LAW * any rule of action (state law, divine law, natural law, moral law) or any system of uniformity (physical law) * determines not only activities as rational beings but also the movements of all objects of creation, animate or inanimate

GENERAL DIVISIONS 1.) Law which is promulgated and enforced by the state * State Law—also called positive law, municipal law, civil law, imperative law ; enforced by the state with the aid of its physical force ; does not concern itself w/ violations of the other rules of action unless they also constitute violations of its commands. 2.) Law which is not promulgated and enforced by the state * Divine Law—law of religion and faith ; concerns itself with the concept of sin and salvation ; promulgated by means of direct revelation ; sanction is through reward and punishment * Natural Law—the divine inspiration of sense of justice, fairness and righteousness by internal dictates of reason alone ; basic understanding of right and wrong dictated his moral nature ; reasonable basis of state law * Moral Law— is the totality of the norms of good and right conduct from the collective sense of every community ; no definite legal sanction but induces social reaction, either positive or negative ; not absolute, but varies from time to time ; influences or shapes state law * Physical Law—nothing more than an order or regularity in nature by which certain results follow certain causes
CONCEPTS
General— the mass of obligatory rules established for the purpose of governing the relations of persons in society
Specific— a rule of conduct, just, obligatory, promulgated by legitimate authority, and of common observance and benefit

CHARACTERISTICS 1.) It is a rule of conduct. * Only external acts. 2.) It is obligatory. * Imposing duty to obey and involves sanction 3.) It is promulgated by legitimate authority. * “statutes”—enacted by congress * “ordinances”—local govt units 4.) It is of common observance and benefit. * Intended by man to serve man ; to maintain harmony and make order and co-existence possible
SOURCES
1.) Constitution * The written instrument by which the fundamental powers of the gov’t are established, limited and defined, and by which these powers are distributed among several dept for their safe and useful exercise for the benefit of people * Fundamental law or supreme law or highest law * Promulgated by the people themselves 2.) Legislation * Declaration of legal rules by competent authority * Enacted law or statute law 3.) Administrative or executive orders, regulations and rulings * Intended to clarify or explain the law and carry into effect its general provisions 4.) Judicial decisions or jurisprudence * Doctrine of precedent/ stare decisis – decisions of superior court are binding on all subordinate court * Jurisprudence- science of philosophy of law 5.) Custom 6.) Other sources
.
ORGANIZATIONS OF COURTS 1.) Regular courts * Supreme Court, Court of Appeals, Regional Trial Courts—courts of general or superior jurisdiction 2.) Special courts * Court of Tax Appeals, Sandiganbayan 3.) Quasi-judicial agencies * Appealed to the office of the president; LTFRB, SEC, etc.

BLACK’S DEFINITION OF LAW
“Law is defined as the regime that orders human activities and relations through systematic application of the force of politically organized society or thru social pressure backed by force in such society.”
* Law is obligatory.
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LAW OF OBLIGATIONS AND CONTRACTS
--the body of rules which deals with 1.) nature and source of obligations and 2.) the rights and duties arising from agreements and the particular contracts.

*Title 1, Articles 1156-1304 general provisions on obligations
*Conclusive presumption of knowledge of lawArticle 3, Civil Code
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ART. 1156 (meaning of obligation)

* Obligationderived from the Latin word obligation which means tying or binding
* Art. 1156 gives the Civil Code of obligation on its passive aspect.
* Juridical necessity the courts of justice may be called upon to enforce fulfillment of obli.
* Damages represent the sum of money given as a compensation for the injury suffered
* Injury harm suffered by a person for the violations of his right

Nature of obligations under Civil Code
Civil obligations obligations which give to the creditor or oblige a right under the law to enforce their performance in courts of justice.

REQUISITES OF AN OBLI * Passive subjectdebtor/obligor * Active subjectcreditor/ oblige * Object/ Prestation subject matter of the obli * Juridical / Legal Tie the efficient cause which binds the parties
FORMS OF OBLI
* May be oral, in writing , or partly in oral and partly in writing.

KINDS OF OBLI ACCDG TO SUBJECT MATTER
1. Real Obliobli to give
2. Personal Obliobli to do or not to do:
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a. Positive personal obli b. Negative personal obli
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Art.1157 (Sources of obli)
a. Law
b. Contracts
c. Quasi-contracts
d. Crimes or acts punishable by law
e. Quasi-delicts or torts

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Art. 1158 (Obli from law)
* They are not presumed bec they are considered a burden upon the obligor.

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Art.1159 (Obli from contracts)
Contract meeting of minds between 2 persons 1. Binding force have the force of law between the contracting parties 2. Requirement for valid contractmust not be contrary to law, morals, good customs, public order or public policy
Compliance in good faith compliance or performance in accordance w/ the stipulations or terms agreed upon

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Art. 1160 (Obli from quasi-contracts)
* No one will be unjustly enriched or benefited at the expense of another

Kinds 1. Negotiorum gestio 2. Solutio indebiti a. No right to receive thing delivered b. Was delivered through mistake
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Art. 1161 (Obli from crimes)
* A person criminally liable is also civilly liable.
* A person not criminally responsible may still be liable civilly.

