Recitation:

1. A filed an action against B for a recovery of sum of money. May there be an issue in that
case whether the obligation is joint or solidary? Yes.
a. Who would claim that the obligation is solidary? A.
2. 2001 Bar, No. 7: Four foreign medical students rented the apartment of Thelma for a
period of 1 year. After one semester, 3 of them returned to their home country and the 4 th
transferred to a boarding house. Thelma discovered that they left unpaid telephone bills
in the amount of P80,000.00. The lease contract provided that the lessees shall pay for the
telephone services in the leased premises. Thelma demanded that the 4 th student pay the
entire amount of the unpaid telephone bills, but the latter is willing to pay only ¼ of it.
Who is correct? Why? (Note: If you use the disputable presumption that the obligation
is joint, you should point out that the facts were not able to counter such
presumption.)
3. Give an example of an obligation which by its nature is solidary?
4. Give an example of an obligation which by law is solidary?
5. Give an example of an obligation which by its terms is solidary?
6. Ronquillo v. CA?
7. Malayan Insurance v. CA?
a. Who were held liable?
b. San Leon was held under what principle?
c. As far as Sio Choy was held liable under what principle?
i. Is Art. 2184 really applicable? No. 1st, he was not in the vehicle. 2nd, 2180
will still not be liable since Sio Choy is not the employer of the driver.
8. PNB v. Independent Planters Association, Inc?
a. Did the SC hold that the subject Rule is contrary to law?
9. A and B creditors while X, Y and Z are debtors. 360K. A filed an action as against X. The
action was dismissed on the ground of prescription. After the decision attained finality, B
filed a case against X. Will the case prosper?
a. Assuming the obligation is joint and the debtors are subjected to the same terms
and conditions, will the suit of B suffer the same fate?
b. Assuming the obligation is joint, A demanded the whole P360,000.00 from X
which the latter paid, can B compel X to pay? No.
i. Is there an exception? To the extent that B benefited from the payment.
c. In a solidary obligation, X paid A the entire P360,000 last year. Today, X claimed
reimbursement from Y? P120,000.
i. Can Y be liable for interest? Depends upon whether the debt was before
or after maturity.
d. Solidary obligation, A demanded payment from X. Then B demanded from X. X
paid B. May A still hold X liable?
10. 1984 Bar, No. 11: A, B and C solidarily promised to pay D the amount of P3,000.00.
Unfortunately, C became insolvent.
a. What recourse does D have against A and B? He can demand fulfillment from
one or both of them.
b. What are the rights of A and B as against each other? To contribute
11. 1998 Bar, No. 15: Joey, Jovy and Jojo are solidary debtors under a loan obligation of
P300,000.00 which has fallen due. The creditor has, however condoned Jojo’s entire share
in the debt. Since Jovy has become insolvent, the creditor makes a demand on Joey to pay
the debt.
a. How much, if any, may Joey be compelled to pay? P50,000.00.
b. To what extent, if at all, can Jojo be compelled by Joey to contribute to such
payment?
12. A and B creditors while X, Y and Z are debtors in the amount of P360,000.00:
 a. What if the action of A against X was dismissed. A then filed an action against Y,
would the action prosper? The answer would depend on why the action against
X was dismissed.
13. 2003 Bar, No. 14: A, B, C, D and E made themselves solidarily indebted to X for the
amount of P50,000.00. When X demanded payment from A, the latter refused to pay on
the following grounds:
a. B is only 16 years old.
b. C has already been condoned by X.
c. D is insolvent.
d. E was given by X an extension of 6 months without the consent of the other four
co-debtors. (Tricky-dicky)
State the effect of each of the above defenses put up by A on his obligation to pay X, if
such defenses are found to be true.
14. Is minority a total or partial defense? It depends on who the minor is. Also consider
whether the obligation is solidary or joint.
15. X promised to pay P100,000.00 to A OR B. A demanded payment from X. Latter on B
demanded payment from X. X paid B. Can A still validly demand payment from X? It
would depend on the intention of the parties as to whether who has the right to choose
upon whom payment should be made. However, the view of Tolentino on this question
is not in accordance with law. It would be a better position to apply the rules on
alternative obligations.
16. An obligation to deliver 1000 sacks of rice, is it divisible or indivisible? It depends on
whether the parties agreed on the partial fulfillment of the prestation.
17. Are there obligations which are divisible by their nature as the law would actually
recognize even without stipulation.

