75102593 lecture in obligations and contracts with jurisprudence

8/12/2019 75102593 Lecture in Obligations and CONTRACTS With Jurisprudence

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OBLIGATIONS AND CONTRACTS

Chapter 1GENERAL PROVISIONS

Art. 1156

Definition of Obligation-a juridical necessity to gie! to do or not to do"-a juridical relation #$ereby a %erson &called t$e creditor' (ay de(and fro( anot$er&called t$e debtor' t$e obserance of a deter(inate conduct &t$e giing! doing! or notdoing'! and in case of breac$! (ay de(and satisfaction fro( t$e assets of t$e latter")& Arias Ra(os! %" *+'

,udicial necessity) because non-co(%liance can result in judicial or legal sanction"

.le(ents of Obligation/0' an actie subject &obligee or creditor'/ t$e %ossessor of a rig$t1 $e in #$ose faor

t$e obligation is constituted12' a %assie subject &obligor or debtor'/ $e #$o $as t$e duty of giing! doing or not

doing13) t$e object or %restation/ t$e subject (atter of t$e obligation1 it (ay consist of

giing a t$ing! or doing or not doing a certain act14) t$e efficient cause &inculu( or juridical tie'/ t$e reason #$y t$e obligation e3ists

and5) Causa (causa debendi4causa obligationes' - #$y obligation e3ists

Requisites of Object:a. licit - if illicit! it is oidb. possible -if i(%ossible! it is oidc. determinate or determinable- or else! oidd. pecuniary value

5inds of Obligations0' 6ro( t$e ie#%oint of sanction

a' ciil obligation &%erfect obligation' / defined in Art" 0078! Ciil Code! andsanctioned by judicial %rocess

b' natural obligation/ t$e duty not to recoer #$at $as oluntarily been %aidalt$oug$ %ay(ent #as no longer re9uired

/ it is sanctioned by la#! but only because conscience $ad originally (otiatedt$e %ay(ent

.3a(%le/ 5no#ing t$at it already %rescribed! a debtor still %aid $is debt to t$ecreditor"

c' (oral obligation/ sanctioned by conscience or (orality! or t$e la#s of t$e

c$urc$".3a(%le/ t$e duty of a cat$olic to $ear (ass on Sundays

2' 6ro( t$e ie#%oint of subject (attera' real obligation/ t$e obligation to gieb' %ersonal obligation/ to obligation to do or not to do

:' 6ro( t$e affir(atieness and negatieness of t$e obligationa' %ositie or affir(atie obligation/ t$e obligation to gie or to dob' negatie obligation/ t$e obligation not to gie or not to do

+' 6ro( t$e %ersons obliged

a' unilateral/ #$en only one of t$e %arties is boundb' bilateral/ #$ere bot$ %arties are or (ay be boundi' reci%rocal/ t$e %erfor(ance of one is de%endent u%on t$e

%erfor(ance of t$e ot$erii' non-reci%rocal/ t$e %erfor(ance of one is not de%endent on t$e

%erfor(ance by t$e ot$er


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Article 1157, Articles 1158-62Art. 1157 Sources of Obligation &LC;A;'

1) La#! (OBLIGATION EX LEGE' -


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Art. 1161/ .3 Delicto or .3


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Chapter )NA!$RE AN& EEC! O OLIGA!IONS

$%%$C&' % )*+A&+1. bligation to give- obligation to delier t$e t$ing agreed u%on2. bligation to donot to do -obligation to do4not to do t$e serice agreed u%on

ACC.SSOR OBLIGATIONS/1. .3ercise diligence 4 @resere t$e t$ing &Art" 008:' .DD

Art. 116::T$e obligation of eery %erson to ta>e care of a D.T.Reys to t$e

bodega are gien2" Tradition Longa e #$en a tenant already in

%ossession buys t$e $ouse $e is renting"+" Tradition Constitutu( @ossessoriu( E o%%osite of Brei e t$ee3ecution of a %ublic instru(ent selling land"


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Art. 1165,D.LA) in t$is article (eans L.GAL D.LA or D.6AJLT

a" ORDINAR D.LA - (erely t$e non-%erfor(ance at t$e sti%ulated ti(eb" L.GAL D.LA or D.6AJLT E t$at delay #$ic$ a(ounts to a irtual non-

fulfill(ent of t$e obligation" AS A RJL.! to %ut a debtor in default! t$ere (ust be aJDICIAL or .TRAJDICIAL D.eys to a $ouse! jac> of a car'

ACC.SSIONS E additions to i(%roe(ents u%on a t$ing &.3a(%les/ #$ateer isbuilt! %lanted or so#n on a %arcel of land'"

If t$ere is a sti%ulation to said effect! accessions and accessories do not $ae to beincluded"

Art. 1167/ T$e Obligation TO DO

If D.BTOR fails to Do so(et$ing! CR.DITOR can/

ae t$e obligation %erfor(ed by $i(self or anot$er at t$e debtorse3%ense &only if anot$er can do t$e %erfor(ance'

Obtain Da(ages E only if %ersonal or s%ecial! or if ot$ers or t$e creditorcant do it

S%ecific %erfor(ance is not a re(edy in %ersonal obligations! ot$er#ise! t$is (aya(ount to inoluntary seritude! #$ic$ is %ro$ibited under our Constitution

K$en a T$ing


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R.SCISSION4CANC.LLATION A5 CA$SES A!!RI$!ALE !O &E!OR

15 Co-tra3e-tio- of te-or 2. &e*a6 'ora - Non %erfor(ance #it$ res%ect to ti(e

a5 'ora so*3e-,iE default on t$e %art of t$e debtor12 of loss &een #$en t$ere is

fortuitous eent'b" debtor liable for da(ages4interestc" resolution &art 00*F! in %ro%er cases'

b5 'ora accepie-,iE default on %art of creditor1 Creditor is guilty of default#$en $e unjustifiably refuses to acce%t %ay(ent or %erfor(ance at t$e ti(e%ay(ent4%erfor(ance can be done

Effects:&0' res%onsibility of debtor is reduced to fraud and gross negligence

&2' debtor is e3e(%ted fro( ris> of loss of t$ing 4 creditor bears ris> ofloss&:' e3%enses by debtor for %reseration of t$ing after delay is c$argeableto creditor&+' if obligation bears interest! debtor does not $ae to %ay fro( ti(e ofdelay&7' creditor liable for da(ages&8' debtor (ay reliee $i(self of obligation by consigning t$e t$ing

c5 Co+pe-satio +oraeE bot$ %arties are in default &in reci%rocal obligations'1t$e effect/ is as if t$ere is no default

Art 116=T$ose obliged to delier or to do so(et$ing incur in delay fro( t$e ti(e t$e

obligee judicially or e3tra-judicially de(ands fro( t$e( t$e fulfill(ent of t$eir obligation"o#eer! t$e de(and fro( t$e creditor s$all not be necessary in order t$at delay

(ay e3ist/a. K$en t$e obligation or t$e la# e3%ressly so declares" ONJb" K$en fro( t$e nature and t$e circu(stances of t$e obligation it a%%ears t$at t$e

designation of t$e ti(e #$en t$e t$ing is to be deliered to t$e serice is to berendered #as a controlling (otie for t$e establis$(ent of t$e contract

c" K$en de(and #ould be useless! as #$en t$e obligor $as rendered it beyond $is%o#er to %erfor(

In reci%rocal obligations! neit$er %arty incurs in delay if t$e ot$er does not co(%ly oris not ready to co(%ly in a %ro%er (anner #it$ #$at is incu(bent u%on $i(" 6ro(t$e (o(ent one of t$e %arties fulfills $is obligation! delay by t$e ot$er begins"

.3tra-judicial de(ands (ay be #ritten or oral-but best if #ritten because it can be%resented as eidence"

AS A RJL.-to %ut a debtor in default! D.


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a" K$en t$e la# so %roidesb" K$en t$e obligation e3%ressly so %roidesc" K$en t$e fi3ing of t$e ti(e #as t$e controlling (otie for t$e establis$(ent of t$e

contractd" K$en de(and #ould be uselesse" K$en t$e obligor $as e3%ressly ac>no#ledged t$at $e really is in default

BJT IN T. @ILI@@IN. LAK! TIS IS NO LONG.R SO because it is e3%ressly%roided t$at in reci%rocal obligations! neit$er %arty incurs default if t$e ot$er doesnot co(%ly #it$ #$at is incu(bent u%on $i(" .en if t$ere #ere ritten' de(andsfro( bot$ sides! t$ere is no default #$en neit$er $as done $is obligation"

It is only #$en one %arty fulfills $is obligation! delay by t$e ot$er begins &assu(ingt$at t$ere is no date set in t$e contract for $is %erfor(ance'"

3. rau, &o*oE oluntary e3ecution of a #rongful act or #illful o(ission!>no#ing and intending t$e effects #$ic$ naturally and necessarily arise fro(suc$ act or o(ission

a. Causante ( causal 3- (a>es contract oidableb. incidente 4 ( incidental 3- fraud in %erfor(ance of obligation1 doesnot affect alidity of obligations

Re+e,ies of Perso- i- frau, u-,er ob*i2atio-s are:a" insist on s%ecific %erfor(ance &art 02::'b" resole contract &art 00M0'c" clai( da(ages! in eit$er case

4. Ne2*i2e-ce Cu*pa- absence of due diligenceE*e+e-ts:a' O(ission of diligence re9uiredb) 5iligence re"uiredE %er nature of obligation! circu(stances of %ersons! ti(e

and %laceArt 117%

T$ose #$o in t$e %erfor(ance of t$eir obligation are guilty of frau,7 -e2*i2e-ceor ,e*a6 a-, those 8ho i- a-6 +a--er co-tra3e-e the te-or thereof are liable forda(ages"

Grounds for Liability in t$e @erfor(ance of Obligationsa" 6raud-use of deceit or ot$er (ac$inations to intentionally eade t$e fulfill(ent of

t$e obligation-T$is ty%e of fraud is a%%licable in obligations only-it is different fro( CAJSALOR INCID.NTAL fraud &fraud t$at e3ists bet#een %arties #$en t$ere is no %re-

e3isting contractual relations or obligations bet#een t$e('"b" Negligence-fault-Fno intentc" Defaultd" iolation of t$e ter(s of Obligation &unless e3cused in %ro%er cases by fortuitous

eents'

T$e 6ollo#ing do not .3e(%t fro( t$e 6ulfill(ent of t$e Obligationa" Increase in t$e cost of t$e %erfor(anceb" @oertyc" Kar bet#een t$e subject of t$e neutral country and t$e subject of a country at

#ar! as long as t$e substantial co(%liance can still be done"

T$ose liable under t$is Article s$ould %ay da(ages! only if %rejudice or da(age #ascaused"

5inds of Da(agesa" ind of da(ages (ay be recoeredd" Te(%erate-#$en t$e e3act a(ount of da(ages cannot be deter(inede" Actual-actual losses as #ell as unreali=ed %rofits


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f" Li9uidated %redeter(ined before$and by agree(ent"

Art 1171

Res%onsibility arising fro( frau,is de(andable in all obligations" Any #aier ofan action for future fraud is oid"

Art 1172

Res%onsibility arising fro( -e2*i2e-ce in t$e %erfor(ance of eery >ind ofobligation is also de(andable! but suc$ liability (ay be regulated by t$e courts!according to t$e circu(stances"

Art 117:

T$e fau*t or -e2*i2e-ceof t$e obligor consists in t$at o(ission of t$e diligence

#$ic$ is re9uired by t$e nature of t$e obligation and corres%onds #it$ t$e circu(stancesof t$e %erson! of t$e ti(e and of t$e %lace" K$en negligence s$o#s bad fait$! t$e%roisions of Articles 00*0 and 22F0 %aragra%$ 2! s$all a%%ly"

9i-,s of &i*i2e-ce $-,er the Ci3i* Co,ea" T$at agreed u%on by t$e %artiesb" In t$e absence of t$at agreed u%on by t$e %arties! t$at re9uired by la#c" In t$e absence of t$at re9uired by la#! t$at e3%ected of a good fat$er of a fa(ily"

