Obligations and Contracts – Lecture Notes shall be regulated by the precepts of the law which establishes them; and

General Provisions Q: What is the importance of differentiating a specific and generic as to what has not been foreseen, by the provisions of this Book.
obligation?
Article 1156 A: Effects of the laws for the two obligations are different. In case of 1st source – LAW
An obligation is a juridical necessity to give, to do or not to fortuitous event (those which cannot be foreseen or can be foreseen but - Those derived from law should not be PRESUMED
do. are inevitable), liability to deliver specific obligations are extinguished. - Thus, you have to point out a specific provision of the law
However, this is not so in the case of generic obligations because you can - This is provided by the Civil law and Special Law (SL should
Q: What is an Obligation? still deliver any other thing to the creditor which falls under the same class prevail in case of conflict)
A: It is a juridical necessity to give, to do, or not to do of the obligation (genus does not perish)
Failure to compel with the juridical necessity will subject the Article 1159
debtor to a sanction To Do or Not to DO (as prestation) Obligations arising from contracts have the force of law
- called Personal obligation between the contracting parties and should be complied with in good
4 essential elements of an obligation: - are either affirmative or negative faith.
1. Active subject – creditor or obligee; person who can demand
the fulfillment of an obligation  Viewpoint of Person Obliged 2nd source – CONTRATCTS
2. Passive subject – debtor or obligor a. Unilateral – only 1 party has an obligation to perform - Have the force of law between contracting parties
3. Object or prestation – object is any of to give, to do or not to b. Bilateral – 2 parties has an obligation to perform. Example: - This must be complied with in GOOD FAITH
do contract of sale (buyer and seller) - Requires consent from the parties; bound by the terms and
4. Efficient cause – judicial tie or vinculum conditions of contracts
Article 1157 - There are limitations for the right over the parties to stipulate
Example: X agreed to give his car to Y Obligations arise from: (they should not be contrary to laws, public policy, good
Active – Y (1) Law; customs, morals, public order)
Passive – X (2) Contracts;
Object – obligation to give the car (3) Quasi-contracts; Principle of Liberty or Freedom of Contracts
Efficient cause – agreement (4) Acts or omissions punished by law; and - Parties have the right to agree on terms and conditions as they
(5) Quasi-delicts. may deem it convenient, provided that such are subject to
Giving (as prestation) limitation
- Called real obligation Sources of Obligation (5)
- 2 types of real obligation - The list is exclusive. Thus if the source is not one of the 5, then Q: What are the essential elements of a contract?
o To give or deliver a specific or determinate thing there is no Obligation to speak of A: meeting of the minds, consent of the cause and consideration
(ex. MY car) 1. Law a. Consent
o to give or deliver a generic or indeterminate thing 2. Contracts b. Cause
(ex. A car) 3. Quasi-Contracts c. Consideration
4. Acts or omissions punished by law (delicts)
Kinds of Obligation: 5. Quasi-Delicts
 Viewpoint of Sanction Good Faith – not by the sword that killeth it but by the spirit that giveth life
a. Civil obligation – can be obtained in court Note: numbers 3-5 are also provided by law (it does not make law inferior to a contract nor a contract superior than the
b. Natural obligation – action has already prescribed but creditor law)
failed to demand within the prescriptive period. Despite the Article 1158
prescription, debtor voluntary delivered payment. In this case, Obligations derived from law are not presumed. Only those Q: What are the difference of an obligation and a contract?
debtor cannot get back what he paid expressly determined in this Code or in special laws are demandable, and A:
c. Moral obligation – ex. Hear mass OBLIGATIONS CONTRACT
- Result of a contract - Results to an obligation of the minds of the mind (consent of cause
- Not necessary require meeting - Always presupposes a meeting and consideration)
- Also provided for by Law (Chapter I, Title XVII of Civil Code) Civil obligations arising from criminal offenses shall be
NOMINATE AND INNOMINATE CONTRACTS - No meeting of the minds governed by the penal laws, subject to the provisions of Article 2177, and
 Nominate – law has given a particular name for that contract of the pertinent provisions of Chapter 2, Preliminary Title, on Human
 Innominate – contracts with no specific name Q: What is a Quasi-Contract? Relations, and of Title XVIII of this Book, regulating damages.
a. DO UT DES – I give that you may give A: Juridical relation resulting from a lawful, voluntary and unilateral and
b. DO UT FACIAS – I give that you may do which has for its purpose the payment of indemnity to the end that no one 4th Source – ACTS OR OMISSIONS PUNISHED BY LAW or DELICT
c. FACIO UT DES – I do that you may give shall unjustly enrich himself at the expense of another - Criminal liability carries civil liabilities
d. FACIO UT FACIAS – I do that you may do o Restitution – return the exact thing
- 2 common kinds: o Reparation – pay equivalent price
Article 1160 a. Negotorium Gestio – unauthorized management o Indemnification – consequential damage
Obligations derived from quasi-contracts shall be subject to Ex. Neighbor saved you properties thus had expenses
the provisions of Chapter 1, Title XVII, of this Book. b. Solution Indebiti – undue payment Article 1162
rd
3 Source – QUASI – CONTRACTS Article 1161
1 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 Obligations derived from quasi-delicts shall be governed by
the provisions of Chapter 2, Title XVII of this Book, and by special laws.
5th Source – QUASI DELICT
- Chapter 2 Title XVII of CC or Special Laws
- Torts and damages
- Basis: act of negligence or omission of care causing damage to
another with no pre-existing contractual relations
Q: When is there negligence?
A: Omission of that diligence which is required by the circumstances of
person, place and time
Q: When can an obligation arise from a quasi-delict?
A: The requirements are as follows:
1. There must be fault or negligence
2. There must be damage or injury
3. There must be a direct relation of cause and effect between
the fault or negligence and damage and injury (the act of
negligence is the proximate cause of the damage)
What is important in quasi-delict is that you have to show that there is no
pre-existing contract between the parties
Take note: If the source is not any of the five sources stipulated, then in it is
not considered an obligation (article 1158)
Ex. Is an employer obliged to provide for legal service to his employee? No,
for the law does not require for such.
Dammum absque injuria (Damage without injury)
- damage without legal injury
- There is damage but there is no injury
- There is no liability in this case
Injury – illegal invasion of a legal right. You associate it with a
wrongful act or omission which will result to loss or damage
Damage – the loss or the hurt or harm done to another which
usually results from the injury
Nature and Effect of Obligations
Real Obligation – obligation to deliver a specific and indeterminate thing
Article 1163
Every person obliged to give something is also obliged to take care
of it with the proper diligence of a good father of a family, unless the law
or the stipulation of the parties requires another standard of care.
- There is an obligation to give something: contemplates on
DETERMINATE OBJECTS ONLY
- Purpose: ensure that the creditor will receive the object. Thus
debtor should take care of the object so as to deliver it to the
creditor
- 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
possession of the obligor, he has the responsibility to take care
2 angel‘s notes
of such using ordinary diligence (diligence required in the
absence of any stipulation in law or contract)
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, time and place
EXCEPTIONS
If the law or contract provides for a DIFFERENT standard of care, said law or
stipulation must prevail (Art. 1163)
Extraordinary diligence –required only if expressly provided by law or
parties expressly provided this in their contract
Good Father of a Family: Standard Care or Diligence given
Q: What are the other types of standards?
A:
a. Slight –by contract, this can be imposed
b. Extraordinary – diligence of very cautious persons; ex.
Common carrier custody (airplanes, bus, etc.)
c. Utmost Diligence – ex. imposed on banks
Article 1164
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 over it until the same has been delivered to him.
Delivery of fruits is only applicable to SPECIFIC obligations
Fruits – three types contemplated in this article
a. Natural – spontaneous product of soil and young of animals
b. Industrial – acquire through industry or labor
c. Civil – rent, lease, interest
Q: what kind of right does the creditor have over the fruits?
A: distinguish personal right from a real right.
Personal – enforceable only against another party
Real right – enforceable against the whole world
Q: When does the obligation to deliver it arises?
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 time the agreement is entered into or is perfected (it is
demandable at once)
 If the obligation has a term (X obliged himself to deliver a land
to Y on Nov. 15) – the obligation arise upon the arrival of the
term
 If there is a conditional obligation- obligation arise when the
condition is fulfilled
- This article contemplates on a situation where the debtor has
not yet delivered the obligation but that contract was already
perfected. In this case, you only have a PERSONAL right that
will compel the seller to deliver such obligation to the creditor.
The buyer thus asks what is due to him.
- The moment the obligation arises, it is only a personal right.
The real right only happens upon delivery.
ILLUSTRATION
Sam is obliged to give Ben on December 1, 2008, a particular parcel of land
 Prior to December 1 – the creditor does not have any right over
the fruits
 December 1 (without delivery yet) – from Dec 1 to 15: he is
entitled to the fruits. However, this is only a personal right
 December 15 (actual or constructive receipt) onwards – he
becomes the owner of the fruits and the land only AFTER the
date of receipt (Real Right)
KINDS OF DELIERY
1. Actual Delivery
- the property changes hands
- ex. The moment the book is given to you (buying of book:
transfer of possession)
2. Constructive Delivery
- The physical delivery is implied
Kinds of Constructive Delivery
a. Tradition simbolica – when you buy a house and the key of the
house is given to you
b. Tradition longa manu – the object is pointed to you
c. Tradition brevi manu – illustrated in a situation where the
person is occupying the property as a lessee or tenant. Such
property is bought by the tenant from the lessor. His
possession is thus changed from a lessee to an owner
d. Tradition constitutum possesorium – opposite of brevi manu.
Selling your own property to another but after the sale you
enter into a contract with the owner for you to occupy the
property as a lessee.
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 the land. The documents will be considered as a
delivery
Article 1165
When what is to be delivered is a determinate thing, the
creditor, in addition to the right granted him by Article 1170, may compel
the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor.
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 responsible for any fortuitous event until he has effected the delivery.
