Art. 1192.
In case both parties have committed a breach of the SECTION 2 - Obligations with a Period
obligation, the liability of the first infractor shall be equitably
tempered by the courts. If it cannot be determined which of
the parties first violated the contract, the same shall be
deemed extinguished, and each shall bear his own damages.
The above article contemplates two situations:
1. First infractor known - One party violated his obligation, the
other also violated his part of the obligation. In this case, the
liability of the first infractor should be equitably reduced.
Ex: A bank failed to release the entire approved loan (80,000), but the
borrower also failed to pay the partial loan release (17,000) he
received after it fell due, both are in default and their respective liability
for damages shall be offset equitably, exclusive of the interest due on
the overdue loan (17,000) since the borrower derived benefits for its
use.
2. First infractor cannot be determined - One part violated its
obligation followed by the other, however it is not determined
which of them was first. In this case, the court shall extinguish
the obligation and each parties shall bear own damages.
Art. 1193. Obligations for those whose fulfilment a day certain
has been fixed, shall be demandable only when that day
comes.
Obligations with resolutory period take effect at once, but
terminate upon arrival of the day certain.
A day certain is understood to be that which must necessarily
come, although it may not be known when.
If the uncertainty consists in whether the day will come or not,
the obligation is conditional, and it shall be regulated by the
rules of the preceding Section.
Period/Term - consists in a space or length of time upon the
arrival of which, the demandability or the extinguishment of an
obligation is determined.
- it may be definite or indefinite
- a period must be possible. If the period is impossible, the
obligation is void.
General Classifications:
A. Ex Die/ Suspensive Period - the obligation begins only from a
day certain upon the arrival of the period.
Ex: “I will pay you 30 days from today” what is suspended is not the
obligation itself but the demandability.
B. In Diem/ Resolutory Period - obligation is valid up to day
certain and terminates upon the arrival of the period.
Ex: “I will give you P1,000 a month until the end of the year”
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Period and Condition distinguished: According to definiteness:

Period/Term Condition 1. Definite Period - When it is fixed; it is known when it will

come
As to fulfillment Sure to come; can May or may not 2. Undefinite Period - It is not fixed; it is not known when it will
happen happen at happen come
the exact date or
unspecified time

As to time ALWAYS refers to Can refer to past Art. 1194. In case of loss, deterioration or improvement of the thing
the future events before the arrival of the day certain, the rules in Article 1189 shall be
observed.
As to influence on Merely fixes the time May cause the
the obligation for the arising of the
demandability or obligation. RECAP:
performance of the
obligation Kinds of Loss:
As to effect, when Empowers the court depends upon the
1. Physical Loss - When a thing perishes as when a house is
left to debtor’s will to fix the duration sole will of the
debtor invalidates burned and reduced to ashes
the obligation 2. Legal Loss -When a thing goes out of commerce or when a
thing previously legal becomes illegal
As to retroactivity of Unless there is an Has retroactive 3. Civil Loss - When a thing disappears in such a way that its
effects agreement, it does effect existence is unknown; or if known, cannot be recovered.
not have retroactive
effect
Rules in case of Loss:

According to source: 1. Debtor without fault - obligation is extinguished

1. Legal Period - When it is provided by the law
2. Conventional or Voluntary Period - When it is agreed to by
the parties
3. Judicial Period - When it is fixed by the court
Ex. Daph obliged herself to give Sab her car worth P100,000 if Sab sells
Daph’s property. However, the car was lost without the fault of Daph.
The obligation is therefore extinguished and Daph is not liable to Sab
even if Sab sells Daph’s property. (General Rule: A person is not liable
for a fortuitous event. Art. 1174)

2. Debtor with fault - obligation to pay damages

Ex. Daph obliged herself to give Sab her car worth P100,000 if Sab sells
Daph’s property. If loss incurred because of Daph’s negligence, Sab will