RA$& &IS!ING$IS0E& RO' NEGLIGENCE

#RAU$ NEGLIGENCE

T$ere is deliberate intention to causeda(age"

T$ere is no deliberate intention to cause da(age"

Liability cannot be (itigated" Liability (ay be (itigated"

Kaier for future fraud is oid" Kaier for future negligence (ay be allo#ed incertain cases/a' gross E can neer be e3cused in adance1

against %ublic %olicyb' si(%le E (ay be e3cused in certain cases

Art 117;

Conce%t/ 6ortuitous .ent - eent #$ic$ could not be foreseen! or #$ic$ t$oug$foreseen! #ere ineitable

Refers to as caso fortuito! act of God! force (ajeure! unaoidable accident.g" Natural cala(ities

.ssential C$aracteristics of a fortuitous .ent &Na>%il H Sons s" CA'0" T$e cause of t$e breac$ of t$e obligation (ust be inde%endent of t$e #ill of

t$e debtor2" T$e eent (ust be eit$er unforeseeable or unaoidable:" T$e eent (ust be suc$ as to render it i(%ossible for t$e debtor to fulfill $is

obligation in a nor(al (anner

+" T$e debtor (ust be free fro( any %artici%ation in! or aggraation of injury tot$e creditor

Liability for fortuitous eents

Ge-era* Ru*e for ortuitous E3e-ts- No %erson s$all be liable for fortuitous eents1i"e"! $is obligation #ill be e3tinguis$ed/


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.3ce%tions to t$e General Rule- #$en t$e debtor s$all be $eld liable for afortuitous eent (Art5 11;4

a' #$en e3%ressly declared by la# & bad fait$! subject (atter isgeneric! debtor is in delay 'b' #$en e3%ressly declared by sti%ulation or contract

c) #$en t$e nature of t$e obligation re9uires assu(%tion of ris> &eg"

obligation of an insurer'

6ORTJITOJS ..NTS CANNOT .. res0ti/s / receit / ricil /r / lter istll0et (t'ese reist*le res0ti/s e)iece 0+ *e itr/ce t/ t'e c/trr+ *+ t'ecreit/r.9

15 T$e recei%t of t$e %rinci%al by t$e creditor #it$out reseration as to interest!s$all gie rise to t$e %resu(%tion t$at said interest $as been %aid"

2" T$e recei%t of a later install(ent #it$out reseration as to %rior install(ents!s$all gie rise to t$e %resu(%tion t$at suc$ %rior install(ents $ae been %aid"

T$e condition not to do an i(%ossible t$ing s$all be considered as not $aing beenagreed u%on/a" If condition is to do an i(%ossible of illegal t$ingcondition and obligation are

oidb" If t$e condition is negatie4not to do t$e i(%ossiblejust disregard t$e condition

but t$e obligation re(ainc" If t$e obligation is negatie4not to do bot$ condition and obligation are alid

Art" 00** Re(edies of creditor to enforce %ay(ent of $is clai(s against debtor

1. $#act performance- s%ecific! substitute! e9uialent2. Attc'and e#ecute debtor6s property which is not e#empt&art 22:8'- pursue the property in the possession of the debtor, e#cept those e#empt bylaw.3. Accion subrogatoria&Art 00*0'- e3ercise all t$e rig$ts and bring all t$eactions of t$e debtor e3ce%t t$ose %ersonal to $i("

Requisites:a" Creditor (ust $ae rig$t of return against debtor

b" T$e debt is due and de(andablec. T$ere is a failure of t$e debtor to collect $is o#n debt fro( :rd%ersons

eit$er t$roug$ (alice or negligenced" Debtors assets are insufficiente" T$e rig$t of account is not %urely %ersonal

4. Accion directa&arts 0*2M H 0872'


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5. Accion pauliana 4 the right to impugn the acts which the debtor may havedone to defraud his creditors. (remedy is rescission3

Requisites:a" T$ere is a credit in faor of %laintiffb" T$e debtor $as %erfor(ed an act subse9uent to t$e contract! giing

adantage to ot$er %ersonsc. T$e creditor is %rejudiced by t$e debtors act #$ic$ are in faor of :rd

%arties and rescission #ill benefit t$e creditord" T$e creditor $as no ot$er legal re(edye" T$e debtors acts are fraudulent

Art5 11no#n to t$e %artieseg" I #ill gie you one (illion %esos if you %ass t$e Bar"

Definition of Condition/ It is an uncertain eent #$ic$ #ields influence on a legalrelations$i% &


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iii5 Potestati3e E de%endent on sole #ill of a %arty1 if on %art of debtor Hsus%ensie E t$e obligation is oid"

Art" 00?2 .en if t$e condition is fulfilled! obligation is not de(andable"1 eg"Debtor #ill gie creditor @0FFFF if debtor goes to JS

If %otestatie on t$e %art of t$e creditor! obligations is alid #$et$er condition issus%ensie or resolutory- eg" Debtor is to gie Creditor @0FFFF if creditor goes to JS

i35 Casua*E de%endent u%on c$ance or $a=ard! or u%on t$e #ill of a t$ird %ersoneg" Ill gie you @0FFF if I #ill #in first %ri=e in t$e lotto #$ic$ I bet today

35 'i=e,E de%endent %artly u%on c$ance and u%on t$e #ill of one of t$e %arties!or u%on t$e #ill of a t$ird %erson" .g" I #ill gie you @0(illion if you (arry A"

3i5 /ith ter+-Positi3e E e3tinguis$ed if ti(e e3%ires or indubitable of condition to

$a%%enNe2ati3e E effectie fro( (o(ent of ti(e ela%sed or eident it cant

$a%%en

3ii5 Possib*e a-, I+possib*e@ossible- ca%able of being fulfilled in its nature and by la#"I(%ossible- inca%able of being fulfilled by its nature and due to o%eration of la#"

(1) &o do- bot$ t$e condition and t$e obligation are oid(2) ot to doEdisregard t$e condition! t$e obligation is still alid1 Condition

not to do an i(%ossible t$ing! dee(ed to $ae been not agreed u%on" Art" 00?:

+mpossible condition 4 physically not feasibleIllegal condition E %ro$ibited by la#! good custo(! %ublic %olicy and (orals

3iii5 Positi3e a-, Ne2ati3ePositi3e E t$e condition t$at so(e eent $a%%en at a deter(inate ti(e"

Obligation is e3tinguis$ed as soon as t$e ti(e e3%ires or it $as beco(e indubitable t$att$e eent #ill not ta>e %lace or it $as beco(e indubitable t$at t$e eent #ill not ta>e%lace" .g" Debtor to gie creditor @0FFF if Creditor #ill (arry A on or before Dece(ber:F! 2F00" obligation is e3tinguis$ed if creditor #ill not (arry A on Dec :F! 2F00"

Ne2ati3eE Condition t$at so(e eent #ill not $a%%en at a deter(inate ti(e"Oblgiation be co(es effectie as soos as t$e ti(e indicated $as ela%sed or it beco(eeident t$a eent #ill not occur" .g" Ill gie you 0FFFF if you $ae not yet (arried A as ofDec :F 2F00"

i= &i3isib*e a-, I-,i3isib*e

Diisible Eca%able of %artial %erfor(ance! eg" A #ill gie B 0FFF if B #ill finis$ $isla# course and @0F!FFF if B %ass t$e bar"

Indiisible E inca%able of %artial %erfor(ance! eg" A #ill gie @0(illion to B if Bfinis$ $is la# course and also to% t$e bar"

Ru*es o- *oss7 i+pair+e-t7 i+pro3e+e-t of the subject +atter pe-,i-2 thehappe-i-2 of suspe-si3e co-,itio- ter+ (Art5 114

Li*ilit+ icse /L/ss?

I0ir0et

Li*ilit+ i cse / I0r/)e0et

? e*t/r@s ltorat e#pense ofobligor usufructuary

Inde(nity Hda(ages

s%ecific %erfor(ance! rescission H da(agesIf it i(%roed at t$e e3%ense of t$e debtor! $es$all $ae no ot$er rig$t t$an t$at granted tot$e usufructuary" &art 00?M'


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?/ e*t/r@s ltor not at e#pense ofobligor

.3tinguis$ed

Creditor to bear da(agesCreditor gets it

RE#$ISI!ES OR !0E AORE'EN!IONE& R$LE:0" T$ere is a sus%ensie condition

2" T$ere is an obligation to delier a deter(inate t$ing:" T$ere is loss! deterioration or i(%roe(ent before t$e $a%%ening oft$e condition

OLIGA!ION /I!0 A PERIO&E future H certain! %ast H uncertain! %ayable #$en able

K$en sti%ulation says 8payable when able 8E it is #it$ a %eriod!

re(edy/a' agree(ent a(ong %arties

b' court s$all fi3 %eriod of %ay(ent #$en %arties unable to agree

9i-,s:a. Reso*utor6& in die( ' E ta>es effect at once but ter(inate u%on arrial oft$e day certain1

5ay certain 4 t$at #$ic$ (ust necessarily co(e! alt$oug$ it (ay not be >no#n#$en

b. Suspe-si3e& e3 die ' E ta>es effect on t$e day sti%ulated

/0EN CO$R!S 'A. I" PERIO&:

a' art 00M*

b) art 00M*! 2nd%aragra%$

c) art 00M0! :rd%aragra%$

d) art 08?*! 2nd! :rd! +t$sentence

e' art 00?F

/0EN &E!OR LOSES RIG0! !O PERIO&:

a" insolency of debtor! unless security %roided

b" did not delier security

c" i(%aired security- t$ru fault or fortuitous eent

d" iolate underta>ing in consideration of e3tension of %eriod

e" atte(%ts to abscond

(;45 acu*tati3eE only one %restation $as been agreed u%on but anot$er (ay be gienin substitution

Effect of *oss or ,eterioratio- thru -e2*i2e-ce7 ,e*a6 or frau, of ob*i2or:

a) of thing intended as substitute - no liability

b) of the substitute after substitution is madeE #it$ liability

(?45 A*ter-ati3eE bound by different %restations but only one is due


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Ri2ht of choice:eneral rule:rig$t of c$oice belongs to debtor

a5 the choice is 8ith ,ebtor

(1) +f only 1 is left either because of fortuitous events or due to debtor6s acts !

