BOOK IV OBLIGATIONS AND CONTRACTS

Title I Obligations
Chapter 1 General Provisions

Article 1156 Meaning of Obligation

Article 1157 Sources of Obligations
Article 1158 Obligations Arising from Law
Article 1159 Obligations Arising from Contracts
Article 1160 Obligations Arising from Quasi-Contracts
Article 1161 Obligations Arising from Delict
Article 1162 Obligations Arising from Quasi-Delict

Chapter 2 Nature and Effects of Obligations

Article 1163 Duties of debtor in obligation to give a determinate thing

Article 1164 Right of creditor to deliver fruits
When obligation to deliver fruits arises
Article 1165 Remedies of creditor in real obligation
When debtor delays or has promised to deliver to separate creditors
Article 1166 Right of creditor to accessions and accessories
Article 1167 Remedies of creditor in positive personal obligation
Article 1168 Remedies of creditor in negative personal obligation
Article 1169 Delay
Article 1170 Those who in the performance of their obligations are guilty of FND or those who
in any manner contravene the tenor thereof, are liable for damages
Article 1171 Demandability of responsibility arising from fraud
Waiver of an action for future fraud void
Article 1172 Demandability of responsibility arising from negligence
Article 1173 What fault or negligence consists (meaning of negligence)
Article 1174 Fortuitous event
Article 1175 Usurious transactions shall be governed by special laws
Article 1176 Presumptions relating to receipts
a. Principal with no reservation as to interest
b. Receipt of latter installment of a debt without reservation as to prior
installments
Article 1177 Remedies available to creditors for the satisfaction of their claims
Article 1178 Transmissibility of Rights

Chapter 3 Different Kinds of Obligations

Section 1 Pure and Conditional Obligations
Article 1179 When obligation is demandable at once
Article 1180 When duration of the period depends upon the will of debtor
Article 1181 Effect of happening
Article 1182 When condition depends upon the will of the debtor
When condition depends upon chance or upon will of the third person
Article 1183 Impossible conditions and its effects
Article 1184 Positive condition – obligation is extinguished when…
Article 1185 Negative condition – obligation shall become effective and binding when…
Article 1186 Constructive fulfillment of suspensive condition
Constructive fulfillment of resolutory condition
Article 1187 Effects of conditional obligation to give once fulfilled
Effects as to fruits and interests during the pendency of the condition (reciprocal)
Article 1188 Rights pending the fulfillment of suspensive condition
a. Creditor
b. Debtor
Article 1189 Rules in case of loss, deterioration, or improvement of thing during pendency of
suspensive condition (note the requisites of application of 1189)
Article 1190 Effects of fulfillment of resolutory condition
Article 1191 Remedies in reciprocal obligations
(Power to rescind obligations is implied in reciprocal ones, in case…)
Article 1192 Where both parties are guilty of breach

Section 2 Obligations with a Period

Article 1193 Obligation with a period
Obligations with a resolutory period
Meaning of a day certain
When uncertainty consists in whether the day will come or not – conditional
Article 1194 Rules in case of loss, deterioration, or improvement before the arrival of the period
Article 1195 Payment before arrival of period
Article 1196 Presumptions as to benefit of period
Exceptions to the general rule
Article 1197 Cases when the court is authorized to fix the duration of the period
Article 1198 When debtor shall lose every right to make use of the period

Section 3 Alternative Obligations

Article 1199 A person alternatively bound by different prestations shall completely perform one
of them.

The creditor cannot be compelled to receive part of one and part of the other
undertaking
Article 1200 The right of choice belongs to the debtor unless
Unless it has been expressly granted to the creditor
 Subject to limitations in second paragraph
Article 1201 Choice produces no effect except from the time it has been communicated
Article 1202 Effect when only one prestation is practicable
Article 1203 When debtor may rescind contract
Article 1204 Effects of loss of objects of obligation
Article 1205 When right of choice belongs to creditor
Rules in case of loss before creditor has made choice
Article 1206 Facultative obligation
Rules in case of loss or deterioration

Section 4 Joint and Solidary Obligations

Article 1207 Concurrence of two or more creditors or of wo or more debtors in one and the
same obligation does not imply that each of the former has a right to demand or
that each of the latter is bound to render, entire compliance with the prestration.

There is solidary liability only when

1.the obligation expressly so states
2. when the law or the nature of the obligation requires solidarity
Article 1208 Joint obligations
Presumed to be divided into as many equal shares as there are creditors or debtors,
the credits or debts being considered distinct from one another
(subject to the rule on multiplicity of suits)
Article 1209 Joint indivisible obligation
Article 1210 Indivisibility does not give rise to solidarity. Solidarity does not imply
indivisibility.
Article 1211 Solidarity not affected by diverse stipulations
Article 1212 Each one of the solidary creditors may do whatever may be useful to the others, but
not anything which may be prejudicial to the latter
Article 1213 Assignment by solidary creditor of his rights
Article 1214 Payment to any of the solidary creditors
Article 1215 NOCOCORE made by any of the solidary creditors or with any of the solidary
debtors shall extinguish the obligation without prejudice to 1219

Effect of NOCOCORE where obligation is joint

Article 1216 Right of creditor to proceed against any solidary debtor
Article 1217 Effects of payment by a solidary debtor
Article 1218 Effect of payment after obligation has prescribed or become illegal
Article 1219 Effect of remission of share after payment
Article 1220 Remission of the whole obligation obtained by one of the solidary debtors
Article 1221 Rules in case a thing has been lost or prestation has become impossible
Article 1222 Defenses available to a solidary debtor

Section 5 Divisible and Indivisible Obligations

Article 1223 Meaning of divisible and indivisible
 Applicability of 1223
Kinds of division
Kinds of indivisibility
Where there is only one creditor and one debtor

Article 1224 Effect of non-compliance by a debtor in a joint indivisible obligation

Article 1225 What are obligations deemed indivisible
What are obligations deemed divisible
Divisibility or indivisibility in obligations not to do

Section 6 Obligations with a Penal Clause

Article 1226 Meaning of principal and accessory obligations
Meaning of obligation with a penal clause
Meaning of penal clause
Purposes of penal clause
Penal clause and condition distinguished
Kinds of penal clause
Penalty substitutions for damages and interests
When creditor may recover damages
When penalty may be enforced

Article 1227 Penalty not substitute for performance

Penal clause presumed subsidiary
When penal clause is joint
Article 1228 Penalty is demandable even without proof of actual damages
Damages recoverable in addition to penalty must be proved
Article 1229 When penalty may be reduced by the courts
Article 1230 Effect of nullity of the penal clause
Effect of nullity of the principal obligation

Chapter 4 Extinguishment of Obligations

General Provisions

Article 1231 Obligations are extinguished by:

PALOREMECONO

Section 1 Payment or Performance

Article 1232 Meaning of payment
Article 1233 When debt is considered paid
Article 1234 When obligation has been substantially performed in good faith
Article 1235 When obligee accepts the performance,
 knowing its incompleteness or irregularity, and
 without expressing any protest or objection,
 the obligation is deemed fully complied with
Article 1236 From whom the creditor is bound to accept payment
Creditor may refuse payment by a third person
Effect of payment by third person
Article 1237 Right of third person to subrogation
Article 1238 Payment by a third person who does not intend to be reimbursed
Article 1239 Payment made by one who does not have the free disposal of the thing due and
capacity to alienate
Article 1240 To whom payment must be made
Article 1241 Effect of payment to an incapacitated person
Effect of payment to a third person
When benefit to creditor need not be proved by debtor
Article 1242 Payment made in good faith to a person in possession of the credit
Article 1243 Payment to the creditor by the debtor after the judicially ordered to retain the debt
Article 1244 Debtor of a thing cannot compel the creditor to receive a different one though same
value or more valuable

In obligations to do or not to do, act or forbearance cannot be substituted by

another act and forbearance against the obligee’s will
Article 1245 Dation in payment
Article 1246 When obligation consists in the delivery of an indeterminate thing or generic thing
who quality and circumstances have not been stated
Article 1247 Who pays the extrajudicial expenses
Who pays the judicial costs
Article 1248 Complete performance of obligation is required
When partial performance is allowed
Article 1249 Legal tender
(Payment of debts in money shall be made in the currency stipulated)
Payment by instruments of credit
(Delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents, shall produce the effect of payment only when they have
been cashed, or when through fault of the creditor they have been impaired.)
Article 1250 In case an extraordinary inflation or deflation of the currency stipulated should
supersede
Article 1251 Place where the obligation shall be made

Subsection 1 Application of Payments

Article 1252 Application of payments meaning

Requisites
Application as to debts not yet due
Rules on application of payments

Article 1253 If the debt produces interest, payment of the principal shall not be deemed to have
been made until the interest have been covered.

Interest earned ahead of the principal

Article 1254 Application of payment to most onerous debt
 When a debt is more onerous than another
Where debts subject to a different burden

Subsection 2 Payment by Cession

Article 1255 Meaning of payment by cession

Requisites
Effect of payment by cession
Dation in payment versus cession

Subsection 3 Tender of Payment and Consignation

Article 1256 Meaning of tender of payment

Requisites for valid tender of payment
Meaning of consignation
Requisites of a valid consignation
Consignation alone shall produce the same effect on the following cases:
AIW2CL
Article 1257 Prior notice to persons interested
Consignation must comply with the provisions on payment
Article 1258 Consignation must be with proper judicial authority
Notice to interested parties once consignation has been made
Article 1259 Who shall bear the expenses for consignation
Article 1260 Debtor may ask the judge to order cancellation of the obligation once consignation
has been duly made
Debtor may withdraw the thing or sum of money deposited before creditor accepts
consignation or before judge decrees that consignation is proper
Article 1261 Effect of withdrawal with authority of creditor
Article 1262 Effect of loss of a generic thing
Article 1264 Effect of partial loss of a specific thing
Article 1265 Presumption of fault in case of loss of a thing in possession of debtor
When presumption not applicable
Article 1266 Effect of impossibility of performance
Article 1267 Effect of difficulty of performance
Article 1268 Effect of fortuitous event where obligation proceeds from a criminal offense
Article 1269 Right of creditor to proceed against third persons