Transcription 4) Delict

OBLIGATIONS AND CONTRACTS 5) Quasi-delict

Atty. Valencia
I. Law

Nov. 5, 2015 e.g. The rights and obligations of spouses, that the spouses
have obligation for mutual support. So if the husband
OBLIGATION- is the juridical necessity to give, to do and not to do. abandons the wife and the wife needs support, the wife can file
an action in court demanding support from the husband. The
4 Elements of Obligation basis of the obligation is the LAW. It does not require any
1. Active Subject agreement or contract between the spouses. It is not necessary
2. Passive Subject because the law already provides.
3. Object/ Prestation
4. Juridical Time/ Vinculum e.g. When the wife is admitted in the hospital to deliver a child
and the hospital now demands payment for the bill. The
Ex: hospital demanded the payment to the parents-in-law because
“X obliged himself to pay P100,000 to Y by virtue of a contract they were the one who brought the wife to the hospital. The
of loan signed by X.” parents-in-law are not obliged to pay because under the law, it
Y= creditor is the husband where the hospital can demand payment.
X= debtor
To pay the sum of P100,000= object/prestation (Real “Obligations derived from law should not be presumed”
Obligation) - If the creditor files an action and he
Contract of X and Y= Juridical Tie raises a law, then he has to POINT
OUT A SPECIFIC PROVISION OF
LAW, CLEARLY STATING HIS RIGHT.
1. Active Subject -The person who can demand the
fulfilment of the obligation Question:
- creditor / obligee Can an employee demand a
o who usually takes the initiative in the reimbursement from his employer for
fulfilment of the obligation the expenses he has incurred in the
performance of his duties?
-NO, because there is no law
2. Passive subject -The person who can be compelled to requiring an employer to
comply the obligation provide legal assistance to the
-debtor/ obligor employee.
o The debtor is passive because he even
want to forget the obligation or simply Can an employee file an action in court
wait for the creditor to demand the or in the Dept of Labor to demand an
obligation employer that he should be given sick
leave and vacation leave?
3. Object or prestation - e.g. to pay a sum of money -NO, because there is no
- Subject/ Prestation is classified into provision in the Labor Code
two: giving the employee such
1. Real Obligation =to give rights. The Labor Code only
2. Personal Obligation provides the employees a 5-
=to do or not to do day service incentive leave.
-However, there is a principle
Real Obligation classified into two: in Labor Code that once a the
benefit has been granted,
1. Specific/ determinate thing then that cannot anymore be
2. Generic/ indeterminate thing taken away. So if the
employer has been already
o Specific/ determinate thing -the given sick leave and vacation
object is identified and separated from a leave, then there is a principle
class of non-diminution of benefits.

o Generic/ indeterminate thing -there is

a law as to how a generic thing be II. Contracts
complied with. The law provides that the -A meeting of the minds, where a person binds
debtor or the obligor cannot deliver an himself with respect to the other to give something
object which is of inferior quality. Neither or to render some service.
can the creditor also demand an object -There has to be agreement
which is of a superior quality.
Elements of Contracts
1) Consent
Personal Obligation -a capacity (to do/not to do) 2) Object
1. Negative =not to do 3) Consideration
2. Positive =to do

Juridical Necessity - non-fulfilment of the obligation will give the creditor -most of the obligations are derived from contract
the right to go to court and
demand for fulfilment or “A contract is the law between contracting parties and must be
damages. complied with good faith”
-It can be enforced by going to The moment the parties have entered into the
court contract, the terms and conditions of the contract
- There are civil obligations becomes the law between them. It means the
parties are obliged to comply with its terms and
4. Juridical Tie/ Vinculum conditions.
-the tie that binds the debtor and creditor
-we relate this to the “sources of the obligation”
Question: Is the LAW inferior of that of CONTRACT?
The 5 Sources of Obligation -NO, because if you enter into a contract,
1) Law the provisions of law become part of the
2) Contract contract.
3) Quasi-Contract (e.g. contract of marriage)

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-there is also a clause which states that,
“the contracting parties may establish
terms and conditions as it may deem
convenient provided they are to contrary
to law, morals, good customs, public
order, public policy.”
-You have the freedom to stipulate or
agree whatever you like. But the contract
may only be binding if the terms and
conditions are not contrary to law,
morals....”
-LAW is therefore superior.
III. Quasi- Contract
-The concept of quasi-contract is based on the
principle that “no one shall unjust himself at the
breach of another”
-There is really no contract at all because there is no
meeting of the minds.
-It is a relation between a debtor and a creditor
which results from a lawful, voluntary and unilateral
act on the part of one person that it results to a
situation where one will enrich himself at the
expense of another.
e.g.
o Negotiurum gesture
o SolutioIndebiti /Undue payment
IV. Delicts/ Crimes
-acts or omissions punished by law
-crime
“a person who is criminally liable is also civilly liable”
Civil liabilities arising from commission of the crime
1) Restitution
2) Reparation
3) Indemnification for damage causes
So if one is convicted by a crime of debt, aside
from imprisonment the court will require
restitution/ reparation/ damages.
V. Quasi-Delicts/ Negligence
-torts and damages
-no commission of crime because when you talk of
crime there is a voluntary act. Here, the source of
obligation arises from the act of negligence.
If asked what are the Two (2) Sources of Obligation:
1) Law
2) Contracts
Because they 3 are already provided for by LAW.
Nov. 7, 2015
We divided our course into Part 1 for Obligations and Part 2 for Contracts.
So if you are to differentiate Obligations from Contracts. Obligation is
broader term than Contract because the latter is just one of the sources of
Obligation.
CONTRACT
-it requires a meeting of the minds between two person
wherein by one binds himself with respect to the other to give
something or to render some service.
-it results to Obligation
-even though it is presumed to be the Law of both parties and
must be complied with good faith, it does not make the Law
inferior to Contract. Because if you have a Contract, all
provisions of the Law relating to the Contract will become part
Terms and Conditions (in a Contract)
-is what considered as the Law between the parties
There are limitations between the power of the party to stipulate. They
are only binding if they are not contrary to Law, Public Policy, Public Order,
Morals and Good Custom.
Quasi-Delict
-it is not intentional
-the reason why a person is liable under quasi delict is when he
is guilty of negligence.
- If such act or omission on the part of a person where
Negligence can be attributed to him and if it results to damage
and injury to another, then he can be held liable.
-under the law it is an act of fault and negligence or it could be
an act or omission which causes damage to another then being
no pre-existing contractual obligations between the parties,
because if there is contractual obligation between the parties,
the source of obligation will be Contract.
-If for example one passenger of a taxi and he suffers an injury
by reason of negligence of the driver. Now there are different
causes of actions available to the passenger. One basis of an
action of a passenger is based on Contract. It can be based on
Contract because there is Contract between a passenger and
the operator if the taxi. So if the passenger who suffered an
injury who’d like to file an action, a case against the operator of
the taxi then his cause of action is breach o contract. This is
because the contract there is between the passenger and the
operator of the taxi.
-But if the taxi which is previously given by the driver bumps
someone as he runs over a pedestrian and thus causing injury,
the liability of the driver there is quasi delict. This is because
there is no contract between the driver and the injured party.
There is no pre-existing contractual obligation but by reason of
fault or act of negligence that caused damage and injury to the
person. So if there is injury sustained by the person
(pedestrian) then he has a cause of action against the driver.
Negligence
-According to Civil Code, it is the omission of that
diligence which is required by the circumstances of a
person, time and place.
-According to Supreme Court, negligence is the
failure to observe for the perfection of difference of
another person, that degree of care, precaution and
vigilance which the circumstances demands and
such other person suffers injury.
-The test of determination so he cannot be
considered guilty of negligence= THE TEST OF
DILIGENCE (prudent in actions)
CHAPTER 2 NATURE AND EFFECTS OF OBLIGATIONS
 Real Obligation- Obligation to give. Object could be a “Specific”
or “Generic” thing.
Art. 1163
-the provision of this article refers to an obligation specific or
determinate thing.
In a case with an obligation with a period, for example, I
obliged myself to deliver my car to X on December 21, 2015.
That is an obligation with a period. But the obligation is not
demandable yet. If I obliged myself to deliver my car today, but
the creditor can only demand the payment on December 21,
2015 since it is an obligation with a period. And so between
now and December 21, how can be the creditor be assured
that that specific thing that I obliged to deliver will really be
delivered because you know, many things can happen between
now and December 21. So to ensure that the interests of
creditor will be protection, there you have Article 1163.
Art 1163 says: “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.”
So in other words while this specific thing is still in the
possession of the debtor, he is already obliged under the law to
take care of that thing. So what is the standard of care that
should be observed, it is ORDINARY DILIGENCE.
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  The diligence of a father in the family is what is referred as
ORDINARY DILIGENCE. The debtor is required to observe such
diligence so that when the moment the period arises or the
condition happens, he will still be able to deliver an object in
the same condition at the time when he obliged himself to
deliver.
 The general rule is that, if the obligation did not say what
degree of diligence is required, the debtor has to observe
ordinary diligence. But there are two exceptions:
1. Unless the law provides
2. Unless the stipulation of the parties
requires.
So it is possible that the law will require “extra-ordinary
diligence” such as that of a contract of a common carrier which
the law expressly requires “extra-ordinary diligence”.
Extra- ordinary diligence – using the utmost diligence of a very
cautious person.
-In terms of Generic thing- the creditor is protected in the
sense that if the debtor is obliged to deliver a car and the car is
destroyed, he can still be compelled to deliver another car
because genus does not perish.
Article 1164
-also refers to deliver a specific thing.
-When you have an obligation which is constituted today, but
the fulfilment of the obligation is on a later date because it is
an obligation with a period or an obligation subject to a
suspensive condition. But when the obligation does not have a
term or does not impose a condition then that is what we call a
Pure Obligation which is demandable immediately by the
creditor.
-If it is an obligation that the fulfilment is on a later day, what
will now happen with respect to the fruits of the thing during
the pendency or prior to the time the obligation to deliver
arises?
The creditor has the rights to the thing from the
time the date to deliver arises. However, he shall
acquire no real right over it until the same is
delivered to him. It means the creditor is entitled to
the fruits of the thing upon the moment to deliver
arises.
-So when will the obligation to deliver arise? And from what
point in time the creditor can legally demand from the debtor
the fulfilment of the obligation?
-It depends on what kind of obligation is
constituted.
-If it is a pure obligation where there is no term and
no condition= immediately demandable.
-If it is an obligation with a period= upon the arrival
of the period.
-If it is an obligation with a condition= upon the
happening of the condition.
-In an obligation without a period, before the delivery, the
creditor has a Personal Right to the fruits.
Personal Right- it is a right he can enforce upon a particular
person. He can enforce that right against the debtor
But if the obligation is subject to a period that a delivery is on
for example Dec. 31, 2014. And if a puppy is born on December
1, 2014, does the creditor has a right over the puppy? The
answer is NO because the law says the creditor has a right to
the fruits of the thing from the time the obligation to deliver it
arises. So in this kind of obligation with a period, when will the
obligation to deliver arise? So on Dec 1, the debtor is the owner
of the puppy. But when subsequent to December 31, let us say
January 1, it is now the creditor. But what kind of right does the
creditor have? It is only a personal right. He can enforce it only
to debtor, which means to say that when debtor sold the
puppy to another person, does the creditor demand that puppy
from Z? No because what the creditor acquired only is a
personal right and he can only it against the debtor. So if the
creditor cannot anymore give him the puppy, the debtor is
liable. Again as what the rule said, the creditor can only acquire
a REAL RIGHT until the same has been delivered to him.
Real Right- enforceable against the whole world. That means
he can enforce that right against anybody.
So delivery of an object results to transfer of
OWNERSHIP. But prior to the delivery, then the right
of the creditor can only be enforced against the
debtor because he only has a personal right. And
prior to the time the obligation to deliver arises, the
creditor has no right.
ObliCon November 9, 2015
We divided the course into obligations and contracts.
The term obligation is broader than contract because contract is just one
of the sources of obligations.
So if you have a contract it results to an obligation.
An obligation does not necessarily require a “meeting of the minds”; the
other sources of obligation which are law, quasi-contract, quasi-delict, and
crime, do not require consent of the parties.
While the contract, a source of obligation, always presupposes a meeting
of the minds. That is why we said that there are 3 essential elements of a
contract and these are:
1. Consent
2. Object
3. Cause or consideration
When we classify contracts according to whether the law has given a
specific name to it, we classify contracts as Nominate Contracts and
Innominate Contracts; so you would notice if you look into the provisions
of the Civil Code there are provisions on specific kinds of contracts. So
what we are discussing here are just the general principles of contracts;
but in other chapters of the civil code, you have contracts which are given
specific names, such as:
 Contract of sale
 Contract of partnership
 Contract of mortgage
 Contract of loan
You have specific names given to certain contracts. So if the law has given
a specific name to a contract, we call this contract NOMINATE CONTRACT.
Now since contract is defined as “the meeting of the minds whereby one
person binds himself to the other to give something or render some
service” it could be possible that the agreement of the parties is not
covered part of a specific contract to which the law has a given a name;
and so these are what we call INNOMINATE CONTRACTS-contract where
the law has not given any specific name. It could be:
1. Du ut des- In the nature of “I get, that you may give” (although
some said this is actually similar to the contract of barter where
the law has given a particular name)
2. Du utfacias- in the nature of “I give that you may do”. So in an
agreement for example, that one is willing to pay a sum of
money for a person to perform a service, so it in the nature of
du ut facia
3. Faciout des- “I do that you may give” let’s say an interpreter,
would enter into a contract that he will agree to interpret and
the other must pay him for his services.
4. Facioutfacias- “I do that you may do”
So these are what are referred to as INNOMINATE CONTRACTS.
Quasi-contracts- it is a juridical relation resulting to a lawful, voluntary,
unilateral act, and which has for its purpose payment for indemnity that
no one shall unjustly enrich himself at the expense of others.
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 -Negotiorumgestium- based on the principle that no one
should unjustly enrich himself at the expense of another
Quasi-delict- there is fault or act of negligence where one did not observe
the diligence required of him, it causes damage or injury to another where
THERE IS NO PRE-EXISTING CONTRACTUAL RELATION bet the parties.
In relation to the nature and effects of an obligation, we said that we have
to classify an obligation to give
1. Specific
2. Generic
Now in relation to an obligation to deliver a specific thing, what is required
of the debtor while he is in possession of the object of the specific thing,
prior to the time that the obligation to deliver arises?
GR: He is to observe ordinary diligence, which is the diligence of a good
father of the family.
EXCEPTIONS: when EXTRAORDINARY DILIGENCE is required by
1. Law
2. Stipulation of a contract
So if there no law, or there is no stipulation by the parties of the contract,
then the standard of care observed is ordinary diligence.
So if you are therefore, drafting a contract and it involves an obligation to
deliver A SPECIFIC THING, and your client is the creditor, how will you fully
protect your creditor?
-then you state in the contract that the debtor is required to observe
extraordinary diligence.
But if you are drafting a contract for the debtor, what would be your
action as far as the degree of diligence?
-do not state anything about the type of diligence required!! Do you get
me? Because if you are only silent as to the degree of diligence then your
client is only required to observe ordinary diligence.
Accession v accessory
For example if you have a parcel of land, what could be considered as an
accession to that parcel of land?
*alluvium- when there is an increase in the area of the land that becomes
part of the principal object.
How about if you have a carrrrrr? HAHAHA what could be an accessory to
a carrrrr?
-that which is for is better use or enjoyment so, what?
*the jack to a car is an accessory
What is the rule on accessions and accessories in relation to obligations to
deliver a specific thing?
*debtor is obliged to deliver the accessions and accessories even if it is not
mentioned. But there is no prohibition for a stipulation to the effect that it
will be excluded; it will only be included if it is not mentioned, if it is silent
about it.
-Let us say for example, that the obligation is to deliver a specific parcel of
land. So X obliged to deliver Y his parcel of land. Now, it turned out that
there is a house standing in that parcel of land, when the obligation now
becomes due, can the debtor now say that in our agreement, it is not
stated that the building will also be part of what he is supposed to give, so
the debtor now, would demolish the building because he wants to make
use of the materials of that building. Is the action of the debtor there
correct? Or should the debtor be compelled to deliver the house also?
-what if the debtor does not want to include the building in the delivery?
What will you advice your client?
*you have to advice you debtor-client that he should exclude the house in
the stipulation.
What are the rules on delivery of a specific thing with respect to who will
be entitled to the fruits during the time when the object is not yet
delivered to the creditor?
*the law says that the creditor shall have the rights to the fruits from the
moment the obligation to deliver arises; however, he shall not acquire any
real right over them until the same is delivered to him.
