Introduction to Law Obligations

What is Law? Chapter 1

- Any rule of action or any system of General Provisions
uniformity.
- Limits not men as rational beings but also ARTICLE 1156: AN OBLIGATION IS A
motions of objects; animate or inanimate. JURIDICAL NECESSITY TO GIVE, TO DO OR
Divisions of Law NOT TO DO.
1. Strict Legal Sense
2. Non-legal Sense What is an Obligation?
Divine Law - Derived from the Latin word obligatio which
- Law of religion and faith means tying or binding.
- Concerns itself with the concept of sin - A tie or bond that is recognized by the law
Natural Law by virtue of which one is bound in favour of
- Divine inspiration in man of the sense of another to render something – to give a
justice, fairness, and righteousness by thing, to do or not to do a certain act.
internal dictates of reason alone. What is Juridical Necessity?
Moral Law - An obligation is a juridical necessity because
- Refers to the totality of the norms of good in case of noncompliance, the courts of
and right conduct growing out of the justice may be called upon by the aggrieved
collective sense of right and wrong in every party to enforce its fulfilment of the
community economic value that it represents.
Physical Law Nature of Obligation under the Civil Code
- Are the uniformities of actions and orders of - Civil Obligation – right of the creditor to
sequence which are the physical phenomena enforce performance in courts of justice.
that we sense and feel - Natural obligation
State Law Essential Requisites of an Obligation
- Law that is promulgated and enforced by the 1. Passive Subject – Debtor or Obligor
state 2. Active Subject – Creditor or Obligee
Concept of State Law 3. Object or presentation – Subject matter of the
1. General Sense – refers to all the laws taken obligation
together. 4. Juridical Tie – efficient cause
2. Specific Sense – defined as “a rule of
conduct, just, obligatory, and promulgated Obligation – is the act or the performance which
by legitimate authority and common the law will enforce
observance and benefit.” Right – power which a person has under the law to
Characteristics of Law demand from another any presentation
1. Rule of Conduct Wrong – an act or omission of one party in
2. It is Obligatory violation of the legal rights or right of another.
3. It is Promulgated by Legitimate Authority - Arises only at the moment a right has been
4. It is of common Observance and Benefit violated
Sources of Law
1. Constitution Essential elements of legal wrong or injury:
2. Legislation 1. A legal right in favour of a person
3. Administrative or executive orders. 2. A correlative legal obligation on the part of
regulations and rulings another ; to respect or not to violate said
4. Judicial Decisions or jurisprudence right
5. Custom 3. An act or omission by the latter in violation
of said right with resulting injury or
damage to the former.

Kinds of obligation according to subject matter

1. Real obligation – the obligation to give
 2. Personal obligation – the obligation to do or
not to do
ARTICLE 1157: OBLIGATION ARISE FROM:
1. LAW
2. CONTRATS
3. QUASI-CONTRACTS
4. CRIMES
5. QUASI-DELICTS
Law – when they are imposed by law itself
Contracts – when they arise from the stipulation od
the parties
Quasi-Contracts – when they arise from lawful,
voluntary and unilateral acts
Crimes – when they arise from civil liability which
is the consequence of a criminal offense
Quasi-Delicts – when they arise from damages
caused t another through act or omission, but not
contractual relation exists between the parties
ARTICLE 1158: OBLIGATIONS ARISING FROM
LAW ARE NOT PRESUMED. ONLY THOSE
EXPRESSLY DETERMINED IN THIS 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 OF THIS BOOK.
ARTICLE 1159: OBLIGATIONS AIRISNG FROM
CONTRACTS HAVE THE FORCE OF LAW
BETWEEN THE CONTRACTING PARTIES
AND SHOULD BE COMPLIED WITH IN GOOD
FAITH.
- Compliance in good faith – compliance or
performance in accordance with the
stipulations or terms of the contract.
ARTICLE 1160: OBLIGATIONS DERIVED
FROM QUASI-CONTRACTS SHALL SUBJECT
TO THE PROVISIONSOF CHAPTER 1, TITLE
XVII OF THIS BOOK.
- Quasi-contractual obligations – a juridical
relation resulting from lawful, voluntary,
and unilateral acts by virtue of which the
parties are bound to each other to the end
that no one will be unjustly enriched or
benefitted by at the expense of another.
Kinds of Quasi-Contracts
1. Negotiorum gertio – voluntary management
of the property or affairs of another without
the knowledge or consent of the latter.
2. Solutio indebiti – the juridical relation which
is created when something is received when
there is no right to demand it and it was
unduly delivered through mistake
Requisites:
a. There is no right to receive the thing
b. The thing was delivered through
mistake.
ARTICLE 1161: CIVIL OBLIGATIONS ARISING
FORM CRIMINAL OFFENSES SHALL BE
GOVERNED BY THE PENAL LAWS, SUBJECT
TO THE PROVISIONS OF ARTICLE 2177, AND
OF THE PERTINENT PROVISIONS OF
CHAPTR 2, PRELIMINARY TITLE ON HUMAN
RELATIONS, AND OF TITLE XVII OF THIS
BOOK, REGULATING DAMAGES.
Scope of Civil Liability
1. Restitution
2. Reparation for the damages
3. Indemnification for consequential damages
ARTICLE 1162: OBLIGATIONS DERIVED
FROM QUASI-DELICTS SHALL BE
GOVERNED BY THE PROVISIONS OF
CHAPTER 2, TITLE XVII OF THIS BOOK, AND
BY SPECIAL LAWS.
- Quasi-delicts - is an act or omission by a
person which causes damage to another in
his person, property or rights
Requisites for quasi-delicts
1. There must be and act or omission
2. There must be fault of negligence
3. There must be damaged caused
4. There must be a direct relation or
connection of cause and effect between the
act or omission and the damage
5. There is no pre-existing contractual relation
between the parties.
Chapter 2
Nature and Effect of Obligations
ARTICLE 1163: EVERYPERSON OBLIGED TO
GIVE SOMETHING IS ALSO OBLIGED TO
TAKE CARE OF IT WITH THE PROPER
DELIGENCE OF A GOOD FATHER OF A
FAMILY, UNLESS THE LAW OR THE
STIPULATION OF THE PARTIES REQUIRES
ANOTHER STANDARD OF CARE.
 - Specific/Determinate thing – particularly
designated or physically segregated others
of the same class
- Generic/Indeterminate thing – refers to a class
or a genus to which it pertains and cannot be
pointed out with particularity.
Duties of Debtor in Obligation to give a
Determinate thing.
1. Preserve the thing
a. Diligence of a good father of a family –
equated with ordinary care
2. Deliver the fruits of the thing
3. Deliver the Accessions and Accessories
4. Deliver the thing itself
5. Answer for damages in case of non-fulfillment or
breach
Duties of a Debtor in Obligation to deliver a
Generic thing.
1. Deliver a thing which is of the quality
intended.
