Professional Documents
Culture Documents
Oblicon Notes Midterms
Oblicon Notes Midterms
05, 2013 o If you are sued against such obligation and through
presentation of evidence you are found guilty, you are
OBLIGATIONS AND CONTRACTS obliged to pay DAMAGES.
o Can be enforced by reason of law.
OBLIGATIONS part is more difficult.
o REASON: provisions are intended to cover all ESSENTIAL REQUISITES OF AN OBLIGATION:
situations.
o The wordings of provisions are very BROAD,
GENERAL, and you have to use imagination. 1. Juridical or legal tie.
Pre-law courses: accountancy and commerce. 2. Active subject: creditor.
CONTRACTS part is less difficult. 3. Passive subject: debtor.
4. Fact, prestation or service: object.
MAIN REFERENCE: Justice Jurado.
o Supplement: cases (in the original).
o To acquire working knowledge by reading the
decisions. ART. 1157: The law even enumerates the sources.
ADVICE TO STUDENTS: do not confine yourself in reading
only law books. Enumeration is exclusive.
o To improve mastery of the English language and There are no other sources of obligations aside from them.
communication skills. BUT there are some civilists that have argued that there are
Primary tool of lawyers. only two sources (law and contracts ONLY).
To complement the law and to communicate QUESTION: if as we have stated, civil obligations are those
your thoughts to convince the judge. which are legally enforceable, does that mean in reality, all civil
EXPECTATIONS: not too many cases those that I will give obligations arise from law itself? NO.
you better understanding. o Such ultimate analysis is NOT correct.
Almost all provisions are IMPORTANT, unlike in PFR. o The law itself enumerated the sources.
o Family Code: duties of Civil Register. o The problem is hen the obligation arises from the law or
o ADVICE: to master the provisions PREREQUISITE. OTHER sources.
Then understand them. o What is the RULE as regards to sources?
Read commentaries (Tolentino, Paras). 1. LAW: if the law itself creates the obligation.
Studies will be greatly delayed; prerequisite to most subjects 2. ACT: if the law merely recognizes /
(Property, Partnership, Sales).
acknowledges or regulates the obligation.
PLEADING: CONCENTRATE AND FOCUS
o A good example of a law being the source (PELAYO
Second semester is a FAST semester: TIYAGA.
vs. LLAURON).
Constitutional Law 2 (rights); Criminal Law 2 -- love is lovelier
Obligation to support between spouses.
the second time around.
FACTS: The wife got sick while the husband
DISCIPLINE; FOCUS.
was away. Somebody else called a doctor. The
NOV. 07, 2013 doctor treated her, thus, he is entitled to
professional fees. He tried to collect the fees
NOTE: ABSENCES: must not incur a lot of absences. from the husband. But the husband said that he
was not the one who called the doctor in the
ARTS. 1156 TO 1162 are some of the most basic provisions. first place.
HELD: The husband is obliged to pay as the
ART. 1156: one of the shortest provisions. obligation arose from the law itself (husband
and wife are obliged to support one another).
To give, to do or not to do. Medical attendance, even
The definition at first glance is incomplete (no not to give). transportation.
But if you look closely, there is no omission or inaccuracy of the The law created the obligation, not from
definition. a contract between the husband and the
o Not to give is included to not to do (all doctor.
encompassing).
JURIDICAL NECESSITY: principally about CIVIL obligations. ART. 1159: OBLIGATIONS arising from CONTRACTS.
There are various kinds of obligations:
o Example: feed the hungry, help the less fortunate. They have the force of law between the contracting parties and
o If we do not comply with those obligations, we will be must be complied with good faith.
bothered by our conscience. Whatever is agreed upon, that is the law within the two
We may feel embarrassed for not helping the contracting parties.
needy. There is a general rule, then there is an exception.
o But if we fail to do such obligations, there is nothing in
the law against such omission.
MORAL in character: demandable in MACASAET VS. COA: this is the application of the general rule of Art.
conscience. 1159.
CIVIL OBLIGATION: non-compliance necessitates sanctions
- The petitioner is entitled of 7% of the final actual construction
from the law behind them. cost.
- But along the way, there was an escalation in the cost: PTA
paid an additional amount to the supplier.
What if the car is generic? Can I (debtor) compel you (creditor) to TANGUILIG VS. CA
accept a car of superior quality? Would there be any prejudice to the
creditor upon such delivery? Is there anything in the law? Stipulation? - Contractor was saying that the strong wind that caused the
damage of the windmill was caso fortuito. NO. The strong
- ART. 1246: nothing suggests something of superior quality to wind in this case was not unforeseen. Precisely the winds on
be delivered. that place had to be strong for the windmill to work.