12/02/09

Remedies

The first thing that should be in your mind as to whether or not an action will prosper is whether
the plaintiff is the aggrieved party. Remedies are only granted to the aggrieved party.

You can classify remedies into:

1. extra-judicial; and
2. Judicial.

Extra-judicial remedies.

Among those expressly recognized by law are the remedies of the unpaid seller:
1. the right to retain;
2. stoppage in transitu; and
3. resale, among others.

The favorite remedy is rescission.

There is this misconception that recession is a judicial remedy. This is both judicial and extra-
judicial under 1191. 1191 is in relation to reciprocal obligations.

As a principal remedy as distinguished from a subsidiary remedy.

Rescission under 1191 is just a result of an erroneous translation. It should have been called
resolution. Under 1191, this power to rescind is given because there is a substantial breech. If
there is only a slight breach only an action for damages. 1381 is based on economic prejudice that
is why the right to rescind is given. So in a decision of Natura, an action for rescission was filed
after 4 years from contract. It will depend on which it depends. If (1191), 4 years. But in that case
the action was based on breach of obligation so 10 years.

Rescission under 1191 is a principal remedy. It may be invoked even if other remedies are
present. 1381 is only a subsidiary remedy. It can only be invoked when there is no other legal
remedies.

URC v. CA – The main issue in the case is whether the action for rescission is proper? Basically
3 defenses of UFC:
1. Magdalo Francisco has not performed his obligation. – If the plaintiff himself has not
complied with his obligation, he has no cause of action. He must be an aggrieved party.
However, according to SC, he had no obligation. Sir may not agree. Read two paragraphs, all
the rights would be transferred, including ownership. Also there is a condition of reverting back.
But at any rate it is just a matter of fact. But on law he agrees.
2. Is there substantial breach? – Yes. Magdalo Francisco was to be appointed chief chemist
of the company. He was terminated from that position.
3. Rescission will not prosper because Magdalo has not exhausted his available remedies. –
Read opinion of JBL Reyes. 1191 is a primary remedy. Magdalo filed under 1191. In 1381,
there need not be breach, only an economic damage is necessary.

UP v. de los Angeles – The question is if rescission may be invoked extra-judicially, why the
need to file an action?
There would be a need to file an action if the aggrieved party is praying for the return of what
was delivered. If that is the case you cannot do extra-judicial rescission. But the extra-judicial
rescission is subject to the question of the other party of the act.

When does extra-judicial rescission take effect? From the time notice is given to the other party.
Even if it is questioned but it is upheld, it is dated to notice.

If fulfillment is resorted to as a remedy, may the aggrieved party still rescind? If fulfillment
should become impossible due to the fault of the offending party, rescission is still a remedy.

If a party asks for rescission, can he later on ask for fulfillment? Read Magdalena case.
Rescission extinguishes the obligation. There is nothing more to be fulfilled. But look at 1181,
although rescission is a remedy, the court may not grant it and fixes a judicial period.

As far as judicial remedies are concerned, Bar Exam Question, possible judicial remedies are (1)
specific performance or (1) for the aggrieved party to ask another person to perform the
obligation or (3) damages. But the first two may be with damages.

A obliged himself to deliver a 2009 29 inch Sony Bravia and a 9 cubic feet refrigerator with motor
number ABC123 and to repair the piano of A. None of these were complied with. Can A be
compelled to perform them? What are the remedies?

Classify the obligations first as to give to do or not to do.

Obligation to repair the piano – (answer questions in seriatim, huwag labo labo, in order dapat,
this is only for conveniece) – this an obligation to do. It may not be compelled otherwise it is
involuntary servitude.
Deliver Sony TV and refrigerator – determine whether the thing is generic or determite. The TV
is generic. The remedy therefore is to ask somebody to deliver such. Specific performance is not a
remedy because it may be performed by anybody. Plus damages.

With regard to the refrigerator – it is a determinate thing, the remedy is to demand fulfillment or
specific performance with damages. It may only be performed by the debtor. It will be proper
for so long as it is possible for him to perform.

With obligations to do – what is the remedy? As to the repair of the piano, the personal
qualifications of the debtor may not have been considered. Others are available, so the remedy
is to have it repaired at the expense of the debtor.

But if the personal qualifications have been taken into consideration, e.g. singing of Regine,
substitute performance cannot be made. So determine if personal qualifications have been taken
into consideration.

Subsidiary Remedies.

1177, the law itself recognizes two subsidiary remedies:

1. Bring all the rights of the debtors against 3rd persons – accion subrogatoria
 There are 3 persons involved, the creditor, the debtor and the debtor of the debtor. Take
note that the court clearly provides that rights which are inherent in his person cannot be
exercised.
 If the debtor is an agent of a 3 rd person, can the creditor exercise the rights of the debtor?
It depends. If in agency, the right of the agent is just to be compensated, it can be
exercised by the creditor.
 Legal support cannot be the subject of a subrogatory action. Otherwise Ok lang.
 Syet, di ko nakuha.
2. Accion pauliana (also recognized in rescissible contracts)

To what extent may a debtor be held liable?

Present and future?

Present property. The law is clear, it is only subject to exemptions provided by law.

The most common is the family home. Take note in FC, a family home is not exempt in certain
situations. Taxes on the property, debts prior to institution, etc. Also when the family home is in
excess of a certain amount.

Rules of court – madami dito. Example 2 carrbaos. It depends. Is he a farmer.

Future property. As a rule they are, subject to exemptions. If there was a judicial declaration of
insolvency, and the obligation is discharged by the courts, there can be no liability.

Modes of extinguishment.

Are the modes of extinguishment exclusive? No. Note that insolvency in itself does not
extinguish.

1231 mentions 10.

Annulment, rescission, fulfillment of a resolutory condition, and prescription.

Bear that in mind when we discuss loss of the thing and prescription.

There are many other modes. Fulfillment of a resolutory period.

Is death a mode of extinguishing obligation? Tolentino says yes. Sir agrees only in so far as
contracts are concerned. For example, if it arises from law it depends upon the law. Exception is
the obligation is purely personal in character.

The unilateral act of one of the parties? In contracts no. It would violate the mutuality of
contracts. As a rule contracts bind the parties subject to exceptions. But the law may grant the
right to revoke. Ex. agency. Any of them may terminate the agency. Partnership also is subject to
unilateral act.

Compromise? Is this mode of extinguishment other than those enumerated? No. It would fall
under condonation up to a certain extent. (Ronquillo v. CA) However, there are those which
cannot be classified as condonation because it is different. Example, delivery of a specific horse.
Then it was changed into a car. The obligation is extinguished but it falls under novation.

Renunciation by the creditor? This is not independent. The civil code recognizes gratuitous and
onerous renunciation. Condonation and novation. Divah? Chos!

Happening of an unforeseen event? SC, it is not a mode of extinguishment. Under the law, the
mode of extinguishment is the effect of the unforeseen event. Example loss. Note that if the
obligation is to deliver an indeterminate thing, a fortuitous event shall not extinguish the
obligation. Also, in delivering a determinate car, it might not have been affected by the fortuitous
event.

Nullity of contracts? If the contract is null and void, no obligation will arise. Therefore there is
nothing to extinguish.

Change in civil status? Yes. Obligation to support may be terminated by nullity of marriage.

Sara v. DBP – pertains to a mode of extinguishment which is the mutual desistance of the parties.
The rationale is if a contract may be created by the agreement of the parties it may be terminated
by the disagreement of the parties.

Payment.

