OBLICON (Finals) Valid though not complete:

o 1234: substantially complied in

Jan 27, 2015 good faith
EXTINGUISHMENT OF OBLIGATION o 1235: C accepts knowing its
I.Payment (Art 1232) incompleteness
 Money
 Delivery 4. Place and Time - WHEN and WHERE
Requisites: Pure Obligation: upon reasonable time
1. Paid by person authorized by law (1236) With a period/suspensive: upon arrival
–WHO should pay? of period/ happening of condition
o Creditor cannot refuse to Conditional resolutory: upon
accept payment if all requisites constitution of obligation
are present -subject to 1169 (demand)
o Payment by third person
(1237)- third person cannot Where (1251)- because interest matters
compel creditor to accept o Designated in obligation
Who are the persons interested in the o Where the thing is at the time
fulfilment? of constitution of obligation
a. Surety (co-signor, primarily o Domicile of debtor
liable)
b. Guarantor 5. WHAT are you going to pay?
c. Mortgagor (lends property as 1246: generic- thing of the same genus,
mortgage to debt) neither inferior nor superior
2. Paid to someone authorized by law 1244: determinate- object agreed upon
(1240) – TO WHOM?
L indebted to M. L pays debt to M’s But if the creditor accepts, okay!
brother (MB). MB accepted. L is still
indebted to M. 1244 (2): obligations to do –
act/forbearance
1241: M was hospitalized, worth P500K.
MB paid for hospitalization using L’s 1249: Monetary obligations
payment, P1M. o Currency stipulated
-redounded to M’s benefit o Legal tender of the Philippines
 Bills; coins (up to P50
3. Complete – HOW? only)
Cannot compel to accept partial Manager’s check which covers
payment! full payment is VALID as legal
tender.
Exceptions: (1248)
o Divisible 1250: Extraordinary inflation/deflation
o Partly liquidated and partly -Requisites for applicability (Equitable v
unliquidated Ng…)
o Joint
o Obligation between parties by Third person pays, Creditor accepts
stipulation Effect: VALID payment, D released
RIGHTS?
L’s daughter pays M. VALID! Successor in
interest.
L’s boyfriend pays M. If M accepts, VALID!
Boyfriend can recover? It depends.
1237:
 Knowledge and consent of L
“or” – reimbursement + subrogation
 With knowledge but L did not agree
-reimbursement + subrogation
 Without knowledge and without
consent
-recover only, if beneficial
-NO subrogation
What if M voluntarily agrees to
subrogate? CANNOT BE (for the benefit
of debtor)
Application of Payment
L has several payments in favour of M, all due,
P1M. L can only pay P600k.
-debtor has the right to designate
-interest first
-most onerous first
Cession (1255)
L is indebted to several creditors, P2M, all due.
L has property worth P1.3 M.
-deliver to creditors, extinguished payment only
until P1.3M
Vs. DATION (1255)
L has loan P1k to M due Jan 1, 2015. L was not
able to pay. She gave condo’s title to M as
payment.
-only one creditor. If c accepts, obligation is
extinguished.
Tender and Consignation
General Rule: tender plus consignation
Tender – effect of stopping the payment of
interest
(M refused L’s payment without just` cause.)
Consignation- put money at disposal of the
court
1256: Consignation alone may extinguish
Requisites of Valid Consignation
1. Valid tender
2. Creditor refused to accept tender
without just cause
3. Debtor must notify creditor about the
tender, to avoid litigation
4. File a case, consign
5. Notify c
Effect: Valid – debtor is released from the
obligation
If perishable: court can order sale
Withdrawal of consignation:
Is the consent of creditor necessary?
 As a matter of right
o Before c accepted the thing
o Before court declares VALID
consignation
 As a matter of privilege
o After court declares VALID
consignation
II. Loss of the Thing Due
To deliver of specific – yes
To deliver of generic – no (monetary obligation)
To do (1266, 1267)
 Legally/physically impossible
 Beyond contemplation
Fortuitous Event (1174 and 1165)
III. Remission/ Condonation
L indebted to M, P1M
M condoned
Requisites:
1. Due and demandable
2. Accepted by obligor
-form of donation (Art 748 and 749)
Oral: simultaneous
Written: less than P5K
Public document: immovable
1271-1272 (Implied condonation) – only
presumption
IV. Compensation (1279) Change of object: 2 kinds
Requisites: a. Express (1292) – parties agree; clear
1. Creditor and debtor and unequivocal
2. Principal bound b. Implied – incompatible
3. Due and demandable
4. Liquidated and demandable M: I will sell you my (specific) Mercedez for
5. No potential controversy P3M instead of P5M.
6. Not prohibited by law (1287) Is there Novation?
a. Depositum
b. Commodatum (bailee) Substitution of Debtor
c. Support 1. Expromision – new d’s substitution with
knowledge or consent of c, even with
Fungible things – susceptible by substitution knowledge of d (reimbursement +
subrogation)
L indebted P1M before January 15, 2015 2. Delegacion – without knowledge of d
M indebted P5K before January 30, 2015 (reimbursement only)
Jan 27, Is legal compensation possible?
NO! Not due (M’s debt) Subrogation of creditor’s right
But if parties agree, VALID!  Conventional
 Legal
1290: If all requisites are present by operation
of law even parties are not aware. Old obligation with accessory is novated.
Effect: (1296)
L indebted P500K, Jan 15
M indebted P500K, Jan 30 Old obligation-stipulation in favour of 3rd person
M assigned to MB his credit in favour of L Effect: (1296)
MB pays L on Jan 30.
Can L set up compensation? Original obligation – conditions imposed (1299)
-If with consent of L, cannot set up
-If with knowledge, without consent, can set up
to the extent of debt prior to notice of Feb 9, 2015:
assignment. Obligations vs. Contract