- What is prohibited is for the creditor to demand something of - The issue of the two different tractors?
superior quality. But he can demand something of inferior in
quality.
- If the parties cannot agree thats the time the court will come
in. ART. 1168: Obligations NOT to do.
- As long as B is willing and able to deliver something of superior
quality, nothing can stop him from doing so. What he cannot do Remedy of the creditor:
is to deliver something of inferior quality.
1. To undo what has been done.
- EXCEPTIONS:
a. When the effect was permanent in nature.
b. When there is physical and legal impossibility
Lets say that I obligated myself to deliver to you a particular horse. We to undo the action.
agreed that the delivery is Dec. 10. On Dec. 10, you demanded the o Example: the agreement of first to
delivery. I only got to deliver the horse on Dec. 15. While I was sell. What has been sold to a third
delivering it, lightning struck and obliterated the horse. party who is in good faith cannot be
unsold.
1. Am I liable to damages? Yes. I am in delay.
2. To recover damages.
2. What if I obligated myself to deliver that same horse to Mr.
Ticman, and on my way to its delivery, the horse was lost due
to a fortuitous event? (debtor has obligated himself to deliver ART. 1170: Breach of an Obligation.
the same object to two or more persons of different interest).
1. Default (mora)
2. Deceit / fraud (dolo)
3. Negligence (culpa)
GENERAL RULE: for caso furtuito, the liability is extinguished. 4. Manner that contravenes the tenor of the obligation
covers a whole multitude of things.
EXCEPTION:
1. When the obligor is in delay BECAUSE it is not the loss TELEFAST vs. CASTRO
that governs, it is the event that is (delayed already). If
only the debtor complied with the obligation on time,
there would have been no loss. RUFUS vs. RODRIGUEZ (not assigned)
2. What the obligor obliged himself to deliver the object to
two or more persons BECAUSE it is not legally possible - FACTS: Rufus was a congressman involved in an association
of law students. Later on, he organized a meeting of the world
to comply with the obligation.
law students in Africa (?) so he sent telegrams to the
- From the moment he promised to deliver the participants about the details of the event. Rufus then flew to
same things, I already made it impossible to do Sudan and when he arrived there, there was no one there. He
such delivery to the both of them. had to spend the night in the airport (great inconvenience on
- Regardless of the nature of the obligation. his part).
- The telegrams were not delivered and he sued for damages.
ART. 1167: Obligations to do. - SC said: do not organize an international conference by
telegrams alone.
- Still, he was awarded damages.
Can a creditor comply the debtor to do a specific action? The
general rule is NO!
o WHY NOW? The remedy of compulsion is an
infringement of a persons freedom.
RECIPROCAL OBLIGATION: where the GENERAL RULE is the If parties agreed in the penalties for breach of contract, that
demand is NOT necessary (but delay is possible). should be followed.
EASTERN: if there was no agreement: for loans and
The obligations are conditioned upon another. forbearance of money: 12%.
Compliance of one party makes another in delay. o Otherwise: 6%.
Created at the same time and same causes that result in the o From the moment the decision was rendered by the
mutual relation of creditor and debtor. Court (regardless of the nature): 6%.
Would it make any difference if I agree that I deliver the object o BSP fixed the rate of interest so WON it is a loan and
on Dec. 10 and you pay me on Dec. 20? YES, BUT in this forbearance UNIFORM RATE: 6%.
case, it is an exception (so no demand, no delay applies).
If the parties agreed on the dates have been agreed upon, NEGLIGENCE
demand becomes necessary. Only when there is demand that
debtor be considered in delay. Omission of the diligence which is required and corresponds
As long as performance is simultaneous, demand is NOT with the circumstances of ART. 1173.
necessary. When a person omits the degree of care of a reasonable man
of ordinary prudence would have done.
NOV. 14, 2013 o If yes, there is no negligence.
o If no, there is negligence.
LAST MEETING: the topic on different ways of breaching a contract.
REPUBLIC VS. LUZON STEVEDORING: caso fortuito: [1] inevitable Lets assume that you are a jeepney passenger and it collided with a
[2] unforeseeable. bus due the negligence of both drivers. What are your options?
