OBLIGATIONS

Chapter 1
Art. 1156 – Art. 1162
I. OBLIGATIONS (CO, NO)
1) Kinds of Obligation
a) Civil (1156-1304) - a JURIDICAL NECESSITY TO GIVE, TO DO or NOT TO DO
- creditor has right of action to enforce performance
- creditor has right to file a case in court/to sue
b) Natural (1423-1430)- no right of action/file a case in court
- voluntary fulfillment/performance
 benefited person has right of retention what has been paid or delivered
- NOT based on POSITIVE LAW
- based on EQUITY & NATURAL LAW

2) 4 Elements of Obligation (AS, PS, P, JT)

a) active subject - creditor/obligor
b) passive subject - debtor/obligee
c) prestation - the conduct to be observed in the performance of the obligation
 to give - real (thing)
 to do - Personal(a - positive
 not to do - ct or - negative
d) juridical tie/vinculum jurisservice)
- reason why obligation exists

3) Sources of Obligation (L, C, QC, D, QD) Art. 1157

a) Law (Art. 1158) - cannot be presumed, always w/basis
- non-performance or erroneous/wrong performance of an obligation prescribed
by law (taxes, licenses)
b) Contract (Art. 1159)- with meeting of the minds
- have the force of law b/w contracting parties
- should be complied w/ in good faith
c) Quasi-contract - no pre-existing contract (SI, NG)
(Art. 1160) - he who is benefited by the act of another MUST PAY
to prevent unjust enrichment
 Solutio indebeti - return what is not due to you
- sense of gratitude
 Negotiorum Gestio - voluntary management of abandoned property
- officious manager has right to reimbursement
d) Delict/crime (Art. 1161)- criminal liability (vs. people of the Philippines) – source of civil liability
- imprisonment
- civil liabilities: (R, R, I)
 Restitution - return the thing
 Reparation - pay the value of the thing
 Indemnification - pay damages
e) Quasi-delict (Art. 1162) - cause damage without intention
- without contract
- damage done not intentional but due to NEGLIGENCE
- pay damages
- ex: CULPA AQUILIANA

obligation is from the latin word obligatio, which means tying or binding.
example, is a contract of marriage, the spouses are bound by their contract and in the philippines, there is no
divorce yet. the symbolic binding in marriage is the cord that is placed during the ceremony.

by juridical necessity, the party who has the right to enforce the obligation can go to court in order either to
enforce specific performance (if the obligation is specific) or damages in the form of money if the obligation is
generic or and obligation to do or not to do.

An obligation is a juridical necessity to :

GIVE - a real obligation

TO DO - a positive personal obligation

NOT TO DO - a negative personal obligation

Examples of obligation to give are :

1. To give a cellphone
2. To give the amount of 500 pesos
3. To give a book
etc.

so, in an obligation to give, a THING must be given (di pwede ug to GIVE LOVE) kay dili na
thing.

Examples of obligation to do are :

1. To repair the cellphone.

2. To build a house.
3. To sing a song.

So, in an obligation to do, an act should be done (de pwede ut TO HEAL A BROKEN HEART
kay it could not be done physically.

Examples of obligation not to do are :

1. No smoking
2. No entry.
3. No littering (taka takag labay ug basura)

so, in an obligation not to do, an act should not be done, opposite sa obligation to do.

Note : There is no obligation not to give coz it is already included in obligation not to do

Elements of an obligation :

1. Active Subject - the creditor or obligee (sajop ag handouts) or the person who can demand
for the fulfillment of the obligation or the person who has the right ( maoy maningil)

2. Passive subject - the debtor or obligor or the person upon whom the obligation can be
demanded, the one who has the liability (maoy utangan ug sa binisaya pa)

3. Object or prestation - the THING to be delivered in an obligation to give or the ACT to be

done in an obligation to do and the ACT NOT TO BE DONE in an obligation not to do.

4. Juridical or legal tie or vinculum juris - the reason that binds the parties to the obligation. To
determine the juridical tie, we will refer to the Sources of Obligation later.

Examples of the elements of obligation :

1. The obligation of the student to pay the tuition fees.

Active subject - UB
Passive subject - Student
Object - Money (bajad tuition baja)
Juridical or legal tie - Contract ( pag enroll ninjo sa UB, ning sud na mog contract ana.

2. The obligation to pay the rental of the boarding house :

Active subject - landlord/landlady
Passive subject - boarder
Object - Money
Juridical or legal tie - contract ( bisag way gipirmahan, naa nay contract)

3. The obligation not to smoke in public places :

Active subject - government
Passive subjects - all people
Prestation - not to smoke in public places
Juridical or legal tie - Law ( naay balaod nga dili mag smoke sa public places)
It is important that all of the requisites must be present in order that their is an obligation

Sources of obligations (the juridical or legal tie or vinculum juris):

1. Law - the specific provision of law must be pointed out in order that the obligation can be
demanded. We should obey the law, otherwise, we can be held liable, DURA LEX, SED LEX
( the law maybe hard or harsh, but is the law, ex. ECQ). There are obligations that are imposed
by law, like payment of taxes.

2. Contract - a meeting of minds (kasabutan) between two persons, which have the effect of law
between the parties. Since you were a child, you have been entering contracts, considering that
as a general rule, contracts can be entered into orally.
ex. buy school supplies, pay the fare of bus, tricycle, buy junk food (undangi na, saging ug
camote kauna). So if there is a contract, there is an obligation.

3. Quasi-Contracts (like contracts) - unlike contracts, there is no meeting of minds in Quasi-

Contract, ( sa binisaya pa, murag naay contract, pero wa diay), however, in order to prevent
unjust enrichment the party is allowed to recover his lost.
Two kinds of quasi-contract :

a. Solution indebiti - undue payment (sa binisaya pa, nakadawat kag kwarta or butang nga di
angay madawat nimu). ex. excess change given by bus conductor (sobra ag sukli), you are
liable to return the said excess change, pwede ka ikiha ana ug di minu e uli.

b. Netotiorum Gestio - unauthorized management (hilabtanon kintahay, hehe).

ex. your uncle did not pay the real property taxes for his land and you voluntarily pay the
same even if you are not authorized, you can demand for reimbursement.

4. Crimes or Delicts - crimes punishable by law carries with it two penalties/liabilites :

a. criminal liability
b. civil liability
Criminal liability is the imprisonment of the offender
Civil liability is the money that the offender will be ordered to pay the victim
Memorize the civil liabilities in the handouts.

In order that a crime is considered to have been committed these should be present:
1. Intelligence - knows what is right or wrong
2. Freedom - no other person forced the offender to commit the crime
3. Intent - there must be the intention to commit the crime ex. mag shabu, mang rape,
mangawat

So an insane person will not commit a crime.

5. Quasi-Delicts - like crimes considering that although there is Intelligence and Freedom, there
is no intent to commit the crime. ( WA TU-JOA).

There is no intent but there is FAULT OR NEGLIGENCE (nag danghag)

The offender (ag nakasa) is liable for damages (money)

NOTE : WHEN WE WILL TALK ABOUT DAMAGES IN LAW 1, THAT MEANS TO PAY
A SUM OF MONEY

OBLIGATIONS
Chapter 2
Art. 1163 – Art. 1178
1) Prestations (OBLIGATIONS) (TG, TD, NTD)

a) To Give (Real Obligation) (S,G)

i. Specific or Determinate Thing
 only one
 ONLY SPECIFIC THING CAN BE LOST
 Creditor may compel debtor to deliver
 Debtor must take care of the thing before delivery. HOW?
• Stipulation
• Law
• Deligence of a good father of the family
 Includes delivery of accessions & accessories unless stipulated
 Excludes fruits that arise before maturity
 Rights of person who paid:
• Before Delivery - Personal - to demand delivery
- extra judicial (out of court)
- judicial (inside court)
• After Delivery - Real - ownership

ii. Generic or Indeterminate Thing

 Many of the same kind
 Belongs to a group or class
 Cannot be lost
 Rights of person who paid:
• Ask another person to deliver at the expense of the debtor
• File a case in court

the object is specific if it can be identified with particularity and there is no other object that can
replace the same.

ex. a yamaha motorcycle with plate no. 1025, the object is specific because there is no other
motorcycle with plate no. 1025

so if we will say, an iphone, a samsung galaxy tab, a black pilot .05 pen, etc., we are referring to
generic objects.

how will we make the objects specific?

the obligation should be to deliver the only iphone of Huan
a samsung galaxy tab with serial no. 5894628635
the black pilot pen that chenee is using now

so ug specific, usa ra jud, wa nay lain. That is why one of the duties of the debtor if the
obligation is specific is to deliver the thing itself, dili pwede ug lain nga butang, whether
inferior or superior, di jud pwede, it should be the thing itself considering that the thing has been
identified with particularlity.

KASABOT?