%erfor( #$at is left" T$e effect is t$at t$e debtor loses t$e rig$t of c$oice

(2) if the choice is limited because of the creditor6s acts! t$e debtor $as t$e rig$tof resolution and da(ages

(3) if all are lost due to debtor! t$e creditor is entitled to da(ages

(4) if some are lost! t$e debtor can c$oose fro( t$e re(aining

b5 the choice is 8ith cre,itor

(1) if one or some are lost due to fortuitous event! t$e creditor c$ooses t$e

re(ainder

(2) if one or some is lost because of the fault of debtor! t$e creditor (ay c$ooseeit$er t$e re(ainder or t$e alue of any #$ic$ disa%%eared! and da(ages ineit$er case

(3) if all is lost due to the debtor6s fault,t$e creditor (ay c$oose t$e alue of anyif so(e is lost due to debtors fault! t$e creditor c$ooses t$e re(ainder

(4) if all is lost due to fortuitous event! obligation is e3tinguis$ed

(5) if all is lost due to creditor6s fault! t$e obligation is e3tinguis$ed

Requisites for +a@i-2 the choice:

a' no#

b' no#ledge t$at a selection is indeed being (ade

c'


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(45 Boi-tE %resu(%tion #$en 2 or (ore creditors or 2 or (ore debtors concur in oneand t$e sa(e obligation

Effects:

a" De(and on one %roduces delay only #it$ res%ect to t$e debt

b" Interru%tion in %ay(ent by one does not benefit or %rejudice t$e ot$er

c" ices of one debtor to creditor $as no effect on t$e ot$ers

d" Insolency of one debtor does not affect ot$er debtors

(45 So*i,ar6 E (ust be e3%ressed in sti%ulation or %roided by la# or by nature ofobligation

a. Acti3eE on t$e %art of creditor or obligee

Eects30" Deat$ of 0 solidary creditor trans(its s$are to $eirs &but collectiely'

2" .ac$ creditor re%resents t$e ot$er in t$e act of recoery of %ay(ent

:" Credit is diided e9ually bet#een creditors as a(ong t$e(seles

+" Debtor (ay %ay any of t$e solidary creditors

b. Passi3eE on t$e %art of debtors or obligors

Eects30" .ac$ debtor (ay be re9uested to %ay #$ole obligation #it$ rig$t to recoer

fro( co-debtors

2" Interru%tion of %rescri%tion to one creditor affects all

:" Interest fro( delay on 0 debtor is borne by all

c. 'i=e, on t$e %art of t$e obligors and obligees! or t$e %art of t$e debtors andt$e creditors

d. Co-3e-tio-a*E agreed u%on by t$e %arties

e. Le2a*E i(%osed by la#

I-sta-ces 8here *a8 i+poses so*i,ar6 ob*i2atio-:

0" obligations arising fro( tort

2" obligations arising fro( 9uasi-contracts

:" legal %roisions regarding obligation of deisees and legatees

+" liability of %rinci%als! acco(%lices! and accessories of a felony

7" bailees in co((odatu(

Eects3a. payment made before debt is due, no interest can be c$arged! otherwise E

interest can be c$arged


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b. insolvency of oneE ot$ers are liable for s$are %ro-rata

c. if different terms 9 conditionsE collect only #$at is due! later on collect fro( any

d" no reimbursementif %ay(ent is (ade after %rescri%tion or beca(e illegal

d. remission made after payment is madeE co-debtor still entitled to rei(burse(ent

e. effect of insolvency or death of co-debtorE still liable for #$ole a(ount

f. fault of any debtorE eery one is res%onsible E %rice! da(age H interest

g. complete personal defenseE total or %artial & u% to a(ount of s$are only ' if not%ersonal to $i(

Eect / l/ss /r i0/ssi*ilit+ / t'e restti/3

a. if without faultE no liability

b. if with faultE t$ere is liability &also for da(age and interest'

c. loss due to fortuitous event after defaultE t$ere is liability &because of default'

(


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Art 118;

T$e condition t$at so(e eent #ill $a%%en at a deter(inate ti(e s$all e3tinguis$t$e obligation as soon as t$e ti(e e3%ires or if it $as beco(e indubitable t$at t$e eent

#ill not ta>e %lace"

If t$e %eriod is not fi3ed in t$e contract! t$e court! considering t$e %arties intentions!s$ould deter(ine #$at %eriod #as really intended"

Art 1185

T$e condition t$at so(e eent #ill not $a%%en at a deter(inate ti(e s$all endert$e obligation effectie fro( t$e (o(ent t$e ti(e indicated $as ela%sed! or if it $asbeco(e eident t$at t$e eent cannot occur"

If no ti(e $as been fi3ed! t$e condition s$all be dee(ed fulfilled at suc$ ti(e as

(ay $ae been conte(%lated! bearing in (ind t$e nature of t$e obligation"

T$is article refers to negatie conditions"

Art 1186

T$e condition s$all be dee(ed fulfilled #$en t$e obligor oluntarily %reents itsfulfill(ent &Doctrine of Constructie 6ulfill(ent'

T$is Article deals #it$ Constructie or @resu(es 6ulfill(ent"

Reason for t$e article/ One (ust not %rofit by $is o#n fault"

Re9uisites/a" oluntarily (ade-intent to %reent (ust be %resentb" Actually %reents-intention #it$out %reention or %reention #it$out intention is

not sufficient

Art 1187

T$e effects of a conditional obligation to gie! once t$e condition $as beenfulfilled! s$all retroact to t$e day of t$e constitution of t$e obligation" Neert$eless! #$ent$e obligation i(%oses reci%rocal %restations u%on t$e %arties! t$e fruits and interestsduring t$e %endency of t$e condition s$all be dee(ed to $ae been (utuallyco(%ensated" If t$e obligation is unilateral! t$e debtor s$all a%%ro%riate t$e fruits andinterests receied! unless fro( t$e nature and circu(stances of t$e obligation it s$ouldbe inferred t$at t$e intention of t$e %erson constituting t$e sa(e #as different"

Art 1188

T$e creditor (ay! before t$e fulfill(ent of t$e condition! bring t$e a%%ro%riateactions fro t$e %reseration of $is rig$ts"

T$e debtor (ay recoer #$at during t$e sa(e ti(e $e $as %aid by (ista>e incase of sus%ensie condition"

Art 118=

K$en t$e conditions $ae been i(%osed #it$ t$e intention of sus%ending t$e

efficacy of an obligation to gie! t$e follo#ing rules s$all be obsered in case of t$ei(%roe(ent! loss or deterioration of t$e t$ing during t$e %endency of t$e condition/

a" If t$e t$ing is lost #it$out t$e fault of t$e debtor! t$e obligation s$all bee3tinguis$ed

b" If t$e t$ing is lost t$roug$ t$e fault of t$e debtor! $e s$all be obliged to %ayda(ages! it is understood t$at t$e t$ing is lost #$en it %eris$es! or goes out ofco((erce! or disa%%ears in suc$ a #ay t$at its e3istence is un>no#n or cannotbe recoered"


18/105

c" K$en t$e t$ing deteriorates #it$out t$e fault of t$e debtor! t$e i(%air(ent is tobe borne by t$e creditor

d" If it deteriorates t$roug$ t$e fault of t$e debtor! t$e creditor (ay c$oose fro( t$erescission of t$e obligation and its fulfill(ent! #it$ inde(nity for da(ages ineit$er case

e" If t$e t$ing is i(%roed by its nature or by ti(e! t$e i(%roe(ent s$all inure to

t$e benefit of t$e creditorf" If it is i(%roed at t$e e3%ense of t$e debtor! $e s$all $ae no ot$er rig$t t$an

t$at granted to t$e usufractuary"

.ffects of @artial Loss-It (ay be %artial loss/a" T$at #ould a(ount to a loss i(%ortant enoug$ to be considered a co(%lete loss

&t$is #ill be deter(ined by t$e courts'b" T$at #ould (erely be considered a deterioration of t$e t$ing! in #$ic$ case t$e

rules on deterioration s$ould a%%ly

Art 11=%

K$en t$e condition $ae for t$eir %ur%ose t$e e3tinguis$(ents of an obligation togie! t$e %arties! u%on fulfill(ent of said conditions! s$all return to eac$ ot$er #$at t$ey$ae receied"

.ffects K$en Resolutory Condition is 6ulfilled/a" T$e obligation is e3tinguis$edb" Because t$e obligation $as been e3tinguis$ed and considered to $ae $ad no

effect! t$e %arties s$ould restore to eac$ ot$er #ant t$ey $ae receiedc" Aside fro( t$e actual t$ings receied! t$e fruits of t$e interests t$ereon s$ould

also be returned after deducting of course t$e e3%enses (ade for t$eir%roduction! gat$ering and %reseration

d" T$e rule on Art 00?M #ill a%%ly to #$oeer $as t$e duty to return in case of t$e

loss! deterioration or i(%roe(ent of t$e t$inge" T$e courts are gien %o#er to deter(ine t$e retroactiity of t$e fulfill(ent of

resolutory conditions"

Art 11=1

T$e %o#er to rescind obligations is i(%lied in reci%rocal ones in case one of t$eobligors s$ould not co(%ly #it$ #$at is incu(bent u%on $i("

T$e injured %arty (ay c$oose bet#een t$e fulfill(ent if t$e latter s$ould beco(ei(%ossible"

T$e court s$all decree t$e rescission clai(ed! unless t$ere be just causeaut$ori=ing t$e fi3ing of a %eriod"

T$is is understood to be #it$out %rejudice to t$e rig$ts of t$ird %ersons #$o $aeac9uired t$e t$ing! in accordance #it$ Articles 0:?7 and 0:?? and t$e


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c. If e %ro%erty is no# in t$e $ands of an innocent :rd %arty #$o $as la#ful%ossession of t$e sa(e

udicial a%%roal for rescission is needed #$en t$ere $as already been deliery oft$e object &unless t$ere is a oluntary returning'

udicial a%%roal is not needed #$en t$ere $as been no deliery yet

C$oice by t$e Injured @artya" 6ulfill(ent or s%ecific %erfor(ance #it$ da(ages orb" Rescission %lus da(ages

Art 11=2

In case bot$ %arties $ae co((itted a breac$ of t$e obligation" T$e liability oft$e first infractor s$all be e9uitably te(%ered by t$e courts" If it cannot be deter(ined#$ic$ of t$e %arties first iolated t$e contract! t$e sa(e s$all be dee(ed e3tinguis$ed!and eac$ s$all bear $is o#n da(ages"

Breac$ of t$e second infractor %roides (itigating effect to t$e liability of t$e firstinfractor because of t$is! t$e courts s$all te(%er4regulate4lessen t$e liability of t$efirst infractor"

Sectio- ) Ob*i2atio-s 8ith a Perio,

Art 11=:

Obligations for #$ose fulfill(ent a day certain $as been fi3ed! s$all bede(andable only #$en t$at day co(es"

Obligations #it$ resolutory %eriod ta>e t$e effect at once! but ter(inate u%onarrial of t$e day certain"

A day certain is understood to be t$at #$ic$ (ust necessarily so(e! alt$oug$ it(ay not be >no#n #$en"

If t$e uncertainty consists in #$et$er t$e day #ill co(e or not! t$e obligation isconditional and it s$all be regulated by t$e rules of t$e %receding Section"

@eriod ids a certain lengt$ of ti(e #$ic$ deter(ines t$e effectiely or t$ee3tinguis$(ent of t$e obligation &it (ust surely co(e'

Different 5inds of @eriods or Ter(sa" Definite-e3act date or ti(e is >no#n or gienb" Indefinite-so(et$ing #ill surely $a%%en but t$e date is un>no#nc" Legal-%eriod granted under t$e %roision of t$e la#d" Conentional or oluntary-%eriod agreed u%on or sti%ulated by t$e %artiese" udicial-%eriod is fi3ed by t$e courts for t$e %erfor(ance of an obligation or for its

ter(inationf" .3 Die- a %eriod #it$ sus%ensie effect- t$e obligation begins u%on t$e arrial of

t$e %eriodg" In Die(-a %eriod #it$ a resolutory effect- t$e obligation ter(inates u%on t$e

arrial of t$e %eriod

Re9uisites for a alid @eriod or Ter(

a" It (ust refer to t$e futureb" It (ust be certain! but can be e3tendedc" It (ust be %$ysically or legally i(%ossible! ot$er#ise t$e obligation is oid"

Art 11=;

In case of loss! deterioration or i(%roe(ent of t$e t$ing before t$e arrial of t$eday certain! t$e rules in Art 00?M s$all be obsered"


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Art 11=5

Anyt$ing %aid or deliered before t$e arrial of t$e %eriod! t$e obligor beinguna#are of t$e %eriod or belieing t$at t$e obligation $as beco(e due and de(andable!(ay be recoered! #it$ fruits and interests"

Art 11=6

K$eneer in an obligation a %eriod is designated! it is %resu(ed to $ae beenestablis$ed for t$e benefit of bot$ t$e creditor and t$e debtor! unless fro( t$e tenor oft$e sa(e or ot$er circu(stances it s$ould a%%ear t$at t$e %eriod $as been establis$edin faor of one or of t$e ot$er"

General Rule/ Ter( is for t$e benefit of t$e debtor or creditor" e use of t$e %eriod/a" K$en after t$e obligation $as been contracted! $e beco(es insolent! unless $e

gies a guaranty or security for t$e debtb" K$en $e does not furnis$ to t$e creditor t$e guarantees or securities #$ic$ $e

