Obligations Flashcards
(203 cards)
1
Q
[Definition of Obligation]
What is an obligation?
A
An obligation is a juridical necessity to give, to do, or not to do. (Art. 1156, Civil Code)
2
Q
[Kinds of Obligations as to Basis and Enforceability]
What are the two kinds of obligations as to basis and enforceability?
A
Civil obligations (enforceable) and natural obligations (not enforceable but retainable after voluntary fulfillment).
3
Q
[Essential Elements of Obligation]
What are the essential elements of an obligation?
A
a. Active subject (creditor/obligee)
b. Passive subject (debtor/obligor)
c. Prestation (subject matter of the obligation)
d. Vinculum Juris/Efficient Cause/Juridical Tie
4
Q
[Transmissibility of Obligation]
What is the general rule regarding the transmissibility of obligations?
A
All rights acquired in virtue of an obligation are transmissible, except when the nature of the obligation, stipulation, or law provides otherwise.
5
Q
[Sources of Obligations]
What are the sources of obligations?
A
Law, contracts, quasi-contracts, delict, and quasi-delict.
6
Q
[Obligations Ex Lege]
How are obligations derived from law regulated?
A
They are regulated by the law that establishes them, and if not foreseen, by the Civil Code. (Art. 1158)
7
Q
[Obligations Ex Contractu]
What is a contract?
A
A contract is a meeting of minds where one binds himself to give or render some service. (Art. 1305)
8
Q
[Force of Contracts]
What is the force of obligations arising from contracts?
A
They have the force of law between the parties and must be complied with in good faith. (Art. 1159)
9
Q
[Obligations Ex Quasi-Contractu]
What is a quasi-contract?
A
A juridical relation from lawful, voluntary acts to prevent unjust enrichment.
10
Q
[Negotiorum Gestio]
What is negotiorum gestio?
A
It is the management of another’s business without authorization, obliging the gestor to continue until the affair ends or be replaced. (Art. 2144)
11
Q
[Solutio Indebiti]
What is solutio indebiti?
A
It is the juridical relation when something is received without right and was unduly delivered through mistake.
12
Q
[Requisites for Solutio Indebiti]
What are the requisites for solutio indebiti?
A
- No right to receive the thing.
- The thing was delivered through mistake.
13
Q
[Obligations Ex Delicto]
What is a delict?
A
An act or omission punishable by law, which may be governed by the Revised Penal Code or other penal laws.
14
Q
[Civil Liability from Crime]
What does civil liability from a crime include?
A
- Restitution
- Reparation of damage
- Indemnification for consequential damages. (Art. 100, Revised Penal Code)
15
Q
[Proof Required for Civil Liability]
What is required to prove civil liability?
A
Proof by preponderance of evidence; criminal liability requires proof beyond reasonable doubt.
16
Q
[Effect of Acquittal on Civil Liability]
Can civil liability still exist if the accused is acquitted?
A
Yes, especially if acquitted due to reasonable doubt.
17
Q
[Employer’s Liability]
When is an employer civilly liable for acts of employees?
A
Employers may be civilly liable for acts of employees but only subsidiarily.
18
Q
[Obligations Ex Quasi-Delicto]
What is a quasi-delict?
A
It is damage caused by fault or negligence without a pre-existing contractual relation. (Art. 2176)
19
Q
[Requisites for Quasi-Delict]
What are the requisites for a quasi-delict?
A
a. Act or omission
b. Fault or negligence
c. Damage caused
d. Direct relation of cause and effect between the act or omission and the damage
20
Q
[Vicarious Liability for Quasi-Delict]
Who is responsible for damages caused by minor children or employees?
A
• Minor children: Father (or mother if the father is incapacitated)
• Employees: Owners, managers, or employers depending on the context
21
Q
[Defense Against Vicarious Liability]
What is the defense available against vicarious liability?
A
Proof of all due diligence to prevent damage or selection/supervision of the employee. This defense is not available for subsidiary liability arising from delicts or crimes.
22
Q
[Multiple Sources of Obligations]
Can a single act be the source of multiple obligations?
A
Yes, a single act can be the source of multiple obligations.
23
Q
[Double Recovery]
Can a plaintiff recover damages twice for the same act or omission?
A
No, double recovery is not allowed. (Art. 2177)
24
Q
[Pure Obligations]
Q: What is a pure obligation?
A
An obligation whose performance does not depend on a future or uncertain event and is demandable at once.
25
[Conditional Obligations]
What defines a conditional obligation?
The acquisition, extinguishment, or loss of rights depends on the happening of a condition. (Art. 1181)
26
[Potestative Condition]
What is a potestative condition?
A condition dependent solely on the will of one of the parties.
27
[Void Potestative Condition]
When is a potestative condition considered void?
When it is dependent solely on the will of the debtor and is suspensive in character. (Art. 1182)
28
[Constructive Fulfillment]
When is a condition deemed fulfilled?
When the obligor voluntarily prevents its fulfillment. (Art. 1186)
29
[Impossible Conditions]
What happens when an obligation depends on an impossible condition?
The obligation is annulled; if divisible, the valid part remains. (Art. 1183)
30
[Types of Impossibility]
What are the types of impossibility for conditions?
1. Physically impossible
2. Legally impossible
31
[Effect of Impossible Condition - Obligation to Do]
What is the effect if an impossible condition is imposed in an obligation to do?
The obligation and the condition are treated as void.
32
[Effect of Impossible Condition - Obligation Not to Do]
What is the effect if an impossible condition is imposed in an obligation not to do?
The impossible condition can be disregarded, and the obligation remains.
33
[Effect of Fulfillment of Conditions]
What is the general rule about the effect of fulfilled conditions?
Fulfillment retroacts to the day of the constitution of the obligation, except for fruits, interests, and periods of prescription.
