DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil
Obligations and Contracts
TITLE I
Obligations
CHAPTER 1
General Provisions
ARTICLE 1156. An obligation is a juridical necessity to give, to do or not to
do. (n)
The term obligation is derived from the Latin word “obligatio” which means a
“tying” or “binding.”
Obligation is a juridical necessity because in case of non-compliance,
the courts of justice may be called upon to enforce its fulfillment or, in
default thereof, the economic value that it represents.
EXAMPLE: Jammi and Hambert entered into a lease agreement in which
Hambert will pay the monthly rent of Php 10,000, otherwise the lease would
be cancelled.
Keith and Ivan entered into an agreement wherein Keith is stipulated to pay
Ivan the amount of Php 5,000 for the delivery of apples.
In other words, the debtor must comply with his obligation whether he likes it
or not; otherwise, his failure will be visited with some harmful or undesirable
legal consequences. If obligations were not made enforceable, then people
can disregard them with impunity. If an obligation cannot be enforced, it may
be only a natural obligation.
Article 1156 gives the Civil Code definition of obligation, in its passive aspect.
Our law merely stresses the duty of the debtor or obligor (he who has
the duty of giving, doing, or not doing) when it speaks of obligation as a
juridical necessity.
Obligation- A legal bond whereby constraint is laid upon a person or group of
persons to act or forebear on behalf of another person or group of persons
· Persons” – both natural & juridical
A civil obligation is one which has a binding force in law, and which gives to
the obligee or creditor the right of enforcing it against the obligor or debtor in
a court of justice. A natural obligation, on the other hand, is one which cannot
be enforced by action, but which is binding on the party who makes it in
conscience and according to the natural law.
Civil Obligations - Obligations which give to the creditor or obligee a right of
action in courts of justice to enforce their performance
Natural Obligations- not being based on positive law but on equity and
natural law, do not grant a right of action to enforce their performance
although in case of voluntary fulfillment by the debtor, the latter may not
recover what has been delivered or rendered by reason thereof
1) A civil obligation is based on positive law, while a natural
obligation is based on equity and natural law; and
2) The former is enforceable in courts of justice, while the latter is
not.8 Natural obligations are discussed under the Title dealing
with “Natural Obligations.” (Title III, Arts. 1423-1430.)
4 Essential Elements:
1. A passive subject (debtor or obligor) – the person who is
bound to the fulfillment of the duty; he who has a duty
2. An active subject (creditor or obligee) – the person who is
entitled to demand fulfillment of the obligation; he who has a
right
3. Object or prestation (subject matter of the obligation) –
conduct required to be observed by the debtor, without
prestation there is nothing to perform.
4. A juridical or legal tie (efficient cause) – binds or connects
the parties to the obligation, can be easily determined by
knowing the source of obligation
(1) Obligation is the act or performance which the law will enforce.
(2) Right, on the other hand, is the power which a person has under the law,
to demand from another any prestation.
(3) A wrong cause of action ,according to its legal meaning,is an act or
omission of one party in violation of the legal right or rights of another,
causing injury to the latter;
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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil
Kinds of obligation according to subject matter.
From the viewpoint of the subject matter, obligation may either be:
(1) Real obligation (obligation to give) or that in which the subject matter is
a thing which the obligor must deliver to the obligee; or
(2) Personal obligation (obligation to do or not to do) or that in which the
subject matter is an act to be done or not to be done.
There are thus two (2) kinds of personal obligation:
(a) Positive personal obligation or obligation to do or to render service
(see Art. 1167.); and
(b) Negative personal obligation or obligation not to do (which naturally
includes obligations “not to give”). (see Art. 1168.)
ARTICLE 1157. Obligations arise from:
1) Law;
2) Contracts;
3) Quasi-contracts;
4) Acts or omissions punished by law; and
5) Quasi-delicts. (1089a)
An obligation imposed on a person and the corresponding right granted to
another must be rooted in at least any of the following sources:
1) Law. — when they are imposed by the law itself, e.g., obligation
to pay taxes; obligation to support one’s family (see Art. 195,
Family Code.);
2) Contracts. — when they arise from the stipulation of the parties
(Art. 1306.), e.g., the obligation to repay a loan by virtue of an
agreement;
3) Quasi-contracts. — when they arise from lawful, voluntary and
unilateral acts and which are enforceable to the end that no one
shall be unjustly enriched or benefited at the expense of another
(Art. 2142.), e.g., the obligation to return money paid by mistake
or which is not due. (Art. 2154.) In a sense, these obligations
may be considered as arising from law; ordered by the court
4) Crimes or acts or omissions punished by law. — when they
arise from civil liability which is the consequence of a criminal
offense (Art. 1161.), e.g., the obligation of a thief to return the
car stolen by him; the duty of a killer to indemnify the heirs of his
victim; and
5) Quasi-delicts or torts. — when they arise from damage caused
to another through an act or omission, there being fault or
negligence, but no contractual relation exists between the
parties (Art. 2176.), e.g., the obligation of the head of a family
that lives in a building or a part thereof to answer for damages
caused by things thrown or falling from the same (Art. 2193.);
the obligation of the possessor of an animal to pay for the
damage which it may have caused. (Art. 2183.)
The term 'quasi-delict' is used in civil law to refer to a negligent act or
omission which results in harm or damage to an individual or to the
property of another. The person causing the harm or damage may do so
without any malice, but may nonetheless be found at fault as a result of
being negligent and/or imprudent.
The enumeration by the law is exclusive; hence, there is no obligation as
defined in Article 1156, if its source is not any of those enumerated.3
The law enumerates 5 sources of obligations. They may be classified as
follows:
1. Those emanating from law; and
2. Those emanating from private acts which may be further subdivided
into:
a. those arising from licit acts, in the case of contracts and
quasi-contracts; and
b. those arising from illicit acts, which may be either punishable
by law in the case of delicts, or not punishable in the case of
quasi-delicts.
Actually, there are only 2 sources: law and contracts, because obligations
arising from quasi-contracts, crimes, and quasi-delicts are really imposed by
law. Where the source of the obligation is a private act, the law merely
recognizes or acknowledges the existence of the obligation.
ARTICLE 1158. Obligations derived 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. (1090)
EXAMPLE: Marvin, Aura’s employer has no obligation to provide the latter free
legal assistance as no law requires this.
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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

Obligations Arising from Law. — Unlike other obligations, those derived
from law can never be presumed. Consequently, only those expressly
determined in the Civil Code or in special laws are demandable. These
obligations shall be regulated by the precepts of the law which
establishes them, and as to what has not been foreseen, by the
provisions of Book IV of the Civil Code.
Article 1158 refers to legal obligations or obligations arising from law. They
are not presumed because they are considered a burden upon the obligor.
They are the exception, not the rule. To be demandable, they must be
clearly set forth in the law, i.e., the Civil Code or special laws. Thus:
(1) An employer has no obligation to furnish free legal assistance to his
employees because no law requires this, and, therefore, an em- ployee may
not recover from his employer the amount he may have paid a lawyer hired
by him to recover damages caused to said employ- ee by a stranger or
strangers while in the performance of his duties.
(2) A private school has no legal obligation to provide clothing allowance to
its teachers because there is no law which imposes this obligation upon
schools.
Under Article 1158, special laws refer to all other laws not contained in the
Civil Code.
Contract - It is the formal expression by the parties of their rights and
obligations they have agreed upon with respect to each other.
For there to be a valid contract, these three elements must be present:
consent, object, and cause.
Consent – permission or approval of each parties in agreement
a meeting of the minds between parties with respect to the object and cause;
there is a certain offer by one party and there is an absolute acceptance by
another party
Object – subject matter of the contract, what must be done/content
Cause – purpose or reason of the contract
Contracts
- A meeting of the minds between 2 persons whereby one
binds according to their nature, may be in keeping with
good faith, usage & the law
- Could be express, implied, oral & written

Components of a Contract
ARTICLE 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith. 1. Complying in good faith - unwritten; implied
(1091)
2. Observing the stipulations in the contract – expressly written
Obligations Arising from Contracts. As a rule, contracts are perfected by
mere consent, and from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all of the
consequences which according to their nature may be in keeping with
good faith, usage and law.39 These contracts are commonly called
consensual contracts. Once the contract is perfected, the valid contract has ARTICLE 1160. Obligations derived from quasi-contracts shall be subject to
the force of law binding the parties to comply therewith in good faith, the provisions of Chapter 1, Title XVII, of this Book. (n)
where neither one may renege therefrom without the consent of the
other. Obligations Arising from Quasi-Contracts. — Quasi- contracts are those
juridical relations arising from lawful, voluntary and unilateral acts, by virtue of
EXAMPLE: John and Anna entered and signed a contract where John is hired which the parties become bound to each other, based on the principle that no
by Anna to be the lead engineer in the construction of her parent’s house. one shall be unjustly enriched or benefited at the expense of another.4

A quasi-contract is that juridical relation resulting from certain lawful, voluntary

and unilateral acts by virtue of which the parties become bound to each other

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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil
to the end that no one will be unjustly enriched or benefited at the expense of
another. (
It is not, properly, a contract at all. In a contract, there is a meeting of the minds
or consent; the parties must have deliberately entered into a formal
agreement. In a quasi-contract, there is no consent but the same is supplied
by fiction of law. In other words, the law considers the parties as having
entered into a contract, irrespective of their intention, to prevent injustice.
EXAMPLE: Chris and Mary entered into an agreement that Chris will deliver
pastries to Mary’s house and stipulated that upon consuming the goods, Mary
will pay Chris 5k through bank transfer. Chris however unintentionally misread
the address and delivered it to the house of Sofia. Sofia assumed the pastries
as a surprise gift given by her friends, and ate it. Although there is no contract
between Chris and Mary, the Court treats this as a Quasi-contract and orders
Mary to either return the pastries or pay Chris.
1. Negotiorum gestio is the voluntary management of the property or
affairs of another without the knowledge or consent of the latter. (Art.
2144.) Thus, if through the efforts of X, a neighbor, the house of Y
was saved from being burned, Y has the obligation to reimburse X
for the expenses X incurred although Y did not actually give his
consent to the act of X in saving his house on the principle of quasi-
contract.
2. Solutio indebiti is 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. (Art. 2154.) The obligation to pay
money mistakenly paid arises from the moment said payment was
made, and not from the time the payee admits the obligation to
reimburse.
ARTICLE 1161. Civil obligations arising from criminal offenses shall be
governed by the penal laws, subject to the provisions of article 2177, and of
the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations,
and of Title XVIII of this Book, regulating damages. (1092a)
Obligations Arising from Criminal Offenses. — As a rule, every person
liable for a felony is also civilly liable. This principle is based on the fact
that, generally, a crime has a dual aspect — the criminal aspect and the
civil aspect. Although these two aspects are separate and distinct from
each other in the sense that one affects the social order and the other,
private rights, so that the purpose of the first is to punish or correct the
offender, while the purpose of the second is to repair the damages
suffered by the aggrieved party, it is evident that the basis of the civil
liability is the criminal liability itself.
EXAMPLE: Mario stole the car of Venus. If Mario is convicted, the court wil
orderl him: (1) to return the car (or to pay its value if it was lost or destroyed);
(2) to pay for any damage caused to the car; and (3) to pay such other
damages suffered by Venus as a consequence of the crime.
The commission of an offense has a two-pronged effect: one, on the
public as it breaches the social order and the other, upon the private
victim as it causes personal sufferings or injury, each of which is
addressed, respectively, by the imposition of heavier punishment on the
accused and by an award of additional damages to the victim.
(2) Oftentimes, the commission of a crime causes not only moral evil but also
material damage. From this principle, the rule has been established that every
person criminally liable for a felony17 is also civilly liable. (Art. 100, Revised
Penal Code; see Albert, the Revised Penal Code Annotated, p. 276.) In
crimes, however, which cause no material damage (like contempt, insults to
person in authority, gambling, violations of traffic regulations, etc.), there is no
civil liability to be enforced. But a person not criminally responsible may
still be liable civilly. (Art. 29; Rules of Court, Rule 111, Sec. 2[c].)
The extent of the civil liability arising from crimes is governed by the Revised
Penal Code and the Civil Code.18
This civil liability includes:
1. Restitution;
2. Reparation for the damage caused; and
3. Indemnification for consequential damages. (Art. 104, Revised Penal
Code.)
EXAMPLE: Mario stole the car of Venus. If Mario is convicted, the court will
him: (1) to return the car (or to pay its value if it was lost or destroyed); (2) to
pay for any damage caused to the car; and (3) to pay such other damages
suffered by Venus as a consequence of the crime.
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.
(1093a)
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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

A quasi-delict is an act or omission by a person (tort feasor) which causes
damage to another in his person, property, or rights giving rise to an
obligation to pay for the damage done, there being fault or negligence but
there is no pre-existing contractual relation between the parties.21 (Art.
2176.)
Requisites of quasi-delict.
Before a person can be held liable for quasi-delict, the following requisites
must be present:
1. There must be an act or omission by the defendant;
2. There must be fault or negligence of the defendant;
3. There must be damage caused to the plaintiff;
4. There must be a direct relation or connection of cause and
effect between the act or omission and the damage; and
5. There is no pre-existing contractual relation between the
parties.
CHAPTER 2
Nature and Effect of Obligations
ARTICLE 1163. Every person obliged to give something is also obliged to
take care of it with the proper diligence of a good father of a family, unless
the law or the stipulation of the parties requires another standard of care.
(1094a)
A thing is said to be specific or determinate when it is particularly designated
or physically segregated from all others of the same class. (Art. 1459.)
This provision refers to an obligation to give a specific or determinate thing.
EXAMPLES:
diligence which an average (a reasonably prudent) person
exercises over his own property.
2. Another standard of care. — However, if the law or the stipu-
lation of the parties provides for another standard of care (slight or
extraordinary diligence), said law or stipulation must prevail. (Art.
1163.)
a. Under the law, for instance, a common carrier (person or company
engaged in the transportation of persons and/or cargoes) is “bound
to carry the passengers safely as far as human care and foresight
can provide, using utmost (extraordinary) diligence of very cautious
persons, with a due regard for all the circumstances.” (Art. 1755.) In
case of accident, therefore, the common carrier will be liable if it
exercised only ordinary diligence or the diligence of a good father of
a family.
b. Banks are duty bound to treat the deposit accounts of their
depositors with the highest degree of care where the fiduciary
nature of their relationship with their depositors is concerned. But
such degree of diligence is not expected to be exerted by banks in
commercial transactions that do not involve their fiduciary
relationship with their depositors. (Reyes vs. Court of Appeals, 363
SCRA 51 [2001].)
c. While parties may agree upon diligence which is more or less than
that of a good father of a family, it is contrary to public policy (see
Art. 1306.) to stipulate for absolute exemption from liability for any
fault or negligence. (see Arts. 1173, 1174.) Thus, a stipulation
exempting a carrier from liability for gross negligence is against
public policy. (Heacock vs. Macondray, 32 Phil. 205 [1915]; see
Arts. 1306, 1744, 1745.)

(1) The watch I am wearing.

Obligation to take care of the thing due. (2) The car sold by X.
(3) My dog named “Terror.”
(4) The house at the corner of Rizal and Del Pilar Streets.
1. Diligence of a good father of a family. — In obligations to give
(5) The Toyota car with Plate No. AAV 344.
(real obligations), the obligor has the incidental duty to take care of
(6) This cavan of rice.
the thing due with the diligence of a good father of a family pending
(7) The money I gave you.
delivery. The phrase has been equated with ordinary care or that

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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

A thing is generic or indeterminate when it refers only to a class or genus to 3. To deliver its accessions andaccessories (seeArt.1166.);
which it pertains and cannot be pointed out with particular- ity. 4. To deliver the thing itself (see Arts. 1163, 1233, 1244; as to
kinds of delivery, Arts. 1497 to 1501.); and
EXAMPLES: 5. To answer for damages in case of non-fulfillment or breach.
(see Art. 1170.)
(1) a Bulova calendar watch.
(2) a 2006 model Japanese car. Duties of debtor in obligation to deliver a generic thing.
(3) a police dog.
(4) a cavan of rice. 1. To deliver a thing which is of the quality intended by the parties
(5) the sum of P10,000.00. taking into consideration the purpose of the obligation and other
circumstances (see Art. 1246.); and
2. To be liable for damages in case of fraud, negligence,or delay, in the
Specific thing and generic thing distinguished. performance of his obligation, or contravention of the tenor thereof.
1. A determinate thing is identified by its individuality. The debtor (see Art. 1170.)
cannot substitute it with another although the latter is of the same
kind and quality without the consent of the creditor. (Art. 1244.)
2. A generic thing is identified only by its specie.The debtor can give
anything of the same class as long as it is of the same kind. ARTICLE 1164. The creditor has a right to the fruits of the thing from the time
the obligation to deliver it arises. However, he shall acquire no real right over
it until the same has been delivered to him. (1095)
EXAMPLES:

(1) If D’s obligation is to deliver to C a Bulova calendar watch, D can deliver
any watch as long as it is Bulova with calendar.
But if D’s obligation is to deliver to C a particular watch, the one D is wearing,
D cannot substitute it with another watch without C’s consent nor can C require
D to deliver another watch without D’s consent although it may be of the same
kind and value. (see Arts. 1244, 1246.)
(2) If D’s obligation is to deliver to C one of his cars, the object refers to a class
which in itself is determinate.
Here, the particular thing to be delivered is determinable without the need of
a new contract between the parties (see Art. 1349.); it becomes determinate
upon its delivery.
Duties of debtor in obligation to give a determinate thing.
1. To preserve or take care of the thing due;
2. To deliver the fruits of the thing (see Art. 1164.);
EXAMPLE: A and B entered into an agreement that A will give B a gold
bracelet. The contract is valid and was signed and perfected. The owner of
the bracelet remains to be A if the delivery has not been made yet, however
upon the completion of delivery to B, B is now the rightful owner.
By law, the creditor is entitled to the fruits of the thing to be delivered
from the time the obligation to make delivery of the thing arises. The
intention of the law is to protect the interest of the obligee should the
obligor commit delay, purposely or otherwise, in the fulfillment of his
obligation.
The creditor shall only have the real right to the fruits once the delivery
has been made and completed.
The meaning of the phrase “he shall acquire no real right over it until the same
has been delivered to him,” is that the creditor does not become the owner
until the specific thing has been delivered to him.
Different kinds of fruits.
The fruits mentioned by the law refer to natural, industrial, and civil fruits.

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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

1. Natural fruits are the spontaneous products of the soil, and the Classification of Obligation from the Viewpoint of Subject Matter
young and other products of animals, e.g., grass; all trees and plants
on lands produced without the intervention of human labor. 1. Real (to give)
2. Industrial fruits are those produced by lands of any kind through a. To give a specific thing (set apart from a class)
cultivation or labor, e.g., sugar cane; vegetables; rice; and all b. To give a generic or indeterminate thing (one of a class)
products of lands brought about by reason of human labor. c. h
3. Civil fruits are those derived by virtue of a juridical relation, e.g., rents 2. Personal (to do or not to do)
of buildings, price of leases of lands and other property and the
amount of perpetual or life annuities or other similar income. (Art.
442.)
Remedies of creditor in real obligation
Meaning of personal right and real right.

