Obligations and Contracts

Art. 1156. An obligation is a juridical necessity to give, to

do or not to do.
Obligation
-obligation is a juridical relation whereby a person (creditor)
may demand from another (debtor) the observance of a
determinate conduct, and, in case of breach, may obtain
satisfaction from the assets of the latter. (Arias Ramos)
Elements of Obligation:
1. an active subject power to demand prestation
[creditor/obligee]
2. assive subject bound to perform the prestation
[debtor/obligor]
3. an object or t!e restation conduct necessary to
produce the effects of the sale
Requisites
a. it must be possible! physically and "uridically
b. it must be determinate or at least determinable
c. it must ha#e the possible equi#alent in money
$ pecuniary interest may be for the benefit of
third persons! not necessarily the parties
$ pecuniary #alue is not limited to the ob"ect or
prestation but e%tends to the sanctions which
corresponds to the "uridical duty
$ creditors interest may be sentimental! moral!
or ideal
$ it must ha#e an economic #alue or
susceptible of substitution in money in case
of non$fulfillment
&. efficient cause"juridical tie between the two
sub"ects by reason of which the debtor is bound in
fa#or of the creditor to perform the prestation' the
#inculum which may be a relation
(stablished by
1. by law e.g. husband and wife )obligation to support*
2. by bilateral acts e.g. contracts
3. by unilateral acts e.g. crimes and quasi$delicts
subjects may be individual persons or juridical
persons; must be determinable in some manner,
need not be determined in the act constituting the
obligation
Art. 115# Obligations arise from:
1. $a%&
'. (ontracts&
). *uasi-contracts&
+. Acts or omissions unis!ed by la%& and
5. *uasi-delicts
+ollicitacio an offer without acceptance is not binding
,nilateral promise can also gi#e rise to obligation
Art. 115,. Obligations derived from la% are not resumed.
Only t!ose e-ressly determined in t!is (ode or in secial
la%s are demandable, and s!all be regulated by t!e
recets of t!e la% %!ic! establis!es t!em& and as to
%!at !as not been foreseen, by t!e rovisions of t!is
.oo/. 011213
the law cannot e%ist as a source of obligations! unless
the acts to which its principles may be applied e%ist
Art. 1152. Obligations arising from contracts !ave t!e
force of la% bet%een t!e contracting arties and s!ould be
comlied %it! in good fait!. 01121a3
Autonomy of %ill $ presupposes that the contract is #alid and
enforceable'
$ terms of the contract must not be contrary to
law! morals! good customs! public policy! or
public order
$ if contract does not #iolate any of the
limitations abo#e! it should be gi#en effect!
notwithstanding the absence of any legal
pro#ision at the time it was entered into
which go#erns it
falsification of contract unauthori-ed insertion of additional
stipulations does not a#oid the whole contract! which still must
be enforced! disregarding only the additional stipulations
4uantum meruit - .as much as he has deser#ed.
$ in cases of attorney/s contracts! an attorney
is not entitled in the absence of e%press
contract! to reco#er more than a reasonable
compensation for his ser#ices
Art. 1161. Obligations derived from 4uasi-contracts s!all
be subject to t!e rovisions of (!ater 1, 5itle 6788, of t!is
.oo/. 0n3
*uasi-contract "uridical relation which arises from certain
lawful! #oluntary! and unilatery acts to the end that no one may
be un"ustly enriched or benefited at the e%pense of another
0cts gi#ing rise to quasi$contract must be
1. lawful
2. #oluntary
3. unilateral
Art. 1161. (ivil obligations arising from criminal offenses
s!all be governed by t!e enal la%s, subject to t!e
rovisions of Article '1##, and of t!e ertinent rovisions
of (!ater ', 9reliminary 5itle, on :uman ;elations, and of
5itle 67888 of t!is .oo/, regulating damages. 0112'a3
R+1! 0rt. 122 3e#ery person criminally liable for a
felony is also ci#illy liable4
5he ci#il liability springs out of and is dependent upon
facts! if true! would constitute a crime
8ndeendent (ivil Action
$ a criminal act is entirely independent of the criminal action
hence! the ci#il action can be filed separately e#en without any
reser#ation in the criminal action
1. obligations not arising from the act or omission
claimed to be criminal
2. #iolations of constitutional rights and liberties of
indi#iduals
3. defamation! fraud! or physical in"uries
&. refusal or failure of members of a local police force to
render protection of life or property
Arts. )1, )', )+, '1#6 - can be gi#en retroacti#e effect
Art. 116'. Obligations derived from 4uasi-delicts s!all be
governed by t!e rovisions of (!ater ', 5itle 6788 of t!is
.oo/, and by secial la%s. 0112)a3
whoe#er by act or omission causes damage to
another! there being fault or negligence! is obliged to
pay for the damage done
4uasi-delict $ no pre$e%isting contractual relation
between the parties in such fault or negligence
basis of liability founded upon undisputable
principle of equity
<egligence failure to obser#e the protection of the interest of
another person! that degree of care! precaution and #igilance
which the circumstances "ustly demands! whereby such other
person suffers in"ury
5est of negligence:
1
Obligations and Contracts
a. duty on the party of the defendant to protect the
plaintiff from the in"ury which the latter complains
b. failure to perform that duty
c. an in"ury to the plaintiff through such failure
5%o =inds of <egligence:
1. culpa aquiliana )culpa$e%tra$contractual* negligence
as a source of obligation
2. culpa contractual negligence in the performance of
a contract
<A5>;E A<? E@@E(5A O@ O.$8BA58O<
9restation - 3 6inds
1. to gi#e
2. to do
3. not to do
?elivery of Beneric Objects
Beneric"indeterminate t!ing indicated only by its 7inds!
without being designated and distinguished from others of the
same 7ind
in the obligation to deli#er a generic thing! the ob"ect
becomes due and demandable
the moment it is deli#ered! it becomes determinate
limited generic when the generic ob"ects are
confined to a particular class
unless limited! the obligation to deli#er a generic or
indeterminate thing is not confined to the ob"ects
which the debtor may own or possess
?elivery of ?eterminate 5!ing
?eterminate"secific t!is one that is indi#iduali-ed and can
be identified or distinguished from others of its 7ind
3 8ncidental or accessory obligations in an obligation to deli#er
a determinate things
1. the obligation to preser#e the thing with due care
2. the obligation to deli#er the fruits
3. the obligation to deli#er the accessions and
accessories
Art. 116). Every erson obliged to give somet!ing is also
obliged to ta/e care of it %it! t!e roer diligence of a
good fat!er of a family, unless t!e la% or t!e stiulation of
t!e arties re4uires anot!er standard of care. 0112+a3
liability for damages imposed upon the debtor who
fails to e%ercise the diligence of a good father of a
family )ordinary diligence*
debtor is e%empted from liability due to no fault or
negligence of his! but to fortuitous e#ents or force
ma"eure
Art. 116+. 5!e creditor !as a rig!t to t!e fruits of t!e t!ing
from t!e time t!e obligation to deliver it arises. :o%ever,
!e s!all ac4uire no real rig!t over it until t!e same !as
been delivered to !im. 011253
;eal rig!t rights of ownership and possession
$3the power belonging to a person o#er a specific
thing! without a passi#e sub"ect indi#idually determined!
against whom such right may be personally e%ercised4
9ersonal rig!t 3the power belonging to one person to
demand another! as a definite passi#e ob"ect! the fulfillment of
a prestation to gi#e! to do! or not to do
Non nudis pactis, sed traditione dominia
rerum transferentur
$ the ownership of things is transferred not by
mere agreements but by deli#ery
the creditor does not acquire any
real right o#er the thing e%cept from the time it is deli#ered
to him
Art. 1165. C!en %!at is to be delivered is a determinate
t!ing, t!e creditor, in addition to t!e rig!t granted !im by
Article 11#1, may comel t!e debtor to ma/e t!e delivery.
8f t!e t!ing is indeterminate or generic, !e may as/ t!at
t!e obligation be comlied %it! at t!e e-ense of t!e
debtor.
8f t!e obligor delays, or !as romised to deliver t!e same
t!ing to t%o or more ersons %!o do not !ave t!e same
interest, !e s!all be resonsible for any fortuitous event
until !e !as effected t!e delivery. 011263
;emedies of (reditor 0%!en debtor fails to comly %it! !is
obligation3
1. an action for specific performance! to obtain
compliance of the prestation'
2. an action! in some cases! to rescind or resol#e the
obligation'
3. an action for damages! e%clusi#ely or in addition to
either of the first actions
9o person shall be imprisoned for debt.
5he debtor in default is not liable for fortuitous e#ents! if he
pro#es that e#en is he had performed the obligation the
loss would ha#e occurred in the same manner.
Art. 1166. 5!e obligation to give a determinate t!ing
includes t!at of delivering all its accessions and
accessories, even t!oug! t!ey may not !ave been
mentioned. 0112#a3
Accessories those things which! destined for the
embellishment! use or preser#ation of another thing or more
importance! ha#e for their ob"ect the completion of the latter for
which they are indispensable or con#enient.
Accessions include e#erything produced by a thing! or
which is incorporated or attached thereto! either naturally or
artificially.
(#erything that is attached! naturally or artificially! to
the principal thing! as well as that which ser#es to
complete it! e#en it not attached to it! must be
deli#ered with it.
5he parties may agree to e%clude any accession or
accessory of the thing.
Art. 116#. 8f a erson obliged to do somet!ing fails to do it,
t!e same s!all be e-ecuted at !is cost.
5!is same rule s!all be observed if !e does it in
contravention of t!e tenor of t!e obligation. @urt!ermore,
it may be decreed t!at %!at !as been oorly done be
undone. 0112,3
when the debtor does not comply with an obligation to
do! the creditor is entitled to ha#e the thing done in a
proper manner! by himself or by a third person! at the
e%pense of the debtor.
2
Obligations and Contracts
5he law does not authori-e the imposition of personal
force or coercion upon the debtor to comply with his
obligation.
5he only remedy is indemnification for damages.
Art. 116,. C!en t!e obligation consists in not doing, and
t!e obligor does %!at !as been forbidden !im, it s!all also
be undone at !is e-ense. 01122a3
0side from undoing what is done in #iolation of the
prohibition! he can be held liable for damages
8n other cases! it is impossible to undo the thing!
either physically or legally! or because of the rights of
third persons! or for some other reason.
Art. 1162. 5!ose obliged to deliver or to do somet!ing
incur in delay from t!e time t!e obligee judicially or
e-trajudicially demands from t!em t!e fulfillment of t!eir
obligation.
:o%ever, t!e demand by t!e creditor s!all not be
necessary in order t!at delay may e-ist:
013 C!en t!e obligation or t!e la% e-ressly so
declare& or
0'3 C!en from t!e nature and t!e circumstances
of t!e obligation it aears t!at t!e designation of
t!e time %!en t!e t!ing is to be delivered or t!e
service is to be rendered %as a controlling motive
for t!e establis!ment of t!e contract& or
0)3 C!en demand %ould be useless, as %!en t!e
obligor !as rendered it beyond !is o%er to
erform.
