Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1216
- applies only to solidary obligations, not joint
ones.
Art 1217
- payment is one of the ways by which an
obligation is extinguished and consists in the
delivery of the thing or the rendition of the
service which is the object of the obligation.
-payment by one solidary creditor extinguishes
the obligation.
- if two or more solidary creditors offered to
pay, creditor may choose which to accept.
-creditor may proceed against any one of the
solidary creditors.
-paying solidary creditor is entitled to
reimbursement from his co-debtors
Art 1218
- if payment is made after the obligation has
prescribed or became illegal, no reimbursement
from co-debtors may be made.
Art 1219
- when one co-debtor paid the debt, and
afterwards his share was remitted (remission)
by the creditor, he still has to reimburse said
debtor, to prevent fraud and give justice to the
paying debtor. If previous, no more.
Art 1220
- if remission of the whole obligation is made as
obtained by one of the solidary debtors, no
reimbursement can be made.
Page 1 of 12
Art 1221 Memorize
- if the thing has been lost or if the prestation
has become impossible without the fault of the
solidary debtors, the obligation is extinguished.
- If there was fault on the part of any one of
them, all shall be responsible to the creditor, for
the price and the payment of damages and
interest, without prejudice to their action
against the guilty or negligent debtor. ( they can
institute action against the guilty debtor though
they are still responsible to the creditor)
- If through a fortuitous event, the thing is lost
or the performance has become impossible
after one of the solidary debtors has incurred in
delay through the judicial or extrajudicial
demand upon him by the creditor, the
provisions of the preceding paragraph shall
apply.
Art 1222
-solidary debtor may raise defenses:
1. those derived from the nature of the
obligation
2. those personal to the debtor
Art 1223
- divisibility and indivisibility refers to the nature
of the obligation.
- if in doubt, resolve in favor of divisibility.
Article 1224:
- object is indivisible and parties are joint
- the person ready to comply with his obligation
cannot be compelled to pay for damages
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
- if solidary and indivisible, he has to pay for the
entire obligation, but he will be reimbursed by
his solidary debtors.
Art 1225:
- definite things and not susceptible of partial
performance are deemed indivisible.
If execution of a number of days of work,
accomplishment of work by metrical units, or
analogous things which are susceptible of
partial performance, are divisible obligation.
- even if physically divisible, can be indivisible if
provided for by law.
Art 1226
- in obligations with a penal clause, penalty
substitutes indemnity for damages and
payment of interest in case of non-compliance,
if there is no stipulation to the contrary.
-penalty can be imposed only if demandable in
the part of the defendant.
Kinds of penal clauses:
Legal penal clause and Conventional penal
clause
Subsidiary and joint
- to insure performance of obligation
Art 1227
- debtor cannot substitute penalty for principal
obligation unless expressly reserved.
- principal and penalty cannot be demanded at
the same time.
Page 2 of 12
Art 1228
-no need of actual damage, only failure to
perform the obligation on the specified period
or when conditions arise, penalty can be
demanded.
Art 1229
The judge may equitably reduce the penalty if
there is partial or irregular
compliance/performance by the debtor. Even if
no performance, if the penalty is iniquitous or
unconscionable, it can also be reduced.
Art 1230
Nullity of penal clause, obligation is not carried,
but if reversed, penal obligation is extinguished.
Art 1231
Obligations are extinguished:
(1) By payment or performance:
(2) By the loss of the thing due:
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of
creditor and debtor;
(5) By compensation;
(6) By novation.
Annulment, rescission, fulfillment of resolutory
condition and prescription are governed
elsewhere in this code.
Death of a party in case of personal obligation,
resolutory term, change of civil status,
compromises, mutual dissent, impossibility of
fulfillment, and fortuitous events also
extinguish obligations.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1232
Payment is not only through delivery of money
but also performance of obligation.
There must be acceptance, expressly or
impliedly, for payment to properly exist.
Art 1233
The payment or performance must be delivered
or rendered completely.
Creditor has burden of proof that valid debt
exists.
Debtor has the burden of proof that the same is
paid. (receipt is the best evidence)
Art 1234
In case of substantially performed in good faith,
obligor may recover as if there has been strict
and complete fulfillment, minus the damage
suffered by the obligee which he can deduct to
what may be recovered.
One cannot just rescind if there is slight breach;
court can even give period for fulfillment of
obligation.
1235
When the obligee, even if he knows the
incompleteness or irregularity of performance,
accepts it without expressing protest or
objection, the obligation is deemed complied
with
Art 1236
Creditor is not bound to accept payment from a
third person who has no interest in the
obligation, unless stipulated.
Whoever pays for another may demand from
the original debtor what he has paid, and if
Page 3 of 12
without the knowledge or will of the debtor,
only to what the debtor has benefited upon
(not entitled to subrogation, where rights
comes to the new creditor).
Art 1237
The one who paid without the knowledge or
will of the debtor, cannot be subrogated in the
rights of the creditor.
Subrogation – the act of putting somebody into
the shoes of the creditor, hence, enabling the
former to exercise all the rights and actions that
could have been exercised by the latter
Subrogation distinguished from reimbursement
P. 355
Art 1238
- if the third person pays the creditor and don’t
want a reimbursement, it is a donation, but
such should be with the consent of the debtor.
Why? No one should be compelled to accept
the generosity of another. But, whether with
consent or not, payment is valid for the
creditor. In any case, third person can only
recover the extent to which the debtor have
benefited from his payment.
Art 1239
- if lacking the free disposal of the thing and
lack of capacity to pay, payment is not valid.
Art 1240
Payment shall be made to the person whose
favor the obligation has been constituted, the
successor in interest, or any person authorized
to receive it. If payment is not authorized,
payment is not valid. Authorization may be by
agreement or by law.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1241 Garnishment – proceeding by which a debtor's
debtor is subjected to the payment of his own
Payment to an incapacitated person debt to another is known as garnishment. But
Valid only if: payment to the 3rd person must be adjudged
that he is the creditor. Any payment made by
1 if he has kept the thing debtor to creditor is invalid.