*he has the right over the fruits not from the time the contract was
constituted, but from the time the obligation to deliver arises.
So when will the obligation to deliver arise? When is the debtor obliged to
deliver?
*depends on the kind of obligation
So what are the kinds of obligation which will be the bases as to when the
obligation to deliver arises?
*pure obligation- no term, no condition, demandable immediately.And
since it is demandable immediately, so the obligation to deliver arises
upon the perfection of the obligation. So if it is a pure obligation, from
that time, the debtor is already obliged to give the fruits to the creditor.
*obligation with a period- upon the arrival of the period
*obligation subject to a condition- upon the happening of the condition
When the obligation deliver arises, what kind of right does the creditor
have, in relation to the fruits?
*Personal right- creditor can only enforce his right against the debtor.
When will the creditor acquire a real right over the fruits?
*when there is already delivery
Real right- results to a right of ownership; therefore, enforceable against
the whole world; not only as against the debtor, but against anybody
Ex: Sam is obliged to give Ben♥on Dec 1, 2014 a particular parcel of land.
So you have here an obligation to deliver a specific thing- a particular
parcel of land. Prior to Dec 1 that was the time when the parties agreed
that Ben has no right over the fruits. From the moment the obligation to
deliver arises, the creditor Ben is already entitled, as a matter of right, to
the fruits, which he can enforce only as against Sam. When the obligation
becomes due on Dec 1, 2014, the debtor may not have yet delivered the
land. so in this case, the delivery was made only on dec 15. So what is the
effect of the delivery of the land, whether the delivery was actual or
constructive? So from dec 15, Ben already becomes the owner of the land
as well as the fruits. And so he has already as of dec 15 acquired a real
right over the land as well as the fruit so he can enforce that right against
anybody. So that if Sam, sold the fruits to a 3rd person , Y, Ben has a better
right because he has already become the owner; and so he can enforce
the same not only against the debtor Sam but also against any other
person.
It says here that the delivery which will transfer ownership could either be
actual or constructive.
 Actual- physical transfer of the object
 Constructive- delivery is effected without physically
transferring the property; physical transfer is implied
o Traditiosimbolica- like how would you deliver a car
without physically giving it- you give the key.
o Traditio longa manu- debtor points to the object
o Traditiobrevimanu- in the case for example of a
contract of sale is entered into but the object of the
sale is already the subject of a contract of lease. So
if you have a contract of lease, it is the opposite of
constitutuumprosesorium. So let us say for example
that one is a tenant, a lessee of a particular parcel of
land. so he is IN POSSESSION of the land as a lessee.
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 That lessee, bought the land from the lessor. So he
is already in possession of the land as lessee, when
he buys that land from the lessor, delivery is by way
of traditiobrevimanu: from the possession of the
land in the concept of a lessee, there is a considered
delivery of that land by the seller as the lessor,
because the lessee now is still in the possession of
the land but now in the concept of an owner. So
that now constitutes as a delivery by contract of
sale.
o Traditioconstitutuumpossesorium- in this case, the
owner of the land who is also in possession of a
parcel of land, sells the the land to a 3rd person. But
when he sold the land to a buyer, he also entered
into a contract of lease with the buyer, this time,
instead of an owner, he now occupies the property
as a lessee. So in the contract of lease there is
already a delivery by way of
constitutuumpossesorium.
o Tradition by execution of legal forms and
solemnities- like, the object of the contract of lease
is a parcel of land and the seller executed a deed of
absolute sale over the parcel of land which is the
subject of the sale. When the seller delivers the
deed of absolute sale to the buyer, that can already
be construes as constructive delivery of the land by
the delivery of the document evidencing the sale.
Next article
So if it is an obligation to deliver a specific thing, then the right on the part
of the creditor is to demand from the debtor that the very object agreed
upon will be delivered. Demandable against the debtor himself only bec
he is the one in possession of that specific object of the obligation.
What if generic thing?
The obligation on the part of the debtor is he can comply with the
obligation by giving any object which belongs to the same class.
And for the purpose of complying with that obligation, under the second
paragraph, the creditor may ask that the obligation be complied with at
the expense of the debtor.
The law provides that in addition to the right to demand specific
performance, failure on the part of the debtor, after the demand has been
made, will hold the debtor liable to pay damages.
So in case of delay, the debtor can be held liable for damges. However for
the debtor to be liable for damges, the delay should be a legal delay.
When is debtor considered to be in legal delay?
-when there is already demand
-mere arrival of the period does not make the debtor in default/delay.
THERE HAS TO BE DEMAND.
-NO DEMAND, NO DELAY.
-demand can be judicial or extra-judicial. When you say judicial you go to
court. When you say extra-judicial you can send a demand letter.
Why is it impt to ascertain whether the object of the obligation is a
specific or generic thing?
-due to the effect of the loss due to a fortuitous event, which is an event,
which cannot be foreseen, or if foreseen, is inevitable.
And so, by the nature of the fortuitous event, the general rule is,
obligation is extinguished and no one can be held liable for loss due to a
fortuitous event. However this rule is applicable only to an obligation to
deliver a specific thing.
But if the obligation is generic, obligation is not extinguished because
genus does not perish.
Under the last paragraph there are 2 exceptions on the general rule that
no one can be held liable for the loss due to a fortuitous event:
1. If debtor delays. Meaning, debtor, despite the demand he
failed to deliver, and subsequent to that demand the object is
destroyed due to a fortuitous event.
2. If the debtor promised to deliver the same thing to 2 or more
persons who do not have the same interest- this shows BAD
FAITH on the part of the debtor.
Remedies of the creditor if the debtor fails to comply with the obligation:
1. Specific performance of the obligation
2. Demand for the rescission or cancellation of the obligation
3. In either case, he can demand for damages.
Effect of a fortuitous event:
1. If object is specific- obligation is extinguished
2. If object is generic- obligation is never extinguished
If there is an obligation with a period that deliver be made on Nov 8 then
on that date, debtor did not deliver, but creditor did not also demand for
delivery, is the debtor in legal delay or ordinary delay?
-only ordinary delay.
However on nov 10, which is after the due date nov 8, the specific car was
destroyed by an earthquake, is the debtor liable?
-no, because he is only in ordinary delay. Apply the general rule.
There is ordinary delay if there is merely a non-performance of the
obligation at a stipulated time.
There is legal delay which amounts to a virtual non-fulfilment of the
obligation when there is a demand.
*interest starts to run from the time demand is made. That is precisely
why it is impt to make a demand. Do not just rely on the demand when
you file the case in court. Because if prior to the filing of the case in court,
you already sent a demand letter and there was still non-compliance of
the obligation, the interest will already start to run from the time you sent
the demand letter. But if you did not send any demand letter, you
immediately filed a case in court which constituted the demand, then the
interest will start to run from the time of the filing of the case.
*for purposes of evidence in court, you send a WRITTEN demand. Because
if it is just a verbal demand, it is difficult to prove.
Latin term for delay is “mora”
We go now to Personal Obligations
a person who fails to do something, the same shall be executed at his cost.
The 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. So these give us the remedies of the creditor if
the debtor fails to do in a personal obligation.
So there is this case cited by your author involving a typewriter.
(basahinnalangsa book parangawa)
What has been poorly done be undone- very common in constructions
Or in a negative personal obligation, like in the obligation NOT TO fence
portion of your land, if the debtor violated such and constructed a fence,
the creditor can demand that the fence be removed at the expense of the
debtor.
Instances where debtor can be considered in delay even when there is no
demand (exceptions to no demand, no delay):
1. When obligation or law expressly so provides
-what lesson do we get out of this? If you are the creditor,
stipulate in the contract that the debtor can be in delay even
without a demand.
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 -For example in a contract of lease: you have a stipulation as to
when the payment is made. “Monthly rental shall be paid by
the debtor on the first day of every month”. If it simply says
“rental is payable on the first day of every month”, when will
the lessee be in default if he does not pay the rental? Only
upon demand.
- if you are the lessor you must stipulate “without need for any
demand”
-other exception is when law expressly provides. Like payment
of taxes. How do we know that there is no need for any
demand? Because the law so provides that if you do not pay on
the said dates then you are already liable to pay surcharge and
interest.
2. When the nature of the circumstances of the obligation it
appears that the designation of the time that the thing is to be
delivered or services is to be rendered is the controlling motive
for the establishment of the contract (time is of the essence)
-wedding dress
-delivery of the materials to be used for the burial of a
deceased.
3. When demand would be useless
-there is already bad faith on the part of debtor
-ex: debtor obliged to give his car to y on dec 9. Prior to the
said date debtor sold his car to another. So on dec 9 he wasn’t
able to deliver the car. The creditor did not demand. Is the
debtor considered in default even if creditor did not demand?
Yes! Because demand is useless because even if you demand a
thousand times, he cannot anymore comply with the
obligation, considering that he has already sold the car to
somebody else.
4. Rule in reciprocal obligations
-like in a contract of sale, both the vendor and vendee have
obligations to perform. The seller has the obligation to deliver
and transfer ownership, the buyer has the obligation to pay the
price. So when do we consider, a party in default in a reciprocal
obligation? The law provides that in such obligation 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 fulfils his
obligation, delay by the other begins. So seller is not in default
if buyer cannot pay or is not ready to pay. Buyer is in default if
seller is already ready to deliver or transfer the ownership and
he makes the demand.
-it is possible that compliance of parties in a reciprocal
obligation is in different dates. It does not necessarily follow
that it is simultaneous. But usually, it is simultaneous. As a rule,
if one delivers, one pays the price. But in some cases, parties
would agree that the performance of the other could be at a
later time and you can only be held in default upon the arrival
of the term or happening of the condition.
-example: contract of sale of a parcel of land: buyer and seller
agreed that seller delivers land immediately and the price will
be paid a year after the delivery of the land. If the seller does
not deliver now or immediately or upon demand of the buyer
he is in delay. If the buyer does not pay the price yet, he cannot
be considered in default because it is still premature to
demand payment considering that the obligation provides that
his obligation to pay will only be a year after the delivery.
Different kinds of delay:
Mora solvendi- delay on the part of debtor despite demand
Mora accipiendi- default on the part of creditor. When? If the creditor
unjustifiably refuses to accept payment or fulfilment of obligation.
Compensatiomorae- both parties are in default; it is as if no one is in
default
NOV 12, 2015
1. Interests for the non-payment of obligation
If it is a mere verbal agreement to pay interest, that is not valid.
The interest stipulation is not valid. Now what we mention that interest
which will be imposable from the time that there is a demand that is made
that is the damages to which the creditor is entitled which is in the form of
interests from the time extrajudicial is made. So that if you did not make
any extrajudicial demand because you immediately filed a case in court
then the interest or damages (in the form of interests) will start only to
run from the time of the filing of the complaint. Therefore, it is more
advantageous if you will make an extrajudicial demand – because from
that time interests will already be imposed.
Now what else would be significant in relation to the performance of an
obligation if the debtor is in default where there is a demand? Let’s say,
that the obligation to deliver is a specific car, the obligation stipulates that
the specific car must be delivered by the debtor on November 1, 2015
(due date). So we have here an obligation with a term, when the
obligation became due on November 1, 2015, the creditor did not make
any demand. On November 5, the car was destroyed due to an earthquake
(fortuitous event). On November 10, there was demand to deliver by the
creditor. What would be the effect of the loss?
Ans. You apply the GR that loss due to a fortuitous event extinguishes the
obligation of the debtor. Debtor is in ordinary delay only, therefore he is
free from any liability because the exception to the general rule only
refers to LEGAL DELAY NOT ORDINARY DELAY – provided for by law.
Now would it make a difference if the demand to deliver was made on
November three? And on November 5, it was destroyed. What is the
effect?
Ans. It is the exception of the GR “loss due to a fortuitous event
extinguishes obligation” – and one of the exceptions is when the debtor is
in legal delay or in default, and subsequent to that demand the specific
thing was destroyed due to the fortuitous event, he can still be held liable
for his obligation because he is in default.
Under what other instance a debtor may be held liable even if the specific
thing promised to be delivered was lost due to a fortuitous event aside
from the case when there is legal delay? Another exception of the general
rule, even if he is not at fault but he is liable.
Ans.When the debtor promised to deliver the same thing to two or more
persons who do not have the same interest – that is already bad faith on
the part of the debtor for having promised as such.
Now let’s go back to the general rule, if there is no demand, there is no
delay. Are there instances where even when there is no demand still the
debtor can be considered to be in default?
Ans. 1. When expressly so declares by law OR stipulated in the
contract
2. Time is of the essence
4. Demand would be useless because it is beyond the debtor’s
power to perform
5. When the obligation is reciprocal: when one does not
perform his obligation , the other does not delay
Now, what about in a reciprocal obligation. When can the party in a
reciprocal obligation be considered in default?
Ans.When one of them is ready to comply with the fulfillment of the
obligation when the other is not.
Is it possible that in a reciprocal obligation, the time of the fulfillment of
the obligations would be different for the parties?
Ans. Yes. If the due dates are different then one of the parties whose
obligation is already due can already made to comply when the other will
have to wait for the time when his obligation becomes due. So it is
possible.
So based on this particular provision, when you draft a contract,where
there is a stipulated time (obligation with a period or subject to a
condition). How will you draft a contract which will benefit the creditor? –
STIPULATION ON THE CONTRACT
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Ans. So you stipulate in the contract the upon the arrival of the due date,
failure of the debtor to comply within the stipulated time would already
put him in default even if no demand was made.
So these are provided for in Art. 1169. We have the general rule and the
exceptions and the case of reciprocal obligation. RULE: No demand, No
delay.
If the debtor is in default because there was a demand and he failed to
pay, what are now the effects?
1. debtor = pay interest + damages
2. debtor may bear the risk of loss and liable for fortuitous event
Another stipulation which can protect the creditor especially in the case of
an obligation to pay a sum of money which is payable on installment –
the creditor can provide in the contract what is known as acceleration
clause.
Acceleration clause – is that which would make all installment due upon
default of one installmente.g there is an obligation to pay a sum of money
amounting 120,000 pesos and the agreement is the 120k is payable
monthly for a period of one year at 10,000 pesos per month. This is a very
common stipulation. If you put acceleration clause to such contract, if in
the event the failure to pay any installment the entire obligation becomes
due and demandable. This one is a valid stipulation – only to ensure that
debtor will comply with the installment. If the debtor will refuse this
clause, then it will create a doubt on the part of the creditor that the
debtor would possibly not comply with the installment when they become
due.
Q: How can I compel the debtor to fulfill his obligation when acceleration
clause has been violated?
A: What are the remedies of the creditor? 1. Specific performance +
damages or if the debtor does not comply despite the demand, you go to
court, then the court may render judgment in your favor = payment of
principal amount + interest + damages 2. Rescission plus damages
Q: What is moraaccipiendi?
A: When the creditor is in defaut.
Q: When can the creditor be considered in default?
A: When the creditor unjustifiably refuses to accept payment despite the
fact the obligation is due (because does not extinguishes the obligation of
the debtor)
Q: What are the remedies of the debtor if there is moraaccipied?
A: The debtor canconsignate the thing in court.
Q: What are the effects of moraaccipiendi?
A: The creditor in this is case shall be liable for damages suffered on the
part of the debtor. He also bears the risk of loss due to fortuitous event.
Take note: it is only moraaccipiendi if the refusal to accept payment is
UNJUSTIFIED because if there is a valid reason for not accepting payment
(ex. If what is expected to deliver to him is a specific car and the debtor
delivered a different car, can the creditor refuse to accept the car? Yes,
the refusal is justified)
So in the case of obligation to pay a sum of money and there is refusal on
the part of the creditor to accept payment without just cause then the
debtor is not liable for the interest from the time of the creditor’s delay.
Like in a contract of loan, the obligation became due on September one,
on sept. 1,the debtor offered to pay the creditor. The creditor refused to
accept the payment for no reason at all. Subsequently, in November, the
creditor now demanded payment, will the debtor pay the interest from
September to the time when payment is made? NO, because it was not his
fault.
Remedy on the part of the debtor:
1. He may (inaudible) to accept the payment so that the debtor will be
free from his obligation because payment of obligation extinguishes
obligation.
Specific grounds for liability for damages
Art. 1170 gives us the grounds for which the debtor can be held liable for
damages
1. Those who are guilty of fraud, negligence, delay, or contravention of
tenor thereof. So as far as the creditor is concerned, the creditor now will
demand payment. Aside from the fulfillment of the obligation, he may also
in addition demand for damages under any of these four circumstances:
a. fraud – how do you differentiate fraud from negligence? Will the award
for damages for these two the same? When you talk about fraud there is
deliberate or intentional evasion of a normal fulfillment of the obligation,
there is bad faith. It is done intentionally. While in case of negligence,
there is just fault or voluntary act or omission on the part of the debtor
which causes damage to another, there is no malice or bad faith.
Danghagraka (ouch naman). Which do you prefer to be called negligent or
fraudulent? someone whispered “beautiful” (HAHA). It is better to be
negligent than fraudulent (mangingilad).
The law also talks about incidental fraud and causal fraud – how do you
differentiate them?
Ans. In article 1170, it talks about incidental fraud – “….those who are in
the performance…” – meaning it is incidental. Example you are obliged to
deliver a LV bag, now what you delivered is a fake LV bag, is that causal
fraud or incidental? It is incidental fraud BECAUSE there was already a
valid contract, and it is the fraud that you committed is in the
performance of the obligation. There is a valid contract of sale to deliver a
LV bag, that means it has to be original, but what you delivered is fake
one.
If in the performance of the obligation, you committed fraud that is
incidental fraud. And so you are liable for damages.
Causal fraud – fraud that is committed which entice the other party to
enter into a contract and that is the reason why if there is fraud that is
committed which has vitiated the consent that makes the contract
voidable. So the fraud there is committed at the exception of the contract.
That is why in the voidable contracts, fraud is one of the vices of consent.
Ex. You want to insure your own life, the insurance company requires
that a person applying for insurance must undergo medical examination,
now you already know that you will not pass the medical examination
because you are suffering from stage 4 cancer, what you did was you
asked somebody else (healthy person) to act for and on behalf of you, and
so you passed the examination and so the application is approved. Now
question, would the insurance company approve the contract if it were
you who was examined? No, there was causal fraud and in that particular
case the effect is – it makes the contract voidable because the consent of
insurance company was vitiated by the fraud.
2. Negligence
4. Delay
5. Contravention of the tenor thereof – like for example, terms set forth
in the contract. For example, in construction contract, there are plans and
specifications and the contractor is required to follow strictly what has
been agreed upon in the plans and specifications. If the contractor
deviates from what is stipulated in the plan, then he can be held liable for
damages. Note: although he has performed the obligations but the
performance was in contravention of the tenor. Another example, when
you construct in the (inaudible words), it was stipulated that there that
there are certain materials should be used however you used different
materials, so can you be held liable? Yes because although you have
performed the obligation, the performance is in still contravention of the
terms and conditions.
What are the different kinds of damages? (in detail in torts an damages)
For easy recall – MENTAL
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1. Moral – mental and physical anguish. When you pray damages for
sleepless nights, wounded feelings. Ex. Breach of promise to marry (you
cannot demand specific performance)
2. Exemplary – corrective or to set an example
4. Nominal – to vindicate a right
5. Temperate – when the exact amount of damages cannot be determined
because there are instances where it is difficult to determine what exactly
is the amount of damages sustained
6. Actual – actual losses and unrealized profit (this can be easily proven)
ex. Breach of intellectual property OR infringement of patent - if there is
infringement of patent that can be sought to losses on the part of the
business or your income would decrease because there is now another
person who has copied your product.
7. Liquidated – damages which is predetermined beforehand by
agreement because it is actually difficult to prove damages. Ex. Stipulation
in construction contract, important stipulation there is when the bldg. will
be completed. So the owner of the bldg. will really be interested to ensure
that the bldg. will be completed on the stipulated date. Now, you advise
the owner of the bldg. to include in the contract to ensure that the
contractor will really complete the bldg. on the stipulated time – “in case
of failure of the contractor to complete the bldg. within the stipulated
time, they will be held liable for damages in the amount of 10,000 pesos
(for example) per day of delay.” No need to prove actual damages because
damages are already agreed upon by the parties.
Art. 1171 – responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.
In other words, even if it is stipulated in the contract that in case of fraud,
the creditor waives his right to file an action in court for future fraud –
NOT VALID = VOID. Reason: to discourage commission of fraud because
remember fraud is intentional (there is malice).
Remember that when we talk about the freedom of the parties to
stipulate, whatever the parties have agreed upon will binding in them
provided it is not contrary to law, so there is a limitation.
But if it is a waiver of an action for past fraud, it is VALID. Reason: acts of
generosity and forgiveness. Ex. They entered into an agreement to settle
the case so that the creditor will not have to go to court, it says “in
consideration of an amount of 15,000 pesos as settlement for the fraud
that has been committed by the debtor, creditor now waives his right to
file action for damages in court.”
Art. 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.
This is why I said that liability for negligence is usually lesser than the
damages awarded due to fraud. This is based on the circumstances 
Fixing of the amount of damages is given to the discretion to the court,
and damages in the case where both parties are negligent then the court
now can mitigate the amount of damages to be awarded.
Q: What about waiver of an action for future negligence?
A: Generally, valid. XPN: when circumstances require extraordinary
diligence. Example, in the contract of common carrier (the law itself
requires this –Civil Code)
Q: Can the contract of common carrier validly provide that despite the
negligence committed by the common carrier the passenger waives his
right to file any action against the transportation company?
TAKE NOTE: in transportation contract, it is a contract of adhesion. What
is this contract of adhesion? It is a take it or leave it basis contract.
Usually, what comes to our mind when we talk about contract is that both
parties will sit down and agree on the terms and conditions of the
contract. BUT in the transportation contract (contract of adhesion), the
one who drafts the contract is the transportation company e.g airline
ticket BUT it is binding. However, it is favorable to the one who drafted it
(natural sya man anggahimo duh). So it is NOT VALID if they provide in the
contract of adhesion that the passenger may waive his right of action for
future negligence. Such provision is not valid, but other provisions are still
binding.
In the contract of adhesion, if there is ambiguity in the contract, the
presumption is in favor of the client and against the company who drafted
the contract.
Gross negligence is tantamount to fraud. It’s liability is the same with the
liability in fraud. Therefore, waiver of an action for future gross negligence
is VOID.
FRAUD NEGLIGENCE
 Deliberate intention to  No such intention
cause damage or injury
 Waiver of liability for  Waiver is allowed
future fraud is VOID
(including gross
negligence)
 Liability cannot be  May be reduced in
mitigated certain cases
That only shows as far as the liability in negligence is concerned, the court
is more lenient with respect to damages due to negligence because this is
unintentional.
What are the kinds of negligence (culpa)?
1. Culpa Contractual – contractual negligence. Negligence in contracts
resulting from breach.Ex. A transportation contract, when you ride a taxi
you already entered a contract with the operator of taxi (even if you may
not have signed a written contract). The contract there is the contract of
common carrier. Now the obligation of the common carrier is to bring you,
the passenger, safely to your destination using the utmost diligence of the
very cautious person and so if you do not reach your destination safely,
then you can hold the common carrier liable under CULPA CONTRACTUAL
BECAUSE THERE IS AN EXISTING CONTRACT BETWEEN THE OPERATOR
AND THE PASSENGER.
If you file a case for culpa contractual, the defendant is not the driver but
is the operator because the contract is between the operator (not the
driver) and passenger.
2. Culpa Aquiliana – Civil negligence. Negligence which by itself is the
source ofobligation between parties not so related before by any pre-
existing contract.Ex. If a taxi runs over a pedestrian thus causing damage
or injury to the pedestrian, there is no pre-existing contract between the
operator and pedestrian, so if you are the pedestrian – you cannot file a
case for breach of contract or culpa contractual because there is no
contract between the pedestrian and the driver. So your basis is culpa
aquiliana, you suffered damages by reason of the negligence committed
by the driver and there is no pre-existing contract between the
pedestrian and the driver.
4. Culpa Criminal – negligence resulting from the commission of the crime.
There are options available to the person injured (either passenger or
pedestrian). You file a case against the driver for criminal offense. In RPC,
there is a provision on criminal negligence. Injured party has remedies:
a. file a criminal case for physical injuries homicide through reckless
imprudence (against the driver)
What is the effect if you file a criminal case against the driver?
Ans. A person who is criminally liable is also civilly liable. If the driver is
convicted, then the passenger or pedestrian as the case may be, will be
entitled to indemnity for damages.
Q: if you avail of culpa criminal against the driver, what happens is the
driver is insolvent?
Ans. Of the driver is insolvent, the operator of the taxi is subsidiary liable.
And that is the reason why even if no case is filed against the owner of the
taxi, the taxi operator would still want to help in defending the driver in
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the criminal offense because he will be solidarily liable if it is proven that
the driver is guilty and driver is insolvent.
FAULT OR NEGLIGENCE of the obligor consists in the omission of the
diligence which is required by the nature of the obligation and
corresponds with the circumstances of the person, time, and place.
If the law or contract does not state the diligence which is to be observed
in the performance of the obligation, the good father of the family shall be
required.
What is a fortuitous event?
Art. 1174 it sets the rule as regards liability for loss due to fortuitous event
except in cases (a) expressly specified by the law, (b) when it is otherwise
declared in the stipulation, (c) when the nature of obligation require the
assumption of risk, NO PERSON SHALL BE RESPONSIBLE OF THOSE EVENTS
WHICH COULD NOT BE FORESEEN OR IF FORESEEN, SUCH ARE INEVITABLE.
So we have mentioned two instances that even if the loss was due to
fortuitous event, the debtor is still held liable and does not extinguish
obligation because it is expressly provided for by the law:
a. when there is delay (legal delay)
b. when he has promised to deliver the same thing to two or more
persons who do not have the same interests
when expressly declared by stipulation or contract:
So what lesson do we get out of this? Again when you draft a contract for
the creditor, and it refers to an obligation to deliver a specific thing, so
how do you fully protect the interest of the creditor?
Ans. It is valid to stipulate in the contract that the debtor will still be held
liable even if the loss is due to a fortuitous event (expressly provided in
the contract) – since the specific thing is destroyed by the fortuitous event
and it cannot be anymore delivered to the creditor, such will be converted
into monetary obligation to pay damages (binding on the part of debtor
because agreed upon)
Nature of the obligation requires the assumption of risk
a. Risk is quite evident
b. Mere difficulty to foresee risk is not sufficient, it must be IMPOSSIBLE to
foresee.
Essential characteristics for the debtor cannot be held liable due fortuitous
event – these should all be PROVED in the court:
a. the cause must be independent of the will of the debtor (act of God), if
the event is an act of man the event should happen independent of the
will of the debtor
b. impossible for him to foresee the event, or if foreseen, it is inevitable
c. the occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner
d. obligor must be free from participation in the aggravation of the injury
to the oblige
Art. 1175 – usurious transactions shall be governed by special laws.
The usury law which sets a limit as to the amount of interest that can be
charged has now been suspende, so there is usury law at present. And so
the parties now are free to agree on the rate of interest that can be
charged, in the later provision you will know that if the interest that is
charged is unconscionable the SC can reduce the amount (based on SC
jurisprudence)
Usury – contracting for or receiving something in excess of the amount
allowed by law for the loan or use of money, goods, chattels, or credits. It
is the exaction of excessive interests. Why? Because the law now gives the
parties the freedom because it can also restrict transactions. However,
there are SC decisions where they regulate or restrict the rate of interest.
Art. 1176 – gives us two presumptions – these are rebuttable
presumptions.
1. The receipt of the principal by the creditor without reservation with
respect to the interest shall give rise to the presumption that the said
interest has been paid.
When you talk about a contract of loan which bears an interest, example.
Principal is 100,000, interest is 10%. So when the obligation becomes due
the debtor is liable to pay 110,000. So if the debtor pays the full amount of
110,000 that results in the extinguishment of obligation. But what
happens if the debtor did not come up with the full amount of 110,000.
Let’s say, he paid only 100,000 – so it depends now on what was stated in
the receipt. If you are the creditor, and you issue there the receipt, it is
stated in your receipt that you receive 100,000 pesos and actually it only
refers to the principle but you did not indicate in the receipt that the
interest has not been paid then the presumption there is if you receive
payment of the principal, then the law presumes that the interest was
already paid.
If the debtor paid only 100,000, you should state in the receipt that as far
as the principal is concerned, it is only 90,000 is received and that 10,000
is the interest. That is how payment will be applied as a rule.
What happens there if you issue a receipt stating that you received an
amount of 100,000 as payment for the principal, it already creates the
presumption that the interest has been paid. But such is a rebuttable
presumption – burden of proof is on the part of the creditor.
Whatever you pay, the interest must be paid first.
2. 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.
Obligation is payable on installment – obligation to pay a sum of money
and it is payable for a period of one year and the amount is 10,000 per
month. If the creditor issues a receipt “received the amount of 10,000
pesos as payment for the march installment” but the January and
February were not yet paid but in the receipt issued by the creditor, there
is no mention of non-payment of Feb and Jan installments. So what is the
effect there if he did not reserve? It is presumed that the Jan and Feb
month installments have already been paid. If receipts are lost for January
and February (part sa debtor then nakit.an ranimopag march), it already
raises the presumption that the previous installments were already paid
BUT REBUTTABLE PRESUMPTION.
So if you are the creditor, if the previous installment were not yet paid
then you have to state in the receipt (kung ganahanang debtor
bayaranang march nyawala pa syakabayadsa January ug February, then
you must state in the receipt that the February and January installments
were not yet paid – you make this RESERVATION)
Nov. 14, 2015
ARTICLE 1174 General rule with respect to fortuitous event and the
exceptions;
So in a contract of lease and 1 of the stipulations in the contract of lease is
that the lessee upon the termination of the contract of lease has to return
the lease property with the same condition that the lessee received it at
the time when the contract of lease started. During the time that the
contract of lease was still effective the part of the property was destroyed
because of a typhoon and so upon the expiration of the term of the lease,
the lessee gave back the property to the lessor and the condition where it
was already damaged by the reason of the typhoon.
Can the lessor demand from the lessee payment for the damages in lieu of
the stipulation in the contract of lease that the debtor is obliged to return
to him the property in the same condition that the lessee received it at the
time the contract of lease was executed?
Answer: as a general rule no liability is incurred if the damage is caused by
a fortuitous event but there are 3 exceptions:
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1st, when the law expressly provides that the debtor is liable to any
fortuitous events if he is guilty of bad faith or is in default.
2nd, when expressly declared by stipulation (for this to apply, it must be
clearly stated in the contract)
3rd, nature of obligation requires assumption of risk
Review the case of Republic vs Luzon Stevedoring Corp.
ARTICLE 1176 - 2 rebuttable presumptions:
1. Receipt of the principal – if the creditor receives the payment
of principal it is presumed that the interest has already been
paid
What should the creditor do so that the presumption will not apply?
- The creditor has to reserve or state in the receipt to the effect
that the interest has not been paid
2. Receipt of a later installment – it presumes that if it creditor
receives the 4thinstallment of a debt, it is understood that the
first 3 installments has already been paid
- The creditor shall also note the reservation
It is the receipt that raises the presumption.
What are now the remedies available to the creditor for the purpose of
satisfying his claim when the debtor does not comply with his obligations
when it becomes due?
1. The creditor can demand for specific performance plus
damages for failure to comply with the demand of obligation
2. Pursue the properties to your debtor (generally by attachment,
exhausting the debtor’s properties)
3. Avail of accionsubrogatoria– you can exercise the rights of your
debtor (debtor is a creditor of another person, you can exercise
his rights to collect what the debtor could collect as a creditor
of another person)
4. AccionPauliana – you can receive – impugn or rescind acts or
contracts done by the debtor to defraud the creditors
(example: you found out at the time you filed the case he has a
parcel of land but when the decision was rendered by the court
favorable to you he does not have anymore lands, so you check
what happened to that land, so if the debtor donated the
property to another the law provides that if a person without
living sufficient property to pay his indebtedness would donate
a property then there is a presumption that such donation is in
fraud of creditor which is but logical because when you donate
you don’t receive anything in exchange why will a person give
away his property when he doesn’t even have sufficient
property to pay his obligations, so the priority of a person is to
pay the obligation rather than donate because you don’t have
an obligation to donate)
- Badges of fraud – indicator that the debtor defrauds the
creditor (instances where it is obvious that it tries to defraud
the creditor)
ARTICLE 1178 – subject to the laws, all rights acquire in virtue of an
obligation are transmissible, if there has been no stipulation to the
contrary
General rule:
- Rights are transmissible
(The heirs of a debtor (in cases where the debtor dies) can only be held
liable to pay up to the extent of the value of the inheritance that is left
with them)
EXP:
1. Law provides otherwise – consent of the other party is
necessary
2. Contract provides otherwise (if it is specifically stated in the
contract that when the debtor dies, the obligation is likewise
extinguished is a valid stipulation)
3. If the obligation is purely personal (example: if the singer dies,
you cannot transfer the obligation to sing in a concert to his
heirs)
November 16, 2015; 2 hours
Kinds of obligations
Pure and conditional obligations
Pure obligation is that which is not subject to a condition there is also no
period. So it is demandable at once. There two kinds of obligations which
are immediately demandable; a pure obligation and an obligation subject
to a resolutory condition. In a pure obligation it says, its performance does
not depend upon a future event or uncertain event or a past event which
unknown to the party. If I oblige myself to give you my car, when can the
creditor demands for the delivery of the car? Immediately, because it is
not subject to a term or any condition.
However, if it is an obligation to pay a sum of money like in a contract of
loan. So ‘X extended a loan of 1 million to Y.’ and the parties did not
provide for a term and no condition. So if we are to apply the general rule
on pure obligation then the amount is considered to be demandable at
once. However, it can be inferred from the nature of the obligation that if
it is a contract of loan and there is no term nor condition, from its very
nature you will note that a period is really intended. You cannot have a
loan and you just borrowed now and the creditor will immediately
demand payment. So under such situation, where the parties in the
agreement simply failed to provide for a term but from the nature of the
obligation it can be inferred that a period has been intended by the parties
because that is really the nature of contract of loan the debtor borrows
money because he would use the money and he should be given time to
pay.
So if there’s no term when is the obligation payable?
In that situation if it can be inferred from the nature of the obligation that
a term was really intended by the parties then the right of the debtor is to
ask the court to fix the period.
Obligation subject to a resolutory condition.
In a conditional obligation the condition can either be resolutory or
suspensive condition. We will differentiate the two. To show another kind
of obligation which is also immediately demandable. Under the second
paragraph which says, every obligation which contains a resolutory
condition shall also shall also be demandable without prejudice to the
effects of the happening of the event. So in that particular provision we
can say that there are two kinds of obligations which are immediately
demandable; the pure obligation where the one whose effectivity or
extinguishment does not depend upon the fulfillment or non-fulfillment of
a condition or upon the expiration of the term therefore it is characterized
that it is immediately demandable, and in the case of an obligation with a
resolutory condition, the happening of the condition extinguishes the
obligation. But once the obligation is constituted it is immediately
demandable.
So what a conditional obligation? So when you talk about a condition, it
can either be a future and uncertain event or it can be a past event
unknown to the parties. But basically when you talk about a condition it
refers to a future or uncertain event. When you say it is uncertain, that
means it may or may not happen as you distinguish condition from a term.
A term will definitely come. Condition is future or uncertain fact or event
upon which an obligation is subordinated or made to depend.
A condition is suspensive when the fulfillment of the condition results in
the acquisition of rights arising out of the obligation. Simply put, a
suspensive condition its happening will give rise to an obligation. Example:
if I oblige myself to give you my car if pass the bar examination. Passing
the bar examination is a future and uncertain event. And so when that
event happens, what is its effect on the obligation? It gives rise to an
obligation. So once you pass the bar exam that gives rise to my obligation
to deliver to you my car.
Resolutory condition: when the fulfillment of the condition results in the
extinguishment of rights arising out of the obligation. If an obligation is
subject to a resolutory condition it is immediately demandable. The
creditor can already compel the debtor to perform the obligation once the
condition is perfected. “I will give you my car for you to use it until you
pass the bar exams.” When is that obligation demandable? I have to
deliver the car but the happening of the condition, the passing of the bar
exam, what is its effect on the obligation? It extinguishes the obligation.
When we say it extinguishes its obligation, it creates now an obligation on
the part of the creditor to return the car.
Our professor then told us “so that you can easily remember the
difference between suspensive and resolutory condition, the happening of
a suspensive condition gives birth to an obligation, while the happening of
a resolutory condition kills an obligation.”
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Then we have potestative condition, when the fulfillment of the condition
depends upon the will of a party to the obligation.
Casual condition, when the fulfillment of the condition depends upon
chance and/or upon the will of a third person. I will give you my car if you
win in the lotto.
Mixed, when the fulfillment of the condition depends partly upon the will
of the party to the obligation and partly upon chance and/or the will of a
third person. ‘I will give you 50k if I am able to sell my land’ – according to
sc, not potestative on the part of the debtor.
Possible, when the condition is capable of realization according to nature,
law, public policy or good customs.
Impossible, when the condition is not capable of realization according to
nature, law, public policy or good customs. Disregard the impossible
condition.
Positive, when the condition involves the performance of an act. ‘to sing in
a concert, I will give you 1 million’
Negative, when the condition involves the omission of an act. ‘I will give
you 1 million if you willnt go to the casino’
Divisible, when the condition is susceptible of partial realization.
Indivisible, when the condition is not susceptible of partial realization.
Conjuctive, when there are several conditions all of which must be
realized.
Alternative, when there are several conditions but only one must be
realized.
Express, when the condition is stated
Implied, tacitly provided.
What is the effect if the obligation provides ‘ I oblige myself 1 million when
my means permit me to do so’ ‘ payable when able’ is that a valid
obligation? You will note that we have another provision which talks about
an obligation where the happening of the condition is made dependent on
the will of the debtor then the obligation is invalid./void. Is this considered
as a void obligation. Under the law which says, if the nature of the
obligation is such that the debtor promises to pay when his means permit
him to so that is considered not as a conditional obligation but an
obligation with a period or term. So if it is considered an obligation with a
term/period, when is the obligation due? ‘x promise to give y his land
when he dies’ this is obligation with a period because death is certain.
The law provides a remedy in an obligation where the debtor binds
himself to pay when his means permit him to do so. When is the
obligation payable? Subject to the provisions of article 1197. The nature
of the obligation it can be inferred that a period is intended by the parties
then you go to the court and ask to fix the period. If the court has already
fixed the period the parties cannot change it.
Suspensive; the date when it was constituted and the date when the
condition happened. In this particular case, what is acquired by creditor
upon the constitution of the obligation is only a mere hope or expectancy.
If the suspensive condition did not take place it is as if there was no
obligation at all.
Resolutory, it also refers to a future and uncertain event upon the
happening or fulfillment of which, rights which have already been
acquired by virtue of an obligation are extinguished or lost. An obligation
subject to a resolutory condition is immediately demandable after its
establishment or constitution.
Condition which refers to a past event unknown to the parties, the event
must not be known to the parties ‘I oblige myself to sell to you my land,
which is the subject to a litigation, if I win the case. What happens if at the
time I made that obligation there was already a decision by the court and
you would not immediately know if the judge already made a decision.
The case was already decided but the parties were not yet aware at the
time when the contract was entered into.
Potestative condition, when the fulfillment of the condition is dependent
upon the will of the debtor, the conditional obligation is void. But if it is
dependent upon the will of the creditor, it is valid.
One case where it involves the sale of a parcel of land. The owner of the
land which is being rented out to X. the owner decided to sell that land
which was being occupied by X. the owner sold that land to Y (buyer). The
agreement was, Y will pay the balance of the selling price the moment the
debtor will vacate the land. And it was imposed as an obligation on the
part of the seller to eject the tenant. The buyer Y had to undertake efforts
to eject the tenant. And only upon ejectment of the tenant will the
balance become due. Is that contract valid considering that the ejectment
of the tenant was made to depend on the efforts of the buyer and only
after the ejectment that the balance will be due. So sc said, that particular
obligation is valid. It is not purely dependent on the will of the
debtor(buyer, in an obligation to pay the balance) because even if the
buyer does not undertake steps to eject the tenant, the tenant may
voluntarily vacate the property. Applying the provision on potestative
condition, the question now is the condition of ejecting the tenant
potestative on the will of the debtor. The obligation then provided that
the buyer who is the obligor in the obligation to pay will pay only the
balance if he is able to eject the tenants. So that is why it was contended
that it was potestative dependent on the will of the debtor(buyer). Sc said,
it is not purely dependent on the will of the buyer because it is not only
the buyer can eject the tenant; one the tenant may voluntarily vacate the
property that would already make the buyer’s obligation to pay due. Or
the seller himself can file an action to eject the tenant because he is still
the owner of the property.
Purely potestative condition, it is one whose fulfillment depends
exclusively upon the will of either one of the parties to the obligation.
What are the effects of the potestative conditions? If the happening of the
condition depends upon the will of the creditor, the obligation is valid. if it
depends upon the will of the debtor, the obligation is void.
That provision which says if the happening of the condition is made
dependent on the will of the debtor only applies if the condition is
suspensive. Because if the condition is resolutory, remember the
obligation is immediately demandable. If it is resolutory the obligation is
not void even if it depends upon the will of the debtor.
In a case where a contract was entered into by the sugar company and the
hacienda. The conditions were the sugar company will do the milling while
the hacienda will construct a road. The hacienda owner did not construct a
road when the sugar central has nothing to use in getting the sugar cane.
Is the sugar central liable under such situation? No, the hacienda owner is
considered to be liable despite the fact that there is nonfulfillment of the
obligation because it was the hacienda owner who voluntarily prevented
the fulfillment of the obligation. There is constructive fulfillment of the
condition. One author explain in this manner, the obligation is X is obliged
to give Y 1 million pesos if he passes the bar exam. On the day of the exam
the debtor locked Y in his room. So Y was not able to take the bar exam so
the condition cannot be fulfilled. Is the debtor liable to give the 1 million?
Yes, there is constructive fulfillment of the obligation because it was the
debtor who voluntarily prevented the fulfillment of the obligation. In
effect the debtor is to be punished for his bad faith. So that is a
constructive fulfillment of a suspensive condition. Not applicable to
resolutory conditions.
In an Obligations subject to suspensive condition you have the date of the
perfection of the obligation up to the time when the suspensive condition
happens, it give rise to the obligation. This provision now tells us what
would be the effect of that happening of the condition. Will it gives rise to
the condition upon its happening the law now provides what we call as the
retroactive effect of the happening of the suspensive condition. Says that
the effects of a conditional obligation to give once the condition has been
fulfilled, it shall retroact to the date of the constitution of the obligation.
Nevertheless, when the obligation imposes reciprocal prestations upon
the parties, the fruits and interest 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 interest received,
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unless from the nature and circumstances of the obligation it should be contract of sale, B can already enjoin the sale. If it is a real property , in
inferred that the intention of the person constituting the same was order the agreement of A to B will bind the whole world, B can have the
different. In obligations to do and not to do, the courts shall determine, in agreement annotated in the registry of property.
each case, the retroactive effect of the condition that has been complied
with. (art. 1187) The debtor may recover what during the same time he has paid by
mistake in case of a suspensive condition. The suspensive condition is to
An obligation subject to a suspensive condition which was constituted in pass the bar exams. If A thought that in 2013 B has already passed the bar
2012. A oblige himself to give B his parcel of land if B passes the bar exams when in fact he did not take the exam. What right does the debtor
exams. B here passed the Bar exam in 2014. So the condition was fulfilled have? A can get the land back because that is considered as payment by
in 2014. It now gives rise to an obligation of A to deliver his parcel of land mistake or solutioindebiti.
but the law says that the effects of a conditional obligation to give, once
the obligation has been fulfilled it retroacts to the date of the constitution To summarize, during the pendency of the condition the creditor has only
of the obligation. Question. As of what date did B become the owner of a mere hope or expectancy. This hope or expectancy is protected by law.
the parcel of land? In 2012 because its effects retroacts to the date of the This is for the protection and preservation of his right.
constitution of the obligation. So if in 2013, B sold that specific land to X is
the sale valid? yes, because his ownership retroacted to 2012. If the (phil long distance telephone vsjeturian) they may take such action as may
obligation is unilateral, the debtor shall appropriate the fruits and interest be appropriate to preserve their conditional right and if the promisor
received now talking about fruits and interest in this particular case when should voluntarily prevent the fulfillment of the condition the same shall
you say it retroacts to the date of the constitution, who owns the fruits be fulfilled, under the constructive fulfillment of the obligation. But if its
and interest within the period of 2012-2014? It is B. under the nature and obligation is one which is generic to pay a sum of money and such
effects of the obligation, the creditor is entitled to the fruits from the obligation cannot extinguish by loss or inability to raise the funds.
moment the obligation to deliver arises but he shall have no real right over
it until the same has been delivered to him. If the case of a conditional Retroactivity effect, so the condition which is imposed is only an
obligation the law says it retroacts to the date of the constitution of the accidental not an essential element of the obligation. Consequently, once
obligation in this case if you have a unilateral obligation where only A is the event which constitutes the obligation is fulfilled thus resulting in its
obliged to give to B, the debtor shall appropriate the fruits receive. Who is effectivity of the obligation its effect must logically retroact to the
the debtor? It is A, as far as the fruits are concerned, the fruits would moment when the essential elements which gave birth to the obligation
belong to the debtor in a unilateral obligation. Although in effect he and not the moment when the accidental element was fulfilled.
became an owner retroacting to 2012 but as far as the fruits are
Art. 1189 gives us the effect during the pendency of the suspensive
concerned, he is entitled to the fruits only as of 2014.
condition.
How can B protect his interest? because it could be possible while he has
Take note in this case we talk about two point in time; the date when the
not passed the bar exam A might sell the property. If A sells the property
obligation was constituted and to the time when the condition happens.
to a buyer who had no knowledge at all as to the obligation of A and B to
Within this period what can possibly happen to the specific object during
deliver the land, that buyer will have a better right over B because he
the pendency of the suspensive condition.
acquired the land in good faith. If B really wants to protect his interest, the
contract should be in writing and he will have it annotated in the registry
Obligation to deliver a Fault of the debtor Not the fault of the
of property. If this agreement or encumbrance is annotated in the registry
specific thing debtor (Fortuitous
of property it is binding against anybody. In other words if there is a buyer event, other person
to that property from A, the right of that buyer is dependent on the etc.)
obligation of A to B. Loss ( if it perishes, Debtor pays the extinguished
goes out of commerce, damages
What is the status between the periods of 2012-2014 if you talk about a existence is unknown,
reciprocal obligation? (a obliged himself to sell to B his parcel of land if B or cannot be
recovered)
passes the Bar exam, contract of sale, A is the seller B is the buyer but
deterioration Creditor may demand Impairment is to be
subject to a suspensive condition) if b passes the bar exams when will the
specific performance borne by the creditor
right of B to buy the land arise? From 2014 and the sale will now retroact plus damages or
to 2012. What are now the obligations? The seller is to deliver and the rescission of the
buyer is to pay the price. In reciprocal obligation it says, obligation and its
fulfillment, with
What about in a reciprocal obligation, reciprocal prestations upon the indemnity for
parties, the fruits and interest during the pendency of the condition shall damages in either
case
be deemed to have been mutually compensated. What does that mean?
improvements The debtor shall have Inure to the benefit of
As far as the fruits are concerned, if it retroact to the time of the
no other right than the creditor
constitution of the obligation B is entitled to the fruits and A is entitled to that granted to the
the interest of the price. When will B pay the price of the land? Only upon usufructuary
the happening of the condition but became the owner of the land in
2012. In effect, when was the sale supposedly consummated? 2012. So
you are supposed to pay in2012 and the payment was that on 2014 so the Usufructuary – he is entitled to remove the improvements for as long as it
money that should been given to A was not paid yet, that money would does not cause damage to the main object.
have earned interest. During the pendency of the period, the land may
also have fruit to it. The law says they don’t anymore have to account for
the interest nor the fruits because they are deemed to have compensated
with each other. For purposes of convenience and practicality of the Nov 28 2015; 1 hour
parties, there is no need to compute for they are deemed to have
A, B and C are solidary debtors bound themselves to pay X and Y who are
compensated with each other.
also solidary creditor 90k. As far as debtors are concerned, anyone of
Art. 1188. The creditor may, before the fulfillment of the condition, bring them can be required to pay the full amount. If one of the debtors ,C, who
the appropriate actions for the preservation of his right. In the above case, paid the obligation then he is entitled for reimbursement from A and B. of
where the obligation is subject to a suspensive condition, the obligation course the payment should be made at the time when the obligation is
was constituted in 2012, B will have to wait until he passes the bar exams. already due and demandable. So if he paid the obligation because there
In the mean time A is still the owner of the property. Now what is the was a demand and the obligation was already due, how much
protection on the part of B so that when the condition is fulfilled the land reimbursement can he be entitled to receive from A and B? he will be
is still there. He is protected under the law. Like he can bring appropriate entitled to receive reimbursement of 30k, because that I the share of each
actions for the preservation of his right. Example, if A would enter a one, plus interest from the time he made the payment up to the time he is

12 | P a g e
reimbursed by the solidary debtors. Let say it was B who paid the 90k, A is
liable to pay his share of 30k and so is C. what is the nature of the
relationship in the action for reimbursement? The treatment here of A and
C is that they are joint debtors in the right of B for reimbursement. Even if
the obligation is solidary, as far as the original obligation is concerned,
that was already extinguished by payment. In the action for
reimbursement by the paying debtor, the co debtors are treated as joint
debtors. What is the consequence of that? When B demands
reimbursement from A, he can only demand the share of A and he cannot
say ‘since we are solidary debtors, I will demand from you payment of
60k’. he can only demand reimbursement for the share of his co debtor
not the full amount.
In another provision, it talks about the effect of insolvency. In case of
insolvency of one of the solidary debtors, what would now be its effect on
the obligation? The solvent debtors are to share the amount which was
supposed to be payable by the insolvent debtor proportionate to their
respective shares. For example(same example sa first), the obligation is
still not paid and A became insolvent. As far as the creditors are
concerned, that is not a problem to them if any of the debtors become
insolvent because they can still demand full payment from any one of the
solidary debtors. But the question now is, if B and C are solvent they
supposed to pay the 90k so the share of A which is supposed to be 30k will
now be divided between B and C. that is why B and C will now be liable for
45k each, their share of 30k and the share of A will be divided between
them. How do we illustrate when we say proportionate? If the respective
obligations of the solidary debtors vary in amount which is possible, for
example, A is 40k, B is 40k and C is 20k for a total of 100k. if A becomes
insolvent, the 100k will now just be shared with B and C. 40k over 60k
times the 100k this is for B. 20k over 60k times the 100k this is for C.
There is also another term created to a solidary obligation. You have what
we call as a surety. What is the difference between a surety and a solidary
debtor? A surety is considered as solidary guarantor. He is not just an
ordinary guarantor but he is a solidary guarantor. For example, D owes C
100k with G as the guarantor(ordinary). When would the guarantor be
held liable to pay? Only in case of failure of the debtor to pay. So the
creditor can run after the guarantor. What if G is not an ordinary
guarantor but a surety or solidary guarantor, he signed the contract of
loan as a surety? Take note if you are an ordinary guarantor the liability is
only subsidiary for the obligation of the principal debtor. That means to
say he can only be held liable in the event of failure of the principal debtor
to pay. Now if you are as a surety, you are not subsidiarily liable but
solidarily liable. What is the nature of your liability if you say solidary? The
creditor may opt to collect from you even if without pursuing the debtor
because you have assumed the liability as a solidary guarantor.
Difference between a surety and a solidary debtor. D and G(surety) are
solidary debtors of C for 100k. a surety is not the principal debtor but
because his liability is the same as that of a solidary debtor the creditor
can demand payment from him. If it was the surety who was required to
pay because the creditor demanded payment from him, what would be
the right of the surety? He can demand for a reimbursement from the
principal debtor. How much reimbursement may he be entitled to? The
full amount of 100k because he is not a principal debtor but a solidary
guanrantor. D and G are the solidary debtors, it was G who paid the 100k
to C. what will now be the right of G? he is entitled to reimbursement
from D but how much? Only 50k because he himself is a principal debtor.
It is possible that the creditor will grant an extension of time to the debtor
within which the obligation will be paid. For example, the obligation is
payable in 2016. When the creditor granted an extension of time to the
debtor, what would be the effect on the liability of G who is the surety?
His obligation is extinguished if he did not give his consent to the
extension. In other words, in order to bind the surety for any extension
granted to the principal debtor you should get the consent of the surety. D
and G are solidary debtors. The obligation is payable in 2015. Now let us
assume that the creditor granted D and extension for his share. So what
will now be the effect of such extension? It can benefit G, the solidary
debtor, even without his consent because that is actually beneficial to a
solidary debtor. Since they are principal debtors, if there is an extension of
time that is granted it does not release the solidary debtors from liability.
What happens if despite the extension of time, C demands payment from
G how much will G be liable? It will be 100k minus the share of D because
he has extended the term for the payment of D. now upon maturity in
2015 can C again demand payment of the balance from G? yes because he
is a solidary debtor. However, since he had already paid his share of 50k
and he is now paying the share of D he can now demand for a
reimbursement from D.
Art. 1214. If there are several solidary creditor, the right of a solidary
creditor is that he can demand full payment of the obligation from any of
the solidary debtors. To whom should a solidary debtor pay? He can pay
any of the creditor. But if there is a demand already made by one of the
solidary creditors then payment should be made to that solidary creditor
who has already made a demand. If both of them made a demand but at
different times then payment should be made to the one who first
demanded for payment. If they demanded payment ate the same time?
Then the debtor may choose whom payment shall be made.
Modes of extinguishing an obligation Novation compensation merger/
confusion condonation
In relation to a solidary obligation, what would be the effect of novation?
Change in a principal object of the obligation, change in the person of the
debtor or change in the person of the creditor, for as long as there is
agreement by the parties that the original obligation will be extinguished
and now a new obligation is created. For example, X owes Y and Z
1million and the creditors are solidary. The object is 1 million, it could be
possible that one of them entered into an agreement with X. so X and Y
agreed that instead of 1million X will construct the house of Y. so there is a
change on the object of the obligation. The first obligation (1million) is
extinguished and a new obligation(construct the house of Y) is created.
What is now the effect of the novation? What will now be the right of Z?
as far as Z is concerned, there is no receivable here because the obligation
has already been extinguished but it benefitted only Y so Y has to
reimburse Z for Z’s share which is 500k. Y cannot prejudice his co creditor,
it is as if why collected the payment.
Compensation, when two persons are debtors and creditors to each other,
reciprocal obligation, and the obligation is extinguished in their concurrent
amount. Like if I owe you 100k and you also owe me 100k so what will
now be the effect? In layman’s language we say ‘quits nata’. If all the
requisites for compensation are present; the obligation are of the same
object, both obligations are already due and demandable, the amount is
already liquidated, there is no claim by any third person, then legal
compensation can take place. Legal compensation takes place by
operation of law. For example, X owes Y and Z 1million(first obligation)
and the creditors are solidary and Y owes X 1million (second obligation). In
the second obligation X is the creditor while in the first obligation he is the
debtor. In this case, toal compensation takes place. Total because the
amounts are the same. So what is the effect? Both obligations are
extinguished. So we go now to the solidary creditors, what will now be the
effect? Y will have to give Z his share of 500k because it was Y who
benefitted by the compensation. Compensation may also be partial if the
amounts are not the same.
November 21, 2015
(Inaudible choshahahabitawwakokasabotsa first
naiyanggipangyawyawhuhuhuhu)
 resolutory condition – if the obligation is a resolutory condition
it is immediately demandable
 suspensivecondition - the moment the condition is fulfilled its
retroactivity retroacts to the date of the constitution of the
obligation, it is as if the obligation then the creditor is deemed
to have become the owner as of the date the obligation was
constituted
- however the law specifically provides that if we talk about
of a unilateral obligation then the fruits shall belong to
the debtor.
- In the case of a reciprocal obligation then the fruits and
interest are deemed to compensate with each other, so
to the debtor and creditor will not have to account even if
it is a reciprocal obligation they could not have to account
for the fruits and interest for purposes of convenience
and practicality, the law says they just deemed to
compensate each other.
13 | P a g e
So the date of the constitution of the obligation made with a period may
be paid before the condition is fulfilled and so the last article (ARTICLE
1189).
What would be the effect if this applies to a situation where there is an
obligation to deliver a specific thing and the obligation is subject to a
suspensive condition? And so within the time from the date of the
constitution of the obligation to the time of the happening of the
condition Article 1189 talks about the;
- in case oflost of the specific thing (you will have to
determine whether the lost was without the fault of the
debtor or it is due to the fault of the debtor)
if the lost of the specific thing was without the fault of the
debtor so you apply the rule that no one can be held
liable for loss due to fortuitous event and so the
obligation is extinguished
the law also defines when is a thing considered to be lost,
it is considered lost when it perishes, it goes out of
commerce or when its existence is unknown or can no
longer be recovered.
If the lost is due to the fault of the debtor then he would
be liable for the damages, he has to pay for damages
because of his bad faith
- in case of deterioration (you also differentiate whether
the deterioration was without the fault of the debtor or if
it was due to the fault of the debtor)
the law says if the deterioration was without the fault of
the debtor then the impairment is to be borne by the
creditor in other words the debtor will just have to deliver
that specific thing in its deteriorated state and he is not
liable for such deterioration
if it was due to the fault of the debtor, the creditor has
two options; the creditor can ask for rescission or he can
demand for specific performance in both cases with
damages
- in the case of improvement (the improvement on the
specific thing could be by nature or by time)
so there was no expense to the part of debtor while the
object was with him but there are improvements, the law
says since there was no expense so the improvement
shall inure to the benefit of the creditor
the other situation is the improvement were made at the
expense of the debtor, then the debtor shall have no
other right than that granted to a usufructuary.
When you talk about the right of usufruct, the usufructuary is entitled to
use of the thing. In relation to the improvements which are introduced by
the usufructuary the law says that expenses introduced at the expense of
the debtor he can remove the improvement if it does not cause damage to
the main object. But if the removal of the improvement would cause
damage to the object then the debtor cannot remove the improvement.
Basically this is just patterned after the basic principles that we have
discussed in relation to an obligation to deliver a specific thing.
Article 1189, notice that this deals with an obligation that subject to a
suspensive condition.
In article 1190 it deals with an obligation subject to a resolutory condition.
An obligation subject to a resolutory condition as we said the obligation is
demandable at once but the happening of the condition what it will result
to the extinguishment of the obligation.
What is the consequence if the obligation is extinguished?
The creditor in the original obligation subject to a suspensive condition
will now have the obligation to return what he received. Example: you
have an obligation where it says I’ll deliver to you my car for you to use it
until you become a lawyer. There is again a period from the time when I
delivered to you my car and the time when you passed the bar exam.
When you now become a lawyer, what is the effect of the obligation? –
you have to return now the car and so when you have to return the car
what is expected of you when the car is still with you? – so you are in the
original obligation subject to a resolutory condition, you were the creditor
and since it is subject to a resolutory condition you can demand
immediate performance to deliver to you the car. The moment the
resolutory condition happened you now become the debtor of the
obligation to return, while the car is with you what can possibly happened
to the car?
- It may be lost
- Deterioration
- Or improvement
Article 1190 says that the rules provided in article 1189 will likewise apply
to obligation subject to a resolutory condition however the person is
previously the creditor will now become the debtor in the obligation to
return.
Article 1191 talks about the remedy of rescission, it talked about a
reciprocal obligation. What is a reciprocal obligation?
- It is an obligation when the 2 parties are debtors and
creditors to each other, the obligations of the parties
arise from the same cause and both have obligation.
Example: contract of sale (the seller and the buyer, both
are debtor and creditor, the seller’s obligation is to
deliver and to transfer ownership. The obligation of the
buyer is that he is expected to pay the price.
What will now be the remedies in case of non-fulfillment of the obligation
in a reciprocal obligation?
The seller has two options;
1. He can demand for specific performance plus damages
2. He can ask for the cancellation of the sale or rescission plus
damages
However, we have to take note if one demands for rescission the party
who demands for rescission should be ready to return what he has
received by virtue of the contract and the law further says that since this is
an option given to the injured party. (who is the injured party? It is the
party who is ready to comply what is expected of him when the other is
not ready to fulfill his obligation despite demand) assuming that the
injured party initially availed the remedy of specific performance, you file
an action in court demanding the specific performance, however, when he
filed that action for specific performance he found out (let say that the
buyer is the one who filed a case in court demanding for the delivery and
transfer of ownership) that the seller cannot anymore deliver and transfer
ownership because he already sold the property to a third person who
acted in good faith. Specific performance here is no longer possible so the
law now says that if after demanding for specific performance but it
becomes impossible then the injured party makes now resort to
rescission. And in this case the third person who acted in good faith is
protected by law. Do not confuse this of consent of rescission where
authorities really said that the more appropriate term is resolution than
rescission because we also have the concept of remedy of rescission in the
case of what we call as effective contracts that rescissible contracts. This is
different, the action for rescission under the defective contract does not
refer to a situation where a party to the contract fails to comply in a
reciprocal obligation, in a rescissible contract this is a remedy availed of
when there is adequacy of consideration or in the case where the contract
is entered into in fraud of creditors. The remedy of rescission is availed of
when the contract is entered into defraud of creditors.
The rescission under article 1191 refers to a reciprocal contract
or obligation. Under rescissible contracts the contract there can be
rescinded because of inadequacy of consideration or what the law refers
to as lesion or the contract was entered into to defraud the creditor.
Next chapter
Obligation with a period
How do we differentiate a period from a condition?
- If you talk about condition it is a future and uncertain. It
may or may not happen.
- If you talk about a period or a term it is future and
certain. It will certainly come but in certain cases we don’t
know when will it happen but it will definitely come.
Example: death
There are instances where the obligation does not specifically state when
the obligation is due, if the obligation does not specify when it becomes
due and from the nature and circumstances of the obligation it can be
inferred that a period is intended by the parties. In a contract of loan for
example it can be inferred from the nature of the contract that a period is
intended by the parties, you cannot say that the obligation is pure and
therefore demandable immediately because it is not inconsonance with
the nature of a contract of loan.
So what is the remedy? Article 1197, if from the circumstances and nature
of the obligation it can be inferred that a period is intended by the parties
then the parties can go to court and ask the court for fixing the period.
If the debtor obliges himself to pay when his means permit him to do so,
how do you classify that obligation? Is that an obligation with a condition
or period?
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 - The law specifically stated that kind of obligation with a
term or period. Since the term has not been fixed then
the same remedy, you go to court and ask the court and
fixed the period and once the period is fixed it cannot
anymore change by the parties.
Three instances that the court fix the period
1. If the obligation does not fix a period, but from its nature and
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
3. If the debtor binds himself to pay when his means permit him
to do so
For whose benefit is the period constituted?
- The law presumes that the period is fixed to benefit both
debtor and creditor.
Is it possible that the period constituted can only benefit a party?
- It can be inferred from the obligation itself, you will be
able to know whether the period will benefit only one
party, like if you have a contract of loan with a term but it
does not bear interest. For whose benefit is the term
constituted? It is for the debtor.
- Although the law presumes that the term is to benefit
both debtor and creditor however, the parties may
stipulate that the period will only benefit one party.
- debtor, is the obligation also void?
You have a suspensive term and also a resolutory term.
If I say I obliged myself to give you my car on dec312015 so that is an
obligation to deliver a specific car with a term. So if I made or the
obligation is constituted today and the term is dec31 so there is a
possibility that it can be lost, deteriorate or improve of that specific thing
and so you apply the same rules.
Resolutory term – if an obligation is subject to this term it is also
demandable immediately like I obliged myself to give you a monthly
allowance of 10k until the end of the year, so that obligation is
immediately demandable but upon the arrival of the term the obligation is
extinguished.
The law also provides specific instances when the debtor loses, so the
general rule is the period is constituted to benefit both debtor and
creditor. But there are instances that the debtor loses the right to make
use of the period.
In the case of an obligation subject to a condition, we have that provision
that if an obligation is subject to a suspensive condition, once the
condition is fulfilled, the effectivity of such obligation retroacts to the date
when the obligation was constituted. Is this also applicable in an obligation
with a period?
So when you talk about an obligation – In 2012, X obliged himself to give
his specific car to Y if X passes the bar exam in 2015. The passing of the bar
exam happened in 2015, as of what date the creditor becomes the owner
of the car?
Ans. The moment the creditor passes the bar exam is already considered
to have become the owner as of 2012.
What happens if the obligation is – in 2012, X obliged himself to give his
car to Y in 2015, so in 2015 which is the arrival of the period, what would
be the effect of the condition? What gives birth to the obligation?
Ans. The obligation arises upon the arrival of the period. The birth of
obligation is on 2015. No retroactive effect for obligation with a period.
When we were talking about an obligation subject to a condition, there is
that provision which says “If the happening of the condition is dependent
purely on the will of the debtor, the obligation is void”, now in the case of
an obligation with a term, if the term is dependent upon the will of the
Ans. Yes it is valid. It is only the term not the fulfillment of the obligation.
When can the creditor demand if the period is dependent upon the will of
the debtor?Ex. The debtor has obliged himself to pay the creditor little by
little, when can the debtor demand?
Ans. When the period is dependent upon the will of the debtor, the court
may fix the period. And once the period is already fixed, then the creditor
will know when the obligation can be demanded which is upon the arrival
of the period.
In what instances should the creditor go to court to fix the period?
Ans. 1. Term is dependent upon the will of the debtor

ARTICLE 1198 Instances where the debtor loses the right to make use of 2. Nothing is mentioned about the period but it can be inferred
the period: from the nature of the obligation that a period was intended
1. When after the obligation has been contracted, he becomes
insolvent, unless he gives a guaranty or security for the debt (it NOTE: ONCE DATE IS FIXED, PARTIES COULD NO LONGER CHANGE IT
is not necessary that he is judicially declared insolvent)
2. When he does not furnish to the creditor the guaranties or For whose benefit is the period constituted?
securities which he has promised
3. When by his own acts he has impaired said guaranties or
Ans. It is for benefit of both creditor and debtor unless otherwise stated.
securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives As far as the debtor is concerned, the debtor may use to comply with the
new ones equally satisfactory obligation before the due date because otherwise, the demand is
4. When the debtor violates any undertaking, in consideration of considered to be premature, he cannot be compelled to perform the
which the creditor agreed to the period obligation.
5. When the debtor attempts to abscond
Are there instances when the creditor can demand for the fulfillment of
the obligation even if the period has not yet lapsed?
NOV23, 2015
Ans. Yes, under five circumstances.
When we talk about a period there is already an existing obligation, so the
1. When after the obligation has been contracted, debtor becomes
arrival of the period does not determine the effectivity of the obligation
insolvent unless he gives a guaranty or security for debt;
because there is already a pre-existing obligation. It merely fixes the time
of the fulfillment of the obligation unlike in condition, the obligation arises
2. When he does not furnish to the creditor the guaranties or securities
or extinguished.
which he has promised
An obligation with a period – there is already an existing obligation, it only
4. When by his own acts he has impaired said guaranties or securities after
fixes the date of its effectivity.
their establishment, and when through a fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory;
Obligation with a condition – gives rise or extinguishes an obligation.

5. When the debtor violates any undertaking. In consideration of which

So that is the reason why if it is an obligation subject to a suspensive
the creditor agreed to the period
condition at the time when the obligation is constituted, you do not have
yet an existing obligation. It is the happening of the condition that will give
6. When the debtor attempts to abscond
rise to an obligation, but if the condition is resolutory, it extinguishes the
obligation.
Example: contract of loan payable for two years, the security by way of
real estate mortgage is the house and lot of the debtor. Because of the
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typhoon Yolanda the roofing of the house came off, can the creditor now
immediately demand for the payment of the obligation? Is there a
difference between mere impairment of the security due to the acts of the
debtor and disappearance of the security due to a fortuitous event?
Ans.Yes, there is. It is very clear that it is enough that the security is
impaired due to the act of the debtor will already lose the right to make
use of the period even if it is a mere impairment, not a total loss.
But if it is a fortuitous event, and the result of fortuitous event is a mere
impairment of the security, does it make the obligation due and
demandable?
Ans. No, there must be a total loss (to protect the interest of the creditor if
there is total loss and the obligation is demandable). If it is mere
impairment resulting from the fortuitous event, the debtor does not lose
the right to make use of the period, hence the creditor cannot compel the
performance.
For both instances, he can make use of the period if he can provide
another security.
Reasons for this exceptions – the possibility that the debtor may not be
able to comply with his obligation. That is why the law now says the
debtor loses the right to make use of the period, giving the creditor the
right to demand payment.
On the matter of insolvency, it says when the debtor becomes insolvent
after the debt has been contracted unless he gives a guaranty or security
for the debt. Is judicial declaration of insolvency necessary?
Ans. No, it is not necessary.
How do you prove that the debtor is insolvent, so that creditor can
demand payment?
Ans. When his assets are less than his liabilities or he finds difficulty in
meeting his obligations when the obligation become due.
What would be the effect if the debtor pays the obligation, unaware of the
period, even if it is not yet due? Can he get it back?
Ans. He is entitled to get it back because it amounts to solutioindebiti
(undue payment)
So you have several examples of contracts involving obligations with a
term, like when we mentioned about the right of the court to fix period
when the term is made dependent upon the will of the debtor. We have a
common provision in certain contract of lease which provides that the
lessee can continue to occupy the property for as long as he pays rental,
so that is the provision in the contract of lease. So if you are the lessor in
this particular kind of contract, you would now want to determine until
when the lessee will occupy the property, because as far as the lessee is
concerned, the lessee would think that he can continue to occupy the
property forever for as long as he pays the rental. So on the part of the
lessor, what would his remedy if wants to fix the time of lease?
So clearly with this kind of stipulation, the term of a contract of lease is
made to depend on the will of the lessee, and so the creditor here who
now wants the period of the contract to be fixed can go to court so that
the court will now fix the period, so that at the end of the term fixed, the
creditor can demand the debtor to vacate the premises.
In another case, it also involves contract of lease. There is stipulation in
the contract of lease that such contract will be for a period of 5 years. But
there is a stipulation to the effect that the contract of lease may be
renewed for the same term subject to the terms and conditions as may be
mutually agreed upon by the parties. That means to say that not all the
provisions or terms and conditions of the original contract will be renewed
because the stipulation in the contract says that the term of 5 years will be
renewed only provided that the lessor and lessee will arrive at the
mutually terms and conditions of the new contract of lease. So the issue
that was raised before the court was, is this also a situation where the
court may fix the period? Is the remedy under Art. 1197 the proper
remedy, that the court may fix the period because there is no specific
period that has been set?
According to the SC in this particular case, Art. 1197 does not apply
because in art 1197, it presupposes a situations where the terms and
conditions are already agreed upon by the parties, what is uncertain only
is the term. So in this particular case, the SC said since it was made clear
from the facts of the case that the parties to that contract of lease were
not able to reach a mutually agreed upon terms and conditions for the
renewal of the contract of lease, therefore, there is no period that can be
fixed. Because in order for 1197 to apply, there has to be a valid and
binding agreement, the only vague thing is the term.
ALTERNATIVE OBLIGATIONS
So you have here two obligations:
1. Alternative obligation
2. Facultative obligation
One of the essential elements of an obligation is the object or prestation
In an alternative obligation, what happens here is that there are several
prestations in one obligation but only one is due.
Facultative obligation – it comprehends only one object or prestation
which is due but it may be complied with by delivery of another object or
the performance of another prestation in substitution
A person alternatively bound by different prestation shall completely
perform one of them, and creditor cannot be compelled to receive part of
one and part of the other.
In the case of alternative obligation, when the debtor binds himself to
deliver object number 1, or 2, or 4. You have three objects. Now, when the
object becomes due mere compliance with one is sufficient to extinguish
the obligation.
In this particular kind of obligation, who has the right to choose as to
whether it is object number 1, 2, or 4?
Ans. If the obligation is silent, then the right to choose belongs to the
debtor
The moment the debtor communicates his choice to the creditor in any
form by which he notifies the creditor as to which object he has chosen to
deliver, then that will now convert the obligation into a simple obligation.
What would be the effect on the obligation if for example when the
obligation is not yet due and there was also no notification by the debtor
made to his creditor as regards his choice, then item number 2 was
destroyed by the debtor. What would be its effect on the obligation?
Ans. It has no effect on the obligation because the debtor can still comply
with the delivery of object 1 or 4. Because the right to choose belongs to
the debtor.
What if the after the destroyed object number 2, object number 1 was
destroyed due to a fortuitous event, what would be the effect on the
obligation?
Ans. The obligation now becomes a simple obligation. So in which case,
even if the debtor did not communicate his choice to the creditor since
the obligation is now converted into a simple obligation, then the debtor
has to deliver object number 4. The debtor cannot also say that his
obligation is distinguished because of the loss due to a fortuitous event
because there is still one object left and he has not yet communicated his
choice.
Now, after what happened to objects 2 and 1, if item number 4 I lost due
to a fortuitous event, what is now the effect of the obligation?
Ans. Obligation is extinguished.
What would be the effect if item number 4 was destroyed by the debtor?
Ans. Debtor will be held liable to the creditor.
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Since he cannot anymore comply with the obligation, what will be now the
basis in determining the liability for damages of the debtor?
Ans. The value of the last thing which disappear – object number 4.
The law also set certain restrictions on the right of the debtor to choose
the object to deliver, what are these?
1. the debtor cannot choose that which is impossible or unlawful or which
could not have been the object
And so if among the objects, one is impossible and the other is unlawful,
he cannot choose those objects.
Would it also be possible if the right to choose is given to the creditor?
Ans. Yes. But for this to become possible, there has to be express
stipulation in the contract.
Example of alternative obligation: contract of insurance, it is provided that
in case of loss, the insurance company may either pay the value of the
damage to the creditor or have the object repaired by the insurance
company.
Alternative obligation can be with a term or subject to a condition. So if it
is subject to a condition and the condition is already fulfilled then he has
the obligation to choose, because obligation arises now (suspensive
condition)
If the debtor does not make a choice and the term has already lapsed,
then the creditor can demand for the fulfillment of the obligation.
**if you are the debtor and you are entering an alternative obligation, just
keep silent as to who has the right to choose. Do not remind or ask the
creditor**
No communication = still remains alternative obligation
What specific form the communication has to be effected?
Ans. Any form may be employed provided that the other party is properly
notified of the selection. So that there will be no quarrel as to whether
there has notification or not. For the one who makes a choice, might as
well do it in writing (for proof but not required)
Is it important to determine when the communication is made?
Ans. Yes, because of the possible things that can happen prior to the
communication. There might be loss or destruction the thing.
Is the consent of the creditor to the choice of the debtor necessary before
the choice can produce effect?
Ans. Not necessary otherwise it is useless giving the right of choice to the
debtor. Or probably you might only do it for courtesy.
Two instances when the obligation (from alternative) becomes simple:
1. when the choice has been communicated
2. when the choice has not been communicated but by some
circumstances only one is practicable for delivery
Art. 120three If through the creditor’s acts, the debtor cannot make a
choice according to the terms of the obligation, the latter may receive the
contract with damages. Again, the right of choice belongs to the debtor
but the creditor performs acts which will now affect the right of the
debtor to choose, then the debtor may ask for the rescission of the
obligation.
Art. 1204 So this is the rule on the determination as to what will now the
bases for the damages:
The creditor shall have a right to indemnity for damages when, through
the fault of the debtor, all the things which are alternatively the object of
obligation have been lost, or the compliance of the obligation has become
impossible.
What is the basis for indemnity?
Ans.The value of the last thing which disappeared or service which last
become impossible. Damages may also be awarded (rule on damages, you
have to prove the extent of damage)
Art. 1205 – the rules in case of loss due to a fortuitous event or loss due to
the fault of the debtor prior to the time when the communication is made.
Ex. Object number 2 was destroyed by the debtor and the right to choose
was given to the creditor, what right will the creditor have?
Ans. The creditor can choose 1 or 4, will he be entitled to damages?
Ans. Yes because of the fact that he was already deprived to choose of
object 2.
What if the creditor does not like objects 1 and 4? Object 2 judiyaganahan.
Ans. He can demand for the value of item number 2 plus damages
RIGHT OF CHOICE BELONGS TO THE DEBTOR
Loss:
1. Fortuitous event
All objects – obligation is extinguished
One or some – debtor chooses from the remainder
2. Fault or negligence of the debtor
All objects – obligation is not extinguished; object converted in
monetary-liable value; value of object which last disappeared; damages
One or some – choose from the remainder but creditor cannot
claim for damages
RIGHT OF CHOICE BELONGS TO THE CREDITOR
Loss:
1. Fortuitous event
All objects – obligation is extinguished
One or some – creditor chooses from the remainder; no liability
on the part of the debtor
2. Fault or negligence of debtor
All objects – value of any subject chosen plus damages
One or some – choose any objects, lost or not. If object
chosen is already lost – value plus damages; if not lost – no damages
(Damages will arise if there is fault, damages cannot arise due to
fortuitous event)
NOTICE: If you read carefully the law, there is damages there but another
author says no damages, but if you read the law, there is damages
because you have been deprived of the choice of that other object.
Art. 1206 – Facultative Obligation
In a facultative obligation, there is only one prestation that is due but the
debtor may render another as a substitute.
When only one prestation has been agreed upon, but the obligor may
render another in substitution, the obligation is called facultative.
The loss or deterioration of the thing intended as a substitute, through the
negligence of the obligor, does not render him liable. But once, the
substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.
Who has the right to make the substitution?
17 | P a g e
Ans. The debtor
Can the right to make the substitution be given to the creditor?
Ans. No, the right to make the substitution only belongs to the debtor
unlike in alternative obligation where the right to choose may be given to
the creditor
(bastanibalik shag play sa part ngaang alternative obligation na convert na
into a simple obligation)
So debtor will have to deliver the object chosen/ object that remained in
this case object 2. Now as to what happens to object 2 in case it is lost due
to a fortuitous event, now it is a simple obligation then obligation is
extinguished.

The loss or destruction of the substitute will not hold the debtor liable If it was lost due to the fault of the debtor then the sae can be held liable
for the damages.
Ex. If he promised to give object 1 but the debtor has the right to make a
substitution with item number 2, it is not alternative. If item number 2 is On the other hand, if the loss due to the fault/negligence of the debtor
destroyed even if fault of the debtor or due to a fortuitous event, he then the rules are:
cannot be held liable because the right to choose whether to make a
substitution ONLY belongs to the debtor.  If ALL are lost due to the fault of the debtor the
Debtor will be held for damages.
ALTERNATIVE FACULTATIVE What is the basis for the determination of the
There are several prestations There is only one prestation but damages? So if the choice was given to the debtor
the debtor may give one as a the basis for the damages is the value of the last
substitute
thing that disappeared.
The right to choose may be given Only the debtor who has the right
either to debtor or creditor or even to substitute the principal object  If only ONE or SOME are lost due to the fault of the debtor, as
to a third person there are still the other objects, if one was lost due to this fault
Complied with the delivery of one Complied with another object in then he can still to give the other objects. Or if the others are
of the objects or by the substitution of that which is due lost and there is one that remains, then he can still comply by
performance of one of prestations delivering that one last object without damages because
The loss or impossibilities it has to The loss or impossibilities of the precisely the right of choice was given to the debtor.
be all of the objects which are due object which is due without any
without the fault of the debtor fault of the debtor is sufficient to
On the other hand, if the right of choice was given to the creditor,
which will result to the extinguish the obligation
extinguishment of the debtor we have to differentiate whether the loss is due to a fortuitous event
If one of the prestation is unlawful, If it is the principal object is lost, or the due to the fault or negligence of the debtor.
the others may still be valid and the even if the substitute is still there,
obligation remains the debtor cannot be required to  If ALL are lost due to a F.E. = obligation is extinguished
deliver the substitute because  If only ONE is lost due to a F.E. = the creditor can still bet the
there is only one prestation due remaining objects.
 If there is only one remaining then the obligation becomes a
simple one, creditor will have to accept the remaining objects
When does the substitution take effect?
without damages because the loss is without the debtor’s fault.
Ans. Only one who is empowered to make the constitution is the debtor,
On the other hand if the loss was due to the fault or negligence of
however, in order for the creditor will be bound by the substitution, it is
the debtor
necessary that the debtor should communicate to the creditor that he has
made the substitution.
 If ALL were lost due to debtor’s fault, since the right of choice
was given to the creditor then the creditor can demand for the
What is the effect of loss of substitution?
value of any of the objects + damages.
Ans. BEFORE THE SUBSTITUTE IS MADE BY THE OBLIGOR, the loss or  If only ONE or SOME were lost due to the fault of the debtor,
deterioration of the thing intended as a substitute, through the negligence then the creditor has 2 options:
of the said obligor, does not render him liable. o Creditor can demand for the remaining objects +
damages (is debtor liable for damages? Yes he is
Once the substitution has been made, the debtor shall be liable for loss or liable because the creditor lost his right to choose
deterioration. due to his fault)
o Demand for the value of any objects that was lost
Obliconnov 26 +damages

Now in the alternative obligation, as a general rule, if the obligation is
silent as to who is given the right of choice, then we said that the right of
choice is given to the debtor.
So based on that concept that choice is presumed to be given to the
debtor, so this will be a guide on the part of parties to a contract when
they look into the terms and conditions. So naturally, if you are the debtor
you can just be silent as to the right of choice because the law already
presumes it to be in your favor.
However if you are the creditor in an alternative obligation then you will
have to propose that the right of choice be given to you as the creditor.
Now while obligation is still alternative because choice has not been made
yet and has not been communicated to the creditor, in the case the
presumption that the right of choice belongs to the creditor applies, then
you have the rules provided in the law as to the effect of the loss of any of
the object in an alternative obligation. It depends on who is given the
right of choice.
(na corrupt ninga part mga frets HUHU amsorry)
Now we compared the alternative obligation v facultative obligation.
In a facultative obligation there is only one object but the debtor may
render another as a substitute.
In a facultative obligation it is only the debtor who is given the right to
make a substitution. So if you have a principal object #1 there is only one
prestation. Then the debtor can only have object #2 as a substitute.
Substitution can only be made by the debtor- cannot be given to the
creditor.
Therefore, if substitution is resorted to by the debtor, he has also to
communicate his desire to make a substitution. The moment he has
communicated such substitution, his obligation is now to deliver object #2.
As to what happens subsequently to object #2 you apply the rules on the
loss of the thing based on a simple obligation. Because the moment
substitution has been made the obligation becomes a simple obligation.
If the obligation is facultative and there is no substitution that was yet
made by the debtor, not yet communicated substitution, the loss of the
substitute, even due to the fault of the debtor, will NOT hold the debtor

18 | P a g e
liable. Even if he destroyed the substitute, he will not be held liable
because the principal object is still there.
Culpable loss of the substitute will not hold the debtor liable. This would
mean that he has opted to comply by delivering the principal object.
JOINT AND SOLIDARY OBLIGATIONS
Now, with respect to the illustrations that we gave, in most of the
examples we only had one debtor and one creditor.
When we talk about joint or solidary obligations there are now the
components of several debtors and several creditors in one and the same
obligation. And so, what is impt with respect to the joint and solidary
obligation is what will govern the nature of the relationship of the debtors,
and/or the creditors, if there are several of them; or the relationship of
the debtor to the creditor.
There is a presumption that if you have several debtors in one and the
same obligation, you do not presume them to be liable for the full amount
of the obligation. In other words, obligation is presumed to be divided
among the joint debtors. Presumption is obligation is joint.
On the other hand, if there is component of several creditors, and it is
silent as to how the creditors relate to each other, then the law also says,
you do not presume that creditor can demand the full payment of the
obligation. Simply put, the creditor can only demand his share. And so it is
presumed to be a joint obligation.
So when will the obligation be solidary?
It is solidary when:
1. Expressly agreed upon by the parties
2. Law provides
3. Obligation require it to be solidary
So the first thing that you will have to consider if the obligation has several
debtors/creditors is go through the enumeration of the solidary
obligation. Did the parties stipulate that the obligation is solidary? Or is
there a specific provision of law saying that the obligation is solidary? Or
does the nature of the obligation require it to be solidary?
If not, then presumption is obligation is joint.
Joint obligations
You can have the components of two or more creditors.
In an example you can have one debtor but 2 creditors in the amount of
300k. D owes X and Y the total amount of 300k. OBLIGATION IS SILENT AS
TO THE relationship of x and y. so the presumption is the obligation is
JOINT. Which means to say that the creditor there can only demand his
share in the obligation. So in this particular example how many obligations
are there?
-there are 2 obligations where d owes x 150k and y can also demand 150k
from d. so it is divided equally bet the 2 creditors. Of course if the
agreement has expressly stated diff amounts, like d owes x and y 300k but
the share of x is 200k and the share of y is 100k, then that will govern.
Presumption of equal division will only apply if agreement is silent.
You can also have 2 or more debtors and only one creditor. So the same
principle will apply. If the amount is 500k, you have 2 joint debtors then
you also have 2 obligations. And since it is silent it is divided equally bet
the 2 debtors.
As to how much is the share of the debtors, and creditors in obligation
which is presumed to be joint but does not specify their respective shares:
the law says that it will be divided equally among the debtors and among
the creditors in the absence of any stipulations.
If from the law or the nature of the wording of the obligations to which
the preceding article refers, the contrary does not appear, then the credit
or debt shall be presumed to be divided into as many equal shares as
there are creditors or debtors, the credits being considered being
considered distinct from one another subject to the rule on multiplicity of
suits.
So debtors are joint debtors. If you would want to demand payment since
the share of each debtor is considered separate and distinct from each
other then you will have as a creditor to demand from each of the joint
debtor. So if you demand from one debtor, the other debtors cannot be
considered yet to be in default because the share of each debtor in a joint
obligation is considered separate and distinct from each other.
That would be very relevant if we talk about the principle of prescription.
In prescription, a person may lose his right to collect by prescription. Let’s
say a contract of loan is embodied in a promissory note; so the creditor
can demand payment of the value of the promissory note when the latter
becomes due and demandable. Under our law on prescription, the action
of the creditor to demand payment should be made within a period of 10
years from the time the obligation became due; otherwise, then his action
will be considered to have prescribed and so the debtor will no longer be
held liable. Therefore, if you are the creditor, so that you will not lose your
right to collect by prescription, then you will have to demand payment.
And if it is a joint obligation, you should have to demand payment from
each of the joint debtor. Because the share of each debtor is separate and
distinct.
Underlying principles:
 Joint obligation is presumed; if silent= joint
 In a joint obligation, creditor is entitled to a proportionate part
of the credit and the debtor is liable only to that proportionate
part of the debt; that is why a brief description of the concept
of a joint obligation, you have there “to each his own”
 Obligations are separate and distinct subject to the rule on
multiplicity of suits.
In this particular obligation, on both sides, you have several parties. You
have 3 debtors and you have 4 creditors and an obligation amounting to
120k. So you apply the 3 principles that we have earlier mentioned. So it is
silent as to what kind of obligation so it is presumed to be a joint
obligation. Then it is also silent as to how much is the share of the parties
so it is divided into equal shares. But there are several debtors and several
creditors in this case. So if each of the debt is considered separate and
distinct from each other, how many obligations are there?
-There are 12 obligations.
-in other words, as far as debtor A is concerned, A owes 4 creditors; so
there are 4 obligations as far as A is concerned. The same is true with B,
and C. so you have a total of 12 obligations.
So if you are to divide the total amount of the obligation, 120k, on the side
of the debtors, each of the debtor’s total liability is 40 thousand. But, the
40k that A owes, he owes it to each creditor W, X, Y, Z. So if creditor W
were to demand from A, he can only demand 10k. Same is true with
respect to the other creditors.
We go to the SOLIDARY OBLIGATION
When is an obligation solidary:
1. When it is expressly stipulated upon by the parties
2. When law so provides
3. When nature of obligation requires solidary
And so in a solidary obligation, this can be described by the concept of “all
for one, one for all”
So if you are a solidary debtor, you can be held liable to pay the full
obligation and what right will the debtor have as against his co-debtors?
-if you are the debtor who paid full amount, you can demand
reimbursement from the co-debtors
On the side of the creditor, if the creditors are solidary creditors anyone of
them can also demand payment for the full amount. And if only one of the
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creditors collected the full amount, what will be his obligation to his co-
creditors
-Give to his co –creditors their respective shares.
In this case, if you have A who owes 100k from Y and Z and they agreed
that obligation is solidary as far as creditors are concerned, Y can demand
the entire 100k from A. A cannot refuse to pay the full amount bec in a
solidary obligation there is the concept of mutual agency.
So knowing the nature of a solidary obligation, if you are a creditor and
there are several of you, what reason can you have, not to agree to a
solidary obligation? By its nature there is a possibility that your co-
creditor, who might manage to collect the full amount, will not give to you
your share. This time you cannot demand payment from the debtor bec
the debtor once he pays full amount to any of the solidary creditors that
results to extinguishment of his obligation.
You can also have several debtors and several creditors in a solidary
obligation. So if you have in this case, A B AND C are solidary debtors of Y
AND Z who are solidary creditors. If Y will demand payment from A he can
demand payment for the full amount and A can also be compelled to pay
for the full amount.
Mutual agency- your co-creditor who is a solidary creditor, can very well
collect the full amount. You would not want to enter into such an
arrangement with a person whom you do not trust bec that person after
collecting full amount might not also deliver your share.
Could it be possible that on the side of the debtor you have a joint
obligation, while on the side of the creditor you have a solidary or vice-
versa?
-yes. So how will it affect the obligation?
So we have here an example where on the side of the debtors they are
solidary, then on the creditor you have joint.
If the obligation is solidary on the side of the debtor, we simply remember
that each one can demand the full amount but on the side of the creditors
they are joint creditors. So if you are a joint creditor you are liable only for
your share.
As far as y is concerned he is liable only up to
So as far as the creditors are concerned, each one being a joint creditor
can collect only a maximum of 60k.
On the side of the debtors this is solidary. So strictly, eavh one can be held
liable for the whole amount of 120k.
Now since it is joint on the side of the creditor, if Y will collect from A, how
much can Y demand from A?
–only 60k, even if the debtors are solidary debtors, because Y here is
entitled to only 60k. The same is true with respect to Z.
If you have joint on the side of the debtor and solidary on the part of the
creditor, again apply the rule. If they are joint debtors of 120k, the
maximum that each one can be held liable is only 40k, being a joint
debtor.
You have Y and Z who aresolidary creditors. If they are solidary creditors
supposedly they can demand 120k. How much can Y demand from A?
-only 40k, even if they are solidary creditors, because the debtors are joint
debtors.
So just remember that if it is joint, you divide the obligation equally among
the parties, and if it is solidary then you can collect the entire amount.
1209- A joint indivisible obligation
If the division is impossible the right of the creditors may be prejudiced
only by their collective acts and the debt can only be enforced by
proceeding against all the debtors. If one of the latter should be insolvent,
the others shall not be liable for his share.
In this kind of division, the object of the division is not capable of partial
performance; that’s why it says division is impossible.
If A and B are joint debtors of X for the delivery of a car worth 1M- so the
object of the obligation here is a car which is indivisible. The division is
impossible but the debtors here are joint debtors. So therefore for X to be
able to enforcecomplete fulfilment of obligation, A and B should be able to
come up with their respective shares. So 500K each. But what happens if
A, is insolvent?
If A is insolvent, can X demand from the solvent debtors, the delivery of
the car which is worth 1M?
-He cannot bec the relationship is joint; in which case the debtor can only
be held liable to pay his share of the obligation.
But since the object is indivisible, X cannot demand from B to deliver one
half of the carrrrbec it is indivisible.
And so under this situation , the obligation of B will now be converted into
a monetary obligation. That means to say, if B is capable of complying with
his share, he can now be held liable by X to pay his share of 500k without
damages bec he is able to come up with his share.
In the event that A, assuming that A later on, is now capable of complying
with his share, it will only be A who will be held liable for damages.
Underlying principles:
 2 or more debtors. If there are 2 or more debtors the fulfilment
of the obligation requires the concurrence of all debtors
although each to his own share
 Creditor will have to enforce the obligation against all debtors
if he wants the fulfilment of the obligation.
 Creditor cannot act in representation of the others and it is also
indivisible and therefore not susceptible of partial fulfilment
then he cannot also demand fulfilment of the entire obligation
if the obligation is indivisible
So what is the effect if one cannot comply?
 The debtors who may have been ready to fulfil or perform
what was incumbent upon them shall not contribute to the
indemnity beyond the corresponding value of the price.
1210- Indivisibility does not necessarily give rise to solidarity neither does
solidarity by itself imply indivisibility
If object is indivisible it does not necessarily mean that the debtors are
solidary debtors. In the same manner that you may have a solidary
obligation but the object is divisible obligation.
Like an obligation to pay a sum of money- like a contract of loan, the
debtors bound them as solidary. X and Y are solidary debtors of A and C.
the parties’ relationship is solidary but the object of the obligation 100k is
divisible; it is capable of partial performance.
1211
In a solidary obligation it may be possible that the debtors may be bound
by diff terms and conditions.
Ex: you have a solidary obligation where X Y and Z are solidary debtors of C
for 9k subject to the following terms and conditions:
1. X’s share is payable on nov 15 2015
2. Y’s share is payable on dec 31
3. And Z’s share is C marries B.
On nov 15 C demands payment from Z. question, can Z be held liable and
if so how much?
-since they are solidary debtors, anyone of them can already be held liable
to pay that which is due even if it is not his share, because they are
solidary debtors. And so when C demands payment from Z on nov 15, Z
can be compelled to pay the 3k share of X, because they are solidary
20 | P a g e
debtors. Now if it were Z who were made to pay, Z can demand
reimbursement from X bec it was X’s share that was due and demandable.
That is the nature of a solidary obligation- the creditor can demand
payment from one some or all of them simultaneously. That is the
prerogative of the creditor! For as long as obligation is already due and
demandable.
-even if it is not your share you can still be held liable to pay for that, and
you can just demand for reimbursement from your co-debtor
-if sharing is equal, and one becomes insolvent, the share on the insolvent
will be divided equally bet the solvent ones
What is the effect of active solidarity?
When you say active it refers to the creditor.
So what id its effect?
-there is mutual agency where each creditor is empowered to exercise
against the debtors not only the rights which corresponds to him but all
the rights which corresponds to the other creditors when the consequent
obligation to render an accounting of his (inaudible word) to the creditor.
That’s why if you’re a solidary creditor you can demand full payment but
you will have to account your co-creditor their respective shares.
What is the effect of passive solidarity?
-anyone of the debtor can be held liable for the full amount and so
therefore the one who pays the full amount of the obligation is also
entitled to reimbursement. However is a debtor only to the extent of his
share.
If the solidary obligation is expressly stipulated or expressly provided for
by the law you already encountered in your study in the family code
where the law provides for instances that obligation is solidary.
-obligations of an absolute community or conjugal partnership. You
remember in the liquidation, the moment the property is liquidated you
pay first from the total properties all obligations of the community. If
there is a balance, then the balance will be divided bet the spouses. What
if the liabilities are more than the assets of the conjugal partnerships?
Who are now held liable?
-exclusive properties of the spouses can be made to answer for the
deficiencies of the absolute of conjugal property. And what is the nature
of the liability of the h & w as regards the unpaid obligations?
-solidary liability; creditor can demand full payment from anyone of them.
Either the h or the w.
-whoever pays will simply demand reimbursement from another.
Special parental authority- the teacher, the school administrator, or the
school are liable for the acts or omissions committed by children under
their care if it causes damage or injury to another
What is the nature of the liability of the teacher administrator and the
school?
-they are solidary liable
Parents- only subsidiary liability which means only when those who are
primarily and solidarily liable are insolvent
Nature of a solidary obligation says each creditor may do whatever may be
useful to the others but not anything which may be prejudicial to the
others and this is bec of the concept of mutual agency. If the creditor does
an act it should be beneficial.
Example, if the creditor sends a demand letter to any of the debtors when
obligation becomes due- that is beneficial
But if solidary creditor will condone the obligation, tells the debtor “forget
about your obligation” that is prejudicial; he has to account for that to his
co-creditors.
As far as debtors are concerned a prejudicial act performed by a solidary
creditor shall be valid and binding based on the principle of mutual agency
among creditors.
The creditor who incurred the act shall indemnify others for damages.
A solidary creditor cannot assign his right to others without the consent of
other co-creditors.
This is an exception to that general rule that rights are transmissible.
This is one instance where the law prohibits assignment of rights without
the consent of co-creditors.
Why? It can prejudice the other co-creditors because their relationship is
based on mutual agency. They trust each other.
DATE: 12-3-’15: RECAP ON NOVATION UNTIL 1230
ARTICLE 1215
Different modes of extinguishing obligation
1. Novation
2. Compensation
3. Confusion or remission
4. Condonation
*nature of solidary obligation is based on mutual agency hence whatever
acts made by one binds the others.
Novation
-takes different forms:
 Change in the object of the obligation
 Change in the person of the debtor
 Change in the person of the creditor
-the original obligation will be extinguished by agreement of the parties
because it will now be substituted by a new obligation.
Example:
X owes Y and Z, solidary creditors for 100,000.
-it is possible that X and Y will agree that instead of the 100k, debtor X will
just repair the house Y.
Hence, the original obligation is extinguished and a new one is created
where there is now a change in the object.
New obligation: repair the house of Y
Q: what is the effect of novation in so far as the original obligation to the
parties?
ANSWER:The first obligation is already extinguished and the new
obligation is to repair the house. As far as the solidary creditors are
concerned, Z is prejudiced if no payment will be made to him since it will
only be the house of Y to be repaired hence it is beneficial to Y only. On his
part, Z, he will be paid by Y his share on the credit which is 50k. But the
original obligation is extinguished and a new one is created.
Effect of Novation
-if it is prejudicial, the solidary creditor who effected the novation shall
reimburse the others for damages incurred by them.
-if it is beneficial to the creditor, all of them will receive the benefits. So
the creditor effecting the novation who was able to secure the fulfillment
of the new obligation shall be liable to the others for the share which
corresponds to them not only for the obligation but also the benefits.
Example:
(same situation above) if instead of an obligation 100k, there is
an agreement between X + Y, the object is a parcel of land. And if you get
the value of the parcel of the land, it is for 150k. Hence, beneficial to
them. Z will be benefitted in consonance with the principle in solidary
obligation that a solidary creditor can do acts which are beneficial to his
co-creditors but not those acts which will be prejudicial.
NB:if it is prejudicial, he will reimburse the co-creditor who is
prejudiced and if damages are sustained, he will also have to
pay.
Compensation
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-it is a figurative operation of weighing two obligations simultaneously in
order to extinguish them to the extent that the amount of one is covered
by the amount of the other.
-Two persons are creditors and debtors to each other. So when to persons
are creditors and debtors to each other and all the requisites for legal
compensation are present (when both obligations are due and
demandable, they are at the same time, both obligations are already
liquidated and there is no claim by any person by any of the credit), then
compensation takes place by operation of law.
“compensation takes place by operation of law”
-the obligations are automatically extinguished to their concurrent
amounts even without the parties knowing it. The obligations are already
extinguished.
Example:
X owes Y + Z, SC for 100k.
Y owes X 100k.
*in the first obligation, X is the debtor and Y + Z are the creditors.
*in the second obligation, Y who was a creditor in the first obligation is the
debtor in the second obligation. And X is a creditor.
Therefore, the two persons X + Y are concern, they are debtors and
creditors to each other. The two obligations are already due and
demandable. The effect is the two obligations are automatically
extinguished. Legal compensation takes place.
NB:
Total compensation-amounts due are the same hence the two
obligations are automatically extinguished.
Partial compensation-amounts are not the same or different
hence there will still be a balance that is payable.
CAVEAT:if the two obligations are automatically extinguished since there
is already legal compensation, as regards Y + Z, Z is not a debtor but the
credit that he has against X is already extinguished. So the rights and
obligations of the parties are: Y, who was benefitted in the sense that it
was his obligation of 100k that was extinguished, therefore he has to
deliver to Z his share of 50k. If he does not immediately reimburse Z, then
he will have to pay Z 50k PLUS interest from the time the compensation
took place up to the time payment was made.
Confusion or Merger
-the characters of creditor and debtor is merged in one person.
-this refers to the merger of the qualities of creditor and debtor in one and
the same person with respect to one and the same obligation.
Example:
Illustration by way of a promissory note
A + X owe Y + Z, SC, 100k. This is evidence by a promissory
note, a negotiable PN where it says “I promise to pay Y + Z solidary
creditors the amount of 100k on December 21, 2015. The PN is signed by
the solidary debtors, A + S.
*negotiable instrument-any person who will be in possession of the PN
can demand payment from the debtor or the signatory of the PN.
If it is negotiated to B to C to D and finally to A. as far as A is
concerned, he is a debtor and when it was negotiated to him, he is also a
creditor. Hence, the character of creditor and debtor are now merged in
the same person. The PN which is the evidence of indebtedness is now
extinguished.
The rights and obligations of the parties: As far as the debtor is concerned
when it was negotiated, there was already a settlement between the
creditors and whatever proceeds was collected he has to deliver that. As
far as the debtor is concerned, it is now A who is the creditor. The merger
of the character of debtor and creditor has benefitted also X because the
obligation is extinguished but it was the credit of A that was used to
extinguish the obligation. So in effect X will have to pay A his share in the
obligation.
Remission or Condonation of debt
-it is an act of pure liberality by virtue of which the creditor, without
having received any compensation or equivalent, renounces his right to
enforce the obligation, thereby extinguishing the same either in its
entirety or in the part or aspect thereof to which the remission refers.
-this is a gratuitous act and this amounts to a donation. When the creditor
tells the debtor to forget the amount of the obligation. Since this
constitutes a donation then the consent of the donee is required as an
essential requisite of a valid donation because no one can be compelled to
accept the generosity of another. So if the debtor did not accept the
remission or condonation of debt then the obligation remains.
Example:(same example) if X, the creditor condones the obligation and
tells A + Z to forget the obligation, the effect will be extinguished if any of
the debtors will accept it since it is considered as a donation in favor of the
debtors (because it benefitted them by the extinguishment of the
obligation).
NB: if there is a valid remission since there was acceptance, as between
the debtors, if there was a condonation of the entire obligation or the
whole amount which was secured by A, A cannot demand X’s share
because there was no actual payment made, hence no basis to ask for
reimbursement.
On the part of the solidary creditors, if it was only Y who
condoned the entire obligation, he has to account for the share of Z. He
has to deliver Z’s share as if Y was able to collect an amount.
ARTICLE 1216
Q: Against whom a creditor may demand payment in the case where
there is a solidary obligation and there are several debtors or there is
plurality on the side of the debtors?
ANSWER: Article 1216 provides the answer. The law provides that the
creditor could proceed to any of the solidary debtors or some or all of
them simultaneously…
*it is the prerogative of the creditor to demand the full payment of one
or all of the debtors.
*as illustrated in the case of the husband and wife, if the ACP or CPG is not
enough, their separate property may be proceeded by the creditors. If the
creditor will proceed the husband’s property, the husband cannot refuse.
Because the nature of their liability is solidary. If there is a demand made
from the husband and he paid the full amount, he could ask
reimbursement from his wife.
Q: If the debtor has already demanded from one of the debtor, can he
still demand from another debtors?
ANSWER: Yes, as long as the obligation had not been paid yet.
Example:
X, Y, Z owe A 100k, the creditor can demand payment from any
of the debtors. If there is a demand from Y, and he pays only 70k, A can
still collect Z the balance as long the obligation is not yet been fully paid.
Suretyship
(Palmaresvs CA)
 There is only one contract and the surety is bound by the same
agreement which binds the principal.
 Demand (extrajudicial or judicial) on the sureties is not
necessary before bringing suit against them since the
commencement of the suit is a sufficient demand.
 A surety is not entitled to be given notice of the principal’s
default. (This is so because if you are a surety, the creditor can
demand payment from you because you are bound solidarily,
you are a solidary guarantor.
ARTICLE 1217
-can be made by one of the solidary debtors and the effect is it
extinguishes the obligation.
-if there are two or more debtors who offered 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”
Ratio: because he is also a principal debtor so when he asks for
reimbursement, he could only ask the share of the debtor from whom he
is demanding payment for reimbursement.
“..with the interest for the payment already made”
-from the time he made the payment up to the time he is being paid.
“The payment is made before the debt is due, no interest for the
intervening period may be demanded”
Ratio: fault of the debtor. If he pays prior to due date, he is not entitled to
pay the interest because of premature payment.
“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.”
-when of the solidary debtors is insolvent, the share of the insolvent
debtor will have to be divided by the remaining solvent debtors. The
sharing is proportionate to their shares.
Summary of the Article
To whom the solidary debtor will pay:
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 1. any of the solidary creditor (if no demand was made)
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-debtor can
select from any who demanded
Legal effects of payment
1. The obligation is totally extinguished.
2. Payer who is a co-solidary debtor is entitled to reimbursement
from his co-solidary debtors.
3. In case of insolvency of a solidary co-debtor, his share shall be
assumed by his solvent solidary co-debtors.
ARTICLE 1218
-One of the modes of extinguishing an obligation is prescription.
-If the period has already lapsed, like an obligation is evidenced by a
written agreement, then the debtor of the written agreement fails to
comply with the obligation. On the part of the creditor, if it is based on a
written agreement, then the prescriptive period to which an action to be
filed is 10 years from the time the obligation becomes due. And so if the
creditor fails to file the action within the prescriptive period, the
obligation is extinguished by prescription. Hence the creditor can no
longer enforce his claim and if he files an action in court after the lapse of
the prescriptive period, then the debtor’s defense will be prescription
because it is no longer legally enforceable.
Effect of Prescription in Solidary Obligation
Situation:
There is a solidary obligation and it has already prescribed. The creditor
did not act within the prescriptive period like in the case of a promissory
note which is 10 years and the period has already lapsed and the creditor
did not make any demand, despite the fact that the obligation has already
prescribed, the debtor paid the obligation to the creditor knowing that the
obligation has already prescribed. After payment, can he ask
reimbursement from his co-debtors?
Answer:
No, because the obligation was already extinguished prior to the time he
made the payment. No benefit derived from his co-debtors when he made
payment.
Caveat: in the case where the obligation becomes illegal
Example: deliver prohibited drugs
At the time the obligation was agreed upon, the particular drug was not
yet prohibited and now it is already prohibited by law, yet the debtor
complies with the obligation. In the same manner, no benefit was derived
by delivery hence not entitled to be reimbursed.
ARTICLE 1219
-deals with the situation “okay.
Pasayluonnalangtikasimongutang.Peronakadawatnaugbayadangcreditor.”I
f this happens, the debtor will say “uy! Di nadaw ta pabayaronkay the
creditor is my friend” where in fact it was already paid. In such case, if it
was already paid the remission has no effect.
Q: Can the co-debtors will still be liable to reimburse?
ANSWER: YES. The co-debtors can still be held liable to reimburse because
the payment was made ahead of the remission. If there was already a
prior payment, the obligation is extinguished by payment.
ARTICLE 1220
-if there was remission of the whole obligation by reason of the friendship
of the creditor and the debtor, one is not entitled to reimbursement since
there was no actual payment made.
ARTICLE 1221
-apply the rules already learned in case there is loss due tofortuitous
event, fault of the debtor.
Simple obligation to deliver a specific thing, if loss
 fortuitous event: extinguish
 fault of the debtor: damages
 without fault and becomes impossible: extinguish
 if loss due to a fortuitous but there was legal delay: damages
(3rd paragraph)
2nd paragraph
Example:
If X + Y, SD oblige to deliver a specific thing and the thing was destroyed by
X. the creditor could still demand payment of damages and interest to Y
who is not the party responsible because the nature of the obligation is
solidary. The debtor who was not at fault and was made to pay can
demand reimbursement for payment made including damages and
interest
ARTICLE 1222
-defenses available to the debtors in an action filed by creditors
-defenses: how the debtor escapes liability
Kinds of Defenses
1. derived from the nature of the obligation
2. personal to him or pertaining to his own
3. personal to others, but only as regards that part of the debt for
which the latter are responsible
Complete Defenses
1 and 2 in which the debtor could not be held liable at all.
-the debtor whom the action is filed cannot be held liable for any amount.
Partial Defenses
-refers to a defense personal to a co-debtor and the liability of a debtor
against whom the demand is made is the total obligation minus the share
of the debtor who has the personal defense.
-can be held liable to pay the total obligation minus the share of the co-
debtor who has a personal defense.
Example: X, Y + Z owe A + B in a solidary obligation the amount of 90k and
it is evidenced by a written agreement and the creditor did not filed an
action within 10 years.
Q: When the creditor files a case against X, what could be X’s
possible defenses?
Answer:
-derive by from the nature of the obligation by reason of
prescription hence complete defense
-object of the obligation is illegal (supposing the object is
delivery of 10 tarsiers) since it is prohibited.
*another complete defense: personal to you
Example:(same characters with the above example)
X, a minor when he signed the promissory note as solidary debtor and a
case is filed against X. he could use minority as his defense. Hence, he
cannot be held liable.
BUT if A files a case against Y in the same obligation when X signed the
promissory note when he was still a minor, how much Y can be held
liable?
Answer: Only 60k because a defense which is personal to a co-
debtor is a partial defense.
DIVISIBLE AND INDIVISIBLE OBLIGATION
Divisible obligation: capable of partial performance
Indivisible obligation: incapable of partial performance
ARTICLE 1224
-joint indivisible obligation
Illustration:
X + Y oblige themselves to deliver a car worth 1M to Z.
-X + Y are joint debtors and to fulfill the obligation, both of them should
come up with their respective shares.
-if one of them cannot give his obligation since the relationship is joint, if X
cannot come up with his share of 500k, Y cannot be made liable to deliver
the amount of 1M. in effect, it will be converted into a monetary
obligation with liability for damages on the part of the noncomplying
debtor is concern.
General Rule: Creditor cannot be compelled to partially receive the
prestation in which the obligation consists; neither may the debtor be
required to make partial payments.
Breach of Joint Indivisible Obligation
-this kind of obligation can be enforced only by proceeding against ALL of
the debtors should fail or refuse to comply with the obligation, it is
converted into one of indemnity for damages.
Example:
Y + Z oblige to deliver a specific horse to A.
-you cannot divide the horse.
-if the obligation is silent, it is joint.
-to enforce the obligation, A must enforce against both Y + Z.
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*if Y fails to comply, he will bear the burden of paying the damages borne
by A for non-fulfillment. Z will not be held liable and he only has to pay for
his share. And the obligation is converted into a monetary obligation.
Exceptions:
1. when the obligation expressly stipulates the contrary
2. when the different prestations constituting the objects of the
obligation are subject to different terms and conditions
3. when the obligation is in part liquidated and in part
unliquidated
NB:
2nd paragraph of Article 1225 is an example of divisible
obligation
 obligation can be accomplished by a certain number
of days
 or by metrical units like construct a road with 10kms
 or analogous things
3rd paragraph means: even if the object is susceptible of partial
obligation but if the parties have agreed and stipulated that the
obligation is not susceptible for partial performance, it
becomes indivisible.
Example: construction of 10km road. If agreed that
it should be the entre 10km road, partial
performance is not possible hence indivisible.
Q: What is the True Test of Divisibility?
ANSWER: Whether the obligation is susceptible of partial compliance or
not.
NB:
In obligations to do, the presumption is it is indivisible.
Partial performance is equal to non-performance. This is the
general rule for indivisible obligations.
OBLIGATIONS WITH A PENAL CLAUSE
Concept:
-one which is an accessory undertaking is attached for the purpose of
insuring its performance by virtue of which the obligor is bound to pay a
stipulated indemnity or perform a stipulated prestation in case of breach.
Example: In a construction contract, very important stipulation is when
will the building be completed and to insure that the contractor will
complete the building on the stipulated date, usually they file a penalty,
that in case of failure to complete the building, a penalty of 10k per day of
delay is imposed.
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 case, to punish the obligor in case of
breach of the principal obligation.
NB:
if there is no penal clause, in case there is non-fulfillment of the
obligation, the remedies of the creditor is to demand specific
performance plus damages.
In claiming for damages, if you are claiming for 1M, you need to
prove that you actually suffered otherwise the court will not
believe. However, you have provided for a penal clause, that
already substitutes for the claim of damages without need of
any proof.
Example:(reference to the same building example)
Q: in what form may the creditor suffer damageif
the building is not yet finished on the stipulated
date?
ANSWER: If not yet done, he will have to rent an
apartment. He will pay monthly rentals hence he
suffered damages. In order for the creditor to claim
damages, he needs to prove it to the court by
presenting evidence which will take place or you
don’t have any receipts to substantiate your claim.
BUT if there is a penal clause in the agreement, you
don’t need to prove that you have suffered for that
particular amount. Because as a general rule, it will
substitute for the damages except if there is a
stipulation to the contrary.
General rule:
The penalty is a substitute for damages and interest.
-proof of actual damages is not necessary in order that the stipulated
penalty may be demanded.
Exceptions:
1. When there is a stipulation to the contrary.
-if your intention when you entered into an agreement, that
even there is a penal clause, you will still be allowed to claim
other damages, then you must state it in the contract,
otherwise the penalty will substitute all damages.
2. When the obligor is sued for refusal to pay the agreed penalty.
3. When the obligor is guilty of fraud.
-since it constitutes bad faith.
NB:
If you want to collect other than the stipulated penalty, you
stipulate and indicate in the agreement that you can collect
other payment other than the agreed penalty, otherwise
general rule will apply.
But the court will also determine and may reduce the penalty
even if it was agreed by the party if it is partly or irregularly
complied with, or the penalty is iniquitous or unconscionable.
Limitation upon the right of the debtor
 The debtor cannot exempt himself from the performance of
the principal obligation by paying the stipulated penalty. There
is, however, an exception to this rule and that is when the right
has been expressly reserved for him.
Limitation upon the right of the creditor
 The creditor cannot demand the fulfillment of the principal
obligation and the satisfaction of the stipulated penalty at the
same time, unless the right has been clearly granted to him.
Instances where the judge may equitably reduce the penalty
-exception to the rule that even if the stipulation of the parties becomes
the law of the parties and such must be complied in good faith, provided
what they have agreed upon is not contrary to law, good moral, public
policy, good customs and public order.
Example:
 Value of the contract agreed is 1M and per day of delay is 500k.
-even if you have agreed on it, you can ask the court to reduce
it for such is unconscionable and shocking to the conscience of
man.
 Rules on interest
-no more Usury law: no minimum and maximum rates of
interest to impose for as long as it is agreed upon by the
parties. However, based on jurisprudence, SC has reduced the
interest rate as agreed upon by the parties for being excessive.
This is based on equity.
 If there is already partial performance
-obligation to deliver a 100 bottles of wine and in case of failure
to deliver, the penalty is 50k pesos. If the debtor delivers 95, it
is improper to impose the penalty of 50k so debtor could go to
court to ask the court to reduce the penalty.
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