Obligations and Contracts – Lecture Notes - The list is exclusive.

Thus if the source is not one of the 5, then

there is no Obligation to speak of
General Provisions 1. Law
2. Contracts
Article 1156 3. Quasi-Contracts
An obligation is a juridical necessity to give, to do or not to do. 4. Acts or omissions punished by law (delicts)
5. Quasi-Delicts
Q: What is an Obligation?
A: It is a juridical necessity to give, to do, or not to do Note: numbers 3-5 are also provided by law
Failure to compel with the juridical necessity will subject the
debtor to a sanction Article 1158
Obligations derived from law are not presumed. Only those
4 essential elements of an obligation: expressly determined in this Code or in special laws are demandable, and
1. Active subject – creditor or obligee; person who can demand the shall be regulated by the precepts of the law which establishes them; and
fulfillment of an obligation as to what has not been foreseen, by the provisions of this Book.
2. Passive subject – debtor or obligor
3. Object or prestation – object is any of to give, to do or not to do 1st source – LAW
4. Efficient cause – judicial tie or vinculum - Those derived from law should not be PRESUMED
- Thus, you have to point out a specific provision of the law
Example: X agreed to give his car to Y - This is provided by the Civil law and Special Law (SL should prevail
Active – Y in case of conflict)
Passive – X
Object – obligation to give the car Article 1159
Efficient cause – agreement Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
Giving (as prestation)
- Called real obligation 2nd source – CONTRATCTS
- 2 types of real obligation - Have the force of law between contracting parties
o To give or deliver a specific or determinate thing (ex. - This must be complied with in GOOD FAITH
MY car) - Requires consent from the parties; bound by the terms and
o to give or deliver a generic or indeterminate thing (ex. conditions of contracts
A car) - There are limitations for the right over the parties to stipulate
(they should not be contrary to laws, public policy, good customs,
Kinds of Obligation: morals, public order)
 Viewpoint of Sanction
a. Civil obligation – can be obtained in court Principle of Liberty or Freedom of Contracts
b. Natural obligation – action has already prescribed but creditor - Parties have the right to agree on terms and conditions as they
failed to demand within the prescriptive period. Despite the may deem it convenient, provided that such are subject to
prescription, debtor voluntary delivered payment. In this case, limitation
debtor cannot get back what he paid
c. Moral obligation – ex. Hear mass Q: What are the essential elements of a contract?
A: meeting of the minds, consent of the cause and consideration
Q: What is the importance of differentiating a specific and generic obligation? a. Consent
A: Effects of the laws for the two obligations are different. In case of b. Cause
fortuitous event (those which cannot be foreseen or can be foreseen but are c. Consideration
inevitable), liability to deliver specific obligations are extinguished. However,
this is not so in the case of generic obligations because you can still deliver
any other thing to the creditor which falls under the same class of the Good Faith – not by the sword that killeth it but by the spirit that giveth life
obligation (genus does not perish) (it does not make law inferior to a contract nor a contract superior than the
law)
To Do or Not to DO (as prestation)
- called Personal obligation Q: What are the difference of an obligation and a contract?
- are either affirmative or negative A:
OBLIGATIONS CONTRACT
 Viewpoint of Person Obliged - Result of a contract - Results to an obligation
a. Unilateral – only 1 party has an obligation to perform - Not necessary require meeting of - Always presupposes a meeting of
b. Bilateral – 2 parties has an obligation to perform. Example: the minds the mind (consent of cause and
contract of sale (buyer and seller) consideration)

Article 1157 NOMINATE AND INNOMINATE CONTRACTS

Obligations arise from:  Nominate – law has given a particular name for that contract
(1) Law;  Innominate – contracts with no specific name
(2) Contracts; a. DO UT DES – I give that you may give
(3) Quasi-contracts; b. DO UT FACIAS – I give that you may do
(4) Acts or omissions punished by law; and c. FACIO UT DES – I do that you may give
(5) Quasi-delicts. d. FACIO UT FACIAS – I do that you may do

Sources of Obligation (5) Article 1160

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 Obligations derived from quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this Book. Nature and Effect of Obligations

3rd Source – QUASI – CONTRACTS Real Obligation – obligation to deliver a specific and indeterminate thing
- Also provided for by Law (Chapter I, Title XVII of Civil Code)
- No meeting of the minds Article 1163
Every person obliged to give something is also obliged to take care of
Q: What is a Quasi-Contract? it with the proper diligence of a good father of a family, unless the law or
A: Juridical relation resulting from a lawful, voluntary and unilateral and the stipulation of the parties requires another standard of care.
which has for its purpose the payment of indemnity to the end that no one
shall unjustly enrich himself at the expense of another - There is an obligation to give something: contemplates on
DETERMINATE OBJECTS ONLY
- 2 common kinds: - Purpose: ensure that the creditor will receive the object. Thus
a. Negotorium Gestio – unauthorized management debtor should take care of the object so as to deliver it to the
Ex. Neighbor saved you properties thus had expenses creditor
b. Solution Indebiti – undue payment - If generic, there is no need to practice good diligence of a father
- In an obligation to deliver a specific thing, while still in the
Article 1161 possession of the obligor, he has the responsibility to take care of
Civil obligations arising from criminal offenses shall be governed such using ordinary diligence (diligence required in the absence of
by the penal laws, subject to the provisions of Article 2177, and of the any stipulation in law or contract)
pertinent provisions of Chapter 2, Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating damages. Relate to art. 1173 – the diligence needed is that which is required by the
NATURE of the obligation and corresponds with the circumstances of person,
4th Source – ACTS OR OMISSIONS PUNISHED BY LAW or DELICT time and place
- Criminal liability carries civil liabilities
o Restitution – return the exact thing EXCEPTIONS
o Reparation – pay equivalent price If the law or contract provides for a DIFFERENT standard of care, said law or
o Indemnification – consequential damage stipulation must prevail (Art. 1163)

Article 1162 Extraordinary diligence –required only if expressly provided by law or parties
Obligations derived from quasi-delicts shall be governed by the expressly provided this in their contract
provisions of Chapter 2, Title XVII of this Book, and by special laws. Good Father of a Family: Standard Care or Diligence given

5th Source – QUASI DELICT Q: What are the other types of standards?
- Chapter 2 Title XVII of CC or Special Laws A:
- Torts and damages a. Slight –by contract, this can be imposed
- Basis: act of negligence or omission of care causing damage to b. Extraordinary – diligence of very cautious persons; ex. Common
another with no pre-existing contractual relations carrier custody (airplanes, bus, etc.)
c. Utmost Diligence – ex. imposed on banks
Q: When is there negligence?
A: Omission of that diligence which is required by the circumstances of Article 1164
person, place and time The creditor has a right to the fruits of the thing from the time
the obligation to deliver it arises. However, he shall acquire no real right
Q: When can an obligation arise from a quasi-delict? over it until the same has been delivered to him.
A: The requirements are as follows:
1. There must be fault or negligence Delivery of fruits is only applicable to SPECIFIC obligations
2. There must be damage or injury Fruits – three types contemplated in this article
3. There must be a direct relation of cause and effect between the a. Natural – spontaneous product of soil and young of animals
fault or negligence and damage and injury (the act of negligence is b. Industrial – acquire through industry or labor
the proximate cause of the damage) c. Civil – rent, lease, interest

What is important in quasi-delict is that you have to show that there is no Q: what kind of right does the creditor have over the fruits?
pre-existing contract between the parties A: distinguish personal right from a real right.
Personal – enforceable only against another party
Take note: If the source is not any of the five sources stipulated, then in it is Real right – enforceable against the whole world
not considered an obligation (article 1158)
Ex. Is an employer obliged to provide for legal service to his employee? No, Q: When does the obligation to deliver it arises?
for the law does not require for such. A: This is qualifiable. It will depend on what is the source of obligation.
 If pure obligation (not subject to any condition or term)- from the
Dammum absque injuria (Damage without injury) time the agreement is entered into or is perfected (it is
- damage without legal injury demandable at once)
- There is damage but there is no injury  If the obligation has a term (X obliged himself to deliver a land to Y
- There is no liability in this case on Nov. 15) – the obligation arise upon the arrival of the term
 If there is a conditional obligation- obligation arise when the
Injury – illegal invasion of a legal right. You associate it with a condition is fulfilled
wrongful act or omission which will result to loss or damage
- This article contemplates on a situation where the debtor has not
Damage – the loss or the hurt or harm done to another which yet delivered the obligation but that contract was already
usually results from the injury perfected. In this case, you only have a PERSONAL right that will

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 compel the seller to deliver such obligation to the creditor. The
buyer thus asks what is due to him. The third paragraph is an exception to the rule on specific obligations which is
- The moment the obligation arises, it is only a personal right. The lost due to fortuitous event
real right only happens upon delivery. 1. If he incurs delay (obligor delays)
Q: When is there delay?
ILLUSTRATION A: first distinguish ordinary delay and legal delay or default. What is
Sam is obliged to give Ben on December 1, 2008, a particular parcel of land contemplated in delay here is the legal delay or default MORA (debtor fails to
 Prior to December 1 – the creditor does not have any right over comply with the obligation on the designated time). Delay happen when you
the fruits still fail to deliver after there has been a demand whether judicial or extra
 December 1 (without delivery yet) – from Dec 1 to 15: he is judicial
entitled to the fruits. However, this is only a personal right
 December 15 (actual or constructive receipt) onwards – he Ordinary – merely non performance at the stipulated time
becomes the owner of the fruits and the land only AFTER the date Legal delay – delay which amounts to a virtual non-fulfillment of the
of receipt (Real Right) obligation (principle behind is “there is no delay if there is no demand”)

KINDS OF DELIERY Take note: A mere reminder with respect to the due date is not a demand.
1. Actual Delivery From the time the demand is made, that is only when the debtor will be
- the property changes hands liable for damages.
- ex. The moment the book is given to you (buying of book: transfer
of possession) 2. If obligor is in bad faith because he promised to deliver the same
2. Constructive Delivery thing to two persons with different interest
- The physical delivery is implied
Remedies of the Creditor when the Debtor fails to comply with his obligation
Kinds of Constructive Delivery 1. Demand SPECIFIC PERFORMANCE of the obligation
a. Tradition simbolica – when you buy a house and the key of the 2. Demand RESCISSION or CANCELLATION
house is given to you 3. Demand DAMAGES either with or without either of the first two
b. Tradition longa manu – the object is pointed to you
c. Tradition brevi manu – illustrated in a situation where the person Article 1166
is occupying the property as a lessee or tenant. Such property is The obligation to give a determinate thing includes that of delivering
bought by the tenant from the lessor. His possession is thus all its accessions and accessories, even though they may not have been
changed from a lessee to an owner mentioned.
d. Tradition constitutum possesorium – opposite of brevi manu.
Selling your own property to another but after the sale you enter - Accessions and Accessories: are included even if not specified in
into a contract with the owner for you to occupy the property as a the contract
lessee. - Applicable only to DETERMINATE obligations
e. Tradition by the execution of legal forms and solemnities – when
you buy a parcel of land, you don’t have to be physically placed on Accessions – attachment that you can no longer separate unless you will
the land. The documents will be considered as a delivery cause damage; additions to or improvements upon a thing

Article 1165
When what is to be delivered is a determinate thing, the Accessories – not attached but are necessary; those joined to or included
creditor, in addition to the right granted him by Article 1170, may compel with the principal for the latter’s better use, perfection, or enjoyment
the debtor to make the delivery.
Take Note: So as to not violate this provision – you shall stipulate in your
If the thing is indeterminate or generic, he may ask that the contract what are those accessories or accessions that you wish to exclude in
obligation be complied with at the expense of the debtor. your sale.

