires that the debt is due. X is not
paying for the extinguishment of ob but a right of
purchase. The remedy must not consignation but a
SPECIFIC PERFORMANCE.
-Special Forms of Payment:
 1.DASION EMPAGO (Art.1245)- the original form of payment is a sum of
money, but because the debtor has no money, he payed his property (in lieu
of money). (tandaan: pag ang binayad sa payment is kwarta, then bako sa
dasion. pero pag property, then dasion yun).
- refering to specific/identifiable property that has been
segregated (as distinguished to Cession)
-a special form of payment, NOVATION ia not a special form of
payment.
Ex: walang pera si X. Imbis na magbayad ng pera,
nagrequest na si debtor kung pwede i-massage na lang
si X. Nag agree naman si X.

Q: Is the obligation extinguished?

A: Yes. but not in a form of Dation Empago (because
massage is not a property), but NOVATION.
-consensual and contractual (by agreement of the parties).
Because dasion empago (property) is not a legal tender.
If nag agree and creditor na property na lang and
ibayad, then it is valid (although not legal
tender/money).
-Q: Up to what extent will dasion be extinguished?
A: (1)must be agreed by the parties; (2) property must be
of fair value
-Purpose: Absolutely conveyance to extinguished the debtors
obligation (pumapatay). Must not be correlated to Law
on Sale because it gives rise to obligation (bumubuhay)creditors.
-Can resort regardless of the numbers of creditors (pwedeng isa
or marami) (as distinguished in cession).
-If there was a delivery of the property, and its delivery was
accepted by the creditor as a form of payment, there must be a corresponding
transfer of ownership from debtor to creditor ONLY UPON DELIVERY, NOT upon the
execution of CONTRACT OF AGREEMENT. (contract is not a mode of transfering an
ownership. In mater of contracts it is the delivery w/c transfer the ownership).
(as distuinguished to cession)

2. Payment by Cession- universality of property of the debtor.

-Concept: will come only in place in case of insolvency (unable
to pay) of the debtor.
-The debtor has several creditors and his assets are not
sufficient to pay his obligations to several creditors due to
insolvency.
- Requires plurality of creditors (maraming creditors).
-There is no transfer of ownership UPON DELIVERY. The property is
delivered for the purpose of SALE. Out of the proceeds of the sale,
the respective credits of the various creditors will have to be
satisfied.
-the obligation will only extiguished ONLY WHEN THE PROCEEDS OF
THE SALE HAD BEEN APPLIED OR GIVEN TO VARIOUS CREDITORS.

3. Consignation- the creditor refuses the tender of payment (money)

WITHOUT JUST OR VALID REASON, the rule is that, the debtor's obligation
is not extinguished. A mere tender alone without followed by a consignation
is not sufficient to extinguish the obligation.
-Rules for consignation to be valid (must be strictly provided):
1. A debt must be due (consignation is not valid if NOT
DUE).
Ex: If the obligation is payable on demand. In order for an
obligation to be due, creditor may ask for demand. Di ka
pwedeng magbayad in the absence of demand, the ob is
not due. So, you cannot resort to consignation, because it
is not yet due (or demanded by creditor).

2. There must be a prior announcement of the debtors

intention to resort into consignation. Prior
announcement must not only resorts to the CREDITORS but also
TO ALL CONCERNED (Ex: guarantor, sureties, etc.)

3. The tender of payment must be deposited in court.

4. There must be a post notice addressed to the creditors
and other persons interested in the fulfillment of
obligation that the payment is already deposited in
court.
PURPOSE: To know by the creditors and others that the
payment is already deposited in court. Then, by the time
the creditor accepts it, then the ob is extinguished.
If not accepted, there will be a litigation (Soco vs.
Melitante)
-always a judicial act (you are to file a complaint for
consignation in court, hindi yung basta mo lang ipapatago
sa court).
-when will the debtors obligation be extinguished?
1. Even w/out the judgment that the consignation is valid,
the creditor already accepted the payment in court. The
judgment of the court will retroact by the time the
complaint was filed in the court.