8n recirocal obligations, neit!er arty incurs in delay if
t!e ot!er does not comly or is not ready to comly in a
roer manner %it! %!at is incumbent uon !im. @rom t!e
moment one of t!e arties fulfills !is obligation, delay by
t!e ot!er begins. 01111a3
?elay D default D mora
$ delay in the fulfillment of obligation
$ non$fulfillment with respect of time
there can be delay only in positi#e obligations )to do
and to gi#e* but there can be no delay in negati#e
obligations )not to do and not to gi#e*
=inds of Eora:
1. mora solvendi $ default on the part of the debtor
which may either be ex re (obligations to give) or ex
persona (obligations to do)
imputable to the debtor
presupposes a prestation that is due and
enforceable
there is no mora in natural obligations
Requisites
a. that the obligation be demandable and already
liquidated
b. that the debtor delays the performance
c. that the creditor requires the performance "udicially
and e%tra"udicially
(ffects
a. when it has for its ob"ect a determinate thing! the
delay places the ris7s of the thing on the debtor
b. he becomes liable for damages
'. mora acciiendi default on the part of the creditor
$ the delay in the performance based on the
omission by the creditor of the necessary
cooperation! especially acceptance on his
part
$ when the debtor tenders payment or
performance but the creditor refuses to
accept it without "ust cause
$ it is essential that the prestation offered be
precisely the one that is due as to content!
time and place
(ffects'
a. the responsibility of the debtor for the thing is reduced
and limited to fraud and gross negligence
b. the debtor is e%empted from the ris7s of loss of the
thing! which automatically pass to the creditor
c. all e%penses incurred by the debtor for the
preser#ation of the thing after the mora shall be
chargeable to the creditor
d. if the obligation bears interest! the debtor does not
ha#e to pay the same from the moment of the mora
e. the creditor becomes liable for the damages
f. the debtor may relie#e himself of the obligation by the
consignation of the thing
). comensation morae default of both parties in
reciprocal obligations
$ the parties in a bilateral contract can regulate
the order in which they shall comply with
their reciprocal obligations
$ if the parties do not determine the order of
fulfillment of their obligations! the fulfillment
must be recirocal and simultaneous
$ neit!er t!e arty incurs default if t!e
ot!er does not comly, is not ready to
comly in a roer manner %it! %!at is
incumbent uon !im
Beneral ;ule: fulfillment by the parties should be
simultaneous. :here both are in default! their respecti#e
liability shall be offset equitably.
;elinquency commences when one of
the contracting parties fulfills his obligation and becomes
in#ested with power to determine the contract because
failure on the opf the other carry out the agreement.
?emand
default begins from the moment the creditor
demands the performance of an obligation
demand may be in any form! pro#ided that it can be
pro#ed )incumbent upon the creditor*
without such demand! "udicial or e%tra$"udicial! the
effects of default will not arise
;emand is necessary e#en if a period has been fi%ed
in the obligation
;efault cannot be ad"udged in fa#or of the creditor!
e%cept from the time that "udicial or e%tra"udicial
demand for payment is made upon the debtor.
?efault
3
Obligations and Contracts
E-tra-judicial demand default begins from the date
of such e%tra$"udicial demand
<o articular date on t!e e-tra-judicial demand
default must commence from the filing of the
complaint
9ature of demand must refer to prestation that is due and not
to another
?emand <ot ;e4uired:
1. where there is e%press stipulation to that effect
2. where the law so pro#ides
)<1=2 it is not sufficient that the law or the obligation
fi%es a date of performance' it must further state e%pressly
that after the period lapses! default will commence*
3. when the period is the controlling moti#e or the
principal inducement for the creation of the obligation
&. where demand would be useless
a. when the impossibility is caused
by some act or fault of the debtor
b. when the impossibility is caused
by fortuitous e#ent! but the debtor has bound
himself to be liable in cases of such e#ents
in case of doubt! doubt is resol#ed in fa#or of the
debtor
(essation of t!e Effects of Eora
.enefits arising from default or delay may cease uon:
1. renunciation by the creditor e-ress or imlied
'. prescription
there is implied renunciation! when after
delay has been incurred! the creditor grants
the e%tension of time to the debtor or agrees
to a no#ation of the obligation.
Art. 11#1. 5!ose %!o in t!e erformance of t!eir
obligations are guilty of fraud, negligence, or delay, and
t!ose %!o in any manner contravene t!e tenor t!ereof, are
liable for damages. 011113
@raud defined as the #oluntary e%ecution of a wrongful act!
or a willful omission! 7nowing and intending the effects which
naturally and necessarily arise from such act or omission.
>raud referred to is the deliberate and intentional
evasion of the normal fulfillment of obligations.
0ny #oluntary and willful intent! which pre#ents the normal
reali-ation from such act ? fraud
0s ground for damages in this article! it implies some 7ind of
malice or dishonesty and it cannot co#er cases of mista7es
and errors of "udgment made in good faith.
5est: the element of intent! and not the degree of actual harm
done
>ault or negligence is 7nown as culpa contractual in this
article' culpa auilian or extra contractual in 0rticle 21@A
But whether contractual or non$contractual! the negligence
of the defendant should be the pro%imate cause of the
damage to the plaintiff if the liability is to attach.
?elay
(#ery debtor who fails in the performance of
his obligation is bound to indemnify for the losses and
damages caused thereby.
3in any manner contra#ene the tenor4 of the
obligation includes any illicit act which impairs the strict
and faithful fulfillment of the obligation! or e#ery 7ind of
defecti#e performance
8t is not enough that there is non$
performance or delay to hold the debtor liable for
damages' such non$performance or delay must be
imputable to him.
5he delay or contra#ention of the obligation
must either be malicious or negligent to actionable' if due
to fortuitous events! such contra#ention cannot ordinarily
gi#e rise to damages.
E-cuse of <on-erformance
:hen the failure of the debtor to perform is
due to fortuitous events or force majeure! he cannot be
held liable for damages! unless there is an e%press
agreement to the contrary or the law otherwise pro#ides in
particular cases.
;ecoverable ?amages
;amage/damages ? include any and all
damages that a human being may suffer in any and all
manifestations of his life physical or material! moral or
psychological! mental or spiritual! financial! economic!
social! political and religious.

Breach of contractual obligation entitles the
other party to damages e#en if no penalty for such breach
is pro#ided in the contract.
8n the matter of damages! the plaintiff is
entitled to the #alue of the use of his property from the
time it was ta7e to the time of restoration.
5he responsibility for damages arising from
non$fulfillment of a contractual obligation cannot be
di#ided nor can it be e%tended to persons who ha#e
nothing to do with the obligation.
9ayment of Eoney
;amages may be reco#ered under this
article when the obligation is to do something other than
the payment of money.
Art. 11#1. ;esonsibility arising from fraud is demandable
in all obligations. Any %aiver of an action for future fraud
is void. 0111'a3
>raud ? malice or bad faith in the
performance of an e%isting obligation! not the fraud or
deceit used to procure a contract
Art. 11#'. ;esonsibility arising from negligence in t!e
erformance of every /ind of obligation is also
demandable, but suc! liability may be regulated by t!e
courts, according to t!e circumstances. 0111)3
=inds of cula
1. culpa contractual ! the court is gi#en a discretion to
mitigate liability according to the circumstances of the
case
$ fault or negligence in t!e erformance of
an already e-isting obligation
2. culpa auiliana not in#ol#ing a breach of e%isting
obligation! an employer may e%culpate or e%empt
himself from liability by pro#ing that the had e%ercised
due diligence to pre#ent the damage
$ source and creator of obligations
4
Obligations and Contracts
$iability of Emloyer
the employee cannot be sentenced to pay
damages! because the responsibility for his acts is in his
principal
the liability arising from the non$fulfillment of
a contractual obligation cannot be di#ided! nor can it be
e%tended to persons who ha#e nothing to do with the
obligation
the owner is the party directly responsible for
the fulfillment of the contract )non$responsibility of the
dri#er to the in"ured party*
Atiulations on $iability for <egligence
1. Craduating the responsibility of the debtor! by
determining the degree of negligence required which
may be more or less than the standard fi%ed by law.
2. 8mposing a liability for fault or negligence! where the
law does not impose it.
E-emtions from $iability
2 6inds
1. a party to a contract is relie#ed from the effects of his
fault or negligence by a third person )e.g. insurance*
2. one party to a contract renounces in ad#ance the right
to enforce liability arising from the fault or negligence
of the other
stipulations e%empting from liability for gross
negligence amounts to a fraud
#alidity of stipulation e%empting from liability
for simple negligence can be accepted as a
general principle
Art. 11#). 5!e fault or negligence of t!e obligor consists in
t!e omission of t!at diligence %!ic! is re4uired by t!e
nature of t!e obligation and corresonds %it! t!e
circumstances of t!e ersons, of t!e time and of t!e lace.
C!en negligence s!o%s bad fait!, t!e rovisions of
Articles 11#1 and ''11, aragra! ', s!all aly.
8f t!e la% or contract does not state t!e diligence %!ic! is
to be observed in t!e erformance, t!at %!ic! is e-ected
of a good fat!er of a family s!all be re4uired. 0111+a3
?egree of ?iligence ;e4uired
when neither the law nor the obligation itself
states the degree of diligence required of the obligor or
debtor 3that which would be obser#ed by a good father
of a family4
bonos aterfamilias a person of ordinary or a#erage
diligence
anyone who uses diligence below this
standard is guilty of negligence
t!ere is no fi-ed standard of diligence
alicable to eac! and every obligation
Art. 11#+. E-cet in cases e-ressly secified by t!e la%,
or %!en it is ot!er%ise declared by stiulation, or %!en
t!e nature of t!e obligation re4uires t!e assumtion of
ris/, no erson s!all be resonsible for t!ose events
%!ic! could not be foreseen, or %!ic!, t!oug! foreseen,
%ere inevitable. 01115a3
"aso fortuito or fortuitous event an e#ent which ta7es place
by accident and could not ha#e been foreseen
$ an une%pected e#ent or act of Cod which could ne#er be
foreseen nor resisted )e.g. floods! torrents! shipwrec7s! etc.
$ independent of the will of the obligor
2 Ceneral 1auses
1. by nature
2. act of man armed in#asion! go#ernmental
prohibitions! etc.
in order that acts of man may constitute
fortuitous e#ent! it is necessary that they ha#e the force of
an imposition which the debtor could not ha#e resisted.
>ortuitous e#ents include una#oidable
accidents! e#en if there has been an inter#ention of human
element! pro#ided fault or negligence cannot be imputed
to the debtor.
Both fortuitous e#ent and force ma"eure refer
to causes independent of the will of the obligor.
(!aracteristics of @ortuitous Event:
1. the of the unforeseen and une%pected occurrence or
the failure of the debtor to comply with his obligation!
must be independent of the human will
2. 8t must be impossible to foresee the e#ent which
constitute caso fortuito! or if it can be foreseen! it must
be impossible to a#oid
3. the occurrence must be such to render it impossible
for the debtor to fulfill his obligation in a normal
manner
&. the obligor must be free from any participation in the
aggra#ation of the in"ury resulting to the creditor
?efense the accident must be due to natural causes and
absolutely without human inter#ention
Beneral ;ule: 5he debtor who is unable to fulfill his obligation
because of fortuitous e#ent or force ma"eure cannot be held
liable for damages of non$performance.
5o be e%empt from liability for loss because
of an act of Cod! he must be free from any pre#ious
negligence or misconduct by which that loss or damage
may ha#e occasioned.
5he parties may e%pressly stipulate in their
contract that the debtor shall be liable to the creditor! e#en
if the performance is rendered impossible by fortuitous
e#ent or force ma"eure.
0nother e%emption to the general rule is
when the nature of the obligation requires the assumption
of ris7.
#ui sentit commodum sentire debet it
incommodum )if a person! for con#enience or profit!
creates ris7s for the public which formerly did not e%ist!
although morally his fault or negligence may not be the
cause of the damages resulting therefrom! ne#ertheless
he should be liable for the damages*
0pplies to all 7inds of public ser#ice
5he liability! howe#er! should be limited to
ris7s and e#ents that are typical of the
business concerned' it cannot e%tend to
dangers which are not typical of the business
5
Obligations and Contracts
5he debtor is also released from
liability when the non$performance of the obligation is due
to the act of the creditor himself.
Art. 11#5. >surious transactions s!all be governed by
secial la%s. 0n3
8nterest $ the income produced by money in relation to its
amount to the time that it cannot be utili-ed by its owner. Day
be
1. Doratory those paid in contractual obligations to pay
a sum of money! either as the price for the use of the
money! or as a the stipulated ad#anced determination
of the damages due to the delay in the fulfillment of
the obligation
2. 1ompensatory interests on obligations which ha#e
an e%tra$contractual or delictual origin
>sury contracting for or recei#ing something in e%cess of the
amount allowed by law for the loan or forbearance of money!
goods or chattels
$ it is the ta7ing of more interest for the use of
money! goods or chattels or credits than the
law allows
Art. 11#6. 5!e receit of t!e rincial by t!e creditor
%it!out reservation %it! resect to t!e interest, s!all give
rise to t!e resumtion t!at said interest !as been aid.
5!e receit of a later installment of a debt %it!out
reservation as to rior installments, s!all li/e%ise raise
t!e resumtion t!at suc! installments !ave been aid.
01111a3
$ based on 0rt. 12E3 in which if a debt
produces interest! payment of the principal
shall not be deemed to ha#e been made until
the interests ha#e been co#ered
$ not applicable to the payment of ta%es
because the ta% of one year is independent
of the ta%es for other years
Art. 11##. 5!e creditors, after !aving ursued t!e roerty
in ossession of t!e debtor to satisfy t!eir claims, may
e-ercise all t!e rig!ts and bring all t!e actions of t!e latter
for t!e same urose, save t!ose %!ic! are in!erent in !is
erson& t!ey may also imugn t!e acts %!ic! t!e debtor
may !ave done to defraud t!em. 011113
;ig!ts of (reditors
8n order to satisfy their claims against their debtors
1. to le#y by attachment and e%ecution upon all the
property of the debtor e%cept such as are e%empt by
law from e%ecution
2. to e%ercise all rights and actions of the debtor! e%cept
such as are inherently personal to him
3. to as7 for the rescission of the contracts made by the
debtor in fraud of their rights
the property of the debtor is sub"ect to
liability of his obligations
;e4uisites in t!e E-ercise of t!e ?ebtorFs ;ig!ts 0by t!e
creditor3
1. the creditor has an interest in the right or action not only
because of his credit but because of the insol#ency of the
debtor
2. malicious or negligent inaction of the debtor in the
e%ercise of his right or action of seriousness as to the
endanger the claim of the creditor
3. the credit of the debto against a third person is certain!
demandable and liquidated
&. the debtor/s rights against the third person must be
patrimonial! or susceptible of being transformed to
patrimonial #alue for the benefit of the creditor
accion subrogatoria (subrogatory action)! the action which
the creditor may e%ercise in the place of his negligent debtor in
order to preser#e or reco#er for the patrimony of the debtor the
product of such action! and then obtain therefrom the
satisfaction of his own credit
$ needs pre#ious appro#al of the court
$ entitled only to so much as is needed to
satisfy his credit
$ the balance! if there be any! pertains to the
creditor
9ersonal ;ig!ts of ?ebtor 0which cannot be e%ercised by the
creditor*
1. the right to e%istence! thereby e%empting from the
reach of creditors whate#er he may be recei#ing as
support
2. rights or relations of a public character
3. rights of an honorary character
&. rights consisting of powers which ha#e not been uses.
8ncluding
a. the power to administer! such as when the
debtor fails to ha#e some property leased
the creditor cannot gi#e it in lease for him
b. the power to carry out an agency or deposity
which are purely personal acts
c. the power to accept an offer to a contract
E. non patrimonial rights! such as the action to establish
the debtor/s status as a legitimate or illegitimate child
A. patrimonial rights not sub"ect to e%ecution! such as
the right to a go#ernment gratuity or pension
@. patrimonial rights inherent in the person of the debtor!
such as the right to re#o7e a donation by reason of
ingratitude and the right to demand the e%clusion of
an unworthy heir
;escission of @raudulent Act
as a last recourse! creditors ha#e the right to set aside or
re#o7e the acts which the debtor may ha#e done to
defraud them
accion pauliana the action to re#o7e or rescind such acts
$ all acts of the debtor which reduce his
patrimony in fraud of his creditors! whether
by gratuitous or onerous title! can be
re#o7ed by this action
$ includes alienation of property! payment of
debts which are not due! renunciation of
rights
6
Obligations and Contracts
$ the debtor/s renunciation of a prescription
which has already been acquired is also
included
$ creditors are protected not only by the
debtor/s #oluntary acts but also from "udicial
acts
$ payments of pre$e%isting obligation already
due whether natural or ci#il cannot be
impugned by an accion pauliana
Art. 11#,. Aubject to t!e la%s, all rig!ts ac4uired in virtue
of an obligation are transmissible, if t!ere !as been no
stiulation to t!e contrary. 0111'3
an instrument e#incing a credit may be transferred or
assigned by the creditor to another! and the transferee
would be considered in lawful possession of the same as
well as of the credit unless the contrary is shown.
(!ater )
?ifferent =inds of Obligations
1. pure
2. conditional
3. with a term
&. alternati#e
E. "oint or mancommunada
A. solidary or in solidum
@. di#isible
F. indi#isible
G. with a penal clause
Art. 11#2. Every obligation %!ose erformance does not
deend uon a future or uncertain event, or uon a ast
event un/no%n to t!e arties, is demandable at once.
Every obligation %!ic! contains a resolutory condition
s!all also be demandable, %it!out rejudice to t!e effects
of t!e !aening of t!e event. 0111)3
9ure obligation when the obligation contains no term or
condition whate#er upon which depends the fulfillment of the
obligation contracted by the debtor
immediately demandable and there is
nothing to e%empt the debtor from
compliance therewith
a demand note is strictly pure obligation and
consequently in the absence of other restrictions!
payment thereof is immediately demandable
when the period originally gi#en has been cancelled
by mutual agreement of the parties! or the non
fulfillment of a condition resol#es the period
stipulated! the obligation must be considered pure
immediate demandability of pure obligations should
not lead to absurd interpretations or requirements
impossible of instantaneous compliance
(onditional Obligation is one which is sub"ect to a
condition.
(ondition e#ery future and uncertain e#ent upon which an
obligation or pro#ision is made to depend
futurity and uncertainty must concur as characteristics of
the e#ent
an e#ent which is not uncertain but must necessarily
happen cannot be a condition' the obligation will be
considered with a term )e.g. death of a person*
the condition must be imposed by the will of a party and
must not be a necessary legal requisite of the act
the e#ent! although uncertain! must be possible
a past e#ent cannot be 3future and uncertain4 and cannot
constitute a condition
what can be a condition is the future 7nowledge or proof of
a past e#en un7nown to the parties! but not the e#ent
itself.
(lassification of (onditions
1. suspensi#e and resolutory
2. potestati#e! casual or mi%ed
3. di#isible and indi#isible
&. con"uncti#e and alternati#e
E. positi#e and negati#e
A. e%press and implied
@. possible and impossible
fulfillment of the condition is indi#isible! hence partial
fulfillment of the condition does not gi#e rise to the
e%istence of part of the obligation
indi#isibility of the condition passes to the heirs of the
debtors hence! some heirs cannot demand partial
performance of the obligation by offering to fulfill the part
of the condition corresponding to them
9lurality of conditions
if se#eral conditions are imposed on the same obligation!
the necessity of complying with all or one depends upon
the intention of the parties
if the conditions imposed are imposed in the alternati#e or
dis"uncti#ely fulfillment of one is sufficient
if con"uncti#ely all of them must be complied with
Art. 11,1. C!en t!e debtor binds !imself to ay %!en !is
means ermit !im to do so, t!e obligation s!all be deemed
to be one %it! a eriod, subject to t!e rovisions of Article
112#. 0n3
the creditor should file an action to fi% a period for the
payment of the obligation
an immediate action to enforce the obligation! without a
period ha#ing been pre#iously fi%ed by the court would be
premature
Art. 11,1. 8n conditional obligations, t!e ac4uisition of
rig!ts, as %ell as t!e e-tinguis!ment or loss of t!ose
already ac4uired, s!all deend uon t!e !aening of t!e
event %!ic! constitutes t!e condition. 0111+3
Ausensive condition if the suspensi#e condition happens!
the obligation arises! if the condition does not happen! the
obligation does not come into e%istence
a7a condition precedent or antecedent
7
Obligations and Contracts
contract cannot be perfected unless the condition is
complied with
;esolutory condition resolutory condition e%tinguishes
rights and obligations already e%isting' the obligations and
rights already e%ist but under the threat of e%tinction upon the
happening of the resolutory condition
a7a subsequent
if t!e condition does not !aen
Ausensive conditional creditor loses all
hope of becoming the real creditor
;esolutory creditor/s rights become
absolute
Art. 11,' C!en t!e fulfillment of t!e condition deends
uon t!e sole %ill of t!e debtor, t!e conditional obligation
s!all be void. 8f it deends uon c!ance or uon t!e %ill of
a t!ird erson, t!e obligation s!all ta/e effect in
conformity %it! t!e rovisions of t!is (ode. 011153
9otestative condition one which depends upon the will of
the contracting parties' one which is in the power of one of the
parties to reali-e or pre#ent
(asual condition depends e%clusi#ely upon chance or other
factors! and not upon the will of the contracting parties' also
includes condition which is depended upon the will of the third
person
Ei-ed condition depends upon the will of one of the
contracting parties and other circumstances! including the will
of a third person
=inds of 9otestative (ondition
1. simple potestati#e condition which presupposes not
only a manifestation of will but also the reali-ation of
an e%ternal act [e.g. Hif you sell your house/]
does not pre#ent the formation of a #alid
obligation
depends on the #oluntary act of the debtor
and also to contingencies o#er which it has
no control
2. purely potestati#e condition which depends solely
and e%clusi#ely upon the will [e.g. if 8 li7e it]
destroys the efficacy of the legal tie
Effect 9otestative (ondition
when the potestati#e condition depends
e%clusi#ely upon the will of the debtor the obligation is
voidG
:hen it depends partly on the will of the
debtor and partly upon chance or the will of a third person
)mi%ed* conditional obligation is valid
:hen it depends on the e%clusi#e will of
the creditor valid
0pplicable only when the condition is suspensi#e and
cannot apply to resolutory condition
0 condition that is both potestati#e )or facultati#e* and
resolutory may be #alid! e#en though the condition is
made to depend upon the will of the obligor
[chec7 cases pp 1E2$1E3]
Art. 11,). 8mossible conditions, t!ose contrary to good
customs or ublic olicy and t!ose ro!ibited by la% s!all
annul t!e obligation %!ic! deends uon t!em. 8f t!e
obligation is divisible, t!at art t!ereof %!ic! is not
affected by t!e imossible or unla%ful condition s!all be
valid.
5!e condition not to do an imossible t!ing s!all be
considered as not !aving been agreed uon. 01116a3
8mossible conditions may be physical or "uridical
+hysically impossible contrary to the law of nature
Iuridically impossible contrary to law! morals! good customs!
and public policy
8mpossible or illicit conditions annul the obligations
dependent upon them only when the conditions are
positi#e and suspensi#e' if negati#e considered to ha#e
not been written )then the obligation is con#erted in pure
and simple one*
0pplies only to contracts
5ime of imossibility in order that an impossible condition
may annul the obligation! the impossibility must e%ist at the
time of the creation of t!e obligation
Juper#ening impossibility does not
affect the e%istence of an obligation
8f the condition was impossible when the
obligation was constituted! the obligation remains #oid
e#en if such condition subsequently becomes possible
unless the parties later agree again [chec7 pp 1E@]
8llogical conditions has similar effect of an impossible
condition
?ivisible obligation that part not affected by the impossible
or unlawful condition shall be #alid
<egative condition obligation is regarded as a pure and
simple one
Art. 11,+. 5!e condition t!at some event !aen at a
determinate time s!all e-tinguis! t!e obligation as soon
as t!e time e-ires or if it !as become indubitable t!at t!e
event %ill not ta/e lace. 0111#3
:hen no period has been fi%ed! the rule in
the second paragraph of article 11FE is applicable
Art. 11,5. 5!e condition t!at some event %ill not !aen at
a determinate time s!all render t!e obligation effective
from t!e moment t!e time indicated !as elased, or if it
!as become evident t!at t!e event cannot occur.
8f no time !as been fi-ed, t!e condition s!all be deemed
fulfilled at suc! time as may !ave robably been
contemlated, bearing in mind t!e nature of t!e obligation.
0111,3
Art. 11,6. 5!e condition s!all be deemed fulfilled %!en t!e
obligor voluntarily revents its fulfillment. 011123
(onstructive fulfillment refers to a condition which
although not e%clusi#ely within the will of the debtor! may in
some way be pre#ented by the debtor from happening
$ a party to a contract may not be e%cused from performing his
promise by the non$occurrence of an e#ent which he himself
pre#ented
$ if in pre#enting the fulfillment of the condition the debtor acts
pursuant to a right! the condition will not be deemed as fulfilled
8
Obligations and Contracts
$ there is constructi#e fulfillment only if the act of the debtor
had in fact pre#ented compliance with the condition
' ;e4uisites:
1. intent of t!e obligor to revent fulfillment of t!e
condition any act imputable to the debtor! whether done with
or without fraud or malice
2. actual revention or comliance
Art. 11,#. 5!e effects of a conditional obligation to give,
once t!e condition !as been fulfilled, s!all retroact to t!e
day of t!e constitution of t!e obligation. <evert!eless,
%!en t!e obligation imoses recirocal restations uon
t!e arties, t!e fruits and interests during t!e endency of
t!e condition s!all be deemed to !ave been mutually
comensated. 8f t!e obligation is unilateral, t!e debtor
s!all aroriate t!e fruits and interests received, unless
from t!e nature and circumstances of t!e obligation it
s!ould be inferred t!at t!e intention of t!e erson
constituting t!e same %as different.
8n obligations to do and not to do, t!e courts s!all
determine, in eac! case, t!e retroactive effect of t!e
condition t!at !as been comlied %it!. 011'13
Between the moment of the
creation of the conditional obligation and the fulfillment of
the suspensi#e condition! the creditor cannot enforce the
obligation' his right during that period is a mere
e%pectancy.
Effects of t!e obligation
retroact to t!e moment %!en suc! obligation %as
constituted or created. Hcondition is only accidental and
not an essential element of the obligation]
if the conditional obligation has
for its ob"ect the deli#ery of a determinate t!ing! the
debtor cannot! before the happening of the suspensi#e
condition! ma7e contracts disposing of or alienating or
encumbering the thing or otherwise creating a real right
o#er the thing incompatible with the right of the creditor.
Because of retroacti#ity of the
obligation! the creditor retains a superior right
;eli#ery transfers ownership or
real rights o#er the thing
8ncrease in #alue which the
thing may acquire before the happening of the suspensi#e
condition inures to the benefit of the creditor
8f the things is lost by fortuitous
e#ent before the happening of the condition! the debtor
suffers the loss because he is still the owner
:hen the obligation to gi#e is
reciprocal! the fruits and interest pending the happening of
the condition are deemed to mutually compensate each
other [the fruits and interests are considered as equi#alent
to and are made to offset each other]
Art. 11,,. 5!e creditor may, before t!e fulfillment of t!e
condition, bring t!e aroriate actions for t!e
reservation of !is rig!t.
5!e debtor may recover %!at during t!e same time !e !as
aid by mista/e in case of a susensive condition. 011'1a3
+ending the happening of the suspensi#e condition the
creditor has only an e%pectancy and cannot compel the
debtor to perform! acts or e#ent may ta7e place which
might render his right illusory
Action for reservation of t!e creditorFs rig!ts may !ave
for t!eir objects:
1. to pre#ent the loss or deterioration of the things which
are the ob"ects of the obligation by en"oining or
restraining acts of alienation or destruction by the
debtor himself or by third person
2. to pre#ent the concealment of the debtor/s properties
which constitute the guaranty in case of non$
performance of the obligation
3. to demand security if the debtor becomes insol#ent
&. to compel the ac7nowledgment of the debtor/s
signature on a pri#ate document or the e%ecution of
the proper public documents for registration so as to
affect third persons
E. to register the deeds of sale or mortgages e#idencing
the contract
A. to set aside fraudulent alienations made by the debtor
@. to interrupt the period of prescription! by actions
against ad#erse possessors of the things which are
the ob"ects of the obligation
the debtor who paid before the happening of the condition
to reco#er only what he paid by mista7e and pro#ided the
action to reco#er is brought before the condition happens
if the payment was made with 7nowledge of the condition
there is an implied wai#er of the condition and whate#er
has been paid cannot be reco#ered
Art. 11,2. C!en t!e conditions !ave been imosed %it!
t!e intention of susending t!e efficacy of an obligation to
give, t!e follo%ing rules s!all be observed in case of t!e
imrovement, loss or deterioration of t!e t!ing during t!e
endency of t!e condition:
013 8f t!e t!ing is lost %it!out t!e fault of t!e
debtor, t!e obligation s!all be e-tinguis!ed&
0'3 8f t!e t!ing is lost t!roug! t!e fault of t!e
debtor, !e s!all be obliged to ay damages& it is
understood t!at t!e t!ing is lost %!en it eris!es,
or goes out of commerce, or disaears in suc! a
%ay t!at its e-istence is un/no%n or it cannot be
recovered&
0)3 C!en t!e t!ing deteriorates %it!out t!e fault of
t!e debtor, t!e imairment is to be borne by t!e
creditor&
0+3 8f it deteriorates t!roug! t!e fault of t!e debtor,
t!e creditor may c!oose bet%een t!e rescission
of t!e obligation and its fulfillment, %it! indemnity
for damages in eit!er case&
053 8f t!e t!ing is imroved by its nature, or by
time, t!e imrovement s!all inure to t!e benefit of
t!e creditor&
063 8f it is imroved at t!e e-ense of t!e debtor,
!e s!all !ave no ot!er rig!t t!an t!at granted to
t!e usufructuary. 011''3
$ applies only to obligations to deli#er a determinate or specific
thing
A t!ing is lost:
1. when it perishes
9
Obligations and Contracts
2. when it goes out of the commerce of man
3. when it disappears
if the loss is due to the fault of the debtor! he becomes
liable for damages to the creditor upon the fulfillment of
the condition' if the debtor is without fault! the obligation is
e%tinguished! unless there is stipulation to the contrary
?eterioration of t!ing deterioration is any reduction or
impairment in the substance of #alue of a thing which does not
amount to loss
if the deterioration is not imputable to the
debtor! he is not liable for any damages for
such deterioration and the creditor must
accept the thing in its impaired condition
8mrovement anything added to! incorporated in! or
attached to the thing that is due
if caused by the nature of things
inures to the benefit of the creditor
if at the e%pense of the debtor
debtor has the right of a
usufructuary )can be remo#ed by
the debtor without damage to the
thing due' if cannot be remo#ed
must be deli#ered together with the
thing to the creditor
Art. 1121. C!en t!e conditions !ave for t!eir urose t!e
e-tinguis!ment of an obligation to give, t!e arties, uon
t!e fulfillment of said conditions, s!all return to eac! ot!er
%!at t!ey !ave received.
8n case of t!e loss, deterioration or imrovement of t!e
t!ing, t!e rovisions %!ic!, %it! resect to t!e debtor, are
laid do%n in t!e receding article s!all be alied to t!e
arty %!o is bound to return.
As for t!e obligations to do and not to do, t!e rovisions
of t!e second aragra! of Article 11,# s!all be observed
as regards t!e effect of t!e e-tinguis!ment of t!e
obligation. 011')3
the rights of the creditors are immediately #ested' but such
rights are always in the danger of being e%tinguished by
the happening of the resolutory condition
if the condition does not happen! those rights are
consolidated and they become absolute in character
if the condition happens! such rights are e%tinguished and
the obligation is treated as if it did not e%ist' each party is
bound to return to the other what he has recei#ed! so that
they may be returned to their original condition before the
creation of the obligation
;ig!ts of t!ird ersons
if deli#ered and ownership is transferred by the possessor
to the third person! and later the condition happens! the
party entitled to restitution cannot sue the third person
directly for the reco#ery of the thing
no real right that can be enforced against third persons in
good faith
$oss, ?eterioration, 8mrovement
if the thing is lost before the happening of the resolutory
condition! the loss must be borne by the owner at the time
of the loss
Art. 1121. 5!e o%er to rescind obligations is imlied in
recirocal ones, in case one of t!e obligors s!ould not
comly %it! %!at is incumbent uon !im.
5!e injured arty may c!oose bet%een t!e fulfillment and
t!e rescission of t!e obligation, %it! t!e ayment of
damages in eit!er case. :e may also see/ rescission, even
after !e !as c!osen fulfillment, if t!e latter s!ould become
imossible.
5!e court s!all decree t!e rescission claimed, unless
t!ere be just cause aut!oriIing t!e fi-ing of a eriod.
5!is is understood to be %it!out rejudice to t!e rig!ts of
t!ird ersons %!o !ave ac4uired t!e t!ing, in accordance
%it! Articles 1),5 and 1),, and t!e Eortgage $a%. 011'+3
;ecirocal obligations in which each party is a debtor and
a creditor on the other' the obligation of one is dependent upon
the obligation of the other' they are to be performed
simultaneously! so that the performance of one is conditioned
upon the simultaneous fulfillment of the other
8mlied or tacit resolutory condition - a condition imposed
e%clusi#ely by law! e#en if there is no corresponding
agreement between the parties
when one party has performed his part of the contract! the
other party incurs in delay
5he party who has performed or is ready and willing to
perform may rescind the obligation if the other does not
perform or is not ready and willing to perform
+ower to rescind is gi#en to the in"ured party
:hen one party fails to comply with his obligation under a
contract! the other party has the right to 1. demand
performance' 2. as7 for the resolution of the contract
:here both parties ha#e committed a breach of obligation
and it cannot be determined who was the first infractor! the
contract shall be deemed e%tinguished and each shall
bear his/its own damages
?eclaration of ;escission
Rescission may ta7e place by the declaration of the
in"ured party' the rescission is a power! which does not
require the pre#ious declaration of rescission by the
courts.
8n"ured party may cancel contract without "udicial
inter#ention
5he e%tra"udicial declaration of the creditor! electing
rescission! produces legal effect.
Knce one of the parties fails to comply with his obligation!
the other is relie#ed from complying with his! and he may
therefore by his own declaration elect to rescind by not
performing his own underta7ing.
Aureme (ourt !eld: the mere failure of one party to perform
his underta7ing does not ipso "ure produce the resolution of the
contract' the other party entitled to resol#e should apply to the
court for a decree of rescission or resolution
Rescission will not be permitted for a slight or casual
breach of the contract! but only for such breaches as are
so substantial and fundamental as to defeat the ob"ect of
the parties in ma7ing the agreement.
1
Obligations and Contracts
Effect of ;escission
(%tinguishes the obligatory relation as if it
had ne#er been created! the e%tinction
ha#ing a retroacti#e effect
(qui#alent to in#alidating and unma7ing the
"uridical tie! lea#ing things in their nature
before the celebration of the contract
Rescission has the effect of abrogating the
contract in all parts
8t is the duty of the court to require both
parties to surrender that which they ha#e
respecti#ely recei#ed and to place each
other as practicable in his original situation
Alternative ;emedies:
1. as7 for specific performance of the obligation
2. KR as7 for the rescission of the contract which has
been breached
0lternati#e remedies so the in"ured party
cannot ha#e both
+rescripti#e period & years form the final
"udgment on specific performance
Jo long as there has not "udgment declaring
rescission! the creditor who has as7ed for it
may change his mind and demand specific
performance or #ice$#ersa
?amages ;ecoverable
Knly those elements of damages can be admitted which
are compatible with the conception of specific performance
Resolution of a contract purchaser is entitled to indemnity
for damages
:hile the right to rescind is implied! the contracting parties
may wai#e the same
5he parties to a bilateral contract may #alidly stipulate that
if one of them does not comply with his obligation! the
contract shall automatically be resol#ed.
Art. 112'. 8n case bot! arties !ave committed a breac! of
t!e obligation, t!e liability of t!e first infractor s!all be
e4uitably temered by t!e courts. 8f it cannot be
determined %!ic! of t!e arties first violated t!e contract,
t!e same s!all be deemed e-tinguis!ed, and eac! s!all
bear !is o%n damages. 0n3
:here both parties are in default! their respecti#e liability
for damages shall be offset equitably
AE(58O< '. - Obligations %it! a 9eriod

Art. 112). Obligations for %!ose fulfillment a day certain
!as been fi-ed, s!all be demandable only %!en t!at day
comes.
Obligations %it! a resolutory eriod ta/e effect at once,
but terminate uon arrival of t!e day certain.
A day certain is understood to be t!at %!ic! must
necessarily come, alt!oug! it may not be /no%n %!en.