$as %ro(isedc" K$en by $is o#n acts $e $as i(%aired said guaranties and securities after t$eir

establis$(ent! and #$en t$roug$ a fortuitous eent t$ey disa%%ear! unless $ei((ediately gies ne# ones e9ually satisfactory

d" K$en t$e debtor iolates any underta>ing! in consideration of #$ic$ t$e creditor

agreed to t$e %eriode" K$en t$e debtor atte(%ts to abscond"

T$e debtor s$all lose eery rig$t to (a>e use of t$e %eriod-it (eans t$at t$e ter( ise3tinguis$ed and t$e creditor can de(and fulfill(ent at once"

Art 11==

A %erson alternatiely bound by different %restations s$all co(%letely %erfor(one of t$e("

T$e creditor cannot be co(%elled to receie %art of one and %art of t$e ot$er

underta>ing"

Art 12%%

T$e rig$t of c$oice belongs to t$e debtor! unless if as been e3%ressly granted tot$e creditor"


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T$e debtor s$all $ae no rig$t to c$oose fro( t$ose %restations #$ic$ arei(%ossible! unla#ful! or #$ic$ could not $ae been t$e object of t$e obligation"

General Rule-In t$e absence of any sti%ulations! t$e rig$t if c$oice belongs to t$edebtor"

Li(itation on t$e Debtors C$oice- t$e debtor s$all $ae no rig$t to c$oose%restations #$ic$ are/

a" I(%ossibleb" Jnla#fulc" K$ic$ could not $ae been t$e object of t$e obligation

Art 12%1

T$e c$oice s$all %roduce no effect e3ce%t fro( t$e ti(e it $as beenco((unicated"

T$e c$oice (ay be co((unicated orally or in #riting! e3%ressly or i(%liedly"

Once notice $as been (ade t$at a c$oice $as been done! t$e obligation beco(es asi(%le obligation to do or to delier t$e object selected"

An election once (ade is binding on t$e %erson #$o (a>es it! and $e #ill nott$erefore be %er(itted to renounce $is c$oice and ta>e an alternatie #$ic$ #as firsto%en to $i("

Re9uisites for ing t$e C$oice/a" no#b" no#ledge t$at a selection is indeed being (adec"


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K$en t$e c$oice $as been e3%ressly gien to t$e creditor! t$e obligation s$allcease to be alternatie fro( t$e day t$e selection $as been co((unicated to t$edebtor"

Jntil t$en t$e res%onsibility of t$e debtor s$all be goerned by t$e follo#ing rules/a" If one of t$e t$ings is lost t$roug$ a fortuitous eent! $e s$all %erfor( t$e

obligation by deliering t$at #$ic$ t$e creditor s$ould c$oose fro( a(ong t$ere(ainder! or t$at #$ic$ re(ains if only one subsists

b" If t$e lose of one of t$e t$ings occurs t$roug$ t$e fault of t$e debtor! t$e creditor(ay clai( any of t$ose subsisting! or t$e %rice of t$at #$ic$! t$roug$ t$e fault oft$e for(er $as disa%%eared! #it$ a rig$t to da(ages

c" If all t$e t$ings are lost t$roug$ t$e fault of t$e debtor! t$e c$oice by t$e creditors$all fall u%on t$e %rice of any of t$e(! also #it$ inde(nity for da(ages"

Art 12%6

K$en only one %restation $as been agreed u%on t$e obligor (ay render anot$erin substitution! t$e obligation is called facultatie"

6acultatie Obligation- one #$ere only one %restation $as been agreed u%on butt$e obligor (ay render anot$er in substitution"

Sectio- ; Boi-t a-, So*i,ar6 Ob*i2atio-

Art 12%7

oint Obligations- eac$ obligor ans#ers only for a %art of t$e #$ole liability and to eac$obligee belongs only a %art of t$e correlatie &e9uialent' rig$ts

Solidary 4 oint and Seeral Obligations- t$e relations$i% bet#een t$e actie and t$e%assie subjects is so close t$at eac$ of t$e for(er or of t$e latter (ay de(and t$efulfill(ent of or (ust co(%ly to t$e #$ole obligation"

General Rule/ K$en t$ere are t#o or (ore debtors or t#o or (ore creditors t$eobligation is joint"

.3ce%tions/a" K$en t$ere is a sti%ulation to t$e contract t$at t$e obligation is solidaryb" K$en t$e object of t$e obligation re9uires liability to be solidaryc" K$en t$e la# declares t$e obligation to be solidary

Art 12%8

Liability of @artners/a" If it arises out of contracts t$e liability is joint or %ro-ratab" If it arises out of a cri(e or 9uasi-delict! t$e liability is solidary toget$er #it$ t$e

%artners$i%

Art 12%=

If t$e diision is i(%ossible! t$e rig$ts of t$e creditors (ay be %rejudiced only byt$eir collectie acts! and t$e debt can be enforced only by %roceeding against all t$edebtors"

C$aracteristics


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a" T$e obligation is joint but since t$e object is indiisible! t$e creditor (ay %roceedagainst all t$e joint debtors for co(%liance is %ossible only if all t$e joint debtors#ould act toget$er

b" De(and (ust t$erefore be (ade on all t$e joint debtors if anyone of t$e debtorsdoes not co(%ly #it$ $is (onetary obligation for da(ages

c" If any of t$e debtors s$all be insolent! t$e ot$ers s$all not be liable for $is s$are

d" If t$ere be joint creditors! deliery (ust be (ade to all! and not (erely to one!unless t$at one be s%ecifically aut$ori=ed by ot$ers

e" .ac$ joint creditor is allo#ed to renounce $is %ro%ortionate credit

Art 121%

T$e indiisibility of an obligation does not necessarily gie rise to solidarity" Nordoes solidarity of itself i(%ly indiisibility"

Indiisibility- refers to t$e subject (atterSolidarity- refers to t$e tie bet#een t$e %arties

Art 1211

Different Kays by K$ic$ T#o Debtors (ay be Bound/a" Jnifor(-#$en t$e debtors are bound by t$e sa(e sti%ulations and clausesb" Ot$er#ise-#$ere t$e obligor! t$oug$ liable for t$e sa(e %restation are

neert$eless not subject to t$e sa(e secondary sti%ulations and clauses

Art 121:A solidary creditor cannot assign $is rig$ts #it$out t$e consent of t$eot$ers"

Art 121; T$e debtor (ay %ay any one of t$e creditors/ but if any de(and $as

been (ade by any one of t$e(! %ay(ent (ust be (ade to $i("

Art 1215

T$e creditor #$o (ay $ae e3%ected any of t$ese acts! as #ell as $e #$o$as collects t$e debt! s$all be liable to t$e ot$ers for t$e s$are in t$e obligationcorres%onding to t$e("

Noation- t$e (odification of an Obligation by c$anging its object or %rinci%al conditions!or by substituting t$e %erson of t$e debtor or by subrogating a t$ird %erson in t$e rig$tsof t$e creditor

Co(%ensation- t$at #$ic$ ta>es %lace #$en 2 %ersons in t$eir o#n rig$t are creditorsand debtors of eac$ ot$er" Co(%ensation (ay be Total or @artial de%ending u%on t$ea(ount inoled

Confusion or es %lace #$en t$e c$aracters of t$e creditor anddebtor are (erged in t$e sa(e %erson

Re(ission or Kaier- t$at act of liberality #$ereby t$e creditor condones t$e obligationof t$e debtor! t$at #$ere t$e creditor tells t$e debtor to forget t$e #$ole t$ing

@ay(ent- one of t$e #ays by #$ic$ t$e obligation is e3tinguis$ed and consists in t$edeliery of t$e t$ing or t$e rendition of t$e serice #$ic$ is t$e object of t$e obligation"

Art 1218 @ay(ent by a solidary debtor s$all not entitle $i( to rei(burse(ent fro( $isco-debtors if suc$ %ay(ent is (ade after t$e obligation $as %rescribed or beco(e illegal"

Art 122% E T$e re(ission of t$e #$ole obligation! obtained by one of t$e solidarydebtors! does not entitle $i( fro( rei(burse(ent fro( $is co-debtors"


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Art 1221

If t$e t$ing $as been lost or t$e %restation $as beco(e i(%ossible #it$out t$efault of t$e solidary debtors! t$e obligation s$all be e3tinguis$ed"

If t$ere #as fault on t$e %art of any one of t$e(! all s$all be res%onsible to t$e

creditor! for t$e %rice and t$e %ay(ent of da(ages and interest! #it$out %rejudice tot$eir action against t$e guilty or negligent debtor"

A solidary obligation i(%lies (utual agency and (utual confidence"

Art 1222

A solidary debtor (ay! in actions filed by t$e creditor! aail $i(self of all defenses#$ic$ are deried fro( t$e nature of t$e obligation and of t$ose #$ic$ are %ersonal to

$i(! or %ertain to $is o#n s$are" Kit$ res%ect to t$ose #$ic$ %ersonally belong to t$eot$ers! $e (ay aail $i(self t$ereof only as regards t$at %art of t$e debt for #$ic$ t$elatter are res%onsible"

5inds of Defensea" T$ose deried fro( t$e nature of t$e obligation- Lac> of consideration or cause- Absolute si(ulation-as #$en t$e contract is totally fictitious- Illegal consideration- .3tinguis$(ent of t$e obligation-as #$en t$e #$ole debt $as been %aid! re(itted!etc"- Non-fulfill(ent of t$e sus%ensie condition

- Statute of frauds- K$en all t$e debtors #ere inca%acitated to gie consent-suc$ as une(anci%ated(inors! insane! etc"- K$en t$ere are ices of Consent4itiated Consent on t$e %art of all t$e debtors

b" T$ose %ersonal to t$e debtor sued

c" T$ose %ersonal to t$e ot$er

Sectio- ? &i3isib*e a-, I-,i3isib*e Ob*i2atio-s

Art 122:

T$e diisibility of t$e indiisibility of t$e t$ings t$at are t$e object of obligations in#$ic$ t$ere is only one debtor and only one creditor does not alter or (odify t$e%roisions of C$a%ter 2 of t$is Title"

Diisible Obligations-one ca%able of %artial %erfor(anceIndiisible Obligations- one not ca%able of %artial %erfor(ance

Classes of 5inds of Indiisibilitya" Conentional- by co((on agree(ent

b" Natural or Absolute- because of t$e nature of t$e underta>ingc" Legal- if so %roided by la#

5inds of Diisiona" ;uantitatie- de%ends on 9uantityb" ;ualitatie- de%ends on 9uality! irres%ectie of 9uantityc" Intellectual or


25/105

Art 122;

A joint indiisible obligation gie rise to inde(nity for da(ages fro( t$e ti(eanyone of t$e debtors does not co(%ly #it$ $is underta>ing" T$e debtors #$o (ay $aebeen ready to fulfill t$eir %ro(ises s$all nor contribute to t$e inde(nity beyond t$ecorres%onding %ortion of t$e %rice of t$e t$ing or of t$e alue of t$e serice in #$ic$ t$e

obligation consists"

.ffect of Non Co(%liance- t$e obligation is conerted to a (onetary one for inde(nity"

Art 1225

6or t$e %ur%ose of t$e %receding articles! obligations to gie definite and t$ose#$ic$ are not susce%tible of %artial %erfor(ance s$all be dee(ed to be indiisible"

In obligations not to do! diisibility or indiisibility s$all be deter(ined by t$ec$aracter of t$e %restation in eac$ %articular case"

Obligations t$at are Dee(ed Indiisible/a" Obligations to gie definite t$ingsb" T$ose #$ic$ are not susce%tible of %artial %erfor(ancec" .en if t$e t$ing is %$ysically diisible! it (ay be indiisible if so %roided by la#d" .en if t$e t$ing is %$ysically diisible! it (ay be indiisible if suc$ #as t$e

intention of t$e %arties concerned

Obligations t$at are Dee(ed Diisiblea" K$en t$e object of t$e obligation is t$e e3ecution of a certain nu(ber of days of

