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ObliCon Reviewer (Salanga)
ObliCon Reviewer (Salanga)
1111. Prescription, obtained by a co-proprietor or a co-owner shall 1115. The provisions of the present Title are understood to be without
benefit the others prejudice to what in this Code or in special laws is established with
Co-ownership—exists when the ownership of an undivided thing or respect to specific cases of prescription
right belongs to different persons
In case of conflict between the period provided in this Title and in
another portion of the Civil Code: the more specific provision will
1112. Persons with capacity to alienate property may renounce prevail
prescription already obtained, but not the right to prescribe in the
future.
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If different statutes are involved providing for different prescriptive 1118. Possession has to be in the concept of an
periods, as well as the types of cause of action contemplated by them A. Owner
are apparently conflicting, they do not exclude each other from being The possessor asserts dominion over the property to the exclusion
availed of by the aggrieved party of all others
It must be adverse possession
1116. Prescription already running before the effectivity of this Code For possession to constitute a foundation of a prescriptive right, it
shall be governed by laws previously in force must be en concepto de dueno (claim of title) or that possession should
But if since the time of this Code took effect, the entire period herein be adverse.
required for prescription should elapse, the present Code shall be B. Public
applicable, even though by the former laws a longer period might be There must be a notorious holding of the property known to the
required community
Situations: It must not be of a surreptitious character because it must be in the
A. Prescriptive period under the old law has lapsed before the effectivity concept of an owner
of the 1950 Civil Code—prescriptive period of the old law shall apply C. Peaceful
B. Prescriptive period under the old law is still running upon the There must be no valid interference from others claiming or
effectivity of the 1950 Civil Code asserting their rights to the property for acquisitive prescription to
i. Old law provides for a different period for the same situation—1950 apply
Civil Code shall prevail provided that the prescriptive period of such D. Uninterrupted
has already lapsed even though under the old law, the period has not
―while tax declaration and tax receipts are not necessarily evidence of
yet lapsed.
title, they are considered as a strong evidence of possession for no one
ii. The remaining balance of the prescription period in the old law in his right mind would be paying taxes year after year for a property
since the effectivity of the 1950 Civil Code is shorter than that that is not in his actual possession‖
provided in the latter—old prescriptive law will apply
1119. Acts of possessory character executed in virtue of license or by
mere tolerance of the owner shall not be available for the purposes of
Chapter 2: Prescription of Ownership and Other Legal Rights
possession
Possession by tolerance does not imply an assertion of ownership and
1117. Acquisitive prescription of dominion and other legal rights may be:
thus produces no effect with respect to possession or prescription
A. Ordinary—requires possession of things in good faith and with just
title for the time fixed by law 1120. Possession is interrupted for the purposes of prescription either:
Requires uninterrupted possession for the required statutory period A. Naturally—through any cause it should cease for more than 1 year
of years in good faith and with a just title B. Civilly—produced by judicial summons to the possessor
B. Extraordinary
An uninterrupted possession strengthens the adverse right of the
Requires uninterrupted possession for the required statutory period possessor
of years but without need of just title and good faith on the part of
the possessor
Art. 1131. For the purposes of prescription, just title must be proved; it is 1136. Possession in wartime, when the civil courts are not open, shall
never presumed. not be counted in favor of the adverse claimant.
The possession of the adverse claimant during that time shall not be
Art. 1132. The ownership of movables prescribes through uninterrupted counted where it must be observed that the civil courts must be closed
possession for 4 years in good faith. If it is functioning, even during wartime, the possession may be counted
The ownership of personal property also prescribes through in his favor
uninterrupted possession for 8 years, without need of any other
condition 1137. Ownership and real rights over immovable also prescribe through
With regard to the right of the owner to recover personal property uninterrupted adverse possession thereof for 30 years, without need of
lost or of which he has been illegally deprived, as well as with respect title or for good faith.
to movables acquired in a public sale, fair, or market, or from a
merchant’s store the provisions of Arts. 559 and 1505 of this Code
shall be observed. 1138. In the computation of time necessary for prescription, the
Art. 559—the possession of movable property acquired in good faith is following rules shall be observed:
equivalent to a title. If the possessor lost or of which the owner has been A. The present possessor may complete the period necessary for
unlawfully deprived, has acquired it in good faith at a public sale, the prescription by tacking his possession to that of his grantor or
owner cannot obtain its return without reimbursing the price paid predecessor in interest
therefor
―grantor‖ and ―predecessor in interest‖ connote a transfer in a
manner provided by law of property from one person to another
1144. The following actions must be brought within ten years from the 1146. The following actions must be instituted within four years:
time the right of action accrues: 1. Upon an injury to the rights of the plaintiff
1. Upon a written contract 2. Upon a quasi-delict
2. Upon an obligation created by law Purpose of an action or suit and the law to govern it, including the
3. Upon a judgment period of prescription, are to be determined by the complaint itself, its
allegations and prayer for relief
The computation of the period should start from the date the cause of
action accrues or from the day the right of the plaintiff is violated Examples of ―injury to the rights of the plaintiff:‖
o The 10-year period in the case of a written contract is to be reckoned o A suit questioning the removal as corporate secretary must be brought
from that time which is not necessarily the date of execution of the within 4 years for the unjustified separation from employment or
contract illegal dismissal is an injury to the rights of the plaintiff
Written contracts: o Action for recovery of damages for taking or retaining personal
property, or incident to trespass upon real estate prescribes within 4
o Action for annulment under Art. 1391 shall be brough within 4 years
o A P.N or a check or a ticket issued for transportation is a written years
contract Examples of quasi-delicts:
o Right to claim payment of deficiency after foreclosure of real estate o Prescriptive period is counted from the day quasi-delict occurred or
mortgage prescribes in 10 years was committed
o Action against the Central Bank for ―tortuous inference,‖ that is, in
Obligations created by law:
o Obligation of the possessor to reconvey to the true owner real closing and liquidating a bank
property arising from a constructive or implied trust Other actions that prescribe in 4 years:
o Obligation of the winner in a gambling game to refund the amount a. To revoke or reduce a donation based on the birth, appearance, or
won to the loser adoption of a child
o Obligation of the lessor to indemnify the lessee in good faith for b. To revoke a donation based on non-compliance with a condition
useful improvements on the property leased c. To rescind a contract
o Obligation of husband and wife, parents and children, and brothers d. To annul a contract
and sisters to support each other
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1147. The following actions must be filed within one year: 1150. The time for prescription for all kinds of actions, when there is no
1. For forcible entry and detainer special provision which ordains otherwise, shall be counted from the day
2. For defamation they may be brought.
Other actions that prescribe in 1 year: Prescriptive period for actions based on quasi-delict shall begin to run
a. To recover possession de facto ―from the day the action may be brought,‖ that is, from the day the
b. To revoke a donation on the ground of ingratitude quasi-delict was committed
c. To rescind or recover damages if immovable is sold with non- Unless otherwise provided, the statutory limitation for period for filing a
apparent burden or servitude criminal action begins to run on the commission of the offense
d. To enforce warranty of solvency in assignment of credits Where offended party expressly reserves his right to institute a separate
Actions that prescribe in 6 months: civil action, the running of the period of prescription starts to run from
a. To rescind the sale or reduce the price of real estate the date reservation is made up to the time the civil action is actually
1. sold at a certain price for a unit area, if the vendor is unable to filed in court
deliver all that is stated in the contract Statute of limitations begins to run as to each unpaid installment from
2. if made for a lump sum, of the vendor is unable to deliver all that the date the creditor could sue the debtor thereof
which is included within the boundaries mentioned in the contract Prescriptive period to set aside or reform a simulate or fictitious written
b. To enforce warranty against hidden defects of, or encumbrances upon deed of pacto de retro sale where the alleged vendees make known their
the thing sold intention by overt acts not to abide by the true agreement, starts from
Action that prescribe in 40 days: the date they make known such intention
o Redhibitory action, based on the faults or defects of animals sold,
must be brought within 40 days from the date of their delivery to the 1151. The time for prescription of actions which have for their object the
vendee
enforcement of obligations to pay principal with interest or annuity runs
from the last payment of the annuity or of the interest.
1148. The limitations of action mentioned in articles 1140 to 1142, and
This refers to obligations where payment of which is due at stipulated
1144 to 1147 are without prejudice to those specified on other parts of
intervals
this Code, in the Code of Commerce, and in special laws.
Hence, if the debt is not yet due, payment of interest or annuity will not
The provisions of Title V on Prescription have suppletory application to start the running of the period
specific cases of prescription found elsewhere in the Civil Code and in
special laws
1152. The period for prescription of actions to demand the fulfillment of
obligations declared by a judgment commences from the time the
1149. All other actions whose periods are not fixed in this Code or in
judgment became final.
other laws must be brought within five years from the time the right of
action accrues.
1153. The period for prescription of actions to demand accounting runs
The right of action or cause of action accrues from the moment of
from the day the persons who should render the same cease in their
commission or omission of an act by a party in violation of his duty to,
or of the right, of another functions.
Essential elements are: The period for the action arising from the result of the accounting runs
a. Right in favor of a person (obligee) from the date when said result was recognized by agreement of the
b. A correlative obligation on the part of another (obligor) interested parties.
c. Am act or omission in violation of said right
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There is no difference between actions for accounting and reliquidation o In the absence of an existing obligation, the party demanding
since both involve the determination, adjustment and settlement of what annulment cannot be considered a creditor, and Art. 1155 is not
is due to the parties under the law applicable
Written acknowledgement of the debt by the debtor:
1154. The period during which the obligee was prevented by the o Written offer of payment works as a renewal of the obligation
fortuitous event from enforcing his right is not reckoned against him.
General Rule: existence of a fortuitous event relieves the obligor from
liability that might otherwise arise in the breach of an obligation or OBLIGATIONS AND CONTRACTS
excuse an obligee from his failure to exercise a right that might
TITLE 1: OBLIGATIONS
otherwise constitute a waiver of said right
A court order deferring action on the execution of a judgment CHAPTER 1: GENERAL PROVISIONS
suspended the running of the 5-year period for execution of a judgment
Prescriptive period to institute foreclosure proceeding by a mortgagee- 1156. An obligation is a juridical necessity to give, to do or not to do.
bank was held legally interrupted when the bank was placed under Obligation—―legal bond whereby constraint is laid upon a person or
receivership by the Central Bank with express prohibition from group of persons to act or forbear on behalf of another person or group
transacting business of persons‖
Elements:
1155. The prescription of actions is interrupted when they are filed 1. Vinculum juris or juridical tie which is the efficient cause established by
before the court, when there is a written extrajudicial demand by the the various sources of obligations
creditors, and when there is any written acknowledgement of the debt 2. The object which is the prestation or conduct, required to be observed
by the debtor. 3. Subject-persons who, viewed from the demandability of the obligation
This means that the period of prescription begins to run anew, and are the (a) active (oblige) and the (b) passive (obligor) subjects
whatever time of limitation might have already elapsed is thereby ―Persons‖—both natural and juridical persons
negated and rendered inefficacious Prestations—to give, to do and not to do
Filing of an action in court:
o Civil actions are deemed commenced from the date of the filing and 1157. Obligations arise from:
docketing of the complaint with the Clerk of Court 1. Law
o Interruption lasts during the pendency of the action 2. Contracts
o If the plaintiff desists from prosecuting the action to its final 3. Quasi-Contracts
conclusion, the action is deemed abandoned and as if it has never 4. Acts or omissions punished by law
been instituted
5. Quasi-delicts
Written extrajudicial demand by the creditor when it does not interrupt
The enumeration is exclusive where there can be no other sources of
prescription:
obligations
o Petition to open an administration proceeding over the estate of a
deceased debtor, even if brought by the creditor Obligations are:
o Written extrajudicial demand addressed to a co-debtor will not A. Civil--gives a right of action to compel their performance
interrupt the prescription as to other debtors who did not receive the B. Natural—based on equity and natural law; it does not grant a right of
demand action to enforce their performance, but after voluntary fulfillment by
1160. Obligations derived from quasi-contracts shall be subject to the 1164. The creditor has a right to the fruits of the thing from the time the
provisions of Ch. 1, Title 17, of this Book. obligation to deliver it arises. However, he shall acquire no real right
Certain lawful, voluntary and unilateral acts give rise to the juridical over it until the same has been delivered to him.