May this mode of extinguishment be invoked in all kinds of obligations? Yes. Payment is
considered synonymous to performance or fulfillment of the obligation.

Is this a good coverage to include all other kinds of obligations? Yes. It has basis in our culture.
It is translated to “Bayad na ko sa iyo.” It is not limited to monetary obligations.

Classify the rules into four.

1. To the person who pays.
2. In relation to the person to whom payment is made.
3. The prestation to be performed or thing to be delivered.
4. Date, time, place and manner of payment.

All of these rules must be considered in order to determine whether the payment is valid.
1. To the person who pays (not necessarily the debtor).
a. Free disposal - If the person who paid is suffering civil interdiction, there is a
right to recover, payment is not valid.
b. Capacity to alienate - Payment by a 12 year old kid (only a voidable contract,
may also arise from quasi-delicts) is not valid.

If A is indebted to B secured by a mortgage executed by X, X offered to pay, would

the obligation be extinguished? It depends on whether B accepted the offer. Tender is
not a mode, it is only preliminary to payment. Note that as a rule a creditor cannot be
compelled to accept performance from a 3rd person. Of course there are exceptions.
(1) stipulation of the parties; (2) the 3 rd person has an interest in the performance of
the obligation (ex. guarantor).

What if A and X are joint creditors? Does a co-debtor have an interest in the
fulfillment of the entire obligation. SC, yes. X may not be compelled to perform the
entire obligation but his reputation is at stake.

What is X paid B and B accepted payment. The payment extinguishes the obligation.
Consent and interest in the performance would only be important only between the
3rd person and the debtor. If there is interest, subrogation. If no interest, depends.

If without knowledge or against the will (no consent), X can only demand
reimbursement to the extent that the original debtor was benefited (A might have
already made partial payments). What is upon demand of A cannot give anything,
can X foreclose? No, no subrogation.

If X paid with the consent of A, X can recover the entire amount paid. He consented.
He can also foreclose the mortgage. It is a misconception to consider that the
mortgage was constituted in favor of B or that the obligation was extingiusihed. You
must consider the effects of subrogation. X will be able to exercise all the rights that B
would have been able to exercise.

The other rules here are not that important.

Example, donation. By express provision of the law, even if the donation was
without consent, B can still retain. What is the effect of the void donation? It will
depend upon the rules of succession. If inofficious, it can be recovered from A.

2. In relation to the person to whom payment is made (not necessarily the creditor).

Example, A is indebted to B. Payment was made to a 3rd person.

1240 enumerates that for payment to be valid it should be made: to a person in whose
favor the obligation was constituted (not necessarily a party to the contract). If not to this
person, to the successors in interest of that person (these may be the heirs or assignees).
Finally, payment was made to a person authorized to receive payment (the authority
need not come from the creditor; the law may grant the authority; e.g. sheriff, agents,
executors, administrators).

If payment is given to person not in 1240, it is an invalid payment. As a rule it does not
extinguish the obligation. But there are exceptions to that rule. Under the law you can
classify it into 3:
 a. The payment redounded to the benefit of the creditor (burden of the payor or
creditor to prove benefit) But there are instances when benefit need not be
proven, it is conclusive:

i. Ratification
ii. By the conduct of the creditor he led the debtor to believe that a 3 rd
person has authority to receive (estoppel)
iii. The 3rd person acquired the rights of the creditor after the payment.
(Even the rights were acquired before payment, it is not payment under
this rule but payment to a successor in interest)

b. The payment was made in good faith to a person in possession of the credit.

Ex. A indebted to B. A executed and delivered a promissory note to B. The note

was negotiated to X. On due date, X was paid. The premise is that X is wrong
party. Possession of credits is different from possession of the evidence of credit.
For example, possession of a bearer instrument is title. But possession of an order
instrument without indorsement is not title.

c. Assignment of credit. Payment was made to the assignor. If there was no

knowledge of the assignment, the payment is valid. Otherwise it is payment to a
3rd person.

3. The prestation to be performed or thing to be delivered.

A very important rule in payment is that partial payment is non-payment. As a rule the
creditor cannot be compelled subject to exceptions. Ex. Stipulation; the debt is partly
liquidated;

1234 and 1235

1234 – substantial performance in good faith.

A obligated himself to deliver 100 sacks of rice to B for P1000 per sack. A delivered 65
sacks of rice. B may or may not accept. He accepted. But the remaining sacks could not be
delivered. Could B have the right to rescind? Yes. The right to rescind can only be
withheld when there has been substantial performance.

Read the cases.

75% is substantial performance.

What is the effect is the performance was substantial?

The aggrieved party has no right to rescind. But he is entitled to damages. So pano na?
Deduct the amount of damages from what would have been paid.

Take note of failure to object to partial payment. The right to question it might be waived.

Payment of debts in money; monetary obligations.

 May there be a valid obligation where the currency agreed upon is not Ph currency?
Yes. A good example is in the law on sales. Note, Ponce was decided prior to allowing
the payment of obligations in foreign currency. RA 8183.

Can a creditor be compelled in checks?

New Pacific Timber case – SC, if it is a certified, manager’s check it is deemed as cash.
But in latter cases, SC said that checks have no legal tender power. Sir thinks that this is a
good developments. Payment through check cannot be compelled but it can be accepted.

But may a check produce an effect of payment? Yes, when it is encashed.

What if the check becomes stale? Can the creditor ask for another check. No, unless it
became stale due to debtor. The check can be used as an evidence of the indebtedness.
But it is only a rebutable presumption.

1250 – the scenario is the debt may have been due already as early as 1968.
(Commissioner v. Burgos) In 1998 the Court decided in favor of the plaintiff. But a
prayer was made to reflect the amount of the debt from the time it was due. Should the
motion be granted? (Phil Foundry). 1250 cannot be invoked for the adjustment because
there was no extra-ordinary inflation or deflation.

1250 was included to adress scenarios similar to WWII. But even assuming that there is
such a senario, should the motion be granted? Not necessarily. Only applied to
obligations arising from contract. 1250 says currency is STIPULATED. In Burgos, the
obligation arose from law, not contract.

Read del Rosario v. Shell.

4. Date, time, place and manner of payment.

It is subject to stipulation.

For delivery of thing:

If determinate – where it was located at the constitution of the obligation.
If indeterminate – domicile of the debtor.

Special forms of payment.

Madalas objective ang questions.

Is consent of the parities required for an obligation to be extinguished by the special forms of
payment? The problem pertains to the consent of the creditors.

In dation in payment, yes.

In consignation, consent is not necessary.
Application of payments? Consent is not required as a rule. The debtor is given the right to
apply.
Payment by cession? Consent of the creditors is necessary. The creditors will only be constituted
as agents to sell the properties and apply the proceeds to the debts.

Whether or not there will be transfer of ownership?

Dation – yes.
Application – yes.
Cession – no.
Consignation – not necessarily, the consignation may be void. But if the consignation is valid
because it was upheld by the court or accepted by the creditor, it retroacts to the date of
consignation.

Extent of extinguishment.
Application of payments. It is always partial payments.
In cession – the rule is clear, it extinguishes to the extent of the proceeds except when it is agreed
upon that there is to total extinguishment.
Consignation – rules are applicable. Ex, if what is consigned is not full payment, there is no
payment. But if consignation is held valid it extinguishes the debt.
Dation – for Sir. payment only up to the extent of the value of the property unless there is an
agreement that the obligation is totally extinguished.

Individual rules.

Dation

Shall it be governed by the law on sales? 1245, only if the debt is in money. Otherwise it will not
be governed by the law on sales.

Citizen’s surety case.

Dation requires a pre-existing debt.

Application of payments:
There is practically only one question – to what debt should payment be applied? The premise is
that debtor has two or more debts of the same kind. The creditor may be 1 or more. The
important thing to note is the multiplicity of debts.

