Obligation

An obligation is a juridical necessity to

give, to do or not do. (Art.1156, Civil Code of
the Philippines)
Juridical necessity means that the court
may be asked to order the performance of
an obligation if the debtor does not fulfill it.
If an obligation cannot be enforced through
the courts, it may be disregarded with
impunity.
Requisites of obligation
1. Active subject (creditor or obligee) - The party who
has the right to demand performance of the obligation.
2. Passive subject (debtor or obligor) - The party who
is obliged to perform the obligation.
3. Prestation - The object or subject matter of the
obligation. It may consist of giving, doing or not doing
something. .
4. Efficient cause - The vinculum or the legal or
juridical tie which binds the parties to an obligation.
The efficient cause of an obligation may be any of the
the sources of obligation.
Examples:
1. D is obliged to give C P50,OOO.00with
interest at 12% per annum on December 31,2015
pursuant to a contract of loan. D is the passive
subject; C is the active subject; the giving of
P50,OOO.00with 12% interest is the prestation;
and the contract of loan is the efficient cause.
The obligation here is unilateral, i.e., only one
party is required to perform a particular conduct.
Examples:
D is obliged to transport the goods of C from Manila to
Cebu, and C is obliged to pay D P1,OOO.00as transport
costs, under a contract of carriage. 'As regards the
transport of the goods which is the prestation, C is the
active subject and D is the-passive subject. As regards
the payment of transport costs which is the prestation,
C is the passive subject and D is the active subject.
The contract of carriage is the efftcient cause for the
obligations of both D and C. The obligations here are
bilateral, i.e., each party is required to perform a
particular conduct.
Civil obligation and natural obligation
distinguished
Civil obligation and natural obligation distinguished
A civil obligation (as defined in Art. 1156) is based on
positive law; hence, it is enforceable by court action.

A natural obligation, on the other hand, is based on

natural law; hence, it is not enforceable by court action.
The obligation, however, exists in equity and moral
justice, such that if the debtor voluntarily performs it,
he can no longer recover what he has given.
Example:
M is the maker of a promissory note with P as payee
for P20,OOO.OO. If M does not pay on due date, P
can enforce payment by filing a court action. If P
does not file a court action against M within 10
years from due date which is the prescriptive period
for actions upon a written contract, ~ loses the right
to enforce payment by court action. However, if M
voluntarily makes the payment to P although the
obligation has prescribed, M will no longer be
allowed to recover the payment because in equity
and moral justice; he still owed P the amount of
P20,OOO.OO.
Sources of obligation ( Art. 1157)
1. Law - A rule of conduct, just and obligatory, laid
down by legitimate authority for common observance and
benefit. (Sanchez Roman). Obligations derived from law
are not presumed. Only more expressly determined 'in the
Civil Code or in special laws are demandable, and shall be
regulated by the precepts of the law which establishes
them; and as to what has not been foreseen, by the
provisions on Obligations. (Art 1158)

Examples: The National Internal Revenue Code which

provides for the payment of taxes; the Anti-Mendicancy
Law which prohibits the giving of alms to beggars.
2. Contracts - A contract is a meeting of
minds between two persons whereby one binds
himself, with respect to the other, to give
something or to render some service (Art. 1305).

Obligations arising from contracts have the force

of law between the contracting parties and should
be complied with in good faith (Art. 1159)
Examples:
A contract of lease which provides for the
payment of rental by the lessee;

A contract of sale which requires the seller

to deliver the thing sold and the buyer to
pay the price.
3. Quasi-contracts - They refer to
certain lawful, voluntary and unilateral
acts giving rise to a juridical relation to the
end that no one shall be unjustly enriched at
the expense of another. (Art. 2142).
Examples: (Quasi-contracts)

Negotiorum gestio - This refers to' the voluntary

administration of the property, business or affairs
of another without his consent or authority. It
creates the obligation to reimburse the gestor
for necessary and useful expenses. (Art. 2150)
Example: (Quasi-contracts)
D and C are the owners of adjacent vegetable
farms. One day, D was not around to tend to his
farm, When C noticed that D had not been around'
for almost a week, he himself cultivated the soil
and placed fertilizer on it, watered the plants,
removed the weeds and wilted leaves, C
incurred necessary and useful expenses in the
process. D must reimburse C for such expenses.
Otherwise, he will be unjustly enriching himself at
C's expense,
Example: (Quasi-contracts)
Solutio indebiti - This refers to payment by
mistake of an obligation which was not due
when paid. It creates the obligation to return
the payment (Art. 2154)
Example:
D, the payee of check for P5,000,00 cashes it
with the drawee bank, but the teller gives him
P10,000.00 by mistake. D is duty bound to
return the excess of P5,000.00 to the bank.
Otherwise, he will be unjustly enriching himself
at the expense of another.
Other Quasi-contracts:
1. When without the knowledge of the person
obliged to give support, it is given by a
stranger, the latter shall have the right to
claim the same from the former, unless it
appears that he gave it out of piety and without
intention of being paid in return.
2. When funeral expenses are borne by a third
person, without knowledge of those relatives who
were obliged to give support to the deceased, said
relatives shall reimburse the third persons;

3. When through an accident or other cause a

persons is injured or become serioulsly ill, and he is
treated or helped while he is not in a condition to
give consent to a contract, he shall be liable for the
services of the physician or other person aiding him,
unless the services has been rendered out of pure
generosity.
4. Acts or omission punishable by law (Delicts);
Example: The obligation of a thief to return the car stolen
by him.

5. Quasi delict or Torts.

Example:
a. The obligation of the head of a family that lives
in building or a part thereof to answer for damages
caused by things thrown or falling from the same.
b. The obligation of the possessor of an animal to
pay for the damages which it may have caused.
NATURE AND EFFECT OF OBLIGATIONS
Concept
A thing' is determinate when it is particularly designated or
physically segregated from all others of the same class. (Art.1460).
Examples:
A 2009 Toyota Corolla with engine no.123456 body no. 546611,
and plate no. FRS 840; my only wristwatch; the house located at
234 Moret Street, Sampaloc, Manila; my horse named "Black
Stallion."

A thing is indeterminate or generic when it is not particularly

designated or physically separated from all others of the same
class, i.e, one of a class. Examples: A horse, a car,
Importance of knowing whether a thing is
determinate or generic

As a rule, the loss of a determinate thing

through a fortuitous event extinguishes the
obligation. (Art. 1262)
Obligations of one obliged to give a
determinate thing.

1. To take good care of the thing with the

diligence of a good father of a family unless the
law or agreement of the parties requires
another standard of care. (Art. 1163)

Diligence of a good father of a family means the

ordinary care that an average person
exercises in taking care of his property.
2. To deliver the thing. (Art. 1163)

This involves placing the thing in the

possession or control of the creditor
either actually or constructively.
3. To deliver the fruits of the thing. (Art. 1164)
a. Kinds of fruits
1. Natural fruits - They are the spontaneous
products of the soil and the young and other
products of animals. (Art. 442) Thus, the trees
that grow naturally on the soil without the
intervention of man and the colt delivered by a
mare are natural fruits. For the young and other
products of animals, they are natural fruits even
with the intervention of human labor.
2. Industrial fruits - They refer to those produced
by land of any kind through cultivation or labor.
(Art. 442) Examples are rice, corn and other crops
produced through the intervention of human labor.

3. Civil fruits - They refer to fruits which are the

result of a juridical relation such as the rent of a
building, price of lease of land and other
property and the amount of perpetual or life
annuities. (Art. 442)
b. When creditor has a right to the fruits of a
determinate thing
The creditor has the- right to the fruits of a
thing from the time the obligation to deliver
it arises. However, he shall acquire no real
right over it until the thing has been
delivered to him. (Art11164)
c. When obligation to deliver the thing arises

1). If the obligation is a pure obligation or

one whose performance is not subject to a
suspensive period or suspensive condition, the
obligation to deliver arises from perfection..
2) If the obligation is subject to a suspensive period
or suspensive condition, the obliqation to deliver
arises upon the arrival of the term or the fulfillment
of the condition.

Thus, if 0 is obliged to give C a specific car on

Christmas day next year, the obligation to deliver
arises only on the arrival of such date. Or if the
obligation of 0 is to give C such car if C passes the
CPA Examination, then the obligation to deliver
arises only upon the fulfillment of such condition.
d. Rights of the creditor
1) Personal right - This is a right that may be enforced
by one person on another, such as the right of the creditor to
demand the delivery of the thing and its fruits from the
debtor. This is also called jus in personam or jus ap rem.

2) Real right - This refers to the right or power over a specific

thing, such as possession or ownership, which is a right
enforceable against the whole world. This is the right
acquired by the creditor over the thing and its fruits when
they have been delivered to him. This is also called jus in
reo
4. To deliver its accessions and accessories even if they
have not been mentioned. (Art. 1160)
a. Accessions - They include everything that is produced
by a thing or is incorporated or attached thereto, either
naturally or artificially, (Art. 440) such as alluvium, the
soil gradually deposited by the current of a river on a
river bank, or whatever is built, planted or sown on a
parcel of land.
b. Accessories - Those joined to or included with
the principal thing for the latter's better use, perfection
or enjoyment (such as the keys to a car or a house, or the
bracelet of a wristwatch).
Remedies of the creditor
Remedies of the creditor
1. If the debtor fails to perform his obligation to
deliver a determinate thinga.
a. To compel the debtor to make the delivery. (Art. 1165) .
b. To demand damages from the debtor. (Art. 1170)
Example:
D is obliged to give C a specific car. On due date, C
demands delivery but D does not deliver. In this case, C
can compel D to deliver the car because there is no other
person in possession or control of it. C can also demand
payment of damages from him.
2. After the debtor fails to perform his obligation to
deliver a generic
a. To ask that the obligation be complied with at
the expense of the debtor. (Art. 1165)
b. To demand damages from the debtor. (Art. 1170)
Example:
D is obliged to deliver 10 sacks of rice to C. It D does not
perform his obligation as stipulated, C can obtain 10
sacks of rice from other sources at the expense of D. C
can do so because the thing is generic and thus can be
replaced with the same kind. C can also ask for damages
from D.
3. If the debtor fails to perform his obligation in
obligations to do
a. If the debtor fails to perform the obligation or
performs it but contravenes the tenor thereof-
1) Creditor may have the obligation executed at the
expense of the debtor. (Art. 1161)
2) He may also demand damages from the
debtor. (Art. 1170)
Example:
D is obliged to construct a hollow block fence for C. By agreement,
the fence will be 2 meters high and 10 meters long, fine-finished and
painted. If D does not perform his obligation, C can ask another
person to, or he himself may, construct the fence at the expense of
D. . C can also ask for damages from D. C cannot compel D to
perform the obligation because compulsion will violate D's right
against involuntary servitude.
If D constructs the fence but did not follow the measurements
agreed upon (i.e., there was contravention of the tenor
of the obligation), C will have the same rights
1) Creditor may have the same be undone at debtor's
expense. (Art. 1167)
2) Creditor may also demand damages from the debtor.
(Art.1170)
Example:
If in the same illustration above, D constructs
the fence following the measurements
but it was not properly aligned, the finishing
was rough, and materials used were
substandard, C can have the fence be
demolished by another person or even by
himself at D's. expense. C can also demand
damages from D.
4. If the debtor does what has been forbidden him
a. The creditor may demand that what has been done be
undone.
b. He may also demand damages from the debtor. (Art.1168)
Example:
B bought a farm lot from S. However, the only access from the
road to B's lot is the lot of D. So B entered into a
contract with D for a right of way over a period of 10 years
and paid a sum therefor. It was agreed that for the duration
of the contract D would not construct any fence between B's
lot and his. Sometime thereafter, however, D constructed a
fence in violation of the agreement. B may demand that D
remove the fence at D's expense.and pay damages.
Grounds for liability to pay damages

1. Fraud
2. Negligence
3. Delay
4. Contravention of the tenor of the obligation.
(Art. 1170.)
Damages
1. Concept, distinguished from injury

Damages refer to the harm done and the

sum of money that may be recovered.

Injury refers to the wrongful, unlawful or

tortuous act. It is the legal wrong to be
redressed.
Kinds of damages (MENTAL)
a. Moral damages - They include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, . moral shock,
social humiliation, and similar injury. (Art. 2217)
b. Exemplary or corrective damages - These are imposed by way of example or
correction for public good, in addition to the moral, temperate,
liquidated or compensatory damages. (Art. 2229)
c. Nominal damages - They refer to damages to vindicate a right. (Art. 2221)
d. Temperate or moderate damages - They are more than nominal but less than
compensatory damages, but may be recovered if the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be
proved with certainty. (Art. 2224)
e. Actual or compensatory damages - These refer to the pecuniary loss, (such as loss
in business or profession) that may be recovered. It includes the value of the loss
suffered and profits not realized. (Art. 2199)
f. Liquidated damages - Those agreed upon by the parties to a contract, to be paid
in case of breach. (Art. 2226)
Fraud

1. Concept
Fraud is the deliberate or intentional evasion'
by the debtor of the normal compliance of his
obligation. Under Art.1170, this actually refers
to the fraud committed by the debtor at the
time of the performance of his obligation.
Kinds of fraud in general
a. According to meaning
1) Fraud in obtaining consent
a) Causal fraud or dolo causante - This refers to fraud
without which consent would not have been given. It
renders the contract voidable.
Example: B bought a ring from S who told. him that the ring
was embellished with diamond. However, S knew all alorig
that the embellishment was not diamond but ordinary glass.
B here gave his consent because of the fraud employed by
S, hence, the contract is voidable.
b) Incidental fraud or dolo incidente - This refers to
fraud without which consent would have still been given
but the person giving it would have agreed on different
terms. The contract is valid but the party employing it
shall be liable for damages.
Example: C hired D to teach in the school of C. D placed
in his application that he had earned units in MBA.
However, D had actually dropped the subjects for the
said units. If C would have hired D even if D did not
complete the said units but that he would have given
a lower salary to D, the fraud committed by D was only
incidental but it would entitle C to recover damages.
2) Fraud in the performance of the
obligation
This is the deliberate act of evading fulfillment of
an obligation in a normal manner. This presupposes an
existing obligation; hence, the fraud has -no effect on
the validity of the contract since it was employed
after perfection. However, the party employing it shall
be liable for damages. (Art. 1170)
Example: B ordered 10 bags of powder soap from S who
agreed to deliver the same after 2 days. On due date, S
delivered 10 bags of powder soap which he mixed with
chalk. This is fraud in the performance of an obligation
which entitles B to recover damages. The fraud,
however, does not have any effect on the validity
of the contract.
b. According to time of commission
1) Future fraud
A waiver of an action for future fraud cannot be
made. If there is an agreement for its waiver, the
same is void. (Art. 1171)' Thus, the debtor will
still be liable for damages if he commits fraud
in the performance of his obligation despite
the waiver.
2) Past fraud
A waiver of an action for past fraud may be made,
since the commission of fraud can no longer be
encouraged. Such waiver is an act of liberality on
the part of the creditor.
Negligence
1. Concept
It is the omission of that diligence which is required by
the nature of the obligation and corresponds with the
circumstances of the person, of the time, and of the
place. (Art. 1173). It is the failure to observe, for the
protection of the interest of another person, that
degree of care, precaution and vigilance which the
circumstances justly demand, whereby such other
person suffers injury. (National Power Corporation
vs. Heirs of Noble Casionan, supra; Guillang vs.
Bedania, G.R. No. 1629a7, May 21, 2009) .
The test of negligence is whether the defendant in doing
the alleged negligent act used that reasonable care and
caution which an ordinary person would have used in the
same situation. (GuiJlangvs. Bedania, supra)

If the law or contract does not state the diligence which is

to be observed in the performance of the obligation, the
debtor must observe the ~iligence of a good father of a
family.
Examples:
a. If the obligation is to deliver a specific window
glass, the debtor must ensure that the glass,
considering its fragility, is well-protected when
he transports it as required by the nature of the
obligation. Otherwise, he will be negligent.
b. A baby-sitter, 21 years old strong and healthy,
will be negligent if she sleeps while on duty
considering that the circumstances of her person
were considered when she was hired for the job.
c. If the driver of a car drives at night without
any headlight, he will be considered negligent
considering that the circumstances of night
time require such light.

d. If the same car driver drives at 50

kilometers per hour along a busy street where
many people are crossing, he will be negligent
because the circumstances of the place.
require that he should drive slowly.
Kinds:
a. Culpa contrectuei (contractual negligence)
This is negligence' in the performance of a contract (such as
the negligence committed by the driver of a bus when a
passenger is hurt during a trip because there is here a
breach of contract of carriage)
Here, the master-servant rule applies, ie., the negligence
of the servant is the negligence of the master.
Accordingly, the defense of a good father of a family in the
selection and supervision of employees is not a defense on
the part of the employer although it may mitigate the
liability. Thus, in the example, the negligence of the
bus driver is also the negligence of the bus owner.
Saludaga vs. Far Eastern University G.R.No. 179337, April 30, 2008
Facts: S, a student of X University, was shot and wounded by G, a security guard of the
school, while inside the campus. S sued X University for damages on the ground that it
breached its obligation under the enrollment contract to provide students with a safe and
secure environment and an atmosphere conducive to learning. In defense, X University
pleaded fortuitous event on the ground that it could not have reasonably foreseen nor
avoided the accident since G was not its employee, and that it complied with its obligation to
ensure a safe environment for its students by having exercised due diligence in selecting the
security services of the SA Security Agency.
Held: Respondent school is liable for damages for breach of contract due to negligence in
providing a safe learning environment. It is settled that in culpa contractual, the mere
proof of the existence of the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief. The school failed to prove that it undertook steps to
ascertain that the security guards assigned to it actually possessed the required
qualifications. A learning institution should not be allowed to completely relinquish security
matters in its premises to the security agency it hired. To do so would result in contracting
away its inherent obligation to ensure a safe learning environment for its students. The
defense of fortuitous event or force majeure must also fail. An act .of God cannot be
invoked to protect a person who has failed to take steps to forestall the possible adverse
consequences of the loss sustained.
b. Culpa aquiliana (civil negligence or tort or quasi-delict
or culpa extra-contractual)
These are acts or omissions that cause damage to
another, there beinq no contractual relation between
the parties. (Art. 2176)
The master-servant rule does not apply. Hence, the defense
of a good father of a family in the selection and supervision
of employees is a defense on the part of the employer to
escape liability. Thus, if a pedestrian is hit by a bus
through the reckless driving of the driver, the latter's
negligence is not the negligence of the owner.
c. Culpa criminal (criminai negligence) -
This is negligence that results in the commission of a crime.
Defense of a good father of a family is not proper
because the employee's guilt is automatically the employer's
civil guilt if the former is insolvent.

The passenger of the bus may bring a court action not only
for culpa contractual against the bus owner, but also one for
culpa criminal against the bus driver for physical injuries
through reckless imprudence. In the same way, the pedestrian
may bring not only a suit for culpa aquiliana against the
driver and the owner, but also one for culpa criminal against
the bus driver for physical injuries through reckless
imprudence.
Delay or default or mora
Concept
Delay or default or mote is the 'non-fulfillment of an obligation with
respect to time.
Kinds
a. Mora solvendi - Delay on the part of the debtor.
1) Ex re - Delay in real obligations (obligations to give)..
2) Ex persona - Delay in personal obligations (obligations to
do).
b. Mora accipiendi - Delay on the part of the creditor.
This exists when the creditor refuses to accept the thing due without
justifiable reason.
c. Compensatio morae - Delay in reciprocal obligations, Le., both
parties are in default. Here, it is as if there is no delay.
When debtor incurs in delay in
obligations to give or to do, requisites:
General rule: The debtor incurs in delay from the time
the creditor demands fulfillment of the obligation but the
debtor fails to comply with such demand (no demand,
no delay, as a rule). The following are the requisites
of delay:
a. The debtor does not perform his obligation on the date
it is due.
b. The creditor demands the performance of the
obligation. c. The debtor does not comply with the
creditor's demand.
Example:
D owes C P5,OOO.OO. The obligation is due
on May 15. If D does not pay on May 15, he
is not yet in delay. But if C makes a
demand on him to pay on that date or
thereafter and D does not comply, then D
will be in delay.
Exceptions, i.e., delay will exist even
without demand in the following cases (Art.
1169):

a. When the law so provides.

Thus, where the law provides for the payment of
penalty if the obligation is not performed on due
date (such as in the case of taxes), then demand
shall not be necessary.
b. When the obligation expressly so declares.
Hence, no demand is necessary if a lease contract provides
that "(T)he rental shall be paid by the Lessee within the first
five days of the month in advance without need of demand."

c. When time is of the essence of the contract.

Thus, where a rent-a-car company is obliged to provide for
the bridal car during a wedding at a particular date, time and
place, the said company is liable if it fails to perform the said
obligation notwithstanding the absence of demand since time
was a controlling motive for the establishment of the
contract.
d. When demand would be useless.
Thus, the debtor will be in delay even without demand from
the creditor if the thing he is obliged to deliver has been
destroyed through his fault or he has delivered it to another
person.

e. In reciprocal obligations, where the obligations arise

out of the same cause and must be fulfilled at the same
time, from the moment one of the parties fulfills his
obligation, delay by the other begins notwithstanding the
absence of demand.

Note: There is no delay in an obligation not to do as one

cannot be in delay for not doing something.
Effects of delay
a. The debtor shall be liable for the
payment of damages. (Art. 1170)

b. If the obligation consists in the delivery

of a determinate thing, he shall be
responsible for any fortuitous event until he
has effected the delivery. (Art. 1165)
Fortuitous events

1. Concept
Fortuitous events are those events that could not be .
foreseen, or which, though foreseen, are inevitable. (Art.
1174).
It is not enough that the event should not been foreseen or
anticipated, but it must be one impossible to foresee or
avoid. (Sicam vs. Jorge, GR. No. 159617, August 8, 2007)

Examples: Natural calamities or acts of God such as

earthquake, typhoon and lightning; and acts of man ("force
majeure") such as war and armed robbery.
Elements
a. The cause must be independent of the debtor's will.
b. There must be impossibility of foreseeing the event or
of avoiding it even if it can be foreseen.
c. The occurrence of the event must be of such
character as to render it impossible for the debtor to
perform his obligation in a normal manner. (See Sicam
vs. Jorge, G.R No. 159617, August 8,2007, for similar
elements or characteristics.)
Liability for fortuitous events

General rule: No person shall be

liable for fortuitous events, i.e., his
obligation will be extinguished.
Exceptions to the rule (Art. 1174):
a. When the law. expressly provides for liability even in
case of fortuitous events (such as that provided in Art.1165
where the obligor is liable for fortuitous events if he delays
or has promised to deliver the same thing to two or more
persons who do not have the same interest).
b. When the parties have declared liability even in case of
fortuitous event.
c. When the nature of the obligation requires the
assumption of risk (such as the obligation of an insurer who
must pay the policy holder even if the loss is caused by a
fortuitous event if the cause thereof is the risk insured
against).
Burden of proving loss due to fortuitous event
The burden of proving that the loss was due to
fortuitous event rests on him who invokes it.
And, in order for a fortuitous event to exempt
one from liability, it is necessary that he must
have committed no negligence or misconduct
that may have occasioned the loss. (Sicam vs.
Jorge, supra)
Presumptions on receipt of principal or of later installment
(these are disputable presumptions and evidence may be
introduced to the contrary by the creditor) (Art. 1176)

1. The receipt of the principal without reservation as,

to interest, shall give rise to the presumption that the
interest has been paid.
2. The receipt of a later installment without reservation
as to prior installments, shall give rise to the
presumption that such prior installments have been
paid.
The above presumptions are disputable; hence, they
may be rebutted by contrary evidence. If the
presumption is conclusive, then no evidence to the
contrary may be admitted.
Remedies of creditor to enforce payment
of his claims against debtor (Art. 1177)
1. Pursue the property in the possession of the debtor, except
those exempt by law.
This is usually by attachment where the creditor files a court
action to exact fulfillment with a prayer that the court set aside a
property belonging to the debtor. If the court decides infavor of
the creditor and the debtor does not pay, the property
attached will be ordered sold and the proceeds thereof applied
to the payment of the obligation.
Exercise all the rights and bring all the
actions of the debtor except those personal
to him (accion subrogatoria).
Example: A owes D. D owes C. If C files a court
action against D to collect, he may ask the court to
order A not to pay D so that in the event that the
court rules in favor of C, A will be required to pay
C. In effect, C is exercising the right to collect
from A which is a right that belongs to D.
Impugn the acts which the debtor may have
done to defraud his creditors (accion pauliana).
This remedy must be of last resort. The creditor must have
taken the successively the foregoing measures before he
can bring this action. (Metrobank vs International
Exchange Bank, G.R. No. 176008,August10, 2011)
Example: D owes C P50,000.00. To defraud C, D sells his
lot, his only property, to B who knows of the fraudulent
intention of D. C may ask the court to order the rescission
of the sale made by D. Once the sale is rescinded and
the lot is returned to D, C may ask the court to order its
attachment and its sale at public auction, and the proceeds
of the sale applied in payment of his claim.
DIFFERENT KINDS OF OBLIGATIONS
(Primary classification under the Civil Code)
1. Pure obligation
2. Conditional obligation
3. Obligation with a period
4. Alternative obligation
5. Facultative obligation
6. Joint obligation
7. Solidary obligation
8. Divisible obligation
9. Indivisible obligation
10. Obligation with a penal clause.
Pure and Conditional Obligations
Pure obligation, concept
A pure obligation is one without a term or
condition and is demandable at once.
Example: I promise to give you P5,000.00.
This is immediately demandable since there is
no term that must expire or a condition that
must happen for the obligation to be
demandable.
Conditional obligation, concept
A conditional obligation is one whose
demandability or extinquishrnent depends upon the
happening of a condition.
Examples:
(1.) "I will give you my car if you pass the CPA
Examination." The condition here is suspensive. You may
not demand the delivery of my car until you pass the CPA
Examination.
(2.) "I will let you use my car until you pass the CPA
Examination." The conditionhere is resolutoiy. You may
demand the delivery of my Car now but you must return
it to me when you pass the CPA Examination.
Condition
Concept
It is an uncertain event which wields an influence on a legal
relationship. (Manresa)
Classification
a. Suspensive and resolutory
1) Suspensive - This is a condition the happening of which
gives rise to the obligation. This is also called condition
antecedent or condition precedent. The demandability of the
obligation is suspended until the happening of the condition.
2) Resolutory - This is a condition the happening of which
extinguishes the obligation. This is also called condition
subsequent. The obligation is demandable at once but it
shall be extinguished upon the happening of the condition.
b. Potestative, casual and mixed
1) Potestative - A condition that depends upon the will of
one of the contracting parties.
a) Potestative on the. part of the debtor
(1) If suspensive - The obligation is void. (Art. 1182)
Even if the condition is fulfilled, the obligation. is
not demandable. (Example: D is to give C
P50,OOO.OO if D goes to Baguio.)
(2) If resolutory - The obligation is valid. (Example:
D is to allow the use of his car by C until D returns
from Baguio.)
b) Potestative on the part of the creditor - The
obligation is valid whether the condition is
suspensive or resolutory.
Examples:
(1) 0 is to give C P50,000.00 if C goes to Baguio.
(2) 0 is to allow the use of his car by C until C
returns from Baquio.
2) Casual - A condition that depends upon chance or
upon the will of a third person.
Examples: (1) 0 is to give C PSO,OOO.OifO0 wins
first prize in the lotto on the bet he placed this
morning. (2) D is to give C P50,000.00 if X goes to
Baguio.

3) Mixed - A condition that depends partly upon the

will of one of the parties and partly upon chance
or upon the will of a third person. (Example:
0 to give C P50,000.00 if C will marry X.)
c. Possible and impossible
1) Possible - One that is capable of fulfillment in its nature
and by law.
2) Impossible - One that is not capable of fvlfillment
in its nature or due to operation of law, such as "if you can
swim across the Pacific Ocean" or "if you kill X'. In
this case, the obligation and the condition are void.
(Art.1183).
Note: If the condition is not to do an impossible
thing, it shall be deemed as not having been agreed upon.
(Art. 1183) Thus, the obligation is immediately demandable.
(Example: 0 is to give C P50,000.00 if C does not swim across
the Pacific Ocean.)
d. Positive and negative
1) Positive - This is a condition that some event
happen at a determinate time. Here, the obligation is
extinguished as soon as the time expires or it has
become indubitable that the event will not take place.
(Art. 1184)
Example: 0 is to give C P50,000 00 if c will marry X on or
before June 30, 2015. The obligation will be extinguished
on July 1, 2015 if C has not yet married X as of June 30,
2015. If X dies on June 1, 2015 before C has
married her, then the obligation is extinguished on
such date because there is no more doubt that the
marriage will not take place.
2) Negative - This is a condition that some event will
not happen at a determinate time. Here, the
obligation becomes effective as soon as the time
indicated has elapsed or it has become evident that
the event will not occur. (Art. 1185)
Example: D is to give C P50,000.00 if C will not marry
X on or before June 30, 2015. The obligation becomes
effective on July 1, 2015 if C has not yet married X as
of June 30, 2015. 'If X dies on June 1, 2015 before C
has married her, then the obligation becomes
effective on such date because there is no more doubt
that the marriage will not take place.
e. Divisible and indivisible
1) Divisible - One that is capable of partial performance.
Under Art. 1183, if the obligation is divisible, that part thereof
which is not affected by the impossible or unlawful condition shall
be valid.
Examples (a): D is to give C a car if C finishes his law course, and
P1,000,000.00 if C tops the Bar Examination. If D finishes his law
course, he may demand the delivery of the car. However, he may
not demand the payment of P1,000,000.do if he does not top the
Bar. (2) D is to give C a car if C finishes his law course and,
P1,000,000.00 if C can get a copy of the test questions in the Bar
Examination in advance. Even if both conditions are fulfilled, C
can only ask for the delivery of a car from D because the second
condition is unlawful.
2) Indivisible - One that is not capable of partial
performance by its nature or by law or
agreement of the parties.
Example: D is to give C a car if C finishes his
law course and tops the Bar. C must comply
with both conditions before he can ask for the
delivery of a car from D.
 Effect of fulfillment of suspensive condition (Art.1187)
General rule: The effect of the fulfillment of the
suspensive condition retroacts to the day of the
constitution of the obligation.
Exceptions: There shall be no retroactive effect with respect to the
fruits and interests as follows:
1. In reciprocal obligations, the fruits and interests shall be deemed to
have been mutually compensated, i.e., each party shall keep the fruits
and interest received by him prior to the fulfillment of the condition.
Example: On May 1, 2011, S agreed to sell his land to B and B agreed
to pay the price of P50,OOO.OOif X finishes his Accounting degree on
March 15, 2015. X finished his Accounting degree as
stipulated. It was as if S was entitled to the price and B to the land
beginning on May 1, 2011. However, S shall keep the fruits on the land
and B the interest on the price during the pendency of the condition.
2. In unilateral obligations, the debtor keeps the fruits
and interests received before the fulfillment of the
condition.