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be entitled to demand damages (P100,000) plus incidental damages (if
there is any).
Rules in case of Deterioration:
1. Debtor without fault - creditor shall bear the damage
Ex. If the car figured in an accident, as a result of which its windshield
was broken and some of its paints were scratched away without the
fault of Daph, thereby reducing its value to P80,000.00, Sab will have
to suffer the deterioration of impairment in the amount of P20,000.00.
2. Debtor with fault - creditor chooses: recession of obligation,
fulfilment, indemnity
Ex. (a) Rescission (or cancellation) of the obligation with damages; in
the case Daph is liable to pay P100,000.00, value of the car before its
deterioration plus incidental damages, if any; or
(b) Fulfilment of the obligation also with damages; in this case, Daph is
bound to Sab to give the car and pay P20,000.00 plus incidental
damages, if any.
Rules in case of Improvement:
1. By nature or time - accustom to the benefit of the creditor
Ex. Suppose the market value of the car increased, who gets the
benefit?
The improvement shall inure to the benefit of Sab. In as much as Sab
would suffer in case of deterioration of the car through a fortuitous
event, it is but fair that he should be compensated in case improvement
go the car instead.
2. At the expense of the debtor - granted to the usufructuary
Ex. During the pendency of the condition, Daph had the car painted
and its seat cover changed at his expense.
In this case, Daph will have the right granted to a usufructuary with
respect to improvements made on the thing held in usufruct.
Art. 1195. Anything paid or delivered before the arrival of the
period, the obligor being unaware of the period or believing
that the obligation has become due to demandable, may be
recovered, with the fruits and interests.
Payment before the arrival of period
- Article 1195 is applied only in the obligation to give. Allows
the recovery of what has been paid by mistake before the
fulfilment of a suspensive condition . The creditor cannot
unjustly enrich himself by retaining he thing or money
received before the arrival of the period.
Payment with knowledge of term
- The payment cannot be recovered when the debtor voluntarily
paid his debt with his knowledge of the period. As if the
debtor tacitly waived the term of the payment. As a result,
obligation is already matured.
Ex. Daph owes Rowen 20,000 which is supposed to be paid on August
25 this year. By mistake Daph paid his obligation on August 25 last
year. Assuming that today is February 25, Daph can recover the
P20,000 plus P600 which is the interest for 6 months at the legal rate of
12% or a total of P10,600. But Daph cannot recover, except the
interest, if the debt had already matured.
Burden of Proof:
- The debtor must have to prove his ignorance of the period.
Same rule should equally apply to the creditor.
Right to Interest and Fruits:
- The debtor has the right to demand for the thing which is been
paid in mistake.
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 Cannot be recovered in the following cases:
• When the obligation is reciprocal or mutual
and there has been premature performance on
both sides.
• When obligation is loan, debtor is bound to pay
interest.
• Period is exclusively for the benefit of the
creditor.
Acted in Good Faith:
- under mistaken belief, the creditor is liable for fruits only
Acted in Bad Faith:
- the creditor shall pay the legal interest if a sum of money is
involved or shall be liable for fruits received.
Art. 1196. Whenever in an obligation a period is designated, it is
presumed to have been established for the benefit of both creditor
and debtor, unless from the tenor of the same or other circumstances
it should appear that the period has been established on favour of
one the the other.
Benefit of period/term:
1. For both parties - in case of doubt the creditor cannot
demand payment and the debtor cannot make an effective
tender and consignation of payment, before the period
stipulated.
2. For the benefit of the creditor - the creditor may demand
performance at any time but the debtor cannot compel the
creditor to accept payment before the period expires.
Ex. Daph borrows money from Rowen and is obliged to make the
payment before December 5. Rowen may compel Daph to make the
payment before December 5, but Daph may not compel Rowen to
receive the payment before December 5 (Rowen will benefit from the
interests that will accrue before December 5)
3. For the benefit of the debtor - the debtor may oppose a
premature demand for payment, but may validly pay at
anytime before the period expires.
Ex. Daph obliges himself to pay Rowen within 5 years. A cannot be
compelled to pay prematurely, but he can pay anytime within 5 years
(Daph benefit because he can pay anytime he wants as long as it’s
within 5 years; Rowen will not benefit from the interests if a decides to
pay early.)
Benefit of term in contracts of loan:
1. For both parties - there is interest and period stipulated
2. For the benefit of the debtor - gratuitous or without interest
Art. 1197. If the obligation does not fix the problem, bur from
