TABLE OF CONTENTS CLASSIFICATIONS OF OBLIGATIONS
1. Primary classification of obligations under
TITLE I. – OBLIGATIONS....................................1
Chapter 3 – Different Kinds of Obligations .
1 I. Intended Learning Objectives ...............1
II. Questions to Answer..............................1
III. Discussion ................................................1
IV. Definitions..............................................28
V. Problems.................................................28
VI. Sources:...................................................29
TITLE I. – OBLIGATIONS
Chapter 3 – Different Kinds of Obligations
I. Intended Learning Objectives
At the end of the lesson, you are expected to
define and differentiate:
1. Pure and Conditional Obligations;
2. Obligations with a Period;
3. Alternative Obligations;
4. Joint and Solidary Obligations;
5. Divisible and Indivisible Obligations;
6. Obligations with a Penal Clause;
II. Questions to Answer
1. Illustrate an obligation subject to a
suspensive condition and resolutory
condition;
2. Differentiate a pure obligation from a
conditional obligation and an obligation
with a period;
3. Difference between a period and a
condition;
4. Difference between alternative and
facultative obligation;
5. Differentiate divisible and indivisble
obligation from joint and solidary
obligation
III. Discussion
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WHEN IS AN OBLIGATION DEMANDABLE 1. When it is a pure obligation; (1179 par. 1)
AT ONCE: 2. When it is subject to a resolutory condition
the Civil Code:
a. Pure and conditiona obligations (Arts. 1179-
1192)
b. Obligations with a period (Arts. 1193-1198)
c. Alternative (Arts. 1199-2105) and facultative
obligations (Art. 1206);
d. Joint and solidary obligations (Arts. 1207-
1222)
e. Divisible and indivisble obligations (Arts.
1223-1225);
f. Obligations with a penal clause (Arts. 1226-
1230)
2. Secondary classification of obigations under
the Civil Code;
a. Unilateral and bilateral obligations (Arts.
1169-1191)
b. Real and personal obligations (Arts. 1163-
1168)
c. Determinate and generic obligations (Art.
1165)
d. Civil and natural obligations (Art. 1423)
e. Legal, conventional and penal oblegations.
(Art.1157, 1159, 1161)
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)
 (1179 par. 2)
3. When it is subject to a resolutory period
(1193 par. 3)
What is a Pure obligation?
It is an obligation which does not depend upon a
future or uncertain event or upon a past event
unknown to the parties and is demandable at
once. This is the first paragraph of Article 1179.
i.e. D obliges himself to pay C the amount of
Php1,000.
The above example does not provide for a period
for compliance, hence it is immediately
demandable.
Another example: D binds himself to pay C
Php1,000.00, upon demand of C. The obligation
is immediately due and demandable, hence
considered as a Pure obligation.
What is a Conditional Obligation?
It is an obligation whose performance or
extinguishment depends upon a future or
uncertain event, or upon a past event unknown
to the parties;
What is a condition?
It is a future or uncertain event or a past but
unknown event, the happening of which, results
to the effectivity or extinguishment of an
obligation.
Characteristics of a condition:
1. Future and uncertain
2. Past but unknown – a condition may be a
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past event unknown to the parties. What
is contemplated by the law is the
knowledge to be acquired in the future, of
a past event which at the moment is
unknown to the parties interested.
What is an obligation subject to a term or
period?
It is an obligation which is not demandable until
after or is extinguished upon the arrival of a
term or period
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 to the provisions of article 1197.
(n)
When the debtor binds himself to pay when his
means permit to do so, the obligation is deemed
to be one with a period. Remember however that
what is left upon the debtor’s will is not the
option on whether or not to pay the obligation,
but as to duration of the period.
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)
THE EFFECT OF HAPPENING OF
CONDITION
1. Acquisition of rights – obligations subject
to a suspensive condition;
2. Loss of rights already acquired –
obligations subject to a resolutory
condition;
CLASSIFICATION OF CONDITIONS:
1. As to effect
a. Suspensive – the happening of which gives rise happening of a condition which is
to the obligation;
b. Resolutory – the happening of which
extinguishes the obligation;
2. As to form:
a. Express – the condition is clearly stated;
b. Implied – the condition is merely inferred
3. As to possibility:
a. Possible – the condition is not capable of
fulfillment, legally or
physically;
b. Impossible – the condition is not capable of
fulfillment, legally or
physically;
4. As to cause or origin:
a. Potestative – the condition depends upon the
will of one of the
contracting parties. Note however
that there can be no suspensive
potestative condition which
depends upon the sole will of the
debtor. A suspensive potestative
condition which depends upon the
sole will of the debtor is void,
because its validity and compliance
is left to the will of the debtor. This
will render the obligation as
nugatory, as the debtor may
expediently fail or refuse to fulfill
the condition, to avoid his
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than magnitude 5, within 10 years
from date of completion of
construction and if found by the
city engineer’s office that
construction defects contributed in
obligation. i.e. I will pay you after I
harvested fish. Suspensive, as the
obligation shall arise after the
to harvest fish. Harvesting fish is a future and
uncertain event which may or may not happen.
Also, the option to harvest fish or not, is left
solely to the option of the debtor. Hence, there is
no stopping the debtor to avoid fulfilling the
condition, so as to avoid his obligation. If there is
however a pre-existing obligation, and then the
condition just followed, then only the condition is
void. For example , D obliged himself to pay C
Php 10,000, 2 months from the date of loan.
Afterwards, he promised to pay C, after he, D,
sells his car. In this case only the condition is
void.
b. Casual – the condition depends upon chance or
upon the will of a third person;
i.e. Contractor obliges himself to repair at his
expense any damage that may be caused to the
building of B, by an earthquake which is less than
magnitude 5, within 10 years from date of
completion of construction; or when S binds
himself to sell his land to B if he wins a case which
is pending before the court.
c. Mixed – the condition depends partly upon
chance and partly upon the will of a third person.
i.e. Contractor obliges himself to repair at his
expense any damage that may be caused to the
building of B, by an earthquake which is less
any way to the damage.
5. As to mode:
a. Positive – the condition consists in
the performance of an act;
b. Negative – the condition consists in
the omission of an act;
 6. As to numbers:
a. Conjunctive – there are several
conditions and all must be fulfilled;
b. Disjunctive – there are several
conditions and only one or some of
them must be fulfilled;
7. As to divisibility:
a. Divisible – the condition is
susceptible of partial performance;
b. Indivisible – the condition is not
susceptive of partial performance.
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)
Potestative Condition
In potestative condition, the fulfillment of the
condition is dependent upon the sole will of
either party.
If the obligation is potestative on the part of the
debtor, at the same time suspensive, it is void.
Because if you are the debtor, you don’t want
your obligation to arise. If the condition is
dependent upon your sole will, then you will not
fulfill the condition.
It is potestative if the debtor says “I will pay if I
want to”. But if he says “I will pay if my means
permit me to do so”, the civil code says that this
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the impossible or unlawful condition shall be
valid.
Impossible condition
The condition not to do an impossible thing shall
be considered as not having been agreed upon.
is an obligation with a period. In this case, the
parties need to have the period fixed for the
payment of the obligation.
there can be no suspensive potestative condition
which depends upon the sole will of the debtor.
A suspensive potestative condition which
depends upon the sole will of the debtor is void,
because its validity and compliance is left to the
will of the debtor. This will render the obligation
as nugatory, as the debtor may expediently fail
or refuse to fulfill the condition, to avoid his
obligation. i.e. I will pay you after I harvested
fish. Suspensive, as the obligation shall arise
after the happening of a condition which is to
harvest fish. Harvesting fish is a future and
uncertain event which may or may not happen.
Also, the option to harvest fish or not, is left
solely to the option of the debtor. Hence, there is
no stopping the debtor to avoid fulfilling the
condition, so as to avoid his obligation. If there
is however a pre existing obligation, and then
the condition just followed, then only the
condition is void. For example , D obliged
himself to pay C Php 10,000, 2 months from the
date of loan. Afterwards, he promised to pay C,
after he, D, sells his car. In this case only the
condition is void.
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
(1116a)
The impossibility may be physical or legal.
If an obligation is subject to an impossible
condition, the obligation is void since in
obligations, the condition is an essential element,
unlike in succession where if an institution is
subject to an impossible condition, only the
condition is deemed void.
But if it is an obligation not to do an impossible
thing, it is valid.
Two kinds of Impossible Conditions
1. Physically impossible conditions;
i.e. I will give you Php 10,000, when pigs fly
2. Legally impossible conditions;
i.e. I will give you Php10,000 if you will shoot
Z;
Effect:
1. Positive impossible condition – void.
Renders the obligation nugatory, as
there was no intention to fulfill the
obligation in the first place;
2. Negative impossible condition – valid.
A condition not to do an impossible
thing, the condition is disregarded and
the obligation is rendered pure and
valid. ; i.e. I will sell you my land if
you do not give me a dog that talks;
3. Only the affected obligation is void –
i.e. I will give you Php 10,000 if you
sell my cellphone and Php 5,000 if you
shoot Z;
4. Only the condition is void – if there is
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age of 22, hence, it is certain that he will not obligation is immediately rendered effective.
marry before the age of 23. In this case, the
an existing obligation, and the
condition just followed;
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)
Art. 1184 refers to a positive condition, the non
happening of which leads to the
extinguishment and/or non-arising of the
obligation.
i.e. I’ll give X Php10,000 if he gets married on or
before he turns 23. What if X does not get
married on or before he turns 23, or he dies at
the age of 18. In this case, the obligation is
extinguished.
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)
Art. 1185 refers to the non-happening of a
negative condition, the non-happening of
which renders the obligation effective.
i.e. I’ll give X Php10,000 if he does not get
married before the age of 23. What if X does not
get married on or before he turns 23, or he dies
at the

Article 1186. The condition shall be deemed
fulfilled when the obligor voluntarily prevents
its fulfillment. (1119)
Art. 1186 refers to the constructive fulfillment of
a suspensive condition.
Requisites for the application for Art. 1186: 1.
The obligation is subject to a suspensive
condition;
2. The obligor prevented its fulfillment;
3. Obligor acts voluntarily;
i.e. I promise to pay you Php10,000 if you find a
buyer for my laptop at Php50,000. You found a
willing buyer, but to evade payment, I sold it to
another buyer. There is a constructive fulfillment
of the condition in this case. Hence, it will seem
that the condition was fulfilled, and the
obligation shall arise. I am still liable to pay you
Php10,000.
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)
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execution of the contract) but before February 14, 2020 (the happening of the condition), and B is
RULES APPLICABLE
PURE obligations are pretty straightforward, as
it is demandable at once. As to conditional
obligations, we first discuss what a suspensive
condition is.
In obligations subject to a suspensive condition,
the happening of the future and uncertain event
gives rise to an obligation. Without the
happening of that condition, you cannot demand
the performance of an obligation.
Rules applicable when there is a suspensive
condition:
Q: What would be the effect when the condition
has been fulfilled?
A: It retroacts to the day of the constitution of the
obligation.
i.e. The obligation was entered into on January 1,
2014, but the condition (for instance the full
payment of the purchase price) happened only
on February 14, 2014, the effect will retroact to
January 1, 2014. If it is a contract of sale the
buyer already has rights as early as January 1,
2014 over the property because of the retroactive
effect of the fulfillment of the condition.
Insofar as the fruits and interest, if it is a
reciprocal obligation, the fruits and interests are
deemed to be mutually compensated. For
instance, the Seller need not deliver to the B the
fruits accruing after January 1, 2020 (the
not obliged to pay legal interest on the price.
Here the fruits and interests received are
deemed to have been mutually compensated.
If the obligation is unilateral, the debtor shall
also appropriate the fruits and interest to
himself, unless by the nature of the obligation
we can infer a different intention.i .e. The donor
executes a deed of donation over a parcel of
land in favor of the donee, once the donee
marries. In this case, the deed of donation was
executed in 2010, while the condition happened
in 2020, fruits accruing from 2010 to 2020 is
rightfully the debtor’s (donor) and the donee
has no right over the same, until the obligation
to deliver arises – at the time of his marriage in
2020.
We should not confuse this with Article 1164. In
1164, the creditor has the right to the fruits from
the time the obligation to deliver arises. Here,
the obligation to deliver arises only upon the
fulfillment of the condition because we are
talking about a conditional obligation.
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)
Rights Of The Creditor - From the time of the
constitution of the obligation, until the
fulfillment of the condition, as long as the
condition is not fulfilled, the obligation does
not yet arise. What if from the time the
obligation was constituted, the debtor made
some acts which could be prejudicial to the
rights of the creditor, does the creditor have
any remedy?
Even if the condition has not yet been
fulfilled, the creditor may bring action for the
protection of his right.
Rights of the Debtor - The debtor may
recover what during the same time he has
paid by mistake in case of a suspensive
condition
Q: What are the rights of the parties before the
fulfillment of the condition?
A:
1. Creditor – _may bring the appropriate actions
for the preservation of his right (Art. 1188), such
as:
a) action for prohibition restraining the
alienation of the thing pending the
happening of the suspensive condition b)
action against adverse possessors to
interrupt the running of prescriptive
period.
c) action to demand security if the debtor
has become insolvent
d) action to set aside alienations made by
the debtor in fraud of creditors
2. Debtor – _may recover what during the same
time he has paid by mistake in case of a
suspensive condition (Art. 1188).
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;
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 7 of 29
(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;
What are the requisites for Art.1189 to apply?
1. Must be a real obligation;
2. Object is a specific/determinate thing;
3. 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
of the condition.

(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;
Take note of the rules in case of loss, deterioration
and improvement. In short, the owner bares the
loss. If whoever becomes the owner at the end,
then he bears the loss, unless there is fault on the
part of the debtor. The owner also gets the
benefits of the improvement.
Kinds of Loss

(6) If it is improved at the expense of the debtor, 1. Physical Loss – when a thing perishes as
he shall have no other right than that granted to when a car is completely destroyed;
the usufructuary. (1122) 2. Legal Loss – when a thing goes out of

WITH DEBTOR’S FAULT commerce or becomes illegal; appears in such a way that its
WITHOUT 3. Civil Loss – when a thing dis existence is unknown,
DEBTOR’S FAULT Loss
DR pays damages Obligation or even if known, it cannot be recovered.
extinguished i.e. a piece of jewelry is dropped from a
Deterioration ship at sea.
CR- choose b/w rescission of Impairment borne by CR have for their purpose the
obligation or extinguishment of an obligation to
fulfillment (with indemnity for give, the parties, upon the fulfillment
damages in either case) of said conditions, shall return to
Article 1190. When the conditions
each other what they have received.
Improvement In case of the loss, deterioration or improvement of
1. BY THE THING’S NATURE OR BY TIME – the thing, the provisions which, with respect to the
_inure to the benefit of the CR debtor, are laid down in the preceding article shall
2. AT THE DEBTOR’S EXPENSE– DR shall be applied to the party who is bound to return.
have no right other than that granted to a
usufructuary
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 8 of 29
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)
1190 – refers to an obligation subject to a
resolutory condition.
and now there is an obligation on the part of C to
return the car to D.
In a resolutory condition, the obligation is
demandable at once, just like in a pure
obligation.
Article 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
SUSPENSIVE CONDITION
Effect of Fulfillment
Obligation arises or becomes effective
Effect of Non-fulfillment
If not fulfilled, no juridical relation is created
The injured party may choose between the
fulfillment and the rescission of the obligation,
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
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)
RESOLUTORY CONDITION
Obligation is extinguished
If not fulfilled, juridical relation is consolidated

When Rights are Acquired

Rights are not yet acquired, but there is hope or Rights are already acquired, but subject to the
expectancy that they will soon be acquired threat or danger of extinction

Rules applicable when there is Resolutory lend the car to C immediately arises, and is
Condition: demandable at once. The obligation shall cease,
once C graduates. Hence, at the moment C
When there is a resolutory conditon, the graduates, the obligation of D to lend the car is
happening of that condition will extinguish the extinguished,
obligation. What happens when the obligation is
extinguished? Then, if you are the creditor, you
What is rescission under Article 1191? It refers
will have to return the thing to the debtor. When
to the cancellation of the contract or reciprocal
the obligation is already extinguished, and there obligation in case of breach on the part of one,
is now an obligation to return, Article 1189 on which breach is violative of the reciprocity
the loss, deterioration and improvement will between the parties. This is properly called
also apply. resolution.

May an injured party avail of both fulfillment

i.e. D obliges himself to let C borrow his car,
and rescission as remedy?
until the day he graduates. The obligation to
 GR: The injured party can only choose between Article 1191 allows the injured party to seek
fulfillment and rescission of the obligation, and rescission even after he has chosen fulfillment.
cannot have both. (Ayson-Simon v. Adamos,G.R. No. L-39378, Aug.
28 1984)
XPN: If fulfillment has become impossible,

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The rescission mentioned under Art. 1191 is into an agreement that violation of the terms of
properly called resolution. Art. 1191 applies to a the contract would cause cancellation thereof,
reciprocal obligation and in such obligation, both even without court intervention. Therefore, it is
parties are debtors and creditors of each other. In not always necessary that a party should resort
reciprocal obligations, even if the right to rescind to the court for the rescission of the contract. If
is not mentioned, it is applicable and it applies to there is a stipulation in the contract which states
parties because of Art. 1191. that rescission without need for a judicial action,
this will be governed by the law of contracts
What are the limitations?
because
So these are also mentioned under Art. 1191, it will be part of the stipulation in the contract, as
first we have to observe due process. Why? in the case of express resolutory conditions
Because even if there is a breach, how do we which is also subject to the limitation that it
know that there is really a breach? Who decides should not be contrary to law, morals, good
especially if there is already a performance as to customs, public order or public policy.
one of the
parties. So one invokes breach, while the other Second limitation, the right to rescind is
denies that there has been a breach, so here a subordinated to the rights of third persons who
judicial action must be resorted to, Art. 1191 then acquired the thing in good faith. So for
is necessarily judicial. The power to rescind example, the buyer and the seller entered into a
obligations is implied in reciprocal ones, in case contract of
one of the obligors should not comply with what sale and the seller has already delivered the
is incumbent upon him. So it is clear by a mere thing but the buyer has not yet paid the price,
reading of the CC provisions. However, it is note that there can be an absolute sale even if
equally settled that in the absence of a payment has not been made yet, depending on
stipulation to the contrary, this power must be the agreement of the parties. So here there is
invoked judicially. It cannot be exercised solely already a contract of sale, and therefore upon
on a party’s own judgment that the other party the delivery of the property by the seller to the
has committed a breach of the obligation. Where buyer, ownership to the property is already
there is no stipulation in the contract giving the transferred to the buyer. Now the original buyer
petitioner the power to rescind without resort to sells it to a third person X and the property is
the courts, the petitioner’s action in unilaterally covered by a Torrens title, is the sale valid? Yes
terminating the contract is unjustified. So it is because the buyer became the owner of the
clear from the said case that it should be invoked property upon delivery even if it is not yet fully
judicially. paid and the buyer in turn can now sell the
property. Upon delivery to X, transfer of
Can there be a stipulation that there is already ownership also occurs. Now because the
no need for the parties to go to court, and that original buyer did not pay, the seller now wants
decision can be made extra-judicially? Can to rescind, can there be rescission? If the third
there be a stipulation? Yes. There is nothing in party who bought the property had no
the law that prohibits the parties from entering knowledge of any defect in the title of the
 original buyer, then he will be considered an
innocent purchaser for value and therefore
rescission cannot be made in that case because
mutual restitution is no longer possible. The
buyer can no longer return the property as it is
already in the hands of a third person who is an
innocent purchaser for value. So that is another
limitation on the right to rescind, unless there is
annotation in the title of the right of the seller
and the third party is aware of that, in this case
then, he can be ordered to return the property.
Third limitation, the court may order the fixing
of the period instead of rescission. Even if there
is a breach, the court may give the debtor a
certain period within which to comply with his
obligation. Exception if the fixing of the period
would serve no other purpose but to delay. So in

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this case, the court can no longer decree the
fixing of a period but only rescission.
Fourth limitation, casual or slight breaches will
not justify rescission. There must be a
substantial breach.
In the case of Angeles vs. Calasanz, the SC held
that when you accept the late payment which is
already beyond the grace period, this amounts to
a waiver of the right to rescind. If you accept
beyond the grace period.
The fifth limitation, the remedy of rescission is
alternative to specific performance, so you
cannot file both specific performance and
rescission. It has to be either specific
performance or rescission. Now there are cases
when even after choosing specific performance
you may still choose for rescission if specific
performance is no longer possible. Even if you
chose at first rescission but it is no longer
possible, then you may choose specific
performance. Like for example you chose for
specific performance but it cannot be done, the
seller did not deliver but you already paid, pero
ang nanghitabo nawala na ang property so it
cannot be delivered. So even if you chose specific
performance, it is no longer possible and so you
may now demand for rescission. Ang reverse
naman is when you choose rescission, the seller
already delivered the property but the buyer has
not fully paid the price and in the meantime the
The injured party may choose between the
fulfillment and the rescission of the obligation,
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
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)
The basis of Art. 1191 for rescission is the breach
of faith. It is not economic injury under Art. 1380,
which is the rescission proper. So the basis for
rescission in 1191 is different from Art. 1380. in
Art. 1191, the basis is the breach of faith or the
violation of the contract. In Art. 1380 or 1381, it is
the lesion or economic injury. In Art. 1191, the
breach must be substantial breach and not
merely casual breach.
In the case of the Congregation of the Virgin
Mary vs Orola, et. al., G.R. No. 169790. April 30,
2008 and Lelicon vs National Housing Authority,
GR. No. 185440, July 13 2011, the common
distinctions discussed by the SC regarding Art.
1191 and Art. 1380 are the following:
Art. 1191 Art. 1380

buyer already sold the property persons will be affected and so in Partial rescission and partial
to a third person, so when the that case the seller may demand specific performance may also
seller asks for rescission it is no for specific performance. be resorted to.
longer possible because third
6th limitation, the remedy of
rescission can only be filed by
one who is not at fault. It can
only be availed of by the
injured party.
Is properly called RESOLUTION
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 11 of 29
Principal action- can be brought Based on lesion or economic
in the first instance when there injury.
is a breach of faith. Retaliatory
contemplates that the right of the
party to rescind the contract is
based on
the breach by the other party.
Also contemplates an alternative
remedy. It is alternative to
specific performance. Both
cannot be availed of at once.
There are specific instances
where you can file rescission or
rescission after you have filed
specific performance.
Based on breach of faith
cannot be filed in the first
instance where there is economic
injury. All other actions which
are available must be
considered, like specific
performance, etc. All other
remedies must be exhausted
first before Art. 1380 can be
availed of.
This is the last remedy. If you
cannot avail of those other
remedies, only then can you
avail of rescission under Art.
1380.
Prescriptive period is Prescriptive period
10 years. is 4 years.
Applies to reciprocal obligations PROPER
or obligations in which the
Not necessarily applicable only
parties are bound to perform
to reciprocal
simultaneously
obligations as it may apply to
other kinds of obligations
Is a principal action which is
Is a subsidiary action, which
retaliatory in character.
means that it
Is called RESCISSION
PERIOD CONDITION
Obligations with a Period
Article 1193. Obligations for whose fulfillment
a day certain has been fixed, shall be
demandable only when that day comes.
Obligations with a resolutory period take effect
at once, but terminate upon arrival of the day
certain.
A day certain is understood to be that which
must necessarily come, although it may not be
known when.
If the 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)
Obligation with a period or a
term
When we say period or term, it is
a future and certain event which
must necessarily come or arrive,
although we may not know
when, but it is sure to arrive, As to Time
unlike a condition which is
tainted with uncertainty.
Refers to the future Refers to a future and
and certain event uncertain event, or a
 past event unknown to the parties
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 cannot be
determined which of the parties first violated As to Fulfillment
It will happen at an exact date or at an indefinite
time, but is sure to arrive
No effect or
influence upon the existence of the
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 12 of 29
its demandability or c. Judicial – _the period or term performance of an obligation or
performance fixed by the courts for the
already existing (resolutory)
Q: What is an obligation with a period or a
term?
A: It is the obligations for whose fulfillment a
day certain has been fixed, shall be demandable
only when that day comes. (Art. 1193)
Q: What are the requisites of a valid period or
term?
A: FCP
1. Future
2. Certain
3. Possible, legally and physically (Paras, Civil
Code of the Philippines Annotated, Vol. IV., 2008 ed.
p. 235)
Q: What is a term or period?
A: It is a certain length of time which determines
the effectivity or the extinguishment of the
obligations.
Q: What is a “day certain”?
A: It is understood to be that which must
necessarily come, although it may not be known
when
the contract, the same shall be deemed
extinguished, and each shall bear his own
damages. (n)
May or may not happen
As to its Influence on the Obligation to
be Fulfilled or Performed
obligation but only in
May give rise to an obligation
(suspensive) or the cessation of one
for its termination.
Kinds of period or term
1. According to effect:
a. Ex die – _this is a term or period with
suspensive effect. The obligation begins only
from a day certain, in other words upon the
arrival of the period.
b. In diem – _a period or term with a resolutory
effect. Up to a certain extent, the obligation
remains valid, but upon the arrival of said
period, the obligation terminates.
2. According to source:
a. Legal – _a period granted under the provisions
of the law.
b. Conventional or voluntary – _period agreed
upon or stipulated by the parties.
3. According to definiteness:
a. Definite – _the exact date or time is known and
given.
b. Indefinite – _something that will surely happen
but the date of happening is unknown.
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)
PLEASE SEE DISCUSSION UNDER ARTICLE
1189
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)
If the period has not yet arrived, the creditor cannot
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 13 of 29
The presumption is, if there is a period, it is for
the benefit of both the creditor and the debtor.
Example: If the obligation is due on December
31, 2014, the creditor cannot be compelled to
accept payment by the debtor, before December
31, 2014. The debtor cannot also be compelled
by the creditor to pay before December 31.
For whose benefit is the period constituted?
GR: 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
XPN: When it appears from the tenor of the
period or other circumstances that it was
established for the benefit of one of the parties.
Jose vs. CA
Here we have a contract of lease. It says that
the lease is for a period of 15 years, subject to
renewal for another 10 years. The phrase
‘subject to renewal’ is unclear on whether the
parties contemplated an automatic renewal,
yet demand the performance of the obligation. That is
why the debtor can recover if he paid prior to the
arrival of the period, on the premise that there is
mistake. If he paid voluntarily, knowing that the
obligation has not yet become due and demandable,
then he is deemed to have waived the period.
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)
or just an option to renew. If what exist is just
an option, who may exercise the option?
Renewal of the contract may be had only
upon their mutual agreement. One party
cannot compel the other to renew. Applying
the principle of mutuality of contracts, and
because the period of the lease is deemed to
have been set for the benefit of both parties.
Thus, there has to be a mutual agreement.
Q: What if the tenor of the contact is that the
debt is payable on or before December 31,
2014, whose benefit is that period for?
A: If you say payable on or before, the debtor
can pay before or it can be on the exact date
stipulated. Can the creditor collect from the
debtor before December 31? No. the option
here is in favor of the debtor.
However, if it says that the debt is
‘demandable on or before December 31’, the
option is on the creditor. So the creditor can
demand on or before. But he cannot be
compelled to accept payment on or before.
 Article 1197. If the obligation does not fix a
period, but from its nature and the
The court may fix the period in this case. The
circumstances it can be inferred that a period
court here does not make the contract for the
was intended, the courts may fix the duration
parties but it only makes clear the intention of
thereof.
the parties.

The courts shall also fix the duration of the

period when it depends upon the will of the
debtor.
In every case, the courts shall determine such
period as may under the circumstances have
been probably contemplated by the parties.
Once fixed by the courts, the period cannot be
changed by them. (1128a)
When may the court fix the period?
1. If the obligation does not fix a period, but
from its nature and circumstances it can be
inferred that a period was intended by the
parties. 2. If the duration of the period depends
upon the will of the debtor.
3. In case of reciprocal obligations, when there is
a just cause for fixing the period.

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 14 of 29

4. If the debtor binds himself when his means
permit him to do so. (5) When the debtor attempts to abscond.
(1129a)
Note: Once fixed by the courts, the period
cannot be changed by the parties.
Article 1198. The debtor shall lose every right When may a debtor lose his right to make use
to make use of the period: of the period?