relation of quasi-contract to the end that no one shall be unjustly Acquisition of real right means that such right can be enforceable
enriched or benefited at the expense of the other against the whole world and will prejudice anybody claiming the same
object of the prestation
1161. Civil obligations arising from criminal offenses shall be governed The real right only accrues when the thing or object of the prestation is
by the penal laws, subject to the provisions of Art. 2177, and of the delivered to the creditor
1197. If the obligation does not fix a period but from its nature and the 1199. A person alternatively bound by different prestations shall
circumstances it can be inferred that a period was intended, the courts completely perform one of them.
may fix the duration thereof. The creditor cannot be compelled to receive part of one and part of the
The courts shall also fix the duration of the period when it depends upon other undertaking.
the will of the debtor. ―Different prestations‖—refers to both the strict sense and the loose
sense of the word ―prestation‖
In every case, the courts shall determine such period as may under the Partial performance of the different prestations cannot be considered
circumstances have been probably contemplated by the parties. Once fulfillment of the obligation and therefore cannot be done unless the
fixed by the courts, the period cannot be changed by them. creditor accepts such partial performance as complete performance
Two-step process: If all but one of the alternatives become legally impossible to fulfill, the
1. The court must first determine that ―the obligation does not fix a obligation will cease to be alternative
period‖ or that a period is made to depend upon the will of the
debtor, but from the nature and circumstances it can be inferred that a 1200. The right of choice belongs to the debtor; unless it has been
period was intended expressly granted to the creditor.
2. The court must decide what period was ―probably contemplated by
the parties‖ The debtor shall have no right to choose those prestations which are
impossible, unlawful or which could not have been the object of the
1198. The debtor shall lose every right to make use of the period: obligation.
1. When after the obligation has been contracted, he becomes Any doubt as to whom the choice is given must always be interpreted in
insolvent, unless he gives a guaranty or security for the debt favor of the debtor
Insolvency need not be judicially declared Only by an express grant of choice can a creditor have the right to
2. When he does not furnish to the creditor the guaranties or choose which prestation is to be performed
securities which he has promised
Securities can take the form of real-estate mortgages or pledges 1201. The choice shall produce no effect except from the time it has
3. When by his own acts he has impaired said guaranties or securities been communicated.
after their establishment, and when through a fortuitous event The creditor is always entitled to be notified of the choice.
they disappear, unless he immediately gives new ones equally Communication to the creditor gives effect to the choice
satisfactory
4. When the debtor violates any undertaking, in consideration of
which the creditor agreed to the period
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1202. The debtor shall lose the right of choice when among the If only the car were lost, the creditor has a choice between the truck
prestations whereby he is alternatively bound, only one is practicable. and the boat
Majority of the choices must be practicable But if all the things are lost through a fortuitous event, the obligation
If only one is practicable, the creditor has no right to complain about is extinguished
such situation because such affects only the debtor who will lose his (2) If the loss of one of the things occurs through the fault of the debtor,
right of choice the creditor may claim any of those subsisting, or the price of that
The creditor has no choice but to accept this single practicable choice which, through the fault of the former, has disappeared, with a right
provided that it is not unlawful or inconsistent with the object of the to damages;
obligation If the debtor destroys the car, the creditor has a choice among the
―practicable‖—capable of being done, or simply feasible truck, the boat or the price of the car plus damages
(3) If all the things are lost through the fault of the debtor, the choice by
1203. If through the creditor’s acts the debtor cannot make a choice the creditor shall fall upon the price of any one of them, also with
according to the terms of the obligation, the latter may rescind the indemnity for damages.
contract with damages. If all the things are lost, the creditor has a choice among the price of
If the debtor has been prevented from making a choice due to the fault the car, the price of the truck or the price of the boat plus damages
of the creditor, the debtor can ask for the rescission of the contract with
damages The same rules shall be applies to obligations to do or not to do in case
one, some or all of the prestations should become impossible.
1204. The creditor shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively the 1206. When only one prestation has been agreed upon, but the obligor
object of the obligation have been lost, or the compliance of the may render another in substitution, the obligation is called facultative.
obligation has become impossible.
The loss or deterioration of the thing intended as a substitute, through
The indemnity shall be fixed taking as a basis the value of the last thing the negligence of the obligor, does not render him liable. But once the
which disappeared, or that of the service which last became impossible. substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.
Damages other than the value of the last thing or service may also be
rewarded. If the substitute prestation was one of the main reasons which induced
the creditor to enter into the contract with the debtor, but the latter did
not really intend to constitute it as a substitute, this could be an act of
1205. When the choice has been expressly given to the creditor, the fraud which would make the whole contract voidable.
obligation shall cease to be alternative from the day when the selection o If the creditor does not make any move to annul the contract and
has been communicated to the debtor. accepts the substitute, his acceptance cannot cure the defect of the
Until then, the responsibility of the debtor shall be governed by the said voidable contract
following rules:
(1) If one of the things is lost through a fortuitous event, he shall
perform the obligation by delivering that which the creditor should
choose from among the remainder, or that which remains if only one
subsists;
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Sec. 4: JOINT AND SOLIDARY OBLIGATIONS a. Joint—entire obligation is to be paid or performed
proportionately by the debtors
1207. The concurrence of 2 or more creditors or of 2 or more debtors in b. Solidary—each one of the debtors are obliged to pay the entire
one and the same obligations does not imply that each one of the obligation, each one of the creditors has the right to demand
from any of the debtors the fulfillment of the entire obligation
former has a right to demand, or that each one of the latter is bound to
i. Passive solidarity—solidarity on the part of the Debtors
render, entire compliance with prestation. There is solidary liability only
Full payment made by one of the solidary debtors
when the obligation expressly so states, or when the law or the nature of extinguishes the obligation. The one who paid can claim
the obligation requires solidary liability. reimbursement from his co-debtors as regards their
Solidary obligation—implies a situation where there are debts or corresponding shares in the obligation
obligations incurred by 2 or more debtors in favor of 2 or more ii. Active solidarity—solidarity on the part of the Creditors
creditors, and giving anyone, some or all of the creditors the right to Full payment to any of the creditors extinguishes the
demand from anyone, some or all of the debtors the satisfaction of the obligation. The creditor who received the entire amount will
total obligation and not merely the share of each debtor in the debts or be liable to pay the corresponding shares of his co-creditors
obligations. in accordance with their internal agreement.
1. It exists only when the obligation expressly so states, or when the law
or nature of the obligation requires solidarity 1208. If from the law, or the nature or the wording of the obligations to
Surety—a person who binds himself to pay the obligation of the debtor which the preceding article refers the contrary does not appear, the
when it becomes due credit or debt shall be presumed to be divided into as many equal shares
1. A surety who is solidarily is therefore an insurer of the debt as there are creditors or debtors, the credits or debts being considered
Guarantor—a person who can be required to pay the indebtedness of distinct from one another, subject to the Rules of Court governing the
the principal debtor only after the creditor has unsuccessfully exhausted multiplicity of suits.
all means to collect from the debtor.
1. A guarantor is subsidiarily liable for the debt of the debtor; he is not The presumption of law is that the obligation is always joint.
jointly liable The joint debtors are obliged to pay only their share in the indebtedness
An agreement to be ―individually‖ and ―jointly‖ liable indicates solidary while the creditors can only claim their share in the credit
liability When there is a concurrence of several creditors or of several
1. ―individually‖—has the same meaning as ―collectively‖, ―separately‖ debtors in one and in the same obligation, there is a presumption
or ―severally‖ that the obligation is joint.
2. Several obligation—one by which one individual binds himself to This provision speaks of joint divisible obligation.
perform the whole obligation o Each of the creditors shall be entitled to demand only the payment
In case of concurrence of 2 or more creditors or 2 or more debtors in of his proportionate share of the credit.
one obligation, the presumption is that the obligation is joint, and o Each of the debtors may be compelled to pay only his
not solidary proportionate share of the debt.
o Solidarity must be expressed o The credits or debts shall be considered distinct from one another.
o When the obligation is ambiguous, it must be considered as joint Consequences of joint obligation:
obligation 1. Each debtor – liable for a proportionate part of the entire debt;
Obligations: 2. Each creditor – entitled to a proportionate part of the credit;
1. Individual obligation—one debtor and one creditor
2. Collective obligation—2 or more debtors and 2 or more creditors
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3. Demand made by one creditor upon one debtor produces the Effect of Obligation is converted into The liability, even if
effects of default only as between them, but not with respect to the breach of monetary obligation for converted into
others; obligation indemnity for damages— indemnity for
4. The interruption of prescription caused by the demand made by where each debtor is liable damages, remain
one creditor upon one debtor will not benefit the cocreditors; only for his own part solidary
5. The insolvency of one debtor will not increase the liability of his
co-debtors, nor will it allow a creditor to demand anything from 1211. Solidarity may exist although the creditors and the debtors may
the co-creditors. not be bound in the same manner and by the same periods and
conditions.
1209. If the division is impossible, the right of the creditors may be Enforcement of the terms and conditions may be made at different
prejudiced only by their collective acts, and the debt can be enforced times. The obligations which have matured can be enforced while
only by proceeding against all the debtors. If one of the latter should be those still undue will have to be awaited. Enforcement can be made
insolvent, the others shall not be liable for his share. against any one of the solidar debtors although it can happen that a
A joint indivisible obligation gives rise to indemnity for damages from particular obligation chargeable to a particular debtor is not yet due.
the time anyone of the debtors does not comply with the undertaking He will be answerable for all the prestations which fall due although
The debtors who may have been ready to fulfill their promises shall not chargeable to the other co-debtors.
contribute to the indemnity beyond the corresponding portion of the
price of the thing or the value of the service in which the obligation 1212. Each one of the solidary creditors may do whatever may be useful
consists to the others, but not anything which may be prejudiced to the latter.
Batman and Robin jointly obliged themselves to deliver a brand new Satisfaction of a judgment against one of the debtors by one of the
Toyota Fortuner worth P1,500,000.00 to Superman. The object, a creditors will discharge their obligation to the other solidary creditors
vehicle, is indivisible. They must deliver the thing jointly. In case of If one of the solidary creditors make an extra-judicial demand for the
breach, the obligation is converted into monetary obligation for debtor to pay, this will benefit also the other creditors as the demand
indemnity for damages. Batman and Robin will be liable only for P will effectively make the prescriptive period for the fulfillment of the
750,000.00 each. obligation run anew
The fact that these other solidary creditors were prejudiced will not
1210. The indivisibility of an obligation does not necessarily give rise to invalidate the extinguishment of the obligation
solidarity. Nor does solidarity of itself imply indivisibility. o Their remedy is to collect their share of the indebtedness from the
Solidary obligation—refers to the nature of the obligation attaching to solidary creditor who made the remission
the obligor and oblige o They can likewise ask for damages for whatever they may have lost as
Indivisible Obligation—the obligation where the prestation or object a result of the remission, such as interest
to be delivered cannot be performed by parts without altering its
essence or substance 1213. A solidary creditor cannot assign his rights without the consent of
Basis Indivisibility Solidarity the others.
Nature Refers to the prestation of the Refers to tie existing Ideally, the relationship between and among solidary creditors is one of
contract between parties mutual trust
Number of Does not require plurality of Requires plurality of o Hence, to preserve as much as possible this confidence, a solidary
subjects / parties parties creditor cannot assign his rights without the consent of the others
parties
1214. The debtors may pay any of the solidary creditors; but if any 1216. The creditor may proceed against any one of the solidary debtors
demand, judicial or extra-judicial, has been made by one of them, or some or all of them simultaneously. The demand made against one of
payment should be made to him. them shall not be an obstacle to those which may subsequently be
This article does not by itself expressly make invalid or void payment to directed against the others, so long as the debt has not been fully
the other non-demanding creditors. collected.
o It is only giving preference to the demanding-creditor without The solidary creditor has a right not to accept partial payment from the
necessarily curtailing the rights of the other creditors to be paid or the solidary debtors.
right of the debtor to pay the other creditors their rightful due o However, if he does not accept partial payment from some of them,
If the demand is extra-judicial, it will facilitate the fulfillment of the this will not prevent him from demanding or claiming from the others
obligation and ultimately the satisfaction of his share who have not actually paid
1215. Novation, compensation, confusion or remission of the debt, made 1217. Payment made by one of the solidary debtors extinguishes the
by one of the solidary creditors or with any of the solidary debtors, shall obligation. If 2 or more solidary debtors offer to pay, the creditor may
extinguish the obligation, without prejudice to the provisions of Art. choose which offer to accept.
1219. He who made the payment may claim from his co-debtors only the share
The creditor who may have executed any of these acts, as well as he who which corresponds to each, with the interest for the payment already
collects the debt, shall be liable to the others for the share in the made. If the payment is made before the debt is due, no interest for the
obligation corresponding to them. intervening period may be demanded.
Modes of extinguishing an obligation: When one of the solidary debtors cannot, because of his insolvency,
1. Novation—the change of creditors, debtors or the principal condition reimburse his share to the debtor paying the obligation, such share shall
of the contract be borne by all his co-debtors, in proportion to the debt of each.
o It must however be clear to release the solidary obligation of the
Payment – consists in the delivery of the thing or the rendition
debtors
(rendering) of the service which is the object of the obligation.
2. Compensation—takes place when 2 persons, in their own right, are
creditors and debtors of each other Interest – compensation for the use of borrowed money
o Erap borrowed P100 from Fernando. Fernando borrowed P75
from Erap. Erap‘s obligation to Fernando is now P25 only,
GENERAL PROVISIONS 1234. If the obligation has been substantially performed in good faith,
1231. Obligations are extinguished: the obligor may recover as though there had been a strict and complete
1) By payment or performance fulfillment, less damages suffered by the obligee.
2) By lost of the thing due Substantial performance is not complete performance where it
constitutes a breach of obligation
3) By the condonation or remission of the debt
o However, the breach in this case is not a material one enough to
4) By the confusion or merger of the rights of creditor and debtor
compel the obligor to rescind the whole obligation
5) By compensation
The pertinent inquiry is not simply whether the breach was willful but
6) By novation whether the behavior of the party in default comports with the
Other causes of extinguishment of obligations, such as annulment, standards of good faith and fair dealing
rescission, fulfillment of a resolutory condition, and prescription, are
governed elsewhere in this Code. 1235. When the obligee accepts the performance knowing its
Death of a party, however, does not extinguish an obligation unless the incompleteness or irregularity, and without expressing any protest or
obligation is personal in nature or intransmissible objection, the obligation is deemed fully complied with.
If the civil liability neither solely nor originally springs from the crime, The substantial compliance contemplated here connotes the waiver of
the civil liability shall persist despite the extinction of the criminal the obligee of damages arising from the breach of contract which
liability resulted in the incompleteness or irregularity of the obligation
The law does not require the protest or objection of the creditor to be
made in a particular manner or at a particular time.
Section 1: PAYMENT OF PERFORMANCE o If the party fails to interpose any objection to the entries or conditions
in an invoice furnished to him by the other party, such failure can be
1232. Payment means not only the delivery of money but also the considered as implied acceptance and therefore he will be liable to pay
performance, in any other manner, of an obligation. the amount stated therein
If the debtor accepts from the creditor a receipt in which an application If the debts due are of the same nature and burden, the payment shall
of payment is made, the former cannot complain of the same, unless be applied to the proportionately.
there is a cause for invalidating the contract. ―most onerous debt‖—the indebtedness which exacts the heavier
The choice as to which debt the payment is to be applied is given to the burden from among the many. Thus, a debt with interest or an
debtor acceleration clause is more onerous
The debtor must make a declaration as to which debt should the Debts are not of the same burden (1st par.)– Rules:
payment be applied 1. Oldest are more onerous than new ones
Application of payment cannot be made on debts which are not yet due, 2. One bearing interest more onerous than one that does not
unless the parties agree 3. secured debt more onerous than unsecured one
4. principal debt more onerous than guaranty
Requisites:
5. solidary debtor more onerous than sole debtor
a. 1 debtor and 1 creditor only
6. share in a solidary obligation more onerous to a solidary debtor
b. 2 or more debts of the same kind
7. liquidated debt more onerous than unliquidated
c. all debts must be due
d. amount paid by the debtor must not be sufficient to cover the total Debts are of the same burden (2nd par.)– the payment shall be
amount of all the debts applied to all of them pro rata or proportionately.
It is necessary that the obligations must all be due. Exceptions: Example: debtor owes his creditor several debts, all of them due, to
a. when there is a stipulation to the contrary; and wit: (1) unsecured debt, (2) a debt secured with mortgage of the
b. the application of payment is made by the party for whose benefit debtor's property, (3) a debt with interest, (4) a debt in which the
the term or period has been constituted (relate to Art. 1196) debtor is solidarily liable with another. Partial payment was made by
the debtor, without specification as to which the payment should be
It is also necessary that all the debts be for the same kind, generally
applied. The most onerous is (4), followed by (2), then (3), then (1).
of a monetary character. This includes obligations which were not
Consequently, payment shall be made in that order.
originally of a monetary character, but at the time of application of
payment, had been converted into an obligation to pay damages by
reason of breach or nonperformance Subsection 2: PAYMENT BY CESSION
1255. The debtor may cede or assign his property to his creditors in
1253. If the debt produces interest, payment of the principal shall not be payment of his debts. This cession, unless there is stipulation to the
deemed to have been made until the interests have been covered. contrary, shall only release the debtor from responsibility for the net
This is merely directory and not mandatory proceeds of the thing assigned. The agreements which, on the effect of
1263. In an obligation to deliver a generic thing, the loss or destruction 1266. The debtor in obligation to do shall also be released when the
of anything of the same kind does not extinguish the obligation. prestation becomes legally or physically impossible without the fault of
A generic thing cannot really be lost or destroyed unless the whole class the obligor.
of said thing is destroyed, hence the obligation subsists despite the loss Obligation ―to do‖—includes all kinds of work or service
or destruction of one thing in the said class
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Obligation ―to give‖—a prestation which consists in the delivery of a Requisites:
movable or an immovable thing in order to create real right of for the 1. event or change in the circumstances could have been foreseen of
use of the recipient, or for its simple possession, or in order to return to the time of the execution contract
its owner 2. it makes the performance of the contract extremely difficult but
When the prestation becomes legally or physically impossible without not impossible
the fault of the obligor, it shall be considered a loss which extinguishes 3. the event must not be due to the act of any of the parties
the obligation 4. the contract is for a future prestation. If the contract is of
Legal Impossibility : may either be - immediate fulfillment, the gross inequality of the reciprocal
1. direct (when the law prohibits the performance or execution of the prestations may be involve desion or want of cause.
work agreed upon, i.e. when it is immoral or dangerous)
2. indirect (the law imposes duties of a superior character upon the 1268. When the debt of a thing certain and determinate proceeds from a
obligor which are incompatible with the work agreed upon, criminal offense, the debtor shall not be exempted from the payment of
although the latter may be perfectly licit, as where the obligor is its price, whatever may be the cause for the loss, unless the thing having
drafted for military service or for a civil function) been offered by him to the person who should receive it, the latter
Physical Impossibilty : examples – death of the debtor; when there is refused without justification to accept it.
an accident... If A stole a watch from B and was criminally charged for such an
offense, and the watch was lost through a fortuitous event, the debtor-
1267. When the service has become so difficult as to be manifestly accused must still pay the price of the watch
beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part. 1269. The obligation having been extinguished by the loss of the thing,
Subjective impossibility—a promissor’s duty is never discharged by the the creditor shall have all the rights of action which the debtor may have
mere fact that the supervening events deprive him of the ability to against third persons by reason of the loss.
perform, if they are not such as to deprive other persons, likewise, of If A buys a house from G, and the house, which is insured, is
ability to render such performance accidentally burned by a fortuitous event prior to the demand for its
Requisites for this article to apply: delivery, the obligation of G to deliver the house is extinguished
1. The prestation has become so difficult to render; and o However, in the event that A has already paid the price of the house,
2. The service has become manifestly beyond the contemplation of the he can seek reimbursement of the insurance proceeds due from the
parties insurance company.
Principle of rebus sic stantibus—the parties stipulate in the light of certain
prevailing conditions, and once these conditions cease to exist, the Sec. 3: CONDONATION OR REMISSION OF DEBT
contract also ceases to exist
―service‖—refers to the ―performance‖ of the obligation 1270. Condonation or remission is essentially gratuitous, and requires
Doctrine Of Unforeseen Event / Doctrine Of Relative Impossibility the acceptance by the obligor. It may be made expressly or impliedly.
(rebus sic stantibus) One and the other kind shall be subject to the rules which govern
o It refers to obligation "to do" (personal obligation) inofficious donations. Express condonation shall, furthermore, comply
o Parties are presumed to have the risk
with the forms of donation.
o It does not apply to aleatory contracts (insurance contract)
o Excludes highly speculative business (stock exchange) Condonation—an act of liberality
o Monatory obligations are also excluded (governed by 1357)
RA Salanga 1A Oblicon Page 35 of 90
o Connotes that there is a previous demandable obligation but the The fact that the document evidencing the debt is in the possession of
obligee or the creditor decides not to enforce the debtor’s prestation the debtor gives rise to the refutable presumption that such document
anymore which requires the obligor’s implied or express consent has been delivered by the creditor voluntarily
Condonation or Remission of a debt—a donation of the obligee’s credit
in favor of the debtor 1273. The renunciation of the principal debt shall extinguish the
Inofficious donation—if it turns out that the thing or amount donated accessory obligations; but the waiver of the latter shall leave the former
(remitted or condoned) encroaches or infringes on the legitime or in force.
successional rights of the heirs of the condoning creditor The existence of the accessory obligation depends on the existence of
o In this case, the debtor must pay the child/children the amount which the principal obligation
will complete his/their legitime
If the principal obligation is extinguished, it carries with it the
Art. 772: Only those who at the time of the donor’s death have a right extinguishment of the accessory obligation but not vice-versa
to the legitime and their heirs and successors in interest may ask for the
reduction of inofficious donations
1274. It is presumed that the necessary obligation of pledge has been
Art. 760: Every donation inter vivos, made by a person having no children
remitted when the thing pledged, after its delivery to the creditor, is
or descendants, legitimate or legitimated by subsequent marriage, or
found in the possession of the debtor, or of a third person who owns the
illegitimate, may be revoked or reduced as provided in the next article,
by the happening of these events: thing.
1. If the donor, after the donation, should have legitimate or legitimated Pledge—an accessory contract
or illegitimate children, even though they be posthumous o it involves a movable property constituted by the owner of such
2. If the child of the donor, whom the latter believed to be dead when he property who has free disposal of it, to secure the fulfillment of a
made the donation, should turn out to be living principal obligation and such contract is perfected only upon the
3. If the donor should subsequently adopt a minor child delivery of the thing pledged to the creditor
In a contract of pledge, the creditor or the obligee must be in possession
1271. The delivery of a private document evidencing a credit, made of the thing pledged
voluntarily by the creditor to the debtor; implies the renunciation of the o If it is in the possession of the debtor or of the third person who
action which the former had against the latter. owns it, there is a presumption that the accessory obligation has been
condoned or remitted
If in order to nullify this waiver, it should be claimed to be inofficious,
the debtor and his heirs may uphold it by proving that the delivery of the Sec. 4: CONFUSION OR MERGER OF RIGHTS
document was made in virtue of payment of the dent.
Promissory note—most common private document evidencing a credit 1275. The obligation is extinguished from the time the characters of
o If a creditor delivers a promissory note to the debtor, the former, in creditor and debtor are merged in the same person.
effect, furnishes the debtor the evidence which could prove the Requisites of merger or confusion are:
indebtedness of such debtor in his favor. It therefore implies that he is 1. It must take place between the creditor and the principal debtor,
no longer interested in the debt 2. The very same obligation must be involved, for if the debtor
acquires rights from the creditor, but not the particular obligation
1272. Whenever the private document in which the debt appears is in question in question there will be no merger,
found in the possession of the debtor, it shall be presumed that the 3. The confusion must be total or as regards the entire obligation.
creditor delivered it voluntarily, unless the contrary is proved.
1287. Compensation shall not be proper when one of the debts arises 1289. If a person should have against him several debts which are
from a depositum or from the obligations of a depository or a bailee in susceptible of compensation, the rules on the application of payments
commodatum. shall apply to the order of the compensation.
Neither can compensation be set up against a creditor who has a claim
for support due by gratuitous title, without prejudice to the provisions of 1290. When all the requisites mentioned in Art. 1270 are present,
par. 2 of Art. 301. compensation takes effect by operation of law, and extinguishes both to
Compensation will not occur in the following situations the concurrent amount, even though the creditors and debtors are not
1. Debts arising from a depositum or from the obligations of a depository aware of the compensation.
o Deposit—constituted from the moment a person receives a thing Legal compensation takes place from the moment that the requisites
belonging to another, with the obligation of safely keeping it and of the articles 1278 and 1270 co-exist; its effects arise on the very
returning the same day which all its requisites concur.
2. Debts arising from the obligations of a bailee in commodatum Voluntary of conventional compensation takes effect upon the
o Bailee in commodatum—acquires the use of the thing loaned but not agreement of the parties.
its fruits Facultative compensation takes place when the creditor declares his
o The bailee is obliged to pay the ordinary expenses for the use and option to set it up.
preservation of the thing loaned Judicial compensation takes place upon final judgment.
o The bailee cannot retain the thing loaned on the ground that the Effects of Compensation:
bailor owes him something even though it may be by reason of 1. Both debts are extinguished to the concurrent amount;
expenses 2. interests stop accruing on the extinguished obligation of the part
3. Debts arising from duty to support extinguished;
o Par. 2 of Art. 301: support in arrears can be compensated or 3. the period of prescription stops with respect to the obligation or
renounced part extinguished;
The application of this is doubtful in view of the fact that the said 4. all accessory obligations of the principal obligation which has been
Art. 301 has already been deleted by the New Family Code extinguished are also extinguished.
Renunciation of Compensation.
1288. Neither shall there be compensation if one of the debts consists in o Compensation can be renounced, either at the time an obligation is
civil liability arising from a penal offense. contracted or afterwards. Compensation rests upon a potestative
4. Debts consisting of a civil liability arising from a penal offense right, and a unilateral decision of the debtor would be sufficient
RA Salanga 1A Oblicon Page 40 of 90
renunciation. Compensation can be renounced expressly of 1292. In order that an obligation may be extinguished by another which
impliedly. substitutes the same, it is imperative that it be so declared in
No Compensation. unequivocal terms, or that the old and the new obligations be on every
o Even when all the requisites for compensation occur, the point incompatible with each other.
compensation may not take place in the following cases: There can be no novation unless 2 distinct and successive binding
a. When there is renunciation of the effects of compensation by a contracts take place, with the later one designed to replace the preceding
party; and convention
b. When the law prohibits compensation.
If a subsequent contract is designed to novate a previous contract and
not all parties to the original contract consented to or are made parties
Sec. 6: NOVATION in the subsequent contract—no novation
1291. Obligations may be modified by: Modifications introduced before a bargain becomes obligatory can in no
1. Changing their object or principal conditions sense constitute novation in law
2. Substituting the person of the debtor The extinguishment of the old obligation by the new one is a necessary
3. Subrogating a third person in the rights of the creditor element of novation which may be effected either expressly or impliedly
Under the provisions of the Civil Code, novation refers to extinctive o ―expressly‖—contracting parties incontrovertibly disclose that their
novation and not modifactory novation object in executing the new contract is to extinguish the old one
o ―implied‖—all that is prescribed by law would be an incompatibility
Novation—a juridical act with a dual function, namely, it extinguishes an
between the two contracts
obligation and creates a new one in lieu of the old
Test of incompatibility—whether or not the 2 obligations can stand
Types of Novation:
together, each one having its independent existence. If they cannot,
1. Objective Novation—occurs when there is a change of the object or
they are incompatible and the latter obligation novates the first.
principal conditions of an existing obligation
o To effect, it is imperative that the new obligation expressly declare The incompatibility must take place in any of the essential
that the old obligation is thereby extinguished, or that the new elements of the obligation; otherwise, the change would be merely
obligation be on every point incompatible with the new one modifactory in nature and insufficient to extinguish the original
2. Subjective Novation—occurs when there is a change of either the obligation
person of the debtor, or of the creditor in an existing obligation ―to cancel‖—means to strike out, revoke, rescind, abandon, or terminate
o To effect, it is necessary that the old debtor be released expressly An obligation to pay a sum of money is not novated, in a new
from the obligation and the third or new debtor assumes his place in instrument wherein the old is ratified, by changing only the terms of
the relation payment and adding other obligations not incompatible with the old
3. Mixed Novation—occurs when the change of the object or principal one, or wherein the old contract is merely supplemented by the new
conditions of an obligation happens at the same time with the change one
of either the person of the debtor or creditor Four essential requisites of Novation:
Novation arising from a purported change in the person of the debtor 1. A previous valid obligation
must be clear and express because, to repeat, it is never presumed 2. The agreement of all the parties to the new contract
General Rule: there is no form of words or writing necessary to give 3. The extinguishment of the old contract
effect to a novation 4. Validity of the new one
1294. If the substitution is without the knowledge or against the will of 1298. The novation is void if the original obligation was void, except
the debtor, the new debtor’s insolvency or non-fulfillment of the when annulment may be claimed only by the debtor; or when
obligation shall not give rise to any liability on the part of the original ratification validates acts which are voidable.
debtor. If the previously existing obligation is void, a subsequent obligation
Expromission—if the old debtor is substituted without the knowledge or intending to novate it shall likewise be voids unless it is clear that such
consent of the old debtor and the obligation is extinguished subsequent one can stand on itself and without any reference to the old
In both delegacion and expromission, the consent of the creditor is one.
indispensable If the original obligation is merely annullable or voidable, it means that it
is valid up to the time it is annulled
1295. The insolvency of the new debtor, who has been proposed by the o Hence, it can be novated before it is annulled
original debtor and accepted by the creditor, shall not revive the action
of the latter against the original obligor; except when said insolvency 1299. If the original obligation was subject to a suspensive or resolutory
was already existing and of public knowledge, or known to the debtor, condition, the new obligation shall be under the same condition, unless
when he delegated his debt. it is otherwise stipulated.
2 cases where the creditor can go against the old debtor in case of In order not to subject the obligation to the previous suspensive
insolvency of the new debtor: condition, there must be an express statement to that effect in the new
1. When the insolvency of the new debtor has already been existing and obligation as novated
of public knowledge when the old debtor delegated the debt
2. When the insolvency is known to the old debtor when he delegated 1300. Subrogation of a third person in the rights of the creditor is either
his debt legal or conventional. The former is not presumed, except in cases
In both cases, the creditor must not have knowledge of the insolvency expressly mentioned in this Code; the latter must be clearly established
of the new debtor in order that it may take effect.
In both cases, the insolvency must have existed at the time the old Legal subrogation—takes effect by mandate of law and does not
debtor delegated his debt proceed from an agreement of the parties
o The law which forms the basis of the subrogation must be clearly
1296. When the principal obligation is extinguished in consequence of a identified and invoked to enforce the rights pertinent thereto
novation, accessory obligations may subsist insofar as they may benefit Conventional subrogation—must be clearly established by the
third person who did not give their consent. unequivocal terms of the substituting obligation or by the evident
incompatibility of the new and old obligations on every point
1382. Payments made in a state of insolvency for obligations to whose 1385. Rescission creates the obligation to return the things which were
fulfillment the debtor could not be compelled at the time they were the object of the contract, together with their fruits, and the price with
affected, are also rescissible. its interest; consequently, it can be carried out only when he who
―in a state of insolvency‖—a debtor whose liabilities already exceed his demands rescission can return whatever he may be obliged to restore.
assets and who can barely pay off his debts Neither shall rescission take place when the things which are the object
If he pays off a creditor whose credit has not yet become due, that of the contract are legally in the possession of third persons who did not
payment can be rescinded act in bad faith.
In this case, indemnity for damages may be demanded from the person
causing the loss.
2171. The rights and obligations of the finder of lost personal property
shall be governed by Arts. 719 and 720.
Art. 719. Whoever finds a movable, which is not treasure, must return it
to its previous possessor.
Art. 720. If the owner should appear in time, he shall be obliged to pay,
as a reward to the finder, 1/10 of the sum or of the price of the thing
found
2173. When a third person, without the knowledge of the debtor, pays
the debt, the rights of the former are governed by Articles 1236 and
1237.
Art. 1236. The creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the obligation,
unless there is a stipulation to the contrary. Whoever pays for another
may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor without the knowledge
or against the will of the latter, cannot compel the creditor to subrogate
him in his rights, such as those arising from a mortgage, guaranty or
penalty.
2175. Any person who is constrained to pay the taxes of another shall be
entitled to reimbursement from the latter.