Tender of Payment (Different from Legal Tender!)- in order to be

valid:
1. The debtor must not have only the intention, the capacity to
make a payment, but most importantly, he must be IN THE ACT OF
PERFORMING THE OBLIGATION.
Ex: If the debtor only wrote a letter to the creditor that
he will pay his debt, then it is not considered as a tender of
payment).

2. Must be made in ABSOLUTE TERMS (without any condition or

qualification).
Ex: Bago magbayad yung debtor, pinapaamin muna yung
creditor na bakla sya. Pag di umamin, hindi magbabayad,
pero pag umamin, magababyad.
Q: Will the debtor resort validly to consignation?
A: NO. Because the tender of payment was not valid.

2. Loss of the thing Due- not limited to real obligation (TO GIVE) but also
applicable to personal obligation ( TO DO), (Ex. Art 1265 and Art. 1266, in w/c
when an obligation is legally or physically impossible, the ob is extinguish by way
of loss. Like, if the service has become difficult to manifest beyond the
contemplation of the parties, an obligation to do is considered extinguished by way
of loss)
- applicable only to real obigation (DETERMINATE THING), because of its
susceptivility to lost. MUST BE:
A. The lost must be without the fault of the debtor.
B. tHE LOST MUST HAVE occured prior to the debtor incurring delay.
-Generally, debtor is not liable if the loss of the thing due is by reason of
fortuituous event. EXCEPT:
1. When the law provides that he still liable although it is by reason
of fortuituous event.
 2. Agreement b/w the parties that he is still liable.
3. If the nature of obligation requires assumption of risk.
- GENERIC THING IS NOT SUSCEPTIBLE FOR extinguisment by way of LOSS (gENUS
nuncuam perit (???)).
-The lost must be without the fault of the debtor

3. Merger or Confusion- the characters of the debtor and creditor are to be found
in one and the same person.
Ex: For the evidence of Negotiable instrument, A executed a negotiable
promisory note in favor of B (creditor). And since that the instrument is
negotiable, B has also a debt to C. He payed the negotiable instrument that was
given by A. C also has a debt to D and give the n.i. provided to him by B. D has a
debt to A. He gave the n.i. to A as a form of payment. A sees that he is the debtor
of promissory note. There is now the merger of the debtor and creditor in one and
the same person. This will now result to the extingishment of the debtor's
obligation.

4. Condonation (Pagpapatawad) or Remission of the Debt- not only involved the act
of the creditor.
-in order to be valid:
a. acceptance by the debtor
-not a unilateral act on the part of tha creditor. That will require a
consent from the debtor. Why? You cannot impose your own generosity in one
person. Why? May mga times na ayaw mong tumanaw ng utang na loob sa ibang tao
(specially ng debtor ??). That is the reason for requiring debtors consent or
acceptance by the debtor where the creditor is condemning or remitting the
obligation.
-Q: Is your unilaterally renunciation of the credit by the creditor a mode
of extinguishing the debtors obligation?
A: No. Why? The debtor may still choose to pay even if the creditor had
already unilaterally renounce the credit. The tender of payment will not be
accepted by the creditor. The debtor can resort to CONSIGNATION. The creditor
cannot impose his own generosity upon the debtor.
-What really happens in a unilateral renounciation of the credit is that it
may be possible for the ob to perish but not by way of renounciation but by
means of prescription (???). Of course if the creditor will unilaterally renounce
his credit, will no longer actively collcet the credit. At kung wala namang
gagawin si debtor, maghihintay lang sya ng any action from the creditor at walang
gumalaw sa kanila through lapse of time, the debt will be extinguished by way
of prescription (PRESCRIPTION MEANS, LINIPASAN NA NG PANAHON).

-Can be done either expressly (in writing) or impliedly (verbally).

1. Express Condonation- the law requires that the parties must follow
the formalities required in asimple donation. What are those formalities in
donation.
a. what is to be donated is PERSONAL PROPERTY and the value of
that exceeds P5k, the law requires that both the donation
and the acceptance of the donations must be in a form of writing,
otherwise the donation is not valid.(Ibig sabihin, pagpinatawad
ung P5k up na debt mo by the creditor, it must be in writing tapos
PAPIRMAHIN MO KAAGAD, otherwise, condonation is NOT valid).

b. If what is to be condoned is an obligation to deliver a REAL

PROPERTY, the law requires that the offer of condonation and the
acceptance of that donation must be embodied in a PUBLIC INSTRUMENT,
otherwise, the condonation is not valid.

