Art. 1191.

The power to rescind obligations is implied in reciprocal ones, in case one of

the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
(1124)
The right to rescind means the right to cancel or to resolve in case of reciprocal
obligation in case of non-fulfillment on the part of one.
Example: In a contract of sale, the buyer can rescind if the seller does not deliver or
the seller can rescind if the buyer does not pay.
The power to rescind is given to the injured party and the injured party has the following
alternative remedies:
1. Demand fulfillment of the obligation plus damages; or
2. Demand rescission of the obligation plus damages.

Art. 1192. In case both parties have committed a breach of the obligation, the liability of
the first infractor shall be equitably tempered by the courts. If it cannot be determined
which of the parties first violated the contract, the same shall be deemed extinguished,
and each shall bear his own damages. (n)
Rules if Both Parties Have Committed a Breach: The above rules are deemed just. The
first one is fair to both parties because the second infract or, though they would derive
some advantage by his own act or neglect. The second rule is likewise just, because it is
presumed that both parties at about the same time tried to reap some benefits. (Report
of the Code Commission)
Example: Jack agreed with Richard that he will sell his brand new 8-string guitar to
Richard. Jack delivered to Richard the 8-string guitar, not mentioning to Richard that it is
defective. Richard also paid Jack with half of the amount with fake money. In this case,
the remedy is to let the courts temper each liability to the other.

SECTION 2. - Obligations with a Period

Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the
day certain.
A day certain is understood to be that which must necessarily come, although it may not
be known when.
If the uncertainty consists in whether the day will come or not, the obligation is
conditional, and it shall be regulated by the rules of the preceding Section. (1125a)
A period is a future and certain length of time which determines the effectivity or the
extinguishment of obligation. Obligation with a period is one whose consequences are
subject in one way or another to the expiration of said period or term. A day certain is
understood to be that which must necessarily come, although it may not be known when.
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Period and Condition Distinguished:

As to fulfillment - A period is a certain event which must happen sooner or later while a
condition is an uncertain event.
As to time a period refers only to the future while a condition may refer to a past unknown
event.
As to influence or effect on the obligation the period fixes the time of the effectivity of the
obligation while a condition may cause the demandability of the obligation to arise or to
terminate.
Example: Lleina promised to Jack that she will buy and give him an Ibanez 8-string
guitar on June 1, 2012. When June 1, 2012 come, Lleinas obligation to give will be
demandable.

Art. 1194. In case of loss, deterioration or improvement of the thing before the arrival of
the day certain, the rules in Article 1189 shall be observed. (n)
Effect of loss, deterioration, or improvement before the arrival of period.
Also refer to Article 1189, NCC.
Example: If Andrew was suppose to deliver to Brian a particular car on Dec. 19,
2011 but the car was destroyed by fortuitous event in July 1, 2011, the obligation is
extinguished.

Art. 1195. Anything paid or delivered before the arrival of the period, the obligor being
unaware of the period or believing that the obligation has become due and demandable,
may be recovered, with the fruits and interests. (1126a)
Effect Of Payment Before Arrival of Period
This article which is similar to Article 1188, NCC, in an obligation to give, allows the
recovery of what has been paid by mistake before the fulfillment of a suspensive
condition.
Example: Erin owes Grant P20,000.00, which was supposed to be paid on December 25
this year. By mistake, Erin paid his obligation on December 25 last year. Assuming that
today is only June 30, Erin can recover the amount plus interest therein. But Erin cannot
recover, except the interest, if the debt had already matured or if Erin had knowledge of
the period.

Art. 1196. Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of both the creditor and the debtor, unless from the tenor of
the same or other circumstances it should appear that the period has been established in
favor of one or of the other. (1127)
Presumption as to benefit of a Period: The general rule is that when a period is fixed by
the parties, the period is presumed to be for the benefit of both creditor and debtor.
Which means that before the expiration of the period, the debtor may not fulfill the
obligation and neither the creditor demands its fulfillment?
By way of exceptions, however, if the tenor of the obligation or other circumstances may
indicate that a period is have been established for the benefit of either the creditor or
debtor:
1. For the benefit of both creditor and debtor
Example: Jack obtained a loan of P10, 000 at 12% interest per annum from
Leo for one year. Jack has a period of one year within which to use the
money, while Leo will benefit from the interest which the money will earn.
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2. For the benefit of the creditor

Example: Jack executes a promissory note in favor of Leo which reads: I
promise to pay Leo for order the amount of P10,000 on demand. Thus, Leo
can demand payment from Jack anytime.
3. For the benefit of debtor
Example: Jack executes a promissory note which reads: I promise to pay
Leo for order the amount of P 10,000 or before December 31, 2001. Jack
can pay her obligation on or before Dec. 31, 2001.

Art. 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the
debtor.
In every case, the courts shall determine such period as may under the circumstances
have been probably contemplated by the parties. Once fixed by the courts, the period
cannot be changed by them. (1128a)
Court Generally is Without Power to Fix a Period
If an obligation does not state a judicial period and no period is intended, the court is not
authorized to fix a period. The courts have no right to make contracts for the parties.
Exceptions:
1. If the obligation does not fix a period but it can be inferred from its nature and
circumstances that a period is intended.
Example: Steff sold a parcel of land to Abing with a right of repurchase. No term is
specified in the contract for the exercise of the right. Then, the court is authorized to fix
the period to repurchase.
2. If the duration of the period depends upon the sole will of the debtor
Example: I will pay you as soon as possible. Here, the period is not fixed, so the court
may fix the same because if this is not so the obligation may never be complied with by
the debtor.

Art. 1198. The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives
a guaranty or security for the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has
promised;
(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor
agreed to the period;
(5) When the debtor attempts to abscond. (1129a)
The general rule is that the obligation is not demandable before the lapse of the period. The
exceptions are based on the fact that the debtor might not be able to comply with his
obligation:
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When debtor becomes insolvent:

The insolvency need not be judicially declared. It is sufficient that the debtor has less
assets than his liabilities or if debtor is unable to pay his debts as they mature. It is noted
that the insolvency of the debtor must occur after the obligation has been contracted.
When debtor does not furnish guaranties or securities promised:
Example: Green borrowed loan from Tonix which loan was secured by a chattel
mortgage of Greens car as a guaranty. After obtaining the loan, Green fails or
does not execute a chattel mortgage, the loan becomes demandable or the
debtor loses her right to make use of the period.
When by his own acts he has impaired said guaranties or securities:
Example: Green borrowed P50, 000 from Tito which loan was secured by a
chattel mortgage on Greens car. Later, Greens fault, the car was damaged or
she causes the impairment of the car, Green loses her right to make use of the
period, unless she gives another one equally satisfactory.
When by fortuitous event, the guaranty or security was lost.
Example: Green borrowed P50,000 from Tonix which loan was secured by a
chattel mortgage on Greens car. After obtaining the loan, the car was lost by
fortuitous event. Green loss his right to make use of the period unless he gives
another guaranty or security equally satisfactory.

When debtor violates an undertaking

Example: Arthur secured a loan from Arnel on condition that Art will paint the
house of Arnel. If after the proceeds of the loan were given to Arthur, he did not
pant the house of Arnel, Arthur loses his right to make use of the period.
When the debtor attempts to abscond.
Abscond means a depart or escape from creditors knowledge to avoid payment of his
debt. Mere attempt on the part of debtor will entitle the creditor to demand payment of
the obligation without waiting for the period to expire.
Art. 1199. A person alternatively bound by different prestations shall completely perform
one of them.
The creditor cannot be compelled to receive part of one and part of the other
undertaking. (1131)
Meaning of Alternative Obligation: It means an obligation where two or more prestations are
due but the delivery of one is sufficient to extinguish the obligation.
Example: Lleina binds herself to give Jack either a determinate refrigerator or a TV set. If
Lleina chooses and delivers the TV set, the obligation is extinguished. Thus, Lleina
cannot compel Jack to accept part of one and the part of the other prestations.

Art. 1200. The right of choice belongs to the debtor, unless it has been expressly granted
to the creditor.
The debtor shall have no right to choose those prestations which are impossible,
unlawful or which could not have been the object of the obligation. (1132)
Rule on who makes the choice:
As a general rule, the right of choice or to select the prestation belongs to the debtor,
unless the right to choose is expressly granted to the creditor. But the right of the debtor
is subject to the following:
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The debtor cannot choose those prestations which are:

a) Impossible Example: Lleina promised to deliver to Jack 100 sacks of rice or a
stone from Uranus. Lleina cannot chose to deliver the stone coming from Uranus
as it is physically impossible.
b) Unlawful Example: Jack obliged herself to deliver to Lleina a kilo of shabu or a
parcel of land. Jack can choose only the delivery of parcel of land.
c) Could not have been the object of the obligation Example: Lleina borrowed from
Jack P50,000. It was agreed that Lleina would give Jack her horse or her
German Piano. Now, Lleina has two horses, a race horse worth P50,000 and an
ordinary horse which is worth for only P5,000. Gaya cannot choose the ordinary
horse, since it is not the horse which Lleina promised.
d) Only one prestation is practicable (Art. 1202) Example: Lleina will deliver to
Jack her carabao, or her horse or her refrigerator. Through no fault of Lleina, the
horse and the carabao were lost by fortuitous event. Lleina can only delivery the
refrigerator which is the only one practicable.

Art. 1201. The choice shall produce no effect except from the time it has been
communicated. (1133)
Right of Choice Must be communicated
Until the choice is made and communicated, the communicated, the obligation remains
alternative. Once the notice to the effect that a choice is made, the obligation ceases to
be alternative and becomes a simple obligation.
Where the choice has been expressly given to the creditor, such choice shall likewise
produce legal effects upon being communicated to the debtor. (Art. 1205, par. 1)
Example: Lleina promised to give to Jack her Netbook, or her Ipad or her mountain bike
5 days from now. Shes told some of Jacks friend that she will give the netbook. When
the obligation was due, Lleina expressly communicated to Jack to give the mountain
bike. The choice of giving the mountain bike is binding to Lleina.

Art. 1202. The debtor shall lose the right of choice when among the prestations whereby
he is alternatively bound, only one is practicable. (1134)
Example: Xander obliged to give Yuri either object A or object B or object C. If objects A
and B are lost by fortuitous event before choice can be made, Xander can deliver only
object C, because the obligation has become a simple one. If later, object C is also
destroyed by a fortuitous event, the obligation is extinguished, and Xander would not be
liable in any way.

Art. 1203. If through the creditor's acts the debtor cannot make a choice according to the
terms of the obligation, the latter may rescind the contract with damages. (n)
When debtor may rescind contract: If through the creditors fault, the debtor cannot
made a choice according to the terms of the obligation the debtor is given the right to
rescind and recover damages.
Example: Guno borrowed from Tonix P5, 000.00. It was agreed that instead of P5, 000,
Guno could deliver a TV set or a refrigerator or a piano. If through the fault of Tonix, the
TV set was destroyed, Guno can rescind the contract if she wants. In case of rescission,
the amount of P 5, 000.00 must be returned by Guno with interest. Tonix, in turn, must
pay Guno the value of the TV set plus damages.
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Art. 1204. The creditor shall have a right to indemnity for damages when, through the
fault of the debtor, all the things which are alternatively the object of the obligation have
been lost, or the compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared, or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded. (1135a)
When right of choice is with debtor and all prestations were lost
This article entitles the creditor to indemnity for damages when all the alternative objects
are lost through the fault of the debtor before he has made his choice. The indemnity for
which the creditor is entitled shall be based on the value of the last thing which
disappeared or lost or the compliance of the obligation has become impossible.
Example: Xander obliged to give Yuri either object A or object B or object C. If all objects
were lost through the acts of the debtor event before choice can be made, Xander is
liable to pay Yuri an amount equal to the last thing lost to be paid with damages.

Art. 1205. When the choice has been expressly given to the creditor, the obligation shall
cease to be alternative from the day when the selection has been communicated to the
debtor.
Until then the responsibility of the debtor shall be governed by the following rules:
(1) If one of the things is lost through a fortuitous event, he shall perform the obligation
by delivering that which the creditor should choose from among the remainder, or that
which remains if only one subsists;
(2) If the loss of one of the things occurs through the fault of the debtor, the creditor may
claim any of those subsisting, or the price of that which, through the fault of the former,
has disappeared, with a right to damages;
(3) If all the things are lost through the fault of the debtor, the choice by the creditor shall
fall upon the price of any one of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do in case one, some or all
of the prestations should become impossible. (1136a)
When Right of Choice is With Creditor and All Prestations Were Lost
This article provides for the rules to be observed when the right of choice is expressly
granted to the creditor, the rules are as follows:
1. When a thing is lost through a fortuitous event
Example: Ivy obliged herself to deliver to Skai a TV set, or a refrigerator, or a
piano. If the TV set was lost through fortuitous event, Skai can choose from
among the remainder or that which remains if only one subsists.
2. When a thing is lost through debtors fault
Example: If the loss of the TV set occurs through the fault of Ivy, Skai may claim
the refrigerator or the piano with a right of damages or the price of the TV set
with a right of damages.
3. When all the things were lost through debtors fault
Example: If all the items are lost through the fault of Ivy, then Skai can demand
the payment of the price of any one of them with a right to indemnity for
damages.

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

Example: The obligation of Ivy shall be extinguished if all the items which are
alternatively the object of the obligation are lost through a fortuitous event (Art.
1174 will apply).

Art. 1206. When only one prestation has been agreed upon, but the obligor may render
another in substitution, the obligation is called facultative.
The loss or deterioration of the thing intended as a substitute, through the negligence of
the obligor, does not render him liable. But once the substitution has been made, the
obligor is liable for the loss of the substitute on account of his delay, negligence or fraud.
(n)
Meaning of Facultative Obligation
A facultative obligation is one where only one prestation has been agreed upon but
the obligor may render another in substitution.
Example: I will give you my piano but I may give my television set as a
substitute.
SECTION 4. - Joint and Solidary Obligations
Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and
the same obligation does not imply that each one of the former has a right to demand, or
that each one of the latter is bound to render, entire compliance with the prestation.
There is a solidary liability only when the obligation expressly so states, or when the law
or the nature of the obligation requires solidarity. (1137a)
Art. 1208. If from the law, or the nature or the wording of the obligations to which the
preceding article refers the contrary does not appear, the credit or debt shall be
presumed to be divided into as many shares as there are creditors or debtors, the credits
or debts being considered distinct from one another, subject to the Rules of Court
governing the multiplicity of suits. (1138a)
Joint Obligation It is an obligation where there is a concurrence of two or more debtors
or two or more creditors or of several debtors and creditors, by virtue of which each of
the debtors is liable for a proportionate part of the credit.
Example of different instances
1.) Patrick, Leo, and Roniel borrowed P9,000 for Lyka. The presumption is that
Patrick, Leo, and Roniel are jointly liable. Lyka demand only P3,000 from each or
a total of P9,000.
2.) Abing borrowed from Leo, Roniel and Lyka P9,000. There is one debtor and
three creditors. Each creditor can demand only P3,000 from A.
3.) Abing and Leo are liable to Roniel and Lyka for P9,000. There are two debtors
and two creditors. Each creditor can demand only P4,500 from each debtor.
There are solidary liability when:
1.) The obligation expressly so states, or
2.) The law requires solidarity or
3.) The nature of the obligation requires solidarity.
Kinds of Solidary Obligation
1. Passive solidarity on the part of the debtors, where anyone of them can be made liable
for the fulfillment of the entire obligation.

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Example Tonix and Skai are solidary debtors of Jack in the amount of P 10,000
2. Active solidarity on the part of the creditors, where anyone of them can demand the
fulfillment of the entire obligation.
Example Tonix is liable to Skai and Jack for the amount of P10,000. Skai and Jack
are solidary creditors.
3. Mixed Solidarity solidarity on the part of the debtors and creditors where each one of
the debtors is liable to render and each one of the creditors has a right to demand, entire
compliance with the obligation.
Example Tonix and Skai are solidarity debtors to Jack and Dann, solidary creditors
in the amount of P 10,000.
Solidarity not presumed The presumption, where there are two or more persons in the
same obligation, is that it is joint. The reason is that solidary obligations are very
burdensome for they create unusual rights and liabilities. Solidarity between debtors
increases their responsibility while solidarity between creditors presuming that they are
bound jointly and not solidarily.

Art. 1209. If the division is impossible, the right of the creditors may be prejudiced only
by their collective acts, and the debt can be enforced only by proceeding against all the
debtors. If one of the latter should be insolvent, the others shall not be liable for his
share. (1139)
Indivisible Joint Obligation The object is indivisible and the T/E between the parties are
merely proportionately liable.
Example Lleina and Ria are jointly liable to give Emi a particular car. The obligation is joint
but since the object is indivisible, the creditor must proceed against all the joint debtor. If any
of the joint debtors be insolvent, the others shall not be liable for others.

Art. 1210. The indivisibility of an obligation does not necessarily give rise to solidarity.
Nor does solidarity of itself imply indivisibility. (n)
Indivisibility as Distinguished from Solidarity Indivisibility refers to the subject matter
while solidarity refers to the Tie between the parties.
Examples:
Joint divisible obligation Abing and Roniel are jointly liable to Canoy for P10, 000.
Joint indivisible obligation Lleina and Ria are jointly liable to give Canoy their car.
Solidary divisible obligation Emi and Lleina are solidarily liable to give Ria P10, 000.
Solidary indivisible obligation Saj and Emi are solidarily liable to give Dean their car.

Art. 1211. Solidarity may exist although the creditors and the debtors may not be bound
in the same manner and by the same periods and conditions. (1140)
The solidary character of the obligation is not destroyed even if the creditors and debtors
are bound by different terms and conditions. The solidarity is still preserved by
recognizing in the creditor the power of claiming from any or all debtors the payment of
the entire obligation.
Example: Jack and Lleina solidarily bound themselves to pay a total of P10,000 to
Ria, and Emi and Saj to the following conditions. Rias share will be due at the end of
the year; Emi will get her share only after she passes the CPA exams and Saj will get
his share only after he painted the house of Ria.
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Art. 1212. Each one of the solidary creditors may do whatever may be useful to the
others, but not anything which may be prejudicial to the latter. (1141a)
Art. 1213. A solidary creditor cannot assign his rights without the consent of the others.
(n)
Solidary Creditors May Do Useful Act; Not Prejudicial Acts A solidary creditor may do
any act beneficial or useful to the others but he cannot act prejudicial to them.
Example of Beneficial Acts To interrupt the running of prescription, the act of one
solidary creditor in making a judicial demand upon any of the solidary debtors is
sufficient. (Art. 1155, NCC)
Example of Prejudicial Acts Should not be performed, otherwise, there will be
liability for damages. However, in the case of remission or condonation, the solidary
creditor is allowed to so remit, and the obligation is extinguished.

Art. 1214. The debtor may pay any one of the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by one of them, payment should be made to him.
(1142a)
Payment to Any of the Solidary Creditors: The rule is that the debtor may pay any one of
the creditors. But when a demand is made by any of the creditors, payment should be
made to him who made the demand, judicially or extra-judicially.
Example: A is liable to B and C P5, 000. A may pay either B or C But if B made a
demand then payment should only be made to him. If A paid C, B is still entitled
to his share from A in case C does not turn over to B his share.

Art. 1215. Novation, compensation, confusion or remission of the debt, made by any of
the solidary creditors or with any of the solidary debtors, shall extinguish the obligation,
without prejudice to the provisions of Article 1219.
The creditor who may have executed any of these acts, as well as he who collects the
debt, shall be liable to the others for the share in the obligation corresponding to them.
(1143)
Liability of Solidary Creditor in case of Novation, Compensation, Confusion or Remission
When a creditor who executed any of these acts, it is logical that he is liable to the
other solidary creditors for their corresponding shares considering that such acts are
prejudicial to them. (Art. 1212, NCC)

Art. 1216. The creditor may proceed against any one of the solidary debtors or some or
all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as the
debt has not been fully collected. (1144a)
Creditor May Proceed Against Any Solidary Debtor In a solidary obligation, the creditor
may proceed against any, some or all of the solitary creditors simultaneously so long as it
has not been fully collected.
Example: Apatrick, Batonix and Cajack solidarily owe Daleo the amount of P9,000.
Daleo can collect from Apatrick or Batonix or Cajack alone or from any two of them or all
of them simultaneously. If demand is made on Apatrick, the latter cannot require Daleo
to make a demand also on Batonix and Cajack or to include them as party defendants
as Daleo has the right to proceed against any one of them.

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Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share
to the debtor paying the obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each. (1145a)
Effects of Payment by a Solidary Debtor Payment is one of the ways by which an
obligation is extinguished and consist in the delivery of the thing or the rendition of the
service which is the object of the obligation.
Example Alleina, Baria and Calila are solidarily liable to Dann and Etonix in the
amount of P9,000 due on Dec. 31. If both Alleina and Baria offer to pay Dann on
Dec. 31, the latter may choose which offer to accept. If Alleina pays the entire
amount of P9,000 on Dec. 31, the obligation is extinguished.
The payment of A gives him the right of reimbursement from B and C P3, 000 each with
interest from the date of payment. However, if C is insolvent, both A and B shall bear the
insolvency in proportion to their shares.

Art. 1218. Payment by a solidary debtor shall not entitle him to reimbursement from his
co-debtors if such payment is made after the obligation has prescribed or become illegal.
(n)
Effect of Payment After Obligation Has Prescribed or Become Illegal
Prescription is one where one acquires ownership and other rights through the
lapse of time in the manner and under the conditions laid down by law.
Example Ajack and Batonix are solidarily indebted to Calliena in the amount of
P 10,000. The debt prescribed. If Ajack paid the debt, he cannot collect form
Batonix his share of the debt. Neither can Ajack can recover from Calleina.
Becomes Illegal Ajack and Batonix are solidarily bound to deliver medical drugs to
Calliena. the transaction of such medical drugs were later prohibited by law.
Notwithstanding the prohibition, Batonix performed the obligation by delivering the
prohibited drugs. Batonix is not anymore entitled to reimbursement from Ajack.

Art. 1219. The remission made by the creditor of the share which affects one of the
solidary debtors does not release the latter from his responsibility towards the codebtors, in case the debt had been totally paid by anyone of them before the remission
was effected. (1146a)
Example: Jack and Lleina solidarily owe Ria P1,000,000. Jack paid Ria the whole
amount. Later Ria remitted Lleinas share. Can Jack still recover reimbursement of
P500,000 from Lleina? Yes.
Art. 1220. The remission of the whole obligation, obtained by one of the solidary debtors,
does not entitle him to reimbursement from his co-debtors. (n)
Remission by Creditor
1.) If payment if made first, the remission is of no effect. There is no more to remit.
2.) If remission is made prior to the payment and payment is made, then there is
payment by mistake.

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3.) If one of the solidary debtors obtained remission on the whole obligation, he is not
entitled to reimbursement from his co-debtors because remission is essentially
gratuitous.

Art. 1221. If the thing has been lost or if the prestation has become impossible without
the fault of the solidary debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all shall be responsible to the creditor,
for the price and the payment of damages and interest, without prejudice to their action
against the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has become impossible
after one of the solidary debtors has incurred in delay through the judicial or extrajudicial
demand upon him by the creditor, the provisions of the preceding paragraph shall apply.
(1147a)
Rules in Case thing has Been Lost or Prestation Has Become Impossible
If the thing is lost or has become impossible to perform through a fortuitous event without
the fault of the debtor, the obligation is extinguished.
Example: A, B and C are solidarily bound to deliver a determinate car to D. Without
any fault on the part of any one of the debtors, the car was lost through the fortuitous
event. The obligation is extinguished.
If in the preceding paragraph, the car was lost through the fault of anyone of the solidary
debtors, anyone of them may be held liable by D for the price of the car plus damages.
The debtors who did not any fault on the lost of the car have the right to recover from
the co-debtor who is at fault.
The solidary debtors are likewise liable even if the thing is lost through fortuitous event if
the loss occurs after anyone of the solidary debtors has been in delay. The debtors,
however who were not in delay have the right to recover from their co-debtors who was
responsible due to his delay.

Art. 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all
defenses which are derived from the nature of the obligation and of those which are
personal to him, or pertain to his own share. With respect to those which personally
belong to the others, he may avail himself thereof only as regards that part of the debt for
which the latter are responsible. (1148a)
Defenses available to a Solidary Debtor The defenses available to the solidary debtors if
the creditor proceeds against him alone for the payment of the entire obligation
1. The defenses derived from the nature of the obligation, such as fraud
prescription, remission illegality or absence of consideration, payment or
performance.
Example: Jack and Lleina are solidarily liable to Canoy in the among to
P6,000. The entire debt was paid by Jamero. In an action by Canoy against
Jack, the latter can raise the defense of payment by virtue of which the
obligation was extinguished.
2. Defenses personal to him or pertaining to his own share, such as minority,
insanity and vitiated consent.
3. Defenses which are personal to others, such as minority, insanity and vitiated
consent.

SECTION 5. - Divisible and Indivisible Obligations

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Art. 1223. The divisibility or indivisibility of the things that are the object of obligations in
which there is only one debtor and only one creditor does not alter or modify the
provisions of Chapter 2 of this Title. (1149)
1. A divisible obligation is one the object of which in its delivery or performance is capable
of partial fulfillment.
Example: Antonio agreed to pay Sky P10,000 in five monthly installments. The
obligation of Antonio is divisible because it is payable in partial payments.
2. An indivisible obligation is one the object which in its delivery or performance is not
capable of partial fulfillment.
Example: Antonio agreed to deliver a determinate car to Sky on Dec. 31. This is an
indivisible obligation because it is not subject to partial performance.

Art. 1224. A joint indivisible obligation gives rise to indemnity for damages from the time
anyone of the debtors does not comply with his undertaking. The debtors who may have
been ready to fulfill their promises shall not contribute to the indemnity beyond the
corresponding portion of the price of the thing or of the value of the service in which the
obligation consists. (1150)
Art. 1225. For the purposes of the preceding articles, obligations to give definite things
and those which are not susceptible of partial performance shall be deemed to be
indivisible.
When the obligation has for its object the execution of a certain number of days of work,
the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.
However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character
of the prestation in each particular case. (1151a)
Obligations Deemed Indivisible The general rule of determining the divisibility or
indivisibility of an obligation depend on the purpose of the obligation.
1. Obligation to give definite things
Example: To give a particular house. Here the obligation is indivisible because of the
nature of the subject matter.
2. Obligations which are not susceptible of partial performance
Example: Saj is obliged to sing a song. Here the obligation is indivisible by reason
its purpose which requires the performance of all the parts.
3. Obligation provided by law to be indivisible even if thing or service physically divisible.
Example: Taxes should be paid within a definite period. Although money is physically
divisible, the amount of tax payable must be delivered in Toto, not partially.
4. Obligations intended by the parties to be indivisible even if thing or service is physically
divisible.
Example: The obligation of Lleina to give P10,000 to Jack on a certain date. Money
is physically divisible by the clear intention here for Lleina to deliver the amount at on
time and as a whole.
Obligations Deemed divisible
1. Obligations which have for their object the execution of a certain number of days of work.

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Example Jack obliged himself to paint the house of Lleina to be finished in 10 days.
The obligation is divisible because it will not be finished in one time.
2. Obligations which have for their object the accomplishment of work by metrical units.
Example Jack obliged himself to deliver 25 cubic meter of sand.
3. Obligations which by their nature are susceptible of partial performance
Example The obligation of Jack to pay a debt of P10,000 to Lleina in ten (10)
monthly installments.

SECTION 6. - Obligations with a Penal Clause

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

Meaning of Penal Clause An obligation with a penal clause is one which contains an
accessory undertaking to pay a previously stipulated indemnity incase of breach. It is
attached to obligations in order to insure their performance.
Purpose of the penal clause:
1.) To insure the performance of the obligation.
2.) To substitute for indemnity for damages and the payment of interest in case of noncompliance of the principal obligation.
3.) To penalize the obligor in case of breach of the principal obligation.

Art. 1227. The debtor cannot exempt himself from the performance of the obligation by
paying the penalty, save in the case where this right has been expressly reserved for
him. Neither can the creditor demand the fulfillment of the obligation and the satisfaction
of the penalty at the same time, unless this right has been clearly granted him. However,
if after the creditor has decided to require the fulfillment of the obligation, the
performance thereof should become impossible without his fault, the penalty may be
enforced. (1153a)
Debtor Cannot Substitute Penalty For the Principal Obligation The general rule is that
the debtor is not allowed to just pay the penalty instead of fulfilling the obligation. He can
do so if the right has been expressly reserved. The reason is that if he can just pay,
fulfillment of the obligation will be considered an alternative one. The word expressly
means that any implied reservation is not allowed.

Art. 1228. Proof of actual damages suffered by the creditor is not necessary in order that
the penalty may be demanded. (n)
Example: Arthur was obliged under a contract with Brad, not to sell shares of stock for
one year. A penal clause was provided. But Arthur sold shares of stock within the period
specified but damages were not proved by Brad to have been suffered by him. May Brad
recover the penalty? Yes, Brad may lawfully recover the penalty.

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

Art. 1230. The nullity of the penal clause does not carry with it that of the principal
obligation.
The nullity of the principal obligation carries with it that of the penal clause. (1155)
Effect of Nullity of Penal Clause The general principle that the accessory follows the
principal. If only the penal clause is void, the principal obligation remains valid and
demandable. The penal clause may be disregarded.
Example: Arthur agreed to sell merchandise to Brad. It is provided in their agreement
that in case of default, Arthur will deliver a prohibited drug as penalty. Here, the
obligation to sell merchandise is valid by the penalty to deliver the prohibited drug is
void. For failure of Arthur to comply with the obligation, Brad may recover damages.

CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS
GENERAL PROVISIONS
Art. 1231. Obligations are extinguished:
(1) By payment or performance:
(2) By the loss of the thing due:
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment
of a resolutory condition, and prescription, are governed elsewhere in this Code. (1156a)
SECTION 1. - Payment or Performance
Art. 1232. Payment means not only the delivery of money but also the performance, in
any other manner, of an obligation. (n)
Payment- it should be the delivery of money and the performance in any other manner of
an obligation.
Ex. Ria is indebted to Emi P1,000.00. Her obligation is to deliver to Emi the amount and
to perform his obligation which is to pay Emi the said amount.

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Art. 1233. A debt shall not be understood to have been paid unless the thing or service in
which the obligation consists has been completely delivered or rendered, as the case
may be. (1157)
The general rule is that, to be considered a valid payment, the thing or service
contemplated must be paid and fulfillment must be complete.

Art. 1234. If the obligation has been substantially performed in good faith, the obligor
may recover as though there had been a strict and complete fulfillment, less damages
suffered by the obligee. (n)
This is the exception to the general rule in Art. 1233, that if there is substantial
performance in good faith by the debtor, the obligation is deemed to be fulfilled.

Art. 1235. When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is deemed
fully complied with. (n)
Another exception to the general rule in Art. 1233, that when the creditor accepts the
performance knowing its incompleteness and irregularities and without expressing any
protest, the obligation is deemed complete.
Ex. Karl agreed to paint the house of Jack. According to their stipulation, Karl
would use a particular brand of paint. If Jack accepted the performance of Karl,
knowing that the paint used was another brand and without expressing any
protest or objection, the obligation is deemed fully complied with.

Art. 1236. The creditor is not bound to accept payment or performance by a third person
who has no interest in the fulfillment of the obligation, unless there is a stipulation to the
contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if
he paid without the knowledge or against the will of the debtor, he can recover only
insofar as the payment has been beneficial to the debtor. (1158a)
The general rule is that, you cannot compel the creditor to accept payment by a third
person whom he may dislike or distrust. However, if it is paid by the guarantor and
mortgagors, creditor can accept it if is stipulated in their contract.
Persons from whom creditor must accept payment:
1. Debtor
2. Any person who has an interest in the obligation (like guarantor).
3. A third person who has no interest in the obligation when there is stipulation that he
can make payment.
Effect of payment by a third person:
1. If made without the knowledge or against the will of the debtor, the person who paid
can recover only insofar as the payment beneficial to him.
Ex. Laila is indebted to Andrew P1,000.00. Richard, a third person paid the whole
amount without the knowledge and consent of Laila, and did not know that Laila
already paid P400.00, Richard is entitled to be reimbursed only on the amount of
P600.00 from Laila since it is the only amount Laila benefited. Richard can recover
P400.00 from Andrew who should not have accepted it. If Andrew acted in bad faith,
he is liable also for interest in lieu of damages.
2. If made with the knowledge of the debtor, the third person shall have the rights of
reimbursement and subrogation, that is to recover what he has paid.
Full reimbursement-full amount down to the single centavo the third person has paid.
Subrogation- the right to step on the shoes of the creditor.

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Ex. In the above case, if the payment of Richard was made with the knowledge or
consent of Laila, Richard can recover from Laila the full reimbursement of P1,000.00
and the rights of subrogation.

Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will
of the latter, cannot compel the creditor to subrogate him in his rights, such as those
arising from a mortgage, guaranty, or penalty. (1159a)
Subrogation- the act of putting somebody into the shoes of the creditor, hence, enables
the former to exercise all the rights and actions that could have been exercised by the
latter.
Rights arising from:
1. A mortgage
2. A guaranty
3. A penalty or penal clause
Art. 1238. Payment made by a third person who does not intend to be reimbursed by the
debtor is deemed to be a donation, which requires the debtor's consent. But the payment
is in any case valid as to the creditor who has accepted it. (n)
Donation, in order to be valid it must be accepted. Since, no one should be compelled to
accept the generosity of another. (Report of the Code of Commission, p. 132). However,
if the creditor accepts the payment, it shall be valid as to him and the payor although the
debtor did not give his consent to the donation.
Ex. Jack owes Tonix P1,000.00. without the intention of being reimbursed, Sky, a
third person paid Jacks obligation. Jack had previously accepted Skys
generosity.
In this case, Jack is not liable to Sky and his obligation is extinguished. But if
Jack did not consent to the donation, Sky may recover from Jack since there has
been no donation, although originally Sky did not tend to be reimbursed.
Nevertheless, the obligation of Jack to Tonix is extinguished because the
payment is valid and he accepted it.

Art. 1239. In obligations to give, payment made by one who does not have the free
disposal of the thing due and capacity to alienate it shall not be valid, without prejudice
to the provisions of Article 1427 under the Title on "Natural Obligations." (1160a)
Free disposal of the thing due- means that the thing to be delivered must not be subject
to any claim or lein or encumbrance of a third person.
Capacity to alienate- that the person is not incapacitated to enter into contracts.
General rule in obligations to give, payment by one who does
disposition and capacity to alienate is not valid.

not have the free

EXC. Is provided in ART. 1427. The creditor cannot be compelled to accept payment
where the person paying it has no capacity to make it.
Ex. Ria agreed to sell to Lleina a refrigerator. If the refrigerator to be delivered to
Lleina belongs to Emi, the same can be recovered by Emi because the payment
is not valid. Ria does not have free disposal of the refrigerator. The same right of
recovery exist although the refrigerator belongs to Ria if she is a minor and
therefore, has no capacity to alienate it.

Art. 1240. Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it. (1162a)
Person to whom payment shall be made:
1. The creditor or oblige (person in whose favor obligation has been constituted).
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2. His successor in interest (like an heir or assignee).

3. Any person authorized to receive it.
Ex. Ria owes Emi P1,000.00. Ria must pay Emi or any person authorized by Emi or in
case of his death, his heirs or any person authorized by law. Payment to any other
person is not valid except as provided in Art. 1241, par. 2. If Ria acted in good faith in
paying to the wrong party is not an excuse.

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