Stevedoring was engaged of towing barges and one day, after 1. Sue the operator: breach of contract of carriage it is very
several days of rain, the Pasig River was swollen and its easy to recover damages from that.
current was strong. Stevedoring still pursued with the operation - All you need is proof of the contract and its breach,
and deployed its most powerful tugboats. It also used the most 2. Quasi-delict: driver of the jeepney, joined with the operator, and
experienced patrons to man the tugboats while towing the can include the driver and the operator of the bus.
barge. The barge then hit one of the supports of the Nagtahan 3. Civil liability based on delict by instituting a criminal case.
Bridge (made of wood during that time).
Stevedoring said they were diligent.
SC: the very precautions undertaken by the company simply
shows this is not caso furtuito.
o The company clearly FORESAW what will happen. MMTC VS. CA
o FORESEEABLE.
NOTE: for caso fortuito, if the client took all necessary A collision between jeepney and a bus of MMTC. The accident
precautions, such defense can be used against you. happened because no two things can occupy the same space
at the same time (in the intersection). The passenger was
injured (awarded damages) and the bus company appealed.
MMTC said they were diligent in supervising and managing its
employees (quasi-delict).
SICAM VS. JORGE SC: to be freed from liability due to supposed diligence, it is not
enough that you have guidelines to be followed by your
The pawnshop was held up. The pawnshop said not liable for workers. There must further be PROOF of implementation (e.g.
loss because they were not negligent: they hired a security disciplinary actions for erring drivers, actual monitoring).
guard, and they asked for safety deposit boxes. MERE ALLEGATIONS of having procedures is decidedly no
SC: the very precautions it took showed that this is NOT caso sufficient to overcome the presumption of negligence.
fortuito.
o It knew they will be robbed: so robbery is NOT
UNFORESEEABLE.
CASO FORTUITO: EXCEPTIONS (4)
RULE: For the debtor to be exempted due to caso, it must be the BMMC VS. CA PHILCOMSAT VS. GLOBE
SOLE and not just the PROXIMATE CAUSE of the injury.
Robbery if caso fortuito (early 19602): the crime situation in Involves the application of Art. 1165 (delay has been incurred).
Manila was not as high as it was when the decision was Maintenance of a car: the shop owner was supposed to finish
rendered (1970). fixing it but he said the cars battery was weak. The owner of
Manila was a lot more peaceful during that time so it was not the car bought a new battery.
NEGLIGENT to walk with a valuable item at night, by yourself. o The shop owner was delayed. Result: no waiver of
liability.
The car was carnapped while it was being test-driven.
Court: NOT caso fortuito car napping (forceful taking) per se
is not caso fortuito.
MIAA VS. ALA o Must be established and proved as an action solely of a
third party the basis was ONLY the police report.
Christmas holiday is not a fortuitous event. Of course it is not. o The business of car maintenance invokes the risk of car
It is an unforeseeable event: it happens every year (duh). napping.
Art. 1265: if a thing is lost, it is assumed that it was the fault of
the person whos in possession of it upon its lost. EXCEPTION:
natural calamity.
BMMC VS. CA
USURY LAW: now in a suspended animation
They were to use a railroad track in Hacienda Helvetica and
their right of way has expired so respondents cannot deliver. ART. 1176:
The expiration of the contract is NOT force majeur.
It was clearly foreseeable no other means were taken by the Presumption No. 1: Reason normally, if the debt produces
petitioner to prevent the expiration of the contract.
an interest, you first pay the interest and not the principal.
o Otherwise, the interest paid will decrease, to the
detriment of a creditor.
Presumption No. 2: clearly stating the receipt of a particular
PHILCOMSAT VS. GLOBE statement.
When its effectivity or extinguishment is NOT dependent in the A term / period may also be suspensive and resolutory; same effect.
fulfilment of a condition.
CONDITION
Future AND uncertain event. A obliged himself to give B 1 million pesos if B gets a grade of 85 in
Constitutional Law 2?
o Is it the concurrence of the two? Or either of the two?
(re: Art. 1179: future or uncertain event ) a. Period or condition? CONDITION. Why? Futurity and
o MUST BE BOTH AND uncertainly. B may or may not be able to get a grade of 85.
o It does not mean that as long as it satisfies either the b. Suspensive or resolutory? SUSPENSIVE. The fulfilment of the
futurity or uncertainty of the obligation, its alright. obligation results to the acquisition of a right over the money.
o This does not make Art. 1179 erroneous. c. Is that condition potestative, casual or mixed? MIXED. The
fulfilment depends partly on B, on Bs professor and any other
o Used the process of exclusion: condition / event.
circumstances (e.g. being lucky / divine providence).