- The distinction between generic and specific obligation is
presented.
- Specific – if lost during fortuitous event, the obligation is
extinguished
- Generic – not extinguished because genus does not perish
1st par – compel the specific thing which was to be delivered
- Debtor cannot compel the creditor to receive another thing
other than that which was specified
nd
2 par – debtor should deliver what belongs to the class not inferior or
superior of quality
- You just deliver the regular type
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - If A lost the horse, B can buy to C and A will pay C
3rd par – the term INTEREST refers to RIGHT
- Even if the obligation is determinate, if two or more persons
who do not have the same interest is to receive such, the
liability will not be lost
- Applies only to DETERMINATE THINGS
The third paragraph is an exception to the rule on specific obligations which
is lost due to fortuitous event
1. If he incurs delay (obligor delays)
Q: When is there delay?
A: first distinguish ordinary delay and legal delay or default. What is
contemplated in delay here is the legal delay or default MORA (debtor fails
to comply with the obligation on the designated time). Delay happen when
you still fail to deliver after there has been a demand whether judicial or
extra judicial
Ordinary – merely non performance at the stipulated time
Legal delay – delay which amounts to a virtual non-fulfillment of the
obligation (principle behind is “there is no delay if there is no demand”)
Take note: A mere reminder with respect to the due date is not a demand.
From the time the demand is made, that is only when the debtor will be
liable for damages.
2. If obligor is in bad faith because he promised to deliver the
same thing to two persons with different interest
Remedies of the Creditor when the Debtor fails to comply with his
obligation
1. Demand SPECIFIC PERFORMANCE of the obligation
2. Demand RESCISSION or CANCELLATION
3. Demand DAMAGES either with or without either of the first
two
Article 1166
The obligation to give a determinate thing includes that of
delivering all its accessions and accessories, even though they may not
have been mentioned.
- Accessions and Accessories: are included even if not specified
in the contract
- Applicable only to DETERMINATE obligations
Accessions – attachment that you can no longer separate unless you will
cause damage; additions to or improvements upon a thing
Accessories – not attached but are necessary; those joined to or included
with the principal for the latter’s better use, perfection, or enjoyment
Take Note: So as to not violate this provision – you shall stipulate in your
contract what are those accessories or accessions that you wish to exclude
in your sale.
Summary
3 angel‘s notes
Rights of Creditor in Determinate Obligation (both can be availed by the
Creditor)
1. Compel specific performance – includes delivery of accessions
- Compel debtor to deliver the thing agreed upon
2. Recover damages in case of Breach (article 1170)
Rights of Creditor in Generic Obligations
1. Compel performance of obligation
2. In case he refuses to comply or cannot comply, obligation may be
complied by another person at the debtor’s expense
3. Recover damages in case of Breach (Mental damages)
Obligations of Debtor in Determinate Obligations
1. Give the very same thing they agreed upon
2. Take care of the thing with proper diligence (article 1163; applicable
only to determinate because generic things can never be lost)
3. Deliver accessions and accessories (article 1166)
4. Pay for damages in case of Breach (1170)
Obligations of Debtor in Generic Obligations
1. Deliver a thing of its class which is neither of superior or inferior
2. Pay for damages in case of breach
Article 1167
If a person obliged to do something fails to do it, the same
shall be executed at his cost.
This same rule shall be observed if he does it in contravention
of the tenor of the obligation. Furthermore, it may be decreed that what
has been poorly done be undone.
- Is not in relation to article 1166
- Contemplates on obligation TO DO or a PERSONAL OBLIGATION
- Debtor cannot be compelled to do something he is asked
because this will result to INVOLUNTARY SERVITUDE (violation
of constitutional right; will result to act of violence
- REMEDY: ask someone to do it but at the expense of the
debtor
- Example: if construction is ugly, you can have it undone
POSITIVE PERSONAL OBLIGATION
Remedies of the Creditor if the debtor fails to do
 To have the obligation performed (by himself or by another) at
the debtor’s expense
 Plus damages
When the thing may be ordered undone
 If made poorly
 If the obligation is a negative one (you are not suppose to do
such act but you do it) – Art 1168
Q: When is 1167 NOT applicable?
A:
1. If debtor posses special qualifications which is the very reason
you agreed in a contract (ex. Concert singers); REMEDY:
damages
2. If you tried to undo and in doing so, it will result to more
damage; REMEDY: you have to be logical and just ask for
damages
Article 1168
When the obligation consists in not doing, and the obligor does
what has been forbidden him, it shall also be undone at his expense.
- Self explanatory
- Similar with article 1167 on the inapplicability
- 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
Article 1169
Those obliged to deliver or to do something incur in delay
from the time the obligee judicially or extrajudicially demands from them
the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the
contract; or
(3) When demand would be useless, as when the obligor has
rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. From the moment one of the parties fulfills
his obligation, delay by the other begins.
- Talks about DEFAULT and DELAY
- Covers the provision of no delay if no demand
- Also provides for the exception of the need for the demand
Kinds of Default
1. Mora Solvendi – default on the part of the debtor
- Note: there is no default in negative and natural obligations
- Effects: (1) debtor may be liable for interest and damages;
(2) may bear the risk of loss; (3) may be liable even for
fortuitous event
2. Mora Accipiendi – creditor is guilty of default when he
unjustifiable refuse to accept the payment or performance at
the time such can be done
3. Reciprocal Obligation – depends upon each other for
performance
Q: Why is it important to know the Delay?
A: so that you would know when to ask for damages
Q: When does Delay come in?
A: It comes in at the time the creditor makes a demand
Q: What is the purpose of setting the due date?
A: The due date will determine when the obligation is demandable
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Q: Does the creditor always have to demand?
A: No, because there are some exceptions (look at book page 123-124)
a. When laws expressly so declares or it is expressly stipulated in
the contract
TAKE NOTE: It is not enough that you only specify the date of
the expiry, rather it should be stipulated that the debtor will be
at default upon the arrival of such term or fulfillment of
condition
b. When time is of the essence – time was so important that you
cannot have other time (ex. Birthday cake)
c. Demand would be useless because it is beyond the debtor’s
power to perform (ex. If he already sold it to another)
d. When obligation is RECIPROCAL: when one does not perform
his obligation, the other does not delay
Note: stipulations in contract prevails over law except if such contract is
void
Mora – latin term for delay
KINDS OF DELAY
1. Mora Solvendi – default on the part of the debtor
- There is no mora solvendi in negative personal obligation
Requisites:
a. The obligation must be due, enforceable, and already
liquidated or determinate in amount
b. There must be non-performance
c. There must be a demand, unless the demand is not required
d. The demand must be for the obligation that is due and not for
another obligation, nor one with a bigger amount, except in
certain instances considering all the circumstances.
Effects:
a. Debtor is liable for interest and damages
b. Debtor may bear the risk of loss
c. He is liable for fortuitous event
2. Mora Accipiendi – default on the part of the creditor
- The obligation is already due, debtor complies but
creditor unjustifiably refuses to accept
Q: Why does this happen?
A: The creditor’s real intention was to reject the lessee (make it appear that
the debtor has not been paying rentals)
Take note: if you are a lessee, if the creditor unjustifiably refuses, you
should comply with tender of payment and consignation (legal procedure)
so as to legally relinquish or extinguish yourself with the liability. (This act is
in writing, consignation: deposit the money in court).
3. Compensatio Morae – when in a reciprocal obligation both
parties are in default; here it is as if neither is in default (both
are in pari de licto)
- They are debtors and creditors to each other (ex.
Contract of lease and sale)
Article 1170
4 angel‘s notes
Those who in the performance of their obligations are guilty
of fraud, negligence, or delay, and those who in any manner contravene
the tenor thereof, are liable for damages.
Q: When are you liable for damages?
A: When there is…
1. FRAUD (deceit or dolo) – deliberate or intentional evasion of
the normal fulfillment of an obligation (synonymous to BAD
FAITH) – You can then be liable for bigger damages
2. NEGLIGENCE (fault or culpa) – any voluntary act or omission,
there being no malice, which prevents the normal fulfillment of
an obligation – your damages can be mitigated
3. DELAY (mora)
4. CONTRAVENTION OF THE TERMS OF THE OBLIGATION –
debtor does not comply with the agreement
Kinds of Damages (discussed in torts and damages)
1. Moral – ex. Damages for sleepless nights; not enough to allege,
you have to prove the extent of the damage
2. Exemplary – setting of an example to others. Deter them from
doing the same
3. Nominal – to vindicate your rights
4. Temperate – damages is not ascertain
5. Actual – this should be proven
6. Liquidated – damages already stipulated in the contract
(common in construction contracts: failure to finish the project
on time)
Article 1171
Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.
- Talks about FRAUD which is intentional and with malice
- This is demandable on all obligation
- Waiver of an action for future fraud is void because the
law does not want to encourage fraud. If waiver is
allowed, it will not deter the person in committing fraud.
- Damages cannot be mitigated by the court
Q: Can a liability for a past fraud be waived?
A: Yes, such shows the generosity and forgiveness of the creditor towards
the debtor
Article 1172
Responsibility arising from negligence in the performance of
every kind of obligation is also demandable, but such liability may be
regulated by the courts, according to the circumstances.
- Talks about negligence (quasi-delict)
- This is also demandable but may be regulated by court
depending on the circumstance (can be mitigated)
Article 1173
The fault or negligence of the obligor consists in the omission
of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of Articles 1171
and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to
be observed in the performance, that which is expected of a good father
of a family shall be required.
- Defines what constitutes negligence
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
time and of the place.
 Negligence is the failure to observe, for the protection of the
interests of another person, that degree of care, precaution,
and vigilance which the circumstances justly demand, whereby
such other person suffers injury (US vs. Barrias)
 It is the “want of care required by the circumstances”
 Accident and negligence are intrincically contradictory; one
cannot exist with the other. Accident occurs when the person
concerned is exercising ordinary care, which is not caused by
fault of any person and which could not have been prevented
by any means suggested by common prudence.