Now, why is it important that you should be able to identify the obligation whether it is specific
or generic? The main reason is the obligation of the debtor if the object is specific is different if
it is generic.

okay, so if the obligation is an obligation to give, a thing must be given and that thing may either
be specific or generic. if the thing is specific, then the thing itself should be delivered. we will
take up the duties of the debtor if the obligation is specific.

1. Take care of the thing with the diligence of a good father of a family :
 This diligence is also known as ordinary diligence, if the parties did not agree on the degree
of diligence required, then it would be ordinary diligence or the diligence of a good father of a
family. What will a good father of a family do :
a. provide the basic needs of the family
b. provide education
c. protect the family
So, pending the delivery of the thing due, the debtor should take care of the thing,otherwise,
in case of lost or deterioration of thing, the debtor can be held liable for damages (monetary )

example : all of you are cats and you are named based on your given names. if there is an
obligation to deliver a cat, the obligation is generic (bisan unsa nga cat e deliver), but if there is
an obligation to deliver a cat named Arlene Anne, then the obligation is specific. It should only
be arlene anne which should be delivered on due date. So pending the arrival of the due date,
the debtor should take care Arlene Anne (the cat) with the diligence of a good father of a family.

If the obligation is to deliver a cat (generic), it could not be determined which cat should be
delivered, so the debtor can deliver any cat as long as it is neither of superior nor of inferior
quality. So in the meantime, there is no cat to take care of.

The diligence required for obligations generally is ordinary diligence or care.

For the delivery of goods, it is extra-ordinary diligence
For the delivery of persons, it is utmost diligence (the highest degree of care)

2. Deliver the thing itself

Considering that the object has already been identified with particularity, then it should be the
thing itself which should be delivered. In our example, it should be Arlene Anne (AA na lang ha
para mubo ra). Dili pwede ug si ug si Jonie Ann ur si Cecille Joy e deliver. Si AA ra jud and
no other. Ug uyab pa, one and only (tinuod ni?)

If the obligation is generic, then bisan kinsa maoy pwede e deliver, basta neither of superior
nor of inferior quality.

That is why in the rule on fortuitous event, if the specific thing is lost due to a fortuitous event,
the obligation is extinguish, because the thing itself is already lost. The debtor is not obliged to
deliver another thing because the obligation is to deliver the thing itself.

If the obligation is generic and the generic thing is lost on the way for its delivery, the
obligation is not extinguish.

example : naa moy utang sa injohang friend nga P500, while on your way to the boarding house
of your friend to pay your obligation bringing with you the P500, you were being held up by
armed men and the P500 as well as your other stuff were taken. Is your obligation to pay P500
extinguish by fortuitous event?

answer : no because P500 is generic, you can still look for another P500 pesos, daghan pang
P500 makit an nimu.

3. Deliver the fruits of the thing

In the law on obligations, there are three kinds of fruits :

Natural fruits - spontaneous product of the soil or the your and other products of animals
Industrial fruits - product of the soil due to the industries of man
Civil fruits - result of a juridical relation (usually contracts)

Determine the kind of fruits of the following :

a. puppy - natural, young of animals
b. dividend income - civil fruit, result of a juridical relation
c. mango fruit in mango plantation - industrial, through the industries of man
d. mahogany three in an idle land - natural, spontaneous product of the soil, idle land
e. eggs of a chicken - natural, other products of animals

Question : How to determine the ownership of the fruits?

Answer : Refer to the date of delivery of the principal thing due.
fruits before due date - debtor is owner
fruits on due date and thereafter - creditor is the owner, however the creditor will
only have personal right (can go against the debtor only) before delivery and a real right (can go
against anybody) after delivery.

Example : Dean is obligation to deliver the specific cat AA to Huan on May 6, 2020. If AA
delivered 2 kittens on the evening of May 5, 2020 and another 3 kittens on the early dawn of
May 6, 2020, who are the owners of the kittens?

Answer : For the kittens born on the evening of May 5, 2020, it is Dean, the debtor because the
due date to deliver AA is on May 6, 2020, the kittens were born before the due date.

For the kittens born on the dawn of May 6, 2020, it is Huan (the creditory) who is the
owner, because the 3 kittens (fruits) were born on the date that AA is to be delivered.

However, the right of Huan before AA and the 3 kittens are delivered is merely a personal right,
meaning, huan can go against Dean only. So, if dean will delever AA and all of the kittens to
Hubert on May 6, 2020, Huan cannot go against Hubert, his right of action for damages is only
against Dean (personal right)

By the time that AA and the 3 kittens will be delivered to Huan, the right of huan will now
become a real right. If Hubert will claim ownership over AA and the kittens which are already in
the hands of Huan, the latter can go against Hubert.

4. Deliver accessions and accessories.

accessions - fruits of a thing or additions to or improvements upon a thing

accessories - things joined to or included with the principal thing for the latter's use, or
completion.

Example : If you will buy a cellphone, will you pay for the charger and headset?
Answer : No, because they are accessories, free na na, apil na e deliver.

If you will buy a motorcycle, apil na ag tools, key and other accessories, di na ka
mo bayad ug dugang para ana.

If you purchased a parcel of land and after payment, the seller who is the
previous owner of land cut down the trees, because according to him, the object of your
contract is only for the sale of the land. Is the seller correct?
Answer : No, the trees are accessions of the land.

So, for accessions and accessories, you can demand for its delivery together with the principal
thing.

5. Answer for damages in case of breach (or violation of the obligation)

Kinds of Damages (MENTAL):

Moral - if there is physical and mental suffering (gilibak ka, pwede mo claim)

Exemplary - to set an example (maka ligis ug taw, pwede pabayaron ani to set an example nga
dapat mag amping)

Nominal - to vindicate a right that has been violated (naay nang squat sa land ninjo, pwede pa
bayaron ani kay injong katungod gi tamakan)
 Temperate - to be awarded if the actual damages cannot be ascertained

Actual - the actual loss (with receipts ug naa) like value sa cellphone nga gikawat, value sa
libro nga gi sunog, etc.

Liquidating - agreed before hand by the parties in a contract. So sa liquidating damages, naay
written contract, then the parties agreed that in case of non performance on due date, the debtor
shall be liable for additional liquidating damages.

BASTA DAMAGES : KWARTA NA

If the obligation is generic, the debtor is bound to deliver an object which is neither of superior
nor of inferior quality and answer for damages in case of breach.

IF THE OBLIGATION IS GENERIC, the action for specific performance cannot be availed of
coz' there will be an unending debate as to what specific object should be delivered, GENERIC
BAJA, that is why nga action for DAMAGES maoy e file, naa gihapoy liability.

IF THE OBLIGATION IS SPECIFIC, the creditor can go to court a file an action for specific
performance considering that the object has already been identified with particularly (nahibaw
an na ug unsa jud nga butang ag due)

What is the remedy if the obligation is an obligation TO DO ?

1. Ask the debtor to perform the act.

2. If he refuses, he cannot be compelled (otherwise there will be involuntary servitude which is
unconstitutional), but the act may be don by another person and the debtor will be ordered to pay
the person who performed the act. (Art 166)

What is the remedy in obligations NOT TO DO and the obligor performed the act?

It shall be undone at his expense.

Example : there is an obligation not to put a gate in the road right of way, but a neighbor
violated the obligation by placing a gate in the road right of way. The remedy here would be
first to ask the neighbor to destroy the gate, if he refuses, then other persons will be hired to
destroy the gate and charge the expenses to the neighbor (it shall be undone at his expense Art.
1167)

Instances wherein the debtor can be held liable for damages (MENTAL) :

1. Default or Legal Delay

2. Fraud or Dolo
3. Negligence of Culpa
4. Contravention of the Terms of the obligation

1. LEGAL DELAY OR DEFAULT

Kinds of Delay :
1. Ordinary Delay - the debtor is not yet liable
2. Legal Delay or Default - the debtor is now liable even if the thing due is lost due to a
fortuitous event.

How will place the debtor in default?

Ans. : A demand should be made, whether judicially (court action) or extra judicially (oral or
written demand)

RULE : NO DEMAND : NO DEFAULT

What is the importance of placing the debtor in DEFAULT?

1. In order that he will be liable for damages.

2. In order that he will be liable even if the thing due is lost due to a fortuitous event.

Example : Dean is obligated to deliver AA to Huan on May 6, 2020. Until today, Dean has not
yet delivered AA to Huan.

1. Can Dean be held liable for damages?

Answer : No, because Dean is not yet in default of legal delay, no demand has been made by
Huan yet. Dean is still in ordinary delay, hence he cannot be held liable for damages.

2. If AA was lost due to fortuitous event this morning, is Dean liable?

Ans. : No, because Dean is not yet in Default and the general rule is that : loss of a specific
thing due to a fortuitous event, extinguishes the obligation.

3. If Huan made a demand for Dean to deliver this morning, but Dean, still did not deliver AA,
then beginning the time that the demand was made, Dean is already in Default, hence, he can
now be held liable for damages.