34
[Fruits and Interests - Reciprocal Obligations]
How are fruits or interests treated in reciprocal obligations when a condition is fulfilled?
The fruits are deemed mutually compensated.
35
[Fruits and Interests - Unilateral Obligations]
How are fruits or interests treated in unilateral obligations when a condition is fulfilled?
The debtor is entitled to the fruits unless otherwise stated.
36
[Period of Prescription]
How is the period of prescription counted when a condition is fulfilled?
It is still counted from the time the condition was fulfilled.
37
[Obligation with a Period]
When is an obligation treated as one with a period?
When the debtor binds himself to pay when his means permit him to do so. (Art. 1180)
38
[Suspensive Conditions with a Deadline]
What happens if a suspensive condition with a deadline is not met?
The obligation is extinguished if the time expires or if it becomes clear the event will not happen.
39
[Rules for Loss, Deterioration, or Improvement]
What are the rules for loss, deterioration, or improvement of a specific or determinate thing subject to a suspensive condition? (Art. 1189)
• Loss:
• Without fault of the debtor: Obligation is extinguished.
• With fault of the debtor: Debtor is liable for damages.
• Deterioration:
• Without fault of the debtor: Impairment is borne by the creditor.
• With fault of the debtor: Creditor can either:
1. Exact fulfillment and ask for damages
2. Ask for rescission and damages
• Improvement:
• By nature or time: Improvement benefits the creditor.
• At the expense of the debtor: Debtor may remove the improvement if it doesn’t damage the thing.
40
[Obligation with a Period/Term]
What is a period/term in an obligation?
A certain length of time determining the effectivity or extinguishment of the obligation, which is certain to arrive even though it may not be known when.
41
[Kinds of Term]
What are the kinds of term?
1. Definite - Specific date or within a fixed period.
2. Indefinite - Period arrives upon the fulfillment of a certain event that is certain to happen.
3. Legal - Imposed by law.
4. Voluntary - Agreed upon by the parties.
5. Judicial - Fixed by courts.
42
[Effect of Term/Period]
What are the effects of a period/term in obligations?
1. Ex die: Period with a suspensive effect.
2. In diem: Period with a resolutory effect.
43
[Benefit of the Period]
What is the general rule regarding the benefit of the period in an obligation?
The period is presumed to be established for the benefit of both the creditor and the debtor. (Art. 1196)
44
[Consequences of Benefit of the Period]
What are the consequences of the general rule for the benefit of the period?
1. The debtor cannot be made to pay before the period.
2. The creditor cannot be made to accept payment before the period.
45
[Loss of Benefit of the Period (Debtor)]
When does a debtor lose the right to the benefit of the period?
1. When he becomes insolvent after the obligation has been contracted, unless he provides a guaranty.
2. When he fails to provide the guaranties promised.
3. When he impairs the guaranties after establishment or if they disappear through fortuitous events, unless new ones are provided.
4. When he violates any undertaking in consideration of which the creditor agreed to the period.
5. When he attempts to abscond.
46
[Loss of Benefit of the Period (Acronym)]
What acronym helps remember when a debtor loses the benefit of the period?
Insolvency, Guaranties, Impairment, Violation, Absconding.
47
[Conjunctive Obligations]
What is a conjunctive obligation?
An obligation where all prestations must be complied with to fulfill the obligation.
48
[Alternative Obligations]
What is an alternative obligation?
An obligation where the performance of one of the prestations fulfills the obligation.
49
[49: Right of Choice (Alternative Obligations)]
Who generally has the right of choice in alternative obligations?
The debtor, except when expressly granted to the creditor or a third party.
50
[Limitations on Debtor’s Right of Choice]
What are the limitations on the debtor’s right of choice in alternative obligations?
The debtor cannot choose any prestation that is impossible or unlawful.
51
[Communication of Choice]
What is required for the choice to take effect in alternative obligations?
The choice must be communicated, a process technically called “concentration.”
52
[Limitation on Choice]
Can the choice in an alternative obligation be part of one prestation and part of another?
No, the choice cannot be divided between prestations.
53
[Effect of Loss (Debtor’s Choice)]
What happens if all the choices in an alternative obligation are lost?
• Fortuitous Event: Obligation is extinguished.
• Fault of Debtor: Value of the last remaining prestation + Damages.
• Fault of Creditor: Debtor cannot make a choice; can ask for rescission + Damages or Perform + Damages.
54
[Effect of Loss (Creditor’s Choice)]
What happens if all the choices in an alternative obligation are lost?
• Fortuitous Event: Obligation is extinguished.
• Fault of Debtor: Value of any + Damages.
• Fault of Creditor: Demand from remaining + Damages.
55
[Faculative Obligations]
What is a facultative obligation?
When only one prestation is agreed upon, but the obligor may render another in substitution.
56
[Right to Substitute in Facultative Obligations]
Who has the right to substitute in facultative obligations?
The debtor always has the right to substitute and cannot be compelled to do so.
57
[Effect of Loss Before Substitution]
What is the effect if the principal is lost before substitution in facultative obligations?
The obligation is extinguished.
58
[Effect of Loss of Substitute Before Substitution]
What is the effect if the substitute is lost before substitution in facultative obligations?
The obligation is not extinguished.
59
[Effect of Loss After Substitution (Principal)]
What is the effect if the principal is lost after substitution in facultative obligations?
The obligation is not extinguished.
60
[Effect of Loss After Substitution (Substitute)]
What is the effect if the substitute is lost after substitution in facultative obligations?
The obligation is extinguished.
61
[Solidary Obligation]
What is a solidary obligation?
A solidary obligation is one where each debtor is liable for the entire obligation, or each creditor is entitled to demand the whole obligation. (Art. 1207)
62
[Formation of Solidary Obligation]
When does a solidary obligation arise?
