civ2 obligations class notes

7/25/2019 CIV2 Obligations Class Notes

1/33

Civil Law Review 2 Atty. Crisostomo UribeNotes/Class LecturesPEACHY ANNE APOLO

AS TO RIGHTS & OBLIGATIONS OF MULTIPLEPARTIES

Usual questions under this topic: Whether the debtor can becompelled to pay the entire amount.Answer o course would depend on the ri!hts and obli!ations omultiple parties: i it is "oint# or i it solidary# or dis"unctiveobli!ation.

$ow would you %now i the obli!ation is a "oint or a solidary

obli!ation&

X & Y bought 500 sacks of rice from A & B.X & Y demanded. A & B delivered to X.X did not give anything to Y.

Can Y hold A & B liable? Can Y still comel delivery a ortion of thesacks of rice?

't depends. ' it is a "oint or solidary obli!ation. (o )rst#determine i it*s a "oint or solidary obli!ation.

+here is "oint obli!ation when no law e,pressly provides#

absence o stipulation and the nature o the obli!ation doesnot provide or solidarity.

't is a solidary obli!ation: by stipulation o the paties# when

the law so provides# and when the nature o the obli!ationrequires solidarity.

-,amples which by ature o /bli!ation that requires solidarity&

+hose under human relations 01# 2# 20 o CC.& +he lawconsiders this as quasi3delict. 4roper -,ample: 's the case oLiwanag vs. Workmens Compensation: (ince theWor%men5s Compensation Act was enacted to !ive ullprotection to the employee# reason demands that thenature o the obli!ation o the employers to paycompensation to the heirs o their employee who died inline o duty# should be solidary6 otherwise# the purpose othe law could not be attained.

-,amples which by Law# requires solidarity&

0722# 0728# 0729# 0100# 010# 2019. CC and 19# 00 o

the ;C.

'n a 4artnership:ABC !artners" borro#ed money from X. Xdelivered to A. A received the money. $o#ever% A misaroriatedthe amount.ay the artners in ABC 'artnershi be held solidarily liable?Can C alone be liable for the entire money?

(ee: 072230729. What is the correct basis&

Art. 0722. Where# by any wron!ul act or omission o any partneractin! in the ordinary course o the business o the partnership orwith the authority o co3partners# loss or in"ury is caused to anyperson# not bein! a partner in the partnership# or any penalty isincurred# the partnership is liable thereor to the same e,tent asthe partner so actin! or omittin! to act.

Art. 0728. +he partnership is bound to ma%e !ood the loss:


2/33

Article 020? !ives the creditor the ri!ht to 5proceed a!ainst

anyone o the solidary debtors or some or all o themsimultaneously.5 +he choice is undoubtedly let to thesolidary# creditor to determine a!ainst whom he will enorcecollection. 'n case o the death o one o the solidarydebtors# he


3/33


4/33

AS TO PERFORMANCE OF PRESTATIONS

+he usual question: Whether the obli!ation can be partiallyperormed.

As a geeral rule: /bli!ations are indivisible.4artial perormance is non3perormance.

E!ce"t#os$ obli!ations are divisible when:0. so a!reed upon by the parties2. the obli!ation is partially liquidated and partially

unliquidated8. as to money9. by their nature# they are divisible.

A B and C obliged themselves to deliver a seci(c horse to X%#orth '300%000. 1he horse died due to the fault of A.X (led an action against C.ill the action roser?

;irst determine what is the cause o action.

' it is or speci)c perormance# it can no lon!er prosperbecause the horse is already dead. An action to delivercannot prosper since it is a )nite thin!

' what is )led is action or money claims33the value o thehorse and dama!es# it will prosper.

o E can be held liable# however# only or up to

40#.# with respect to his share. +his obli!ationinvolves a "oint indivisible obli!ation. (ince thestipulation is silent as to the debtors share# theyshall share equally.

o C can be held liable only or his share and not or the

dama!es. 't is only A who can be liable or dama!esbecause the thin! was lost due to his ault.


5/33

2. 't was so stipulated o non3compliance

'n the case o Bachrach $otors vs. %spirit"'t was a!reed in the sale contracts that 02J interest will be paid on the unpaidprice# and in case o the non3payment o the total debt at maturity# 2J shall bethe penalty.'t was contended that the 2 per cent penalty upon the debt# in addition to theinterest o 02 per cent per annum# ma%es the contract usurious.

(C: (uch a contention is not well ounded. Article 002 o the Civil Codepermits the a!reement upon a penalty apart rom the interest. (hould

there be such an a!reement# the penalty# does not include the interest#and which may be demanded separetely.

Accordin! to this# the penalty is not to be added to the interest or thedetermination o whether the interest e,ceeds the rate ),ed by the law#since said rate was ),ed only or the interest.

Dut considerin! that the obli!ation was partly perormed# and ma%in! useo the power !iven to the court by article 009 o the Civil Code# thispenalty is reduced to 0 per cent o the unpaid debt.

8. ' the debtor reused to pay the penalty.

4n an obligation #ith a enal clause% can the +) comel the C) toaccet the enalty instead the +) erforming the obligation?

As a rule # the debtor cannot compel the creditor to acceotthe penalty instead o perormin! the obli!ation# thecreditor can compel the debtor to perorm the obli!ation.

-EC-4+'/: the debtor can compel the creditor where his

ri!ht has been e,pressly reserved or him as provided inArt 022@ o CC.

Can the C) both demand for the erformance of the obligation andthe ayment of the enalty agreed uon?

MR: the creditor cannot

-EC-4+: when such ri!ht is clearly !ranted to him.

ot necessarily e,pressly !ranted bcs it may be inerred by

the acts o the parties.

4f the obligation is void and there is a enal clause% may a arty beheld liable under the enal clause?

MR: o. bcs a penal clause is an accessory underta%in!. '

the obli!ation is void# any accessory underta%in! is alsovoid.

-EC: ' the nullity o the obli!ation would !ive rise to the

enorcement o the penal clause# then party thereto can beheld liable under the penal clause.

BREACH OF OBLIGATIONS

' there*s an obli!ation# may one o the parties be held liable&ot necessarily.

;irst# bcs maybe both o the parties are obli!ed to complywith an obli!ation.

4an!alawa# even i one o them or the debtor in an

obli!ation ailed to comply with the obli!ation# maybe therewas no ault on his part# maybe it was due to the ault othe creditor# or the ortuitous event that was unoreseen# orthou!h oreseen are inevitable under 00@9.

+here are also one other reason why not every time there is

an obli!ation# a party thereto may be held liable. Dcs under00@ only those who are !uilty o raud# ne!li!ence ordelay# but also those who in any manner contravene thetenor thereo shall be held liable or dama!es.

'n other words# rom this article# it is clear that not onlydebtors can be held liable. Naya n!a the law starts with theword Othose. -ven creditors# can be !uilty o raud# hindilan! an! debtor. 4wede rin sya ma!in! !uilty n! ne!li!enceand in delay# %nown as mora accipiendi. Dut it is not onlybcs there was raud# ne!li!ence or delay# in !eneral# yun!last phrase Oin contravention o the tenor o the obli!ationin whatever manner# would cover perormance. 's therecomplete or imperect perormance# can be the basis oliability.

Lets start with actors a'ect#g o(l#gat#os$

)* FRAU+

;raud can be classi)ed !enerally into two.

-,ample: ' A oPered a R'M or sale to D# misrepresentin! that it isa 29 Narat !old# where in act it was "ust !old3plated.

's there raud& F-(.

's this raud under 00@# @0& o. Dcs raud under 00@0

involves raud in the perormance.A while a!o# an! scenario involvin! the rin!# pertains toraud in obtainin! consent. ' you notice# yun! raud na itois %nown as Causal ;raud or >olo Causante# which is alreadyunder 0887# under contracts.'n other words# there can only be raud in obtainin!

consent# i it is in relation to Contracts. Whereas yun! raud


6/33

in the perormance under 00@0# it doesn*t matter rom whatsource o the obli!ation# it can be rom law# or others./ course# in contracts# it need not only be causal raud# itmay also be incidental raud under 0899. +his raud# will notaPect the validity o the contract# but it can be the basis tohold the party who commit the raud liable or dama!es.' you remember in causal raud# it would result to avoidable contract# then annulment would be the remedy.

A!ain in 00@0# the raud is in the perormance. -,ample#would be culpa3contractual# raud in the perormance o anobli!ation arisin! rom contract.

Question: ' an action or speci)c perormance was )led# on the!round that raud was committed by the deendant in theperormance o an obli!ation. $owever# the deendant was able toprove to the court that the plaintiP e,ecuted a waiver# statin! thatdespite raud on the part o either parties# no action would be )ledby either. With this waiver# the question is# will the action prosper&

+he answer depends on W$- the waiver was e,ecuted inrelation to the raudulent act.

Dcs i the waiver was e,ecuted D-;/R- the raudulent act#that would be considered as a waiver to uture raud# andunder the law# a waiver to uture raud is void. (imple lan!naman an! reason dyan# bcs it is considered a!ainst publicpolicy# otherwise. +he party to this contract would invite theother party to commit raud# cause either way he will not beliable.

' the waiver was e,ecuted ater the raudulent act# it would

amount to condonation# thereore the action will no lon!erprosper.

Walan! tanon! masyado sa raud# lalo na problem type na tanon!#

meron but very ob"ective. Cause an! raud sub"ective# and minsansobran! haba n! tanon!. e!li!ence also# or similar resosns.Whether an act is a ne!li!ent act or not# is also sub"ective an!determination.' you remember CAM/ vs IRR# hindi unanimous an! decision 2o the "ustices considered the act as ne!li!ent act. Dut..)rst.. lets!o to ne!li!ence.

,* NEGLIGENCE's ne!li!ence synonymous as to ault&

+he answer is de)nitely not# i only bcs under 002?# what

would constitute quasi delict is ault /R ne!li!ence. 'n otherwords# ault is not the same as ne!li!ence.

Also# the (C would ma%e this distinction by sayin! that# inault# there can be an intention to cause harm to another#while ne!li!ence is by mere omission which# ' ully support#bcs in ta!alo!# pa! sinabi natin! Oits your ault# it meansO%asalanan mo yan. >oes it mean ne!li!ence mo yan& ot

necessarily. 4a! sinabi natin! ault# pweden! malicious#pweden! intentional. >iba&

Culpa# what is this word& 's it synonymous to ne!li!ence&

$indi din. Dcs culpa is considered to be more

encompassin!# covered nya an! ault and ne!li!ence. (owhen you say culpa# %asama na an! ne!li!ence dyan. Nayaculpa contractual# covered an! ault and ne!li!ence.

Dut the main issue here is# -.e -oul a act (e cos#ere aegl#get act0Read a!ain the case o C#NC' vs $RR# is theact o Can!co# ali!htin! rom a movin! vehicle# is that a ne!li!ent

act& As ' said# 2 "ustices considered the rulin! rom the U( that

Oali!htin! rom a movin! vehicle is a ne!li!ent act. ' haveto remind you pala# an! de)nition n! ne!li!ence ditto aymade applicable to quasi3delict# %aya impt not only in theperormance o obli!ation# but also in relation to ne!li!enceas constitutin! an independent source o obli!ation.

ow# a!ain# sa 2 "ustices# paran! tama. Nasi had he not

ali!hted rom a movin! train# had he waited or the train tostop# he would not have been in"ured. 't is a !ood ar!umentdiba& Naya lan!# mali tala!a yun! ar!ument eh. 4reciselyhe did not wait or the train to be in ull stop. We are nottal%in! about that scenario# we are in a scenario that heali!hted rom a movin! train. Dcs# an! mas ma!anda sana#he should have waited# non siquetor# it doesn*t ollow theposition o the ma"ority. Duttama ba an! ma"ority o the"ustice# that the act was not a ne!li!ent act& -h tumata%bopa an! sasa%yan eh. Well the ma"ority based on a rule# nowenshrined in Article 00@8. +o be able to determine whetherthe act is a ne!li!ent act or not# we have to consider theA+UR- o the obli!ation which corresponds to thecircumstance as to the person# the time and the place.Consider the circumstances surroundin! this act.

?


7/33

' you read the case# even without considerin! 00@8# ' wouldalready support the decision o the ma"ority. Deore Can!coali!hted# there was another person who ali!hted )rst# so ahead oCan!co. Considerin! the scenario# the train was about to stop# sopaba!al n! paba!al# thereore# dapat nun! si Can!co na bumaba#mas maba!al na# pero bat eton! taon! to was not in"ured. (iCan!co was in"ured& +hereore# it was not bcs o the ali!htin! romthe movin! vehicle per se which was the ne!li!ent act. (omethin!

must have happened somewhere else.

Applyin! 00@8 as applied in this case# the nature o the obli!ation#' would say that it is impt bcs we have to consider the de!ree odili!ence that have to be observed. Lalo na eto# common carrierito. +hey must e,ercise the hi!hest de!ree o dili!ence. Dy law#andyan un! common carriers to e,ercise hi!hest de!ree odili!ence li%e public utility. Maya n! 4L>+# Ieralco IC'I>C.Dut in $inadanao (erminal vs. Phoeni) #ss"rance:(tevedorin! companies are not required to e,ercise another

de!ree o dili!ence. ust ordinary dili!ence.

As to the circumstances as to the time and place# this really wasthe basis o the "ustices. / course# under the circumstances n!ana the train was about to stop. /therwise# %un! 0 %ph pa an!ta%bo# tas you would ali!ht# si!uro naman sobra sobran!ne!li!ence na yan.'t cannot be said that Can!o was ne!li!ent. Why& Dcs Can!co wasat his prime at the time it was committed.'n other words# tamanaman. $e was around 2 at the time# eh %un! 12 years old %a# taspa stop na# tatalon %a padin# may ne!li!ence tala!a.'n act the (C even considered the act that Can!o was a male in

concludin! that the act was not a ne!li!ent act# what has the!ender !ot to do with this& 't was bcs at the time the incidenthappened# m!a 012s to# women was wearin! Nimono. (o it hassomethin! to do with the apparel. ' na%a3Nimono %a tas tatalon %a#si!uro naman tala!an! maddis!rasya %a. An! ne!li!ence is aunction o time.'nto the place# he was very much amiliar with the place# bcseveryday he will ride the train# but an! isan! actor ditto indeterminin! who is the ne!li!ent is the +'I-. 't was ni!httime#ultimately# the employees o IRR are ne!li!ent bcs they placedsac%s o watermelon near the train. Naya n!a his arm had to beamputated cos bumaba sya# and sumabit sya don sa sac%s.

Also# the act that the place was poorly lit. ' may watermelon taswell3lit naman# ma%i%ita nya. >i na sya si!uro tatalon.Well %aya pala hindi na in"ure yun! other person na tumalon# bcssa tinalunan nya# walan! watermelon. (o it was really theemployees o IRR who were ne!li!ent.A!ain# the person# time and the place.

/ne last. (L--4'M while at wor%. 's that a ne!li!ent act&

A!ain# determine the nature o the obli!ation. Nun!obli!asyon mon! ma! bantay n! !oods# n! bata# ba%ayaya# or para mas ma!anda# !overness. aman. Ia%atulo!%a lan! 8 seconds# hulo! na an! bata sa stairs. /rnana%aw na lahat n! binabantayan mo diba. Dut i abo!ado%a# an! obli!asyon mo naman ay !umawa n! pleadin!s#naman# %ahit matulo! %a n! hours o%ay lan!# basta mapasa mo diba.

$ow impt yun! nature o the obli!ation sa determination& Nun!driver %a n! bus# na%o# %un! seconds %a lan! mai!lip# patay a!adlahat n! pasahero mo diba& Naya ' ully appreciate the drivers

papuntan! ba!uio# bicol# %ahit at least 8 inches na lan! paran!ban!in na# at least# wala %a sa ban!in diba& Fun! ne!li!encena%a%amaty. Naya wa! masyado. Fun! %ay Robredo# di sanan!an!ampanya % o%ay Robredo ha# pero pa!isipan nyo din. Lastyear m!a 9 !ovt employees talsi% sa trabaho. Dcs i you wouldsi!n a certi)cation that air worthy an! eroplano# pero di man lan!pinalipad an! eroplano to chec%.

/ne other# basically there are 2 %inds o ne!li!ence.

Iay ne!ili!ence in the perormance o obli!ation# -,ampledyan# culpa3contractual.

Iay ne!li!ence that constitute as independent source o

obli!ation# an! e,ample naman dyan ay quasi3delict. /rculpa3aquialana. /r culpa3criminal. Wala silan! pre3e,istin!obli!ation# but the obli!ation would arise due to thene!li!ent act.

;inally# ' would have to emphasiSe the %inds o ne!li!ence as to thee,tent.

Iay simple ne!li!ent act# and !rossly ne!li!ent act.

$ow impt is this&

'n the case o (%L%!#*( vs. C#*(R'+ ma%i%ita nyo an!relevance nayan. >ito# or the sendin! o a messa!ethrou!h a tele!ram# claimin! moral dama!es. 'n contracts#

@


8/33

in order or the party to be held liable or moral dama!es#that party must have acted in bad aith or was in wantondisre!ard o his obli!ations. (o bad aith is not easy toprove. 'n act# !ood aith is the one presumed by law. Nayaan! cause o action dito sa +-L-;A(+ was breach ocontract. An! tele!ram na ito is to inorm the children andthe husband o the deceased# that this person was alreadydead. 'ma!ine# tele!ram ito# you can "ust ima!ine %elan pa

ito n!yare. (o# the messa!e was not received. $indinapadala# %aya this deceased was buried by (o)a# one othe dau!hters. +he rest nalaman nila ater na. (o they sued+eleast. +eleast*s deense was that it was due toatmospheric pressure that was beyond their control.Iu%an! tama naman# you cant control that naman. Dutna%ahanap n! lusot an! (C# it turned out that the +-L-;A(+did not inorm (o)a that they ailed to send the messa!e.

(C considered this as a !rossly ne!li!ent act. $indi mo

na!awa# sabihin mo sa%in# so ' could*ve done somethin!diba. 'n our law# !ross ne!li!ence amounts to raud.

/%ay na yan. Iost o the bar e,am questions ay nasa >-LAF.

1* +ELAY>elay is also %nown as >-;AUL+ or I/RA.

When a person is in delay# does it mean that he did not perormthe obli!ation&

$indi naman. $e may have inormed pero maybe# days or

months ater the obli!ation was due and demandable. +hisis why it*s also called on34erormance with Respect to+ime.

When would a person be considered in delay& An impt reqt is >emand. At least as a rule. o demand# no

delay.Dut there are e,ceptions to this rule. Iadali lan! naman.