Scopes of civil liability
1.) Restitution 2.) Reparation for the damages caused 3.) Indemnification for consequential damages

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Art. 1162 (Obli from quasi-delicts)
Requisites
1. There must be act or omission 2. There must be fault or negligence 3. There must be damage caused 4. A direct relation of cause and effect bet. 1 and 3 5. No pre-existing contractual relation between parties
Crimes vs Quasi-delict
* criminal/ malicious intent * only negligence
* purpose is punishment * indemnification of offended party
* affects public interest * concerns private interest
* criminal and civil liability * only civil liability
*cannot be compromised *can be compromised
*guilt must be proven beyond * need only be proved by
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reasonable doubt preponderance of evidence

NATURE AND EFFECT OF OBLIGATIONS
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Art. 1163 ( Diligence of a good father of a family)
Specific or determinate - particularly designated or physically segregated others of the same class ; cannot be substituted with another without the consent of the creditor
Generic or indeterminate - refers only to class or genus to which it pertains and cannot be pointed out with particularity ; can give anything of the same class as long as it’s of the same kind
Duties of debtor in obligations to give a determinate thing
1. Preserve the thing A. diligence of a good father of a family - equated with ordinary care or that diligence which an average person exercises over his own property b. another standard of care - law or stipulated by the parties (eg. contract of carriage) c. factors to be considered - nature of obligation, circumstances of the person, time and place. d. reason for debtor's obligation - insure that the thing to be delivered would subsist in the same condition as it was when the obli was contracted
2. Deliver the fruits of the thing
3. Deliver the accessions and accessories (1166)
4. Deliver the thing itself ( 1163, 1233, 1244)
5. Answer for damages in case of non-fulfillment or breach (1170)

Duties of obligor to deliver a generic thing
1. To deliver the thing which is of the quality intended (1246)
2. To be liable for damages (1170)

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Art. 1164 (no demand, no delay)
Diff kinds of fruits
1. Natural - products of soil, and young and other product of animals
2. Industrial - produced through cultivation or labor
3. Civil - derived by virtue of juridical relation
Right of creditor to the fruits
* to protect the interest of the obligee should the creditor commit delay, purposely or otherwise, in the fulfillment of the obligation
When obli to deliver fruits arises
1. Perfection of the contract - birth of the contract/ meeting of the minds
2. Subject to suspensive condition - upon the fulfillment of the condition or arrival of term
3. Contract of sale - * price has been paid!
4. Obli from law, quasi-contract, delict and quasi- delict - determined by the specific provisions of law
Personal vs Real Right
Personal - power of a person to demand from another, as a definite passive subject, the fulfiilment of obli
Real - interest of a person over a specific thing without a definite passive subject against whom the right may be personally enforced. Ownership acquired by delivery
* tradition - same as delivery

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Art. 1165 (specific performance)
Remedies of creditor in real obligation
1. Specific real obli a. demand for specific performance w/ right for indemnity of damages b. demand rescission or cancellation w/ right to recover for damages c. demand for payment of damages only (it is the only feasible remedy)
2. Generic real obli *can be performed by the third person
When debtor delays or has promised delivery to separate creditors
* compliance in bad faith - not exempted from responsibility in a fortuitous event (determinate thing only)
*for indeterminate thing - genus nunquam perit (genus never perishes)

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Art. 1166 (Accessions and accessories)
Accessions - fruits of the thing or add ons or improvement upon a thing
Accessories - things joined to or included with the principal thing for embellishment, better use or completion
Right of creditor to accessions or accessories
*implied ---> principle of law that “accessory follows the principal"

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Art. 1167 (Obligation to do)
Situations
1. D fails to perform
2. D performs the obli but contrary to the terms
3. D performs the obli but in poor manner
Remedies of creditor in positive personal obli
1. If D fails to comply a. have the obli performed by himself, or by another at D's expense b. recover damages
2. If obli is poorly done or in contravention of the term a. be undone if possible b. recover the damages
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Art. 1168 (Negative personal obli)
* D cannot be guilty of delay
* remedy --only recovery of damages done due to performance of prohibited obli

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Art. 1169 (Delay)
Delay
1. Ordinary delay - failure to perform an obli on time 2. Legal delay / fault / mora -failure to perform an obli on time which failure constitutes a breach in obli
Kinds of delay/ default
1. Mora solvendi - part of debtor
2. Mora accipiendi - part of creditor
3. Compensatio Morae - delay of obligors in reciprocal obli
Requisites of Mora Solvendi
1. failure to perform of positive obli on the date agreed upon
2. demand (judicial or extrajudicial) to comply with his obli
3. failure to comply with demand
Effects of delay
1. Mora Solvendi a. guilty of breach or violation of obli b. liable for interest or damages c. liable even for fortuitous event
2. Mora Accipiendi a. guilty of breach of obli b. liable for damages c. bears the risk of loss of thing due d. D is not liable for interest ( obli to pay money) e. D may release himself from obli by consignation or deposit ( 1256)
When demand is not necessary to put debtor in delay
1. When obli so provides
2. When law so provides
3. When the time is of essence
4. When demand would be useless
5. When there is performance by a party in reciprocal obli
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Art. 1170 (Grounds for liability)
1. Fraud (deceit/ dolo) - deliberate or intentional evasion of normal fulfillment of obli a. Incidental fraud (dolo incidente) - committed in the performance of obli already existing bec. of contract b. Casual fraud ( dolo casual) - employed in the execution of contract
2. Negligence (fault/culpa) - voluntary act or ommission (no malice)
3. Delay (mora) (1169)
4. Contraventions of the term of obli
Fraud and negligence distinguished
* deliberate intention * no intention
* waiver of liability for future fraud is void * waiver of such may be allowed
* must be clearly proven * presumed from the violation
* liability cannot be reduced/ mitigated by court * may be reduced accdg to circumstances

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Art. 1171 (Responsibility from fraud)
*Responsibility arising from fraud is demandable in all kind of obli.
*Waiver for future fraud is void while waiver of action for past fraud is valid (act of magnanimity or generosity of victim).

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Art. 1172 (Responsibility from negligence)
* Responsibility arising from negligence is demandable but courts are given wide discretion in fixing the measures of damages.
Kinds of negligence 1. Contractual negligence (culpa contractual)not a source of obli but negligence in the fulfilment of pre-existing obli 2. Criminal negligence (culpa criminal)

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Art. 1173 (Factors to be considered in negligence) 1. Nature of obli 2. Circumstances of person 3. Circumstances of time 4. Circumstances of place
Measure of liability for damages
* acted upon good faith damages for the natural and probable consequences of the breach of obli
* in bad faith responsible in all damages attributed to the non-performance of obli
Kinds of diligence required 1. Agreed upon by parties 2. In absence of stipulation, that which is required by law (in particular cases) 3. If both are silent, then the diligence expected of a good father of a family

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Art. 1174 (Fortuitous event)
* Fortuitous event event independent of will of obligor but not of other human wills
* Force majeure events totally independent of human will
Requisites of fortuitous event 1. Must be independent of, at least, debtor’s will 2. Could not be foreseen, or if foreseen is inevitable 3. Renders impossibility to comply with obli 4. D must be free from any participation/ aggravation of injury to C
Rules as to liability in case of fortuitous event
General rule: A person is not responsible for loss or damage from fortuitous event. 1. When expressly specified by law a. D is guilty of fraud, negligence or delay or contravention of the tenor of obli b. has promised to deliver same thing to 2 or more who don’t have same interest c. obli to deliver a specific thing arises from crime d. the thing to be delivered is generic 2. When declared by stipulation 3. When the nature of obli requires assumption of risk

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Art. 1175 (Usury)
* Simple loan/ Mutuum
* Usury
Requisites for recovery of interest 1. Payment of interest must be expressly stipulated 2. Agreement must be in wrting 3. Interest must be lawful

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Art. 1176 (Presumptions on receipts)
Presumption: Interest/ prior installments have been paid when there is receipt of principal/ later instalment.
When presumptions in1176 do not apply 1. With reservation as to interest 2. Receipt w/out indication of particular instalment paid 3. Receipt for the part of a principal 4. Payment of taxes 5. Non-payment proven

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Art. 1177 (Remedies available for creditors)
a. Exact fulfilment with the right to damages
b. Pursue the leviable property of debtor
c. Exercise all the rights and bring all actions of the debtor except those inherent or personal to the person
d. ask the court to rescind or impugn acts or contracts w/c D have done to defraud him

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Art. 1178 (Transmissibility of rights)
General rule: All rights acquired in virtue of an obli are transmissible, except… 1. Prohibited by law a. By contract of partnership b. By contract of agency c. By contract of commodatum 2. Prohibited by stipulation of the parties

DIFFERENT KINDS OF OBLI
Sec 1. Pure and Conditional Obli

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Art.1179 (Definition of Pure and Conditional Obli)
Pure Obli not subject to any condition and no specific date is mentioned for its fulfilment and is immediately demandable.
Conditional Obli whose consequences are subject to the fulfilment of a condition
Condition future and uncertain event, upon which, the effectivity or extinguishment of obli depends.
Characteristics of condition
* future and uncertain OR past but unknown
2 principal kinds of condition 1. Suspensive condition condition precedent or condition antecedent 2. Resolutory condition condition subsequent
When obli is demandable at once 1. When it is pure 2. When it is subject to resolutory condition 3. When it is subject to resolutory period

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Art. 1180 (Obli w/ period)
Period future AND certain event upon the arrival of w/c the obli either arises or extinguished
When duration of period depends upon will of D 1. D promises to pay when his means permit him to do so 2. Other cases little by little; as soon as possible; from time to time; at any time I have the money; in partial payments; when I am in the position to pay

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Art. 1181 (Conditional Obli)
* The acquisition of rights and extinguishment/loss of rights already acquired depends upon the happening of event w/c constitutes the condition.

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Art. 1182 (Potestative Condition)
Classifications of Condition 1. As to effect : Suspensive and Resolutory 2. As to form: Express and Implied 3. As to possibility: Possible and Impossible 4. As to cause/origin: Potestative and Casual and Mix 5. As to mode: Positive and Negative 6. As to numbers: Conjunctive and Disjunctive 7. As to divisibility: Divisible and Indivisible
* Potestative condition
* When suspensive condition depends upon will of D it is void.

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Art. 1183 (Impossible conditions)
* Refers to suspensive condition
Kinds
1. Physically impossible in nature, cannot exist or can’t be done 2. Legally impossible contrary to law, moral, good customs, public order, public policy
Effects
1. Conditional obli void (positive obli) 2. Conditional obli valid in negative obli 3. Only the affected obli void (if divisible) 4. Only condition is void

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Art. 1184 (Positive Suspensive Condition)
The obli is extinguished: 1. As soon as the time expires w/out the event taking place 2. As soon as event cannot anymore take place even if time specified has not expired

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Art. 1185 (Negative Suspensive Condition)
The obli is rendered effective: 1. From the moment time has elapsed w/out the event taking place 2. From the moment event cannot occur, even if there’s still time

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Art. 1186 (Constructive fulfilment of S. Condition)
Requisites
1. The condition is suspensive 2. The obligor actually prevents the fulfilment of obli 3. He acts voluntarily.