1. As a rule the debtor has the right of application. But there are limitations: (Ex. 100, 50, 30
debt; payment of 30)
a. Rules on partial payment are applicable.
b. Rules on debts not yet due where the period is for the benefit of the creditor.
c. Cannot be applied to the principal prior to interest.
d. Cannot vary agreements as to where to apply first.
2. Creditor may designate. But is consent of debtor needed? Yes. The creditor will issue a
receipt and only when such receipt is accepted that there is a valid application.
3. What if there was no designation by the parties? Apply to onerous? Wrong! First look at
whether all the debts are of the same nature or burden, if so, pro rata. If not of the same
nature, apply to most onerous. (There is no hard and fast rule to determine which is more
onerous.)

Ex.

Debt 1: Sole debtor (more onerous)

Debt 2: Solidary

Debt 1: interest bearing (more onerous)

Debt 2: no interest

Debt 1: secured (more onerous)

Debt 2: unsecured
Debt 1: Principally bound (more onerous) (but note, the premise the guarantor is already liable.
Not that he is secondariliy liable. It becomes more onerous because the person subsidiarily bound
has a recourse against the person primarily liable)
Debt 2: Subsidiarilly bound

With regard to older or newer debts, there can be no basis to say which one is more onerous.

Payment by Cession

A property which is exempt may be ceded but in case of a family home, the consent of all
beneficiaries are needed.

Is insolvency needed? No. This is an agreement of the parties. Insolvency is not important.

Financial difficulty is the normal scenario but it is not required.

What if the debtor is willing to abandon his property to his creditors but the creditors refuse?
What is the next best remedy? File a petition for declaration of insolvency.

Note that cession does not extinguish the entire obligations but in judicial declaration, obligations
may be extinguished.

Tender of payment and consignation

Tender of payment is not a mode of extinguishing obligations. It is a mere offer to pay.

Is tender of payment required as a rule prior to consignation? Look at 1256. There are 6 grounds.
But in 5 of them, tender is not required. Tender of payment is required only when the creditor
refuses to accept without just cause.

Soto case – SC, tender of payment maybe extra-judicial. So it may be judicial. But this is wrong.
By its very nature tender of payment is extra-judicial. It is made prior to the case for consignation.

If the debtor wrote 3 letters to the debtor that he is willing to pay, is it a valid tender? No. There
must be an actual offering of payment.

Dimculata v. Navarro. Note that consignation requires the existence of an obligation to be

extinguished. Otherwise, there is no need for consignation.

Grounds:
1. When the creditor is unknown – note that there may be an agent.
2. Without just cause refuses to issue a receipt – receipt does not extinguish, but a receipt is
a proof of payment, so to protect the debtor, consignation is granted.
3. 2 or more persons claim the same right – Note that the debtor should first determine who
has the right. There mere claim of multiple parties is not sufficient.

Another issue is notice, notice before and after is needed. Is it required that the debtor himself
sends them? Only the first notice should be given by the debtor. The second notice may be in the
form of a summons.

What if there are multiple debts like lease? SC – still give the notices to the creditor for every
obligation or installment.
Sir agrees with Tolentino that lack of notice gives rise to damages, but still take note of the case.
Effect of withdrawal – can the debtor withdraw as a matter of right? Yes, if the creditor has not
yet accepted AND the court has not yet declared the consignation is valid. Afterwards,
withdrawal can be made, but not as a matter of right. It must be done with consent.

Ex. debt secured by mortgage.

If withdrawn as a matter of right – the obligation exists, mortgage subsists.
If withdrawn not as a matter of right – the obligation is revived, but not the mortgage.

The obligation to pay interest:

A is indebted to B.
Due on 1/1/01.
Tender of payment of 1/2/01.
Consignation on 1/1/04.
Court rendered a decision on 1/1/09.

If the court declared the consignation to be void, the obligation has interest IF the debtor is in
delay.
If the court declared the consignation to be valid:
the intervening period from consignation up to judgment, no interest.
The intervening period from due date to tender – yes if there is delay.
During tender to consignation – SC, justice and equity, no interest; View of Sir,
Compensatio morae. Both parties are in delay from the time of tender. If both are in delay, there
is no delay.