8f t!e uncertainty consists in %!et!er t!e day %ill come or
not, t!e obligation is conditional, and it s!all be regulated
by t!e rules of t!e receding Aection. 011'5a3
5erm or eriod is a space of time which! e%erting influence
on obligations as a consequence of their "uridical act!
suspends their demandability or determines their
e%tinguishment
As distinguis!ed from condition
(ondition 5erm"9eriod
0
s to fulfillment
,ncertain e#ent Dust necessarily
come
0
s to influence on
obligation
Ci#es rise to an
obligation or
e%tinguishes one
already e%isting
Las no effect upon
the e%istence of
obligations! but only
their demandability or
performance
0
s to time
Day refer to a past
e#ent un7nown to the
parties
0lways refer to the
future
0
s to will of the
debtor
1ondition which
depends upon the
sole will of the debtor
annuls the obligation
+eriod left to the
debtor/s will merely
empowers the court
to fi% such period
;e4uisites of a 9eriod
1. future
2. certain
3. possible
=inds of 5erms:
1. suspensi#e e% die one that must lapse before the
performance of the obligation can be demanded
2. resolutory in diem the period after which the
performance must terminate
(lassified according to source:
1. legal fi%ed by law
2. #oluntary stipulated by the parties
3. "udicial allowed by the courts
Eay also be classified as:
1. original
2. period of grace
3. definite
&. indefinite
Effect of eriod:
11
Obligations and Contracts
obligations with a term are demandable only when
the day fi%ed for their performance arri#es
period for prescription must also be counted only
from such date of maturity and not from the date of
the obligation
once the date stipulated arri#es! the obligation can
be enforced
Ausension of 9eriod
in case of fortuitous e#ents or force ma"eure!
the contract shall be deemed suspended during said
period [only relie#es the parties from fulfillment of their
respecti#e obligations during that time]
Art. 112+. 8n case of loss, deterioration or imrovement of
t!e t!ing before t!e arrival of t!e day certain, t!e rules in
Article 11,2 s!all be observed. 0n3
Art. 1125. Anyt!ing aid or delivered before t!e arrival of
t!e eriod, t!e obligor being una%are of t!e eriod or
believing t!at t!e obligation !as become due and
demandable, may be recovered, %it! t!e fruits and
interests. 011'6a3
o applies only to obligations to gi#e
o allows for the reco#ery of the thing or money itself!
plus the fruits and interests )understood as those
accruing from the moment of payment to the date of
reco#ery*
o if the action to reco#er is not brought by the debtor
before the date of maturity! then the right to reco#er
the thing or money will cease
o allows debtor to reco#er fruits and interests in all
cases where he paid under mista7e as to the period
o construed in relation to the pro#isions on solution
indebiti or payment of what is not due
@ruits and 8nterests cannot be recovered in t!e follo%ing
cases:
1. when the obligation is reciprocal and there has been
premature performance on both sides
2. when the obligation is a loan on which the debtor is
bound to pay with interest
3. when the period is e%clusi#ely for the benefit of the
creditor! because the debtor paying in ad#ance loses
nothing
debtor has the burden of pro#ing his ignorance of the
period
if the payment before the period was made #oluntarily
with 7nowledge of the period! the payment cannot be
reco#ered )tacitly wai#ed the term*
Art. 1126. C!enever in an obligation a eriod is
designated, it is resumed to !ave been establis!ed for
t!e benefit of bot! t!e creditor and t!e debtor, unless from
t!e tenor of t!e same or ot!er circumstances it s!ould
aear t!at t!e eriod !as been establis!ed in favor of
one or of t!e ot!er. 011'#3
8f t!e eriod is for t!e benefit of:
1. both parties the creditor cannot demand payment
and the debtor cannot ma7e an effecti#e tender and
consignation of payment before the period stipulated
2. creditor only he may demand performance at any
time! but the debtor cannot compel him to accept
payment before the period e%pires
3. debtor only he may oppose a premature demand for
payment! but may #alidly pay at any time before the
period e%pires
Art. 112#. 8f t!e obligation does not fi- a eriod, but from
its nature and t!e circumstances it can be inferred t!at a
eriod %as intended, t!e courts may fi- t!e duration
t!ereof.
5!e courts s!all also fi- t!e duration of t!e eriod %!en it
deends uon t!e %ill of t!e debtor.
8n every case, t!e courts s!all determine suc! eriod as
may under t!e circumstances !ave been robably
contemlated by t!e arties. Once fi-ed by t!e courts, t!e
eriod cannot be c!anged by t!em. 011',a3
whene#er a period is fi%ed pursuant to its pro#isions! the
court does not amend or modify the obligation
concerned! but merely enforces or carries out an implied
stipulation in the contract
(ourt may fi- a eriod in t!e follo%ing cases:
1. when the term of the lease has been left to the will of
the lessee
2. when the terms of a donation imposing certain
conditional do not fi% time for the performance of the
conditions
3. where a building contract did not fi% a definite period
within which the engineer was to complete the
construction of the house co#ered of the contract
&. when the #endor is gi#en the right to redeem but no
term was specified for the redemption
the mere failure of the parties to fi% a period!
howe#er! will not "ustify the court in fi%ing one' thus! it is
not incumbent upon courts to fi% the period during which
the contracts of employment or ser#ices shall last
the only action that can be maintained on
obligations falling under this article is an action to as7 the
court to fi% a term within which the obligor must comply
with his obligation
once the period has been fi%ed by the court it
becomes part of the contract! and it cannot be
subsequently changed or e%tended by the court without
the consent of both parties
12
Obligations and Contracts
Art. 112,. 5!e debtor s!all lose every rig!t to ma/e use of
t!e eriod:
013 C!en after t!e obligation !as been contracted, !e
becomes insolvent, unless !e gives a guaranty or security
for t!e debt&
0'3 C!en !e does not furnis! to t!e creditor t!e guaranties
or securities %!ic! !e !as romised&
0)3 C!en by !is o%n acts !e !as imaired said guaranties
or securities after t!eir establis!ment, and %!en t!roug! a
fortuitous event t!ey disaear, unless !e immediately
gives ne% ones e4ually satisfactory&
0+3 C!en t!e debtor violates any underta/ing, in
consideration of %!ic! t!e creditor agreed to t!e eriod&
053 C!en t!e debtor attemts to abscond. 011'2a3
o in cases pro#ided in this article! the obligation
becomes due and demandable e#en if the period
has not yet e%pired
o the degree of insol#ency that would "ustify
immediate enforcement of the obligation is a
matter that should be left to the courts
Art. 1122. A erson alternatively bound by different
restations s!all comletely erform one of t!em.
5!e creditor cannot be comelled to receive art of one
and art of t!e ot!er underta/ing. 011)13
Kn the basis of plurality of ob"ects! obligations may be
classified into
1. con"uncti#e
2. alternati#e se#eral ob"ects being due! the fulfillment
of one is sufficient! determined by the choice of the
debtor who generally has the right of election' the loss
of one of the things due does not e%tinguish the
obligation
3. facultati#e only one thing is due! but the debtor has
reser#ed the right to substitute it with another' the loss
of that which is due as the ob"ect of the obligation will
e%tinguish the obligation
Art. 1'11. 5!e rig!t of c!oice belongs to t!e debtor, unless
it !as been e-ressly granted to t!e creditor.
5!e debtor s!all !ave no rig!t to c!oose t!ose restations
%!ic! are imossible, unla%ful or %!ic! could not !ave
been t!e object of t!e obligation. 011)'3
8n alternati#e obligations the debtor has the right to
choose the method of meeting the obligation unless
the creditor e%pressly reser#ed the right to himseld
5he right to choose may be granted to the creditor'
grant must be e%pressed
$imits on election
5he right to choose is indi#isible the debtor cannot
choose part of one prestation and part of another
5he debtor cannot choose unlawful or impossible
underta7ings. 5he presence of such underta7ings
does not annul the obligation! which subsists! e#en as
an alternati#e one if there are other lawful and
possible ob"ects.
13
Obligations and Contracts
9either can the debtor select prestation which could
not ha#e been the ob"ect of the obligation.
@orm of Action
o when the debtor has the right to choose!
the plaintiff/s action must be in the alternati#e form!
demanding either M or N ob"ect! at the election of the
debtor
o if the creditor demands only one of the
ob"ects! he as7s more than what he is entitled to
demand!
o the "udgment must also be in alternati#e
form.
Art. 1'11. 5!e c!oice s!all roduce no effect e-cet from
t!e time it !as been communicated. 011))3
the notice of selection or
choice may in any form pro#ided it is sufficient to
ma7e the other party 7now that the election has been
made' may be made
1* orally 2* in writing 3* tacitly
&* by any other unequi#ocal means
:hen the debtor! to whom the
right to choose pertains! performs one of the
prestations with the intent to discharge the obligation!
he is released! because the selection made may be
implied in the fact of performance
5acit declaration of the
selection in the following
1. performance of the debtor who has the right to choose
2. acceptance of a prestation by the creditor when he has
the right of selection
3. when the creditor sues for the performance of one of the
prestations
the law does not require the other party to consent to
the choice made by the party entitled to choose.
0 mere declaration of the choice! communicated to
the other party is sufficient' it a unilateral declaration
of will
E-cetion when the debtor has chosen a prestation
which could not ha#e been the ob"ect of the
obligation' the creditor/s consent would bring about a
no#ation of the obligation
9lurality of subjects
:hen there are #arious debtors or creditors! and the
obligation is "oint! the consent of the all is necessary
to ma7e the selection effecti#e! because none of them
can e%tinguish the entire obligation.
8f the obligation is solidary! and there is no stipulation
to the contrary! the choice by one will be binding
personally upon him but not as to others
(ondition or 5erm
5he selection made by one party cannot be sub"ected
by him to a condition or a term unless the other party
consents thereto.
Effect of (!oice
to limit the obligation to the ob"ect or prestation
selected! with all the consequences which the law
pro#ides.
5he obligation is con#erted into a simple prestation.
Knce the selection has been communicated! it
becomes irre#ocable.
5o allow a change in the selection after it has been
communicated to the other party! is to e%pose the
latter to damages arising from the preparation he may
ma7e on the assumption that the prestation selected
is the one to be performed.
Election once made is binding on t!e erson %!o
ma/es it, and !e %ill not t!ereafter be ermitted to
renounce !is c!oice and ta/e anot!er alternative
%!ic! %as at first oen to !im.
Error as to Obligation
:hen the debtor performs one of the prestations!
belie#ing that he has a simple obligation )an
ignorance of the alternati#es and the right to choose*!
there is no declaration of the selection! nor a binding
performance of the obligatiob.
5here is a payment of what is not due! and the debtor
can reco#er the same in accordance with the
pro#ision of the law on quasi$contracts.
?elay in Ea/ing (!oice
5he right to choose is not lost by the mere fact that
the party entitled to choose delays in ma7ing his
selection.
Art. 1'1'. 5!e debtor s!all lose t!e rig!t of c!oice %!en
among t!e restations %!ereby !e is alternatively bound,
only one is racticable. 011)+3
8f all the prestations! e%cept one! are impossible or
unlawful! it follows that the debtor can choose and perform
only that one.
5he obligation ceases to be alternati#e and is con#erted
into a simple obligation to perform the only feasible and
practicable prestation.
5he impossibility of the other prestations must not be due
to the creditor/s acts. )arts. 1223 shall apply in such cases*
0pplies only when the debtor has the right to choose
:here the creditor is granted the right to choose! article
122E when only one prestation remains practicable! either
due to fortuitous e#ent or due to the fault of the debtor
Art. 1'1). 8f t!roug! t!e creditorJs acts t!e debtor cannot
ma/e a c!oice according to t!e terms of t!e obligation,
t!e latter may rescind t!e contract %it! damages. 0n3
Art. 1'1+. 5!e creditor s!all !ave a rig!t to indemnity for
damages %!en, t!roug! t!e fault of t!e debtor, all t!e
t!ings %!ic! are alternatively t!e object of t!e obligation
!ave been lost, or t!e comliance of t!e obligation !as
become imossible.
14
Obligations and Contracts
5!e indemnity s!all be fi-ed ta/ing as a basis t!e value of
t!e last t!ing %!ic! disaeared, or t!at of t!e service
%!ic! last became imossible.
?amages ot!er t!an t!e value of t!e last t!ing or service
may also be a%arded. 011)5a3
0pplies to cases in which the debtor has the
right to choose
8f only some of the prestations are rendered
impossible! the fault of the debtor does not ma7e him
liable for damages )because he can still comply with the
obligation by performing any of the prestations remaining
)if there are still se#eral or there is only one still possible*
Le will become liable for damages under the
terms of this article when all the prestations become
impossible through his fault.
Effect of @ortuitous Event
8f all obligation becomes impossible! lea#ing only one
prestation obligation is e%tinguished )debtor not liable for
damages*
;ebtor is liable but the basis of damages will be the #alue
of the last prestation which became impossible through his
fault.
Art. 1'15. C!en t!e c!oice !as been e-ressly given to
t!e creditor, t!e obligation s!all cease to be alternative
from t!e day %!en t!e selection !as been communicated
to t!e debtor.
>ntil t!en t!e resonsibility of t!e debtor s!all be
governed by t!e follo%ing rules:
013 8f one of t!e t!ings is lost t!roug! a fortuitous
event, !e s!all erform t!e obligation by
delivering t!at %!ic! t!e creditor s!ould c!oose
from among t!e remainder, or t!at %!ic! remains
if only one subsists&
0'3 8f t!e loss of one of t!e t!ings occurs t!roug!
t!e fault of t!e debtor, t!e creditor may claim any
of t!ose subsisting, or t!e rice of t!at %!ic!,
t!roug! t!e fault of t!e former, !as disaeared,
%it! a rig!t to damages&
0)3 8f all t!e t!ings are lost t!roug! t!e fault of t!e
debtor, t!e c!oice by t!e creditor s!all fall uon
t!e rice of any one of t!em, also %it! indemnity
for damages.
5!e same rules s!all be alied to obligations to do or not
to do in case one, some or all of t!e restations s!ould
become imossible. 011)6a3
:hen the creditor has the right to choose! his selection ta7es
effect from the moment it is communicated to the debtor.
Jelection by the creditor made e%pressly or tacitly
Effect of (reditorFs delay
when the creditor fails to ma7e a selection in cases where
he has the right to choose! the debtor will not incur in
delay in the performance of the obligation! e#en if there is
a definite period fi%ed for performance.
E-cetion: when the obligation becomes a simple one by
the e%ercise of the creditor to choose there will be delay
on the part of the debtor.
8f the debtor does not ma7e his selection before the period
fi%ed! the debtor/s duty to perform does not arise because
the particular prestation to be performed has not been
determined.
Art. 1'16. C!en only one restation !as been agreed
uon, but t!e obligor may render anot!er in substitution,
t!e obligation is called facultative.
5!e loss or deterioration of t!e t!ing intended as a
substitute, t!roug! t!e negligence of t!e obligor, does not
render !im liable. .ut once t!e substitution !as been
made, t!e obligor is liable for t!e loss of t!e substitute on
account of !is delay, negligence or fraud. 0n3
?istinguis!ed from alternative
Alternative @acultative
0s to contents of the
obligation
5here are #arious
prestations all of
which constitute
parts of the obligation
1reditor demands all
the prestations!
lea#ing the debtor to
choose
Knly the principal
prestation constitutes
the obligation! the
accessory being only
a means to facilitate
payment
1reditor can demand
only the principal
prestation
0s to nullity 9ullity of one
prestation does not
in#alidate the
obligation in respect
to those which ha#e
no #ice
9ullity of the principal
prestation )such as
when the ob"ect is
unlawful or outside
the commerce of
man*! in#alidates the
obligation and the
creditor cannot
demand the
substitute e#en when
this is #alid
0s to choice 5he right to choose
may be gi#en to the
creditor
Knly the debtor can
choose the substitute
prestation
0s to effect of loss Knly the impossibility
of all the prestations
due without fault of
the debtor
e%tinguishes the
obligation
5he impossibility of
the principal
prestation is sufficient
to e%tinguish the
obligation! e#en if
substitute is possible
$oss of substitute
15
Obligations and Contracts
if the substitute prestation becomes
impossible due to the fault or negligence of the debtor! the
obligation is not affected! and he cannot be held liable for
damages
as a matter of principle there should always
be liability for bad faith
C!en substitution becomes effective
from the time the debtor communicates to the creditor that he
elects to perform the substitute prestation
AE(58O< +. - Koint and Aolidary Obligations

Art. 1'1#. 5!e concurrence of t%o or more creditors or of
t%o or more debtors in one and t!e same obligation does
not imly t!at eac! one of t!e former !as a rig!t to
demand, or t!at eac! one of t!e latter is bound to render,
entire comliance %it! t!e restation. 5!ere is a solidary
liability only %!en t!e obligation e-ressly so states, or
%!en t!e la% or t!e nature of t!e obligation re4uires
solidarity. 011)#a3
Art. 1'1,. 8f from t!e la%, or t!e nature or t!e %ording of
t!e obligations to %!ic! t!e receding article refers t!e
contrary does not aear, t!e credit or debt s!all be
resumed to be divided into as many s!ares as t!ere are
creditors or debtors, t!e credits or debts being considered
distinct from one anot!er, subject to t!e ;ules of (ourt
governing t!e multilicity of suits. 011),a3
Koint obligation one in which each of the solidary debtors
are liable only for a proportionate part of the debt! and each
creditor is entitled only to a proportionate part of the credit.
(ach creditor can reco#er only his share of the
obligation! and each debtor can be made to
pay only his part
Eancomunada, mancomunada simle, ro
rata
L%e romise to ayM 0by 2 or more signers
and no other words used to indicate the
character of the liability*
Aolidary obligation is one in which the debtor is liable for
the entire obligation! and each creditor is entitled to demand
the whole obligation.
(ach creditor may enforce the entire obligation!
and each debtor may be obliged to pay it in full.
Eancomunada solidaria, joint and several,
in solidum
Ljustos o searadamenteM
N8 romise to ayF 0followed by the signatures
of 2 or more persons*
8ndividually and collectively
8ndividually liable
8ndividual and jointly liable
Koint c!aracter resumed when two persons are liable
under a contract or under a "udgment! and no words appear in
the contract of the "udgment to ma7e each liable for the entire
obligation! the presumption is that their obligation is "oint or
mancomunada! and each debtor is liable only for a
proportionate part of the obligation.
Effect of joint liability
1. the demand by one creditor upon one debtor! produces
the effects of default only with respect to the creditor who
demanded and the debtor on whom the demand was
made but not with respect to the others
2. the interruption of prescription by the "udicial demand of
one creditor upon a debtor! does not benefit the other
creditors nor interrupt the prescription as to other debtors
16
Obligations and Contracts
3. the #ices of each obligation arising from the personal
defect of a particular debtor or creditor does not affect the
obligation or rights of others
&. the insol#ency of a debtor does not increase the
responsibility of his co$debtors! nor does it authori-e a
creditor to demand anything from his co$creditors
E. in "oint di#isible obligations! the defense of res "udicata is
not e%tended from one debtor to another
C!en solidarity e-ists
1. when there is an e%press stipulation in the contract
that the obligation is solidary! or words ha#ing the
same effect as used
2. when a charge or condition is imposed upon heir or
legatees! and the testament e%pressly ma7es the
charge or condition as in solidum
3. when the law e%pressly pro#ides for solidarity of the
obligation of se#eral obligors [chec7 pp 222]
&. when a solidary responsibility is imposed by a final
"udgment upon se#eral defendants
E. when the nature of the obligation requires solidarity
an obligation is presumed to be "oint unless solidarity has
been agreed upon
solidarity liability articles 1G$22! ci#il code
?isjunctive obligations
:hen there are two creditors designated dis"uncti#ely
1. application of the rules of alternative obligation
entitles the debtor to choose the creditor whom he
would pay
2. application of the rules of solidarity entitles either
one of the creditors to demand full payment! and the
debtor cannot refuse to pay the creditor who ma7es
the demand by alleging that the he chooses to pay
the other creditor
in case of doubt, solidarity s!ould be
favored! as it is more conduci#e to the
fulfillment of the obligation
Art. 1'12. 8f t!e division is imossible, t!e rig!t of t!e
creditors may be rejudiced only by t!eir collective acts,
and t!e debt can be enforced only by roceeding against
all t!e debtors. 8f one of t!e latter s!ould be insolvent, t!e
ot!ers s!all not be liable for !is s!are. 011)23
Koint indivisible obligation when there are se#eral debtors!
but the prestation is indi#isible )e.g. deli#ery of a house*! the
obligation is "oint! unless the solidarity has been stipulated.
8ts fulfillment requires the concurrence of all the
debtors! although each for his part
Kn the side of the creditors! collecti#e action is
e%pressly required for acts which may be
pre"udicial
9lurality of creditors if there are se#eral creditors and only
one debtor! the obligation can be performed only by deli#ering
the ob"ect to all the creditors "ointly.
0 debtor who deli#ers the thing to one creditor
only! becomes liable for damages because of
non$performance to other creditors! unless
they ha#e authori-ed the formers to recei#e
payment for all of them
8f only one or some of the creditors demand the
prestation! the debtor may legally refuse to
deli#er to them' he can insist that all creditors
together recei#e the thing and if any of them
refuses to "oin the others! he may deposit the
thing in court by way of consignation
8nterrution of 9rescrition an act which would ordinarily
interrupt prescription! effected by one creditor or against one of
the debtors is not #alid and has no effect' as long as the
obligation is "oint! the act of one creditor cannot ha#e any effect
as to another creditor! because the credit of each one is
separate from the credits of others. [t!e act of one is
ineffectiveO
9lurality of debtors where the plurality of sub"ects is among
the debtors! the indi#isible obligation can be performed by
them only by acting together. 8f any of the debtors is not willing
to perform! the prestation is con#erted into an indemnification
of damages.
5he obligation not to do when there are se#eral debtors!
is a "oint indi#isible obligation.
+artial performance is equi#alent to a total non$
performance
Art. 1'11. 5!e indivisibility of an obligation does not
necessarily give rise to solidarity. <or does solidarity of
itself imly indivisibility. 0n3
8ndi#isibility refers to the prestation which is not capable of
partial performance! while solidarity refers to the legal tie
or #inculum defining the e%tent of liability
:hen there are #arious creditors or debtors! the obligation
is "oint e#en if performance is indi#isible.
Art. 1'11. Aolidarity may e-ist alt!oug! t!e creditors and
t!e debtors may not be bound in t!e same manner and by
t!e same eriods and conditions. 011+13
=inds of solidarity:
1. acti#e one that e%ists among the creditors
2. passi#e one that e%ists among the debtors
3. mi%ed both on the part of the creditor and debtor
Active Aolidarity essence consists in the authority of each
creditor to claim and enforce the rights of all! with the resulting
obligation of paying e#eryone that belongs to him' there is
mutual representation )hence! mutual agency*
17
Obligations and Contracts
Effects:
1. since it is a reciprocal agency! the death of a solidary
creditor does not transmit the solidarity to each of his
heirs but to all of them ta7en together
2. each creditor represents the others in the act of
recei#ing payment! and in all other acts which tend to
secure the credit or ma7e it more ad#antageous.
3. one creditor does not represent the others in such
acts as no#ation! compensation! remission.