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.
Take Note: Negligence + Bad faith = fraud
TEST FOR DETERMINATION (When is there negligence)
You ask: Would a prudent man in his position foresee harm to the person
injured as a reasonable consequence of the course about to be pursued? If
so, the law imposes a duty on the actor to refrain from that course, or to
take precaution against its mischievous results, and the failure to do so
constitutes negligence. Reasonable foresight of harm followed by the
ignoring of the admonition born of this provision, is the constitutive fact
of negligence (Picart vs. Smith)
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,
rather it is negligence.
(1) Reasonable care and caution expected of an ordinary prudent
person
Did the defendant in doing the alleged negligent act use
reasonable care and caution which an ordinary prudent person
would have used in the same situation. If not, then he is guilty
of negligence (Mandarin Vila, Inc. case)
Negligence is therefore a question of fact, its existence being
dependent upon the particular circumstances of each case.
Factors to be considered:
a. Nature of the obligation – you knew that the area was
flammable but you smoked. There is clear negligence
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 b. Circumstances of the person – you are on duty as a police c. Nature of obligation requires assumption of risk
guard, you fell asleep not by reason of any ailment, then a TAKE NOTE: the creditor can rebut such claim wherein the lessee will say
robbery occurred that he has already paid the interest for the receipt shows payment for
c. Circumstances of time – during night time you drove your car Requisites: principal, however the burden of proof is that of the creditor
without any headlight 1. Event happened without any participation of the debtor
d. Circumstance of Place – while driving your car at colon street, (independent of his will) The creditor can specify in the receipt a RESERVATION with regards to the
you drove at 60kph 2. Event cannot be foreseen, or if foreseen is inevitable interest so that even though it is specified in the receipt that payment is for
3. By reason of the event, it was impossible for him to comply the principal amount, there will be no presumption that the interest has
(2) No hard and fast rule for measuring degree of care with the obligation in a normal manner already been paid.
4. There is no contributory negligence on the debtor’s part
KINDS OF NEGLIGENCE (refer pg. 143-145 for comparison) 2nd paragraph of 1176
1. Culpa Contractual – negligence in contracts resulting in breach Article 1175 - Tackles presumptions in payments of INSTALLMENTS
- Ex: you have a contract of common carrier Usurious transactions shall be governed by special laws. - Ex. A receipt acknowledging the payment of rentals of march
(transportation contract): passenger can file for damages gives the presumption that rentals for January and February is
against operator; you can also demand for culpa criminal - Contemplated on USURY LAW. However, such law is no longer paid
and for civil liability applicable today - You can likewise, as a lessor, note the reservation
2. Culpa Aquiliana – negligence which by itself is the source of an - Thus, interests are based on the agreement of the contracting
obligation between the parties not so related before by any parties, which is complied in Good faith Q: What if no date is specified with regards to the month rental but the date
pre-existing contract - Rule: If there is consent or agreement, then that will govern of the receipt is dated march, can this raise a presumption that payment for
3. Culpa Criminal – negligence resulting in the commission of a the relationship January and February were made?
crime - However: even if USURY law is suspended, the SC reduced the A: NO, because such date only tackles the date of receipt and not on the
- You will file an action against the driver. If the driver is amount of interest imposable on the ground that the right is date that corresponds to the payment of such
convicted but insolvent, the owner will be subsidiarily inequitable or unconscionable (thus, the party is not totally
liable free) Take Note: Yearly Taxes are not installment payments and the law provides
for such presumption on installments alone!
FRAUD VS. NEGLIGENCE Article 1176
Deliberate intention to cause No such intention The receipt of the principal by the creditor without Article 1177
damage or injury reservation with respect to the interest, shall give rise to the presumption The creditors, after having pursued the property in possession of
Waiver of liability for future fraud is Waiver is allowed that said interest has been paid. the debtor to satisfy their claims, may exercise all the rights and bring all
void (includes gross negligence) the actions of the latter for the same purpose, save those which are
Liability cannot be mitigated May be reduced in certain cases The receipt of a later installment of a debt without inherent in his person; they may also impugn the acts which the debtor
reservation as to prior installments, shall likewise raise the presumption may have done to defraud them.
Take note: this is Fraud in the performance of an obligation (dolo that such installments have been paid.
incidente); REMEDY: damages - Remedies of creditor when the debtor does not comply with
- Talks about presumptions which could either be the obligation
Ex. Instead of delivering a wine, what you deliver is a wine bottle however (1) Conclusive or
what is inside is not wine, then this is dolo incidente; committed in the (2) Disputable or rebuttable (what is contemplated in this 1. Demand for specific performance plus damages for failure to
performance of the obligation. article) comply with the demand of obligation
- Presumption applies and is advantageous to debtor or lessee 2. Pursue the properties belonging to your debtor
Dolo causante – Fraud committed in the execution of the contract. Consent 3. Avail of accion subrogatoria – you can exercise the rights of
is vitiated by fraud. You should not have entered the contract not unless Conclusive – you are no longer allowed to present other evidences to prove your debtor (ex. Debtor is the creditor of another person, you
there was a fraud. REMEDY: annulment of contract. otherwise can then exercise his rights to collect what the debtor could
- These are evidences which you cannot rebut (ex. We are all collect as a creditor of another person)
Article 1174 presumed to know the law; thus you cannot defend yourself by 4. Accion Pauliana – you can receive – impugn or rescind acts or
Except in cases expressly specified by the law, or when it is saying that you are not aware of such law) contracts done by the debtor to defraud the creditors (ex.
otherwise declared by stipulation, or when the nature of the obligation Fictitious sale: make it appear that it was sold when in fact it is
requires the assumption of risk, no person shall be responsible for those - Such presumption is reasoned by experience and convenience not; it is just to evade his liabilities – )
events which could not be foreseen, or which, though foreseen, were
inevitable. Disputable – such fact is presumed unless you present other evidences that Article 1178
will prove otherwise Subject to the laws, all rights acquired in virtue of an obligation are
FORTUITUIOUS EVENT transmissible, if there has been no stipulation to the contrary.
1. Act of man Take Note: a creditor can refuse to accept if you do not pay the amount you
2. Act of God are obliged to pay - Rights are transmissible except if
a. Law provides otherwise – consent of other party is
GR: no liability in fortuitous event 1ST paragraph of 1176 necessary
Exceptions - Tackles presumption in payments of INTERESTS b. Contract provides otherwise
a. When expressly declared by law - the first payment is that of the interest and the balance will be c. If the obligation is purely personal
b. When expressly declared by stipulation on the principal.
5 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
6 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
KINDS OF OBLIGATIONS (Classification) - What is contemplated here are the types of obligations which A: The obligation is extinguished.
are DEMANDABLE at once
PRIMARY - 1st paragraph Simply stated: an obligation with no terms or Article 1180
1. Pure Obligation – there is no condition or term to fulfill; conditions is demandable at once When the debtor binds himself to pay when his means permit
Demandable at the time the contract is perfected - 2nd paragraph: Resolutory conditions are also demandable at him to do so, the obligation shall be deemed to be one with a period,
2. Conditional Obligation – there is a condition which should be once without prejudice to the extinguishment of the obligation subject to the provisions of Article 1197.
fulfilled once the condition is fulfilled
a. Suspensive – the condition is awaited. The - This provision contemplates on an obligation with a TERM or
obligation arises the moment the condition is Past Events – would refer to the FUTURE KNOWLEDGE OF PAST EVENTS, PERIOD. The term is due upon the capacity of the debtor to pay
satisfied which will determine whether or not an obligation will arise such obligation.
b. Resolutory – the condition is to be avoided. The - “Payment does not depend on the debtor’s will, rather, what is
obligation is extinguished the moment the dependent on the debtor is the TIME when payment by him
condition is satisfied Classification of Conditions can be made. “
3. Obligation with a Period or Term – that which necessarily must A.
come regardless of whether the parties know when it happen 1. Suspensive (conditions precedent or conditions antecedent) – the Q: How long is the term?
or not happening of the condition gives rise to the obligation A: The term is not solely dependent neither on the creditor nor the debtor.
4. Alternative or Faculative 2. Resolutory (conditions subsequent) – the happening of the condition In this case, Article 1197 is also applied wherein the Court is obliged to fix
5. Conjunctive extinguishes the obligation the duration of the period. Upon arrival of this period, the creditor can now
6. Joint – there are more than one person who is liable for the B. demand for the payment.
obligation. They have equal share of responsibility 1. Potestative – the obligation arises from the personal will of the
7. Solidary – upon the insolvency of one of the parties who is debtor; fulfillment of the condition depends upon the will of a party to
responsible for the obligation, the other party is to fulfill the the obligation
full liability of the contract 2. Casual – obligation depends on chance or hazard or the will of a third Article 1181
8. Divisible – the fulfillment of the obligation may be done at person (winning of lotto) In conditional obligations, the acquisition of rights, as well as
separate times 3. Mixed – depends partly on the will of the debtor and that of a third the extinguishment or loss of those already acquired, shall depend upon
9. Indivisible – the fulfillment of the obligation must be done at person or on chance (if I pass the bar) the happening of the event which constitutes the condition.
one time C.
10. With a Penal Clause 1. Divisible – capable of partial performance or realization - This article contemplates on Conditional Obligations; that such
2. Indivisible – not capable of partial performance because of the nature arises or is extinguished upon the fulfillment of the condition
SECONDARY of the thing, or because of the intention of the parties - Suspensive – efficacy or obligatory force is subordinated to the
1. Unilateral – only one person or party has an obligation to D. happening of a FUTURE or UNCERTAIN event
perform 1. Positive – an act is to be performed - Resolutory – rights are already acquired are lost once the
2. Bilateral – two parties has an obligation to perform 2. Negative – something will be omitted condition is fulfilled; Thus, there is a need to revoke the
3. Real – right which is demandable upon the whole world upon E. donation first before extinguishment of the obligation is taken
the delivery of the debtor of the obligation to the creditor 1. Express – the condition is stated to effect.
4. Personal – right of the creditor to demand upon the debtor the 2. Implied – the condition is merely inferred
delivery of the obligation as its due period has already lapsed F. SUSPENSIVE CONDITION
5. Determinate – specific object is the subject of the obligation 1. Possible – capable of fulfillment in nature and in law; condition is
6. Generic – the subject of the obligation belongs to a particular capable of realization according to nature, law , public policy or good Therefore, what is acquired by the obligee or creditor upon the constitution
class customs of the obligation is only a mere hope or expectancy. Unlike other hope or
7. Positive – there is a need for the performance of the obligation 2. Impossible – not capable of fulfillment due to nature or due to the expectancies, however, it is protected by the law
8. Negative – equivalent to omission; something should not be operation of law or morals or public policy; or due to a contradiction in
done or is to be omitted its terms
9. Legal G. Q: What happens if the suspensive condition does not take place?
10. Conventional 1. Conjunctive – when there are several conditions, all of which should A: it is as if there is no obligation at all. The parties would stand as if the
11. Penal be realized conditional obligation never existed
12. Civil – obligation arises according the Civil law 2. Alternative – if only one or a few of the conditions have to be
13. Natural – obligation arises according to natural law performed or realized RESOLUTORY CONDITION

Article 1179 The obligation is immediately demandable after its establishment or

Every obligation whose performance does not depend upon a Q: When is a pure obligation demandable? constitution. Unlike an obligation with a suspensive condition, rights arising
future or uncertain event, or upon a past event unknown to the parties, is A: At once, the moment you said such obligation or such contract has been out of the obligation are acquired immediately and vested in the oblige or
demandable at once. perfected. (Immediately) creditor

Every obligation which contains a resolutory condition shall Condition – future and uncertain event Article 1182
also be demandable, without prejudice to the effects of the happening of Period – that which necessarily must come When the fulfillment of the condition depends upon the sole
the event. will of the debtor, the conditional obligation shall be void. If it depends
Q: What is the effect of the happening of the resolutory condition?
7 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
upon chance or upon the will of a third person, the obligation shall take
effect in conformity with the provisions of this Code.
- Simply means: if the condition is POTESTATIVE, the conditional
obligation is VOID
- talks about an obligation subject to POTESTATIVE condition
(dependent upon the will of the debtor)
- If condition depends upon chance – it will take effect upon the
provision of this code (ex. I will give you 100 if I win the lotto;
The obligation is valid because it is dependent upon chance
- If the condition is mixed – the condition is also valid
DEBTOR
1. Potestative and Suspensive
- Both the condition and the obligation are VOID
- Ex. I will give you 1M next month if I like
2. Potestative and Resolutory
- Both the condition and the obligation are VALID
- Ex. I will employ you now, but if in any event I decide not
to need your services, your contract will end
CREDITOR
1. Potestative
- Both the condition and the obligation are VALID
- Ex. I’ll give you my fountain pen if you desire to have it
Ex of mixed: I will give you 100 if I sell my parcel of land.
- The selling is not solely dependent on the will of the debtor coz
such is as well dependent on the buyer or price
If it made to depend upon the will of the creditor – valid
If upon the debtor – void
Take note: the precept contained n the first sentence of Article 1182 is only
applicable only to a SUSPENSIVE CONDITION
This means that if the obligation is subject to a resolutory and potestative
condition, the condition is VALID (valid because it is already demandable at
once)
Article 1183
Impossible conditions, those contrary to good customs or
public policy and those prohibited by law shall annul the obligation which
depends upon them. If the obligation is divisible, that part thereof which
is not affected by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be
considered as not having been agreed upon.
- This article contemplates on the effects of Impossible and
Illegal conditions
Effects:
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
DISREGARD the CONDITION but the OBLIGATION REMAINS
- In this situation, this becomes a PURE and VALID obligation
3. If the condition is a NEGATIVE (not to do an ILLEGAL), both the
condition and the obligation are VALID
8 angel‘s notes
- This only applies to obligations and contracts, not to
testamentary disposition or to donations
Take note: if some conditions in a contract are impossible to comply with,
the insurer cannot validly assert a breach of said conditions
Lecture Note:
If the obligation, however, is a pre-existing obligation, and therefore does
not depend upon the fulfillment of the condition for its perfection, it is
quite clear that only the condition is void, but NOT the obligation.
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 and immediately demandable
Article 1184
The condition that some event happen at a determinate time
shall extinguish the obligation as soon as the time expires or if it has
become indubitable that the event will not take place.
- This deals with a POSITIVE CONDITION
- Obligation subject to SUSPENSIVE CONDITION
- Simply means that a condition which falls on a specific or
determinate time shall extinguish the obligation as soon as the
time expires or that it is sure not to take place
- If the period is not fixed in the contract, the court , considering
the parties’ intentions, should determine what period was
really intended
- Talks about an event to happen
Take Note: POSITIVE - EXTINGUISED
Ex. I will give you a parcel of land if you marry X this year. If by the end of
the year, you still did not marry, the obligation of the debtor is extinguished.
“or if it has become indubitable that the event will not take place”
Ex. On Nov. 15, X died, then the obligation is extinguished because you can
no longer marry
Article 1185
The condition that some event will not happen at a
determinate time shall render the obligation effective from the moment
the time indicated has elapsed, or if it has become evident that the event
cannot occur.
If no time has been fixed, the condition shall be deemed
fulfilled at such time as may have probably been contemplated, bearing in
mind the nature of the obligation.
- This deals with a NEGATIVE CONDITION
- Similar with 1184 however, what is contemplated is a condition
that some event will NOT happen at a determinate or specific
time.
- The obligation is effective from the moment the time indicated
has elapsed or is evident that it cannot occur
- If no specific date when the obligation is fulfilled: you consider
the circumstances surrounding the agreement; what is
contemplated by the parties
Take Note: NEGATIVE – EFFECTIVE
Article 1186
The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
- The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment
- Contemplates generally of SUSPENSIVE conditions
- This deals with CONSTRUCTIVE or PRESUMED fulfillment
- Requisites:
a. Voluntary
b. Actually PREVENTS fulfillment
- Applicable to RESOLUTORY conditions if the DEBTOR is at FAULT
Ex. A sold land now to B on a condition that B should marry C
within 1 year, otherwise B should return the land. If A kills C, B
does not have to return the land because A is at fault.
- Can only be applied to suspensive conditions and not to
resolutory conditions
Article 1187
The effects of a conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of the constitution of
the obligation. Nevertheless, when the obligation imposes reciprocal
prestations upon the parties, the fruits and interests during the pendency
of the condition shall be deemed to have been mutually compensated. If
the obligation is unilateral, the debtor shall appropriate the fruits and
interests received, unless from the nature and circumstances of the
obligation it should be inferred that the intention of the person
constituting the same was different.
In obligations to do and not to do, the courts shall determine, in
each case, the retroactive effect of the condition that has been complied
with.
- The effects of a conditional obligation to GIVE generally
retroacts to the day of the constitution of the obligation
(applicable only to CONSENSUAL contracts
- Exception to the General Rule: with regards to FRUITS or
INTERESTS and PERIOD OF PRESCRIPTION (for reciprocal
obligations because it is presumed they are mutually
compensated; however, in a unilateral prestation, you should
deliver the fruits and interest unless it can be inferred that the
intention is otherwise)
- In an obligation to DO, the COURT will determine the
retroactive effect of the condition
Scenario:
- You have a date of the constitution of the obligation to the date
of the happening of suspensive condition (ex. In year 2004, I
obliged myself to give you a parcel of land if you pass the bar
examination)
Unilateral Obligation (example)
2004 – date of the constitution of obligation
2008 – date of happening of the suspensive condition
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - As far as the fruits are concerned: If the obligations are
UNILATERAL , the debtor shall appropriate the fruits and
interests received
- In between – the debtor is still the owner of the fruits
Reciprocal Obligation
- in between (in pendency) – fruits shall be deemed to have
been mutually compensated
- Buyer is not obliged to pay interest, neither the seller obliged
to give the fruits
- Why? Because it will be inconvenient between the parties to
compute the interest and fruits
Article 1188
The creditor may, before the fulfillment of the condition,
bring the appropriate actions for the preservation of his right.
The debtor may recover what during the same time he has paid by
mistake in case of a suspensive condition.
- This article contemplates on (1) actions to preserve Creditor’s
Rights and (2) Right of the Debtor to Recover what was Paid by
Mistake
- (1): bring appropriate actions for the preservation of his rights;
ask for security if debtor is about to be insolvent; ask the court
to prevent alienation or concealment
- (2): This is a case of SOLUTIO INDEBITI
Q: Why is there a need for such provision?
A: So that while the condition has not yet happened, the creditor’s right is
safeguarded
Q: What can the creditor do to protect his rights?
A: You can have an annotation in the papers.
Take Note: During the pendency of the condition, the obligee or creditor
has only a MERE HOPE OR EXPECTANCY. The hope and expectancy is
protected by law. This is for the protection and preservation of his right.
Without this protection, the right of the creditor becomes meaningless.
Q: What is the appropriate action?
A: have the property annotated or registered in the registry of property
(caveat emptor). So whoever acquires the land will be bound to such
obligation.
Take Note: When the obligation imposes reciprocal prestations upon the
parties, the fruits and interests during the pendency of the condition shall
be deemed to have been mutually compensation.
Article 1189
When the conditions have been imposed with the intention of
suspending the efficacy of an obligation to give, the following rules shall
be observed in case of the improvement, loss or deterioration of the thing
during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the
obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall
be obliged to pay damages; it is understood that the thing is
lost when it perishes, or goes out of commerce, or disappears
9 angel‘s notes
in such a way that its existence is unknown or it cannot be
recovered;
(3) When the thing deteriorates without the fault of the
debtor, the impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the
creditor may choose between the rescission of the obligation
and its fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other
right than that granted to the usufructuary.
- if the obligation is to deliver a specific thing, 3 things can
happen during the pendency of the suspensive condition
a. the specific thing promised to be delivered may be lost
b. there is deterioration
c. there could be improvements
Rules governing in these situations: (during the pendency of the condition)
Loss – when it perishes, disappears, its existence is unkown
a. due to fault of debtor – the debtor is obliged to PAY DAMAGES
b. not due to fault of debtor – the obligation is EXTINGUISHED
Deterioration
a. due to fault of debtor – the creditor may choose between
recission of the obligation and its fulfillment with indemnity for
damages
b. not due to fault of debtor – the impairement shall be borne by
the creditor (creditor will accept)
Improvements
a. by nature – inure to the benefit of the creditor
b. by passage of time - inure to the benefit of the creditor
c. introduced at the expense of the debtor – debtor have the
right than that granted to the usurfructuary (if improvement
cannot be removed without causing damage, then the debtor
is not entitled to the improvement. But if it can be removed
without causing damage, the debtor can remove such
improvement)
Article 1190
When the conditions have for their purpose the
extinguishment of an obligation to give, the parties, upon the fulfillment
of said conditions, shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing,
the provisions which, with respect to the debtor, are laid down in the
preceding article shall be applied to the party who is bound to return.
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 the extinguishment of the obligation.
- In short means: Once the resolutory conditions is fulfilled, the
obligation is extinguished
- Because obligation is extinguished, the parties should restore
to each other what they have received – this would include the
fruits and interests after deducting the expenses made for their
production, gathering and preservation
- In this situation, the creditor becomes the debtor in his
obligation to return
Article 1191
The power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent
upon him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either case.
He may also seek rescission, even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission claimed, unless there be
just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388
and the Mortgage Law.
- Power to rescind applies only to RECIPROCAL (created and
established at the same time, out of the same cause, and
which result in mutual relationship between the parties; the
parties are debtors and creditors to each other) obligations due
to breach of bad faith
- REMEDY: either (1) fulfillment (file an action for specific
performance; demand the person in delay) + damages or (2)
rescission + damages (NOTE: the right is not conjunctive thus
the plaintiff CANNOT ask for BOTH remedies
- Note however that you can file for rescission after choosing
fulfillment if the latter becomes impossible
Rescission (or Resolve) – abrogates the contracts from its inception and
requires a mutual restitution of benefits received; it’s as if no contract has
been made (restore the parties to their relative positions)
TAKE NOTE: the cause must be IDENTICAL and the obligations should arise
simultaneously
Note: the right to rescind belongs to the Injured Party. The injured Party is
the one who has complied with his part of his obligation.
Characteristics of the Right to Rescind or Resolve
1. Only exists in reciprocal obligations (note: if there is a period,
you cannot declare default before the expiration of the period)
2. It can be demanded only if the plaintiff is ready, willing and
able to comply with his own obligations, and the other is not
3. The right to rescind in NOT absolute (look at limitations)
a. Trivial causes or slight breaches will not cause
rescission
b. If there be a just cause for fixing the period within
which the debtor can comply, the court will not
decree rescission
c. If the property is now in the hands of an innocent
third party who has lawful possession of the same
4. The right to rescind needs judicial approval when there has
already been delivery of the object. However, if it is expressly
stipulated in the contract that despite delivery rescission can
be made without going to court, such contract remains valid.
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 The right to rescind need not have a judicial approval when Obligations with a resolutory period take effect at once, but and the lessor is allowed to terminate the lease after each month, provided
there has been no delivery yet terminate upon arrival of the day certain. there is due notice.

Note: if the question is whether there was a violation in the A day certain is understood to be that which must necessarily REQUISITES FOR A VALID PERIOD OR TERM
contract, you should go to court and resolve such. come, although it may not be known when. 1. It must refer to the FUTURE
2. It must be CERTAIN (sure to come) but can be EXTENDED
5. The right to rescind is implied (presumed) to exist and If the uncertainty consists in whether the day will come or 3. It must be PHYSICAL and LEGALLY possible
therefore, need not be expressly stipulated upon not, the obligation is conditional, and it shall be regulated by the rules of
6. The right to rescind may be waived, expressly or impliedly the preceding Section. Effect of a Fortuitous event
- No one is still liable for this. The obligation is extinguished
Take note: extrajudicial rescission of a contract is not possible without an - Contemplates on obligations with a period – that such is
express stipulation to that effect demandable only when that day comes Article 1194
Period In case of loss, deterioration or improvement of the thing
Limitations on the Right to Rescind - Certain length of time which determines the effectivity or the before the arrival of the day certain, the rules in Article 1189 shall be
a. The power of the court to fix the period – if there are minor extinguishment of obligations observed.
violations - Interval of time which either suspends its demandability or
b. Resort to the courts produces its extinguishment - In case of loss, deterioration or improvement of the thing
c. Right of third person – those who come into possession and is Note BEFORE the arrival of the day certain, the rules in article 1189
not in bad faith are protected; in such case, the only remedy of Suspensive term – only specifies when the obligation is demandable shall be observed
the injured party is to proceed against the party responsible for - Contemplates on a SUSPENSIVE term
the transfer or conveyance for damages PERIOD vs. CONDITION
d. Violations should be Substantial or serious so as to allow a PERIOD CONDITION Article 1195
rescission of contract Fulfillment - event which must happen - is an uncertain event Anything paid or delivered before the arrival of the period, the
e. Waiver of the right (right to ask for a rescission) sooner or later even if time (future and uncertain) obligor being unaware of the period or believing that the obligation has
cannot be determined become due and demandable, may be recovered, with the fruits and
Obligation of a Seller Reference to time - Always refers to the - may under the law interests.
1. Deliver a car future refer to the past
2. Transfer ownership Influence on the - merely fixes the time or - Causes an - Talks about PREMATURE payment
obligation the efficaciousness of an obligation to arise - Simply means that a debtor can recover his payments of debts
Take note: if buyer, due to rescission, is obliged to return the car but obligation or to cease as well as the fruits and interests if he paid before the arrival of
destroyed it, could no longer proceed in the process. This is because, if you Different Kinds of Terms and Periods period and he was unaware that the time has not yet accrued.
file for rescission, you should also be ready to return the object subject of A - Only apply to OBLIGATIONS TO GIVE
the obligation. 1. Definite – the exact date or time is known and given
2. Indefinite – something that will surely happen, but the date of Take note: if debtor knew that the arrival of period has not yet come but
If 3rd party is in bad faith, the only remedy of the injured party is to proceed happening is unknown paid, he can no longer recover what he paid for.
against the 3rd person who acted in bad faith for damages. You can also go B
after both the seller and 3rd party if both of them acted in bad faith. 1. Legal – period granted under the provision of the law If both the debtor and creditor implicitly changed the period,
2. Conventional or Voluntary – period agreed upon or stipulated the debtor could no longer recover payment.
Article 1192 by the parties
In case both parties have committed a breach of the 3. Judicial – the period or term fixed by the courts Q: Within what period must recovery be made if the debtor did not know
obligation, the liability of the first infractor shall be equitably tempered C that payment was not yet due?
by the courts. If it cannot be determined which of the parties first violated 1. Ex die – a period with suspensive effect. Obligation begins only A: Before the debt matures (regarding what was paid). Even after maturity
the contract, the same shall be deemed extinguished, and each shall bear from a day certain, upon the arrival of the period (regarding interest) for after all the creditor was in BAD FAITH. But note that
his own damages. 2. In diem – term with a resolutory effect. Up to a time certain, the right prescribes 5 years after premature payment.
the obligation remains valid, but upon the arrival of said
- In case both parties committed a breach: period, the obligation terminates Article 1196
o Determine the first infractor – he is to pay the Whenever in an obligation a period is designated, it is
liability (but this can be tempered because both Condition – when you are not even sure if something will happen as a fact presumed to have been established for the benefit of both the creditor
committed a breach) or not and the debtor, unless from the tenor of the same or other circumstances
o If it cannot be determined – each shall bear his it should appear that the period has been established in favor of one or of
own damages Acceleration Clause – clause which expressly stipulates that upon failure to the other.
pay installment for a certain month, the whole debt should thereupon - The designation of a period is generally for the BENEFIT of
CONDTITIONS WITH A TERM become at once payable. BOTH the creditor and the debtor
Ex. When there is INTEREST stipulated (debtor – given enough
Article 1193 Take note: time to pay; creditor – can earn from the interest)
Obligations for whose fulfillment a day certain has been A lease on a “month-to-month basis” is one with a DEFINITE
fixed, shall be demandable only when that day comes. term. In this kind of agreement, the lease is deemed from month to month,

10 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
General rule: creditor cannot demand performance of the obligation before
expiration of the period and debtor cannot perform the obligation before
the expiration of the period.
Note: this article applies if the setting of period is voluntary or conventional.
It is NOT applicable if period is set BY COURT (judicial)
- Exceptions:
o Term is for the best of the debtor alone (debtor
required to pay only at the end)
o Term is for the benefit of the creditor alone
(creditor can demand at any time, but he cannot
be compelled to accept payment before the
expiration of the period)
Article 1197
If the obligation does not fix a period, but from its nature and
the circumstances it can be inferred that a period was intended, the courts
may fix the duration thereof.
The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
In every case, the courts shall determine such period as may under
the circumstances have been probably contemplated by the parties. Once
fixed by the courts, the period cannot be changed by them.
- If the obligation has no fixed period but there was a clear
intention to have one, the court may fix the duration thereof.
Court also fixes period if period is based on the will of the
debtor
- Applies only where a CONTRACT OF LEASE clearly exists
SUMMARY OF 3 INSTANCES THAT COURT FIX PERIOD
1. If the obligation does not fix a period, but from its nature and
the circumstances it can be inferred that a period was intended
by the parties
2. If the duration of the period depends upon the will of the
debtor ( I will pay you when I like or the day that I fix)
3. If the debtor binds himself to pay when his means permit to do
so
Note: once the date is fixed, parties could no longer change it
When the Court MAY NOT fix the Term
1. When no term was even intended (PURE obligation)
2. When obligation is PAYABLE on DEMAND
3. When specific periods are provided for in the law (LEAGL
PERIOD) ex. Employment contract: time for payment of salary
Q: Within what period must the action to fix the period be brought?