V. Novation How contracts are perfected?

-amendment or modification of
obligation
Requisites:
1. Previous valid obligation
2. Agreement of the parties to the new
obligation
3. Extinguishment of old obligation
4. Validity of new obligation
How to modify?
 Change the object
 Change in principal condition
 Person of the debtor
 Consensual (1315)
 Real (1316)
Bought a condo unit with a Deed of Sale, but
condo unit not yet delivered (just turned over
the key)
Is the contract already perfected?
Deed of Sale is a consensual contract; delivery is
not necessary.
C and M entered into a Contract of Sale. Can A
sign contract in behalf of M? (1317)
Characteristics of Contract:
A-autonomy (1306)
M-mutuality (1308, 1309, 1310)
O-obligatory (1315, 1159)
R-relativity (1311, 1312, 1313, 1314)
How is consent manifested?
1. Offer and acceptance
2. Legal capacity
3. Intelligent, free, real
AUTONOMY
Contrary to public policy – when it goes against
public good or undermines interest (property
right) of individual
Contrary to law
-mandatory and prohibitory (Art 5)
-expressive of fundamental principles of justice
-impose essential requisites of contract (1318)
CONSENT: if not free, intelligent, real
-VITIATED (causes: mistake, violence,
intimidation, undue influence, fraud)
RELATIVITY (1311)
-does not affect third persons
Exceptions: 1312, 1313, 1314, 1311(2)
1. Stipulations in favour of 3rd person
2. 3rd person who come into possession of
object of obligation
3. Creditors
4. 3rd person who induces another to
violate contract
Test of Beneficial Stipulation
(Coquia v. Fielman’s Insurance, p. 386, Jurado)
CONSENT
On Jan 15, L offered the sale of condo unit to M,
with the period to accept until Jan 25.
Jan 20, X learned about selling of L of the condo
unit.
Jan 24, L informed M that she no longer sells.
Can L still withdraw the offer? Yes
If M gave L P10,000 in advance, L cannot
withdraw. There is a consideration.
If given a period to accept:
Contracts become:
 Option (consideration= option money)
 Contract of sale (if accepted)
Offer = proposal to make contract
What is LEGAL CAPACITY?
-qualifications of a person to do something
legally
1321: Period of acceptance
-acceptance beyond time fixed in the offer is
not legally an acceptance – NEW OFFER (may be
accepted or rejected by original offeror)
-manner – counter-offer
10am: L texted M that she will sell the condo
4:30pm: L withdrew the offer
4:35pm: M texted L that he is accepting the
offer
--10am to 4:34- L can still withdraw (prior of L’s
knowledge of acceptance)
NO KNOWLEDGE = NO ACCEPTANCE
Voidable: one party incapacitated (1319(1))
Unenforceable: both parties incapacitated
(1403(3))
Void: disqualified (1409)
Disqualification vs. Incapacity
Disqualification:
 Donation propter nuptias (133)
 Selling of property between spouses
(1490)
 Common-law spouses’ donation (87)
Incapacity:
 Unemancipated minor
 Insane or demented person
 Deaf mute, unable to write
 Civil interdiction
 Under guardianship
Misrepresentation: must have at least passed
the age of puberty
Janella (minor) – VALID
Ryza (minor)- VOIDABLE
Can insane execute a contract? Yes, during lucid
interval
(Mendezona vs. Ozamis)
Feb 23, 2015
Tolerable fraud – no malice
Fraud in the performance of obligation: remedy
(1170)
Committed by 3rd person – does not vitiate
consent
1344:
Kinds of Fraud
1. Dolo Causante-voidable
2. Dolo Incidente – damages
Mistake – lack of knowledge
Mistake by third person – does not vitiate
except mutual and substantial
Is contract of adhesion valid? YES, but not all
Exception: depends upon circumstances of each
and every case
Consent is lacking in simulated contracts.
Undue influence – 3rd person may vitiate
consent
Lesion: rescissible when? (1381) suffer lesion by
more than ¼ of the value of the thing which is
the object thereof
March 12, 2015
In reformation, is it required to have a valid
contract?
YES, otherwise annulment is the proper
remedy.
Cases when reformation is not possible:
(Tanay Recreation case)
1367: Why cannot be reformed after being
enforced?
M is indebted to C, P2M. M sold his only
property to L in order to avoid collection of
payment by C.
C learned this from L.
C opposed the said sale and the registration by
Register of Deeds.
Should Register of Deeds issue the registration?
YES. Rescissible contract cannot be assailed
collaterally, only directly.
C cannot collaterally attack. Remedy is to file an
action for rescission.
Direct attack- sole purpose of attacking or
impugning the validity
Colaterally- separate proceeding
M has condo (P2M) and house & lot (P3M) and
cash (P100K). M owes C P4M.
Is M insolvent? NO!
Insolvency: Assets <Liabilities
1191 vs 1381
1191:
 By reason of non-compliance
 Principal action
1381:
 By reason of lesion
 Subsidiary action
Contract of things under litigation
-from the moment the defendant receives
summons to answer a complaint until rendition
of decision.
Lesion – damage suffered by a person by virtue
of contract disadvantageous to him
1390: VOIDABLE
1403: UNENFORCEABLE
If the contract is advantageous to ward and
suffers lesion by more than 1/4:
UNENFORCEABLE
If ward does not suffer lesion: VALID
If approved by court despite lesion: VALID
Restitution is applicable only to rescissible on
the ground of lesion.
Exception of restitution:
a. Accion pauliana
b. Third party is in good faith
Good faith?
Annulment?
(MWSS v. CA)
Purpose of Prescription:
Effect of Annulment (1398-1402)
March 16, 2015
Defect of Unenforceable Contract:
1.Unauthorized contracts (agents)
-Special power of attorney
Eg. C(agent); M (principal)
Can buyer set up defense of
Unenforceability?
-applicable only to contracts merely executor
2. Statute of Fraud – must be in writing (for
evidential purposes only)
Eg. C contracted with M to build house for 3
years. On 2017, not even a single post was
erected.
-M can file but cannot support by oral evidence.
If C failed to object to oral evidence, it can be
admitted.
Ratification:
 Failure to object to presentation of oral
evidence
 Acceptance of the benefits
VOID and INEXISTENT – produce no legal effect
Eg. VOID: lawyer who purchased a property of
litigant under pending litigation.
-All requisites are present but contrary to law.
Donation not in writing is void. If 10 years after,
it was written, it becomes valid but does not
retroact.
VOID: only contracting parties may assail.
Kabit system: void contract (object is contrary
to law and public policy)
Future things – already in existence but still to
be acquired
In Pari Delicto
-In pari delicto applies only to legal per se
contracts. (illegality of cause and object)
-for the protection of public interest
1411: constitutes criminal offense
1412: does not constitute criminal offense
Exceptions (1413 – 1419)
(DOH vs. Canchela)
-In this case, it is an exception under 1416: not
illegal per se but merely prohibited for
protection of plaintiff
C donated everything he has, leaving nothing
for himself. Can he recover?
-Illegal contract but not illegal per se, he may
recover.
Is the sale of land to alien prohibited?
-Merely prohibited, buyer can recover
Philippines has no Usury Law anymore
-it depends now upon the parties’ agreement
NATURAL OBLIGATION
Civil – can be enforced in courts
Natural – cannot be enforced
Eg. If action has already prescribed, no longer
required to perform but because of ethical
consideration, you comply.
Can natural obligation be a sufficient cause of
contract?
 Yes if based on civil obligation (like the
previous example)
 But if purely based on ethical
consideration, no.

1426, 1427: no longer applicable

Voluntary fulfilment
C borrowed from M (15y/o), P500K
15 years later, remembered about his debt,
paid M P250K.
C realized that M no longer has the right to
collect as it already prescribed.
Can C asked for the return?
YES, no voluntary fulfilment!

ESTOPPEL
Estoppel vs. Prescription

Does it apply to question of fact? To question of

law?

Is government bound by estoppel? NO

Is void contracts covered by estoppel? No

(laches)