Obligations and Contracts – Lecture Notes Sources of Obligation (5)

- The list is exclusive. Thus if the source is not one of

General Provisions the 5, then there is no Obligation to speak of
1. Law
Article 1156 2. Contracts
An obligation is a juridical necessity to give, to 3. Quasi-Contracts
do or not to do. 4. Acts or omissions punished by law (delicts)
5. Quasi-Delicts
Q: What is an Obligation?
A: It is a juridical necessity to give, to do, or not to do Note: numbers 3-5 are also provided by law
Failure to compel with the juridical necessity will
subject the debtor to a sanction Article 1158
Obligations derived from law are not
4 essential elements of an obligation: presumed. Only those expressly determined in this
1. Active subject – creditor or obligee; person who can Code or in special laws are demandable, and shall be
demand the fulfillment of an obligation regulated by the precepts of the law which establishes
2. Passive subject – debtor or obligor them; and as to what has not been foreseen, by the
3. Object or prestation – object is any of to give, to do provisions of this Book.
or not to do
4. Efficient cause – judicial tie or vinculum 1st source – LAW
- Those derived from law should not be PRESUMED
Example: X agreed to give his car to Y - Thus, you have to point out a specific provision of the
Active – Y law
Passive – X - This is provided by the Civil law and Special Law (SL
Object – obligation to give the car should prevail in case of conflict)
Efficient cause – agreement
Article 1159
Giving (as prestation) Obligations arising from contracts have the
- Called real obligation force of law between the contracting parties and
- 2 types of real obligation should be complied with in good faith.
o To give or deliver a specific or
determinate thing (ex. MY car) 2nd source – CONTRATCTS
o to give or deliver a generic or - Have the force of law between contracting parties
indeterminate thing (ex. A car) - This must be complied with in GOOD FAITH
- Requires consent from the parties; bound by the
Kinds of Obligation: terms and conditions of contracts
 Viewpoint of Sanction - There are limitations for the right over the parties to
stipulate (they should not be contrary to laws, public
a. Civil obligation – can be obtained in court
policy, good customs, morals, public order)
b. Natural obligation – action has already prescribed but
creditor failed to demand within the prescriptive
Principle of Liberty or Freedom of Contracts
period. Despite the prescription, debtor voluntary
- Parties have the right to agree on terms and
delivered payment. In this case, debtor cannot get
conditions as they may deem it convenient, provided
back what he paid
that such are subject to limitation
c. Moral obligation – ex. Hear mass
Q: What are the essential elements of a contract?
Q: What is the importance of differentiating a specific and
A: meeting of the minds, consent of the cause and
generic obligation?
consideration
A: Effects of the laws for the two obligations are different. In
a. Consent
case of fortuitous event (those which cannot be foreseen or
b. Cause
can be foreseen but are inevitable), liability to deliver specific
c. Consideration
obligations are extinguished. However, this is not so in the
case of generic obligations because you can still deliver any
other thing to the creditor which falls under the same class of
Good Faith – not by the sword that killeth it but by the spirit
the obligation (genus does not perish)
that giveth life (it does not make law inferior to a contract nor
a contract superior than the law)
To Do or Not to DO (as prestation)
- called Personal obligation
Q: What are the difference of an obligation and a contract?
- are either affirmative or negative
A:
OBLIGATIONS CONTRACT
 Viewpoint of Person Obliged
- Result of a contract - Results to an obligation
a. Unilateral – only 1 party has an obligation to perform
- Not necessary require - Always presupposes a
b. Bilateral – 2 parties has an obligation to perform.
meeting of the minds meeting of the mind
Example: contract of sale (buyer and seller)
(consent of cause and
consideration)
Article 1157
Obligations arise from:
(1) Law; NOMINATE AND INNOMINATE CONTRACTS
(2) Contracts;  Nominate – law has given a particular name for that
(3) Quasi-contracts; contract
(4) Acts or omissions punished by law; and  Innominate – contracts with no specific name
(5) Quasi-delicts. a. DO UT DES – I give that you may give
b. DO UT FACIAS – I give that you may do
1 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 c. FACIO UT DES – I do that you may give
d. FACIO UT FACIAS – I do that you may do
Article 1160
Obligations derived from quasi-contracts shall
be subject to the provisions of Chapter 1, Title XVII, of
this Book.
3rd Source – QUASI – CONTRACTS
- Also provided for by Law (Chapter I, Title XVII of Civil
Code)
- No meeting of the minds
Q: What is a Quasi-Contract?
A: Juridical relation resulting from a lawful, voluntary and
unilateral and which has for its purpose the payment of
indemnity to the end that no one shall unjustly enrich
himself at the expense of another
- 2 common kinds:
a. Negotorium Gestio – unauthorized management
Ex. Neighbor saved you properties thus had
expenses
b. Solution Indebiti – undue payment
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.
4th Source – ACTS OR OMISSIONS PUNISHED BY LAW or
DELICT
- Criminal liability carries civil liabilities
o Restitution – return the exact thing
o Reparation – pay equivalent price
o Indemnification – consequential damage
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.
5th Source – QUASI DELICT
- Chapter 2 Title XVII of CC or Special Laws
- Torts and damages
- Basis: act of negligence or omission of care causing
damage to another with no pre-existing contractual
relations
Q: When is there negligence?
A: Omission of that diligence which is required by the
circumstances of person, place and time
Q: When can an obligation arise from a quasi-delict?
A: The requirements are as follows:
1. There must be fault or negligence
2. There must be damage or injury
3. There must be a direct relation of cause and effect
between the fault or negligence and damage and
injury (the act of negligence is the proximate cause
of the damage)
What is important in quasi-delict is that you have to show that
there is no pre-existing contract between the parties
Take note: If the source is not any of the five sources
stipulated, then in it is not considered an obligation (article
1158)
2 angel‘s notes
Ex. Is an employer obliged to provide for legal service to his
employee? No, for the law does not require for such.
Dammum absque injuria (Damage without injury)
- damage without legal injury
- There is damage but there is no injury
- There is no liability in this case
Injury – illegal invasion of a legal right. You associate
it with a wrongful act or omission which will result to
loss or damage
Damage – the loss or the hurt or harm done to
another which usually results from the injury
Nature and Effect of Obligations
Real Obligation – obligation to deliver a specific and
indeterminate thing
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.
- There is an obligation to give something:
contemplates on DETERMINATE OBJECTS ONLY
- Purpose: ensure that the creditor will receive the
object. Thus debtor should take care of the object so
as to deliver it to the creditor
- If generic, there is no need to practice good diligence
of a father
- In an obligation to deliver a specific thing, while still
in the possession of the obligor, he has the
responsibility to take care of such using ordinary
diligence (diligence required in the absence of any
stipulation in law or contract)
Relate to art. 1173 – the diligence needed is that which is
required by the NATURE of the obligation and corresponds
with the circumstances of person, time and place
EXCEPTIONS
If the law or contract provides for a DIFFERENT standard of
care, said law or stipulation must prevail (Art. 1163)
Extraordinary diligence –required only if expressly provided by
law or parties expressly provided this in their contract
Good Father of a Family: Standard Care or Diligence given
Q: What are the other types of standards?
A:
a. Slight –by contract, this can be imposed
b. Extraordinary – diligence of very cautious persons;
ex. Common carrier custody (airplanes, bus, etc.)
c. Utmost Diligence – ex. imposed on banks
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.
Delivery of fruits is only applicable to SPECIFIC obligations
Fruits – three types contemplated in this article
a. Natural – spontaneous product of soil and young of
animals
b. Industrial – acquire through industry or labor
c. Civil – rent, lease, interest
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Q: what kind of right does the creditor have over the fruits?
A: distinguish personal right from a real right.
Personal – enforceable only against another party
Real right – enforceable against the whole world
Q: When does the obligation to deliver it arises?
A: This is qualifiable. It will depend on what is the source
of obligation.
 If pure obligation (not subject to any condition or
term)- from the time the agreement is entered into or
is perfected (it is demandable at once)
 If the obligation has a term (X obliged himself to
deliver a land to Y on Nov. 15) – the obligation arise
upon the arrival of the term
 If there is a conditional obligation- obligation arise
when the condition is fulfilled
- This article contemplates on a situation where the
debtor has not yet delivered the obligation but that
contract was already perfected. In this case, you only
have a PERSONAL right that will compel the seller to
deliver such obligation to the creditor. The buyer thus
asks what is due to him.
- The moment the obligation arises, it is only a
personal right. The real right only happens upon
delivery.
ILLUSTRATION
Sam is obliged to give Ben on December 1, 2008, a particular
parcel of land
 Prior to December 1 – the creditor does not have any
right over the fruits
 December 1 (without delivery yet) – from Dec 1 to
15: he is entitled to the fruits. However, this is only a
personal right
 December 15 (actual or constructive receipt)
onwards – he becomes the owner of the fruits and
the land only AFTER the date of receipt (Real Right)
KINDS OF DELIERY
1. Actual Delivery
- the property changes hands
- ex. The moment the book is given to you (buying of
book: transfer of possession)
2. Constructive Delivery
- The physical delivery is implied
Kinds of Constructive Delivery
a. Tradition simbolica – when you buy a house and the
key of the house is given to you
b. Tradition longa manu – the object is pointed to you
c. Tradition brevi manu – illustrated in a situation where
the person is occupying the property as a lessee or
tenant. Such property is bought by the tenant from
the lessor. His possession is thus changed from a
lessee to an owner
d. Tradition constitutum possesorium – opposite of brevi
manu. Selling your own property to another but after
the sale you enter into a contract with the owner for
you to occupy the property as a lessee.
e. Tradition by the execution of legal forms and
solemnities – when you buy a parcel of land, you
don’t have to be physically placed on the land. The
documents will be considered as a delivery
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.
3 angel‘s notes
If the thing is indeterminate or generic, he may
ask that the obligation be complied with at the
expense of the debtor.
If the obligor delays, or has promised to
deliver the same thing to two or more persons who do
not have the same interest, he shall be responsible for
any fortuitous event until he has effected the delivery.
- The distinction between generic and specific
obligation is presented.
- Specific – if lost during fortuitous event, the
obligation is extinguished
- Generic – not extinguished because genus does not
perish
1st par – compel the specific thing which was to be delivered
- Debtor cannot compel the creditor to receive another
thing other than that which was specified
2nd par – debtor should deliver what belongs to the class not
inferior or superior of quality
- You just deliver the regular type
- If A lost the horse, B can buy to C and A will pay C
3rd par – the term INTEREST refers to RIGHT
- Even if the obligation is determinate, if two or more
persons who do not have the same interest is to
receive such, the liability will not be lost
- Applies only to DETERMINATE THINGS
The third paragraph is an exception to the rule on specific
obligations which is lost due to fortuitous event
1. If he incurs delay (obligor delays)
Q: When is there delay?
A: first distinguish ordinary delay and legal delay or default.
What is contemplated in delay here is the legal delay or
default MORA (debtor fails to comply with the obligation on
the designated time). Delay happen when you still fail to
deliver after there has been a demand whether judicial or
extra judicial
Ordinary – merely non performance at the stipulated time
Legal delay – delay which amounts to a virtual non-fulfillment
of the obligation (principle behind is “there is no delay if there
is no demand”)
Take note: A mere reminder with respect to the due date is not
a demand. From the time the demand is made, that is only
when the debtor will be liable for damages.
2. If obligor is in bad faith because he promised to
deliver the same thing to two persons with different
interest
Remedies of the Creditor when the Debtor fails to comply with
his obligation
1. Demand SPECIFIC PERFORMANCE of the obligation
2. Demand RESCISSION or CANCELLATION
3. Demand DAMAGES either with or without either of
the first two
Article 1166
The obligation to give a determinate thing includes
that of delivering all its accessions and accessories,
even though they may not have been mentioned.
- Accessions and Accessories: are included even if not
specified in the contract
- Applicable only to DETERMINATE obligations
Accessions – attachment that you can no longer separate
unless you will cause damage; additions to or improvements
upon a thing
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion

Accessories – not attached but are necessary; those joined to
or included with the principal for the latter’s better use,
perfection, or enjoyment
Take Note: So as to not violate this provision – you shall
stipulate in your contract what are those accessories or
accessions that you wish to exclude in your sale.
Summary
Rights of Creditor in Determinate Obligation (both can be
availed by the Creditor)
1. Compel specific performance – includes delivery of
accessions
- Compel debtor to deliver the thing agreed upon
2. Recover damages in case of Breach (article 1170)
Rights of Creditor in Generic Obligations
1. Compel performance of obligation
2. In case he refuses to comply or cannot comply, obligation
may be complied by another person at the debtor’s
expense
3. Recover damages in case of Breach (Mental damages)
Obligations of Debtor in Determinate Obligations
1. Give the very same thing they agreed upon
2. Take care of the thing with proper diligence (article 1163;
applicable only to determinate because generic things can
never be lost)
3. Deliver accessions and accessories (article 1166)
4. Pay for damages in case of Breach (1170)
Obligations of Debtor in Generic Obligations
1. Deliver a thing of its class which is neither of superior or
inferior
2. Pay for damages in case of breach
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.
- Is not in relation to article 1166
- Contemplates on obligation TO DO or a PERSONAL
OBLIGATION
- Debtor cannot be compelled to do something he is
asked because this will result to INVOLUNTARY
SERVITUDE (violation of constitutional right; will
result to act of violence
- REMEDY: ask someone to do it but at the expense of
the debtor
- Example: if construction is ugly, you can have it
undone
POSITIVE PERSONAL OBLIGATION
Remedies of the Creditor if the debtor fails to do
 To have the obligation performed (by himself or by
another) at the debtor’s expense
 Plus damages
When the thing may be ordered undone
 If made poorly
 If the obligation is a negative one (you are not
suppose to do such act but you do it) – Art 1168
Q: When is 1167 NOT applicable?
A:
4 angel‘s notes
1. If debtor posses special qualifications which is the
very reason you agreed in a contract (ex. Concert
singers); REMEDY: damages
2. If you tried to undo and in doing so, it will result to
more damage; REMEDY: you have to be logical and
just ask for damages
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.
- Self explanatory
- Similar with article 1167 on the inapplicability
- If the obligation is not to do and something is done,
the creditor has the right to have it undone at the
expense of the debtor
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.
- Talks about DEFAULT and DELAY
- Covers the provision of no delay if no demand
- Also provides for the exception of the need for the
demand
Kinds of Default
1. Mora Solvendi – default on the part of the debtor
- Note: there is no default in negative and natural
obligations
- Effects: (1) debtor may be liable for interest and
damages; (2) may bear the risk of loss; (3) may be
liable even for fortuitous event
2. Mora Accipiendi – creditor is guilty of default when he
unjustifiable refuse to accept the payment or
performance at the time such can be done
3. Reciprocal Obligation – depends upon each other for
performance
Q: Why is it important to know the Delay?
A: so that you would know when to ask for damages
Q: When does Delay come in?
A: It comes in at the time the creditor makes a demand
Q: What is the purpose of setting the due date?
A: The due date will determine when the obligation is
demandable
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion

Q: Does the creditor always have to demand?
A: No, because there are some exceptions (look at book page
123-124)
a. When laws expressly so declares or it is expressly
stipulated in the contract
TAKE NOTE: It is not enough that you only specify the
date of the expiry, rather it should be stipulated that
the debtor will be at default upon the arrival of such
term or fulfillment of condition
b. When time is of the essence – time was so important
that you cannot have other time (ex. Birthday cake)
c. Demand would be useless because it is beyond the
debtor’s power to perform (ex. If he already sold it to
another)
d. When obligation is RECIPROCAL: when one does not
perform his obligation, the other does not delay
Note: stipulations in contract prevails over law except if such
contract is void
Mora – latin term for delay
KINDS OF DELAY
1. Mora Solvendi – default on the part of the debtor
- There is no mora solvendi in negative personal
obligation
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
d. The demand must 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. Debtor is liable for interest and damages
b. Debtor may bear the risk of loss
c. He is liable for fortuitous event
2. Mora Accipiendi – default on the part of the creditor
- The obligation is already due, debtor complies
but creditor unjustifiably refuses to accept
Q: Why does this happen?
A: The creditor’s real intention was to reject the lessee (make
it appear that the debtor has not been paying rentals)
Take note: if you are a lessee, if the creditor unjustifiably
refuses, you should comply with tender of payment and
consignation (legal procedure) so as to legally relinquish or
extinguish yourself with the liability. (This act is in writing,
consignation: deposit the money in court).
3. Compensatio Morae – when in a reciprocal
obligation both parties are in default; here it is as if
neither is in default (both are in pari de licto)
- They are debtors and creditors to each other (ex.
Contract of lease and sale)
Article 1170
Those who in the performance of their
obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor
thereof, are liable for damages.
Q: When are you liable for damages?
A: When there is…
5 angel‘s notes
1. FRAUD (deceit or dolo) – deliberate or intentional
evasion of the normal fulfillment of an obligation
(synonymous to BAD FAITH) – You can then be liable
for bigger damages
2. NEGLIGENCE (fault or culpa) – any voluntary act or
omission, there being no malice, which prevents the
normal fulfillment of an obligation – your damages
can be mitigated
3. DELAY (mora)
4. CONTRAVENTION OF THE TERMS OF THE
OBLIGATION – debtor does not comply with the
agreement
Kinds of Damages (discussed in torts and damages)
1. Moral – ex. Damages for sleepless nights; not
enough to allege, you have to prove the extent of the
damage
2. Exemplary – setting of an example to others. Deter
them from doing the same
3. Nominal – to vindicate your rights
4. Temperate – damages is not ascertain
5. Actual – this should be proven
6. Liquidated – damages already stipulated in the
contract (common in construction contracts: failure
to finish the project on time)
Article 1171
Responsibility arising from fraud is
demandable in all obligations. Any waiver of an action
for future fraud is void.
- Talks about FRAUD which is intentional and with
malice
- This is demandable on all obligation
- Waiver of an action for future fraud is void
because the law does not want to encourage
fraud. If waiver is allowed, it will not deter the
person in committing fraud.
- Damages cannot be mitigated by the court
Q: Can a liability for a past fraud be waived?
A: Yes, such shows the generosity and forgiveness of the
creditor towards the debtor
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.
- Talks about negligence (quasi-delict)
- This is also demandable but may be regulated
by court depending on the circumstance (can be
mitigated)
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.
- Defines what constitutes negligence
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion

It is the Omission of that diligence which is required by
the nature of the obligation and corresponds with the
circumstances of the person, of the time and of the
place.
 Negligence 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 (US vs. Barrias)
 It is the “want of care required by the circumstances”
 Accident and negligence are intrincically
contradictory; one cannot exist with the other.
Accident occurs when the person concerned is
exercising ordinary care, which is not caused by fault
of any person and which could not have been
prevented by any means suggested by common
prudence.
Note: There is really no fault in accidents because the person
has practiced ordinary care; while negligence is defined as the
absence of such care.
Take Note: Negligence + Bad faith = fraud
TEST FOR DETERMINATION (When is there negligence)
You ask: Would a prudent man in his position foresee
harm to the person injured as a reasonable
consequence of the course about to be pursued? If so,
the law imposes a duty on the actor to refrain from that
course, or to take precaution against its mischievous results,
and the failure to do so constitutes negligence. Reasonable
foresight of harm followed by the ignoring of the
admonition born of this provision, is the constitutive
fact of negligence (Picart vs. Smith)
Ex. Assigning of the most competent person is an indication
that there is a foresight of danger. This cannot therefore be
considered as an accident, rather it is negligence.
(1) Reasonable care and caution expected of an ordinary
prudent person
Did the defendant in doing the alleged negligent act
use reasonable care and caution which an ordinary
prudent person would have used in the same
situation. If not, then he is guilty of negligence
(Mandarin Vila, Inc. case)
Negligence is therefore a question of fact, its
existence being dependent upon the particular
circumstances of each case.
Factors to be considered:
a. Nature of the obligation – you knew that the area was
flammable but you smoked. There is clear negligence
b. Circumstances of the person – you are on duty as a
police guard, you fell asleep not by reason of any
ailment, then a robbery occurred
c. Circumstances of time – during night time you drove
your car without any headlight
d. Circumstance of Place – while driving your car at
colon street, you drove at 60kph
(2) No hard and fast rule for measuring degree of care
KINDS OF NEGLIGENCE (refer pg. 143-145 for comparison)
1. Culpa Contractual – negligence in contracts
resulting in breach
6 angel‘s notes
- Ex: you have a contract of common carrier
(transportation contract): passenger can file for
damages against operator; you can also demand
for culpa criminal and for civil liability
2. Culpa Aquiliana – negligence which by itself is the
source of an obligation between the parties not so
related before by any pre-existing contract
3. Culpa Criminal – negligence resulting in the
commission of a crime
- You will file an action against the driver. If the
driver is convicted but insolvent, the owner will
be subsidiarily liable
FRAUD VS. NEGLIGENCE
Deliberate intention to cause No such intention
damage or injury
Waiver of liability for future Waiver is allowed
fraud is void (includes gross
negligence)
Liability cannot be mitigated May be reduced in certain
cases
Take note: this is Fraud in the performance of an
obligation (dolo incidente); REMEDY: damages
Ex. Instead of delivering a wine, what you deliver is a wine
bottle however what is inside is not wine, then this is dolo
incidente; committed in the performance of the obligation.
Dolo causante – Fraud committed in the execution of the
contract. Consent is vitiated by fraud. You should not have
entered the contract not unless there was a fraud. REMEDY:
annulment of contract.
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.
FORTUITUIOUS EVENT
1. Act of man
2. Act of God
GR: no liability in fortuitous event
Exceptions
a. When expressly declared by law
b. When expressly declared by stipulation
c. Nature of obligation requires assumption of risk
Requisites:
1. Event happened without any participation of the
debtor (independent of his will)
2. Event cannot be foreseen, or if foreseen is inevitable
3. By reason of the event, it was impossible for him to
comply with the obligation in a normal manner
4. There is no contributory negligence on the debtor’s
part
Article 1175
Usurious transactions shall be governed by special
laws.
- Contemplated on USURY LAW. However, such law is
no longer applicable today
- Thus, interests are based on the agreement of the
contracting parties, which is complied in Good faith
- Rule: If there is consent or agreement, then that will
govern the relationship
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - However: even if USURY law is suspended, the SC Article 1177
reduced the amount of interest imposable on the The creditors, after having pursued the property in
ground that the right is inequitable or possession of the debtor to satisfy their claims, may
unconscionable (thus, the party is not totally free) exercise all the rights and bring all the actions of the
latter for the same purpose, save those which are
Article 1176 inherent in his person; they may also impugn the acts
The receipt of the principal by the creditor which the debtor may have done to defraud them.
without reservation with respect to the interest, shall
give rise to the presumption that said interest has - Remedies of creditor when the debtor does not
been paid. comply with the obligation

The receipt of a later installment of a debt
without reservation as to prior installments, shall
likewise raise the presumption that such installments
have been paid.
- Talks about presumptions which could either be
(1) Conclusive or
(2) Disputable or rebuttable (what is contemplated in
this article)
- Presumption applies and is advantageous to debtor
or lessee
Conclusive – you are no longer allowed to present other
evidences to prove otherwise
- These are evidences which you cannot rebut (ex. We
are all presumed to know the law; thus you cannot
defend yourself by saying that you are not aware of
such law)
1. Demand for specific performance plus damages for
failure to comply with the demand of obligation
2. Pursue the properties belonging to your debtor
3. Avail of accion subrogatoria – you can exercise the
rights of your debtor (ex. Debtor is the creditor of
another person, you can then exercise his rights to
collect what the debtor could collect as a creditor of
another person)
4. Accion Pauliana – you can receive – impugn or
rescind acts or contracts done by the debtor to
defraud the creditors (ex. Fictitious sale: make it
appear that it was sold when in fact it is not; it is just
to evade his liabilities – )
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.

- Such presumption is reasoned by experience and - Rights are transmissible except if

convenience a. Law provides otherwise – consent of other party
is necessary
Disputable – such fact is presumed unless you present other b. Contract provides otherwise
evidences that will prove otherwise c. If the obligation is purely personal

Take Note: a creditor can refuse to accept if you do not pay

the amount you are obliged to pay

1ST paragraph of 1176

- Tackles presumption in payments of INTERESTS
- the first payment is that of the interest and the
balance will be on the principal.

TAKE NOTE: the creditor can rebut such claim wherein the
lessee will say that he has already paid the interest for the
receipt shows payment for principal, however the burden of
proof is that of the creditor

The creditor can specify in the receipt a RESERVATION with

regards to the interest so that even though it is specified in
the receipt that payment is for the principal amount, there will
be no presumption that the interest has already been paid.

2nd paragraph of 1176

- Tackles presumptions in payments of
INSTALLMENTS
- Ex. A receipt acknowledging the payment of rentals
of march gives the presumption that rentals for
January and February is paid
- You can likewise, as a lessor, note the reservation

Q: What if no date is specified with regards to the month

rental but the date of the receipt is dated march, can this
raise a presumption that payment for January and February
were made?
A: NO, because such date only tackles the date of receipt and
not on the date that corresponds to the payment of such

Take Note: Yearly Taxes are not installment payments and

the law provides for such presumption on installments alone!