1. When expressly stipulated.
2. When required by law.
3. When the nature of the obligation requires it. (Art. 1207)
63
[Enforcement of Solidary Obligations]
What are the rules for enforcement of solidary obligations?
1. A debtor may pay any one of the solidary creditors; payment should be made to the creditor who has made demand.
2. Novation, compensation, confusion, or remission by any creditor or debtor extinguishes the obligation.
3. A solidary debtor can use defenses personal to himself or his share; he can only use defenses personal to others for their share. (Arts. 1208–1211)
64
[Payment and Reimbursement in Solidary Obligations]
What happens if one of the solidary debtors pays the entire obligation?
1. The obligation is extinguished.
2. The paying debtor can claim reimbursement from co-debtors for their respective shares plus interest.
3. If a debtor cannot reimburse due to insolvency, the share is borne by other co-debtors proportionally. (Arts. 1213–1215)
65
[Creditor’s Rights in Solidary Obligations]
What rights does a creditor have in a solidary obligation?
1. The creditor may proceed against any or all solidary debtors.
2. Demand against one does not prevent future demands against others until the debt is fully collected.
3. Payment after prescription or illegality does not entitle reimbursement from co-debtors. (Arts. 1216–1218)
66
[Joint Obligation]
What is a joint obligation?
A joint obligation is one where each debtor is liable only for a proportionate part of the debt, or each creditor is entitled only to a proportionate part of the credit. (Art. 1208)
67
[Effects of Joint Obligations]
What are the effects of joint obligations?
1. Demand by one creditor upon one debtor only affects the specific debtor and creditor involved.
2. Interruption of prescription or partial payment affects only the debtor or creditor involved.
3. Personal defects or insolvency of one debtor do not affect the others. (Art. 1209)
68
[Disjunctive Obligations]
What is the rule for disjunctive obligations?
Although not explicitly covered by the New Civil Code, disjunctive obligations should follow rules similar to solidary obligations, ensuring that debtors and creditors are not given a choice in fulfilling or collecting the obligation. (Art. 1207)
69
[Indivisibility and Solidarity]
Does indivisibility imply solidarity?
No, indivisibility does not necessarily connote solidarity. The rules on solidarity and joint obligations still apply to multiple parties. (Art. 1234)
70
[Indivisible Obligations]
What types of obligations are considered indivisible?
1. Obligation to give definite things.
2. Obligations not susceptible to partial performance.
3. Obligations capable of partial performance but treated as indivisible by law or intention. (Art. 1234)
71
[Divisible Obligations]
What types of obligations are considered divisible?
1. Execution of a certain number of days of work.
2. Accomplishment of work by metrical units.
3. Payment of a certain amount in installments.
4. Accomplishment of work susceptible to partial performance. (Art. 1234)
72
[Joint Indivisible Obligations]
What happens if a joint indivisible obligation is impossible to divide?
1. The right of the creditors may be prejudiced only by their collective acts.
2. The debt can only be enforced against all the debtors.
3. If one debtor is insolvent, the others are not liable for his share.
4. Indemnity for damages arises from the time any debtor fails to comply, with indemnity limited to the debtor’s portion. (Art. 1235)
73
[Solidary Indivisible Obligations]
How does a solidary indivisible obligation differ from a joint indivisible one?
1. In a solidary indivisible obligation, even an innocent debtor or one ready to comply can be liable for damages.
2. The innocent debtor can seek reimbursement from the debtor at fault or who is not ready to comply. (Art. 1235)
74
[General Rule for Penal Clause]
What is the general rule regarding the penalty in obligations with a penal clause?
The penalty shall substitute the indemnity for damages and payment of interests in case of non-compliance.
75
[Exceptions to the General Rule for Penal Clause]
What are the exceptions to the general rule that the penalty substitutes indemnity for damages and payment of interests?
A:
1. If there is a stipulation to the contrary.
2. If the debtor refuses to pay the penalty.
3. If the debtor is guilty of fraud in fulfilling the obligation.
76
[Payment of Penalty Instead of Fulfillment]
Can the debtor exempt himself from performing the obligation by paying the penalty?
As a rule, the debtor cannot exempt himself from the performance of the obligation by paying the penalty unless this right has been expressly reserved for him.
77
[Fulfillment and Penalty]
Can the creditor demand both the fulfillment of the obligation and the penalty simultaneously?
The creditor cannot demand both the fulfillment of the obligation and the penalty at the same time unless this right has been clearly granted to him.
78
[Impossibility of Performance After Creditor’s Demand]
What happens if the creditor demands fulfillment, but performance becomes impossible without his fault?
The penalty may be enforced if the performance of the obligation becomes impossible without the creditor’s fault after he has decided to require fulfillment.
79
[Reduction of Penalty]
When can courts reduce the penalty in an obligation with a penal clause?
Courts can reduce the penalty whenever:
1. The principal obligation has been partly or irregularly complied with.
2. The penalty is iniquitous or unconscionable.
80
[Real vs. Personal Obligations]
What is the difference between real and personal obligations?
• Real obligation: The obligation to give.
• Personal obligation: The obligation to do or not to do.
81
[Positive vs. Negative Obligations]
What is the difference between positive and negative obligations?
• Positive obligation: The obligation to give or to do.
• Negative obligation: The obligation not to do or not to give.
82
[Unilateral vs. Bilateral Obligations]
What is the difference between unilateral and bilateral obligations?
• Unilateral obligation: Only one of the parties is bound.
• Bilateral obligation: Both parties are bound.
83
[Concurrent Obligations in Obligations to Give a Determinate Thing]
What are the concurrent obligations in obligations to give a determinate thing?
The concurrent obligations are:
1. To deliver the thing, which may be actual or constructive.
2. To take care of it with the proper diligence of a good father of a family (bonus pater familias), unless another standard of care is stipulated or required by law.