A: within the proper prescriptive period for specific performance if a period
had been originally fixed, but to be counted from the perfection of the
contract
The PRESCRIPTIVE PERIOD IS 10 YEARS
Take Note: Court determines the period by considering the time probably
contemplated by the parties. The parties my of course change the period by
11
mutual agreement, or may even disregard the same in which case, the
obligation becomes a pure one, and demandable at once.
Article 1198
The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor the guaranties or securities
which he has promised;
(3) When by his own acts he has impaired said guaranties or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which
the creditor agreed to the period;
(5) When the debtor attempts to abscond.
- Debtor lose every right to make use of the period when:
o He becomes insolvent, unless he gives a guaranty
or security for the debt
Q: When is a debtor considered insolvent? Should there be a
judicial proceeding or declaration?
A: Judicial declaration is not necessary in this case. He is
insolvent if his obligation exceeds his assets.
o He does not furnish the creditor the guarantees or
securities which he has promised (making a
mortgage in favor of a third person instead of the
creditor)
o By his own acts he has impaired said guarantees
or securities after their establishment; through
fortuitous event they disappear (the security will
disappear) unless he immediately gives new ones
equally satisfactorily
 There are two situations in this
provision
Take note: The security, if destroyed during the fortuitous
event, DO NOT extinguishes the obligation because this is not
the real subject of the obligation. The more because of the fact
that such is also a generic thing.
o Debtor violates any undertaking
o Debtor attempts to abscond (debtor tries to
escape the obligation is a sign of bad faith. Intent
is sufficient)
Article 1199
A person alternatively bound by different prestations shall
completely perform one of them.
The creditor cannot be compelled to receive part of one and
part of the other undertaking.
- Person alternatively bound by different prestation shall
completely perform one of them
- Creditor should not accept a portion of the different
prestations
Article 1200
The right of choice belongs to the debtor, unless it has been
expressly granted to the creditor.
The debtor shall have no right to choose those prestations
which are impossible, unlawful or which could not have been the object of
the obligation.
- The right to choose which of the prestation should be acted
upon is on the hands of the DEBTOR unless it is EXPRESSLY
granted to the creditor
- Debtor cannot choose those which are impossible, unlawful or
which could not have been the object of the obligation
1. Those undertaking which are not included among those
from which the obligor may select
2. Those which are not yet due and demandable at the
time the selection is made
3. Those which by reason, is… (changed looks because of
fault)
Article 1201
The choice shall produce no effect except from the time it has
been communicated.
- The choice among the alternative obligations should be
communicated ORALLY or WRITTEN (implied or expressed) to
the creditor before it takes effect
Note: any form may be employed provided that the other party is properly
notified of the selection
- Once choice is made, debtor can NO LONGER RENOUNCE IT
and take an alternative which was first open to him
Note: once choice is communicated to the creditor, the obligation becomes
simple thus ceasing to be alternative.
Reason behind the need for Communication:
- It is to inform the creditor that the obligation is now a simple
one, no longer alternative, and if already due, for the creditor
to receive the object being delivered
REQUISITES FOR THE MAKING OF THE CHOICE
1. Made properly – creditor or agent is informed
2. Full knowledge that a selection is indeed being made
3. Made voluntary and freely
4. Made in due time – before or upon maturity (otherwise, the
creditor can sue him in court with an alternative relief as “give
this or that”)
5. Made to all the proper persons
6. Made without the conditions unless agreed to by the creditor
7. May be waived, expressly or impliedly
Article 1202
The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one is practicable
- If only one of the prestations is left, then the debtor has no
other choice but to deliver it
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Q: What are the instances where an alternative obligation becomes simple? (3) If all the things are lost through the fault of the debtor, ALTERNATIVE FACULTATIVE
A: the choice by the creditor shall fall upon the price of any one 1. If object 1 is lost due to 1. If object 1 is lost due to
1. When the choice has been communicated of them, also with indemnity for damages. fortuitous event, debtor will fortuitous even, the obligation is
2. When the choice has not been communicated, but by some have to deliver object 2 extinguished (no need to deliver
circumstances only 1 is left to be practicable The same rules shall be applied to obligations to do or not to object 2)
do in case one, some or all of the prestations should become impossible. 2. Various things are due, but the 2. Only one thing is principally due
Article 1203 giving of one is sufficient
If through the creditor's acts the debtor cannot make a choice - If choice is expressly given to the creditor, the latter shall also 3. If one of the prestation is illegal, 3. If the principal obligation is void,
according to the terms of the obligation, the latter may rescind the communicate his choice to the debtor the others may be valid and the and there is no necessity of
contract with damages. obligation remains giving the substitute. (the nullity
Note: right of choice can also be expressly granted to a 3 rd person. (should of the principal carries with it the
- If through the creditor’s acts the debtor cannot make a choice be agreed upon by the parties) nullity of the accessory or
according to the terms of the obligation, the debtor may substitute)
rescind the contract with damages SUMMARY OF RULES (1204 AND 1205) 4. If it is impossible to give all 4. If it is impossible to give the
Right of Choice Belongs to the Debtor except one, that last one must principal, the substitute does not
Note: the contract is NOT AUTOMATICALLY RESCINDED. Debtor may allow still be given have to be given; if it is
the obligation to remain in force insofar as the possible choice or choices Loss impossible to give the substitute,
are involved. 1. Fortuitous Event the principal must still be given
a. All objects - obligation is extinguished 5. The right to choose may be 5. The right of choice is given only
Article 1204 b. One or some – debtor chooses from the given either to debtor or to the debtor
The creditor shall have a right to indemnity for damages remainder creditor
when, through the fault of the debtor, all the things which are 2. Fault or negligence of the Debtor
alternatively the object of the obligation have been lost, or the a. All objects – obligation is NOT extinguished; object Q: When does the substitution take effect?
compliance of the obligation has become impossible. converted to monetary-liable value; value of A: in order that the creditor will be bound by the substitution, it is
object which last disappeared; damages necessary that the debtor must communicate such fact to the creditor
The indemnity shall be fixed taking as a basis the value of the b. One or some – choose from the remainder but
last thing which disappeared, or that of the service which last became creditor cannot claim for damages Q: What is the effect of loss of substitute?
impossible. A: before the substitute is made by the obligor, the loss or deterioration of
Damages other than the value of the last thing or service may also be Right of Choice Belongs to the Creditor the thing intended as a substitute, through the negligence of the said
awarded. Loss obligor, does not render him liable.
1. Fortuitous Event Once the substitution has been made, the debtor shall be liable for loss or
- If the alternatives are lost due to the negligence or fault of the a. All objects – obligations is extinguished deterioration.
debtor, the creditor have the right to indemnity for damages b. One or some – creditor chooses from the
remainder; no liability on the part of the debtor JOINT AND SOLIDARY OBLIGATION
Q: What is the basis for the indemnity? 2. Fault or negligence of debtor
A: the value of the last thing which disappeared or service which last a. All objects – value of any subject chosen plus Article 1207
become impossible damages The concurrence of two or more creditors or of two or more
b. One or some – chose any object, lost or not. If debtors in one and the same obligation does not imply that each one of
Note: if alternative 1 and 2 are destroyed due to debtor’s fault but the third object chosen is already lost – value plus damages; the former has a right to demand, or that each one of the latter is bound
is destroyed due to fortuitous event, the obligation is extinguished! if not lost – no damages to render, entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or when the law or
Article 1205 Article 1206 the nature of the obligation requires solidarity.
When the choice has been expressly given to the creditor, the When only one prestation has been agreed upon, but the
obligation shall cease to be alternative from the day when the selection obligor may render another in substitution, the obligation is called - Simply means that you do NOT render or demand the ENTIRE
has been communicated to the debtor. facultative. compliance with the prestation to yourself
Until then the responsibility of the debtor shall be governed The loss or deterioration of the thing intended as a substitute, Note: Solidary liability arises only if it is expressly stipulated in the contract,
by the following rules: through the negligence of the obligor, does not render him liable. But or when the law or the nature of the obligation requires solidarity.
(1) If one of the things is lost through a fortuitous event, he once the substitution has been made, the obligor is liable for the loss of
shall perform the obligation by delivering that which the the substitute on account of his delay, negligence or fraud. JOINT VS. SOLIDARY OBLIGATIONS
creditor should choose from among the remainder, or that - Joint – each obligor answers only for a part of the whole liability and to
which remains if only one subsists; - Contemplates on FACULTATIVE OBLIGATION each obligee belongs only a part of the correlative rights
(2) If the loss of one of the things occurs through the fault of o It is one where only one prestation has been
the debtor, the creditor may claim any of those subsisting, or agreed upon but the obligor may render another - Solidary or Joint and Several – the relationship between the active and
the price of that which, through the fault of the former, has in substitution the passive subjects is so close that each of the former or of the latter
disappeared, with a right to damages; may demand the fulfillment of or must comply with the whole
ALTERNATIVE VS. FACULTATIVE OBLIGATION

12 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 obligation. (can ask for reimbursement to others who are liable or
subject to receive)
Remember: if there is only one debtor and creditor, the rules in this article
DO NOT apply
GENERAL RULE (when there are 2 or more debtors or creditors): JOINT
- In the absence of any fact or law which would make the
defendants solidarily liable, the presumption is that they are
only JOINTLY liable
Exceptions:
a. There is a stipulation in the contract that the obligation is
solidary
b. When the nature of the obligation requires liability to be
solidary
c. When the law declares the obligation to be solidary
Article 1208
If from the law, or the nature or the wording of the
obligations to which the preceding article refers the contrary does not
appear, the credit or debt shall be presumed to be divided into as many
shares as there are creditors or debtors, the credits or debts being
considered distinct from one another, subject to the Rules of Court
governing the multiplicity of suits.
- Talks about the general rule when there are 2 or more debtor
or creditor
- CONSEQUENCE:
o The debt shall be divided into as many shares as
there are creditors or debtors
o The credit or the debts will be distinct from one
another, BUT regarding the brining of the action in
court, the Rules of Court governing the multiplicity
of suits will be followed
PRINCIPLES (JOINT OBLIGATION)
A. Joint obligation is presumed by law
B. In joint obligations, the creditor is entitled to a proportionate
part of the credit and the debtor is liable only to a
proportionate part of the debt (to each his own)
C. The debts or credits are being considered distinct and separate
form one another subject to the rules of court governing the
multiplicity of suits
Note:
Court’s FINAL JUDGMENT outweighs stipulations in contracts.
CONSEQUENCES OF JOINT LIABILITY
1. Vitiated consent on the part of one debtor does not affect the
others
2. Insolvency of one debtor does not make others responsible for
his share
3. Demand by the creditor on one joint debtor puts him in
default, but not the others since the debts are distinct
4. When the creditor interrupts the running of the prescriptive
period by demanding judicially form one, the others are not
affected
13
LIABILITIES OF PARTNERS
1. If it arises out of CONTRACT, the liability is JOINT or pro rata.
Exception – claiming compensation for employee’s death in
line of duty
2. It if arises out of a CRIME or a QUASI-DELICT, the liability is
SOLIDARY
Article 1209
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
by proceeding against all the debtors. If one of the latter should be
insolvent, the others shall not be liable for his share.
- Contemplates on INDIVISIBLE JOINT OBLIGATION (joint with
respect to the parties but indivisible with respect to the
fulfillment of the obligation)
- Fulfillment of obligations requires the consent of all the
debtors, although each for his part. On the side of the
creditors, collective action is also required for acts which may
be prejudicial.
Characteristics:
1. Creditor must proceed against ALL the joint debtors, for
compliance is possible only if all the joint debtors would act
TOGETHER
2. Demand is made on ALL the joint debtors
3. If any of the joint debtors be insolvent, the others shall not be
liable for his share
4. If there is joint creditors, delivery must be made to all, unless
someone is specifically authorized by the others
5. Each joint creditor is allowed to renounce his proportionate
credit
Note: A demand by one joint creditor is not a demand by the others
Article 1210
The indivisibility of an obligation does not necessarily give
rise to solidarity. Nor does solidarity of itself imply indivisibility.
- The indivisibility of an obligation does not necessarily give rise
to solidarity. Nor does solidarity of itself imply indivisibility
In effect you can have a joint divisible obligation (ex. Monetary obligation),
joint indivisible obligation (ex. Car), solidary divisible obligation, solidary
indivisible obligation
Indivisibility – refers to the SUBJECT MATTER
Solidarity – refers to the TIE BETWEEN THE PARTIES
DIFFERENT KINDS OF SOLIDARITY
1. Active Solidarity – on the part of the creditor or obligee
2. Passive Solidarity – on the part of the debtor or obligor
3. Mixed Solidarity – on both parts
4. Conventional Solidarity – agreed upon by the parties
5. Legal Solidarity – that imposed by law
Article 1211
Solidarity may exist although the creditors and the debtors
may not be bound in the same manner and by the same periods and
conditions.
- Debtors may still be solidarily liable despite the difference on
terms or conditions
- To do: the whole solidary obligation can be recovered from
ANY of the solidary debtors MINUS the share of those with
unmatured conditions or terms
EFFECT OF ACTIVE SOLIDARITY (it will only happen if the obligation
stipulates or the law so provides or the nature of the obligation so requires)
Mutual Agency – each creditor is empowered to exercise against the debtor
or debtors not only the rights which corresponds to him, but also all the
rights which correspond to the other creditors, with the consequent
obligation to render an accounting of his acts to such creditors.
Anyone of the creditors can collect the full amount from the debtor but he
must make an account and reimburse the shares of his fellow creditors
EFFECT OF PASSIVE SOLIDARITY
Anyone of them is compelled to make the full amount but has the right to
obtain reimbursement from other debtor plus the interest.
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 debtor only to the extent of his share in the obligation.
Article 1212
Each one of the solidary creditors may do whatever may be
useful to the others, but not anything which may be prejudicial to the
latter.
- Solidary creditors may do useful, not prejudicial acts
o Beneficial – to interrupt the running of
prescription
Note: the prescription of actions is interrupted
when they are filed before the courts
Ex. You demand full payment from debtor will stop
the prescriptive period
o Prejudicial – remission or condonation
- Note: as far as the solidary creditors are concerned, the
creditor who performed the act shall incur the obligation and
damages to his fellow creditors
Article 1213
A solidary creditor cannot assign his rights without the consent of
the others.
- GR: a solidary creditor cannot assign his rights without consent
of the others
- Reason for such rule: because such obligation implies mutual
agency and mutual confidence. If a creditor does acts that is
prejudicial to the others, then their rights are endangered,
hence, the necessity of their consent.
- Criticism: at some cases, there is really no TRUST that exists
between two solidary creditors when the reason why they
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 became solidary is due to the operation of law (except when it
arises from voluntary contracts)
- If one of the creditors assigned without consent and the
person assigned collects from the debtor, such collection is not
considered valid. This is to avoid connivance so as to result
extinguishment of obligation through payment
- Note: debtor can also refuse to pay 3 rd person if the latter
claims to have been assigned by one of the creditors.
Q: what if assignment was made in favor of another solidary creditor
without the consent of the other creditor?
A: there is no violation. In such case there can be no invasion of the
personal or confidential relationship among the solidary creditors.
Article 1214
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 should be made to him.
- Simply contemplates to whom the debtors must pay
o To any of the solidary creditors (if there is no
demand made)
o Exception: payment must be made to solidary
creditor who made a demand (judicial or
extrajudicial)
- Note: if one of the creditors already sued for action, it is
essential that the first action be first terminated before other
creditors could demand. However, if the first action was just an
extrajudicial demand and the debtor does not pay, the other
creditor may now file a judicial demand.
Article 1215
Novation, compensation, confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary debtors,
shall extinguish the obligation, without prejudice to the provisions of
Article 1219.
The creditor who may have executed any of these acts, as
well as he who collects the debt, shall be liable to the others for the share
in the obligation corresponding to them.
- Contemplates on the different prejudicial acts of the creditor
- Effect: shall extinguish the obligation, without prejudice to the
provision of article 1219 (look at the provision)
1. Novation
- Modification of an obligation by changing its object or
principal conditions, or by substitution the person of the
debtor, or by subrogating the person of the debtor, or by
subrogating a third person in the rights of creditor
- It gives rise to a new obligation
2. Compensation
- Takes place when two persons, in their own right, are
creditors and debtors of each other
- May be total or partial depending on the amount
involved
Total Compensation: automatically extinguish the obligation
14
3. Confusion or Merger
- Takes place when the characters of creditor and debtor
are merged in the same person (original debtor
eventually becomes a creditor of his own payment)
- Usually happens when the creditors endorse debtors’
payment to another person and such person endorses
the payment back to one of the debtors.
- In this case, the solidary obligation is EXTINGUISHED
4. Remission or Waiver
- Act of pure liberality whereby a creditor condones the
obligation of the debtor. (tells the debtor “forget about
the whole thing”)
- Remission may be TOTAL or PARTIAL (in partial, can remit
only one of the debtors obligation)
- In this case, the co-debtor in a total remission benefits
from the act of remission
Article 1216
The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made against
one of them shall not be an obstacle to those which may subsequently be
directed against the others, so long as the debt has not been fully
collected.
- The creditor may proceed against anyone of the solidary
debtors or some or all of them simultaneously so long as the
debt has not been fully collected
- 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 he wants to.
- Note: this applies only to PASSIVE SOLIDARY (or mixed
solidarity) obligations, not joint because in the latter, you
cannot let one of the debtor pay for the other’s debt.
PASSIVE SOLIDARITY VS. SURETYSHIP
Surety Case: Palmares vs. CA (look at bullet points for SCs decision)
Similarity
1. Both the solidary debtor and the surety (assumes a solidary
role) guarantee for another person
2. Both can demand for reimbursement
Difference
1. The solidary debtor is indebted for his own share only; the
surety is indebted only for the share of the principal debtor
2. Solidary debtor can be reimbursed what he paid MINUS his
share; surety can be reimbursed by the whole amount he paid
for
3. If a solidary debtor receives extension, the other debtor does
not get the same extension. If a principal debtor receives an
extension without the surety’s consent, the surety is released.
 In suretyship, there is but one contract, and the surety is
bound by the same agreement which binds the principal
 Demand on the sureties is not necessary before bringing suit
against them since the commencement of the suit is sufficient
demand
 A surety is not entitled to be given notice of the principal’s
default
Note: guarantor – your liability is subsidiary. Creditor should first demand
from the principal. It is only when the principal is insolvent that the creditor
could go after the guarantor
Article 1217
Payment made by one of the solidary debtors extinguishes
the obligation. If two or more solidary debtors offer to pay, the creditor
may choose which offer to accept.
He who made the payment may claim from his co-debtors
only the share which corresponds to each, with the interest for the
payment already made. If the payment is made before the debt is due, no
interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor paying the obligation, such
share shall be borne by all his co-debtors, in proportion to the debt of
each.
- Payment made by one of the solidary debtors extinguishes the
obligation
- He who made the payment may claim from his co-debtors only
the share which corresponds to each, with the interests for the
payment already made
- When one of the solidary debtors cannot reimburse his share
due to his insolvency, such share shall be borne by all his co-
debtors, in proportion to the debt of each. (insolvency of one
should be shouldered by the rest)
Payment – one of the ways which an obligation is extinguished
- Consists in the delivery of the thing or the rendition of the
service which is the object of obligation
Summary to whom shall the solidary debtor pay:
1. Any of the solidary creditor
2. If there was a demand – to the demanding creditor only
3. If there were 2 or more demands – to the first who demanded
(priority in time is priority in right)
4. If there were 2 or more demands at the same time – select
form any who demanded
Article 1218
Payment by a solidary debtor shall not entitle him to
reimbursement from his co-debtors if such payment is made after the
obligation has prescribed or become illegal.
- Payment by a solidary debtor shall not entitle him to
reimbursement from his co-debtors if such payment is made
after the obligation has prescribed or become illegal
- Note: if debtor A paid C without knowing that the debt had
prescribed, A can recover from C on the basis of solution
indebiti
Prescription – one of the modes of extinguishing obligation. (prescriptive
period for the creditor to collect)
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 respect to those which personally belong to the others, he may avail
Article 1219 himself thereof only as regards that part of the debt for which the latter Indivisible obligation
The remission made by the creditor of the share which affects are responsible. - One not capable of partial performance
one of the solidary debtors does not release the latter from his - Kinds of Indivisibility
responsibility towards the co-debtors, in case the debt had been totally - Provides for defenses for actions filed by the creditor o CONVENTIONAL indivisibility – made by common
paid by anyone of them before the remission was effected. - Defenses may be a complete defense for all debtors unless agreement
such defense is personal thus applicable only to one or few o NATURAL or ABSOLUTE indivisibility – it is due to
- The remission (or condonation) made by the creditor of the the nature of the object of undertaking; ex. Trip to
share which affects one of the solidary debtors does not Kinds of Defenses manila
release the latter from his responsibility towards the co- a. Derived from NATURE of the obligation (this is a COMPLETE o LEGAL indivisibility – if so provided by law
debtors, in case the debt had been totally paid by anyone of defense)
them before the remission was effected i. Lack of consideration or cause INDIVISIBLITY vs. SOLIDARITY
- Reason: since payment extinguishes the obligation, there is ii. Absolute simulation (contract is totally fictitious) INDIVISIBLITY SOLIDARITY
nothing more to remit! iii. Illegal consideration 1. Refers to the nature of obligation 1. Refers to tie between the parties
- For this to be valid – there should be an acceptance of the iv. Extinguishment of obligation (whole debt is paid, 2. May exist even if there is only 2. Needs at least two debtors or
debtor-donee (if you did not accept the donation through remitted, or has prescribed) one debtor and only one creditor creditors
remission, then your obligation is not extinguished) v. Non-fulfillment of the suspensive condition (if made 3. the fault of one is not the fault 3. The fault of one is the fault of
upon the whole object or upon all the debtors) of the other (can be a joint) others
Article 1220 vi. Stature of frauds
The remission of the whole obligation, obtained by one of the vii. When ALL debtors are incapacitated to give consent Article 1224
solidary debtors, does not entitle him to reimbursement from his co- viii. When there are VICES OF CONSENT (vitiated consent) on
A joint indivisible obligation gives rise to indemnity for
debtors. the part of ALL the debtors damages from the time anyone of the debtors does not comply with his
undertaking. The debtors who may have been ready to fulfill their
- The remission of the whole obligation, obtained by one of the b. Those that are PERSONAL to the debtor sued (also a COMPLETE promises shall not contribute to the indemnity beyond the corresponding
solidary debtor, does not entitle him to reimbursement from defense unless the defense is NON-FULFILLMENT YET of a
portion of the price of the thing or of the value of the service in which the
his co-debtors CONDITION or the NON-ARRIVAL YET of the term, this is only a obligation consists.
- Reason: there is nothing to reimburse because the debtor PARTIAL DEFENSE)
- A joint indivisible obligation gives rise to indemnity for
himself who offered payment did not really pay anything at all. damages from the time anyone of the debtors does not comply
Complete defense
with his undertaking
Article 1221 1. Derived from the nature of the obligation - Here, the object is INDIVISIBLE and yet the parties are merely
If the thing has been lost or if the prestation has become 2. Personal to the debtor
bound JOINTLY
impossible without the fault of the solidary debtors, the obligation shall Partial defense
be extinguished. 1. Personal defense of his co-debtor
Effect of noncompliance:
1. If joint indivisible: The obligation is converted into a monetary
If there was fault on the part of any one of them, all shall be Note: The contract entered into by the minors is voidable.
one for indemnity.
responsible to the creditor, for the price and the payment of damages and The kind of obligation can be enforced only by
interest, without prejudice to their action against the guilty or negligent DIVISIBLE AND INDIVISIBLE OBLIGATIONS
proceeding against ALL of the debtors. If anyone
debtor. of the debtors should fail or refuse to comply with
Article 1223
the obligation, it is converted into one of
If through a fortuitous event, the thing is lost or the The divisibility or indivisibility of the things that are the indemnity for damages
performance has become impossible after one of the solidary debtors has object of obligations in which there is only one debtor and only one
incurred in delay through the judicial or extrajudicial demand upon him by creditor does not alter or modify the provisions of Chapter 2 of this Title. Take note: the person who is ready to pay is not liable for
the creditor, the provisions of the preceding paragraph shall apply.
damages.
- Contemplates on divisible and indivisible obligation
- Contemplates on effect of loss or impossibility: - Divisibility or indivisibility refers to the nature of the obligation
2. If solidary indivisible: one of the debtors is liable to pay
o If without fault of solidary debtors – no liability whether it is capable of partial performance or not everything and can later recover reimbursement from co-
o If with fault – there is liability for all debtors but debtor
subject for reimbursement of the payment of Divisible obligation
damages from the debtor who is at fault (also for - One capable of partial performance
GR: creditor cannot be compelled to receive partial payments and debtor to
damages and interest) - Kinds of Division pay partial payment.
o Loss because of a fortuitous event AFTER default – o QUANTITATIVE division – depends on quantity
here there will be liability because of the DEFAULT o QUALITATIVE division – depends on quality, Exceptions:
(same provision of second situation) irrespective of quantity; ex. One child inherits 1. When the obligation expressly stipulates the contrary
land, the other inherit cash 2. When the different prestations constituting the objects of the
Article 1222 o INTELLECTUAL OR MORAL division – one that obligation arte subject to different terms and conditions
A solidary debtor may, in actions filed by the creditor, avail exists merely in the mind, and not in physical 3. When the oblation is in part liquidated and in part unliquidated
himself of all defenses which are derived from the nature of the obligation reality; ex. Sisters owning a common car, the half
and of those which are personal to him, or pertain to his own share. With share is only in the mind
15 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
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.
- Contemplates on the following:
o obligations that are deemed indivisible:
 Obligations to give definite things
 Those which are not susceptible of partial
performance (ex. Conduct a performance concert)
 Even if physically divisible, yet the law provides it
to be indivisible
 Even if physically divisible, but the parties
intended it to be indivisible
o Obligations that are deemed divisible
 If it is the execution of a certain number of days of
work
 If it is the accomplishment of work by metrical
units
 If obligation is to pay a certain amount in
installments
 If it is the accomplishment of work susceptible of
partial performance
Take note: in obligations to do, the presumption is indivisibility. Partial
performance is equal to non-performance. This is the general rule for
indivisible obligations.
Q: What is the test of divisibility?
A: whether the obligation is susceptible of partial compliance or not
Q: What is the effect of illegality on a divisible contract?
A: if the illegal term can be separated from the legal ones, the latter may be
enforced.
OBLIGATIONS WITH A PENAL CLAUSE
(book page 324 penal clause defined)
Article 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.
16
The penalty may be enforced only when it is demandable in
accordance with the provisions of this Code.
Penal Clause
- COERCIVE means to obtain from the debtor compliance
- It is an ACCESSORY UNDERTAKING to assume greater liability in
case of breach
- Purpose: it is to insure the performance of an obligation and
also to substitute for damages and payment of interest incase
of noncompliance (if no stipulation to the contrary)
- necessary in order that the penalty may be demanded.
SUMMARY OF PURPOSE:
1. To insure the performance of the obligation
2. To liquidate the amount of damages to be awarded to the
injured party in case of breach of the principal obligation
3. In certain exceptional cases, to punish the obligor in case of
breach of the obligation
Kinds of Penal Clauses
a. Legal Penal clause – one that is imposed by law
b. Conventional Penal clause – that which has been agreed upon
by the parties
c. Subsidiary – when only the penalty may be asked
d. Joint – when both the principal contract and the penal clause
can be enforced
Q: What is the difference between a penal clause and a condition?
A: A penal clause constitutes an obligation although accessory; the
condition does not. Therefore, the penalty may become demandable in
default of the unperformed principal obligation, and sometimes jointly with
it, while the condition is never demandable
Q: What are the instances that you can demand both the penalty and the
payment for damages?
A:
a. When there is EXPRESS STIPULATION to the effect that
damages or interest may still be recovered, despite the
presence of the penalty clause
b. When the debtor refuses to pay the penalty imposed in the
obligation and he is sued
c. When the debtor is GUILTY of FRAUD or DOLO in the fulfillment
of the obligation. (why? Because there can be renunciation of
an action to enforce liability for future fraud because this is
against public policy and against the express provision of the
law.
Note: A penalty may be enforced only when it is DEMANDABLE. Further, the
penalty may be REDUCED if it is INEQUITOUS or UNCONSCIONABLE.
Article 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.
- Contemplates on the limitation on the right of the debtor and
that of the creditor:
- Generally, debtor cannot substitute penalty for the principal
obligation except if such right has been EXPRESSLY reserved
- Generally, creditor cannot demand both fulfillment and the
penalty at the same time except if such right has been CLEARLY
granted to him
Article 1228
Proof of actual damages suffered by the creditor is not
- Proof of actual damages suffered by the creditor is NOT
NECESSARY in order that the penalty may be demanded
- Proof is not needed because the penalty is considered as a
LAWFUL means for repairing losses and damages
- Advantage: even if the actual damage is less than what was
stipulated, you can still collect such without proving it
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
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion