OUTLINE

ON
OBLIGATIONS AND CONTRACTS

Title One: OBLIGATIONS

Chapter 1. General Provisions

I. Definition – Art. 1156

A. Elements
1. Active subject (obligor)
2. Passive subject (obligee)
3. Prestation (object of obligation – to give, to do, not to do)
4. Efficient cause or juridical tie (“vinculum juris”)

B. Distinction between natural (Art. 1423-1430) and civil obligations (Art. 1156-1304)

C. Classification of Obligations

1. Primary classification under the Civil Code

a. Pure or conditional (Art. 1179-1192)
b. With a period or term (Art. 1193-1198)
c. Alternative or facultative (Art. 1199-1206)
d. Joint or solidary (Art. 1207-1222)
e. Divisible or indivisible (Art. 1223-1225)
f. With a penal clause (Art. 1226-1230)

2. Secondary Classification
a. Legal (Art. 1158), conventional (Art. 1159), and penal (Art. 1161)
b. Real (to give) and personal (to do or not to do)
c. Determinate and generic (as to subject matter of obligation)
d. Positive (to give, to do) and negative (not to give, not to do)
e. Unilateral and bilateral
f. Individual and collective
g. Accessory and principal
h. As to object or presentation: simple, multiple, conjunctive,
distributive, alternative, facultative
i. Possible and impossible

II. Sources of Obligations – Art. 1157

CASE:
Sagrada Orden de Predicadores del Santisimo Rosario Filipinas vs. National
Coconut Corporation, 91 SCRA 503 (1952)

A. Law – Art. 1158

B. Contracts – Art. 1159, 1305

C. Quasi-contracts – Art. 1160, 2142

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 1. Negotiorum gestio (officious management) – Art. 2144 – 2153
2. Solutio indebiti (payment not due/payment by mistake) – Art. 2154-2163
3. Other quasi-contracts (support by strangers) – Art. 2164-2175

D. Acts or omissions punished by law

1. Civil liability arising from crime (ex delicto) – Art. 1161, 2177; Art. 100,
Revised Penal Code; Rule 111, Rules of Criminal Procedure

a. Every person criminally liable for a felony is civilly liable – Art. 100,
Revised Penal Code

• Exception – crimes without civil liability

b. Subsidiary civil liability for crime – Art. 102, 103, Revised Penal
Code

2. Implied institution of civil action for the recovery of civil liability ex delicto –
Sec. 1-7, Rule 111, Rules on Criminal Procedure

• Exceptions – waiver, reservation, prior institution of civil action

CASES:
Casupanan v. Laroya, G.R. No. 145391, August 26, 2002
Mendoza vs. Arrieta, 91 SCRA 113 (1975)
San Ildefonso Lines, Inc. v. Court of Appeals, G.R. No. 119771, April 24, 1998
Heirs of Simon v. Chan, G.R. No. 157547, February 23, 2011
Rodriquez v. People, G.R. No. 155531-34, July 29, 2005

b. Effect of acquittal or death of accused

CASES:
Daluraya v. Oliva, G.R. No. 210148, December 8, 2014
Lumantas v. Calapiz, G.R. No. 163753, January 15, 2014
Asilo vs. Bombasi, G.R. Nos. 159017-18, March 9, 2011
People vs. Amistoso, G.R. No. 201447, August 28, 2013

E. Quasi-delict – Art. 1162, 2176

1. Distinction between quasi-delict and crime (delict)

2. Liability for fault of others (doctrine of vicarious liability/imputed negligence)
– Art. 2180; Art. 218, 219, Family Code

CASES:
Mendoza v. Sps. Gomez, G.R. No. 160110, June 18, 2014
PSBA vs. CA, 205 SCRA 729 (1992)
Amadora vs. CA, 160 SCRA 315 (1988)

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Chapter 2. Nature and Effect of Obligations

I. Kinds of Prestation (to give, to do, not to do)

A. Obligation to give (real)

1. Specific/determinate thing
a. Obligations of the obligor:
i. To deliver the thing itself – Art. 1244
ii. To preserve the thing – Art. 1163
iii. To deliver the fruits – Art. 1164; nature of right over the fruits
– personal or real right
iv. To deliver the accessions and accessories – Art. 1166
b. Rights of the obligee – Art. 1165

2. Generic/indeterminate thing – Art. 1246

B. Obligation to do (personal) – Art. 1244, par. 2

C. Obligation not to do (personal) – Art. 1244, par. 2

II. Breach of Obligation

A. Concept of breach
1. Nature of breach – substantial vs. casual/ slight breach
2. Breach of obligation with liability for damages (Art. 1170) and breach of
obligation without liability for damages (fortuitous event)