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Art. 1187 (Retroactivity of Obli)
1. In obli to give it shall retroact to the day when the obli was constituted upon fulfilment ; obli can exist w/out being subject to condition
2. In obli to do or not to do no fixed rule is provided

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Art. 1188 (Rights of C and D in S. Condition)
* Pending on the fulfilment of suspensive condition:
a. Right of creditor bring appropriate action for preservation of rights
b. Rights of debtor case of solutio indebiti

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Art. 1189 (Loss, Deterioration or Improvement of Thing)
Requisites for 1189 1. Real obli 2. Specific or determinate thing 3. Subject to suspensive condition 4. Condition is fulfilled 5. There is loss, deterioration or improvement during the pendency of the condition
Kinds of Loss 1. Physical loss perishes 2. Legal loss goes out of commerce or has become illegal 3. Civil lossexistence is unknown or if known, cannot be recovered
Rules
* Loss w/out D’s fault not liable due to fortuitous event * Loss through D’s fault C is entitled to demand damages * Deterioration w/out D’s fault still not liable * Deterioration through D’s fault either rescission of obli w/damages or fulfilment of obli w/ damages * Improvement by nature or time C will have the benefit * Improvement at D’s expense “Usufruct”

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Art. 1190 (Fulfillment of resolutory condition)
1. In obli to give * there is return to status quo * in case thing is on 3rd person who didn’t acted in bad faith, the remedy of the party entitled to restitution is against the other * obli of mutual restitution is absolute

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Art. 1191 (Reciprocal Obli)
Kinds of obli accdg to person obliged 1. Unilateral only one party is obliged to comply w/ prestation 2. Bilateral both parties are Cs and Ds of each other
* Reciprocal obli arise from same cause and in w/c each party is debtor and creditor of each other.
Remedies in reciprocal obli * alternative and not cumulative a. Choice of remedies * Action for specific performance w/ damages * Action for rescission w/ damages b. Remedy of rescission for noncompliance granted for breach of other party that violates the reciprocity between them.
Limitations on rights to demand rescission 1. Resort to courts 2. Power of court to fix period 3. Right of third person 4. Substantial violation 5. Waiver of right
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Art. 1192 (Both Parties are Guilty of Breach)
a. First infractor known, the other also violated the liability of 1st infractor will be equitably reduced
b. First infractor cannot be determined contract is deemed extinguished and each shall bear his own damages

Sec. 2 Obligations with a Period

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Art. 1193 (Meaning of Period)
Difference of period as to condition
As to fulfillment: must happen sooner or late at date known beforehand or time that can’t be determined
As to time: refers only to future
As to influence on the obli: merely fixes the time for the fulfillment of obli
As to effect when left on D’s will: empowers the court to fix duration of period
As to retroactivity effect: unless there is agreement, arrival doesn’t have retroactive effect
Kinds of Period/Term 1. Accdg to effect * Suspensive period (ex die) * Resolutory period ( in diem) 2. Accdg to source * Legal, Conventional/ Voluntary, Judicial 3. Accdg to definiteness * Definite/ Indefinite

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Art. 1194 (loss, deterioration and improvement)
* before arrival of period
*see Art. 1189

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Art. 1195 (Payment before arrival of period)
* same as 1188, par. 2 no to unjustly enrichment
Presumption: Debtor knew that the debt was not yet due.

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Art. 1196 (Establishment of period)
Presumption: The period established is for the benefit of both creditor and debtor.
Exceptions to general rule 1. Term is for benefit of debtor alone 2. Term is for benefit of creditor alone
Computation of term/period
* year = 365 days ; day = 24 hours ; night = from sunset to sunrise
* if months are designated by name = number of days
*1st day is excluded and last day is included

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Art. 1197 (Court’s power to fix period)
General rule: If obli doesn’t state period and no period is intended, the court is not authorized to fix period.
Exceptions
1. No period is fixed but a period is intended 2. Duration of period depends upon will of D

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Art. 1198 (Obli Demandable before lapse of Period)
General rule: Obli is not demandable before lapse of period.
Exceptions
* When D becomes insolvent * When D does no furnish guaranties/ securities promised * When guaranties/ securities given have been impaired/ disappeared * When D violates and undertaking * When D attempts to abscond

Sec. 3 Alternative Obligations

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Art. 1199 (Alternative Obli)
Kinds of obli accdg to object 1. Simple obli 2. Compound obli a. Conjuctive b. Distributive * Alternative * Facultative

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Art. 1200 (Right of Choice)
General rule : The right to choose prestation belongs to the debtor.
When right of choice is not absolute * Cannot choose prestation that are impossible, unlawful, or w/c couldn’t be the object of obli * Has no more right to choose when only one is practicable. * Cannot choose part of one prestation and part of another

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Art. 1201 (Communication)
* Until the choice is made and communicated, the obligation remains alternative.

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Art. 1202 (Only one is practicable)
* The obli is converted into a simple one

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Art. 1203 (Rescission of contract by debtor)
* If through C’s fault, D may rescind contract with damages.