3. To deliver the fruits of the thing from the time the obligation to deliver arises, though the creditor only acquires real rights over the fruits upon delivery.
4. To deliver all accessions and accessories, even if they are not mentioned.
84
[Kinds of Fruits]
What are the different kinds of fruits in an obligation to give a determinate thing?
• Natural fruits: Spontaneous products of the soil, young, and other products of animals.
• Industrial fruits: Those derived from human intervention, cultivation, or labor.
• Civil fruits: Those derived from the juridical relation of parties.
85
[Accessions vs. Accessories]
What is the difference between accessions and accessories?
• Accessories: Items joined to or included with the principal for its better use, perfection, or enjoyment (e.g., keys to a house).
• Accessions: Additions or improvements upon a thing, including an alluvium or whatever is built, planted, or sown on land (e.g., a building constructed on land).
86
[Concurrent Obligations in Obligation to Give a Generic Thing]
Do concurrent obligations exist in an obligation to give a generic thing?
No, concurrent obligations do not exist in an obligation to give a generic thing.
87
[Remedies for Breach of Obligation to Give a Determinate Thing]
What is the remedy for breach of an obligation to give a determinate thing?
The remedy is specific performance, but only if it is legally and physically possible. Substitute performance is not possible.
88
[Remedies for Breach of Obligation to Give a Generic Thing]
What is the remedy for breach of an obligation to give a generic thing?
The remedy can be either specific or substitute performance. The creditor can have another person deliver the same kind of thing at the debtor’s expense, plus damages.
89
[Remedies for Breach of Obligation to Do]
What is the remedy for breach of an obligation to do?
The remedy is substitute performance, as forcing the obligor to comply would violate the constitutional prohibition against involuntary servitude
90
[Remedies for Breach of Obligation Not to Do]
What is the remedy if the obligor does something they are obligated not to do?
The creditor may have the act undone at the expense of the debtor.
91
[Rescission in Reciprocal Obligations]
What is rescission in reciprocal obligations?
Rescission, often termed “resolution,” is a primary remedy in cases of substantial or fundamental breach or non-compliance in reciprocal obligations.
92
[Rescission in Rescissible Contracts]
What is rescission under Articles 1301/1303 in rescissible contracts?
It is a remedy of last resort, typically used when there is lesion or economic injury to a party.
93
[Types of Damages (MENTAL)]
What are the different types of damages, represented by the acronym “MENTAL”?
• Moral damages: For mental and physical anguish.
• Exemplary damages: Corrective or to set an example.
• Nominal damages: To vindicate a right when no other kind of damages may be recovered.
• Temperate damages: When the exact amount of damages cannot be determined.
• Actual damages: Actual losses incurred, requiring proof.
• Liquidated damages: Predetermined amount, agreed upon beforehand.
94
[Liability for Fraud, Negligence, Delay, or Contravention]
What is the consequence for those guilty of fraud, negligence, delay, or contravention in the performance of their obligations?
T hey are liable for damages. (Art. 1170)
95
[Definition of Fraud]
How is fraud defined in the context of obligations?
Fraud occurs when, through insidious words or machinations, one party induces the other to enter into a contract that they otherwise would not have agreed to. (Art. 1338)
96
[Responsibility Arising from Fraud]
Is responsibility arising from fraud demandable in all obligations?
Yes, responsibility arising from fraud is demandable in all obligations, and any waiver of an action for future fraud is void. (Art. 1171)
97
[Kinds of Fraud: Dolo Causante]
What is dolo causante?
Dolo causante, or fraud in obtaining consent, applies only to contracts where consent is necessary. It affects the validity of the contract, making it voidable.
98
[Kinds of Fraud: Dolo Incidente]
What is dolo incidente?
Dolo incidente, or fraud in the performance of an obligation, does not affect the validity of the contract but makes the party guilty of fraud liable for damages.
99
[Definition of Negligence]
What constitutes negligence in the context of obligations?
Negligence consists in the omission of the diligence required by the nature of the obligation and corresponds with the circumstances of the persons, the time, and the place.
100
[Degree of Care Required]
What are the degrees of care required in obligations?
1. As a rule:
• That required by law (e.g., a common carrier must exercise extraordinary care).
• That agreed upon by the parties.
2. In the absence of the above:
• The diligence of a good father of a family.
101
[Kinds of Negligence as to Source]
What are the kinds of negligence as to the source?
1. Culpa Contractual - Contractual negligence, resulting in a breach of contract.
2. Culpa Aquiliana - Civil negligence or quasi-delict.
3. Culpa Criminal - Criminal negligence, resulting in the commission of a crime or delict.
102
[Negligence of the Injured Party: No Recovery]
What happens if the injured party’s negligence was the immediate and proximate cause of the injury?
There is no recovery for damages
103
[Negligence of the Injured Party: Contributory Negligence]
What happens if the injured party’s negligence was only contributory to the injury?
The injured party may still recover damages, but the courts can mitigate or reduce the amount of damages.
104
[Kinds of Delay]
What are the kinds of delay in obligations?
1. Mora Solvendi - Delay on the part of the debtor, which may be:
• Mora solvendi ex re: In real obligations.
• Mora solvendi ex persona: In personal obligations.
2. Mora Accipiendi - Delay on the part of the creditor.
3. Compensatio Morae - Delay on the part of both parties.
105
[When is a Debtor Considered in Default?]
When is a debtor considered in default?
General Rule: Upon demand, which may be judicial or extra-judicial.
106
[Exceptions to the Requirement of Demand]
What are the exceptions to the requirement of demand to consider a debtor in default?
1. When stipulated - The contract must state that no demand is needed to consider the debtor in default.
2. When the law so declares - Example: Delivery of a partner’s share in a partnership.
3. When the nature of the obligation shows that the time of delivery or service was a controlling motive - Example: A florist for a wedding.