2. Implied Condonation- no form.

 -Certain presumptions in Condonation
A. If the document evidencing the credit is a form of a private
document (your own document, NOT YET NOTARIZED). If the INDEBTEDNESS is
in a form of a private document, it is usually kept or in the possession of
the creditor. But if it was later on found in the possession of the
debtor, that will give rise to two presumptions:
1. That it was voluntarily delivered by the creditor to the
debtor. Why? Isang documento na dapat hawak ni
creditor ay makikita sa debtor, the law pressumes that it was
delivered by the creditor to debtor, because the law always in favor in
good faith or presumptions of inocence.

2. That the debt has been condoned.

Q: How to rebut the presumption of condonation.
A: Presumption is not conclusive. Must be prove that there
was no delivery or the delivery was not voluntarily.

B. If what was condoned is a CONTRACT OF PLEDGE (mere accessory

contract), it is the only one considered to be extiguished without
affecting the PRINCIPAL CONTRACT OF LOAN.

C. If what was condoned is a PRINCIPAL CONTRACT OF LOAN, the contract

of pledge is also extiguished because the accessory cannot stand alone
without the principal.

5. Compensation- OFF-SETTING(icancel o bawasan ang something) of two (2)

obligations up to there concurrent amount.
-Distinguishments:
1. Payment (performance of obligation)
2. Loss (will require the loss of thing that is due)
3. Condonation/ Remission ( pagpapatawad)
4. Merger/ Confusion (requires the merging of debtors and creditor as
one the same person)

-Kinds (parties are mutually creditors and debtors of each other in their own
rights):
1. Judicial Compensation (Contract claim)- takes place by reason of
court order.
2. Voluntary/ Conventional- agreement of the parties (Contractual)
-will not require any requisites, except that the parties are
mutually creditors and debtors of each other in their own rights.
3. Legal- takes place by reason of provision of law.
-requisites of valid legal take place:
a. the parties are mutually creditors and debtors of each
other in their own rights. (Ex: If one is a debtor merely in a
representative of a capacity as a guardian of a
certain ward, legal compensation will not take in place
because they are not mutually creditors and debtors of
each other in their own rights).

b. the parties must be mutually creditors and debtors of

each other as principals. (Ex: If one is a mere guarantor,
legal compensation will not takes place because it is necessary
that both are principals).

c.both debts must be due, demandable, and liquidated

d. must consist in form of money. Pwede man consumables but

of the same kind and quality.
 e. over either of the debts, there must be no retention or
controversies communicated in due time by a 3rd person.

Ex: Just remember Voltez V (If all requisites volts in,

tapos na ang laban). If the Volsenian (traitor)
will try to break the 5th requisite that was already volted
in, then it was too late, at was already formed,
legal compensation take place. But if the Volsenian impire will
prevented the Voltez V to volt in (Ex, if the 5th not
communicated in due time by a 3rd person requisite to
volt), then the legal compensation will not
take place.

Situation: A and B are mutually debtors and creditors of

each other as principals of their own right up to the
concurrent amount of P1M. Both debts are due, liquidated,
and demandable, and both consist of payable by money (in
short, all requisites are present), except that, A is also
indebted to C, and C was able to get a judgment in his favor for
the amount of payment of P1M. To satisfy that judgment, C will get a
Writ of Execution allowing the court to look for the property of A.
Unfortunately, no property was seen to A, except a debt to B. The
court can garnish that credit of A. The court will issue a
garnishment addressed to B informing B not to pay A, but
instead, pay it to the court in favor of C. That is the example
of retention or controversy commensed by 3rd person. If that
will be communicated in DUE TIME (meaning, all requisites are
already taken place) at dumating yung NOTICE OF GARNISHMENT,
THAT WILL ALREADY BE TOO LATE. Why? If the debt is already due,
liquidated and demandable, the two obligations of A and B will
be compensated by way of legal compensation up to the
concurrent amout of P1M. So, pagdating ng garnishment, since
compensation operates by way of law, and 4 requisites are
already present, kit will takes place by operation of law,
pagdating na notice of garnishment, is there astill a credit to be retain?
WALA NA, because it was already extinguished by way of
compensation.