1. Personal right is the right or power of a person (creditor) to demand
from another (debtor), as a definite passive subject, the fulfillment of
the latter’s obligation to give, to do, or not to do.
2. Real right is the right or interest of a person over a specific thing (like
ownership, possession, mortgage, lease record) 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 him by Article 1170, may compel the
debtor to make the delivery.
1. Specific real obligation – creditor may exercise the following
remedies:
a. Specific performance or fulfillment of obligation with a right to
indemnity for damages
b. Rescission or cancellation of obligation, also with a right to
recover damages (Art. 1380)
c. Resolution (Art. 1191)
d. Demand payment of damages only where it is the only feasible
remedy
2. Generic real obligation – can be performed by a third person since
the object is expressed only according to its family / genus. Not
necessary to compel debtor to make delivery although he may ask
for performance of obligation, with the right to recover damages in
case of breach

If the thing is indeterminate or generic, he may ask that the obligation be 2 Instances Where a Fortuitous Event Does Not Exempt
complied with at the expense of the debtor.
1. if the obligor “delays” (This is really default or “mora.”)
If the obligor delays, or has promised to deliver the same thing to two or more
2. if the obligor is guilty of BAD FAITH (for having promised to deliver
persons who do not have the same interest, he shall be responsible for any
the same thing to two or more persons who do not have the same
fortuitous event until he has effected the delivery. (1096)
interest — as when one is not the agent merely of the other)

2 Kinds of Delay
Determinate / specific thing – something which is susceptible of particular
1. Ordinary delay – merely non-performance at a stipulated time
designation or specification
2. Legal delay – non-fulfillment of obligation; arises after either judicial
or extrajudicial demand has been made
Indeterminate / generic thing – something not particularized r specified but
has reference only to a class or genus

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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil
ARTICLE 1166. The obligation to give am determinate thing includes that of
delivering all its accessions and accessories, even though they may not have
been mentioned. (1097a)
The general rule is that all accessions and accessories are considered
included in the obligation to deliver a determinate thing although they may not
have been mentioned. This rule is based on the principle of law that the
accessory follows the principal. In order that they will be excluded, there must
be a stipulation to that effect.
Accessions – fruits of, or additions to, or improvements upon, a thing (not
necessary to the principal thing)
Accessories – things joined to, or included with, the principal thing for the
latter’s embellishment, better use, or completion (must go together with
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 if he does it in contravention of the tenor of
the obligation. Furthermore, it may be decreed that what has been poorly done
be undone. (1098)
Article 1167 contemplates on three situations:
1. The debtor fails to perform an obligation to do; or
2. The debtor performs an obligation to do but contrary to the terms
thereof; or
3. The debtor performs an obligation to do but in a poor manner.
Remedies of the Creditor:
1. If the debtor fails to comply with his obligation to do, the creditor has
the right:
a. to have the obligation performed by himself, or by another
unless personal considerations are involved, at the
debtor’s expense; and
b. to recover damages. (Art. 1170.)
2. In case the obligation is done in contravention of the terms of the
same or is poorly done, it may be ordered (by the court) that it be
undone if it is still possible to undo what was done.
ARTICLE 1168. When the obligation consists in not doing, and the obligor
does what has been forbidden him, it shall also be undone at his expense.
(1099a)
This article refers to negative personal obligations. As a rule, the remedy is
undoing the prohibited thing plus damages
Negative personal obligation – not to do a certain thing or act. The thing
done or act performed shall be undone at the expense of the obligor. Damages
may be claimed against him.
EXAMPLE: S sold a land to B. It was stipulated that S would not construct a
fence on a certain portion of his land adjoining that sold to B. Should S
construct a fence in violation of the agreement, B can have the fence removed
at the expense of S.
ARTICLE 1169. Those obliged to deliver or to do something incur in delay
from the time the obligee judicially 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 declare; 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 establishment 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 manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins. (1100a)
Although Art. 1169 uses the words “in delay,” these should be translated to
mean default (MORA).
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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil
To put a debtor in default, as a rule, DEMAND is needed. The demand may
be judicial, as when a complaint for specific performance is filed; or
extrajudicial, without court proceed-ngs.
When Demand Is Not Needed to Put Debtor in Default
a. When the law so provides
b. When the obligation expressly so provides.
c. When time is of the essence of the contract (or when the fixing
of the time was the controlling motive for the establishment of
the contract).
d. When demand would be useless, as when the obligor has
rendered it beyond his power to perform.
e. When the obligor has expressly acknowledged that he really is
in default (But it should be noted that his mere asking for
extension of time is not an express acknowledgment of the
existence of default on his part)
Kinds of Mora
1. Mora Solvendi (default on the part of the debtor)
- Delay on the part of the debtor to fulfill obligation by reason
of cause imputable to him
a. Mora solvendi ex re (debtor’s fault in real obligations)
b. Mora solvendi ex persona (debtor’s default in personal
obligations
- Not applicable on negative obligations (one cannot be late in
NOT doing and giving)
- Requisites:
a. The obligation must be due, enforceable, and already
liquidated or determinate in amount.
b. There must be non-performance
c. There must be a demand, unless the demand is not
required (as already discussed). (When demand is
needed, proof of it must be shown by the creditor)
d. he demand must be be for the obligation that is due (and
not for another obligation, nor one with a bigger amount,
except in certain instances, considering all the
circumstances)
- Effects:
a. If the debtor is in default, he may be liable for interest
or damages
b. He may also have to bear the risk of loss *In both
cases it is however essential that his being in default
is attributable to his own fault)
c. He is liable even for fortuitous event, although
damages here may be mitigated if he can prove that
even if he had not been in default, loss would have
occurred just the same
2. Mora Accipiendi (default on the part of the creditor)
- The creditor is guilty of default when he unjustifiably refuses
to accept payment or performance at the time said payment
or performance can be done. Some justifiable reasons for
refusal to accept may be that the payor has no legal capacity
or that there is an offer to pay an obligation other than what
has been agreed upon.
- If an obligation arises ex delicto (as the result of a crime), the
debtor-criminal is responsible for loss, even though this be
through a fortuitous event, unless the creditor is in mora
accipiendi
- Effects:
a. Breach of obligation
b. Liable for damages suffered, if any by the debtor
c. Bears risk of loss of the thing due
d. Where obligation is to pay money, debtor is not
liable for interest from time of creditor’s delay
e. Debtor may release himself from obligation by
consignation of the thing or sum due
3. Compensatio morae (when in reciprocal obligations both
parties are in default; here it is as if neither is in default)
- If the performance is not set on different dates, either by the
law, contract, or custom, it is understood that performance
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must be simultaneous. Hence, one party cannot demand phrase “in any manner contravene the tenor” of the obligation includes not
performance by the other, if the former himself cannot only any illicit act which impairs the strict and faithful fulfillment of the
perform. obligation, but also every kind of defective performance.
- when neither has performed, there is compensatio morae
(default on the part of both; so it is as if no one is in default). In case of fraud, bad faith, malice, or wanton attitude, the obligor shall be
If one party performs, and the other does not, the latter would responsible for all the damages which may be reasonably attributed to the
be in default non-performance of the obligation.
- Effects:
a. Delay of obligor cancels out effects of delay of Article 1170 gives the four grounds for liability which may entitle the
oblige and vice versa; neither will be guilty injured party to damages (see Art. 2197.) for all kinds of obligations
b. Liability of first infractor shall be equitably regardless of their source, mentioned in Article 1157, whether the obli-
tempered or balanced by courts. If cannot be gations are real or personal. (supra.) It contemplates that the obligation was
eventually performed but the obligor is guilty of breach thereof. Here, the
determined which is guilty of delay, contract shall
breach of the obligation is voluntary; in Article 1174, it is in- voluntary.
be deemed extinguished, each shall bear own
damages 1. Fraud (deceit or dolo) - t is the deliberate or intentional evasion of
the normal fulfillment of an obligation.
Requisites of Mora a. As a ground for damages
- implies malice or dishonesty and it cannot cover cases of
mistake and errors of judgement made in good faith
1. Failure of debtor to perform his (positive) obligation on date agreed
- synonymous to bad faith as it involves a design to mislead
upon
or deceive others
2. Demand made by creditor upon the debtor to fulfill, perform, or
b. Incidental fraud (dolo incidente)
comply: either judicial (filed in court) or extra-judicial (when made
-committed in the performance of an obligation already
outside of court/ orally/ in writing)
existing because of contract
3. Failure of debtor to comply with such demand
-to be differentiated from causal fraud (dolo causante)
which is a fraud employed in the execution of contract which
When demand is not necessary to place obligor in default: vitiates consent and makes the contract voidable and to
incidental fraud under Art 1344 employed for the purpose of
1. Law or obligation expressly declares securing consent of the other party to enter into contract but
2. Nature of contract shows that time is of the essence such was not the principal inducement in the making of the
3. When demand would be useless contract
4. When debtor admits he is in default c. Civil fraud - employed for the purpose of the normal
fulfillment of an obligation and its existence merely results
in breach thereof giving rise to the right of the innocent party
to recover damages.

ARTICLE 1170. Those who in the performance of their obligations are guilty
EXAMPLE: Aura obliged herself to deliver 50 bottles of Jose Cuervo Tequila
of fraud, negligence, or delay, and those who in any manner contravene the
to Jammi. However she delivered 50 bottles of El Hombre Tequila which is
tenor thereof, are liable for damages. (1101)
another and a cheaper brand. Aura is then guilty of fraud and is liable for
paying damages to Jammi.
In general, every debtor who fails in the performance of his obligations
is bound to indemnify the creditor for the damages caused thereby. The

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2. Negligence (fault or culpa) - any voluntary act or omission, there

being no malice, which prevents the normal fulfillment of an FRAUD NEGLIGENCE
obligation.
There is a deliberate intention to There is no intention to cause
EXAMPLE: Ivan, the bank manager, lent Hannah, a complete stranger, Gab’s cause damage or injury damage or injury
duplicate certificate and information entrusted to the bank for the purpose of
having it photocopied.
Waiver of the liability for future fraud Waiver may be allowed in a
3. Delay (mora) - delay in the performance of the obligation is void certain sense for negligence

EXAMPLE: Keith proposed a business plan to Marvin which he agreed to. Must be proven clearly, mere Already presumed from the
Thereafter, Keith delivered Marvin a document for signing on December 1, preponderance of evidence is not breach of a contractual obligation
2020 which Marvin agreed and promised to sign before the deadline on sufficient
February 10, 2020. Waiting for another business deal from his friend, Elysse,
Marvin kept delaying the signing until it was already past the deadline. Marvin
Liability cannot be mitigated by the Liability may be reduced
is guilty of delay and is liable to pay damages to Keith.
courts according to the circumstances

4. Contravention of the terms of the obligation - violation of the

terms and conditions stipulated in the obligation.
Where the negligence shows bad faith or is so gross that it amounts to malice
or wanton attitude on the part of the defendant, the rules on fraud shall apply.
EXAMPLE: Keith proposed a business plan to Marvin which he agreed to. (see Art. 1173.) In such case, no more distinction exists between the two at
Thereafter, Keith delivered Marvin a document for signing on December 1, least as to effects.
2020 which Marvin agreed and promised to sign before the deadline on
February 10, 2020. Waiting for another business deal from his friend, Elysse,
In contracts and quasi-contracts, the damages in which the obligor who acted
Marvin kept delaying the signing until it was already past the deadline. Marvin
in good faith is liable shall be those that are natural and probable
is guilty of delay and is liable to pay damages to Keith.
consequences of the breach of obligation and which the parties have foreseen
or could have reasonably foreseen at the time the obligation was constituted.
5. Contravention of the terms of the obligation - unilateral act of
terminating a contract without legal justification by a party makes him
liable for damages suffered by the other

EXAMPLE: Aura and Gabs are business partners. It was stipulated in the
contract that Aura will handle the sales and marketing of their business, while
Gabs will be in charge with accounting and finance. Because of her heavy
load in her job, Aura decided to terminate her role in the sales department
without legal justification and informing Gabs. She deactivated her sales email
and did not bother to look for a replacement. Their company then lost a
number of clients since no one was entertaining their queries. Aura is liable
for the damages that the company suffered.
ARTICLE 1171. Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void. (1102a)
When a party complies with or performs an obligation
fraudulently,he/she is liable for damages.
Responsibility arising from fraud can be demanded with respect to all
kinds of obligation and unlike in the case of responsibility arising from
negligence (Art. 1172.), the court is not given the power to mitigate or reduce
the damages to be awarded. This is so because fraud is deemed serious

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and evil that its employment to avoid the fulfillment of one’s obligation
should be discouraged.
A waiver of an action for future fraud is void (no effect, as if there is no
waiver) as being against the law and public policy. (Art. 1409[1].) A
contrary rule would encourage the perpetration of fraud because the
obligor knows that even if he should commit fraud he would not be liable
for it thus making the obligation illusory.
A past fraud can be the subject of a valid waiver because the waiver can
be considered as an act of generosity and magnanimity on the part of
the party who is the victim of the fraud. Here, what is renounced is the
effects of the fraud, that is, the right to indemnity of the party entitled thereto.
Liability for Fraud or Dolo
• According to time of commission, fraud may be past or future
(liability for past fraud may be waived; this is not so for future fraud).
• According to meaning, fraud may be classified as follows:
a. fraud in obtaining consent (may be causal or merely
incidental)
b. fraud in performing a contract (inaccurately referred to
by some as incidental fraud). Fraud here may be either:
a. dolo causante (causal fraud)
b. dolo incidente (incidental fraud)
*While dolo causante is so important a fraud that vitiates consent (allowing
therefore annulment), dolo incidente is not important*
EXAMPLE: Elysse bought a sedan worth 350k from Jammi and agreed that
the payment will be made on the delivery. After the car’s delivery at Elysse’s
house, she knowingly paid Jammi counterfeit money. Elysse is liable for
damages.
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. (1103)
General rule: negligence must always be proven
Negligence - The omission of that diligence which is required by the nature
of the obligation & corresponds with the circumstances of the persons, of the
time & of the place
In the performance of every kind of obligation, the debtor is liable for
damages resulting from his negligence or culpa. The courts are however
given wide discretion in fixing the measure of damages, since negligence
is a question which must necessarily depend on the circumstances of
each particular case. Thus, the court may take into consideration the
good or bad faith of the obligor (defendant) or the conduct of the obligee
(plaintiff) when the damage was incurred. They can either increase or
decrease the damages.
Negligence is not as serious as fraud because there is no bad faith or
deliberate intention to cause injury/damages.
When both parties to a transaction are mutually negligent in the
performance of their obligations, the fault of one cancels the negligence
of the other.
EXAMPLE: Ivan and Jammi entered into a contract of sale whereas Ivan shall
deliver a Siberian husky to Jammi on February 14, 2020. Jammi has already
paid half the amount. However on February 11,2020 the dog died due to Ivan’s
negligence. He is therefore liable for damages as he failed to fulfill a pre-
existing obligation.
Kinds of Negligence according to source of obligation
1. Contractual negligence (culpa contractual) or negligence in
contracts resulting in their breach
- not a source of obligation but merely makes the debtor liable for
damages in view of his/her negligence in the fulfillment of a pre-
existing obligation resulting on its non-fulfillment or breach.
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- a civil negligence which does not amount to a crime
-the negligence of the defendant is merely an incident in the
performance of an obligation;
-there is ALWAYS a pre-existing contractual relation
-source of the obligation of the defendant to pay damages to the
plaintiff is the breach or nonfulfillment of the contract;
-existence of the contract and of its breach or nonfulfillment is
sufficient prima facie to warrant a recovery;
EXAMPLE: Ivan and Jammi entered into a contract of sale whereas Ivan shall
deliver a Siberian husky to Jammi on February 14, 2020. Jammi has already
paid half the amount. However on February 11,2020 the dog died due to Ivan’s
negligence. He is therefore liable for damages as he failed to fulfill a pre-
existing obligation.
- The same negligent act causing damages may produce
civil liability arising from a crime under Article 100 of the
RPC.
- In negligence cases, the aggrieved party may choose
between a criminal action under Article 100 of the Revised
Penal Code or a civil action for damages under Article 2176
of the Civil Code.
EXAMPLE: Due to the death of the hamster sold by Ivan, Jammi filed an action
against for damage to property through reckless imprudence and prayed for
recovery of damages. In this case, the crime is the source of obligation to pay
damages.
Where liability arises from a mere tort (culpa aquiliana), not involving a
breach of positive obligation, an employer or master may excuse himself
under the last paragraph of Article 218011 by proving that he had exercised
“all the diligence of a good father of a family to prevent the damage.” It
is a complete defense.

2. Civil negligence (culpa aquiliana) or negligence which by itself
is the source of an obligation between the parties not formally
bound before by any pre-existing contract.
- Also called torts or quasi-delict
- Governs when the act or omission complained of constitutes
an actionable tort independent of the contract
- Negligence is substantive and independent.
- There MAY OR MAY NOT BE a pre-existing contractual
relation
- the source is the defendant’s negligent act or omission
itself.
- negligence of the defendant must be proved.
This defense is not available if the liability of the employer or master
arises from a breach of contractual duty (culpa contractual) though this
may mitigate damages. It has been held that where the injury is due to the
concurrent negligence of the drivers of the colliding vehicles, the drivers
and owners of the said vehicles shall be primarily, directly and solidarily
liable for damages and it is immaterial that one action is based on quasi-
delict and the other on culpa contractual as the solidarity of the
obligation (see Art. 1207.) is justified by the very nature thereof.

EXAMPLE: Ivan and Jammi entered a sale contract which has been fulfilled
and completed after the delivery of the hamster to Jammi. After a day, the
hamster fell ill and upon the veterinarian’s diagnosis Jammi learned that it’s
been dehydrated for days. The hamster eventually died. There is no pre-
existing contractual relationship between Jammi and Ivan, thus, the source of
liability is Ivan’s negligence. The negligence of Ivan resulted to the death of
the hamster.

3. Criminal negligence (culpa criminal) or negligence resulting in

the commission of a crime.

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ARTICLE 1173. The fault or negligence of the obligor consists in the omission
of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of articles 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 is expected of a good father of a family shall be
required. (1104a)
Negligence - According to SC is a conduct that creates undue risk or harm
to another. It is the 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.”
1st paragraph: Negligence is relative and comparative rather than an absolute
term as its application depends on the situation of the parties. If the negligence
of the obligor shows bad faith, the obligor can be held responsible for all the
damages which may be reasonably attributed to the non-performance of the
obligation. In this case, the difference between fraud and negligence
disappears
2nd paragraph: In the absence of stipulation, the diligence required is that
of a good father of a family (ordinary diligence)
EXAMPLE: Marvin employed Ivan as maintenance staff in his factory. Stated
in his employment contract that he is to do ordinary chores. One day Marvin
ordered Ivan to clean a machine despite his lack of knowledge about
machinery and without giving any warnings about the dangers it may cause.
While cleaning, Ivan’s fingers were cut in the machine. Marvin is liable for
damages as there was negligence on his part in not warning Ivan and giving
him instructions to avoid accidents.
Keith loaded the tomatoes harvested from the farm of Hannah on her truck.
They agreed that Keith is to deliver the tomatoes within the day in the market.
On her way, Keith saw her friend Gabs which she has not seen in 2 years.
They then went out for drinks. With this, the tomatoes were left in a tightly
closed container without ventilation which caused them to rot. When Keith
delivered the tomatoes, most of them were rotten and useless. Keith is liable
for damages for her gross negligence with respect to the care of a perishable
good/property.
Test for determining whether a person is negligent.
1. Reasonable care and caution expected of an ordinary prudent
person.
- Simply stated: “Did the defendant in doing the alleged
negligent act use the reasonable care and caution which
an ordinary prudent person would have used in the
same situation. If not, then he is guilty of negligence.’’
2. No hard and fast rule for measuring degree of care.
- The existence of negligence in a given case is NOT
determined by reference to the personal judgment of the
actor in the situation before him. It is the law that considers
what would be reckless or negligent in the man of
ordinary intelligence and determines liability by that.
Factors to be considered:
1. Nature of the obligation. — e.g., smoking while carrying materials
known to be inflammable constitutes negligence;
2. Circumstances of the person. — e.g., a guard, a man in the prime
of life, robust and healthy, sleeping while on duty is guilty of negli-
gence;
3. Circumstances of time. — e.g., driving a car without headlights at
night is gross negligence but it does not by itself constitute negli-
gence when driving during the day;
4. Circumstances of the place. — e.g., driving at 60 kilometers per
hour on the highway is permissible but driving at the same rate of
speed in Quezon Boulevard, Manila, when traffic is always heavy is
gross recklessness.
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 of risk, no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, were inevitable. (1105a)
When an extraordinary event which cannot be foreseen, or which,
though foreseen is inevitable, occurred, a person is not liable for the
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damages it caused. It is for the reason that the event is either impossible
to foresee or impossible to avoid.
Fortuitous event - a happening independent of the will of the obligor and
which happening, makes the normal fulfillment of the obligation
impossible.
EXAMPLE: Hannah lent her car to Gab and asked her to deliver the ordered
pastries of Aura. On her way to Aura’s house, she passed by a small road
where a fight transpired. The boys involved in the fight started to throw stones
at each other, which hit Hannah’s car causing damage to its windows. Gab is
not liable for the damages as the throwing of the stone was a fortuitous event
which could not be foreseen by her or which, though foreseen, was inevitable.
Fortuitous event distinguished from force majeure.
1. Acts of man - Strictly speaking, fortuitous event is an event
independent of the will of the obligor but not of other human wills,
e.g., war, fire, robbery, murder, insurrection, etc.
2. Acts of God. — They are those events which are totally independent
of the will of every human being, e.g., earthquake, flood, rain,
shipwreck, lightning, eruption of volcano, etc. They are also called
force majeure. The term generally applies to a natural accident.
•In our law, fortuitous events and force majeure are identical in so far as they
exempt an obligor from liability. Both are independent of the will of the obligor.•
Kinds of fortuitous events.
1. Ordinary fortuitous events or those events which are common and
which the contracting parties could reasonably foresee (e.g., rain);
2. Extraordinary fortuitous events or those events which are
uncommon and which the contracting parties could not have
reasonably foreseen (e.g., earthquake, fire, war,19 pestilence,
unusual flood)
Requisites of a fortuitous event.
1. The event must be independent of the human will or at least of
the obligor’s will;
2. The event could not be foreseen (unforeseeable), or if it could
be foreseen, must have been impossible to avoid (unavoidable);
3. The event must be of such a character as to render it impossible
for the obligor to comply with his obligation in a normal manner;
and
4. The obligor must be free from any participation in, or the
aggravation of the injury to the obligee.
- If event concurs with fraud, negligence, delay or violation in any manner
of the tenor of the obligation, the obligor cannot escape liability
ARTICLE 1175. Usurious transactions shall be governed by special laws. (n)
Usurious transactions are not regulated or prohibited by the Civil Code.
As special law may govern, regulate, or allow usurious interest. The PH
used to have Usury Law Act of 2655 as amended by PD No.116 which
was suspended in 1983.
Usury is now legally non-existent. Interest can be charged as lender and
borrower may agree upon.
a) For loan or forbearance of money, the rate of interest due is that
stipulated;; otherwise, 12% per annum computed from judicial or
extrajudicial demand until fully paid. In addition, interest due shall
earn legal interest (compound interest) from the time it is judicially
demanded.
b) For other than loan or forbearance of money, the interest shall be
6% as indemnity at the discretion of the court. When the amount of
the obligation is reasonably established, the interest shall run from
judicial or extra-judicial demand; otherwise, from the time the amount
is finally adjudged.
c) Where a judgment awarding a sum of money under (a) or (b)
above, has become final and executory, the legal rate of interest
shall be 12% from such finality, based on the adjudged principal and
unpaid interest, until full satisfaction.
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.
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ARTICLE 1176. The receipt of the principal by the creditor, without reservation
with respect to the interest, shall give rise to the presumption that said interest
*Below contains those written in the Usury Law* has been paid.

Kinds of interest. The receipt of a later installment of a debt without reservation as to prior
installments, shall likewise raise the presumption that such installments have
1. Simple interest. — when the rate of interest is stipulated by the been paid. (1110a)
parties
2. Compound interest. — when the interest earned is upon interest 1st: The provided receipt/acknowledgement receipt proves that the
due interest has been paid, thus the obligation has been fulfilled.
3. Legal interest. — when the rate of interest intended by the parties
is presumed by law, as when the loan mentions interest but does not If the debtor is issued a receipt by the creditor and it is shown that the principal
specify the rate thereof. has been paid without any reservation with respect to the interest, there arises
4. Lawful interest. — when the rate of interest is within the maximum a disputable presumption that the interest has also been paid.
allowed by (usury) law
5. Unlawful interest. — when the rate of interest is beyond the Fact giving rise to presumption – payment of principal without reservation
maximum fixed by law. as to the interest

EXAMPLE: Elysse owes Marvin 100k with an interest of 2% a month. Marvin

issued a receipt for the principal. It was not stated whether or not the interest
Interest rules
has been paid. It is then presumed that Elysse has already paid the interest
since normally, payment of interest precedes that of the principal.
Under the Usury Law, they are:
2nd: The payment of the later installment shall give rise to the
1. Legal rate. — 12% per annum. presumption that prior installments have already been paid.

- The legal rate is 12% (from default until fully paid) if the transaction
is a loan or forbearance of money, goods, or credits or the judgment
involves a loan or forbearance of money, goods or credits, as
prescribed in Central Bank Circular No. 416 otherwise (e.g.,
indemnity for damages occasioned by an injury to person or loss of
property), it is only 6% as provided in Article 2209
If the debtor is issued a receipt by the creditor acknowledging payment of a
latter installment of a specified debt without any reservation with respect to
prior installments, there also arises a disputable presumption that such prior
installments have already been paid.
Fact giving rise to the presumption – payment of later installment

2. Maximum rate:
a. 12% per annum — if the loan is secured in whole or in part
by a mortgage upon real estate with a Torrens Title or by any
agreement conveying such real estate (also registered) or an
interest therein. For purposes of the ceiling, loans secured
by government securities such a treasury bills, CB
certificates of indebtedness, etc., qualify as secured loans
b. 4% per annum — if the loan is not secured as provided
above; or
c. The rate prescribed by the Monetary Board of the Central
Bank.
d.
EXAMPLE: Hannah is a lessee of Jammi’s condominium in Makati. She pays
15k rental fee every month. In September, Hannah was stationed by her boss
in Cebu for a month, thus, she asked her friend Keith to temporarily occupy
the condo. By the end of September Keith paid 15k to Jammi, and Jammi
issued a receipt that the payment was for the month of September. The
presumption is then, the rents for the previous months were paid since it is a
usual business practice that prior installments are first liquidated before
payments are applied to the later installments.

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Presumption
- means the inference of a fact not actually known arising from
its usual connection with another which is known or proved.
- always arise from set of facts
- To have probative value, presumptions must be provided by
law
- Once facts are proven, then the presumption of law will
attach
- Will hold as true unless rebutted
When presumptions in Article 1176 do not apply.
1. With reservation as to interest - The presumptions established
in Article 1176 do not arise where there is a reservation as to
interest or prior installments, as the case may be. The
reservation may be made in writing or verbally.
2. Receipt for a part of principal. - The first paragraph of Article
1176 only applies to the receipt of the last installment of the
entire capital, not to a mere fraction thereof. A receipt for a
part of the principal, without mentioning the interest, merely
implies that the creditor waives his right to apply the payment
first to the interest and then to the principal. Only when the
principal is fully receipted for, may failure to reserve the
claim for interest give rise to the presumption that said
interest has been paid.
3. Receipt without indication of particular installment paid
- Art. 1176(2) is not applicable if the receipt does not recite that
it was issued for a particular installment due as when the receipt
is only dated
4. Payment of taxes. Article 1176 does not apply to the payment
of taxes. Taxes payable by the year are not installments of the
same obligation.
5. Non-payment proven. Article 1176 is not applicable where
the non-payment of the prior obligations has been proven.
Between a proven fact and a presumption pro tanto, the former
stands, and the latter falls.
ARTICLE 1177. The creditors, after having pursued the property in
possession 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 are
inherent in his person; they may also impugn the acts which the debtor may
have done to defraud them. (1111)
The law protects the creditors. Civil obligations are demandable &
enforceable in the court of law. In cases where the debtor does not comply
with his/her obligation, there are remedies available to the creditor for the
protection and enforcement of his/her right against the debtor. He/She can
demand:
1. exact fulfillment (specific performance) with the right to damages;
2. pursue the leviable (not exempt from attachment under the law)
property of the debtor;
3. “after having pursued the property in possession of the
debtor,’’ exercise all the rights (like the right to redeem) and bring
all the actions of the debtor (like the right to collect from the debtor
of his debtor) except those inherent in or personal to the person
of the latter (such as the right to vote, to hold office, to receive legal
support, to revoke a donation on the ground of ingratitude, etc.);
4. ask the court to rescind or impugn acts or contracts which the
debtor may have done to defraud him when he cannot in any
other manner recover his claim.
The debtor is liable with all his property, present and future, for the
fulfillment of his obligations, subject to the exemptions provided by law.
•BUT the creditor CANNOT bring those which are inherent in the person
of the obligor•
Action for support – the creditor cannot file an action on behalf of the
obligor to claim support from the latter’s parents to satisfy the
indebtedness
EXAMPLE: I cannot pay the 500k I owe to Gabs which is due today. But I
own a car worth 250k and Ivan owes me 100k. Under these circumstances,
the law grants Gabs the right to:
1. Bring an action for the collection of 500k with the right to damages
2. If inspite of the judgement rendered, I failed to pay the amount due,
Gabs can ask for the documents of my car so that it may be sold and
I can pay her from the proceeds of the sale.
3. She can ask the court to order Ivan to not to pay me so that the
payment may be made to her.
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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.
(1112)
General rule: rights growing out of an obligation are transmissible
-Rights of obligations or those rights which are acquired by virtue of an
obligation are as a general rule transmissible in character. Consequently, they
may be alienated or assigned to third person. The same right is
transferred. A person who received rights cannot receive greater
rights.
General rule: Real rights are transmissible but personal rights are
intransmissible
1. Personal right is the right or power of a person (creditor) to demand
from another (debtor), as a definite passive subject, the fulfillment of
the latter’s obligation to give, to do, or not to do.
2. Real right is the right or interest of a person over a specific thing (like
ownership, possession, mortgage, lease record) without a definite
passive subject against whom the right may be personally enforced.
EXEMPTIONS (simpler words)
1. where they are not transmissible by their very nature, such as in the
case of a purely personal right
2. where there is a stipulation of the parties that they are not
transmissible
3. where they are not transmissible by operation of law
EXEMPTIONS
1. Prohibited by law. — When prohibited by law, like the rights in
partnership, agency, and commodatum which are purely personal in
character
a. By the contract of partnership, two or more persons bind
themselves to contribute money, property or industry to a
common fund, with the intention of dividing the profits
among themselves.
(b) By the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another, with the
consent or authority of the latter.
(c)By the contract of commodatum, one of the parties delivers to another
something not consumable so that the latter may use the same for a certain
time and return it. Commodatum is essentially gratuitous
2. Prohibited by stipulation of parties. — When prohibited by
stipulation of the parties, like the stipulation that upon the death of
the creditor, the obligation shall be extinguished or that the creditor
cannot assign his credit to another. The stipulation against
transmission must not be contrary to public policy
It must be observed, however, that intransmissibility by stipulation of the
parties, being exceptional and contrary to the general rule, should not be
easily implied, but must be clearly established, or at the very least, clearly
inferable from the provisions of the contract itself.
EXAMPLE: When I was 7 years old, my father availed a college educational
plan payable for 5 years for me. I however received a scholarship grant to
study in London. Thus, I can transfer the rights I acquired from the educational
plan paid by my father to my brother.
Jammi got a condominium in Eastwood on an installment basis payable in 5
years. On his 5th year of paying the condo, Jammi received a 5-year contract
offer to work in New Zealand. He cannot miss the opportunity so he transferred
the rights and the obligation to pay for the remaining months for his
condominium to his brother.
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Atty. Francis Joseph Ampil

CHAPTER 3 1. Future and uncertain - in order to constitute an event as condition

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, is
demandable at once.
Every obligation which contains a resolutory condition shall also be
demandable, without prejudice to the effects of the happening of the event.
(1113)
1ST PARAGRAPH: Pure obligations are characterized by its immediate
demandability. It is not subject to any condition or any specific date.
However, this quality must not be understood as requiring the obligor or debtor
to comply immediately with his/her obligation. A distinction must be made
between the immediate demandability of the obligation and its performance or
fulfillment by the obligor or debtor who may be granted by the court a
reasonable period of performance. The period remains pure even when such
period is fixed by the court.
EXAMPLE: Aura has executed a promissory note promising to pay her P5,000
debt to Marvin upon Marvin’s demands and without fixing any particular date
for payment. Aura’s obligation is now immediately due and demandable, for
Marvin may rely with wording of “upon demand”
2ND PARAGRAPH: Conditional obligations’ effectivity is subordinated to
the fulfillment or non-fulfillment of a future or an uncertain fact or event. Its
consequences are subject or dependent on the fulfilment of a condition.
EXAMPLE: Ivan promises to give Jammi P10,000 if he wins the Family Feud
Game organized by DLSU-COL. The obligation can only be demandable upon
the winning of Jammi.
it must not only be in the future but it must also be uncertain meaning,
its very occurrence and time of occurrence is uncertain
2. Past but unknown
- past event unknown to the parties
- there is a knowledge to be acquired in the future of a past
event which at the moment is unknown to the parties
interested
2 Principal Kinds of Conditions
(As to effect)
1. Suspensive condition (condition precedent or condition
antecedent)
- performance or fulfillment of the condition results in the
birth or acquisition of the right contemplated in the
obligation
- the demandability of the obligation is suspended until the
happening of a future and uncertain event which constitutes
the condition
- signifies a future and uncertain event upon the fulfillment of
which the obligation becomes effective.
2. Resolutory condition (condition subsequent)
- when the fulfillment of the condition results in the
extinguishment or loss of rights arising out of the
obligation.
Distinctions between suspensive and resolutory conditions.
The difference between the two conditions is very clear; both bear an
influence on the existence of the obligation, but in diametrically opposed
manner.

Condition - a future and uncertain event in which the effectivity or

extinguishment of obligations depends upon.

Characteristics of condition

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Other Classification of Obligation

SUSPENSIVE RESOLUTORY
I. (As to cause or origin)
Once fulfilled, obligation arises Once fulfilled, obligation is
1. Potestative – performance or fulfillment of condition depends upon extinguished
will of the debtor
If it does not take place, the tie of If it does not take place, the tie of law
2. Casual – performance or fulfillment of condition depends upon
law (juridical or legal tie) does is consolidated
chance and/or upon will of a third person not appear
3. Mixed – performance or fulfillment of condition depends partly upon
will of a party to the obligation and partly upon chance and/or the will Until the first takes place, the Its effects flow, but over it, hovers the
of a third person existence of the obligation is a possibility of termination
mere hope
II. (As to possibility)

1. Possible – capable of fulfillment according to nature, law, public When obligation is demandable at once.
policy, or good customs
2. Impossible – not capable of fulfillment according to nature, law, An obligation is demandable at once —
public policy, or good customs
(1) when it is pure (Art. 1179, par. 1.);
III. (As to mode) (2) when it is subject to a resolutory condition (Ibid., par. 2.); or
(3) when it is subject to a resolutory period. (Art. 1193, par. 2.)
1. Positive – condition involves doing of an act
2. Negative – condition involves omission of an act

IV. (As to divisibility) Article 1180. When the debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with a period, subject
1. Divisible – condition susceptible of partial performance to the provisions of Article 1197.
2. Indivisible – condition not susceptible of partial performance
This provision provides that obligation shall be deemed to have a period if the
V. (As to number) debtor has bound himself/herself to pay when his/her means permit him/her
to do so. Hence, the duration of the period is subject to the will of the debtor.
However, if the creditor and debtor cannot agree on a period, they can resort
1. Conjunctive – several conditions, all must be performed to the courts for the determination of the duration of the period in accordance
2. Alternative – several conditions, only one must be with Article 1197. The period cannot be changed once fixed by the courts.
performed
Period - a future and certain event upon the arrival of which the obligation
VI. (As to form) subject to it either arises or is extinguished

1. Express – condition is expressly stated As when the debtor binds himself/herself to pay:
2. Implied – condition is merely inferred
a. “Little by little”

