Book 4 Chapter 2 – Nature and Effect of Obligations

Civil Code of the Philippines Article 1163

General Rule:
Title I – Obligations o Every person obliged to give something is also obliged to
Chapter 1 – General Provisions take care of it with the proper diligence of a good father
Article 1156 of a family (diligence of a prudent man)
o An obligation is a juridical necessity to give, to do or not
Exception:
to do.
o Unless the law or the stipulation of the parties requires
another standard of care
Article 1157
Obligations arise from: Article 1163 applies to obligations to give a determinate thing.
1. Law Ordinary diligence:
2. Contracts Diligence of a good father of a family
3. Quasi – Contracts Diligence of a prudent man
4. Delicts
Extraordinary diligence:
5. Quasi – Delicts
Diligence of very cautious persons

Article 1158 Example of a case where the law requires extraordinary care:

o Obligations derived from law are not presumed. o A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the
o Only those expressly determined in this Code or in special
utmost diligence of very cautious persons, with a due
laws are demandable, and shall be regulated by the
regard for all the circumstances
precepts of the law which establishes them; and as to what
has not been foreseen, by the provisions of this Book.
Article 1164

Article 1159 o The creditor has a right to the fruits of the thing from
the time the obligation to deliver it arises.
o Obligations arising from contracts have the force of law
between the contracting parties and should be complied o However, he shall acquire no real right over it until the
with in good faith. same has been delivered to him.

Personal right:
Article 1160 Enforceable against the contracting parties only
o Obligations derived from quasi-contracts shall be subject Also known as jus in personam or jus ad rem
to the provisions of Chapter 1, Title 17 Extra-Contractual
Real right:
Obligations, Book 4, Civil Code of the Philippines.
Enforceable against the whole world
Also known as jus in re
Article 1161
Kinds of Delivery:
o Civil obligations arising from criminal offenses shall be
1. Actual delivery (Tradition)
governed by the penal laws, subject to:
Where physically, the property changes hands
1. Article 2177, Civil Code of the Philippines
2. Constructive delivery
2. Chapter 2 Human Relations, Preliminary Title,
Where physical transfer is implied
Civil Code of the Philippines
3. Title 18 Damages, Book 4, Civil Code of the Types of Constructive Delivery:
Philippines 1. Traditio Simbolica
o Symbolical tradition
Article 1162 o Keys of a bodega are given
o Obligations derived from quasi-delicts shall be governed 2. Traditio Longa Manu
by the provisions of: o Delivery by mere consent or
1. Chapter 2 , Title 17 Extra-Contractual Obligations, the pointing out of the object
Book 4, Civil Code of the Philippines o Pointing out the car, which is
2. Special laws the object of the sale
 3. Traditio Brevi Manu
o Delivery by the short hand
o Delivery whereby a possessor
of a thing not as an owner,
becomes the possessor as
owner
4. Traditio Constitutum Possessorium
o Opposite of Traditio Brevi Manu
o Delivery whereby a possessor
of a thing as an owner,
retains possession no longer
as an owner, but in some
other capacity
5. Tradition by the execution of legal
forms and solemnities
o Execution of a public instrument
selling land
Note:
o A sale which is simulated, or even a genuine one, where
there is no delivery of the object, does not transfer
ownership
When Does the Obligation to Deliver Arise?
It depends:
o If there is no term or condition, then from the perfection of
the contract
o If there is a term or a condition, then from the moment the
term arrives or the condition happens
Article 1165
If the thing to be delivered is determinate or specific:
o Creditor may compel the debtor to make the delivery
o If the debtor is guilty of fraud, negligence, or delay in
delivering the determinate or specific thing, he shall be
liable for damages
o If the obligor delays, or has promised to deliver the same
thing to two or more persons who do not have the same
interest, he shall be responsible for fortuitous event until
he has effected the delivery.
If the thing to be delivered is indeterminate or generic:
o Creditor may ask the debtor to comply with the obligation
at his (debtor) expense.
Article 1166
o The obligation to give a determinate thing includes that
of delivering all its accessions and accessories, even
though they may not have been mentioned.
Article 1167
o If a person obliged to do something fails to do it or does
it in contravention of the tenor of the obligation, the
same shall be executed at his expense.
o Furthermore, it may be decreed that what has been
poorly done be undone.
Article 1168
o If a person obliged not to do something does it, the
same shall be undone at his expense.
Article 1169
o Obligor obliged to give or to do something shall incur in
delay from the time the obligee demands judicially or
extra-judicially the fulfillment of such obligation.
o However, the demand of the oblige shall not be
necessary in order that delay may exist, in the following:
1. Obligation or the law expressly so declares
2. If from the nature and the circumstances of the
obligation, the designation of the time for its
fulfillment was a controlling motive for the
establishment of the contract
3. If demand would be useless, as when the obligor
has rendered it beyond his power to perform
In reciprocal obligations:
o 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.
o From the moment one of the parties fulfills his
obligation, delay by the other begins.
Article 1170
o Obligors who are guilty of fraud, negligence, or delay in
the performance of the obligation and those who
contravene its tenor, are liable for damages.
Article 1171
o Responsibility arising from fraud is demandable in all
obligations
o Any waiver of an action for future fraud is void
Article 1172
o Responsibility arising from negligence is demandable in
all obligations
o But such liability may be regulated by the courts,
according to the circumstances
 Article 1178
Article 1173 General Rule:
The fault or negligence of the obligor consists in: o All rights acquired in virtue of an obligation are
o Omission of that diligence required by the nature of the transmissible
obligation and corresponds with the circumstances of the
Exceptions:
person, of the time and of the place.
1. If the law provides otherwise
If the law or contract does not state the diligence to be observed
2. If the contract provides otherwise
in the performance of the obligation:
3. If the obligation is purely personal
o Diligence of a good father of a family shall be required
If negligence shows bad faith:
o It constitutes fraud, and responsibility arising from it is
demandable in all obligations
o Obligor is responsible for damages that may be reasonably
attributed to the non-performance of the obligation
Article 1174 Chapter 3 – Different Kinds of Obligations
General Rule: Section 1 – Pure and Conditional Obligations
o No liability for a fortuitous event (caso fortuito) (that which Article 1179
ould not be foreseen, or which even if foreseen, was Obligation Is Demandable at Once:
inevitable). 1. If it is a pure obligation:
Exceptions: o Obligation without a condition or a term
Debtor is responsible for a fortuitous event in the following: o Obligation whose performance does not depend
1. If expressly declared by the law upon a future or uncertain event, or upon a past
2. If expressly declared by stipulation or contract event unknown to the parties
3. If the nature of the obligation requires the assumption of 2. If it is an obligation with a resolutory condition, subject
risk to the effects of the happening of the event
4. If the thing to be delivered be indeterminate or generic o It provides for the extinguishment of the
obligation upon the happening of the said
Article 1175 condition
o Usurious transactions shall be governed by special laws
Article 1180
Article 1176 o If the debtor binds himself to pay when his means permit
Receipt of the principal by the creditor, without reservation as to him to do so:
the interest:
o It is deemed to be an obligation with a period
o Prima facie presumption that interest has been paid
o Court shall fix the duration of such period
Receipt of a later installment of a debt without reservation as to
prior installments: Article 1181
o Prima facie presumption that prior installments have In conditional obligations, the acquisition of rights, as well as the
been paid extinguishment or loss of those already acquired:
o Depends upon the happening of the event which
Article 1177 constitutes the condition
Rights of the Creditors:
Suspensive Condition
1. Exact or demand payment
o Conditions precedent or conditions antecedent
2. Exhaust debtor’s properties, generally by attachment
o Happening of the condition gives rise to the acquisition of
3. Accion subrogatoria (subrogatory action) — i.e., exercise
a right
all rights and actions except those inherent in the person
of the debtor Resolutory Condition
4. Accion pauliana (impugn or rescind acts or contracts done o Conditions subsequent
by the debtor to defraud the creditor) o Happening of the condition extinguishes a right already
acquired
 o Conditional obligation is valid
Article 1182
Potestative Condition Article 1184
o Fulfillment of such condition depends upon the sole will of Positive Condition:
one of the parties o The condition that some event happen at a determinate
Casual Condition time shall extinguish the obligation as soon as:
1. The time expires, or
o Fulfillment of such condition depends upon chance or
2. If it has become indubitable that the event will
upon the will of a third person
not take place
Mixed Condition
If the period is not fixed in the contract, the court, considering the
o Fulfillment of such condition is dependent partly on the
parties’ intentions, should determine what period was really
will of one of the contracting parties, or of the obligor,
intended.
and partly on chance, hazard or the will of a third person

Rules:
Article 1185
Potestative Condition:
Negative Condition:
1. If potestative on the part of the debtor:
If also a suspensive condition:
o The condition that some event will not happen at a
determinate time shall render the obligation effective as
o Conditional obligation is void
soon as:
If also a resolutory condition:
1. The time expires, or
o Conditional obligation is valid
2. If it has become indubitable that the event will
2. If potestative on the part of the creditor:
not take place
o Conditional obligation is valid
If the period is not fixed in the contract, the court, considering the
Casual Condition:
parties’ intentions, should determine what period was really
1. If casual condition be attached to the obligation:
intended.
o Conditional obligation is valid

Mixed Condition: Article 1186

1. If mixed condition be attached to the obligation: o If the debtor or obligor voluntarily prevents the fulfillment
o Conditional obligation is valid of a condition in a conditional obligation:
o Such condition is deemed fulfilled, and the
Article 1183 obligation becomes demandable immediately.
Impossible Condition
o Fulfillment of such condition is impossible in itself, Article 1187
physically or logically Effect of Fulfillment of a Suspensive Condition:

Illegal or Unlawful Condition o Obligation becomes effective from the day the obligation
was constituted (retroactive effect)
o Fulfillment of such condition is contrary to law, good
customs, and public policy Thus:

Rules:
 Any alienation by the creditor with respect to the thing
due during the pendency of the condition will be valid
Impossible Condition:
1. If the condition is to do an impossible thing:  Any alienation by the debtor with respect to the thing

o Conditional obligation is void due during the pendency of the condition will be void

2. If the condition is not to do an impossible thing: However, no retroactive effect with respect to:
o Disregard the condition; obligation is valid 1. Fruits and interests:

Illegal or Unlawful Condition: o In unilateral obligations, debtor gets the fruits

1. If the condition is to do an illegal or unlawful thing: and interests unless there is a contrary intent.

o Conditional obligation is void o In reciprocal obligations, the fruits and interests

2. If the condition is not to do an illegal or unlawful thing: during the pendency of the condition shall be
 deemed to compensate each other, even though Effects if the resolutory condition in a conditional obligation is
they really be unequal fulfilled and the thing to be returned be determinate or specific:
2. Period of prescription 1. The obligation is extinguished
o Period of prescription runs from the day the 2. Because the obligation had been extinguished and
condition was fulfilled, because it can be considered to have had no effect from the beginning, the
enforced only from said date parties should restore to each other what they have
received
Article 1188 3. Aside from the actual things received, the fruits or the
Before the Fulfillment of a Suspensive Condition: interest thereon should also be returned after deducting
1. Creditor may bring the appropriate actions for the of course the expenses made for their production,
preservation of his right gathering, and preservation
2. Debtor may recover what has been paid by mistake or by 4. The courts are given power to determine the retroactivity
deliberate action during the pendency of the condition of the fulfillment of resolutory conditions