(1) When after the obligation has been
contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor
the guaranties or securities which he has
promised;
(3) When by his own acts he has impaired
said guaranties or securities after their
establishment, and when through a fortuitous
event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any
undertaking, in consideration of which the
creditor agreed to the period;
1. When after the obligation has been contracted
he becomes Insolvent, unless he gives a guaranty
or security for the debt;
2. When he does not furnish to the creditor the
Guaranties or securities which he has promised;
3. When by his own acts he has Impaired said
guaranties or securities after their establishment,
and when through a fortuitous event they
disappear, unless he immediately gives new
ones or 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. (Art.
1198)
So even if there is a period mentioned, the
obligation is immediately due and demandable
 if any of the instances in this article is present. are two or more prestations. It may be: a.
Conjunctive obligation – one where there are
SECTION 3
Alternative Obligations several prestations and all
of htem are due; or
ARTICLE 1199. A person alternatively bound b. Distributive oblgiation – one where
by different prestations shall completely two or more of the prestations is
perform one of them. due. It may be:
The creditor cannot be compelled to receive part i. Alternative obligation – one
of one and part of the other undertaking. where several prestations
(1131) are due but the performance
of one is sufficient; (Art.
1199)
Kinds of Obligation according to object: ii. Facultative obligation – one
where only one prestation is
1. Simple – one where there is only one due but the debtor may
prestation substitute another. (Art.
2. Compound obligation – one where tehre 1206)

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 15 of 29

Alternative obligation – D EITHER P10,000, or an iphone X. or fraud
borrowed from C P10,000. It is alternatively the object of the
agreed that D shall comply with Facultative obligation - D obligation have been lost or the
his obligation by giving C borrowed from C compliance of the obligation has
on account of delay, negligence become impossible.
P10,000. It is agreed that D shall comply with his Void prestation
obligation by giving C P10,000, or If principal If one prestation is void, the
at the option of D, an iphone X. obligation is void, the creditor others free from vices preserve
cannot
FACULTATIVE ALTERNATIVE compel delivery of the validity of the
OBLIGATIONS OBLIGATIONS the substitute obligation
Number of prestation Impossibility of prestation
Only one object is Several objects are If there is If various
due due impossibility to prestations are
Manner of compliance deliver the principal impossible to
May be complied May be complied thing or prestation, perform except one,
with by substitution with by fulfilling the obligation is this one must be
of one that is due any of those extinguished, even if delivered.
alternately due the substitute If all prestations are
Right to choice obligation is valid impossible to
Choice pertains only to debtor obligation is Effect of fortuitous loss
GR: Choice pertain to debtor extinguished Loss of substitute before the
XPN: Expressly granted to Loss of substitute Where the choice is given to the
creditor creditor,
perform, the or third person

Fortuitous loss of extinguish the the loss of the

extinguishes the all obligation alternative through
obligation pres substitution through the fault of the
Fort tatio the fault of the debtor renders him
uito n debtor doesn’t make
us will him liable.
loss
Effect of culpable loss liable for damages

Culpable loss debtor

obliges the debtor to deliver Article 1200. prestations which ar
substitute prestation without which could
debtor, unless it has been expressly granted to not hav
liability to debtor the creditor. obligation. (1132)
Culpable loss of any object due
will give rise to liability to The debtor shall have no right to choose those
Liability of the debtor
Substitution has been made and of indemnity for In alternative obligation, who
communicated to the creditor, damages when, through the fault has the right to choose
the obligor is liable for the loss of the debtor, all the things prestation?
of the thing which are
The creditor shall have the right

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 16 of 29

GR: The right of choice belongs to the debtor
XPN: unless it has been expressly given to the
creditor (Art. 1200).
Article 1201. The choice shall produce no effect
except from the time it has been communicated.
(1133)
In alternative obligations, when does the
choice made take effect?
The choice made takes effect only upon
communication of the choice to the other party
and from such time the obligation ceases to be
alternative (Art. 1201; Art. 1205).
Article 1202. The debtor shall lose the right of
choice when among the prestations whereby he
is alternatively bound, only one is practicable.
(1134)
What are the limitations on debtor’s right to
choose?
A:
1. The debtor must absolutely perform the
prestation chosen. He cannot compel the creditor
to receive part of one and part of the other
undertaking.
2. The debtor shall have no right to choose those
prestation which are impossible, unlawful or
which could not have been the object of the
obligation (Art. 1200).
3. The debtor shall lose the right to choice when
among the prestation whereby he is alternatively
bound, only one is practicable (Art. 1202).
When will alternative obligation become a
simple obligation?
1. When the debtor has communicated the
choice to the creditor.
2. When debtor lose the right to choice among
the prestations whereby the debtor is
alternatively bound, only one is practicable (Art.
1202).
3. When the choice has been expressly given to
the creditor and his choice has been
communicated to the debtor
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)
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)
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

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 17 of 29

price of any one of them, impossible. (1136a) CR may choose any of those
also with indemnity for choose from among the were lost,
damages. What are the effects of remainder or that DUE TO
loss of objects in which FORTUITO US EVENT
The same rules shall be alternative obligations? remains if only one DUE TO DEBTOR’S
applied to obligations to do indemnity for damages FAULT
or not to do in case one, CR may subsists
some or all of the Some but not all are claim any of those but it is the price/value
prestations should become lost subsisting OR he may of with
Choice Belongs to Debtor right to
All are lost DR released based on Only one remains of DR, CR has a right to
from the the value of the last damages indemnity for damages
obligation thing which disappeare that can be
CR shall claimed
have a right to Deliver that which
indemnify for damages remains. In case of fault
Some but not all are deliver that which he facultative.
lost shall choose from
DR shall among the The loss or deterioration of Article
the thing 1206 – refers
intended as to a
deliver that which he remainder without a substitute, through the facultative
negligence obligation.
of the
shall choose from damages obligor, does not render him Please
liable.see discussion
But once the
among the remainder Article 1206. When only one substitution has been
prestation has been made, the obligor
under Articleis1199.
liable
d/service which agreed upon, but the obligorformay
the render
loss ofanother
the substitute on account of his
become in delay, negligence
substitution, the obligation or fraud. (n)
is called
impossible DR shall
Only one remains Effect of Loss of the Principal thing:
Deliver that which remains
Choice Belongs to Creditor 1. Before substitution – obligation is
All are lost DR released from the them with liable for damages.
obligation extinguished if lost through
CR may fortuitous event. If lost with
claim the faulth of the debtor, the debtor is
price/value of any of

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 18 of 29

2. After substitution – regardless if thru
fortuitous event or with fault of debtor, the the same obligation does not imply that each one
debtor shall not be liable.
Effect of Loss of the Substitute:
1. Before substitution- the loss of the
substitute with or without fault does not
make the debtor liable. Note that in
facultative obligation, the choice is always
with the debtor only. Hence the loss of the
substitute merely causes the obligation to
cease as a facultative obligation, as the
debtor loses his right to choose the
substitute.
2. After substitution- once the susbtitution is
made, and the substitutre is lost, the
liability of the debtor is based on whetehr
or not the loss is due to his fault.
SECTION 4
Joint and Solidary Obligations
Article 1207. The concurrence of two or more
creditors or of two or more debtors in one and
of the former has a right to demand, or that
each one of the latter is 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)
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
appear, the credit or debt shall be presumed to
be divided into as many shares as there are
creditors or debtors, the credits or debts being
considered distinct from one another, subject to
the Rules of Court governing the multiplicity
of suits. (1138a)
It is one where the credit or debt shall be
presumed to be divided into as many equal
shares as there are creditors or debtors, the
credit or debts being considered distinct from
one another (Art. 1208).
It is where each debtor is liable only for a creditors has the right to demand from any of the
proportionate part of the debt and each creditor debtors, the payment or fulfillment of the entire
is entitled only to a proportionate part of the obligation.
credit.

What are solidary obligations? In the absence of any specific provision, an

obligation is presumed to be a joint obligation.
It is where each of the debtors obliges to pay the Solidarity is never presumed due to its
entire obligation, and where each one of the burdensome nature.

What are joint obligations? Each debtor is liable only for a
JOINT proportionate part of the entire
OBLIGATION Presumed by law debt Each creditor, if there are
(Art. 1208) several, is entitled only to a
proportionate part of the credit
SOLIDARY
OBLIGATION Not presumed.
Must be expressly stipulated by
the parties, or when the law or
the
nature of the
obligation requires solidarity.
(Art. 1207)
Each debtor is obliged to pay the
entire obligation
Each creditor has the right to
demand from any of the debtors,
the payment or
fulfillment of the entire
obligation

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(Tolentino, Civil In a SOLIDARY OBLIGATION, any one of the
CodeVol IV, 1999 solidary debtors may be held liable for the entire
ed. p. 217) obligation and any one of the solidary creditors
may claim the entire obligation.
So the motto here is “one for all and all for one.”
Unlike in a joint obligation, “to each his own.”
So assuming, we have A,B, are debtors, while C
and D are the creditors, debt is php100,000, they
are all solidary. How much can we collect from
A and how much can c collect? The entire Php
100,000, because any one can be held liable.
only entitled to 50k and D is entitled only to 50k.
How much can C collect from A?50k the same
thing for D.
So in a solidary obligation as provided for in
1215 and 1214, any one of the solidary creditors
may collect or demand payment for the entire
obligation.

Can there be solidarity at the same time a joint So there is also MUTUAL AGENCY because any
obligation in one obligation? one of them may comply.

Yes. Please read Article 1212.

Assuming that A and B are joint debtors, and C
and D are solidary creditors for 100k?
How much is the liability of A? 50k
How much is the collectible of C? The entire
100k because they are solidary creditors
How much can C collect from A? C may only
collect 50k becauseA is a joint debtor.
But how much can he collect? The entire 100k
because he is a solidary creditor but because A is
just a joint debtor he can only collect 50k. He can
collect both from A and B, 50k each. It makes
him entitled to the entire 100k.
How about in the reverse, A and B are solidary
debtors and C and D are joint creditors?
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)
There being mutual agency, between and among
the solidary creditors, this article says each one
may do anything beneficial to the other but not
prejudicial.
So the creditor may demand from the debtor the
obligation. The demand interrupts the
prescriptive period for the ENTIRE
OBLIGATION not only for his share. But not any
act prejudicial, for example condoning the entire
debt? Actually he can condone, but the law says,
not prejudicial, so he may condone but he is
bound to give to their other creditors their
shares.

So A and B can be made liable for the entire What are the legal consequences if the
obligation of 100k but being joint creditors, C is obligation is joint?

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 20 of 29

1. Each debtor is liable only for a proportionate The demand made by one creditor upon one
part of the entire debt debtor, produces effects of default only as
2. Each creditor, if there are several, is entitled between them
only to a proportionate part of the credit 3. 4. Interruption of prescription caused by the
demand made by one creditor upon one debtor,
will NOT benefit the co-creditors or the co
debtors
5. Insolvency of a debtor will not increase the
liability of his co-debtor
6. Vices of each obligation emanating from a
particular debtor or creditor will not affect the
others
7. In indivisible or joint obligation, the defense
of res judicata of one does not extend to the
others.
What is the effect of solidary obligation?
Each one of the debtors is obliged to pay the
entire obligation, and each one of the creditors
has the right to demand from any of the debtors
the payment or fulfillment of the entire
obligation.
What are the rules in a solidary obligation?
1. Anyone of the solidary creditors may collect
or demand payment of the whole obligation;
there is mutual agency among solidary debtors
(Arts. 1214, 1215)
2. Any of the solidary debtor may be required to
pay the whole obligation; there is mutual
guaranty among solidary debtors (Arts. 1216,
1217, 1222)
3. Each one of solidary creditors may do
whatever maybe useful to the others, but not
anything prejudicial to them (Art. 1212);
however, any novation, compensation,
confusion or remission of debt made by any
solidary creditors or with any of the solidary
debtors shall extinguish the obligation without
prejudice to his liability for the shares of other
solidary creditors (Art. 1215; Art.1219).
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 21 of 29
4. In case of insolvency of one of the debtors, the the obligation (Art. 1209).
others shall not be liable for his shares. To hold
otherwise would destroy the joint character of
What are the kinds of solidary obligation?
1. Passive – _solidarity on the part of the debtors
2. Active – _solidarity on the part of the creditors
3. Mixed – _solidarity on both sides
Article 1209. If the division is impossible, the
right of the creditors may be prejudiced only by
their collective acts, and the debt can be
enforced only by proceeding against all the
debtors. If one of the latter should be insolvent,
the others shall not be liable for his share.
(1139)
Article 1210. The indivisibility of an obligation
does not necessarily give rise to solidarity. Nor
does solidarity of itself imply indivisibility. (n)
Article 1211. Solidarity may exist although the
creditors and the debtors may not be bound in
the same manner and by the same periods and
conditions. (1140)
Article 1209 refers to a joint indivisible obligation.
What is the effect of joint indivisible
obligations?
1. If there are two or more debtors, compliance
with the obligation requires the concurrence of
all the debtors, although each for his own share.
The obligation can be enforced only by
preceding against all of the debtors.
2. If there are two or more creditors, the
concurrence or collective act of all the creditors,
although each of his own share, is also necessary
for the enforcement of the obligation. 3. Each
credit is distinct from one another; therefore a
joint debtor cannot be required to pay for the
share of another with debtor, although he may
pay if he wants to.
What is the effect of breach of a joint
indivisible obligation by one debtor? If one of
the joint debtors fails to comply with his
undertaking, the obligation can no longer be
fulfilled or performed. It is converted into one of
indemnity for damages. Innocent joint debtor
shall not contribute to the indemnity beyond
their corresponding share of the obligation.
For example, A, B and C are liable to give a car
to D worth 300,000 pesos. Technically, A, B and
C are only liable for 100,000 given that their
obligation is joint. However, it is impossible for
them to individually fulfill the obligation as the
object of the obligation is a car. They cannot
deliver the car by piece. Hence, it can only be
fulfilled by its compliance with the concurrence
of all the debtors. Now what if C is not able to
comply with his obligation, in this case D cannot
compel specific performance, as A and B may
not be compelled to pay more than their
respective share. In this case, the cause of action
is only for damages. A and B however will not
be held liable for damages, for the non-
compliance of C of his obligation.
Note that Solidarity refers to the juridical or legal
tie, while indivisibility refers to the prestation.
In the above example, the liability of A, B and C
are joint, but the object of their obligation is
indivisible.
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)
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 22 of 29
Already discussed.
Article 1213. A solidary creditor cannot assign
his rights without the consent of the others. (n)
Why? This is common sense. Each creditor
represents the interests of the others, and the
assignee may not have the confidence of the
original solidary creditors. Note that even
though the solidary creditor may collect the
entire debt, his collection shall inure to the
benefit of the other solidary creditors. He cannot
keep the entire proceeds for himself. If there is a
third party, how sure are the original co-
creditors that the assignee will give the share of
the others after receiving the
entire payment.
What are the effects of assignment of rights in
a solidary obligation?
GR: Solidary creditor cannot assign his right
because it is predicated upon mutual
confidence, meaning personal qualification of
each creditor had been taken into consideration
when the obligation was constituted (Art. 1213).
XPNs:
1. Assignment to co-creditor; or
2. Assignment is with consent of co-creditor.
Article 1214. The debtor may pay any one of
the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by one
of them, payment should be made to him.
(1142a)
To whom must payment be made in a solidary
obligation?
GR: To any of the solidary creditors.
XPN: If demand, judicial or extra-judicial, has
been made by one of them, payment should be
made to him.
Article 1215. Novation, compensation,
confusion or remission of the debt, made by
any of the solidary creditors or with any of the
solidary debtors, shall extinguish the
obligation, without prejudice to the provisions
of article 1219.
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)
Eample:
A, debtor and B,C,D solidary creditors in the
amount of Php30,000 If B validly condones the
debt in the amoun tof Pd18,000, he will be liable
for P6,000 each to C and D. If B collects 15,000
from A, B must give 5,000 each to C and D.
Article 1216. The creditor may proceed against
any one of the solidary debtors or some or all of
them simultaneously. The demand made
against one of them shall not be an obstacle to
those which may subsequently be directed
against the others, so long as the debt has not
been fully collected. (1144a)
So because the obligation is solidary, any one of
the debtors can be held liable for the entire
obligation. The creditors can just choose among
the debtors for the entire obligation. So in a
solidary obligation, it is not necessary to join all
the other debtos in the case. They are NOT
indispensable parties, because you can proceed
against any one of them, and it can be fully
satisfied by just a demand against one. But if it is
NOT satisfied, then he may proceed against the
others simultaneously or successively as long as
the entire obligation has not yet been fully paid.
Article 1217. Payment made by one of the
solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the
creditor may choose which offer to accept.
He who made the payment may claim from his
co debtors only the share which corresponds to
each, with the interest for the payment already
made. If the payment is made before the debt is
due, no interest for the intervening period may
be demanded.
When one of the solidary debtors cannot,
because of his insolvency, reimburse his share
to the debtor paying the obligation, such share
shall be borne by all his co-debtors, in
proportion to the debt of each. (1145a)
So if you are a solidary debtor as one of the
debtors, any one of you can pay and it shall
extinguihs the entire obligation.
If there are solidary creditors on the otherhand,
if any one of them should make a demand, the
payment should be made to the one who made
the demand. You cannot pay to the others
anymore because even if there is mutual agency
in a solidary obligation, once a demand is made
by any one of them, the agency is not
concentrated on the one who made the demand.
Now, in case of payment of the solidary debtors,
he who paid the entire oblgation has the right to
collect also from the other debtors because in
reality they are obliged to pay. But with respect
to the creditors, they can collect from any one of
them.
How about the effect INSOLVENCY?
In solidary obligations, the insolvency of one
solidary debtor is shouldered by the other
debtors. Unlike in a joint obligation, if one is
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 23 of 29
insolvent, each one will contribute to pay the
share of the insolvent debtor.
For example A, B and C are solidary debtors,
C is insolvent, A can be made to pay for the
entire obligation. So A will have to pay the
entire obligation but as to reimbursement
from his co-debtors, A and B will share the
insolvency of C.
Article 1218. Payment by a solidary debtor shall
not entitle him to reimbursement from his co
debtors if such payment is made after the
obligation has prescribed or become illegal. (n)
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)
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)
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)
Article 1222. A solidary debtor may, in actions
filed by the creditor, avail himself of all defenses
which are derived from the nature of the obligation
and of those which are personal to him, or pertain
to his own share. With respect to those which
personally belong to the others, he may avail
himself thereof only as regards that part of the debt
for which the latter are responsible. (1148a)
So, what are the defenses available to the
solidary debtor?
1. Those defenses which are derived from the
nature obligation. For example
PRESCRIPTION, if an obligation has
prescribed, the entire obligation cannot be
demanded at all, PAYMENT, STATUTE OF
FRAUDS, so if the obligation is NOT
enforceable, then any one of the solidary
debtor may raise that defense.
2. Defenses personal to the debtor himself. For
example at the time the obligation was
contracted, A was a MINOR, and creditor
makes a demand. If he goes to A, the possible
demand of A is minority. As to A as to the
minor, that is a total defense,you cannot
collect even if it is a solidary obligation
3. Defenses which are personal to the other
solidary debtors. So the same thing, A, B and
C, A was a minor. The creditor now goes to B
for collection, what are the possible defenses
of B? B can allege A’s minority as a partial
defense. B is a solidary debtor but A is a
minor, so you can deduct A’s liability.
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
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 24 of 29
creditor does not alter or modify the provisions of
Chapter 2 of this Title. (1149)
Article 1224. A joint indivisible obligation gives
rise to indemnity for damages from the time
anyone of the debtors does not comply with his
undertaking. The debtors who may have been
ready to fulfill their promises shall not contribute
to the indemnity beyond the corresponding
portion of the price of the thing or of the value of
the service in which the obligation consists.
(1150)
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)
DIVISIBLE INDIVISIBLE
What are the obligations that are deemed
indivisible and obligations that are deemed
divisible:
1. Obligations that are deemed indivisible:
a. Obligations to give definite things
b. Those which are not susceptible of partial
performance
c. Even the object or service may be physically
divisible, an obligation is indivisible if so
provided (i) by law or (i) intended by the
parties. (Art. 1225)
A pledge or mortgage is one and indivisible by
provision of law, and the rules applies even if
the obligation is joint and not solidary (Art.
2089).
2. Obligations that are deemed divisible: a.
When the object of the obligation involves: i.
certain number of days of work;
ii. accomplishment of work by metrical unit;
iii. Analogous things which are by their nature
susceptible of partial performance (Art. 1225)
It is not uncommmon, that an indivisible
obligation is confused with a SOLIDARY
OBLIGATION.
When we say INDIVISIBLE OBLIGATION, we
are referring to the SUBJECT MATTER OF

Susceptibility of an obligation to OBLIGATION OR THE in parts.

be performed partially
Non-susceptibility to be
performed partially
Partial
performance is tantamount to
non performance
PRESTATION. When we say When can the obligation be not
SOLIDARY, we are referring to performed in parts?
the TIE between parties.
If it is physically indivisible,
When we say INDIVISIBLE stipulated to be indivisible or by
OBLIGATION, it means that the the nature of the obligation it is
obligation cannot be performed indivisible.

