SECTION 4 – JOINT AND SOLIDARY OBLIGATIONS (Article 1222)

Defenses available to a solidary debtor

(Article 1207-1208) 1. Defenses derived from the nature of obligation
Kinds of Obligation According to Number of parties 2. Defenses personal to, or which pertains to share of
1. Individual Obligation debtor sued
2. Collective Obligation 3. Defenses personal to other solidary debtors

Classification of Collective Obligation SECTION 5 – DIVISIBLE AND INDIVISIBLE OBLIGATION

1. Joint Obligation
2. Solidary Obligation (Article 1223)
Kinds of division
When to presume obligation as joint? 1. Qualitative division
1. Easy determination of the ff. 2. Quantitative division
a. Person liable to pay (debtor) 3. Ideal or intellectual division
b. Person entitled to demand (creditor)
c. Extent of the liability of the debtor Kinds of indivisibility
d. Extent of the right of the creditor 1. Legal indivisibility
2. Where there is plurality of parties and the share of 2. Conventional indivisibility
each in the obligation is specified (the correlative 3. Natural indivisibility
rights and obligation are known)
3. Where there is plurality of parties but the share of (Article 1225)
each is not specified. Obligation deemed indivisible
a. There are as many debts as debtors 1. Obligation to give definite things
b. There are as many credits as creditors 2. Obligation is susceptible of partial performance
c. The debts and/or credits are considered 3. Provided by law
distinct and separate from one another 4. Intended by the parties
d. Each debtor is liable only for a proportionate
part of debt Obligation deemed divisible
e. Each creditor is entitled only to a 1. Execution of certain number of days
proportionate part of the credit 2. Accomplishment by metrical units
3. Nature are susceptible of partial performance
When an obligation solidary exists?
1. Obligation is expressly so states SECTION 6 – OBLIGATION WITH PENAL CLAUSE
2. Law requires solidarity (Article 1226)
3. The nature of obligation requires solidarity Kinds of penal clause
4. Imposed in a final judgment against several defendant 1. As to origin
a. Legal penal clause
Kinds of Solidarity b. Conventional penal clause
1. According to the parties bound: 2. As to its purpose
a. Passive Solidarity a. Compensatory penal clause
b. Active Solidarity b. Punitive penal clause
c. Mixed Solidarity 3. As to demandability or effect
2. According to sources: a. Subsidiary or alternative penal clause
a. Conventional Solidarity b. Joint or cumulative
b. Legal Solidarity
c. Real Solidarity When creditor may recover damages
3. According to legal tie 1. When stipulated by the parties
a. Uniform 2. When debtor refuses to pay the penalty
b. Non-uniform or varied 3. When debtor is guilty of fraud in fulfillment of
obligation
Prescriptive periods of action
1. Within 10 years (Article 1229)
a. Upon written contract When penalty may be reduced by the court
b. Upon obligation created by law 1. Partial or irregular performance
c. Upon a judgment 2. When penalty is iniquitous or unconscionable
2. Within 6 years
a. Upon oral contract
b. Upon quasi-contract
3. Within 4 years
a. Upon delict
b. Upon quasi-delict
CHAPTER 4 – EXTINGUISHMENT OF OBLIGATION 2. The successor in interest
3. Any person authorized to received it
(Article 1231)
Cause of extinguishment of obligation (Article 1241)
1. Payment or Performance Payment to third person where benefit of creditor need not to
2. Loss of the thing due be proved
3. Condonation or Remission of debt 1. If after payment, the third person acquires the
4. Confusion or Merger of right of parties creditor’s right (subrogation in the creditor’s right)
5. Compensation 2. If the creditor ratifies the payment to the third person
6. Novation (ratification by creditor)
7. Other causes 3. If by the creditor’s conduct, the debtor has been led to
a. Annulment believe that the third person has authority to receive
b. Rescission the payment (estoppel on the part of creditor)
c. Fulfillment of resolutory condition
d. Prescription (Article 1245)
Special forms of payment
a. Death of parties in case of personal service 1. Dation in payment
b. Mutual desistance or withdrawal 2. Application of payment
c. Arrival of resolutory period 3. Payment by cession
d. Compromise 4. Tender of payment and consignation
e. Impossibility of fulfillment
f. Happening of fortuitous event When partial performance is allowed?
1. When there is a stipulation to that effect
(Article 1233) 2. When debt is in part liquidated and unliquidated
When debt is considered paid? 3. When different prestation is subject to different terms
1. Integrity of prestation or condition
2. Identity of prestation
(Article 1249)
(Article 1234-1235) Payment by means of mercantile document does not
Exemption of RA 1233 (integrity of prestation) distinguish obligation,
1. Substantial performance in good faith 1. Until they have been cashed
2. Incomplete and irregular performance is waived 2. Unless they have been impaired through the creditor’s
fault
(Article 1234)
Requisites of substantial performance in good faith (Article 1251)
1. There must be substantial performance Place where obligation shall be paid
2. The obligor must be in good faith 1. If there is stipulation, payment is made in the place
designated
(Article 1235) 2. If there is stipulation and the thing to be delivered is
Principle of estoppel specific, payment is made where the thing was at the
1. If the payment is incomplete or irregular, the creditor perfection of contract
may properly reject it. 3. If there is no stipulation and the thing to be delivered
2. In case of acceptance, the law considers that he waives is generic, payment is made is made at the domicile of
his right. The whole obligation is extinguish. the debtor

Requisites of incomplete and irregular performance SUBSECTION 1 – APPLICATION OF PAYMENT

1. The oblige must know that the performance is
incomplete or irregular
2. He accepts the performance without objection and
protest
(Article 1236)
Persons from whom the creditor must accept payment
1. The debtor
2. Any person who has interest in the obligation
3. A third person who has no interest in the obligation
when there is stipulation that he can make payment
(Article 1240)
Person to whom payment shall be made
1. The creditor
(Article 1252)
Requisites of application of payment
1. There must be one debtor and one creditor
2. There must be two or more debts
3. The debts must be of the same kind
4. The debts to which the payment made by the debtor
has been applied must due.
5. The payment made must not be sufficient to cover all
the debts
Rules on application of payment
1. The debtor has the first choice
2. The right to make the application once exercised is
irrevocable unless the creditor consents to change
 3. Creditor may make the designation
4. Applied to most onerous to the debtor
5. Applied proportionately

(Article 1254)
Rules to determine most onerous debt
1. Interest bearing note
2. A debt as a sole debtor
3. Debts secured by a mortgage or pledge
4. One with higher interest rate
5. Obligation with penalty clause

SUBSECTION 2 – PAYMENT BY CESSION

(Article 1255)
Requisites of payment by cession
1. There must be two or more creditors
2. The debtor must be partially insolvent
3. The assignment must involve all the properties of the
debtor
4. The cession must be accepted by the creditor

SUBSECTION 3 – TENDER OF PAYMENT AND CONSIGNATION

(Article 1256)
Requisites of valid consignation
1. Existence of valid debt due
2. Tender of payment by debtor and refusal without
justifiable reason by the creditor to accept it
3. Previous notice of consignation to persons interested
in the fulfillment of obligation
4. Consignation of thing or sum due
5. Subsequent notice of consignation to interested
parties
Requirement for valid tender of payment
1. Tender of payment must comply with the rules on
payment or with the terms required by the contract.
2. It must be unconditional and for the whole amount
due and in legal tender
3. It must be actually made

(Article 1259)
Consignation deemed to be properly arranged
1. When creditor accepts the thing or sum deposited
2. Declared by the court as properly made
3. Cancellation of obligation by the court