2. If the payment is beneficial to him Interpleader – name of the action in which a

certain person in possession of certain property
- the one who made the payment has the
wants claimants to litigate among themselves
burden of proving that payment was beneficial.
for the same.
Payment to a 3rd party not duly authorized
Injunction – it is a judicial process by virtue of
Valid only if: which a person is generally ordered to refrain
from doing something. Preliminary injunction if
It has redounded to the benefit of the creditor. prohibition is during the pendency of certain
proceedings.
Such benefit need not be proved if,
Art 1244
1. if after the payment, 3rd person acquires the
creditor's rights Debtor cannot compel the creditor to receive a
different one, even if with same value or more
2. creditor ratifies the payment to 3rd person
valuable than that which must be given.
3. by the creditor's conduct, the debtor has
An act required cannot be substituted by
been led to believe that 3rd person had
another act without the obligee's will.
authority to receive payment
It will not apply in facultative obligations, dation
Payment by check is not yet payment by
in payment, or novation.
delivery.
Art 1245
Art 1242
Dation in payment, whereby property is
Payment in good faith to any person in
alienated to the creditor in satisfaction of debt
possession of the credit shall release the
in money, shall be governed by the law of sales.
debtor.
- there must be follow up deed of conveyances.
Payment by payor must be in good faith. Payee
must be in possession of the credit itself. Dation in payment – mode of extinguishing an
obligation whereby the debtor alienates in
Art 1243
favor of the creditor property for the
Debtor's payment is not valid if he is judicially satisfaction of monetary debt.
ordered to retain the debt. Payment if made is
Dation in payment is valid if:
void.
1. the creditor consents

Page 4 of 12
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
2. the dation in payment will not prejudice the
other creditors
3. the debtor is not judicially declared insolvent.
Art 1246
In obligation of indeterminate or generic thing
whose quality and circumstances have not been
stated, creditor cannot demand a thing of
superior quality or inferior quality. The purpose
of the obligation shall be considered.
Art 1247
Extrajudicial expenses required by payment
shall be for the account of the debtor unless
otherwise stipulated.
Art 1248
Performance should generally be complete.
Partial performance:
1. when there is stipulation to this affect.
2. when different prestations are subject to
different conditions or different terms.
3. when a debt is in part liquidated and in part
unliquidated, in which case performance of the
liquidated part may be insisted upon either by
the debtor or the creditor.
4. when a joint debtor pays his share or the
creditor demands same
p. 377
Art 1249
Payment should be made in legal currency/legal
tender.
Art 1250
Extraordinary inflation
Page 5 of 12
Art 1251
Payment shall be in the place designated in the
obligation.
If there is no stipulation:
Determinate thing – where it might be at the
time the obligation was constituted.
If the obligation is any thing – delivery must be
made at the time domicile of the debtor.
If the debtor changes his domicile in bad faith
or after he has incurred delay, additional
expenses shall be borne by him.
Art 1252
He has various debts of the same kind to one
and the same creditor, may choose which of the
debt, at the time of payment, to which such
applies.
If debtor accepts a receipt of the application of
payment from creditor, he cannot complain of
it after, unless there is a cause invalidating the
contract.
Special forms of payment:
Application of payment (imputation)
Dation in payment
Assignment in favor of creditors
Tender of payment and consignation.
Requirements of application of payment:
1. there must be two ore more debts
2. the debts must be of the same kind
3. the debts are owed by the same debtor in
favor of the same creditor
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
4. all debts are due
5. the payment is not enough to extinguish all
the debts
How application of payment is made:
1. debtor makes the designation
2. if not, creditor makes it, stating in the receipt
that he issues.
3. by operation of law.
If creditor makes application without
knowledge and consent of the debtor, not valid.
Art 1253
If debt has interests, payment of principal
cannot be insisted without paying the interests,
unless the creditor agrees.
Art 1254
In any case, the debt which is most onerous to
the debtor among those due, shall be deemed
satisfied. If debts due are of the same nature
and burden, payment shall be applied to all of
them proportionately.
Art 1255
Debtor may cede or assign his property to his
creditors in payment of his debts. He shall be
released of his debt up only to the net proceeds
of his property.
Cession or assignment – it is the process by
which a debtor transfer all the properties not
subject to execution in favor of his creditors so
that the latter may sell them, and thus apply
the proceeds to their credits.
Requisites:
1. more than one debt
Page 6 of 12
2. more than one creditor.
3. complete or partial insolvency of debtor
4. abandonment of all debtor's property not
exempt from execution ( unless validly waived)
in favor of creditors.
5. acceptance or consent on the part of the
creditors.
Creditors are not owners but mere assignees
with authority to sell. It is dation in payment
where there is transfer of rights and ownership.
Distinguish dation in payment from cession
P.412
Tender of payment and consignation
Tender of payment is defined as the act of
offering the creditor what is due to him
together with a demand that the creditor
accept the same.
Consignation is defined as the act of depositing
the thing due with the court or judicial
authorities whenever the creditor cannot
accept or refuses to accept payment. It
generally requires a prior tender of payment.
Difference of the two, P.414
Art 1256
There must be a pending case in court
If tender of payment is refused by the creditor
without just cause, debtor is released from his
responsibility by the consignation of the thing
or sum due.
Effects of consignation:
1. if creditor is absent, unknown, does not
appear at the place of payment.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
2. he is incapacitated to receive payment at the
time payment is due.
3. without just cause, he refuses to give a
receipt.
4. when two or more persons claim the same
right to collect. (interpleader action)
5. when the title of the obligation is lost.
Consignation without tender of payment – debt
is not extinguished.
Creditor justified in refusing tender:
1. tender of payment is not valid.
Requisites:
1. must be in legal tender
