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

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

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

Article 1157 NOMINATE AND INNOMINATE CONTRACTS

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

Sources of Obligation (5) Article 1160

1 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 Obligations derived from quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this Book.
3rd Source – QUASI – CONTRACTS
- Also provided for by Law (Chapter I, Title XVII of Civil Code)
- No meeting of the minds
Q: What is a Quasi-Contract?
A: Juridical relation resulting from a lawful, voluntary and unilateral and
which has for its purpose the payment of indemnity to the end that no one
shall unjustly enrich himself at the expense of another
- 2 common kinds:
a. Negotorium Gestio – unauthorized management
Ex. Neighbor saved you properties thus had expenses
b. Solution Indebiti – undue payment
Article 1161
Civil obligations arising from criminal offenses shall be governed
by the penal laws, subject to the provisions of Article 2177, and of the
pertinent provisions of Chapter 2, Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating damages.
4th Source – ACTS OR OMISSIONS PUNISHED BY LAW or DELICT
- Criminal liability carries civil liabilities
o Restitution – return the exact thing
o Reparation – pay equivalent price
o Indemnification – consequential damage
Article 1162
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
2 angel‘s notes
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 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
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 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
2nd par – debtor should deliver what belongs to the class not inferior or
superior of quality
- You just deliver the regular type
- 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
3 angel‘s notes
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
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
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
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
4 angel‘s notes
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
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).
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 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
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.
5 angel‘s notes
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
b. Circumstances of the person – you are on duty as a police guard,
you fell asleep not by reason of any ailment, then a robbery
occurred
c. Circumstances of time – during night time you drove your car
without any headlight
d. Circumstance of Place – while driving your car at colon street, you
drove at 60kph
(2) No hard and fast rule for measuring degree of care
KINDS OF NEGLIGENCE (refer pg. 143-145 for comparison)
1. Culpa Contractual – negligence in contracts resulting in breach
- Ex: you have a contract of common carrier (transportation
contract): passenger can file for damages against operator;
you can also demand for culpa criminal and for civil liability
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 2. Culpa Aquiliana – negligence which by itself is the source of an
obligation between the parties not so related before by any pre-
existing contract
3. Culpa Criminal – negligence resulting in the commission of a
crime
- You will file an action against the driver. If the driver is
convicted but insolvent, the owner will be subsidiarily liable
FRAUD VS. NEGLIGENCE
Deliberate intention to cause No such intention
damage or injury
Waiver of liability for future fraud is Waiver is allowed
void (includes gross negligence)
Liability cannot be mitigated May be reduced in certain cases
Take note: this is Fraud in the performance of an obligation (dolo incidente);
REMEDY: damages
Ex. Instead of delivering a wine, what you deliver is a wine bottle however
what is inside is not wine, then this is dolo incidente; committed in the
performance of the obligation.
Dolo causante – Fraud committed in the execution of the contract. Consent is
vitiated by fraud. You should not have entered the contract not unless there
was a fraud. REMEDY: annulment of contract.
Article 1174
Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were
inevitable.
FORTUITUIOUS EVENT
1. Act of man
2. Act of God
GR: no liability in fortuitous event
Exceptions
a. When expressly declared by law
b. When expressly declared by stipulation
c. Nature of obligation requires assumption of risk
Requisites:
1. Event happened without any participation of the debtor
(independent of his will)
2. Event cannot be foreseen, or if foreseen is inevitable
3. By reason of the event, it was impossible for him to comply with
the obligation in a normal manner
4. There is no contributory negligence on the debtor’s part
Article 1175
Usurious transactions shall be governed by special laws.
- Contemplated on USURY LAW. However, such law is no longer
applicable today
- Thus, interests are based on the agreement of the contracting
parties, which is complied in Good faith
- Rule: If there is consent or agreement, then that will govern the
relationship
- However: even if USURY law is suspended, the SC reduced the
amount of interest imposable on the ground that the right is
inequitable or unconscionable (thus, the party is not totally free)
Article 1176
The receipt of the principal by the creditor without reservation
with respect to the interest, shall give rise to the presumption that said
interest has been paid.
6 angel‘s notes
The receipt of a later installment of a debt without reservation
as to prior installments, shall likewise raise the presumption that such
installments have been paid.
- Talks about presumptions which could either be
(1) Conclusive or
(2) Disputable or rebuttable (what is contemplated in this article)
- Presumption applies and is advantageous to debtor or lessee
Conclusive – you are no longer allowed to present other evidences to prove
otherwise
- These are evidences which you cannot rebut (ex. We are all
presumed to know the law; thus you cannot defend yourself by
saying that you are not aware of such law)
- Such presumption is reasoned by experience and convenience
Disputable – such fact is presumed unless you present other evidences that
will prove otherwise
Take Note: a creditor can refuse to accept if you do not pay the amount you
are obliged to pay
1ST paragraph of 1176
- Tackles presumption in payments of INTERESTS
- the first payment is that of the interest and the balance will be on
the principal.
TAKE NOTE: the creditor can rebut such claim wherein the lessee will say that
he has already paid the interest for the receipt shows payment for principal,
however the burden of proof is that of the creditor
The creditor can specify in the receipt a RESERVATION with regards to the
interest so that even though it is specified in the receipt that payment is for
the principal amount, there will be no presumption that the interest has
already been paid.
2nd paragraph of 1176
- Tackles presumptions in payments of INSTALLMENTS
- Ex. A receipt acknowledging the payment of rentals of march gives
the presumption that rentals for January and February is paid
- You can likewise, as a lessor, note the reservation
Q: What if no date is specified with regards to the month rental but the date
of the receipt is dated march, can this raise a presumption that payment for
January and February were made?
A: NO, because such date only tackles the date of receipt and not on the date
that corresponds to the payment of such
Take Note: Yearly Taxes are not installment payments and the law provides
for such presumption on installments alone!
Article 1177
The creditors, after having pursued the property in possession of the
debtor to satisfy their claims, may exercise all the rights and bring all the
actions of the latter for the same purpose, save those which are inherent in
his person; they may also impugn the acts which the debtor may have done
to defraud them.
- Remedies of creditor when the debtor does not comply with the
obligation
1. Demand for specific performance plus damages for failure to
comply with the demand of obligation
2. Pursue the properties belonging to your debtor
3. Avail of accion subrogatoria – you can exercise the rights of your
debtor (ex. Debtor is the creditor of another person, you can then
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 exercise his rights to collect what the debtor could collect as a
creditor of another person)
4. Accion Pauliana – you can receive – impugn or rescind acts or
contracts done by the debtor to defraud the creditors (ex.
Fictitious sale: make it appear that it was sold when in fact it is
not; it is just to evade his liabilities – )

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

- Rights are transmissible except if

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

7 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
KINDS OF OBLIGATIONS (Classification)
PRIMARY
1. Pure Obligation – there is no condition or term to fulfill;
Demandable at the time the contract is perfected
2. Conditional Obligation – there is a condition which should be
fulfilled
a. Suspensive – the condition is awaited. The obligation
arises the moment the condition is satisfied
b. Resolutory – the condition is to be avoided. The
obligation is extinguished the moment the condition is
satisfied
3. Obligation with a Period or Term – that which necessarily must
come regardless of whether the parties know when it happen or
not
4. Alternative or Faculative
5. Conjunctive
6. Joint – there are more than one person who is liable for the
obligation. They have equal share of responsibility
7. Solidary – upon the insolvency of one of the parties who is
responsible for the obligation, the other party is to fulfill the full
liability of the contract
8. Divisible – the fulfillment of the obligation may be done at
separate times
9. Indivisible – the fulfillment of the obligation must be done at one
time
10. With a Penal Clause
SECONDARY
1. Unilateral – only one person or party has an obligation to perform
2. Bilateral – two parties has an obligation to perform
3. Real – right which is demandable upon the whole world upon the
delivery of the debtor of the obligation to the creditor
4. Personal – right of the creditor to demand upon the debtor the
delivery of the obligation as its due period has already lapsed
5. Determinate – specific object is the subject of the obligation
6. Generic – the subject of the obligation belongs to a particular class
7. Positive – there is a need for the performance of the obligation
8. Negative – equivalent to omission; something should not be done
or is to be omitted
9. Legal
10. Conventional
11. Penal
12. Civil – obligation arises according the Civil law
13. Natural – obligation arises according to natural law
Article 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.
- What is contemplated here are the types of obligations which are
DEMANDABLE at once
- 1st paragraph Simply stated: an obligation with no terms or
conditions is demandable at once
- 2nd paragraph: Resolutory conditions are also demandable at once
without prejudice to the extinguishment of the obligation once
the condition is fulfilled
Past Events – would refer to the FUTURE KNOWLEDGE OF PAST EVENTS,
which will determine whether or not an obligation will arise
Classification of Conditions
A.
8 angel‘s notes
1. Suspensive (conditions precedent or conditions antecedent) – the
happening of the condition gives rise to the obligation
2. Resolutory (conditions subsequent) – the happening of the condition
extinguishes the obligation
B.
1. Potestative – the obligation arises from the personal will of the debtor;
fulfillment of the condition depends upon the will of a party to the
obligation
2. Casual – obligation depends on chance or hazard or the will of a third
person (winning of lotto)
3. Mixed – depends partly on the will of the debtor and that of a third
person or on chance (if I pass the bar)
C.
1. Divisible – capable of partial performance or realization
2. Indivisible – not capable of partial performance because of the nature of
the thing, or because of the intention of the parties
D.
1. Positive – an act is to be performed
2. Negative – something will be omitted
E.
1. Express – the condition is stated
2. Implied – the condition is merely inferred
F.
1. Possible – capable of fulfillment in nature and in law; condition is
capable of realization according to nature, law , public policy or good
customs
2. Impossible – not capable of fulfillment due to nature or due to the
operation of law or morals or public policy; or due to a contradiction in its
terms
G.
1. Conjunctive – when there are several conditions, all of which should be
realized
2. Alternative – if only one or a few of the conditions have to be performed
or realized
Q: When is a pure obligation demandable?
A: At once, the moment you said such obligation or such contract has been
perfected. (Immediately)
Condition – future and uncertain event
Period – that which necessarily must come
Q: What is the effect of the happening of the resolutory condition?
A: The obligation is extinguished.
Article 1180
When the debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with a period,
subject to the provisions of Article 1197.
- This provision contemplates on an obligation with a TERM or
PERIOD. The term is due upon the capacity of the debtor to pay
such obligation.
- “Payment does not depend on the debtor’s will, rather, what is
dependent on the debtor is the TIME when payment by him can
be made. “
Q: How long is the term?
A: The term is not solely dependent neither on the creditor nor the debtor. In
this case, Article 1197 is also applied wherein the Court is obliged to fix the
duration of the period. Upon arrival of this period, the creditor can now
demand for the payment.
Article 1181
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 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.
- This article contemplates on Conditional Obligations; that such
arises or is extinguished upon the fulfillment of the condition
- Suspensive – efficacy or obligatory force is subordinated to the
happening of a FUTURE or UNCERTAIN event
- Resolutory – rights are already acquired are lost once the
condition is fulfilled; Thus, there is a need to revoke the donation
first before extinguishment of the obligation is taken to effect.
SUSPENSIVE CONDITION
Therefore, what is acquired by the obligee or creditor upon the constitution
of the obligation is only a mere hope or expectancy. Unlike other hope or
expectancies, however, it is protected by the law
Q: What happens if the suspensive condition does not take place?
A: it is as if there is no obligation at all. The parties would stand as if the
conditional obligation never existed
RESOLUTORY CONDITION
The obligation is immediately demandable after its establishment or
constitution. Unlike an obligation with a suspensive condition, rights arising
out of the obligation are acquired immediately and vested in the oblige or
creditor
Article 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.
- 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
9 angel‘s notes
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
- 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.
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 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
10
- 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 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.
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - 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
11
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.
The right to rescind need not have a judicial approval when there
has been no delivery yet
Note: if the question is whether there was a violation in the
contract, you should go to court and resolve such.
5. The right to rescind is implied (presumed) to exist and therefore,
need not be expressly stipulated upon
6. The right to rescind may be waived, expressly or impliedly
Take note: extrajudicial rescission of a contract is not possible without an
express stipulation to that effect
Limitations on the Right to Rescind
a. The power of the court to fix the period – if there are minor
violations
b. Resort to the courts
c. Right of third person – those who come into possession and is not
in bad faith are protected; in such case, the only remedy of the
injured party is to proceed against the party responsible for the
transfer or conveyance for damages
d. Violations should be Substantial or serious so as to allow a
rescission of contract
e. Waiver of the right (right to ask for a rescission)
Obligation of a Seller
1. Deliver a car
2. Transfer ownership
Take note: if buyer, due to rescission, is obliged to return the car but
destroyed it, could no longer proceed in the process. This is because, if you
file for rescission, you should also be ready to return the object subject of the
obligation.
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
If 3rd party is in bad faith, the only remedy of the injured party is to proceed
against the 3rd person who acted in bad faith for damages. You can also go
after both the seller and 3rd party if both of them acted in bad faith.
Article 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.
- In case both parties committed a breach:
o Determine the first infractor – he is to pay the liability
(but this can be tempered because both committed a
breach)
o If it cannot be determined – each shall bear his own
damages
CONDTITIONS WITH A TERM
Article 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.
- Contemplates on obligations with a period – that such is
demandable only when that day comes
Period
- Certain length of time which determines the effectivity or the
extinguishment of obligations
- Interval of time which either suspends its demandability or
produces its extinguishment
Note
Suspensive term – only specifies when the obligation is demandable
PERIOD vs. CONDITION
PERIOD CONDITION
Fulfillment - event which must happen - is an uncertain event
sooner or later even if time (future and uncertain)
cannot be determined
Reference to time - Always refers to the - may under the law
future refer to the past
Influence on the - merely fixes the time or - Causes an obligation
obligation the efficaciousness of an to arise or to cease
obligation
Different Kinds of Terms and Periods
A (regarding interest) for after all the creditor was in BAD FAITH. But note that
1. Definite – the exact date or time is known and given
2. Indefinite – something that will surely happen, but the date of
happening is unknown
B Whenever in an obligation a period is designated, it is presumed
1. Legal – period granted under the provision of the law
2. Conventional or Voluntary – period agreed upon or stipulated by
the parties
3. Judicial – the period or term fixed by the courts
C the creditor and the debtor
1. Ex die – a period with suspensive effect. Obligation begins only
from a day certain, upon the arrival of the period
12
2. In diem – term with a resolutory effect. Up to a time certain, the
obligation remains valid, but upon the arrival of said period, the
obligation terminates
Condition – when you are not even sure if something will happen as a fact or
not
Acceleration Clause – clause which expressly stipulates that upon failure to
pay installment for a certain month, the whole debt should thereupon
become at once payable.
Take note:
A lease on a “month-to-month basis” is one with a DEFINITE term.
In this kind of agreement, the lease is deemed from month to month, and the
lessor is allowed to terminate the lease after each month, provided there is
due notice.
REQUISITES FOR A VALID PERIOD OR TERM
1. It must refer to the FUTURE
2. It must be CERTAIN (sure to come) but can be EXTENDED
3. It must be PHYSICAL and LEGALLY possible
Effect of a Fortuitous event
- No one is still liable for this. The obligation is extinguished
Article 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.
- 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
- Contemplates on a SUSPENSIVE term
Article 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 due and demandable, may be recovered, with the fruits and
interests.
- Talks about PREMATURE payment
- Simply means that a debtor can recover his payments of debts as
well as the fruits and interests if he paid before the arrival of
period and he was unaware that the time has not yet accrued.
- Only apply to OBLIGATIONS TO GIVE
Take note: if debtor knew that the arrival of period has not yet come but
paid, he can no longer recover what he paid for.
If both the debtor and creditor implicitly changed the period, the
debtor could no longer recover payment.
Q: Within what period must recovery be made if the debtor did not know
that payment was not yet due?
A: Before the debt matures (regarding what was paid). Even after maturity
the right prescribes 5 years after premature payment.
Article 1196
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.
- The designation of a period is generally for the BENEFIT of BOTH
Ex. When there is INTEREST stipulated (debtor – given enough
time to pay; creditor – can earn from the interest)
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
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;
13
(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
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 When the choice has been expressly given to the creditor, the
Note: once choice is communicated to the creditor, the obligation becomes obligation shall cease to be alternative from the day when the selection has
simple thus ceasing to be alternative. been communicated to the debtor.

Reason behind the need for Communication:
- 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
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.
- If choice is expressly given to the creditor, the latter shall also
communicate his choice to the debtor

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

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

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

- Simply means that you do NOT render or demand the ENTIRE
compliance with the prestation to yourself
Note: Solidary liability arises only if it is expressly stipulated in the contract,
or when the law or the nature of the obligation requires solidarity.
JOINT VS. SOLIDARY OBLIGATIONS
- Joint – each obligor answers only for a part of the whole liability and to
each obligee belongs only a part of the correlative rights
- Solidary or Joint and Several – the relationship between the active and the
passive subjects is so close that each of the former or of the latter may
demand the fulfillment of or must comply with the whole 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
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:
GENERAL RULE (when there are 2 or more debtors or creditors): JOINT
1. Creditor must proceed against ALL the joint debtors, for
- In the absence of any fact or law which would make the
compliance is possible only if all the joint debtors would act
defendants solidarily liable, the presumption is that they are only
TOGETHER
JOINTLY liable
2. Demand is made on ALL the joint debtors
Exceptions:
3. If any of the joint debtors be insolvent, the others shall not be
a. There is a stipulation in the contract that the obligation is solidary
liable for his share
b. When the nature of the obligation requires liability to be solidary
4. If there is joint creditors, delivery must be made to all, unless
c. When the law declares the obligation to be solidary
someone is specifically authorized by the others

15 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 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
16
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
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
3. Confusion or Merger
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - 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.
17
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)
Article 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.
- The remission (or condonation) 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
- Reason: since payment extinguishes the obligation, there is
nothing more to remit!
- For this to be valid – there should be an acceptance of the debtor-
donee (if you did not accept the donation through remission, then
your obligation is not extinguished)
Article 1220
The remission of the whole obligation, obtained by one of the
solidary debtors, does not entitle him to reimbursement from his co-
debtors.
- The remission of the whole obligation, obtained by one of the
solidary debtor, does not entitle him to reimbursement from his
co-debtors
- Reason: there is nothing to reimburse because the debtor himself
who offered payment did not really pay anything at all.
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Article 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.
- Contemplates on effect of loss or impossibility:
o If without fault of solidary debtors – no liability
o If with fault – there is liability for all debtors but subject
for reimbursement of the payment of damages from
the debtor who is at fault (also for damages and
interest)
o Loss because of a fortuitous event AFTER default – here
there will be liability because of the DEFAULT (same
provision of second situation)
Article 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.
- Provides for defenses for actions filed by the creditor
- Defenses may be a complete defense for all debtors unless such
defense is personal thus applicable only to one or few
Kinds of Defenses
a. Derived from NATURE of the obligation (this is a COMPLETE defense)
i. Lack of consideration or cause
ii. Absolute simulation (contract is totally fictitious)
iii. Illegal consideration
iv. Extinguishment of obligation (whole debt is paid, remitted,
or has prescribed)
v. Non-fulfillment of the suspensive condition (if made upon
the whole object or upon all the debtors)
vi. Stature of frauds
vii. When ALL debtors are incapacitated to give consent
viii. When there are VICES OF CONSENT (vitiated consent) on the
part of ALL the debtors
b. Those that are PERSONAL to the debtor sued (also a COMPLETE
defense unless the defense is NON-FULFILLMENT YET of a
CONDITION or the NON-ARRIVAL YET of the term, this is only a
PARTIAL DEFENSE)
Complete defense
1. Derived from the nature of the obligation
2. Personal to the debtor
Partial defense
1. Personal defense of his co-debtor
Note: The contract entered into by the minors is voidable.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Article 1223
18
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.
- Contemplates on divisible and indivisible obligation
- Divisibility or indivisibility refers to the nature of the obligation
whether it is capable of partial performance or not
Divisible obligation
- One capable of partial performance
- Kinds of Division
o QUANTITATIVE division – depends on quantity
o QUALITATIVE division – depends on quality, irrespective
of quantity; ex. One child inherits land, the other
inherit cash
o INTELLECTUAL OR MORAL division – one that exists
merely in the mind, and not in physical reality; ex.
Sisters owning a common car, the half share is only in
the mind
Indivisible obligation
- One not capable of partial performance
- Kinds of Indivisibility
o CONVENTIONAL indivisibility – made by common
agreement
o NATURAL or ABSOLUTE indivisibility – it is due to the
nature of the object of undertaking; ex. Trip to manila
o LEGAL indivisibility – if so provided by law
INDIVISIBLITY vs. SOLIDARITY
INDIVISIBLITY SOLIDARITY
1. Refers to the nature of obligation 1. Refers to tie between the parties
2. May exist even if there is only one 2. Needs at least two debtors or
debtor and only one creditor creditors
3. the fault of one is not the fault of 3. The fault of one is the fault of
the other (can be a joint) others
Article 1224
A joint indivisible obligation gives rise to indemnity for damages
from the time anyone of the debtors does not comply with his undertaking.
The debtors who may have been ready to fulfill their promises shall not
contribute to the indemnity beyond the corresponding portion of the price
of the thing or of the value of the service in which the obligation consists.
- A joint indivisible obligation gives rise to indemnity for damages
from the time anyone of the debtors does not comply with his
undertaking
- Here, the object is INDIVISIBLE and yet the parties are merely
bound JOINTLY
Effect of noncompliance:
1. If joint indivisible: The obligation is converted into a monetary one
for indemnity.
The kind of obligation can be enforced only by
proceeding against ALL of the debtors. If anyone of the
debtors should fail or refuse to comply with the
obligation, it is converted into one of indemnity for
damages
Take note: the person who is ready to pay is not liable for
damages.
2. If solidary indivisible: one of the debtors is liable to pay
everything and can later recover reimbursement from co-debtor
GR: creditor cannot be compelled to receive partial payments and debtor to
pay partial payment.
Exceptions:
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 1. When the obligation expressly stipulates the contrary
2. When the different prestations constituting the objects of the
obligation arte subject to different terms and conditions
3. When the oblation is in part liquidated and in part unliquidated
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.
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
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- 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)
-
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 necessary
in order that the penalty may be demanded.
- 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
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Article 1229
The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even
if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.

- Contemplates on situations when the penalty may be reduced by

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

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

subject merely to equitable reduction.

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

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

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

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

penal clause.

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

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