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Art. 1204 (Right for indemnity of C)
* if some of the objects D is not liable, even if loss of some is his fault, since he has the right to choose and obli can still be performed.
* if all objects C has right to indemnity for damages, taking as a basis the value of the last thing w/c disappeared

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Art. 1205 (Right of choice to C)
* * The debtor may expressly give the right of choice to creditor.
Rules in case of loss before C’s decision) 1. When a thing is lost through fortuitous event 2. When thing is lost through D’s fault 3. When all are lost through D’s fault 4. When all are lost through fortuitous event

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Art. 1206 (Facultative Obli)
** before substitution, if principal thing is lost then obli is extinguished or D is liable for damages. But if substitution is lost, with or without D’s fault, D is not liable because it is not due.
**after substitution, opposite of above.
Alternative vs. Facultative
* several prestations due * only one prestation due
* right of choice may be given to C or 3rd person * given only to D
*loss of some doesn’t extinguish obli *loss of thing due extinguishes obli
(fortuitous event)

Sec. 4 Joint and Solidary Obligations Art. 1207 (When there is solidary obli)
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Art. 1208 (Presumption of Joint Obli)
* Collective Obli vs. Individual Obli
* Joint Obli there are as many debts as debtors and credits as creditor (proportionately)
* Solidary Obli each one of D is bound to render and each one of C has right to demand
Presumption: If there are two or more debtor and/or creditor, collective obligation is presumed to be joint. a. There are as many debts as there are creditors b. There are as many credits as there are creditors c. Are considered distinct and separate from one another d. Each D is liable for a proportionate part of debt e. Each C entitled on a proportionate part of credit
Words used to joint liability
* * mancomunada, mancomunadamente, pro rata, proportionately, “ we promise to pay”
When obli is solidary 1. The obli expressly so states 2. The law requires solidarity 3. The nature of obli requires solidarity
Words used to solidary obli
** jointly and/or severally; solidaria; in solidum; together and/or separately; individually and/or collectively; juntos o separadamente; “ I promise to pay”

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Art. 1209 (Joint Indivisible Obli)
**constitutes middle ground between solidary and joint obli
**Joint because parties are proportionately liable and Indivisible because object is not physically divisible.

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Art. 1210 (Indivisibility vs. Solidarity)
* refers to the prestation * refers to juridical or legal tie
* only D guilty of breach is liable * all Ds are liable
* 1 C and D is enough * at least 2 or more Cs or Ds
* others are not liable in insolvency * other Ds are proportionately liable

**Joint Indivisible **Solidary Indivisible
**Joint Divisible **Solidary Divisible

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Art. 1211 (Stipulations in Solidarity)
* Uniform parties are bound by same stipulations
* Non-uniform/ Varied not subject to same stipulations

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Art. 1212 (Acts of Solidary Creditors)
** theory of mutual agency
** each can do whatever is beneficial/ useful to others BUT not those that may be prejudicial to them.
**obli is extinguished if there is prejudicial act.

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Art. 1213 (Assignment by Solidary Creditor)
**in the absence of consent by others, one cannot assign his right to 3rd person.

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Art. 1214 (Payment to Any Solidary Creditor)
General rule: D may pay any of C.
**If demand has been made by one, payment should be made to him.

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Art. 1215 (Liability of Solidary Creditor)
**In case of novation, remission, compensation or confusion, C who executed these acts should be liable to others for their corresponding shares.
**Obli is extinguished.

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Art. 1216 (Right to Proceed to Any Debtor)
**not applicable to joint obli
**may proceed to any of Ds or some or all simultaneously as long as debt is not fully collected

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Art. 1217 (Effect of Payment by S. Debtor)
* between solidary Ds and Cs even if only one has paid, obli is extinguished.
* among solidary Ds the one who paid can demand reimbursement from his co-debtors for their proportionate shares w/ legal interest
* among solidary Cs receiving person is jointly liable to others

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Art. 1218 (Obli has Prescribed or Become Illegal)
Prescription one acquires ownership and other right through lapse of time in the manner and under the condition laid down by the law
** w/in 10 years (from the time right of action accrues) 1. Written contract 2. Obli created by law 3. Upon a judgement
**w/in 6 years 1. Oral contract 2. Quasi-contract
** w/in 4 years 1. Injury to the right of the plaintiff 2. Quasi-delict
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Art. 1219 (Effect of Remission of Share)
**if remission is paid previous to the payment and payment is made, solutio indebiti arises.

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Art. 1220 (Reimbursement in case of remission)
** no right to reimbursement in case of remission

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Art. 1221 (Rules When Prestation is Lost/ Impossible) 1. Lost w/o fault and before delay obli is extinguished 2. Loss is due to fault on part of solidary D all are responsible for damages; can recover damages from real negligent 3. Loss is w/o fault but after delay still responsible for damages

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Art. 1222 (Defense Available to S. Debtor) 1. Defenses derived from nature of obli 2. Defenses personal to, or w/c pertain to share of, debtor sued 3. Defenses personal to any solidary debtor

Sec. 5 Divisible and Indivisible Obligations

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Art. 1223 (Divisibility or Indivisibility)
Controlling circumstance : the purpose of the obli or intention of the parties
Kinds of division 1. Qualitative 2. Quantitative 3. Ideal/ Intellectual
Kinds of indivisibility 1. Legal 2. Conventional 3. Natural

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Art. 1224 (Joint Indivisible Obli)
**if any one of Ds doesn’t comply w/ his undertaking, then obli is converted into one for damages (only).

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Art. 1225 (When Obli is Indivisible) 1. Obli to give definite thing 2. Obli w/c are not susceptible of partial performance 3. Obli provided by law to be indivisible even if thing/ service is physically divisible 4. Obli intended by parties to be indivisible even if thing/service is physically divisible
Obli is deemed divisible when) * object is execution of certain number of days of work * accomplishment of work by metrical units * by nature are susceptible of partial performance
Sec. 6 Obligations with a Penal Clause

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Art. 1226 (Definition)
* Principal Obli validity and existence doesn’t depend to other obli
* Accessory Obli attached to principal obli and cannot stand alone
**Obli w/ penal clause contains an accessory undertaking to pay previously stipulated indemnity in case of breach of principal prestation.
**purpose: to assume greater responsibility in case of breach 1. to insure performance by creating an effective deterrent against breach 2. to substitute a penalty for indemnity for damages and payment of interest
Kinds
1. as to origin: legal and conventional 2. as to purpose: compensatory and punitive 3. as to demandability or effect : subsidiary/alternative and joint/cumulative
General rule: the penalty takes place the indemnity for damages and the payment of interests in case of non-compliance.
When creditor may recover damages * when stipulated by parties * when obligor refuses to pay penalty legal interest * when obligor is guilty of fraud

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Art. 1227 (Rules in Penalty)
** D cannot just pay penalty instead if performing the obli.
General rule: C cannot demand the fulfillment of obli and satisfaction of the penalty at the same time.

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Art. 1228 (Proof of Actual Damage)
**all that C has to prove is the violation of obli by D to enforce penalty.
**C cannot recover more than the stipulated penalty

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Art. 1229 (Reduction of Penalty by Court) * when there is partial or irregular performance * when the penalty agreed upon is iniquitous or unconscionable

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Art. 1230 (Nullity of Penal Clause)
**following the general rule of principal and accessory
** nullity of principal nullify the whole obli BUT if only penal clause is void, principal obli remains valid and demandable.

EXTINGUISHMENT OF OBLIGATIONS

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Art. 1231 (Obligations areExtinguished) 1. Payment or performance 2. Loss of thing due 3. Condonation or remission of the debt 4. Confusion or merger of rights of C and d 5. Compensation 6. Novation

Sec. 1 Payment or Performance

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Art. 1232 (Meaning of Payment)
~not only delivery of money but also in giving of thing, and doing/not doing of an act

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Art. 1233 ( Debt is Paid) 1. Integrity of Prestation the thing/ service is completely delivered/ rendered ; general rule: partial/ irregular performance doesn’t extinguish obli 2. Indentify of Prestation the very thing/ service due must be delivered/ rendered

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Art. 1234 (Substantial Performance in Good Faith)
Requisites
* There must be substantial performance * The obligor must be in good faith

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Art. 1235 (Incomplete/ Irregular Performance is Waived)
Principle of Estoppel: If payment is incomplete or irregular, the creditor may properly reject it. In case of acceptance, obli is extinguished.
Requisites
* The oblige knows that the performance is incomplete/ irregular * He accepts performance w/out protest or objection

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Art. 1236 (Accepting of Payment)
Persons from whom creditor must accept payment a. Debtor b. Any person who has interest in the obli (guarantor) c. 3rd person who has no interest in the obli but there is stipulation that he can make payment
Effect of payment by third person i. If made w/out knowledge or against will of D recovery is only up to the extent/ amount of debt at time of payment ii. If made w/ knowledge of D payer shall have the right of reimbursement and subrogation

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Art. 1237 (Payment w/out Knowledge of D)
**3rd person cannot compel C to subrogate him the latter’s accessory rights of mortgage, guaranty or penalty.

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Art. 1238 (Donation)\
** if the paying 3rd person does not intend to be reimbursed, the payment is deemed a donation which requires D’s consent to be valid.

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Art. 1239 (Requirements in Obli to Give)
General rule: Payment by one who does not have the free disposition of thing due and capacity to alienate it is not valid.
Free disposal of thing due the thing to be delivered must not be subject to any claim or lien or encumbrance of a 3rd person
Capacity to alienate the person is not incapacitated to enter into contracts

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Art. 1240 (Person to whom payment should be made) * The creditor or oblige * His successor in interest * Any person authorized to receive it

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Art. 1241 (Payment to Incapacitated/3rd Person)
**Incapacitated not valid unless such incapacitated person kept the thing paid or delivered, or was benefited by the payment ; proof of benefit is incumbent to D
**3rd Person is not valid unless it has redounded to the benefit of C.
When benefit to C need not be proven by D 1. Subrogation of the payer in C’s rights 2. Ratification by C 3. Estoppel on the part of C

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Art. 1242 (Payment to 3rd person in possession of credit)
**Payment made in good faith releases the debtor.
**Possession of the credit itself and not merely documents/ instrument of credit

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Art. 1243 (When Payment to C is not Valid)
** payment made to C by D after the latter has been judicially ordered to retain the debt shall not be valid.

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Art. 1244 (Complying with the Prestation Due)
** a thing different from the due cannot be offered or demanded
** the act to be performed/ prohibited cannot be substituted against obligee’s will

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Art. 1245 (Dation in Payment) Special forms of payment 1. Dation in payment 2. Application of payment 3. Payment by cession 4. Tender of payment and consignation
Dation in payment (adjudication/ dacion en pago) the conveyance of ownership of a thing as an accepted equivalent of performance * an existing debt in money is satisfied by alienation of property

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Art. 1246 (Rule of the Medium Quality)
**there is lack of precise declaration in the obli
**C cannot demand of superior quality, D cannot deliver of inferior quality
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Art. 1247 (Extrajudicial Expenses)
General rule: The extrajudicial expenses of payment are for the account of the debtor.
**Losing party also generally pays judicial costs.

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Art. 1248 (Performance of Obli-complete)
General rule: Creditor can accept but he cannot be compelled to accept partial performance.
When partial performance is allowed * When there is an express stipulation to that effect * When the debt is in part liquidated and in part not liquidated * When the diff prestations are subject to diff terms and conditions

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Art. 1249 (Legal tender)
**Payment should be made in currency stipulated and if not possible then in the currency w/c is legal tender in the Phils.
Legal Tender the currency w/c D can legally compel C to accept
**all coins and notes issued by BSP only!
Payment by means of instruments of credits * Right of C to refuse or accept promissory note, checks (manager’s check), bills of exchange and other commercial documents are not legal tender * Effect of Obli doesn’t extinguish obli until they have been cashed or have been impaired through C’s fault

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Art. 1250 (Extraordinary Inflation/ Deflation)
** The purchasing value of the currency at time of establishment of obli shall be the basis of payment.
**only for contractual obli

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Art.1 251 (Place of Payment) 1. If there is stipulation, to the place designated 2. If there is stipulation and specific thing to be delivered, shall be at the place where the thing was 3. If there is no stipulation and generic thing is to be delivered, shall be at the domicile of debtor

Subsec 1. Application of Payments

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Art. 1252 (Definition and Requisites)
Application of payments designation of debt to w/c should be applied the payment made by D who has various debt of same kind in favour of one and same C.
Requisites
* 1 debtor and 1 creditor * 2 or more debts * Debts must be of the same kind * Debts to w/c payment has been applied must be due * Payment made must not be sufficient to cover all debts
Rules o application of payments 1. D has 1st choice, at the time of making payment 2. If D doesn’t apply, C may apply by specifying in the receipt w/c debt should be paid 3. If C also didn’t apply, the debt w/c is most onerous to D shall be deemed satisfied 4. If debts are of same nature and burden, shall be applied proportionately to all

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Art. 1253 (Payment of Interest before Principal)
**is mandatory: D cannot choose to credit his payment to the principal before interest is paid.

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Art. 1254 (More Onerous Debt) * An interest-bearing debt vs. non-interest bearing * Debt as sole debtor vs. solidary debtor * Debt secured by mortgage or pledge vs. unsecured debts * Of two interest-bearing, the one with higher rate * Obli with penal clause vs. one without penal clause

Subsec 2. Payment by Cession

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Art. 1255 (Meaning and requisites)
Payment by Cession assignment or abandonment of all properties of D for the benefit of C, w/c latter may sell and apply proceeds to satisfaction of credits
Requisites
* 2 or more creditors * D must be (partially) insolvent * Cession must be accepted by creditors
Dation vs. Cession
* only one creditor *several creditors
* doesn’t presupposes insolvency * D is insolvent at time of assignment
*doesn’t involve all properties * extends to all properties
* C becomes owner of thing * C acquires right to sell and apply proceeds
* an act of novation *is not

Subsec. 3 Tender of Payment and Consignation

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Art. 1256 (Meaning and Requisites)
Tender of Payment act of D of offering to C the thing/ amount due
Consignation act of depositing thing/amount due w/ proper court when C doesn’t desire or can’t receive it
Requisites for valid consignation 1. Existence of valid debt which is due 2. Tender of payment by D and refusal of C w/out justifiable reason 3. Previous notice of consignation to interested persons 4. Consignation of thing/amount due 5. Subsequent notice of consignation to interested parties
When tender of payment is not required * When C is absent/unknown or doesn’t appear in place of payment * When C is incapacitated to receive payment * When w/out cause, refuses to give receipt * When 2 or more persons claim same right to collect * When title of obli is lost
Requirements for valid tender of payment 1. Must comply w/ the rules of payment 2. Must be unconditional and for whole amount 3. Must be actually made

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Art. 1257 (Prior Notice)
**in the absence of prior notice, the consignation, as payment, shall be void.

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Art. 1258 (Proper Judicial Authority and Subsequent Noti)
** Consignation with the proper judicial authority is necessary to effect payment.
**After consignation has been made, second notice to interested parties must be made.

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Art. 1259 (Expenses in Consignation)
** Creditor bears expenses of consignation
When consignation deemed properly made 1. When C accepts deposit 2. When C questions validity and court declares it has been properly made 3. When C neither accepts nor questions, and court orders cancellation of obli

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Art.1260 (Withdrawal by D of Deposit)
**obli shall continue to remain in force and D will shoulder expenses * Before C accepts consignation * Before judicial declaration that the consignation has been properly made

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Art. 1261 (Withdrawal with C’s consent)
**The creditor shall lose every preference which he may have over the thing and the co-debtors, guarantors and sureties shall be released.

Sec. 2 Loss of Thing Due

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Art. 1262 (Loss of DeetrminateThing)
Requisites
* Obli is to deliver specific/ determinate thing * Loss of thing occurs w/out D’s fault * D is not guilty of delay
When loss of thing won’t extinguish liability * When law so provides * When stipulation so provides * When nature of obli requires assumption of risk * When obli to deliver arises from crime
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Art. 1263 (Loss of Generic Thing)
** Loss doesn’t extinguish obli even for fortuitous event.

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Art. 1264 (Partial Loss of Specific Thing)
**portion of thing is lost/ destroyed or suffers depreciation/ deterioration
**equivalent of difficulty of performance in obli to do

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Art. 1265 (Presumption of Fault in case of Loss)
Presumption: The loss was due to D’s fault.
**doesn’t apply in case of natural calamities

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Art. 1266 (Release from Obli to Do)
**The impossibility of performance will result in the extinction of obli. * Legally impossible * Physically impossible

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Art. 1267 (Difficulty of Performance)
**When the performance of service has become so difficult beyond the contemplation of the parties, the court is authorized to release obligor in whole or in part.

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Art. 1268 (Obli from Crime, Fortuitous Event)
**Obli subsists except when C refused to accept the thing w/out justification, after it has been offered to him

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Art. 1269 (Right to Proceed to 3rd person)
** The rights of action of D are transferred to C from extinguishment of obli, by operation of law to protect by reason of loss

Sec. 3 Condonation or Remission of Debt

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Art. 1270 (Definition) * Gratuitous abandonment by C of his right against D
Requisites
* Must be gratuitous * Must be accepted by obligor * Parties must have capacity * Must not be inofficious * Must comply with forms of donation
Kinds
* As to extent: Complete vs. Partial * As to form: Express vs. Implied * As to date of effectivity: Inter Vivos and Mortis Causa
Effect of inofficious remission
**No one can give more than that which he can give by will, otherwise excess shall be inofficious and shall be reduced by court accordingly

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Art. 1271 (Delivery of Private Document)
Presumption: Implied or tacit remission by C

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Art. 1272 (Private Document found in D)
**The creditor voluntarily delivered it.

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Art. 1273 (Renunciation of Principal Debt)
** follows the rule that accessory follows principal

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Art. 1274 (Accessory Obli of Pledge)
**If pledge is found in possession of D or 3rd person who owns it, it is presumed that the pledge is remitted, not the obli itself.

Sec. 4 Confusion or Merger of Rights

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Art. 1275 (Definition and Requisites) meeting in one person of the qualities of C and D with respect to same obli * Must take place between principal debt ad creditor * Must be complete

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Art. 1276 (Effect of Merger) in the person of principal D or C: extinguishes obli thus guarantors benefited.
In the person of guarantor: extinguishes the guaranty but not the principal obli

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Art. 1277 (Confusion in Joint Obli)
** will only extinguish the share corresponding to whom two characters concur vs. solidary obli where the whole obli is extinguished.

Sec. 5 Compensation

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Art. 1278 (Meaning and Kinds) extinguishment to the concurrent amount of debts of 2 persons, who in their own right, are Ds and Cs of each other,
Kinds
* As to effect or extent: Total vs. Partial * As to cause/origin: Legal, Voluntarily, Judicial, Facultative

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Art. 1279 (Requisites of Compensation) * The parties are principal Cs and Ds of each other * Both debts consist in sum of money or of consumable things of same kind or quality * Two debts are due/ demandable. * Two debts are liquidated * No retention or controversy commenced by third person

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Art. 1280 (Compensation by Guarantor)
**exception to the general rule :: he can set up compensation

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Art. 1281 (Total and Partial Compensation)
**if debts are of same amount, then there is total compensation

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Art. 1282 (Voluntary Compensation)
**valid even if debts are not yet due

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Art. 1283 (Juridical Compensation)
**may be compensated when so declared by final judgement of the court

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Art. 1284 (Rescissible or Voidable Debts) still are valid until they are judicially rescinded or avoided.

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Art. 1285 (Assignment Before or After Compensation)
*compensation takes place before assignment the debts are extinguished to the concurrent amount by operations of law
* compensation after assignment a. assignment w/ consent of debtor b. assignment w/ knowledge but w/out consent of debtor c. assignment w/out knowledge of debtor

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Art. 1286 (When debts are of different places)
**compensation takes place by operations of law, but there is indemnity for expenses of exchange or transportation to place of payment.
**indemnity shall be paid by the person who raises the defense of compensation

Art. 1287 (Depositum, Commodatum, Support)
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Art. 1288 (Civil Liability Arising from Penal Offense)
Instances when legal compensation is not allowed by law * Where one of the debts arises from depositum * Where one of the debts arises from commodatum * Where one of the debts arises from a claim for support due by gratuitous title * When one of the debts consists in civil liability arising from penal clause

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Art. 1289 (Application of Payment in Compensation)
** D must inform C which of the debts shall be the subject of compensation.

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Art. 1290 (Even if C and D are not Aware)
**when all requisites in 1279 are present, compensation takes effect by operation of law

Sec. 6 Novation

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Art. 1291 (Definition) extinguishment of obligation through creation of new one that substitutes it * Changing the object or principal conditions * Substituting the person of the debtor * Subrogating a 3rd person in the rights of creditor

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Art.1292 (Requisites)
*never presumed. * Previous valid obli * Capacity and intention of the parties to modify or extinguish obli * Modification or extinguishment of obli * Creation of new valid obli

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Art. 1293 (Personal Novation)
** substitution and subrogation
Kinds of substitution * Expromision 3rd person, w/o knowledge or against consent of D, assumes the latter’s obligation; old debtor is released from obli * Delegacion at the instance of D, C accepts 3rd person to take place of D.

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Art. 1284 (In Expromision)
** old Debtor is not liable in case of insolvency or nonfulfillment of new D.

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Art. 1295 (Insolvency of New Debtor)
General rule: old D is not liable to the C in case of insolvency of new D.
Exceptions
* Insolvency is already existing and of public knowledge at time of delegacion * Insolvency is known by old debtor

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Art. 1296 (Novation on Accessory Obli)
**same with those previously mentioned

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Art. 1297 (New Obli is Void)
General rule: there is no novation if new obli is void

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Art. 1298 (Old Obli is Void)
*mentioned in requisites of novation

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Art. 1299 (Old Obli Subject to Condition)
*2nd obli will also be deemed subject to same condition

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Art. 1300 (Subrogation)
*can take place by express agreement of parties or by operations of law

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Art. 1301 (Conventional Subrogation)
*requires consent of all ( debtor, old creditor and new creditor)

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Art. 1302 (Legal Subrogation) * When a creditor pays another creditor who is preferred * When 3rd person w/out interest in obli pays with approval of D * When 3rd person w/ interest in obli pays even w/out knowledge of D

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Art. 1303 (Effect of Legal Subrogation)
**except only for the change in person of the creditor, the obli subsists in all respect as before the novation.

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Art. 1304 (Effect of Partial Subrogation)
**The creditor to whom partial payment has been made by new creditor remains a creditor to the extent of the balance of the debt.