&. the credit and its benefits are di#ided equally among
the creditors! unless there is an agreement among
them to di#ide differently
E. the debtor may pay to any solidary creditor! but if a
"udicial demand is made on him! he must pay only to
the plaintiff
A. each creditor may renounce his right e#en against the
will of the debtor! and the latter need not thereafter
pay the obligation to the former
9assive Aolidarity essence is that each debtor can be made
to answer for the others! with the right on the debtor$payor to
reco#er from the others their respecti#e shares
Effects:
1. each debtor can be required to pay the entire
obligation' but after payment! he can reco#er from the
co$debtors their respecti#e shares
2. the debtor who is required to pay may set up by way
of compensation his own claim against the creditor
)effect the same as payment2
3. the total remission of the debt in fa#or of a debtor
releases all the debtors' but when this share affects
only the share of one debtor! the other creditors are
still liable for the balance of the obligation
&. all the debtors are liable for the loss of the thing due!
e#en if such loss is caused by the fault of only one of
them! or by fortuitous e#ent after one of the debtors
has incurred in delay
E. the interruption of prescription as to one debtor affects
all the others' but the renunciation by one debtor of
prescription already had does not pre"udice the others
because the e%tinguishment of the obligation by
prescription e%tinguishes also the mutual
representation among the solidary debtors
A. the interests due by reason of the delay of one of the
debtors are borne by all of them
5erms and condtions:
legal bonds in solidarity may be uniform )debtors are
bound by the same conditions and clauses* or
varied )where the obligors! although liable for the
same prestation! are ne#ertheless not sub"ect to
same terms and conditions* [chec7 pp 22G]
Art. 1'1'. Eac! one of t!e solidary creditors may do
%!atever may be useful to t!e ot!ers, but not anyt!ing
%!ic! may be rejudicial to t!e latter. 011+1a3
each solidary creditor may interrupt prescription! constitute
the debtor in default of bring suit so that the obligation may
produce interest
Art. 1'1). A solidary creditor cannot assign !is rig!ts
%it!out t!e consent of t!e ot!ers. 0n3
the solidary creditor is an agent of the others' hence!he
cannot assign that agency to a third person without the
consent of the other creditors.
Dutual agency! which is the essence of acti#e solidarity
implies mutual confidence
5he law implies that since assignments cannot be made! it
produces no effect whatsoe#er' the co$creditors and the
debtors are not bound thereby! and the assignee cannot
be regarded as a solidary creditor
Art. 1'1+. 5!e debtor may ay any one of t!e solidary
creditors& but if any demand, judicial or e-trajudicial, !as
been made by one of t!em, ayment s!ould be made to
!im. 011+'a3
the solidary creditor are tacitly mutual representati#es of
each other for demanding payment.
5he equality of the rights of the solidary creditors by #irtue
of this mutual representation lasts only until one of them
goes ahead of the others and sues the debtor.
:hen one creditor ma7es a "udicial demand! the tacit
representation is by the other creditors is considered
re#o7ed! and during the pendency of the action! the
creditors who did not sue lose their representation of
others.
E-tra-judicial demand
(%tra "udicial demand has the same effect as "udicial
demand in terminating the mutual representation among
solidary creditors and concentrating the agency in the
creditor who made the demand.
?emand by several creditors
if all or se#eral solidary creditors demand
payment separately! the debtor should pay to
the one who first notified him.
8f the creditors demand at the same time or
collecti#ely! the debtor preser#es his right to
choose and may pay anyone of those
demanding payment
Ei-ed solidarity when one creditor ma7es a demand upon
one of the debtors! the latter cannot pay to any other creditor
but one who made the demand
18
Obligations and Contracts
Art. 1'15. <ovation, comensation, confusion or
remission of t!e debt, made by any of t!e solidary
creditors or %it! any of t!e solidary debtors, s!all
e-tinguis! t!e obligation, %it!out rejudice to t!e
rovisions of Article 1'12.
5!e creditor %!o may !ave e-ecuted any of t!ese acts, as
%ell as !e %!o collects t!e debt, s!all be liable to t!e
ot!ers for t!e s!are in t!e obligation corresonding to
t!em. 011+)3
5he debtor who effects the no#ation cannot! by himself!
bind the others to a new debt without their consent
$ovation % the act of either replacing an obligation to perform
with a new obligation, or replacing a party to an agreement
with a new party
CR the mere e%tension of time for payment gi#en by the
creditor to a solidary debtor does not release others from
the obligation.
?ation in ayment: the deli#ery of a specific ob"ect as a
substitute for the performance of the obligation. 8f it is not
immediately effected! but it is in the form of a promise! it
amounts to a no#ation.
Eerger and comensation when the merger and
compensation is partial! and there is doubt as to what part
of the debt it should be applied! the rules on application of
payments shall apply.
;emission when one creditor ma7es a remission! it
e%tinguishes the obligation in the amount and to the e%tent
in which it is made' but the co$creditor who made the
remission becomes liable to his co$creditors for his share.
[chec7 pp 23G]
Effects of t!e acts - considered from 2 aspects
1. the relation between the creditors and debtors any
of the acts will e%tinguish the obligation! so that no
creditor may thereafter sue any debtor )e%cept in
no#ation! where there may be no change or only
partial change of the parties*' as among creditors
the act of any one of them in e%tinguishing the
obligation with respect to the debtor or debtors does
not pre"udice the rights of the other creditors to
reco#er their respecti#e shares from the creditor who
effected the acts
2. the relations among debtors themsel#es $ the co$
debtor as to whom the obligation was e%tinguished
cannot reco#er from his other co$debtors more than
their respecti#e shares in whate#er he may ha#e
gi#en up or lost as the consideration for the
e%tinguishment of the obligation
Art. 1'16. 5!e creditor may roceed against any one of t!e
solidary debtors or some or all of t!em simultaneously.
5!e demand made against one of t!em s!all not be an
obstacle to t!ose %!ic! may subse4uently be directed
against t!e ot!ers, so long as t!e debt !as not been fully
collected. 011++a3
9assive Aolidarity and Auretys!i
Aimilarities:
1. a solidary debtor! li7e a surety! stands for
some person
2. both debtor and surety! after payment may
require that they reimbursed
?istinctions:
1. a solidary debtor is liable not only for his co$debtor/s
obligation but also for his own )both a principal debtor
and a surety*
2. a solidary debtor/s responsibility for his co$debtor is
primary! not subsidiary
3. an e%tension of time gi#en by the creditor to a debtor
would not release a solidary co$debtor but would
release a solidary guarantor or surety
article applies only to solidary obligations! not to "oint ones
the solidary debtors may be sued simultaneously in one
suit or successi#ely in different actions
the "udgment ad#erse to a solidary creditor can be set up
against the other co$creditors in subsequent actions
19
Obligations and Contracts
unless it is founded on a cause personal to the plaintiff in
the first action
(%ception the co$creditors are not affected if the
"udgment is based on a cause personal to the
plaintiff
8f the one of the solidary debtors is insol#ent! the
other debtors can still be sued until the debt is paid
5he "udgment against one debtor cannot be
enforced against the others' a new action must be
filed against the latter
Art. 1'1#. 9ayment made by one of t!e solidary debtors
e-tinguis!es t!e obligation. 8f t%o or more solidary
debtors offer to ay, t!e creditor may c!oose %!ic! offer
to accet.
:e %!o made t!e ayment may claim from !is co-debtors
only t!e s!are %!ic! corresonds to eac!, %it! t!e
interest for t!e ayment already made. 8f t!e ayment is
made before t!e debt is due, no interest for t!e
intervening eriod may be demanded.
C!en one of t!e solidary debtors cannot, because of !is
insolvency, reimburse !is s!are to t!e debtor aying t!e
obligation, suc! s!are s!all be borne by all !is co-debtors,
in roortion to t!e debt of eac!. 011+5a3
+ayment by one of the solidary debtors and his
subsequent release from liability results in the release
from liability of the other debtors to the creditor.
:hen a solidary co$debtor pays the entire obligation there
is no real case of subrogation! because the original
obligation is e%tinguished and a new one is created.
8f a solidary debtor pays the obligation in part! he can
reco#er reimbursement from the co$debtors only in so far
as his payment e%ceeded his share of the obligation.
:hen a solidary debtor pays the entire obligation! the
resulting obligation of the co$debtors to reimburse him
becomes "oint.
8f one cannot pay because of insol#ency! and cannot pay
his share in the reimbursement! the others )including the
one who paid* shall bear such share proportionately.
Art. 1'1,. 9ayment by a solidary debtor s!all not entitle
!im to reimbursement from !is co-debtors if suc!
ayment is made after t!e obligation !as rescribed or
become illegal. 0n3
0fter the obligation has prescribed or has become illegal! it
is no longer due! and none of the solidary debtors can be
compelled by the creditor to pay.
8f one of the debtors actually pay such an obligation! he
does not thereby re#i#e the as the co$debtors' hence they
cannot be made to pay anything to the debtor who has
paid.
Art. 1'12. 5!e remission made by t!e creditor of t!e s!are
%!ic! affects one of t!e solidary debtors does not release
t!e latter from !is resonsibility to%ards t!e co-debtors,
in case t!e debt !ad been totally aid by anyone of t!em
before t!e remission %as effected. 011+6a3
0pplies to a case where a co$debtor has already paid the
obligation in full when the remission of the part affecting
another debtor is made.
5o e%empt the co$debtor whose part is thus subsequently
remitted will gi#e way to fraud.
0fter one solidary debtor has paid the entire obligation! it
is e%tinguished! and there is nothing more to remit! e#en
partially.
0fter the creditor has made a remission of the share of
one solidary debtor! the credit will be limited to the balance
[chec7 pp 2&A]
Art. 1''1. 5!e remission of t!e %!ole obligation, obtained
by one of t!e solidary debtors, does not entitle !im to
reimbursement from !is co-debtors. 0n3
Art. 1''1. 8f t!e t!ing !as been lost or if t!e restation !as
become imossible %it!out t!e fault of t!e solidary
debtors, t!e obligation s!all be e-tinguis!ed.
8f t!ere %as fault on t!e art of any one of t!em, all s!all
be resonsible to t!e creditor, for t!e rice and t!e
ayment of damages and interest, %it!out rejudice to
t!eir action against t!e guilty or negligent debtor.
8f t!roug! a fortuitous event, t!e t!ing is lost or t!e
erformance !as become imossible after one of t!e
solidary debtors !as incurred in delay t!roug! t!e judicial
or e-trajudicial demand uon !im by t!e creditor, t!e
rovisions of t!e receding aragra! s!all aly. 011+#a3
(ffects pro#ided for in the article is limited to the case of
non$performance because of the loss of a thing or
impossibility of the prestation that is due.
8f the loss or impossibility is due to fortuitous e#ent!
without fault or delay on the part of any debtor! then the
obligation is e%tinguished' no debtor can be held liable for
damages.
8f the loss or impossibility is due to the fault of any solidary
debtor! or due to fortuitous e#ent after a debtor has
incurred in delay! the obligation is con#erted into an
obligation to pay indemnity! consisting of the price!
damages and interest.
8f the thing is not lost or the prestation has not become
impossible! but there is delay! fraud! fault or negligence! or
some other breach of the obligation! the creditor may also
reco#er indemnity of damages from any of the solidary
debtors.
:hen there is loss or impossibility of performance the
guilty debtor bears the entire burden of the indemnity
:here there is no loss or impossibility of performance
e#en the debtors who are free from delay must bear a part
2
Obligations and Contracts
of the price of thing! but the guilty debtor shoulders the
damages e%clusi#ely.
Art. 1'''. A solidary debtor may, in actions filed by t!e
creditor, avail !imself of all defenses %!ic! are derived
from t!e nature of t!e obligation and of t!ose %!ic! are
ersonal to !im, or ertain to !is o%n s!are. Cit! resect
to t!ose %!ic! ersonally belong to t!e ot!ers, !e may
avail !imself t!ereof only as regards t!at art of t!e debt
for %!ic! t!e latter are resonsible. 011+,a3

?efenses of solidary debtor:
1. defenses deri#ed from the nature of the obligation
2. defenses personal to the debtor$defendant
3. defenses personal to the other solidary debtors
?efenses in!erent in obligation Hthose connected with the
obligation and are deri#ed from its nature' constitute a total
defense]
1. the non$e%istence of the obligation because of illicit
cause or ob"ect! or absolute simulation
2. nullity due to defect in capacity or consent of all
debtors! such as minority! fraud or #iolence
3. unenforceability because of lac7 of proper proof under
the statute of frauds
&. non$performance of suspensi#e condition or non$
arri#al of period affecting the entire obligation
E. e%tinguishment of the obligation
A. all other means of defense which may in#alidate the
original contract from which the right of action of the
creditor against the debtor arises )res "udicata!
prescription! etc.]
?efenses ersonal to t!e creditor may be partial or total
such as minority! insanity! fraud! #iolence or intimidation
AE(58O< 5. - ?ivisible and 8ndivisible Obligations

Art. 1''). 5!e divisibility or indivisibility of t!e t!ings t!at
are t!e object of obligations in %!ic! t!ere is only one
debtor and only one creditor does not alter or modify t!e
rovisions of (!ater ' of t!is 5itle. 011+23
?ivisibility of t!ings
a thing is considered indi#isible when! if di#ided into parts! its
#alue is diminished disproportionately.
Day be qualititati#e )the thing is not entirely homogeneous!
such as inheritance* or quantitati#e )parts in themsel#es
may be separated* or ideal )when parts are not separated
in a material way! but they are assigned to se#eral
persons to the undi#ided portions pertaining to them such
as co$ownership*
?ivisible obligation one which is susceptible of partial
performance' the debtor can legally perform the obligation by
parts and the creditor cannot demand a single performance of
the entire obligation.
8ndivisible obligation when it cannot be #alidly performed in
parts.
?ivisibility or indivisibility - refers to the performance of the
prestation and not to the thing which is the ob"ect thereof.
Art. 1''+. A joint indivisible obligation gives rise to
indemnity for damages from t!e time anyone of t!e
debtors does not comly %it! !is underta/ing. 5!e
debtors %!o may !ave been ready to fulfill t!eir romises
s!all not contribute to t!e indemnity beyond t!e
corresonding ortion of t!e rice of t!e t!ing or of t!e
value of t!e service in %!ic! t!e obligation consists.
011513
8n case of non$performance by any of the debtors! the
obligation is con#erted into a liability for losses and
damages.
8f one of the debtors is insol#ent or fails to pay his share!
the others will not be liable for his share.
;amages can be reco#ered from the debtor who failed to
perform.
5he entire liability for other damages is shouldered by the
defaulting debtor.
Aolidarity and 8ndivisibility: ?istinctions
Aolidarity 8ndivisibility
Refers to the #inculum and
therefore principally to the
sub"ects of the obligation
Refers to the prestation or the
ob"ect of the obligation
Requires plurality of sub"ects 9ot required
Jolidarity remains e#en when
there has been non$performance
and the debtors become liable for
damages
:hen the indi#isible obligation is
con#erted into one to pay
damages! the reason of the
indi#isibility ceases to e%ist! and
each debtor becomes liable for
his part of the indemnity
;eath of the debtor terminates
the solidarity which is not
transmitted to the heirs
0ffects the heirs of the debtor in
that they remain bound to perform
the same prestation
Art. 1''5. @or t!e uroses of t!e receding articles,
obligations to give definite t!ings and t!ose %!ic! are not
suscetible of artial erformance s!all be deemed to be
indivisible.
5he di#isibility of the ob"ect does not necessarily
determine the di#isibility of the obligation. 5he test of
di#isibility of an obligation is whether or not it is
susceptible of partial performance.
5he obligation may be indi#isible by reason of the
pro#isions of the law! of the e%press will of the parties! or
of their presumed will! shown by the relation of the distinct
parts of its ob"ects! each of which may be a necessary
complement of the others! or by the purpose of the
obligation which requires the reali-ation of all the parts.
@actors considered to determine %!et!er an obligation is
divisible or not:
1. the will or intention of the parties! which may be
e%pressed or presumed
2. the ob"ecti#e or purpose of the stipulated prestation
3. the nature of the thing
21
Obligations and Contracts
&. the pro#isions of the law affecting the prestation
in indi#isible obligations! partial performance is equi#alent
to non$performance! e%ceptions
1. where the obligation has been substantially performed
in good faith! the debtor may reco#er as if there had
been complete performance! minus the damages
suffered by the creditor )art. 123&*
2. when the creditor accepts performance! 7nowing its
incompleteness and without protest
di#isible and indi#isible obligations are not
necessarily identical to se#erable and entire contracts'
whether a contract is entire or se#erable depends in
general upon the consideration to be paid! not on its
ob"ect.
8f consideration is single entire
8f consideration is e%pressly or by implication
apportioned se#erable
8f the contract is se#erable and one part is
illegal the part which is illegal is #oid and cannot be
enforced! but that part which is legal is enforceable
AE(58O< 6. - Obligations %it! a 9enal (lause

Art. 1''6. 8n obligations %it! a enal clause, t!e enalty
s!all substitute t!e indemnity for damages and t!e
ayment of interests in case of noncomliance, if t!ere is
no stiulation to t!e contrary. <evert!eless, damages s!all
be aid if t!e obligor refuses to ay t!e enalty or is guilty
of fraud in t!e fulfillment of t!e obligation.
5!e enalty may be enforced only %!en it is demandable
in accordance %it! t!e rovisions of t!is (ode. 0115'a3
9enal clause is an accessory underta7ing to assume greater
liability in case of breach. 8t is attached to an obligation in order
to insure performance. Cenerally sum of money but it can
also be any other thing stipulated by the parties )including an
act or abstention*
?ouble function:
1. to pro#ide for liquidated damages
2. to strengthen the coerci#e force of the
obligation by the threat of greater
responsibility in the e#ent of breach
may be:
1. subsidiary or alternati#e non$performance! only the
penalty is as7ed
2. "oint or cumulati#e both the principal underta7ing
and the penalty may be demanded
urose
1. punishment the question of indemnity for damages
is not resol#ed but remains subsisting
2. reparation the matter of damages is generally
resol#ed! and it represents the estimate of the
damages that a party might suffer from non$
performance of obligation
t!e mere non-erformance of t!e
rincial obligation gives rise to t!e rig!t to enalty
there is no difference between a penalty and
liquidated damages' treated as the same legally
the creditor cannot reco#er more than the
penalty stipulated! e#en if he pro#es that the damages
suffered by him e%ceed in amount of such penalty
when the penalty stipulated is not contrary to
law! morals! or public order! it must be enforced against
the party liable.
?amages besides enalty 0%!ere damages and interest
may be recovered3:
1. when there is e%press pro#ision to that effect
2. when the debtor refuses to pay the penalty
3. when the debtor is guilty of fraud in the non$fulfillment
of the obligation
enforcement of the penalty can be
demanded by the creditor only when the non$performance
is due to fault or fraud of the debtor.
9on$performance gi#es rise to the
presumption of fault
;ebtor has burden of pro#ing an e%cuse
due to force ma"eure or to the acts of the creditor himself.
5he principal obligation may be "oint! and yet
the penalty may either be "oint or solidary! depending upon
the agreement of the parties.
?istinguis!ed from conditional obligations
(onditional obligations Obligation %it! a enal
clause
5here is no obligation before the
suspensi#e condition happens' it
is the fulfillment of the condition
which gi#es to the obligation
there is already an e%isting
obligation from the #ery beginning
)the principal obligation*
+rincipal obligation is dependent
upon an uncertain e#ent
8t is the accessory obligatin
)penalty* which is dependent
upon non$performance of the
principal obligation
?istinguis!ed from alternative obligations
Alternative obligations Obligation %it! a enal
clause
5wo or more obligations are due!
but fulfillment of one of them is
sufficient
5here is only one prestation and it
is only when this is not performed
that the penal clause is
enforceable
5he impossibility of one of the
obligations! without fault of the
debtor! still lea#es the other
subsisting
8mpossibility of the principal
obligation e%tinguishes also the
penalty
5he debtor can choose which 5he debtor cannot choose to pay
22
Obligations and Contracts
prestation to fulfill the penalty to relie#e himself of
the principal obligation! unless
that right is e%pressly granted to
him
?istinguis!ed from facultative obligations
@acultative obligations Obligation %it! a enal
clause
+ower of the debtor to ma7e
substitution is absolute
+ayment of the penalty in lieu of
the principal obligation can be
made only by e%press stipulation
1reditor can ne#er demand both
prestations
Juch may be granted to the
creditor
(omared %it! guaranty 0guaranty is a contract by #irtue of
which a third person! called the guarantor! binds himself to
fulfill the obligation of the principal debtor in case the latter fails
to do so*
Aimilarities:
1. both intended to insure the performance of the
principal obligations
2. both accessory and subsidiary obligations
?ifferences
Buaranty Obligation %it! a enal
clause
Kb"ect of the obligations of the
principal debtor and the guarantor
is the same
5he obligation to pay the penalty
is different from the principal
obligation
5he principal debtor cannot be a
guarantor of the same obligation
+rincipal obligation and the
penalty can be assumed by the
same person
Cuaranty subsists e#en when the
principal obligation is #oidable or
unenforceable or is a natural one
+enalty is e%tinguished by the
nullity of the principal obligation!
e%cept when the penal clause is
assumed by a third person
if the penal clause is assumed by a third
person! the same principle will apply as the
case of a guaranty
Art. 1''#. 5!e debtor cannot e-emt !imself from t!e
erformance of t!e obligation by aying t!e enalty, save
in t!e case %!ere t!is rig!t !as been e-ressly reserved
for !im. <eit!er can t!e creditor demand t!e fulfillment of
t!e obligation and t!e satisfaction of t!e enalty at t!e
same time, unless t!is rig!t !as been clearly granted !im.
:o%ever, if after t!e creditor !as decided to re4uire t!e
fulfillment of t!e obligation, t!e erformance t!ereof
s!ould become imossible %it!out !is fault, t!e enalty
may be enforced. 0115)a3
;ig!t of ?ebtor
as a rule! the debtor cannot a#oid performance of the
principal obligation by offering to pay the penalty
E-cetion the right to substitute the penalty for the
principal obligation may be e%pressly granted by the
creditor to the debtor
;ig!t of (reditor
as a rule the creditor cannot demand performance of the
principal obligation and the penalty at the same time
E-cetion:
1. the creditor may enforce both the principal obligation
and the penalty when this right is clearly granted to
him
2. where the creditor has demanded fulfillment of the
principal obligation but it cannot be performed' in this
case! he may then demand penalty
Art. 1'',. 9roof of actual damages suffered by t!e creditor
is not necessary in order t!at t!e enalty may be
demanded. 0n3
Art. 1''2. 5!e judge s!all e4uitably reduce t!e enalty
%!en t!e rincial obligation !as been artly or irregularly
comlied %it! by t!e debtor. Even if t!ere !as been no
erformance, t!e enalty may also be reduced by t!e
courts if it is ini4uitous or unconscionable. 0115+a3
9artial or irregular erformance refers to the e%tent or
quality of fulfillment' irregular! to the form
the power of the "udge to reduce penalty refers only to
penalties prescribed in the contract' it does not co#er
ta%es that are due
the amount of the penalty is not determined by the in"ury
suffered by the creditor! but by what has been agreed
upon by the parties who are free to determine such
amount
when the penalty is contrary to morals or good customs! it
may e#en be entirely #oided
the interest of the creditor includes which are intangible
and not sub"ect to concrete proof! such as the sentimental
#alue which he attaches to the performance of the
obligation
the penalty may be reduced in instances where it is out of
proportion to the actual damage cause by the non$
performance or improper performance of the contract
the penalty is not enforceable when the principal obligation
becomes impossible due to fortuitous e#ent! or when the
creditor pre#ents the debtor from performing the principal
obligation
urose of t!e enalty:
1. to compensate for damage
2. to guarantee performance of the contract]
Art. 1')1. 5!e nullity of t!e enal clause does not carry
%it! it t!at of t!e rincial obligation.
5!e nullity of t!e rincial obligation carries %it! it t!at of
t!e enal clause. 011553
general rule: the nullity of the principal obligation also
nullifies the penal clause which is only an accessory to the
principal obligation
23
Obligations and Contracts
E-cetions 0t!e enal clause subsists even if t!e rincial
obligation cannot be enforced3:
1. when the penalty is underta7en by third person
precisely for an obligation which is unenforceable!
#oidable! or natural! in which case it assumes the
form of a guaranty which is #alid under article 22E2
2. when the nullity of the principal obligation itself gi#es
rise to liability of the debtor for damages )such as
when the #endor 7new that the thing was ine%istent at
the time of the contract so the #endor becomes liable
for damages
<ullity of 9enal (lause: the penal clause may be #oid
because it is contrary to law! morals! good customs! public
order! or public policy
the principal obligations subsist if #alid
in case of non$performance! the damages
shall be determined by the same rules as if
no penalty had been stipulated
$$$$$$$$$$$$$$$$$$$$$$$$$$nothing follows$$$$$$$$$$$$$$$$$$$$$$$$$
24