TERM / PERIOD futurity AND certainty of an event.
ROMERO VS. CA
A obligated himself to give B 1 A obligated himself to give B 1
million pesos if A wants to. million pesos if B wants A to. Real parcel of land; initial payment.
Is that conditioned MIXED? YES. Dependent partly to the
- POTESTATIVE: illusory; eviction and ejectment of informal settlers and partly of the will
there is no actual of the debtor.
obligation for the fulfilment
of the debtor.
LIM vs. CA: Contract of lease Last month, A borrowed 1 million NOV. 26, 2013
with the tenant determining how pesos from B. today, A stipulated
long the lease will be. that he will pay B when A wants ART. 1188: intended to cover a situation where there is a
to. SUSPENSIVE CONDITION.
- Potestative; dependent to
the tenant; in violation of - Previous indebtedness.
Answers the question: what can the creditor do prior to the
the MUTUALITY ON
CONTRACTS (position of fulfilment condition to protect his intended?
relative equality. What rights of the debtor have if it fulfil his obligation by
mistake?
o JUDICIAL NATURE.
A borrowed 1 million from B and ART. 1188, PAR. 1 early remedy before condition fulfilled
A obligated himself to pay B as will be in the nature of JUDICIAL ACTION? NO.
soon as A receive funds from
o Appropriate actions.
selling his house.
Normally, when you bring an action, what does that connote?
- Mixed; depends on the will Does not necessarily always involve court action in spite the
of the debtor and of third wordings of the law (i.e. Registration).
parties (buyer). o The creditor does not necessarily have to title that land.
o A has to deliver a piece of land to B. While waiting for
the end of the academic year, B has the right to
preserve its rights. if B knew A will sell the land to
The GENERAL RULE does not apply to pre-existing another person, B can have it registered and have it
obligations. annotated at the back of the title. The third person
cannot invoke any protection as he had been notified.
o Remedies available to preserve his rights that does
SECURITY BANK VS. CA
NOT involve court action.
- The Bank engaged the services of the respondents for the
construction of its building within a definite period and agreed
cost. In the escalation provision, cost escalation will be CONDITION PERIOD
determined upon mutual agreement.
- Did the bank pay the contractor after the demand for payment
of cost escalation? No. Reason: there was no mutual Futurity and uncertainty. Futurity and certainty (even
agreement between the two. though not known exactly when.
- SC: Potestative; INVALID.
o How could that possibly be a potestative condition
when it is not dependent to the sole will of one part? ART. 1188: by its very nature, a SUSPENSIVE: is there any doubt
How do you reconcile that? condition is uncertain. at all that the obligation will be
o ANSWER: you can more or less assume that the fulfilled and be demandable?
contractor will agree to be paid the additional cost so YES, there is no doubt.
the only missing consent is of the banks.
o Ergo, dependent only to the will of the bank: INVALID.
The very life / existence of the By its very nature, a period will
obligation still hangs in a balance surely come to pass.
because if the condition is
fulfilled, then thats good. If NOT,
RUSTAN VS. IAC the obligation will be
extinguished.
It is upon Rustans decision WON delivery can be stopped.
Raw material for pulp: WOOD.
POTESTATIVE: depends on Rustans will only.
When will the deliveries will be made, stopped, resumed. If the law allows recovery of fruits and interest (Art. 1195:
Violate the mutuality of contracts. mistake of delivery), should not this law, by reason, also gives
rights to the recovery of fruits and interest? YES.
- ANSWER: Is A liable? NO. the basic assumption for applying ART. 1190: what is the difference between Art. 1190 and 1187?
11189 is that the condition is already fulfilled. Only at the time
you graduated and got the GWA of 90 that A will be held liable.
- What if the car was lost in a fortuitous event? A not liable. ART. 1190 ART. 1187
A obliged himself to deliver B a particular ring. While A was traveling The obligation to return is
by boat, that particular ring fell. So when is a thing considered gone out ABSOLUTE. Manresa: quite
of commerce? If a thing is no longer manufactured? radical.
- Not necessarily; when it cannot be legally acquired or The obligation ceases to be and
transferred from A B. will not leave any effects.