#or>b" K$en t$e object of t$e obligation is t$e acco(%lis$(ent of #or> by (etric unitsc" K$en t$e %ur%ose of t$e obligation is to %ay a certain a(ount in install(ent

d" K$en t$e object of t$e obligation is t$e acco(%lis$(ent of #or> susce%tible of%artial %erfor(ance

T$e c$aracter of t$e %restation or obligation #ill deter(ine t$e diisibility orindiisibility of obligation not to do"

Sectio- Ob*i2atio-s 8ith a Pe-a* C*ause

Art 1226

In obligation #it$ a %enal clause! t$e %enalty s$all substitute t$e inde(nity froda(ages and t$e %ay(ent of interest in case of non-co(%liance! if t$ere is no sti%ulation

to t$e contrary" Neert$eless! da(ages s$all be %aid if t$e obligor refuses to %ay t$e%enalty or is guilty of fraud in t$e fulfill(ent of t$e obligation"

@rinci%al @ur%ose of t$e @enal Clause- to insure t$e %erfor(ance of t$e obligation andalso to substitute for da(ages and t$e %ay(ent of interest in case of non-co(%liance"

.3ce%tions to t$e General Rule/a" K$en t$ere is e3%ress sti%ulation to t$e effect t$at da(ages or interest (ay still

be recoered! des%ite t$e %resence of t$e %enalty clauseb" K$en t$e debtor refuses to %ay t$e %enalty i(%osed in t$e obligationc" K$en t$e debtor is guilty of fraud in t$e fulfill(ent of t$e obligation

Art 1227

T$e debtor cannot e3e(%t $i(self fro( t$e %erfor(ance of t$e obligation by%aying t$e %enalty! sae in t$e case #$ere t$is rig$t $as been e3%ressly resered for$i(" Neit$er can t$e creditor de(and t$e fulfill(ent of t$e obligation and t$e satisfactionof t$e %enalty at t$e sa(e ti(e! unless t$is rig$t $as been clearly granted to $i("o#eer! if after t$e creditor $as decided to re9uire t$e fulfill(ent of t$e obligation! t$e


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%erfor(ance t$ereof s$ould beco(e i(%ossible #it$out $is fault! t$e %enalty (ay beenforced"

I6 t$e debtor can just %ay t$e %enalty! t$e fulfill(ent of t$e obligation #ill beconsidered an alternatie one"

Art 1))


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C0AP!ER IVE"!ING$IS0'EN! O OLIGA!IONS

2odes of $#tinguishment of bligation:0" @ay(ent or %erfor(ance2" Loss of t$e t$ing due:" Condonation or re(ission of debt+" Confusion or (erger of rig$ts

7" Co(%ensation8" Noation*" Annul(ent?" RescissionM" 6ulfill(ent of resolutory condition

1. PA.'EN! OR PEROR'ANCEE deliery of (oney and %erfor(ance! in any ot$er(anner of t$e obligation

RE#$ISI!ES OR VALI& PA.'EN!PEROR'ANCE

A. &it' resect t/ restti/ itsel3

&0' identity

&2' integrity or co(%leteness

&:' indiisibility

B. &it' resect t/ rties- (ust be (ade by %ro%er %arty to %ro%er %arty

&0' @ayor

(a) Payor - t$e one %erfor(ing! $e can be t$e debtor $i(self or $is $eirs or

assigns or $is agent! or anyone interested in t$e fulfill(ent of t$eobligation1 can be anyone as long as it is #it$ t$e creditors consent

(b) 5person paysperforms- only t$e creditors consent1

+f performance is done also with debtor6s consent- $e ta>es t$e %lace of t$edebtor" T$ere is subrogation e3ce%t if t$e :rd %erson intended it to be adonation

(c) rdperson paysperforms with consent of creditor but not with debtor6sconsent,t$e re%ay(ent is only to t$e e3tent t$at t$e %ay(ent $as beenbeneficial to debtor

&2' @ayee

(a) payee -creditor or obligee or successor in interest of transferee! or agent

(b) rdperson- if any of t$e ff" concur/


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i" it (ust $ae redounded to t$e obligees benefit and only to t$e e3tentof suc$ benefit

ii" it falls under art 02+0! %ar 0!2!: - t$e benefit is total so! %erfor(anceis total

(c) anyone in possession of the credit- but #ill a%%ly only if debt $as notbeen %reiously garnis$ed

PA.'EN! 'A&E !O AN INCAPACI!A!E& PERSON 7 VALI& I:

0" Inca%acitated %erson >e%t t$e t$ing deliered! or

2" Insofar as t$e %ay(ent $as been beneficial to $i(

PA.'EN! !O A R&PAR!. NO! A$!0ORIFE&7 VALI& I PROVE& ONL.!O !0E E"!EN! O ENEI!H

PRES$'E& I:

1. After %ay(ent! :rd%erson ac9uires t$e creditors rig$ts

2. Creditor ratifies %ay(ent to :rd%erson

:" By creditors conduct! debtor $as been led to (a>e t$e %ay(ent &esto%%el'

PA.'EN! 'A&E IN GOO& AI!0 !O A PERSON IN POSSESSION O CRE&I!S0ALL RELEASE &E!OR7

Requisites:0" @ay(ent by debtor (ust be (ade in good fait$

2" Creditor (ust be in %ossession of t$e credit H not (erely t$e eidence ofindebtedness

C. &it' resect t/ ti0e lce / +0et - (ust be according to t$eobligation

/here pa6+e-t shou*, be +a,e:0" In t$e %lace designated in t$e obligation

2. +f there is no e#press stipulation and the underta;ing is to deliver aspecific thingE at t$e %lace #$ere t$e t$ing (ig$t be at t$e (o(ent t$eobligation #as constituted

:" In ot$er case E in t$e %lace of t$e do(icile of t$e debtor

!i+e of pa6+e-t- ti(e sti%ulated

$ffect of payment 4 e3tinguis$ obligation

$#cept: order to retain debt

S$S!AN!IAL PEROR'ANCE

0" Atte(%t in Good 6ait$ to %erfor( #it$out #illful or intentional de%arture

2" Deiation is slig$t

:" O(ission4Defect is tec$nical or uni(%ortant


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+" es t$e designation

2. +f not! creditor (a>es it by so stating in t$e recei%t t$at $e issues E unlesst$ere is cause for inalidating t$e contract

3. +f neither the debtor nor creditor has made the application or if theapplication is not valid! t$en a%%lication! is (ade by o%eration of la#

/0O 'A9ES APPLICA!ION:

Ge-era* Ru*e:Debtor

E=ceptio-:Creditor E

a' Debtor #it$out %rotest acce%ts recei%t in #$ic$ creditor s%ecifiede3%ressly and un(ista>ably t$e obligation to #$ic$ suc$ %ay(ent #as tobe a%%lied E debtor in t$is case renounced t$e rig$t of c$oice

b' K$en (ont$ly state(ents #ere (ade by t$e ban> s%ecifying t$e

a%%lication and t$e debtor signed said state(ents a%%roing t$e status of$er account as t$us sent to $er (ont$ly by t$e ban>

IN CASE NO APPLICA!ION 0AS EEN 'A&E0" A%%ly %ay(ent to t$e (ost onerous

2. +f debts are of the same nature and burden! a%%lication s$all be (ade toall %ro%ortionately


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b. &acio- e- Pa2oE (ode of e3tinguis$ing an obligation #$ereby t$e debtoralienates in faor of t$e creditor %ro%erty for t$e satisfaction of (onetary debt1

e3tinguis$ u% to a(ount of %ro%erty unless #4 contrary sti%ulation1

A s%ecial for( of %ay(ent because 0 ele(ent of %ay(ent is (issing/ ID.NTIT

Goerned by la# on sales

Co-,itio-s for a 3a*i, ,acio-:0' If creditor consents! for a sale %resu%%oses t$e consent of bot$

%arties

2' If dacion #ill not %rejudice t$e ot$er creditors

:' If debtor is not judicially declared insolent

c. Cessio-Assi2-+e-t i- a3or of cre,itorsE t$e %rocess by #$ic$ debtortransfer all t$e %ro%erties not subject to e3ecution in faor of creditors is t$att$e latter (ay sell t$e( and t$us! a%%ly t$e %roceeds to t$eir credits1e3tinguis$ u% to a(ount of net %roceeds & unless #4 contrary sti%ulation '

9i-,s:

1. *egalE goerned by t$e insolency la#

2" oluntary E agree(ent of creditors

RE#$ISI!ES OR VOL$N!AR. ASSIGN'EN!

a'


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RE#$ISI!ES O VALI& CONSIGNA!ION:&0' .3istence of alid debt

&2' Consignation #as (ade because of so(e legalcause - %reious alid tender #as unjustly refused or circu(stances(a>ing %reious tender e3e(%t

(3) @rior Notice of Consignation $ad been gien to t$e%erson interested in %erfor(ance of obligation &0stnotice'

&+' actual de%osit4Consignation #it$ %ro%er judicialaut$orities

(5) subse9uent notice of Consignation &2ndnotice'

Effects: E=ti-2uish+e-t of ob*i2atio-

&0' Debtor (ay as> judge to order cancellation of obligation

&2' Running of interest is sus%ended

&:' Before creditor acce%ts or before judge declares consignation $as been%ro%erly (ade! obligation re(ains & debtor bears ris> of loss at t$e(eanti(e! after acce%tance by creditor or after judge declares t$atconsignation $as been %ro%erly (ade E ris> of loss is s$ifted to creditor'

Co-si2-atio- 8o prior te-,er a**o8e, i-:

0" creditor absent or un>no#n4 does not a%%ear at t$e %lace of %ay(ent

2" inca%acitated to receie %ay(ent at t$e ti(e it is due:" refuses to issue recei%t #4o just cause

+" 2 or (ore creditor clai(ing t$e sa(e rig$t to collect

7" title of obligation $as been lost

)5 LOSS O !0E !0ING &$EE %artial or total4 includes i(%ossibility of %erfor(ance

/0EN IS !0ERE A LOSS:

0' K$en t$e object %eris$es &%$ysically'

2' K$en it goes out of co((erce

:' K$en it disa%%ears in suc$ a #ay t$at/ its e3istence is un>no#n or it cannot berecoered

/0EN IS !0ERE I'POSSIILI!. O PEROR'ANCE

0' @$ysical i(%ossibility

2' Legal i(%ossibility /

&a' Directly E caused as #$en %ro$ibited by la#

&b' Indirectly E caused as #$en debtor is re9uired to enter a (ilitary draft

OLIGA!ION !O &ELIVER A SPECIIC !0ING

Ge-era* Ru*e: .3tinguis$ed


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E=ceptio-s:

a' Debtor is at fault

b' Debtor is (ade liable for fortuitous eent because of a %roision of la#!

contractual sti%ulation or t$e nature of t$e obligation re9uires assu(%tion of ris>on %art of debtor

OLIGA!ION !O &ELIVER A GENERIC !0ING

Ge-era* Ru*e:Not e3tinguis$ed

E=ceptio-s:

a' if t$e generic t$ing is deli(ited

b' if t$e generic t$ing $as already been segregated

c' (onetary obligation

OLIGA!ION !O &O

Ge-era* Ru*e:Debtor is released #$en %restation beco(es legally or %$ysicallyi(%ossible #it$out fault on %art of debtor

EEC! O PAR!IAL LOSSE & judicial deter(ination of e3tent is necessary'

a) when loss is significantE (ay be enoug$ to e3tinguis$ obligation

b) when loss insignificantE not enoug$ to e3tinguis$ obligation

/0EN !0ING IS LOS! IN !0E POSSESSION O !0E &E!OR

Presu+ptio-:Loss due to debtors fault & dis%utable '

E=ceptio-:natural cala(ity! eart$9ua>e! flood! stor(

5 RE$S SIC S!AN!I$S % agree(ent is alid only if t$e sa(e conditions %reailingat ti(e of contracting continue to e3ist at t$e ti(e of %erfor(ance