Example: On May 1, 2012, S promised to give B his

land if B passed the Bar Examination in February
2015. B passed the Bar Examination as stipulated. It
was as if B was entitled to the land beginning on May 1,
2012. However, still keep the fruits on the land during
the pendency of the condition.
Rights' of the parties before the fulfillment of
the condition (Art.1188)
1. Creditor - He may bring the appropriate
actions for the preservation of his right, such as
registering his claim with the Register of Deeds, if
appropriate, to notify all third persons, or asking
the debtor to provide a security if the debtor is
about to become insolvent.

2. Debtor - He may recover what he has paid by

mistake.
Effect when the debtor voluntarily
prevents fulfillment of the condltion
The condition is deemed fulfilled if the debtor voluntarily
prevents its fulfillment (Art. 1186); hence, the obligation
becomes immediately. demandable. Here, there must be an
intent on part of the debtor to prevent compliance with
the condition and actually prevents its fulfilment.
Example:
D promised to give P10,OOO.OOto C, a marathon athlete, if C
finishes the race during the athletic meet. However, on the
eve of the scheduled race, D put a substance. on the drink of C
who experienced weakening after taking the drink, and hence,
was not able to join the race. Here, D must give
P10,OOO.OtOo C since the condition is deemed fulfilled
Rules in case of loss, deterioration or improvement of determinate' thing
before the fulfillment of the suspensive condition (Art. 1189)
1. Loss of the thing
a. Without debtor's fault - Obligation is extinguished.
b. With debtor's fault '- Debtor is obliged to pay damages.
Concept of loss ,
A thing is considered lost when it perishes, or goes out of. commerce
or disappears in such a way that its existence is unknown 9r it cannot
be recovered.
Example: D is obliged to give C a specific house if C passes the CPA
Examination. If the house is destroyed in a fire without the fault of D
before C passes the CPA Examination, D's obligation is extinguished
even if C, thereafter, passes the CPA Examination. But if the house is
destroyed through the fault of D such as when he placed inside the
house highly flammable chemicals which caused the fire, then D shall
be obliged to pay damages should C pass the CPA Examination..
2. Deterioration of the thing
a. Without debtor's fault - The impairment shall be borne by the
creditor, i.e., no liability on the part of the debtor to pay damages.
b. With debtor's fault - The creditor may choose between:
1) Rescission, plus damages
2) Fulfillment, plus damages
Example:
D is obliged to give a specific car to C if C finishes his economics
degree. The deterioration of the car due to wear and tear before C
finishes his economics degree will be borne by C when C later finishes
the said degree. However, if the car is damaged in an accident due to
D's fault, C, when he finishes his economics degree may rescind the
contract' and ask for damages, or ask D to deliver the car in its
deteriorated condition plus damages.
3. Improvement of the thing
a. By nature or by time - The improvement shall
inure to the benefit of the creditor.

Example: D is obliged to give his violin to C if C

finishes his course in music. If the quality of the
tone produced by the violin had improved between
the time that D's obligation was constituted and
the completion by C of his course in music, then
such improvement shall inure to the benefit of C.
b. At the expense of the debtor - The debtor will have the rights
granted to a usufructuary, i.e., he 'can have enjoyment of the use of
the improved thing and its fruits. He may remove the improvement if
no damage is caused to the principal thing. If the improvement cannot
be removed without causing damage to the principal thing, the thing
and the improvement shall be delivered to the creditor without any right
on the part of the debtor to indemnity. He may, however, set
off the improvements against any damage to the thing. (Arts. 579 and
580)
Example: D is obliged to give his only car to C if C finishes his
economics degree. Before C finished the said degree, D had the
car repainted. In this case, D can continue using the car in its
improved condition. Upon the completion by C of his economics
degree, D cannot remove the paint because it will cause damage to
the car. However, if he had caused a dent on the car due to his
fault, he may set off the cost of repainting against the cost of
damage brought by such dent.
Rule in case of fulfillment of resolutory
condition (Art. 1190)
1. Upon the fulfillment of the resolutory condition, the
obligation is extinguished.

2. The parties shall return to each other what they have

received.

3. In case of loss, deterioration or improvement of the

thing, the provisions in the above rule (Art. 1189), which
pertain to the debtor shall be applied to the party who is
bound to return.
Reciprocal obligation, concept
A reciprocal obligation is one that arises from the same
cause and in which each party is a debtor and a creditor of
the other, such that the obligation of one is dependent
upon the obliqation of the other. (Goldloop Properties,
Inc. vs. Government Service Insurance System, G.R. No.
171076, August 1, 2012). Reciprocal obligations are to be
performed simultaneously so that the performance of one is
conditioned upon the simultaneous fulfillment of the other.
(Jalandoni vs. Cabalum Commercial School, 61216-R, July
15, 1980)
Example: S sold his Toyota car to B for P200,000.00.
The delivery of the car by S is dependent upon the
payment of the price by B.
Obligations with a Period

Obligation with a period, concept

An obligation with a period is one whose
demandability or extinguishment is
subjected to the expiration of the term
which must necessarily come .. In
other words, there is a day certain
when the obligation will arise or cease.
Examples: (1) D is obliged to give his car to C on May 1,
2015. On May 1, 2015, the obligation becomes
demandable by reason of the expiration of the term or
period. The period here is one with a suspensive effect or
ex die. (2) On January 1, 2015, D allowed C to use his car
until May 1, 2015. The obligation is demandable on January
1,.2015 but on May 1, 2015, D's- obligation to let C use his
car is extinguished by reason of the expiration of the term.
The period here is- one with a resolutory effect or in diem. C
must therefore return the car.
Concept of period and day certain
Period is a space of time which determines the
effectivity or extinguishment of an obligation.
Thus, the space of time between January 1,
2015 and January 1, 2016 is a period the lapse of
which will cause an obligation to arise or cease.
A day certain is that which must necessarily come
although it may not be known when. (Art.
1193) An example is the death of a person which
will necessarily come. Thus, if the obligation of
D is to give C P10,OOO.OO when X dies, the
obligation is one with a period.
Period distinguished from condition.
1. As to fulfillment -
A condition is an event that mayor may not happen; a period is an event that
must necessarily come, at a gate known beforehand, or at a time that cannot be
determined.
2. As to time -
A condition may refer to the future or to a past event . unknown to the parties;
a period always refers to the future.
3. As to influence on the obligation -
A condition causes an obligation to arise or to cease; a period merely fixes the
time for the efficaciousness of an obligation. (8 Manresa 153, 154)
4. As to the will of the debtor
A period that depends upon the will of the debtor authorizes the court to fix its
duration. (Art. 1197, par. 2), while a condition that depends upon the will of
the debtor which is suspensive shall annul the obligation. (Art.1182).
Kinds of period
1. Ex die - This is a period with a suspensive effect. Here, the
obligation becomes demandable upon the lapse of the period. (Art.
1193)
2. In diem - This is a period with a resolutory effect. Here, the
obligation is demandable at once but is extinguished upon the lapse of
the period: (Art. 1193)
Other kinds are:
1. Legal - A period that is fixed by law.

2. Voluntary - This is fixed by the parties.

3. judicial - One that is fixed by the court.

Problem:

"I Willpay you my debt when my means

permit me to do so." Is this an obligation
with a period or with a condition?
Answer:
This is an obligation with a period. Here, the
remedy of the creditor is to ask the court to fix
the period. (Art. 1180, 1197) Once the court
has fix:edthe period, it may no longer change it
as it becomes a part of the agreement by the
parties.
Presumption as to who has the benefit of the period
Whenever a period is designated in an obligation, it shall be presumed
to have been established for the benefit of both the creditor and the
debtor, unless from the tenor of the obligation or other circumstances, it
should appear that it has been established for the benefit of only one
of the parties. (Art. 1196).
Therefore, the debtor cannot be compelled to perform, and the creditor
cannot be compelled to accept ~erformance, before the term expires.
Example: D borrowed Pi 0,000.00 from C on January 1, 2015.
The loan bears interest at 10% per annum with both
principal and interest being due on December 31, 2015. Before
December 31, 2015, C cannot compel D to pay and deprive him
of the use of the money until the said date. Neither may D
compel C to accept payment before December 31, 2015 and
deprive C of the interest for remaining term.
Period is for the benefit of one of the parties
1. For the benefit of the debtor - He cannot be compelled to
perform his obligation before the expiration of the term, but he may
choose to perform before such expiration at his option.
Example: D is obliged to pay C P1 0,000.00 on or before December 31,
2015. D cannot be compelled to pay before December 31, 2015.
However, he may Choose to pay at any time before December 31,2015
or on December 31,2015 at his option.
2. For the benefit of the creditor - He cannot be compelled to accept
performance before expiration of the term, but he may choose to
demand performance before such expiration at his option..
Example: On November 1, 2014, D borrowed from C P10,000.00.
"collectible" on or before June 30, 2015. C may demand payment on
June 30, 2015 or at any time before the said date. However, D
cannot compel him to accept the payment at any time before June
30, 2015.
When debtor loses his right to make use of the period if
it is for his benefit; (Art. 1198),
i.e., the creditor may demand immediate payment
1. When he becomes insolvent, unless he gives a guaranty or
security for the debt.
2. When he fails to furnish the guaranties or securities that he
has promised.
Example: D borrowed P20,000.00 from .C promising to pledge
his ring to C to secure the debt within one month. C gave D
one year to pay the loan. D, however, failed to pledge his ring
within the period agreed upon. In this case, C can demand
immediate payment even before the agreed due date thereof.
3. When he impairs the said guaranties or securities by
his own acts, or when through a fortuitous eventthey
disappear, unless he gives new ones equally
satisfactory.
Example: D obtained a loan from C, the same being
secured by a chattel mortgage on D's car. The loan is
payable within one year. On the seventh month, the
car was razed by fire. C can demand immediate
payment unless 0 gives another security that is equally
satisfactory. This is true even if the cause of the Joss or
impairment was not due to the fault of D.
4. When he violates any undertaking in consideration of which
the creditor agreed to the period.
Example: C granted a loan of P50,OOO.OO to D giving D one
year to pay provided D did not engage in any gambling until he
has paid the debt. If D enters a casino to play in the slot
machine, say after one month, C can already demand
immediate payment.

5. When he attempts to abscond.

Thus, if the debtor has been disposing all his property with an
attempt to leave his place of business or residence to escape his
creditors, such creditors can demand immediate payment of his
debts although their maturity date is not yet due.
Alternative Obligations and Facultative Obligations
Kinds of obligations according to the number of prestations
1. Simple - One where there is only one prestation.
2. Compound - One when there are several prestations. This may be:

a. Conjunctive - Here, several prestations are due but all must be

performed.
Example: D is to give C a specific ring, a specific watch and a
specific bracelet to C. D must deliver all the items to C.

b.Distributive or disjunctive - This may either be alternative

or facultative..
Alternative obligation, concept

An alternative obligation is one where several

prestations are due but the complete
performance of one of them is sufficient to
extinguish the obligation. (Art. 1199)
Example: D is obliged to give a specific ring, a
specific watch or a specific bracelet to C. The
delivery of any of the three articles will extinguish
the obligation.
Right to choose prestation
The right of choice belongs to the debtor, unless it has been
expressly given to the creditor. (Art. 1199)

Limitations on debtor's right to choose

1. The debtor must completely perform the prestation chosen.
He cannot compel the creditor to receive part of one and part of
another undertaking. (Art. 1199)

2. He cannot choose those prestations which are impossible,

unlawful or which could not have been the object of the
obligation. (Art. 1199)
When obligation ceases to be alternative
and becomes a simple obligation.
1. When the debtor has communicated his choice to the
creditor. (Art. 1201)

2. When among the prestations whereby the debtor is

alternatively bound, only one is practicable. (Art. 1202)

3. When the creditor has communicated his choice to

the debtor, if the creditor has been expressly given the
right of choice. (Art.1205)
Rules in case of loss of things or
impossibility of services which are
alternatively the object of the obligation.
1. When right of choice is with the debtor (Art. 1204)
a. If only one or some are lost through a fortuitous event or
through the debtor's fault, the debtor may deliver any of
the remainder, or that which remains if only one
subsists.
b. If all are lost through a fortuitous event, the obligation
is extinguished (based on the rule that no person shall be
responsible for fortuitous event).
c. If all are lost through the debtor's fault, the debtor shall
pay the value of the last thing that was lost plus
damages.
Examples:

D is to give C a specific ring, a specific

bracelet or a specific wristwatch. The
obligation is silent as to who will choose the
item to be delivered. Therefore, the right of
choice belongs to D.
a. If the ring is lost through a fortuitous event, D may deliver
the bracelet or the wristwatch. The same rule applies if the ring
is lost through the fault of D. In the case of the latter, D shall
have no liability for damages because he can still perform his
obligation by choosing to deliver the bracelet or the wristwatch,

b. If the ring and the bracelet are lost through a fortuitous event
or through D's fault, the obligation is converted into a simple
obligation to deliver the wristwatch. There is no liability for
damages on the part of D even if the loss is due to his fault
because he can s!ill perform his obligation. It was as if D chose to
deliver the wristwatch.

c. If all things are lost due to a fortuitous event, D's

obligation is extinguished.
d. If the ring and the bracelet are lost through a
fortuitous event, the obligation becomes a simple
obligation to deliver the wristwatch. If the
wristwatch is thereafter lost due to the fault of D, D
shall pay damages.

e. If the ring, the bracelet and the wristwatch are lost

one after the other due to D's fault, D shall pay the
value of the wristwatch, the last item that was lost,
plus damages.

f. If the ring and the bracelet are lost through D's fault,
the obligation becomes a simple obligation to deliver
the wristwatch. If the wristwatch is thereafter lost
When right of choice is expressly granted to
the creditor (Art. 1205)
When right of choice is expressly granted to the creditor
(Art.1205)
a. If only one or some are lost through a fortuitous event, the
debtor shall deliver that which the creditor should choose among
the remainder, or that which remains if only one subsists.
b. If all are lost through a fortuitous event, the obligation shall be
extinguished.
c. If only one or some are lost through the debtor's fault, the
creditor may claim any of those subsisting, or the price of those
which were lost through the debtor's fault plus damages.
d. If all are lost through the debtor's fault, the creditor may claim
the price of any of them plus damages.
Examples:

D is to give C a specific ring, a specific

bracelet or a specific wristwatch. The
parties agreed that C shall have the right of
choice.
a. If the ring is lost through a fortuitous event, D shall deliver either
the bracelet or the wristwatch at the choice ofC.

b. If all are lost through a fortuitous event, D's obligation is extinguished.

c. If the ring and the bracelet are lost through a fortuitous event, D shall
deliver the wristwatch which is the remaining item. The obligation
becomes a simple obligation to deliver the wristwatch. If the
wristwatch is thereafter lost due to D's fault, D shall pay damages.

d. If the ring and the bracelet are lost due to D's fault, the obligation
does not become a simple obligation to deliver the wristwatch. C can
still choose from the payment of the price of the ring or the bracelet
with damages, or the delivery of the wristwatch.
e. If all are lost due to the fault of D. C may claim the price of any of
them plus damages.
Facultative obligation, concept

An obligation where only one prestation is

due but the debtor may render another in
substitution.

Example: D is obliged to give a specific ring

to C with the agreement that D may deliver
a specific watch as a substitute.
Rules in case of loss of principal thing and
substitute.
1. Before substitution (i.e., before the debtor has informed
the creditor of the substitution)
a. Principal thing
1) If lost due to fortuitous event, the obligation is extinguished.
2) If lost due to the debtor's fault, debtor shall pay damages.

b. Substitute
The loss of the substitute whether through a fortuitous event or
through the debtor's fault imposes no additional obligation on the
debtor because it is not yet due. The debtor has still to deliver the
principal thing.
2. After substitution
a. Principal thing
The loss of the principal thing whether through a fortuitous
event or through the debtor's fault imposes no additional
obligation on the debtor because the thing due is already
the substitute. After the substitution has been
communicated, the thing due is the substitute. The
obligation also ceases to be a facultative obligation and
becomes a simple obligation.
b. Substitute
1) If lost through a fortuitous event, the obligation is
extinguished.
2) If lost through the debtor's fault, the debtor shall pay
damages.
Alternative obligation and facultative
obligation, distinguished
Alternative obligation
1. Several prestations are
due, but the performance
of one is sufficient to
extinguish the debt.
2. If there are void prestations,
the others may still be valid,
hence, the obligation remains
Facultative obligation
1. Only one prestation, the
principal obligation, is due.
2. If the principal obligation is void,
the debtor is not required to give
the substitute.

3. The right of choice is with 3. The right of choice

the debtor, unless expressly belongs to the debtor
given to the creditor. only.
 Alternative obligation Facultative obligation

4. If all prestations are 4. If the principal obligation

impossible except one, that is impossible, the
which is possible must still be debtor is not required to
given. give the substitute.
Joint and Solidary Obligations
Joint and solidary obligations, concept
In a joint or solidary obligation, there is a concurrence of two or more
debtors and/or two or more creditors in one and the same
obligation.
In a joint obligation, each debtor is liable only for a proportionate part of
the debt, and each creditor is entitled only to a proportionate part of the
credit.
Examples:
(1) A and B are indebted to X for P10,000.OO A is liable only for P5,OOO; B
is liable only for P5,OOO.OO
(2) Aowes X and Y P8,OOO.OO. X can collect only P4,OOO.OO; Y can
collect only P4,OOO.OO.
In a solidary obligation, each debtor IS liable for the whole
obligation, and each creditor is entitled to demand payment of the whole
obligation.
Kinds of solidary obligation
1. Passive solidarity - This is solidarity on the part of the debtors
Example: A and B, solidary debtors, are indebted to X for
P10,OOO.OO.X can demand payment of P10,OOO.OOfrom either A or
B. If A pays X P10,OOO.OOth, e obligation IS extinguished. A can
demand reimbursement of P5,OOO.OfOrom B representing the latter's
share in the debt.
2. Active solidarity - This is solidarity on the part of the creditors.
Example: A owes X and Y, solidary creditors.
P8,OOO.OO.Either X or Y may demand payment of P8,OOO.OO from A.
If A pays X P8,OOO.OOth,e obligation is extinguished. X must give
P4,OOO.OOto Y representing the latter's share in the credit.
3. Mixed solidarity or solidarity on the part of both
debtors and creditors.
Example: A and B, solidary debtors owe X and Y,
solidary creditors, P12,OOO.00. X or Y may collect from
A or B the total sum of P12,OOO.00. If A 'pays X
P12,000.00, the obligation is extinguished. B must
reimburse A P6,000 00. On the other hand, X must give
P6,OOO.00to Y.
Other terms for solidary obligation
1. Jointly and severally
2. Individually and collectively
3. In solidum
4. Mancomunada solidaria
5. Juntos 0 separadamente

Other terms for joint obligation

1. Proportionately
2. Pro rata
3. Mancomunada
4. Mancomunada simple
General rule if there is a concurrence of two or more
debtors and/or two or more creditors in one and the same
obligation.
The obligation is presumed to be joint when there is a concurrence of
two or more debtors and/or two or more creditors in one and the
same obligation. There is solidary liability only in the following cases:
1. When the obligation expressly so states.
2. When the law requires solidarity.
Examples:
a. When two or more persons nave appointed an agent for a common
transaction or undertaking, they shall be solidarily liable for the
consequences of the agency. (Art. 1915)
b. Where the instrument containing the words U I promise to pay" is
signed by two or more persons, they are deemed to be jointly and
severally liable thereon.
3. When the nature of the obligation requires solidarity.
Example:
SG, a security guard of AB Partnership, was killed by criminal
elements in line of duty. The heirs of S demanded
compensation under the Workmen's Compensation Law (WCL)
for the whole amount from A. partner. A claimed that he should
be liable only for one-half thereof, the other half to be
shouldered by B. his partner. since their liability IS only joint as
the law was silent on the nature of liability. The court ruled that
the partners' liability is solidary since the nature of their
obligation requires solidarity. The evident intention of the WCL
is to give full protection to workers. This purpose would be
defeated if the employers' liability were only joint. (See
Liwanag. et al vs. WCC, L-12164. May 22, 1959.)
A, B and C are obliged to give X, Y and Z P27,OOO.OOH.ow many
distinct debts are there in the obligation?
Answer: Since the obligation is presumed to be joint, there are
9 distinct debts -9S follows:
1. A owes X P3,000. 00.
2. A owes Y P3, 000. 00.
3. A owes Z P3, 000. 00.
4. B owes X P3, 000. 00.
5. B owes Y P3, 000. 00.
6. B owes Z P3, 000. 00.
7. C owes X P3, 000. 00.
B. C owes Y P3, 000. 00.
9. C owes Z P3,000. 00.
Example:
A, B and C, joint debtors, are
obliged to give X, Y and Z, solidary
creditors, P18,OOO.OO How much
may X collect and from whom?
Answer:
X, being a solidary creditor, may collect the
sum of P18, 000. 00. However, since the
debtors are joint debtors, he may collect
only P6,000 from each of them. After
collecting the sum of P18,000. 00, X must give
Y and Z's share of P6,000. 00 each.
A, Band C, solidary debtors, are obliged to give X, Y and Z, joint
creditors, P18,OOO.00.How much may A be held liable?
Answer: A, being a solidary debtor, may be held liable for
P18,000.00. However, since the creditors are joint creditors, each of
them may collect only P6,000.00 from A. If A pays the whole amount
of P18,000.00 to the creditors, A can demand reimbursement of
P6,000.00 each from Band C.

A, Band C, solidary debtors, are obliged to give X, Y and Z,

solidary creditors, P18,000.00. How much may Z collect and from
whom?
Answer: Z may collect P18,OOOfrom any of the solidary debtors each
of whom may be held liable for the entire obligation. If Z collects
P18,000.00 from A, Z must give X and Y P6,OOO.00each. A, on the
other hand, can demand reimbursement from Band C at P6,000.00
each.
Some problems when there is unequal sharing in the
debt and/or credit
A and B owe X and Y P10,OOO.00T. he share of A in the debt is 40%, while
that of B is 60%. The share of X in the credit is 70%, while that of Y is
30%. '
1. Joint debtors and joint creditors
A can be held liable for not more than P4,OOO.00 (40% of P10,OOO.00,
while B, not more than P6,OOO.00 (60% of P10,OOO.00). X can collect
not more than P7,OOO.00 (70% of P10,OOO.00), while Y, not more than
P3,OOO.00 (30% of P10,000.OO.)
a. How much may X collect from A? from B?
From A, X may collect P2,800.00 (40% of P7,000.00.), From B, X may
collect P4,200.00 (60% of P7,000.00.)
(Alternative computation: A, (P4,000.00 x 70% =
P2,800.00); B, (P6,000.00 x 70% = P4,200.00)
b. How much may Y collect from A? from B?

From A, Y may collect P1,200.00 (40% of

P3,000.00). From B, Y may collect
P1,800.00 (60% of P3,000.00.)
(Alternative computation:
A, (P4,OOO.00 x 30% = P1,200.00);
B, (P6,OOO.00 x 30% = P1,800.00)
2. Joint debtors and solidary creditors (active solidarity)
a. How much may X collect from A? from B?
X, being a solidary creditor, may collect the whole amount of
P10,OOO.00. However, since the debtors are joint debtors, he cannot
collect more than P4,OOO.OOfrom A, and not more than P6,OOO.00 from
B. After collecting the amount of P10,OOO.00, he must give P3,OOO.00
to Y representing the latter's share in the credit.

b. How much may Y collect from A? from B?

If Y is the one collecting, may collect the whole amount of P10,OOO.00.
However, since the debtors are joint debtors, he cannot collect more
than P4,OOO 00 from A, and not more than P6,OOO.00 from B. After
collecting the amount of P10,OOO.00, he must give P7,OOO.00 to X
representing the latter's share in the credit.
3. Solidary debtors and joint creditors (passive solidarity)
a. How much may A be held liable and by whom?
A may be held liable for the whole amount of P10,OOO.00. However,
since the creditors are jolntly bound, X can collect from him not more
than P7,OOO 00, and Y, not more than P3,OOO.00. After A has paid the
debt, he can demand reimbursement from B in the amount of
P6,OOO.00.

b.How much may B be held liable and by whom?

B may be held liable for the whole amount of P10,OOO.00. However,
since the creditors are jolntly bound, X can collect from him not more
than P7,OOO.00, and Y, not more than P3,OOO.00. After B has paid
the debt, he can demand reimbursement from A in the amount of
P4,OOO.00.
4. Mixed solidarity
Here, either X or Y may collect from either A or B the
whole amount of P10,OOO.OO. If A is the one paying, he
can demand reimbursement from 8 in the amount of
P6,OOO.OO. If the 8 is the one paying, he can demand
reimbursement from A in the amount of P4,OOO.OO. If X
is the one collecting, he must give P3,OOO.OO to Y. If Y
is the one collecting, he must give P7,OOO.OO to X.
A and B are solidary debtors of X and Y, solidary creditors, in the
amount of P20,OOO.OO.
1. If X renounces or remits the whole obligation without the consent
of Y, will the obligation be extinguished?

Answer: Yes, because the remission made by any solidary

creditor extinguishes the whole obligation. (Art. 1215) However, X
has to give Y's share of P10,000.00 since a solidary creditor may not
do anything prejudicial to his co-solidary creditors. (Art. 1212) A
solidary creditor who has caused the extinguishment of the
obligation by 'remission, novation, compensation or confusion, or
who has collected the debt, shall be liable to the others for the
shares corresponding to them. (Art. 1215).
2. Suppose the remission of the whole obligation was obtained by
A, may A demand reimbursement from 8?
Answer: No, because the remission of the whole obligation obtained by one of the
solidary debtors does not entitle him to reimbursement from his co-debtors (Aft 1220),
remission being the gratuitous abandonment by the creditors of their rights to the obligation.
3. Suppose that X renounces or remits A's share amounting to P10,OOO.OO. However, it
turned out that 8 had already paid P20,OOO.OO to Y two days before. May 8 still collect
P10,OOO.OO from A representing A's share?
Answer: Yes, B may still collect from A P10,000.00. The remission made by the creditor of
the share which affects one of the solidary debtors does not release the latter from
responsibility to his co-debtors, in case the debt has been totally paid by anyone of them
before the remission was effected. (Art.1219) A's remedy will be to go after X or Y to col/ect
the sum he paid to B.

A is indebted to X, Y and Z, solidary creditors, for P24,OOO.OO. Suppose X

makes a demand against A, to whom shall A pay?
Answer: A must pay to X. If A pays to another solidary creditor, say Y, the sum of
P24,000.00, the payment, as a rule, is valid only with respect to V's share of PB,000.00. Thus,
if X and Z do not receive their respective shares from Y, A can still be held liable for
P16,000.00. (See Art. 1214.)
Joint indivisible obligation, concept and characteristics
A joint indivisible obligation is an obligation where the debtors or creditors are jointly bound
but the prestation or object is indivisible. It has the following characteristics:
1. The creditors must act collectively, meaning, all of them must make the demand
unless one is specifically authorized to act for the others. (Art. 1209) A demand made by
one or some but not all of the creditors will not be effective.
2. The demand must be made against all the debtors since compliance is possible
only if they act together. (Art. 1209)
3. The right of the creditors may be prejudiced only by their collective acts.
Thus, a renunciation made by a joint creditor extinguishes only his own share. The
obligation, however, is converted into an obligation to pay the value of the thing. If all joint
creditors make the renunciation, the obligation is extinguished. (Art. 1209)
4. If one of the debtors does not comply with his undertaking, the obligation is
converted into a monetary obligation to pay damages. The debtors who may have been
ready to comply shall not contribute to the indemnity beyond the corresponding price of
the thing or the value of the service in which the obligation consists. (Art. 1224)
Obligations with a Penal Clause ligation
with a penal clause, concept
An obligation with a penal clause is one which provides for a later
liability on the part of the debtor in case of non-compliance The
iessory undertaking on the part of the debtor is called the penal
use.

Example: D is obliged to construct a commercial building for C nin

a period of three months. The parties agreed that should D fail to
sh the construction of the building within the said period, D shall
pay C 1,000.00 for every day of delay as penalty.
kinds of penal clause
Legal and conventional
a. Legal-Imposed by law.
b. Conventional - Imposed by the agreement of the
parties.

Subsidiary and joint

a. Subsidiary - When only the penalty may be
enforced.
b. Joint - When boththe obligation and the penalty
may be enforced.
 Rule in case obligation has a penal clause
General rule: The penalty takes the place of the damages and interest in case of
non-compliance.

Exceptions, i.e., aside from the penalty, damages and interest may also be
demanded:
1. When there IS a stipulation to that effect.
A stipulation for the payment of interest and penalty apart from interest in case
of delay is not contrary to law, morals, good customs or public policy. (Nicolas vs.
Oel-Nacia Corporation, G. R. No 158026, April 23, 2008) For as long as the amounts
stipulated are not exorbitant, not unconscionable or contrary to morals and public
policy, the court will sustain the amounts agreed upon because obligations arising from
contracts have the force of law between the parties and should be complied
with in good faith. [Pryce Corporation vs. Philippine Amusement and Gaming Corp.,
458 SCRA 164 (2005)]

2. When the debtor refuses to pay the penalty.

O is obliged to deliver 10 sacks of rice to C on May 10. The parties agreed that if
0 fails to deliver on due date, he will pay a penalty of P500.00.

1. Supposing that 0 failed to deliver on due date. may he just pay the penalty of
P500.00?

Answer: No, because the debtor cannot exempt himself from the performance of
the obligation by just paying the penalty, except when this right has been
expressly reserved for him. (Art_.1227)

2. May C demand the delivery of 10 sacks of rice and the payment of the penalty
at the same time upon'default of O?

Answer: No. The creditor cannot demand fulfillment of the obligation and the
payment of the penalty at the same time except when this right has been clearly
granted to him, or if after requiring fulfillment of the obligation, the
performance thereof becomes impossible without his fault, he may also enforce
the penalty. (Art. 1227)
When the court may reduce the penalty
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. (Art. 1229)

Effect of nullity of principal obligation, penal clause

1. The nullity of the principal obligation carries with it the nullity of the penal
clause. This is so because the penal clause, being just an accessory undertaking, cannot
stand by Itself

2. The nullity of the penal clause does not carry with it that of the principal
obligation. This IS so because the principal obligation can stand by itself.