LAW ON OBLIGATION

Article 1156. An obligation is a juridical necessity to give, to do, or not to do

● Juridical necessity - court may be called upon in case of non compliance; juridical is the force of law.

Requisites:

1. Active subject - the obligee/creditor

2. Passive subject - obligor/debtor
● Keyword - pass, sino magpapasa, magbibigay
3. Juridical or legal tie - sources of obligation
4. Fact, prestation or service - the object of obligation

Obligations are civil or natural

● Civil - defined by article 1156

● Natural - based on equity and natural law, kusa

JURIDICAL TIE: SOURCES OF OBLIGATION

- that which binds or connects the parties to the obligation

1. Law - explicitly provided by law

2. Contracts - law enforced between contracting parties, should be complied in good faith

● Requisite: COC
○ Consent
○ Object
○ Cause

3. Quasi-contracts - arising from lawful, voluntary, and unilateral acts

 for a contract implied in law, which acts as a remedy for a dispute between two parties that
don't have a contract.
● Principle: no one should be unjustly enriched at the expense of another
● Example: Solutio Indebiti, Negotiorum Gestio
○ Solutio Indebiti - received by mistake, obligation to return it
○ Negotiorum Gestio - unilateral management of property, the owner is bound to reimburse any
expenses incurred by the person who manage the property while the owner is away
- is a legal situation where someone manages or interferes in another person's business
transaction without permission but out of concern
4. Delicts - Article 100 of RPC, every person who is criminally liable is also civilly liable; is an offense
against the law.

5. Quasi-delicts - causes damage to another because of acts or omissions, they are in fault or negligence

NATURE AND EFFECTS OF OBLIGATION

PRESTATION: OBLIGATION TO GIVE

Decree of care: diligence of a good father of a family (Art. 1163)

● Ordinary/Reasonable diligence

Fruits of the thing: Creditor acquires (Article 1164)

● GenRule: Personal Right to the thing when the obligation to deliver arises
● Real Right when the thing has been delivered because delivery transfers ownership

Rights of Creditor if the obligation is to deliver a Determinate Thing

1. Compel delivery of the thing including accessions and accessories

● Accessions (PIA) - produced, incorporated, attached

● Accessories - joined or included in the principal thing for its enjoyment or perfection. Example,
charger to a cell phone

2. If not delivered, remedy is rescission (cancellation) of contract

3. Recover damages for breach of the obligation

4. If lost or destroyed without the fault of the debtor before incurred in delay, obligation is extinguished

Rights of Creditor if the obligation is to deliver a Generic Thing

1. To deliver the thing

2. If not delivered, remedy is rescission (cancellation) of contract

3. Recover damages for breach of the obligation

4. Loss or destruction does not extinguish the obligation

● Genus never perishes

`
PRESTATION: OBLIGATION TO DO

If fails to do: the same shall be executed at the expense of the obligor plus damages

● Bawal pilitin ni creditor si debtor na iperform ang obligation, constitution prohibits involuntary
servitude

If contravention of the tenor of the obligation: (hindi nasunod yung usapan)

● The same shall be executed at the expense of obligor

● Undone what is poorly done
● Damages may be claimed

PRESTATION: OBLIGATION NOT TO DO

If obligor does it:

● It shall be undone at obligor’s cost

● Damages may be claimed

DAMAGES: FNDC (Fraud, Negligence, Delay &Contravention)

Article 1170. Those who in the performance of their obligation are guilty of fraud, negligence,

delay, and those who in any manner contravene the tenor thereof, are liable for damages

DAMAGES: FRAUD (dolo)

Two kinds of fraud

1. In obtaining consent dolo causante or dolo incidente, the contract is voidable

● Dolo causante - serious in character

● Dolo incidente - not serious in character

2. In the fulfillment of the obligation

● Responsibility arising from fraud is demandable in any obligations

● Any waiver of an action for future fraud is void

DAMAGES: NEGLIGENCE (culpa)

Definition: omission of that diligence which is required by nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place
 ● If not stated what kind of diligence is required, the general rule is diligence of a good father of a
family

Test of negligence: did the defendant in doing- the alleged negligent act use that person would

have used in the same situation? If not, then he is guilty of negligence.

Kinds of negligence:

1. Culpa contractual - negligence in the performance of a contract (Art. 1170)

2. Culpa aquiliana (quasi-delicts) - acts or omissions that cause damage to another, no contractual
relation between the parties

3. Culpa criminal (delicts) - negligence that results in the commission of a crime

DAMAGES: DELAY (mora)

Definition: non-fulfillment of an obligation on time

Kinds of Delay

1. Mora solvendi - delay on the part of the debtor

2. Mora accipiendi - delay on the part of the creditor

3. Compensation morae - both parties are in delay

Genrule: No Demand, No Delay

Except:

● When the law provides

● There is an express stipulation
● When time is of the essence
● Demand would be useless
● In reciprocal obligations
FORTUITOUS EVENTS

Definition: those that could not be foreseen, or which, though foreseen, are inevitable (Art.1174)

Elements:

● The cause must be independent of debtor’s will - acts of god

● Could not be foreseen or if foreseen, inevitable
● Occurrence of the event made it impossible to debtor to perform his obligations in a normal
manner
● Debtor had no participation in the aggravation of the damage

General Rule: no person shall be liable for fortuitous event

Except:

● Law expressly provides

● Stipulation expressly provides
● Nature of the obligation requires the assumption of risk
● Loss is partly due to the fault of the debtor
● The debtor promised the same thing to people who does not have the same interest
● The thing is generic
● The debtor is in delay
● The liability proceeds from a criminal loss

Article 1191

● The power to rescind (cancel) obligations is implied in reciprocal ones - resolution

● Injured party may choose between fulfillment and the rescission of the obligation plus damages in
either cases
○ He may seek rescission even after he chose fulfillment if fulfilling the obligation become
impossible

Article 1176

● Presumption on receipt of interest or of later installment

● Incase of monetary obligation, if the creditor presents a receipt containing just the principal, the
presumption is the interest is already paid
○ So as in installments, if the receipt is about the latest installment then the presumption is the
former installments are already paid

Remedies of a creditor to enforce payment of his claims against the debtor

- Nagpautang ka tas di ka na binayaran

1. Exact performance

2. Exhaust assets in possession of the debtor except those exempt by law

3. Accion subrogatoria - creditor ,ay go after the debtors (3rd persons) of the defendant

● The debtors of my debtors are also my debtors

4. Accion pauliana (must exhaust first all the other remedies) - an action where the creditor files an
action in court for the rescission of acts or contracts entered into by thedebtor designed to defraud the
creditor

Principle of Transmissibility of Rights

General Rule: All rights are transmissible (namamana)

Except:

● The law prohibits

● There is express stipulation
● The nature of the right is not transmissible (ex. Marriage contract)

KINDS OF OBLIGATION: PURE AND CONDITIONAL

PURE OBLIGATION
- Walang condition/term
- Demandable at once

CONDITIONAL OBLIGATION
- May condition on either on the acquisition or the extinguishment
Definition of Condition: a future uncertain event

Kinds of Condition
1. Suspensive - wala munang obligation, magkakaroon ng obligation kapag nangyare na
yung condition. Gives rise to obligation
2. Resolutory - extinguish na yung obligation kapag nangyare na yung condition,
demandable at once. Extinguishes the obligation
3. Potestative - depends upon the will of either debtor or creditor
● On the part of the debtor
○ If suspensive - void
○ If resolutory - valid
● On the part of the creditor - valid if suspensive of resolutory
 4. Casual - depends upon chance or will of 3rd person
5. Mixed - partly by will, partly by chance

Impossible Condition (Art. 1183)

● The whole obligation depending on the impossible obligation is annulled
● If the obligation is divisible, valid pa rin yung hindi affected ng impossible condition
● If the condition is NOT to do an impossible thing, consider as walang napagkasunduan na
condition. The obligation is valid

Positive Condition (Art. 1184)

● The condition that some event happen at a determinate time shall extinguish the obligation as
soon as the time expires or if it has become impossible that the condition will not take place

Negative Condition (Art. 1185)

● Render the obligation effective

1. Time indicated has elapsed

2. Become evident that the event cannot occur

3. No time has been fixed

Rights of the Parties Before Fulfillment of Condition

● Creditor may bring appropriate actions for the preservation of his rights
● Debtor may recover what he has paid by mistake (akala nya may obligation na sya) in case of
suspensive condition (Art. 1188)
● The condition shall be deemed fulfilled when the obligor voluntarily prevents fulfillment of
condition, meaning obligation arises (Art. 1186)

Effect of Fulfillment of Obligation

General Rule: the effects of a conditional obligation to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the obligation

Exception: there shall be no retroactive effect to the fruits and interest as follows

1. In reciprocal obligations

2. In unilateral obligations, the debtor keeps the fruits and interests received before the
fulfillment of the condition

Rules in Case of Loss, Deterioration or Improvement of Determinate Thing Before the

Fulfillment of the Condition (Art. 1189)

1. Loss of the thing

● Without debtor’s fault - obligation is extinguished

● Through the debtor’s fault - debtor is obliged to pay damages

2. Deterioration of the thing

● Without debtor’s fault - impairment shall be borne by creditor

● Through the debtor’s fault - creditor may choose between

a. Rescission plus damages

b. Fulfillment plus damages

3. Improvement of the Thing

● By nature or time - benefit is on the creditor

● At the expense of the debtor - only usufruct

Rules in case of fulfillment of resolutory condition

1. Obligation is extinguished

2. Parties shall return to each other what they have received

3. In case of Loss, Deterioration, Improvement, refer to Art 1189

OBLIGATION WITH A PERIOD

● Period is future, certain event

● Resolutory Period - take effect at once, terminate upon arrival of the day certain
○ Day certain - which must necessarily come, although it may not be known when (Art. 1193)
● In case of loss, deterioration, improvement before the arrival of certain day, Article 1194 applies
● Whenever an obligation with a period is designated, it is presumed to be established for the
benefit of both parties unless otherwise stated that the period is only benefitted to one party (Art.
1196)
● Debtor may recover the thing deliver or paid including the fruits and interests before the arrival of
period, kung hindi sya aware na hindi pa pala due yung obligation (Art. 1195)
● “When my means permit me to do so” - it shall be deemed obligation with a period
○ Kung kailan ko gusto
● Court may fix the duration of period kung walang napagusapan yung parties
● Court shall fix the duration ng period when the period depends upon the will of the debtor
● Once naayos na ni court yung period bawal na ito baguhin ng parties (Art. 1197)

When debtor loses his rights to make use of the period (IGIVA) - ibig sabihin magiging pure obligation
na sya, demandable at once

● I - insolvent na si debtor
○ Unless he gives guaranty or security for the debt
● G - Guaranties/Securities were not furnished
● I - impairs the guaranties/securities by his own act, or when fortuitous event they disappear
○ Unless nagbigay sya ng bago na may equal satisfactory
● V - violates any undertaking in consideration of which the creditor agrees to the period
● A - attempts to abscond (tumakas)

KINDS OF OBLIGATION: ALTERNATIVE AND FACULTATIVE OBLIGATIONS

ALTERNATIVE OBLIGATION

- There are several prestations

- Complete performance of one of them is sufficient to extinguish the whole obligation
Who has the Right to Choose

General Rule: si Debtor ang may right

Except: expressly granted kay creditor

● Hindi pwedeng piliin ni debtor yung impossible, unlawful, hindi kasama sa choices na prestation
● If through creditor’s act, debtor cannot make choice, debtor may rescind the contract with
damages

When Obligation ceases to be Alternative and Becomes Simple Obligation

1. When debtor communicated his choice to creditor

● Nakapili na si debtor ng choice

2. Kapag isa nalang yung pwedeng ideliver kasi wala ng choice

3. Kapag binigay kay creditor yung right to choose at ni communicate nya kay debtor yung choice nya

Rules in case mawala yung mga alternatives before ma-communicate sa other party yung

choice

A. If the right of choice ay nasa Debtor

1. One or some are lost through fortuitous event or through the debtor’s fault

- Debtor may deliver kung alin man sa mga natira

2. All are lost through fortuitous event

- Obligation is extinguished

3. All are lost through debtor’s fault

- Debtor shall pay the value of the LAST thing lost plus damages

B. If the right of choice ay nasa Creditor

1. One some are lost through fortuitous event

- Creditor may choose among the remainder kung ano dapat i deliver ni creditor

2. All are lost through fortuitous event

- Obligation is extinguished
3. One or some are lost through debtor’s fault

- Creditor may claim anything doon sa natira or the price ng nawala plus damages

4. All are lost through debtor’s fault

- Creditor may claim the price of ANY of them plus damages

FACULTATIVE OBLIGATION

- Only one prestation has been agreed upon

- But obligor/debtor may render another in substitution

Rules in case of loss of Principal thing and Substitute

A. Lost before Substitution

● Principal thing is lost due to fortuitous event

o Obligation is extinguished
● Principal thing is lost due to debtor’s fault
o Debtor is liable for damages
● If the substitute is lost
o Debtor is not liable regardless of cause

B. Lost after Substitution

● Principal thing is lost

o Debtor is not liable regardless of cause
● Substitute is lost due to fortuitous event
o Obligation is extinguished
● Substitute is lost through debtor’s fault
o Debtor is liable for damages

KINDS OF OBLIGATION: JOINT AND SOLIDARY OBLIGATIONS

● There are two or more debtors, and two or more creditors\
JOINT OBLIGATION

- A joint obligation requires debtors to pay proportionately and creditors to demand payment
proportionately
- Pro rata
- Credit or debt is divided in equal shares as there are creditors or debtors
- Each Debtor is liable only for a proportionate part of the debt
- Each Creditor has proportionate share to the credit

SOLIDARY OBLIGATIONS

- A solidary obligation requires each debtor to pay the entire obligation and each creditor can
demand full payment from any debtor.
- One for all, all for one
- Each debtor obliges to pay the entire obligation
- Each creditor has the right to demand payment of entire obligation from any of the debtors

General Rule: if there are 2 or more debtors and 2 or more creditors, it is a joint obligation

Except:

● When the obligation expressly states that it is solidary

● Law requires solidarity
● The nature of obligation requires solidarity

Kinds of Solidarity

1. Passive - solidarity on the part of debtors

2. Active - solidarity on the part of creditors

3. Mixed - solidarity on both parties

Article 1211. Solidarity may exist although the creditors and the debtors may not be bound in

the same manner and by the same periods and conditions

Rules in solidarity

A. As to Debtors

1. Any of the solidary debtor may be required to pay the whole obligation
2. Debtors may pay any one of the solidary creditors. But if may nag demand na

creditor dapat sa kanya ibayad (Art. 1214)

3. Payment made by one of solidary debtor extinguishes the whole obligation

o Kapag dalawa nag offer na magbayad, creditor may choose kung kanino tatanggapin
● Pwedeng mag-claim yung debtor na nagbayad sa mga co-debtors nya pero only to share which
corresponds to each plus interest for the payment already made.

Kung nabayaran ang debt before due, walang interest

● Kapag insolvent si isang co-debtor, dapat ishoulder ng lahat ng co-debtors yung part ng
insolvent debtor in proportion to debt of each (Art. 1217)

4. Payment by a solidary debtor shall not entitle for reimbursement from his co-debtors if such payment
is made after the obligation has been prescribed or become illegal (Art. 1218)

5. If there is remission or condonation sa part lang ng isang debtor, debtor is only released from his
share pero liable pa rin sya sa co-debtors nya. Ang effect nyan mababawasan yung total loan. (Art. 1219)

6. If the whole obligation is condoned obtained by one solidary creditor, hindi sya pwedeng maningil sa
co-debtors for reimbursement (Art. 1222)

B. As to Creditors

1. Anyone may collect or demand payment of the whole obligation

2. Creditor may proceed against any one of the solidary debtors or some or all of them simultaneously.
The demand made against one of them shall not be an obstacle to those which may subsequently be
directed against others, so long as the debt has not been fully collected (Art. 1216)

3. Each one of solidary creditors may do whatever may be useful to the others, but not anything
prejudicial to them (Art. 1212)

● Any novation, compensation, confusion, or remission of debt is valid pero liable si creditor na
nagpatawad sa co-creditors nya (Art. 1215 & 1219)

4. Solidary creditor cannot assign his rights without the consent of the others (Art. 1213)

Rules in case of loss of thing or if the prestation becomes impossible

● If without the fault of the debtor

o Obligation is extinguished
● If there was fault on the part of any one of debtor
o ALL is responsible to creditor for the price, damage, and interest
o This is not prejudiced to their action against the guilty/negligent debtor
 ● If through a fortuitous event
o Obligation is extinguished
o Except in delay, ALL shall be responsible to creditor

KINDS OF OBLIGATION: DIVISIBLE AND INDIVISIBLE OBLIGATIONS

DIVISIBLE

- Capable of partial performance

INDIVISIBLE

- Not capable of partial performance

Article 1225. Even though the object or service may be physically divisible, an obligation is

indivisible if so provided by law or intended by the parties

Article 1224.

- A joint indivisible obligation (hindi pwede hiwa-hiwalay) give rise to indemnity for damages kapag hindi
nagawa ng isang debtor yung undertaking nya

- The debtors na ready na i fulfill yung undertaking nila ay hindi pwedeng mag contribute sa indemnity
beyond corresponding portion of the price of the thing

KINDS OF OBLIGATION: OBLIGATIONS WITH PENAL CLAUSE

OBLIGATIONS WITH PENAL CLAUSE

- Penalty substitutes the indemnity for damages and interest

- If walang stipulation indemnity pa rin susundin

● Pwede pa rin magkasundo yung parties na in addition to the liability for damages and interest
meron ka pang liability
● Damages shall be paid if obligor refuses to pay penalty or he is guilty of fraud in
fulfillment of obligation (Art. 1226)
● Debtor cannot exempt himself to the obligation by choosing to pay the penalty
● Creditor cannot demand fulfillment of the obligation and payment of penalty at the same
time, unless expressly granted to him
 ● If after the creditor has decided na ifulfill nalang yung obligation, then the performance of it
becomes impossible without his fault, the penalty may be enforced (Art. 1227)
● Proof of actual damages is not necessary in order that the penalty may be demanded (Art.
1228)
● Pwedeng bawasan ng court ang penalty if
o Principal obligation is partially complied
o Even if there is no performance, the penal clause is questionable (Art. 1229)
● If the penal clause is void, the principal obligation is still valid. If the principal obligationis void,
the penal clause is also void (Art. 1230)

EXTINGUISHMENT
PALOREMECONO-PARE-FU (not exclusive)

● PA - payment or performance

● LO - loss of the thing due

● RE - remission or condonation

● ME - merger or confusion

● CO - compensation

● NO - novation

● P - prescription

● A - annulment

● RE - rescission

● FU - fulfillment of resolutory condition

EXTINGUISHMENT: PAYMENT OR PERFORMANCE

Characteristics of Payment

1. Integrity - it must be complete

 A debt shall not be understood to have been paid unless the thing or service in which the
obligation consists has been completely delivered or rendered,
● Except:

○ Obligation is substantially performed in good faith - obligor may recover as though there had
been a strict and complete fulfillment less damages suffered by obligee
○ Obligee accepts the performance knowing its completeness or irregularity - without protest,
the obligation is deemed full complied

2. Indivisibility - hindi installment

 Payment or performance must be for the whole of the obligation and not just parts

● Debtor cannot be compelled by the creditor to perform obligation in parts

neither can the debtor compel the creditor to accept obligation in parts

● Except

○ Pumayag sila sa partial performance

○ Part of the obligation is liquidated and part is unliquidated
○ It became impractical to require the debtor to perform in full

● If the obligation is a monetary obligation, the payment must be in legal tender (Art. 1249)

● In case of extraordinary inflation or deflation of the currency stipulated should supervine, the value of
the currency at the time of the establishment of the obligation shall be the basis of payment, unless
there is an agreement (Art. 1250)

Place of Payment:

1. In the place designated in the obligation

2. If there is no agreement:

● Kung nasaan yung determinate thing at the moment the obligation is constituted
● If wala pa rin, sa domicile ni debtor

Payment by 3rd Persons

General Rule: Creditor is not bound to accept payment or performance by a 3rd person

Except:

1. 3rd person has interest in the fulfillment of obligation

2. Contrary stipulation (Art. 1236)

Rights of 3rd Person who made the Payment

1. If with knowledge and consent of debtor

● Total reimbursement

● Rights of subrogation to all the rights of the creditor

2. If without knowledge of debtor

● Can recover only insofar as payment has been beneficial to debtor

● No right of subrogation(the practice of substituting one party for another in a legal setting)

Article 1238. Payment made by a 3rd person who does not intend to be reimbursed by the debtor is
deemed to be a donation, which requires the debtor’s consent. But the payment is inany case valid as to
the creditor who has accepted it

Persons entitled to receive payment

1. The person whose favor of the obligation has been constituted (the creditor)

2. Successor in interest

3. Any person authorized to receive it (Art. 1240)

General Rule: payment to an unauthorized person is not a valid payment

SPECIAL FORMS OF PAYMENT

DATION IN PAYMENT (dacion en pago)

- May monetary obligation tapos bagay pinangbayad

- Dapat ma fufully extinguish yung debt kapag bagay pinangbayad

Requisites:

● Existence of monetary obligation

● Alienation to the creditor of a property by the debtor with the consent of creditor

● The satisfaction of the money obligation of the debtor

APPLICATION OF PAYMENT

- Whenever a debtor has multiple debts of the same kind with the same creditor the debtor
may designate which debt that the payment should apply to first.

Requisites:

1. There is only one debtor and one creditor

2. Maraming utang

3. Debts are of the same kind or identical in nature

4. All debts are due

5. Hindi sapat yung payment para ma cover lahat ng utang

How Application is made

1. Debtor ang may choice kung saan nya iaapply

2. Kung di pumili si debtor, si creditor mamimili

3. Kung pareho silang di namili

- To the most onerous debt

- If same nature and burden, proportionately to all

PAYMENT BY CESSION

 Payment by cession is when the debtor who has multiple creditors and insufficient
property to cover such obligations abandons all of his property for the benefit of his
creditors where the latter will use the proceeds thereof to cover the formers obligations.

Requisites:

1. Maraming utang

2. Insolvent si debtor

3. Debtor abandons all his properties except those which are exempt from execution

4. Acceptance of the cession by the creditors

TENDER OF PAYMENT AND CONSIGNATION

 If the creditor to whom tender of payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility by the consignation of the thing or
sum due.

Requisites to extinguish obligation by consignation

1. May valid legal tender (nagbayad muna)

2. Without just cause, hindi tinanggap ni creditor

3. Persons interested in the fulfillment of the obligation must be notified by debtor of his intention to
consign it

4. The sum or thing due is deposited to judicial authorities

5. Dapat na notify si creditor na na consign yung payment sakanya

Article 1260. Before ma-accept ni creditor yung consignation, or before ma declare ng court na consign
na ito properly, pwede pang ma withdraw ni debtor yung ni-consign niya. In effect, obligation remain in
force.

When Consignation, without previous tender of payment will produce the same effect (AIRTT)

a. Creditor is absent or Unknown or does not appear in the place of payment

b. Creditor is incapacitated to receive payment

c. Creditor refuse to give a receipt without just cause

d. Two or more person claim the payment

e. Title of the obligation has been lost

LOSS OF THE THING DUE

A thing is lost when (DOPE)

● Disappears

● Goes out of commerce

● Perishes
● Existence is unknown or it cannot be recovered

General rule: if a determinate thing is lost, the obligation is extinguished

Except:

● Debtor is at fault of the loss

● Debtor is in delay

● When law provides

● There is express stipulation

● Nature of obligation requires the assumption of risk

● The debt proceeds from a criminal offense - unless the person who should receive it refuses to accept
it without just cause

● If a generic thing is lost, the obligation is not extinguish

Article 1266. If an obligation becomes illegally or physically impossible to do without the fault

of obligor, he shall be released from the obligation

Article 1267. Obligor may also release from the obligation in whole or in part if the service

becomes so difficult as to be manifestly beyond the contemplation of the parties

Article 1269. If the loss was caused by a 3rd person, creditor has all the rights of action which

the debtor may have against the 3rd person

CONDONATION / REMISSION
- Pinapatawad yung utang

Requisites of condonation

1. Gratuitous

2. Accepted by debtor
3. Hindi sobra (inofficious)

4. Formalities provided by law on donations must be complied

● Movable property and more than 5 thousand - it must be in writing, otherwisevoid

● Immovable - must be in public instrument, otherwise void

5. An existing demandable debt at the time the remission is made

Article 1271. The delivery of private document evidencing a credit, made voluntarily by the

creditor to the debtor, implies the renunciation of the action which the creditor has against the

debtor

Article 1272. Whenever the private document in which the debt appears is found in the

possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless

the contrary is proved

● The renunciation off principal debt extinguish accessory obligation

● Waiver of accessory obligation leave the principal obligation enforceable

MERGER / CONFUSION

- when a debtor becomes their own creditor.

Requisite

1. It must take place between the creditor and the principal debtor (ex. Not guarantor)

(Art. 1276)

2. The very same obligation must be involved

3. The confusion mist be total or as regards the entire obligation

Efects

● Obligation is extinguished (Art. 1275)

 ● Confusion which takes place in the person of any off the guarantors does not extinguish the
obligation

Merger in joint obligation

- Does not extinguish joint obligation

- Except as to regards to the share of corresponding creditor or debtor whom the two character concur

Merger in solidary obligation

- Merger in one of the solidary debtors or solidary creditors extinguishes the whole

obligation

COMPENSATION
- Kwits

- I owe you, you owe me, offset nalang

Requisites

1. They are principally debtors and creditors of each other

2. Both debts consist of money, or if consumable they are the same kind and also same quality

3. Both debts are due

4. Both are liquidated and demandable

5. No controversy surrounded

6. Compensation must not be prohibited by law

Debts or Obligations Not Subject to Compensation

1. Arising from contracts of depositum

2. Arising from obligations of a depositary

3. Arising from obligations of a bailee in commodatum

4. Claims for support due by gratuitous title

5. Obligations arising from criminal offense

6. Certain obligations in favor of government

Kinds of Compensation

1. Legal compensation - by operation of law

2. Conventional - by agreement

3. Judicial (set-off) - by court judgment

4. Facultative - kapag pumayag yung isa na tanggapin yung compensation kahit hindi ito

subject for compensation

● Ang dapat mag waive ay yung party who has the right to oppose the compensation

● Obligations subject to facultative compensation

○ Depositum
○ Obligations of a depositary
○ Obligations in commodatum
○ Support

■ General Rule: claim of support due to gratuitous title

■ Exception: future support

○ Civil liability from crime

NOVATION
- Changing of object or principal condition

- Substituting another in the place of the debtor

- Subrogating a 3rd person to the rights of creditor

Requisites

1. Valid old obligation

 ● If old obligation is void, it cannot be cured by novation

● If just voidable, novation is valid

2. Agreement between the parties to extinguish or modify old obligation

● Except

○ When the person of the debtor is changed which can be made even if it is against the will of
debtor
○ When another person is subrogated in the place of the creditor

3. Extinguishment of old obligation

4. Valid new obligation

Kinds of Novation

1. According to object or purpose

A. Real/Objective - napalitan yung object or principal condition

B. personal/Subjective - parties yung napalitan

a. Substituting the person of debtor - dapat laging may consent ni creditor, kahit walang consent ni
debtor

i. Expromision - 3rd person inititates

ii. Delegacion - debtor initiates

b. Subrogating a 3rd person in the rights of the creditor

i. Conventional - by agreement

ii. Legal - by operation of law

c. Mixed - change of object and parties

It is presumed that there is legal subrogation when:

1. Creditor pays another creditor who is preferred

2. 3rd person, not interested in obligation, pays with express or tacit approval of the debtors

3. Even w/o the knowledge of debtor, a person interested in the fulfillment of obligation pays, w/o
prejudice to the effects of confusion as to the latters’ share

2. According to form

A. Express - declared in unequivocal terms

B. Implied - when the old and new obligation are on every point incompatible with

each other