4. When demand would be useless - Example: The debtor has already transferred, destroyed, or hidden the thing.
5. In reciprocal obligations - When respective obligations must be performed simultaneously, and one party was not ready
107
[Contravention of the Obligation (Violatio)]
What does “contravention of the obligation” mean?
It includes any illicit act which impairs the strict and faithful fulfillment of the obligation or any defective performance. The debtor who fails in performance is bound to indemnify for the losses and damages caused.
108
[Definition of a Fortuitous Event]
What is a fortuitous event?
A fortuitous event is an extraordinary event that is not foreseeable or avoidable. It must be impossible to foresee or avoid, not merely unforeseen
109
[General Rule on Responsibility for Fortuitous Events]
What is the general rule on responsibility for fortuitous events?
No person shall be responsible for events which could not be foreseen or were inevitable.
110
[Exceptions to the General Rule on Fortuitous Events]
What are the exceptions to the general rule on fortuitous events?
1. Declared by stipulation.
2. When the nature of the obligation requires the assumption of risk - Example: Insurance contracts.
3. Expressly specified by law, such as:
• A possessor in bad faith (Art. 552).
• An obligor already in delay or who promised the same thing to multiple persons with differing interests (Art. 1165).
• The officious manager may be liable for any fortuitous event under Art. 2147.
4. When negligence, delay, or fraud concurred with the fortuitous event.
111
[Modes of Extinguishment of Obligations (Art. 1231)]
What are the modes of extinguishment of obligations under Article 1231?
1. By payment or performance
2. By the loss of the thing due
3. By condonation or remission of the debt
4. By confusion or merger of the rights of creditor and debtor
5. By compensation
6. By novation
112
[Other Causes of Extinguishment of Obligations]
What are the other causes of extinguishment of obligations, aside from those listed in Article 1231?
a. Annulment
b. Rescission
c. Fulfillment of a resolutory condition
d. Prescription
These causes are governed elsewhere in the Civil Code.
113
[Definition of Payment or Performance]
What does “payment” include under the Civil Code?
Payment includes not only the delivery of money but also the performance, in any other manner, of an obligation.
114
[Payment by a Third Person - With Consent of the Debtor/Interest in the Fulfillment]
Can a creditor be compelled to accept payment made by a third person with the debtor’s consent or interest in the fulfillment of the obligation?
Yes, the creditor can be compelled to accept payment.
115
[Payment by a Third Person - Without Knowledge or Consent of the Debtor]
Can a creditor be compelled to accept payment made by a third person without the debtor’s knowledge or consent?
No, the creditor cannot be compelled to accept payment.
116
[Subrogation to the Rights of the Creditor]
When does subrogation to the rights of the creditor occur if a third person makes the payment?
Subrogation occurs if the payment is made with the debtor’s consent or if the third person has an interest in the fulfillment of the obligation. Without either, there is no subrogation.
117
[Reimbursement to Third Person - With Consent or Interest]
What is the amount of reimbursement for a third person who pays with the debtor’s consent or interest in the fulfillment?
They are entitled to full reimbursement.
118
[Reimbursement to Third Person - Without Consent or Interest]
What is the amount of reimbursement for a third person who pays without the debtor’s consent or interest in the fulfillment?
They are entitled to beneficial reimbursement only.
119
[Persons with Interest in Fulfillment of Obligation]
Who are considered persons with an interest in the fulfillment of an obligation?
Persons with an interest include those subsidiarily liable, such as guarantors, co-debtors (including joint co-debtors), and third-party mortgagors whose properties secure the obligation.
120
[Third Party Payor and Donation]
What happens if a third party payor does not intend to be reimbursed?
The payment may be treated as a donation, which requires the debtor’s acceptance for validity.
121
[Invalid Donation and Reimbursement]
What occurs if the debtor did not consent to the donation from a third party payor?
There would be no valid donation, and the third party payor can seek reimbursement from the debtor.
122
[Effect of Third Party Payment on Obligation]
Is the payment still valid as to the creditor if the debtor did not consent to the donation?
Yes, the payment is still valid as to the creditor, and the obligation is extinguished.
123
[Capacity and Free Disposal in Payment]
What are the requirements for a payor to make a valid payment?
The payor should have the capacity to alienate and the free disposal of the thing due. Minors and those under civil interdiction cannot make a valid payment.
124
[Person in Whose Favor Obligation is Constituted]
To whom can payment be made under the provision as to the payee?
Payment may be made to the person in whose favor the obligation has been constituted, even if they were not a party to the constitution of the obligation.
125
[Successor in Interest]
Can payment be made to a successor in interest?
Yes, payment can be made to the successor in interest, who may not have been a creditor at the time of constitution but may be a creditor at the time of fulfillment.
126
[Authorized Person]
Can payment be made to an authorized person?
Yes, payment can be made to any person authorized to receive it. Agents are considered creditors for collection purposes but not in their own right.
127
[Third Party Benefit]
When can payment be made to a third party?
Payment can be made to a third party if it benefits the creditor. The benefit to the creditor need not be proven if:
a. The third person acquires the creditor’s rights after payment.
b. The creditor ratifies the payment to the third person.
c. The debtor was led to believe by the creditor’s conduct that the third person had authority to receive the payment.
d. The third party is in possession of the credit.
128
[Payment to Incapacitated Person]
What is the rule for payment to an incapacitated person?
Payment to an incapacitated person is valid only if the incapacitated person keeps the thing delivered or if it was beneficial to them.
129
[Delivery of Specific Thing]
Can a debtor compel a creditor to receive a different specific thing?
No, the debtor cannot compel the creditor to receive a different specific thing, even if the substitute is of equal or greater value.
130
[Delivery of Generic Thing]
What are the rules regarding the delivery of a generic thing?
For a generic thing, the creditor cannot demand a thing of superior quality, nor can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances must be considered.
131
[Obligations to Do or Not to Do]
Can an act or forbearance be substituted by another act or forbearance in obligations to do or not to do?
No, an act or forbearance cannot be substituted by another against the obligee’s will.
132
[Legal Tender]
What constitutes legal tender under the New Central Bank Act?
Coins and currencies issued by the BSP have legal tender power. Currency notes have no limit for legal tender, while coins have limits:
1. P1 coins and above – legal tender up to P1,000 (now P2,000 from December 2022).
2. Coins below P1 – legal tender up to P100 (now P200 from December 2022).
133
[Negotiable Instruments and Checks]
Are negotiable instruments and checks considered legal tender?
No, they are not considered legal tender. Their acceptance depends on the creditor. They do not extinguish the obligation until:
1. The check or mercantile document has been encashed.
2. Its value becomes impaired.
134
[Extraordinary Inflation or Deflation]
What is the rule regarding extraordinary inflation or deflation of the currency stipulated in an obligation?
The value 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.
135
[Place of Payment (Designated)]
Where should payment be made if the place of payment is designated in the obligation?
Payment should be made in the place designated in the obligation.
136
[Place of Payment (No Stipulation, Determinate Thing)]
Where should payment be made if there was no stipulation and the obligation involves the delivery of a determinate thing?
Payment should be made wherever the thing might be at the moment the obligation was constituted.
137
[Place of Payment (Other Cases)]
Where is the place of payment if there is no specific designation and the obligation does not involve a determinate thing?
The place of payment shall be the domicile of the debtor.
138
[Additional Expenses Due to Bad Faith or Delay]
Who bears the additional expenses if the debtor changes his domicile in bad faith or after incurring delay?
The additional expenses shall be borne by the debtor.
139
[Dation in Payment]
What is dation in payment?
Dation in payment is the delivery or transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation.
140
[Extent of Extinguishment (Dation in Payment)]
To what extent does dation in payment extinguish the obligation?
General rule: To the extent of the value of the thing delivered as agreed upon or as may be proved. Exception: If the parties consider the thing as equivalent to the obligation through an express or implied agreement or by silence.
141
[Application of Payment]
What is the application of payment?
The designation of the debt which is being paid by a debtor who has several obligations of the same kind in favor of the creditor to whom payment is made.
142
[Requisites for Application of Payment]
What are the requisites for the application of payment?
1. There is only one debtor.
2. There are several debts.
3. The debts are of the same kind.
4. There is only one and the same creditor.
143
[Debtor’s Right to Apply Payment]
What are the limitations to the debtor’s right to apply payment?
1. The creditor cannot be compelled to accept partial payment.
2. The debtor cannot apply payment to principal if interest has not been paid.
3. The debt must be liquidated, unless otherwise agreed.
4. Payment cannot be applied if the period has not arrived and such period was constituted in favor of the creditor, except with consent.
5. If there is an agreement as to which debt must be paid first.
144
[Payment Application Without Designation]
If the debtor does not designate which debt the payment applies to, how is the payment applied?
The payment applies to the debt chosen by the creditor as reflected in the receipt accepted by the debtor without protest.
145
[Payment Application by Debtor and Creditor]
If neither debtor nor creditor designates the application of payment, how is it applied?
1. If debts are of different nature and burden – to the debt which is most onerous to the debtor.
2. If debts are of the same nature and burden – applied proportionately.
146
[Payment by Cession]
What is cession in the context of payment?
Cession is when the debtor delivers all his properties to his creditors for the purpose of selling and applying the proceeds to settle his obligations.
147
[Kinds of Cession]
What are the kinds of cession?
1. Voluntary – debtor cedes or assigns property to creditors in payment of debts; extinguishment is up to the amount of the proceeds.
2. Judicial – under the Financial Rehabilitation and Insolvency Act; advantages include discharge of debtor’s debts and extinguishment of obligations.
148
[Properties Exempt from Execution in Cession]
Are properties exempt from execution covered by cession?
Generally, properties exempt from execution are not covered by cession, except if the debtor waives such exemption.
149
[Distribution of Proceeds to Creditors]
How are proceeds from a cession distributed to creditors?
1. According to stipulation.
2. By preference of credit.
150
[Tender of Payment]
What is tender of payment and does it extinguish the obligation?
Tender of payment is the debtor’s manifestation of intent to comply with the obligation, offering immediate performance. It is a preparatory act and does not itself extinguish the obligation.
151
[Consignation]
What is consignation and how does it affect the obligation?
Consignation is the deposit of the object of the obligation in a competent court after tender of payment has been refused or direct payment is impossible. It extinguishes the obligation.
152
[When Consignation is Applicable]
When is consignation applicable and what are the requisites?
Consignation applies to extinguish obligations, not to exercise rights. Requisites include:
1. A valid debt that is due.
2. Legal cause to consign, such as unjust refusal or certain circumstances like creditor’s absence or incapacity.
3. Previous notice to interested parties.
4. Deposit of the amount or thing due in court.
153
[Withdrawal of the Thing Deposited]
What are the conditions for withdrawing the deposited thing in consignation?
1. Withdrawal as a matter of right: Before acceptance by the creditor or judicial declaration of propriety; obligation is not yet extinguished.
2. Withdrawal after acceptance or declaration: Only with the creditor’s consent; obligation is revived, and the creditor cannot run after the guarantor unless consented.
154
[Definition of Loss]
What does “loss” mean in the context of obligations?
Loss means when the thing goes out of commerce, perishes, or disappears in such a way that its existence is unknown or it cannot be recovered.
155
[Loss Due to Fortuitous Event]
Under what conditions is a debtor not liable for damages if the loss is due to a fortuitous event?
The debtor is not liable for damages except in the following cases:
1. When the law provides otherwise.
2. When stipulated otherwise.
3. When the nature of the obligation requires assuming the risk.
4. Obligations arising from a criminal offense, unless the creditor is in mora accipiendi.
5. Obligations to give a generic thing, except in cases of limited generic.
156
[Partial Loss]
How does partial loss affect the obligation?
Partial loss may extinguish the obligation if it is significant enough and the intent of the parties is considered. The test is whether the parties would have entered into the obligation without the lost item.
157
[Presumption of Fault in Loss]
What is the presumption of fault when the thing is lost in the possession of the debtor?
It is presumed that the loss was due to the debtor’s fault unless proven otherwise. This presumption does not apply in cases of natural calamities like earthquakes or floods.
158
[Impossibility of Performance]
What is considered impossibility of performance in obligations?
Impossibility of performance includes:
1. Physical impossibility (e.g., destruction of the object).
2. Legal impossibility (e.g., a law making the obligation illegal).
159
[Types of Impossibility]
What are the types of impossibility in obligations?
Types of impossibility include:
1. Nature: Physical (due to the nature of the act) and Legal (due to subsequent law).
2. Reference: Objective (act itself is impossible) and Subjective (debtor is unable, but another could perform).
3. Extent: Partial or Total.
4. Period: Permanent or Temporary.
160
[Difficulty of Prestation]
What happens if the service becomes so difficult that it is manifestly beyond the contemplation of the parties?
The obligor may be released from the obligation in whole or in part. However, this does not automatically extinguish the obligation; the debtor must go to court to seek release from the obligation, not modification of the contract terms.
161
[Court Action for Difficulty of Performance]
What should a debtor do if performance of the obligation becomes extremely difficult but not beyond contemplation of the parties?
The debtor can seek court action to be released from the obligation, but not to modify the terms of the contract.
162
[Creditor’s Rights Against Third Parties After Loss]
What rights does the creditor have if the obligation is extinguished by the loss of the thing?
The creditor acquires all the rights of action that the debtor may have against third parties related to the loss.
163
[Condonation or Remission of Debt]
What is condonation or remission of debt?
It is an act of liberality where the creditor renounces the enforcement of an obligation, either in whole or in part, without receiving any equivalent.
164
[Gratuitous Condonation]
What happens if a condonation is not gratuitous?
It will be considered:
1. Dation in Payment: When the creditor receives something different from what was stipulated.
2. Novation: When the terms of the obligation are changed.
3. Compromise: When the matter is in dispute and the creditor receives some concession.
165
[Kinds of Condonation - Form]
What are the forms of condonation?
1. Express: Made formally, following specific forms for movable or immovable property.
2. Implied: Inferred from acts like delivery or destruction of evidence of credit.
166
[Kinds of Condonation - Extent]
What are the types of condonation based on extent?
1. Total: Extinguishes the whole obligation.
2. Partial: Applies to part of the obligation, amount, accessory obligations, or solidarity debt.
167
[Kinds of Condonation - Manner]
What are the manners of remission in condonation?
1. Inter Vivos: Takes place during the creditor’s lifetime.
2. Mortis Causa: Takes effect upon the creditor’s death, and must be executed through a will.
168
[Confusion or Merger of Rights]
What is the concept of confusion or merger of rights?
It refers to the meeting in one person of the qualities of both creditor and debtor with respect to the same obligation, resulting in the extinguishment of that obligation.
169
[Requisites for Confusion or Merger]
What are the requisites for confusion or merger of rights to extinguish an obligation?
a. The merger must occur between the creditor and the principal debtor.
b. It must involve the same obligation.
c. The merger must be total.
170
[Examples of Confusion or Merger]
Give examples of how confusion or merger of rights extinguishes an obligation.
a. A merger between PNB and Allied Bank extinguishes PNB’s indebtedness to Allied Bank.
b. When H inherits his deceased father T’s debt, the obligation is extinguished since H becomes both creditor and debtor.
171
[Effect of Confusion on Guarantors]
How does confusion or merger of rights affect guarantors?
Confusion in the person of the principal debtor or creditor benefits the guarantors. However, if the creditor’s debt is assigned to the guarantor and the guarantor becomes the creditor, the obligation is not extinguished as the guarantor is not the principal debtor.
172
[Compensation]
What is compensation in the context of extinguishing obligations?
Compensation is a mode of extinguishing obligations to the extent of the concurrent amounts when two parties are both creditors and debtors of each other.
173
[Kinds of Compensation - Effects/Extent]
What are the types of compensation based on effects or extent?
1. Total: When the two obligations are of the same amount.
2. Partial: When the amounts are not equal, and compensation applies to the lesser amount.
174
[Kinds of Compensation - Origin/Cause]
What are the types of compensation based on origin or cause?
1. Legal: Takes effect by operation of law when all requisites are met.
2. Facultative: Can be claimed by one party, who may object to it, such as when one obligation has a period that is waived.
3. Conventional: Agreed upon by the parties even if some requisites are lacking.
4. Judicial: Decreed by the court in a case involving a counterclaim.
175
[Requisites for Compensation]
What are the requisites for compensation according to Art. 1279?
1. Each obligor must be both a principal debtor and a principal creditor of the other.
2. Both debts must be in a sum of money, or if consumable things, they must be of the same kind and quality if stated.
3. Both debts must be due.
4. Debts must be liquidated and demandable.
5. There must be no retention or controversy commenced by third persons and communicated in due time to the debtor.
176
[Guarantors and Compensation]
How can guarantors use compensation?
Guarantors may use compensation concerning what the creditor may owe the principal debtor.
177
[Rescissible or Voidable Debts and Compensation]
Can rescissible or voidable debts be subject to compensation?
Yes, rescissible or voidable debts may be the subject of compensation before they are rescinded or annulled.
178
[Assignment of Credit and Compensation]
When can a debtor invoke compensation against assigned credits?
A debtor can invoke compensation if:
1. He had no knowledge of or did not consent to the assignment; or
2. He had knowledge or consent but reserved his right to compensation.
179
[Situations Where Compensation May Not Be Proper]
In which situations is compensation not proper?
1. Depositum – as to the depositary.
2. Bail – as to the bailee.
3. Support – as to the one giving support, except for support in arrears and those of contractual nature.
4. Civil liability arising from a penal offense.
180
[Several Debts and Compensation]
How are several debts susceptible to compensation handled?
The rules on the application of payments apply to the order of compensation.
181
[Legal Compensation]
When does legal compensation take effect and what is its impact?
Legal compensation takes effect by operation of law and extinguishes both debts to the concurrent amount, even if the creditors and debtors are unaware of the compensation.
182
[Requisites for Novation]
What are the requisites for novation?
1. Previous valid obligation.
2. Agreement of all parties to a new contract.
3. Extinguishment of the old obligation.
4. Validity of the new obligation.
183
[Kinds of Novation - Nature]
What are the kinds of novation as to nature?
1. Objective/Real – Changes the object or principal conditions of the obligation.
2. Subjective/Personal – Changes the parties involved in the obligation.
3. Mixed – Combines elements of both objective and subjective novation.
184
[Kinds of Novation - Form]
What are the kinds of novation as to form?
1. Express – Clearly stated in the agreement.
2. Implied – Inferred from the actions or circumstances.
185
[Kinds of Novation - Extent]
What are the kinds of novation as to extent?
1. Total – The entire obligation is extinguished and replaced.
2. Partial – Only part of the obligation is extinguished and replaced.
186
[Objective or Real Novation - Change in Object]
What is an example of objective or real novation involving a change in the object?
A change in the object of the obligation, where the original object is replaced with a new one.
187
[Objective or Real Novation - Change in Principal Conditions]
What are the types of changes in the principal conditions of an obligation in objective or real novation?
1. Express – Clearly stated in unequivocal terms.
2. Implied – The old and new obligations are incompatible; requires clear and convincing proof of incompatibility.
188
[Objective or Real Novation - Test for Incompatibility]
How is incompatibility determined in implied objective or real novation?
If the old and new obligations cannot stand together, incompatibility exists, and the new obligation novates the old one. If they can coexist, no novation occurs.
189
[Subjective Novation - Active (Subrogation)]
What is active subjective novation?
It involves subrogation where a third person is substituted in place of the original creditor.
190
[Subjective Novation - Subrogation by Agreement or Express]
What are the requirements for subrogation by agreement or express?
Requires the consent of the original parties and the third person being subrogated.
191
[Subjective Novation - Subrogation by Law or Implied]
When does subrogation by law or implied occur?
1. When a creditor pays another preferred creditor without the debtor’s knowledge.
2. When a third person pays with the express or tacit approval of the debtor.
3. When a person interested in the obligation pays without the debtor’s knowledge, affecting only their share.
192
[Effects of Subrogation]
What are the effects of subrogation?
Subrogation transfers the credit to the subrogated person with all associated rights, including those against the debtor or third parties, subject to any stipulations in conventional subrogation.
193
[Preference of Original Creditor]
What rights does the original creditor have after partial payment and subrogation?
The original creditor can still claim the remainder of the debt and is preferred over the person subrogated in their place.
194
[Passive Novation - Definition]
What is passive novation?
Passive novation occurs when a third person is substituted for the original debtor, with the new debtor taking over the obligation.
195
[Passive Novation - Clarity Requirement]
What must be clear for passive novation to be valid?
It must be clear to both parties that the new debtor is replacing the old debtor.
196
[Passive Novation - Expromision]
What is Expromision in passive novation?
Expromision is a type of passive novation done without the knowledge or consent of the original debtor.
197
[Passive Novation - Beneficial Reimbursement]
What is the extent of reimbursement for Expromision in case of insolvency?
The old debtor is no longer liable if the new debtor becomes insolvent.
198
[Passive Novation - Delegacion]
What is Delegacion in passive novation?
Delegacion is when the original debtor consents to the substitution of a new debtor
199
[Passive Novation - Parties in Delegacion]
Who are the parties involved in Delegacion?
1. Delegante – The old debtor.
2. Delegado – The new debtor.
3. Delegatorio – The creditor.
200
[Passive Novation - Liability of Old Debtor in Delegacion]
What is the liability of the old debtor in case of insolvency of the new debtor in Delegacion?
The old debtor may still be liable if the insolvency was already existing and of public knowledge or known to the debtor.
201
[Passive Novation - Full Reimbursement]
What is the extent of reimbursement for Delegacion if the new debtor is insolvent?
The old debtor is generally not liable if the insolvency was not known or was not publicly known at the time of the Delegacion.
202
[Extent of Reimbursement in Passive Novation]
What is the extent of reimbursement in passive novation for Expromision and Delegacion?
1. Expromision: Beneficial reimbursement — the old debtor is no longer liable if the new debtor becomes insolvent.
2. Delegacion: Full reimbursement — the old debtor may still be liable if the insolvency was already known or publicly known.
203
[Additional Aspects of Novation]
What are the requirements and effects of novation concerning the creditor’s consent, accessory obligations, and conditional obligations?
1. Creditor’s Consent: Necessary for novation in the person of the debtor (Art. 1293).
2. Accessory Obligations: Generally extinguished with novation, except for “pour atrui” where the third person’s consent is required.
3. Conditional Obligations: The new obligation retains the same conditions (suspensive or resolutory) as the original obligation unless otherwise stipulated.