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b. “As soon as possible”
c. “From time to time”
d. “As soon as I have money”
e. “At any time I have the money”
f. “In partial payments”
g. “When I am in a position to pay”
Article 1181. In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. (1114)
Suspensive Condition - If the obligation depends upon a suspensive
condition, the acquisition of rights by the obligee or creditor depends on the
occurrence of the event which constitutes the condition. Hence, the birth or
effectivity of the obligation is suspended until the happening or fulfillment of
the event which constitutes the condition. If the suspensive condition does not
take place, the parties would stand as if the conditional obligation had never
existed.
EXAMPLE: Gabs bought a lotto ticket and bet on her lucky numbers. She
won P100,000,000 which she can claim anytime with the condition that she
shows and surrenders her ticket as proof. Gabs cannot claim her prize if her
ticket is lost because surrendering of the ticket is a condition precedent to the
payment of the cash prize.
Resolutory Condition - When the obligation is subject to a resolutory
condition, it becomes demandable immediately after it is established. Rights
arising from the obligation are acquired immediately by the obligee or creditor.
However, non-compliance with or non-fulfillment of the condition resolves the
contract by force of law without need of judicial intervention.Thus, although
rights are immediately vested in the obligee or creditor upon the constitution
of the obligation, such rights are always subject to the threat or danger of
extinction.
EXAMPLE: Elysse gave Hannah a 700 sqm land in Bohol. Written in contract
is the resolutory condition to build a rest house within a period of 2 years from
the date of transfer. 2 years have passed but no rest house was built, thus,
the rights over the land that Hannah acquired are now extinguished. Rights
over the land are reverted to Elysse.
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 a third person, the obligation shall take effect in
conformity with the provisions of this Code. (1115)
As regards the cause upon which its fulfillment depends, a condition may be
either potestative, casual or mixed.
FIRST SENTENCE: Only applicable to suspensive conditions.
1. Potestative / Facultative condition
- a condition suspensive in nature and which depends upon the sole
will of one of the contracting parties.
- one whose fulfillment depends exclusively upon the will of either one
of the parties to the obligation.
(Suspensive) Conditional obligation void – where the potestative
condition depends solely upon the will of the debtor, the conditional
obligation shall be void – its validity and compliance is left to the will of the
debtor and it cannot be legally demanded
The law expressly states that the conditional obligation shall be void if it is
subject to a potestative condition whose fulfillment depends exclusively upon
the will of the debtor. To allow conditions whose fulfillment depends
exclusively upon the will of the debtor would be equivalent to
sanctioning obligations which are illusory. What may depend upon the
exclusive will of the debtor is ONLY the time within which the condition
shall be fulfilled.
EXAMPLE: Marvin owes Elysse P20,000. Since they are friends, Elysse did
not give Marvin a deadline for the payment, hence, Marvin just told her that he
will pay her once he sells the condo in which he lives. Both conditions and
obligations are void since Marvin(debtor) is telling Elysse(creditor) that he will
pay his debt whenever he wants.
(Suspensive) Conditional obligation valid - If the condition depends
exclusively upon the will of the creditor, the obligation is valid. Normally,
the creditor is interested in the fulfillment of the obligation because it is for
his/her benefit. It is up to him/her whether to enforce his/her right or not.
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EXAMPLE: Aura loaned P500,000 from Gabs and stated that she will pay the
money she owed her upon her demand. The obligation and condition is valid
since it depends exclusively upon the will of Gabs (creditor).
(Resolutory) Conditional obligation valid - A condition which is both
potestative (or facultative) and resolutory may be valid, even though the
condition is left to the will of the obligor or debtor. It is because it is but
natural that the debtor is interested in the fulfillment of the resolutory
condition since it is only by such fulfillment that he can reacquire the
rights which have already been vested in the obligee or creditor upon
the constitution of the obligation.
EXAMPLE: Ivan contracted the services of Jammi for his printing business.
Jammi then ordered printers from Japan. They both agreed that should the
machines do not arrive in 6 months, Ivan can cancel the contract at his option.
The condition is valid even if it is made upon the will of Ivan (obligor) since it
is resolutory in nature.
2. Casual condition
- a condition suspensive upon chance or upon the will of a third
person.
- If the fulfillment of the condition depends upon chance and/or the will
of a third person, the obligation including such condition shall take
effect.
- When the fulfillment of the condition does not depend on the will of
the obligor, but that on a third person who can in no way be
compelled to carry it out, and it is found by the court that the obligor
has done all in his power to comply with his obligation, his part of the
contract is deemed complied with and he has a right to demand
performance of the contract by the other party.
EXAMPLE: Hannah binds herself to sell her limited edition Avengers
merchandise to Ivan if he wins the case pending before the Supreme Court.
3. Mixed condition
- a condition which depends partly upon chance and partly upon the
will of a third person
- If fulfillment of the condition depends partly upon the will of a party to
the obligation and partly upon chance and/or the will of a third person,
the obligation including such condition shall take effect
EXAMPLE: Jammi purchased a house worth P3,000,000 from Elysse. He has
already paid P2,000,000, and the payment of his P1,000,000 balance is
subject to the condition that the house shall be vacated by the occupants and
that Elysse shall ensure that the premises shall be vacated. The fulfillment of
the condition depends partly upon the will of Jammi (debtor) and the will of the
occupants (third party)
Article 1183. Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which depends
upon them. If the obligation is divisible, that part thereof which is not affected
by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be considered as not having
been agreed upon. (1116a)
The condition upon which an obligation is made to depend may also be
classified as possible or impossible.
It is possible - when it is capable of realization not only according to its nature,
but also according to the law, good customs and public policy.
It is impossible - when it is NOT capable of realization either according to its
nature or according to law, good customs or public policy.
This provision refers to suspensive conditions. It applies only to cases
where the impossibility already existed at the time the obligation was
constituted. If the impossibility arises after the creation of the obligation,
Article 1266 governs.
2 Kinds of Impossible Conditions
1. Physically impossible conditions - when they, in the nature of
things, cannot exist or cannot be done;
2. Legally impossible conditions - when they are contrary to law,
morals, good customs, public order, or public policy
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Effect of impossible conditions
1. Conditional obligation void. - Impossible conditions as well as
those which are contrary to good customs or public policy and those
which are prohibited by law shall annul the obligation which
depends upon them. BOTH the obligation and the condition are
VOID. The reason behind the law is that the obligor knows his
obligation cannot be fulfilled. He/She has no intention to comply
with his/her obligation.
EXAMPLE: Elysse told Hannah that she will pay for her condo’s
association fees provided that Hannah rob Jammi’s house. Both the
condition and obligation are void as they are dependent to an
impossible condition, contrary to public policy.
2. Conditional obligation valid. - If the condition is NEGATIVE-not
to do an impossible thing, it is disregarded and the obligation is
rendered PURE and VALID. The condition is always fulfilled
when it is NOT TO DO an impossible thing so that it is the same
as if there were no condition. The negative condition may be not to
give an impossible thing.
EXAMPLE: Gabs promised to give Ivan a motorcycle provided that
he will not anymore engage in a physical fight with Jammi. The
condition is disregarded and the obligation is deemed valid.
3. Only the affected obligation void. - If the obligation is DIVISIBLE
the part thereof not affected by the impossible condition shall
be VALID.
EXAMPLE: Aura told Marvin that she will give him P30,000 if he was
able to sell her car and a condo if he physically- assault Ivan. Aura’s
obligation to give P30,000 is valid but the obligation to give a condo
is void since it depends upon an impossible condition.
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, for its
existence, ONLY the condition is VOID
EXAMPLE: Gabs obligates herself to give a Macbook to Hannah.
Hannah then later agreed to steal Ivan’s reviewers before Gabs gives
her the Macbook. The condition to steal Ivan’s reviewer is void, but
the pre-existing obligation of Gabs to give Macbook to Hannah is
valid.
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
indubitable that the event will not take place. (1117)
This provision refers to POSITIVE CONDITIONS - involves the
performance of an act or the fulfillment of an event
Obligation is extinguished:
1. As soon as the time expires without the event taking place
2. As soon as it has become indubitable that the event will not take
place although the time specified has not yet expired.
EXAMPLE: Jammi obliges himself to give Marvin a resort in La Union if the
latter marries Elysse before he reaches the age of 30. Marvin married another
woman named Olivia when he was 28. Thus, the obligation is now
extinguished because it becomes indubitable that the event will take place.
Article 1185. The condition that some event will not happen at a determinate
time shall render the obligation effective from the moment the time indicated
has elapsed, or if it has become evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled at such time
as may have probably been contemplated, bearing in mind the nature of the
obligation. (1118)
This provision refers to NEGATIVE CONDITION -involves the non-
performance of an act or the non-fulfillment of an event.
Obligation shall become effective and binding:
1. from the moment the time indicated has elapsed without the event
taking place;or
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2. from the moment it has become evident that the event can not occur,
although the time indicated has not yet elapsed
2ND PARAGRAPH: The intention of the parties, taking into consideration
the nature of the obligation, SHALL GOVERN IF NO TIME has been fixed for
the fulfillment of the condition. This rule may also be applied to positive
conditions.
EXAMPLE: Aura obliges herself to pay Gabs P500,000 if she is not yet
married by December 31, 2020. Gabs married her fiance on January 2, 2021.
Aura has the obligation to pay the P500,000 because the time indicated
elapsed without the event taking place.
Article 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment. (1119)
This provision enunciates the constructive fulfillment of a SUSPENSIVE
CONDITION. It applies to cases where the obligor intentionally impedes
the fulfillment of a condition which would entitle the obligee to exact
performance from the obligor.
3 Requisites for the Application of Article 1186
1. Condition is suspensive
2. Obligor prevents fulfillment of condition
3. He acts voluntarily or intentionally
The law DOES NOT require that the obligor acts with malice or fraud, as long
as his purpose is to prevent the fulfillment of the condition, the condition is
deemed fulfilled. He should not be allowed to profit from his own fault or bad
faith to the prejudice of the obligee.
EXAMPLE: Ivan agreed to give Jammi a 10% commission if he could sell his
sedan at P300,000. Jammi found a buyer who decided to buy the car upon
the terms prescribed by Ivan. To evade the payment of the 10% commission,
Ivan sold the car for P280,000 without the aid of Jammi. In this case, Jammi
has duly performed the condition stated by Ivan, Ivan however purposely
prevented it, thus the condition is deemed fulfilled. And Ivan is liable and
obliged to give Jammi the 10% commission.
In a reciprocal obligation like a contract of sale, both parties are mutually
obligors and also obligees. (Article 1167)
Reciprocal obligation
- there exists a duty owed by one individual to another and vice versa.
- one party is bound to perform a prestation in exchange for the other
party’s performance.
- bears upon or binds 2 parties in an EQUAL manner
EXAMPLE: Elysse promised and agreed to sell her farm to Aura provided that
the latter secure a loan from BPI. Aura applied for a loan. However, after a
while, Elysse changed her mind about selling the farm. She then called
Marvin, a BPI officer and induced him not to grant Aura the loan. In here, the
condition is deemed complied and Elysse is liable to sell her farm to Aura.
This Article ALSO applies to an obligation subject to a resolutory condition
with respect to the debtor who is bound to return what he has received upon
the fulfillment of the condition.
EXAMPLE: Hannah obliges herself to allow Ivan to occupy her condo in
Eastwood, as long as she is assigned in the Masbate provincial office. Upon
learning that Hannah would be transferred to the QC headquarters, he
induced the HR manager to assign Jammi instead. Hannah’s obligation is
now extinguished as the fulfillment of the resolutory condition was voluntarily
and intentionally prevented by Ivan. Hence, Ivan must vacate the condo.
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 prestations upon the
parties, the fruits and interests during the pendency of the condition shall be
deemed to have been mutually compensated. If the obligation is unilateral, 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 constituting 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. (1120)
This article is applicable only to suspensive conditions where there was
fulfillment. The effects of conditional obligation to give shall retroact to the date
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of the constitution of the obligation if the suspensive condition had been If the 5% discount would be applied to the months pending the fulfillment of
fulfilled. condition is upon the court’s discretion.

Retroactive effects of fulfillment of suspensive condition:

Retroactive effects as to fruits and interests in obligations to give – for
OBLIGATIONS TO GIVE OBLIGATIONS TO DO OR NOT TO practical reasons, the Art. 1187 DOES NOT REQUIRE the delivery of fruits or
DO payment of interests accruing before the fulfillment of the suspensive condition

Becomes demandable only upon RECIPROCAL OBLIGATIONS UNILATERAL OBLIGATIONS

the fulfillment of the condition
NO RETROACTIVITY - because the NO RETROACTIVE EFFECT -
Once the condition is fulfilled, its NO FIXED RULE is provided. fruits and interests received during the because they are gratuitous. The
effects shall RETROACT TO However, this DOES NOT mean that pendency of the condition are deemed debtor receives nothing from the
THE DAY WHEN THE RETROACTIVITY RULE is not to have been mutually compensated. creditor. Thus, fruits and
OBLIGATION WAS applicable. This rule is necessary for purposes of interests belong to the debtor
CONSTITUTED The courts are empowered by the use convenience since the parties would during the pendency of the
Reason: The condition is ONLY of sound discretion and bearing in not have to render mutual accounting condition
an ACCIDENTAL ELEMENT of mind the intent of the parties, to of what they have received. Fruits here UNLESS a contrary intention
the contract; an OBLIGATION determine, in each case, the may be natural, industrial, or civil fruits appears
CAN EXIST without being subject retroactive effect of the suspensive
to a condition. condition that has been complied
EXAMPLES:
with. It INCLUDES the POWER to
Rule on Retroactivity has NO DECIDE that the fulfillment of the
APPLICATION to REAL condition shall (1) have no retroactive Reciprocal: Ivan agreed to sell his Laguna farm to Jammi provided that he
CONTRACTS as they are effect or (2) from what date such passed the November 2021 Bar exams. If Jammi passes the Bar, the
perfected only by delivery of the retroactive effect shall be reckoned obligation becomes demandable. Jammi is entitled to all the interest that his
object of obligation. money (which he will pay Ivan) may earn, while Ivan is entitled to the fruits
which the farm has produced during the pendency of the condition.

EXAMPLES:
Obligations to Give: On January 17, 2020 Hannah agreed to sell her land in
Bicol to Marvin for P1,000,000 should Marvin win his custody case. Marvin
won his custody case on October 9, 2020. Before October 9, Marvin has no
right to demand the sale of land by Hannah. However, when the condition was
fulfilled on October 9, it reflects that Marvin was entitled to the land beginning
from January 17.
Obligations to do or nor to do: Jammi pays his rent annually. On February 1,
Elysse agreed to cut 5% from Jammi’s monthly rent provided that Jammi
makes his first real estate sale. Jammi sold a 2-bedroom condo on August 7.
Unilateral: Hannah agreed to sell her strawberry farm to Gabs if the latter
passes all her subjects in the current term. Pending the happening of the
condition, Hannah is entitled to the strawberries and other fruits the the farm
may produce. She will only deliver the title of the farm to Gabs once the
condition has been fulfilled, unless a contrary intention appears.
Article 1188. The creditor may, before the fulfillment of the condition, bring
the appropriate actions 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. (1121a)

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Paragraph 1 (RIGHTS OF THE CREDITOR) authorizes the creditor to take
any appropriate actions for the preservation of creditor’s right during the
pendency of the condition.
Example: On Feb. 15, 2020, Marvin obliged himself to sell a parcel of land to
Jammi if he passed the Bar exams in November, 2020. From the time the
obligation was constituted and pending the happening of the condition
(passing the Bar Exams) Jammi may cause the annotation of the condition in
the certificate of title in the Register of Deeds where the land is located, to
preserve his right over the parcel of land.
Remedies of the creditor:
1. Action for prohibition restraining the alienation of the thing pending the
happening of the suspensive condition
2. Petition for the annotation of the creditor’s right
3. Action to demand security if the debtor has become insolvent
4. Action to set aside alienations made by the debtor in fraud of creditors
5. Actions against adverse possessors to interrupt the running of
prescriptive period
Paragraph 2 (RIGHTS OF THE DEBTOR) states that in order that debtor may
recover what he has paid by mistake, during the pendency of the condition,
the following requisites may be present:
1) The debtor paid the creditor before the fulfillment of the condition;
2) Payment made by debtor was through mistake and error;
The action to recover what was paid by mistake should be made before the
fulfillment of the condition.
Solutio indebiti- based on the principle that no one shall enrich himself at the
expense of another.
Example: Jammi obliged himself to pay Ivan P20,000 if a PAL plane crashes
at Cebu before Dec. 30, 2012. After the obligation was constituted and before
December 30, 2012, a plane crashed in Cebu. Jammi honestly and believing
that the condition was fulfilled paid the P20,000 to Ivan. It turned out however
that it was a Cebu airline that crashed. Thus, Jammi may recover the amount
paid to Ivan by mistake for the reason that the condition has not yet been
fulfilled.
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 disappears 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 the creditor;
(4) If it deteriorates through the 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 benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right
than that granted to the usufructuary. (1122)
Requisites for application of Article 1189.
1. The obligation is a real obligation-obligation to give, a subject is a
thing and the obligor must deliver to the obligee
2. The object is a specific or determinate thing;-distinct from the other
of the same class
3. The obligation is subject to a suspensive condition;
4. The condition is fulfilled; and
5. There is loss, deterioration, or improvement of the thing during the
pendency of the happening on one condition.
Kinds of loss in civil law:
1. Physical loss--when a thing perishes as when a house is burned
and reduced to ashes; or
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Atty. Francis Joseph Ampil
2. Legal loss--when a thing goes out of commerce (when a thing is
expropriated), or when a thing that is legal before becomes illegal
Example: during the Japanese occupation, American dollars had
become impossible since their use was forbidden by the belligerent
occupant.
3. Civil loss--when a thing disappears in such a that its existence is
unknown (a particular bag has been missing for sometime) or even
if known, it cannot be recovered, whether as a matter of fact (a
particular diamond ring is dropped in the middle of the Atlantic
Ocean) or of law, ( a property is lost through prescription)
Rules in case of loss etc. of thing during pendency of suspensive
condition.
1. Loss of thing without debtor’s fault. -obligation is extinguished
Example: Aura obliged herself to give Hannah a determinate car if she
passes the Bar Exams in November the current year. If during the
pendency of the condition the car was lost through fortuitous event
without the fault of Aura, the obligation to deliver the car is extinguished
even if the condition is fulfilled later.
2. Loss of thing through debtor’s fault. -the creditor is entitled to
deman for damages
Example: In the same example, if the loss occurred because of the
negligence of Aura, Hannah will be entitled to to demand damages
(Art. 1170)
3. Deterioration of thing without debtor’s fault – the creditor will bear
the deterioration or impairmentt
A thing deteriorates when its value is reduced or impaired with or
without the fault of the debtor. -
Example: Again in the same example, 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 Aura, thereby
reducing its value to 40,000 (from 50,000), Hannah will have to suffer
the deterioration of impairment in the amount of P10, 000.
Example 2: Jack obliged himself to give Tonix a determinate Toyota
car if Tonix passes the October CPA Exams. During the pendency of
the condition, the car was partially damaged by flood, without the
fault on the part of Jack. If the condition is fulfilled, Ian will bear the
impairment.
4. Deterioration of thing through debtor’s fault. – the creditor can
cancel the obligation with damages or have the obligation fulfilled
with damages
Example: In the same example (1), Hannah may choose between:
a. Rescission (or cancellation) of the obligation with damages;
in the case Aura is liable to pay P50,000, value of the car
before its deterioration plus incidental damages, if any; or
b. Fulfilment of the obligation also with damages (see Art.
1191); in this case Aura is bound to Hannah to give the car
and pay P20,000 plus incidental damages, if any.
5. Improvement of thing by nature or by time. – the creditor shall
have the benefit of the improvement
A thing is improved when its value is increased or enhanced by
nature or by time or at the expense of the debtor/creditor.
Example: Who gets the benefit if the market value of the car
increased?
The improvement shall inure to the benefit of Hannah. Inasmuch as
Hannah would suffer in case of deterioration of the car through
fortuitous event, it is but fair that she should be compensated in case
of improvement of the car instead.
6. Improvement of thing at expense of debtor.
Example: During the pendency of the condition, Aura had the car
painted and its seat cover changed at her expense.
In this case, Aura will have the right granted to a usufructuary with
respect to improvements made on the thing held in usufruct.
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3. The fruits and interests thereon should also be returned after

OBLIGATIONS TO GIVE
Obligation is extinguished and parties
are obliged to return to each other what
they have received under the obligation.
o There is a return to the status
quo
o Obligation of mutual
restitution is absolute, not
only to the things received nut
also to fruits and interest
o If in the possession of a third
person (legally), remedy of
the party entitled to restitution
is against the other
OBLIGATIONS TO DO OR NOT TO
DO
In some obligations, courts shall
determine the retroactive effect of the
fulfillment of such condition as in the
case where condition is suspensive. The
courts in exercise of discretion may even
disallow retroactivity taking into account
the circumstances of the case.
deducting of course the expenses made for the production, gathering
and preservation, if any.
4. The rules given in Art. 1189, N CC will apply to whoever has the duty
to return in case of loss, deterioration or improvement of the thing.
5. The courts are given power to determine the retroactivity of the
fulfillment of a resolutory conditions.
Example : Abing gave Ivy a parcel of land on condition that Ivy will pass
the Bar Exams on November, this year. Ivy did not pass the Bar Exams.
The obligation is extinguished and therefore, it is as if there was never an
obligation at all. Ivy will therefore have to return both the land and the
fruits he had received there from the moment Abing has given him the
land.

Usufruct – temporary use and enjoyment of another’s property with the basic Article 1191. The power to rescind obligations is implied in reciprocal ones,
obligation of preserving it 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
Article 1190. When the conditions have for their purpose the extinguishment obligation, with the payment of damages in either case. He may also seek
of an obligation to give, the parties, upon the fulfillment of said conditions, shall rescission, even after he has chosen fulfillment, if the latter should become
return to each other what they have received. impossible.

In case of the 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 the obligations to do and not to do, the provisions of the second
paragraph of Article 1187 shall be observed as regards the effect of the
extinguishment of the obligation. (1123)
Effects when resolutory condition is fulfilled:
1. The obligation is extinguished. (Art. 1181, NCC)
2. Because the obligation is extinguished and considered to have had
no effect, the parties should restore to each other what they have
received.
The court shall decree the rescission claimed, unless there be just cause
authorizing 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. (1124)
Reciprocal obligations are those which are created or established at the same
time, out of the same cause, and which result in mutual relationships of
creditor and debtor between the parties.
FIRST PARAGRAPH: Established the principle that if one of the parties fails
to comply with what is incumbent upon him, there is a right on the part of the
other to rescind (resolve or remove) the obligation

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This condition is implied as a general rule in all reciprocal obligations. Since it
has the effect of extinguishing rights which are already acquired or vested, it
is resolutory in character.
SECOND PARAGRAPH: The right to rescind or resolve the obligation is a
right which belongs to the injured party alone.
THIRD PARAGRAPH: It is essential that the rescission must be invoked
judicially. The party entitled to rescind must invoke judicial aid by filing the
proper action for rescission.
The mere failure of a party to comply with what is incumbent upon him does
not ipso jure produce the rescission or resolution of the obligation. As stated
by the Supreme Court, it is the judgment of the court and not the mere will of
the vendor which produces the rescission of the sale.
Kinds of obligation according to the person obliged.
1. Unilateral - when only one party is obliged to comply with a
prestation.
EXAMPLE: Aura needs to pay Gabs 500 pesos
2. Bilateral - when both parties are mutually bound to each other. In
other words, both parties are debtors and creditors of each other.
a. Reciprocal - arise from the same cause and in
which each party is a debtor and creditor of the other, such
that the performance of one is designed to be the equivalent
and the condition for the performance of the other.
GENERAL RULE: They are to be be performed
simultaneously or at the same time. Non- fulfillment gives
the other the right to demand rescission
EXAMPLE: Aura will give gab 500 provided that gab will
give her 2 starbucks drinks (if di ka nagbayad, walang kape
so reciprocal)
b. Non-reciprocal - those which do not impose
simultaneous and correlative performance; performance of
one party is not dependent upon the simultaneous
performance by the other
EXAMPLE: Aura will give gab 500 now, gab needs to deliver civil code codal
tomorrow
Breach of contract – failure without legal reason to comply with the terms of
contract
Breach of obligation – failure or refusal by a party without legal reason or
excuse to perform, in whole or in part, the obligation or undertaking which is
incumbent upon him
Substantial breach – depending on the circumstances of the case; the court
will have to assess the facts first
Breach of faith – obligor’s failure to comply with an obligation already extant,
not a failure of a condition to render binding that obligation
Choice of remedy in reciprocal obligations:
1. Action for rescission + damages
2. Action for specific performance + damages (if specific performanceis
impossible, rescission may still be sought)
*Previous demand by obligee for the fulfillment of the obligation is necessary
before the obligor can be considered in default. In the absence of demand,
the oblige has no cause of action as the obligor would not yet be considered
in breach of his contractual obligation*
*If there is a valid basis for the extension of performance of the reciprocal
obligation, the court will not decree rescission but will rather fix a period for
fulfillment*
Rescission
• resolution or cancellation of the contract; applicable to reciprocal
obligations; when a party asks for this as remedy, he impliedly
recognizes its existence. Its effect is to put an end to the contract in
all its parts as though it never were. A party may demand rescission
if he is ready, willing, and able to comply with his own obligations
while the other is not capable to perform his own. Must not be
contrary to law, morals, good customs, public order, or public policy
• subject to judicial scrutiny even if extrajudicially enforced
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• vested in the RTC cannot be determined which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his own damages. (n)
Restrictions on the right to rescind
This article contemplates two situations:
1. . Due process must be observed
2. Right to rescind is subordinated to the rights of third persons who 1. First infractor known.--One party violated his obligation; subsequently,
acquired the thing in good faith the other also violated his part of the obligation.
3. He must respect the power of the Court to fix period in lieu of 2. First infractor cannot be determined--One party violated his obligation
decreeing rescission followed by the other, but it cannot be determined which of them was the
4. Slight breaches of the contract will not justify rescission first infractor.
5. Judicial or notarial act is necessary before a valid rescission can take
place
Rules if Both Parties Have Committed a Breach: The above rules
are deemed just. The first one is fair to both parties because the
Cases when judicial approval is not needed in rescission: second infract or, though they would derive some advantage by his
own act or neglect. The second rule is likewise just, because it is
1. Express stipulation of automatic rescission without need of judicial presumed that both parties at about the same time tried to reap some
action benefits. (Report of the Code Commission)

a. Takes effect only after the creditor has notified the debtor of
his choice of rescission
2. In the absence of an express stipulation, judicial approval is needed
unless debtor voluntarily returned the thing. But, if there has been no
delivery yet, judicial approval is not needed to rescind the contract.
Example: Jack agreed with Richard that he will sell his brand new 8-
string guitar to Richard. Jack delivered to Richard the 8-string guitar,
not mentioning to Richard that it is defective. Richard also paid Jack
with half of the amount with fake money. In this case, the remedy is
to let the courts temper each liability to the other.

Inapplicability of the article:

SECTION 2: Obligations with a Period
1. Sales of real property by installments – governed by Maceda Law
2. Sales of personal property by installments – governed by Recto Article 1193. Obligations for whose fulfillment a day certain has been fixed,
Law shall be demandable only when that day comes.
3. Contracts of partnership – governed by the Law on Partnership
Obligations with a resolutory period take effect at once, but terminate upon
Effects of rescission – destroys or extinguishes the obligation to pay arrival of the day certain.

Arbitration clause – renders rescission impossible since this mandates
parties to resolve differences b arbitration and not through an extrajudicial
rescission or judicial action
Article 1192. In case both parties have committed a breach of the obligation,
the liability of the first infractor shall be equitably tempered by the courts. If it
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.
(1125a)
A period is a future and certain length of time which determines the effectivity
or the extinguishment of obligation.

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Obligation with a period is one whose consequences are subject in one way
or another to the expiration of said period or term. A day certain is understood
to be that which must necessarily come, although it may not be known when.
Period and Condition Distinguished:
As to fulfillment - A period is a certain event which must happen
sooner or later while a condition is an uncertain event.
As to time – a period refers only to the future while a condition may refer
to a past unknown event.
As to influence or effect on the obligation – the period fixes the time
of the effectivity of the obligation while a condition may cause the
demandability of the obligation to arise or to terminate.
Example: Lleina promised to Jack that she will buy and give him an Ibanez 8-
string guitar on June 1, 2021. When June 1, 2021 come, Lleina’s obligation to
give will be demandable.
Requisites for a valid term or period:
1. Future
2. Certain (may be extended by mutual agreement)
3. Possible physically and legally
Kinds of period / term:
1. According to effect
a. Suspensive period (ex die) – obligation begins only from a
day certain upon the arrival of the period
b. Resolutory period (in diem) – obligation is valid up to a day
certain and terminates upon the arrival of the period
2. According to source
a. Legal period – provided for by law
b. Conventional or Voluntary period – agreed to by parties c.
Judicial period – fixed by the court
3. According to definiteness
a. Definite period – fixed or known when it will come
b. Indefinite period – not fixed or not known when it will come
(courts are usually empowered by law to fix the same, see Art.
1197)
c.
Article 1194. In case of loss, deterioration or improvement of the thing before
the arrival of the day certain, the rules in article 1189 shall be observed. (n)
Effect of loss, deterioration, or improvement before the arrival of period.
Example: If Elysse was suppose to deliver to Marvin a particular car on Feb.
20, 2021 but the car was destroyed by fortuitous event in Feb 14, 2021, the
obligation is extinguished.
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.
(1126a)
Effect Of Payment Before Arrival of Period
This article which is similar to Article 1188, NCC, in an obligation to give,
allows the recovery of what has been paid by mistake before the fulfillment of
a suspensive condition.
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Example: Erin owes Grant P20,000.00, which was supposed to be paid on
December 25 this year. By mistake, Erin paid his obligation on December 25
last year. Assuming that today is only June 30, Erin can recover the amount
plus interest therein. But Erin cannot recover, except the interest, if the debt
had already matured or if Erin had knowledge of the period.
Applicability – applies only to obligations to give. The creditor cannot
unjustly enrich himself by retaining the thing or money received before the
arrival of the period. This article cannot apply to obligations to do or not to do
because it is physically impossible to recover the service rendered, and as to
the latter, as the obligor performs by not doing, he cannot recover what he
has not done
Presumption – debtor knew the debt was not yet due. He has the burden of
proving that he was unaware of the period. He may no longer recover the
thing or money once the period has arrived but he can recover the fruits or
interests thereof from the date of premature performance to the date of
maturity of the obligation
Reason – it is unfair if the creditor will be allowed to hold on to the thing
when it is not yet due and leave the debtor without relief
Difference with solutio indebiti – there is no existing debt or obligation to
pay the recipient in solutio indebiti
Situations when there can be no recovery even if conditions in the
article are present:
1. Obligation is reciprocal and there has been premature performance
on both sides
2. Obligation is a loan on which debtor is bound to pay interest
3. Period is exclusively for the benefit of the creditor because the
debtor by paying in advance loses nothing
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. (1127)
The general rule is that when a period is designated for the performance or
fulfillment of an obligation, it is presumed to have been established for the
benefit of both the creditor and the debtor.
Consequently, as a general rule, the creditor cannot demand the performance
of the obligation before the expiration of the designated period; neither can
the debtor perform the obligation before the expiration of such period.
Thus, it has been held that in a monetary obligation contracted with a period,
the debtor has no right, unless the creditor con
Presumption as to benefit of period:
1. Obligation subject to a fixed period – presumption is that the
period is intended for the benefit of both the creditor and debtor
*Debtor has no right to accelerate the time for the payment of the
obligation even if the tender includes an offer to pay not only the
principal but also the interests in full
2. Reciprocal contract – period must be deemed to have been
agreed upon for the benefit of both parties, absent language
showing that the term was
Exceptions:
1. Term is for the benefit of the debtor alone – cannot be compelled to
pay prematurely
2. Term is for the benefit of the creditor – may demand fulfillment even
before arrival of term but debtor cannot require him to accept
payment before the expiration of the stipulated period
Why creditor cannot be compelled to accept before period:
1. Interest expected to be realized will be lessened if premature
payment is made
2. Desire of creditor to have money invested safely instead of having it
in his hands
3. Usury Law: a special prohibition of payment of interest in advance
for more than a year (no longer operative under CB Circular No.
905)
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Computation of period – Administrative code of 1987 being the more Example: I will pay you as soon as possible. Here, the period is not
recent law governs the computation of legal periods fixed, so the court may fix the same because if this is not so the
obligation may never be complied with by the debtor.
1. Year – 12 months
2. Month – 30 days (unless it refers to a specific calendar month in Significance of the rule – ascertains the will of the parties and gives effect
which case it shall be computed according to the number of days the thereto. Lack of stipulation of the obligation as to period may be supplied by
specific month contains the court upon application for that purpose
3. Day – 24 hours
4. Night – sunset to sunrise Ultimate facts to be alleged in complaint

1. Facts showing that a contract was entered into, imposing on one of

the parties an obligation or obligations in favor of another
Article 1197. If the obligation does not fix a period, but from its nature and the 2. Facts showing or from which an inference may reasonably be
circumstances it can be inferred that a period was intended, the courts may drawn that a period was intended
fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the Period fixed cannot be changed by the courts:
will of the debtor.
1. Period agreed upon by parties
In every case, the courts shall determine such period as may under the 2. Period fixed by the court
circumstances have been probably contemplated by the parties. Once fixed 3. Period fixed in a final judgment
by the courts, the period cannot be changed by them. (1128a)
Cases where article was not applied
A term or period is judicial when the duration thereof is fixed by a competent
court in accordance with the causes expressly recognized by law. Once fixed 1. Stipulation in a contract that agent will turn over the proceeds of the
by a competent court, the period can no longer be judicially changed sale of the tobacco as soon as the same was sold
2. Duration of lease is left to the will of the lessor
Before fixing of period – obligation is suspended 3. Contract of lease had not been renewed
4. Obligation agreed upon is payable on demand
When the court will fix period: 5. Obligation is pure, simple, and unconditional
6. Duration of contracts of employment or service

1. When no period is mentioned, but it is inferable from the nature and

circumstances of the obligation that a period was intended.
Rationale: unless fixing of period is allowed, enterprising debtors
can easily find justifications for not fulfilling their obligations forever Article 1198. The debtor shall lose every right to make use of the period:
without being liable for the delay
(1) When after the obligation has been contracted, he becomes insolvent,
Example: Steff sold a parcel of land to Abing with a right of unless he gives a guaranty or security for the debt;
repurchase. No term is specified in the contract for the exercise of
the right. Then, the court is authorized to fix the period to repurchase. (2) When he does not furnish to the creditor the guaranties or securities which
he has promised;
2. When debtor binds himself to pay when means permit him to do so

