JOINT AND SOLIDARY OBLIGATION - There must be a plurality of parties, either o the !

re"itor#s, "ebtor#s si"e or o both si"es$ - %o&e'er, the mere fa!t or the prese !e of plurality of parties "oes ot e!essarily mea that the obli(atio is Soli"ary$ - Soli"arity may o ly e)ist i * &ays (see 3 sources of solidarity) +, * SO-R./S O0 SOLIDARITY, 1a2a 3Test of Soli"arity45 6$ By La& 7$ By stipulatio of the parties *$ By reaso of the ature of the obli(atio +, * &ays to "etermi e if the Obli(atio is Soli"ary, 6$ Is there a la& that pro'i"es that the obli(atio is Soli"ary8 o If Y/S 9 Soli"ary o If NO 9 a s&er the 7 " :uestio 7$ Di" the parties stipulate for Soli"arity8 o If Y/S 9 Soli"ary o If NO 9 a s&er to the *r" :uestio *$ Does the ature of the obli(atio re:uire soli"arity8 o If Yes 9 Soli"ary o If NO 9 the presumptio is JOINT Note: SOLIDARY resu!ed" Obligations are never

A y of the soli"ary "ebtors !a be may to pay > !ompelle" to pay, ot o ly his share, but the e tire "ebt to a yo e of the soli"ary !re"itors$

Note, I passi'e soli"arity, the la& (i'es the soli"ary "ebtors a treme "ous bur"e &hereas, i a!ti'e soli"arity, the la& (i'es the soli"ary !re"itors a treme "ous ri(ht$ +, 0or a obli(atio to be Soli"ary, is it e!essary to use the term 3Soli"ary48 Yes$ I or"er that the !o tra!t be soli"ary$ /'e thou(h the la& "oes ot re:uire this term to ma2e it soli"ary, as lo ( as the parties may use other terms to ma2e the obli(atio soli"ary$

+, .a the obli(atio be Soli"ary &ithout usi ( the term 3Soli"ary48 - Yes$ Be!ause the la& "oes ot re:uire the use of the term for the obli(atio to be soli"ary, &hat the la& allo&s is that the parties may use other terms as lo ( as it &ill ma2e the obli(atio Soli"ary$ ?e), Joi t a " Se'erally@ .AS/, RON+-ILLO - A!tio to re!o'er a sum of mo ey a(ai st * "efe "a ts - =arties e tere" i to a !ompromise a(reeme t - %is !laim &as rou "e" off to 6AAB i stea" of 66CB - DAE &ill be pai" by the * "efe "a ts o the sate spe!ifie" i the a(reeme t - The other DAE &ill be pai" a(ai o the "ate spe!ifie" also i the a(reeme t - The a(reeme t pro'i"e" that, 3;e hereby bi " oursel'es JOINTLY a " S/F/RALLY4 - No payme t &as ma"e by the "efe "a ts - S. rule" that u "er the phrase Joi tly a " Se'erally it mea s SOLIDARY$ +, ;hat is the "isti !tio bet&ee the ri(hts of the a!ti'e sub<e!t a " obli(atio of the
=a(e 1 of 5 OBLIGATIONS AND CONRACTS Finals R.A. 2010-2011

+, ;hy "oes Soli"ary is e'er presume"8 6$ A!ti'e Soli"arity - Be!ause if a obli(atio is Soli"ary, the la& (i'es the soli"ary !re"itor, a treme "ous ri(ht i &hi!h he !a "ema " full !omplia !e of the obli(atio from a yo e of the soli"ary "ebtors$ - I <oi t Obli(atio , the !re"itor !a "ema " o ly as mu!h as it may !orrespo " to his share i the !re"it$ 7$ =assi'e Soli"arity

passi'e sub<e!t i Joi t a " Soli"ary Obli(atio s8 6$ Joi t Obli(atio a$ .re"itor may o ly !olle!t his share i the !re"it from the "ebtor b$ Debtor may o ly be ma"e to pay i so mu!h as it may !orrespo " to his share i the "ebt$ 7$ Soli"ary Obli(atio a$ Soli"ary .re"itor may !olle!t the e tire amou t if the obli(atio from a y of the Soli"ary Debtors$ b$ Soli"ary Debtor !a be ma"e to pay the e tire amou t of the obli(atio to a y of the Soli"ary .re"itors$ +, ;hat is the basis of these ri(hts8 - Gutual A(e !y ?!re"itor si"e@ a " Gutual Guara ty ?"ebtor si"e@ +, ;hat is Gutual A(e !y8 - It is the pri !iple that (o'er s the relatio ship e)isti ( amo ( the !re"itors o ly i a Soli"ary Obli(atio $ - It mea s that o e of the Soli"ary .re"itors a!ts also i behalf of his !o!re"itors a " ea!h of the Soli"ary .re"itors is a agent of ea!h other$ +, ;hat is the basis of the obli(atio of the Soli"ary Debtors to pay the full amou t of their obli(atio 8 1mutual a(e !y5 - The pri !iple of mutual a(e !y (o'er s the relatio ship e)isti ( bet&ee the soli"ary "ebtors$ - /a!h soli"ary "ebtors bi "s himself to pay ot o ly his share but the e tire "ebt$ +, ;he "oes the pri !iple of Gutual A(e !y be(i s a " &he "oes it e "8 - Gutual A(e !y i A!ti'e Soli"arity be(i s from the mome t of the perfe!tio of the obli(atio $ - It e "s either,

o o

6$ -po payme t of the obli(atio 7$ ;he "ema " is ma"e by a yo e of the soli"ary !re"itors$

Note, Illustratio begins$

Solidary A B C

of ho& Gutual A(e !y

Solidary X Y Z

A, B, . bi "s themsel'es soli"arily i fa'or of H, Y, I

JJJ0rom the mome t of the perfe!tio of the obli(atio , Gutual A(e !y be(i s to (o'er the relatio ship amo ( the soli"ary !re"itors$

Note, Illustratio of ho& Gutual A(e !y ends$

Solidary DEBTORS A B C Solidary CREDITORS X Y Z

How does it end?

6$ ;he a yo e from A, B, . pays

a yo e from H, Y, I$ ?the obli(atio is e)ti (uishe"@

7$ ;he a yo e of from H, Y, I ma"e a +, ;hy "oes "ema " put a e " to Gutual A(e !y8 - The mome t o e of the soli"ary !re"itors ma"e a "ema " upo a yo e of the soli"ary "ebtors$ - Be!ause the "ebtor &ho re!ei'es the "ema " !a ot pay to a y other !re"itors &ho "i" ot ma"e the "ema "$ - The "ebtor &ho re!ei'es the "ema " !a pay o ly to the !re"itor &ho ma"e the "ema "$ - =ayi ( the !re"itor &ho "i" ot ma2e the "ema " mea s payi ( a *r" perso $ - Be!ause the mome t "ema " &as ma"e by o e of the Soli"ary .re"itors,
=a(e 2 of 5 OBLIGATIONS AND CONRACTS Finals R.A. 2010-2011

all ri(hts of the other !re"itors are sai" to be !o !e trate" i the !re"itor &ho ma"e the "ema ", so that the "ebtor &ho re!ei'e" the "ema " !a ot pay the other !re"itor$ %e !a o ly pay the "ema "i ( !re"itor$ As a Ge .re"itors Soli"ary obli(atio eral Rule, a yo e of the Soli"ary !a "ema " a " a yo e of the Debtors !a pay the e tire $

+, Gi)e" Soli"arity8 - Soli"arity e)ist from both !re"itor a " the "ebtors si"es$ +, Gutual Guara ty8 - ;he A pays to a y of the soli"ary !re"itors, the obli(atio of A, B, . is e)ti (uishe"$ - %o&e'er, si !e A &as the o e &ho pai" the e tire obli(atio , he the o& be!omes the e& !re"itor of B a " .$ - But it "oes ot mea that A a!:uires the ori(i al ri(ht of H, Y, I as !re"itors be!ause he "oes ot i a y&ay$ - A is o ly e title" to be reimburse"$ A#s <ob is to see2 reimburseme t from B a " .$ - A is ot subro(ate" to the ri(hts of H, Y, I be!ause of he is subro(ate", he !a see2 the full amou t from B a " . e'e his share$ +, The la& says that ea!h of the soli"ary !re"itors may "o &hate'er may be useful to the others but ot a ythi ( &hi!h may be pre<u"i!ial to the latter$ %o&e'er, i a subse:ue t pro'isio , No'atio , .ompe satio , .o fusio or Remissio of the Debt ma"e by a y of the soli"ary !re"tiors or &ith a y of the soli"ary "ebtors shall e)ti (uish the obli(atio 8 Example: - A,B,. o&es *AB to H,Y,I - A,B,.#s share is 6AB ea!h$ - H lo'es "o(s a " he as2e" A to (i'e him a "o( a " the !re"it &ill be pai"$ - The effe!t of the obli(atio is e)ti (uishe" +, The a!t of A is ot be efi!ial to Y a " I$ Is it ot pre<u"i!ial to his other !re"itors8 - A!ts of o'atio , !ompe satio , !o fusio or remissio of the "ebt shall e)ti (uish the obli(atio $ =ro'i"e", that the a!ti ( !re"itor "eli'ers to his !o-!re"itors their shares i the !re"it, there is o pre<u"i!e$ - %o&e'er, the pro'isio o'erloo2e" o e thi (K ;hat if H be!omes
=a(e of 5 OBLIGATIONS AND CONRACTS Finals R.A. 2010-2011

H=N, o !e a Soli"ary .re"itor ma2es a "ema ", Gutual A(e !y !eases to e)ist be!ause i so far as the t&o parties are !o !er e"K the Debtor &ho re!ei'e" the "ema " !a o ly pay to the "ema "i ( !re"itor$ NOT/, Illustratio of the H=N,
Solidary DEBTORS A B C Solidary CREDITORS X Y Z

I so far as H a " A are !o !er e", the Ge eral Rule "oes ot apply to them be!ause the Gutual A(e !y has !ease" to e)ist &he H "ema "e" payme t from A$ I here, A !a o ly pay to H, &ho ma"e the "ema ", be!ause all ri(hts of Y a " I are o& !o !e trate" o ly to H$

+, Si !e A !a ot pay to Y a " I, .a B or . pay the obli(atio after H has bee pai" by A8 - Yes$ The Ge eral Rule still applies to B a " .$ +, .a H still re!ei'e payme t from B a " .8 - Yes$ Be!ause the Ge eral Rule still applies to them$ - The termi atio of Gutual A(e !y o ly applies to A a " H !a ot refuse to a!!ept the payme t$

i sol'e t8 ;hat is the reme"y of the other !re"itors8 9 NO R/G/DY$ +, H "ema "s from A$ A "i" ot pay$ ;hat is H#s reme"y8 - H !a "ema " from B or . - Or he !a (o to !ourt a " sue A i or"er to !olle!t payme t +, To &hom he must sue8 - A yo e from the soli"ary "ebtors$ .AS/, =NB '$ .ON./=.ION GINING - S. rule" that it &as ot e!essary to i !lu"e the estate of the perso &ho "ie", &hile it is true that all the members of the Boar" &ho si( e", &hile they are e!essary parties, they are NOT INDIS=/NSABL/ parties$ - La& says that i e for!i ( the Soli"ary Obli(atio , the !re"itor !a file a a!tio a(ai st a y of the Soli"ary DebtorsK the !re"itor !a !hoose amo ( themK the !re"itor !a sue o ly a fe& of them a " ot e!essarily all of them$ .AS/, IG=/RIAL INS-RAN./ '$ DAFID - S. rule" that the obli(atio is Soli"ary si !e they bou " themsel'es 3<oi tly a " se'erally4$ The "eath of o e "oes ot mea e)ti (uishme t of the other$ The "eath of o e simply mea s the !o !e tratio of the "ema " upo the sur'i'i ( "ebtor$ +, I !ase of =assi'e Soli"arity ?Soli"ary Debtors@, is it e!essary that the "ebtors be bou " by the same terms a " !o "itio s8 - The la& says, Soli"arity may e)ist althou(h the !re"itors a " "ebtors may ot be bou " i the same ma er a " by the same perio"s a " !o "itio s$ /)ample, 6AB is "ue o Gar!h 6, it shoul" be pai" by A 6AB is "ue o April 6, it shoul" be pai" by B

6AB is "ue o .

Gay 6, it shoul" be pai" by

+, .a B a " . be !ompelle" to pay o either of the "ue "ates pro'i"e"8 - Y/S$ Be!ause they are soli"ary "ebtors$ +, R/GISSION or .ONDONATION - A!t of for(i'e ess +, .a a la& o remissio 'e applie" to soli"ary obli(atio 8 - Yes$ +, If the obli(atio is !o "o e", &hat &ill be the effe!t of remissio 8 - The effe!t "epe "s o the ob<e!t of the remissio >!o "o atio $ a$ If &hat has bee !o "o e" is o ly a #OR$ION O% $&' O(LI)A$ION, it &ill result to =ARTIAL /HTING-IS%G/NT of the obli(atio $ b$ If &hat has bee !o "o e" is o ly the S&AR' O% A S#'*I%I* D'($OR, the share of that "ebtor is e)ti (uishe" but he is ot release" from the obli(atio be!ause of soli"arity$ !$ If &hat is !o "o e" is the SOLIDARY $I', the obli(atio remai s a " the obli(atio is tra sforme" from soli"ary to <oi t$ +, ;hat is the effe!t of the "elay i !urre" by a Soli"ary Debtor8 - Ge $ Rule, Delay of o e is "elay of all$ - Shoul" the thi ( "ue (et lost "ue to the fault of o e of the soli"ary "ebtors, a$ If the o e to pay is the G-ILTY D/BTOR, he is also re:uire" to pay the 'alue L "ama(es L i terest$ b$ If the o e to pay is the INNO./NT D/BTOR, he has the ri(ht of re!ourse a(ai st the (uilty "ebtor$ %e !a re!o'er from him$ +, ;hat is a =/NAL .LA-S/8
=a(e ! of 5 OBLIGATIONS AND CONRACTS Finals R.A. 2010-2011

A a!!essory u "erta2i ( ma"e by a party to assume (reater liability i !ase of brea!h$

+, ;hat is the purpose8 - Ge erally, it is to stre (the !oer!i'e for!e of a obli(atio but also ser'es as a substitute i "em ifi!atio for "ama(es payme t of i terest$

the it is for a "

7$ ;he there has bee IRR/G-LAR =/R0ORGAN./ *$ /'e if there has bee NO =/R0ORGAN./ at all, if the pe alty a(ree" upo is e)!essi'e or u !o s!io able$ +, ;he &ill the pro'isio apply &hi!h authoriMes the !ourt to re"u!e the pe alty8 - S. rule", o ly if the obli(atio &ith a pe al !lause has bee brou(ht as a sub<e!t f the !ourt#s liti(atio $ +, I a obli(atio &ith a =e al .lause, &hat if the "ebtor &ill <ust say, 3I &ill <ust pay for the pe alty !lause4$ .a the "ebtor !ompel the !re"itor to a!!ept the payme t or 'i!e 'ersa8 - Ge $ Rule, Debtor !a ot !ompel the !re"itor or the !re"itor "ema " from the "ebtor$ - H=N 9 u less su!h ri(ht has bee /H=R/SSLY (i'e to the "ebtor$ +, If that ri(ht is e)pressly (i'e to the "ebtor, &hat &ill be its effe!t of the (ra t o the ori(i al obli(atio 8 - The ori(i al obli(atio &ith pe al !lause &ill !ease to e)ist be!ause the obli(atio &ill o& be !o 'erte" i to either, Alter ati'e or 0a!ultati'e obli(atio , "epe "i ( o the te or of the (ra t of the ri(ht ?o the "ebtor#s si"e@ - ?o the !re"itor#s si"e@ 9 /)press (ra t of the ri(ht is ot re:uire"$ .lear (ra t or it !a be implie"$

+, Substitute for I "em ifi!atio 8 - Gea s that if BR/A.% is !ommitte", the i <ure" party !a o ly re!o'er from the pe alty !lause ot from "ama(es$ - H=Ns, 6$ ;he there is a stipulatio 7$ Debtor refuses to pay *$ ;he there is 0rau" JJJI o!e t parties !a !laim =e alty a " Dama(es +, =e alty as substitute for i "em ifi!atio for "ama(es, suppose bea!h &as !ommitte" but o "ama(e resulte", !a the pe alty be "ema "e"8 If Yes, &hat is the pe alty substituti ( it8 - =roof of a!tual "ama(e is ot e!essary to be able to !laim the pe alty be!ause the basis of the ri(ht to !laim the pe alty is ot "ama(es but BR/A.%$ +, ;hat 2i " of pe alty may parties to a !o tra!t a(ree o 8 - ;hate'er the parties may a(ree shall be the la& bet&ee them, but sub<e!t to LIGITATIONS$ - ? ot !o trary to la&, publi! morals, (oo" !ustoms, publi! or"er a " publi! poli!y@ +, Gay a a(ree" pe alty be re"u!e"8 - O ly 'ali" pe alties !a be re"u!e"$ +, ;he are !ourts empo&ere" to re"u!e a a(ree" pe alty8 6$ ;he there has bee a =ARTIAL =/R0ORGAN./ of a obli(atio

=a(e 5 of 5 OBLIGATIONS AND CONRACTS Finals R.A. 2010-2011