2. To be liable for damages in case of fraud,
negligence, or delay.
Different kinds of Fruits:
1. Natural Fruits – products of the soil, and the
young and other products of animals
2. Industrial Fruits – produced by the lands of
any king through cultivation or labor.
3. Civil Fruits – virtue of juridical relation
 The creditor is only entitled to the right to
the fruits of the thing from the time the
obligation to make the delivery arises.
4. Personal Right – right or power of a person
to demand from another, as a passive subject,
the fulfilment of the latter’s obligation
5. Real Right – right or interest of a person over
a specific thing, without a definite passive
subject against whom the right may be
personally enforced.
ARTICLE 1165: WHEN WHAT IS TO BE
DELIVERED IS A DETERMINATE THING, THE
CREDITOR, IN ADDITION TO THE RIGHT
GRANTED TO HIM BY ART. 1170, MAY
COMPEL THE DEBTOR TO MAKE THE
DELIVERY.
IF THE THING IS INDETERMINATE OR
GENERIC, HE MAY ASK THAT THE
OBLIGATION BE COMPLIED WITH AT THE
EXPENSE OF THE DEBTOR.
IF THE DEBTOR 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.
1. Specific real obligation remedies for the
Creditor:
a. Demand specific performance
b. Demand rescission or cancellation
c. Demand payment of damages
2. Generic real obligation remedies for the
Creditor:
a. Ask for the performance of the
obligation
b. Right to recover damaged in case of
breach or violation of the obligation
ARTICLE 1166: THE OBLIGATION TO GIVE A
DETERMINATE THING INCLUDES THAT OF
DELIVERING ALL ITS ACCESSIONS AND
ACCESSORIES, EVEN THOUGH THEY MAY
NOT HAVE BEEN MENTIONED.
- Accessions – are the fruits of a thing or
additional or improvements upon a thing
- Accessories – joined to or included with the
principal thing
ARTICLE 1167: IF A PERSON OBLIGED TO DO
SOMETHING FAILS TO DO IT, THE SAME
SHALL BE EXECUTED AT HIS COST.
THIS SAME RULE SHALL BE
OBSERVED ID HE DOES IT IN
CONTRAVENTION OF THE TENOR OD THE
OBLIGATION. FUTHERMORE, IT MAY BE
DECREED THAT WHAT HAS BEEN POORLY
DONE BE UNDONE.
Remedies of creditor in positive personal
obligation:
1. Have the obligation performed by himself
at the expense of the debtor
2. Recover damages
3. Have the obligation to be undone if it is still
possible
ARTICLE 1167: WHEN THE OBLIGATION
CONSISTS IN NOT DOING, AND THE
OBLIGOR DOES WHAT HAS BEEN
FORBIDDEN HIM, IT SHALL ALSO BE
UNDONE AT HIS EXPENSE.
ARTICLE 1169: THOSE OBLIGED TO DELIVER
OR TO DO SOMETHING INCUR DELAY FROM
THE TIME THE OBLIGEE JIDICIALLY OR
EXTRAJUDICIALLY DEMANDS FROM THEM
THE FULFILLMENT OF THEIR OBLIGATION.
HOWEVER, THE DEMAND BY THE
CREDITOR SHALL NOT BE NECESSARY IN
ORDER THAT DELAY MAY EXIST:
1. WHEN THE OBLIGATION OR THE LAW
EXPRESSLY SO DECLARES; OR
2. WHEN FROM THE NATURE AND THE
CIRCUMSTANCES OF THE
OBLIGATION IT APPEARS THAT THE
DESIGNATION OF THE TIME WHEN
THE THING IS TO BE DELIVERED OR
THE SERVICE IS TO BE RENDERED
WAS A CONTROLLING MOTIVE FOR
THE ESTABLISHEMENT OF THE
CONTRACT; OR
3. WHEN DEMAND WOULD BE USELESS,
AS WHEN THE OBLIGOR HAS
RENDERED IT BEYOND HIS POWER TO
PERFORM.
IN RECIPROCAL OBLIGATIONS,
NEITHER PARTY INCURS IN DELAY IF
THE OTHER DOES NOT COMPLY OR IS
NOT READY TO COMPLY IN A PROPER
MANNDER WITH THAT IS INCUMBENT
UPON HIM. FROM THE MOMENT ONE OF
THE PARTIES FULFILLS HIS OBLIGATION,
DELAY BY RHE OTHER BEGINS.
- Delay – mere failure to perform an obligation
on time
- Legal delay - failure to perform an obligation
on time which failure constitutes a breach of
the obligation
Kinds of Delay:
1. Mora Solvendi – delay on the part of the
debtor
2. Mora accipiendi – delay on the part of the
creditor
3. Compensatio morae – delay of the obligors in
reciprocal obligations
Requisites of delay or default by the debtor:
1. Failure of the debtor to perform his
obligation on the date agreed upon.
2. Demand made by the creditor upon the
debtor to comply with his obligation
3. Failure of the debtor to comply with such
demand.
When demand is not necessary to put debtor in
delay
1. When the obligation so provides
2. When law so provides
3. When time is of essence
ARTICLE 1170: THOSE WHO IN THE
PERFORMANCE OF THEIR OBLIGATIONS
ARE GUILTY OF FRAUD, NEGLIGENCE, OR
DELAY AND THOSE WHO IN ANY MANNER
CONTRAVENE TO THE TENOR THEREOF,
ARE LIABLE FOR DAMAGES.
Grounds for Liability:
1. Fraud – deliberate or intentional evasion of
the normal fulfilment of an obligation.
o Implies some kind of malice or
dishonesty and it cannot cover
cases of mistake and errors of
judgement made in good faith
2. Negligence – any act or omission, there being
no bad faith or malice, which prevents the
normal fulfilment of an obligation.
3. Delay –
4. Contravention of terms of the obligation –
violation of the terms and conditions
stipulated in the obligation.
ARTICLE 1171: RESPONSIBILITY ARISING
FROM FRAUD IS DEMANDABLE IN ALL
OBLIGATIONS. ANY WAIVER OF AN ACTION
FOR FUTRUE FRAUD IS VOID.
ARTICLE 1172: RESPONSIBILITY ARISING
FROM NEGLIGENCE IN THE PERFORMANCE
OF EVERY KIND OF OBLIGATION IS ALSO
DEMANDABLE, BUT SUCH LIABILITY MAY
BE REGULATED BY THE COURTS,
ACCORDING TO THE CIRCUMSTANCES.
Kinds of Negligence according to source of
obligation:
1. Contractual Negligence – negligence in
contracts resulting in their breach. It is not a
source of obligation.
2. Civil Obligation – also called torts or delicts
3. Criminal negligence – negligence resulting in
the commission of a crime.
ARTICLE 1173: THE FAULT OR NEGLIGENCE
OF THE OBLIGOR CONSISTS IN THE
OMISSION OF THAT DELIGENCE WHICH OS
REQUIRED BY THE NATURE OF THE
OBLIGATION AND CORRESPONDS WITH
THE CIRCUMSTANCEES OF THE PERSON, OF
THE TIME AND OF THE PLACE. WHEN
NEGLIGENCE SHOWS BAD FAITH, THE
PROVISIONS OF ARTICLE 1171 AND 2201,
PARAGRAPH 2 SHALL APPLY.
IF THE LAW OR CONTRACT DOES
NOT STATE THE DILIGENCE WHICH IS TO BE
OBSERVED IN THE PERFORMANCE, THAT
WHICH OS EXPECTED OF A GOOD FATHER
OF A FAMILY SHALL BE REQUIRED.
- Fault or Negligence – failure to observe for the
protection of the interests of another person,
that degree of care, precaution, and
vigilance, which the circumstances justly
demand, whereby such other person suffers
injury.
- Damages – the money compensation
awarded to a party for loss or injury
resulting from breach of contract or
obligation by the other.
Factors to be considered
1. Nature of the obligation
2. Circumstances of the person
3. Circumstances of time
4. Circumstances of the place
ARTICLE 1174: EXCEPT IN CASES EXPRESSLY
SPECIFIED BY THE LAW, OR WHEN IT IS
OTHERWISE DECLARED BY STIPULATION,
OR WHEN THE NATURE OF THE
OBLIGATION REQUIRES THE ASSUMPTION
FOR THOSE EVENTS WHICH COULD NOT BE
FORESEEN, OR WHICH THOUGH FORESEEN,
WERE INEVITABLE.
- Fortuitous event – event which cannot be
seen, or which, though foreseen, is
inevitable. Either impossible to foresee or
impossible to avoid.
- Acts of man – fortuitous event is an event
independent of the will of the obligor but not
of other human wills.
- Acts of God – events which are totally
independent will of every human being.
Kinds of fortuitous event
1. Ordinary fortuitous event – events that are
common and which the contracting parties
could reasonably foresee
2. Extra-ordinary fortuitous event – events that
are uncommon and which the contracting
parties could not have reasonably foreseen.
Requisites of a fortuitous event
1. The event must be independent of the
human will or at least of the debtor’s will
2. The event could not be foreseen, or if
foreseen is inevitable;
3. The event must be of such a character as to
render it impossible for the debtor to
comply with his obligation in a normal
manner;
4. The debtor must be free from any
participation in, or the aggravation of, the
injury to the debtor, that is, there is no
concurrent negligence on his part.
ARTICLE 1175: USURIOUS TRANSACTIONS
SHALL BE GOVERNED BY SPECIAL LAWS.
- Simple loan or mutuum – is a contract where
by one of the parties deliver to another,
money or another consumable thing, upon
the condition that the same amount of the
same kind and quality shall be paid. it may
be gratuitous or with a stipulation to pay
interest.
- Usury – contracting for or receiving interest
in excess of the amount allowed by law for
the loan or use of money, goods, chattels, or
credits.
ARTICLE 1176: THE RECEIPT OF THE
PRICIPAL BY THE CREDITOR, WITHOUT
RESERVATION WITH RESPECT TO THE
INTEREST, SHALL GIVE RISE TO THE
PRESUMPTION THAT SAID INTEREST HAS
BEEN PAID.
THE RECEIPT OF A LATER
INSTALLMENT OF A DEBT WITHOUT
RESERVATION AS TO PRIOR
INSTALLMENTS, SHALL LIKEWISE RAISE
THE PRE SUMPTION THAT SUCH
INSTALLMENT HAS BEEN PAID.
Kinds of presumption
1. Conclusive presumption – cannot be
contradicted
2. Disputable (rebuttable) presumption – can be
contradicted by presenting proof
When presumption in Article 1176 do not apply:
1. With reservation as to the interest
2. Receipt without indication of particular
instalment paid
3. Receipt for a part of the principal
4. Payment of taxes
5. Non-payment proven
ARTICLE 1177: THE CREDITORS, AFTER
HAVING PURSUED THE PROPERTY IN
POSSESION OF THE DEBTOR TO SATISFY
THEIR CLAIMS, MAY EXERCISE ALL THE
RIGHTS AND BRING ALL THE ACTIONS OF
THE LATTER FOR THE SAME PURPOSE, SAVE
THOSE WHICH ALSO IMPUGN THE ACTS
WHICH THE DEBTOR MAY HAVE DONE TO
DEFRAUD THEM.
ARTICLE 1178: SUBJECT TO THE LAWS, ALL
RIGHTS ACQUIRED IN VIRTUE OF AN
OBLIGATION ARE TRANSMISSIBLE, IF
THERE HAS BEEN NO STIPULATION TO THE
CONTRARY.
Transmissibility of rights
1. Prohibited by law
a. Contract of partnership
b. Contract of agency
c. Contract of commodatun
2. Prohibited by stipulation of the parties
Chapter 3
DIFFERENT KINDS OF OBLIGATIONS
Section 1 – Pure and Conditional Obligations
ARTICLE 1179: EVERY OBLIGATION WHOSE
PERFORMANCE DOES NOT DEPEND UPON A
FUTURE OR UNCERTAIN EVENT, OR UPON A
PAST EVENT UNKNOWN TO THE PARTIES, IT
DEMANDABLE AT ONCE.
EVERY OBLIGATION WHICH
CONTAINS A RESOLUTORY CONDITION
SHALL BE DEMANDABLE, WITHOUT
PREJUDICE TO THE EFFECTS OF THE
HAPPENING OF THE EVENT.
1. Pure Obligation – demandable at once
2. Conditional Obligation - one whose effectivity
is subordinated to the fulfillment or non-
fulfillment of a future AND uncertain event
or upon a past event unknown to the parties
3. Condition – a future and an uncertain event
4. Suspensive – the happening of the condition
gives rise to the obligation
5. Resolutory – the happening of the condition
extinguishes the obligation
ARTICLE 1180: WHEN THE DEBTOR BINDS
HIMSELF TO PAY WHEN HIS MEANS PERMIT
HIM TO DOSO, THE OBLIGATION SHALL BE
DEEMED TO BE ONE WITH A PERIOD,
SUBJECT TO THE PROVISIONS OF ARTICLE
1197.
Period – a future and certain event
ARTICLE 1181: IN CONDITIONAL
OBLIGATIONS, THE ACQUISITION OF
RIGHTS, AS WELL AS THE
EXTINGUISHMENT OR LOSS OF THOSE
ALREADY AQUIRED, SHALL DEPEND UPON
THE HAPPENING OF THE EVENT WHICH
CONSTITUTES THE CONDITION.