Article 1189 5. During the pendency of the condition:

Upon fulfillment of the suspensive condition in a conditional 1. If the thing is lost without the fault of the person bound
obligation to give a determinate or specific thing, the following are to return it:
the rules during the pendency of the condition: o Obligation to return it shall be extinguished
1. If the thing is lost without debtor’s fault: 2. If the thing is lost through the fault of the person bound
o Conditional obligation shall be extinguished to return it:
2. If the thing is lost with debtor’s fault: o He shall pay damages
o Debtor shall pay damages
Thing is lost when:
Thing is lost when:  It perishes
 It perishes  It goes out of commerce
 It goes out of commerce  It disappears in such a way that its existence is unknown
 It disappears in such a way that its existence is unknown or it cannot be recovered
or it cannot be recovered
2. If the thing deteriorates without the fault of the person
3. If the thing deteriorates without debtor’s fault: bound to return it:
o Creditor bears impairment loss o Person to whom the thing is returned bears
4. If the thing deteriorates with debtor’s fault: impairment loss
o Creditor may choose to: 3. If the thing deteriorates through the fault of the person
1. Rescind the obligation with indemnity bound to return it:
for damages, or o Person to whom the thing is returned may
2. Push through with the obligation with choose to:
indemnity for damages 1. Rescind the obligation to return with
5. If the thing is improved by its nature, or by time: indemnity for damages, or
o Creditor gets the benefit 2. Push through with the obligation to
6. If the thing is improved at debtor’s expense: return with indemnity for damages
o Debtor is entitled to the rights of a usufructuary 4. If the thing is improved by its nature, or by time:
over useful improvements o Person to whom the thing is returned gets the
 Debtor has a right to enjoy the use and benefit
the fruits of the thing 5. If the thing is improved at the expense of the person
o Debtor is not entitled to reimbursement but he bound to return it:
may remove the improvements provided he o He is entitled to the rights of a usufructuary over
does not, by doing so, damage the property useful improvements
 He has a right to enjoy the use and the
Article 1190 fruits of the thing
 o He is not entitled to reimbursement but he may
remove the improvements provided he does
not, by doing so, damage the property
Article 1191
Right to rescind:
o It means the right to cancel or resolve the reciprocal
obligation because of the breach of faith by the
defendant, which is violative of the reciprocity between
the parties.
o Rescission creates the obligation to return the object of
the contract. It can be carried out only when the one who
demands rescission can return whatever he may be
obliged to restore.
Reciprocal obligation:
o Obligations where two (2) parties are reciprocally obliged
to do or give something
Characteristics of the right to rescind or resolve under Article 1191:
1. It is implied in reciprocal obligations
o It is implied (presumed) to exist and, therefore,
need not be expressly stipulated upon
2. It may be waived, expressly or impliedly
o E.g. Accepting delayed installment payments
beyond the grace period amounts to an implied
waiver of the right to rescind
2. It can be demanded only if the plaintiff is ready, willing,
and able to comply with his own obligation, and the
defendant is not
3. Guilty party cannot rescind.
o He who comes to equity must come with clean
hands.
4. Right to rescind is NOT absolute:
1. Trivial causes or slight breaches on the part of
the defendant will not cause rescission
2. If there be a just cause for fixing the period
within which the debtor can comply, the court
will not decree rescission
3. If the property is now in the hands of an
innocent third party who has lawful possession
of the same, rescission cannot be availed
anymore by the plaintiff
5. Right to rescind by the plaintiff needs judicial approval if
there has already been delivery of the object, unless the
defendant voluntarily returns it
6. Right to rescind by the plaintiff need not judicial approval:
1. If there has been no delivery yet
2. In case there has been delivery, the contract
stipulates that either party can rescind the same
or take possession of the property upon non-
fulfillment by the other party
Choices of the Injured Party (Plaintiff)
1. Injured party (plaintiff) may choose between:
1. Fulfillment of the obligation plus damages, or
2. Rescission of the obligation plus damages
Note:
o Right to choose between the two (2) courses of
action is alternative and alternative prayer may
be made in a court complaint unless either had
been waived previously
o Right to choose between the two (2) courses of
action is not conjuctive, i.e. plaintiff cannot ask
for both remedies
2. Injured party (plaintiff) who has elected fulfillment may, if
fulfillment be impossible, still ask for rescission, provided
that rescission is otherwise proper
o Rule is vice-versa, provided the court has not yet
given a final judgment
3. If an action is brought for specific performance, the
damages sought must be asked in the same action;
otherwise, the damages are deemed waived
Article 1192
o In case both of the parties have committed a breach of
the obligation:
o Liability of the 1st infractor shall be equitably
tempered by the courts
o If it cannot be determined which of the parties first
violated the contract:
o Contract is extinguished, and each party shall
bear his own damages
Section 2 – Obligations with a Period
Article 1193
Obligations with a Suspensive Period
o Obligations with a Period Ex die
o Obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes
Obligations with a Resolutory Period
o Obligations with a Period In diem
o Obligations for whose extinguishment a day certain has
been fixed, shall terminate only when that day comes
o Obligations with a resolutory period take effect at once
(demandable at once), but terminate upon arrival of the
day certain
Day Certain
 o It is understood to be that which must necessarily come, Anything paid or delivered before the arrival of the period, the
although it may not be known when obligor or debtor being unaware of the period or believing that the
Two (2) different types: obligation has become due and demandable:
1. Definite: o May be recovered, with the fruits and interests
o Exact date or time is known and given Fruits and interests:
2. Indefinite:
o In unilateral obligations, debtor gets the fruits
o Something that will surely happen, but the date and interests unless there is a contrary intent.
of happening is unknown (e.g. death)
o In reciprocal obligations, the fruits and interests
If the uncertainty consists in whether the day will come or not: during the pendency of the condition shall be
o Obligation is conditional deemed to compensate each other, even though
they really be unequal
When Period of Prescription Begins:
o Period of prescription commences from the time the term
in the obligation arrives, for it is only from that date that it
is due and demandable.
Article 1194
Article 1196
Upon the arrival of the day certain in an obligation with a period to
In Obligation with a Period / Term:
give a determinate or specific thing, the following are the rules
General Rule:
before the arrival of the day certain:
o Period or term is established for the benefit of both the
1. If the thing is lost without debtor’s fault:
debtor and creditor
o Obligation with a period shall be extinguished
o Debtor is given enough time to pay; he can also
2. If the thing is lost with debtor’s fault:
resist premature demand for compliance
o Debtor shall pay damages
o Creditor cannot be forced to accept premature
Thing is lost when: payment, especially when, in the contract, there
 It perishes is interest stipulated or when he is interested in
 It goes out of commerce keeping his money safely invested
 It disappears in such a way that its existence is unknown
Exception:
or it cannot be recovered
o Unless from the tenor of the obligation or other
3. If the thing deteriorates without debtor’s fault:
circumstances, it should appear that the period or term
o Creditor bears impairment loss has been established for the benefit of the debtor or for
4. If the thing deteriorates with debtor’s fault: the benefit of the creditor
o Creditor may choose to:
Article 1196 applies only:
1. Rescind the obligation with indemnity
o Where the parties to a contract themselves have fixed a
for damages, or
period, and not to a case where the parties have authorized
2. Push through with the obligation with
the Court to fi x a reasonable term
indemnity for damages
5. If the thing is improved by its nature, or by time:
Article 1197
o Creditor gets the benefit
The only action which the creditor can bring upon an obligation
6. If the thing is improved at debtor’s expense:
that does not fix a term, but where a term was indeed intended, is
o Debtor is entitled to the rights of a usufructuary
to ask the court to fix the period within which the debtor must
over useful improvements
pay for the simple reason that the fulfillment of the obligation
 Debtor has a right to enjoy the use and itself cannot be demanded until after the court has fixed the
the fruits of the thing period for its compliance.
o Debtor is not entitled to reimbursement but he o Once fixed by the courts, the period cannot be changed
may remove the improvements provided he by the contracting parties.
does not, by doing so, damage the property
When the Court may fix the period?
1. If the duration depends upon the will of the debtor
Article 1195
1. “when my means permit me to do so”
 2. “I’ll pay you little by little” 3. Which could not have been the object of the obligation
3. “as soon as possible”, “as soon as I have money”
Notes:
4. “in partial payments”
o In an obligation with a period or term, the general rule is
2. If although the obligation does not fix a period, it can be
that the term is for the benefit of both the debtor and
inferred that a period was intended
the creditor
o In an alternative obligation, however, the general rule is
Article 1198
that the debtor has the right of choice
Debtor shall lose the benefit of the period, i.e. he shall lose every
right to make use of the period, the term is extinguished, and the
obligation becomes demandable immediately in these cases:
1. If after the obligation has been contracted, he (debtor)
becomes insolvent:
o Unless he (debtor) gives a guaranty or security
for the debt
o Insolvency need not be judicially declared
2. If he (debtor) does not furnish to the creditor the guaranties
Article 1201
or securities he has promised
In Alternative Obligations:
3. If either through his (debtor’s) fault or through a
The choice shall produce no effect except from the time it has been
fortuitous event, the guaranties or securities, after their
communicated.
establishment, are impaired:
o Since the law requires no specific form, the choice can be
o Unless he (debtor) immediately gives new ones
communicated orally or in writing, expressly or impliedly,
equally satisfactory
such as by performance of one of the obligations.
4. If he (debtor) violates any undertaking, in consideration of
o Once notice has been made, the choice is binding on the
which the creditor agreed to the period
person making it, and he will not be permitted to
5. If he (debtor) attempts to abscond
renounce his choice and take an alternative which was
first open to him.
Section 3 – Alternative Obligations
o Purpose of the notice is to inform the creditor that the
Article 1199
obligation is now a simple one, no longer alternative, and
Alternative Obligation
if already due, for the creditor to receive the object being
o An obligation where out of the two or more objects or
delivered, if tender of the same has been made
prestations which may be given, only one is due
Rules in Exercising the Right of Choice:
Rules:
1. It should be made properly so that the creditor or his
1. A person alternatively bound by different prestations shall
agent will actually know
completely perform one of them
2. It is made with full knowledge that a selection is indeed
2. Creditor cannot be compelled to receive part of one and
being made
part of the other undertaking
3. It is made voluntarily, free from the vices of consent
4. It is made in due time, i.e., before or upon maturity
Article 1200
o Otherwise, the creditor can sue him in court
In Alternative Obligations:
with an alternative relief as “give this or that,
General Rule:
depending upon your choice
o Debtor is given the Right of Choice (i.e. right to choose
5. It is made to all the proper persons:
the object to give), in the absence of any stipulation
o Hence, if there be joint creditors, all of them
Exception:
must be notified
o Unless the Right of Choice has been expressly given to
6. It is made without conditions, unless agreed to by the
the creditor
creditor
Limitations on the Debtor’s Right of Choice o Otherwise, it can be said that no real choice is
Debtor shall have no right to choose those prestations which are: being made
1. Impossible, or 7. It may be waived, expressly or impliedly, since all rights in
2. Unlawful, or general may be waived
Article 1202
In Alternative Obligations:
Debtor loses the Right of Choice:
o If among the objects or prestations he is alternatively
bound, only one (1) is practicable
Article 1203
If through the creditor’s acts, the debtor cannot make a choice
according to the terms of the obligation:
o Debtor may rescind the contract with damages
If the debtor is deprived of the right to choose because of the
creditor’s own act, debtor may either:
1. Deliver the other object or prestation, or
2. Rescind the contract with damages
Article 1204
In Alternative Obligations
Article 1204 applies when:
1. Right of Choice belongs to the Debtor, and
2. Loss or impossibility happened before the selection was
made by the Debtor
Rule:
If all objects or prestations in alternative obligations are lost or
become impossible, because of debtor’s fault:
o Creditor is entitled t0 indemnity which is the value of the
last thing lost, or the value of the service last become
impossible, with damages
Example:
D is obliged to give C, at D’s option, either object No. 1, object No.
2 or object No. 3.
a) If objects Nos. 1 and 2 were destroyed by a fortuitous
event, and later object No. 3 is destroyed by D’s fault,
would D be liable?
o Yes, because loss of objects Nos. 1 and 2
converted the obligation into a simple one, and
D is liable for object No. 3, with damages.
b) If instead, objects Nos. 1 and 2 were destroyed by D’s
own fault, and later object No. 3 is lost by a fortuitous
event, should D be held liable?
o No, D should not be held liable.
o D had all the right in the world to destroy
objects Nos. 1 and 2, since he was free not to
select them. In destroying Nos. 1 and 2 he really
made his choice and the obligation to give has
become a simple one — to give No. 3.
o Loss of the object of a simple obligation by
fortuitous event should, as a rule, extinguish any
liability
Article 1205
In Alternative Obligations
Article 1205 applies:
o If the Right of Choice belongs to the Creditor
Rules:
1. For the choice to be given the creditor, the right must
expressly be given to him. It cannot just be implied.
o Of course, the communication of choice by
creditor as to what object be delivered or what
prestation be performed, may be express or
implied, such as when suit is made for one of
the objects
2. Creditor loses the right to choose if only one of the
prestations is practicable.
3. Obligation shall cease to be alternative from the day the
selection has been communicated to the debtor.
4. If the creditor delays in choosing, he cannot yet hold the
debtor “in delay”, or in default, notwithstanding the
lapse of maturity, for the debtor does not know what to
deliver yet.
5. Before the choice is being communicated to the debtor,
the following are the rules:
1. If one of the things is lost or one of the service
becomes impossible through a fortuitous event,
debtor shall perform the obligation:
1. By delivering or performing that which
the creditor chooses from among the
remainder, or
2. By delivering or performing that which
remains if only one subsists
2. If the loss of one of the things or the impossibility
of one of the services occurs through debtor’s
fault, the creditor may:
1. Claim any of those subsisting objects
or prestations, or
2. Claim the price of that which, through
debtor’s fault has disappeared or has
become impossible with damages
3. If all the things are lost or all services become
impossible through debtor, the choice by the
creditor shall fall upon the price of any one of
them with damages.
Article 1206
Facultative Obligation
o It is one where only one prestation has been agreed upon
but the obligor may render another in substitution.
Rules:
Before Substitution:
o Loss or deterioration of the thing intended as substitute,
through debtor’s fault, does not render him liable.
After Substitution:
o Loss or deterioration of the substitute, through debtor’s
fault, renders him liable.
o Example: A and B are solidary debtors of C to the amount
of P1,000,000. C can demand the whole P1,000,000 from
A. A in turn, after paying C, can ask reimbursement from B
to the amount of P500,000, B’s share.
If there are two (2) or more debtors or two (2) or more creditors:
o General Rule:

Alternative vs. Facultative o Joint Obligation

1. In an alternative obligation, there are two (2) or more o Exception:
prestations o Solidary Obligation, only if:
o In a facultative obligation, there is only (1) 1. There is a stipulation in the contract
prestation, but another may be given by the that the obligation is solidary
obligor as a substitute 2. The nature of the obligation requires
2. In an alternative obligation, if one of the prestations is liability to be solidary
illegal or becomes impossible, the others are still eligible 3. The law declares the obligation to be
for performance because obligation still remains valid solidary:
o In a facultative obligation, if the principal 1. Obligations arising from tort
prestation is illegal or becomes impossible, there 2. Obligations arising from quasi-
is no need to give the substitute because the contracts
obligation is considered void 3. Legal provisions regarding the
obligations of devisees and
o In a facultative obligation, if the substitute is
legatees
illegal or becomes impossible, there is still a
4. Civil liability of principals,
need to give the principal prestation because
accomplices, and accessories
the obligation still remains valid
of a felony
3. In an alternative obligation, the right of choice may be
5. Bailees in commodatum
given either to the debtor or to the creditor
o In a facultative obligation, the right of choice Question?
to deliver another in substitute belongs to the May the obligation be joint on the side of the creditors and
debtor only solidary on the side of the debtors or vice-versa?
o Yes. “In such cases, the rules applicable to each subject
Section 4 – Joint and Solidary Obligation of the obligation should be applied, the character of the
Article 1207 creditors or the debtors determining their respective
Joint Obligation rights and liabilities.”
o In a joint obligation “each obligor answers only for a part
of the whole liability and to each obligee belongs only a Article 1208
part of the correlative rights.” Article 1208 gives the presumption that when there are two (2) or
o “To each his own.’’ more debtors, or two (2) or more creditors, the obligation is joint

o Example: A and B are joint debtors of C to the amount of and as a consequence:

P1,000,000. C can demand only P500,000 from A, and only 1. The debt shall be divided into as many shares as there

P500,000 from B. are debtors

Solidary Obligation, or “Joint and Several” Obligation
o “Juntos o separadamente”
o In a solidary or “joint and several” obligation, the
relationship between the active (obliges) and the passive
(obligors) subjects is so close that each of the former or of
the latter may demand the fulfillment of or must comply
with the whole obligation.
o “One for all, all for one.”
2. The credit shall be divided into as many shares as there
are creditors
3. The credits or the debts will be separate and distinct
from one another:
o But, regarding the bringing of the action in
court, the Rules of Court governing the
multiplicity of suits will be followed
o This means that ordinarily one (1)
creditor may sue one (1) of the debtors
for the latter’s share of the obligation.
 But, in view of the fact that the aim of 3. If the dependents of an employee of a partnership claim
the Rules of Court is to obtain a just, compensation for the employee’s death in line of duty,
speedy, & inexpensive determination the liability is solidary.
of every action or proceeding, it would
Liabilities of Agents
be much better to sue all the
o In general — joint, even if appointed at the same time,
necessary parties at the same time
unless solidarity has been agreed upon
Synonyms
Liabilities of Co-Principals (In Agency)
Joint Obligation:
o Solidary
1. Mancomunada
2. Mancomunada simple Liabilities of Husband and Wife
3. Proportionate o After conjugal funds have been exhausted, the husband
4. Pro rata and the wife are liable jointly to creditors of the conjugal
5. “We promise to pay,” if there are 2 or more signatures partnership.

Solidary Obligation:
1. Joint and several
2. In solidum Liabilities of Violators of Arts. 19, 20, 21, 22 (on Human Relations)
3. Mancomunada solidaria of the Civil Code
4. Juntos o separadamente
o It is believed that infractors thereof should be held liable
5. Individually and collectively
in solidum, considering the fact that said violations are
6. Each will pay the whole value
either penal in nature or contrary to morals.
7. “I promise to pay,” if there are 2 or more signatures
Liabilities of Employer and Employee for the Latter’s Tortious Act
Rules on Joint Obligations
o Here, the liability of an employer is primary (not
1. Vitiated consent on the part of one debtor does not
subsidiary), and solidary with that of the employees.
affect the others
o Example: A and B are joint debtors of C for
Article 1209
P1,000,000. A’s consent was obtained by C thru
Indivisible Joint Obligation
fraud. B would still be liable for P500,000,
o Indivisible — referring to the OBJECT; joint — referring
while A will not be liable, since the 2 debts are
to the TIE between the parties, who are merely
considered distinct from each other.
proportionately liable
2. Insolvency of one (1) debtor does not make others
responsible for his share Rules in Indivisible Joint Obligation

o Example: A, B, and C are joint debtors of D for 1. The obligation is joint but since the object is indivisible, the

P3,000,000. If A is insolvent, B should pay D creditor must proceed against ALL the joint debtors, for

only P1,000,000, his own proportionate share. compliance is possible only if all the joint debtors would

3. Demand by the creditor on one (1) joint debtor puts him in act TOGETHER.

default, but not the others since the debts are distinct. 2. Demand must be made on ALL the joint debtors.

4. If the creditor interrupts the running of the prescriptive 3. If any of the joint debtors be insolvent, the others shall

period by demanding judicially from one, the others are not be liable for his share.

not affected. 4. If there be joint creditors, delivery must be made to all,

and not merely to one, unless that one be specifically
o Therefore, it is possible that the shareof one
authorized by the others
joint debtor has not prescribed, while those of
5. Each joint creditor is allowed to renounce his
the others have already prescribed
proportionate credit
5. Defenses of one (1) debtor are not necessarily available
6. A demand by one (1) joint creditor is not a demand by
to the others
the other creditors
Liabilities of Partners
1. If it arises out of a contract, the liability is joint. Article 1210
2. If it arises out of a crime or a quasi-delict, the liability is
o Indivisibility of an obligation does not necessarily give
solidary
rise to solidarity
 o Solidarity of an obligation does not necessarily give rise
to its indivisibility
Indivisibility vs. Solidarity
o Indivisibility - refers to the object or subject matter
o Solidarity – refers to the tie between the parties
Different kinds of Solidarity
1. Active solidarity – Creditors’ part
2. Passive solidarity – Debtors’ part
3. Mixed solidarity – Creditors’ or Debtors’ part
4. Conventional solidarity – Agreed upon by the parties
5. Legal solidarity – Imposed by law
Article 1211
o Solidarity (tie between the parties) may exist although
the creditors and the debtors may not be bound in the
same manner and by the same periods and conditions
Question:
o In 2004, A, B, and C bound themselves in solidum to give
X P300,000 subject to the following stipulations: A to
pay in 2005; B, if he passes the bar; C, in 2007. How much
can X demand from A in 2005?
Answer:
o Only P100,000. Since this is solidary, X has a right to
P300,000 (the whole) MINUS B’s share of P100,000 and
C’s share of P100,000, or a total of only P100,000. In
2007, X can collect from A the P100,000 corresponding
to C. The moment B passes the bar, X can also collect
from A, B’s share of P100,000.
Article 1212
Each one of the solidary creditors may do whatever may be useful
(Beneficial Act) to his fellow solidary creditors
Example:
To interrupt the running of prescription
o Act of one solidary creditor in making a judicial
demand upon any of the solidary debtors is
sufficient
o The law provides that: “The prescription of
actions is interrupted when they are filed
before the Courts.”
Each one of the solidary creditors may not do whatever may be
prejudicial (Prejudicial Act) to his fellow solidary creditors
o Prejudicial act should not be performed, otherwise,
there will be liability for damages
In the case of remission or condonation of the obligation by a
solidary creditor (which is really prejudicial):
o Solidary creditor is allowed to so remit, and the obligation
is extinguished, without prejudice to his liability to the
other solidary creditors
Article 1213
General Rule:
o A solidary creditor cannot assign his rights
Exception:
o If there is consent of his fellow solidary creditors
Reason?
o Solidary obligation implies fiduciary relationship, based
on trust and confidence. Should the assignee or
substitute do acts which would prejudice the others (as
when he absconds after receiving payment), there is no
doubt that the other creditor’s right are endangered,
hence, the necessity of their consent.
Article 1214
o If there is no demand yet by any of the solidary creditors,
the debtor may pay any one of them
o If there is a demand, judicial or extra-judicial, made by
any of the solidary creditors, the debtor shall pay only to
the solidary creditor making the demand
Article 1215
Novation, compensation, confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary
debtors, shall extinguish the obligation.
o Creditor who may have executed any of these acts, as
well as he who collects the debt, shall be liable to other
solidary creditors for their share in the obligation
o Remission made by the creditor of the share which
affects one of the solidary debtors does not release said
solidary debtor from his responsibility towards the co-
debtors, in case the debt had been totally paid by
anyone of them before the remission was effected.
Novation:
o It is the modification of an obligation by changing its
object or principal conditions, or by substituting the
person of the debtor, or by subrogating the person of
the debtor, or by subrogating a third person in the rights
of creditor.
Compensation:
o It takes place when two persons, in their own right, are
creditors and debtors of each other.
o It may be total or partial, depending upon the amount
involved.
Confusion or Merger:
o It takes place when the characters of creditor and debtor
are merged in the same person.
Remission or Waiver or Condonation
o It is an act of liberality which takes place when the
creditor condones the obligation of the debtor.
o It may be total or partial.
o If one of the solidary creditors remitted the obligation in
favor of one of the solidary debtors, the obligation is
deemed extinguished.
o Oher solidary creditor should not be prejudiced
by the remission of the obligation. He is entitled
for the reimbursement of his share in the
obligation by the one making the remission.
o Other debtor, however, is not bound to make
any payment or reimbursement to the one
granted of remission, because it is an act of
liberality; a gratuitous act, and that the grantee
did not give anything to the creditors.
Note:
o In suretyship, although the surety is also, in a way, a
solidary debtor in a passive solidary obligation, an
extension of time to the principal debtor without the
surety’s consent will release the surety from the contract.
Article 1216
Article 1216 applies only to solidary obligations, not to joint ones,
for in joint obligations, failure to collect from one joint debtor his
share does not authorize the creditor to proceed against the
others, regarding the insolvent debtor’s share.
Creditor may proceed against any one of the solidary debtors or
some or all of them simultaneously.
o If the creditor sues only one, or two, or several of the
debtors (but not all) there is no waiver against those not
yet sued. They may be proceeded against later.
Passive Solidarity vs. Suretyship
Similarities:
1. Both the solidary debtor and the surety guaranteefor
another person
2. Both can demand reimbursement
Differences:
1. Solidary debtor is indebted for his own share only; surety
is indebted only for the share of the principal debtor
2. Solidary debtor can be reimbursed what he has paid
MINUS his own share; a surety can be reimbursed for
everything he paid
3. If a solidary debtor receives an extension of the period for
payment, the others are still liable for the whole
obligation now, minus the share of the debtor who has
received the extension; If a principal debtor receives an
extension, without the surety’s consent, the surety is
released
Notes:
o When the law expressly provides for solidarity of the
obligation, each obligor may be compelled to pay the
entire obligation.
o The demand made against one of the solidary debtors
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.
o A guarantor binds himself subsidiarily to answer for the
principal debtor, in case of insolvency; hence, the creditor
cannot immediately proceed against the guarantor
o A surety binds himself solidarily with the principal debtor,
hence, the creditor can proceed against the surety
immediately (i.e., without first exhausting the properties
of the principal debtor)
Article 1217
Payment made by one of the solidary debtors:
o Extinguishes the obligation
If two or more solidary debtors offer to pay:
o 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, plus interests from the time of
payment (if payment is made after the debt is due)
o If the payment is made before the debt is due, no interest
for the intervening period may be demanded
Article 1218
Payment of an obligation by a solidary debtor shall not entitle him
to reimbursement from his co-debtors if such payment is made:
 1. After the obligation has prescribed, or their action against the guilty or negligent debtor, provided
2. After the obligation has become illegal it is a specific or determinate thing or prestation

If a right to sue upon a civil obligation has lapsed by extinctive Effect of Loss or Impossibility: (Specific or Determinate Thing)
prescription, the obligor: If without fault – no liability
o Cannot recover what he has delivered or the value of the If with fault – there is liability:
service he has rendered o Price of the thing due plus damages and interests
Loss because of a fortuitous event after default – there is liability
Article 1219 o Price of the thing due plus damages and interests
Remission made by the creditor of the share which affects one of
the solidary debtors does not release said solidary debtor from his
Article 1222
responsibility towards the co-debtors, in case the debt had been
In actions filed by the creditor, a solidary debtor may:
totally paid by anyone of them before the remission was effected.
1. Avail himself of all defenses which are derived from the
o Since payment extinguishes the obligation, there is nature of the obligation
nothing more to remit 2. Avail himself of all defenses which are personal to him, or
pertain to his own share
Note: 3. Avail himself of all defenses which personally belong to
o If one of the solidary debtors cannot, because of his the others only as regards that part of the debt for which
insolvency, reimburse his share to the debtor paying the he is responsible
obligation, such share must be borne by all his co-debtors
in proportion to the debt of each 1. Defenses derived from the nature of the obligation:
1. Lack of consideration or cause
Article 1220 2. Absolute simulation:
Remission of the whole obligation, obtained by one of the solidary o Contract is totally fictitious
debtors: 3. Illegal consideration
o Does not entitle said solidary debtor to reimbursement 4. Extinguishment of the obligation:
from his co-debtors o Whole debt has been paid, remitted, or has
Note: prescribed
o To allow the contrary would be to induce fraud and to 5. Non-fulfillment of the suspensive condition
countenance partiality 6. Statute of Frauds
7. When all the debtors were incapacitated to give consent:
Remission, it must be borne in mind, is essentially gratuitous.
o Such as unemancipated minors, insane, idiots,
Article 1221 persons under a hypnotic spell
If the thing has been lost or if the prestation has become impossible 8. When there are vices of consent (vitiated consent) on the
without the fault of the solidary debtors: part of all the debtors:

o Obligation shall be extinguished¸ provided it is a specific o Such as when all were forced or intimidated or
or determinate thing or prestation unduly influenced or were led into error

If there was fault on the part of any one of them: 2. Defenses which are personal to the solidary debtor or pertain to
o All shall be responsible to the creditor for the price and the his own share:
payment of damages and interest, without prejudice to 1. Vitiated consent – complete defense
their action against the guilty or negligent debtor, provided
o As when he was forced, etc.
it is a specific or determinate thing or prestation
2. Incapacity to give consent – complete defense
If through a fortuitous event, the thing is lost or the performance o As when he is a minor
has become impossible after one of the solidary debtors has 3. Non-fulfillment of condition imposed regarding his share –
incurred in delay through the judicial or extrajudicial demand upon partial defense
him by the creditor: o Unless provided otherwise
o All shall be responsible to the creditor for the price and the 4. Non-arrival of term – partial defense
payment of damages and interest, without prejudice to o Unless provided otherwise
Section 5 – Divisible and Indivisible Obligations Divisible obligations:
Article 1223 1. Obligations susceptible of partial performance
Divisible Obligation: 2. Obligations which has for its object the execution of a
o One capable of partial performance certain number of days of work
3. Obligations which has for its object accomplishment of
Indivisible obligation:
work by metrical units
o One not capable of partial performance
In obligations not to do:
Classes or Kinds of Indivisibilty:
o Indivisibility or divisibility is determined by the character
1. Conventional Indivisibility:
of the prestation or object in each particular case
o By common agreement
2. Natural or absolute indivisibility: Effect of Illegality on a Divisible Contract:

o By the nature of the object of undertaking o In case of a divisible contract, if the illegal terms can be
3. Legal indivisibility: separated from the legal ones, the latter may be enforced

o By provision of law

‘Indivisibility’ vs. ‘Solidarity’

Section 6 – Obligations with a Penal Clause
1. Indivisibility refers to the nature of the obligation; while
Article 1226
solidarity refers to the juridicial tie between the parties
In Obligations with a Penal Clause
2. Indivisibility may exist even if there is only one (1) debtor
In case of non-compliance:
and one (1) creditor; while solidarity needs at least two
o Penalty shall substitute for damages and interests
(2) debtors, or two (2) creditors
3. In indivisible obligations, the fault of one is not the fault of Nevertheless, damages shall be paid, if:
others; while in solidary obligations, the fault of one is the 1. If there is stipulation to the contrary
fault of others 2. Debtor refuses to pay the penalty, or
3. Debtor is guilty of fraud
Article 1224 Penalty may be enforced only when it is demandable in accord
A joint indivisible obligation gives rise to indemnity for damages with the provisions of this Code.
from the time anyone of the debtors does not comply with his
Penal Clause:
undertaking.
o A coercive means to obtain compliance from the debtor
Debtors who may have been ready to fulfill their promises:
o Its principal purpose is to insure the performance of an
o Shall not contribute to the indemnity beyond the obligation and also to substitute for damages and the
corresponding portion of the price of the thing or of the payment of interest in case of non-compliance
value of the service in which the obligation consists
Kinds of Penal Clauses
Joint Indivisible Obligation: First Classification:
o Here the object is indivisible 1. Legal penal clause
o Parties are merely bound jointly o One that is imposed by the law
Effect of Non-Compliance by even one (1) of the debtors: 2. Conventional penal clause

o Obligation is converted into a monetary one, which o One that has been agreed upon by the parties
consists of the price of the thing or object due plus Second Classification:
damages and interest 1. Subsidiary
o Only the penalty may be asked in case of non-
Article 1225 compliance
In obligations to give or to do: 2. Joint
Indivisible obligations: o Both the principal contract and the penal clause
1. Obligation to give definite things can be enforced in case of non-compliance
2. Obligations not susceptible of partial performance Penal Clause vs. Condition
3. Obligations which are physically divisible but are legally 1. Penalty constitutes an obligation although accessory;
or conventionally indivisible while condition does not.
 2. Penalty may become demandable in default of the
unperformed principal obligation, and sometimes jointly
with it; while condition is never demandable

General Rule:
o In obligations with penal clause, penalty substitutes for
damages and interests in case of non-compliance
Exceptions:
1. If there is express stipulation that damages or interest
may still be recovered, despite the presence of the
penalty clause
2. If the debtor refuses to pay the penalty imposed in the
obligation
3. If the debtor is guilty of fraud or dolo in the fulfillment of
the obligation
o Because there can be no renunciation of an action
to enforce liability for future fraud because, as we
have seen, this is against public policy and against
the express provisions of the law

May Any Penalty Be Demandable?

o No. The penalty may be enforced only when it is
demandable in accordance with the provisions of the Civil
Code, one of which states that the penalty may be
reduced if it is iniquitous or unconscionable

Article 1227