CASES:
Spouses Guanio vs. Makati Shangri-la, G.R. No. 190601, February 7, 2011

B. Modes of breach with liability for damages (mora, dolo, culpa, contravention of
tenor) – Art. 1170

1. Delay (mora) – Art. 1169

a. Mora solvendi (delay of the debtor)
i. Requisites
ii. General rule – demand by creditor is necessary to incur
delay (Art. 1169)
iii. Exceptions – demand is not necessary (Art. 1169)
b. Mora accipiendi (delay of the creditor)
i. Requisites
c. Compensatio morae (delay of parties in reciprocal obligations)

CASES:
Social Security System v. Moonwalk Development & Housing Corporation,
G.R. No. 73345, April 7, 1993
Santos Ventura Hocorma Foundation, Inc. vs. Santos, G.R. No. 153004,
November 4, 2004
Pantaleon v. American Express International, Inc. G.R. No. 174269, May 8,
2009
Solar Harvest, Inc. v. Davao Corrugated Carton Corporation, G.R. No. 176868,
July 26, 2010

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 2. Fraud (dolo)
a. Concept
i. Fraud in the performance of obligation – Art. 1171
ii. Fraud in the constitution/creation of the obligation – dolo
incidente/dolo causante
b. Waiver of future fraud – Art. 1171

CASE:
Tankeh v. Development Bank of the Philippines, G.R. No. 171428, 11
November 2013

3. Negligence (culpa)
a. Concept – Art. 1173, par. 1
i. Culpa aquiliana vs. culpa contractual

CASES:
Gutierrez vs. Gutierrez, 56 Phil 177, G.R. No. 34840, 23 September 1931
Vazquez vs. De Borja, 74 Phil 560, G. R. No. L-48930, 23 February1944
Radio Communications of the Philippines v. Verchez, G.R No. 164349, 31
January 2006

ii. Liability may be regulated by courts according to

circumstances (Art. 1172)
iii. Applicable provision when there is bad faith - Art. 1173

b. Standard of care required

i. Generally: ordinary diligence or “diligence of a good father
of a family”– Art. 1173 par. 2
ii. Exceptions: law or contract states diligence to be observed

CASES:
Francisco v. CBCI, G.R. 193577, September 7, 2011
Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation, G.R.
No. 179446, 10 January 10, 2011
Crisostomo vs. CA, 409 SCRA 528 (2003)
Sarmiento vs. Sps. Cabrido, 401 SCRA 122 (2003)
Metro Manila Transit Corporation v. Court of Appeals, G.R. No. 104408, 21
June 1993
Spouses Teodoro v. Perena, G.R. No.157917, 29 August 2012
Reyes v. Puyat-Reyes, G.R. No. 118492. August 15, 2001

4. Contravention of the Tenor

CASE:
Chaves vs. Gonzales, 32 SCRA 547, G.R. No. 27454, 30 April 1970

C. Breach Due to Fortuitous Event – Article 1174

1. Concept of fortuitous event – act of God; act of man
2. Requisites
3. Effect of fortuitous event
a. General rule: extinguishment of liability
b. Exceptions: liability is not extinguished (Art. 1174)

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 i. In cases specified by law (Examples: Arts. 1165 par. 3,
1942, 1979, 2001, 2147, 552)
ii. When otherwise declared by stipulation
iii. When the nature of the obligation requires the assumption
of risk
4. Effect of concurrent fault

CASES:
Juan Nakpil & Sons vs. Court of Appeals, 144 SCRA 597, G.R. No. L-47851,
October 3, 1986
National Power Corporation vs. Court of Appeals, 161 SCRA 334, G.R. No.
L-47379, May 16, 1988
Republic vs. Luzon Stevedoring Corporation, 21 SCRA 279, G.R. No. L-21749,
September 29, 1967
Philcomsat vs. Globe Telecom, 429 SCRA 153, G.R. No. 147324, May 25, 2004
Yobido vs. Court of Appeals, 281 SCRA 1, G.R. No. 113003, October 17,
1997
Bacolod-Murcia Milling vs. Court of Appeals, 182 SCRA 24, G.R. Nos. 81100-
01, February 7, 1990
Austria vs. Court of Appeals, 31 SCRA 527, G.R. No. L-29640, June 10, 1971

III. Remedies of Parties for Breach/Enforcement of Right

A. Specific performance (obligation to give specific thing) – Art. 1165 par. 1;

Substitute performance (obligation to give generic objection/obligation to do) – Art.
1165, par. 2, Art. 1167; Undoing in obligation not to do – Art . 1168

B. Rescission – Art. 1191, 1192 (See discussions on Chapter 3 – Art. 1191, infra)

C. Damages – Art. 1170

D. Subsidiary Remedies
1. Accion subrogatoria - Art. 1177
a. Concept
b. Requisites
c. Exceptions – rights which purely personal to the debtor/inherent
rights of debtor (e.g., Art. 772 on inofficious donation; action for
support under the Family Code)
2. Accion pauliana (contracts entered in fraud of creditors)–Art. 1177,1381
par. 3
3. Accion directa – Art. 1652, 1608, 1729, 1893

CASES:
Khe Hong Cheng vs. Court of Appeals, 355 SCRA 701, G.R. No. 144169, March 20,
2001.
Siguan vs. Lim, 318 SCRA 725, G.R. No. 134685, November 19, 1999.