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(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 attempts to abscond. (1129a)
General Rule: An obligation is not demandable before the lapse of period.
However, in any of the five (5) cases mentioned in Article 1198, the debtor
shall lose every right to make use of the period, that is, the period is
disregarded and the obligation becomes pure and, therefore, immediately
demandable.
1. When the debtor becomes insolvent. (Insolvency: the debtor suffers
from a lack of financial liquidity making it impossible to pay debts as
they fall due.)
Example: Jammi owes Aura P20,000.00 due and payable on
October 9. If Jammi becomes insolvent, say on August 1, Aura, can
demand immediate payment from Jammi even before maturity
unless he gives sufficient guarantee or security.
2. When debtor does not furnish guarantees or securities promised.
Example: Suppose in the same example, Jammi 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
Example: If the debt is secured by a mortgage on the house of
Jammi, but the house was burned and destroyed through his fault,
the obligation also becomes demandable unless Jammi gives a new
security equally satisfactory.
4. When debtor violates an undertaking.
Example: Now, suppose that Aura in the example agreed to the
period in
consideration of the promise of Jammi to repair her piano free of
charge.
The violation of this undertaking by Jammi gives Aura the right to
demand
immediate payment of the loan.
5. When debtor attempts to abscond. (mere attempt or intent to
abscond is sufficient)
Example: Before the due date of the obligation, Jammi (debtor)
changed his addresswithout informing Aura (creditor) and with the
intention of escaping fromhis obligation. This act of Jammi 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
ARTICLE 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. (1131)
An alternative obligation is one wherein various prestations are due but the
performance of one of them is sufficiently determined by the choice which, as
a general rule, belongs to the debtor.
Example: Marvin borrowed from Gabs P15,000. It was agreed that Marvin
could comply with his obligation by giving Gabs the P15,000, or a television
set, or by painting the brand new house of Gabs.
Delivery of either of the three given conditions is sufficient to comply with the
obligation. Gabs cannot be compelled to to accept, for instance, P7,000 and
half of the television set. (par 2)
Kinds of Obligations according to object:
1. Simple Obligation- There is only one prestation.
2. Compound Obligation- There are two or more prestations. It may
be:
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● Conjunctive Obligation- one where there are several
prestations and all of them are due.
● Disjunctive Obligation- one where one of two or more of
the prestations is due.
● Facultative obligation – debtor is bound to perform one
prestation or to deliver one thing with areserved right to
choose another prestation or thing as substitute for the
principal
Alternative obligation – one wherein various prestations are due but the
performance of one of them is sufficiently determined by the choice, which,
as a general rule, belongs to the debtor
Article 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 been the object of the obligation.
(1132)
General Rule: right to choose the prestation belongs to the debtor. Except if
expressly granted to creditor, or to a third person, when the right is given to
him by common agreement
Example: Hannah binds herself to deliver an Iphone 12 or a Macbook Air to
Elysse on March 8 and to communicate her choice on or before March 1. If
Hannah delays in making her selection, Elysse cannot exercise the right
because it is not expressly granted to her.
The right of the debtor to make a choice is not absolute. The right of choice is
subject to the following limitations:
1. The debtor cannot choose those prestations which are: (a)
impossible, (b) unlawful, or (c) which could not have been the object
of the obligation. These prestations are void.
2. The debtor has no more right of choice, when among the prestations
whereby he is alternatively bound, only one is practicable.
3. The debtor cannot choose part of one prestation and part of another
prestation.
Article 1201. The choice shall produce no effect except from the time it has
been communicated. (1133)
Until the choice has been made and communicated, the obligation remains
alternative. Once the notice of the election is given to the creditor, the
obligation ceases to be alternative and becomes simple. Such choice once
properly made and communicated is irrevocable and cannot, therefore, be
renounced.
The burden of proving that such communication has been made is upon him
who made the choice. The law does not require any particular form regarding
the giving of notice. It may, therefore, be made orally or in writing, expressly
or impliedly.
EXAMPLE: Aura owes Gab P500, she can either give Gab a pen, a paper or
an apple. Aura chose to give the apple. She must communicate her choice to
Gab and the obligation will cease to be an alternative obligation and just be a
simple obligation
Communication of notice that choice has been made:
1. Effect of notice – until choice is made, obligation remains
alternative
a. Once notice of election is given to the creditor, obligation
ceases to be alternative and becomes simple
b. Such choice once properly made and communicated is
irrevocable and cannot be renounced
c. Where choice is expressly given to the creditor, such
choice shall produce the same legal effects when
communicated to the debtor
2. Proof and form of notice – burden of proof that communication
has been made is upon him who made the choice
a. Form may either be in writing, verbal, implied, or by any
other unequivocal means
Effect of delay in making a selection - Right to make a choice is not lost.
Hence, if a complaint was filed in court:
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1. Court will make the choice
2. Court may order the debtor / creditor to make the choice within a
certain period
*Note: if there is any delay, the court will punish the one who did
not make the choice by ordering the other party to exercise the
right instead
Article 1202. The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one is practicable. (1134)
According to the article, when among several prestations whereby the debtor
is alternatively bound, only one prestation can be performed because all of
the others are impracticable, the debtor loses his right of choice altogether.
In other words, the obligation loses its alternative character; it becomes
a simple obligation.
EXAMPLE: Aura is supposed to pay Gab 500, she can either kill X, give her
drugs, or give her a phone. Aura loses the right to choose because only one
is practiceable. she can only legally do the third option which is to give the
phone.
However, the provision must be distinguished from the second paragraph of
Article. 1200. Under Art. 1202, there is only one prestation and the
obligation is converted into a simple one because the debtor loses his
right of election. Under par 2 of Art. 1200, there are still two or more
prestations which can be performed and the obligation is still alternative
because the debtor can still exercise his right of election.
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 damages. (n)
It is the very nature of an alternative obligation hat the debtor can make his
choice without the consent of the creditor. Hence, the right given the debtor to
rescind the contract and recover damages if, through the creditor’s fault, he
cannot make a choice according to the terms of the obligation. The debtor,
however, is not bound to rescind.
Since the debtor’s right of choice is rendered ineffective through the
creditor’s fault, his only possible recourse will be to bring an action to rescind
the contract with damages. Rescission creates the obligation to return the
things which were the object of the contract together with their fruits, and the
price with its interest.
Example: Marvin borrowed from Aura P20,000.00. It was agreed that instead
of P20,000.00, Marvin could deliver an Ipad, or clean Aura’s house for a
month.
If through the fault of Aura, the Ipad is destroyed, Marvin can rescind the
contract if he wants. In case of rescission, the amount of P20,000.00 must be
returned by Marvin with interest. Aura, in turn, must pay Marvin the value of
item one plus damages.
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 a basis the value of the last thing which
disappeared, or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be
awarded. (1135a)
This provision is only applicable in cases where the right of choice belongs to
the debtor and the loss or impossibility happened before selection was made.
Effects of loss or becoming impossible of objects of the obligation:
1. Some of the objects – even if through the fault of the debtor, the
latter is not liable since he has the right of choice and the obligation
can still be performed
2. All of the objects – credit or shall have the right to indemnity for
damages since the obligation can no longer be complied with. If lost
through a fortuitous event, obligation is extinguished.
Basis of indemnity – value of the last thing which disappeared. In case of
disagreement, it is incumbent upon the creditor to prove such value. Reason:
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upon loss or impossibility of the first thing or service, the last one is converted
into a simple obligation.
EXAMPLE: Aura agreed to deliver an apple, orange, mango but she loses the
first two, she is not liable for the same as the obligation can still be fulfilled by
delivering the mango. However, if she loses all, liability will be attached unless
she loses it due to a fortuitous event in which the obligation ceases.
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 responsibility of the debtor shall be governed by the following
rules:
(1) If one of the things is lost through a 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;
(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 with indemnity for
damages.
The same rules shall be applied to obligations to do or not to do in case one,
some or all of the prestations should become impossible. (1136a)
This provision is applicable only to cases where the right of choice belongs
to the creditor.
Rules in case of loss before creditor has made choice:
1. When thing lost due to fortuitous event – creditor can choose
among remainder
Example: Ivan obliged himself to deliver to Hannah a television set,
or a sofa bed or a laptop, or a printer. If the television set is lost
through a fortuitous event, Hannah can choose from among the
remainder or that which remains if three of the items are lost.
2. When thing lost through debtor’s fault – creditor may claim any of
the remaining presations with a right to damages, or the price of
that lost item, with a right to damages
Example: If the loss of the television set occurs through the fault of
Ivan, Hannah may claim the sofa bed or the laptop or printer with a
right to damages or the price of the television set also with a right to
damages.
3. When all things are lost through debtor’s fault – creditor can demand
payment of the price of any one of the item with a right to indemnity
for damages
Example: If all the items are lost through the fault of Ivan, then
Hannah can demand the payment of the price of any one of them
with a right to indemnity for damages.
4. When all things are lost due to fortuitous event – obligation is
extinguished (Art. 1174 shall apply)
Example: The obligation of Ivan shall be extinguished if all the items
which are alternatively the object of the obligation are lost through a
fortuitous event. In this case, Article 1174 shall apply.
Article 1206. When only one prestation has been agreed upon, but the obligor
may render another in substitution, the obligation is called facultative.
According to this provision, a facultative obligation is defined as an obligation
wherein only one object or prestation has been agreed upon by the parties to
the obligation, but which may be complied with by the delivery of another
object or the performance of another prestation in substitution.
Only one object or prestation is due, but if the obligor fails to deliver such
object or to perform such prestation, he can still comply with his obligation by
delivering another object or performing another prestation in substitution.
A facultative obligation is one where only one prestation has been agreed
upon but the obligor may render another in substitution.
Effects of loss:
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1. Before substitution – principal: if due to fortuitous event, General rule: When there are 2 or more debtors, or 2 or more creditors,
obligation is extinguished; otherwise, debtor is liable for damages;
substitute: not yet due, hence loss only extinguishes facultative the obligation is JOINT.
character of the obligation
2. After substitution – principal: debtor is not liable for the principal;
it is no longer due; substitute: liability of debtor depends on Exceptions:
whether or not the loss was due to his fault

a. when there is a stipulation in the contract that the obligation is

solidary

b. when the nature of the obligation requires liability to be solidary

c. when the law declares the obligation to be solidary

Consequently, where the obligation is silent with respect to the nature or

character of the right of the creditors or of the liability of the debtors, each of

the creditors is entitled to demand only for the payment of his proportionate
EXAMPLE: “I will give you my piano but I may give my television set as
a substitute.” In this obligation, only the piano is due. Hence, its loss share of the credit, while each of the debtors can be compelled to pay only his
through my fault will make me liable.
proportionate share of the debt
SECTION 4: Joint and Solidary Obligations
Classification of obligations:

ARTICLE 1207. The concurrence of two or more creditors or of two or

1. Individual obligation – only one obligor and one obligee
more debtors in one and the same obligation does not imply that each
2. Collective obligation – two or more debtors and/or two or more
one of the former has a right to demand, or that each one of the latter is
creditors. It may be joint or solidary.
bound to render, entire compliance with the prestation. There is a

solidary liability only when the obligation expressly so states, or when

the law or the nature of the obligation requires solidarity. (1137a)

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Joint Obligation (“To each his own.”) 3. The demand made by one creditor upon one debtor, produces the

effects of default only as between them, but not with respect to the
• each obligor answers only for a part of the whole liability and to each
others
obligee belongs only a part of the correlative rights.
4. Interruption of prescription caused by the demand made by one
• The whole obligation is to be paid/fulfilled proportionately by different
creditor upon one debtor, will not benefit toe co-creditors; neither, will
debtors and/or is to be demanded proportionately by the different
that demand interrupt the prescription of the obligation as to the other
creditors.
debtors

5. Insolvency of a debtor will not increase liability of co-debtors; neither

EXAMPLE: Aura and Mavin are joint debtors of Elysse for the amount of
will it allow a creditor to demand anything from the co- creditors
P1,000. Elysse can only demand P500 from Aura, and P500 from Marvin.
6. Vices of each obligation emanating from the personal defect of a

particular debtor or creditor will not affect the obligation or rights of

Synonyms
the others

1. mancomunada

2. mancomunada simple Solidary Obligation (One for all, all for one.”)

3. proportionate
• The relationship between the active and the passive subjects is so
4. pro rata
close that each of the former or of the latter may demand fulfillment

Consequences of joint obligations: of or must comply with the whole obligation.

• Each of the debtors is liable for the entire obligation and/or each one
1. Each debtor is liable only for a proportionate part of the entire debt
of the creditors has a right to demand entire compliance or
2. Each creditor, if there are several, is entitled to only a proportionate
satisfaction of the whole obligation from any or all of the debtors
part of the credit

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EXAMPLE: Ivan and Jammi are solidary debtors of Gab to the amount of When is an obligation solidary:

P5,000. Gab can demand the whole P5,000 from Ivan, and in turn Ivan can
a. Conventional/ Voluntary Solidarity – when the obligation
ask P2,500 reimbursement from Jammi.
expressly so states

a. Passive-solidarity - solidarity of the part of the debtors b. Legal Solidarity – when the law requires solidarity

b. Active solidarity – solidarity on the part of the creditors c. Real Solidarity – When the nature of the obligation requires

c. Mixed solidarity – each one of the debtors is liable to render, solidarity

and each one of the creditors has a right to demand, the entire
Note: it also exists when it is imposed in a final judgment
compliance with the obligation
against several defendants (aka, judicial solidarity
d. Conventional solidarity – solidarity is agreed upon by parties

e. Legal solidarity – solidarity is imposed by the law Some Instances Where the Law Imposes Solidary Liability

f. Real solidarity – solidarity is imposed by the nature of the

a. obligations arising from tort
obligation
b. obligations arising from quasi-contracts
Synonyms: c. legal provisions regarding the obligations of devisees and legatees

d. liability of principals, accomplices, and accessories of a felony

1. joint and several
e. bailees in commodatum
2. in solidum

3. mancomunada solidaria
Consequences of solidarity:
4. juntos o separadamente

5. individually and collectively 1. Passive solidarity – full payment made by anyone of the debtors

6. each will pay the whole value extinguishes the obligation. Payor can claim reimbursement from

co-debtors as regards corresponding shares

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2. Active solidarity – anyone of the solidary creditors can demand considered distinct from one another, subject to the Rules of Court

the entire obligation from any debtor. If a particular debtor has fully governing the multiplicity of suits. (1138a)

paid the entire obligation to one of the creditors, the other creditors
This Article gives us the presumption that when there are two or more debtors,
cannot demand anymore.
or two or more creditors, the obligation is JOINT and as a consequence:
May the obligation be joint on the side of the creditors and solidary on
a. The debt shall be divided into as many shares as there are
the side of the debtors or vice-versa? - YES “In such cases, the rules
creditors or debtors.
applicable to each subject of the obligation should be applied, the character
b. The credits or the debts will be distinct from one another, BUT
of the creditors or the debtors determining their respective rights and
regarding the bringing of the action in court, the Rules of Court
liabilities.”
governing the multiplicity of suits will be followed.
When obligation is ambiguous, obligation is considered as joint.
The most fundamental effect of joint divisible obligations is that each creditor
However, the following must be stressed:
can demand only for the payment of his proportionate share of the credit, while
1. When two or more persons signed a promissory note stating: “WE each debtor can be held liable only for the payment of his proportionate share
promise to pay”, the obligation is joint. There is no showing of of the debt.
solidarity.
In joint obligations, the different shares of the debt or the credit are considered
2. When two or more persons signed a promissory note stating: “I
distinct from one another. But they are subject to the Rules of Court governing
promise to pay”, the obligation is solidary.
the multiplicity of suits. This means that ordinarily, one creditor may sue one

of the debtors for the latter’s share of the obligation

ARTICLE 1208. If from the law, or the nature or the wording of the

obligations to which the preceding article refers the contrary does not
EXAMPLE: Hannah asked Jammi and Ivan to pay their rent balance
appear, the credit or debt shall be presumed to be divided into as many
amounting to P10,000. Without specifying if the obligation is joint or solidary,
shares as there are creditors or debtors, the credits or debts being
it is presumed as joint. Thus, the debt is divided into 2; P5,000/each.

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Consequences of joint liability 4. When the creditor interrupts the running of the prescriptive period by

demanding judicially from one, the others are not affected.

1. Vitiated consent on the part of one debtor does not affect the others.
(Therefore, it is possible that the share of one joint debtor has not

prescribed, while those of the others have already prescribed.)

EXAMPLE: Ivan and Jammi are joint debtors of Elysse for P5,000.

Ivan’s consent was obtained by Elysse through fraud. Jammi is still

EXAMPLE: Elysse, Hannah, and Aura are joint debtors of P15,000
liable to pay the P5,00, while Ivan is not. The 2 debts are considered
from Ivan. Due to an occurrence, Ivan instituted an action for Aura to
distinct from each other.
pay her debt. Elysse and Hannah remain unaffected. Only Aura is

required to pay.
2. Insolvency of one debtor does not make others responsible for his

share.
5. Defenses of one debtor are not necessarily available to the others.

EXAMPLE: Aura, Gabs, and Hannah are joint debtors of Marvin for
EXAMPLE: Elysse and Marvin are joint debtors of Jammi. As
P3,000. Aura becomes insolvent. Gabs and Hannah are only liable
stipulated in their contract, they are two pay Jammi 2 years from the
for their own proportionate share which is P1,000 each.
date the money was received. When the payment day came, Marvin

said that his money was robbed therefore he can’t pay. This defense
3. Demand by the creditor on one joint debtor puts him in default, but
would not be available for Elysse, she still needs to pay.
not the others since the debts are distinct.

Liabilities
EXAMPLE: Marvin lent P15,000 to joint debtors Elysse, Jammi, and
1. Liabilities of Partners
Aura. One day Marvin decided to demand the P5,000 payment from

Elysse. This does not mean however that Jammi and Aura should • If it arises out of a contract, the liability is JOINT or PRO

also pay their proportionate shares, since the debts are distinct. RATA (Art. 1816, Civil Code). Exception if the dependents

of an employee claim compensation for the employee’s

death in line of duty.

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• If it arises out of a crime or a quasi-delict, the liability is does not appeal from an erroneous judgment holding the liability to

SOLIDARY (together with the partnership) be merely subsidiary, instead of solidary, the same becomes res

2. Liabilities of Agents judicata, and the obligation ceases to be solidary.

• In general: JOINT, even if appointed at the same time,

unless solidarity has been agreed upon. (Art. 1894, Civil

ARTICLE 1209. If the division is impossible, the right of the creditors
Code).
may be prejudiced only by their collective acts, and the debt can be
3. Liabilities of Co-Principals (in agency)
enforced only by proceeding against all the debtors. If one of the latter
• SOLIDARY
should be insolvent, the others shall not be liable for his share. (1139)
4. Liabilities of Husband and Wife

• After conjugal funds have been exhausted, the husband This Article speaks of a joint indivisible obligation (indivisible — referring

and the wife are liable JOINTLY to creditors of the conjugal to the OBJECT; joint — referring to the TIE between the parties, who are

partnership. (Here the rules of partnership are suppletorily merely proportionately liable, unless solidarity has been stipulated by the

applicable.) parties or the law, in which case, it is called a solidary indivisible obligation).

5. Liabilities of Violators of Arts. 19, 20, 21, 22 (on Human The obligation is JOINT because the parties are merely proportionately

Relations) of the Civil Code liable. And the obligation is INDIVISIBLE because the object or subject

• It is believed that infractors thereof should be held liable IN matter is not physically divisible into different parts

SOLIDUM, considering the fact that said violations are

Joint indivisible obligation – joint as to liabilities of the debtors or rights of
either penal in nature or contrary to morals
the creditors but indivisible as to compliance.
6. Liabilities of Employer and Employee for the Latter’s Tortious

Act A joint indivisible obligation is in a sense somewhat midway between the joint

- Here, the liability of an employer is PRIMARY (not subsidiary), and and the solidary obligation, although it still retains the 2 fundamental

SOLIDARY with that of the employees. However, if the injured party characteristics of the joint — (1) no creditor can act in representation of

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the others, and (2) that no debtor can be compelled to answer for the EXAMPLE: Gabs, Hannah and Aura are jointly liable to give an iPad worth

liability of the others. P45, 000 to Jammi. On the date of the delivery, Gabs and Hannah are willing

but Aura is not due to insolvency. Gabs and Hannah are not liable to pay for
Characteristics
Aura’s proportionate share. Jammi can institute an action against Aura for

a. The obligation is joint but since the object is indivisible, the non-fulfillment of obligation.

creditor must proceed against ALL the joint debtors (Art. 1209),

for compliance is possible only if all the joint debtors would act
ARTICLE 1210. The indivisibility of an obligation does not necessarily
TOGETHER.
give rise to solidarity. Nor does solidarity of itself imply indivisibility. (n)
b. Demand must, therefore, be made on ALL the joint debtors.

c. If any one of the debtors does not comply with his monetary Indivisibility and solidarity are not identical. Indivisibility refers to SUBJECT

obligation for damages. MATTER, while solidarity refers to TIES BETWEEN PARTIES.

d. If any of the joint debtors be insolvent, the others shall not be INDIVISIBILITY SOLIDARITY
liable for his share. Refers to prestation or the object of Refers to the juridical or legal ties
the obligation that binds the parties
a. If there be joint creditors, delivery must be made to all, and not
Only the debtor guilty of breach of All of the debtors are liable for the
merely to one, unless that one be specifically authorized by the
obligation is liable for damages breach of the obligation committed
by co-debtor
others.
Can exist although there is only 1 There must be at least 2 debtors and
b. Each joint creditor is allowed to renounce his proportionate
debtor and 1 creditor 2 creditors
credit.
Others are not liable in case of Others are also liable in case of
insolvency of one debtor insolvency of one
Effect of breach of a joint indivisible obligation – obligation could no longer a. Joint divisible obligation — A and B are jointly liable to X

be fulfilled because the prestation or object is an indivisible one. Division is for P1 million.

not possible in indivisible prestation. Accordingly, the obligation is converted b. Joint indivisible obligation — A and B are jointly liable to

into one of indemnity for damages. give X this car.

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c. Solidary divisible obligation — A and B are solidarily in relation to the common debtor or debtors, represents all

bound to give X P1 million. of the other creditors

d. Solidary indivisible obligation — A and B are solidarily

EXAMPLE: Marvin owes P60 to Elysse, Ivan and Jammi.
bound to give X this car.
Their agreement is that the creditors are solidary. Hence, in

either Elysse, Ivan, and Jammi may collect the entire P60

ARTICLE 1211. Solidarity may exist although the creditors and the subject to the giving of the share of the other co-solidarity

debtors may not be bound in the same manner and by the same periods creditors.

and conditions. (1140)

2. Passive Solidarity

Solidarity may be active (among creditors), passive (among debtors),or mixed • on the part of the debtors or obligors

(among creditors and debtors). It could also be conventional (agreed upon) or • tie or vinculum existing among several debtors of one and

legal (imposed by law) the same obligation by virtue of which each of them, in

relation to his co-debtors, possesses the character of debtor

Classification
only with respect to his share in the obligation, but in relation

to the common creditor or creditors, represents all of the

(As to parties bound)
other debtors
1. Active Solidarity
EXAMPLE: Aura and Marvin are solidary debtors and are
• on the part of the of the creditors or obligees
obliged to pay P100 to Hannah. Since this is a passive
• Tie or vinculum existing among several creditors of one and
solidarity, if Hannah demands the entire amount of P100
the same obligation by virtue of which each of them, in
from Aura, she has to pay it and thereafter, ask Marvin for
relation to his co-creditors, possesses the character of
P50 reimbursement which is his share in the debt.
creditor only with respect to his share in the obligation, but

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3. Mixed Solidarity - on the part of the obligors and obligees or on the EXAMPLE: Marvin and Elysse are indebted to Ivan and Jammi the

part of the debtors and creditors amount of P1,000. They stipulated that the nature of their respective

obligations will be solidary.

EXAMPLE: Jammi and Ivan are indebted with P500 to Gabs and

Hannah. They stipulated that the nature of the obligation is solidary 2. Varied, Non-uniform, Otherwise - although the obligors are liable

on the part of both debtors and creditors. Thus, either Jammi or Ivan for the same prestation, they are not subject to the same stipulations

may pay the entire P500 subject to reimbursement of the other’s and clauses

share. Also, either Gabs or Hannah can the demand P500 subject to
EXAMPLE: Aura and Hannah, solidary debtors, are indebted to Gabs
the giving of the share of the other party.
and Jammi, solidary creditors, the amount of P1,000. They stipulated

(As to source) in the contract that Aura’s P500 share in the obligation is due on Feb

24, while the share of Hannah is due if Jammi passes his ObliCon
1. Conventional - agreed upon by the parties
exam.
2. Legal Solidarity - imposed by law (Arts. 1911, 1915, 1945,

2146,NCC)

3. Real Solidarity - imposed by the nature of the obligation ARTICLE 1212. Each one of the solidary creditors may do whatever may

be useful to the others, but not anything which may be prejudicial to the

latter. (1141a)

Solidarity Despite Different Terms or Conditions

As a consequence of the relationship of mutual agency existing among the

1. Uniform - when the debtors are bound by the same stipulation and solidary creditors, each one of them may do whatever may be useful or

clauses beneficial to the others, but not anything which may be prejudicial to the latter.

Hence, each solidary creditor may demand the payment or performance of

the entire obligation from one, some or all of the debtors.

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The act of one will affect the others because of their relationship. Reason: Essentially, a solidary obligation implies mutual agency and mutual

confidence. Hence rights cannot just be assigned to a third person without

EXAMPLE: Solidary debtors Aura and Marvin are indebted with P1,000 to
consent of the others, it being a prejudicial act.
solidary creditors Elysse and Jammi which will mature on Feb.28. On the said

date, either Elysse or Jammi can make a demand. This demand is beneficial Should the assignee or substitute do acts which would prejudice the others
to both creditors because otherwise, the debt might be extinguished of (as when he absconds after receiving payment), there is no doubt that the
prescription. other creditors’ rights are endangered, hence, the necessity of their consent.

Beneficial Act - To interrupt the running of prescription, the act of one

Article 1213 is an exception to the “Transmissibility of Rights” doctrine. Stated
solidary creditor in making a judicial demand upon any of the solidary debtors
otherwise, all rights are transmissible except when the law provided. This
is sufficient. The law provides that: “The prescription of actions is interrupted
provision on the other hand, expressly prohibits the assignment of the rights
when they are filed before the Courts.”
of a co-solidary creditor.

Prejudicial Acts - should not be performed, otherwise, there will be liability

for damages. However, in the case of remission or condonation (which is really

prejudicial), the solidary creditor is allowed to so remit, and the obligation is ARTICLE 1214. The debtor may pay any one of the solidary creditors;
extinguished, without prejudice to his liability to the other creditors. but if any demand, judicial or extrajudicial, has been made by one of

them, payment should be made to him. (1142a)

ARTICLE 1213. A solidary creditor cannot assign his rights without the
Any solidary creditor may demand the payment or performance of the
consent of the others. (n)
obligation from one, some or all of the debtors. Such a demand may be either

judicial or extrajudicial-In such case, payment shall be made only to the

General rule: A solidary creditor cannot assign his rights but he/she is
creditor who made the demand and to no other. However, in the absence of
allowed if the others consent.

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Obligations and Contracts
Atty. Francis Joseph Ampil

any judicial or extrajudicial demand, payment may be made by the debtor to Novation, compensation, confusion and remission are some of the modes of

anyone of the solidary creditors extinguishing an obligation. Consequently, the solidary creditor/s who may

have executed any of these acts shall be liable to the other solidary creditor/s
EXAMPLE: Aura and Gab solidary owe Marvin, Elysse, and Jammi P500.
for the share in the obligation corresponding to the latter.
Aura may pay to either one of them. However, if Marvin makes a demand on

the due date, Aura must only pay to Marvin. Novation

Article 1214 is applicable not only in cases of active solidarity but also to mixed
• mode of extinguishing an obligation by changing the principal
solidarity although the singular debtor is employed. In case of mixed solidarity,
conditions, or by substituting the person of the debtor, or by
the debtor upon whom no demand has been made, may pay any one of the
subrogating a third person in the rights of the creditor
solidary creditors.
• while it extinguishes the obligation, it creates a new one in lieu of the

EXAMPLE: Elysse and Gabs are solidary indebted with P100 to Hannah. old

Hannah demanded the payment of the P100 to Elysse. In this case, Gabs may • liability of the solidary creditor who effected the novation to the other

pay the P100 even when it was Elysse whom Hannah demanded from. solidary creditors shall depend upon the character of the new

obligation which is created

ARTICLE 1215. Novation, compensation, confusion or remission of the EXAMPLE: Marvin and Elysse solidarily owe Jammi and Aura P2,000.

debt, made by any of the solidary creditors or with any of the solidary Marvin agreed with Jammi that instead of paying P2,000, he and Elysse

debtors, shall extinguish the obligation, without prejudice to the will just deliver a specific power bank.Upon delivery of the powerbank,

provisions of article 1219. the obligation is extinguished. However, Jammi still owes Aura P1,000

(her share).
The creditor who may have executed any of these acts, as well as he

who collects the debt, shall be liable to the others for the share in the

obligation corresponding to them. (1143)

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Compensation compensation, and therefore the solidary obligation amounting to P400 still

subsists.
• takes place when 2 persons, in their own rights are creditors and
Confusion (Merger)
debtors of each other

• weighing two obligations simultaneously in order to extinguish them

• merger of the qualities of creditor and debtor in one and the same
to the extent that the amount of one is covered by the amount of the
person with respect to one and the same obligation.
other
• the obligation is extinguished from the time the characters of creditor
• may be total or partial, depending upon the amount involved
and debtor are merged in the same person
• total compensation automatically extinguishes the obligation,

whether known or unknown to the parties EXAMPLE: Aura and Ivan made a negotiable promissory note whereby

they bound themselves solidarily to pay P1000 to Jammi and Marvin,

EXAMPLES:
solidary creditors. Jammi and Marvin endorsed the note in favor of

(Total) : Marvin and Aura are solidary debtors of Ivan and Jammi, solidary Hannah; Hannah in favor of Elysse; and Elysse in favor of Aura. Now,

creditors to the amount of P1,000. Ivan owes Marvin P1,000 on account of a Aura who is a debtor, now becomes a creditor. There is a merger or

different obligation. Here we have a case of automatic extinguishment of the confusion of rights here; the solidary obligation is extinguished, but Ivan

obligation by virtue of total compensation. Aura however, should not benefit is indebted to Aura for his share of debt

completely since it was Marvin’s credit that was used to compensate. So Aura
Remission (Waiver)
owes Marvin P500 (her share of the debt). On the other hand, Jammi should

not be prejudiced, so he can recover P500 (his credit) from Ivan.

• act of liberality whereby a creditor condones the obligation of the

(Partial): Gabs and Hannah are solidary debtors of Elysse to the amount of debtor; that where the creditor tells the debtor to “forget about the

P500. Elysse is however indebted to Gabs for P100. This is a case of partial whole thing.”

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Atty. Francis Joseph Ampil

• an act of pure liberality by virtue of which the creditor, without having The creditor may proceed against any one or some or all of them
simultaneously, since any one of the solidary debtors can be held liable for
received any compensation or equivalent, renounces his right to the payment of the entire obligation,

enforce the obligation, thereby extinguishing the same either in its This Article is not applicable to a joint obligation. It reiterates the rule that in a

entirety or in the part or aspect thereof to which the remission refers. solidary obligation (passive solidarity), any one or some or all of the solidary

• essentially gratuitous, and requires the acceptance by the debtor debtors simultaneously, may be made to pay the debt so long as it has not

• may be made expressly or impliedly been fully collected.

• may be partial or total

EXAMPLE: Jammi, Ivan, and Marvin solidary owe Aura the amount of P5,000.

EXAMPLE: Solidary debtors, Gabs and Marvin owe Hannah and Aura P1,000. Aura can collect from Jammi or Ivan or Marvin alone or from any two of them

Before the maturity date, Hannah condoned/remitted the obligation in favor of or all of them simultaneously. If demand is made on Jammi, the latter cannot

Gabs. In this case, the obligation of Gabs and Marvin are extinguished require Aura to make a demand also on Ivan and Marvin or to include them

because of the remission/condonation. as party defendants as Aura has the right to proceed against any one of them.

If the remission is without the knowledge or consent of Aura, Hannah is liable Rules:

to pay her P500. Furthermore, Marvin is not liable to Gabs for his P500 share
1. Since the liability of is solidary, the other, solidary debtors are not
since in solidary obligations, the remission of one is the remission of all.
indispensable parties in a suit filed by the creditor.

2. The bringing of an action against a solidary debtor to enforce

ARTICLE 1216. The creditor may proceed against any one of the solidary
payment of the obligation is not inconsistent with and does not
debtors or some or all of them simultaneously. The demand made
preclude the bringing another to compel the others to fulfill their
against one of them shall not be an obstacle to those which may
obligations.
subsequently be directed against the others, so long as the debt has not
3. In case of death of one of the solidary debtors, the creditor may
been fully collected. (1144a)
proceed against the estate of the deceased solidary debtor alone or

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Atty. Francis Joseph Ampil

against any or all of the surviving solidary debtors whose liability is Paragraph 1: Payment made by one of the solidary debtors extinguishes the

independent of and separate from the deceased debtor, instead of obligation. (Payment must be full) However, the creditor for his protection is

instituting a proceeding for the settlement of the estate of the given the right to choose which offer to accept if two or more solidary debtors

deceased debtor wherein his claim could be filed. offer to pay.

4. The choice is left to the solidary creditor to determine against whom

EXAMPLE: A, B and C are solidarily liable to D and E in the amount of P9,000
he will enforce collection.
due on Dec. 31. If both A and B offer to pay D on Dec. 31, the latter may

choose which offer to accept. If A pays the entire amount of P9,000 on Dec.
ARTICLE 1217. Payment made by one of the solidary debtors
31, the obligation is extinguished.
extinguishes the obligation. If two or more solidary debtors offer to pay,

the creditor may choose which offer to accept.

Paragraph 2 and 3: Payment made by one of the solidary debtors does not

create a real case of subrogation. It merely entitles him to claim

He who made the payment may claim from his co-debtors only the share
reimbursement from his co-debtors only the share which corresponds to
which corresponds to each, with the interest for the payment already
each.
made. If the payment is made before the debt is due, no interest for the

intervening period may be demanded.

Payment

When one of the solidary debtors cannot, because of his insolvency,

• one of the ways by which an obligation is extinguished
reimburse his share to the debtor paying the obligation, such share shall
• not only the delivery of money, but also the performance of service
be borne by all his co-debtors, in proportion to the debt of each. (1145a)
• consists in the delivery of the thing or the rendition of the service

which is the object of the obligation.

This Article refers to the effects of payment by one of the solidary debtors. It

is not applicable to where no such payment has been made.

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Atty. Francis Joseph Ampil

Effects of payment: paying debtor cannot get any reimbursement--when the obligation has

prescribed or become illegal.

1. Between solidary debtors and creditor(s) – extinguishes the

obligation. However, the creditor for his protection is given the right Effect of Payment After Obligation Has Prescribed or Become Illegal
to choose which offer to accept if two or more solidary debtors offer
Prescription – is one where one acquires ownership and other rights through
to pay
the lapse of time in the manner and under the conditions laid down by law.
2. Among solidary debtors – payment of one of the solidary debtors

does not create a real case of subrogation. It merely entitles him to EXAMPLES:

claim reimbursement from his co-debtors “only the share which

(Prescription) – A and B are solidarily indebted to C in the amount of P 10,000.
corresponds to each” (Art. 1277) However, in case of insolvency of
The debt prescribed. If A paid the debt, he cannot collect from B his share of
any of the solidary debtors, the others assume the share of the
the debt. Neither can A can recover from C.
insolvent one pro rata

3. Among solidary creditors – the receiving creditor is jointly liable to Becomes Illegal – A and B are solidarily bound to deliver medical drugs to C.

the others for their corresponding shares The transaction of such medical drugs were later prohibited by law.

Notwithstanding the prohibition, B performed the obligation by delivering the

prohibited drugs. B is not anymore entitled to reimbursement from A.

ARTICLE 1218. Payment by a solidary debtor shall not entitle him to

Following actions must be brought within 10 years from the time the
reimbursement from his co-debtors if such payment is made after the
right of action accrues:
obligation has prescribed or become illegal. (n)

1. Upon a written contract

When a solidary debtor pays the obligation, he is entitled, as a rule, to
2. Upon an obligation created by law
reimbursement from his co-debtors. This Article mentions two cases when the

3. Upon a judgment

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The following actions must be commenced within 6 years:
1. Upon an oral contract
2. Upon a quasi-contract
The following actions must be instituted within 4 years:
1. Upon an injury to the rights of the plaintiff
2. Upon a quasi-delict
ARTICLE 1219. The remission made by the creditor of the share which
affects one of the solidary debtors does not release the latter from his
responsibility towards the co-debtors, in case the debt had been totally
paid by anyone of them before the remission was effected. (1146a)
If payment is made first, the remission or waiver is of no effect. There is no
more obligation to remit. IF remission is made previous to the payment and
payment is made, solution indebiti arises. It is incumbent upon the debtor
whose debt is remitted, to prove the priority of the remission to the payment
to release him from responsibility towards his co-debtors.
Payment is a mode of extinguishing an obligation, hence, upon full payment,
obligation is already extinguished. Consequently, the remission after full
payment is no effect as there is nothing more to remit.
This Article is designed to prevent fraud and to give justice to the paying
debtor. (See 8 Manresa 226).
Example: A and B solidarily owe X P1,000,000. A paid X the whole amount.
Later, X remitted B’s share. Can A still recover reimbursement of P500,000
from B? ANS.: Yes.
ARTICLE 1220. The remission of the whole obligation, obtained by one
of the solidary debtors, does not entitle him to reimbursement from his
co-debtors. (n)
General rule: No right to reimbursement in case of remission.
Remission is essentially gratuitous, hence the debtor who obtains remission
pays nothing to the creditor.
The article applies only when the whole obligation is remitted. In case of
novation, compensation, or confusion, the debtor with whom it is affected is
entitled to recover from his co-debtors their corresponding shares of the
obligation.
Remission by Creditor –
1.) If payment if made first, the remission is of no effect. There is no more to
remit.
2.) If remission is made prior to the payment and payment is made, then there
is payment by mistake.
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3.) If one of the solidary debtors obtained remission on the whole obligation,
he is not entitled to reimbursement from his co-debtors because remission is
essentially gratuitous.
EXAMPLE: Jammi and Marvin are solidary debtors of Elysse to the amount of
P10,000. Elysse remitted the whole obligation when Jammi offered to pay.
Jammi here cannot get any reimbursement from Marvin since after all, Jammi
did not pay anything to Elysse. To allow the contrary would be to induce fraud
and to countenance partiality.
ARTICLE 1221. If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation shall
be extinguished.
If there was fault on the part of any one of them, all shall be responsible
to the creditor, for the price and the payment of damages and interest,
without prejudice to their action against the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has
become impossible after one of the solidary debtors has incurred in
delay through the judicial or extrajudicial demand upon him by the
creditor, the provisions of the preceding paragraph shall apply. (1147a)
1. Paragraph 1: Loss is without fault and before delay.
a. Rule: If without fault — no liability.
EXAMPLE Aura, Hannah, and Gabs obliged are solidarily obliged to give
Elysse a Chanel bag valued at 100,000.
The obligation shall be extinguished if the bag is lost or destroyed through a
fortuitous event without the fault of the Aura, Hannah, and Gabs and before
they have incurred in delay.
2. Paragraph 2: Loss is due to fault on the part of the solidary
debtor.
Rule
a. f with fault — there is liability (also for damages and
interest).
b. Solidary obligation implies mutual agency and mutual
confidence.
EXAMPLE: If the Chanel bag was lost through the fault of Gabs, Aura ang
Hannah shall also be responsible to Elysse for the price of the Chanel bag as
well as damages although Aura and Hannah were not at fault at all.
Aura and Hannah, however, can recover from Gabs, the guilty or negligent
debtor, the full amount of such price and damages if Aura and Hannah have
already contributed to the price of the Chanel bag. If Elysse recovers the price
and damages from Gabs, she cannot anymore claim reimbursement from
Aura and Hannah, because Gabs alone was at fault.
3. Paragraph 3: Loss is without fault but after delay.
a. Loss because of a fortuitous event AFTER default —
here, there will be liability because of the default.
EXAMPLE: If the Chanel bag was lost through a fortuitous event but after a
demand was made upon Gabs, Elysse can recover damages from Aura or
Hannah or both of them without prejudice to the right action of the latter
against Gabs following the same rule in paragraph 2.
The default by Gabs makes all the solidary debtors responsible even for a
fortuitous event.
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ARTICLE 1222. A solidary debtor may, in actions filed by the creditor, f. Statute of Frauds

avail himself of all defenses which are derived from the nature of the g. when ALL the debtors were incapacitated to give con-

obligation and of those which are personal to him, or pertain to his own sent (such as unemancipated minors, insane, idiots,

share. With respect to those which personally belong to the others, he persons under a hypnotic spell)

may avail himself thereof only as regards that part of the debt for which h. when there are VICES OF CONSENT (vitiated con- sent)

the latter are responsible. (1148a) on the part of ALL the debtors (such as when all were

forced or intimidated or unduly influenced or were led into

This Article applies in actions filed by the creditor. The creditor or creditors
error)
may proceed against any of the solidary debtors or all of them simultaneously

for the payment of the obligation,

2. Those personal to the debtor sued. (This is a complete defense

generally, but if the defense is non-fulfillment yet of a condition or the

Kinds of defenses:
non-arrival yet of the term, this is only a PARTIAL defense, that is,