2. it must include whatever interest is due
3. generally it must be unconditional
4. the obligation must be due.
Interests run until principal is paid if
consignation after tender of payment is
delayed.
Art 1257
Consignation must be first announced to those
interested in the fulfillment of the obligation
before it releases the debtor.
Requisites of consignation:
1. existence of a valid debt
2. valid prior tender
3. prior notice of consignation
4. actual consignation
5. subsequent notice of consignation.
Page 7 of 12
(there is a pending case/suit to compel creditor
to accept. Without it, no consignation can be
made.)
Art 1258
Things due are deposited in court. Can be done
only if with valid tender and notification of
creditor.
Art 1259
Expenses of a proper consignation shall be
charged against the creditor/
Art 1260
After consignation, debtor can ask for
cancellation of obligation. The thing can be
withdrawn however before acceptance of
consignation or before judicial decision of
cancellation of obligation.
Risk of loss is to the creditor.
Art 1261
Withdrawal of the thing after consignation but
with consent of the creditor, he loses
preference over such, and co-debtors,
guarantors and sureties are released. But
obligation still remains.
Loss – impossibility of performance.
Art 1262
Delivery of determinate thing extinguished if
lost or destroyed without fault of the debtor
and before delay.
If debtor is liable for fortuitous events, loss of
the thing does not extinguish the obligation and
he shall be responsible for damages. Same as
when obligation requires assumption of risk.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1263
For generic thing, loss or destruction does not
extinguish obligation.
Art 1264
Courts will determine whether partial loss
tantamounts to extinguishment of obligation.
Art 1265
When the thing is lost in the possession of the
debtor, he is presumed at fault unless contrary
is proved. But will not apply if through natural
calamities.
Art 1266
Debtor shall be released of obligation if it
becomes legally or physically impossible,
without his fault.
Art 1267
When the service has become so difficult,
obligor can be released, in whole or in part.
Personal obligation only, for real obligation, this
does not apply.
Art 1268
When debt of a determinate thing is from a
criminal offense, debtor is not exempted from
payment of its price regardless of cause of loss,
unless when payment had been given, it was
refused without justification (mora accipiendi)
Art 1269
Creditor has rights of action against third
persons who is the cause of the loss of the thing
of the obligation.
Page 8 of 12
Art 1270
Condonation or remission is essentially
gratuitous and requires acceptance by obligor,
expressly or impliedly.
Inofficious donations – involuntary. Express
donations must comply with forms of donation.
Requisites of remission
1. there must be an agreement
2. parties must be capacitated and must
consent
3. there must be subject matter
4. the cause or consideration must be liberality
5. obligation remitted must have been
demandable at the time of remission
6. remission must not be inofficious.
7. formalities of a donation are required in the
case of an express remission
8. waivers or remissions are not to be presumed
generally, but must be convincingly shown.
Art 1271
Delivery of a private document evidencing a
credit made voluntarily by the creditor to the
debtor, presumes renunciation of action which
creditor had against debtor. Remission is
presumed here.
In order to nullify these, it should be claimed as
inofficious, but debtor may uphold it by proving
that delivery of document was made in virtue of
payment of the debt.
- privy to the parties only. It speaks of a private
document not a public one.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1272
If a private document containing debt is found
in debtor's possession, it is presumed that the
creditor delivered it voluntary, unless contrary
is proved.
- presumption of voluntary delivery. To rebut it,
only receipt of payment must be presented to
prove debt is already paid.
Art 1273
Renunciation of principal debt extinguishes
accessory obligation, but waiver of the latter
leave the former in force.
Art 1274
If pledge is found in the possession of debtor,
accessory obligations are presumed remitted.
Art 1275
Obligation is extinguished from the time the
character of debtor and creditor is merged.
Merger/confusion – is the meeting in one
person of the qualities of the creditor and
debtor with respect to the same obligation.
Requisites of merger:
1. it should take place between the principal
debtor and creditor.
2. the merger must be clear and definite.
3. the very obligation involved must be the
same or identical.
Art 1276
Merger benefits the guarantor. But confusion
does not extinguish the obligation.
Art 1277
Page 9 of 12
Confusion does not extinguish a joint obligation
except the share corresponding to the debtor or
creditor.
Article 1278
Compensation happens when to persons are
debtor and creditor of each other.
- it is the extinguishment in the concurrent
amount of the obligations of those persons who
are debtor and creditor of one another.
In payment, it must be complete and indivisible,
in compensation, partial is allowed. Payment is
made through deliver or action, compensation
by operation of law.
In confusion, only one person in whom is
merged the qualities of debtor and creditor. In
compensation, there must be two persons who
are debtor and creditor of each other.
Art 1279
Requisites of compensation:
1. each of the obligor be a debtor and creditor
of each other.
2. both debts consist in a sum of money, or if
the thing is consumable, of the same kind and
quality.
3. the two debts are due
4. they be liquidated and demandable.
5.no retention or controversy commenced by
3rd persons and communicated in due time by
the debtor.
Presupposes two debts and two credits.
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
Art 1280
Guarantor may set up compensation as regards
what the creditor may owe the principal debtor.
Guarantor is subsidiarily bound.
Art 1281
Compensation can be partial or total. If total,
obligation, total compensation.
Art 1282
Parties may agree on the compensation not yet
due.
Art 1283
If one has a claim for another, another's claim
of damage to him can be subject of
compensation.
Art 1284
When one or both debts are rescissible or
voidable, they may be compensated before
rescinded or voided.
Art 1285
If debtor consented to assignment of rights by
creditor to a third person, cannot set up against
that third person compensation which would
pertain to him against the creditor, unless
assignor was notified by debtor at the time he
gave his consent that he reserved his right to
the compensation.
If creditor communicated but debtor did not
consent, debtor may set up compensation
previous to the cession, but not subsequent
ones.
If assignment is made without knowledge of the
debtor, he may set up compensation of all
credits previous and after the assignment.
Page 10 of 12
Cases covered:
1. assignment made with the consent of the
debtor
2. assignment made with the knowledge but
without consent of the debtor.
3. assignment made without knowledge and
consent of the debtor.
Read more in the book p.471
Art 1286
Compensation takes palce by operation of law
though debts are payable at different places,
subject to indemnity for expenses of
transportation (made by whoever claims for
compensation)
Art 1287
Legal compensation cannot take place:
Debt arising from depositum
Obligations of a bailee in commodatum
Debt arising from a claim for support due to
gratuitous title
Art 1288
No compensation from civil liability arising from
a criminal offense.
Art 1289
Rules on application of payments shall apply to
the order of compensation.
Art 1290
If all requisites from 1279 is present,
compensation takes place by operation of law
and extinguish debts to the concurrent
amounts. Meaning, if one debt is larger than
 Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno
the other, a balance still subsists. Also debt, and thus excuses himself. Here, the
extinguishes accessory obligations. creditor and the new and old debtor must
agree.
Art 1291
Old debtor must be released from obligation,
Obligation may be modified by: otherwise no expromision.
1. changing their object or principal conditions Expromision requisites:
2. substituting the person of the debtor 1. the initiative must come from a third person
3. subrogating a third person in the right of the 2. the new debtor and the creditor must
creditor.
consent.
novation requisites: 3. the old debtor must be excused or released
1. existence of a valid old obligation. from his obligation.

2. intent to extinguish or to modify the old Debtor upon his payment gives him rights under
obligation by substantial difference 1236 and 1237.

3. the capacity and consent of all the parties Art 1294

4. validity of the new obligation. If substitution is without the knowledge or

against the debtor's will, the new debtor's
Art 1292 insolvency or non-fulfillment of the obligation
shall not give rise to any liability on the part of
Express and implied novation.
the original debtor.
Read in the book and reviewer.
Art 1295

Onward – read through book and reviewer.

Art 1293

In novation where a new debtor replaces the

old one, it can be made even without the
knowledge or will of the old debtor, but not
without consent if the creditor.

Change of debtor and change of creditor.

This talks of passive subjective novation.

Expromision – initiative comes from the third

person

Delegacion – initiative comes from the debtor

for it is he who delegates another to pay the

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Reviewer in Obligations and Contracts
Nestor Jeremy B. Moreno

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