If there is a contract between parties gave rise to a reciprocal - Tolentino applied for a loan in a bank of P80k and mortgaged
obligation, but nothing in the contract mentions the option of his land of 100 hectares and the bank approved it. Although the
bank approved the loan, it only released P17k. There is a huge
rescission, is rescission still applicable? YES, despite the
unreleased amount (P63k). In the meantime, the bank was
stipulations in the contract are silent regarding it. mismanaged and was ultimately prevented to do business. The
IMPORTANT NOTE: as long as the obligation is reciprocal, bank tried to foreclose the property.
rescission is always available as a remedy to the injured party. - SC: it is not certainly fair for the foreclosure of the entire land
Would there be any material different if the contract is silent for the loan when P17k was the only amount released.
regarding rescission and when is it not? Are they the same? o He bank cannot be compelled to give the rest of the
NO. When there is no provision in the contract, there is a need loan: P63k cannot be fulfilled.
o PARTIAL fulfilment; PARTIAL rescission.
to file for rescission and ask the court.
Rescission can only be made for a substantial breach, not
casual or slight breach of obligation.
RA 6552: MACEDA LAW (Sale of land through instalments).
o Mandatory 30 days of grace period.
TAN VS. CA
o Rescission for 30 days from notice from notarial act.
- There was a few days of delay in clearing the title. ART. 1592: in the sale of immovable property (land): rescission
- Mere delay for a few days in clearing the title to the property: of contract.
NOT substantial breach. o Even after the vendee, the buyer may pay even after
- Where there is nothing in the contract empowering the expiration when there is NO DEMAND for rescission
petitioner to rescind it without resort to the courts, the either judicially or through a notary.
petitioner's action in unilaterally terminating the contract in this o Once there has been demand, even a mere crossclaim
case is unjustified.
for a counterclaim will suffice to be constructively
- Time not being of the essence in the agreement, a slight delay
on the part of the private respondents in the performance of notified.
their obligation, is not sufficient ground for the resolution of the
agreement, more so when the delay was not totally attributable NOV. 28, 2013
to them.
ART. 1191: the power to rescind is always there for RECIPROCAL
OBLIGATIONS (conditioned upon each other).
ROQUE vs. LAPUZ: paid 6 out of The decision of the court will be Sometimes, the contract between parties may contain an
the 120 installments the operative act that will affect ACCELERATION CLAUSE.
SUBSTANTIAL BREACH. the rescission. o For certain payments which can be paid by instalments.
o If there is non-payment, all the remaining instalments
will immediately be due and demandable.
Infractor is liable for damages in both remedies.
AYSON vs. ADAMOS: The injured party may still opt for rescission
when fulfilment becomes impossible.
ART. 1197
- A sold a parcel of land to B and A could not deliver the title to B
BORROMEO VS. CA
4. When the debtor violates any undertaking, in consideration of
- FACTS: people involved here were two friends (Villamor
which the creditor agreed to the period;
borrowed from Borromeo a certain amount of money). Villamor
issued a promissory note that he would pay on Nov. 29, 1933. - A has 5 years to pay B, as long as A does not smoke.
Since they were friends, they agreed that the borrowed money One month later, he did. RESULT: A will lost the benefit
can be paid even beyond the prescriptive period (waiver of of the period. He can be demanded to pay now.
prescription). The complaint was filed on Jan. 7, 1953. 5. When the debtor attempts to abscond.
- Has the action prescribed? NOT YET. - Mere attempt is enough, even though it was not
- Basic principle: you cannot waive future prescription (to end
successful.
possible litigation).
- 10 YEARS: prescription for actions of written documents.
- Court: Since there was an agreement of the payment being
able to be demanded beyond the prescribed period, then the CENTRAL PHIL. UNIV. vs. CA: after 50 ears, the condition still has
first ten years are NOT COUNTED. It was filed within the not been fulfilled.
prescriptive period: Nov. 29, 1953.
- Did the court simply fix a period? NO. They did not require the - Petitioner was given enough time.
fixing of the period. They immediately demanded payment. - There is no judicial obstacle for the rescission of the donation
o Why not? It will further delay litigation. (Bellosillo).
o Same evidences will be presented. - Dissenting opinion (Davide): for the court to first fix a period.
- Combination of fixing a term and collection.
- The decision was rendered: Sept. 1972 a long time has
passed.
DEC. 05, 2013
If A filed an action against B for fixing the period and it is granted: Dec.
01, 2013. B went to A a week before the date, and B asked for another A and B agreed that A will deliver his car. If he cannot deliver his car
extension of 1 year (Dec. 01, 2014). Out of the goodness of As heart, on the agreed date, he will deliver his motorcycle instead. One day
he agreed. before the agreed date, the car was lost by caso fortuito. Can B legally
demand the delivery of the motorcycle?
- Is that a valid agreement? YES. They are not prohibited to do
so. - FACULTATIVE: there is only one object due.
- Only the court is prohibited to fix another period: res judicata. - NO, B cannot legally demand the delivery of the object, as the
- A can even condone the non-payment. obligation has already been extinguished.
ART. 1198: the debtor shall lose every right to make use of a period:
1. When after the obligation has been contracted, he becomes A obliged himself to deliver either Object 1, Object 2 or Object 3 on
insolvent, unless he gives a guaranty or security for the debt; Dec. 1. What kind of obligation is that?
- Debtor is considered insolvent when he has more
- ALTERNATIVE: several objects are due.
liabilities than he has assets.
- On Dec. 1, A brought on Dec. 1 Object 1 and tendered it to B.
2. When he does not furnish to the creditor the guaranties or Can A legally insist on the delivery of Object 1?
securities which he has promised; YES. The debtor has the right of choice in the absence
3. When by his own acts he has impaired said guaranties or of any stipulations to the contrary.
securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives
new ones equally satisfactory;
- A borrowed P500k to B and I provided a chattel Can the right be granted to the creditor in a facultative
mortgage over my car. A broke the car through an obligation?
A obliged himself to deliver either Object 1, Object 2 or Object 3 on Assume that A and B agreed on the delivery of specific and
Dec. 1. Then Object 1 was lost because of caso fortuito. Can the determinate objects: 1, 2, 3 on Dec. 1. On Nov. 27, we met, and A said
debtor be held liable? he will deliver Object 1 on Dec. 1. On Nov. 29, Object 1 was lost. On
Dec. 1.
- NO, the debtor will not be liable.
- Can B legally demand the delivery of Object 2 instead? NO.
- Upon the communication of the choice of the debtor, the
obligation already becomes simple.
The loss of the object extinguishes the obligation.
A obliged himself to deliver either Object 1, Object 2 or Object 3 on - Once a choice has been made, the legal effect of that is that
Dec. 1. Then Object 1 was lost because of the debtors fault. Can the the obligation ceases to be alternative.
debtor be held liable?
A obliged himself to deliver either Object 1, Object 2 or Object 3 on A, B, C are indebted to X for an amount of P12,000. Joint or solidary
Dec. 1. If the right of choice now belongs to B (creditor), and then obligation?
Object 1 was lost through the fault of the debtor.
- JOINT. There was no express stipulation of the solidary nature
- Can A (debtor) be liable? A has a choice: of the debt.
1. Select the delivery of Object 2 or 3. - Can X collect the entire amount from A alone?
2. Select Object 1, with indemnity for damages. NO. A only has a proportionate share of P4,000 from
- If A chooses Object 2, can he receive damages? the whole debt.
o NO, the obligation to deliver Object 2 can still be - When parties (debtors) are jointly bound: KKB (kanya kanyang
complied with. bayad ).
o It is only is the creditor has been given the right of
choice and his choice was lost due to the fault of the
debtor can he recover the value of the lost thing with
damages.
A, B, C are jointly and severally indebted to X for an amount of
P12,000. How much can X collect to A?
When all objects were lost due to the fault of the debtor, then - The entire amount (P12,000).
the creditor can recover: the value of any one of them + - Individually and collectively.
damages.
NOVATION: X and Y are to receive a particular ring that is worth - X happens to be interested to the sister of A and condone the
P12,000 from A, B, C and D. X alone entered to an agreement that the entire debt. Can A demand reimbursement from B, C, and D?
debtors will instead deliver a particular bracelet worth P24,000. When NO. The remission of the debt if gratuitous. Di mo siya
the agreed date of delivery came, Y is now demanding the delivery of pwedeng pagkakitaan.
the ring. Can Y legally compel A, B, C and D to do so? RESULT if yes: unjust enrichment.
- X does not condone the entire debt but only As (P3,000). Is
- NO. Even though Y was not aware of the changes, due to that valid?
mutual representation, X can bind Y to the new / substitute YES. Effect: the debtor A is completely released from X
obligation. and Y but he is still bound by his ties of co-solidarity.
- Once the bracelet is delivered, how much is Ys interest / The P3,000 will be condoned so the maximum amount
share? of the P24,000 = P12,000. that can be collected is P9,000.