4. If after Huan made a demand to Dean, AA was stolen, is the obligation of Dean extinguish by
fortuitous event?
Ans. : No, because even if the specific thing is lost due to a fortuitous event, the obligation is not
extinguish if the debtor is already in default.

What are the kInds of default?

1. Mora solvendi - debtor fails to deliver even if demand has been made
2. Mora accipiendi - creditor refuses to accept the specific thing delivered (gusto ug mas nice)
3. Compensatio Morae - debtor and creditor both did not perform the obligation

Rule : NO DEMAND : NO DEFAULT

Exceptions :

1. When the obligation provides - pwede sa written agreement nga mag sabot daan nga
automatic default ug di mo perform on due date.

2. When the law provides - example, payment of taxes, automatic default as provided for by law
if not paid on due date.

3. When time is of the essence - time is the controlling motive in entering into the obligation.
example : mag party ag summer class sa law 1 kay naay nag birthday (wa pay ECQ OR
GCQ) and nag order of food sa Chao King nga ipa deliver sa D-103 at 6 pm on May 7, 2020.
Ning abot na lag 11 pm, way delivery. In this case, automatic nga default na kay needed ag food
at 6pm on May 7, 2020.

other examples - wedding dress nga dili ma deliver on the date of wedding, automatic
default na
- video coverage para kasal, wa mo tungha ag videographer, automatic
default.

4. When demand would be useless.

Toa na ni Hubert si AA, didto ge deliver hi Dean. Maka deliver pa ba si Dean ni Huan? Dili
na, so bisan pag mo demand si Huan, useless ra gihapon, automatic default na.

5. performance of one party in a reciprocal obligation.

You purchased an iphone for 10 K, the iphone was already delivered to you, but you have not
yet paid the same. You are automatically in default here, demand is no longer necessary.
Reciprocal obligation - both parties are liable.

2. FRAUD or DOLO - intentional evasion of the normal fulfillment of the obligation

(TINUJUAN JUD)

Kinds of Fraud :
Causal Fraud or dolo causante - fraud was committed at the time the agreement was entered into.
Consent here is vitiated considering that it was given because of the fraud or misrepresentation
of the other party. Ug ning tug-an pa daan sa tinuod, di unto mo sud sa obligation ag pikas
party.

ex. an offer was made for the delivery of 5 brand new iphone 10, however, in reality the debtor
do not have any brand new iphones. On due date, 5 refurbished iphone 10 were delivered. The
remedy of the creditor here is to file for annulment of the obligation or contract because of
fraud.

Incidental Fraud of dolo incidente - fraud was committed in the performance of the obligation.
This is the fraud that the debtor can be held liable for damages.

Same example above, but the seller in truth has brand new iphone 10,m however, on due date,
the seller/debtor delivered 4 brand new iphone 10 and 1 refurbished. The fraud here is in the
performance of the obligation, hence the debtor/seller can be held liable for damages.

3. NEGLIGENCE or CULPA - (ka danghag)

Kinds of negligence :

Contractual negligence or Culpa Contractual - there is pre-existing contractual relation between

the parties.
Example : Bus na disgrasya, mga pasahero maka demand ug damages based on culpa
contractual kay wa sila mo abot sa place of destination safelyl

Gapada ag ginikanan ug bugas ug buwad gikag ubay. Pag claim sa studyante sa

bus driver and conductor, gi ingnan sijang nawa. Liable sila due to contractual
negligence. How about if the bus driver and helper will claim that the rice and dried fish
were stolen, hence, the same were lost due to a fortuitous event, is their obligation
extinguish?
Ans. : No, because their obligation requires the assumption of risk (exception to the
rule on fortuitous event.

Criminal Negligence or Culpa Criminal - the negligent act resulted in a criminal offense.

If the passengers above suffered injuries, they can file damages based on culpa criminal.

Ex. : A person hit by a vehicle suffered injuries can claim damages based on culpa criminal.

Civil negligence or culpa aquillana - this is QUASI-DELICT or TORTS, which in itself is a

source of an obligation.

So a person who is walking in the road is hit by a vehicle can claim damages based on culpa
quillana and culpa criminal if he suffered injuries, but he cannot claim damages based on culpa
contractual because there is no pre-existing contractual relation between the parties.
FORTUITOUS EVENT - any event which cannot be foreseen of if it can be foreseen, it cannot
be avoided. It may be acts of man or acts of God.

Events which cannot be foreseen :

Robbery, theft, swindling, Earthquake, Tornado, Lightning, Flash Flood, etc.

Events which can be foreseen but cannot be avoided :

war, Typhoon, volcanic eruption, etc.

What might happen if there is a fortuitous event?

Ans. : The thing due may be lost because of the fortuitous event.

RULE IN CASE THERE IS A FORTUITOUS EVENT :

" LOSS OF A SPECIFIC THING DUE TO A FORTUITOUS EVENT, EXTINGUISHES THE

OBLIGATION"

So the rule will only apply if the obligation is specific and the lost occurred without fault on the
part of the debtor.

Exceptions :

1. When the debtor is guilty of DEFAULT, FRAUD, NEGLIGENCE or CONTRAVENTION

OF THE TERMS OF THE OBLIGATION

2. IF THE LAW PROVIDES

3. When the debtor promise to deliver the same thing to two or more persons who do not have
the same interest.

4. When the obligation requires the assumption of risk (bus driver and helper)

5. When declared by stipulation (apil na sa kasabutan nila nga liable lang gihapon bisag mawa ag
butang due to a fortuitous event)

6. When the obligation is generic - GENUS NUNQUAM PERIT (generic object does not perish)
- di mahurot ag generic object

Kinds of presumption :

1. Conclusive - final na jud na, di na ka pwede mo question pa ana. Like the presumption that
all of us knows the CURFEW during ECQ and GCQ, conclusive na, ug mo violate ka, liable ka.

2. Disputable or rebuttable - evidence may be presented to dispute or question the oblgation.

ex. payment of loan with interest - the payment received should be applied to the interest due
before the principal loan, otherwise, presumed nga na bayaran na ag interest. the presumption
however is disputable, pwede pag mo present ug proof nga in truth, na bayaran na jud ag
interest.

ex. you acquired a motorcycle payable on installment basis - you did not pay the installment
due for March and April, pagka May, ning bayad kag for 1 month, the payment should be
applied for the month of March, otherwise ug sa month of May e apply, the presumption is na
bayaran na ag March ug April
KInds of obligations :

1. Pure - is not subject to a condition or period, hence demandable at once.

ex. I obligate myself to give P100 to you. (This is pure because there is no condition and
there is no period).

2. Conditional - Subject to a future and uncertain event.

Kinds of condition :
Suspensive condition - the happening of the condition will give rise to the effectivity and
demandability of the obligation.
ex. I will give you P500 by the time that you will become a CPA. (This is conditional
because the obligation is subject to a future and uncertain event.)

Resolutory - the happening of the condition will put an end to the obligation which is
already in existence.
ex. Your seaman brother obligated himself to give you the amount of P3,000 per month
until you will graduate in college. ( In this obligation, your brother is immediately liable to
give to you the amount of P3,000, but he will stop giving P 3,000 by the time that you will
graduate in college.

3. With a Period - subject to a future but certain event.

Kinds of Period :
Ex Die (suspensive period ) - the arrival of the period will give rise to the
DEMANDABILITY of the obligation which is already in existence.
ex. You will be given a brand new iphone on December 25, 2020. ( There is already an
existing obligation, however, its demandability is suspended until the arrival of December 25,
2020)

In Diem (resolutory period ) - the arrival of the period of which will put an end to an existing
obligaiton
ex. You will be given the amount of P3,000 per month until March 2023. (the obligation is
demandable at once but will surely end on March 2023)

NOTE : in an obligation with a condition whether suspensive or resolutory, we use the word
HAPPENING, whereas if the obligation is subject to a period, we use the word ARRIVAL.
Why?

Ans. If the obligation is subject to a condition, it is not yet sure whether the condition will
happen or not, WA PAY SIGURO mahitabo ba, furture and uncertain baja. Mao nang a
condition is subject to a further and uncertain event. Event nga wa pa mahitabo, unja wa pa juy
siguro mahitabo ba.

Whereas if the obligation is subject to a period. future but certain event, meaning that
although wa pa mo abot, siguro jud nga mo abot, mao nang we use the word, ARRIVAL.

So, if wa pa moy uyab, unsa man nang obligation nga hatagan mog cp ug maka uyab na
mo? Conditional sir kay uncertain paman wapay sure kanus a maka uyab or di jud maka
uyab.