IV. Usurious Transactions – Article 1175, 1413, 1961

CASES:
Eastern Shipping Lines, Inc. vs. Court of Appeals, GR No. 97412, July 12, 1994.
Nacar vs. Gallery Frames and/or Felipe Bordey, Jr., GR No. 189871, August 13,
2013

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 Sps. Andal vs. Philippine National Bank, et al., GR No. 194201, November 27, 2013.
Advocates for Truth in Lending Act, et al. vs. Bangko Sentral Monetary Board, GR
No. 192986, January 15, 2013

V. Presumptions in Payment of Obligations – Art. 1176

VI. Transmissibility of Rights – Art. 1178

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Chapter 3. Different Kinds of Obligations

I. Pure and Conditional Obligations

A. Pure obligations- Art. 1179, par. 1

B. Conditional obligations – Art. 1180, Art. 1181
1. Concept of condition (vs. term/period)
2. Debtor’s promise to pay when he can is not a conditional obligation – Art.
1180
3. Kinds of Conditions
a. Suspensive (condition precedent) – Art. 1181

CASES:
Gaite vs. Fonacier, 2 SCRA 831, G.R. No. L-11827. July 31, 1961.
Gonzales vs. Heirs of Thomas and Paula Cruz, 314 SCRA 585, G.R. No. L-
131784. September 16, 1999.
Coronel vs. Court of Appeals, 263 SCRA 15, G.R. No. 103577, October 7,
1996
Commissioner of Internal Revenue vs. Petron Corporation, G.R. No. 185568,
March 2, 2012

b. Resolutory (condition subsequent) – Art. 1179, 1181

CASES:
Central Philippine University vs. Court of Appeals, 246 SCRA 511
Quijada vs. Court of Appeals, 299 SCRA 695, G.R. No. 126444, December 4,
1998

c. Potestative, casual, mixed – Art. 1182

i. Obligation is void if fulfillment of condition is dependent on
the sole will of the debtor (potestative suspensive condition)
– Art. 1182
1. Applies only if potestative suspensive condition is
imposed on the birth (perfection) of the obligation
2. Not apply if condition imposed on fulfillment
(performance) of pre-existing obligation, or if
potestative resolutory condition

CASES:
Lao Lim vs. Court of Appeals, 191 SCRA 151, G.R. No. 87047, October 31,
1990
M. D. Taylor vs. Uy Tieng Piao and Tan Liuan Tan Liuan & Company, 43
Phil. 873, G.R. No. 16109, October 2, 1922
Rustan Pulp & Paper Mills, Incorporated vs. IAC, 214 SCRA 665, G.R. No.
70789. October 19, 1992
Romero vs. Court of Appeals, 250 SCRA 223, G.R. No. 107207. November
23, 1995

d. Impossible and illegal conditions – Art. 1183

i. Distinguish effect if condition is imposed on contract and on
donation (Art. 727)
e. Positive and negative conditions – Art. 1184-1185
4. Constructive fulfillment – Art. 1186

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 CASES
M. D. Taylor vs. Uy Tieng Piao and Tan Liuan Tan Liuan & Company, 43 Phil.
873, G.R. No. 16109, October 2, 1922
PLDT v. Jeturian, 97 Phil 981, G.R. L-7756, July 30, 1955

5. Effect of fulfillment of conditions

a. Effect if suspensive condition is fulfilled – Art. 1187
b. Effect if resolutory condition is fulfilled – Art. 1190
6. Remedy of creditor before fulfillment of condition – Art. 1188

CASES:
PLDT v. Jeturian, 97 Phil 981, G.R. L-7756, July 30, 1955

7. Rules in case of loss, deterioration or improvement pending the happening

of the condition – Art. 1189
a. Effect of loss and deterioration with or without debtor’s fault;
Meaning of loss
b. Effect of improvement by nature/time or debtor’s expense

8. Rescission – Art. 1191-1192

a. Concept of rescission (resolution)
i. Implied in reciprocal obligations – Art. 1191, par. 1

CASES:
Boysaw vs. Interphil Promotions, 148 SCRA 365, G.R. No. L-22590, March 20,
1987

ii. Alternative remedies of injured party – Art. 1191, par. 2

iii. Judicial discretion to decree rescission - Art. 1191, par. 3
iv. Effect on third persons - Art. 1191, par. 4
ii. Distinguished from rescission under Art. 1381 (rescissible
contracts)
b. Necessity for judicial action
i. Judicial action to rescind
ii. Extrajudicial rescission
c. Nature of breach – substantial vs. causal/slight breach
d. Effect of rescission
i. Mutual restitution
ii. Termination of contract
iii. Effect upon third person

CASES:
Deiparine, Jr. vs. Court of Appeals, 221 SCRA 503, G.R. No. 96643, April 23,
1993
EDS Manufacturing, G.R. No. 162802, October 7, 2013
Heirs of Sofia Quirong v. Development Bank of the Philippines, G.R. No.
173441, December 9, 2009
EDS Manufacturing, G.R. No. 162802, October 7, 2013
U.P. vs. De Los Angeles, 35 SCRA 365, G.R. No. L-28602, September 29, 1970
Angeles vs. Calasanz, 135 SCRA 323, G.R. No. L-42283 March 18, 1985
Iringan vs. Court of Appeals, 366 SCRA 41, G.R. No. 129107. September 26,
2001

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 Vlarde, et al. vs. Court of Appeals, 361 SCRA 56 (2001)
Maglasang v. Northwestern, G.R. No. 188986, March 20, 2013

e. Rescission in contracts of sale –

i. Sale of real property – Art. 1592, R.A. 6552 (Maceda Law)
ii. Sale of personal property – Art, 1593, 1484-1486 (Recto
Law), 1526 and 1534 (special rights of unpaid seller of
goods)

II. Obligation with a Period – Art.1193, 1180

A. Period or term
1. Concept of period/term (vs. condition) – Art. 1193, 1980
2. Kinds of period/term
a. Suspensive (ex die)- Article 1193, par. 1
b. Resolutory (in diem)- Article 1193, par. 2
c. Express or implied (Art. 1197, par. 1 and 2)
d. Definite or indefinite
e. Voluntary, legal (Art. 1682, 1687), or judicial – Art. 1197
B. Rules in case of loss, deterioration or improvement before arrival of period – Art.
1194, 1189
C. Effect of payment in advance- Art. 1195
D. Benefit of a period
1. For whose benefit – Art. 1196
2. Loss of benefit of period by debtor – Art. 1198
E. When court may fix a period
1. Inferred that period was intended – Art. 1197

CASES:
Maria Lachica, etc. vs. Gregorio Araneta, Inc., 47 OG No.11 5699, August 19, 1949
Ponce de Leon vs. Santiago Syjuco Inc., 90 SCRA 311, G.R. No. L-3316. October 31,
1951
Buce vs. Court of Appeals, 332 SCRA 151, G.R. No. 136913. May 12, 2000

2. Depends on the will of the debtor (potestative term) – Art. 1197, Art. 1180
i. Distinguish potestative term and potestive suspensive condition

CASES:
Gregorio Araneta, Inc. vs. Phil. Sugar Estates Dev’t. Co. Ltd., 20 SCRA 330, G.R. No.
L-22558. May 31, 1967.
Central Philippine University vs. Court of Appeals, 246 SCRA 511, G.R. No. 112127,
July 17, 1995

III. Alternative Obligations

A. Alternative Obligations – Art. 1199-1205

1. Concept – Art. 1199
2. When debtor has the right of choice – Art. 1200-1204
3. When creditor has the right of choice – Art. 1205
F. Facultative obligation- Art. 1206
1. Concept
2. Distinguished from alternative obligations

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 3. Effect of loss of substitute before or after substitution

IV. Joint and Solidary Obligations

A. Joint Obligations – Art.
1. Concept
a. Requisites
b. Words used to indicate joint obligations
2. Presumption of joint liability – Art. 1207, 1208
3. Effects – Art. 1207, 1208
a. Extent of liability of debtor
b. Extent of right of creditor
c. In case of novation, compensation, confusion (Art. 1277), remission
4. Joint indivisible obligations – Art. 1209, 1210 (See discussions on Joint
Indivisible Obligations, infra)
B. Solidary Obligations
1. Concept
a. Requisites
b. Words used to indicate solidary obligations
2. Kinds
a. Active (among creditors), passive (among debtors), or mixed
(among creditors and debtors) – Art. 1211
i. Distinguish passive solidary obligation from suretyship
b. Legal (Art. 1208, 1915, 1945; Art. 119, Revised Penal Code),
conventional (Art. 1208), or real

CASES:
Inchausti & Co. vs. Yulo, 34 Phil. 978, G.R. No. 7721. March 25, 1914
Lafarge Cement Philippines, Incorporated vs. Continental Cement Corporation, 443
SCRA 522, GR No. 155173. November 23, 2004
Inciong v. Court of Appeals, G.R. No. 96405, June 26, 1996

3. Effects
a. What acts may be done by solidary parties – Art. 1212
i. Effect of prejudicial acts as to creditors – Art. 1212
ii. Effect of novation, compensation, confusion and remission
by creditor – Art. 1215, 1219
b. Assignment of rights not allowed – Art. 1213
c. Demand and payment
i. Effect of demand by creditor - Art. 1214
ii. Effect of demand upon a debtor – Art. 1216
iii. Effect of payment of debtor – Art. 1217
d. Novation, compensation, confusion, and remission – Art. 1215
i. Effect of novation, compensation, confusion, and remission
– Art. 1215
ii. Effect of remission – Art. 1219, 1220
e. Effect of loss or impossibility of performance – Art. 1221
f. Defenses available to solidary debtor
i. Kinds
1. Those derived from the nature of the obligation
2. Personal defenses
3. Defenses pertaining to his share

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 4. Those personally belonging to the other co-debtors
ii. Effect

CASES:
R.F.C. vs. Court of Appeals, et al., 94 Phil. 984, G.R. No. L-5942. May 14, 1954
Quiombing vs. Court of Appeals, 189 SCRA 325
Inciong v. Court of Appeals, G.R. No. 96405, June 26, 1996
JAPRL Development Corp., et al vs. SBC 6 June 2011
Inchausti & Co. vs. Yulo, 34 Phil. 978, G.R. No. 7721. March 25, 1914.
Alipio vs. Court of Appeals, 341 SCRA 441, GR No. 134100. September 29, 2000

C. Joint Indivisible Obligations

1. Concept – Art. 1209, 1210
a. Joint indivisible distinguished from joint divisible obligation
b. Joint indivisible distinguished from solidarity – Art. 1210
2. Effects
a. Enforcement of rights- Art. 1209
b. Liability for damages in case of breach- Art. 1224

V. Divisible and Indivisible Obligations

A. Concept – Art. 1223

B. Joint indivisible obligations – Art. 1224 (See discussions on Joint Indivisible
Obligations, supra)
1. Enforcement of rights- Art. 1209
2. Liability for damages in case of breach- Art. 1224
C. Presumptions of indivisibility or of divisibility – Art. 1225

VI. Obligations with a Penal Clause

A. Concept
B. Kinds of penal clause
1. As to effect: subsidiary or joint/complementary
2. As to source/origin: legal or conventional
3. As to purpose: compensatory/reparatory or punitive
C. Demandability of penalty- Article 1226, par. 2
D. Effects of Penal Clause
1. Substitute for indemnity for damages and payment of interest / creditor
cannot collect other damages in addition to penalty – Art. 1226

• Exceptions - Art. 1226

2. Not exempt debtor from performance- Art. 1227

• Exceptions- Art. 1227

3. Creditor cannot demand both performance and penalty at the same time –
Art. 1227
• Exceptions- Art. 1227

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 4. Proof of actual damages not necessary; applies if penalty is substitute for
indemnity or payment of interest under Art. 1226 – Art. 1228

E. When penalty shall be equitably reduced- Art. 1229

F. Nullity of Principal Obligation or Penal Clause; Effects – Art. 1230

CASES:
Makati Development Corporation vs. Empire Insurance Company, 20 SCRA 657, G.R.
No. L-21780. June 30, 1967
Tan vs. Court of Appeals, 367 SCRA 571, G.R. No. 116285. October 19, 2001
Country Bankers Insurance Corp. vs. Court of Appeals, 201 SCRA 458, G.R. No.
85161. September 9, 1991

Chapter 4. Extinguishment of Obligations

I. Modes of Extinguishment- Art. 1231

A. Payment or performance
B. Loss or impossibility
C. Condonation or remission
D. Confusion or merger
E. Compensation
F. Novation
G. Other causes

II. Payment or Performance

A. Concept – Art. 1232
B. Requisites
1. How payment should be made (“integrity”) – Art. 1233-1235
a. Complete delivery/performance (Art. 1233)/ partial payment is not
allowed (Art. 1248)
b. Exceptions:
i. When obligation is part liquidated and in part unliquidated –
Art. 1248
ii. Substantial performance in good faith – Art. 1234
iii. Estoppel – Art. 1235
c. Presumptions in payment of interests and
installments- Art. 1176
2. Persons who may pay
a. Debtor or legal representative
b. Third person
i. Who is an interested party
1. Meaning of “interested party”
2. Effects (legal subrogation) – Art. 1302 [3]
ii. Who is not an interested party but with consent of debtor
1. Effects – Art. 1236, 1237
iii. Who is not an interested party and without knowledge or
against the will of the debtor
1. Effects- Art. 1236, par. 2; 1237
iv. Who does not intend to be reimbursed – Art. 1238
c. Payment by person who does not have free disposal of property in
obligation to give – Art. 1239, 1427

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 d. Payment by solidary debtor in case of active solidarity- Art. 1214
3. Person to whom payment may be made
a. Creditor, successor-in-interest, or person authorized – Art. 1240
b. Incapacitated person- Article 1241, par. 1
c. Third person- Article 1241, par. 2
i. Requisites
ii. When proof of benefit not required - Article 1241,par. 3
d. Payment in good faith to person in possession of credit – Art. 1242
e. Payment to creditor after judicial order of retention – Art. 1243
4. What must be paid (“identity”)
a. In obligations to:
i. Give a specific thing – Art. 1244, par. 1
ii. Give a generic thing – Art. 1246
iii. To do or not to do – Art. 1244, par. 2

CASES:
Arrieta vs. National Rice and Corn Corporation, 10 SCRA 79, G.R. No.L-15645.
January 31, 1964.
St. Paul Fire and Marine Insurance Company vs. Macondray and Co., Inc., 70 SCRA
122, GR No. L-27796. March 20, 1976.

5. Expenses of making payment – Art. 1247

6. Rules in monetary obligations – Art. 1249
i. Currency of payment
ii. Payment by negotiable instrument/check – Section 60, R.A.
7653 (New Central Bank Act); Art. 1249
iii. Meaning of “legal tender”

CASES:
Papa vs. AU Valencia, et. al., 284 SCRA 643, GR No. 105188. January 23, 1988
PAL vs. Court of Appeals, 181 SCRA 557, GR 49188. Jan 30, 1990
Tibajia vs. Court of Appeals, G.R. No. 100290, June 4, 1993

7. Rules in case of extraordinary inflation/deflation – Art. 1250

8. Where payment is made – Art. 1251

C. Application of Payments
1. Concept – Art. 1252

CASES:
Reparations Commission vs. Universal Deep-Sea Surety & Fidelity Co., 83 SCRA
765, G.R. Nos. L-21901 and L-21996, June 27, 1978
Paculdo vs. Regalado, 345 SCRA 134, G.R. No. 123855, November 20,2000

2. Requisites – Art. 1252

3. Rules in application of payments – Art. 1252, 1253, 1254

D. Payment by Cession
1. Concept – Art. 1255
a. Contractual (Art. 1255) and judicial (Insolvency Law)
2. Requisites
3. Effects

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E. Dation in Payment
1. Concept - Article 1245
a. Distinguished from “pactum commissorium”
b. Distinguished from application of payments
c. Distinguished from payment by cession

CASE:
DBP vs. Court of Appeals, 284 SCRA 14, G.R. No. 118342. January 5, 1998

2. Requisites
3. Effects

CASE:
Filinvest Credit Corp. vs. Philippine Acetylene Co., Inc., 111 SCRA 421, G.R. No. L-
50449. January 30, 1982

F. Tender of Payment and Consignation

1. Tender of payment – Art. 1256
a. Concept
b. Requisites of valid tender of payment
c. Effect of valid tender of payment
2. Consignation
a. Concept/Purpose
b. Requisites – Art. 1257, 1258
i. Debt is due
ii. Valid tender is unjustly refused
1. Meaning of unjust refusal
2. When tender and refusal are not required– Art. 1256,
par. 2
iii. First notice - Art. 1257, par. 1
iv. Placed at disposal of judicial authority
iv. Second notice – Art. 1258, par. 2
c. Effect of non-compliance – Art. 1258, par. 2
d. Effects of consignation when properly made
i. Expenses of consignation – Art. 1259
ii. Court approval - Art. 1260, par. 1
d. Effect of withdrawal
i. By debtor before acceptance by creditor or approval by
court – Art. 1260, par. 2
ii. By debtor after proper consignation with creditor’s approval
– Art. 1261

CASES:
De Guzman vs. Court of Appeals, 137 SCRA 730, G.R. No. L-52733. July 23, 1985.
TLG International Continental Enterprising, Inc. vs. Flores, 47 SCRA 437, G.R. No.
L-35381. October 31, 1972
McLaughlin vs. Court of Appeals, 144 SCRA 693, G.R. No. L-57552. October 10,
1986
Soco vs. Militante, 123 SCRA 160, G.R No. L-58961, 28 June 1983.
Sotto vs. Mijares, 28 SCRA 17, G.R. No. L-23563. May 8, 1982.

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 Meat Packing Corporation of the Philippines vs. Sandiganbayan, 359 SCRA 409,
G.R. No. 103068. June 22, 2001.
Teddy G. Pabugais vs. Dave P. Sahijwani, GR No. 156846 (2004), G.R. No. 156846.
February 23, 2004

III. Loss or Impossibility

A. Loss of thing due

1. Concept/Meaning – Art. 1189 [2]
2. Effect of loss (obligation to give)
a. In obligation to give a pecific/determinate thing – Art. 1262, 1268
i. When obligation is extinguished
ii. When obligation is not extinguished
iii. Rule if obligation arises from criminal offense – Art. 1268
b. In obligation to give a generic thing- Art. 1263
c. In case of partial loss – Art. 1264
d. Action against creditor – Art. 1269
4. Presumption – Art. 1265, 1165
a. When not applicable

B. Impossibility of performance (obligation to do)

1. Concept/meaning of legal or physical of impossibility
2. Effect of legal or physical impossibility – Art. 1266
i. Without fault of obligor – Art. 1266
1. Obligation is extinguished
2. Rule applies to supervening/subsequent impossibility, not
legal or physically impossibility existing at the time of the
constitution of the obligation (void Art. 1409 [1][5])
ii. With fault of obligor – Art. 1262, par. 2 (by analogy)
2. Effect when not impossible but “manifestly difficult beyond contemplation
of parties” (doctrine of “rebus sic stantibus”)– Art. 1267
i. Requisites
ii. In case of partial impossibility- Art. 1264 (by analogy)

CASES:
Occena vs. Jabson, 73 SCRA 637, GR No. L-44349. October 29, 1976.
Naga Telephone Co., Inc. (NATELCO) vs. Court of Appeals, 230 SCRA 351, GR No.
107112. February 24, 1994
Philippine National Construction Corp. (PNCC) vs. Court of Appeals, GR No.
116896. May 5, 1997
ETPI vs. ETEV, 8 February 2012

IV. Condonation or Remission

A. Concept – Art. 1270

B. Requisites
C. Kinds
1. As to extent: total or partial
2. As to form: express or implied
3. As to constitution: inter vivos or mortis causa
D. Governing rules

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 1. Extent of remission, whether express or implied; rules on inofficious
donations – Art. 1270 par. 2; Art. 750, 751, 771
2. Form of express donation; applicability of law on donation – – Art. 1270,
par. 2; Art. 748, 749

CASE:
Victor Yam & Yek Sun Lent vs. Court of Appeals, G.R. No. 104726. February
11, 1999

E. Presumptions – Art. 1271, 1272, 1274

F. Effect of renunciation of principal or accessory obligation – Art. 1273; rationale

V. Confusion or Merger of Rights

A. Concept
B. Requisites
C. Kinds
1. As to extent: total or partial
2. As to constitution: inter vivos or mortis causa
D. Effects
1. Obligation is extinguished – Art. 1275
2. In case of joint obligation – Art. 1277
3. In case of solidary obligations – Art. 1215
E. Confusion in principal or accessory obligation – Art. 1276

VI. Compensation
A. Concept – Art. 1278
1. Distinguished from confusion
B. Kinds
1. As to extent: total or partial – Art. 1281
2. As to origin: legal, conventional, judicial, facultative
C. Legal Compensation
1. Requisites- Article 1279, 1280
a. “Due” distinguished from “demandable”

CASE:
Gan Tion vs. Court of Appeals, et al, 28 SCRA 235, GR No. L-22490.
May 21, 1969
Silahis Marketing Corp. vs. Intermediate Appellate Court, 180 SCRA
21, G.R. No. 74027. December 7, 1989
Bank of the Philippine Islands vs. Court of Appeals, 255 SCRA 571,
G.R. No. 116792. March 29, 1996
PNB vs. Court of Appeals, 259 SCRA 174, G.R. No. 108052. July 24,
1996
Mirasol vs. Court of Appeals, 351 SCRA 44, G.R. No. 128448.
February 1, 2001

2. Effects – Art. 1290, 1289

CASES:
Montemayor v. Millora, 27 July 2011

D. Conventional compensation – Art. 1282

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 E. Judicial compensation – Art. 1283
F. Effect of if one or both debts are rescissible or voidable– Art. 1284
G. Effects of assignment of Credit
1. With consent of debtor- Article 1285, par. 1
2. With knowledge but without the consent of the debtor- Article 1285, par. 2
3. Without knowledge of debtor- Article 1285, par. 3
H. Compensation of debts payable in different places – Art. 1286
I. When compensation is not allowed – Art. 1287, 1288
J. Rule when there are several debts – Art. 1288

VII. Novation

A. Concept – Art.1291
B. Requisites – Art. 1292
C. Kinds
1. As to form: express or implied
2. As to object/essence: objective/real, subjective/personal (substitution or
subrogation), or mixed
3. As to effect: total or partial
E. Express or implied novation – Art. 1292
D. Objective novation – Art. 1291 [1]
1. Change in the cause
2. Change in object
3. Change in principal conditions; meaning of “principal conditions”
E. Subjective novation –
1. Substitution of the person of the debtor - Art. 1291 [2], 1293
i. Expromission (without knowledge or against the will of the original
debtor) – Art. 1294
ii. Delegacion (new debtor proposed by the original debtor) – Art. 1295
2. Subrogation of the person of the creditor – Art. 1291 [3], 1300
i. Conventional – Art. 1301
ii. Legal – Art. 1302
iii. Effect of subrogation – Art. 1303, 1304

CASES:
Dormitorio vs. Fernandez, 72 SCRA388, G.R. No. L-25897. August 21, 1976
Magdalena Estates, Inc. vs. Rodriguez, 18 SCRA 967, G.R. No. L-18411. December
17, 1966
Reyes vs. Court of Appeals, 264 SCRA 35, G.R. No. 120817. November 2, 1996
Cochingyan, Jr. vs. R & B Surety and Insurance Co., Inc., 161 SCRA 339
G.R. No. L-47369. June 30, 1987
Broadway Centrum Condominium Corporation vs. Tropical Hut Food Market, Inc.,
224 SCRA 302, G.R. No. 79642. July 5, 1993.
California Bus Lines, Inc. vs. State Investment House, Inc., 418 SCRA 297, G.R. No.
147950. December 11, 2003
Sime Darby Philippines. Vs. Good Year Philippines, June 8, 2011

D. Effect
1. Principal Obligation is extinguished – Art. 1296
2. When accessory obligation may subsist – Art. 1296
3. If new obligation is void – Art. 1297

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 4. If original obligation is void – Art. 1298
5. If original obligation is subject to suspensive or resolutory condition – Art.
1299
6. Of subrogation of the rights of the creditor – Art. 1303, 1304

CASES:
Garcia vs. Llamas, 417 SCRA 293, G.R. No. 154127. December 8. 2003
Quinto vs. People, G.R. No. 126715. April 14, 1999

CASE:
Licaros vs. Gatmaitan, 362 SCRA 548, G.R. No. 142838. August 9, 2001
Astro Electronics Corp. vs. Philippine Export and
Foreign Loan Guarantee Corp., 411 SCRA 422, G.R. No. 136729. Sep. 23, 2003

VIII. Prescription

A. General Provisions – Art. 1106-1107

1. Kinds – Art. 1106
a. Acquisitive prescription
b. Extinctive prescription
2. Persons who may acquire property by prescription (acquisitive) – Art.
1107
3. Against whom prescription (acquisitive or extinctive) may run against for
or against – Art. 1108-1111
4. Renunciation of prescription – Art. 1112, see also Art. 1114
5. Objects which may be acquired by prescription (acquisitive) – Art. 1113
6. Rights of creditor or persons interested in prescription – Art. 1114
7. Governing law on prescription – Art. 1115
8. Rule on prescription running before effectivity of the Civil Code – Art.
1116
B. Acquisitive prescription
1. Meaning
2. Kinds of acquisitive prescription
a. Ordinary
b. extraordinary
3. Requisites
a. Ordinary acquisitive prescription
b. Extraordinary prescription
4. Possession
a. Concept of adverse possession – Art. 1118, 1119
c. When possession interrupted – Art. 1120-1125

5. Good faith; meaning – Art. 1127, 1128; 526,527,528, 529

6. Just title (titulo colorado)
a. Meaning – Art. 1129
b. True and valid – Art. 1130
c. Not presumed – Art. 1131

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 i. Distinguish just title required for prescription (titulo
colorado) with just title under Art. * (titulo verdado)
7. Period prescribed by law
a. Movables – 4 (ordinary) or 8 years (extraordinary) – Art. 1132,
par. 1, 2
i. Action to recover right over movable – Art.1132, par. 3, Art.
1140
ii. Movables possessed through crime – Art. 1133
b. Immovables – 10 (ordinary) or 30 years (extraordinary) – Art.
1134, 1137
i. Action to recover immovable – Art. 1141
8. Rules on registered properties – Art. 1126
9. Possession by mistake – Art. 1135
10. Possession in wartime – Art. 1136
11. Rules for computation of time necessary for prescription – Art. 1138

Calicdan vs. Cendana, G.R. 155080, 2/5/04

Spouses Ragudo vs. Fabella Estate, G.R. 146823, 8/9/05
Bautista vs. Poblete, G.R. 141007, 9/13/05
Restar vs. Cichon, G.R. 161720, 11/22/05
Heirs of Crisologo vs. Rañon, G.R. 171068, 9/5/07
Aguirre v. Court of Appeals, 421 SCRA 310*

C. Extinctive prescription
1. Meaning – Art. 1139
2. Action to recover movable – Art. 1140
3. Action to recover immovable – Art. 1141
4. Prescriptive period of certain actions – Art. 1142-1147;1148
5. Prescriptive period of actions not fixed by law – Art. 1149
6. When prescriptive period commences
a. All kinds of action – Art. 1150
b. When object is enforcement to pay principal with interest –
Art. 1151
c. Demand fulfillment of obligation declared by judgment – Art. 1152
d. Demand accounting – Art. 1153
7. Effect of fortuitous event – Art. 1154
8. When prescription is interrupted – Art. 1155

Vda. De Gualberto vs. Go, G.R. 139843, 7/21/05

Solid Homes vs. Tan, G.R. 145156, 29/05
Mariano vs. Petron, G.R. 169438, 1/21/10

IX. OTHER CAUSES

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