- If the thing substituted (bracelet) is worth less, he gets of the - A is still liable by his co-debtors. If B pays the P9,000, he can
P12,000 (value of the original object) = P6,000. claim reimbursement from C and D. IF D becomes insolvent,
- MORAL OF THE STORY: A solidary creditor who does not the continuing liability of A comes in. The P3,000 that D cannot
participate in the novation shares the benefits, but not the pay will be borne by A, B, and C.
losses.
Three individuals borrowed from a bank and bound themselves The delivery or the rendering of the service must be whole,
in a solidary manner. Then came the war where the Japanese otherwise, there will be non-compliance.
occupied the Philippines. The Japanese forces issued a form of EXCEPTIONS:
Japanese money. In the course of their occupation and when 1. When the obligation expressly stipulates the contrary.
the liberation was fast approaching, the value of those notes 2. When the different prestations constituting the objects
dropped. After the war, the Japanese war notes were of no
value. If you borrowed P10,000 during the war, can you pay it of the obligation are subject to different terms and
in peso after the war? A scale has been made to determine the conditions.
amount and value of Japanese notes in peso at specific times 3. When the obligation is in part liquidated and in part
in the war. The scale was called the BALLANTYNE unliquidated.
SCHEDULE OF VALUES. The rule was that if a debtor has - UNLIQUIDATED PART: damages due to any
contracted the loan during the Japanese occupation, it can be fault of the debtor (i.e. accident).
paid with the corresponding value of the Japanese notes in
- LIQUIDATED PART: the exact amount is
peso using the scale of values.
The obligation was contracted before the war and was paid certain (i.e. P1M + 12% interest).
during the war using Japanese war notes by only one of the
solidary debtors. The bank accepted the payment. After the
war, he was asking for his co-debtors reimbursement. His co-
debtors said that they should convert the amount into peso
using the values (applying the Ballantye schedule of values).
But the debtor who paid said that the obligation to reimburse
G X
HAW PIA VS. CHINA BANKING:
- Petitioner borrowed from the bank. When the WWII broke out,
1. Payment of X to C with the knowledge and consent of D: China Bank was considered as an enemy asset and was
subrogation and reimbursement. sequestered by the Japanese authorities. They designated the
2. Payment of X to C without the knowledge and consent of D: Bank of Taiwan (liquidator bank) and it was authorized to
PAYMENT MADE TO SOMEBODY ELSE NOT VALID. A creditor cannot demand a thing of superior quality.
o A has a business and was getting goods from B, so A is NOT IN THE LAW: that debtor cannot deliver a thing of
indebted to B. C came to A, saying that he was Bs superior quality.
collector, so A paid C. it turned out, C was an impostor o WHAT IS IN THE LAW: he cannot deliver a thing of
A was required to pay B again. inferior quality.
o MORAL: make sure that the persons claiming as o So there is nothing in the law that prohibits the debtor to
agents of your creditor are real agents deliver a thing that is better.
Supposing A borrowed P10M to B. when the debt became due,
A went to B with a bayong of money. A left it to B. Unknown to ART. 1248: rule on partial payments, subject to 3 EXCEPTIONS:
A, B was already crazy during that time. B then used the
money as pangatong, all of it. Can A be required to pay again? 1. When the obligation expressly stipulates the contrary.
o YES. Art. 1241: when payment is valid: 2. When the different prestations constituting the objects of the
1. Kept. obligation are subject to different terms and conditions.
2. Beneficial (but using the money as pangatong is 3. When the obligation is in part liquidated and in part
not the rational use of money). unliquidated.
If payment is made to a 3rd person, GENERALLY, the payment
ART. 1249
is VALID if it redounded to the benefit of the creditor.
o EXCEPTIONS (RES):
1. Ratification.
A borrowed P1K from B and they entered into an agreement that A will
2. Estoppel. pay B in US dollars. Is such stipulation valid?
3. Subrogation.
Payment made to a third person in possession of the credit: - YES, it is valid.
VALID. - Can B legally insist on being paid in US dollars? YES.
o A was indebted to B. To whom will A pay? To B. - Is RA 4100 still in effect? Not anymore; repealed.
o Unknown to A, B assigned the credit to C. will A be It is NOT impossible for parties to stipulate such (as of
July 1996).
justified to still pay to B? YES; good faith.
There is no legislative prohibition in the currency of
A will still be released from his debt as he made payment.
a VALID PAYMENT, despite not being able to
pay C.
ART. 1243: One needs to follow a court order asking him not to pay When there is no currency stipulated by the parties or when it
(as in a notice of garnishment or attachment). becomes impossible to deliver such currency; CURRENCY TO
BE USED: currency which is legal tender in the Philippines.