' so stipulated# na din a %elan!an n! demand. -,ample# sa

Credit Card nyo# you will be liable in case you ail to pay ondue date# without need o demand.

' the law so provides. -cample ditto# A!ency and

partnership. (a partnership Oto ma%e !ood his promises tothe contribution i he did not perorm# he is already indelay.

8rd# i the demand would be useless. ' due to the ault o the

debtor. -,ample# napa%a mamahalin! babasa!in!vase# orwhatever reason# nabasa! yun! vase# even beore the duedate# dina %elan!an demand# the debtor is already liable ordama!es even i thereis no demand.

Last para!raph 00?1 in relation to reciprocal obli!ations# i one othe parties has already ul)lled his obli!ation# that one party who

did not is already in delay. A!ain this is what the law provides.$owever# this is sub"ect to the stipulation o the parties.

'; the seller had already delivered the thin! in a contract o sale#but the buyer has not paid the price. >oes it mean that the buyeris already in delay&

ot necessarily# bcs pwede namin! na! usap sila that he

will pay within ? months. 00?1 pertains to pure obli!ations#demandable at once.

>-LAF / +$- 4AR+ /; CR: Iora accipiendiDa%it sya in delay&

Iaybe the creditor does not want to accept the payment othe debtor.

-h ba%it naman hindi tatan!!apin ni creditor&

Iaybe bcs# it is not in compliance with the quantity a!reedupon.

o Meneral rule is: 4artial perormance is non3

perormance sub"ect to stipulation. A

lso# maybe bcs the !oods are o inerior quality# or maybe

the !oods are dama!ed# so ba%it mo tatan!!apin or anyother conditions&

(o a!ain# to be in mora accepiendi it must be without "ustcause. (o dahil in delay sya# anon! dama!e ma3ccause nunsa debtor& Iaramin! possible reasons. 4ano %un! !umamitpa sya n! bar%o# eroplano and the e,penses o thetransportation# mahal# pa! hindi tinan!!ap in someinstances# %elan!an pa nya ma! rent n! warehouse. +hus#mala%in! !astos i hindi tan!!apin n! creditor.

Dut in the case o#gcaoili vs. *I*+ this pertains to another %indo delay# this is in relation to a housin! unit na inapply ni A!acaoiliwith M('(# na !a!awa n! bahay# throu!h its contractors


9/33

basta roo lan!. thus# A!caoili %new that he cannot live with thatstructure# he suspended the payments o monthly amortiSations.+o which# M('( cancelled the a!reement. /bviously# an! !round indeault si A!caoli.

+he (C said that even i A!acoili was in delay in the

perormance o his obli!ation# which is to pay# M('( wasalso in delay in the perormance o his obli!ation# to delivera habitable house. +hereore# both parties are in delay. 'n

contemplation o law# no one is in delay# hence# M('( has nori!ht to cancel the a!reement.

'n relation to demand. When a person would ollow up# or remindthe other party. 's that suTcient to constitute demand in order ordelay to set in&

o. An! reminder is not a demand. ONamusta na an! utan!

%o&Another impt point# sa!ot n! m!a %a%lase niyo parati: pumapaso%to# Oan obli!ation would become due upon demandpa! !anyanan! naisa!ot# papaso% na an! discussion na: in the )rst place# willthere be a valid demand ' the obli!ation is not yet due and

demandable& >iba hindi& +here can never be a valid demand i the

obli!ation is not yet due and demandable. /bviouslythereore# an obli!ation does not become due anddemandable dahil sa demand. +o the contrary# %ailan!andue and demandable ba!o %a ma%apa! demand.

-,. an /bli!ation is to due and demandable on an 80. Aba an 27palan! na! demand na si creditor or the delivery o the !oods. -hon eb 2 all the !oods were destroyed due to a ortuitous event#while still in the possession o the debtor. Can the debtor be heldliable or the loss&

o. $e can only be held liable# i he was only in delay at thetime o the loss. (ince the demand was not a valid demand#he was not in delay. 'ts as i there was no demand.

Dar question# with re!ards to the contract o lease:0 month an! %ontrata pero na! start an! eb 0# on march 0# thelessor demanded or the return o the thin!# but the lessee ailed tocomply due to a mechanical ailure on his truc%. +he ne,t day# itwas burned throu!h a )re started rom a nei!hbor establishment.Wala syan! %asalanan. Dut an! tanon!# can he be held liable&

A!ain pa! !anyan an! problem# an! isipin mo.. Loss o the

thin! due to a ortuitous event. An! !eneral rule dyan ay

00@9. $owever# may e,ceptions don ha. $indi papaso% an!stipulation# ature o the obli!ation involves contract oris%# bcs the law so provides. DANA. Anon! law ito& 'nconnection with the obli!ation to deliver a determinatethin!# such thin! is lost or destroyed due to a ortuitousevent# the debtor shall be held liable i at the time o thelosshe was already in delay. Was the lessee already indelay& A!ain# in mar0 an! demand. alid ba an! demand&

$indi. Why# 0 month under art 08 o civil code# 0 month is8 days. (o. >emandable pa sya on march 0@# dahil;ebruary only has 27 days.

As mentioned earlier# even i the debtor ailed to comply with hisobli!ation# i the reason or this non3compliance was due to aortuitous eventhe cannot be held liable. Dut only as a rule. Dcsthere are e,ceptions. 'sipin mo parati may stipulation ba#assumption o ris%# as% yourselis there a law which wouldconsider this person liable or responsible despite the act thatthere was a ortuitous event under the circumstances& An! sa!otdito. Alamin an! laws# 00? e,ample.

When a debtor# promised to deliver the same thin! to two or morepersons who does not have the same interests# and thereater# thethin! was lost due to a ;-# liable pa din sya.As you read laws ti!nan niyo an! m!a !anton! provision# which aperson can still be held liable despite a ortuitous event becausethe law so provides.Dut out o this# an! isan! paborito ay nasa commodatum# sa aticle019.

>iba an! !eneral rule n!a Oi the thin! while in thepossession o the baileeVborrower was lost or destroyed dueto a ortuitous event while in the possession o the bailee#

the borrower cannot be held liable. +hat is the !eneral rule. Dut by way o e,ception# that article would tell us the

scenarios. +he instances when the bailee can be held liable.Nun! lima an! na%a3enumerate dyan# tatlo na an! na!3appear sa bar e,am. +hat is how avorite that article is.Fun! isan! libon! article n!a hidni pa natatanon! eh. 4eroito# three times na. -,ample: Dcs the borrower used thethin! or another purpose than that a!reed upon by theparties# tama n!a naman din# libe na n!a eh nan!hihiram%a na rin lan! tapos !a!amitin mo sa ba!ay diba# it*s a veryreasonable e,ception sa !eneral rule. Chec% niyo sasyllabus.

1


10/33

(a cases# andito an! N(C ,*. Co"rt o- #ppeals. apa%ainterisado n! case na to# and consistent an! (upereme Court dito.'n order or one to invo%e ortuitous event as a deense# thereshould be no concurrent ne!li!ence nor bad aith on his part# so hecan invo%e the deense o ;-. An! nan!yare dito# A4/C/Rreleased water rom a certain dam# as a result o the release o thewater# the properties o the plaintiP at the oot o the dam was

destroyed. /bviously# an! deense n! +C was ortuitous event%asi n!a naman may ba!yo. +hey had to release the water %asimappuno na an! dam. 4a! napuno an! dam# ba%a sumabo! yun!dam# ma!%%aron n! problem sa inte!rity n! dam# and masisira n!buon! buo. Dut# tama ba an! deense& Was A4/C/R held liable&

A4/C/R was held liable because there was concurrent

ne!li!ence on A4/C/R. When they released the water# itwas only when the dam was ull. un! punon! puno na.dapat# ba!o pa mapuno yun dam# they should have slowlyreleased the water. Dcs there had been previous typhoon#much stron!er than that typhoon pero no dama!es naman

sa property n! plaintiP. 'n other words# it was because othe ne!li!ence o the typhoon that*s why dama!e wascaused to the plaintiP.

' the reason o the non3perormance was due to the act o thecreditor# walan! ba!o dyan.

*IC#$ vs. 'R% is about a contract# the owners o these pieceso "ewelry sued the owners o the pawnshop bcs they could notreturn the "ewelries to the owner. Well an! deense nya# there wasa robbery. Claimin! that it is a ortuitous eventhe should not beheld liable. Anon! na!in! rulin! dito&

(C: +hey are liable. An! unusual dito sa case# he was the only on who testi)ed

that there was a robberyan! m!a empleyado niya wala.-ven the security !uardhindi na!testiy anon! nan!yari.Nun! wala %an! security !uard is already a ne!li!ent act.And or that# that is already a concurrin! ne!li!ent act andhe cannot invo%e ortuitous event as a deense. Dut also#ma!anda an! theory n! plaintiPs.

0st: 't was proven that iton! deendant already contemplated naan! m!a pieces o "ewelry ay ilala!ay sa vault sa ban!%o#obviously hindi niya !inawa. (econd# robbery is not an event that

which could not been oreseenalamo naman pala# %aya n!a %ayona! a!ree na ila!ay don %asi tala!a namin! maramin! robberies.(o in a way# this cannot be considered an unoreseen event due tothe nature o the business. 'n other words# robbery is not aortuitous event per se. 't depends on the circumstances.

2ndne!li!ent act dito# %inclaim niya# because aternoon an!robbery# it was une,pected %aya hindi na%asara an! vault.

0


11/33

REME+IES FOR BREACH OF OBLIGATIONS

Usual questions in the bar under this topic: %ILL THE ACTIONPROSPER0And the premise here is that: there is already a pendin! action)led. Unusual an! Oi you are a lawyer# what action will you )le&

'n answerin! questions such as this# always consider the ollowin!:

)* %HO FILE+ THE CASE0 's he the in"ured party&

' one who sued is not the in"ured partythe action will not

prosper. Dcs remedies are !ranted only to thea!rrievedVin"ured.

ote however that# plaintiP is /+ always the in"ured party.o Dein! the plaintiP does not necessarily ma%e you the

CR or the >R. Iinsan inuunahan lan! nun! isa yun!proper party.

'; the plaintiP is the in"ured party# ta%e note a distinction:

o +here was harm incurred# there is a principle %nown

as >amnum Absque 'n"uria


12/33

depends on so many actors. ' in wrt!# )led within 0 yearsrom the time the cause o action accrues.+o distin!uish these two# the (C said: +he remedy orescission is not con)ned to the rescissible contracts under0871# there are 2 %inds o Rescission# distin!uished asollows:

Resc#ss#o uer )12)

What is required: LESION3 !uardianentered a contract involvin! theproperty o the ward# and the lattermust suPer lesion more than X othe value.

Resc#ss#o uer ))4)

What is required: substantialVundamentalBREACH

't is a su(s##ar56 act#obased onin"ury to the plaintiP*s economicinterests as described in 08730870.Hmay only be invo%ed i there is noother available remedy.

't is a "r#c#"al act#o based on thedeendant*s breach o aith# a violation o thereciprocity between the parties.Hdirect and principal action.

4rescribes in 7 5ears rom the timethe ri!ht o action accrued. irect and principal action. (ee theConcurrin! opinion o DL Reyes. Classic case na tama an! principleon the basis that Ia!dalo had not complied with his obli!ation#thereore his action to rescission should not prosper.


13/33

conclusively and )nally settle whether the action ta%en was or was notcorrect in law.

,* FULFILLMENT AS A REME+YConsider the ature o /bli!ation as to 4restationRemedies:

a. (peci)c 4erormanceb. (ubstitute 4erormancec. -quivalent 4erormance /DL'MA+'/.

'n the case o CI(I5%N *4R%(6 vs. Co"rt o- #ppeals:4ascual -nterprises was sayin! that it cannot be held liable underthe 'ndemnity A!reement bcs the e,ecution o the >eed oAssi!nment was made by dacion en pa!o which e,tin!uished itsobli!ation under the 'ndemnity A!reement.Dut it turned out# the indemnity a!reement and the deed oassi!nment were e,ecuted on the very same day. Contract o (ale#'ndemnity A!reement# >eed o Assi!nment# (uretyshipall

entered into in the same day. +he implication is that the suretycompany at the time the deed o assi!nment was e,ecutedwasnot yet liable under the suretyship a!reement. 'n a suretyshipa!reementyou can only be liable i the principal debtordeaulted. Nun! same day yon# may deault naba& (yempre hindi#wala pan! deault. +hus# the indemnity a!reement is only toindemniy in case he cannot pay in the (uretyship A!reement.(ince there is no obli!ation to be e,tin!uished at the time the>eed o Assi!nment was e,ecuted# it cannot be considered asdacion en pa!o. +he (C ruled that the >eed o Assi!nment ismerely another security.

0280 mentions 0 Iodes o -,tin!uishment. +ha last our wouldinclude Annulment# Rescission# ;ul)llment o the ResolutoryCondition and 4rescription.

Question: 's the list e,clusive&

o. +here are others not mentioned.

'n the case o *#4R# vs. 3BP+ the (upreme Court would

tell us that mutual resistance also %nown as mutuumdisestum is also a mode o e,tin!uishment. +he ratio asdiscussed by the (C is: i an obli!ation may arise by themutual a!reement o the parties then an obli!ation mayli%ewise be e,tin!uished by their mutual disa!reement.

08


14/33

/ther authors would considerV include the ollowin! as the Oothermodes:

>-A+$ o one o the debtor&o >oes not necessarily e,tin!uish obli!ations.o +olentino: As a rule# death does not e,tin!uish

obli!ations.o Uribe*s view on +olentino*s position: 't is true only i

the obli!ation is arisin! rom contracts. Why& ' it isone arisin! rom law# it would be the law whichwould so provide or the ePect o the death o theparty to the obli!ation.

o ' purely personal obli!ationswith the death o the

person# the obli!ation will be e,tin!uished. $owever#this would all under the impossibility operormance.

;/R+U'+/U( --+(o 's it a mode& /. +hou!h it is relevant in loss o the

thin!V impossibility o perormance.o ;ortuitous -vent per se# is not a mode o

e,tin!uishment bcs precisely# not every time there isa ortuitous event# obli!ations will be e,tin!uished.

C/I4R/I'(- AMR--I-+

o 's it a mode& /. Decause# it would either all on

Condonation or ovation.o /rdinarily# a compromise a!reement# !ive and ta%e

yan.o 'n Ron7"illo vs. Co"rt o- #ppeals:+here was a

compromise a!reement entered into. 'nstead o thedebtor bein! required to pay 40@## in thecompromise a!reement# 400# na lan!. 's therean e,tin!uishment& Fes# partial. 's this a distinctmode rom 0820& o. 't would all undercondonation. +he 4?# was condoned.

ULL'+F /; C/+RAC+(o 's it another mode&

/. $ow can nullity o contracts be a mode o

e,tin!uishment when there is no validobli!ation& 't cannot be a mode.

Under 0280# those that are mentioned:0. Annulment: this is the remedy o a voidable contracts2. Rescission: as a subsidiary remedy in rescissible contracts.

8. ;ul)llment o a Resolutory Condition

9. 4rescription

Usual bar e,am questions on: 4ayment# Compensation andovation.Condonation was as%ed once. Loss o the thin!never. Conusionnever.

09


15/33

)* PAYMENT OR PERFORMANCE

4ayment is applicable to any %ind o obli!ation. -ven obli!ations todo or not to do can be e,tin!uished by this mode because it issynonymous to perormance.

Always consider the classi)cation o 9 Rules:

0. 4erson who pays2. 4erson to whom payment is made8. +hin! to be deliveredV 4restation to be perormed9. >ate# time# place and manner o payment

)st rule$ %HO PAYS0

Called as the 4ayor.

ot necessarily the debtor.

-Pects# i the oPer to pay is made by:

0. I'/R 0 years old. oidable obli!ation


16/33

o Fes# because there was payment. +here was an

acceptance by the creditor.o Under the law# he cannot oreclose because he will

never be subro!ated in the ri!hts o the creditor.+hereore# he cannot e,ercise whatever ri!ht the CRhad not only a!ainst the debtor but every one othose subsidiarily liable.

4f X has an interest in the ful(llment of the obligation% !guarantorfor e=amle" and he o/ers to ay B #ho acceted the same. 4f it is#ithout the kno#ledge of A% Can X foreclose the mortgage?

Fes# because upon payment he was subro!ated to the ri!hts

o the creditor because this is payment by a person who hasinterest.

4f X% #ho has no interest in the ful(llment of the obligation% and heo/ers to ay B #ho acceted the same. 1his time% #ith thekno#ledge or consent of A% Can X foreclose the mortgage?

Fes# because when he made the payment# there was

consent by A. $e can be subro!ated to the ri!hts o the

creditor. +hus# he can validly demand the entire amountpaid and can oreclose the mort!a!e.

' payment was with the consent o A# how much can E

claim rom A& +he entire amount paid. >oes it matter i hewas bene)ted only or 4?%& o. because he consented eh#not only to the e,tent he was bene)ted.

4f X and B% had an agreement that uon ayment of X to the debtof A to B% he #ill be subrogated to the rights of the creditor.$o#ever% X is a erson #ho doesn2t have interest and it #as made#ithout the kno#ledge or against the #ill of the debtor A. Can X besubrogated to the rights? Can he foreclose?

>espite the a!reement o E and D# he will not besubro!ated because this rule in relation to third partypayment was meant to protect debtors. As lon! as thepayment o a 8rdperson who does not have interest andwas made without the %nowled!e or a!ainst the will# he willnot be subro!ated.

hat if a erson% #ho does not have interest% aid B% but #ithoutthe intention of seeking reimbursement from A. $o#ever% > #eeksafter this ayment% X demanded from B% the return of the amount.Argument of X* this ayment #as not consented to by A. Bcs hehas no intention of seeking reimbursement% the e/ect of this

ayment is by donation. And by donation% consent of the donee isneeded. 1unay na donee dito ay sino? -i A% ero binigay kay B.1his is #hat is kno#n as indirect donation. Can B be comelled the'00%000?

o# the law itsel e,pressly provides that D can retain the

amount paid. 't is a valid payment as ar as D is concerned.

, rule$ AS TO %HOM PAYMENT IS MA+E

Called as 4AF--

Who is the 4ayee&o 029: 4ayment shall be made to:

0. +he person in whose avor the obli!ation wasconstituted

ot necessarily a party to the constitution o the obli!ation.

CR->'+/R. (ya an! dapat bayaran.

2. (uccessors in interest o the person $eirs o the creditor

Assi!nee

8. Any person authoriSed to receive payment ot only those authoriSed by the CR but also by law: such as

Receivers# Liquidators# Administrators# (heriP# Le!alRepresentatives# etc.

A!entsas authoriSed by the creditor. Qstn: Are a!ents thecreditors& (C: a!ents are creditors bcs they have the powerto demand ul)llment. A!ents are creditors# but they are notcreditors in their own ri!ht.

Usual bar e,am questions are in the e,ceptions.

What i the payment was made to a person who is notenumerated amon! 029&

+hen payment is not made to a proper party.

What i payment was made to a wron! party&o As a geeral rule# the payment is a void payment# and

thereore it will not e,tin!uish the obli!ation.o E!ce"t#os to the !eneral rule that despite it was

made to a wron! party# it may e,tin!uish the obli!ation.0. ' the payment redounded to the bene)t o the

creditor.2. ' the payment was made in !ood aith and to a

person in possession o credit.8. ' the payment was made to the creditor ater the

assi!nment o credit to a third person# but

without %nowled!e o assi!nment.0?


17/33

X debtor Y creditor.4f ayment #as made to A.

MR: oid payment. F can still collect rom E.-,c: ' the payment redounded to the bene)t o F.

'n such case# as a geeral rule : .as t.e (ure o "ro;#gthat the payment made to A redounded to the bene)t o F.E!ce"t#os$

0. ' F rati)ed the payment.2. ' this payment was made by E to A bcs o the acts o F that

A had the authority to receive payments. Under theprinciple o -stoppel.

8. ' A# ater payment# acquired the ri!hts o F# the creditor. 'tsas i na!3bene)t din an! creditor.

X debtorY creditorX borro#ed money from Y. $e e=ecuted a romissory note% #hichhe delivered to Y% romising to ay a certain amount. or #hateverreason% the romissory note #as #ith A. 'remise* A is a #rongarty.4f A demanded from X% habang ha#ak niya ang '@. X aid.ill that e=tinguish the obligation of X to Y?

MR: /rdinarily# no. ' the 4 is a note which is payable to F.A will not e,tin!uish his obli!ation to F bcs it was not madeto a person in possession o the credit.

H4ossession o the credit acd! to the civil codemeans: he appears to have the ri!ht.Dut since hindi naman na%apan!alan %ay A# he doesnot appear to have the ri!ht. (o# no.

-EC: ' payable to bearer. Fes# provided that when E paid A#he made in !ood aith# bcs he paid to a person inpossession o credit. As lon! as E was not aware o thedeect o the title o Athat will e,tin!uish his obli!ations toF.

(C decided a case 8# 9 months a!o# and cited this article.

+he plaintiP was claimin! ownership over the land which

was e,propriated by F 0%000 from Y. thereafter% #hen the obligation becamedue% o/ered to ay Y but only 0%000.X refused to accet the 0%000.hen X met the >> year old son of Y% and o/ered the 0%000#hich Y2s son acceted. But the money #as lost.$o# much can Y validly demand from X?Can E still be compelled to pay the entire 2#&What is the ePect o payment o 0% to F*s son&

MR: +here bein! no stipulation or partial payment# the creditor is

not bound to accept. R can be demanded to pay only the liquidated portion8. +he debt is sub"ect to diPerent terms and conditions

As ar as the amount which E paid to the son# clearly this is apayment to a wron! party# and thereore will not e,tin!uish theentire obli!ation. +his is bcs this situation does not all under any

0@


18/33

o the e,ceptions. Whether the money was lost in the casino# theact that the payment did not redound to the bene)t o the CR.

1r rule$ AS TO THE PRESTATION TO BE PERFORME+ ORTHING TO BE +ELIoctrine o (ubstantial 4erormance under 0289

'n the case o ("a8on vs. avier the debt was payable in 0 years.And the debtor already paid the monthly installments or 7thyear#beore he deaulted payments. +hus# the creditor invo%edrescission as a remedy.'s rescission the proper remedy& Dcs i there was alreadysubstantial perormance# rescission can no lon!er be invo%ed as aremedy.+his rule is consistent with 0010# i you remember# rescission isonly a remedy i the breach is substantial.

Applyin! this rule to the acts# 7 years out o 0. 'n act# in

the case# the total amount paid already e,ceeded theprincipal amount. Was rescission considered to be a validremedy&

/. Decause in this scenario# there was already asubstantial perormance.

'n one case. Legarda vs. *aldana# 1 payments out o 02. Ioreor less 7J.

Under the substantial perormance rule: since there was

already a substantial perormance# rescission is no lon!er aremedy.

Remedy nyan& (peci)c perormance plus dama!es.

2. 'rre!ularV 'ncomplete 4erormance


19/33

4AFI-+ ' I/-+ARF /DL'MA+'/(

'4: Art. 0291. +he payment o debts in money shall be made inthe currency stipulated# and i it is not possible to deliver suchcurrency# then in the currency which is le!al tender in the4hilippines.+he delivery o promissory notes payable to order# or bills oe,chan!e or other mercantile documents shall produce the ePecto payment only when they have been cashed# or when throu!hthe ault o the creditor they have been impaired.

alidity of an obligation #ith a stiulation to ay an obligation#hich is not in 'hiliine currency?

't is a valid obli!ation. RA 7078 payment to orei!n

currencies is allowed# as lon! as it is a!reed upon by theparties.

4f A is a assenger of a eeney% and as ayment for his ride% heo/ered to ay the driver >5 cents for '>3.00. Can the driver validlyrefuse ayment?

o# bcs it is a valid payment. >enominations o # 0 and 2 cents are le!al tender up to

40.

While 4 and 40 coins are le!al tender up to 40#.

Court ordered A to ay B '500%000.B o/ered to ay '>50%000 cash and another '>50%000 manager2scheck to the sheri/. Can the C) validly refuse? 4s he bound toaccet? Can he be comelled to ay?o. Dcs# the 42# cash would be tantamount to a partialpayment only.Iana!er*s chec% is not a le!al tender.

'n the case o Roman Catholic Bishop o- $alolos vs.

I#C and (ia9ia vs. C#+ which overturned the earlier caseo New Paci1c (imer vs. *eneris.+he (C ruled that achec%# whether a mana!er*s chec% or ordinary chec%# is notle!al tender# and an oPer o a chec% in payment o a debt isnot a valid tender o payment and may be reused receiptby the creditor.

L-MAL +->-R and 4ayment in relation to C$-CN(: Chec%s aspayment will produce ePect o payment only when they have beencashed.

4f the check #as dated une % >05. 1oday% eb 7% >0,% check#as resented for encashment and dishonored. 4s the obligatione=tinguished?

o# because there was no valid payment.

4s it ossible to e=tinguish by other means?

When chec% is impaired. (+AL- C$-CN(: does not

e,tin!uish obli!ations.

OArt. 02. 'n case an e,traordinary inYation or deYation o thecurrency stipulated should supervene# the value o the currency atthe time o the establishment o the obli!ation shall be the basis opayment# unless there is an a!reement to the contrary.

/+-: 02 is applicable only i the source o the obli!ation

is contract.Dasis: the law says Ocurrency stipulated

Dbligation of ' illion is due and demandable in E,F.After the hearing of the case% the decision #as (nally romulgated

in EEG.Creditor (led a D14D@ for the adustment of the amount% acdg toart >50.Bcs% in E,F Dne eso is e9ual to >7 eso at time of institution ofthe obligaton. hile today% Dne eso is e9ual to 7F eso at thetime of ayment udge denied the motion.

Art 02 will not apply. 'n order to ad"ust# there must be an

e,traordinary inYation. 'n the case o !ilipino Pipe vs.N#W#*## Extraordinary inflation exists "when there is a decrease orincrease in the purchasing power of the Philippine currency which is

unusual or beyond the common fluctuation in the value said currency, andsuch decrease or increase could not have reasonably foreseen or wasmanifestly beyond contemplation the parties at the time of theestablishment of the obligation. While appellant's voluminous records andstatistics proved that there has been a decline in the purchasing power of thePhilippine peso, this downward fall of the currency cannot be considered"extraordinary." It is simply a universal trend that has not spared ourcountry.

Commissioner vs. B"rgosArticle 02 o the CC provides that the value o currency at thetime o the establishment o the obli!ation shall be the basis opayment which would be the value o peso at the time o ta%in! o

01


20/33

the property when the obli!ation o the !overnment to pay arises.'t is only when there is an a!reement that the inYation will ma%ethe value o currency at the time o payment# not at the time o theestablishment# the basis or payment.

Bar Huestion* A and B entered into a Contract of Iease1here #as a stiulation that rentals #ill be increased in ar to thevaluation of the eso% if there is any.Action (led* Jnla#ful detainerill the action roser?

3el Rosario vs. *hell Fes# even when there is no

e,traordinary inYation# i there is a stipulation by parties# asinvo%ed in the contract itsel. +he rentals were increasedproportionally by their a!reement.

SPECIAL FORMS OF PAYMENT4s consent of the arties re9uired in e=tinguishment by -ecialorms of 'ayment?

ot in all orms.>R CR Why required&

>ation in4ayment

Req Req Dcs the Creditor has to accept thedelivery o another thin! instead othe prestation a!reed upon. ' thereis no consent on the part o the

creditor# there can be no dation inpayment.H

Application o4ayment

Req MR:otReq

Consent as to the acceptance isnecessary.Dcs i he doesn*t acceptanothermode may be used: Consi!nation wVcourt.

4aymentby CessionorAssi!nment

Req Req Dcs i the CR would not a!ree thatthe >R would abandon hisproperties or the CR to sell# therecan be no payment by cession.

Consi!nati

on

Req ot

Req

+he consent o CR is not required

even i CR reuses to accept thethin! delivered by the >R to thecourt by way o consi!nationthecourt may declare the consi!nationvalid.

hat is the e/ect of delivery of the thing from the debtor to thecreditor?4s there transfer of o#nershi?

ot necessarily.>ation in4ayment

Fes +here is transer o ownership# bcs thethin! bein! delivered and the

ownership thereo is transerred insatisaction o his debt.

Application o4ayments

F-( +here is transer o ownershipimmediatelyi money is delivered by>R to the CR# ownership passes to theCR. Dcs the only issue here is Otowhich debt the payment will apply&

4ayment byCession orAssi!nment

o. /wnership does not pass bcs thecreditor upon delivery o the thin!s"ust accept the thin!s as thin!s to besold# and that the proceeds thereo areto be applied in his indebtedness.

Consi!nation 'tdep

$ere ownership does notautomatically pass to the creditors.

2


21/33

ends

' it is void consi!nation# ownershipdoes not pass at all.'; the consi!nation is valid# or i thecreditor will accept thin! consi!nated#then ownership passes to the creditor.@D1


22/33

8. +e(ts alrea5 ue a e9aa(le>the lawrequires that the debt is already due in order that thedebtor would have the ri!ht to desi!nate such paymentto the debt.

a* ?+UE@ means the period ),ed or the bene)t othe creditor or or both o them.

(* ' it is not yet due# but the period is ),ed solelyor the bene)t o the debtor# the debtor candesi!nate the payment bcs it is or his bene)t#

c* +hereore# A may not desi!nate the 8% or thepayment o the 8% debt# i the 8% debt is notyet due.

hat if A entrusted the creditor X to aly the 70k to 30k debtL thedebt is secured by a mortgage. As instructed% X alied theayment% and issued a receit stating that the 30k is aliedtherein. +ays after% A asked X to aly the amount to the 50k debtinstead. 1hough the creditor cannot be comelled% he may accetif he #ants to. X then agreed. 1hereafter% A #as not able to ay Xas to the 30k debt.Can X foreclose the mortgage?

o. +he 8% obli!ation was revived when he chose the

payment to %# the mort!a!e however was not revived.Dcs# mort!a!eis not revived without the consent o themort!a!or.

hat if the debtor did not designate the debt to #hc the aymentshall aly? 4s the debtor2s consent re9uired in the designationmade by the creditor?

+he debt desi!nated by the creditor will be ollowed. +hecreditor has the ri!ht to desi!nate whc debt the paymentshall apply.

Fes. Dy e,press provision o law# i in the receipt the debtorsees that the payment was applied to a particular debt# andthe debtor does not a!ree to such application# he mayreuse to accept the application.

1he debtor made the ayment. 1he creditor acceted and issued aayment6#ithout designating the articular debt. hich debt theayment shall aly?

't will depend on whether it is a debt o the same nature

and burden /R whether the debt is most onerous.o ' all debts is o the same nature and burden: the law

requires "ro"ort#oal a""l#cat#o*

o As to the most onerous debt# it must be applied to

t.e 9ost oerous o(l#gat#o*

NOTE$ this rule shall apply i neither the creditor nor the

debtor made desi!nation. And i the limitations are notpresent.

%HICH e(t #s t.e 9ost oerous0 o hard and ast rule.

All actors must be considered in determinin! which is moreonerous.

o

E!$in one debt he is the !uarantor# and in the otherdebt he is the principal. +he debt in which he is theprincipal is more onerous.

o Reason: his liability is not merely inchoate and even

i his liability is only subsidiary# he is already liable.Dcs or this to apply# the principal debtor shouldhave deaulted and his properties e,haustedthat*swhy he is liable. /therwise# theres no reason toapply application o payments bcs there will only beone debt

o Another reason: bcs in !uaranty# the !uarantor may

be able to recover what he paid to the CR rom the

>R6 while# in the debt to whc he is a principal# hecannot recover anythin! by way o reimbursement.

Bigger amount is more onerous than that of smaller

amount? o basis# amount is not relevant.

Dlder debt is more onerous?o basis. /lder debts may be

less onerousbcs it is abt to prescribe.

C* PAYMENT BY CESSION OR ASSIGNMENT

4s it necessary that the debtor be insolvent?

o. 'nsolvency is not required i you read Art 02? careully.

Also the act that this is a!reement by the parties: there

can only be payment o cessioni the creditor a!reed. (olon! as the debtor is willin! to abandon the properties andthe creditors a!ree and the proceeds shall be applied to thedebt. +here is cession.

Also# what is transerred to the creditor is up to the amount

o the net proceeds

-hould all the roerties of the debtor be delivered and assigned?

o. +here are properties which are e,empt rom e,ecution.

22


23/33

Can the debtor deliver to the creditor roerties e=emt frome=ecution?

Fes# bcs that is a ri!ht which the debtor cam waive# thou!h

he cannot be compelled# he may abandon those propertiesto the creditor. $owever# there are certain properties whccannot be sub"ect o the claim o creditor even wV consento the drli%e the amily home# when there arebene)ciaries o the amily home who can ob"ect to the salethereo.

hat if the debtor is #illing to abandon all his roerties and thecreditors #ould refuse% #hat is the remedy of the debtor?

;ile or an action or insolvency. -Pect& $e will be "udicially

dischar!ed rom the obli!ation.

$o# do you determine the distribution among the creditors?0. (tipulation o the parties as to the sharin! o

theproceeds2. +he rules on concurrence and preerence o credits will

be applied# bcs in these rules# there are preerred debts

and those debts whc are not preerred they shall be paidproportionally.

+* TEN+ER OF PAYMENT AN+ CONSIGNATION

Art >5,% there are 5 grounds or causes for consignation #hereinthe la# e=ressly rovides that the tender of ayment is notre9uired.

0. When the creditor is absent or un%nown# or does not appear at the place opayment6

>. When he is incapacitated to receive the payment at the time it is due63. When# without "ust cause# he reuses to !ive a receipt67. When two or more persons claim the same ri!ht to collect6

5. When the title o the obli!ation has been lost.NOTE$ Here3 t.ere #s o teer o "a59et (ut cos#gat#o #s ;al#*

Mrounds or causes of consignation #here tender of ayment isnecessary under the la#?

Where the creditor reuses to accept without "ust cause.

As a rule# teer o "a59et #s ot reu#re. +he only

e=cetionis when the creditor reuses to accept without"ust cause.

*'C' vs. $ILI(#N(%:

OTeer o "a59et (5 #ts ;er5 ature #s

e!trau#c#al@o i tender o payment is made durin! the pendency o

the action# the consi!nation is void.o +ender o payment should be made prior to

consi!nation# not durin! the pendency o the action.

O+ender o payment must be distin!uished rom

consi!nation. +ender is the antecedent o consi!nation# that

is# an act preparatory to the consi!nation# which is theprincipal# and rom which are derived the immediateconsequences which the debtor desires or see%s to obtain.+ender o payment may be e,tra"udicial# while consi!nationis necessarily "udicial# and the priority o the )rst is theattempt to ma%e a private settlement beore proceedin! tothe solemnities o consi!nation.

4f the debtor sent 3 letters to the creditor saying :4 am #illing toay my debtN; 4s this a valid tender of ayment?

o. in order or tender o payment to be valid# you have to

actually oPer the amount to the creditor. 't is the act o

oPerin! the amount which constitutes a valid tender opayment.

)e9uisites of consignation*0. +here must be a debt to be e,tin!uished


24/33

o When without "ust cause# the creditor reuses to

issue a receipt. 'n our "urisdiction# receipt is merelyan evidence# but i the creditor reueses to issue areceipt or does not want to# it is better that thedebtor does not !ive the payment to him# bcs he candeny the debtor did not pay.

o When two or more persons claim the same ri!ht to

collect.

8. otices required or consi!nation to be valid.$o# many notices is re9uired? At least two# or eachamount which became due.

o Ieanin!# every month that the payment is not

accepted# notice prior the consi!nation must be sent.o hy?+his is to !ive the creditor the ri!ht to chan!e his

mind

4s it re9uired that both notices be from the debtor?

o. the )rst notice should come rom the debtor prior

the consi!nation# and the second notice may come into

the orm o summons.

After the delivery of the money or thing #P the court% #hat ifthereafter% the money #as #ithdra#n from the court% andthereafter the creditor failed to ay the creditor. Can the creditorstill go after those #ho are subsidiarily liable for the debt?'remise here is* A indebted to B% A delivered sum of money to thecourt% ho#ever% for some reason% A #ithdre# the money. 1he debtis secured by mortgage% if A failed to ay% can B foreclose themortgage?

't depends whether the withdrawal was made as a

matter o ri!ht or not. ' A withdrew the money as a 9atter o r#g.t$

o hen is #ithdra#al a matter of right? ' the

creditor has not yet accepted and the court hasnot yet declared the consi!nation to be valid# the>R can still withdraw anytime.

o 'n such case# the debt has ot 5et (ee

e!t#gu#s.e>bcs in consi!nation the debt willonly be e,tin!uished either bcs o acceptance bycr or declaration o the court o its validity.Absence o the two# o obli!ation is e,tin!uished.

o +hereore# i the >R withdrew# the CR may still

oreclose the mort!a!e# bcs the obli!ation wasnever e,tin!uished.

' the withdrawal is ot a 9atter o r#g.t# thereore his

withdrawal was with the consent o the creditor.o 'n such case# upon the acceptance by the

creditor or the declaration o the court o itsvalidity# the obli!ation is e,tin!uished.

o

+hereore# when the amount was withdrawn bythe# debtor the obli!ation was revived# and uponrevival# the debtor ailed to pay# the creditor canno lon!er oreclose the mort!a!e.

o Reason& With the e,tin!uishment o the

principal# obli!ation such as the accessorycontracts are also e,tin!uished.

Iiability to ay interest% #hat if*>000 >005 >00E >07 >0,+ue date 1ender of 'ayment Consignation 'romulg. udgment

1oday

Can the debtor be held liable from >003 to >0,?o Fes# when the debtor was in delay# on the premise that

there was a demand and theat demand was necessary orthe debtor to incur in delay.

o Also# i the court considered the consi!nment to be a void

consi!nation.

Assuming it is a valid consignation% #hen #ould the debtor be heldliable for interest?

o ;rom 2 to 2. When it is a valid consi!nation# it

means that the creditor reused to accept the paymentwithout "ust cause. +hereore# it has the ePect o retroactin!

rom the date o delivery o the amount with the court. 't*sas i the obli!ation was e,tin!uished at the time theconsi!nation was made. $e is not liable to pay interest rom

hat haensin the eriod of tender of ayment to theconsignation% can he be made liable for ayment of interest?

o o. rom the time the tender o payment was made# the

debtor is no lon!er liable or interest. ' the creditor reusesto accept# the debtor should !o to court or consi!nation.

o DA('(& Dy reason o "ustice and equity&o When the creditor reused to accept without "ust casue# it is

not that he is in delay whc is a%a as compensation morae. 'both parties are already in delay# ollowin! the rulin! in

29


25/33

#gcaoili vs *I*+ no one is in delay. And in contemplationo law# i no one is in delay# no once could be liable to payinterest.

,* LOSS OF THING +UE

4ssue here is.. Can this mode of e=tinguishment be invoked in allkinds of obligations?

Fes# even i the provision says Oloss o the thin! due# thereare still provisions pertainin! to o(l#gat#os to o*+husauthors would consider a better nameor this mode# whc is:Oimpossibility o perormance

'n impossibility o perormance# it would already includeo(l#gat#os to g#;e or to el#;er. 'n case o obli!ationsto !ive it will be impossible to perorm bcs the thin! to bedelivered is lost.

4n obligations to deliver a generic thing% #hen e=tinguished?

+he law de)nes loss as a scenario whereby the thin! !oes

out o commerce.

(uch that i the !eneric thin! !oes out o commercethereis nothin! to deliver.

Also# an obli!ation to deliver a !eneric thin! may bee,tin!uished bcs o impossibility o perormance due to:4hysical impossibilitywhen by its nature# it cannot beperormed# or Le!al impossibility# when due to asubsequent law# the thin! became prohibited.

4n obligations to deliver a determinate thing% #hen e=tinguished?

Acd! to +olentino# i the loss o the thin! was due to the

ault o the debtorthe obli!ation is not e,tin!uished.

Acd! to >e Leon and other authors# even i loss was due to

the ault o the debtorthe obli!ation is e,tin!uished#without pre"udice to his liability or dama!es.

' '+/ A /DL'MA+'/ +/ 4AF A (UI /; I/-F.

2


26/33

+a%e note that when you say yes# you ta%e the position thatthere was e,tin!uishment.

4aran! sa prescription diba# prescription is a mode o

e,tin!uishin! an obli!ation# bcs it converts the civilobli!ation to a natural obli!ation. +here is a chan!e in theobli!ation# thereore there is e,tin!uishment6 in the samemanner that i the obli!ation to deliver is converted to amonetary obli!ation# there is an e,tin!uishment o anobli!ation.

ho has the burden of roving that the loss #as due to the fault ofthe debtor?

As a rule: +he plaintiPthe one claimin!


27/33

1* CON+ONATION OR REMISSION OF+EBT

Also kno#n as #hat? >onation o Credit

4ssue here is* #hat is the e/ect of an e=ressed or imliedcondonation?

't depends whether the condonation was made e!"ressl53

or #9"l#el5*

4f for e=amle% there is a +onation of Credit* an e=ressedcondonation for the obligation to deliver transfer of land*

An e,press condonation has to comply with the ormalitieso law as to >onation.

'n this case# since the donation involves that o a Real

4ropertyit must be made in a public instrument#speciyin! the property donated. +he acceptance must alsobe made in wrt!in the same deed o donation# and madedurin! the lietime o the donor. /therwise# there will not be

a valid condonation.

Bar Huestion* X is indebted to his father for '500k% the son aid300k through a check. hen the father dies% the e=ecutordemanded for the ayment of the balance. X claimed that the>00k #as condoned as can be seen at the back of the check% itstates that :this is condonation for the full amount;. as theree=tinguishment by condonation?

+his is an e,press condonation o the entire obli!ation.

An e,press condonation has to comply with the ormalitieso the law on donation. +his is a >onation o Credit# andthereore# under the lawi the credit is more than 4##

the condonation must be in writin!. And that there must beacceptance in writin!.

(ince there was no acceptance in wrt!# there was no

acceptance. $ence# it is not a valid condonation.

hen #ill there be an imlied condonation?or e=amle% if the debt is evidenced by a romissory note% andthe romissory note after having been delivered to the creditor%#as found in the ossession of the debtor. as theree=tinguishment by condonation?

'n this case there is only a "resu9"t#o3 that the

promissory note was voluntarily returned to the debtor.

' it is voluntary returned to the debtor# the ePect is that the

obli!ation is e,tin!uished. An implied condonation that ispresumed by law only # t.e ocu9et #s a "r#;ate#stru9et*

o Dcs# i it is a public instrument: there is no such

presumption bcs a public document has severalcopies in custody o several oTcesVpeople.

ote however# that this is merely a disputable presumption.

hat if a ring #as delivered by X to Y% as a security. !hatcontract? 'ledge." After the erfection of the ledge% the thing #asfound in ossession of the debtor. 4s the obligation of Xe=tinguished?

o.

+he presumption by law may only arise in case where the

thin! delivered by way o pled!e is ound in the possessiono the o-er o t.e t.#g pled!ed.

+a%e note that the debtor is not necessarily the owner o the

thin! pled!ed. 4led!e may be constituted by a third person#so that i the thin! was ound in possession o the debtor

the presumption will not arise. A!ain# ta%e note that this is a disputable presumption.hy

#ould the creditor deliver naman the thing to the debtor?Iaybe or sae%eepin!# etc.

2@


28/33

7* CONFUSION OR MERGER OF RIGHTS

$ere% the characters of the debtor and creditor are merged in erson.hen #ill this haen?Dy a Ier!er A!reement or Ier!er Contract#such as in 4D and Allied Dan%. $ave you heard o their mer!er&

@o 9uestions naman sa bar e=ams so far% but 4 think the only issue

here is #hether there can be a 'A)14AI CD@J-4D@. 4f yes% #hen? When the obl!i!ation has "oint debtorsthe conusion is

only to the e,tent o the share o the "oint debtor involved.

$ere% #hat if# has a det o- P< illion to B. and in:

EEF >005 >07 >0,+ue&+emandable erger )escission iles Action

4t #as rescinded bcs A did not comly #ith the terms% so #ith therescission% they #ere converted back to their revious obligations

rior the merger.

'rescrition is not a ossible defense. hy?

'n */cip vs. Co"rt o- #ppeals+the time o the mer!er tothe time o rescission should not be counted in thecomputation o prescription period# bcs durin! the 011732# prescription is deemed suspended. RA+'/& >urin!those times# the CR will not )le a case bcs it will be absurd!iven that he is also a CR o himsel.

* COMPENSATION

Compensation may be:)* PARTIAL

ay there be > or 0 debts e=tinguished as artial comensation?

F-(. +here can be 2 or 0 debts e,tin!uished by

compensation but it is still partial compensation.

W$F& As lon! as the debts o one are not equal to the debts

o the other# the compensation will only be to theconcurrent amount and there will be no totale,tin!uishment.

,* TOTALhen does this take lace?

When the debts are totally equal. -,: When the debt is

40N# and the other is also 40%.

-,amples:A owes D 0%# but D has several debts to A amtn! to 2%# 0%#%. ' you add it up# it will only be 7%. With compensation# all the

debts will be totally e,tin!uished# bcs the e,tin!uishment is or thecocurret a9out*

8. 'n such case# the 7% debt o D will be e,tin!uished# but Awill still have to pay 2% to D.

9. +his is important as to the l#a(#l#t5 to "a5 #terest3 as towhether or not there can be valid oreclosure.

A has obligation to B% B has obligation to A. A2s obligation isinterest bearing. After comensation% can B still collect interest?Can A be held liable for interest?

't depends.

't will depend on the amount involved.

4f B2s debt is smaller than% 50k% A2s debt is 00k. Can B collectinterest?

ot anymore# bcs the debt will be totally e,tin!uished# the0% will be reduced by % to the concurrent amount.

hat if the 00k is secured by a mortgage. After comensation%may A foreclose the mortgage?

Fes# bcs there will still be a balance o %. a mort!a!e is an

indivisible contract# until the obli!ation is not e,tin!uished#the mort!a!ee will remain in orce. And thereore# i D ailedto pay A %# A can still oreclose the mort!a!e.

27


29/33

BAR E:AM UESTIONA oened a savings account #ith Y Bank in the amount of 'illion.1hereafter% A borro#ed money from the same bank. F00k.A #anted to #ithdra# the ' illion. 1he bank said* no you cannot#ithdra# the ' because your obligation to ay the 'F00k isalready due. e are invoking comensation% and can only#ithdra# u to '>00k.A claimed that there can be no comensation bcs under >FG%

there can be no comensation #here one of the debts arises froma deosit.ho is correct?

+he ban% is correct. (avin!s account deposit is not a

deposit. 't is a contract o loan. 027@ will not apply. ' bothare simple loan# there can be compensation.

+his is %nown as ;acultative Compensation.

DA('(: The contract between the bank and its depositor is governed by theprovisions of the Civil Code on simple loan. Article 1980 of the Civil Code expresslyprovides that x x x savings x x x deposits of money in banks and similar instittionsshall be governed by the provisions concerning simple loan. There is a debtor!creditorrelationship between the bank and its depositor. The bank is the debtor and the

depositor is the creditor. The depositor lends the bank money and the bank agrees topay the depositor on demand. The savings deposit agreement between the bank andthe depositor is the contract that determines the rights and obligations of the parties.

IN+S OF COMPENSATION$)* Legal Co9"esat#o

33considered the true %ind o compensation.33by operation o law.33rom the moment all the essential requisites are present#compensation ta%es place even without the %nowled!e o theparties.

RES$

)* they must be mutual creditors and debtors o eachother

,* both debts must be in sum o money or i theypertain to !oods# they must be o the same %ind andquality.

1* Doth parties must be principally bound7* +hey must be creditors and debtors o each other in

their own ri!ht.* Doth debts must already be deue and demandable* +he debts must be liquidates and demandable* /ne o the debts must not arise rom Art 027@ and

0277.

,* 05

21


30/33

1he ne=t day% B assigned his credit to X.Bis indebted to A the /*

'70%000 due eb '30%000 due Aug 5

'5%000 due Dct 3Huestion*. 4f on ay 5% >05* $o# much can X comel A to ay?

o one.

A cannot be compelled to pay E since the obli!ation is not

yet due and demandable.

' the assi!nment was made D-;/R- the debts became

due# and the assi!nee demand on that date# he is not yetentitled to payment.

>. 4f on#"g =+ >?@=% demand #as made. Can A validly claimcomensation for the 3 debts? Can X comel A to ay the debt of'00%000?

't depends. Dn #hat? Dn the / factors*

F#rst3 c.ecK t.e +ate o Ass#g9etT.e3 eter9#e # Ass#g9et #s 9ae -#t. Ko-lege

o t.e e(tor or ot*I 9ae -#t. Ko-lege3 eter9#e urt.er #

t.ere -as coset to t.e ass#g9et or oe*o I coset #s g#;e3 eter9#e -.et.er

reser;at#o to t.e r#g.t to co9"esat#o-as g#;e or ot*

I -/o Ko-lege*

4n other #ords% ho# much can X comel A???

%#t. Ko-lege3CONSENT IS

GI


31/33

* NO00% A died.>00G case #as (led.$eirs of A as a defense raised rescrition #as given since italready lased as far as time is concerned.B argued that there is novation.

o novation. ot all chan!e o person s lead to novation.

$ere# it is the same obli!ation# hence# prescriptive periodwas not tolled.

A had a contract #ith B% #hc #as voidable. B assigned his right toC.Can A invoke vitiation of consent?

o# bcs there was the creation o -W obli!ation btwn Aand C. $ence# A cannot raise the deense he had a!ainst D.

But% if the assignment #as done #ithout the kno#ledge of A% can Ainvoke vitiation against C?

Fes. Dcs this involved in the same obli!ation# thereore# Acan raise his deense a!ainst C.

4n the case of $ILL#R vs. C#+ petitioner obtained a avorable "ud!ment.+he lower court issued the writ o e,ecution on the basis o which the sheriP seiSedthe respondent5s Willy5s ;ord "eep. +he respondent# however# pleaded with thepetitioner to release the "eep under an arran!ement whereby the respondent# tosecure the payment o the "ud!ment debt# a!reed to mort!a!e the vehicle in avoro the petitioner. +he petitioner a!reed to the arran!ement6 thus# the partiese,ecuted a chattel mort!a!e on the "eep. Resolution o the controversy posed bythe petition at bar hin!es entirely on a determination o whether or not thesubsequent a!reement o the parties as embodied in the deed o chattel mort!a!eimpliedly novated the "ud!ment obli!ation.

o substantial incompatibility between the mort!a!e obli!ation and the "ud!mentliability o the respondent suTcient to "ustiy a conclusion o implied novation. +hestipulation or the payment o the obli!ation under the terms o the deed o chattelmort!a!e serves only to provide an e,press and speci)c method or itse,tin!uishment payment in two equal installments. +he chattel mort!a!e simply

!ave the respondent a method and more time to enable him to ully satisy the"ud!ment indebtedness. +he chattel mort!a!e a!reement in no manner introducedany substantial modi)cation or alteration o the "ud!ment. 'nstead o e,tin!uishin!the obli!ation o the respondent arisin! rom the "ud!ment# the deed o chattelmort!a!e e,pressly rati)ed and con)rmed the e,istence o the same# ampliyin!only the mode and period or compliance by the respondent.

+he deense o implied novation requires clear and convincin! proo o completeincompatibility between the two obli!ations. +he law requires no speci)c orm or anePective novation by implication. +he test is whether the two obli!ations can standto!ether. ' they cannot# incompatibility arises# and the second obli!ation novates

the )rst. ' they can stand to!ether# no incompatibility results and novation does notta%e place.

CLASSIFICATION OF NO


32/33

the!uarantorbcs he isnotsubro!ated in theri!ht o D.

2. ' payment was-#t. coset o

A3E issubro!ated in theri!hts o D# hence#art 082 applies.

E can run

ater the!uarantor

As to 2ndquestion:i Ddemandedpayment

rom E# sinceE oPered topay himbutlater on Ebecameinsolvent#can herecover romA&

'n the !iven acts#in case oinsolvency o E# Awill never beliable bcs thesubstitution waswVo his consent.

B caot e9a ro9 A3(ecause t.e o(l#gat#o.as alrea5 (eee!t#gu#s.e (5o;at#o*$/W--R# i A is in bad aith$e can be held liable to D.

' E became insolvent A;+-Rsubstitution# there is no badaith.

Also# i A and D were awareo the insolvency o E butstill allows such substitution#

D cannot hold A liable# bcs insuch case# both are in badaith.

,* O(ect#;e No;at#o$ pertainin! to sub"ect matter

a. CHANGE IN THE OBJECT

'n the case oapan #irlines vs. *I$#N#N"A# $stifies its action by arging that there was %a need to verify the athenticity ofrespondent&s travel docment.%'()t alleged that no one from its airport staff had encontered aparole visa before.'*)t frther contended that respondent agreed to fly the next day so that itcold first verify his travel docment+ hence+ there was novation.',)t maintained that it was not

gilty of breach of contract of carriage as respondent was not able to travel to the -nited tatesde to his own volntary desistance.'

C/ Considering that respondent was forced to get ot of the plane and left behind against hiswill+ he cold not have freely consented to be rebooked the next day. )n short+ he did not agreeto the alleged novation. ince novation implies a waiver of the right the creditor had before thenovation+ sch waiver mst be express.'8)t cannot be spposed+ withot clear proof+ thatrespondent had willingly done away with his right to fly on "ly (9+ 199(.

. CHANGE IN THE PRINCIPAL CON+ITION

'n a U>MI-+# is there novation by the act that thereater# ana!reement btwn the parties to the case as to the:

0. Reduction o the amount2. 4ayment in installment8. (ecured with Real -state Iort!a!e9. With order o payment o Atty*s ;ees.

Was there novation& 'n the case o !4# vs. 6#P(C: Fes there was.Dut the >issentin! opinion: /-# and ' quote:The ma$ority maintains that here there is an implied novation by %reason of incompatibilityreslting from the fact that+ whereas the $dgment was for 1+'*8.0, payable at one time+ did

not provide for attorney&s fees+ and was not secred+ the new obligation is for 1+(00 payable ininstallments+ stiplates for attorney&s fees+ and is secred by a mortgage.% 2ith respect to theamont+ it shold be noted that+ %while the obligation nder the $dgment was redced to1+(00+ there was+ however+ a stiplation to the effect that the discont wold be recoverable inthe event of appellants& defa lt to comply with the terms of the agreement. And as to attorney&sfees and the secrity by way of mortgage+ the stiplation therefor contained in the agreement isof no moment+ for it is merely incidental to+ and anticipatory of+ a sit which appellee maychoose to take against appellants. 3ar+ therefore+ from extingishing the obligation nder the

$dgment+ the agreement ratifies it and provides merely a new method and more time for the$dgment debtor to satisfy it. )f the $dgment debtor fail to comply with the terms of theagreement+ the $dgment creditor shall be deemed remitted to his original rights nder the

$dgment which he may choose to execte or enter+ instead+ a separate sit on the terms of thesettlement.4

4f the original obligation is void%and the arties had an agreement #hich #as also void%can there be novation?

o novation because there is nothin! to e,tin!uish.

Can the ne# agreement be enforced?

o. hy? bcs# the consideration is void.


33/33

Notes ro9 Class Lectures o$PEACHY ANNE APOLO,8)

88

civ2 obligations class notes

Documents