EEC! O &IIC$L!. E.ON& PAR!IES CON!E'PLA!ION

Ru*e:Obligor (ay be released in #$ole or in %art

$


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b" T$ere (ust be a subject (atter &object of t$e re(ission! ot$er#ise t$ere #ouldbe not$ing to condone'

c" Cause of consideration (ust be liberality &.ssentially gratuitous! an act ofliberality '

d" @arties (ust be ca%acitated and (ust consent1 re9uires acce%tance by obligor1i(%lied in (ortis causa H e3%ressed inter ios

e" 6or(alities of a donation are re9uired in t$e case of an e3%ress re(ission

f" Reocable E subject to rule on inofficious donation & e3cessie! legiti(e isi(%aired ' H ingratitude H condition not follo#ed

g" Obligation re(itted (ust $ae been de(andable at t$e ti(e of re(ission

$" Kaiers or re(ission are not to be %resu(ed generally

or+s: E=te-t: 9i-,s:a. $#press E for(alitiesof donation

a" total a" @rinci%al E accessory also condoned

b" +mplied E conduct issufficient

b" %artial b" accessory E %rinci%al still outstanding

c" accessory oblig" Of %ledge E condoned1%resu(%tion only! rebuttable

Requisites of I+p*ie,:

1. voluntary delivery 4%resu(%tion1 #$en eidence of indebtedness is #4 debtorE %resu(ed oluntarily deliery by creditor1 rebuttable

2. effect of delivery of evidence of indebtedness is conclusion that debt iscondonedE already conclusion1

)/ltr+ eli)er+ / ri)te /c0et

a. if in hands of 7oint debtorE only $is s$are is condonedb. if in hands of solidary debtor - #$ole debt is condoned

c" &acitE oluntary destruction of instru(ent by creditor1 (ade to %rescribe#4o de(anding

?5 CON$SION OR 'ERGER O RIG0!Sc$aracter of debtor H creditor is (erged insa(e %erson #it$ res%ect to sa(e obligation

RE#$ISI!ES:a" It (ust ta>e %lace bet#een %rinci%al debtor H %rinci%al creditor only

b"


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e. Neit$er debt (ust be retained in a controersy co((enced by :rd%ersonH co((unicated #4 debtor &neit$er debt is garnis$ed'

9i-,s:

a. lel E by o%eration of la#1 as long as 7 re9uisites concur- een if

un>no#n to %arties H if %ayable in diff %laces1 inde(nity for e3%ense ofe3c$anges1 een if not e9ual debts E only u% to concurring a(ountb. c/)eti/lE agree(ent of %arties is enoug$! forget ot$er re9uire(entas long as bot$ consentedc. cltti)eE one %arty $as c$oice of clai(ing4o%%osing E one #$o $asbenefit of %eriod (ay c$oose to co(%ensate

- not all re9uisites are %resent- de%ositu(1 co((odatu(1 cri(inal offense1 clai( for future su%%ort1ta3es

d. icil E set off1 u%on order of t$e court1 needs %leading H %roof1 allre9uire(ents (ust concur e3ce%t li9uidation

e. t/tlE #$en 2 debts are of t$e sa(e a(ountf. rtilE #$en 2 debts are not of t$e sa(e a(ount

Effect of assi2-+e-t of cre,it to r,perso-H ca- there sti** be co+pe-satio-

a" if made after compensation too; placeE no effect1 co(%ensation already%erfectedb" if made before compensation too; placeE de%ends

1. with consent of debtorE debtor is esto%%ed unless $e reseres $isrig$t H gae notice to assignee

2. with ;nowledge but wo consent of debtorE co(%ensation (ay beset u% as to debts (aturing %rior to assign(ent3. wo ;nowledgeE co(%ensation (ay be set-u% on all debts %rior to$is >no#ledge

5 NOVA!IONE e3tinguis$(ent of obligation by creating4 substituting a ne# one in its%lace

a" c$anging object or %rinci%al conditionsb" substituting %erson of debtorc. subrogating :rd%erson in rig$t of creditor

RE#$ISI!ES:

a" alid obligationb" intent to e3tinguis$ old obligation E e3%ressed or i(%lied/co(%letely4substantially inco(%atible old and ne# obligation on eery %ointc" ca%acity H consent of %arties to t$e ne# obligationd. alid ne# obligation

EEC! O NOVA!ION:a. e#tinguishment of principal carries accessory! e=cept:

- sti%ulation to contrary- sti%ulation %our autri unless beneficiary consents- (odificatory noation only1 obliged to #4c is less onerous- old obligation is oid

b. old obligation subsists if:- ne# obligation is oid or oidable but annulled already & e3ce%t/intention of %arties '

c. if old obligation has condition


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- if esolutory 9 it occurred Eold obligation already e3tinguis$ed1 none# obligation since not$ing to noate- if suspensive 9 it never occurredEas if no obligation1 also not$ing tonoate

d. if old obligation has condition! (ust be co(%atible #it$ t$e ne#

obligation1 if new is wo conditionE dee(ed attac$ed to ne#

e. if new obligation has condition- if resolutory/ alid

- if suspensive 9 did not materiali>e/ old obligation is enforced9IN&S:

a. REALOBEC!IVEE c$ange object! cause4consideration or %rinci%al condition

b5 PERSONALS$BEC!IVE

1. substituting person of debtor ( passive 3

E"PRO'ISION1 initiatie is fro( :rd %erson or ne# debtor 1 ne# debtor Hcreditor to consent1 old debtor released fro( obligation1

subject to full rei(burse(ent H subrogation if (ade #4 consent of old debtor1if #4o consent or against #ill ! only beneficial rei(burse(ent1

if ne# debtor is insolent! not res%onsible since #4o $is consent

&ELEGACION1 initiatie of old debtor1 all %arties to consent1 full

rei(burse(ent1

if insolent ne# debtor E not res%onsible old debtor because obligatione3tinguis$ed by alid noation unless/

insolency already e3isting H of %ublic >no#ledge or >no# to $i( at ti(e ofdelegacion

a. 5eleganteE old debtor

b. 5elegatario - creditor

c. 5elegadoE ne# debtor

2. subrogating rdperson to rights of creditor ( active 3

a. conventional- agree(ent H consent of all %arties1 clearlyestablis$ed

b. legal-ta>es %lace by o%eration of la#1 no need for consent1 not%resu(ed e3ce%t as %roided for in la#/

presumed when-

0" creditor %ays anot$er %referred creditor een #4o debtors >no#ledge

2. :rd%erson not interested in obligation %ays #4 a%%roal of debtor

:" %erson interested in fulfill(ent of obligation %ays debt een #4o>no#ledge of debtor


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&iffere-ce fro+ pa6+e-t b6 r,perso- Cha-2e of ,ebtor 0" debtor is not nec" Released fro( debt 0" debtor is released

2" can be done #4o consent of creditor 2" needs consent of creditorE e3%ress or i(%lied

:" 0 obligation :" 2 obligations1 0 is e3tinguis$ed H ne# one

created+" :rd%erson $as no oblig" to %ay if insolent +" ne# debtor is obliged to %ay

Art 1)1 Obligations are e3tinguis$ed/a" By %ay(ent or %erfor(anceb" By t$e loss of t$e t$ing duec" By t$e condonation or re(ission of t$e debtd" By t$e confusion or (erger of t$e rig$ts of creditor and debtore" By co(%ensationf" By noation

Ot$er causes of e3tinguis$(ent of obligation! suc$ as annul(ent! rescission! fulfill(entof a resolutory condition! and %rescri%tion! are goerned else#$ere in t$is code"

Still ot$er causes/a" Deat$ of a %arty in case t$e obligation is a %ersonal oneb" Resolutory ter(c" C$ange of ciil statusd" Co(%ro(isese" +0et /r er/r0ce

Art 1)) @ay(ent (eans not only t$e deliery of (oney but also t$e %erfor(ance inany ot$er (anner! of an obligation"

Art 1) a debt s$all not be understood to $ae been %aid unless t$e t$ing or sericein #$ic$ t$e obligation consists $as been co(%letely deliered or rendered! as t$e case(ay be"

Re9uisites for a alid %ay(ent under t$is Article/a" T$e ery t$ing or serice conte(%lated (ust be %aidb" 6ulfill(ent (ust be co(%lete

Art 1)? K$en t$e obligee acce%ts t$e %erfor(ance! >no#ing its inco(%leteness ofirregularity! and #it$out e3%ressing any %rotest or objection! t$e obligation is dee(edfully co(%lied #it$"

Art 1)Creditor (ay acce%t %ay(ent fro( a stranger/

a" if t$ere is a sti%ulation allo#ing t$isb" or if said t$ird %erson $as an interest in t$e fulfill(ent of t$e obligation

T$e t$ird %erson (ay %ay/a. Kit$ t$e >no#ledge and consent of t$e debtor- $ere! t$e %ayor4said : rd%erson is

entitled to Rei(burse(ent and Subrogation to suc$ rig$ts as guaranty! %enalty

clause! or (ortgageb" Kit$out t$e debtors >no#ledge or against $is #ill E $ere! t$e %ayor is not entitled

to subrogation/ $e is allo#ed only Beneficial rei(burse(ent

Instances #$en recoery can be $ad fro( t$e creditor and not fro( t$e innocent debtor/a" K$en t$e debt $as %rescribedb" K$en t$e debt $ad been co(%letely re(ittedc" K$en debt $as already been %aid


37/105

d" K$en legal co(%ensation $ad already ta>en %lace

Art 1) K$oeer %ays on be$alf of t$e debtor #it$out t$e >no#ledge or against t$e#ill of t$e later! cannot co(%el t$e creditor to subrogate $i( in $is rig$ts! suc$ as t$osearising fro( a (ortgage! guaranty! or %enalty"

Art 1)< @ay(ent (ade by a t$ird %erson #$o does not intend to be rei(bursed byt$e debtor is dee(ed to be a donation! #$ic$ re9uires t$e debtors consent" But t$e%ay(ent is in any case alid as to t$e creditor #$o $as acce%ted it"

Art 1)> In obligations to gie! %ay(ent (ade by one #$o does not $ae t$e freedis%osal of t$e t$ing due and ca%acity to alienate it s$all not be alid #it$out %rejudice tot$e %roisions of Art 0+2* under t$e Title on ,Natural Obligations)

General Rule- if t$e %erson %aying $as no ca%acity to gie/a" @ay(ent is not alid-if acce%tedb" Creditor cannot een be co(%elled to acce%t itc" T$e re(edy of consignation

.3ce%tion- K$en a (inor bet#een 0? and 20 years of age! #$o $as entered into acontract #it$out t$e consent of t$e %arents or guardian oluntarily %ays a su( of (oneyor deliers a fungible t$ing in t$e fulfill(ent of an obligation! t$ere s$all be no rig$t torecoer fro( t$e sa(e fro( t$e obligee #$o $as s%ent or consu(ed it in good fait$"

Art 1);D % @ay(ent s$all be (ade to t$e %erson in #$ose faor t$e obligation$as been constituted! or $is successor in interest! or any %erson aut$ori=ed toreceie it"

If t$e reci%ient #as not aut$ori=ed! t$e %ay(ent is generally not alid"

Art 1);1 @ay(ent to a t$ird %arson #$o is inca%acitated to ad(inister $is %ro%ertys$all be alid if $e $as >e%t t$e t$ing deliered! or insofar as t$e %ay(ent $as beenbeneficial to $i("

@ay(ent (ade to a t$ird %erson s$all also be alid insofar as it $as redounded tot$e benefit of t$e creditor" Suc$ benefit to t$e creditor need not be %roen in t$efollo#ing case/

a" If after t$e %ay(ent! t$e t$ird %erson ac9uires t$e rig$ts of t$ecreditor

b" If t$e creditor ratifies t$e %ay(ent to t$e t$ird %ersonc" If by t$e creditors conduct! t$e debtor $as been led to beliee t$at

t$e t$ird %erson $ad aut$ority to receie t$e %ay(ent

.3a(%les K$en Benefit to t$e Creditor is @resu(ed/a" If after %ay(ent! t$e t$ird %erson ac9uires t$e creditors rig$ts-as #$en

t$e creditor is indebted to t$e t$ird %ersonb" If t$e creditor ratifies t$e %ay(ent to t$e t$ird %erson-li>e if


38/105


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Art 1); K$en t$e obligation consists in t$e deliery of an indeter(inate or generict$ing! #$ose 9uality and circu(stances $ae not been stated! t$e creditor cannotde(and a t$ing of su%erior 9uality" Neit$er can t$e debtor delier a t$ing of inferior9uality" T$e %ur%ose of t$e obligation and ot$er circu(stances s$all be ta>en intoconsideration"

If t$e contract does not s%ecify t$e 9uality/a" T$e creditor cannot de(and a t$ing of su%erior 9uality- but if $e desires! $e (ay

de(and and acce%t one of inferior 9uality"b" T$e debtor cannot delier a t$ing of inferior 9uality- but if $e so desires! $e (ay

delier one of su%erior 9uality- %roided it is not of a different >ind"

Art 1);< Jnless t$ere is an e3%ress sti%ulation to t$at effect! t$e creditor cannot beco(%elled %artially to receie t$e %restations in #$ic$ t$e obligation consists" Neit$er(ay t$e debtor be re9uired to (a>e %artial %ay(ents"

o#eer! #$en t$e debt is in %art li9uidated and on %art unli9uidated! t$e creditor(ay de(and and t$e debtor (ay effect t$e %ay(ent of t$e for(er #it$out #aiting for t$e

li9uidation lf t$e latter"

.3ce%tions #$en @artial @erfor(ance is Allo#ed/a" K$en t$ere is sti%ulation to t$is effectb" K$en t$e different %restations are subject to different conditions or different

ter(s &e"g" li>e a debt %ayable in install(ent'c" K$en a debt is in %art li9uidated and in %art unli9uidated! in #$ic$ case

%erfor(ance of t$e li9uidated %art (ay be insisted u%on by eit$er by t$e debtoror creditor"

d" K$en a joint debtor %ays $is s$are or t$e creditor de(ands t$e sa(ee" K$en a solidary debtor %ays only t$e %art de(andable because t$e rest are not

yet de(andable on account on t$eir being subject to different ter(s and

conditionsf" In case of co(%ensation! #$ic$ one debt is larger t$an t$e ot$er! it follo#s t$at a

balance is left"

Art 1);>

T$at %ay(ents of debts in (oney s$all be (ade in t$e currency sti%ulated! and ifit is not %ossible to delier suc$ currency! t$en in t$e currency #$ic$ is legal tender int$e @$ili%%ines"

In t$e (eanti(e! t$e action deried fro( t$e original obligation s$all be $eld inabeyance"

Legal tender- it is t$at #$ic$ a debtor (ay co(%el t$e creditor to acce%t in %ay(ent of adebt"

Sti%ulation of anot$er currency/a" Jnder t$e first %aragra%$ of t$is Article! %ay(ent (ay be eit$er/

In t$e currency sti%ulated

Or if it is not %ossible to delier suc$ currency! t$en in @$ili%%ine legal tender

Art 1)?D

In case an e3traordinary inflation or deflation of t$e currency sti%ulated s$ould

su%erene! t$e alue of t$e currency at t$e ti(e of t$e establis$(ent of t$e obligations$all b t$e basis of %ay(ent! unless t$ere is an agree(ent to t$e contrary"I-f*atio- it is a s$ar% sudden increase of (oney or credit or bot$ #it$out acorres%onding increase in business transaction

Jnder t$is article! t$e basis of %ay(ent is t$e alue at t$e ti(e t$e obligation #asconstituted or incurred! unless t$ere is an agree(ent to t$e contrary"


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Art 1?1 - Payment shall be made in the place designated in the obligation.

T$ere being no e3%ress sti%ulation and if t$e underta>ing is to delier a t$ing! t$e%ay(ent s$all be (ade #$ereer t$e t$ing (ig$t be at t$e (o(ent t$e obligation #asconstituted"

In any ot$er case! t$e %lace of %ay(ent s$all be t$e do(icile of t$e debtor" If t$edebtor c$anges $is do(icile in bad fait$! or after $e $as incurred in delay! t$e additionale3%enses s$all be borne by $i("

K$ere %ay(ent (ust be (ade/a" If t$ere is sti%ulation E in t$e %lace designatedb" If t$ere is no sti%ulation/

- If it is an obligation to delier a deter(inate t$ing! t$en on t$e %lace#$ere t$e t$ing (ig$t be at t$e ti(e t$e obligation #as constituted1

- If t$e obligation is for any ot$er t$ing! deliery (ust be (ade to t$edo(icile of t$e debtor"

Subsection 0 E A%%lication of @ay(entsArt5 1)?)

+ s%ecial for(s of %ay(ent/a" A%%lication or i(%utation of %ay(entsb" Dation in %ay(entc" Assign(ent in faor of creditors4cessationd" Tender of %ay(ent and consignation

A%%lication of %ay(ent E t$e designation of t$e debt to #$ic$ s$ould be a%%lied a%ay(ent (ade by a debtor #$o o#es seeral debts in faor of t$e sa(e creditor

Re9uisites for a%%lication/a" T$ere (ust be 2 or (ore debtsb" T$e debts (ust be of t$e sa(e >indc" T$e debts are o#ed by t$e sa(e debtor in faor of t$e sa(e creditord" All t$e debts (ust be due

General rule/ it is t$e debtor #$o is gien t$e rig$t to select #$ic$ of $is debt $e is%aying"

.3ce%tion/d" If t$ere #as a alid %rior but contrary agree(ent! t$e debtor cannot

c$oose

e" T$e debtor cannot c$oose to %ay %art of t$e %rinci%al a$ead of t$einterest unless t$e creditor consents"

o# a%%lication for %ay(ent is (ade/a" T$e debtor (a>es a designationb" If not! t$e creditor (a>es it! by so stating in t$e recei%t t$at $e issues! unless

t$ere is cause for inalidating t$e contractc" If neit$er t$e debtor nor t$e creditor $as (ade t$e a%%lication! or if t$e

a%%lication is not alid! t$en a%%lication is (ade by o%eration of la#"

If t$e creditor (a>es t$e a%%lication #it$out t$e >no#ledge andconsent of t$e debtor! t$e a%%lication is not alid"

Once t$e a%%lication $as been (ade! it (ay not be reo>ed! unlessbot$ %arties agree" .en if bot$ %arties agree! $o#eer! still t$ereocation or c$ange in t$e a%%lication #ill not be allo#ed if t$ird%ersons #ould be %rejudiced"

A%%lication (ust be (ade at t$e ti(e #$en %ay(ent by t$e debtor is(ade! not after#ards"


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Art5 1)?

If t$e debt %roduces interest! %ay(ent of t$e %rinci%al s$all not be dee(ed to$ae been (ade until t$e interest $as been coered"

Interest (ust be %aid first E t$e debtor cannot insist t$at $is %ay(ent be credited

to t$e %rinci%al instead of t$e interest" o#eer! if t$e creditor agrees! t$at is alarig$t"

.ffect if %ay(ent is credited to t$e %rinci%al E reduction of t$e %rinci%al #ould ofcourse result in t$e decrease of t$e total interest collectible"

K$at interest I su%%osed to be %aid/d" Interest by #ay of co(%ensatione" Interest by #ay of da(ages due to default

Art5 1)?;

Rules in case no a%%lication for %ay(ent $as been oluntarily (adea" A%%ly it to t$e (ost onerous4$eay4burdenso(e- &in case t$e due and

de(andable debts are of different natures'b" If t$e debts are of t$e sa(e nature and burden! a%%lication s$all be (ade to all

%ro%ortionately"0"If t$e debtor (a>es t$e a%%lication! t$e %ay(ent s$ould be credited to t$e firstdebt" T$e debtor cannot insist t$at t$e creditor acce%t it for t$e second debt forinsofar as t$e second debt is concerned! it is only a %artial %ay(ent" And undert$e la#! a creditor cannot generally be co(%elled to receie %artial %ay(ent:" If no a%%lication $as been (ade! t$e la# ste%s in! and a%%lication #ill be

(ade! not e9ually but %ro%ortionately"

Sectio- )

Pa6+e-t b6 Cessio-

Art 1)??

Cession or assign(ent in faor of creditors- it is a %rocess by #$ic$ a debtor transfers allt$e %ro%erties not subject to e3ecution in faor of $is creditors so t$at t$e %ro%erties notsubject to e3ecution in faor of $is creditors so t$at t$e latter (ay sell t$e(! and t$usa%%ly t$e %roceeds to t$eir credits"

5inds or Classes of Assign(enta" Legal- t$e (ajority of creditors (ust agree1 goerned by t$e insolency la#

b" oluntary-all creditors (ust agree1 t$is is referred to in Art 0277

Re9uisites for oluntary Assign(ent/a"


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-Does not affect all t$e %ro%erties-Does not re9uire %lurality of creditors-Only t$e s%ecific or concerned creditors consent is re9uired-e %lace during t$e solency of t$e debtorTransfers o#ners$i% u%on deliery-T$is is really an act of noation

b" Cession-In general! affects all t$e %ro%erties of t$e debtor-Re9uires (ore t$an 0 creditorRe9uires t$e consent of all t$e creditors-Re9uires full or %artial insolencyDoes not transfer o#ners$i%Not an act of noation

Art 1)?

Tender of @ay(ent- t$e act of offering t$e creditor #$at is due $i( toget$er #it$ ade(and t$at t$e creditor acce%t t$e sa(e"Consignation-t$e act of de%ositing t$e t$ing due #it$ t$e court or judicial aut$orities#$eneer t$e creditor cannot acce%t or refuses to acce%t %ay(ent" It generally re9uiresa %rior tender of %ay(ent" It releases t$e debtor of $is debt"

In tender of %ay(ent and consignation! to e3tinguis$ t$e debtors obligation! one(ust co(%ly #it$ t$e re9uisites %roided in Arts 0278-027?"

Art 1)? In order t$at t$e consignation of t$e t$ing due (ay release t$e obligor! it(ust first be announced to t$e %ersons interested in t$e fulfill(ent of t$e obligation"

T$e consignation s$all be ineffectual if it is not (ade strictly in consonance #it$t$e %roisions #$ic$ regulate %ay(ent"

.ssential Re9uisites for Consignation/a" .3istence of a alid debtb" alid %rior tender! unless tender is e3cusedc" @rior notice of consignation &before de%ositFd" Actual consignation &de%osit'e" Subse9uent notice of consignation

Art1)?< Consignation s$all be (ade by de%ositing t$e t$ing due at t$e dis%osal ofjudicial aut$ority! before #$o( t$e tender of %ay(ent s$all be %roed! in a %ro%er case!

and t$e announce(ent of t$e consignation in ot$er cases"

Art 1)?> T$e e3%enses of consignation! #$en %ro%erly (ade s$all be c$arged againstt$e creditor"

Art1)D Once t$e consignation $as been duly (ade! t$e debtor (ay as> t$e judge toorder t$e cancellation of t$e obligation"

Before t$e creditor $as acce%ted t$e consignation! or before a judicial declarationt$at t$e consignation $as been %ro%erly (ade! t$e debtor (ay #it$dra# t$e t$ing or t$esu( de%osited! allo#ing t$e obligation to re(ain in force"

If t$e consignation is duly &%ro%erly' (ade/a" T$e debtor (ay as> t$e judge to order t$e cancellation of t$e obligationb" T$e running of interest is sus%endedc" Before t$e creditor acce%ts! or before t$e judge declares t$at consignation $as

been (ade! t$e obligation re(ains

K$en debtor (ay #it$dra# t$e t$ing or su( consignated/a" As a (atter of rig$t


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0" Before t$e creditor $as acce%ted t$e consignation2" Or before t$ere is a judicial declaration t$at t$e consignation $ad been

%ro%erly (ade-obligation and accessory sti%ulation re(ainb" As a (atter of %riilege

K$en after consignation $ad been %ro%erly (ade! t$e creditor aut$ori=es t$edebtor to #it$dra# t$e t$ing"

Art 1)1E If t$e consideration $aing (ade! t$e creditor s$ould aut$ori=e t$e debtor to#it$dra# t$e sa(e! $e s$all lose eery %reference #$ic$ $e (ay $ae oer t$e t$ing"T$e co-debtors! guarantors and sureties s$all be released"

Sectio- ) Loss of the !hi-2 ,ue

Loss- under t$is section! loss includes i(%ossibility of %erfor(ance

K$en is t$ere a lossPa" K$en t$e object %eris$es &%$ysically it is destroyed'b" K$en it goes out of co((ercec" K$en it disa%%ears in suc$ a #ay t$at/

Its e3istence is un>no#n

Or it cannot be recoered

I(%ossibility of @erfor(ance includes/a" @$ysical i(%ossibilityb" Legal i(%ossibility- #$ic$ is eit$er

Directly caused-#$en %ro$ibited by la#

Indirectly caused- #$en t$e debtor is re9uired to enter a (ilitary draftc"


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c" T$e object (ust be a future serice #it$ future unusual c$ange in conditions"

Art 1?@B

T$is Article gies one instance #$ere a fortuitous eent does not e3tinguis$ t$eobligation"

.3ce%tion/ K$en t$e creditor is in


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Art 1); It is %resu(ed t$at t$e accessory obligation of %ledge $as been re(itted#$en t$e t$ing %ledged! after its deliery to t$e creditor! is found in t$e %ossession of t$edebtor! or of a t$ird %erson #$o o#ns t$e t$ing"

In a contract of %ledge! deliery is (andatory so t$at t$e contract is %erfected"

Sectio- ; Co-fusio- or 'er2er of Ri2hts

Art 1)? T$e obligation is e3tinguis$ed fro( t$e ti(e t$e c$aracters of creditors anddebtors are (erged in t$e sa(e %erson"

e %lace bet#een t$e %rinci%al debtor and creditor"

b" T$e (erger (ust be clear and definite"c" T$e ery obligation inoled (ust be t$e sa(e or identical"

Art 1) es %lace in t$e %erson of t$e %rinci%al debtor or creditorbenefits t$e guarantors" Confusion #$ic$ ta>es %lace in t$e %erson of any of t$e latterdoes not e3tinguis$ t$e obligation"

Art 1) Confusion does not e3tinguis$ a joint obligation e3ce%t as regards t$e s$arecorres%onding to t$e creditor or debtor in #$o( t$e t#o c$aracters concur"

In joint obligations! t$e debts are distinct and se%arate fro( eac$ ot$er"

Sectio- ? Co+pe-satio-

Art 1)< Co(%ensation s$all ta>e %lace #$en t#o %ersons! in t$eir o#n rig$t! arecreditors and debtors of eac$ ot$er"

Co(%ensation s" @ay(ent

a" K$ile %ay(ent (ust be co(%lete and indiisible as a rule! in co(%ensation!%artial e3tinguis$(ent is al#ays %er(itted"

b" K$ile %ay(ent inoles action or deliery! true4legal co(%ensation ta>es %laceby o%eration of la#"

Co(%ensation s"


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Legal- ta>es %lace by o%eration of la#

oluntary or Conentional- due to t$e agree(ent of bot$ %arties

udicial- also called ,set off)

6acultatie- one of t$e %arties $as t$e c$oice of clai(ing t$e co(%ensation or ofo%%osing it"

Art 1?!

T$e re9uisites enu(erated under Art 02*M are t$ose for L.GAL co(%ensation"OLJNTAR co(%ensation in general re9uires no re9uisite e3ce%t t$at t$eagree(ent be oluntarily and alidly entered into"

Negatie Re9uisites for Legal Co(%ensationa" Oer eit$er of t$e debts (ust t$ere be any retention or controersy co((enced

by t$ird %ersons and co((unicated in due ti(e to t$e debtor" &T$ere can be nolegal co(%ensation #$en ones clai( against anot$er is still t$e subject of courtlitigation'

b" T$ere (ust $ae been no #aier of t$e co(%ensationc" T$e co(%ensation of t$e debts (ust not $ae been %ro$ibited by la#

Art 1)


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.66.CT/ Debtor can set u% co(%ensation as a defense for all debts (aturing@RIOR to $is >no#ledge of t$e assign(ent $et$er t$e debts (atured before orafter t$e assign(ent'

Art 1)es %lace by o%eration of la#! een t$oug$ t$e debts (aybe %ayable at different %laces! but t$ere s$all be an inde(nity for e3%enses of e3c$ange

or trans%ortation to t$e %lace of %ay(ent"

Art 1) de%osit for t$is is really aloan'- It is t$e de%ository #$o cannot clai( co(%ensation" T$e de%ositor isallo#ed to so clai("

b" K$en one debt arises fro( t$e obligations of a de%ositoryc" K$en one debt arises fro( t$e obligations of a bailee in co((odatu( &t$e

borro#er of %ro%erty #$o %ays not$ing for t$e loan'- t$e lender (ay clai(co(%ensation! t$e borro#er is not allo#ed to do so"

Obligations of t$e De%ositorya" e is obliged to >ee% t$e t$ing safely and to return it #$en re9uired! to t$e

de%ositor! or to $is $eirs and successors! or to t$e %erson #$o (ay $ae beendesignated in t$e contract"

b" Jnless t$ere is a sti%ulation to t$e contrary! t$e de%ositary cannot de%osit t$et$ing to a t$ird %erson

c" If a de%osit #it$ a t$ird %erson is allo#ed! t$e de%ositary is liable for t$e loss of$e de%osited t$e t$ing #it$ a %erson #$o is (anifestly careless or unfit"

d" T$e de%ositary is res%onsible for t$e negligence of $is e(%loyees

e" T$e de%ositary cannot (a>e use of t$e t$ing de%osited #it$out t$e e3%ress%er(ission of t$e de%ositor" Ot$er#ise! $e s$all be liable for da(ages"o#eer! #$en t$e %reseration of t$e t$ing re9uires its use! it (ust be usedonly for t$at %ur%ose"

Art 1)D K$en all t$e re9uisites (entioned in Article 02*M are %resent! co(%ensationta>es effect by o%eration of la#! and e3tinguis$es bot$ debts to t$e concurrent a(ount!een t$oug$ t$e creditors and debtors are not a#are of t$e co(%ensation"

Art 1)>1

Noation- t$e substitution or c$ange of an obligation by anot$er! #$ic$ e3tinguis$es or(odifies t$e first! eit$er c$anging its object or %rinci%al condition! or substituting anot$er

in %lace of t$e debtor! or subrogating t$ird %erson in t$e rig$t of t$e creditor"

5inds of Noation/


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A. Acc/ri t/ its O*ect /r r/se31. eal or b7ective- changing the ob7ect or principal conditions of the obligation ?. Personal or 'ub7ective -change of persons

a" .3%ro(ission or Delegacion- substituting t$e %erson of t$e debtorb" Subrogating a t$ird %erson in t$e rig$ts of t$e creditor- (ay be

b0"Conentional Subrogation- by agree(ent

b2"Legal Subrogation- by o%eration of la# b. 2i#ed- change of ob7ect or parties

B. Acc/ri t/ t'e /r0 / t'e c/stitti/1. $#press- it is declared in une"uivocal terms?. +mplied- when the ? obligations are essentially incompatible with each other.

C. Acc/ri t/ its etet / eect1. &otal or e#tensive novation 4 when the old obligation is completely e#tinguished

?. Partial or 2odificatory 4 also called imperfect or improper 4 the old obligation is

merely modified, thus, it still remains in force insofar as it has been modified.

Re9uisites for Noation/a" T$e e3istence of a alid OLD obligationb" T$e intent to e3tinguis$ or (odify t$e old obligation by a substantial difference

&t$e e3tinguis$(ent4(odification itself is a result of noation'c" T$e ca%acity and consent of all t$e %arties &e3ce%t in t$e case of e3%ro(ision!

#$ere t$e old debtor does not %artici%ate'd" T$e alidity of t$e ne# obligation

Art 1)>) In order t$at an obligation (ay be e3tinguis$ed by anot$er #$ic$ substitutet$e sa(e! it is i(%eratie t$at it be so declared in une9uiocal ter(s! or t$at t$e old andt$e ne# obligation be on eery %oint inco(%atible #it$ eac$ ot$er"

o# i(%lied Noation (ay be ing Substantial C$anges in/a" T$e object or subject (atter of t$e contract &e"g" deliery of a car instead of adia(ond ring'b" T$e cause or consideration of t$e contract &e"g" u%#ard c$anges in %rice'

a" T$e %rinci%al ter(s of t$e contract &e"g" reduction of t$e ter( or %eriodoriginally sti%ulated'

Art 1)>

2 5inds if @ersonal or Subjectie Noation/

a" @assie- c$ange in t$e debtor b" Actie- c$ange in t$e creditor

Art 02M: s%ea>s of @assie subjectie Noation- #$ic$ (ay be in t$e for( of/a" .3%ro(ission- initiatie co(es fro( a t$ird %erson

c" Delegacion- initiatie co(es fro( t$e debtor! for it is $e #$o delegates anot$er to%ay t$e debt! and t$us! $e e3cuses $i(self" T$e : %arties! t$e old debtor! t$ene# debtor and t$e creditor! (ust agree"

Art 1)>; If t$e substitution is #it$out t$e >no#ledge or against t$e #ill of t$e debtor!t$e ne# debtors insolency or non-fulfill(ent of t$e obligation s$all not gie rise to anyliability on t$e %art of t$e original debtor"

Re9uisites for .3%ro(ision/a" T$e initiatie (ust co(e fro( a t$ird %erson-#$o #ill be ne# debtor


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b" t$e ne# debtor and t$e creditor (ust consentc" t$e old debtor (ust be e3cused or released fro( $is obligation &T$e old debtors>no#ledge4consent is not re9uired

Art 1)>? T$e insolency of t$e debtor! #$o $as been %ro%osed by t$e original debtorand acce%ted by t$e creditor! s$all not reie t$e action of t$e latter against t$e original

obligor! e3ce%t #$en said insolency #as already e3isting and of %ublic >no#ledge or>no#n to t$e debtor! #$en $e delegated $is debts"

Re9uisites for Delegacion/a" T$e initiatie co(es fro( t$e old debtorb" All t$e %arties concerned (ust consent or agree

Art 1)>

Accessory obligations or sti%ulations (ade in faor of t$ird %ersons re(ainunless said t$ird %ersons $ae t$eir consent to t$e noation"

Art 1)> If t$e ne# obligation is oid! t$e original one s$all subsist unless t$e %artiesintend t$at t$e for(er relation s$ould be e3tinguis$ed in any eent"

Ot$er factors/a" If t$e ne# obligation is subject to a condition and said condition does not (ateriali=e!t$e old obligation subsists"If t$e ne# obligation #as intended! but t$e ne# contract #as neer %erfected fro lac> oft$e necessary consent! t$e old obligation continues"

Rule if Ne# Obligation is en %lace #ill naturally $ae to be set aside

Art 1)>


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Art 1)>> If t$e original obligation #as subject to a sus%ensie or resolutory condition!t$e ne# obligation s$all be under t$e sa(e condition! unless it is ot$er#ise sti%ulated"

Art 1DD

Subrogation- t$e transfer to a t$ird %erson of all t$e rig$ts a%%ertaining to t$e creditor!

including t$e rig$t to %roceed against guarantors! or %ossessors of (ortgages! subjectto any legal %roision or any (odification t$at (ay be agreed"

5inds of Subrogation/6ro( t$e ie#%oint of Cause of Origin

a" Conentional or oluntary Subrogation- re9uires an agree(ent and t$e consentof t$e original %arties and of t$e creditor"

b" Legal Subrogation- ta>es %lace by o%eration of la#

6ro( t$e ie#%oint of e3tent

a" Total Subrogationb" @artial Subrogation- t$ere #ould no# be 2 or (ore creditors

75102593 lecture in obligations and contracts with jurisprudence

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