7 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
KINDS OF OBLIGATIONS (Classification)
PRIMARY
1. Pure Obligation – there is no condition or term to
fulfill; Demandable at the time the contract is
perfected
2. Conditional Obligation – there is a condition which
should be fulfilled
a. Suspensive – the condition is awaited. The
obligation arises the moment the condition
is satisfied
b. Resolutory – the condition is to be avoided.
The obligation is extinguished the moment
the condition is satisfied
3. Obligation with a Period or Term – that which
necessarily must come regardless of whether the
parties know when it happen or not
4. Alternative or Faculative
5. Conjunctive
6. Joint – there are more than one person who is liable
for the obligation. They have equal share of
responsibility
7. Solidary – upon the insolvency of one of the parties
who is responsible for the obligation, the other party
is to fulfill the full liability of the contract
8. Divisible – the fulfillment of the obligation may be
done at separate times
9. Indivisible – the fulfillment of the obligation must be
done at one time
10. With a Penal Clause
SECONDARY
1. Unilateral – only one person or party has an
obligation to perform
2. Bilateral – two parties has an obligation to perform
3. Real – right which is demandable upon the whole
world upon the delivery of the debtor of the
obligation to the creditor
4. Personal – right of the creditor to demand upon the
debtor the delivery of the obligation as its due period
has already lapsed
5. Determinate – specific object is the subject of the
obligation
6. Generic – the subject of the obligation belongs to a
particular class
7. Positive – there is a need for the performance of the
obligation
8. Negative – equivalent to omission; something should
not be done or is to be omitted
9. Legal
10. Conventional
11. Penal
12. Civil – obligation arises according the Civil law
13. Natural – obligation arises according to natural law
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.
- What is contemplated here are the types of
obligations which are DEMANDABLE at once
- 1st paragraph Simply stated: an obligation with no
terms or conditions is demandable at once
- 2nd paragraph: Resolutory conditions are also
demandable at once without prejudice to the
8 angel‘s notes
extinguishment of the obligation once the condition
is fulfilled
Past Events – would refer to the FUTURE KNOWLEDGE OF
PAST EVENTS, which will determine whether or not an
obligation will arise
Classification of Conditions
A.
1. Suspensive (conditions precedent or conditions
antecedent) – the happening of the condition gives rise to
the obligation
2. Resolutory (conditions subsequent) – the happening of
the condition extinguishes the obligation
B.
1. Potestative – the obligation arises from the personal will
of the debtor; fulfillment of the condition depends upon the
will of a party to the obligation
2. Casual – obligation depends on chance or hazard or the
will of a third person (winning of lotto)
3. Mixed – depends partly on the will of the debtor and that
of a third person or on chance (if I pass the bar)
C.
1. Divisible – capable of partial performance or realization
2. Indivisible – not capable of partial performance because
of the nature of the thing, or because of the intention of the
parties
D.
1. Positive – an act is to be performed
2. Negative – something will be omitted
E.
1. Express – the condition is stated
2. Implied – the condition is merely inferred
F.
1. Possible – capable of fulfillment in nature and in law;
condition is capable of realization according to nature, law ,
public policy or good customs
2. Impossible – not capable of fulfillment due to nature or
due to the operation of law or morals or public policy; or
due to a contradiction in its terms
G.
1. Conjunctive – when there are several conditions, all of
which should be realized
2. Alternative – if only one or a few of the conditions have to
be performed or realized
Q: When is a pure obligation demandable?
A: At once, the moment you said such obligation or such
contract has been perfected. (Immediately)
Condition – future and uncertain event
Period – that which necessarily must come
Q: What is the effect of the happening of the resolutory
condition?
A: The obligation is extinguished.
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.
- This provision contemplates on an obligation with a
TERM or PERIOD. The term is due upon the capacity
of the debtor to pay such obligation.
- “Payment does not depend on the debtor’s will,
rather, what is dependent on the debtor is the TIME
when payment by him can be made. “
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Q: How long is the term?
A: The term is not solely dependent neither on the creditor nor
the debtor. In this case, Article 1197 is also applied wherein
the Court is obliged to fix the duration of the period. Upon
arrival of this period, the creditor can now demand for the
payment.
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.
- This article contemplates on Conditional Obligations;
that such arises or is extinguished upon the
fulfillment of the condition
- Suspensive – efficacy or obligatory force is
subordinated to the happening of a FUTURE or
UNCERTAIN event
- Resolutory – rights are already acquired are lost once
the condition is fulfilled; Thus, there is a need to
revoke the donation first before extinguishment of
the obligation is taken to effect.
SUSPENSIVE CONDITION
Therefore, what is acquired by the obligee or creditor upon
the constitution of the obligation is only a mere hope or
expectancy. Unlike other hope or expectancies, however, it
is protected by the law
Q: What happens if the suspensive condition does not take
place?
A: it is as if there is no obligation at all. The parties would
stand as if the conditional obligation never existed
RESOLUTORY CONDITION
The obligation is immediately demandable after its
establishment or constitution. Unlike an obligation with a
suspensive condition, rights arising out of the obligation are
acquired immediately and vested in the oblige or creditor
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.
- Simply means: if the condition is POTESTATIVE, the
conditional obligation is VOID
- talks about an obligation subject to POTESTATIVE
condition (dependent upon the will of the debtor)
- If condition depends upon chance – it will take effect
upon the provision of this code (ex. I will give you
100 if I win the lotto; The obligation is valid because
it is dependent upon chance
- If the condition is mixed – the condition is also valid
DEBTOR
1. Potestative and Suspensive
- Both the condition and the obligation are VOID
- Ex. I will give you 1M next month if I like
2. Potestative and Resolutory
- Both the condition and the obligation are VALID
9 angel‘s notes
- Ex. I will employ you now, but if in any event I
decide not to need your services, your contract
will end
CREDITOR
1. Potestative
- Both the condition and the obligation are VALID
- Ex. I’ll give you my fountain pen if you desire to
have it
Ex of mixed: I will give you 100 if I sell my parcel of land.
- The selling is not solely dependent on the will of the
debtor coz such is as well dependent on the buyer or
price
If it made to depend upon the will of the creditor – valid
If upon the debtor – void
Take note: the precept contained n the first sentence of Article
1182 is only applicable only to a SUSPENSIVE CONDITION
This means that if the obligation is subject to a resolutory and
potestative condition, the condition is VALID (valid because it
is already demandable at once)
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.
- This article contemplates on the effects of Impossible
and Illegal conditions
Effects:
1. If the condition is to DO and IMPOSIBLE or ILLEGAL
thing, both the condition and obligation is VOID
2. If the condition is a NEGATIVE (not to do the
IMPOSSIBLE), you DISREGARD the CONDITION but
the OBLIGATION REMAINS
- In this situation, this becomes a PURE and VALID
obligation
3. If the condition is a NEGATIVE (not to do an ILLEGAL),
both the condition and the obligation are VALID
- This only applies to obligations and contracts, not
to testamentary disposition or to donations
Take note: if some conditions in a contract are impossible to
comply with, the insurer cannot validly assert a breach of said
conditions
Lecture Note:
If the obligation, however, is a pre-existing obligation, and
therefore does not depend upon the fulfillment of the
condition for its perfection, it is quite clear that only the
condition is void, but NOT the obligation.
If the condition is NOT TO DO AN IMPOSIBLE THING, it shall be
considered as not having been agreed upon. Consequently,
the obligation becomes pure and immediately demandable
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.
- This deals with a POSITIVE CONDITION
- Obligation subject to SUSPENSIVE CONDITION
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - Simply means that a condition which falls on a
specific or determinate time shall extinguish the
obligation as soon as the time expires or that it is
sure not to take place
- If the period is not fixed in the contract, the court ,
considering the parties’ intentions, should determine
what period was really intended
- Talks about an event to happen
Take Note: POSITIVE - EXTINGUISED
Ex. I will give you a parcel of land if you marry X this year. If
by the end of the year, you still did not marry, the obligation
of the debtor is extinguished.
“or if it has become indubitable that the event will not take
place”
Ex. On Nov. 15, X died, then the obligation is extinguished
because you can no longer marry
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.
- This deals with a NEGATIVE CONDITION
- Similar with 1184 however, what is contemplated is a
condition that some event will NOT happen at a
determinate or specific time.
- The obligation is effective from the moment the time
indicated has elapsed or is evident that it cannot
occur
- If no specific date when the obligation is fulfilled: you
consider the circumstances surrounding the
agreement; what is contemplated by the parties
Take Note: NEGATIVE – EFFECTIVE
Article 1186
The condition shall be deemed fulfilled when
the obligor voluntarily prevents its fulfillment.
- The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment
- Contemplates generally of SUSPENSIVE conditions
- This deals with CONSTRUCTIVE or PRESUMED
fulfillment
- Requisites:
a. Voluntary
b. Actually PREVENTS fulfillment
- Applicable to RESOLUTORY conditions if the DEBTOR
is at FAULT
Ex. A sold land now to B on a condition that B should
marry C within 1 year, otherwise B should return the
land. If A kills C, B does not have to return the land
because A is at fault.
- Can only be applied to suspensive conditions and not
to resolutory conditions
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
10
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.
- The effects of a conditional obligation to GIVE
generally retroacts to the day of the constitution of
the obligation (applicable only to CONSENSUAL
contracts
- Exception to the General Rule: with regards to
FRUITS or INTERESTS and PERIOD OF PRESCRIPTION
(for reciprocal obligations because it is presumed
they are mutually compensated; however, in a
unilateral prestation, you should deliver the fruits
and interest unless it can be inferred that the
intention is otherwise)
- In an obligation to DO, the COURT will determine the
retroactive effect of the condition
Scenario:
- You have a date of the constitution of the obligation
to the date of the happening of suspensive condition
(ex. In year 2004, I obliged myself to give you a
parcel of land if you pass the bar examination)
Unilateral Obligation (example)
2004 – date of the constitution of obligation
2008 – date of happening of the suspensive condition
- As far as the fruits are concerned: If the obligations
are UNILATERAL , the debtor shall appropriate the
fruits and interests received
- In between – the debtor is still the owner of the fruits
Reciprocal Obligation
- in between (in pendency) – fruits shall be deemed to
have been mutually compensated
- Buyer is not obliged to pay interest, neither the seller
obliged to give the fruits
- Why? Because it will be inconvenient between the
parties to compute the interest and fruits
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.
- This article contemplates on (1) actions to preserve
Creditor’s Rights and (2) Right of the Debtor to
Recover what was Paid by Mistake
- (1): bring appropriate actions for the preservation of
his rights; ask for security if debtor is about to be
insolvent; ask the court to prevent alienation or
concealment
- (2): This is a case of SOLUTIO INDEBITI
Q: Why is there a need for such provision?
A: So that while the condition has not yet happened, the
creditor’s right is safeguarded
Q: What can the creditor do to protect his rights?
A: You can have an annotation in the papers.
Take Note: During the pendency of the condition, the obligee
or creditor has only a MERE HOPE OR EXPECTANCY. The hope
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
and expectancy is protected by law. This is for the protection
and preservation of his right. Without this protection, the right
of the creditor becomes meaningless.
Q: What is the appropriate action?
A: have the property annotated or registered in the registry of
property (caveat emptor). So whoever acquires the land will
be bound to such obligation.
Take Note: 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
compensation.
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.
- if the obligation is to deliver a specific thing, 3
things can happen during the pendency of the
suspensive condition
a. the specific thing promised to be delivered may
be lost
b. there is deterioration
c. there could be improvements
Rules governing in these situations: (during the pendency of
the condition)
Loss – when it perishes, disappears, its existence is unkown
a. due to fault of debtor – the debtor is obliged to PAY
DAMAGES
b. not due to fault of debtor – the obligation is
EXTINGUISHED
Deterioration
a. due to fault of debtor – the creditor may choose
between recission of the obligation and its fulfillment
with indemnity for damages
b. not due to fault of debtor – the impairement shall be
borne by the creditor (creditor will accept)
Improvements
a. by nature – inure to the benefit of the creditor
b. by passage of time - inure to the benefit of the
creditor
11
c. introduced at the expense of the debtor – debtor
have the right than that granted to the usurfructuary
(if improvement cannot be removed without causing
damage, then the debtor is not entitled to the
improvement. But if it can be removed without
causing damage, the debtor can remove such
improvement)
Article 1190
When the conditions have for their purpose the
extinguishment of an obligation to give, the parties,
upon the fulfillment of said conditions, shall return to
each other what they have received.
In case of 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.
- In short means: Once the resolutory conditions is
fulfilled, the obligation is extinguished
- Because obligation is extinguished, the parties
should restore to each other what they have received
– this would include the fruits and interests after
deducting the expenses made for their production,
gathering and preservation
- In this situation, the creditor becomes the debtor in
his obligation to return
Article 1191
The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, 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.
- Power to rescind applies only to RECIPROCAL
(created and established at the same time, out of the
same cause, and which result in mutual relationship
between the parties; the parties are debtors and
creditors to each other) obligations due to breach of
bad faith
- REMEDY: either (1) fulfillment (file an action for
specific performance; demand the person in delay) +
damages or (2) rescission + damages (NOTE: the
right is not conjunctive thus the plaintiff CANNOT ask
for BOTH remedies
- Note however that you can file for rescission after
choosing fulfillment if the latter becomes impossible
Rescission (or Resolve) – abrogates the contracts from its
inception and requires a mutual restitution of benefits
received; it’s as if no contract has been made (restore the
parties to their relative positions)
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
TAKE NOTE: the cause must be IDENTICAL and the obligations
should arise simultaneously
Note: the right to rescind belongs to the Injured Party. The
injured Party is the one who has complied with his part of his
obligation.
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 the
contract, the same shall be deemed extinguished, and
each shall bear his own damages.

