Article 1223-1240

Prepared by: Mark Anthony S. Rico

Article 1223. The divisibility or indivisibility of the things that are the object of obligations in which there is only
one debtor and only one creditor does not alter or modify the provisions of Chapter 2 of this Title. (1149)

DIVISIBLE & INDIVISIBLE

Divisible Obligation - the delivery or performance of which is capable of partial fulfillment.
Indivisible Obligation - the delivery or performance of which is not capable of partial fulfillment.
Test of DISTINCTION
In determining whether the prestation would be divisible or not, we must not confine our definition to
merely the possibility of the prestation to be divisible or not. A more precise approach would be to consider
the purpose of the obligation and the Intention of the parties, such that, even if the object or service may
be physically divisible, it CAN be considered INDIVISIBLE if so provided by LAW or INTENDED BY THE
PARTIES. However, if the obligation is NOT physically divisible, or the service is not succesceptible of
partial performance, the obligation is always INDIVISIBLE, the intention of the parties to the contrary
notwithstanding.
Application:
1. A agreed to pay B P2,000 in four equal monthly payment. The obligation of A is a divisible one
because its capable of partial performance.
2. Lets say, in reference to the example, A is bound to pay B the same amount, on a certain date. The
obligation now becomes indivisible on the sense that even though money is a divisible thing, the
parties intended for the indivisible performance of the whole amount of P 2,000 on the agreed upon
date.
B.
1. A obliged himself to deliver to B a specific car on January 1. The obligation is an indivisible one
because it is not capable of partial performance. The car must be delivered at one time and as a
whole.
2. Supposed that the agreement is that A will deliver half the car January 1 and the other half January 30.
Even if it would be inconceivable that B would agree to the stipulation, lets just assume that he did, will
the obligation be divisible or indivisible?

Answere:
The obligation is still indivisible and A must deliver the car on Jan 1or Jan 30, a definite thing like the
car cannot be severed into parts without altering its essence or destroying its value
Kinds of Division
1. Qualitative
2. Quantitative
3. Ideal or Intelectual division
Kinds of Indivisibility
1. Legal
2. Conventional
3. Natural

Article 1224. A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors
does not comply with his undertaking. The debtors who may have been ready to fulfill their promises shall not
contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the
service in which the obligation consists. (1150)

Effects of non-compliance by a debtor in a joint-indivisible obligation

If anyone of the debtors does not comply with his undertaking in a joint indivisible obligation, the obligation
is converted into one for damages ( to pay money). The creditor cannot ask for specific performance or
rescission because there is no cause of action against the other debtors who are willing to fulfill their
promises.

Article 1225. For the purposes of the preceding articles, obligations to give definite things and those which are not
susceptible of partial performance shall be deemed to be indivisible.
When the obligation has for its object the execution of a certain number of days of work, the accomplishment of
work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall
be divisible.

However, even though the object or service may be physically divisible, an obligation is indivisible if so provided
by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each
particular case. (1151a)

Divisibility or indivisibility in obligations not to do.

1. Indivisible obligation and Divisible Obligation
A obliged himself to B, not to sell drugs on Bs area for one year. Here, the obligation not to sell
should be fulfilled CONTINOUSLY during a certain period. Because the forbearance here is continous.
But if the obligation of A is not to sell drugs on Bs area only during Tuesdays and Sundays, the
obligation is divisible because the forbearance here is not continous.

SECTION 6. - Obligations with a Penal Clause

Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the
payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages
shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. (1152a)

Meaning of Penal Clause

-A penalty stipulated from which derives security of compliance for an obligation.
Penalty substitute for damages and interest
-as a general rule the penalty taked the place of the indemnity for damages and the payment of interest in
case of non-compliance
When Creditor may recover damages.
1. When stipulated by parties.
2. When obligor refuse to pay the penalty
3. When the obligor is guilty of fraud in the fulfillment of the obligation.
Application
A promises to construct a sari-sari store for B. their contract carried with it a penal clause, whereas
in case of non-compliance, B would pay penalty of 50k. A, failed to construct the sari-sari store and B
suffered 40k damages.
In this case the penalty of 50k must be paid to B. B cannot recover more than the 50k even if he
declared 60k damages.
The penalty substitutes the indemnity for the damages of 40k, unless there is a stipulation to the
contract that B can recover penalty +damages, in which case B may still recover damages proved by him.
If A refuses to pay penalty, then B can recover legal interest from A. the interest represents new
damages brought about by As nonpayment of penalty.
If A is guilty of fraud, then B will be also awarded for damages as provided for by Article 1171.

When Penalty may be enforced

The penalty may be enforced when it is demandable in accordance with the provisions of the civil code.
Meaning the penalty, being a stipulation in a contract, can be demanded upon breach of the obligation and
such is not contrary to law.
The penalty would not be demandable when the breach of the obligation resulted from a fortuitous event.

Art. 1227. The debtor cannot exempt himself from the performance of the obligation by paying the penalty, save in
the case where this right has been expressly reserved for him. Neither can the creditor demand the fulfillment 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 has decided to require the fulfillment of the obligation, the performance thereof
should become impossible without his fault, the penalty may be enforced. (1153a)

Penalty not substitute for performance

Generally, the debtor cannot just pay the penalty instead of performing the obligation. Because the object
of the penalty is to secure compliance with the obligation.

If the debtor is allowed just to pay the penalty, in-effect the obligation becomes an alternative one.
The debtor can only exempt himself from the non-fulfillment of the obligation on when this right has been
expressly reserved for him.

Application
A is required to deliver a bag of candy to B otherwise, A shall pay penalty of 1k. Under the above article, A
cannot just pay the 1k penalty as substitute for non compliance of the principal obligation. Exept when
expressly granted to him by B.
Penal Clause is always presumed SUBSIDIARY to the principal prestation.
With and without Performance:
In the preceeding example, if a delivered the bag of candy after delay, and B Accepted the delivery, the
penalty cannot also be demanded unless such right is expressly given to the creditor.
If a did not perform the said obligation, B on the other hand may choose between requiring fulfillment or
satisfaction of the penalty as agreed.
If B chooses fulfillment of the obligation, he may not subsequently demand penalty unless fulfillment
should become impossible without his fault. And vice versa, if B chooses to receive penalty, he may not
subsequently require the fulfillment of the obligation. However, B can still demand performance of the
obligation should S not pay the penalty.

Art. 1228. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be
demanded. (n)
Note: Article 1228 only applies when penalty is fixed by the parties to substitute indemnity for damages.
Art. 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. (1154a)

When penalty may be reduced by the courts

1. When there is partial performance
2. When penalty is excessive even if non performance

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

Effect of Nullity of Penal Clause

-If only the penal clause is void, the principal obligation remains valid and demandable. The penal clause is
just disregarded. The injured party may recover damages in case of non-performance as if no penalty has
been stipulated.
Example:
A agreed to sell merchandise to B. provided in their agreement that in case of default, A will kill Bs
best friend. Here only the penalty is void because of its nature.

Effect of Nullity of the Principal Obligation

-If the principal obligation is void, the penalty is also void. But if the nullity of the principal obligationis due
to the fault of the debtor, who acted in bad faith, by reason that the creditor suffered damages, the penalty
may be enforced.

Example:
A agreed to sell illegal merchandise to B. provided in their agreement that in case of default, A will
pay B 1k for penalty. Here the principal is void because of its illegal nature as well as the penalty even if
the penalty is valid.
CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS

GENERAL PROVISIONS
Art. 1231. Obligations are extinguished:
(1) By payment or performance:
(2) By the loss of the thing due:
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a resolutory
condition, and prescription, are governed elsewhere in this Code. (1156a)

SECTION 1. - Payment or Performance

Art. 1232. Payment means not only the delivery of money but also the performance, in any other manner, of an
obligation. (n)

Art. 1233. A debt shall not be understood to have been paid unless the thing or service in which the obligation
consists has been completely delivered or rendered, as the case may be. (1157)

Art. 1234. If the obligation has been substantially performed in good faith, the obligor may recover as though there
had been a strict and complete fulfillment, less damages suffered by the obligee. (n)

Requisites for the Aplication of Article 1234

1. There must be substantial performance
2. The obligor must be in good faith.
Application
A obliges himself to deliver to B 10 apples on or before Feb 4. On Feb 4, A was only able to deliver to B 9
Apples due to the shortage within the Philippine market of apples resulted from the monstrous increase in
demand of apples worldwide. Note that in this situation A is willing to comply with his obligation but the
worldwide market does not permit him to do so. A can recover as though there had been complete delivery
of the obligation less the price of 1 apple. A however, must show that he attempted in good faith to do good
with his obligation.

Art. 1235. When the obligee accepts the performance, knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed fully complied with. (n)

In this case of acceptance, the law considers that the creditor waived his right and the whole obligation is
extinguished.
Requisites:
1. The Creditor knows that the performance is incomplete or irregular
2. The Creditor accepts the performance without accepting any protest or objection.

Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to the contrary
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the
debtor. (1158a)

Whom the Creditor is bound to receive payment

1. The debtor
2. Any person who has an interest in the obligation(guarantor).

3. A third person who has no interest in the obligation when there is stipulation that he can make
payment.
Creditor may refuse payment by a third person.
Effect of payment made by third person.
1. If made without the knowledge or against the will of the debtor the recovery if only up to the extent or
amount of the debt at the time of payment.
2. If made with the knowledge of the debtor the payer shall have the right of reimbursement and
subrogation, that is to recover what he has paid and to acquire all rights of the creditor.
Application
A owes B the sum of 10k, C a stranger offers to pay B. Suppose B accepts the payment, the right
of C to recover from A depends upon whether the payment was made with knowledge or consent
of A.
1. If the payment made by C was without consent of A, if the total debt is 10k and c paid B the
complete amount of 10k, C can reimburse 10k from A. but lets say, if the outstandaing debt is
only 5k and C paid B 10k, C can only collect 5k from A and the other 5k to B, whereas B was
erroneously benefited.
2. If the payment made by C was with the knowledge and consent of A. C can recover from A 10k
with all the rights of subrogation.

Subrogation and reimbursement.

1. In reimbursement, the third person entitled by reason of payment has merely the bare right to
be refunded to the extent of the amount beneficial to the debtor, without the right to the
guarantees and securities of the original obligation. In subrogation, however, there is no real
extinction of the obligation, but only change of creditor.

Art. 1238. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a
donation, which requires the debtor's consent. But the payment is in any case valid as to the creditor who has
accepted it. (n)

Embodies the idea that no one should be compelled to accept the generosity of another
A donation should be accepted
If the creditor accepts the payment, kt shall be valid as to him and the payor although the debtor did not give his
consent to the donation.

Art. 1239. In obligations to give, payment made by one who does not have the free disposal of the thing due and
capacity to alienate it shall not be valid, without prejudice to the provisions of Article 1427 under the Title on
"Natural Obligations." (1160a)

FREE DISPOSAL OF THE THING DUE the thing to be delivered should be free from any claims lien or
encumbrances.
CAPACITY TO ALIENATE the person is not incapacitated to enter into a contract and for that matter to make
disposition to the thing due.

Art. 1240. Payment shall be made to the person in whose favor the obligation has been constituted, or his
successor in interest, or any person authorized to receive it. (1162a)