Obligations and Contracts – HCDC 2nd Exam Coverage|Page 25 of 29

So even if an obligation is indivisible, it DOES indivisible joint and indivisible solidary
NOT FOLLOW that it is SOLIDARY. There are obligations.
A and B entered into an obligation to deliver a
car to X. So the nature of their obligation as to
the subject matter, is INDIVISIBLE. Because
even if you can physically divide the car, it
destroys the integrity of the obligation so it has
to be delivered as a whole.
As to the legal tie, what is the tie between the
parties? In the absence of any stipulation, JOINT.
So to each his own, X cannot compel A to deliver
the entire car alone or B to deliver the car alone
because the obligation is indivisible. So how can
he compel the delivery? He has to make a
demand against both A and B because the
obligation is indivisible. But because the
obligation is joint, a demand from one will not
compel one to perform or deliver the entire
obligation. So there has to be a demand against
both debtors so that delivery can be made.
For example, what if X now, the creditor,
demands from both A and B, A is ready but B is
not, so what happens now to the obligation? It is
indivisible and joint. One is not ready. In that
case the obligation is converted into a
MONETARY OBLIGATION, for damages. In
that case, because it is JOINT, only B is liable for
his default. A who is ready, will contribute his
share without damages, B, his share, plus
damages. So that’s for indivisible and joint
obligations.
SECTION 6
Obligations with a Penal Clause
Article 1226. In obligations with a penal clause,
the penalty shall substitute the indemnity for
damages and the payment of interests in case of
noncompliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid if
the obligor refuses to pay the penalty or is guilty
of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is
demandable in accordance with the provisions of
this Code. (1152a)
What is a penal clause?
It is an accessory obligation or undertaking
attached to the principal obligation to assure
greater responsibility in case of breach. Note:
Proof of actual damages suffered by the
creditor is not necessary in order that the
penalty may be demanded (Art. 1228).
Q: What is the effect of incorporating a penal
clause in an obligation?
GR: The penalty fixed by the parties is a
compensation or substitute for damages in case
of breach.
XPNs: Damages shall still be paid even if there
is a penal clause if: SRG
1. there is a Stipulation to the contrary 2. the
debtor Refuses to pay the agreed penalty
In the case of FILINVEST LAND VS. CA, G.R.
No. 138980, September 20, 2005, the SC
discussed the nature of Penal clause. A penal
clause is an accessory undertaking to assume
greater liability in case of breach, it is attached
to an obligation in order to ensure performance
and has a double function:
1. To provide for liquidated damages 2. To
strengthen the coercive force of obligation by
the threat of great responsibility in case of
breach.
There has to be a stipulation in order to enforce a
penal clause. It has the function of liquidated
damages. It now makes it easier for parties to
claim for damages. You need not prove, it is
agreed upon. It is really a penalty, by the
presence of the penal clause, the parties will now
fear that if they breach the obligation, they will
be liable for more.
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 26 of 29
General Rule: The penalty shall substitute the
indemnity for damages and the payment of
interest in case of non-compliance, if there is no
stipulation to the contrary.
So if there is already a penal clause it shall be the
one paid to the aggrieved party, there will be no
more damages or interest unless there is a
stipulation to the contrary.
EXCEPTIONS:
1. There is a stipulation to the contrary 2. If
the obligor, refuses to pay the penalty,
damages may be recovered
3. The obligor is guilty of fraud in the
payment of obligations.
So take note, if there is a penal clause, you only
have to prove BREACH of the obligation, no
need to prove the actual damages or the amount
of damages.
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)
Article 1228. Proof of actual damages suffered by
the creditor is not necessary in order that the
penalty may be demanded. (n)
Can the debtor just choose penalty over non
fulfillment?
GR: No. The debtor cannot exempt himself from
the performance of the obligation by paying the
penalty (Art. 1227).
XPN: Yes, when the right has been expressly
reserved to the debtor (Art. 1227).
Can the creditor demand both the fulfillment
of the principal obligation and the penalty?
GR: No. The creditor cannot demand the
fulfillment of the obligation and the satisfaction
of the penalty at the same time (Art. 1227).
XPNs:
1. When the right has been clearly granted to
him;
2. If 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. (Art. 1227)
Article 1229. The judge shall equitably reduce
the penalty when the principal obligation has
been partly or irregularly complied with by the
debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if
it is iniquitous or unconscionable. (1154a)
The most common issue in a penal clause is the
REDUCTION OF PENALTIES. Even if there is
an agreement, the penalty may still be reduced
in the following instances:
1. If the principal obligation is partially
complied with
2. If the obligation has been irregularly
complied with
3. If the penalty is iniquitous or unconscionable.
In the case of FILINVEST LAND VS. CA, G.R.
No. 138980, September 20, 2005. SC said, the
project is already 93.4% completed but the
project was NOT COMPLETED on time because
there were extensions. The owner of the project
wanted to enforce penalty in the contract.
Filinvest asked for reduction. The case of Lauriat
was cited by the owner of the project because in
that case, SC made a distinction between a
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 27 of 29
PENAL CLAUSE as LIQUIDATED DAMAGES
AND PENAL CLAUSE as PENALTY.
SC said, if a PENAL CLAUSE was intended to be
a penalty, the court will be quick to reduce the
PENALTY. Why? Because in that kind of penal
clause, the parties did not take into account the
possible damages that they will probably suffer
in case of breach. But if the penal clause is
intended as liquidated damages, the courts will
be slow, because if it is intended as liquidated
damages, the parties already considered the
amount that they will suffer in case of breach so
the court will not meddle with that and readily
reduce the amount.
HOWEVER, SC said, that distinction will apply
only if THERE IS NO PARTIAL OR
IRREGULAR PERFORMANCE because if there
is PARTIAL OR IRREGULAR PERFORMANCE,
the law is very clear, that the court may reduce
the penalty regardless if it was intended to be a
penalty or for liquidated damages. So the court
said, there is a ground to reduce penalt.
How do we know that the penalty is
unconscionable or iniquitous?
Tolentino vs. Supervalley G.R. No. 172384
September 13, 2007
The question of whether a penalty is
unconscionable or iniquitous is partly subjective
and objective. Its resolution will depend on such
factor as, but not necessarily confined to the
time, extent and purpose of the penalty, the
nature of the obligation, the mode of breach, the
prevailing legalities, the relationship of parties,
is to be submitted to the sound discretion of the
court.
The lessee here is SM. It was stipulated that
before the lessee can make improvements, it has
to ask for SM’s consent. Lessee did not ask for
SM’s consent. SM wanted to forfeit the security
deposit. The security deposit was in the amount
of Php109,000. So here, was the penalty
iniquitous and unconscionable?
SC said, in this particular case, the breach
committed by the lessee was NOT THAT
SIGNIFICANT AND SUBSTANTIAL as to
warrant forfeiture of the security deposit. When
you rent a place in a mall, you sometimes need
to renovate your space as part of the marketing
ploy. It is not a matter of necessity but a business
strategy as well.
Article 1230. The nullity of the penal clause
does not carry with it that of the principal
obligation.
The nullity of the principal obligation carries
with it that of the penal clause. (1155) 1230
IV. Definitions
Define or give the meaning of the following: (3
points each)
a) Condition;
b) Pure Obligation;
c) Potestative Condition;
d) Physical loss;
e) Legal impossibility;
f) Facultative obligation;
g) Alternative obligation;
h) Divisible obligation;
i) Indivisible obligation;
j) Solidary obligation;
k) Joint obligation;
V. Problems
Explain or state briefly the rule or reason for our
answers (10 points each):
a) Seller agreed to sell to the buyer a specific
car for Php200,000, delivery of the car and
the payment of the price to be made on
June 15. What are the remedies of the
buyer, if he already paid the purchase
 Obligations and Contracts – HCDC 2nd Exam Coverage|Page 28 of 29
price ahead of time, but the seller failed
to deliver as the car was swept by the
flashflood, days before the delivery.
i.What if despite warning that there will
be a flashflood, the seller failed to act
promptly, what are the remedies of the
buyer?
ii.What if the object of the sale is “a sedan”.
What is the effect of the loss of the seller’s
sedan, to the obligation?

b) A, B and C are jointly liable to deliver a

car to D on a certain date. There was
failure to deliver due to the failure of C
to give his share to the purchase price.
i. What is the remedy of D;
ii. What are the individual
obligations of A, B and C;
VI. Sources:
c. Lectures of Atty. Leilanie
Yangyang-Espejo;
d. The Law on Obligtations and
Contracts by Hector S. De Leon;
e. Obligations and Contracts (Laws,
Principles and Jurisprudence) by
Atty. Andrix D. Domingo, CPA,
MBA
f. UST Golden Notes;
Obligations and Contracts – HCDC 2nd Exam Coverage|Page 29 of 29