6. Novation- unique because has a dual function.

- while novation results to the extinguishment of obligation, the debtor
extinguished by creating a new obligation.
-new obligation will result to the extinguisment of the old obligation.
-Kinds/Classification of Novation:
1. Extinctive and Modificatory
A. Extinctive (Art 1291)- will result to the extinguishment of
debtors obligation.
B. Modificatory- does not extinguished an obligation , but
instead, the mode of obligation is modified by the new agreement.

-either express or implied.

1. Express Novation-it is necessary that in the new agreement,
there must be a clear provision that the new contract is for the
purpose of extinguishing the old obligation. In the absense of
that statement in the new contract, novation is not pressumed.

2. Implied Novation- only exist when there will be a total

incompatibility or repugnancy b/w two (2) obligations. Absence of
total repugnancy b/w the two obligations' if they can be harmonized,
what we have is simply a case of modificatory novation, not
extinctive.

2. Real or Personal Novation

A. Real Novation- involves in change in object of obligation or
principal condition. (1st par of Art. 1291)
B. Personal Novation- if it involves in change in person of the
debtor or creditor, the cause or consideration is principal
condition. (2nd and 3rd par of Art. 1291)

a. 2nd par- if what it to be change is the person of the debtor,

the change is refer to as SUBSTITUTION.
- since novation is not to be pressumed before the
substitution of the old to new debtor, it is necessary that
there is a clear agreement that the old debtor is being
released from his obligation and that he is being substituted
by the new debtor.

Ex: X borrowed from a bank by purchasing a car with a

monthly amortisation payable for 5 years. After 2 years, X
decided to sell the car to Y. X then executed a deed of sale
with assumption of mortgage informing that Y will assumes the
remaining mortgage to the bank. Y informed the bank that he
will resumes the payment made by X. Bank accepted the payments by
Y. Unfortunately, Y stop paying after a year.

Q: Can the bank go after X (previous owner of the car)?

A: Yes. There is still no novation by way of substitution
of the person of the debtor. To take place, it is necessary
that the novation was made expressly. There must be a clear
agreement that the old debtor is being released.
Ff. Q: Can the banc cannot consider the payment of Y as a
form of consent that he will be the one to pay the rest of
mortgage?
A: NO. The acceptance of the bank in the payment coming
from the new owner of the car NOT INCONSISTENT with
existence of the old obligation. It is still compatible
to the old obligation. Why? The creditor (Bank) can accepts
payment from anybody.

-Two (2) ways of substitution (DEBTOR): (listen pa more on

53min, part 5)
1. Ex Promicion- if the initiative of substitution is
NOT imanated from the debtor himself.
2. Delegacion- if the initiative of substitution is
imanated from the PREVIOUS debtor himself
(the debtor who offer the substitute)
Q: May it be possible for the action of the previous debtor
to be revive?
A: YES! iN TWO SITUATIONS (delegation only): (1) If there
was fraud, where delegacion offer a substitute person that
is insolvent which is known to the debtor; and (2)
KATANGAHAN, DELEGACION offer substitution that is
insolvent known to the public, except to the debtor.

b. 3rd par- if what it to be change is the person of the

CREDITOR, the change is refer to as SUBROGATION.
-two kinds:
1. Legal- provision of law (enumerated in Art 1302).
 Ex:a. If the one who paid the obligation is a 3rd
person who has the interest in the fulfillment
of obligation wether the payment was made with or
without the debtors consent, legal subrogation will
take place.
b. If the one who paid the obligation is a 3rd
person who has NO interest in the fulfillment of
obligation, legal subrogation will take place ONLY
with debtors consent,
2. Conventional- change is the person of the
CREDITOR by agreement of the parties (old creditor,
new creditor, and the debtor)
- all three must give there consent, otherwise
there is no conventional subrogation.
- almost similar to ASSIGNMENT OF CREDIT (but
different) in w/c there is a old creditor(assignor), new
creditor (assignee), and debtor.
Q: Is the Assignment of Credit similar to
Conventional Subrogation?
A: NO. In C.S requires that the three involved must
have the consent, whereas, in AoC