1

Obligations

CHAPTER 1 (4) Acts or omissions punished by

General Provisions law; and

Article 1156. An OBLIGATION is a (5) Quasi-delicts.

juridical necessity:
The enumeration is exclusive. (Naval v. Rias, 8
Phil. 508)
1. to give;
2. to do; or
Article 1158. Obligations derived from
3. not to do.
law are not presumed. Only those
Elements of obligation: expressly determined in this Code or in
special laws are demandable, and shall
1. An active subject (oblige or creditor) the be regulated by the precepts of the law
possessor of a right which establishes them; and as to what
2. A passive subject (obligor or debtor) he
has not been foreseen, by the provisions
who has the duty of giving, doing, or not
doing of this Book. (Obligation ex lege)
3. The object or prestation the subject matter;
the duty of giving, doing or not doing The law says obligations derived from law are
4. The efficient cause the reason why the not presumed. This merely means that the
obligation exists obligation must be clearly set forth in the law.
5. In certain cases, form is also important.
If regarding an obligation ex lege, there is a
Kinds of obligations: conflict between the New Civil Code and a
special law, the latter prevails unless the contrary
1. From the view point of sanction has been expressly stipulated in the New Civil
a. Civil obligation Art. 1156 Code.
b. Natural obligation the duty not to
recover what has voluntarily been
paid although payment was no
Article 1159. Obligations arising from
longer required contracts have the force of law between
c. Moral obligation the contracting parties and should be
2. From the viewpoint of subject matter
a. Real obligation the obligation to complied with in good faith. (Obligation
give ex contractu)
b. Personal obligation the obligation
to do or not to do Contracts are not superior to law. Their terms and
3. From the affirmativeness and negativeness
conditions must not be contrary to law, morals,
of the obligation
good customs, public order, or public policy.
a. Positive or affirmative obligation
the obligation to give or to do
Neither party pay unilaterally and upon his own
b. Negative obligation the obligation
exclusive volition, escape his obligations under
not to do
4. From the viewpoint of persons obliged the contract, unless the other party assented
a. Unilateral where only one of the thereto, or unless for causes sufficient in law and
parties is bound pronounce adequate by a competent tribunal. (L-
b. Bilateral where both parties are 10337)
bound
i. Reciprocal
ii. Non-reciprocal the
performance of one is non- CONTRACT OBLIGATION
dependent upon
performance of the other If valid, results to an A result of a contract, but
obligation not all obligations come
from contracts
Article 1157. Obligations arise from:
Presupposes meeting of Meeting of the minds is
(1) Law; the minds not always necessary

(2) Contracts; Contracts for attorneys services stand upon an

entirely different footing from contracts for the
payment of compensation for any other services.
(3) Quasi-contracts;
An attorney is not entitled, in the absence of

express contract, to recover more than a
reasonable compensation for his services. And
even when an express contract is made, the
court can ignore it and limit the recovery of
reasonable compensation if the amount of the
stipulated fee is found by the court unreasonable.
(Borcena v. IAC, G.R. No. 70099)
Innominate contracts (contratos innominados):
1. Do ut des I give that you may give
2. Do ut facias I give that you may do
3. Facio ut des I do that you may give
4. Facio ut facias I do that you may do
Article 1160. Obligations derived from
quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this
Book.
Quasi-contract that juridical relation resulting from a
lawful, voluntary, and unilateral act, and which has for
its purpose the payment of indemnity to the end that
no one shall be unjustly enriched or benefited at the
expense of another
Kinds of quasi-contracts:
1. Negotiorum gestio This takes place when a
person voluntarily takes charge of anothers
abandoned business or property without the
owners authority. Reimbursement must be
made to the gestor for necessary and useful
expenses, as a rule.
2. Solutio indebiti This takes place when
something is received when there is no right
to demand it, and it was unduly delivered
thru mistake. The recipient has the duty to
return it.
Requisites of solutio indebiti:
1. He who paid was not under obligation to do
so; and
2. The payment was made by reason of an
essential mistake of fact.
Article 1161. Civil obligations arising
from criminal offenses shall be governed
by the penal laws, subject to the
provisions of article 2177, and of the
pertinent provisions of Chapter 2,
Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating
damages. (Obligation ex delicto)
Every person criminally liable for a felony is also
civilly liable. (Art. 100, RPC)
Ruling of Bayotas Case:
1. Death of the accused pending appeal of his
conviction extinguishes his criminal liability as well as
the civil liability based solely thereon. As opined by
Justice Regalado, in this regard, "the death of the
accused prior to final judgment terminates his criminal
2
liability and only the civil liability directly arising from
and based solely on the offense committed, i.e., civil
liability ex delicto in senso strictiore."
2. Corollarily, the claim for civil liability survives
notwithstanding the death of accused, if the same
may also be predicated on a source of obligation
other than delict. Article 1157 of the Civil Code
enumerates these other sources of obligation from
which the civil liability may arise as a result of the
same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts
3. Where the civil liability survives, as explained in
Number 2 above, an action for recovery therefor may
be pursued but only by way of filing a separate civil
action and subject to Section 1, Rule 111 of the 1985
Rules on Criminal Procedure as amended. This
separate civil action may be enforced either against
the executor/administrator or the estate of the
accused, depending on the source of obligation upon
which the same is based as explained above.
4. Finally, the private offended party need not fear a
forfeiture of his right to file this separate civil action by
prescription, in cases where during the prosecution of
the criminal action and prior to its extinction, the
private-offended party instituted together therewith the
civil action. In such case, the statute of limitations on
the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with
provisions of Article 1155 of the Civil Code, that
should thereby avoid any apprehension on a possible
privation of right by prescription.
Article 1162. Obligations derived from
quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this
Book, and by special laws. (Obligation ex
quasi-delict)
Quasi-delict a fault or act of negligence (or omission
of care) which causes damages to another, there
being no pre-existing contractual relations between
the parties

CHAPTER 2
Nature and Effect of Obligations
Article 1163. Every person obliged to
give something is also obliged to take
care of it with the proper diligence of a
good father of a family, unless the law or
the stipulation of the parties requires
another standard of care. (1094a)
DEFAULT RULE: Diligence of a good father of a
family is required.
CUSTOM RULE: Another standard of care is required
if the law or the stipulation of the parties so provides.
Article 1164. The creditor has a right to
the fruits of the thing from the time the
obligation to deliver it arises. However,
he shall acquire no real right over it until
the same has been delivered to him.
REAL RIGHT PERSONAL RIGHT
A power over a specific A power demandable by
thing one person of another
Binding on the whole Enforceable only against
world the obligor
Kinds of delivery:
1. Actual delivery where physically, the
property changes hands
2. Constructive delivery where the physical
transfer is implied
a. Traditio simbolica
b. Traditio longa manu
c. Traditio brevi manu
d. Traditio constitutum possessorium
e. Tradition by execution of legal
forms and solemnities
When obligation to deliver arise:
1. If there is not term or condition, then from the
perfection of the contract; or
2. If there is a term or a condition, then from the
moment the term arrives or the condition
happens.
Article 1165. When what is to be
delivered is a determinate thing, the
creditor, in addition to the right granted
him by article 1170, may compel the
debtor to make the delivery.
If the thing is indeterminate or generic,
he may ask that the obligation be
complied with at the expense of the
debtor. (Specific performance)
3
Remedies of the creditor when debtor fails to comply
with his obligation:
1. Demand specific performance;
2. Demand rescission or cancellation in proper
cases;
3. Demand damages either with or without
either of the first two.
Effect of fortuitous event:
1. If the thing to be delivered is a determinate
thing, when such determinate thing is lost
because of a fortuitous event before delivery,
the obligation to deliver is extinguished.
2. If the thing to be delivered is a generic thing,
when such generic thing is lost because of a
fortuitous event before delivery, the
obligation to deliver is not extinguished.
Instances when fortuitous event does
not excuse compliance with the
obligation to deliver:
1. If the obligor delays, (really means in
default) or
2. If the obligor has promised to deliver
the same thing to two or more
persons who do not have the same
interest. (obligor is in bad faith)
3. If the thing to be delivered is a generic thing,
when such generic thing is lost because of a
fortuitous event before delivery, the obligation to
deliver is not extinguished.
ORDINARY DELAY DEFAULT (Legal Delay)
There is merely non- That delay that amount to
performance at the a virtual non-fulfillment of
stipulated time the obligation (see Art.
1169 to know when there
is default)
Article 1166. The obligation to give a
determinate thing includes that of
delivering all its accessions and
accessories, even though they may not
have been mentioned. (1097a)
If there is a stipulation to said effect, accession
and accessories do not have to be included.
Article 1167. If a person obliged to do
something fails to do it, the same shall
be executed at his cost.
This same rule shall be observed if he
does it in contravention of the tenor of
the obligation. Furthermore, it may be
decreed that what has been poorly done
be undone. (Positive personal obligation)
Remedies of creditor here:

1. To have the obligation performed by another
at the debtors expense;
2. To obtain damages.
Specific performance is not available here
because it would amount to involuntary servitude
which is prohibited by the Constitution.
Article 1168. When the obligation
consists in not doing, and the obligor
does what has been forbidden him, it
shall also be undone at his expense.
(Negative personal obligation)
When things may be ordered undone at the expense
of obligor:
1. When something is poorly done; or
2. When the obligation consists in not doing,
and obligor does what has been forbidden
him.
Article 1169. When those obliged to
deliver or to do something incur in delay
(means in default):
1. When the obligee judicially or
extrajudicially demands from the
obligor fulfillment of his
obligation. The default begins at the
time of the demand. (General Rule)
2. When the obligation or the law
expressly so declare; or
In case of stipulation, mere fixing of the period is
not enough. There must be a provision that if
payment is not made when due, default or liability
for damages or interests automatically arises.
(De la Rosa v. BPI, 51 Phil. 926)
3. When from the nature and the
circumstances of the obligation it
appears that the designation of
the time when the thing is to be
delivered or the service is to be
rendered was a controlling motive
for the establishment of the
contract; (when time is of the
essence) or
4. When demand would be useless,
as when the obligor has rendered
it beyond his power to perform; or
5. When the obligor has expressly
acknowledged that he really is in
default.
Mere asking for extension of time is not an
express acknowledgement of the existence of
default on his part.
4
Different kinds of mora:
1. Mora solvendi default on the part of the
debtor
a. Mora solvendi ex re debtors fault
in real obligations
b. Mora solvendi ex persona
debtors default in personal
obligations
2. Mora accipiendi default on the part of the
creditor
3. Compensation morae when in a reciprocal
obligation both parties are in default
Requisites of default (mora solvendi):
1. The obligation must be due, enforceable,
and already liquidated or determinate in
amount;
2. There must be non-performance;
3. There must be a demand, unless the
demand is not necessary; (apply here the
enumeration in Art. 1169) and
4. The demand must be for the obligation that
is due.
There is not mora solvendi in negative obligations
because one cannot be late in not doing or
giving.
There is no mora in natural obligations.
A mere reminder, like This is to remind you that
your next instalment fall due on Jan. 7, 2005, is
not a demand because for all that we know
lateness may still be tolerated by the creditor.
(Castan)
Demand may be in any form (oral or written),
provided that it can be proved. (Cetus
Development v. CA, G.R. No. 77647)
Demand must be categorical and not a mere
statement of fact or a suggestion. (Aerospace
Industries v. CA, G.R. No. 108129)
Demand is ineffective if action is already barred
by laches. (Soliva v. Intestate Estate of Villalba,
G.R. No. 154017)
Effects of mora solvendi:
1. Liability for damages or interest;
2. Bear the risk of loss;
3. Liable even for a fortuitous event (dagames
may however be mitigated if he can prove
that even if he had not been in default, loss
would have occurred just the same).
The creditor is guilty of default (mora accipiendi)
when he unjustifiably refuses to accept payment
or performance at the time said payment or
performance can be done.
A debtor who incurs delay or default is liable for
damages plus interest, generally from
extrajudicial or judicial demand in the form of
interest. (Malayan Insurance v. CA, G.R. No.
59919)
 5

In reciprocal obligations, neither party contravene the tenor thereof, are liable
incurs in delay if the other does not for damages.
comply or is not ready to comply in a
proper manner with what is incumbent Kinds of damages (M.E.N.T.A.L.):
upon him. From the moment one of the
1. Moral
parties fulfills his obligation, delay by the 2. Exemplary
other begins. (1100a) 3. Nominal
4. Temperate
5. Actual
When damages or interest entitled to a creditor may
6. Liquidated
be lost:

1. If the principal obligation is allowed to lapse

Article 1171. Responsibility arising from
by prescription; fraud is demandable in all obligations.
2. If the damages or interest are allowed to Any waiver of an action for future fraud
prescribe; is void.
3. If the damages or interest are condoned.

Classification of fraud:
Guidelines for imposition of interest on the amount
claim or damage:
1. According to time of commission
a. Past action against it may be
1. When the obligation is breached, and it
waived
consists in the payment of a SUM OF b. Future action for it cannot be
MONEY, i.e., a loan or forbearance of waived
money, the interest due should be that which 2. According to meaning
may have been stipulated in writing. a. Fraud in performing a contract (Art.
a. Interest due shall itself earn legal 1171)
interest from the time it is judicially b. Fraud in obtaining consent
demanded. i. Dolo causante (Art. 1338)
b. In the absence of stipulation, the ii. Dolo incidente (Art. 1344)
rate of interest shall be 12% per
annum. Article 1172. Responsibility arising from
c. The interest shall begin to run from
the time the demand is judicially or
negligence in the performance of every
extrajudicially made (from the time kind of obligation is also demandable,
of default). but such liability may be regulated by the
2. When an obligation, NOT constituting a loan courts, according to the circumstances.
or forbearance of money, is breached, an
interest on the amount of damages awarded
may be imposed at the courts discretion with
6% rate per annum. DOLO CULPA
a. The interest shall begin to run from
the time the demand is made There is deliberate Although voluntary, still
judicially or extrajudicially if the intention to cause there is no deliberate
amount of the damage is damage or prejudice intention to cause
established with reasonable damage
certainty; or
b. The interest shall begin to run only Liability arising from dolo Liability due to
from the date the court judgement cannot be mitigated or negligence may be
is made when such certainty cannot reduced reduced in certain cases
be so reasonably established at the
time of the judicial or extrajudicial Waiver of an action to Waiver of an action to
demand. enforce liability due to enforce liability due to
c. In any case, the actual base of
future fraud is void future culpa may in a
computation of legal interest shall
certain sense be allowed
be on the amount finally adjudged.
3. When the judgment of the court awarding a
sum of money becomes final and executory,
the rate of legal interest, whether the case GROSS negligence can never be excused in
falls under paragraph 1 or paragraph 2, advance for this would be contrary to public
above, shall be 12% per annum from such policy.
finality until its satisfaction, this interim period
SIMPLE negligence may in certain cases be
being deemed to be by then an equivalent to
excused or mitigated.
a forbearance of credit.

Kinds of culpa according to source of obligation:

Article 1170. Those who in the
performance of their obligations are 1. Culpa contractual
guilty of (1) fraud, (2) negligence, or (3) 2. Culpa aquiliana
delay, and (4) those who in any manner 3. Culpa criminal
 6

Elements of fortuitous event:

CULPA CULPA CULPA
CONTRACTUA AQUILIANA CRIMINAL 1. The event must be independent of the will of
L the debtor;
2. It must be either unforeseeable or
Contractual Tort or quasi- Crime or delict unavoidable;
3. It must be such as to render it impossible for
negligence delict
the debtor to fulfil his obligation in a normal
manner;
Negligence is Negligence is Negligence is
4. The debtor must be free from any
merely incidental direct, direct,
participation in, or aggravation of, the injury
to the substantive, substantive
to the creditor.
performance of and and
an obligation independent independent of If the war had already broken out before the
already existing contract contract was entered into, the war cannot be
because of a considered unforeseen. (Server v. Eisemberg
contract and Co., G.R. No. L-10741)

There is a pre- No pre-existing No pre-existing

EXCEPTIONS:
existing obligation obligation
obligation
1. Cases expressly specified by the law
Requires Requires The quantum (see Art. 1165); or
preponderance preponderance of evidence is 2. When it is otherwise declared by
of evidence of evidence proof beyond stipulation; or
reasonable 3. When the nature of the obligation
doubt
requires the assumption of risk.
Defense of Defense of Defense of (Doctrine of created risk)
good father of good father of good father of
the family is not the family is the family is Article 1175. Usurious transactions shall
available available not a proper be governed by special laws. (n)
defense

Debtor is Ordinarily, the Accused
presumed at victim has to presumed
fault prove the innocent
negligence of
the defendant
Article 1173. The fault or negligence of
the obligor consists in the omission of
that diligence which is required by the
nature of the obligation and corresponds
with the circumstances of the persons,
of the time and of the place. When
negligence shows bad faith, the
provisions of articles 1171 and 2201,
paragraph 2, shall apply.
Standard of care or diligence to be
observed:
1. That agreed upon by the parties;
2. In the absence of (1), that required
by law; or
3. That which is expected of a good
father of a family. (If the law or
contract does not so state.)
Article 1174. GENERAL RULE: No person
shall be responsible for those events
which could not be foreseen, or which,
though foreseen, were inevitable.
is Article 1176. The receipt of the principal
by the creditor without reservation with
respect to the interest, shall give rise to
the presumption that said interest has
been paid. The receipt of a later
installment of a debt without reservation
as to prior installments, shall likewise
raise the presumption that such
installments have been paid.
Article 1177. The creditors, after having
pursued the property in possession of
the debtor to satisfy their claims, may
exercise all the rights and bring all the
actions of the latter for the same
purpose, save those which are inherent
in his person; they may also impugn the
acts which the debtor may have done to
defraud them.
Rights of creditors against defaulting debtor:
1. Exact payment;
2. Exhaust debtors property (attachment);
3. Exercise all the rights and bring all the
actions of the debtor except those inherent in
his person (accion subrogatoria);
4. Impugn the acts which the debtor may have
done to defraud them (accion pauliana).
Article 1178. GENERAL RULE: Subject to
the laws, all rights acquired in virtue of
 7

an obligation are transmissible, if there

has been no stipulation to the contrary.

Exceptions: CHAPTER 3
Different Kinds of Obligations
1. If the law provides otherwise;
2. If the contract provides otherwise;
3. If the obligation is purely personal. SECTION 1
Pure and Conditional Obligations

Article 1179. Every obligation whose

performance does not depend upon a
future or uncertain event, or upon a past
event unknown to the parties, is
demandable at once. (pure)

Every obligation which contains a

resolutory condition shall also be
demandable, without prejudice to the
effects of the happening of the event.
(with resolutory condition)

Pure obligation one without a condition or term;

demandable at one, provided there will be no
absurdity

Condition an uncertain event which wields an

influence on a legal relationship

Term or period that which necessarily must come

whether the parties know when it will happen or not

Article 1180. When the debtor binds

himself to pay when his means permit
him to do so, the obligation shall be
deemed to be one with a period, subject
to the provisions of article 1197. (Thus,
Sec. 2 herein will apply.)

Payment here does not depend on the debtors

will. It is the time when payment is to be made
that is dependent upon him. Thus, this is an
obligation with a term or period.

Article 1181. In conditional obligations,

the acquisition of rights, as well as the
extinguishment or loss of those already
acquired, shall depend upon the
happening of the event which
constitutes the condition.

Suspensive condition the happening of which will

give rise to the acquisition of a right

Resolutory condition the happening of which

extinguishes a right already acquired

Article 1182. When the fulfillment of the

condition depends upon the sole will of
the debtor, the conditional obligation

shall be void (potestative). If it depends
upon chance or upon the will of a third
person, the obligation shall take effect in
conformity with the provisions of this
Code (casual).
Types of conditions here:
1. Potestative (facultative) condition depends
upon the sole will of the debtor
a. If it is suspensive and potestative
on the part of the debtor, VOID
the condition and the obligation are
both void;
b. If it is potestative on the part of the
debtor and resolutory, VALID;
c. If it is potestative on the part of the
creditor, VALID;
2. Casual depends upon chance or upon the
will of a third person; VALID
3. Mixed the condition does not solely
depend on the will of the debtor, VALID
Article 1183. Conditions that would annul
the obligation which depends upon them
(both the condition and the obligation are
void):
1. Impossible conditions;
2. Those contrary to good customs or
public policy; and
3. Those prohibited by law.
If the obligation is divisible, that part
thereof which is not affected by the
impossible or unlawful condition shall be
valid.
The condition not to do an impossible
thing shall be considered as not having
been agreed upon. (But, the obligation
here is valid.)
Article 1184. The condition that some
event happen at a determinate time shall
extinguish the obligation as soon as the
time expires or if it has become
indubitable that the event will not take
place. (Positive condition)
Article 1185. The condition that some
event will not happen at a determinate
time shall render the obligation effective
from the moment the time indicated has
elapsed, or if it has become evident that
the event cannot occur. (Negative
condition)
If no time has been fixed, the condition
shall be deemed fulfilled at such time as
may have probably been contemplated,
8
bearing in mind the nature of the
obligation. (1118)
Article 1186. The condition shall be
deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
(Constructive or presumed fulfilment)
This article applies to suspensive conditions. It
also applies to instances when the obligor
secures the happening of a resolutory condition.
Article 1187. GENERAL RULE: The
effects of a conditional obligation to
give, once the condition has been
fulfilled, shall retroact to the day of the
constitution of the obligation.
If A, in 2004, promises to sell the land to B if B
passes the bar in 2006, B would be entitled to the
land beginning 2004 if he passes the bar in 2006.
The sale or donation made by B in 2004 is valid.
The sale or donation made by A in 2004 will not
be valid.
Nevertheless, when the obligation
imposes reciprocal prestations upon the
parties, the fruits and interests during
the pendency of the condition shall be
deemed to have been mutually
compensated.
In the previous example, A can keep the fruits
and interest of the land from 2004 until the
condition is fulfilled.
If the obligation is unilateral, the debtor
shall appropriate the fruits and interests
received, unless from the nature and
circumstances of the obligation it should
be inferred that the intention of the
person constituting the same was
different.
If A, in 2004, promised to give the land to B if B
passes the bar in 2006, A will keep the fruits and
interest of the land from 2004 until 2006 if B
passes the bar in 2006.
In obligations to do and not to do, the
courts shall determine, in each case, the
retroactive effect of the condition that
has been complied with. (1120)
Article 1188. The creditor may, before the
fulfillment of the condition, bring the
appropriate actions for the preservation
of his right.

The debtor may recover what during the
same time he has paid by mistake in
case of a suspensive condition.
Article 1189. When the conditions have
been imposed with the intention of
suspending the efficacy of an obligation
to give, the following rules shall be
observed in case of the improvement,
loss or deterioration of the thing during
the pendency of the condition:
A. If the thing is LOST it perishes, goes
out of commerce, of disappears in such
a way that its existence is unknown or it
cannot be recovered
1. Without the fault of the debtor
Effect: The obligation shall
EXTINGUISHED.
2. Through the fault of the debtor
Effect: The debtor shall be obliged to
PAY DAMAGES.
B. When the thing DETERIORATES
(partial loss)
1. Without the fault of the debtor
Effect: The impairment is to be BORNE
by the creditor.
2. Through the fault of the debtor
Effect: The creditor may CHOOSE
between the (1) RESCISSION of the
obligation and its (2) FULFILLMENT, with
indemnity for damages in either case.
C. If the thing is IMPROVED
1. By its NATURE, or by TIME
Effect: The improvement shall INURE to
the benefit of the creditor.
2. At the EXPENSE of the debtor
Effect: The debtor shall have no other
right than that granted to the
USUFRUCTUARY.
This article applies only if the suspensive
condition is fulfilled and if object is specific.
9
Article 1190. When the conditions have
for their purpose the extinguishment of
an obligation to give, the parties, upon
the fulfillment of said conditions, shall
return to each other what they have
received. (Resolutory condition)
In case of the loss, deterioration or
improvement of the thing, the provisions
which, with respect to the debtor, are laid
down in the preceding article shall be
applied to the party who is bound to
return.
As for the obligations to do and not to
do, the provisions of the second
paragraph of article 1187 shall be
observed as regards the effect of the
extinguishment of the obligation. (1123)
be
Article 1191. The power to rescind
obligations is implied in reciprocal ones,
in case one of the obligors should not
comply with what is incumbent upon
him. (Right to rescind)
The injured party may choose between
the fulfillment and the rescission of the
obligation, with the payment of damages
in either case. He may also seek
rescission, even after he has chosen
fulfillment, if the latter should become
impossible. (Choice of injured party)
The rescission referred to here is not predicated
on injury to economic interests on the part of the
party plaintiff (which is the basis for the rescission
mentioned in Arts. 1380 and 1381), but on the
breach of faith by the defendant, which breach is
violative of the reciprocity between the parties.
(UFC v. CA, G.R. No. L-29155)
Reciprocal obligations those where two parties are
reciprocally obliged to do or give something
It is not enough that both parties are indebted to
each other. The cause must be identical and the
obligations should arise simultaneously.
(Manresa)
The right of rescission exists only in reciprocal
obligations.
Rescission can be demanded only if the plaintiff
is ready, willing, and able to comply with his own
obligation, and the other is not.
The guilty party cannot rescind. He who comes to
equity must come with clean hands. (Seva v.
Berwia, 48 Phil. 581)
Trivial cause or slight breaches will not cause
rescission. (Song Fo v. Hawaiian-Phil. Co., 47
 10

Phil. 821) Rescission may be had only for such
breaches that are so substantial and fundamental
as to defeat the object of the parties in making
the agreement. (Ang v. CA, G.R. No. 80058)
Obligations with a resolutory period take
effect at once, but terminate upon arrival
of the day certain. (Resolutory period)

The court shall decree the rescission A day certain is understood to be that
claimed, unless there be just cause which must necessarily come, although
authorizing the fixing of a period. it may not be known when. (like death)

Judicial approval is needed when there has
already been delivery of the object (unless of
course there is a voluntary returning). (Guevara
v. Pascual, 12 Phil. 311)
Judicial approval is not needed when there has
been no delivery yet, or in case there has been
delivery, the contract stipulates that either party
can rescind the same or take possession of the
property upon fulfilment by the other party.
(Consing v. Jamandre, G.R. No. L-27674)
If the uncertainty consists in whether the
day will come or not, the obligation is
conditional, and it shall be regulated by
the rules of the preceding Section.
Period a certain length of time which determines the
effectivity or the extinguishment of obligations
PERIOD CONDITION

The right is not conjunctive, that is, the plaintiff

An event which is certain An uncertain event, an
cannot ask for both remedies. (Verceluz v. to happen, whether the event which may happen
Edano, 44 Phil. 801) But, they can be prayed in time when it will happen or not
the alternative in the complaint. (TS, Feb. 6, is known or not
1912)

The rule is that rescission or resolution of a Always refer to the future May refer even to the
past
contract has the effect of abrogating it in all its
parts. The creditor cannot demand rescission,
and still insist on the performance of subordinate Merely fixes the time or Causes an obligation to
stipulations. (Po Paues v. Sequenza, 47 Phil. the efficaciousness of an arise or to cease
404) obligation

Kinds of terms or periods:

This is understood to be without
prejudice to the rights of third persons 1. Definite the exact date or time is known
who have acquired the thing, in and given
accordance with articles 1385 and 1388 2. Indefinite something that will surely
happen, but the date of happening is
and the Mortgage Law.
unknown
3. Legal a period granted under the
The right to rescind may be waived, expressly or provisions of law
impliedly. 4. Conventional or voluntary period agreed
upon or stipulated by the parties
5. Judicial the period or term fixed by the
Article 1192. In case both parties have
courts for performance of an obligation or for
committed a breach of the obligation, the its termination
liability of the first infractor shall be 6. Ex die a period with a suspensive effect
7. In diem a period or term with a resolutory
equitably tempered by the courts.
effect

If it cannot be determined which of the Requisites for a valid period or term:

parties first violated the contract, the
same shall be deemed extinguished, and 1. It must refer to the future;
each shall bear his own damages. (n) 2. It must be certain but can be extended;
3. It must be physical and legally possible,
otherwise the obligations is void.

The period of prescription commences from the

SECTION 2 time the term in the obligation arrives, for it is
only from that date that it is due and demandable.
Obligations with a Period
(Ullmann v, Hernaez, 30 Phil. 69)

Article 1193. Obligations for whose Evidence of extension of period, if any be given,
fulfillment a day certain has been fixed, must be shown by debtor. (Phil. Engg. Co. v.
Green, 48 Phil. 466)
shall be demandable only when that day
comes. (Suspensive period)
Article 1194. In case of loss,
deterioration or improvement of the

thing before the arrival of the day
certain, the rules in article 1189 shall be
observed.
Article 1195. Anything paid or delivered
before the arrival of the period, the
obligor being unaware of the period or
believing that the obligation has become
due and demandable, may be recovered,
with the fruits and interests. (1126a)
If the debtor is aware of the period or knows that
the obligation has not yet become due and
demandable, he cannot recover what he has paid
or delivered.
The debtor may recover what he has paid or
delivered (with fruits and interests) before the
debt matures. But he can recover the fruits and
interests even after maturity (this right, however,
prescribes 5 years after premature payment).
The law presumes that the debtor know of the
prematureness. This may, however, be rebutted
by him. Thus, in order to avail of the right to
recover, the debtor must prove that he was
unaware of the period or believed in good faith
that the obligation has become due and
demandable.
Article 1196. GENERAL RULE: Whenever
in an obligation a period is designated, it
is presumed to have been established
for the benefit of both the creditor and
the debtor.
This article applies only where the parties to a
contract themselves have fixed a period, and not
to a case where the parties have authorized the
court to fix a reasonable term. (Orit v. Balrodgan,
G.R. No. L-12277)
EXCEPTION: If from the tenor of the
same or other circumstances it should
appear that the period has been
established in favor of one or of the
other.
Article 1197. When the courts may fix a
period:
1. If the obligation does not fix a period,
but from its nature and the
circumstances it can be inferred that
a period was intended.
2. When the duration of the period
depends upon the will of the debtor.
In every case, the courts shall determine
such period as may under the
circumstances have been probably
contemplated by the parties. Once fixed
11
by the courts, the period cannot be
changed by them.
When by virtue of Art. 1197, the court fixes the
term, it does not thereby amend or modify the
obligation concerned. Whenever the period is
fixed, the court merely enforces or carries out an
implied stipulation in the contract. (Deudor v. J.M.
Tuason and Co., G.R. No. L-13768)
If a case falls under the situations in this article,
the proper action is not to compel the debtor the
performance of the obligation, but to ask the
court to fix the duration of the term. However,
when a prior and separate action would be a
mere formality and serve no other purpose but
delay, there is no necessity of a prior action to
ask the court to fix the duration of the term.
(Tiglao v. Manila Railroad Co., 98 Phil. 181)
The prescriptive period for an action to have the
period fixed is 10 years from the perfection of the
contract. (Calero v. Carrion, G.R. No. L-13246)
Article 1198. The debtor shall lose every
right to make use of the period (the term
is extinguished, and the obligation is
demandable at once):
(1) When after the obligation has been
contracted, he becomes insolvent,
unless he gives a guaranty or security
for the debt;
(2) When he does not furnish to the
creditor the guaranties or securities
which he has promised;
(3) When by his own acts he has
impaired said guaranties or securities
after their establishment, and when
through a fortuitous event they
disappear, unless he immediately gives
new ones equally satisfactory;
(4) When the debtor violates any
undertaking, in consideration of which
the creditor agreed to the period;
(5) When the debtor attempts to
abscond. (1129a)
SECTION 3
Alternative Obligations
Article 1199. A person alternatively
bound by different prestations shall
completely perform one of them.

The creditor cannot be compelled to
receive part of one and part of the other
undertaking. (1131)
Article 1200. The right of choice belongs
to the debtor, unless it has been
expressly granted to the creditor.
The debtor shall have no right to choose
those prestations which are impossible,
unlawful or which could not have been
the object of the obligation. (Limitation on
the debtors choice)
Article 1201. The choice shall produce
no effect except from the time it has
been communicated. (1133)
Since the law requires no specific for, it is
believed the choice can communicated orally or
in writing, expressly or impliedly, such as by
performance of one of the obligations. (Manresa)
An election once made is binding on the person
who makes it, and he will not, therefore, be
permitted to renounce his choice and take an
alternative which was first open to him. (Reyes v.
Martinez, 55 Phil. 492)
The debtor must notify the creditor in order to
inform the creditor that the obligation is now a
simple one, no longer alternative, and if already
due, for the creditor to receive the object being
delivered, if tender of the same has been made.
Requisites for the making of choice:
1. It must be made properly so that the creditor
or his agent will actually know;
2. It is made with full knowledge that a
selection is indeed being made;
3. It is made voluntarily and freely;
4. It is made in due time;
5. It is made to all proper persons;
6. It is made without conditions unless agreed
to by the creditor;
7. It may be waived, expressly or impliedly.
Article 1202. The debtor shall lose the
right of choice when among the
prestations whereby he is alternatively
bound, only one is practicable. (1134)
Article 1203. If through the creditor's
acts the debtor cannot make a choice
according to the terms of the obligation,
the latter may rescind the contract with
damages.
This means that if one of the choices is deprived
from the debtor because of the act of the creditor,
the debtor may choose the other choice(s)
available, or rescind the contract with damages.
12
Article 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 object
of the obligation have been lost, or the
compliance of the obligation has become
impossible.
The indemnity shall be fixed taking as a
basis the value of the last thing which
disappeared, or that of the service which
last became impossible.
Damages other than the value of the last
thing or service may also be awarded.
Article 1205. When the choice has been
expressly given to the creditor, the
obligation shall cease to be alternative
from the day when the selection has
been communicated to the debtor.
Until then the responsibility of the debtor
shall be governed by the following rules:
3. 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;
4. If the loss of one of the things occurs
through the fault of the debtor, the
creditor may claim any of those
subsisting, or the price of that which,
through the fault of the former, has
disappeared, with a right to damages;
5. If all the things are lost through the
fault of the debtor, the choice by the
creditor shall fall upon the price of
any one of them, also with indemnity
for damages.
The same rules shall be applied to
obligations to do or not to do in case
one, some or all of the prestations
should become impossible.
Art. 1205 does not apply when the contract does
not state to whom the right to choose is given, for
in such case it is the debtor who can choose.
Article 1206. When only one prestation
has been agreed upon, but the obligor
may render another in substitution, the
obligation is called FACULTATIVE.
 13

The loss or deterioration of the thing 4. Liability of principals, accomplices, and

intended as a substitute, through the accessories of a felony
5. Bailees in commodatum
negligence of the obligor, does not
render him liable. But once the Article 1208. If from the law, or the nature
substitution has been made, the obligor or the wording of the obligations to
is liable for the loss of the substitute on which the preceding article refers the
account of his delay, negligence or contrary does not appear, the credit or
fraud. debt shall be presumed to be divided
into as many shares as there are
creditors or debtors, the credits or debts
ALTERNATIVE FACULTATIVE
being considered distinct from one
Various things are due Only one thing is due, another, subject to the Rules of Court
but the giving of one is and it is that one which governing the multiplicity of suits.
sufficient generally is given, but the
other may be given to This article gives us the presumption that when
render payment of there are two or more debtors, or two or more
fulfilment easy creditors, the obligation is joint.

If one of the prestations If the principal obligation Description of joint obligations:

is illegal, the others may
be valid and the
obligation remains
If it is impossible to give
all except one, that last
one must still be given
is void, there is no
necessity of giving the
1. The credit or debt is divided into as many
substitute
shares as there are creditors or debtors;
2. The credits or debts will be considered
If it is impossible to give distinct from one another, subject to the
the principal, the Rules of Court governing multiplicity of suits.
substitute does not have
to be given
Consequences of joint liability:

The right to choose may The right to choose given

be given either to debtor only to the debtor
or creditor
SECTION 4
Joint and Solidary Obligations
Article 1207. GENERAL RULE: The
concurrence of two or more creditors or
of two or more debtors in one and the
same obligation does not imply that each
one of the former has a right to demand,
or that each one of the latter is bound to
render, entire compliance with the
prestation. (Two or more creditors in one
obligation are joint creditors. Two or more
debtors in one obligation are jointly liable.)
EXCEPTIONS: There is a solidary liability
when:
1. When the obligation expressly so
states, or
2. When the law or the nature of the
obligation requires solidarity.
Some instances where the law imposes solidary
liability:
1. Obligations arising from tort
2. Obligations arising from quasi-delicts
3. Legal provisions regarding the obligations of
devisees and legatees
1. Vitiated consent on the part of one debtor
does not affect the others.
2. Insolvency of one debtor does not make
others responsible for his share.
3. Demand by the creditor on one joint debtor
puts him in default, but not the others since
the debts are distinct.
4. When the creditor interrupts the running of
the prescriptive period by demanding
judicially from one, the others are not
affected. Therefore, it is possible that the
share of one joint debtor has not prescribed,
while those of the others have already
prescribed.
5. Defenses of one debtor are necessarily
available to the others.
Article 1209. If the division is impossible,
the right of the creditors may be
prejudiced only by their collective acts,
and the debt can be enforced only by
proceeding against all the debtors. If one
of the latter should be insolvent, the
others shall not be liable for his share.
(Indivisible joint obligation)
ILLUSTRATION:
A, B, and C are jointly liable to give a particular car
worth P1.2M in favor of D, E, F, and G. A is insolvent.
D and E have renounced their share. The debtors are
not in default. How much can F and G get from each
debtor?
 14

F can get P100,000 from B and P100,000 from C. F Article 1215. Novation, compensation,
has rights of creditor over an insolvent debtor against confusion or remission of the debt, made
A.
by any of the solidary creditors or with
G has the same rights as F. any of the solidary debtors, shall
extinguish the obligation, without
Article 1210. The indivisibility of an prejudice to the provisions of article
obligation does not necessarily give rise 1219.
to solidarity. Nor does solidarity of itself
imply indivisibility. (n) The creditor who may have executed any
of these acts, as well as he who collects
the debt, shall be liable to the others for
INDIVISIBILITY SOLIDARITY the share in the obligation
corresponding to them.
Refers to the nature of Refers to the tie between
the obligation the parties
Article 1216. The creditor may proceed
May exist even if there is Needs at least two debtor
against any one of the solidary debtors
only one debtor and only or creditors or some or all of them simultaneously.
one creditor
The demand made against one of them
The fault of one is not the The fault of one is the shall not be an obstacle to those which
fault of others fault of the others
may subsequently be directed against
the others, so long as the debt has not
Article 1211. Solidarity may exist
been fully collected.
although the creditors and the debtors
may not be bound in the same manner
This article applies only to solidary obligations,
and by the same periods and conditions. not to joint ones, for in the latter, failure to collect
from one joint debtor his share does not
ILLUSTRATION: authorize the creditor to proceed against the
others, regarding the insolvent debtors share.
A, B, and C are solidary debtors of X in the amount of (Luna v. Arcenas, 34 Phil. 80)
P300,000 subject to the following stipulations: A to
pay in 2005; B, if he passes the bar; C, in 2007.
SOLIDARY DEBTOR SURETY
In 2005, X may collect from A, B, or C P100,000. The
moment B passes the bar, X can collect from any of Indebted for his own Indebted only for the
them another P100,000. In 2007, the remaining share only share of the principal
P100,000 may be collected by X from any of them. debtor

The rule is that the whole solidary obligation can Can be reimbursed what Can be reimbursed for
be recovered from any of the solidary debtors he has paid minus his everything he paid
minus the share of those with unmatured own share
conditions or terms. (Manresa)
If a solidary receives an If the principal debtor
Article 1212. Each one of the solidary extension of the period receives an extension
creditors may do whatever may be useful for payment, the other without the suretys
are still liable for the consent, the surety is
to the others, but not anything which whole obligation minus released
may be prejudicial to the latter. (1141a) the share of the debtor
who has received the
Article 1213. A solidary creditor cannot extension
assign his rights without the consent of
the others. (GENERAL RULE) Article 1217. Payment (of the whole
obligation) made by one of the solidary
EXCEPTION: He is allowed if all the others consent. debtors extinguishes the obligation. If
two or more solidary debtors offer to
Article 1214. GENERAL RULE: The pay, the creditor may choose which offer
debtor may pay any one of the solidary to accept.
creditors.
He who made the payment may claim
EXCEPTION: But if any demand, judicial from his co-debtors only the share which
or extrajudicial, has been made by one of corresponds to each, with the interest
them, payment should be made to him. for the payment already made. If the

payment is made before the debt is due,
no interest for the intervening period
may be demanded.
With reference to the reimbursement, the co-
debtors of the debtor who paid the whole amount
are merely joint debtors of the latter. He may only
claim the share which corresponds to each of
his co-debtors.
The fact of payment is the basis of the right to be
reimbursed, for not until then had he the right to
be reimbursed. Hence, the obligation of the
others to reimburse him arises only from the time
payment is made. (Wilson v. Berkenkotter, G.R.
No. L-4476)
When one of the solidary debtors
cannot, because of his insolvency,
reimburse his share to the debtor paying
the obligation, such share shall be borne
by all his co-debtors, in proportion to the
debt of each.
Article 1218. Payment by a solidary
debtor shall not entitle him to
reimbursement from his co-debtors if
such payment is made after the
obligation has prescribed or become
illegal.
1. If the debtor pays the creditor without knowing
that the debt has already prescribed, the former
can recover from the latter what he has paid on
the basis of solution indebiti.
Article 1219. The remission made by the
creditor of the share which affects one of
the solidary debtors does not release the
latter from his responsibility towards the
co-debtors, in case the debt had been
totally paid by anyone of them before the
remission was effected. (1146a)
Article 1220. The remission of the whole
obligation, obtained by one of the
solidary debtors, does not entitle him to
reimbursement from his co-debtors. (n)
Article 1221. If the thing has been lost or
if the prestation has become impossible
without the fault of the solidary debtors,
the obligation shall be extinguished.
If there was fault on the part of any one
of them, all shall be responsible to the
creditor, for the price and the payment of
damages and interest, without prejudice
to their action against the guilty or
negligent debtor.
15
If through a fortuitous event, the thing is
lost or the performance has become
impossible after one of the solidary
debtors has incurred in delay through
the judicial or extrajudicial demand upon
him by the creditor, the provisions of the
preceding paragraph shall apply.
Article 1222. A solidary debtor may, in
actions filed by the creditor, avail himself
of all defenses which are derived from
the nature of the obligation and of those
which are personal to him, or pertain to
his own share. With respect to those
which personally belong to the others,
he may avail himself thereof only as
regards that part of the debt for which
the latter are responsible.
Defenses available to the solidary debtor sued:
1. Those derived from the nature of the
obligation (TOTAL DEFENSE);
Here, the debtor(s) sued will not be liable.
2. Those which are personal to the debtor sued
(TOTAL OR PARTIAL DEFENSE);
Here, generally, the debtor(s) sued will not be liable.
But if the defense is based on a condition or term that
has not yet been fulfilled or arrived, the debtor will not
be totally free from liability. The defense is merely
partial.
3. Those which personally belong to the others
(PARTIAL DEFENSE).
Here the debtor sued may set up the personal
defense belonging to a co-debtor, but it only has
the effect of decreasing the liability equal to the
share of the debtor to whom the personal
defense belong.
SECTION 5
Divisible and Indivisible Obligations
Article 1223. The divisibility or
indivisibility of the things that are the
object of obligations in which there is
only one debtor and only one creditor
does not alter or modify the provisions
of Chapter 2 of this Title. (1149)
Divisible obligation one capable of partial
performance
Indivisible obligation one not capable of partial
performance

Article 1224. A joint indivisible obligation
gives rise to indemnity for damages from
the time anyone of the debtors does not
comply with his undertaking. The
debtors who may have been ready to
fulfill their promises shall not contribute
to the indemnity beyond the
corresponding portion of the price of the
thing or of the value of the service in
which the obligation consists.
Joint indivisible obligation:
A and B are jointly liable to give C a specific car worth
P2 million.
If A is ready to fulfil the obligation but B is not, the
obligation will be converted into a monetary one for
indemnity. A will be liable for P1 million only to C; and
B to the other P1 million.
Article 1225. Obligations that are deemed
indivisible:
1. Obligations to give definite things;
2. Those which are not susceptible of
partial performance;
3. Even though the object or service
may be physically divisible, an
obligation is indivisible if so provided
by law or intended by the parties.
Obligations that are deemed divisible:
1. When the obligation has for its object
the execution of a certain number of
days of work;
2. When the obligation has for its object
the accomplishment of work by
metrical units;
3. Analogous things which by their
nature are susceptible of partial
performance.
In obligations not to do, divisibility or
indivisibility shall be determined by the
character of the prestation in each
particular case.
2. In case of a divisible contract, if the illegal terms
can be separated from the legal ones, the latter
may be enforced. (Art. 1420)
SECTION 6
Obligations with a Penal Clause
Article 1226. GENERAL RULE: In
obligations with a penal clause, the
16
penalty shall substitute the indemnity for
damages and the payment of interests in
case of noncompliance.
EXCEPTIONS: Damages will still be paid:
1. If there is a stipulation to the
contrary;
2. If the obligor refuses to pay the
penalty; or
3. If the obligor is guilty of fraud in the
fulfillment of the obligation.
The penalty may be enforced only when
it is demandable in accordance with the
provisions of this Code.
Article 1227. GENERAL RULE: The
debtor cannot exempt himself from the
performance of the obligation by paying
the penalty.
EXCEPTION: Save in the case where this
right has been expressly reserved for
him.
GENERAL RULE: The creditor cannot
demand the fulfillment of the obligation
and the satisfaction of the penalty at the
same time.
EXCEPTION: Unless this right has been
clearly granted to him.
However, if after the creditor has decided
to require the fulfillment of the
obligation, the performance thereof
should become impossible without his
fault, the penalty may be enforced.
Article 1228. Proof of actual damages
suffered by the creditor is not necessary
in order that the penalty may be
demanded. (n)
Article 1229. When the penalty may be
reduced by the judge:
1. When the principal obligation has
been partly or irregularly complied
with by the debtor.
2. Even if there has been no
performance, if the penalty is
iniquitous or unconscionable.
Article 1230. The nullity of the penal
clause does not carry with it that of the
principal obligation.
 17

The nullity of the principal obligation
carries with it that of the penal clause.
4. Manner, time and place of payment.
3. If the judgement upon which the aggrieved party
made payment is null and void, the payment
made thereunder is also null and void. (Manila
Surety v. Lim, G.R. No. L-9343)

Article 1233. A debt shall not be

understood to have been paid unless the
thing or service in which the obligation
consists has been completely delivered
or rendered, as the case may be. (1157)
CHAPTER 4
Extinguishment of Obligations Article 1234. If the obligation has been
substantially performed in good faith,
General Provisions the obligor may recover as though there
had been a strict and complete
Article 1231. Obligations are
fulfillment, less damages suffered by the
extinguished:
obligee.

(1) By payment or performance;

(2) By the loss of the thing due;
(3) By the condonation or remission of
the debt;
(4) By the confusion or merger of the
rights of creditor and debtor;
(5) By compensation;
Article 1235. When the obligee accepts
the performance, knowing its
incompleteness or irregularity, and
without expressing any protest or
objection, the obligation is deemed fully
complied with.
4. Mere receipt of a partial payment is not
equivalent to the required acceptance of
performance as would extinguish the whole
obligation. (De Castro v. CA, G.R. No. 115838)

(6) By novation. Article 1236. GENERAL RULE: The

creditor is not bound to accept payment
Other causes of extinguishment of or performance by a third person.
obligations, such as
EXCEPTIONS: (1) If there is a stipulation
1. annulment, to the contrary; or (2) If the third person
2. rescission, has an interest in the fulfilment of the
3. fulfillment of a resolutory obligation.
condition, and
4. prescription, Effect of payment by third person:

are governed elsewhere in this Code.
SECTION 1
Payment or Performance
Article 1232. PAYMENT means:
1. the delivery of money; and
2. the performance, in any other
manner, of an obligation.
1. The third person may demand from
the debtor what he has paid. (Right to
Reimbursement and subrogation)
2. 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.
(Right to Beneficial reimbursement only;
no right of subrogation)
Instances when the third person can recover from the
creditor and not from the innocent debtor:

Requisites for payment to exist: 1. In case of undue payment or solutio indebiti;

2. When the debt had already prescribed;
3. When the debt had been completely
1. Person who pays;
remitted;
2. Person to whom payment is made;
4. When the debt has already been paid;
3. Thing to be paid; and
 18

5. When legal compensation had already taken Payment made to a third person shall
place. also be valid insofar as it has redounded
to the benefit of the creditor. Such
Article 1237. Whoever pays on behalf of
benefit to the creditor need not be
the debtor without the knowledge or
proved in the following cases:
against the will of the latter, cannot
compel the creditor to subrogate him in (1) If after the payment, the third
his rights, such as those arising from a person acquires the creditor's
mortgage, guaranty, or penalty. rights;
Subrogation the act of putting somebody into the
shoes of the creditor, hence, enabling the former to
(2) If the creditor ratifies the
exercise all the rights and actions that could have payment to the third person;
been exercised by the latter
(3) If by the creditor's conduct, the
debtor has been led to believe
SUBROGATION REIMBURSEMENT that the third person had authority
to receive the payment. (1163a)
Recourse can be had to There is no such
the mortgage, guaranty, guaranty
or pledge Article 1242. Payment made in good faith
to any person in possession of the credit
The debt is extinguished The new creditor has shall release the debtor. (1164)
in one sense, but a new different rights, so it is as
creditor, with exactly the if there has indeed been
Article 1243. Payment made to the
same rights as the old an extinguishment of the
one, appears on the obligation creditor by the debtor after the latter has
scene been judicially ordered to retain the debt
shall not be valid. (1165)
There is something more There is only a personal
than a personal action for action to recover the
Article 1244. The debtor of a thing
recovery amount
cannot compel the creditor to receive a
Article 1238. Payment made by a third different one, although the latter may be
person who does not intend to be of the same value as, or more valuable
reimbursed by the debtor is deemed to than that which is due.
be a donation, which requires the
debtor's consent. But the payment is in In obligations to do or not to do, an act
any case valid as to the creditor who has or forbearance cannot be substituted by
accepted it. (Payment by stranger is another act or forbearance against the
deemed a donation) obligee's will. (1166a)

Article 1239. In obligations to give, Article 1245. Dation in payment, whereby

payment made by one who does not property is alienated to the creditor in
have the free disposal of the thing due satisfaction of a debt in money, shall be
and capacity to alienate it shall not be governed by the law of sales.
valid, without prejudice to the provisions
of article 1427 under the Title on "Natural
SALE DATION IN PAYMENT
Obligations."
There is no pre-exisitng There is a pre-exisitng
Article 1240. Payment shall be made to credit credit
the person in whose favor the obligation
has been constituted, or his successor Gives rise to obligations Extinguishes the
obligation
in interest, or any person authorized to
receive it. The cause or The cause or
consideration is the price consideration is the
Article 1241. Payment to a person who is or object extinguishment of the
incapacitated to administer his property debt or the acquisition of
the object offered in
shall be valid if he has kept the thing
credit
delivered, or insofar as the payment has
been beneficial to him. There is greater freedom There is less freedom in
 19

2. When the different prestations are subject to

in the determination of the determination of price
the price
The giving of the price The giving of the object
may generally end the in lieu of the credit may
obligation of the buyer extinguish completely or
partially the credit
Requisites of dation in payment:
1. Consent of the creditor;
2. It should not prejudice the other creditors;
3. The debtor should be judicially declared
insolvent;
4. It should not constitute pactum
commissorium.
Article 1246. When the obligation
consists in the delivery of an
indeterminate or generic thing, whose
quality and circumstances have not been
stated, the creditor cannot demand a
thing of superior quality. Neither can the
debtor deliver a thing of inferior quality.
The purpose of the obligation and other
circumstances shall be taken into
consideration. (1167a)
Article 1247. GENERAL RULE: The
extrajudicial expenses required by the
payment shall be for the account of the
debtor.
EXCEPTION: IF it is otherwise stipulated.
With regard to judicial costs, the Rules
of Court shall govern.
Article 1248. Unless there is an express
stipulation to that effect, the creditor
cannot be compelled partially to receive
the prestations in which the obligation
consists. Neither may the debtor be
required to make partial payments.
However, when the debt is in part
liquidated and in part unliquidated, the
creditor may demand and the debtor may
effect the payment of the former without
waiting for the liquidation of the latter.
GENERAL RULE: The creditor cannot be compelled
partially to receive the prestations in which the
obligation consists. Neither may the debtor be
required to make partial payments.
different conditions or different terms;
3. When a debt is in part liquidated and in part
unliquidated, in which case performance of
the liquidated part may be insisted upon
either by the debtor or the creditor;
4. When a joint debtor pays his share or the
creditor demands the same;
5. When a solidary debtor pays only the part
demandable because the rest are not yet
demandable on account of their being
subject to different terms and conditions;
6. In case of compensation, when one debt is
larger than the other, it follows that a balance
is left;
7. When work is to be done by parts.
Article 1249. FORM OF PAYMENT of
debts in money: (follow this order)
1. In the currency stipulated (R.A. 8183);
or
2. If it is not possible to deliver such
currency, then in the currency which
is legal tender in the Philippines.
Legal tender that which a debtor may compel a
creditor to accept a payment of the debt
5. Obligations in foreign currency may be
discharged in Philippine currency based on the
prevailing rate at the time of payment. (Sharp &
Co. v. Northwest Airlines, G.R. No. 133498)
The delivery of promissory notes
payable to order, or bills of exchange or
other mercantile documents shall
produce the effect of payment only when
they have been cashed, or when through
the fault of the creditor they have been
impaired.
In the meantime, the action derived from
the original obligation shall be held in
the abeyance.
GENERAL RULE: A check is not a legal tender and,
therefore, the creditor cannot be compelled to accept
payment thru this means.
EXCEPTIONS:
1. When the creditor is in estoppel or he had
previously promised he would accept check;
2. When the check has lost its value because
of the fault of the creditor.
3. When payment occurs not because of a debt
but because of the exercise of the right of
conventional redemption.

EXCEPTIONS: Article 1250. In case an extraordinary

inflation or deflation of the currency
1. When there is an express stipulation to that stipulated should supervene, the value
effect; of the currency at the time of the
establishment of the obligation shall be

the basis of payment, unless there is an
agreement to the contrary. (n)
Inflation a sharp sudden increase of money or credit
or both without a corresponding increase in business
transaction
Extraordinary inflation a decrease or increase in the
purchasing power of the Philippine currency which is
unusual or beyond the common fluctuation in the
value of said currency
6. The effects of extraordinary inflation or deflation
are not to be applied without an official
declaration thereof by competent authorities.
(Singson v. Caltex)
Article 1251. Payment shall be made in
the place designated in the obligation.
There being no express stipulation and if
the undertaking is to deliver a
determinate thing, the payment shall be
made wherever the thing might be at the
moment the obligation was constituted.
In any other case the place of payment
shall be the domicile of the debtor.
If the debtor changes his domicile in bad
faith or after he has incurred in delay, the
additional expenses shall be borne by
him.
These provisions are without prejudice
to venue under the Rules of Court.
SUBSECTION 1. Application of Payments
Article 1252.Requisites for APPLICATION
OF PAYMENT to be made use of:
1. The debtor has various debt;
2. The debts are of the same kind;
3. They are favor of one and the same
creditor;
4. All the debts must be due, unless
there is a stipulation to the contrary,
or unless the application of payment
is made by the party for whose
benefit the term has been
constituted;
5. The payment is not enough to
extinguish all the debts;
6. The debtor has preferential right to
choose the debt to which his payment is
to be applied (this is given by law as a
rule).
a. The debtor will not have the right
to choose the debt to which
20
payment is to be applied, if there
is a stipulation to the contrary;
b. The debtor cannot choose to pay
principal first ahead of interest.
(Art. 1253)
If the debtor makes a proper application and the
creditor refuses, the creditor will be in mora
accipiendi.
If the creditor makes the application without the
knowledge and consent of the debtor, the
application is not valid. (BPI v. Espinosa)
Application of payments cannot be revoked
unless both parties agree. (Bachrach v. Golingco,
39 Phil. 912)
Even if both parties agree, however, still the
revocation or change in the application will not be
allowed if third persons would be prejudiced.
If the debtor accepts from the creditor a
receipt in which an application of the
payment is made, the former cannot
complain of the same, unless there is a
cause for invalidating the contract.
Application must be made at the time when
payment by the debtor is made, not afterwards.
(Powell v. National Bank, 54 Phil. 54)
Application of payment cannot be availed of by a
surety or a solidary guarantor, or partner-creditor.
Article 1253. If the debt produces
interest, payment of the principal shall
not be deemed to have been made until
the interests have been covered.
(General Rule)
EXCEPTION: If the creditor agrees, this all right.
(Manresa)
Article 1254. When the payment cannot
be applied in accordance with the
preceding rules, or if application cannot
be inferred from other circumstances,
the debt which is most onerous to the
debtor, among those due, shall be
deemed to have been satisfied.
If the debts due are of the same nature
and burden, the payment shall be
applied to all of them proportionately.
This article applies if no voluntary application of
payments is made.
SUBSECTION 2. Payment by Cession
Article 1255. The debtor may cede or
assign his property to his creditors in
 21

payment of his debts. This cession, (1) When the creditor is absent or
unless there is stipulation to the unknown, or does not appear at
contrary, shall only release the debtor the place of payment;
from responsibility for the net proceeds
of the thing assigned. The agreements (2) When he is incapacitated to
which, on the effect of the cession, are receive the payment at the time it
made between the debtor and his is due;
creditors shall be governed by special
laws. (3) When, without just cause, he
refuses to give a receipt;

DACION EN PAGO CESSION (4) When two or more persons

claim the same right to collect;
Does not affect all the In general, affects all
(action for interpleader)
properties properties of the debtor

Does not require plurality Requires more than one (5) When the title of the obligation
of creditors creditor has been lost.

Only the specific or Requires the consent of Tender of payment without consignation does not
concerned creditors all the creditors extinguish the debt; consignation must follow.
consent is required (Capalungan v. Medrano, G.R. No. L-13783)

May take place during Requires full or partial When consignation is not required:
the solvency of the insolvency
debtor
1. In the case of options;
2. In case of pacto de retro;
Transfers ownership Does not transfer 3. In the case of legal redemption.
upon delivery ownership
For the purposes of the preceding enumeration,
This is really an act of Not an act of novation mere tender of payment is sufficient to compel
novation them, but it does not relive the tenderer from his
obligation to pay the price when they are allowed.
SUBSECTION 3. Tender of Payment and (Paez v. Magno, 83 Phil. 405)

Consignation

Tender of payment the act of offering the creditor

what is due him together with a demand that the Article 1257. In order that the
creditor accept the same consignation of the thing due may
release the obligor, it must first be
Consignation the act of depositing the thing due
announced to the persons interested in
with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment the fulfillment of the obligation.

The consignation shall be ineffectual if it

TENDER OF PAYMENT CONSIGNATION is not made strictly in consonance with
the provisions which regulate payment.
Tender of payment is the antecedent of consignation.
Essential requisites for consignation:
May be extrajudicial Necessarily judicial
1. Existence of a valid debt;
Article 1256. If the creditor to whom
2. Valid prior tender, unless tender is excused;
tender of payment has been made
refuses without just cause to accept it,
Requisites of a valid tender of payment:
the debtor shall be released from
responsibility by the consignation of the 1. Made in lawful currency;
thing or sum due. 2. Should include the interest due;
3. Must be unconditional, unless the cause for
refusal is some other ground;
Consignation alone shall produce the 4. The obligation must be due;
same effect in the following cases: 5. The tender must also be in full satisfaction of
the claim, not merely a partial payment
thereof.

3. Prior notice of consignment;


REASON: To enable the creditor and other parties
interested to reconsider the previous refusal, and
thus, avoid litigation by the simple expedient of
accepting payment.
The first notice of consignation may be
accomplished simultaneously with the tender of
payment. (Valenzuela v. Bakani, G.R. No. L-
4689)
The notice is not essential if the sum to be
deposited is the sum due under a final
judgement. (Arzaga v. Rumbaoa, 91 Phil. 499)
4. Actual consignation;
Requisites:
1. A complaint filed in court;
2. The thing deposited is the very object that is
due;
3. It must be deposited with the proper judicial
authority;
4. It must be accompanied by proof that tender
has been duly made, unless tender is
excused, and that prior notice of
consignation had already been sent.
5. Subsequent notice of consignation (Art. 1258).
This is not mandatory if the amount due is as
consequence of a final judgement. (Salvante v.
Cruz, 88 Phil. 236)
The mere filing of the complaint and the service
of summons on the defendant-creditor,
accompanied by a copy of the complaint, can
take the place of said second notice. (Andres v.
CA, 47 O.G. 2876)
Article 1258. Consignation shall be made
by depositing the things due at the
disposal of judicial authority, before
whom the tender of payment shall be
proved, in a proper case, and the
announcement of the consignation in
other cases.
The consignation having been made, the
interested parties shall also be notified
thereof. (1178)
Article 1259. The expenses of
consignation, when properly made, shall
be charged against the creditor. (1179)
If not properly made, the consignation expenses
are chargeable to the debtor.
Article 1260. Once the consignation has
been duly made, the debtor may ask the
judge to order the cancellation of the
obligation.
Before the creditor has accepted the
consignation, or before a judicial
22
declaration that the consignation has
been properly made, the debtor may
withdraw the thing or the sum deposited,
allowing the obligation to remain in
force. (The power to withdraw is a matter of
right)
Article 1261. If, the consignation having
been made, the creditor should authorize
the debtor to withdraw the same (the
power to withdraw is a matter of privilege),
he shall lose every preference which he
may have over the thing. The co-debtors,
guarantors and sureties shall be
released.
SECTION 2
Loss of the Thing Due
Article 1262. An obligation which
consists in the delivery of a determinate
thing shall be extinguished if it should
be lost or destroyed without the fault of
the debtor, and before he has incurred in
delay.
When by law or stipulation, the obligor is
liable even for fortuitous events, the loss
of the thing does not extinguish the
obligation, and he shall be responsible
for damages. The same rule applies
when the nature of the obligation
requires the assumption of risk.
Requisites in order that loss or destruction of the thing
due will extinguish the obligation:
1. The thing is determinate or specific;
2. It was lost or destroyed without fault of the
debtor;
3. The debtor is not in default;
4. The law or a stipulation does not make the
debtor liable even for fortuitous event;
5. The nature of the obligation does not require
the assumption of risk.
THUS the GENERAL RULE is: The loss of the
thing extinguishes the obligation.
EXCEPTIONS:
o If the loss was due to the debtors fault;
o The thing lost or destroyed is generic
(Art. 1263);
o If the debtor is in default;
o The law makes the debtor liable even
for fortuitous event;

o There is a stipulation that makes the
debtor liable even for fortuitous event;
o The nature of the obligation requires the
assumption of risk.
Article 1263. In an obligation to deliver a
generic thing, the loss or destruction of
anything of the same kind does not
extinguish the obligation.
Article 1264. The courts shall determine
whether, under the circumstances, the
partial loss of the object of the obligation
is so important as to extinguish the
obligation.
Article 1265. Whenever the thing is lost
in the possession of the debtor, it shall
be presumed that the loss was due to his
fault, unless there is proof to the
contrary, and without prejudice to the
provisions of article 1165. This
presumption does not apply in case of
earthquake, flood, storm, or other natural
calamity.
Article 1266. The debtor in obligations to
do shall also be released when the
prestation becomes legally or physically
impossible without the fault of the
obligor.
The impossibility must be after the constitution of
the obligation. If it was before, there is nothing to
extinguish.
Obligation to do includes all kinds of work or
service
Obligation to give a prestation which consists in
the delivery of a movable or an immovable thing in
order to create a real right, or for the use of the
recipient, or for its simple possession, or in order to
return it to its owner
Article 1267. When the service has
become so difficult as to be manifestly
beyond the contemplation of the parties,
the obligor may also be released
therefrom, in whole or in part. (rebus sic
stantibus; moral impossibility or
impracticability due to change of certain
conditions; doctrine of the frustration of the
commercial object; doctrine of frustration of
enterprise)
Real obligations (to give) are not included within
this article. This article applies only to personal
obligations.
23
Requisites in order for the debtor to be released from
his obligation here:
1. The service has become so difficult;
2. The subsequent difficulty was beyond the
contemplation of both parties; it is not
enough that the parties have not anticipated
or foresaw the difficulty, it must be
impossible for the parties to anticipate or
foresee the difficulty;
3. The debtor must ask for relief;
4. The object must be for future service with
future unusual change in conditions.
Article 1268. When the debt of a thing
certain and determinate proceeds from a
criminal offense, the debtor shall not be
exempted from the payment of its price,
whatever may be the cause for the loss,
unless the thing having been offered by
him to the person who should receive it,
the latter refused without justification to
accept it.
Article 1269. The obligation having been
extinguished by the loss of the thing, the
creditor shall have all the rights of action
which the debtor may have against third
persons by reason of the loss. (1186)
SECTION 3
Condonation or Remission of the Debt
Article 1270. Condonation or remission
is essentially gratuitous, and requires
the acceptance by the obligor. It may be
made expressly or impliedly.
Condonation or remission the gratuitous
abandonment by the creditor of his right
One and the other kind shall be subject
to the rules which govern inofficious
donations. Express condonation shall,
furthermore, comply with the forms of
donation.
Essential requisites for remission:
1. There must be acceptance by the obligor;
2. The parties must be capacitated and must
consent;
3. There must be subject matter;
4. The cause or consideration must be
liberality;
5. The obligation remitted must be demandable
at the time of remission;
6. The remission must not be inofficious;
7. Formalities of a donation are required in the
case of an express remission;
 24

8. Remission must be clearly and convincingly Requisites of a valid merger:

shown.
Article 1271. The delivery of a private
document evidencing a credit, made
voluntarily by the creditor to the debtor,
implies the renunciation of the action
which the former had against the latter.
(Implied remission)
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 document was
made in virtue of payment of the debt.
This is not applicable to public documents.
Article 1272. Whenever the private
document in which the debt appears is
found in the possession of the debtor, it
shall be presumed that the creditor
delivered it voluntarily, unless the
contrary is proved.
1. It should take place between the principal
debtor and creditor;
2. The merger must be clear and definite;
3. The very obligation involved must be the
same or identical.
Article 1276. Merger which takes place in
the person of the principal debtor or
creditor benefits the guarantors. (The
obligation is extinguished and the contract
of guaranty is extinguished.)
Confusion which takes place in the
person of any of the latter does not
extinguish the obligation. (The obligation
is not extinguished, but the contract of
guaranty is extinguished.)
Article 1277. Confusion does not
extinguish a joint obligation except as
regards the share corresponding to the
creditor or debtor in whom the two
characters concur.

Outline/Requisites of implied remission:

1. The private document evidencing the credit

is delivered to the debtor;
2. The delivery to the debtor was made
voluntarily by the creditor.
a. It is presumed that the delivery was
voluntary if the private document is
found in the possession of the
debtor.
Article 1273. The renunciation of the
principal debt shall extinguish the
accessory obligations; but the waiver of
the latter shall leave the former in force.
SECTION 5
Compensation
Article 1278. COMPENSATION shall take
place when two persons, in their own
right, are creditors and debtors of each
other. (a specie of abbreviated payment)
Compensation that which takes place when two
persons, in their own right, are creditors and debtors
of each other, and which extinguishes the obligation,
partially or completely

Article 1274. It is presumed that the

accessory obligation of pledge has been COMPENSATION PAYMENT
remitted when the thing pledged, after its
delivery to the creditor, is found in the Partial extinguishment is As a rule, must be
possession (1) of the debtor, or (2) of a always permitted complete and indivisible
third person who owns the thing.
Takes place by operation Involves action or
of law delivery

SECTION 4 COMPENSATION MERGER

Confusion or Merger of Rights
There must be two There is only one person
persons who are in whom is merged the
Article 1275. The obligation is mutually creditor and qualities of creditor and
extinguished from the time the debtor of each other debtor
characters of creditor and debtor are
merged in the same person. There must be two There can only be one
obligations obligation
Merger or confusion the meeting in one person of
the qualities of creditor and debtor with respect to the
same obligation COMPENSATION SET-

OFF/COUNTERCLAIM
Takes place by operation Must be pleaded to be
of law effectual
Set-off or counterclaim works as a sort of judicial
compensation.
Stockholders, as such, are not creditors of the
corporation. (Corpus Juris)
Article 1279. In order that (LEGAL)
compensation may be proper, it is
necessary:
(1) That each one of the obligors
be bound principally, and that he
be at the same time a principal
creditor of the other;
(2) That both debts consist in a
sum of money, or if the things due
are consumable, they be of the
same kind, and also of the same
quality if the latter has been
stated;
(3) That the two debts be due;
(4) That they be liquidated and
demandable;
(5) That over neither of them there
be any retention or controversy,
commenced by third persons and
communicated in due time to the
debtor.
Voluntary compensation does not require the
requisites in the preceding enumeration. It only
requires that the agreement be voluntary and
validly entered into.
Article 1280. Notwithstanding the
provisions of the preceding article, the
guarantor may set up compensation as
regards what the creditor may owe the
principal debtor. (exception to no. 1 in Art.
1279)
Article 1281. Compensation may be total
or partial. When the two debts are of the
same amount, there is a total
compensation.
Article 1282. The parties may agree upon
the compensation of debts which are not
yet due. (Conventional or voluntary
compensation)
25
The requisites in Art. 1279 are not necessary.
Here, the parties must have legal capacity and
must freely give their consent.
Article 1283. If one of the parties to a suit
over an obligation has a claim for
damages against the other, the former
may set it off by proving his right to said
damages and the amount thereof.
(Judicial compensation or set-off)
The requisites in article 1279 are necessary, but it
is not required that the claim be liquidated at the
time of pleading. The liquidation may be made in
the proceedings.
Article 1284. When one or both debts are
rescissible or voidable, they may be
compensated against each other before
they are judicially rescinded or avoided.
Article 1285. The debtor who has
consented to the assignment of rights
made by a creditor in favor of a third
person, cannot set up against the
assignee the compensation which would
pertain to him against the assignor,
unless the assignor was notified by the
debtor at the time he gave his consent,
that he reserved his right to the
compensation.
If the creditor communicated the cession
to him but the debtor did not consent
thereto, the latter may set up the
compensation of debts previous to the
cession, but not of subsequent ones.
If the assignment is made without the
knowledge of the debtor, he may set up
the compensation of all credits prior to
the same and also later ones until he had
knowledge of the assignment. (1198a)
Article 1286. Compensation takes place
by operation of law, even though the
debts may be payable at different places,
but there shall be an indemnity for
expenses of exchange or transportation
to the place of payment. (1199a)
Article 1287. When compensation is not
proper or cannot be set up:
1. When one of the debts arises from a
depositum; (the depositary cannot
claim compensation, but the depositor
can) or

2. When one of the debts arises from
the obligations of a depositary; (the
depositary cannot claim compensation,
but the depositor can; this must not be
confused with deposits in banks, in
which case this rule does not apply) or
3. When of the debts arises from the
obligations of a bailee in
commodatum; (the lender may claim
the compensation; the borrower cannot)
or
4. When one of the debts arises from a
claim for support due by gratuitous
title; (the person obliged to support
cannot claim compensation) or
5. If one of the debts consists in civil
liability arising from a penal offense.
(the accused cannot claim
compensation, but the offended party
can) (Art. 1288)
The cases in preceding enumeration are referred
to as facultative compensation.
Article 1289. If a person should have
against him several debts which are
susceptible of compensation, the rules
on the application of payments shall
apply to the order of the compensation.
Article 1290. When all the requisites
mentioned in article 1279 are present,
compensation takes effect by operation
of law, and extinguishes both debts to
the concurrent amount, even though the
creditors and debtors are not aware of
the compensation.
SECTION 6
Novation
Article 1291. Obligations may
modified by:
(1) Changing their object
principal conditions;
(2) Substituting the person of the
debtor;
(3) Subrogating a third person in
the rights of the creditor. (1203)
Article 1292. In order that an obligation
may be extinguished by another which
substitute the same, it is imperative that
it be so declared in unequivocal terms,
26
or that the old and the new obligations
be on every point incompatible with each
other. (1204)
Article 1293. Novation which consists in
substituting a new debtor in the place of
the original one, may be made even
without the knowledge or against the will
of the latter, but not without the consent
of the creditor. Payment by the new
debtor gives him the rights mentioned in
articles 1236 and 1237. (1205a)
Article 1294. If the substitution is without
the knowledge or against the will of the
debtor, the new debtor's insolvency or
non-fulfillment of the obligations shall
not give rise to any liability on the part of
the original debtor. (n)
Article 1295. The insolvency of the new
debtor, who has been proposed by the
original debtor and accepted by the
creditor, shall not revive the action of the
latter against the original obligor, except
when said insolvency was already
existing and of public knowledge, or
known to the debtor, when the delegated
his debt. (1206a)
Article 1296. When the principal
obligation is extinguished in
consequence of a novation, accessory
obligations may subsist only insofar as
they may benefit third persons who did
not give their consent. (1207)
Article 1297. If the new obligation is void,
the original one shall subsist, unless the
parties intended that the former relation
should be extinguished in any event. (n)
be Article 1298. The novation is void if the
original obligation was void, except
when annulment may be claimed only by
or the debtor or when ratification validates
acts which are voidable. (1208a)
Article 1299. If the original obligation
was subject to a suspensive or
resolutory condition, the new obligation
shall be under the same condition,
unless it is otherwise stipulated. (n)
Article 1300. Subrogation of a third
person in the rights of the creditor is
either legal or conventional. The former
is not presumed, except in cases

expressly mentioned in this Code; the
latter must be clearly established in
order that it may take effect. (1209a)
Article 1301. Conventional subrogation
of a third person requires the consent of
the original parties and of the third
person. (n)
Article 1302. It is presumed that there is
legal subrogation:
(1) When a creditor pays another
creditor who is preferred, even
without the debtor's knowledge;
(2) When a third person, not
interested in the obligation, pays
with the express or tacit approval
of the debtor;
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(3) When, even without the
knowledge of the debtor, a person
interested in the fulfillment of the
obligation pays, without prejudice
to the effects of confusion as to
the latter's share. (1210a)
Article 1303. Subrogation transfers to the
persons subrogated the credit with all
the rights thereto appertaining, either
against the debtor or against third
person, be they guarantors or
possessors of mortgages, subject to
stipulation in a conventional
subrogation. (1212a)
Article 1304. A creditor, to whom partial
payment has been made, may exercise
his right for the remainder, and he shall
be preferred to the person who has been
subrogated in his place in virtue of the
partial payment of the same credit.