Otherwise, he needs to pay again. Are all notes and coins issued by the Central Bank legal tender
MORAL: follow court orders. of all types of debts (public and private)? YES.
o If A owes B P10M, can A pay B using P20 bills? YES.
ART. 1244: if the object is particular the same one agreed upon o Can A pay B using P10 coins? NO.
must be delivered. o Circular No. 537:
a. P1, P5, P10 coins: only until P1,000.
DATION: happens when the debtor has outstanding debt of money b. Centavo coins: only until P100.
and he is having liquidation problems. o If I ride a taxi, and my fare amounted to P98, can I pay
using centavo coins alone? YES.
o If I buy 1kg of meat (P140), can I use centavo coins to
If A is indebted to B, and A does not have cash, one of As property
pay? NO, it is not legal tender. The price is higher than
can be alienated B.
P100.
- As the accepted equivalent of the monetary obligation:
1. There must be an agreement.
2. There is no dation unless ownership is transferred from A owes B P1M and when it became due, A issued a check worth P1M.
the debtor to the creditor. Can B refuse the check?
- If there is none, then, such is only a security.
- YES, why? A check is not a legal tender.
- Will there be a difference if it is a cashiers check? NO.
Whatever kind of check NOT legal tender.
DEC. 17, 2013 - A check is not legal tender and may thus be validly refused.
IMPAIRMENT: more applicable with merchantile documents - Which debt/s had already been paid, then?
(issued by third persons). - Its possible that the 2nd debt was paid in full, or the 1st and
o Ordinarily, impairment happens to checks and 3rd debts.
documents issued by third persons. If there is such due Payment of P1M does not mean its for the 2nd debt
(P1M), considering the identity of the payment and of
to the creditors fault, then the debt is considered paid.
the debt.
The mere fact that the amount pain is identical to one
ART. 1250: EXTRA-ORDINARY INFLATION of the debts does not mean it should be applied for
that debt.
There is still room for Application of Payment.
A owed B so they entered a contract that A will pay B in US dollars, - When there are provisions about application of payment, the
where the prevailing exchange rate of Peso and US dollars is 40:1. creditor and debtor will know which debt/s will be paid.
When the payment became due, the exchange rate became 44:1. Is - Applicable only when the debts are of the same kind /
such inflation extraordinary? nature.
- If the debts are not of the same kind (P500k, delivery of a
- NO. The value of any currency would usually fluctuate on a particular car), then there is no doubt which is paid.
daily basis ORDINARY FLUCTUATIONS only. If A paid B P500k, then that payment is for the P500k
- The change must be SO BIG and completely debt.
UNFORESEEABLE / totally beyond the contemplation of the
parties.
REQUISITES:
Many of our cases: no extraordinary inflations, MOSTLY 1. ONE CREDITOR and ONE DEBTOR.
ORDINARY. - Remember: there are still some situations when there
EXAMPLES OF EXTRAORDINARY INFLATION: will be more than one creditors or debtors, yet AP is still
1. FILIPINO PIPE VS. NAWASA: when Germany lost in applicable.
WWI. They were forced to pay huge reparations so the A. Is A is a debtor of B for P500k in one
value of their currency spiralled down/ transaction and in another, A became solidary
2. Japanese war notes during the WWII. liable to B, with other debtors C and D.
NOTE: according to (someone) there is a need for official o There is one creditor, but there are more
government declaration of the existence of an extraordinary than one debtors.
inflation. o AP is possible if A pays B P500k.
B. ART. 1792 (PARTNERSHIP): if A is a managing
ART. 1251: PLACE OF PAYMENT
partner (one that manages the affairs), then by
its very nature, there must be trust and
1. In the place stipulated by the parties.
confidence among its partners.
2. If there is NO express stipulation:
o WHY? The actions of the managing
a. DETERMINATE THING: where the thing is located.
partner can bind his partners.
- NOT LITERAL: not the precise place where it is
at.
If A obliged himself to deliver a Here is a person who is a debtor of a partnership, X. That same person
particular car to B, and when the agreed
1. When the payment cannot be applied in accordance with the If the payment made by the debtor bears interest, the interest
preceding rules, or has to be paid first before the principal.
2. If application cannot be inferred from other circumstances. NOT MANDATORY.
If the creditor agrees with the payment of the principal first,
Then payment is to be applied to the most onerous ones. then its alright.
ART. 1262
ART. 1264
ART. 1255: