Sunteți pe pagina 1din 90

Chapter 3: Kinds of Obligations

Classification of Obligations:
 The Civil Code classifies obligations primarily into: (PU CO PE ALFA JOS DIP)
1. Pure;
2. Conditional;
3. With a period;
4. Alternative;
5. Facultative;
6. Joint;
7. Solidary or several or in solidum;
8. Divisible;
9. Indivisible;
10. With a penal clause.
Other provisions of the Civil Code, however, impliedly admit other classes of
obligations, to wit:

a.) Unilateral and bilateral;


b.) determinate and generic;
c.) legal, conventional and penal;
d.) real and personal
Section I. – Pure and Conditional Obligations

ART. 1179. Every obligation whose performance does not depend


upon a future or uncertain event, or upon a past event unknown to the parties,
is demandable at once.

Every obligation which contains a resolutory condition shall also be


demandable, without prejudice to the effects of the happening of the event.
(1113)
1. Pure Obligation – when the obligation contain no term or condition whatever
upon which depends the fulfillment of the obligation contracted by the
debtor.
 It is immediately demandable and there is nothing to exempt the debtor from
compliance therewith.
 Example – Sara obliged herself to pay her loan of P1,000 to Mark on demand.
 Instances when obligations immediately demandable:
1. It is a pure obligation;
2. It is subject to a resolutory condition;
3. It is subject to resolutory period.
2. Conditional Obligations – one which is subject to a condition of one whose
performance depends upon a future or uncertain events or upon past event
unknown to the parties.
ART. 1180. When the debtor binds himself to pay when his
means permits him to do so, the obligation shall be deemed to be one
with the period, subject to the provisions of article 1197.(n)

Example –
A promissory note states that “This is to acknowledge receipt of sum of
One thousand Six Hundred pesos (P1, 600.00) and I am to pay my debt to Arvin
as soon as possible or as soon as I have the money.” It was held that the
conditional obligation is void, because the collection would be impossible, the
remedy of the creditor is to ask the Court to fix the period of payment, thus, it
becomes an obligation with a period.
 ART. 1181. In conditional obligations, the acquisition of rights as well as
the extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. (1114)

 ART. 1182. When the fulfillment of the condition depends upon the sole
will of the debtor, the conditional obligation shall be void. If it depends upon
chance or upon the will of a third person, the obligation shall take effect in
conformity with the provisions of this code. (1115)

 ART. 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. (1116a)
 ART. 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. (1117)

 ART. 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 not 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. (1118)

 ART. 1186. The condition shall be deemed fulfilled when the


obligor voluntarily prevents its fulfillment. (1119)
Kinds or classifications of condition:
1. Suspensive and Resolutory
 Suspensive – the happening of the condition gives rise to an obligation.

Example:
Maya binds herself to deliver a determinate car to Mark if he marries Sara. The obligation
is only demandable upon the happening of the condition that is, if Mark marries Sara. The
obligation is suspended and not yet demandable.

 Resolutory – the happening of the condition extinguishes the obligation already existing.

Example:
Arvin binds himself to lend his only car to Ian until the latter passes the CPA Board. The
obligation to lend is immediately demandable. Ian’s right over the car is extinguished upon
his passing the CPA board. Ian is now obliged to return the car.
Kinds or classifications of condition:
2. Potestative, Casual and Mixed

 Potestative – is one the fulfillment of which depends upon the sole will of the debtor. This kind of condition is void.
Example:
Arvin Promise to give his only parcel of land to Maya if he decides to leave for the United States.

 Casual – is one the fulfillment of which depends upon chance.


Example:
Mario agrees to give Maria a determinate car if Maria’s only racing horse will win the sweepstake race.

 Mixed – is one which depends partly upon the will of third person and partly upon chance
Example:
Vincent promise to give Victor a new Toyota Car if Victor will be able to play with and beat Karpov in a game of chess.
This is mixed condition, that is Karpov willingness to play chess with Victor and the latter’s winning over Karpov.
Kinds or classifications of condition:
3. Possible and Impossible
Impossible condition is divided into 2:
a) Physical Impossibility – the condition imposed is not capable of being performed physically.
Example:

Grace will give Christine a gold necklace if she swims across the Pacific
Ocean.

b) Illegal Impossibility – when the condition imposed is contrary to law, good custom or public policy.

Example:
1. Contrary to law – Pedro agrees to give Ernesto P100,000 if Ernesto will kill Mario.
2. Contrary to good custom – Santos binds himself to give Maria a gold wrist watch if she
will cohabit with Mr. Reyes without benefit of marriage.
3. Contrary to public policy – Maria agrees to employ Grace in her company if Grace will
not join a labor union.
Kinds or classifications of condition:
4. Positive and Negative:

A Negative condition is one where some event will not happen at a determinate time, either
a.) the time indicated has elapsed; or
b.) it has become evident that the event cannot occur (Art. 1185, NCC)

Example:
Victor will give Jason a car if he will not marry Helen until Dec. 19, 2001, if Jason has not
married Helen until Dec. 19, 2001 or if Helen has died within the prescribed time without having
married to Jason, the obligation becomes demandable. If Jason married Helen within the prescribed
time, the obligation of Victor is extinguished.
Kinds or classifications of condition:
5. Divisible and Indivisible

 Divisible – that part of obligation which is not affected by impossible or unlawful condition
shall be valid (Art. 1183, NCC)
Example-
X promise to pay Y the sum of P1, 000.00 if Y furnishes X with information as to the
whereabouts of Z and another sum of P2, 000.00 if Y kills Z. in the obligation, the first part (to
pay P1, 000.00) is valid while the second part (P2, 000.00) is void because only the latter is
affected by the condition.

6. Express and Implied


 ART. 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.
(1120)
Effects of conditional obligation to
give:
 Once the condition is fulfilled, the effects of the conditional obligations shall
retroact to the day of the constitution of the obligation and not on the date
when the condition was fulfilled.

 Example –
On Jan. 1, 1999 A agreed to give B a parcel of land if he passes the May, 1999 CPA
exams. If B passes the CPA exams in May, 1999, he is entitled to the land effective
Jan. 1, 1999 because B’s right over the land retroacts to the date when the
obligation was constituted.
 As to the fruits and interest – The effect of conditional obligation to give, as a
rule, do not retroact to the date of the constitution of the obligation. The
following rules shall govern:

1. In reciprocal obligation (like a contract of sale) - the fruits and interest during the
pendency of the condition shall be deemed to have been mutually compensated.

Example:
A agrees to sell and B agrees to buy A’s parcel of land if B
passes the May, 1999 CPA exams. If B passes the May, 1999 CPA Board, the
obligation becomes demandable. B is entitled to all the interests that his
money (with which to pay A) may earn while A is entitled to the fruits
which the parcel of land may have produced during the pendency of the
condition.
2. In unilateral obligation – the debtor shall appropriate the fruits and interests
received during the pendency of the condition unless a contrary intention
appears.
Example –
X agreed to give Y a parcel of land if Y passes the CPA
Board in May, 1999 exams. Pending the happening of the condition, A
is entitled to the fruits which the land may produce, A will deliver only
the parcel of land if the condition is fulfilled, unless a contrary
intention appears.
 ART. 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 (1121a)

 Preservation of Creditor’s Right –


The action for the preservation of the creditor’s right may have for their
objectives:

1. To prevent the loss or deterioration of the things which are the objects of the
obligation by enjoining or restraining acts of alienation or destruction by the
debtor himself or by third person;
Preservation of Creditor’s Right –
2. To prevent concealment of the debtor’s properties which constitute the guaranty in case of non-
performance of the obligation;

3. To demand security if the debtor becomes insolvent;

4. To compel the acknowledgement of the debtor’s signature on a private document or the execution
of proper public document for registration so as to affect third person.
Preservation of Creditor’s Right –

5. To register the deeds of sale or mortgages;

6. To set aside fraudulent alienation made by the debtor;

7. To interrupt the period of prescription by actions against adverse possessors of the things which
are objects of the obligation. (Lawyer’s journal, 1951, p. 47)
Paragraph I of the above article authorizes the creditor to take any appropriate
actions for the preservation of creditor’s right during the pendency of the
condition:

◦ Example:
On Jan. 1, 1999, Raul obliged himself to sell a parcel of land to Dennis if he passes the
CPA exams in October, 1999. From the time the obligation was constituted and pending
the happening of the condition (passing the CPA Exams) Dennis may cause the
annotation of the condition in the certificate of title in the Register of Deeds where the
land is located, to preserve his right over the parcel of land.
 Paragraph II in order that debtor may recover what he has paid by mistake,
during the pendency of the condition, the following requisites may be present:

1. The debtor paid the creditor before the fulfillment of the condition;
2. Payment made by debtor was through mistake and error;

1. The action to recover what was paid by mistake should be made before the
fulfillment of the condition.

 Example –
Pedro obliged himself to pay Santos P20, 000 if a PAL plane crashes at Cebu before
Dec. 30, 1998. After the obligation was constituted and before Dec. 30, 1998, a plane
crushed in Cebu. Pedro honestly and believing that the condition was fulfilled paid
the P20, 000 to Santos. It turned out however that it was a Cebu airline that crushed.
Thus, Pedro may recover the amount paid to Santos by mistake for the reason that
the condition has not yet been fulfilled.
 ART. 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 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.
 These rules apply only to obligation to give a determinate or specific thing
subject to a suspensive condition in case of loss, deterioration or improvement
of the thing.
1. In case of loss of the thing

a) If the thing is lost without the fault of the debtor, the obligation shall be extinguished.
Example –
Reyes obliged himself to give Santos a determinate car if he passes the CPA Exams in Oct. the
current year. If during the pendency of the condition the car was lost through fortuitous event without
the fault of Reyes, the obligation to deliver the car is extinguished even if the condition is fulfilled later.

b) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages. If in the example
above, the specific car was lost through the fault of Reyes, he shall be liable for damages upon the
fulfillment of the condition.
 It is understood that the thing is lost:
a) When it perishes (as when a house is burnt to ashes)

a) When it goes out of commerce (as when the object before is unprohibited
becomes prohibited)

b) When disappears in such a way that its existence is unknown (as when a particular
car has been missing for some time)

c) When it disappears in such a way that it cannot be recovered (as when a particular
diamond ring is dropped in the middle of the Atlantic Ocean).
2. When the thing deteriorates -
a) When the thing deteriorates during the pendency of the condition, without the fault of the debtor,
the impairment is to be borne by the creditor.
Example –
Arvin obliged himself to give Ian a determinate Toyota car if Ian passes the October CPA Exams.
During the pendency of the condition, the car was partially damaged by flood, without the fault on
the part of Arvin. If the condition is fulfilled, Ian will bear the impairment.

b) If the thing deteriorates, during the pendency of the condition, through the fault of the debtor, the
creditor may choose, after the fulfillment of the condition, between the rescission of the obligation
or its fulfillment, with indemnity for damages in either case.
3. When the thing improved –

a) If the thing improved during the pendency of the condition, by its nature, or by time, the improvement
shall inure to the benefit of the creditor. The reason for this is to compensate the creditor who would
suffer in case, instead of improvement, there would be deterioration without the fault of the debtor.
b) If the thing is improved at the expense of the debtor, he have no other right than that granted to the
usufructuary. By us usufruct is meant the right to enjoy the property of another which includes the
right to enjoy and use the fruits of the property.
 ART. 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 to the
preceding article shall be applied to the party who is bound to return.

 As for obligations to do or 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. (1123)
Effects When Resolutory Condition is
fulfilled
1. The obligation is extinguished. (Art. 1181, NCC)
2. Because the obligation is extinguished and considered to have had no effect, the
parties should restore to each other what they have received.
3. The fruits and interests thereon should also be returned after deducting of
course the expenses made for the production, gathering and preservation, if any.
4. The rules given in Art. 1189, N CC will apply to whoever has the duty to return in
case of loss, deterioration or improvement of the thing.
5. The courts are given power to determine the retroactivity of the fulfillment of a
resolutory conditions.
 Example :

A gave B a parcel of land on condition that B will pass the


CPA Exams on May, this year. B did not pass the CPA Exams. The obligation
is extinguished and therefore, it is as if there was never an obligation at all. B
will therefore have to return both the land and the fruits he had received there
from the moment A has given him the land.
 ART. 1191. The power to rescind obligatios 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 later
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.
Right to Rescind
The right to rescind means the right to cancel or to resolve in case of reciprocal obligation in
case of non-fulfillment on the part of one.
 Example:
In a contract of sale, the buyer can rescind if the seller does not deliver or te seller can rescind if the
buyer does not pay.
 The power to rescind is given to the injured party and the injured party has the following
alternative remedies:
1. Demand fulfillment of the obligation plus damages; or
2. Demand rescission of the obligation plus damages.
 ART. 1192. In case both parties have committed a breach of the obligation, the
liability of the first infractor shall be equitably tempered by the courts. If it
cannot be determined which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his own damages.

 Rules if Both Parties Have Committed a Breach


The above rules are deemed just. The first one is fair to both parties
because the second infract or, though they would derive some advantage
by his own act or neglect. The second rule is likewise just, because it is
presumed that both parties at about the same time tried to reap
some benefits. (Report of the Code Commission)
 Section 2 - Obligations with a period
`
 ART. 1193. Obligations for whose fulfillment a day certain has
been fixed, shall be demandable only when that day comes.

 Obligations with a resolutory period take effect at once, but terminate


upon arrival of the day certain.

 A day certain is understood to be that which must necessarily come,


although it may not be known when.

 If the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules of the
preceding Section.
Period Defined –
A period is a future and certain length of time which determines the effectivity or the
extinguished of obligation.

Obligation with a period is one whose consequences are subject in one way or another to the
expiration of said period or term. (8Manresal58)

A day certain is understood to be that which must necessarily come, although it may not be
known when.
Period and Condition Distinguished:
a) As to fulfillment - A period is a certain event which must happen sooner or later while a condition is an uncertain
event.

b) As to time – a period refers only to the future while a condition may refer to a past unknown event.

c) As to influence or effect on the obligation – the period fixes the time of the effectivity of the obligation while a
condition may cause the demandability of the obligation to arise or to terminate.
ART. 1194. In case of loss, deterioration or improvement of the thing before
the arrival of the day certain, the rules in article 1189 shall be observed. (n)
◦ Effect of loss, deterioration, or improvement before the arrival of period.

Note the cross reference to Art. 1189, NCC.


◦ Example:

If A is suppose to deliver to B a particular car on Dec. 19, 1999 by


the car was destroyed by fortuitous event in July 1, 1999, the obligation is
extinguished.
 ART. 1195. Anything paid or delivered before the arrival of the period,
the obligor being unaware of the period or believing that the obligation has
become de and demandable, may be recovered, with the fruits and interests.
(1126a)

 Effect Of Payment Before Arrival of Period

This article which is similar to Article 1188, NCC, in an obligation to give, allows
the recovery of what has been paid by mistake before the fulfillment of a suspensive
condition.

 Example -
E owes G P20, 000.00, which was supposed to be paid on December 25 this year. By mistake, E paid his
obligation on December 25 last year. Assuming that today is only June 30, E can recover the amount plus
interest therein. But E cannot recover, except he interest, if the debt had already matured or if E had
knowledge of the period.
 ART. 1196. Whenever in an obligation a period is designated, it is
presumed to have been established for the benefit of both the creditor and
the debtor, unless from the tenor of the same or other circumstances it should
appear that the period has been established in favor of one or of the other.
(1127)

 Presumption As to Benefit Of A Period


The general rule is that when a period is fixed by the parties , the period is presumed
to be for the benefit of both creditor and debtor.

 Which means that before the expiration of the period, the debtor may not fulfill the
obligation and neither the creditor demand its fulfillment.
 By way of exceptions, however, if the tenor of the obligation or other
circumstances may indicate that a period is have been established for the benefit
of either the creditor or debtor:
1. For the benefit of both creditor and debtor
 Example –
Sara obtained a loan of P10, 000 at 12% interest per annum from Mark for one year. Sara has a period of one
year within which to use the money, while Mark will benefit from the interest which the money will earn.

2. For the benefit of the creditor


 Example -
Sara executes a promissory note in favor of Mark which reads: “I promise to pay Mark or order the amount of
P10, 000 on demand. Thus, Mark can demand payment from Sara anytime.

3. For the benefit of debtor


 Example –
Sara executes a promissory note which reads: “I promise to pay Mark r order the amount of P 10,000 or before
December 31, 2001. Sara can pay her obligation on or before Dec. 31, 2001.
 ART. 1197. If the obligation does not fix a period, but from its nature and
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
circumstance have been probably contemplated by the parties. Once by the courts,
the period cannot be changed by them. (1128 a)

 Court Generally is Without Power to Fix a Period


If an obligation does not state a judicial period and no period is intended, the court is
not authorized to fix a period. The courts have no right to make contracts for the
parties.
Exceptions to the general rule
1. If the obligation does not fix a period but it can be inferred from its nature and circumstances that a period is
intended.
Example:
S sold a parcel of land to B with a right of repurchase. No term is specified in the contract for the exercise of
the right. Then, the court is authorized to fix the period to repurchase.

2. If the duration of the period depends upon the sole will of the debtor
Example:
I will pay you as soon as possible. Here , the period is not fixed, so the court may fix the same because if this
is not so the obligation may never be complied with by the debtor.
 ART. 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. (1129a)
When Debtor Loses The Right to Make
Use Of A Period
The general rule is that the obligation is not demandable before the lapse of the period. The
exceptions are based on the fact that the debtor might not be able to comply with his
obligation:

1. When debtor becomes insolvent:


The insolvency need not be judicially declared. It is sufficient that the debtor has less assets than his liabilities or if debtor is unable
to pay his debts as they mature. It is noted that the insolvency of the debtor must occur after the obligation has been contracted.
When Debtor Loses The Right to Make
Use Of A Period
2. When debtor does not furnish guaranties or securities promised:
Example:
Sara borrowed loan from Mark which loan was secured by a chattel mortgage of Sara’s car as a
guaranty. After obtaining the loan, Sara fails or does not execute a chattel mortgage, the loan
becomes demandable or the debtor loses her right to make use of the period.

3. When by his own acts he has impaired said guaranties or securities:


Example:
Sara borrowed P50, 000 from Mark which loan was secured by a chattel mortgage on Sara ‘s car.
Later, Sara’s fault, the car was damaged or she causes the impairment of the car, Sara loses her right
to make use of the period, unless she gives another one equally satisfactory.
When Debtor Loses The Right to Make
Use Of A Period
4. When by fortuitous event, the guaranty or security was lost.
Example:
Sara borrowed P50, 000 from Mark which loan was secured by a chattel mortgage on Sara’s car. After
obtaining the loan, the car was lost by fortuitous event. Sara loss her right to male use of the period unless
she gives another guaranty or security equally satisfactory.

5. When debtor violates an undertaking –


Example:
Art secured a loan from Arnold on condition that Art will paint the house of Arnold. If after the proceeds of
the loan was given to Art, he did not pant the house of Arnold, Art loses his right to make use of the period.

6. When the debtor attempts to abscond.


Abscond means a depart or escape from creditor’s knowledge to avoid payment of his debt. Mere attempt
on the part of debtor will entitle the creditor to demand payment of the obligation without waiting for the
period to expire.
 Section 3. Alternative and Facultative obligations

 ART. 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. (1131)

 Meaning of Alternative Obligation


It means an obligation where two or more prestations are due but the delivery of
one is sufficient to extinguish the obligation.

Example:
Sara binds herself to give Mark either a determinate refrigerator or a TV set. If Sara chooses and delivers the TV
set, the obligation is extinguished. Thus, Sara cannot compel Mark to accept part of one and the part of the
other prestations.
ART. 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.
Rule on Who Makes the Choice –
 As a general rule, the right of choice or to select the prestation belongs to the debtor,
unless the right to choose is expressly granted to the creditor. But the right of the
debtor is subject to the following:
The debtor cannot choose those prestations which are:
a) Impossible – E.g.- Sara promised to deliver to Mark 100 sacks of rice or a stone from
Mars. Sara cannot chose to deliver the stone coming from Mars as it is physically
impossible.

b) Unlawful – E.g. Sara obliged herself to deliver to Mark a kilo of dangerous drug or a
parcel of land. Sara can choose only the delivery of parcel of land.

c) Could not have been the object of the obligation - E.g. Sara borrowed from Mark P50,
000. It was agreed that Sara would give Mark her horse or her German Piano. Now, Sara
has two horses, a race horse worth P50, 000 and an ordinary horse which is worth for
only P5, 000. Sara cannot choose

d) Only one prestation is practicable (Art. 1202) – E.g. Sara will deliver to Mark her carabao,
or her horse or her refrigerator. Through no fault of Sara, the horse and the carabao were
lost by fortuitous event. Sara can only delivery the refrigerator which is the only one
practicable.
 ART. 1201. The choice shall produce no effect except from the time
it has been communicated. (1133)

 Right of Choice Must be Communicated –


 Until the choice is made and communicated, the communicated, the obligation
remains alternative. Once the notice to the effect that a choice is made, the obligation
ceases to be alternative and becomes a simple obligation.
 Where the choice has been expressly given to the creditor, such choice shall likewise
produce legal effects upon being communicated to the debtor. (Art. 1205, par. 1)
 ART. 1202. The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one is practicable.
 ART. 1203. If Through The creditor’s acts the debtor cannot make a choice
according to the terms of the obligation, the latter may rescind the contract with
damages.

 When debtor may rescind contract


If through the creditor’s fault, the debtor cannot made a choice according to the terms
of the obligation the debtor is given the right to rescind and recover damages.

 Example:
Sara borrowed from Mark P5, 000.00. it was agreed that instead of P5, 000, Sara could deliver a TV set or a
refrigerator or a piano. If through the fault of Mark, the TV set was destroyed, Sara can rescind the contract if she
wants. In case of rescission, the amount of P 5, 000.00 must be returned by Sara with interest. Mark, in turn,
must pay Sara the value of the TV set plus damages.
 ART. 1204. The creditor shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively the
object of the obligation have been lost, or the compliance of the obligation
has become impossible.

The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared, or that of the service which last became impossible.

Damages other than the value of the last thing or service may also be awarded.
(1135a)

 When right of choice is with debtor and all prestations were lost –
This article entitles the creditor to indemnity for damages when all the alternative
objects are lost through the fault of the debtor before he has made his choice. The
indemnity for which the creditor is entitled shall be based on the value of the last
thing which disappeared or lost or the compliance of the obligation has become
impossible.
 ART. 1205. When the choice has been expressly given to the creditor, the
obligation shall cease to be alternative from the day when the selection has
been communicated to the debtor.
Until then the responsibility of the debtor shall be governed by the following
rules

1) If one of the things is lost through a fortuitous event, he shall perform the
obligation by delivering that which the creditor should choose from among the
remainder, or that which remains if only one subsists;

2) If the loss of one of the things occurs through the fault of the debtor, the creditor
may claim any of those subsisting, or the price of that which, through the fault of
the former, has disappeared, with a right to damages

3) If all the things are lost through the fault of the debtor, the choice by the creditor
shall fall upon the price of any one of them, also with indemnity for damages.
 The same rules shall be applied to obligations to do or not to do in case one.
Some or all of the prestations should become impossible. (1136a)

 When Right of Choice is With Creditor and All Prestations Were Lost
This article provides for the rules to be observed when the right of choice
is expressly granted to the creditor, the rules are as follows:

1. When a thing is los through a fortuitous event


Example
Sara obliged herself to deliver to Mark a TV set, or a refrigerator, or a
piano. If the TV set was lost through fortuitous event, Mark can choose from
among the remainder or that which remains if only one subsists.
2. When a thing is lost through debtor’s fault
Example:
If the loss of the TV set occurs through the fault of Sara, Mark may claim the
refrigerator or the piano with a right of damages or the price of the TV set with a
right of damages.

3. When all the things were lost through debtor’s fault


Example:
If all the items are lost through the fault of Sara, then Mark can demand the payment
of the price of any one of them with a right to indemnity for damages.

4. When all the thing are lost through a fortuitous event


Example:
The obligation of Sara shall be extinguished if all the items which are alternatively the
object of the obligation are lost through a fortuitous event (Art. 1174 will apply).
 ART. 1206. When only one prestation has been agreed upon, but the
obligor may render another in substitution, the obligation is called facultative.
 The loss or deterioration of the thing intended as a substitute, through the
negligence of the obligor, does not render him liable. But once the substitution has
been made, the obligor is liable for the loss of the substitute on account of his
delay, negligence or fraud.

 Meaning of Facultative Obligation –


 A facultative obligation is one where only one prestation has been agreed upon but
the obligor may render another in substitution.
 Example:
 I will give you my piano but I may give my television set as a substitute.
Alternative and Facultative
Distinguished –
1) As to choice – In facultative – the right for substitution is given only to the debtor in
Alternative – the choice may be given either to the debtor or to the creditor;

2) As to things due – In facultative – only the principal obligation is due by may substitute
another; in alternative, there are several things due but the delivery of one is sufficient;

3) As to validity or nullity – In facultative – if the principal thing is unlawful or impossible, there


is no need of delivering the substitute in alternative – if one of the thing is unlawful or
impossible, there is still a need to deliver any of those which remain valid or the only
remaining one is valid.
 Section 4 – Joint and Solidary Obligations

 ART. 1207. The concurrence of two or more creditors or of two or


more debtors in one and the same obligation does not imply that each one of
the former has a right to demand, or that each one of the latter is bound to
render, entire compliance with the prestation. There is a solidary liability only
when the obligation requires solidarity. (1137a)

 ART. 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 equal 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. (1138a)
 Joint Obligation –
It is an obligation where there is a concurrence of two or more debtors or two or
more creditors or of several debtors and creditors, by virtue of which each of the
debtors is liable for a proportionate part of the credit.

 Example of different instances


1) A, B, and C borrowed P9, 000 for D. The presumption is that A, B and C are jointly liable. D can demand
only P3, 000 from each or a total of P9, 000.
2) A borrowed from B, C and D P9, 000. There is one debtor and three creditors. Each creditor can demand
only P3, 000 from A.
3) A and B are liable to C and D for P9, 000. There are two debtors and two creditors. Each creditor can
demand only P4, 500 from each debtor.
SOLIDARY OBLIGATION
There are solidary liability when

1) The obligation expressly so states, or

2) The law requires solidarity or

3) The nature of the obligation requires solidarity.


Kinds of Solidary Obligation
1. Passive – solidarity on the part of the debtors, where anyone of them can be made liable for
the fulfillment of the entire obligation.
 Example – A and B are solidary debtors of C in the amount of P 10, 000

2. Active – solidarity on the part of the creditors, where anyone of them can demand the
fulfillment of the entire obligation.
 Example – A is liable to B and C for the amount of P10, 000. B and C are solidary creditors.

3. Mixed Solidarity – solidarity on the part of the debtors and creditors where each one of the
debtors is liable to render and each one of the creditors has a right to demand, entire
compliance with the obligation.
 Example – A and B are solidarity debtors to C and D, solidary creditors in the amount of P 10, 000.
 Solidarity not presumed
 The presumption, where there are two or more persons in the same obligation, is
that it is joint. The reason is that solidary obligations are very burdensome for they
create unusual rights and liabilities. Solidarity between debtors increases their
responsibility while solidarity between creditors presuming that they are bound
jointly and not solidarily.

 ART. 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.

 Indivisible Joint Obligation –


 The object is indivisible and the T/E between the parties are merely proportionately
liable.
 Example –
A and B are jointly liable to give C a particular car. The obligation is joint but since the object is indivisible, the
creditor must proceed against al the joint debtor. If any of the joint debtors be insolvent, the others shall not be
liable for others.
 ART. 1210. The indivisibility of an obligation does not necessarily give rise t
solidarity. Nor does solidarity of itself imply indivisibility. (n)

 Indivisibility as Distinguished from Solidarity


Indivisibility refers to the subject matter while solidarity refers to the Tie
between the parties.
 Examples:
1. Joint divisible obligation – A and B are jointly liable to C for P10, 000.

2. Joint indivisible obligation – A and B are jointly liable to give C their car.

3. Solidary divisible obligation – A and B are solidarily liable to give C P10, 000.

4. Solidary indivisible obligation – A and B are solidarily liable to give C their car.
 ART. 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.

The solidary character of the obligation is not destroyed even if the


creditors and debtors are bound by different terms and conditions. The
solidarity is still preserved by recognizing in the creditor the power of claiming
from any or all debtors the payment of the entire obligation.

 Example:
A and B solidarily bound themselves to pay a total of P10, 000 to C, and D and E to the following conditions. C’s
share will be due at the end of the year; D will get his share only after he passes the CPA exams and E will get
his share only after he painted the house of C.
 ART. 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.
(1141a)

 ART. 1213. A solidary creditor cannot assign his rights without the consent
of the others.

 Solidary Creditors May Do Useful Act; Not Prejudicial Acts –


A solidary creditor may do any act beneficial or useful to the others but he cannot
act prejudicial to them.

 Example of Beneficial Acts –


 To interrupt the running of prescription, the act of one solidary creditor in making a judicial demand upon any of
the solidary debtors is sufficient. (Art. 1155, NCC)

 Example of Prejudicial Acts –


 Should not be performed, otherwise, there will be liability for damages. However, in the case of remission or
condonation, the solidary creditor is allowed to so remit, and the obligation is extinguished.
 Art. 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.

 Payment to Any of the Solidary Creditors


The rule is that the debtor may pay any one of the creditors. But when a demand
is made by any of the creditors, payment should be made to him who made the
demand, judicially or extra-judicially.

 Example
A is liable to B and C P5, 000. A may pay either B or C But if B made a demand then payment should only be
made to him. If A paid C, B is still entitled to his share from A in case C does not turn over to B his share.
 ART. 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.

 Liability of Solidary Creditor in case of Novation, Compensation, Confusion or


Remission –

 When a creditor who executed any of these acts, it is logical that he is liable to the
other solidary creditors for their corresponding shares considering that such acts are
prejudicial to them. (Art. 1212, NCC)
 ART. 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. (1144a)

 Creditor May Proceed Against Any Solidary Debtor –


 In a solidary obligation, the creditor may proceed against any, some or all of the
solitary creditors simultaneously so long as it has not been fully collected.

 Example
A, B and C solidarily owe D the amount of P9, 000. D can collect from A or B or C alone or from any two of them
or all of them simultaneously. If demand is made on A, the latter cannot require D to make a demand also on B
and C or to include them as party defendants as D has the right to proceed against any one of them.
 ART. 1217. Payment made by one of the soldiery 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 to each. (1145a)
 Effects of Payment by a Solidary Debtor –
Payment is one of the ways by which an obligation is extinguished and consist in the
delivery of the thing or the rendition of the service which is the object of the
obligation.
 Example –
A, B and C are solidarily liable to D and E in the amount of P9, 000 due on Dec. 31. If
both A and B offer to pay D on Dec. 31, the latter may choose which offer to accept. If
A pays the entire amount of P9, 000 on Dec. 31, the obligation is extinguished.

The payment of A gives him the right of reimbursement from B and C P3, 000 each
with interest from the date of payment. However, if C is insolvent, both A and B shall
bear the insolvency in proportion to their shares.
 ART. 1218. Payment by a solidary debtor shall not entitle in to
reimbursement from his co-debtors if such payment is made after the
obligation has prescribed or become illegal. (n)

 Effect of Payment After Obligation Has Prescribed or Become Illegal –

1. Prescription – is one where one acquires ownership and other rights through the
lapse of time in the manner and under the conditions laid down by law.

 Example – A and B are solidarily indebted to C in the amount of P 10, 000. The debt prescribed. If A paid the
debt, he cannot collect form B his share of the debt. Neither can A can recover from C.

2. Becomes Illegal – A and B are solidarily bound to deliver medical drugs to C. the
transaction of such medical drugs were later prohibited by law. Notwithstanding
the prohibition, B performed the obligation by delivering the prohibited drugs. B is
not anymore entitled to reimbursement from A.
 ART. 1219. The remission made by the creditor of the share which affects
one of the solidary debtors does not release the latter from his responsibility
towards the co-debtors, in case the debt had been totally paid by anyone of
them before the remission was effected. (1146a)

 ART. 1220. The remission of the whole obligation obtained by one of the
solidary debtors, does not entitle him to reimbursement from his co-debtors.

 Remission by Creditor –

1) If payment if made first, the remission is of no effect. There is no more to remit.

2) If remission is made prior to the payment and payment is made, then there is
payment by mistake.

3) If one of the solidary debtors obtained remission on the whole obligation, he is not
entitled to reimbursement from his co-debtors because remission is essentially
gratuitous.
 ART. 1221. If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation shall be
extinguished.

 If there was fault on the part of any one of them, all shall be responsible to
the creditor, for the price and the payment of damages and interest, without
prejudice to their action against the guilty or negligent debtor.

 If through a fortuitous event, the thing is lost or the performance has become
impossible after one of the solidary debtors has incurred in delay through the
judicial or extrajudicial demand upon him by the creditor, the provisions of
the preceding paragraph shall apply. (1147a)
Rules in Case thing has Been Lost or Prestation Has
Become Impossible –
1. If the thing is lost or has become impossible to perform through a fortuitous event without
the fault of the debtor, the obligation is extinguished.

 Example:
A, B and C are solidarily bound to deliver a determinate car to D. Without any fault on the part of any
one of the debtors, the car was lost through the fortuitous event. The obligation is extinguished.
Rules in Case thing has Been Lost or Prestation Has
Become Impossible –
2. If in the preceding paragraph, the car was lost through the fault of anyone of the solidary
debtors, anyone of them may be held liable by D for the price of the car plus damages. The
debtors who did not any fault on the lost of the car have the right to recover from the co-
debtor who is at fault.

3. The solidary debtors are likewise liable even if the thing is lost through fortuitous event if
the loss occurs after anyone of the solidary debtors has been in delay. The debtors, however
who were not in delay have the right to recover from their co-debtors who was responsible
due to his delay.
ART. 1222. A solidary debtor may, in actions filed by the creditor, avail
himself of all defenses which are derived from the nature of the obligation
and of those which are personal to him, or pertain to his own share.

With respect to those which personally belong to the others, he may avail
himself thereof only as regards that part of the debt for which the latter are
responsible.
Defenses available to a Solidary
Debtor –
The defenses available to the solidary debtors if the creditor proceeds against him alone
for the payment of the entire obligation

1. The defenses derived from the nature of the obligation, such as fraud prescription, remission
illegality or absence of consideration, payment or performance.

 Example
A and B are solidarily liable to C in the among to P6, 000. The entire debt was paid by d. in an action by C against A, the latter can
raise the defense of payment by virtue of which the obligation was extinguished.
Defenses available to a Solidary Debtor –
2. Defenses personal to him or pertaining to his own share, such as minority, insanity and vitiated
consent.

3. Defenses which are personal to others, such as minority, insanity and vitiated consent.
Section 5 – Divisible and Indivisible Obligations]

ART. 1223. The divisibility or indivisibility of the things that are


the object of obligations in which there is only one debtor and only one
creditor does not alter or modify the provisions of Chapter 2 of this title.
(1149)
Definition of Terms –
1. A divisible obligation is one the object of which in its delivery or performance is capable of partial
fulfillment.

 Example:
A agreed to pay B P10, 000 in five monthly installment. The obligation of A is divisible because it is payable
in partial payments.

2. An indivisible obligation is one the object which in its delivery or performance is not capable of
partial fulfillment.

 Example:
A agreed to deliver a determinate car to B on Dec. 31. This is an indivisible obligation because it is not
subject to partial performance.
 ART. 1224. A joint indivisible obligation gives rise to indemnity for
damages from the time anyone of the debtors does not comply with his
undertaking. The debtors who may been ready to fulfill their promises shall
not contribute to the indemnity beyond the corresponding portion of the
price of the thing or of the value of the service in which the obligation
consist. (1150)

 ART. 1225. For the purposes of the preceding articles, obligation


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 indivisible.

 However, even though the object or service may be physically


divisible, and obligation is Indivisible if so provided by law or intended by
the parties.

 In obligations not to do, divisibility or indivisibility shall be determined


by the character of the prestation in each particular case. (1151a)
Obligations Deemed Indivisible –
The general rule of determining the divisibility or indivisibility of an obligation depend
on the purpose of the obligation.
1. Obligation to give definite things

 Example:
To give a particular house. Here the obligation is indivisible because of the nature of the subject
matter.

2. Obligations which are not susceptible of partial performance

 Example:
A is obliged to sing a song. Here the obligation is indivisible by reason its purpose which requires the
performance of all the parts.
Obligations Deemed Indivisible
3. Obligation provided by law to be indivisible even if thing or service physically divisible.

 Example:
Taxes should be paid within a definite period. Although money is physically divisible, the amount of
tax payable must be delivered in Toto, not partially.

4. Obligations intended by the parties to be indivisible even if thing or service is physically


divisible.

 Example:
The obligation of A to give P10, 000 to B on a certain date. Money is physically divisible by the clear
intention ere for A to deliver the amount at on time and as a whole.
Obligations Deemed Divisible
1. Obligations which have for their object the execution of a certain number of days of work.

 Example –
A obliged himself to paint the house of B to be finished in 10 days. The obligation is divisible because it will not be
finished in one time.

2. Obligations which have for their object the accomplishment of work by metrical units.

 Example:
A obliged himself to deliver 25 cubic meter of sand.

3. Obligations which by their nature are susceptible of partial performance

 Example
The obligation of A to pay a debt of P10, 000 to B in ten (10) monthly installments.
 Section 6 – Obligations with a Penal Code

 ART. 1226. In obligations with a penal clause, the penalty shall


substitute the indemnity for damages and the payment of interests in case of
non-compliance, if there is no stipulation to the contrary. Nevertheless,
damages shall be paid if the obligor refuses to pay the penalty or is guilty of
fraud in the fulfillment of the obligation.

 The penalty may be enforced only when it is demandable in accordance


with the provisions of this Code. (1152a)

 Meaning of Penal Clause –


 An obligation with a penal clause is one which contains an accessory undertaking to pay a previously
stipulated indemnity incase of breach. It is attached to obligations in order to insure their performance.
Purpose of a Penal Clause
1) To insure the performance of the obligation.

2) To substitute for indemnity for damages and the payment of interest in case of non-
compliance of the principal obligation.

3) To penalize the obligor in case of breach of the principal obligation.


 ART. 1227. The debtor cannot exempt himself from the performance of
the obligation by paying the penalty, save in the case where this right has
been expressly reserved for him.

 Neither can the creditor demand the fulfillment of the obligation and the
satisfaction of the penalty at the same time, unless this right has been clearly
granted him. However, if after the creditor has decided to require the
fulfillment of the obligation, the performance thereof should become
impossible without his fault, the penalty may be enforced. (1153a)

 Debtor Cannot Substitute Penalty For the Principal Obligation –


The general rule is that the debtor is not allowed to just pay the penalty instead of fulfilling the obligation. He
can do so if the right has been expressly reserved. The reason is that if he can just pay, fulfillment of the
obligation will be considered an alternative one. The word expressly means that any implied reservation is not
allowed.
ART. 1228. Proof of actual damages suffered by the creditor is not
necessary in order that the penalty may be demanded.

ART. 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable. (1154a)
When Penalty May be Reduced by the
Court –
a) When the obligation has been partly complied with by the debtor;

b) When the obligation has been irregularly complied with by the debtor

c) When the penalty is iniquitous or unconscionable, even if there has been no performance at
all.
 ART. 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 the penal clause. (1155)

 Effect of Nullity of Penal Clause –


The general principle that the accessory follows the principal. If only the
penal clause is void, the principal obligation remains valid and demandable.
The penal clause may be disregarded.

 Example:
 A agreed to sell merchandise to B. it is provided in their agreement that in case of default, A will deliver a
prohibited drug as penalty. Here, the obligation to sell merchandise is valid by the penalty to deliver the
prohibited drug is void. For failure of A to comply with the obligation, B may recover damages