If the obligor delays, or has promised to deliver the same thing

to two or more persons who do not have the same interest, he shall be Summary
responsible for any fortuitous event until he has effected the delivery. Rights of Creditor in Determinate Obligation (both can be availed by the
Creditor)
- The distinction between generic and specific obligation is 1. Compel specific performance – includes delivery of accessions
presented. - Compel debtor to deliver the thing agreed upon
- Specific – if lost during fortuitous event, the obligation is 2. Recover damages in case of Breach (article 1170)
extinguished
- Generic – not extinguished because genus does not perish Rights of Creditor in Generic Obligations
1. Compel performance of obligation
1st par – compel the specific thing which was to be delivered 2. In case he refuses to comply or cannot comply, obligation may be
- Debtor cannot compel the creditor to receive another thing other complied by another person at the debtor’s expense
than that which was specified 3. Recover damages in case of Breach (Mental damages)
2nd par – debtor should deliver what belongs to the class not inferior or
superior of quality Obligations of Debtor in Determinate Obligations
- You just deliver the regular type 1. Give the very same thing they agreed upon
- If A lost the horse, B can buy to C and A will pay C 2. Take care of the thing with proper diligence (article 1163; applicable only
3rd par – the term INTEREST refers to RIGHT to determinate because generic things can never be lost)
- Even if the obligation is determinate, if two or more persons who 3. Deliver accessions and accessories (article 1166)
do not have the same interest is to receive such, the liability will 4. Pay for damages in case of Breach (1170)
not be lost
- Applies only to DETERMINATE THINGS Obligations of Debtor in Generic Obligations

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1. Deliver a thing of its class which is neither of superior or inferior Kinds of Default
2. Pay for damages in case of breach 1. Mora Solvendi – default on the part of the debtor
- Note: there is no default in negative and natural obligations
Article 1167 - Effects: (1) debtor may be liable for interest and damages; (2)
If a person obliged to do something fails to do it, the same shall may bear the risk of loss; (3) may be liable even for fortuitous
be executed at his cost. event
2. Mora Accipiendi – creditor is guilty of default when he
This same rule shall be observed if he does it in contravention of unjustifiable refuse to accept the payment or performance at the
the tenor of the obligation. Furthermore, it may be decreed that what has time such can be done
been poorly done be undone. 3. Reciprocal Obligation – depends upon each other for performance

- Is not in relation to article 1166

- Contemplates on obligation TO DO or a PERSONAL OBLIGATION Q: Why is it important to know the Delay?
- Debtor cannot be compelled to do something he is asked because A: so that you would know when to ask for damages
this will result to INVOLUNTARY SERVITUDE (violation of
constitutional right; will result to act of violence Q: When does Delay come in?
- REMEDY: ask someone to do it but at the expense of the debtor A: It comes in at the time the creditor makes a demand
- Example: if construction is ugly, you can have it undone
Q: What is the purpose of setting the due date?
POSITIVE PERSONAL OBLIGATION A: The due date will determine when the obligation is demandable
Remedies of the Creditor if the debtor fails to do
 To have the obligation performed (by himself or by another) at the Q: Does the creditor always have to demand?
debtor’s expense A: No, because there are some exceptions (look at book page 123-124)
 Plus damages a. When laws expressly so declares or it is expressly stipulated in the
When the thing may be ordered undone contract
 If made poorly TAKE NOTE: It is not enough that you only specify the date of the
 If the obligation is a negative one (you are not suppose to do such expiry, rather it should be stipulated that the debtor will be at
act but you do it) – Art 1168 default upon the arrival of such term or fulfillment of condition
b. When time is of the essence – time was so important that you
Q: When is 1167 NOT applicable? cannot have other time (ex. Birthday cake)
A: c. Demand would be useless because it is beyond the debtor’s
1. If debtor posses special qualifications which is the very reason you power to perform (ex. If he already sold it to another)
agreed in a contract (ex. Concert singers); REMEDY: damages d. When obligation is RECIPROCAL: when one does not perform his
2. If you tried to undo and in doing so, it will result to more damage; obligation, the other does not delay
REMEDY: you have to be logical and just ask for damages
Note: stipulations in contract prevails over law except if such contract is void
Article 1168
When the obligation consists in not doing, and the obligor does what Mora – latin term for delay
has been forbidden him, it shall also be undone at his expense.
KINDS OF DELAY
- Self explanatory 1. Mora Solvendi – default on the part of the debtor
- Similar with article 1167 on the inapplicability - There is no mora solvendi in negative personal obligation
- If the obligation is not to do and something is done, the creditor
has the right to have it undone at the expense of the debtor Requisites:
a. The obligation must be due, enforceable, and already liquidated
Article 1169 or determinate in amount
Those obliged to deliver or to do something incur in delay from b. There must be non-performance
the time the obligee judicially or extrajudicially demands from them the c. There must be a demand, unless the demand is not required
fulfillment of their obligation. d. The demand must be for the obligation that is due and not for
However, the demand by the creditor shall not be necessary in order that another obligation, nor one with a bigger amount, except in
delay may exist: certain instances considering all the circumstances.

(1) When the obligation or the law expressly so declare; or Effects:

(2) When from the nature and the circumstances of the a. Debtor is liable for interest and damages
obligation it appears that the designation of the time when the b. Debtor may bear the risk of loss
thing is to be delivered or the service is to be rendered was a c. He is liable for fortuitous event
controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has 2. Mora Accipiendi – default on the part of the creditor
rendered it beyond his power to perform. - The obligation is already due, debtor complies but creditor
unjustifiably refuses to accept
In reciprocal obligations, neither party incurs in delay if the Q: Why does this happen?
other does not comply or is not ready to comply in a proper manner with A: The creditor’s real intention was to reject the lessee (make it appear that
what is incumbent upon him. From the moment one of the parties fulfills his the debtor has not been paying rentals)
obligation, delay by the other begins.
Take note: if you are a lessee, if the creditor unjustifiably refuses, you should
- Talks about DEFAULT and DELAY comply with tender of payment and consignation (legal procedure) so as to
- Covers the provision of no delay if no demand legally relinquish or extinguish yourself with the liability. (This act is in writing,
- Also provides for the exception of the need for the demand consignation: deposit the money in court).

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 3. Compensatio Morae – when in a reciprocal obligation both parties If the law or contract does not state the diligence which is to be
are in default; here it is as if neither is in default (both are in pari observed in the performance, that which is expected of a good father of a
de licto) family shall be required.
- Defines what constitutes negligence
- They are debtors and creditors to each other (ex. Contract of
lease and sale) It is the Omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the person, of the
Article 1170 time and of the place.
Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the  Negligence is the failure to observe, for the protection of the
tenor thereof, are liable for damages. interests of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
Q: When are you liable for damages? other person suffers injury (US vs. Barrias)
A: When there is…
1. FRAUD (deceit or dolo) – deliberate or intentional evasion of the  It is the “want of care required by the circumstances”
normal fulfillment of an obligation (synonymous to BAD FAITH) –
You can then be liable for bigger damages  Accident and negligence are intrincically contradictory; one
cannot exist with the other. Accident occurs when the person
2. NEGLIGENCE (fault or culpa) – any voluntary act or omission, there concerned is exercising ordinary care, which is not caused by fault
being no malice, which prevents the normal fulfillment of an of any person and which could not have been prevented by any
obligation – your damages can be mitigated means suggested by common prudence.

3. DELAY (mora) Note: There is really no fault in accidents because the person has practiced
ordinary care; while negligence is defined as the absence of such care.
4. CONTRAVENTION OF THE TERMS OF THE OBLIGATION – debtor
does not comply with the agreement Take Note: Negligence + Bad faith = fraud

Kinds of Damages (discussed in torts and damages) TEST FOR DETERMINATION (When is there negligence)
1. Moral – ex. Damages for sleepless nights; not enough to allege, You ask: Would a prudent man in his position foresee harm to the person
you have to prove the extent of the damage injured as a reasonable consequence of the course about to be pursued? If
2. Exemplary – setting of an example to others. Deter them from so, the law imposes a duty on the actor to refrain from that course, or to take
doing the same precaution against its mischievous results, and the failure to do so constitutes
3. Nominal – to vindicate your rights negligence. Reasonable foresight of harm followed by the ignoring of the
4. Temperate – damages is not ascertain admonition born of this provision, is the constitutive fact of negligence
5. Actual – this should be proven (Picart vs. Smith)
6. Liquidated – damages already stipulated in the contract (common
in construction contracts: failure to finish the project on time) Ex. Assigning of the most competent person is an indication that there is a
foresight of danger. This cannot therefore be considered as an accident,
Article 1171 rather it is negligence.
Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void. (1) Reasonable care and caution expected of an ordinary prudent
person
- Talks about FRAUD which is intentional and with malice
- This is demandable on all obligation Did the defendant in doing the alleged negligent act use
- Waiver of an action for future fraud is void because the law reasonable care and caution which an ordinary prudent person
does not want to encourage fraud. If waiver is allowed, it will would have used in the same situation. If not, then he is guilty of
not deter the person in committing fraud. negligence (Mandarin Vila, Inc. case)
- Damages cannot be mitigated by the court
Negligence is therefore a question of fact, its existence being
Q: Can a liability for a past fraud be waived? dependent upon the particular circumstances of each case.
A: Yes, such shows the generosity and forgiveness of the creditor towards the
debtor Factors to be considered:
a. Nature of the obligation – you knew that the area was flammable
Article 1172 but you smoked. There is clear negligence
Responsibility arising from negligence in the performance of b. Circumstances of the person – you are on duty as a police guard,
every kind of obligation is also demandable, but such liability may be you fell asleep not by reason of any ailment, then a robbery
regulated by the courts, according to the circumstances. occurred
c. Circumstances of time – during night time you drove your car
- Talks about negligence (quasi-delict) without any headlight
- This is also demandable but may be regulated by court d. Circumstance of Place – while driving your car at colon street, you
depending on the circumstance (can be mitigated) drove at 60kph

Article 1173 (2) No hard and fast rule for measuring degree of care
The fault or negligence of the obligor consists in the omission of
that diligence which is required by the nature of the obligation and KINDS OF NEGLIGENCE (refer pg. 143-145 for comparison)
corresponds with the circumstances of the persons, of the time and of the 1. Culpa Contractual – negligence in contracts resulting in breach
place. When negligence shows bad faith, the provisions of Articles 1171 and - Ex: you have a contract of common carrier (transportation
2201, paragraph 2, shall apply. contract): passenger can file for damages against operator;
you can also demand for culpa criminal and for civil liability

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 2. Culpa Aquiliana – negligence which by itself is the source of an
obligation between the parties not so related before by any pre- The receipt of a later installment of a debt without reservation
existing contract as to prior installments, shall likewise raise the presumption that such
3. Culpa Criminal – negligence resulting in the commission of a installments have been paid.
crime
- You will file an action against the driver. If the driver is - Talks about presumptions which could either be
convicted but insolvent, the owner will be subsidiarily liable (1) Conclusive or
(2) Disputable or rebuttable (what is contemplated in this article)
FRAUD VS. NEGLIGENCE - Presumption applies and is advantageous to debtor or lessee
Deliberate intention to cause No such intention
damage or injury Conclusive – you are no longer allowed to present other evidences to prove
Waiver of liability for future fraud is Waiver is allowed otherwise
void (includes gross negligence) - These are evidences which you cannot rebut (ex. We are all
Liability cannot be mitigated May be reduced in certain cases presumed to know the law; thus you cannot defend yourself by
saying that you are not aware of such law)
Take note: this is Fraud in the performance of an obligation (dolo incidente);
REMEDY: damages - Such presumption is reasoned by experience and convenience

Ex. Instead of delivering a wine, what you deliver is a wine bottle however Disputable – such fact is presumed unless you present other evidences that
what is inside is not wine, then this is dolo incidente; committed in the will prove otherwise
performance of the obligation.
Take Note: a creditor can refuse to accept if you do not pay the amount you
Dolo causante – Fraud committed in the execution of the contract. Consent is are obliged to pay
vitiated by fraud. You should not have entered the contract not unless there
was a fraud. REMEDY: annulment of contract. 1ST paragraph of 1176
- Tackles presumption in payments of INTERESTS
Article 1174 - the first payment is that of the interest and the balance will be on
Except in cases expressly specified by the law, or when it is the principal.
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those TAKE NOTE: the creditor can rebut such claim wherein the lessee will say that
events which could not be foreseen, or which, though foreseen, were he has already paid the interest for the receipt shows payment for principal,
inevitable. however the burden of proof is that of the creditor

FORTUITUIOUS EVENT The creditor can specify in the receipt a RESERVATION with regards to the
1. Act of man interest so that even though it is specified in the receipt that payment is for
2. Act of God the principal amount, there will be no presumption that the interest has
already been paid.
GR: no liability in fortuitous event
Exceptions 2nd paragraph of 1176
a. When expressly declared by law - Tackles presumptions in payments of INSTALLMENTS
b. When expressly declared by stipulation - Ex. A receipt acknowledging the payment of rentals of march gives
c. Nature of obligation requires assumption of risk the presumption that rentals for January and February is paid
- You can likewise, as a lessor, note the reservation

Requisites: Q: What if no date is specified with regards to the month rental but the date
1. Event happened without any participation of the debtor of the receipt is dated march, can this raise a presumption that payment for
(independent of his will) January and February were made?
2. Event cannot be foreseen, or if foreseen is inevitable A: NO, because such date only tackles the date of receipt and not on the date
3. By reason of the event, it was impossible for him to comply with that corresponds to the payment of such
the obligation in a normal manner
4. There is no contributory negligence on the debtor’s part Take Note: Yearly Taxes are not installment payments and the law provides
for such presumption on installments alone!
Article 1175
Usurious transactions shall be governed by special laws. Article 1177
The creditors, after having pursued the property in possession of the
- Contemplated on USURY LAW. However, such law is no longer debtor to satisfy their claims, may exercise all the rights and bring all the
applicable today actions of the latter for the same purpose, save those which are inherent in
- Thus, interests are based on the agreement of the contracting his person; they may also impugn the acts which the debtor may have done
parties, which is complied in Good faith to defraud them.
- Rule: If there is consent or agreement, then that will govern the
relationship - Remedies of creditor when the debtor does not comply with the
- However: even if USURY law is suspended, the SC reduced the obligation
amount of interest imposable on the ground that the right is
inequitable or unconscionable (thus, the party is not totally free) 1. Demand for specific performance plus damages for failure to
comply with the demand of obligation
Article 1176 2. Pursue the properties belonging to your debtor
The receipt of the principal by the creditor without reservation 3. Avail of accion subrogatoria – you can exercise the rights of your
with respect to the interest, shall give rise to the presumption that said debtor (ex. Debtor is the creditor of another person, you can then
interest has been paid.
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 exercise his rights to collect what the debtor could collect as a
creditor of another person)
4. Accion Pauliana – you can receive – impugn or rescind acts or
contracts done by the debtor to defraud the creditors (ex.
Fictitious sale: make it appear that it was sold when in fact it is
not; it is just to evade his liabilities – )

Article 1178
Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary.

- Rights are transmissible except if

a. Law provides otherwise – consent of other party is necessary
b. Contract provides otherwise
c. If the obligation is purely personal

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KINDS OF OBLIGATIONS (Classification) 1. Suspensive (conditions precedent or conditions antecedent) – the
happening of the condition gives rise to the obligation
PRIMARY 2. Resolutory (conditions subsequent) – the happening of the condition
1. Pure Obligation – there is no condition or term to fulfill; extinguishes the obligation
Demandable at the time the contract is perfected B.
2. Conditional Obligation – there is a condition which should be 1. Potestative – the obligation arises from the personal will of the debtor;
fulfilled fulfillment of the condition depends upon the will of a party to the
a. Suspensive – the condition is awaited. The obligation obligation
arises the moment the condition is satisfied 2. Casual – obligation depends on chance or hazard or the will of a third
b. Resolutory – the condition is to be avoided. The person (winning of lotto)
obligation is extinguished the moment the condition is 3. Mixed – depends partly on the will of the debtor and that of a third
satisfied person or on chance (if I pass the bar)
3. Obligation with a Period or Term – that which necessarily must C.
come regardless of whether the parties know when it happen or 1. Divisible – capable of partial performance or realization
not 2. Indivisible – not capable of partial performance because of the nature of
4. Alternative or Faculative the thing, or because of the intention of the parties
5. Conjunctive D.
6. Joint – there are more than one person who is liable for the 1. Positive – an act is to be performed
obligation. They have equal share of responsibility 2. Negative – something will be omitted
7. Solidary – upon the insolvency of one of the parties who is E.
responsible for the obligation, the other party is to fulfill the full 1. Express – the condition is stated
liability of the contract 2. Implied – the condition is merely inferred
8. Divisible – the fulfillment of the obligation may be done at F.
separate times 1. Possible – capable of fulfillment in nature and in law; condition is
9. Indivisible – the fulfillment of the obligation must be done at one capable of realization according to nature, law , public policy or good
time customs
10. With a Penal Clause 2. Impossible – not capable of fulfillment due to nature or due to the
operation of law or morals or public policy; or due to a contradiction in its
SECONDARY terms
1. Unilateral – only one person or party has an obligation to perform G.
2. Bilateral – two parties has an obligation to perform 1. Conjunctive – when there are several conditions, all of which should be
3. Real – right which is demandable upon the whole world upon the realized
delivery of the debtor of the obligation to the creditor 2. Alternative – if only one or a few of the conditions have to be performed
4. Personal – right of the creditor to demand upon the debtor the or realized
delivery of the obligation as its due period has already lapsed
5. Determinate – specific object is the subject of the obligation
6. Generic – the subject of the obligation belongs to a particular class Q: When is a pure obligation demandable?
7. Positive – there is a need for the performance of the obligation A: At once, the moment you said such obligation or such contract has been
8. Negative – equivalent to omission; something should not be done perfected. (Immediately)
or is to be omitted
9. Legal Condition – future and uncertain event
10. Conventional Period – that which necessarily must come
11. Penal
12. Civil – obligation arises according the Civil law Q: What is the effect of the happening of the resolutory condition?
13. Natural – obligation arises according to natural law A: The obligation is extinguished.

Article 1179 Article 1180

Every obligation whose performance does not depend upon a When the debtor binds himself to pay when his means permit
future or uncertain event, or upon a past event unknown to the parties, is him to do so, the obligation shall be deemed to be one with a period,
demandable at once. subject to the provisions of Article 1197.

Every obligation which contains a resolutory condition shall also - This provision contemplates on an obligation with a TERM or
be demandable, without prejudice to the effects of the happening of the PERIOD. The term is due upon the capacity of the debtor to pay
event. such obligation.
- “Payment does not depend on the debtor’s will, rather, what is
- What is contemplated here are the types of obligations which are dependent on the debtor is the TIME when payment by him can
DEMANDABLE at once be made. “
- 1st paragraph Simply stated: an obligation with no terms or
conditions is demandable at once Q: How long is the term?
- 2nd paragraph: Resolutory conditions are also demandable at once A: The term is not solely dependent neither on the creditor nor the debtor. In
without prejudice to the extinguishment of the obligation once this case, Article 1197 is also applied wherein the Court is obliged to fix the
the condition is fulfilled duration of the period. Upon arrival of this period, the creditor can now
demand for the payment.
Past Events – would refer to the FUTURE KNOWLEDGE OF PAST EVENTS,
which will determine whether or not an obligation will arise

Article 1181
Classification of Conditions
A.

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 In conditional obligations, the acquisition of rights, as well as the This means that if the obligation is subject to a resolutory and potestative
extinguishment or loss of those already acquired, shall depend upon the condition, the condition is VALID (valid because it is already demandable at
happening of the event which constitutes the condition. once)

- This article contemplates on Conditional Obligations; that such Article 1183

arises or is extinguished upon the fulfillment of the condition Impossible conditions, those contrary to good customs or public
- Suspensive – efficacy or obligatory force is subordinated to the policy and those prohibited by law shall annul the obligation which
happening of a FUTURE or UNCERTAIN event depends upon them. If the obligation is divisible, that part thereof which is
- Resolutory – rights are already acquired are lost once the not affected by the impossible or unlawful condition shall be valid.
condition is fulfilled; Thus, there is a need to revoke the donation
first before extinguishment of the obligation is taken to effect. The condition not to do an impossible thing shall be considered
as not having been agreed upon.
SUSPENSIVE CONDITION
- This article contemplates on the effects of Impossible and Illegal
Therefore, what is acquired by the obligee or creditor upon the constitution conditions
of the obligation is only a mere hope or expectancy. Unlike other hope or Effects:
expectancies, however, it is protected by the law 1. If the condition is to DO and IMPOSIBLE or ILLEGAL thing, both the
condition and obligation is VOID
2. If the condition is a NEGATIVE (not to do the IMPOSSIBLE), you
Q: What happens if the suspensive condition does not take place? DISREGARD the CONDITION but the OBLIGATION REMAINS
A: it is as if there is no obligation at all. The parties would stand as if the - In this situation, this becomes a PURE and VALID obligation
conditional obligation never existed 3. If the condition is a NEGATIVE (not to do an ILLEGAL), both the
condition and the obligation are VALID
RESOLUTORY CONDITION - This only applies to obligations and contracts, not to
testamentary disposition or to donations
The obligation is immediately demandable after its establishment or
constitution. Unlike an obligation with a suspensive condition, rights arising Take note: if some conditions in a contract are impossible to comply with, the
out of the obligation are acquired immediately and vested in the oblige or insurer cannot validly assert a breach of said conditions
creditor
Lecture Note:
Article 1182 If the obligation, however, is a pre-existing obligation, and therefore does not
When the fulfillment of the condition depends upon the sole will depend upon the fulfillment of the condition for its perfection, it is quite
of the debtor, the conditional obligation shall be void. If it depends upon clear that only the condition is void, but NOT the obligation.
chance or upon the will of a third person, the obligation shall take effect in
conformity with the provisions of this Code. If the condition is NOT TO DO AN IMPOSIBLE THING, it shall be considered as
not having been agreed upon. Consequently, the obligation becomes pure
- Simply means: if the condition is POTESTATIVE, the conditional and immediately demandable
obligation is VOID
- talks about an obligation subject to POTESTATIVE condition Article 1184
(dependent upon the will of the debtor) The condition that some event happen at a determinate time
- If condition depends upon chance – it will take effect upon the shall extinguish the obligation as soon as the time expires or if it has
provision of this code (ex. I will give you 100 if I win the lotto; The become indubitable that the event will not take place.
obligation is valid because it is dependent upon chance
- If the condition is mixed – the condition is also valid - This deals with a POSITIVE CONDITION
- Obligation subject to SUSPENSIVE CONDITION
DEBTOR - Simply means that a condition which falls on a specific or
1. Potestative and Suspensive determinate time shall extinguish the obligation as soon as the
- Both the condition and the obligation are VOID time expires or that it is sure not to take place
- Ex. I will give you 1M next month if I like - If the period is not fixed in the contract, the court , considering the
2. Potestative and Resolutory parties’ intentions, should determine what period was really
- Both the condition and the obligation are VALID intended
- Ex. I will employ you now, but if in any event I decide not to - Talks about an event to happen
need your services, your contract will end Take Note: POSITIVE - EXTINGUISED
CREDITOR
1. Potestative
- Both the condition and the obligation are VALID Ex. I will give you a parcel of land if you marry X this year. If by the end of the
- Ex. I’ll give you my fountain pen if you desire to have it year, you still did not marry, the obligation of the debtor is extinguished.

Ex of mixed: I will give you 100 if I sell my parcel of land. “or if it has become indubitable that the event will not take place”
- The selling is not solely dependent on the will of the debtor coz Ex. On Nov. 15, X died, then the obligation is extinguished because you can no
such is as well dependent on the buyer or price longer marry

If it made to depend upon the will of the creditor – valid Article 1185
If upon the debtor – void The condition that some event will not happen at a determinate
time shall render the obligation effective from the moment the time
Take note: the precept contained n the first sentence of Article 1182 is only indicated has elapsed, or if it has become evident that the event cannot
applicable only to a SUSPENSIVE CONDITION occur.

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 If no time has been fixed, the condition shall be deemed fulfilled - As far as the fruits are concerned: If the obligations are
at such time as may have probably been contemplated, bearing in mind the UNILATERAL , the debtor shall appropriate the fruits and interests
nature of the obligation. received
- In between – the debtor is still the owner of the fruits
- This deals with a NEGATIVE CONDITION
- Similar with 1184 however, what is contemplated is a condition Reciprocal Obligation
that some event will NOT happen at a determinate or specific - in between (in pendency) – fruits shall be deemed to have been
time. mutually compensated
- The obligation is effective from the moment the time indicated - Buyer is not obliged to pay interest, neither the seller obliged to
has elapsed or is evident that it cannot occur give the fruits
- If no specific date when the obligation is fulfilled: you consider the - Why? Because it will be inconvenient between the parties to
circumstances surrounding the agreement; what is contemplated compute the interest and fruits
by the parties
Article 1188
Take Note: NEGATIVE – EFFECTIVE The creditor may, before the fulfillment of the condition, bring
the appropriate actions for the preservation of his right.
Article 1186 The debtor may recover what during the same time he has paid by mistake
The condition shall be deemed fulfilled when the obligor in case of a suspensive condition.
voluntarily prevents its fulfillment.
- This article contemplates on (1) actions to preserve Creditor’s
- The condition shall be deemed fulfilled when the obligor Rights and (2) Right of the Debtor to Recover what was Paid by
voluntarily prevents its fulfillment Mistake
- Contemplates generally of SUSPENSIVE conditions - (1): bring appropriate actions for the preservation of his rights; ask
- This deals with CONSTRUCTIVE or PRESUMED fulfillment for security if debtor is about to be insolvent; ask the court to
- Requisites: prevent alienation or concealment
a. Voluntary - (2): This is a case of SOLUTIO INDEBITI
b. Actually PREVENTS fulfillment
- Applicable to RESOLUTORY conditions if the DEBTOR is at FAULT Q: Why is there a need for such provision?
Ex. A sold land now to B on a condition that B should marry C A: So that while the condition has not yet happened, the creditor’s right is
within 1 year, otherwise B should return the land. If A kills C, B safeguarded
does not have to return the land because A is at fault.
- Can only be applied to suspensive conditions and not to resolutory Q: What can the creditor do to protect his rights?
conditions A: You can have an annotation in the papers.

Article 1187 Take Note: During the pendency of the condition, the obligee or creditor has
The effects of a conditional obligation to give, once the condition only a MERE HOPE OR EXPECTANCY. The hope and expectancy is protected by
has been fulfilled, shall retroact to the day of the constitution of the law. This is for the protection and preservation of his right. Without this
obligation. Nevertheless, when the obligation imposes reciprocal protection, the right of the creditor becomes meaningless.
prestations upon the parties, the fruits and interests during the pendency of
the condition shall be deemed to have been mutually compensated. If the Q: What is the appropriate action?
obligation is unilateral, the debtor shall appropriate the fruits and interests A: have the property annotated or registered in the registry of property
received, unless from the nature and circumstances of the obligation it (caveat emptor). So whoever acquires the land will be bound to such
should be inferred that the intention of the person constituting the same obligation.
was different.
Take Note: When the obligation imposes reciprocal prestations upon the
In obligations to do and not to do, the courts shall determine, in each parties, the fruits and interests during the pendency of the condition shall be
case, the retroactive effect of the condition that has been complied with. deemed to have been mutually compensation.

- The effects of a conditional obligation to GIVE generally retroacts Article 1189

to the day of the constitution of the obligation (applicable only to When the conditions have been imposed with the intention of
CONSENSUAL contracts suspending the efficacy of an obligation to give, the following rules shall be
- Exception to the General Rule: with regards to FRUITS or observed in case of the improvement, loss or deterioration of the thing
INTERESTS and PERIOD OF PRESCRIPTION (for reciprocal during the pendency of the condition:
obligations because it is presumed they are mutually (1) If the thing is lost without the fault of the debtor, the
compensated; however, in a unilateral prestation, you should obligation shall be extinguished;
deliver the fruits and interest unless it can be inferred that the (2) If the thing is lost through the fault of the debtor, he shall be
intention is otherwise) obliged to pay damages; it is understood that the thing is lost
- In an obligation to DO, the COURT will determine the retroactive when it perishes, or goes out of commerce, or disappears in such
effect of the condition a way that its existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor,
Scenario: the impairment is to be borne by the creditor;
- You have a date of the constitution of the obligation to the date of (4) If it deteriorates through the fault of the debtor, the creditor
the happening of suspensive condition (ex. In year 2004, I obliged may choose between the rescission of the obligation and its
myself to give you a parcel of land if you pass the bar examination) fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the
Unilateral Obligation (example) improvement shall inure to the benefit of the creditor;
2004 – date of the constitution of obligation (6) If it is improved at the expense of the debtor, he shall have no other
2008 – date of happening of the suspensive condition right than that granted to the usufructuary.