ARTICLE 1182: WHEN THE FULFILLMENT OF
THE CONDITION DEPENDS UPON THE SOLE
WILL OF THE DEBTOR, THE CONDITIONAL
OBLIGATION SHALL BE VOID. IF IT
DEPENDS UPON CHANCE OR UPON THE
WILL OF THE THIRS PERSONE, THE
OBLIGATION SHALL TAKE EFFECT IN
CONFORMITY WITH THE PROVISIONS OF
THIS CODE.
1. Potestative Condition – suspensive on nature
and which depends upon the sole will of
one of the contracting parties
2. Conditional Obligation Void – when it
depends upon the will of the debtor
3. Only the Condition Void – if the obligation is
a pre-existing one
4. Casual Condition – if the suspensive
condition depends upon chance OR upon
the will of a third person, the obligation is
valid
5. Mixed Condition – if the suspensive
condition depends partly upon chance
AND partly upon the will of a third person
the obligation is valid.
ARTICLE 1183: IMPOSSIBLE CONDITIONS,
THOSE CONTRARY TO GOOD CUSTOMS OR
PUBLIC POLICY AND THOSE PROHIBITED BY
LAW SHALL ANNUL THE OBLIGATION
DIVISIBLE, THAT PART THEROF WHICH IS
NOT AFFECTED BY THE IMPOSSIBLE OR
UNLAWFUL CONDITION SHALL BE VALID.
THE CONDITION NOT TO DO AN
IMPOSSIBLE THING SHALL BE CONSIDERED
A NOT HAVING BEEN AGREED UPON.
Kinds of Impossible Conditions
1. Physically Impossible Conditions – cannot exist
or cannot be done
2. Legally Impossible Conditions – contrary to
law, morals, good customs, public order, or
public policy
Effects:
1. Conditional Obligation Void – both the
obligation and condition are void.
2. Conditional Obligation Valid – only if it is not
to do an impossible thing
3. Only the affected obligation void – if the
obligation is divisible
4. Only the Condition Void – if the obligation is
a pre-existing obligation, and therefore,
does not depend upon the fulfillment of the
condition which is impossible.
ARTICLE 1184: THE CONDITION THAT SOME
EVENT HAPPEN AT A DETERMINATE TIME
SHALL EXTINGUISH THE OBLIGATION AS
SOON AS THE TIME EXPIRES OR IF IT HAS
BECOME IDUBITABLE THAT THE EVENT
WILL NOT TAKE PLACE. (POSSITIVE
SUSPENSIVE CONDITION)
ARTICLE 1185: THE CONDITION THAT SOME
EVENT WILL NOT HAPPEN AT A day when the obligation was
DETERMINATE TIME SHALL RENDER THE
OBLIGATION EFFECTIVE FROM THE
MOMENT THE TIME INDICATED HAS
ELAPSED, OR IT IF HAS BECOME EVIDENT
THAT THE EVENT CANNOT OCCUR.
IF NO TIME HAS BEEN FIXED, THE
CONDITION SHALL BE DEEMED FULFILLED
AS SUCH TIME AS MAY HAVE PROBABLY
BEEN CONTEMPLATED, BEARING IN MIND
THE NATURE OF THE OBLIGATION.
(NEGATIVE CONDITION)
ARTICLE 1186: THE CONDITION SHALL BE
DEEMED FULFILLED WHEN THE OBLIGOR
VOLUNTARILY PREVENTS ITS
FULFILLMENT.
Constructive fulfillment of Suspensive Condition
1. The condition is suspensive
2. The obligor actually prevents the fulfillment
of the condition; and
3. He acts voluntarily
ARTICLE 1187: THE EFFECTS OF A
CONDITIONAL OBLIGATION TO GIVE, ONCE
THE CONDITION HAS BEEN FULFILLED,
SHALL RETROACT TO THE DAY OF THE
CONSTITUTION OF THE OBLIGATION.
NEVERTHELESS, WHEN THE OBLIGATION
IMPOSES RECIPROCAL PRESENTATION
UPON THE PARTIES, THE FRUITS AND
INTERESTS DURING THE PENDENCY OF THE
CONDITION SHALL BE DEEMED TO HAVE
BEEN MUTUALLY COMPENSATED, THE
DEBTOR SHALL APPROPRIATE THE FRUITS
AND INTERESTS RECEIVED, UNLESS FROM
THE NATURE AND CIRCUMSTANCES OF THE
OBLIGATION IT SHOULD BE INFERRED
THAT THE INTENTION OF THE PERSON
CONSISTING THE SAME WAS DIFFERENT.
IN OBLIGATIONS TO DO AND NOT TO
DO, THE COURTS SHALL DETERMINE, IN
EACH CASE THE RETROACTIVE EFFECT OF
THE CONDITION THAT HAS BEEN
COMPLIED WITH.
Retroactive effects of fulfillment of suspensive
condition
1. In Obligations to give – demandable upon the
fulfillment of the condition
o its effects shall retroact to the
constituted.
2. In Obligations to do or not to do – no fixed rule
is provided.
Retroactive effect as to Fruits and Interests in
Obligations to Give
1. In Reciprocal Obligations – no retroactivity
2. In Unilateral Obligations – no retroactivity
ARTICLE 1188: THE CREDITOR MAY, BEFORE
THE FULFILLMENT OF THE CONDITION,
BRING THE APPROPRIATE ACTION FOR THE
PRESERVATION OF HIS RIGHT.
THE DEBTOR MAY RECOVER WHAT
DURING THE SAME TIME HE HAS PAID BY
MISTAKE IN CASE OF A SUSPENSIVE
CONDITION.
Rights pending fulfillment of suspensive
condition
1. Creditor – may go to court to prevent the
alienation or concealment of the property
the debtor has bound himself to deliver
2. Debtor – entitled to recover what he has
paid by mistake prior to the happening of
the suspensive condition.
ARTICLE 1189: WHEN THE CONDITIONS
HAVE BEEN IMPOSED WITH THE INTENTION
OF SUSPENDING THE EFFICACY OF AN
OBLIGATION TO GIVE, THE FOLLOWING
RULES SHALL BE OBSERVED IN CASE OF THE
IMPROVEMENT, LOSS OR DETERIORATION
OF THE THING DURING THE PENDENCY OF
THE CONDITION:
1. IF THE THING IS LOST WITHOUT THE
FAULT OF THE DEBTOR, THE
OBLIGATION SHALL BE
EXTINGUISHED;
2. IF THE THING IS LOST THROUGH THE
FAULT OF THE DEBTOR, HE SHALL BE
OBLIGED TO PAY DAMAGES; IT IS
UNDERSTOOD THAT THE THING IS
LOST WHEN IT PERISHES, OR GOES
OUT OF COMMERCE, OR DISSAPEARS
IN SUCH A WAY THAT ITS EXISTENCE
IS UNKNOWN OR IT CANNOT BE
RECOVERED;
3. WHEN THE THING DETERIORATES
WITHOUT THE FAULT OF THE
DEBTOR, THE IMPAIRMENT IS TO BE
BORNE BY THR CREDITOR;
4. IF IT DETERIORATES THROUGH THA
FAULT OF THE DEBTOR, THE
CREDITOR MAY CHOOSE BETWEEN
THE RESCISSION OF THE
OBLIGATION AND ITS FULFILLMENT,
WITH INDEMNITY FOR DAMAGES IN
EITHER CASE;
5. IF THE THING IS IMPROVED BY ITS
NATURE, OR BY TIME, THE
IMPROVEMENT SHALL INURE TO THE
BENEFIR OF THE CREDITOR;
6. IT IF IS IMPROVED AT THE EXPENSE
OF THE DEBTOR, HE SHALL HAVE NO
OTHER RIGHT THAN THAT GRANTED
TO THE USUFRUCTUARY.
Kinds of loss
1. Physical Loss – when a thing perishes
2. Legal Loss – when a thing goes out of
commerce or when it becomes illegal
3. Civil Loss – when a thing disappears in such
a way that its existence is known, or even if
it cannot be recovered.
ARTICLE 1190: WHEN THE CONDITIONS
HAVE FOR THEIR PURPOSE THE
EXTINGUISHMENT OF AN OBLIGATION TO
GIVE, THE PARTIES, UPON THE
FULFILLMENT OF SAID CONDITIONS, SHALL
RETURN TO EACH OTHER WHAT THEY
HAVE RECEIVED.
IN CASE OF LOSS, DETERIORATION
OR IMPROVEMENT OF THE THING, THE
PROVISIONS WHICH WITH RESPECT TO THE
DEBTOR ARE LAID DOWN IN THE
PRECEDING ARTICLE SHALL BE APPLIED TO
THE PARTY WHO IS BOUND TO RETURN.
AS FOR OBLIGATIONS TO DO AND
NOT TO DO, THE PROVIONS OF THE
SECOND PARAGRAPH OF ARTICLE 1187
SHALL BE OBSERVED AS REGARDS THE
EFFECT OF THE EXTINGUISHMENT OF THE
OBLIGATION.
ARTICLE 1191: THE POWER TO RESCIND
OBLIGATIONS IS IMPLIED IN RECIPROCAL
ONES, IN CASE ONE OF THE OBLIGORS
SHOULD NOT COMPLY WITH WHAT IS
INCUMBENT UPON HIM.
THE INJURED PARTY MAY CHOOSE
BETWEEN THE FULFILLMENT AND THE
RESCISSION OF THE OBLIGATION, WITH
THE PAYMENT OF DAMAGES IN EITHER
CASE. HE MAY ALSO SEEK RESCISSION,
EVEN AFTER HE HAS CHOSEN
FULFILLMENT, IT THE LATTER SHOULD
BECOME IMPOSSIBLE.
THE COURTS SHALL DECREE THE
RESCISSION CLAIMED, UNLESS THERE BE
JUST CAUSE AUTHORISING THE FIXING OF
A PERIOD.
THIS IS UNDERSTOOD TO BE
WITHOUT PREJUDICE TO THE RIGHTS OF
THIRD PERSONS WHO HAVE ACQUIRED
THE THING, IN ACCORDANCE WITH
ARTICLES 1385 AND 1388 AND THE
MORTGAGE LAW
Kinds of Obligation according to the Person
Obliged
1. Unilateral – when only one party is obliged
to comply presentation
2. Bilateral – both parties are mutually bound
to each other – may also be reciprocal or
non-reciprocal
a. Reciprocal
b. Non-reciprocal
Remedies in Reciprocal Obligations
1. Choice of Remedies
a. Action for specific performance
b. Action for rescission of the obligation
2. Remedy of rescission for non-compliance
Limitations on right to demand rescission
1. Resort to the courts
2. Power of court to fix period
3. Right of third person
4. Substantial violation
5. Waiver of right
ARTICLE 1192: IN CASE PARTIES HAVE
COMMITTED A BREACH OF THE
OBLIGATION, THE LIABILITY OF THE FIRST
INFRACTOR SHALL BE EQUITABLY
TEMPERED BY THE COURTS. IF IT CANNOT
BE DETERMINED WHICH OF THE PARTIES
FIRST VIOLATED THE CONTRAT, THE SAME
SHALL BE DEEMED EXTINGUISHED, AND
EACH SHALL BEAR HIS OWN DAMAGES.
Two situations
1. First infractor known – one party violated his
obligation, the other also violated his part of
the obligation and liability of the first
infractor should be equitably reduced
2. First infractor cannot be determined - one party
violated his obligation followed by the
other, but it cannot be determined which of
them was the first intractor. Each shall bear
his own damages
Section 2
Obligations with a Period
ARTICLE 1193: OBLIGATIONS FOR WHOSE
FULFILLMENT A DAY CERTAIN HAS BEEN
FIXED, SHALL BE DEMANDABLE ONLY
WHEN THAT DAY COMES
OBLIGATIONS WITH A RESOLUTORY
PERIOD TAKE EFFECT AT ONCE, BUT
TERMINATE UPON ARRIVAL OF THE DAY
CERTAIN.
A DAY CERTAIN IS UNDERSTOOD TO
BE THAT WHICH MUST NECESSARILY COME,
ALTHOUGH IT MAY NOT BE KNOWN WHEN.
IF THE UNCERTAIN CONSISTS IN
WHETHER THE DAY WILL COME OR NOT,
THE OBLIGATION IS CONDITIONAL, AND IT
SHALL BE REGULATED BY THE RULES OF
THE PRECEDING SECTION
1. Obligation with a period – is one whose effects
or consequences are subjected in one way or
another to the expiration or arrival of said
period or term.
2. Period – a future and certain event upon the
arrival of which the obligation subject to it
either arises or is terminated.
Kinds of Period or Term
1. Suspensive Period – the obligation begins
only from a day certain upon the arrival od
period
2. Resolutory Period – the obligation is valid up
to a day certain and terminates upon arrival
of the period
3. Indefinite Period – when it is not fixed or it is
not known when it will come. A period is
not fixed but a period is intended.
ARTICLE 1194: IN CASE OF LOSS,
DETERIORATION OR IMPROVEMENT OF
THE THING BEFORE THE ARRIVAL THE DAY
CERTAIN, THE RULES IN ARTICLE 1189
SHALL BE OBSERVED.
ARTICLE 1195: ANYTHING PAID OR
DELIVERED BEFORE THE ARRIVAL OF THE
PERIOD, THE OBLIGOR BEING UNAWARE OF
THE PERIOD OR BELIEVING THAT THE
OBLIGATION HAS BECOME DUE AND
DEMANDABLE, MAY BE RECOVERED, WITH
THE FRUITS, AND INTERESTS.
ARTICLE 1196: WHENEVER IN AN
OBLIGATION A PERIOD IS DESIGNATED, IT
IS PRESUMED TO HAVE BEEN ESTABLISHED
FOR THE BENEFIT OF BOTH THE CREDITOR
AND THE DEBTOR, UNLESS FROM THE
TENOR OF THE SAME OR OTHER
CIRCUMSTANCES, IT SHOULD APPEAR
THAT THE PERIOD HAS BEEN ESTABLISHED
IN FAVOR OF ONE OR OF THE OTHER.
Exceptions to the general rule THEY DISAPPEAR, UNLESS HE
1. Term is for the benefit of the debtor alone. IMMEDIATELY GIVES NEW ONES
2. Term is for the benefit of the creditor alone. EQUALLY SATISFACTORY
Computation of term period 4. WHEN THE DEBTOR VIOLATES ANY
1. The Administrative Code of 1987 UNDERTAKING, IN CONSIDERATION
a. Legal Periods – “Year” shall be 12 OF WHICH THE CREDITOR AGREED
calendar months; “month” of thirty TO THE PERIOD;
days (unless refers to a specific 5. WHEN THE DEBTOR ATTEMPTS TO
month); “day” to a day of 24 hours; ABSCOND.
”night” from sunrise to sunset 1. When the debtor has become insolvent
2. A calendar month is a month designated in the 2. When debtor does not furnish guaranties or
calendar without regards to the number of days securities promised
it may contain 3. When guaranties or securities given have been
impaired or have disappeared
ARTICLE 1197: IF THE OBLIGATION DOES 4. When debtor violates an undertaking
NOT FIX A PERIOD, BUT FROM ITS NATURE 5. When debtor attempts to abscond
AND CIRCUMSTANCES IT CAN BE INFERRED
THAT A PERIOD WAS INTENDED, THE Section 3
COURTS MAY FIX THE DURATION THEREOF. Alternative Obligations
THE COURTS SHALL ALSO FIX THE
DURATION OF THE PERIOD WHEN IT ARTICLE 1199: A PERSON ALTERNATIVELY
DEPENDS UPON THE WILL OF THE DEBTOR. BOUND BY DIFFERENT PRESENTATIONS
IN EVERY CASE, THE COURT SHALL SHALL COMPLETELY PERFORM ONE OF
DETERMINE SUCH PERIOD AS MAY UNDER THEM.
THE CIRCUMSTANCES HAVE BEEN THE CREDITOR CANNOT BE
PROBABLY CONTEMPLATED BY THE COMPELLED TO RECEIVE PART OF ONE AND
PARTIES. ONCE FIXED BY THE COURTS, THE PART OF THE OTHER UNDERTAKING.
PERIOD CANNOT BE CHANGED BY THEM.
Kinds of obligation according to object:
*If the obligation does not state a period and no period 1. Simple obligation – one where there is only
was intended, the court is not authorized to fix a period. one presentation
Exceptions in the general rule: 2. Compound obligation – one where there are
1. No period is fixed but a period was intended two or more presentation
2. Duration of the period depends upon the will of a. Conjunctive obligation – one where there
the debtor. are several presentations
b. Distributive obligation – one where there
ARTICLE 1198: THE DEBTOR SHALL LOSE are several presentations and all of them
EVERY RIGHT TO MAKE USE OF THE are due
PERIOD: 1. Alternative obligation – one where
1. WHEN AFTER THE OBLIGATION HAS several presentations are due but the
BEEN CONTRACTED, HE BECOMES performance of one is sufficient, at the
INSOLENT, UNLESS HE GIVES A choice of the debtor
GUARANTY OR SECURITY FOR THE 2. Facultative obligation – one where only
DEBT; one presentation is due but the debtor
2. WHEN HE DOES NOT FURNISH TO may substitute another
THE CREDITOR THE GUARANTEE OR
SECURITIES WHICH HE HAS ARTICLE 1200: THE RIGHT OF CHOICE
PROMISED; BELONGS TO THE DEBTOR, UNLESS IT HAS
3. WHEN BY HIS OWN ACTS HE HAS BEEN EXPRESSLY GRANTED TO THE
IMPAIRED SAID GUARANTIED OR CREDITOR.
SECURITIES AFTER THEIR THE DEBTOR SHALL HAVE NO RIGHT
ESTABLISHMENT, AND WHEN TO CHOOSE THOSE PRESENTATIONS
THROUGH A FORTUITOUS EVENT WHICH ARE IMPOSSIBLE, UNLAWFUL OR
WHICH COULD NOT HAVE BEEN THE
OBJECT OF THE OBLIGATION.
(LIMITATIONS)
ARTICLE 1201: THE CHOICE SHALL PRODUCE
NO EFFECT EXCEPT FROM THE TIME IT HAS
BEEN COMUNICATED.
ARTICLE 1202: THE DEBTOR SHALL LOSE THE
RIGHT OF CHOICE WHEN AMONG THE
PRESENTATIONS WHERE BY HE
ALTERNATIVELY BOUND, ONLY ONE IS
PRACTICABLE.
- If only one is practicable, the obligation becomes
simple
ARTICLE 1203: IF THROUGH THE
CREDITOR’S ACTS, THE DEBTOR CANNOT
MAKE A CHOICE ACCORDING TO THE
TERMS OF THE OBLIGATION, THE LATTER
MAY RESCIND THE CONTRACT WITH
DAMGES.
ARTICLE 1204: THE CREDITOR SHALL HAVE
A RIGHT TO INDEMNITY FOR DAMAGES
WHEN, THROUGH THE FAULT OF THE
DEBTOR, ALL THE THINGS WHICH ARE
ALTERNATIVELY THE OBJECT OF THE
OBLIGATION HAVE BEEN LOST OR THE
COMPLIANCE OF THE OBLIGATION HAS
BECOME IMPOSSIBLE.
THE INDEMNITY SHALL BE FIXED
TAKING AS THE VALUE OF THE THING
WHICH DISAPPEARED, OR THAT OF THE
SERVICE WHICH LAST BECAME IMPOSSIBLE.
DAMAGES OTHER THAN THE VALUE
IF THE LAST THING OR SERVICE MAY ALSO
BE AWARDED.
1. Some of the objects – the debtor can still
choose the other alternatives left
2. All of the objects – the creditor shall have the
right to indemnify for damages since the
obligation can no longer be complied
ARTICLE 1205: WHEN THE CHOICE HAS BEEN
EXPRESSLY GIVEN TO THE CREDITOR, THE
OBLIGATION SHALL CEASE TO BE
ALTERNATIVE FROM THE DAY WHEN THE
SELECTION HAS BEEN COMMUNICATED TO
THE DEBTOR.
UNTIL THEN THE RESPONISIBILITY
OF THE DEBTOR SHALL GOVERNED BY THE
FOLLOWING RULES:
1. IF ONE OF THE THINGS IS LOST
THROUGH FORTUITOUS EVENT, HE
SHALL PERFORM THE OBLIGATION
BY DELIVERING THAT WHICH THE
CREDITOR SHOULD CHOOSE FROM
AMONG THE REMAINDER, OR THAT
WHICH REMAINS IF ONLY ONE
SUBSISTS;
- The creditor has the right to choose among the
remaining alternatives
IS 2. IF THE LOSS OF ONE OF THE THINGS
OCCURS THROUGH THE FAULT OF
THE DEBTOR, THE CREDITOR MAY
CLAIM ANY OF THOSE SUBSISTING,
OR THE PRICE OF THAT WHICH,
THROUGH THE FAULT OF THE
FORMER, HAS DISAPPEARED, WITH A
RIGHT TO DAMAGES;
- The creditor has the right to choose among the
alternatives left, with damages or for the price of
the object lost plus damages.
3. IF ALL THE THINGS ARE LOST
THROUGH THE FAULT OF THE
DEBTOR, THE CHOICE BY THE
CREDITOR SHALL ALSO FALL UPON
THE PRICE OF ANY ONE OF THEM,
ALSO WITH INDEMNITY FOR
DAMAGES.
- The creditor can demand the price of one of the
lost items and ask for damages
THE SAME RULES SHALL BE APPLIED TO
OBLIGATIONS TO DO, OR NOT TO DO IN
CASE ONE, SOME OR ALL OF THE
PRESENTATIONS SHOULD BECOME
IMPOSSIBLE.
ARTICLE 1206: WHEN ONLY ONE
PRESENTATION HAS BEEN AGREED UPON,
BUT THE OBLIGOR MAY RENDER ANOTHER
SUBSTITUTION, THE OBLIGATION IS
CALLED FACULTATIVE.
THE LOSS OR DETERIORATION OF
THE THING INDENTED AS A SUBSITUTE,
THROUGH THE NEGLIGENCE OF THE
OBLIGOR, DOES NOT RENDER HIM LIABLE.
BUT ONCE THE SUBSTITUTION HAS BEEN
MADE, THE OBLIGOR IS LIABLE FOR THE
LOSS OF THE SUBSTITUTE ON ACCOUNT OF
HIS DELAY, NEGLIGENCE OR FRAUD.
Effects of loss
1. Before substitution – if the principal thing is
lost through a fortuitous event, the
 obligation is extinguished; otherwise, the
debtor is liable for damages.
2. After substitution – if the principal thing is
lost, the debtor is not liable whatever may
be the cause of the loss, because it is no
longer due.
Section 4
Joint and Solidary Obligations
ARTICLE 1207: THE CONCURRENCE OF TWO
OR MORE CREDITORS OR TWO OR MORE
DEBTORS IN ONE AND THE SAME
OBLIGATION DOES NOT IMPLY THAT EACH
ONE OF THE FORMER HAS A RIGHT TO
DEMAND, OR THAT EACH ONE OF THE
LATTER IS BOUND TO RENDER, ENTIRE
COMPLIANCE WITH THE PRESENTATION.
THERE IS A SOLIDARY LIABILITY ONLY
WHEN THE OBLIGATION EXPRESSLY SO
STATES, OR WHEN THE LAW OR THE
NATURE OF THE OBLIGATION REQUIRES
SOLIDITARY.
ARTICLE 1208: IF FROM LAW, OR THE
NATURE OR THE WORDING OF THE
OBLIGATIONS TO WHICH THE PRECEDING
ARTICLES REFERS, THE CONTRARY DOES
NOT APPEAR, THE CREDIT OR DEBT SHALL
BE PRESUMED TO BE DIVIDED INTO AS
MANY EQUAL SHARES AS THERE ARE
CREDITORS OR DEBTORS, THE CREDITS OR
DEBTS BEING CONSIDERED DISTINCT
FROM ONE ANOTHER, SUBJECT TO THE
RULES OF COURT GOVERNING THE
MULTIPLICITY OF SUITS.
Kinds of obligations according to the number of
parties:
1. Individual obligation – one where there is
only one obligor or one obligee
2. Collective obligation – one where there are
two or more debtors and/or two or more
creditors. May be joint or soliditary
Meaning of joint and solidary obligations:
1. Joint obligation – one where the whole
obligation is to be paid or fulfilled
proportionately by the different debtors
and/or is to be demanded proportionately
by the different creditors.
2. Solidary obligation – one where each one of
the debtors is bound to render, and/or each
one of the creditors has a right to demand
from any of the debtors, entire compliance
with the presentation.
I. Definition
1. Active solidarity – solidarity on the part of
the creditors, where any of one of them can
demand the fulfillment of the entire
obligation
2. Joint Indivisible Obligation – it is a joint as to
liabilities of the debtors or rights of the
creditors but indivisible as to compliance
3. Solidary Divisible Obligations - Parties are
merely proportionately liable to the object/
subject matter which are physically divisible
into different parts.
Section 5
Divisible and Indivisible Obligations
ARTICLE 1223: THE DIVISIBILITY OR
INDIVISIBILITY OF THE THINGS THAT ARE
THE OBJECT OF OBLIGATIONS IN WHICH
THERE IS ONLY ONE DEBTOR AND ONLY
ONE CREDITOR DOES NOT ALTER OR
MODIFY THE PROVISIONS OF CHAPTER 2 OF
THIS TITLE.
1. Divisible obligations – the object of which, in
its delivery or performance, is capable of
partial fulfillment
2. Indivisible obligations – the object of which, in
its delivery or performance is not capable of
partial fulfillment
Kinds of Division:
1. Qualitative Obligation – one based on quality,
not on number or quantity of the things
which are the object of the obligation
2. Quantitative Obligation – one based on
quantity rather than on quality
3. Ideal or Intellectual Division – one which
exists only in the minds of the parties
Kinds of Indivisibility:
1. Legal Indivisibility – a specific provision of
law declares as indivisible, obligations
which, by their nature are divisible
2. Conventional Indivisibility – when the will of
the parties make as indivisible, obligations
which, by their nature are divisible.
3. Natural Indivisibility – where the nature of
the object or presentation does not admit of
division, to give a particular car, to sing a
song, etc.
*Since divisibility or indivisibility refers to the object or
presentation, it does not alter or modify said provisions.
When there is only one creditor and one debtor, the latter
has to perform the obligation in its totality, whether or
not the presentation is divisible.
ARTICLE 1224: A JOINT INDIVISIBILE
OBLIGATION GIVES RISE TO INDEMNIFY
FOR DAMAGES DOES NOT COMPLY WITH
THIS UNDERTAKING. THE DEBTORS WHO
MAY HAVE BEEN READY TO FULFILL THEIR
PROMISES SHALL NOT CONTRIBUTE TO THE
INDEMNITY BEYOND THE CORRESPONDING
PORTION OF THE SERVICE IN WHICH THE
OBLIGATION CONSISTS.
*If any one of the debtors does not comply with his
undertaking in a joint indivisible obligation, the
obligation is converted into one for damages. The
creditor cannot ask for specific performance or rescission
because there is not cause of action against the other
debtors who are willing to fulfill their performance.
ARTICLE 1225: FOR THE PURPOSE OF THE
PRECEDING ARTICLES; OBLIGATIONS TO
GIVE DEFINITE THINGS AND THOSE WHICH
ARE NOT SUSCEPTIBLE OF PARTIAL
PERFORMANCE SHALL BE DEEMED TO BE
INDIVISIBLE.
WHEN THE OBLIGATION HAS FOR ITS
OBJECT THE EXECUTION OF A CERTAIN
NUMBER OF DAYS OF WORK, THE
ACCOMPLISHMENT OF WORK BY METRICAL
UNITS, OR ANALOGOUS THINGS WHICH BY
THEIR NATURE ARE SESCEPTIBLE OF
PARTIAL PERFORMANCE, IT SHALL BE
DIVISIBLE.
HOWEVER, EVEN THOUGH THE
OBJECT OR SERVICE MAY BE PHYSICALLY
DIVISIBLE, AN OBLIGATION IS INDIVISIBLE
IF SO PROVIDED BY LAW OR INDENTED BY
THE PARTIES.
IN OBLIGATION NOT TO DO,
DIVISIBILITY OR INDIVISIBILITY SHALL BE
DETERMINED BY THE CHARACTER OF THE
PRESENTATION IN EACH PARTICULAR
CASE.
Obligations deemed indivisible:
1. Obligations to give definite things
2. Obligations which are not susceptible of partial
performance
3. Obligations provided by law to be indivisible
even if thing or service is physically divisible
4. Obligations intended by the parties to be
indivisible even if thing or service is physically
divisible
Obligations deemed divisible:
1. Obligations which have for their object the
execution of a certain number of days of work.
2. Obligations which have for their object the
accomplishment of work by metrical units.
3. Obligation which by their nature are susceptible
of partial performance
Section 6
Obligations with a Penal Clause
ARTICLE 1226: IN OBLIGATIONS WITH A
PENAL CLAUSE, THE PENALTY SHALL
SUBSTITUTE THE INDEMNITY FOR
DAMAGES AND THE PAYMENT OF
INTERESTS IN CASE OF NON-COMPLIANCE,
THERE IS NO STIPULATION TO THE
CONTRARY. NEVERTHELESS, DAMAGES
SHALL BE PAID IF THE OBLIGOR REFUSES
TO PAY THE PENALTY OR IS GUILTY OF
FRAUD IN THE FULFILLMENT OF THE
OBLIGATION.
THE PENALTY MAY BE ENFORCED
ONLY WHEN IT IS DEMANDABLE IN
ACCORDANCE WITH THE PROVISIONS OF
THIS CODE.
1. Principal obligation – is one which can stand
by itself and does not depend for its validity
and existence upon another obligation
2. Accessory obligation – is one which is
attached to a principal obligation and,
therefore, cannot stand alone
3. Obligation with a Penal Clause - is one which
contains an accessory undertaking to pay a
previously stipulated indemnity in case of
breach of the principal presentation,
intended primarily to induce its fulfillment.
4. Penal Clause – an accessory undertaking
attached to an obligation to assume greater
liability in case of breach (never
demandable)
- The purposes of Penal Clause are reparation and
punishment.
Kinds of Penal Clause:
1. As to its Origin:
a. Legal Penal Clause – when it is provided
by law
b. Conventional Penal Claus – when it is
provided for by stipulation of the parties
2. As to its Purpose:
 a. Compensatory Penal Clause – when the
penalty takes the place of damages
b. Punitive Penal Clause – when the penalty
is imposed merely as punishment for
breach
3. As to its Demandability or Effect:
a. Subsidiary or Alternative Penal Clause –
when only the penalty can be enforced
b. Joint or Cumulative Penal Clause – when
both the principal obligation and the
penal clause can be enforced.
When creditor may recover damages:
1. When so stipulated by the parties
2. When the obligor refuses to pay the penalty, in
which case the creditor may recover legal
interest thereon
3. When the obligor is guilty of fraud in the
fulfillment of the obligation.
ARTICLE 1227: THE DEBTOR CANNOT
EXEMPT HIMSELF FROM THE
PERFORMANCE OF THE OBLIGATION BY
PAYING THE PENALTY, SAVE IN THE CASE
WHERE THIS RIGHT HAS BEEN EXPRESSLY
RESERVED FOR HIM. NEITHER CAN THE
CREDITOR DEMAND THE FULFILLMENT OF
THE OBLIGATION AND THE SATISFACTION
OF THE PENALTY AT THE SAME TIME,
UNLESS THIS RIGHT HAS BEEN CLEARLY
GRANTED HIM. HOWEVER, IF AFTER THE
CREDITOR HAS DESCIDED TO REQUIRE THE
FULFILLMENT OF THE OBLIGATION, THE
PERFORMANCE THEREOF SHOULD BECOME
IMPOSSIBLE WITHOUT HIS FAULT, THE
PENALTY MAY BE ENFORCED.
ARTICLE 1229: THE JUDGE SHALL
EQUITABLY REDUCE THE PENALTY WHEN
THE PRINCIPAL OBLIGATION HAS BEEN
PARTLY OR IRREGULARLY COMPLIED WITH
BY THE DEBTOR. EVEN IF THERE HAS BEEN
NO PERFORMANCE, THE PENALTY MAY
ALSO BE REDUCED BY THE COURTS IF IT IS
INIQUITOUS OR UNCONSCIONABLE.
When the penalty be reduced by the courts:
1. When there is partial or irregular performance
2. When the penalty agreed upon is iniquitous or
unconscionable
ARTICLE 1230: THE NULITY OF THE PENAL
CLAUSE DOES NOT CARRY WITH IT THAT
OF THE PRINCIPAL OBLIGATION.
THE NULITY OF THE PRINICPAL
OBLIGATION CARRIES WITH IT THAT OF
THE PENAL CLAUSE.
Effect of nullity of the penal clause:
- If only the penal clause is void, the principal
obligation remains valid and demandable. The
injured party may recover damages in case of
non-performance of obligation as if no penalty
had been stipulated.
Effect of nullity of the principal obligation:
- If the principal obligation is void, the penal clause
is likewise void. But if the nullity of the principal
obligation is due to the fault of the debtor, who
acted in bad faith, the penalty may be enforced.

ARTICLE 1228: PROOF OF ACTUAL DAMAGES

SUFFERED BY THE CREDITOR IS NOT
NECESSARY IN ORDER THAT THE PENALTY
MAY BE DEMANDED.
- In an obligation with a penal clause all that the
creditor has to prove, to enforce the penalty, is the
violation of the obligation by the debtor

Damages recoverable in addition to penalty must

be proved.
The creditor must prove the amount of such damges
which he actually suffered resulting from the breach of
the principal obligation