Characteristics of the Right to Rescind or Resolve
1. Only exists in reciprocal obligations (note: if there is
a period, you cannot declare default before the
expiration of the period)
2. It can be demanded only if the plaintiff is ready,
willing and able to comply with his own obligations,
and the other is not
3. The right to rescind in NOT absolute (look at
limitations)
a. Trivial causes or slight breaches will not
cause rescission
b. If there be a just cause for fixing the period
within which the debtor can comply, the
court will not decree rescission
c. If the property is now in the hands of an
innocent third party who has lawful
possession of the same
4. The right to rescind needs judicial approval when
there has already been delivery of the object.
However, if it is expressly stipulated in the contract
that despite delivery rescission can be made without
going to court, such contract remains valid.
The right to rescind need not have a judicial approval
when there has been no delivery yet
Note: if the question is whether there was a violation
in the contract, you should go to court and resolve
such.
5. The right to rescind is implied (presumed) to exist
and therefore, need not be expressly stipulated upon
6. The right to rescind may be waived, expressly or
impliedly
Take note: extrajudicial rescission of a contract is not possible
without an express stipulation to that effect
- In case both parties committed a breach:
o Determine the first infractor – he is to pay
the liability (but this can be tempered
because both committed a breach)
o If it cannot be determined – each shall bear
his own damages
CONDTITIONS WITH A TERM
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.
- Contemplates on obligations with a period – that
such is demandable only when that day comes
Period
- Certain length of time which determines the
effectivity or the extinguishment of obligations
- Interval of time which either suspends its
demandability or produces its extinguishment
Note
Suspensive term – only specifies when the obligation is
demandable

Limitations on the Right to Rescind PERIOD vs. CONDITION

a. The power of the court to fix the period – if there are PERIOD CONDITION
minor violations Fulfillment - event which must - is an uncertain
b. Resort to the courts happen sooner or event (future and
c. Right of third person – those who come into later even if time uncertain)
possession and is not in bad faith are protected; in cannot be determined
such case, the only remedy of the injured party is to Reference to - Always refers to the - may under the
proceed against the party responsible for the transfer time future law refer to the
or conveyance for damages past
d. Violations should be Substantial or serious so as to Influence on - merely fixes the - Causes an
allow a rescission of contract the obligation time or the obligation to
e. Waiver of the right (right to ask for a rescission) efficaciousness of arise or to cease
an obligation
Obligation of a Seller Different Kinds of Terms and Periods
1. Deliver a car A
2. Transfer ownership 1. Definite – the exact date or time is known and given
2. Indefinite – something that will surely happen, but
Take note: if buyer, due to rescission, is obliged to return the the date of happening is unknown
car but destroyed it, could no longer proceed in the process. B
This is because, if you file for rescission, you should also be 1. Legal – period granted under the provision of the law
ready to return the object subject of the obligation. 2. Conventional or Voluntary – period agreed upon or
stipulated by the parties
If 3rd party is in bad faith, the only remedy of the injured party 3. Judicial – the period or term fixed by the courts
is to proceed against the 3rd person who acted in bad faith for C
damages. You can also go after both the seller and 3rd party if 1. Ex die – a period with suspensive effect. Obligation
both of them acted in bad faith. begins only from a day certain, upon the arrival of
the period
Article 1192

12 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 2. In diem – term with a resolutory effect. Up to a time
certain, the obligation remains valid, but upon the
arrival of said period, the obligation terminates
Condition – when you are not even sure if something will
happen as a fact or not
Acceleration Clause – clause which expressly stipulates that
upon failure to pay installment for a certain month, the whole
debt should thereupon become at once payable.
Take note:
A lease on a “month-to-month basis” is one with a
DEFINITE term. In this kind of agreement, the lease is deemed
from month to month, and the lessor is allowed to terminate
the lease after each month, provided there is due notice.
REQUISITES FOR A VALID PERIOD OR TERM
1. It must refer to the FUTURE
2. It must be CERTAIN (sure to come) but can be
EXTENDED
3. It must be PHYSICAL and LEGALLY possible
Effect of a Fortuitous event
- No one is still liable for this. The obligation is
extinguished
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.
- 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
- Contemplates on a SUSPENSIVE term
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.
- Talks about PREMATURE payment
- Simply means that a debtor can recover his
payments of debts as well as the fruits and interests
if he paid before the arrival of period and he was
unaware that the time has not yet accrued.
- Only apply to OBLIGATIONS TO GIVE
Take note: if debtor knew that the arrival of period has not yet
come but paid, he can no longer recover what he paid for.
If both the debtor and creditor implicitly changed the
period, the debtor could no longer recover payment.
Q: Within what period must recovery be made if the debtor
did not know that payment was not yet due?
A: Before the debt matures (regarding what was paid). Even
after maturity (regarding interest) for after all the creditor was
in BAD FAITH. But note that the right prescribes 5 years
after premature payment.
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.
13
- The designation of a period is generally for the
BENEFIT of BOTH the creditor and the debtor
Ex. When there is INTEREST stipulated (debtor –
given enough time to pay; creditor – can earn from
the interest)
General rule: creditor cannot demand performance of the
obligation before expiration of the period and debtor cannot
perform the obligation before the expiration of the period.
Note: this article applies if the setting of period is voluntary or
conventional. It is NOT applicable if period is set BY COURT
(judicial)
- Exceptions:
o Term is for the best of the debtor alone
(debtor required to pay only at the end)
o Term is for the benefit of the creditor alone
(creditor can demand at any time, but he
cannot be compelled to accept payment
before the expiration of the period)
Article 1197
If the obligation does not fix a period, but from
its nature and the circumstances it can be inferred
that a period was intended, the courts may fix the
duration thereof.
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.
- If the obligation has no fixed period but there was a
clear intention to have one, the court may fix the
duration thereof. Court also fixes period if period is
based on the will of the debtor
- Applies only where a CONTRACT OF LEASE clearly
exists
SUMMARY OF 3 INSTANCES THAT COURT FIX PERIOD
1. If the obligation does not fix a period, but from its
nature and the 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 ( I will pay you when I like or the day that I
fix)
3. If the debtor binds himself to pay when his means
permit to do so
Note: once the date is fixed, parties could no longer change it
When the Court MAY NOT fix the Term
1. When no term was even intended (PURE obligation)
2. When obligation is PAYABLE on DEMAND
3. When specific periods are provided for in the law
(LEAGL PERIOD) ex. Employment contract: time for
payment of salary
Q: Within what period must the action to fix the period be
brought?
A: within the proper prescriptive period for specific
performance if a period had been originally fixed, but to be
counted from the perfection of the contract
The PRESCRIPTIVE PERIOD IS 10 YEARS
Take Note: Court determines the period by considering the
time probably contemplated by the parties. The parties my of
course change the period by mutual agreement, or may even
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
disregard the same in which case, the obligation becomes a
pure one, and demandable at once.
Article 1198
The debtor shall lose every right to make use
of the period:
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the debt;
(2) When he does not furnish to the creditor the
guaranties or securities which he has promised;
(3) When by his own acts he has impaired said
guaranties or securities after their establishment, and
when through a fortuitous event they disappear,
unless he immediately gives new ones equally
satisfactory;
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the
period;
(5) When the debtor attempts to abscond.
- Debtor lose every right to make use of the period
when:
o He becomes insolvent, unless he gives a
guaranty or security for the debt
Q: When is a debtor considered insolvent? Should
there be a judicial proceeding or declaration?
A: Judicial declaration is not necessary in this case.
He is insolvent if his obligation exceeds his assets.
o He does not furnish the creditor the
guarantees or securities which he has
promised (making a mortgage in favor of a
third person instead of the creditor)
o By his own acts he has impaired said
guarantees or securities after their
establishment; through fortuitous event
they disappear (the security will disappear)
unless he immediately gives new ones
equally satisfactorily
 There are two situations in this
provision
Take note: The security, if destroyed during the
fortuitous event, DO NOT extinguishes the obligation
because this is not the real subject of the obligation.
The more because of the fact that such is also a
generic thing.
o Debtor violates any undertaking
o Debtor attempts to abscond (debtor tries to
escape the obligation is a sign of bad faith.
Intent is sufficient)
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.
- Person alternatively bound by different prestation
shall completely perform one of them
- Creditor should not accept a portion of the different
prestations
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.
14
- The right to choose which of the prestation should be
acted upon is on the hands of the DEBTOR unless it is
EXPRESSLY granted to the creditor
- Debtor cannot choose those which are impossible,
unlawful or which could not have been the object of
the obligation
1. Those undertaking which are not included
among those from which the obligor may select
2. Those which are not yet due and demandable at
the time the selection is made
3. Those which by reason, is… (changed looks
because of fault)
Article 1201
The choice shall produce no effect except from
the time it has been communicated.
- The choice among the alternative obligations should
be communicated ORALLY or WRITTEN (implied or
expressed) to the creditor before it takes effect
Note: any form may be employed provided that the other
party is properly notified of the selection
- Once choice is made, debtor can NO LONGER
RENOUNCE IT and take an alternative which was first
open to him
Note: once choice is communicated to the creditor, the
obligation becomes simple thus ceasing to be alternative.
Reason behind the need for Communication:
- It is to inform the creditor that the obligation is now a
simple one, no longer alternative, and if already due,
for the creditor to receive the object being delivered
REQUISITES FOR THE MAKING OF THE CHOICE
1. Made properly – creditor or agent is informed
2. Full knowledge that a selection is indeed being made
3. Made voluntary and freely
4. Made in due time – before or upon maturity
(otherwise, the creditor can sue him in court with an
alternative relief as “give this or that”)
5. Made to all the proper persons
6. Made without the conditions unless agreed to by the
creditor
7. May be waived, expressly or impliedly
Article 1202
The debtor shall lose the right of choice when
among the prestations whereby he is alternatively
bound, only one is practicable
- If only one of the prestations is left, then the debtor
has no other choice but to deliver it
Q: What are the instances where an alternative obligation
becomes simple?
A:
1. When the choice has been communicated
2. When the choice has not been communicated, but by
some circumstances only 1 is left to be practicable
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.
- If through the creditor’s acts the debtor cannot make
a choice according to the terms of the obligation, the
debtor may rescind the contract with damages
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
Note: the contract is NOT AUTOMATICALLY RESCINDED. Debtor
may allow the obligation to remain in force insofar as the
possible choice or choices are involved.
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.
- If the alternatives are lost due to the negligence or
fault of the debtor, the creditor have the right to
indemnity for damages
a. All objects – obligation is NOT extinguished;
object converted to monetary-liable value;
value of object which last disappeared;
damages
b. One or some – choose from the remainder
but creditor cannot claim for damages
Right of Choice Belongs to the Creditor
Loss
1. Fortuitous Event
a. All objects – obligations is extinguished
b. One or some – creditor chooses from the
remainder; no liability on the part of the
debtor
2. Fault or negligence of debtor
a. All objects – value of any subject chosen
plus damages
b. One or some – chose any object, lost or not.
If object chosen is already lost – value plus
damages; if not lost – no damages

Q: What is the basis for the indemnity? Article 1206

A: the value of the last thing which disappeared or service When only one prestation has been agreed
which last become impossible upon, but the obligor may render another in
substitution, the obligation is called facultative.
Note: if alternative 1 and 2 are destroyed due to debtor’s fault
but the third is destroyed due to fortuitous event, the The loss or deterioration of the thing intended
obligation is extinguished! as a substitute, through the negligence of the obligor,
does not render him liable. But once the substitution
Article 1205 has been made, the obligor is liable for the loss of the
When the choice has been expressly given to substitute on account of his delay, negligence or fraud.
the creditor, the obligation shall cease to be
alternative from the day when the selection has been - Contemplates on FACULTATIVE OBLIGATION
communicated to the debtor. o It is one where only one prestation has been
agreed upon but the obligor may render
Until then the responsibility of the debtor shall another in substitution
be governed by the following rules:
(1) If one of the things is lost through a ALTERNATIVE VS. FACULTATIVE OBLIGATION
fortuitous event, he shall perform the
obligation by delivering that which the creditor ALTERNATIVE FACULTATIVE
should choose from among the remainder, or 1. If object 1 is lost due to 1. If object 1 is lost due to
that which remains if only one subsists; fortuitous event, debtor will fortuitous even, the
(2) If the loss of one of the things occurs have to deliver object 2 obligation is extinguished
through the fault of the debtor, the creditor (no need to deliver object
may claim any of those subsisting, or the price 2)
of that which, through the fault of the former, 2. Various things are due, but 2. Only one thing is principally
has disappeared, with a right to damages; the giving of one is due
(3) If all the things are lost through the fault of sufficient
the debtor, the choice by the creditor shall fall 3. If one of the prestation is 3. If the principal obligation is
upon the price of any one of them, also with illegal, the others may be void, and there is no
indemnity for damages. valid and the obligation necessity of giving the
remains substitute. (the nullity of
The same rules shall be applied to obligations the principal carries with it
to do or not to do in case one, some or all of the the nullity of the accessory
prestations should become impossible. or substitute)
4. If it is impossible to give all 4. If it is impossible to give
- If choice is expressly given to the creditor, the latter except one, that last one the principal, the substitute
shall also communicate his choice to the debtor must still be given does not have to be given;
if it is impossible to give the
Note: right of choice can also be expressly granted to a 3 rd substitute, the principal
person. (should be agreed upon by the parties) must still be given
5. The right to choose may be 5. The right of choice is given
SUMMARY OF RULES (1204 AND 1205) given either to debtor or only to the debtor
Right of Choice Belongs to the Debtor creditor
Loss
Q: When does the substitution take effect?
1. Fortuitous Event A: in order that the creditor will be bound by the substitution,
a. All objects - obligation is extinguished
it is necessary that the debtor must communicate such fact to
b. One or some – debtor chooses from the the creditor
remainder
2. Fault or negligence of the Debtor Q: What is the effect of loss of substitute?

15 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
A: before the substitute is made by the obligor, the loss or
deterioration of the thing intended as a substitute, through
the negligence of the said obligor, does not render him liable.
Once the substitution has been made, the debtor shall be
liable for loss or deterioration.
JOINT AND SOLIDARY OBLIGATION
Article 1207
The concurrence of two or more creditors or of
two or more debtors in one and the same obligation
does not imply that each one of the former has a right
to demand, or that each one of the latter is bound to
render, entire compliance with the 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.
- Simply means that you do NOT render or demand the
ENTIRE compliance with the prestation to yourself
Note: Solidary liability arises only if it is expressly stipulated in
the contract, or when the law or the nature of the obligation
requires solidarity.
JOINT VS. SOLIDARY OBLIGATIONS
- Joint – each obligor answers only for a part of the whole
liability and to each obligee belongs only a part of the
correlative rights
- Solidary or Joint and Several – the relationship between the
active and the passive subjects is so close that each of the
former or of the latter may demand the fulfillment of or
must comply with the whole obligation. (can ask for
reimbursement to others who are liable or subject to
receive)
Remember: if there is only one debtor and creditor, the rules
in this article DO NOT apply
GENERAL RULE (when there are 2 or more debtors or
creditors): JOINT
- In the absence of any fact or law which would make
the defendants solidarily liable, the presumption is
that they are only JOINTLY liable
Exceptions:
a. 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
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.
- Talks about the general rule when there are 2 or
more debtor or creditor
- CONSEQUENCE:
o The debt shall be divided into as many
shares as there are creditors or debtors
o The credit or the debts will be distinct from
one another, BUT regarding the brining of
the action in court, the Rules of Court
governing the multiplicity of suits will be
followed
16
PRINCIPLES (JOINT OBLIGATION)
A. Joint obligation is presumed by law
B. In joint obligations, the creditor is entitled to a
proportionate part of the credit and the debtor is
liable only to a proportionate part of the debt (to
each his own)
C. The debts or credits are being considered distinct
and separate form one another subject to the rules of
court governing the multiplicity of suits
Note:
Court’s FINAL JUDGMENT outweighs stipulations in contracts.
CONSEQUENCES OF JOINT LIABILITY
1. Vitiated consent on the part of one debtor does not
affect the others
2. Insolvency of one debtor does not make others
responsible for his share
3. Demand by the creditor on one joint debtor puts him
in default, but not the others since the debts are
distinct
4. When the creditor interrupts the running of the
prescriptive period by demanding judicially form one,
the others are not affected
LIABILITIES OF PARTNERS
1. If it arises out of CONTRACT, the liability is JOINT or
pro rata. Exception – claiming compensation for
employee’s death in line of duty
2. It if arises out of a CRIME or a QUASI-DELICT, the
liability is SOLIDARY
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.
- Contemplates on INDIVISIBLE JOINT OBLIGATION
(joint with respect to the parties but indivisible with
respect to the fulfillment of the obligation)
- Fulfillment of obligations requires the consent of all
the debtors, although each for his part. On the side
of the creditors, collective action is also required for
acts which may be prejudicial.
Characteristics:
1. Creditor must proceed against ALL the joint debtors,
for compliance is possible only if all the joint debtors
would act TOGETHER
2. Demand is made on ALL the joint debtors
3. If any of the joint debtors be insolvent, the others
shall not be liable for his share
4. If there is joint creditors, delivery must be made to
all, unless someone is specifically authorized by the
others
5. Each joint creditor is allowed to renounce his
proportionate credit
Note: A demand by one joint creditor is not a demand by the
others
Article 1210
The indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does solidarity
of itself imply indivisibility.
- The indivisibility of an obligation does not necessarily
give rise to solidarity. Nor does solidarity of itself
imply indivisibility
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
In effect you can have a joint divisible obligation (ex.
Monetary obligation), joint indivisible obligation (ex. Car),
solidary divisible obligation, solidary indivisible obligation
Indivisibility – refers to the SUBJECT MATTER
Solidarity – refers to the TIE BETWEEN THE PARTIES
DIFFERENT KINDS OF SOLIDARITY
1. Active Solidarity – on the part of the creditor or
obligee
2. Passive Solidarity – on the part of the debtor or
obligor
3. Mixed Solidarity – on both parts
4. Conventional Solidarity – agreed upon by the parties
5. Legal Solidarity – that imposed by law
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.
- Debtors may still be solidarily liable despite the
difference on terms or conditions
- To do: the whole solidary obligation can be recovered
from ANY of the solidary debtors MINUS the share of
those with unmatured conditions or terms
EFFECT OF ACTIVE SOLIDARITY (it will only happen if the
obligation stipulates or the law so provides or the nature of
the obligation so requires)
Mutual Agency – each creditor is empowered to exercise
against the debtor or debtors not only the rights which
corresponds to him, but also all the rights which correspond to
the other creditors, with the consequent obligation to render
an accounting of his acts to such creditors.
Anyone of the creditors can collect the full amount from the
debtor but he must make an account and reimburse the
shares of his fellow creditors
EFFECT OF PASSIVE SOLIDARITY
Anyone of them is compelled to make the full amount but has
the right to obtain reimbursement from other debtor plus the
interest.
Each solidary debtor, insofar as the creditor or creditors are
concerned, is the debtor of the entire amount; however, with
respect to his co-debtors, he is a debtor only to the extent of
his share in 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.
- Solidary creditors may do useful, not prejudicial acts
o Beneficial – to interrupt the running of
prescription
Note: the prescription of actions is
interrupted when they are filed before the
courts
Ex. You demand full payment from debtor
will stop the prescriptive period
o Prejudicial – remission or condonation
- Note: as far as the solidary creditors are concerned,
the creditor who performed the act shall incur the
obligation and damages to his fellow creditors
Article 1213
A solidary creditor cannot assign his rights without
the consent of the others.
17
- GR: a solidary creditor cannot assign his rights
without consent of the others
- Reason for such rule: because such obligation implies
mutual agency and mutual confidence. If a creditor
does acts that is prejudicial to the others, then their
rights are endangered, hence, the necessity of their
consent.
- Criticism: at some cases, there is really no TRUST
that exists between two solidary creditors when the
reason why they became solidary is due to the
operation of law (except when it arises from
voluntary contracts)
- If one of the creditors assigned without consent and
the person assigned collects from the debtor, such
collection is not considered valid. This is to avoid
connivance so as to result extinguishment of
obligation through payment
- Note: debtor can also refuse to pay 3 rd person if the
latter claims to have been assigned by one of the
creditors.
Q: what if assignment was made in favor of another solidary
creditor without the consent of the other creditor?
A: there is no violation. In such case there can be no invasion
of the personal or confidential relationship among the solidary
creditors.
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.
- Simply contemplates to whom the debtors must pay
o To any of the solidary creditors (if there is no
demand made)
o Exception: payment must be made to
solidary creditor who made a demand
(judicial or extrajudicial)
- Note: if one of the creditors already sued for action, it
is essential that the first action be first terminated
before other creditors could demand. However, if the
first action was just an extrajudicial demand and the
debtor does not pay, the other creditor may now file
a judicial demand.
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.
- Contemplates on the different prejudicial acts of the
creditor
- Effect: shall extinguish the obligation, without
prejudice to the provision of article 1219 (look at the
provision)
1. Novation
- Modification of an obligation by changing its
object or principal conditions, or by substitution
the person of the debtor, or by subrogating the
person of the debtor, or by subrogating a third
person in the rights of creditor
- It gives rise to a new obligation
2. Compensation
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
 - Takes place when two persons, in their own right,
are creditors and debtors of each other
- May be total or partial depending on the
amount involved
Total Compensation: automatically extinguish the obligation
3. Confusion or Merger
- Takes place when the characters of creditor and
debtor are merged in the same person (original
debtor eventually becomes a creditor of his own
payment)
- Usually happens when the creditors endorse
debtors’ payment to another person and such
person endorses the payment back to one of the
debtors.
- In this case, the solidary obligation is
EXTINGUISHED
4. Remission or Waiver
- Act of pure liberality whereby a creditor
condones the obligation of the debtor. (tells the
debtor “forget about the whole thing”)
- Remission may be TOTAL or PARTIAL (in partial,
can remit only one of the debtors obligation)
- In this case, the co-debtor in a total remission
benefits from the act of remission
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.
- The creditor may proceed against anyone of the
solidary debtors or some or all of them
simultaneously so long as the debt has not been fully
collected
- A suit filed against one does not mean a waiver on
filing a suit against the other debtors in the future.
The creditor may do so if he wants to.
- Note: this applies only to PASSIVE SOLIDARY (or
mixed solidarity) obligations, not joint because in the
latter, you cannot let one of the debtor pay for the
other’s debt.
PASSIVE SOLIDARITY VS. SURETYSHIP
Surety Case: Palmares vs. CA (look at bullet points for SCs
decision)
Similarity
1. Both the solidary debtor and the surety (assumes a
solidary role) guarantee for another person
2. Both can demand for reimbursement
Difference
1. The solidary debtor is indebted for his own share
only; the surety is indebted only for the share of the
principal debtor
2. Solidary debtor can be reimbursed what he paid
MINUS his share; surety can be reimbursed by the
whole amount he paid for
3. If a solidary debtor receives extension, the other
debtor does not get the same extension. If a principal
debtor receives an extension without the surety’s
consent, the surety is released.
 In suretyship, there is but one contract, and the
surety is bound by the same agreement which binds
the principal
18
 Demand on the sureties is not necessary before
bringing suit against them since the commencement
of the suit is sufficient demand
 A surety is not entitled to be given notice of the
principal’s default
Note: guarantor – your liability is subsidiary. Creditor should
first demand from the principal. It is only when the principal is
insolvent that the creditor could go after the guarantor
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.
- Payment made by one of the solidary debtors
extinguishes the obligation
- He who made the payment may claim from his co-
debtors only the share which corresponds to each,
with the interests for the payment already made
- When one of the solidary debtors cannot reimburse
his share due to his insolvency, such share shall be
borne by all his co-debtors, in proportion to the
debt of each. (insolvency of one should be
shouldered by the rest)
Payment – one of the ways which an obligation is extinguished
- Consists in the delivery of the thing or the rendition
of the service which is the object of obligation
Summary to whom shall the solidary debtor pay:
1. Any of the solidary creditor
2. If there was a demand – to the demanding creditor
only
3. If there were 2 or more demands – to the first who
demanded (priority in time is priority in right)
4. If there were 2 or more demands at the same time –
select form any who demanded
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.
- 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
- Note: if debtor A paid C without knowing that the
debt had prescribed, A can recover from C on the
basis of solution indebiti
Prescription – one of the modes of extinguishing obligation.
(prescriptive period for the creditor to collect)
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
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
the co-debtors, in case the debt had been totally paid
by anyone of them before the remission was effected.
- The remission (or condonation) 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
- Reason: since payment extinguishes the obligation,
there is nothing more to remit!
- For this to be valid – there should be an acceptance
of the debtor-donee (if you did not accept the
donation through remission, then your obligation is
not extinguished)
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.
- The remission of the whole obligation, obtained by
one of the solidary debtor, does not entitle him to
reimbursement from his co-debtors
- Reason: there is nothing to reimburse because the
debtor himself who offered payment did not really
pay anything at all.
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.
- Contemplates on effect of loss or impossibility:
o If without fault of solidary debtors – no
liability
o If with fault – there is liability for all debtors
but subject for reimbursement of the
payment of damages from the debtor who is
at fault (also for damages and interest)
o Loss because of a fortuitous event AFTER
default – here there will be liability because
of the DEFAULT (same provision of second
situation)
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.
- Provides for defenses for actions filed by the creditor
- Defenses may be a complete defense for all debtors
unless such defense is personal thus applicable only
to one or few
19
Kinds of Defenses
a. Derived from NATURE of the obligation (this is a
COMPLETE defense)
i. Lack of consideration or cause
ii. Absolute simulation (contract is totally fictitious)
iii. Illegal consideration
iv. Extinguishment of obligation (whole debt is paid,
remitted, or has prescribed)
v. Non-fulfillment of the suspensive condition (if
made upon the whole object or upon all the
debtors)
vi. Stature of frauds
vii. When ALL debtors are incapacitated to give
consent
viii. When there are VICES OF CONSENT (vitiated
consent) on the part of ALL the debtors
b. Those that are PERSONAL to the debtor sued (also a
COMPLETE defense unless the defense is NON-
FULFILLMENT YET of a CONDITION or the NON-ARRIVAL
YET of the term, this is only a PARTIAL DEFENSE)
Complete defense
1. Derived from the nature of the obligation
2. Personal to the debtor
Partial defense
1. Personal defense of his co-debtor
Note: The contract entered into by the minors is voidable.
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.
- Contemplates on divisible and indivisible obligation
- Divisibility or indivisibility refers to the nature of the
obligation whether it is capable of partial
performance or not
Divisible obligation
- One capable of partial performance
- Kinds of Division
o QUANTITATIVE division – depends on
quantity
o QUALITATIVE division – depends on quality,
irrespective of quantity; ex. One child
inherits land, the other inherit cash
o INTELLECTUAL OR MORAL division – one that
exists merely in the mind, and not in
physical reality; ex. Sisters owning a
common car, the half share is only in the
mind
Indivisible obligation
- One not capable of partial performance
- Kinds of Indivisibility
o CONVENTIONAL indivisibility – made by
common agreement
o NATURAL or ABSOLUTE indivisibility – it is
due to the nature of the object of
undertaking; ex. Trip to manila
o LEGAL indivisibility – if so provided by law
INDIVISIBLITY vs. SOLIDARITY
INDIVISIBLITY SOLIDARITY
1. Refers to the nature of 1. Refers to tie between the
obligation parties
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
2. May exist even if there is 2. Needs at least two debtors
only one debtor and only or creditors
one creditor
3. the fault of one is not the 3. The fault of one is the fault
fault of the other (can be a of others
joint)
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.
- A joint indivisible obligation gives rise to indemnity
for damages from the time anyone of the debtors
does not comply with his undertaking
- Here, the object is INDIVISIBLE and yet the parties
are merely bound JOINTLY
Effect of noncompliance:
1. If joint indivisible: The obligation is converted into a
monetary one for indemnity.
The kind of obligation can be enforced only
by proceeding against ALL of the debtors. If
anyone of the debtors should fail or refuse
to comply with the obligation, it is converted
into one of indemnity for damages
Take note: the person who is ready to pay is not
liable for damages.
2. If solidary indivisible: one of the debtors is liable to
pay everything and can later recover reimbursement
from co-debtor
GR: creditor cannot be compelled to receive partial payments
and debtor to pay partial payment.
Exceptions:
1. When the obligation expressly stipulates the contrary
2. When the different prestations constituting the
objects of the obligation arte subject to different
terms and conditions
3. When the oblation is in part liquidated and in part
unliquidated
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.
- Contemplates on the following:
o obligations that are deemed indivisible:
 Obligations to give definite things
20
 Those which are not susceptible of partial
performance (ex. Conduct a performance
concert)
 Even if physically divisible, yet the law
provides it to be indivisible
 Even if physically divisible, but the parties
intended it to be indivisible
o Obligations that are deemed divisible
 If it is the execution of a certain number of
days of work
 If it is the accomplishment of work by
metrical units
 If obligation is to pay a certain amount in
installments
 If it is the accomplishment of work
susceptible of partial performance
Take note: in obligations to do, the presumption is
indivisibility. Partial performance is equal to non-performance.
This is the general rule for indivisible obligations.
Q: What is the test of divisibility?
A: whether the obligation is susceptible of partial compliance
or not
Q: What is the effect of illegality on a divisible contract?
A: if the illegal term can be separated from the legal ones, the
latter may be enforced.
OBLIGATIONS WITH A PENAL CLAUSE
(book page 324 penal clause defined)
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.
Penal Clause
- COERCIVE means to obtain from the debtor
compliance
- It is an ACCESSORY UNDERTAKING to assume greater
liability in case of breach
- Purpose: it is to insure the performance of an
obligation and also to substitute for damages and
payment of interest incase of noncompliance (if no
stipulation to the contrary)
-
SUMMARY OF PURPOSE:
1. To insure the performance of the obligation
2. To liquidate the amount of damages to be awarded to
the injured party in case of breach of the principal
obligation
3. In certain exceptional cases, to punish the obligor in
case of breach of the obligation
Kinds of Penal Clauses
a. Legal Penal clause – one that is imposed by law
b. Conventional Penal clause – that which has been
agreed upon by the parties
c. Subsidiary – when only the penalty may be asked
d. Joint – when both the principal contract and the penal
clause can be enforced
Q: What is the difference between a penal clause and a
condition?
angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion
A: A penal clause constitutes an obligation although o When the obligation has been irregularly
accessory; the condition does not. Therefore, the penalty may complied with by the debtor
become demandable in default of the unperformed principal o When the penalty is iniquitous or
obligation, and sometimes jointly with it, while the condition is unconscionable, even if there has been no
never demandable performance at all

Q: What are the instances that you can demand both the
penalty and the payment for damages?
A:
a. When there is EXPRESS STIPULATION to the effect
that damages or interest may still be recovered,
despite the presence of the penalty clause
b. When the debtor refuses to pay the penalty imposed
in the obligation and he is sued
c. When the debtor is GUILTY of FRAUD or DOLO in the
fulfillment of the obligation. (why? Because there can
be renunciation of an action to enforce liability for
future fraud because this is against public policy and
against the express provision of the law.
Note: A penalty may be enforced only when it is
DEMANDABLE. Further, the penalty may be REDUCED if it is
INEQUITOUS or UNCONSCIONABLE.
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.
Note: Penalties which are iniquitous or unconscionable is NOT
VOID, but subject merely to equitable reduction.
Q: What are the situations wherein penal clause cannot be
enforced?
A:
1. The breach is the fault of the creditor
2. A fortuitous event intervened, unless the debtor
expressly agreed on his liability in case of fortuitous
events
3. The debtor is not yet in default
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.
- 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
- this is based on the principle that the accessory
follows the principal and not the other way around
reason: the penal clause is merely an access

- Contemplates on the limitation on the right of the

debtor and that of the creditor:
- Generally, debtor cannot substitute penalty for the
principal obligation except if such right has been
EXPRESSLY reserved
- Generally, creditor cannot demand both fulfillment
and the penalty at the same time except if such right
has been CLEARLY granted to him

Article 1228
Proof of actual damages suffered by the
creditor is not necessary in order that the penalty may
be demanded.

- Proof of actual damages suffered by the creditor is

NOT NECESSARY in order that the penalty may be
demanded
- Proof is not needed because the penalty is
considered as a LAWFUL means for repairing losses
and damages
- Advantage: even if the actual damage is less than
what was stipulated, you can still collect such
without proving it

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.

- Contemplates on situations when the penalty may be

reduced by the court:
o When the obligation has been partly
complied with by the debtor

21 angel‘s notes
OBLIGATIONS & CONTRACTS
Paras and Atty. Valencia’s Class Discussion