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 - if the obligation is to deliver a specific thing, 3 things can happen debtors and creditors to each other) obligations due to breach of
during the pendency of the suspensive condition bad faith
a. the specific thing promised to be delivered may be lost - REMEDY: either (1) fulfillment (file an action for specific
b. there is deterioration performance; demand the person in delay) + damages or (2)
c. there could be improvements rescission + damages (NOTE: the right is not conjunctive thus the
plaintiff CANNOT ask for BOTH remedies
Rules governing in these situations: (during the pendency of the condition) - Note however that you can file for rescission after choosing
fulfillment if the latter becomes impossible
Loss – when it perishes, disappears, its existence is unkown
a. due to fault of debtor – the debtor is obliged to PAY DAMAGES Rescission (or Resolve) – abrogates the contracts from its inception and
b. not due to fault of debtor – the obligation is EXTINGUISHED requires a mutual restitution of benefits received; it’s as if no contract has
been made (restore the parties to their relative positions)
Deterioration TAKE NOTE: the cause must be IDENTICAL and the obligations should arise
a. due to fault of debtor – the creditor may choose between simultaneously
recission of the obligation and its fulfillment with indemnity for
damages Note: the right to rescind belongs to the Injured Party. The injured Party is
b. not due to fault of debtor – the impairement shall be borne by the the one who has complied with his part of his obligation.
creditor (creditor will accept)
Characteristics of the Right to Rescind or Resolve
Improvements 1. Only exists in reciprocal obligations (note: if there is a period, you
a. by nature – inure to the benefit of the creditor cannot declare default before the expiration of the period)
b. by passage of time - inure to the benefit of the creditor 2. It can be demanded only if the plaintiff is ready, willing and able to
c. introduced at the expense of the debtor – debtor have the right comply with his own obligations, and the other is not
than that granted to the usurfructuary (if improvement cannot be 3. The right to rescind in NOT absolute (look at limitations)
removed without causing damage, then the debtor is not entitled a. Trivial causes or slight breaches will not cause
to the improvement. But if it can be removed without causing rescission
damage, the debtor can remove such improvement) b. If there be a just cause for fixing the period within
which the debtor can comply, the court will not decree
Article 1190 rescission
When the conditions have for their purpose the extinguishment c. If the property is now in the hands of an innocent third
of an obligation to give, the parties, upon the fulfillment of said conditions, party who has lawful possession of the same
shall return to each other what they have received. 4. The right to rescind needs judicial approval when there has
already been delivery of the object. However, if it is expressly
In case of the loss, deterioration or improvement of the thing, stipulated in the contract that despite delivery rescission can be
the provisions which, with respect to the debtor, are laid down in the made without going to court, such contract remains valid.
preceding article shall be applied to the party who is bound to return. The right to rescind need not have a judicial approval when there
has been no delivery yet
As for the obligations to do and not to do, the provisions of the
second paragraph of Article 1187 shall be observed as regards the effect of Note: if the question is whether there was a violation in the
the extinguishment of the obligation. contract, you should go to court and resolve such.

- In short means: Once the resolutory conditions is fulfilled, the 5. The right to rescind is implied (presumed) to exist and therefore,
obligation is extinguished need not be expressly stipulated upon
- Because obligation is extinguished, the parties should restore to 6. The right to rescind may be waived, expressly or impliedly
each other what they have received – this would include the fruits
and interests after deducting the expenses made for their Take note: extrajudicial rescission of a contract is not possible without an
production, gathering and preservation express stipulation to that effect
- In this situation, the creditor becomes the debtor in his obligation
to return Limitations on the Right to Rescind
a. The power of the court to fix the period – if there are minor
Article 1191 violations
The power to rescind obligations is implied in reciprocal ones, in b. Resort to the courts
case one of the obligors should not comply with what is incumbent upon c. Right of third person – those who come into possession and is not
him. in bad faith are protected; in such case, the only remedy of the
injured party is to proceed against the party responsible for the
The injured party may choose between the fulfillment and the transfer or conveyance for damages
rescission of the obligation, with the payment of damages in either case. d. Violations should be Substantial or serious so as to allow a
He may also seek rescission, even after he has chosen fulfillment, if the rescission of contract
latter should become impossible. e. Waiver of the right (right to ask for a rescission)

The court shall decree the rescission claimed, unless there be just Obligation of a Seller
cause authorizing the fixing of a period. 1. Deliver a car
This is understood to be without prejudice to the rights of third persons 2. Transfer ownership
who have acquired the thing, in accordance with Articles 1385 and 1388
and the Mortgage Law. Take note: if buyer, due to rescission, is obliged to return the car but
- Power to rescind applies only to RECIPROCAL (created and destroyed it, could no longer proceed in the process. This is because, if you
established at the same time, out of the same cause, and which file for rescission, you should also be ready to return the object subject of the
result in mutual relationship between the parties; the parties are obligation.

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If 3rd party is in bad faith, the only remedy of the injured party is to proceed 2. In diem – term with a resolutory effect. Up to a time certain, the
against the 3rd person who acted in bad faith for damages. You can also go obligation remains valid, but upon the arrival of said period, the
after both the seller and 3rd party if both of them acted in bad faith. obligation terminates

Article 1192 Condition – when you are not even sure if something will happen as a fact or
In case both parties have committed a breach of the obligation, not
the liability of the first infractor shall be equitably tempered by the courts.
If it cannot be determined which of the parties first violated the contract, Acceleration Clause – clause which expressly stipulates that upon failure to
the same shall be deemed extinguished, and each shall bear his own pay installment for a certain month, the whole debt should thereupon
damages. become at once payable.

- In case both parties committed a breach: Take note:

o Determine the first infractor – he is to pay the liability A lease on a “month-to-month basis” is one with a DEFINITE term.
(but this can be tempered because both committed a In this kind of agreement, the lease is deemed from month to month, and the
breach) lessor is allowed to terminate the lease after each month, provided there is
o If it cannot be determined – each shall bear his own due notice.
damages
REQUISITES FOR A VALID PERIOD OR TERM
CONDTITIONS WITH A TERM 1. It must refer to the FUTURE
2. It must be CERTAIN (sure to come) but can be EXTENDED
Article 1193 3. It must be PHYSICAL and LEGALLY possible
Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes. Effect of a Fortuitous event
- No one is still liable for this. The obligation is extinguished
Obligations with a resolutory period take effect at once, but
terminate upon arrival of the day certain. Article 1194
In case of loss, deterioration or improvement of the thing before
A day certain is understood to be that which must necessarily the arrival of the day certain, the rules in Article 1189 shall be observed.
come, although it may not be known when.
- In case of loss, deterioration or improvement of the thing BEFORE
If the uncertainty consists in whether the day will come or not, the arrival of the day certain, the rules in article 1189 shall be
the obligation is conditional, and it shall be regulated by the rules of the observed
preceding Section. - Contemplates on a SUSPENSIVE term

- Contemplates on obligations with a period – that such is Article 1195

demandable only when that day comes Anything paid or delivered before the arrival of the period, the
Period obligor being unaware of the period or believing that the obligation has
- Certain length of time which determines the effectivity or the become due and demandable, may be recovered, with the fruits and
extinguishment of obligations interests.
- Interval of time which either suspends its demandability or
produces its extinguishment - Talks about PREMATURE payment
Note - Simply means that a debtor can recover his payments of debts as
Suspensive term – only specifies when the obligation is demandable well as the fruits and interests if he paid before the arrival of
period and he was unaware that the time has not yet accrued.
PERIOD vs. CONDITION - Only apply to OBLIGATIONS TO GIVE
PERIOD CONDITION
Fulfillment - event which must happen - is an uncertain event Take note: if debtor knew that the arrival of period has not yet come but
sooner or later even if time (future and uncertain) paid, he can no longer recover what he paid for.
cannot be determined
Reference to time - Always refers to the - may under the law If both the debtor and creditor implicitly changed the period, the
future refer to the past debtor could no longer recover payment.
Influence on the - merely fixes the time or - Causes an obligation
obligation the efficaciousness of an to arise or to cease Q: Within what period must recovery be made if the debtor did not know
obligation that payment was not yet due?
Different Kinds of Terms and Periods A: Before the debt matures (regarding what was paid). Even after maturity
A (regarding interest) for after all the creditor was in BAD FAITH. But note that
1. Definite – the exact date or time is known and given the right prescribes 5 years after premature payment.
2. Indefinite – something that will surely happen, but the date of
happening is unknown Article 1196
B Whenever in an obligation a period is designated, it is presumed
1. Legal – period granted under the provision of the law to have been established for the benefit of both the creditor and the debtor,
2. Conventional or Voluntary – period agreed upon or stipulated by unless from the tenor of the same or other circumstances it should appear
the parties that the period has been established in favor of one or of the other.
3. Judicial – the period or term fixed by the courts - The designation of a period is generally for the BENEFIT of BOTH
C the creditor and the debtor
1. Ex die – a period with suspensive effect. Obligation begins only Ex. When there is INTEREST stipulated (debtor – given enough
from a day certain, upon the arrival of the period time to pay; creditor – can earn from the interest)

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General rule: creditor cannot demand performance of the obligation before (5) When the debtor attempts to abscond.
expiration of the period and debtor cannot perform the obligation before the
expiration of the period. - Debtor lose every right to make use of the period when:
o He becomes insolvent, unless he gives a guaranty or
Note: this article applies if the setting of period is voluntary or conventional. security for the debt
It is NOT applicable if period is set BY COURT (judicial) Q: When is a debtor considered insolvent? Should there be a
judicial proceeding or declaration?
- Exceptions: A: Judicial declaration is not necessary in this case. He is insolvent
o Term is for the best of the debtor alone (debtor if his obligation exceeds his assets.
required to pay only at the end)
o Term is for the benefit of the creditor alone (creditor o He does not furnish the creditor the guarantees or
can demand at any time, but he cannot be compelled securities which he has promised (making a mortgage
to accept payment before the expiration of the period) in favor of a third person instead of the creditor)
o By his own acts he has impaired said guarantees or
Article 1197 securities after their establishment; through fortuitous
If the obligation does not fix a period, but from its nature and event they disappear (the security will disappear)
the circumstances it can be inferred that a period was intended, the courts unless he immediately gives new ones equally
may fix the duration thereof. satisfactorily
 There are two situations in this provision
The courts shall also fix the duration of the period when it Take note: The security, if destroyed during the fortuitous event,
depends upon the will of the debtor. DO NOT extinguishes the obligation because this is not the real
subject of the obligation. The more because of the fact that such is
In every case, the courts shall determine such period as may under the also a generic thing.
circumstances have been probably contemplated by the parties. Once fixed o Debtor violates any undertaking
by the courts, the period cannot be changed by them. o Debtor attempts to abscond (debtor tries to escape the
obligation is a sign of bad faith. Intent is sufficient)
- If the obligation has no fixed period but there was a clear
intention to have one, the court may fix the duration thereof. Article 1199
Court also fixes period if period is based on the will of the debtor A person alternatively bound by different prestations shall
- Applies only where a CONTRACT OF LEASE clearly exists completely perform one of them.