The following obligations are pure (no condition, no period) :

1. payable today
2. payable at once
3. payable upon demand
4. I obligate myself to give you P 100. (no condition, no period, ma demand dretso)

Examples of Conditional obligations : future and uncertain

1. payable upon passing the CPA

2 payable upon graduating in college
3. payable by the time that Arlene Anne will reach 30 years old (Wa pay siguro kaabot ba sijag
30)

Examples of obligations with a period : furture but certain

1. payable upon the death of GMA

2. payable upon the lifting of GCQ (ma lift ra man jud na, wa pa lang hibaw-e when)
3. payable by the time that mayon volcano will erupt
4. payable on December 25, 2020

SO, sa pure, wa nay hasol, demand na dretso

sa condition, wa pay siguro mahitabo ba
sa period, sure jud mahitabo, bisag wa hibaw-e anus-a, pero mahitabo jud

Three obligations that can be demanded at once :

1. Pure
2. Subject to a resolutory condition
3. Subject to a resolutory period

Kinds of conditions as to cause or origin

1. Potestative obligation - happening depends upon one party

Depends on the debtor - the obligation is null and void
ex. I will give you P500 if i feel like it ( way claru jud, ug ganahan ra ag debtor mohatag
sija, so this obligation is not demandable, it is not valid)

Depends on the creditor - valid

ex. I will give you P500 by the time that you will become a CPA. ( ag creditor/studyante
maningkamot ma CPA, para ma liable ag debtor)

SO, if the obligation depends upon the sole will of the debtor the obligation is potestative, but is
null and void.
if the obligation depends upon the sole will of the creditor, it is still potestative and
perfectly valid

2. Casual - depends upon chance or upon the will of a third person.

ex. I will give you 1% of the winnings if i will win in the lotto games. (the obligation is
valid, it depends upon chance)

I will give you P 500 by the time that Pretty Edulan will become a lawyer. ( the
obligation is valid, it depends upon the will of a third person

So ag answer sa quiz, pareha nga casual.

3. Mixed, depends partly upon chance and partly upon the will of a third person.

I will give you a new car by the time that Gloria Araneta will marry. (ajaw banha
hap) - the obligation is valid, it depends partly upon chance and upon the will of a third
person, hehe

Impossible Conditions :

Rule : if subject to a positive impossible condition - null and void.

ex. I will give you P500 if you will be able to fly on your own self. (how about ug
makalupad jud ka? full moon ra ba ron? - still null and void, there is no obligation at all)

If subject to a negative impossible condition - valid

 ex. I will give you P500 if you cannot fly on your own - obligation is valid and is
considered a pure obligation which can be demanded at once. ( sure man jud pud nga di
ka maka lupad sa imuha rang kaugalingon)

Kinds of impossible conditions :

1. Physically impossible - in the nature of things di jud pwede.
ex. payable if you can carry a 10 wheeler truck
payable if you will be able to swim underwater on your own from Tagb to Cebu
payable if you will be able to jump from the 3rd floor of diamond building to the ground
without any injury.

What if nahimo jud na nimu? Rule : dili lang gihapon liable ag debtor kay wa may obligation
in the first place, null and void baja. pero ug negative lagi, valid and demandable at once

2. Legally impossible - the condition is contrary to

a. Law - ex. payable if you will kill Juan Ponce Enrile
payable if you will be able to rob a bank
payable if you will deliver shabu
payable if you will celebrate your fiesta with many visitors during this GCQ
What if nahimo ag condition? - Not liable gihapon, the condition is null and void. basta
null and void gani, wa jud na jamo, bisag unsaon pa.

b. Morals - ex. payable if you will render sexual favors

payable if you will live as a concubine (baje)/paramour (laki)

So, a prostitute cannot demand payment after performing the act. unsay buhaton
sa prostitute? Pay now, service later (ug masakpan, both the prostitute and the other
party shall be prosecuted)

c. Good Customs - supak sa atong maajo nga custombre

ex. payable if you will spit at your grand mother
payable if you will not talk with your parents

Ug buhaton jud na sa debtor, dili liable ag creditor.

d. Public Order - makasamok sa atong maajong pamujo

ex. payable if you will see to it that no vehicle can pass in front of the UB main gate for 30
minutes. Ug nahimu nimu na, di gihapon liable ag debtor.

e. Public Policy - Vote buying is contrary to law and contrary to public policy
.

Rules in case of loss, deterioration or improvement of the thing pending the happening of the
suspensive codition or arrival of the suspensive period :

1. lost without debtor's fault (refers to specific things only) - obligation is extinguish. The rule
on fortuitous event will apply. (Extinguish gani, mawa na ag obligation)

2. lost due to debtor's fault - debtor liable for damages, even if the thing was lost due to a
fortuitous event. basta gani due to debtor's fault, liable jud na, ajaw nag tagda nang fortuitous
event.

Kinds of Loss :
Physical - thing perishes, like the houses that were swept away during typhoon yolanda,
nangawa jud ag mga houses.
Legal loss - legal sa una, karon dili na.
ex. Before the ECQ, there was an obligation to accept tourists in the hotel. During ECQ,
dili na pwede, the object of the obligation is legally loss.
Civil loss - nahagbong imung earings while nag whale watching sa Lila. Kahibaw ka asa
dapita pero di na nimu makit-an
3. thing deteriorates without debtor's fault - impairment shall be borne by the creditor.
ex. Your brother obligated himself to give to you his motorcycle by the time that you will
graduate in college. Unja 10 years ka nag skwela before naka graduate. Na maot na jud ag
motor due to wear and tear and without fault of your brother. so Ikaw nga creditor maoy mo
shoulder sa deterioration.

4. the thing deteriorates through debtor's fault

Two remedies ( Pili ra kag usa ani) :
a. Fulfillment with damages - ipadajon gihapon and additionally pabayaron ug kwarta as
damages
b. Rescission with damages - e cancel ag obligation then pabayaron ug damages

5. The thing is improved by nature or time - creditor is the owner of improvement

ex. You will be given a specific parcel of land by the time you will graduate in college. Ug
daghan ng mga hardwood nanubo sa land, you will be the owner of the trees also. Your
ownership of the land and the trees will retroact as of the date of the obligation. (ikaw tag ija sa
land ug improvements beginning the time the obligation was entered into, not during the time
that the condition happened)

6. Improved at the expense of the debtor - pwede ra mogamit ag debtor until such time nga mo
abot na ag time of delivery, mao nay gitawag of usufruct.

In a contract of usufruct a person is allowed to use and enjoy the property (and its income)
belonging to another subject to the condition that he will return the same on the agreed time.

Kinds of obligations according to the person obliged :

1. Unilateral - only one party is liable

ex. the obligation to return a borrowed book. ( Ag borrower ray naay obligation). This
contract is a contract of commodatum. Ug unsay gihuwaman, mao jud gihapong butanga e uli.

In Mutuum - the thing that is due is not the thing itself, but a thing which is of the same kind
and quality. This is still a unilateral obligation, ag nang huwam ray naay liability.
ex. you will borrow P 500. You have the obligation to pay P500 but it is not the same P500
bill that you borrowed, different nag serial number.

2. Bilateral - both parties have an oblgation

a. Reciprocal - simultaneous performance of the obligation.
ex. contract of sale or mopalit kag red horse - buyer will pay and seller will give the ice
cold red horse, ahem.

b. Non - reciprocal - not simultaneous performance of the obligation.

Namaylo ug money imung friend nimu unja nang huwam kag book sa imung friend.
Although kamong duha naay obligation, pero lain lain ag injong obligation .

Rule : If one party cannot perform in a reciprocal obligation, the other party cannot be
compelled to perform. (maka relate mo ani, hayahaya man sija)

How about if both parties committed a breach in a reciprocal obligation. (Naka violate silang
duha) :

The liability of the first infractor shall be equitably reduced or tempered. If wa mahibaw-e
kinsay ning violate ug una, extinguish ag obligation, each party will bear his own damages.

Obligations with a Period

There should be a day certain - a day which will necessarily arrive, even though it may not be
known when. Pareha anang death of a person, mo abot jud na, mao nga period na sija.

Computation of Period :

Year - 12 calendar months

Month - 30 days unless the name of the month is specifically stated
Day - 24 hours
Nigh - sunset to sunrise

How to Count the Period : EXCLUDE THE FIRST DAY, INCLUDE THE LAST DAY

EX. Ten days from May 8, 2020. so way labot sa ihap ag May 8, mag start na ka sa
May 9, so ag tenth day is May 18, 2020. apil ug ihap ag last day which is May 18.

For Whose benefit is the period?

Ans. For both the debtor and the creditor. The debtor cannot be compelled to make payment
before the arrival of the period, neither can the creditor be allowed to demand payment before
the arrival of the period. Except if the period is for the benefit of one person only, like in a
contract of commodatum.

How about if the period is not clear?

Ans. The parties can go to court under Art, 1197, for the court to fix the proper period. Once the
court have fixed the period, it can no longer be changed by the parties.