its nature and circumstances it can be inferred that a period
was intended the courts may fix the duration thereof.
The courts shall fix the duration of the period when it depends
upon the will of the debtor.
In every case, the courts shall determine such period as may
under the circumstances have been probably contemplated by
the parties, Once fixed by the courts, the period cannot be
changed by them.
Judicial Period - designed by court
Contractual Period - fixed by the parties in their contract
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Court will fix a period:
1. When no period was mentioned, but it is interpretable from
the nature and circumstances of the obligation that both
parties intended on a period.
2. When the period is dependent upon the will of the debtor.
3. When no period was mentioned nor intended
4. The court must fix the duration of the period to prevent the
possibility that the obligation may never be fulfilled.
Court cannot fix a period:
1. If there is an agreed upon period by both parties but it has
already expired.
2. From the moment that both parties agree said period fixed by
the court, it become a law governing their contract.
Action to Fix Term
- An action can only be vindicated under this article is an
action to request the court to fix a term which the debtor must
comply with.
Effect of Term
- Once the term has been fixed by the curt, it is already a part
of the contract which cannot be changed without the consent
of both parties. If the period fixed by court expires, it is when
the debtor commences default.
Prescription - An action to request the court to fix a term is
subject to rules of prescription.
Art. 1198. The debtor shall lose every right to make use of the
period:
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or security
for the debt;
(2) When he does not furnish to the creditor the guaranties or
securities which he has promised;
(3) When by his own acts, he has impaired said guaranties or
securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration
of which the creditor agreed to the period;
(5) When the debtor attempt to abscond
General Rule:
- Obligation cannot be demanded until after the lapse of the
prescribed time.
However….. when the debtor commits any of the acts stated in
Art 1198, the period is disregarded and the creditor is entitled to
demand the fulfilment of the obligation.
(1) When the debtor becomes insolvent
• The insolvency need to be judicially declared. It
is sufficient that debtor could not pay his debts
due to lack of funds.
Ex. Daph owes Sab P10,000 due and payable on December 20. If
Daph becomes insolvent, say on September 10, Sab can demand
immediate payment from Daph even before maturity unless Daph gives
sufficient guaranty or security.
It is sufficient that the assets of Daph are less than her liabilities
or Daph is unable to pay his debts as they mature.
Note: the insolvency of Daph must occur after the obligation has been
contracted.
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(2) When the debtor does not furnish guaranties or securities
promised
Ex. Daph promised to mortgage his house to secure the debt. If he fails
to furnish said security as promised, he shall lose his right to the period.
(3) When guaranties or securities given have been impaired or
have disappeared
• If security was lost through debtor’s fault -
impairment
• If security was lost through fortuitous event -
disappearance
Ex. If the debt is secured by a mortgage on the house of Daph, but the
house was burned through her fault, the obligation also becomes
demandable unless Daph gives a new security equally satisfactory.
In this case the house needs to be totally destroyed as it is
sufficient that the security be impaired by the act of Daph. But in the
case of a fortuitous event, it is required that the security must
disappear.
(4) When debtor violates an undertaking
• If such undertaking is the reason for the creditor
to agree with such period.
Ex. Suppose the Sab agreed to the period in consideration of the
promise of Daph to repair the piano of Sab free of charge. The violation
of this undertaking by Daph gives Sab the right to demand immediate
payment of loan.
(5) When debtor attempts to abscond
• Mere attempt to abscond is sufficient. it is an
indication of bad faith.
Ex. Before the due date of the obligation, Daph (debtor) changed his
address without informing Sab (creditor) and with the intention of
escaping from his obligation. This act of Daph is a sign of bad faith
which results in the loss of his right to the benefit of the period
stipulated.
SECTION 3 - Alternative Obligations
Art. 1199. A person alternatively bound by different prestations
shall completely perform one of them.
The creditor cannot be compelled to receive part of one and
part of the other undertaking
Kinds of Obligations:
1. Simple Obligation - only one prestation is present
2. Compound Obligation - two or more prestations:
• Conjunctive - several prestations and all of them
are due
• Distributive - one or two or more prestations are
due
3. Alternative Obligation - various prestations are due but
performance of one of them in sufficiently determined by the
choice, as a general rule, belongs to the debtor
Ex. Daph borrowed from Rowen P10,000. It was agreed that
Daph could comply with his obligation by giving Rowen
P10,000, or a color television set, or by painting the house of
Rowen.
Art. 1200. The right of choice belongs to the debtor, unless it
has been expressly granted to the creditor.
The debtor shall have no right to choose those prestations
which are impossible, unlawful or which could not have beens
the object of the obligation.
- As a general rule the right of presentation belongs to the
debtor.
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As an exception, it may be exercised by the creditor but only
when expressly granted to him, or by a third person when the
right is given to him through common agreement
Ex. Daph ensures her house with Sab, and insurance company. It is
agreed that, if said use is destroyed or damaged, R may either pay the
damage or loss or “reinstate or rebuild the house.”
Since there is nothing said in the contract as to who has the
right of choice, it belongs to Sab, the debtor.
Art. 1201. The choice shall produce no effect except from the
time it has been communicated.
1. Effect of notice - until the choice is made and
communicated, the obligation remains alternative.
• Once the notice of election has been given to the
creditor, the obligation ceases to be alternative
and becomes simple.
• One choice has been properly made and
communicated, it is irrevocable and cannot be
renounced.
• Where choice has been expressly given to the
creditor, such choice shall likewise produce legal
effects upon being communicated to the debtor.
2. Proof and form of notice - proving that said communication
has been made upon who made the choice.
Art. 1202. The debtor shall lose the right of choice when
among the prestations, whereby he is alternatively bound, only
one is practicable.
If only one is practicable, the obligation in converted into a
simple one.
Art. 1203. Through the creditor’s acts, the debtor cannot make
a choice according to the terms of the obligation, the latter
may rescind the contract with damages.
- The right given the debtor to rescind contract and recover
damages if, through the creditor’s fault, he cannot make a
choice according to the terms and obligation. The debtor,
however, is not bound to rescind.
Ex. Daph borrowed P20,000 from Rowen. It was agreed that instead of
P20,000, Daph could deliver item one or item two.
If through the fault of Rowen, item one is destroyed, Daph can
rescind the contract. In case of rescission, the amount of P20,000 must
be returned by Daph with interest. Rowen, in turn, must pay Daph the
value of the item plus damages.
Daph, instead of rescinding the contract , may choose item
two or three with a right to recover the value of item one with
damages. If D chooses item one, his obligation is extinguished. C is not
liable for damages.
Art. 1204. The creditor shall have a right to indemnity for
damages when, through the fault of the debtor, all the things
which are alternatively the object of the obligation has become
impossible.
The indemnity shall be fixed taking as a basis the value of the
last things which disappeared, or that of the service which
became impossible.
Damages other than the value of the last things or service may
also be awarded,
Effect of Loss:
1. Some of the objects - some objects of the obligation have
been lost or have become impossible even through the fault
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 of the debtor, the creditor is not liable since he has the right
of choice and the obligation can still be performed.
2. All of the objects - all items have been lost or have become
impossible through the debtor’s fault, the creditor shall have
the right to indemnity for damages since the obligation can
no longer be complied with. If the cause of loss is a
fortuitous event, obligation is extinguished.
Basis of indemnity:
- shall be fixed taking as basis the value of the last thing which
disappeared (obligations to give) or that of the service which
last became impossible (obligations to do). In case of
disagreement, it is incumbent upon the creditor to prove such
value, or which things last disappeared or which service last
became possible.
Art. 1205. When the choice has been expressly given to the
creditor, the obligation shall cease to be alternative from the
day when the selection has been communicated to the debtor.
Until the responsibility of the debtor shall be governed by the
following rules:
(1) If 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.
(2) If the loss of one of the things occurs through the fault of
the debtor, the creditor may claim any of those subsisting,
or the price of that which, through the fault of the former,
has disappeared, with a right to damages.
(3) If all the things are lost through the fault of the debtor, the
choice by the creditor shall fall upon the price of any one
of them, also the indemnity for damages.
The same rules shall be applied to obligations to do to not to
do in case one, some or all of the prestations should become
impossible.

Selection by Creditor:

- Right of the creditor takes effect from the moment it is

communicated with the debtor.
- Expressly or implied
- Tacit selection when creditor accepts a presentation offered by
debtors.

Effects of Creditor’s Delay:

- If creditor failed with his right to choose, there is no delay on

the part of debtor even there is definite period fixed for the
performance go obligation.

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- Default or delay on the debtor, arises only if when obligation Effect of Loss:
become simple one by he exercise of the creditors of his right
to choose. 1. Before substitution - whether due to fortuitous event or fault
of the debtor, does not effect the debtor’s liability to deliver
Rules in case of loss: the principal thing.
Ex. Daph will give Sab item one or if Daph wants, item two.
1. When a thing is lost through a fortuitous event (A) If item one is lost through a fortuitous event, the obligation of Daph
2. When a thing is lost through the debtor’s fault is extinguished.
(B) If item one is lost through the fault of Daph, Daph is liable for
damages.
The rules are also applicable to personal obligations. The
(C) If item two is lost with or without the fault of Daph, she is still liable
responsibility of the debtor for damages depends upon whether
to deliver item one. Daph is not liable for damages for the loss of
the cause which has rendered the obligation impossible was due item two as it is not due.
to his fault or not.
2. After substitution - if the principal thing is lost, the debtor is
not liable whatever may be the cause of loss, because it is no
Art. 1206. When only one prestation has been agreed upon, longer due.
but the obligor may render another in substitutions, the Ex. Daph will give Sab item one or if Daph wants, item two.
obligations is called facultative. (A) If item one is lost with out without the fault of Daph, Daph is not
The loss or deterioration of the things intended as a substitute, liable for its loss since its his obligation to deliver item two.
(B) If item two is lost through a fortuitous event, the obligation of Daph
though the negligence of the obligor, does not render him
is extinguished.
liable. But once the substitute has been made, the obligor is
(C) If item two is lost through the fault of Daph, Daph is liable for
liable for the loss of the substitute on account of his delay, damages.
negligence or fraud.
Alternative and Facultative Obligations
Facultative Obligation
- only one prestation has been agreed upon but the obligor may Alternative Facultative
render another in substitution.
Ex. “I will give you my piano but i may give my television set as a Number of several prestations only one prestation
substitute.” Prestations are due but is due although the
In this obligation, only the piano is due. Hence, its loss through compliance with one debtor is allowed to
my fault will make me liable. is sufficient substitute another

Right of Choice may be given to the given only to the

credit or third person debtor

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Loss through does not extinguish obligation is Art. 1208. If from the law, or the nature or the wording of the
fortuitous event obligation extinguished obligations to which the preceding article refers the contrary
Loss through fault of loss of one of the debtor is liable
does not appear, the credit or debt shall be presumed to be
debtor alternative does not divided into as many equal shares as there are creditors or
render the debtor loss of substitute debtors, the credits or debts being considered distinct from
liable
before the one another, subject to the Rules of Court governing the
substitution does multiplicity of suits.
choice belongs to not make the debtor
the creditor makes liable.
Classification of Obligations:
makes debtor liable

Nullity of Prestation the nullity of the the nullity of that 1. Individual Obligation - only one debtor and one creditor in a
prestation does not prestation agreed contract.
invalidate the others
upon invalidates the 2. Collective Obligation - two or more debtor/creditor
obligation

the debtor or • Joint Obligation - entire obligation is to be paid/

creditor shall choose the debator is not
from among the bound to choose the
remainder substitute.
SECTION 4: Joint and Solidary Obligations
Art. 1207. The concurrence of two or more creditors or of two
or more debtors in one and the same obligation does not imply
that each one of the former has a right to demand, or that each
one of the latter is bound to render, entire compliance with the
prestations. There is a solidary liability only when the obligation
expressly so states, or when the law or the nature of the
obligation requires solidarity.
performed proportionately by the debtors.
Consequences of Joint Obligation:
(1) Each debtor - liable for a proportion part of the entire debt.
Ex. Daph, Rowen, Senna and Sab owe P100 to Benji (4 debts and 1
credit) Each of them owes Benji P25. Benji cannot collect the entire
P100 from any one of them.
(2) Each creditor - entitled to a proportion part of the credit.
Ex. Sab owes P100 to Daph and Rowen (1 debt and 2 credits) Sab can
only collect 50 from each of them.
(3) The debts /credits are considered distinct and separate from
one another
(4) There are as many credits as there are creditors
(5) There are as many debts as there are debtors
Other words used for “Joint Obligation”
• Mancum
• Mancomunada
• Mancomunadamente
• Pro rata

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 • Solidary Obligation - each one of the debtors are
obliged to pay the entire obligation, each one of
the creditors has the right to demand from any of
the debtors

There is solitary liability when:

(1) The obligation expressly states solidarity
(2) The law requires solidarity
(3) the nature of the obligation requires solidarity
(4) It is imposed in a final judgement against several defendants

Consequences of Solidary Obligation:

A. Passive Solidarity - part of the debtors
• Anyone of them can be made liable for the
fulfillment of the entire obligation.
• Nature of a mutual guarantee.
B. Active Solidarity - part of the creditors
• Anyone of them can demand the fulfillment of
the entire obligation.
C. Mixed Solidarity - Part of the debtors and creditors
• Where each of the debtors is liable to render, and
each one of the creditors has a right to demand,
entire compliance with the obligation.
D. Conventional Solidarity
• Agreed upon between parties.
E. Legal Solidarity
• Imposed by law
Ex. All partners are solidarity liable with the partnership for any crime or
quasi - delict committed by any partner acting in the ordinary course of
business of the partnership or with the authority of his co - partners.
F. Real Solidarity
• Is imposed by the nature of the obligation.

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