SUMMARY OF 3 INSTANCES THAT COURT FIX PERIOD The creditor cannot be compelled to receive part of one and part
1. If the obligation does not fix a period, but from its nature and the of the other undertaking.
circumstances it can be inferred that a period was intended by the
parties - Person alternatively bound by different prestation shall completely
2. If the duration of the period depends upon the will of the debtor perform one of them
( I will pay you when I like or the day that I fix) - Creditor should not accept a portion of the different prestations
3. If the debtor binds himself to pay when his means permit to do so
Article 1200
Note: once the date is fixed, parties could no longer change it The right of choice belongs to the debtor, unless it has been
expressly granted to the creditor.
When the Court MAY NOT fix the Term
1. When no term was even intended (PURE obligation) The debtor shall have no right to choose those prestations which
2. When obligation is PAYABLE on DEMAND are impossible, unlawful or which could not have been the object of the
3. When specific periods are provided for in the law (LEAGL PERIOD) obligation.
ex. Employment contract: time for payment of salary
- The right to choose which of the prestation should be acted upon
Q: Within what period must the action to fix the period be brought? is on the hands of the DEBTOR unless it is EXPRESSLY granted to
A: within the proper prescriptive period for specific performance if a period the creditor
had been originally fixed, but to be counted from the perfection of the - Debtor cannot choose those which are impossible, unlawful or
contract which could not have been the object of the obligation
The PRESCRIPTIVE PERIOD IS 10 YEARS 1. Those undertaking which are not included among those
from which the obligor may select
Take Note: Court determines the period by considering the time probably 2. Those which are not yet due and demandable at the time
contemplated by the parties. The parties my of course change the period by the selection is made
mutual agreement, or may even disregard the same in which case, the 3. Those which by reason, is… (changed looks because of fault)
obligation becomes a pure one, and demandable at once.
Article 1201
Article 1198 The choice shall produce no effect except from the time it has
The debtor shall lose every right to make use of the period: been communicated.
(1) When after the obligation has been contracted, he becomes insolvent, - The choice among the alternative obligations should be
unless he gives a guaranty or security for the debt; communicated ORALLY or WRITTEN (implied or expressed) to the
(2) When he does not furnish to the creditor the guaranties or securities creditor before it takes effect
which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after Note: any form may be employed provided that the other party is properly
their establishment, and when through a fortuitous event they disappear, notified of the selection
unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the - Once choice is made, debtor can NO LONGER RENOUNCE IT and
creditor agreed to the period; take an alternative which was first open to him
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 When the choice has been expressly given to the creditor, the
Note: once choice is communicated to the creditor, the obligation becomes obligation shall cease to be alternative from the day when the selection has
simple thus ceasing to be alternative. been communicated to the debtor.

Reason behind the need for Communication: Until then the responsibility of the debtor shall be governed by
- It is to inform the creditor that the obligation is now a simple one, the following rules:
no longer alternative, and if already due, for the creditor to (1) If one of the things is lost through a fortuitous event, he shall
receive the object being delivered perform the obligation by delivering that which the creditor
should choose from among the remainder, or that which remains
REQUISITES FOR THE MAKING OF THE CHOICE if only one subsists;
1. Made properly – creditor or agent is informed (2) If the loss of one of the things occurs through the fault of the
2. Full knowledge that a selection is indeed being made debtor, the creditor may claim any of those subsisting, or the
3. Made voluntary and freely price of that which, through the fault of the former, has
4. Made in due time – before or upon maturity (otherwise, the disappeared, with a right to damages;
creditor can sue him in court with an alternative relief as “give this (3) If all the things are lost through the fault of the debtor, the
or that”) choice by the creditor shall fall upon the price of any one of
5. Made to all the proper persons them, also with indemnity for damages.
6. Made without the conditions unless agreed to by the creditor
7. May be waived, expressly or impliedly The same rules shall be applied to obligations to do or not to do
in case one, some or all of the prestations should become impossible.
Article 1202
The debtor shall lose the right of choice when among the - If choice is expressly given to the creditor, the latter shall also
prestations whereby he is alternatively bound, only one is practicable communicate his choice to the debtor

- If only one of the prestations is left, then the debtor has no other Note: right of choice can also be expressly granted to a 3 rd person. (should be
choice but to deliver it agreed upon by the parties)

Q: What are the instances where an alternative obligation becomes simple? SUMMARY OF RULES (1204 AND 1205)
A: Right of Choice Belongs to the Debtor
1. When the choice has been communicated
2. When the choice has not been communicated, but by some Loss
circumstances only 1 is left to be practicable 1. Fortuitous Event
a. All objects - obligation is extinguished
Article 1203 b. One or some – debtor chooses from the remainder
If through the creditor's acts the debtor cannot make a choice 2. Fault or negligence of the Debtor
according to the terms of the obligation, the latter may rescind the contract a. All objects – obligation is NOT extinguished; object
with damages. converted to monetary-liable value; value of object
which last disappeared; damages
- If through the creditor’s acts the debtor cannot make a choice b. One or some – choose from the remainder but creditor
according to the terms of the obligation, the debtor may rescind cannot claim for damages
the contract with damages
Right of Choice Belongs to the Creditor
Note: the contract is NOT AUTOMATICALLY RESCINDED. Debtor may allow the Loss
obligation to remain in force insofar as the possible choice or choices are 1. Fortuitous Event
involved. a. All objects – obligations is extinguished
b. One or some – creditor chooses from the remainder;
Article 1204 no liability on the part of the debtor
The creditor shall have a right to indemnity for damages when, 2. Fault or negligence of debtor
through the fault of the debtor, all the things which are alternatively the a. All objects – value of any subject chosen plus damages
object of the obligation have been lost, or the compliance of the obligation b. One or some – chose any object, lost or not. If object
has become impossible. chosen is already lost – value plus damages; if not lost
– no damages
The indemnity shall be fixed taking as a basis the value of the
last thing which disappeared, or that of the service which last became Article 1206
impossible. When only one prestation has been agreed upon, but the obligor
Damages other than the value of the last thing or service may also be may render another in substitution, the obligation is called facultative.
awarded.
The loss or deterioration of the thing intended as a substitute,
- If the alternatives are lost due to the negligence or fault of the through the negligence of the obligor, does not render him liable. But once
debtor, the creditor have the right to indemnity for damages the substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.
Q: What is the basis for the indemnity?
A: the value of the last thing which disappeared or service which last become - Contemplates on FACULTATIVE OBLIGATION
impossible o It is one where only one prestation has been agreed
upon but the obligor may render another in
Note: if alternative 1 and 2 are destroyed due to debtor’s fault but the third is substitution
destroyed due to fortuitous event, the obligation is extinguished!
ALTERNATIVE VS. FACULTATIVE OBLIGATION
Article 1205

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 ALTERNATIVE FACULTATIVE Article 1208
1. If object 1 is lost due to fortuitous 1. If object 1 is lost due to fortuitous If from the law, or the nature or the wording of the obligations
event, debtor will have to deliver even, the obligation is to which the preceding article refers the contrary does not appear, the
object 2 extinguished (no need to deliver credit or debt shall be presumed to be divided into as many shares as there
object 2) are creditors or debtors, the credits or debts being considered distinct from
2. Various things are due, but the 2. Only one thing is principally due one another, subject to the Rules of Court governing the multiplicity of
giving of one is sufficient suits.
3. If one of the prestation is illegal, 3. If the principal obligation is void,
the others may be valid and the and there is no necessity of giving - Talks about the general rule when there are 2 or more debtor or
obligation remains the substitute. (the nullity of the creditor
principal carries with it the nullity - CONSEQUENCE:
of the accessory or substitute) o The debt shall be divided into as many shares as there
4. If it is impossible to give all except 4. If it is impossible to give the are creditors or debtors
one, that last one must still be principal, the substitute does not o The credit or the debts will be distinct from one
given have to be given; if it is impossible another, BUT regarding the brining of the action in
to give the substitute, the court, the Rules of Court governing the multiplicity of
principal must still be given suits will be followed
5. The right to choose may be given 5. The right of choice is given only to
either to debtor or creditor the debtor PRINCIPLES (JOINT OBLIGATION)
A. Joint obligation is presumed by law
Q: When does the substitution take effect? B. In joint obligations, the creditor is entitled to a proportionate part
A: in order that the creditor will be bound by the substitution, it is necessary of the credit and the debtor is liable only to a proportionate part
that the debtor must communicate such fact to the creditor of the debt (to each his own)
C. The debts or credits are being considered distinct and separate
Q: What is the effect of loss of substitute? form one another subject to the rules of court governing the
A: before the substitute is made by the obligor, the loss or deterioration of multiplicity of suits
the thing intended as a substitute, through the negligence of the said obligor,
does not render him liable. Note:
Once the substitution has been made, the debtor shall be liable for loss or Court’s FINAL JUDGMENT outweighs stipulations in contracts.
deterioration.
CONSEQUENCES OF JOINT LIABILITY
JOINT AND SOLIDARY OBLIGATION 1. Vitiated consent on the part of one debtor does not affect the
others
Article 1207 2. Insolvency of one debtor does not make others responsible for his
The concurrence of two or more creditors or of two or more share
debtors in one and the same obligation does not imply that each one of the 3. Demand by the creditor on one joint debtor puts him in default,
former has a right to demand, or that each one of the latter is bound to but not the others since the debts are distinct
render, entire compliance with the prestation. There is a solidary liability 4. When the creditor interrupts the running of the prescriptive
only when the obligation expressly so states, or when the law or the nature period by demanding judicially form one, the others are not
of the obligation requires solidarity. affected

- Simply means that you do NOT render or demand the ENTIRE LIABILITIES OF PARTNERS
compliance with the prestation to yourself 1. If it arises out of CONTRACT, the liability is JOINT or pro rata.
Exception – claiming compensation for employee’s death in line of
Note: Solidary liability arises only if it is expressly stipulated in the contract, duty
or when the law or the nature of the obligation requires solidarity. 2. It if arises out of a CRIME or a QUASI-DELICT, the liability is
SOLIDARY
JOINT VS. SOLIDARY OBLIGATIONS
- Joint – each obligor answers only for a part of the whole liability and to Article 1209
each obligee belongs only a part of the correlative rights If the division is impossible, the right of the creditors may be
prejudiced only by their collective acts, and the debt can be enforced only
- Solidary or Joint and Several – the relationship between the active and the by proceeding against all the debtors. If one of the latter should be
passive subjects is so close that each of the former or of the latter may insolvent, the others shall not be liable for his share.
demand the fulfillment of or must comply with the whole obligation. (can - Contemplates on INDIVISIBLE JOINT OBLIGATION (joint with
ask for reimbursement to others who are liable or subject to receive) respect to the parties but indivisible with respect to the fulfillment
of the obligation)
Remember: if there is only one debtor and creditor, the rules in this article - Fulfillment of obligations requires the consent of all the debtors,
DO NOT apply although each for his part. On the side of the creditors, collective
action is also required for acts which may be prejudicial.