Ex. The debtor binds himself to pay by the time that he has money. This obligation is with a
period under Art. 1180.
Murag subject sa condition ni nga obligation kay ug maka kwarta na ag debtor, anha na sija
bajad, but Art. 1180 is clear nga the obligation is one with a period.

Unja anus-a man ag period ani? Anus-a man maka afford ag debtor?
Ans. The creditor will go to court and have the court fix the period.

RULE : THE PERIOD SHOULD BE RESPECTED. THE DEBTOR CANNOT BE HELD

LIABLE BEFORE THE ARRIVAL OF THE PERIOD, EXCEPT (Art. 1198) :
1. Na insolvent ag debtor after the obligation has been entered into. Di na maghuwat ag creditor
ug due date, otherwise, wa nay mahabilin nga properties sa debtor.

2. The debtor did not deliver the promised security or guarantee.

Ex. The debtor borrowed money payable on June 30, 2020 and he promised to deliver his
iphone as collateral. If the debtor did not deliver his iphone, the creditor can immediately
demand for the payment of the obligation without waiting for June 30, 2020.

3. The securities of guaranties were impaired or loss even by fortuitous event.

Ex. The collateral is the motorcycle, however, they agreed that the debtor is still allowed to
use the motorcycle, unja, nabangga ag debtor, naguba ag motor, so the creditor can immediately
demand payment of the obligaiton.

4. The debtor violates any undertaking.

Ex. The debtor agreed that the creditor is allowed to use a portion of his land as right of way
to the creditor. Ug koralon gani sa debtor ag land nga di na maka agi ag creditor, pwede
paninglon dretso sa creditor ag obligation without waiting for the period.

5. When the debtor attempts to absond (MO SIBAT)

Inig action ug sibat sa debot, paninglon na dretso, di na mag huwat sa period kay kinsa pa
may paninglan ug wa na ag debtor.
KInds of obligation according to object :

1. Simple - only one prestation and only one is due

ex. delivery of a specific iphone

2. Compound - two or more prestations

a. Conjuctive or conjoint - several prestations and all are due.
ex. Chenee is obligated to deliver to Anie Rose a specific iphone AND a paricular galaxy
tab AND a specific laptop. ( kinahanglan, tanan e deliver on due date, ug naay di ma deliver,
liable si Chenee for damages).

b.. Distributive - one or more but not all of the prestations are due.
1. Alternative - several prestations but the performance of one is sufficent.
ex. Chenee is obligated to deliver to Anie Rose a specific iphone OR a paricular galaxy
tab OR a specific laptop. - In this oblgation Chenee is obligated to deliver, any one of the agreed
objects and as a rule, Chenee (the debtor has the right of choice).

2. Facultative obligation - only one object is due, but the debtor may give another as
a substitute. This is always a simple obligation, however, the debtor, Chenee may deliver
another as a substitute.
ex. Chenee is obligated to deliver to Anie Rose a specific iphone or as a substitute,
she may deliver a particular galaxy tab.
The right to make the substitution always belongs to the DEBTOR, it cannot be
delegated to the creditor.

RULES IN AN ALTERNATIVE OBLIGATION (the right of choice belongs to the debtor):

Ex. Chenee is obligated to deliver to Anie Rose (AR) a specific iphone OR a paricular
galaxy tab OR a specific laptop.

1. The general rule is that the right of choice belongs to the Debtor (Chenee in our example).
The alternative obligation will ultimately become a simple obligation by the time that the
choice is made and communicated to the Creditor. So if Chenee will inform AR that she will
deliver the specific iphone, then the obligation will now become a simple obligation, that is the
delivery of the specific iphone. (Forget the galaxy tab and laptop)

On due date, Chenee may deliver any of the above things to AR if no choice was
communicated to AR and that is sufficient to extinguish the obligation.

2. All objects were lost due to a fortuitous event - obligation is extinguish (all are specific
objects) in accordance with the rule on fortuitous event.

3. Only one object is practicable - the obligation automatically becomes a simple a obligation,
that is the delivery of the remaining object.
ex. The specific iphone was lost due to a fortuitous event and the particular galaxy tab was
intentionally destroyed by Chenee. The remaining object is the specific laptop. So the
obligation is to deliver the laptop (a simple obligation).

4. All objects were intentionally destroyed by the debtor - the debtor is liable for damages.
Ex. All objects were intentionally destroyed by Chenee (gisapot kay wa jud maka uyab), then
Chenee shall be liable for damages.
How will you determine the damages payable by Chenee?
Ans. It will be the value of the last thing that was lost due to the fault of Chenee.

Ex. Chenee is obligated to deliver to Anie Rose (AR) a specific iphone OR a paricular galaxy
tab OR a specific laptop on May 11, 2020. On May 8, the specific iphone was thrown to the
swimming pool by Chenee and on May 9, the particular galaxy tab was smashed with a hammer
by Chenee (sadista), and on May 10, the specific laptop was burned by Chenee. What will be
the liability of Chenee?
Ans. The value of the specific laptop, the last thing that was lost due to the fault of Chenee.
(peace chen)
RULES IN AN ALTERNATIVE OBLIGATION IF THE RIGHT OF CHOICE BELONGS TO
THE CREDITOR :

When will the right of choice belong to the creditor?

Ans. If it is EXPRESSLY GRANTED to the creditor. Art. 1200

Ex. Chenee is obligated to deliver to Anie Rose (AR) a specific iphone OR a paricular
galaxy tab OR a specific laptop and the right of choice belongs to AR. - In this obligation,
it will now be AR who will inform Chenee the object that is to be delivered in order that
the obligation will become a simple obligation. ( Na bali).

1. If all objects were lost due to fortuitous event (right of choice belongs to AR). - obligation is
extinguish.

2. If only one object is practicable (right of choice belongs to AR) - the obligation will not
automatically become a simple obligation.

Ex. The specific iphone and the particular galaxy tab were lost due to a fortuitous event and
only the specific laptop remains. - the obligation here becomes a simple obligation, that is the
delivery of the specific laptop.

If the specific iphone was lost due to a fortuitous event , the particular galaxy tab
was intentionally destroyed by Chenee and what remains is the specific laptop. - The obligation
is not automatically become a simple obligation considering that the right of choice belongs to
AR. - AR will have the right to choose whether he will demand for the delivery of the specific
laptop (the remaining object) or for the value of the particular galaxy tab which was
intentionally destroyed by Chenee. ( Si Chenee mag boot, pero way labot ag nawa due to a
fortuitous event).

3. All objects were intentionally destroyed by the debtor (the right of choice belongs to AR) -
the debtor is liable for damages.
Ex. All objects were intentionally destroyed by Chenee (gisapot kay wa jud maka uyab), then
Chenee shall be liable for damages.
How will you determine the damages payable by Chenee?
Ans. It will be the value of ANY OF THE THINGS that were lost due to the fault of
Chenee.
‌
Ex. Chenee is obligated to deliver to Anie Rose (AR) a specific iphone OR a paricular galaxy
tab OR a specific laptop on May 11, 2020. On May 8, the specific iphone was thrown to the
swimming pool by Chenee and on May 9, the particular galaxy tab was smashed with a hammer
by Chenee (sadista), and on May 10, the specific laptop was burned by Chenee. What will be
the liability of Chenee?

Ans. It depends upon AR. It will be the value of any of the objects that were lost due to the
fault of Chenee. It is AR who was the right of choice, so sija maoy mag boot.

NOTE : IF ALL OBJECTS WERE LOST DUE TO THE FAULT OF THE DEBTOR :

DEBTOR HAS THE RIGHT OF CHOICE - liable for the value of the last object lost

CREDITOR HAS THE RIGHT OF CHOICE - The creditor have the right to choose the value
of any of the things that were lost due to the fault of the debtor (pwede ug value sa specific
iphone pilion, the first object the was intentionally destroyed)

Kinds of obligations according to the number of parties :

1. Individual obligation - one debtor or one creditor

 ex. Huan is obligation to deliver a specific car to Dean on May 12, 2020. (usa ra ka debtor,
usa ra pud ka creditor)

2. Collective obligation - two or more debtors and/or two or more credtiors

a. Joint obligation - to each his own. the obligation of the debtors is separate and distinct
from each other or the right of the creditors is separate and distinct from each other.
b. Solidary obligation - all for one, one for all - the entire obligation can be demanded from
any one of the debtors or may be demanded by any one of the creditors.

How will you know that the obligation is solidary?

Ans. It must be expressly provided for in the obligation.

Illustrations :

1. Marlon and Johnny Gie are obligated in the amount of P600 to Dimple which is payable on
May 11, 2020. The obligation is joint. How much can Dimple demand from Marlon on due
date?
Ans. P 300 (P600/2) and Marlon is not liable for the share of Johnny Gie even if Johnny Gie
is insolvent.

2. Marlon and Johnny Gie are obligated in the amount of P600 to Dimple which is payable on
May 11, 2020. The obligation is solidary. How much can Dimple demand from Marlon on due
date?
Ans. The entire amount of P 600, however, Marlon can demand reimbursement from Johnny
Gie for his share of P300. If Johnny Gie is already insolvent, Marlon will assume all of the
liability.

3. Marlon and Johnny Gie are obligated in the amount of P600 to Dimple which is payable on
May 11, 2020. The obligation is silent whether it is joint or solidary. How much can Dimple
demand from Marlon on due date?
Ans. P300 only, the presumption is that the obligation is only joint.

4. Reynard, Angelica and Cecille Joy (Debtors) are liable to Ma. Margeorie and Ma. Sheryl
(Creditors) in the amount of P 1,200. The debtors are solidary debtors, while the creditors are
joint creditors. On due date how much can Ma. Margeorie can demand from Reynard?
Ans. P600. As joint creditors, each of them are only entitled to her share ( P1,200/2).
Reynard on the other hand can demand reimbursement from Angelica and Cecille Joy for their
share of P 200 each ( P,200 / 3 ). Ma. Sheryl may collect her share from Reynard also because
the debtors are solidary debtors.

5. Reynard, Angelica and Cecille Joy (Debtors) are liable to Ma. Margeorie and Ma. Sheryl
(Creditors) in the amount of P 1,200. The debtors are joint debtors, while the creditors are
solidary creditors. On due date how much can Ma. Sheryl demand from Angeiica?
Ans. P400 the obligation of Angelica as a joint debtor ( P1,200 / 3 ) and Angelica is not liable
for the shares of Reynard and Cecille Joy.

6. Reynard, Angelica and Cecille Joy (Debtors) are liable to Ma. Margeorie and Ma. Sheryl
(Creditors) in the amount of P 1,200. The debtors are joint debtors and the creditors are also
joint creditors. On due date how much can Ma. Margeorie can demand from Reynard?
Ans. P 200 only. As Joint debors, each one of them is liable for P 400 ( P1,200 / 3) and the P
400 liability for each debtor is payable to Ma. Margeorie and Ma. Sheryl, so each one of the
creditors is entitled to P 200 only ( P 400 / 2 )

Divisible and Indivisible Obligations :

Divisible - Capable of partial performance, ex. construct a house (anam anam ug gama)

Indivisible - Not capable of partial performance, ex. delivery of a specific iphone ( di pwede ug
anam anam ug deliver)
Obligations with a Penal Clause :
Principal obligation - can stand on its own and does not depend upon another obligation for its
validity and existence. ex. mutuum (mang huwam ug kwarta)

Accesory obligation - depends upon another obligation for its validity and existence.
ex. mang prenda ug iphone kay mang huwam ug kwarta.
The principal obligation here is mutuum (simple loan), while the accessory obligation is
the contract of pledge (prenda ug iphone). Dili ka mang prenda ug dili ka mo huwam ug kwarta,
so a contract of pledge (prenda) is an accessory obligation in a contract of loan.

Penal Clause - an accessory undertaking to assume greater liability in case of breach. (this is a
form of liquidated damages). ex. Ug di maka bayad on due date, naay penaldy nga 5% per
month. - the penalty here is demandable because of the penal clause and the obligation is an
obligation with a penal clause.

Proof is no longer necessary in order that the penalty can be demanded in case of non
performance on due date.

Rule : If the principal obligation is null and void, the accessory is also null and void. If it is only
the accessory which is null and void, the principal obligation remains to be valid and
demandable.

Modes of Extinguishing an Obligation (PLCCCN) : (Mawa na ag obligation)

1. Payment or Performance
2. Loss of the thing due (only if the object is specific and no fault on the part of the debtor)
3. Condonation or Remission
4. Confusion or merger of the rights of creditor and debtor
5. Compensation
6. Novation

Other causes :

7. Annulment
8. Rescission
9. Fulfillment of resolutory condition/period
10. prescription

1. PAYMENT OR PERFORMANCE

Payment – means delivery of money, property or performance in any other manner of the
obligation.
Ex. Deliver P10,000 cash as payment of a loan.
Return the borrowed book on the Law on Obligations and Contracts.
Cut the hair of a customer.

Rule on payment in order that the obligation will be extinguished :

a. In order that the obligation will be extinguished, payment should be complete.

Ex. Huan is obligated to Dean in the amount of P 5,000 cash payable on May 12, 2020. On
due date, Huan delivered P3,000 only. Is the obligation of Huan extinguished?
Ans. No, payment is not complete.

b. If the obligation has been substantially performed in good faith, payment will extinguish the
obligation, less damages.
c. If the creditor accepted the payment or performance knowing that it is incomplete or irregular,
the obligation is extinguished.
Q. What should the creditor do in order that the obligation will not be extinguished? Ans. The
creditor must protest or object.

d. Who can compel the creditor to accept payment of the obligation? (kinsay maka pugos sa
creditor ug dawat sa gi hatod nga bayad)
Ans. 1. The debtor
2. Person interested in the obligation (guarantor or owner of the property used as
collateral)
3. A person authorized to make payment as agreed by the creditor and the debtor.

So a person, other than those mentioned above cannot compel the creditor to accept the
payment delivered and the creditor will not be in mora accipiendi. (Nganu man pud nga di
man modawat ag creditor? Ans. Aron mo daghan pa ag bayronong interest ug loan ag
contract)

e. Person to Whom Payment shall be made : (Kinsay angay hatagan sa bayad):

1. Creditor or oblige
2. Successor in interest (mga anak ug patay nag ginikanan nga creditor or ag taw nga
gipasahan sa collectahonon)
3. Any person authorized to receive it. (gihatagan ug authority to receive payment)

So, if your payment is delivered to a person other than the above named persons,
payment is not valid and will not extinguish the obligation, except if:
a. after the payment, the third person acquires the creditor’s rights
(subrogation)
b. the creditor ratifies the payment to the third person.
c. the creditor is in estoppel

Reminder : Ajaw pa taka taka ug bilin sa imung payment sa laing taw.

f. If there is no stiputation (condition or requirement in the agreement), the debtor will pay the
extrajudicial expenses needed in the payment of the obligation.
Ex. Ipada sa Palawan pawnshop ag payment sa utang, it will be the debtor who will pay for
the fee charged by Palawan pawnshop, if there is no agreement to the contrary.

g. Payment of debts in money shall be made in the currency stipulated, if none, then it will be
the legal tender of the Philippines.

Legal tender –The currency which a debtor can legally compel the creditor to accept in
payment of a debt. The legal tender in the Philippines are the notes and coins issued by
the Banko Sentral ng Pilipinas ( the Philippine Peso).

P1, P5 and P 10 coins are legal tender up to P1,000 only

1 centavo, 5 centavos, 10 centavos and 25 centavos are legal tender up to P 100 only
Peso Bills (papel) – are legal tender up to whatever amount.

So ug bayaran kag tinag P 10 sa utang nga P2,000, pwede di nimu dawaton because
P 10 is legal tender only up to P 1,000.

Question : How about if a check is delivered as payment of an obligation, can the creditor be

SPECIAL MODES OF PAYMENT :

1. Dation in payment
2. Application of Payments
3. Payment by Cession
4. Tender of Payment or consignation

1. Dation in payment or Dacion in Pago – the obligation is to pay a sum of money, however, a
thing is delivered (and accepted) by the creditor as payment of the obligation.
Ex. Huan is obligated to Dean in the amount of P 40,000 cash. On due date, Huan did
not have any money, so he offered to Dean his Camera as payment of his obligation. If Dean
will accept the Camera as payment of the obligation of P 40,000 cash, then the obligation is
extinguish.

This is a special mode of payment because the thing delivered is not the thing that is due.
You should remember that in the payment of the obligation, the thing that is to be delivered must
be the thing that is due. ( mao nga special mode of payment at dation in payment)

2. Application of Payments – the designation of the debt to which should be applied the payment
made by a debtor who has various debts of the same kind in favor of one and the same creditor.
Ex. The following are the obligations of Huan to Dean :
Feb. 2, 2020, P 20,000 – no interest, no collateral due on May 5, 2020
March 5, 2020, P 40,000 with interest – due on May 10, 2020
April 17, 2020, P 60,000 with collateral – car – due on May 12, 2020

Today, Huan delivered to Dean the amount of P90,000 as payment of his obligations
(Kuwangan).

First Rule : Huan should designate as what obligation will the P 90,000 be applied first.
Second Rule : If Huan failed to designate the obligation to be paid, then it will be Dean
in his receipt, who will designate the obligation/s in which the P 90,000 will be applied.
Third Rule : If both Huan and Dean failed to designate the obligations paid, then the
payment will be applied first to the most burdensome obligation which is the P60,000 with
collateral –car., then the remaining P 30,000 payment to the obligation with interest. The
remaining balance of obligation will be P 10,000 with interest and P 20,000 with no interest and
no collateral.

If all of the debts are of the same nature and burden, the payment shall be applied
proportionately (if 1st and 2nd rule cannot be applied):

Ex. The following are the obligations of Huan to Dean, all with interest (no
collateral) :
Feb. 2, 2020, P 20,000, due on May 5, 2020
March 5, 2020, P 40,000, due on May 10, 2020
April 17, 2020, P 60,000, due on May 12, 2020

Today, Huan delivered to Dean the amount of P90,000 as payment of his obligations
(Kuwangan).

The payment shall be applied as follows :

Feb. 2 obligation – P20,000 / P120,000 x P 90,000 = P 15,000

March 5 obligation – P40,000 / P120,000 x P90,000 = P 30,000
April 17 obligation – P60,000 / P120,000 x P90,000 = P 45,000

Note : if the debt produces interest, payment should be applied first to the interest. (Di maka
pugos ag debtor nga ag principal unahon). Remember that if payment is applied to the principal,
there is a disputable presumption that the interest has already been paid. ( So, adto jud sa
interest una. Mao nang mga utang sa atong ginikanan dugay mahuman kay ag bayad, interest ra
kotob, di mag lihok ag principal).

This is a special mode of payment because the obligations which were paid will be extinguished
up to the actual payment applied. (bisag di complete, ma extinguish sija)

3. Payment by Cession
Requisites :
1. Two or more creditors (Daghang gi utangan)
2. Debtor must be (partially) insolvent ( Naa pay asset pero kuwang para e bayad sa
tanang utang)
3. Involves all properties of the debtor
4. Cession is accepted by the creditors.

Ex. AA has the following obligations :

P 20,000 payable to MY
P 30,000 payable to JL
P 50,000 payable to CJ
All obligations are already due and demandable and the remaining assets of AA are
valued at P60,000 (partially insolvent) which is insufficient to pay all of her obligations. AA
cede all of her assets to the creditors who accepted the cession. How will the payment be
applied?
Ans. To MY – 2/10 x P 60,000 = P 12,000
To JL – 3/10 x P 60,000 = P 18,000
To CJ – 5/10 of ½ of P 60,000 = P 30,000
The above obligations are extinguish as an exception to the rule that payment must be
complete in order to extinguish the obligation. (mao ni nga special mode of payment ni)

How about the balance?

Ans. AA is still liable for the balance of the obligation:
To MY = P 8,000
To JL = P 12,000
To CJ = P 20,000

4. Tender of Payment and Consignation

Tender of Payment – offer of payment by the debtor to the creditor

Consignation – act of depositing the amount or thing due with the proper court when the
creditor refuses to accept payment when tendered by the debtor.

RULE : NO PRIOR TENDER : NO CONSIGNATION

So it is important that a prior tender of payment should be made, before consignation can
be made in court.

This is a special mode of payment because the amount or thing due (dili pwede services)
is delivered to the court and not to the creditor or any person authorized to receive payment.

Steps in the extinguishment of the obligation through tender of payment and consignation

1. Tender (Offer) the payment to the creditor.

2. If the creditor refuses to accept the payment made, inform all persons interested in
the obligation (guarantors, owner of the collateral, solidary debtors, solidary creditors,
ect.) that the amount or thing due will be consigned (deposited) in court.
3. Actual deposit of the amount or thing due in court ( this is consignation ) and the
court will issue a receipt.
 4. Inform again all persons interested in the obligation that the amount or thing due has
already been consigned ( deposited ) in court. Attached a copy of the receipt issued by the
Court.
5. Ask the judge to order the cancellation of the obligation. There should be a Court
Order that the obligation is already cancelled (extinguished).

Note : The steps must be observed in order that the obligation will be extinguished by Tender of
Payment and Consignation.

Q. Who will bear the expenses of consignation if properly made?

Ans. The creditor. Art. 1259

RULE : NO PRIOR TENDER : NO CONSIGNATION

Exceptions : (Wa nay tender, dretso nag consign sa court)

1. The creditor is absent or unknown, or does not appear in the place of payment. (wa
dinha ag creditor or wa motungha, wa hibaw-e ug asa na)
If you will not consign your payment in court, the obligation will remain to be valid and
enforceable and it the obligation is with interest, additional interest will be charged until
payment is made.

2. Creditor is incapacitated to receive payment at the time it is due.

If na buang ag creditor sa due date, ajaw na e offer nija, dretso nag consign. Payment
made to an incapacitated person will only extinguish the obligation if the incapacitated
person has been benefited out of the payment made or he kept the payment.

3. Without cause, the creditor refuses to issue a receipt.

Mo ingun rag creditor nga ibilin lang nang payment sa ijang secretary sa office (person
authorized to accept payment), then, unja na lang resibo. Consign the payment in court
directly.

4. Two or more persons claim the right to collect.

Namatay ag parents sa boarding house nimu, then 4 ka anak nag ijahay ug paningil sa
rental. You consign your payment in court without making a prior tender.

5. Title of the obligation is lost.

You signed a Promissory Note (PN) during the time that you contracted the obligation,
subject to the condition that the said PN will be returned to you upon payment of you
debt. If on due date, the PN is lost, consign your payment directly to court without any
prior tender.

Modes of Extinguishing an Obligation (PLCCCN) : (Mawa na ag obligation)

1. Payment or Performance
2. Loss of the thing due (only if the object is specific and no fault on the part of the debtor)
3. Condonation or Remission
4. Confusion or merger of the rights of creditor and debtor
5. Compensation
6. Novation

2. Loss of the thing due (only if the object is specific and no fault on the part of the debtor)

Requisites in order that the obligation will be extinguished in obligations to give:

1. specific or determinate object
2. loss is without fault of the debtor

Loss will not extinguish the obligation (bisan pag mawa ag specific object, naa gihapoy
obligation which is converted into money):
 1. Debtor is guilty of default, fraud, negligence or contravention of the terms of the obligation
2. The law provides
3. Stipulation (conditions and requirements) of the parties provides
4. Nature of the obligation requires the assumption of risk
5. Obligation to deliver arises from a crime ( e uli ag kinawat nga cellphone, di ma extinguish
bisag masunog ug apil ag cellphone sa house sa thief. pabayaron ug kwarta depende ug pilay
price sa cp)
6. Debtor promised to deliver to two or more persons who do not have the same interest
7. Generic object

Q. Who shall determine whether the partial loss will extinguish the obligation?
A. The courts (judge) Art. 1264

Rule : Whenever the thing is lost in the possession of the debtor, the presumption is that the loss
was due to the fault of the debtor, but there is no presumption if the loss occurred during a
natural calamity. Art. 1265

Art. 1266. In obligations to do, the obligation is lost if the prestation (act) becomes legally or
physically impossible.

Ex. Obligation to sing, but before due date the debtor has an operation on his throat which
cannot be healed on the date of performance. The obligation is physically impossible, so it is
extinguished.

Obligation to transport passengers from Bohol to Cebu on April 1, 2020. The

obligation is legally impossible, so it is extinguished.

Art. 1267. Service becomes so difficult as to be manifestly beyond the contemplation of the
parties, obligation is extinguished.
Ex. An obligation to build a house in the riverbank. Subsequently, the land in which the house
is to be built was washed away during a flash flood caused by a strong typhoon. – The
obligation is extinguished.

3. Condonation or Remission (gi kwits ag obligation, gratis na lang, kasuway na mo tanan ani)

- essentially gratuitous and needs the acceptance of the debtor.

Ex. Utangan si Huan ni Dean in the amount of P 5,000 payable on May 15, 2020. Today Dean
informed Huan that the obligation is condoned, (di na pabayaran ni Huan ag utang. Kinahanglan
mosugot si Huan nga di na sija mo bayad), otherwise, the obligation will not be extinguished.

There is no condonation if the debtor performed an act, and in consideration thereof, the
obligation is cancelled. The amount of the obligation is considered as an income of the debtor,
subject to tax. (kinahanglan wa juy gibuhat, then gi condone ag obligation).

Rule : If a private document evidencing the obligation is in the hands of the debtor even if the
debtor has not yet paid the obligation, then the presumption (disputable) is that the obligation is
condoned and the private document is presumed to have been voluntarily delivered by the
creditor. ( wa mawa ag document or wa kawata sa debtor).

Rule : The condonation or remission or renunciation of the principal obligation, carries with it
all of the accessories, under the principle that the accessory follows the principal. Art. 1273

Ex. Huan is obligated to Dean in the amount of P10,000 and as collateral, Huan
delivered his iphone in pledge (prenda) to Dean. If Dean will condone the principal loan
of Huan (dili na pabayaron si Huan), then the principal obligation of loan in the amount of
P10,000 is extinguish, as well as the accessory obligation of pledge (makuha na dretso ni
Huan ag iphone).
Rule : The condonation or remission or renunciation of the accessory obligation, does not
include the principal obligation. Art. 1273 and Art. 1274

Ex. Huan is obligated to Dean in the amount of P10,000 and as collateral, Huan delivered his
iphone in pledge to Dean. Even if Huan has not yet paid his obligation, Dean returned the iphone
to Huan. Is the entire obligation extinguish?
Ans. No, only the obligation of pledge (prenda) which is an accessory obligation is extinguish.
The principal obligation of loan (mutuum) of P10,000 remains to be valid and demandable.

4. Confusion or merger of the rights of creditor and debtor. (Confusion = maka libog)

- meeting in one person of the qualities of creditor and debtor with respect to the same
obligation.

Ex. In consideration of his loan, Huan executed a Promissory Note (PN) payable to
Dean in the amount P 5,000.00. The PN is negotiable ( can be used just like money). Dean
purchased office supplies amounting to P5,000 from Karen delivering the PN as his payment.
Karen then paid her obligation to Lalaine in the amount of P 5,000 by delivering the PN.
Lalaine thereafter used the PN as payment for her obligation to Huan in the amount of P5,000
for her pre nup pictorials. What will happen to the obligation?
Ans. The obligation is extinguish because Huan is the Debtor and Huan is now the
credtor. ( si Huan utangan, sija puy maningil sa ijahang utang, so extinguish kay maka libog,
murag si kim chiu)

5. Compensation ( sa bisaya pa – PAKANG, naka suway na mo ani?)

- Two persons in their own right are creditors and debtors of each other.

Kinds of Compensation :
1. Voluntary or conventional – to be agreed by the parties over obligations which are not
yet due.
2. Legal – automatic nga ma extinguish, di na pwede maningil. This applies only if both
obligations are already due and demandable.

Ex. On February 10, the owner of your boarding house borrowed P 1,000 from you, which is
payable on February 20. On due date (February 20) you collected from the owner of your
boarding house the P 1,000. The owner of your BH told you that her obligation is extinguish by
compensation. Is there legal compensation if your rental in the amount of P1,000 will be due
only on February 28 ?
Ans. No, in order that there is legal compensation, both debts must be due and demandable. In
this case, your obligation is not yet due on Feb. 20, so there is no legal compensation.

Q. If you will not demand payment from the owner of the BH on Feb. 20 and at the end of the
month, the owner will collect your monthly rental. Can you be compelled to pay your rental?
Ans. No, your obligation is extinguish by legal compensation.

Note : If you will agree with the owner of the BH on Feb. 20 that you will no longer collect the
P1,000 because it will be charged to your monthly rental (due on Feb. 28), then that will be
voluntary compensation which will still extinguish the obligation.

If your monthly rental is P1,500, at the end of the month, you can only claim partial
compensation up to P1,000 and you will have to pay the balance of P500.

Instances wherein legal compensation is not allowed :

1. One of the debts arises from a depositum

 Ex. You left your stuff at the deposit counter in the mall. Then you purchased on account
from the mall. If your stuff got lost, the mall owner cannot set up legal compensation (pwede
voluntary)

2. One of the debts arises from a commodatum.

Ex. You borrowed P500 from your friend. Subsequently, your friend borrowed your book. If
your book will be lost while in possession of your friend, your friend cannot claim legal
compensation.

3. One of the debts arises from a claim for support due by gratuitous title
Ex. You (illegitimate) borrowed money from your father in the amount of P20,000. Your
father later on cannot set up compensation for his obligation to support you.

4. One of the debts consists in civil liability arising from a penal offense.
Ex. CJ owes Reynard the amount of P 5,000 cash. After their class in Law 1 (classroom), CJ
forgot her CP and Reynard found the same but did not give it (crime of theft) to CJ. Upon
being caught, Reynard cannot set up compensation with the obligation of CJ because his
obligation to return the CP arises from a criminal offense (theft).

6. Novation – also known as Modification of the obligation. (Gi usob ag obligation)

- an obligation is extinguish through the creation of a new one which substitutes it.
(so, naa gihapoy obligation, pero lain na, gi usob)

Obligations may be modified by :

1. Changing their object or principal condition.

Ex. Marlon is obligated to deliver to Hariel a specific iphone on May 15, 2020. Today,
Marlon and Hariel agreed that instead of the iphone, Marlon will deliver a particular laptop (para
edmodo). In this case, the obligation to deliver the iphone is extinguish, but there is a new
obligation, to deliver a particular laptop. (gi usob ag object).

2. Substituting the person of the debtor (substitution – alisdan ag debtor)

a. Delegacion – with the consent/knowledge or upon the instance of the original debtor
(OD)
Ex. Old Debtor (OD) is obligated to Old Creditor (OC) in the amount of P5,000
payable on May 15, 2020 and as collateral, OD delivered his iphone to OC. Today, OD
offered to OC that it will New Debtor (ND) who will pay his obligation, to which OC gave
his consent.
In this case, the obligation to OD to OC is extinguish, but there is new obligation,
the obligation of ND to OC.

Q. How about if ND is insolvent and was not able to pay OC, can OD be still held liable?
Ans. No, because the obligation of OD is already extinguish, however, if OD knew beforehand
that ND is insolvent at the time of delegacion, then OD shall be liable.

Q. How about if ND became insolvent only after the delegacion, can OC go against OD?
Ans. No. the obligation of OD is already extinguish and the subsequent insolvency of ND shall
not revived the obligation.

Q. If on due date ND paid the amount of P5,000 to OC, what will be the rights of ND?
Ans. ND will be subrogated to all of the rights of OC, hence ND can demand for the possession
of the iphone until such time that he will be paid by OD. In this case, ND will become the New
Creditor (NC) - so from ND TO NC. This is a case of LEGAL SUBROGATION.

Q. How about if OD have already paid P1,000, but ND was not informed about the advance
payment and ND paid P5,000 to OC, how much can ND demand from OD?
Ans. The entire amount of P5,000, it is the fault of OD in not informing ND about the advance
payment.

Q. How about the P1,000 advance payment?

Ans. OD can claim the same from OC under the principle of solution indebiti.

b. Expromision - without the consent/knowledge of the original debtor (OD)

Ex. Old Debtor (OD) is obligated to Old Creditor (OC) in the amount of P5,000
payable on May 15, 2020 and as collateral, OD delivered his iphone to OC. Today, New
Debtor (ND) without the knowledge of OD, offered to OC that he will pay the obligation of
OD on due date to which OC agreed.

In this case, even if the substitution is without the knowledge of OD, the obligation of OD is still
extinguished and a new obligation is created, the obligation of ND to OC

Q. How about if ND is insolvent and was not able to pay OC, can OD be still held liable?
Ans. No, whether OD was aware about the insolvency or not, his obligation is already
extinguish, anyway he did not know about the substitution.

Q. If on due date ND paid the amount of P5,000 to OC, what will be the rights of ND?
Ans. ND can only demand payment of P5,000 from OD. ND cannot demand for the possession
of the iphone because in expromision, there is no legal subrogation.

Q. How about if OD have already paid P1,000, but ND was not aware about it and ND paid
P5,000 to OC, how much can ND demand from OD?
Ans. ND can demand the amount of P4,000 only, the amount that OD was benefited.

Q. How about the P1,000 advance payment?

Ans. ND can claim the same from OC under the principle of solution indebiti.

Rule : how about if ND does not intend to e reimburse?

Ans. it will be treated as a donation.

c. Changing the person of the Creditor – Subrogation (all rights the old creditor will be
transferred to the new creditor)

Kinds of Subrogation :
1. Conventional – with the consent of all parties.

Ex. Old Debtor (OD) is obligated to Old Creditor (OC) in the amount of P5,000 payable on
May 15, 2020 and as collateral, OD delivered his iphone to OC. Today OD and OC agreed that
the obligation will be paid to New Creditor (NC) on due date, to which NC also agreed.

In this case, the obligation of OD to OC is extinguish, but there is a new obligation

created, the obligation of OD to NC and NC can demand for the possession of the iphone.

2. Legal Subrogation – provided by law (automatic ni)

Instances :
a. Creditor pays another creditor who is preferred even without debtor’s consent
Ex. Marlon is the debtor of the following creditors :
AA, P 50,000 cash with interest, payable on June 5, 2020
CJ, P 100,000 cash with collateral truck, payable on August 3, 2020
CA, P 200,000 cash with collateral land, payable today
 In this case, AA may pay the obligation of Marlon to CA today even if Marlon did not
give his consent. After paying the obligation of Marlon to CA, AA will acquire all of the rights
of CA, so the total collectible obligation of AA will now be P250,000 with collateral land.

b. A third person not interested (not a guarantor) in the obligation pays with the consent of
the debtor ( DELEGACION )

c. A person interested (guarantor, solidary debtor, co-maker) in the fulfillment of the

obligation pays the obligation even without the consent of the debtor.
Reason : The guarantor, solidary debtor or co-maker will ultimately become liable if the
debtor will not pay.