1. Those derived from the nature of the obligation (this is a complete he will still be liable except for his own share in the meantime).

defense). a. Vitiated consent (as when he was forced, etc.) —

a. lack of consideration or cause COMPLETE defense.

b. absolute simulation (as when the contract is totally b. Incapacity to give consent (as when he is a minor) —

fictitious) COMPLETE defense.

c. Illegal consideration c. Non-fulfillment of condition imposed regarding his

d. extinguishment of the obligation (as when the whole debt share (PARTIAL defense, unless provided otherwise).

has been paid, remitted, or has prescribed) d. Non-arrival of term (regarding his share — PARTIAL

e. non-fulfillment of the suspensive condition (if made upon defense — unless provided otherwise).

the whole object or upon all the debtors)

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EXAMPLE: Aura and Ivan are solidary debtors of Marvin in the amount of
P3,000. When Marvin demanded from Aura, she raised her defense of
insanity at the time of the perfection of contract. If this is true, Aura would not
be liable.
3. Defenses personal to other solidary debtors.
• A solidary debtor may avail himself/herself only as regards
that part of the debt for which the other solidary debtors are
responsible
• PARTIAL
EXAMPLE: Aura and Ivan are solidary debtors of Marvin in the amount of
P3,000. When Marvin demanded from Ivan, he raised his defense of insanity
of Aura at the time of the perfection of the contract. If this is true, Ivan would
only be liable for his P1500 share in the debt. He is not liable for the share of
Aura amounting to P1500.
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.
(1149)
This article pertains to divisible and indivisible obligations.
(1) A divisible obligation is one the object of which, in its delivery or
performance, is capable of partial fulfillment
(2) An indivisible obligation is one the object of which, in its delivery or
performance, is not capable of partial fulfillment.
*While Article 1223 appears to be limited to real obligations because it speaks
of “things,” the word is used in its broad sense as referring to the object or
prestation of the obligation, which may be to deliver a thing or to render some
service.
Example: Marvin agreed to pay Hannah P2,000.00 in four equal monthly
installments. The obligation of Marvin is divisible because it is capable of
partial performance. But if the agreement is that Marvin will pay Hannah on a
certain date the full amount of P2,000.00, the obligation is indivisible although
money is physically divisible because the intention of the parties is that the
obligation must be fulfilled at one time and as a whole.
Kinds of division.
(1) Qualitative division or one based on quality, not on number or quantity of
the things that are the object of the obligation.
Example: Aura and Jammi are heirs of Gab. They agreed to divide the
inheritance as follows: to Aura — a house and lot and home appliances and
to Jammi — a ricefield, a car and P100,000.00 cash.
(2) Quantitative division or one based on quantity rather than on quality.
Example: In the preceding example, if the inheritance consists only of a
ricefield its partition by meters and bounds into two equal parts is a quantitative
division. Another example is when Aura and Jammi divide 300 cavans of palay
harvested from the ricefield or the P100,000.00 cash.
(3) Ideal or intellectual division or one which exists only in the minds of the
parties.
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Example: Suppose the car and the ricefield in the first example, were inherited ARTICLE 1224. A joint indivisible obligation gives rise to indemnity for
by both Aura and Jammi. As co-owners, their one-half shares in the car are
not separable in a material way but only mentally. Similarly, before the land is damages from the time anyone of the debtors does not comply with his
actually divided between Aura and Jammi, they are merely co-owners, and
neither one of them can say that he is the absolute owner of a specific portion undertaking. The debtors who may have been ready to fulfill their
thereof.
promises shall not contribute to the indemnity beyond the
Kinds of indivisibility.
corresponding portion of the price of the thing or of the value of the

(1) Legal indivisibility. — where a specific provision of law declares as service in which the obligation consists. (1150)
indivisible, obligations which, by their nature, are divisible.

(2) Conventional indivisibility. — where the will of the parties makes as
indivisible, obligations which, by their nature, are divisible and
(3) Natural indivisibility. — where the nature of the object or prestation does
not admit of division, e.g., to give a particular car, to sing a song, etc.
This provision pertains to the effect of non-compliance of a debtor in a joint
indivisible obligation. If any one of the debtors does not comply with his
undertaking in a joint indivisible obligation, the obligation is transformed into

one for damages, i.e., to pay money. The creditor cannot ask for specific
INDIVISIBILITY SOLIDARITY
performance or rescission because there is no cause of action against the

Refers to the nature of obligation Refers to the vinculum or the juridical other debtors who are willing to fulfill their promises.
tie existing between parties

May exist although only one There must be at least 2 debtors or

Effect of non-compliance by a debtor in a joint indivisible obligation:
debtor and creditor are involved creditors

Does not consider the fault of
one as the fault of others
Death of the debtor does not
extinguish the prestation: heirs
are bound by unfulfilled
prestation
The fault of one is the fault of others
1. Obligation transformed into one for damages – creditor cannot
ask for specific performance or rescission because there is no
Death of the debtor terminates
solidarity because the same is not
cause of action against the other debtors who are willing to fulfill
transferred to the heirs
their promises

2. Contribution of innocent debtors limited to their respective

shares – effect of non-compliance by a debtor is to make all the

debtors liable for damages but the innocent debtors shall not

contribute beyond their respective shares of the obligation

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EXAMPLE: Aura and Elysse obliged themselves to deliver a necklace worth
P10,000 to Jammi and Marvin on Feb.25. The obligation is presumed to be
joint and the object is indivisible by its nature. Thus, this is a joint indivisible
obligation. Upon demand by Jammi and Marvin, Aura is willing to deliver
but Elysse refused to comply with her obligation. Accordingly, the obligation
is converted into indemnity for damages. Aura is liable for her P5,000 share
while Elysse is liable for P5,000 plus damages and interest.
ARTICLE 1225. For the purposes 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 susceptible 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 intended by the
parties.
In obligations not to do, divisibility or indivisibility shall be determined
by the character of the prestation in each particular case. (1151a)
If the prestation which constitutes the object of the obligation is susceptible of
partial compliance, the obligation is divisible; if it is not susceptible of partial
compliance, the obligation is indivisible.
Consequently, the true test of divisibility is whether the obligation is
susceptible of partial compliance or not.
The above article lays down the general rule for determining the divisibility or
indivisibility of an obligation.
* Divisible and indivisible obligations are not to be confused with divisible and
indivisible contracts.
(Paragraph 1) INDIVISIBLE
1. The obligation to give definite things
Example: To give a particular electric fan; to deliver a specific car. Here, the
obligation is indivisible because of the nature of the subject matter.
2. Obligation which are not susceptible of partial performance
Example: To sing a song or to dance the “tinikling.” Here, the obligation is
indivisible by reason of its purpose which requires the performance of all the
parts. Is the obligation still indivisible, if there are more than one participant?
The obligation becomes divisible as far as the participants are concerned
because it is capable of partial performance.
(Paragraph 2) DIVISIBLE
1. Obligations which have for their object the execution of a certain number
of days of work
Example: The obligation of Ivan to paint the house of Hannah, the painting to
be finished in 10 days. Here, the obligation need not be fulfilled at one time.
2. Obligations which have for their object the accomplishment of work by
metrical units.
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Example: The obligation of Jammi to make Aura a table, 3 feet wide and 5 feet SECTION 6: Obligations with a Penal Clause
long.

3. Obligations which by their nature are susceptible of partial performance. ARTICLE 1226. In obligations with a penal clause, the penalty shall

substitute the indemnity for damages and the payment of interests in

Example: ; Marvin has the obligation to render 3 song numbers in a program
or
case of noncompliance, if there is no stipulation to the contrary.

The obligation of Elysse to pay a debt of P12,000.00 in 12 monthly Nevertheless, damages shall be paid if the obligor refuses to pay the
installments of P1,000.00.
penalty or is guilty of fraud in the fulfillment of the obligation.
(Paragraph 3)

1. Obligations provided by law to be indivisible even if thing or service is The penalty may be enforced only when it is demandable in accordance
physically divisible
with the provisions of this Code. (1152a)

Example: Under the law, taxes should be paid within a definite period.
Although money is physically divisible, the amount of tax payable must be
delivered in toto, not partially. An obligation with a penal clause is one which contains an accessory

undertaking to pay a previously stipulated indemnity in case of breach of the

2. Obligations intended by the parties to be indivisible even if thing or service
is physically divisible. principal prestation intended primarily to induce its fulfillment.

Example: The obligation of Marvin to give P1,000.00 to Jammi on March 29,

2021. Money is physically divisible but the clear intention here is for Marvin to General Rule: In obligations with a penal clause, the penalty shall substitute
deliver P1,000.00 at one time and as a whole.
the indemnity for damages and the payment of interests in case of non-

Effect of Illegality of a Part of a Contract compliance

• Exceptions:
DIVISIBLE INDIVISIBLE
1. When there is a stipulation to the contrary.
The illegal part is void and not Entire contract is void and not
enforceable. The legal part shall enforceable 2. When the obligor refuses to pay the penalty.
still be valid and enforceable
3. When the obligor is guilty of fraud in the fulfillment of the

obligation

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Penal Clause: an accessory undertaking attached to an obligation to assume a. Subsidiary or alternative penal clause. — when only the penalty
can be enforced; and
greater liability on the part of the obligor in case of breach of the obligation. b. Joint or cumulative penal clause. — when both the principal
obligation and the penal clause can be enforced.

Purpose of a Penal Clause PENAL CLAUSE CONDITION

Constitutes accessory obligation Does not constitute accessory

1. To insure their performance by creating an effective deterrent obligation

against breach, making the consequences of such breach as May become demandable in default Never demandable
of the unperformed obligation and
onerous as it may be possible and sometimes jointly with it

2. to substitute a penalty for the indemnity for damages and the

payment of interests in case of non-compliance or There is a principal obligation to

which the accessory obligation of
3. to punish the debtor for the non-fulfi llment or violation of his penal clause is joined. Only one
thing due, which the creditor may
obligation.
OBLIGATIONS WITH PENAL demand unaffected by the existence
CLAUSE of the penal clause. The debtor
cannot choose to pay penalty in lieu
Kinds of Penal Clause. of performance except when
expressly granted to him.
The existence of the obligation is
(1) As to its origin:
uncertain. If condition does not take
CONDITIONAL OBLIGATIONS place, the obligation is deemed in
a. Legal penal clause. — when it is provided for by law; and law never to have existed
b. Conventional penal clause. — when it is provided for by
There is only one obligation, two
stipulation of the parties.
things due alternatively, and the
ALTERNATIVE OBLIGATIONS obligation may be satisfied by the
(2) As to its purpose: performance of one of them.
Election belongs to debtor, except
a. Compensatory penal clause. — when the penalty takes the place when expressly granted to the
of damages; and creditor
b. Punitive penal clause. — when the penalty is imposed merely as Only one thing notwithstanding
punishment for breach. conferred upon the debtor to satisfy
FACULTATIVE OBLIGATIONS the obligation by substituting
another in its place
(3) As to its dependability or effect:

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Obligations and Contracts
Atty. Francis Joseph Ampil
Liability for penalty, damages, and/or interests:
1. Penalty substitutes for damages and interests – proof of actual
damages need not be presented in order that penalty may be
enforced
2. Penalty and interests enforceable – law permits an agreement
upon a penalty apart from the interest; if such agreement is present,
the penalty does not include the interest and as such, the two are
different and distinct things which may be demanded separately
3. Penalty damages and interests enforceable – creditor, in
addition to the penalty, may recover damages and interests:
. a. When so stipulated by parties;
b. When obligor refuses to pay the penalty; orWhen oblihhhhhhgor
is c.When obligor is guilty of fraud
4. Requirement to make penalty enforceable – as a stipulation in a
contract, a penalty is demandable only if there is a breach of the
obligation and is not contrary to law, morals, good customs, public
order, or public policy. If obligation cannot be fulfilled due to a
fortuitous event, obligation is extinguished
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 decided to require the fulfillment of the obligation,
the performance thereof should become impossible without his fault, the
penalty may be enforced. (1153a)
1st Sentence: The general rule is that the debtor is NOT allowed to just pay
the penalty instead of fulfilling the obligation. He can only do so if the right has
been EXPRESSLY reserved. The reason is that if he can just pay, fulfillment
of the obligation will be considered an alternative one. The word EXPRESSLY
means that any implied reservation is not allowed.
Precisely, the object of the penalty is to secure compliance with the obligation.
If the debtor is allowed to just pay the penalty, this would in effect make the
obligation an alternative one. The debtor can exempt himself from the non-
fulfillment of the obligation only when “this right has been expressly reserved
for him.”
Exceptions:
• When creditor was clearly given the right to enforce both the
principal obligation and the penalty
• When creditor has demanded fulfillment, but debtor was unable to
fulfill the obligation due to his own fault
*If fault is due to creditor’s own act, he cannot claim penalty
*If impossibility of fulfillment is due to fortuitous event, principal
obligation and penalty shall be extinguished
2nd Sentence: As a general rule, the creditor cannot demand the fulfillment
of the obligation and the satisfaction of the penalty at the same time. The
primary purpose of the penalty is to urge the debtor to the performance of the
main obligation.
EXAMPLE: Ivan promised Elysse to finish a table within 3 months. The
contract stipulates that in case he does not build the table at all, he is
supposed to forfeit P3,000. In this case, as a general rule, he cannot just give
P3,000 as substitute for his non-performance of the obligation. The penal
clause is not supposed to substitute the performance of the principal
obligation. He may, however, be expressly granted by the Elysse the right to
refrain from the execution of the contract by a forfeiture of the penalty.
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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

ARTICLE 1228. Proof of actual damages suffered by the creditor is not Under Art. 1229, the court may equitably reduce the stipulated penalty in the

necessary in order that the penalty may be demanded. (n) following instances: first, if the principal obligation has been PARTLY

COMPLIED WITH by the debtor; second, if the principal obligation has been
In an obligation with a penal clause all that the creditor has to prove is the
IRREGULARLY COMPLIED WITH by the debtor;; and third, if the penalty is
violation of the obligation by the debtor, in order to demand penalty. There is
INIQUITOUS or UNCONSCIONABLE even if there has been no
no necessity of proving actual losses and damages suffered.
performance.

Penal clause serves as punishment and a lawful means of repairing losses PARTLY COMPLIED WITH
and damages. Thus, upon violation of the conditions stipulated, the injured

party is not obliged to prove losses and damages suffered. • contemplates a case in which some, but not all, of the prestations are

complied with by the debtor

Article 1228 applies only where the penalty is fixed by the parties to substitute • refers to quantity or quality of the performance
the indemnity for damages. In any of the three exceptions when damages may
EXAMPLE: Aura is to deliver 10 bottles of Jose Cuervo Tequila Gold to Gabs
be recovered in addition to the penalty (Art. 1227.), the creditor must prove
on March 2. On that day, Aura has only delivered 9 bottles. In here there was
the amount of such damages which he actually suffered resulting from the
a partial performance of the obligation.
breach of the principal obligation

IRREGULARLY COMPLIED WITH

• contemplates a case in which all of the prestations are complied with,

ARTICLE 1229. The judge shall equitably reduce the penalty when the but not in accordance with the tenor of the agreement
principal obligation has been partly or irregularly complied with by the
• refers to the form.
debtor. Even if there has been no performance, the penalty may also be

reduced by the courts if it is iniquitous or unconscionable. (1154a)

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 DLSU College of Law
Obligations and Contracts
Atty. Francis Joseph Ampil

EXAMPLE: In the same example. On the day of delivery, Aura was able to has in some way been already benefited by the 9 bottles of tequila, so the
penalty may be reduced.
deliver 10 bottles of Jose Cuervo Tequila but it was the Silver variant. In here,

there is an irregularity in the performance.

INIQUITOUS or UNCONSCIONABLE ARTICLE 1230. The nullity of the penal clause does not carry with it that

of the principal obligation.

• contemplates a case in which the only question raised is whether the

amount of the stipulated penalty is reasonable or unconscionable The nullity of the principal obligation carries with it that of the penal

• the obligor may ask for the reduction of the penalty, even if there has clause. (1155)

been no performance of the principal obligation.

EXAMPLE: As agreed, the failure of Aura to deliver the 10 bottles of Jose
Cuervo Tequila Gold would result to the payment of a brand new car. The
penalty is unreasonable since a brand new car is a very excessive penalty for
the non-performance of the obligation.
Art. 1229 of the Civil Code applies ONLY to an obligation or contract, subject
of a litigation, the condition being that the same has been partly or irregularly
If penal clause is not valid, it does not mean that its nullity will also make the
principal obligation null and void
On the other hand, if the principal obligation is null and void, the penal clause
will have no more use for existence and is therefore also considered null and
void.
Reasons
• The principal obligation can stand alone, and the void penal clause
will just be disregarded.
• The efficacy of such obligation is not dependent upon the efficacy of
the penal clause.

complied with by the debtor. Said proviso also applies even if there has been

no performance, as long as the penalty is iniquitous or unconscionable. It Effect of nullity of penal clause

cannot apply to a final and executory judgment. The nullity of the penal clause DOES NOT carry with it that of the principal
obligation

EXAMPLE: Aura promises to deliver Dave 10 bottles of tequila on Feb.23. It Effect of nullity of the principal obligation
is stipulated in the contract that Aura’s failure to do so on that day will result
to the forfeiture of P10,000. On that day, Aura was able to deliver only 9 of the The nullity if the principal obligation CARRIES WITH it that of the penal clause
10 bottles promised. There has been a partial or irregular performance, but B because the penalty is merely an accessory obligation. Consequently, if the

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Obligations and Contracts
Atty. Francis Joseph Ampil

principal obligation is null and void, the penal clause is also null and void. The
principle is that accessory follows the principal

EXAMPLE: Ivan promised to pay P5,000 to Jammi on February 25. As an

additional stipulation, they agreed that Ivan will be liable to deliver 1 pack of
marijuana as a penalty in case of his failure to deliver his obligation on maturity
date. The obligation to pay P5,000 is valid, however the penalty is void. Only
the penalty is disregarded

Ivan promised to deliver marijuana to Jammi. As an additional, they agreed

that Ivan will be liable for P5000 as penalty in case of failure to deliver the
obligation. Both the obligation and the penalty is disregarded.

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