Characteristics:
GENERAL RULE (when there are 2 or more debtors or creditors): JOINT
1. Creditor must proceed against ALL the joint debtors, for
- In the absence of any fact or law which would make the
compliance is possible only if all the joint debtors would act
defendants solidarily liable, the presumption is that they are only
TOGETHER
JOINTLY liable
2. Demand is made on ALL the joint debtors
Exceptions:
3. If any of the joint debtors be insolvent, the others shall not be
a. There is a stipulation in the contract that the obligation is solidary
liable for his share
b. When the nature of the obligation requires liability to be solidary
4. If there is joint creditors, delivery must be made to all, unless
c. When the law declares the obligation to be solidary
someone is specifically authorized by the others

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 5. Each joint creditor is allowed to renounce his proportionate credit Article 1213
A solidary creditor cannot assign his rights without the consent of the
Note: A demand by one joint creditor is not a demand by the others others.

Article 1210 - GR: a solidary creditor cannot assign his rights without consent of
The indivisibility of an obligation does not necessarily give rise to the others
solidarity. Nor does solidarity of itself imply indivisibility. - Reason for such rule: because such obligation implies mutual
agency and mutual confidence. If a creditor does acts that is
- The indivisibility of an obligation does not necessarily give rise to prejudicial to the others, then their rights are endangered, hence,
solidarity. Nor does solidarity of itself imply indivisibility the necessity of their consent.
- Criticism: at some cases, there is really no TRUST that exists
In effect you can have a joint divisible obligation (ex. Monetary obligation), between two solidary creditors when the reason why they
joint indivisible obligation (ex. Car), solidary divisible obligation, solidary became solidary is due to the operation of law (except when it
indivisible obligation arises from voluntary contracts)
- If one of the creditors assigned without consent and the person
Indivisibility – refers to the SUBJECT MATTER assigned collects from the debtor, such collection is not
Solidarity – refers to the TIE BETWEEN THE PARTIES considered valid. This is to avoid connivance so as to result
extinguishment of obligation through payment
DIFFERENT KINDS OF SOLIDARITY - Note: debtor can also refuse to pay 3 rd person if the latter claims
1. Active Solidarity – on the part of the creditor or obligee to have been assigned by one of the creditors.
2. Passive Solidarity – on the part of the debtor or obligor
3. Mixed Solidarity – on both parts Q: what if assignment was made in favor of another solidary creditor without
4. Conventional Solidarity – agreed upon by the parties the consent of the other creditor?
5. Legal Solidarity – that imposed by law A: there is no violation. In such case there can be no invasion of the personal
or confidential relationship among the solidary creditors.
Article 1211
Solidarity may exist although the creditors and the debtors may Article 1214
not be bound in the same manner and by the same periods and conditions. The debtor may pay any one of the solidary creditors; but if any
demand, judicial or extrajudicial, has been made by one of them, payment
- Debtors may still be solidarily liable despite the difference on should be made to him.
terms or conditions
- To do: the whole solidary obligation can be recovered from ANY of - Simply contemplates to whom the debtors must pay
the solidary debtors MINUS the share of those with unmatured o To any of the solidary creditors (if there is no demand
conditions or terms made)
EFFECT OF ACTIVE SOLIDARITY (it will only happen if the obligation stipulates o Exception: payment must be made to solidary creditor
or the law so provides or the nature of the obligation so requires) who made a demand (judicial or extrajudicial)
- Note: if one of the creditors already sued for action, it is essential
Mutual Agency – each creditor is empowered to exercise against the debtor that the first action be first terminated before other creditors
or debtors not only the rights which corresponds to him, but also all the could demand. However, if the first action was just an extrajudicial
rights which correspond to the other creditors, with the consequent demand and the debtor does not pay, the other creditor may now
obligation to render an accounting of his acts to such creditors. file a judicial demand.

Anyone of the creditors can collect the full amount from the debtor but he Article 1215
must make an account and reimburse the shares of his fellow creditors Novation, compensation, confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary debtors,
EFFECT OF PASSIVE SOLIDARITY shall extinguish the obligation, without prejudice to the provisions of Article
1219.
Anyone of them is compelled to make the full amount but has the right to The creditor who may have executed any of these acts, as well as
obtain reimbursement from other debtor plus the interest. he who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
Each solidary debtor, insofar as the creditor or creditors are concerned, is the
debtor of the entire amount; however, with respect to his co-debtors, he is a - Contemplates on the different prejudicial acts of the creditor
debtor only to the extent of his share in the obligation. - Effect: shall extinguish the obligation, without prejudice to the
provision of article 1219 (look at the provision)
Article 1212 1. Novation
Each one of the solidary creditors may do whatever may be - Modification of an obligation by changing its object or
useful to the others, but not anything which may be prejudicial to the latter. principal conditions, or by substitution the person of the
debtor, or by subrogating the person of the debtor, or by
- Solidary creditors may do useful, not prejudicial acts subrogating a third person in the rights of creditor
o Beneficial – to interrupt the running of prescription - It gives rise to a new obligation
Note: the prescription of actions is interrupted when
they are filed before the courts 2. Compensation
Ex. You demand full payment from debtor will stop the - Takes place when two persons, in their own right, are
prescriptive period creditors and debtors of each other
o Prejudicial – remission or condonation - May be total or partial depending on the amount involved
- Note: as far as the solidary creditors are concerned, the creditor
who performed the act shall incur the obligation and damages to Total Compensation: automatically extinguish the obligation
his fellow creditors
3. Confusion or Merger

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 - Takes place when the characters of creditor and debtor are
merged in the same person (original debtor eventually When one of the solidary debtors cannot, because of his
becomes a creditor of his own payment) insolvency, reimburse his share to the debtor paying the obligation, such
- Usually happens when the creditors endorse debtors’ share shall be borne by all his co-debtors, in proportion to the debt of each.
payment to another person and such person endorses the
payment back to one of the debtors. - Payment made by one of the solidary debtors extinguishes the
- In this case, the solidary obligation is EXTINGUISHED obligation
- He who made the payment may claim from his co-debtors only
4. Remission or Waiver the share which corresponds to each, with the interests for the
- Act of pure liberality whereby a creditor condones the payment already made
obligation of the debtor. (tells the debtor “forget about the - When one of the solidary debtors cannot reimburse his share due
whole thing”) to his insolvency, such share shall be borne by all his co-debtors, in
- Remission may be TOTAL or PARTIAL (in partial, can remit proportion to the debt of each. (insolvency of one should be
only one of the debtors obligation) shouldered by the rest)
- In this case, the co-debtor in a total remission benefits from
the act of remission Payment – one of the ways which an obligation is extinguished
- Consists in the delivery of the thing or the rendition of the service
Article 1216 which is the object of obligation
The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made against Summary to whom shall the solidary debtor pay:
one of them shall not be an obstacle to those which may subsequently be 1. Any of the solidary creditor
directed against the others, so long as the debt has not been fully collected. 2. If there was a demand – to the demanding creditor only
3. If there were 2 or more demands – to the first who demanded
- The creditor may proceed against anyone of the solidary debtors (priority in time is priority in right)
or some or all of them simultaneously so long as the debt has not 4. If there were 2 or more demands at the same time – select form
been fully collected any who demanded
- A suit filed against one does not mean a waiver on filing a suit
against the other debtors in the future. The creditor may do so if Article 1218
he wants to. Payment by a solidary debtor shall not entitle him to
- Note: this applies only to PASSIVE SOLIDARY (or mixed solidarity) reimbursement from his co-debtors if such payment is made after the
obligations, not joint because in the latter, you cannot let one of obligation has prescribed or become illegal.
the debtor pay for the other’s debt.
- Payment by a solidary debtor shall not entitle him to
PASSIVE SOLIDARITY VS. SURETYSHIP reimbursement from his co-debtors if such payment is made after
Surety Case: Palmares vs. CA (look at bullet points for SCs decision) the obligation has prescribed or become illegal
Similarity - Note: if debtor A paid C without knowing that the debt had
1. Both the solidary debtor and the surety (assumes a solidary role) prescribed, A can recover from C on the basis of solution indebiti
guarantee for another person
2. Both can demand for reimbursement Prescription – one of the modes of extinguishing obligation. (prescriptive
period for the creditor to collect)
Difference
1. The solidary debtor is indebted for his own share only; the surety Article 1219
is indebted only for the share of the principal debtor The remission made by the creditor of the share which affects
2. Solidary debtor can be reimbursed what he paid MINUS his share; one of the solidary debtors does not release the latter from his
surety can be reimbursed by the whole amount he paid for responsibility towards the co-debtors, in case the debt had been totally
3. If a solidary debtor receives extension, the other debtor does not paid by anyone of them before the remission was effected.
get the same extension. If a principal debtor receives an extension
without the surety’s consent, the surety is released. - The remission (or condonation) made by the creditor of the share
which affects one of the solidary debtors does not release the
 In suretyship, there is but one contract, and the surety is bound by latter from his responsibility towards the co-debtors, in case the
the same agreement which binds the principal debt had been totally paid by anyone of them before the
 Demand on the sureties is not necessary before bringing suit remission was effected
against them since the commencement of the suit is sufficient - Reason: since payment extinguishes the obligation, there is
demand nothing more to remit!
 A surety is not entitled to be given notice of the principal’s default - For this to be valid – there should be an acceptance of the debtor-
donee (if you did not accept the donation through remission, then
Note: guarantor – your liability is subsidiary. Creditor should first demand your obligation is not extinguished)
from the principal. It is only when the principal is insolvent that the creditor
could go after the guarantor Article 1220
The remission of the whole obligation, obtained by one of the
Article 1217 solidary debtors, does not entitle him to reimbursement from his co-
Payment made by one of the solidary debtors extinguishes the debtors.
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept. - The remission of the whole obligation, obtained by one of the
solidary debtor, does not entitle him to reimbursement from his
He who made the payment may claim from his co-debtors only co-debtors
the share which corresponds to each, with the interest for the payment - Reason: there is nothing to reimburse because the debtor himself
already made. If the payment is made before the debt is due, no interest for who offered payment did not really pay anything at all.
the intervening period may be demanded.

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Article 1221 The divisibility or indivisibility of the things that are the object of
If the thing has been lost or if the prestation has become obligations in which there is only one debtor and only one creditor does not
impossible without the fault of the solidary debtors, the obligation shall be alter or modify the provisions of Chapter 2 of this Title.
extinguished.
- Contemplates on divisible and indivisible obligation
If there was fault on the part of any one of them, all shall be - Divisibility or indivisibility refers to the nature of the obligation
responsible to the creditor, for the price and the payment of damages and whether it is capable of partial performance or not
interest, without prejudice to their action against the guilty or negligent
debtor. Divisible obligation
- One capable of partial performance
If through a fortuitous event, the thing is lost or the performance - Kinds of Division
has become impossible after one of the solidary debtors has incurred in o QUANTITATIVE division – depends on quantity
delay through the judicial or extrajudicial demand upon him by the creditor, o QUALITATIVE division – depends on quality, irrespective
the provisions of the preceding paragraph shall apply. of quantity; ex. One child inherits land, the other
inherit cash
- Contemplates on effect of loss or impossibility: o INTELLECTUAL OR MORAL division – one that exists
o If without fault of solidary debtors – no liability merely in the mind, and not in physical reality; ex.
o If with fault – there is liability for all debtors but subject Sisters owning a common car, the half share is only in
for reimbursement of the payment of damages from the mind
the debtor who is at fault (also for damages and
interest) Indivisible obligation
o Loss because of a fortuitous event AFTER default – here - One not capable of partial performance
there will be liability because of the DEFAULT (same - Kinds of Indivisibility
provision of second situation) o CONVENTIONAL indivisibility – made by common
agreement
Article 1222 o NATURAL or ABSOLUTE indivisibility – it is due to the
A solidary debtor may, in actions filed by the creditor, avail nature of the object of undertaking; ex. Trip to manila
himself of all defenses which are derived from the nature of the obligation o LEGAL indivisibility – if so provided by law
and of those which are personal to him, or pertain to his own share. With
respect to those which personally belong to the others, he may avail
INDIVISIBLITY vs. SOLIDARITY
himself thereof only as regards that part of the debt for which the latter are
INDIVISIBLITY SOLIDARITY
responsible.
1. Refers to the nature of obligation 1. Refers to tie between the parties
- Provides for defenses for actions filed by the creditor 2. May exist even if there is only one 2. Needs at least two debtors or
- Defenses may be a complete defense for all debtors unless such debtor and only one creditor creditors
defense is personal thus applicable only to one or few 3. the fault of one is not the fault of 3. The fault of one is the fault of
the other (can be a joint) others
Kinds of Defenses
a. Derived from NATURE of the obligation (this is a COMPLETE defense) Article 1224
i. Lack of consideration or cause A joint indivisible obligation gives rise to indemnity for damages
ii. Absolute simulation (contract is totally fictitious) from the time anyone of the debtors does not comply with his undertaking.
iii. Illegal consideration The debtors who may have been ready to fulfill their promises shall not
iv. Extinguishment of obligation (whole debt is paid, remitted, contribute to the indemnity beyond the corresponding portion of the price
or has prescribed) of the thing or of the value of the service in which the obligation consists.
v. Non-fulfillment of the suspensive condition (if made upon - A joint indivisible obligation gives rise to indemnity for damages
the whole object or upon all the debtors) from the time anyone of the debtors does not comply with his
vi. Stature of frauds undertaking
vii. When ALL debtors are incapacitated to give consent - Here, the object is INDIVISIBLE and yet the parties are merely
viii. When there are VICES OF CONSENT (vitiated consent) on the bound JOINTLY
part of ALL the debtors
Effect of noncompliance:
b. Those that are PERSONAL to the debtor sued (also a COMPLETE 1. If joint indivisible: The obligation is converted into a monetary one
defense unless the defense is NON-FULFILLMENT YET of a for indemnity.
CONDITION or the NON-ARRIVAL YET of the term, this is only a The kind of obligation can be enforced only by
PARTIAL DEFENSE) proceeding against ALL of the debtors. If anyone of the
debtors should fail or refuse to comply with the
Complete defense obligation, it is converted into one of indemnity for
1. Derived from the nature of the obligation damages
2. Personal to the debtor
Partial defense Take note: the person who is ready to pay is not liable for
1. Personal defense of his co-debtor damages.

Note: The contract entered into by the minors is voidable. 2. If solidary indivisible: one of the debtors is liable to pay
everything and can later recover reimbursement from co-debtor
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
GR: creditor cannot be compelled to receive partial payments and debtor to
Article 1223 pay partial payment.

Exceptions:

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 1. When the obligation expressly stipulates the contrary - Purpose: it is to insure the performance of an obligation and also
2. When the different prestations constituting the objects of the to substitute for damages and payment of interest incase of
obligation arte subject to different terms and conditions noncompliance (if no stipulation to the contrary)
3. When the oblation is in part liquidated and in part unliquidated -
SUMMARY OF PURPOSE:
Article 1225 1. To insure the performance of the obligation
For the purposes of the preceding articles, obligations to give 2. To liquidate the amount of damages to be awarded to the injured
definite things and those which are not susceptible of partial performance party in case of breach of the principal obligation
shall be deemed to be indivisible. 3. In certain exceptional cases, to punish the obligor in case of
breach of the obligation
When the obligation has for its object the execution of a certain Kinds of Penal Clauses
number of days of work, the accomplishment of work by metrical units, or a. Legal Penal clause – one that is imposed by law
analogous things which by their nature are susceptible of partial b. Conventional Penal clause – that which has been agreed upon by
performance, it shall be divisible. the parties
c. Subsidiary – when only the penalty may be asked
However, even though the object or service may be physically d. Joint – when both the principal contract and the penal clause can
divisible, an obligation is indivisible if so provided by law or intended by the be enforced
parties.
Q: What is the difference between a penal clause and a condition?
In obligations not to do, divisibility or indivisibility shall be A: A penal clause constitutes an obligation although accessory; the condition
determined by the character of the prestation in each particular case. does not. Therefore, the penalty may become demandable in default of the
unperformed principal obligation, and sometimes jointly with it, while the
- Contemplates on the following: condition is never demandable
o obligations that are deemed indivisible:
 Obligations to give definite things Q: What are the instances that you can demand both the penalty and the
 Those which are not susceptible of partial performance payment for damages?
(ex. Conduct a performance concert) A:
 Even if physically divisible, yet the law provides it to be a. When there is EXPRESS STIPULATION to the effect that damages or
indivisible interest may still be recovered, despite the presence of the
 Even if physically divisible, but the parties intended it penalty clause
to be indivisible b. When the debtor refuses to pay the penalty imposed in the
obligation and he is sued
o Obligations that are deemed divisible c. When the debtor is GUILTY of FRAUD or DOLO in the fulfillment of
 If it is the execution of a certain number of days of the obligation. (why? Because there can be renunciation of an
work action to enforce liability for future fraud because this is against
 If it is the accomplishment of work by metrical units public policy and against the express provision of the law.
 If obligation is to pay a certain amount in installments
 If it is the accomplishment of work susceptible of Note: A penalty may be enforced only when it is DEMANDABLE. Further, the
partial performance penalty may be REDUCED if it is INEQUITOUS or UNCONSCIONABLE.

Take note: in obligations to do, the presumption is indivisibility. Partial Article 1227
performance is equal to non-performance. This is the general rule for The debtor cannot exempt himself from the performance of the
indivisible obligations. obligation by paying the penalty, save in the case where this right has been
Q: What is the test of divisibility? expressly reserved for him. Neither can the creditor demand the fulfillment
A: whether the obligation is susceptible of partial compliance or not of the obligation and the satisfaction of the penalty at the same time,
unless this right has been clearly granted him. However, if after the creditor
Q: What is the effect of illegality on a divisible contract? has decided to require the fulfillment of the obligation, the performance
A: if the illegal term can be separated from the legal ones, the latter may be thereof should become impossible without his fault, the penalty may be
enforced. enforced.

OBLIGATIONS WITH A PENAL CLAUSE - Contemplates on the limitation on the right of the debtor and that
(book page 324 penal clause defined) of the creditor:
- Generally, debtor cannot substitute penalty for the principal
Article 1226 obligation except if such right has been EXPRESSLY reserved
In obligations with a penal clause, the penalty shall substitute - Generally, creditor cannot demand both fulfillment and the
the indemnity for damages and the payment of interests in case of penalty at the same time except if such right has been CLEARLY
noncompliance, if there is no stipulation to the contrary. Nevertheless, granted to him
damages shall be paid if the obligor refuses to pay the penalty or is guilty
of fraud in the fulfillment of the obligation. Article 1228
Proof of actual damages suffered by the creditor is not necessary
The penalty may be enforced only when it is demandable in in order that the penalty may be demanded.
accordance with the provisions of this Code.
- Proof of actual damages suffered by the creditor is NOT
Penal Clause NECESSARY in order that the penalty may be demanded
- COERCIVE means to obtain from the debtor compliance - Proof is not needed because the penalty is considered as a
- It is an ACCESSORY UNDERTAKING to assume greater liability in LAWFUL means for repairing losses and damages
case of breach - Advantage: even if the actual damage is less than what was
stipulated, you can still collect such without proving it

19 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Article 1229
The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even
if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.

- Contemplates on situations when the penalty may be reduced by

the court:
o When the obligation has been partly complied with by
the debtor
o When the obligation has been irregularly complied
with by the debtor
o When the penalty is iniquitous or unconscionable, even
if there has been no performance at all

Note: Penalties which are iniquitous or unconscionable is NOT VOID, but

subject merely to equitable reduction.

Q: What are the situations wherein penal clause cannot be enforced?

A:
1. The breach is the fault of the creditor
2. A fortuitous event intervened, unless the debtor expressly agreed
on his liability in case of fortuitous events
3. The debtor is not yet in default

Article 1230
The nullity of the penal clause does not carry with it that of the
principal obligation.

The nullity of the principal obligation carries with it that of the

penal clause.

- the nullity of the penal clause does not carry with it that of the
principal obligation
- the nullity of the principal obligation carries with it that of the
penal clause
- this is based on the principle that the accessory follows the
principal and not the other way around
reason: the penal clause is merely an access

20 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion