Notes On Kinds of Obligation

KINDS OF OBLIGATIONS
A. PRIMARY CLASSIFICATION OF OBLIGATIONS

B. SECONDARY CLASSIFICATION OF OBLIGATIONS
PRIMARY CLASSIFICATION OF OBLIGATIONS

I. PURE and CONDITIONAL OBLIGATIONS
(Arts. 1179-1192, NCC)
PURE OBLIGATION - An obligation which is demandable at once.
CONDITIONAL OBLIGATION - an obligation whose fulfillment or extinguishment
depends upon a future and uncertain event.
II. OBLIGATIONS WITH A PERIOD
(Arts. 1193-1198, NCC)
An obligation whose fulfillment or extinguishment depends upon a future and
certain event.
III. ALTERNATIVE AND FACULTATIVE OBLIGATIONS
(Arts. 1199-1206, NCC)
ALTERNATIVE OBLIGATION - an obligation which involves multiple prestation but
debtor will only perform one prestation.
FACULTATIVE OBLIGATION - an obligation which involves a principal prestation
and a substitute prestation.
IV. JOINT AND SOLIDARY OBLIGATIONS
(Arts. 1207-1222, NCC)
JOINT OBLIGATIONS - an obligation where each debtor can be made to pay only
his share in the obligation.
SOLIDARY OBLIGATIONS - an obligation where one debtor can be made to pay
for the whole obligation subject to reimbursement.
V. DIVISIBLE AND INDIVISIBLE OBLIGATIONS
(Arts. 1223-1225, NCC)
DIVISIBLE OBLIGATION - an obligation whose performance of the prestation can
be fulfilled in parts.
INDIVISIBLE OBLIGATION - an obligation whose performance of the prestation
cannot be fulfilled in parts.
VI. OBLIGATIONS WITH A PENAL CLAUSE
(Arts. 1226-1230, NCC)
An obligation which contains an undertaking to assume greater liability in case of
breach of said obligation.
SECONDARY CLASSIFICATION OF OBLIGATIONS

I. LEGAL, CONVENTIONAL, AND PENAL OBLIGATIONS
(Arts. 1158, 1159 and 1161, NCC)
LEGAL OBLIGATION - an obligation which arises from law.
CONVENTIONAL OBLIGATION - an obligation which arises from contracts.
PENAL OBLIGATION - an obligation which arises from the commission of a crime.
II. REAL AND PERSONAL OBLIGATIONS
(Arts. 1163-1168, NCC)
REAL OBLIGATIONS - an obligation to give
PERSONAL OBLIGATION - an obligation to do or not to do.
III. DETERMINATE AND GENERIC OBLIGATIONS
(Arts. 1163-1166, NCC)
DETERMINATE OBLIGATION - an obligation that is individualized and can be
identified or distinguished from others of its kind.
GENERIC OBLIGATION - an obligation that is not individualized and cannot be
IV. POSITIVE AND NEGATIVE OBLIGATIONS
(Arts. 1167-1168, NCC)
POSITIVE OBLIGATION - an obligation to give or to do.
NEGATIVE OBLIGATION - an obligation not to do.
V. UNILATERAL AND BILATERAL OBLIGATIONS
(Art. 1191, NCC)
UNILATERAL OBLIGATION - an obligation which only one party is bound to
perform an obligation.
BILATERAL OBLIGATION - an obligation where both parties are reciprocally
bound to perform an obligation.
VI. CIVIL AND NATURAL OBLIGATIONS
(Arts. 1156 and 1453, NCC)
CIVIL OBLIGATIONS - an obligation which, if not fulfilled when it becomes due
and demandable, gives a right of action to compel their performance.
NATURAL OBLIGATIONS - an obligation which, not being based on positive law
but on equity and natural law, do not grant a right of action to enforce their
performance, but after voluntary fulfillment by the obligor, they authorize the
retention of what has been delivered or rendered by reason thereof.
VII. ACCESSORY AND PRINCIPAL OBLIGATIONS
(Arts. 1166 and 1230, NCC)
ACCESSORY OBLIGATION - an obligation where its existence depends upon a
principal obligation.
PRINCIPAL OBLIGATION - an obligation which exists without depending upon
another obligation.
VIII. INDIVIDUAL AND COLLECTIVE OBLIGATIONS
INDIVIDUAL OBLIGATION - an obligation which involves only one subject.
COLLECTIVE OBLIGATION - an obligation which involves multiple subjects.
PURE AND CONDITIONAL OBLIGATIONS
CONDITION v. PERIOD
CONDITION
An uncertain and future event which wields an influence on a legal relationship.
PERIOD
A future and certain event which necessarily must come whether the parties know
when it will happen or not.
QUESTION: May a past event be considered a condition?

ANSWER: No.
HOWEVER, a past event unknown to the parties may be considered a condition if
the ascertainment of a future knowledge of a past event will determine whether or
not an obligation will arise.
AS TO THE EFFECT OF OBLIGATIONS

A. SUSPENSIVE CONDITION
The happening of the condition gives rise to the obligation.
B. RESOLUTORY CONDITION
The fulfillment of the condition results in the extinguishment of the obligation.
DISTINCTION
SUSPENSIVE CONDITION RESOLUTORY CONDITION
If the condition is fulfilled, the obligation If the condition is fulfilled, the obligation is
arises or becomes effective. extinguished.
If the condition is NOT fulfilled, no If the condition is NOT fulfilled, juridical
juridical relation is created relation is consolidated.
Rights are NOT yet acquired, but there is Rights are already acquired but subject to
a hope or expectancy that they will soon the threat of extinction.
be acquired.
AS TO ORIGIN OF CONDITION
A. POTESTATIVE CONDITION
The fulfillment of the condition depends upon the will of either of the parties.
B. CASUAL CONDITION
The fulfillment of the condition depends upon chance and/or upon the will of a third
person.
C. MIXED CONDITION
The fulfillment of the condition depends partly upon the will of a party to the
obligation and partly upon chance and/or the will of a third person.
AS TO POSSIBILITY
A. POSSIBLE CONDITION
Capable of realization or fulfillment according to nature, law, public policy and
customs.
B. IMPOSSIBLE CONDITION
Not capable of realization according to nature, law, morals, good customs, public
policy and public order.
1. PHYSICAL IMPOSSIBLE CONDITION
2. LEGAL IMPOSSIBLE CONDITION
AS TO MODE
A. POSITIVE CONDITION
Involves the performance of an act.
B. NEGATIVE CONDITION
Involves the non-performance of an act.
AS TO DIVISIBILITY
A. DIVISIBLE CONDITION
The condition is susceptible of partial realization.
B. INDIVISIBLE CONDITION
The condition is not susceptible of partial realization.
AS TO NUMBERS
A.CONJUNCTIVE CONDITION
Several conditions, ALL of which must be realized.
B. ALTERNATIVE CONDITION
Several conditions, ONE which must be realized.
AS TO FORM
A.EXPRESS CONDITION
The condition is stated expressly.
B. IMPLIED CONDITION
The condition is tacit.
WHEN IS AN OBLIGATION DEMANDABLE AT ONCE

A. When it is a pure obligation;
B. When the obligation is subject to a resolutory condition; and,
C. When the obligation is subject to resolutory period.
RULES ON POTESTATIVE, CASUAL OR MIXED CONDITIONS
POTESTATIVE CONDITIONS:
A. POTESTATIVE CONDITION ON THE PART OF THE DEBTOR:
1. SUSPENSIVE CONDITION - both the condition and the obligation are VOID.
2. RESOLUTORY CONDITION - both the condition and the obligation are VALID.
B. POTESTATIVE ON THE PART OF THE CREDITOR - both obligation and condition
are VALID.
MIXED CONDITIONS
The conditional obligation is VALID.
RULES ON POSSIBLE AND IMPOSSIBLE CONDITIONS

IMPOSSIBLE CONDITIONS:
A. PHYSICALLY IMPOSSIBLE CONDITION
Conditions which are contrary to the law of nature.
B. LEGALLY IMPOSSIBLE CONDITIONS
Conditions which are unlawful or juridically impossible because it is contrary to
good customs, morals, public policy or public order.
GENERAL RULE: Impossible conditions shall annul the obligation which depends upon
them. (Art. 1183, NCC)
EXCEPTIONS:
1. If the obligation is DIVISIBLE, that part thereof which is not affected by the
impossible or unlawful condition shall be VALID.
2. The condition NOT TO DO an impossible thing shall be considered as not having
been agreed upon. (Art. 1183, NCC).The obligation remains valid and becomes a
pure obligation.
3. If the obligation is pre-existing and not depending on the fulfillment of the
impossible condition for its existence, only the condition is VOID.
RULES ON POSITIVE AND NEGATIVE CONDITIONS
I. POSITIVE CONDITIONS RULE:
In positive conditions, an obligation is extinguished as soon as the time expires or if it
becomes indubitable that the event will not take place. (Art.1184,NCC)
PROBLEM
FACTS: A and B entered into a Contract to Sell. A agreed to sell to B a 100 sq. m.
parcel of land. The purchase price is P5M to be paid in installment basis and subject to
the following conditions:
1. Failure to pay installments - a penalty of 2% interest per month shall be imposed;
2. If such default continues for a period of 6 months - seller has the right to cancel
the contract; and,
3. In case of cancellation, the seller shall return to the purchaser the amount he
received less penalties, unpaid charges and dues on the property.
B notified A that he will no longer continue to pay due to the adverse effects of
economic crisis in his business. B asked for the cancellation plus refund. A refused to
cancel and instead filed for specific performance demanding payment of the balance.
QUESTION: Should A refund the amount paid by B?

ANSWER: YES. Payment is a positive suspensive condition.
QUESTION: Is specific performance a proper action in this case?
ANSWER: NO. There is no breach of contract.
II. NEGATIVE CONDITIONS RULE:

In negative conditions, the obligation is effective from the moment the time indicated
has lapsed, or if it has become evident that the event cannot occur, although the time
indicated has not yet lapsed. (Art. 1185, NCC)
DOCTRINE OF CONSTRUCTIVE COMPLIANCE

Art. 1186, NCC
•Doctrine of Constructive Fulfillment of Suspensive Condition
•The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
REQUISITES:
A. The condition is suspensive;
B. The obligor actually prevents the fulfillment of the condition; and,
C. He acts voluntarily.
PRINCIPLE OF RETROACTIVITY IN SUSPENSIVE CONDITION

A.IN OBLIGATIONS TO GIVE
Once the obligation has been fulfilled, it shall retroact to the day of the constitution of
the obligation.
RATIONALE: The condition is only an accidental element of the contract. Hence, the
obligation is still valid even in the absence of such condition.
RECIPROCAL OBLIGATIONS
DEFINITION: Those which arise from the same cause and in which each party is a
debtor and creditor of the other.
The performance of one is conditioned upon the simultaneous fulfillment of the other.
From the moment one of the parties fulfills his obligation, delay by the other party
begins.
NON-RECIPROCAL OBLIGATIONS. Those which do not impose simultaneous or

correlative performance on both parties. The performance of one party is NOT
dependent upon the simultaneous performance by the other.
Ex. A owes B ten thousand pesos and B owes A carabao
REMEDIES IN RECIPROCAL OBLIGATIONS

CHOICE OF REMEDIES:
A. ACTION FOR SPECIFIC PERFORMANCE

Fulfillment of the obligation damages
B. ACTION FOR RESCISSION
With damages.
- RESCISSION (Art. 1191, NCC)
This has the effect of "unmaking" a contract, or its "undoing" from the beginning and not
merely its termination. To rescind means to declare a contract void at its inception and
put an end to it as though it never was.
NB: Rescission under Art. 1191, NCC applies when there is non-compliance by one of
the contracting parties in case of reciprocal obligation.

Refers to rescissable contracts
A remedy granted by law to contracting parties and even to third persons to secure
reparation of damages caused to them by a contract, even if this should be valid, by
restoration of things to their condition at the moment prior to the celebration of the
contract.
Contract is initially valid but produces a lesion or pecuniary damage to someone.
DISTINCTION
PROBLEM
FACTS: A offered to purchase from Spouses H & W their 300 sq. m. parcel of land
covered by TCT No. 1345 in the amount of P7M. Finding the offer acceptable, the
spouses executed a Memorandum of Agreement. A's lawyer prepared a DOS indicating
the purchase price as only P700K. This is to save on taxes. Upon signing the DOAS,
P700K was paid and a postdated check amounting to P6.3 M was given. The title was
transferred to A. When the check was presented for payment, the check was
dishonored for "DAIF". Spouses filed for rescission.
QUESTION: What remedy will apply? Art. 1191 or Art. 1381?

ANSWER: ART. 1191, NCC. Non-fulfillment by A of his obligation.
PROBLEM
FACTS: A and B are agents authorized to sell eight (8) parcels of land to the NHA. The
total purchase price is P24M. The NHA purchased the parcels of land to be developed
as a housing project. Deeds of Absolute Sale were executed covering the 8 parcels of
land. However, it was found out by the DEN that 3 parcels of land were landslide prone;
hence, not suitable for housing. NHA cancelled the Deeds of Sale covering the 3
parcels of land. A and B submit that NHA had no legal basis to rescind the DOAS of the
three parcels of land.
QUESTION: Is the cancellation of the DOAS by the NHA the same with rescission
under Art. 1191, NCC? If yes, is it a proper remedy?
ANSWER: No. Cancellation was due to the fact that the object of the sale was not
suitable for the purpose.
LIMITATIONS ON THE RIGHT TO DEMAND RESCISSION (Art. 1191, NCC)

A. RESORT TO COURTS; EXCEPTION - Judicial Rescission;
B. POWER OF THE COURT TO FIX THE PERIOD - The court has discretionary
power to allow a period within which a person in default may be permitted to
perform his obligation if there is just cause for giving time to the debtor.
C. RIGHTS OF THIRD PERSONS - Rescission creates mutual restitution.However,
if the thing is in the hands of a third person who acted in good faith, rescission is
not available as a remedy.
D. SLIGHT VIOLATION - Rescission will not be granted to slight breaches of
contract; or
E. WAIVER OF RIGHT - The right to rescind may be waived expressly or impliedly.
EFFECTS OF BREACH OF BOTH PARTIES

- Art. 1192, NCC
A. The liability of the first infractor shall be equitably tempered by the courts.
B. 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.
PROBLEM
FACTS: A, an architect-contractor entered into an "Owner-Contractor Agreement" with
B to build the swimming pool of the latter for 45 days with a contract price of P2M. The
billing shall be progressive depending on the accomplishment.
First, second and 3rd billing was paid. However, on the 4th billing, B refused to pay.
A abandoned the project and B refused to pay for the work. A was constrained to file an
action for the collection of sum of money. B filed a counterclaim for damages because
of A's abandonment.
QUESTION:
A. Is Art. 1192, NCC applicable in this case?
B. How will you apply Art. 1192, NCC?
C. Is A entitled to damages?
D. Is B entitled to his counterclaim?
OBLIGATIONS WITH A PERIOD
IN GENERAL
BASIC CONCEPTS:
DAY CERTAIN DEFINED -understood that which must necessarily come although it
may not be known when.
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. (Art. 1180, NCC)
TERM OR PERIOD DEFINED - An interval of time, which exertina an influence on an

obligation as a consequence of a judicial act, either suspends its demandability_ or
produces its extinguishment.
CONDITION v. PERIOD
AS TO EFFECT
A. SUSPENSIVE PERIOD (EX DIE)
Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when the day comes.
B. RESOLUTORY PERIOD (IN DIEM)
Takes effect at once, but terminate upon the arrival of the day certain.
AS TO EXPRESSION
A. EXPRESS PERIOD
When the period is specifically stated.
B. IMPLIED PERIOD
Not specifically stated but it can be deduced that the parties intended a period.
AS TO DEFINITENESS
A. DEFINITE PERIOD
When there is a fixed date or time.
B. INDEFINITE PERIOD
When there is no fixed date or time.
AS TO SOURCE
A. CONVENTIONAL PERIOD: Period is agreed upon by the parties
B. LEGAL PERIOD: Period is fixed by law
C. JUDICIAL PERIOD: Period fixed by the Courts.
LOSS, DETERIORATION OR IMPROVEMENT

Art. 1194, NCC
Same effect and rules as discussed in Art. 1189, NCC
ADVANCE PAYMENT BY MISTAKE

Art. 1195, NCC
◦ If the obligor is unaware of the period or believes that the obligation has become
due and demandable, and thus pays or delivers before the arrival of the period, he may
recover the thing paid or delivered, with fruits and interest.
NB: This article is only applicable to obligations to give.
NB: PRESUMPTION: It is presumed that the debtor is fully aware of the period. Hence,
he has the burden to prove otherwise.
BENEFIT OF THE PERIOD
Art. 1196, NCC

GENERAL RULE: The period is presumed established for the benefit of BOTH the
creditor and the debtor.
EFFECT: The debtor may not be compelled to perform the obligation BEFORE the
arrival of the period, and the creditor cannot be compelled to accept performance
BEFORE the arrival of the period.

EXCEPTIONS:
If the period has been established in favor of the following:
A.THE DEBTOR ALONE
The debtor may not be compelled to perform the obligation BEFORE the arrival of the
period, but he may VALIDLY DO SO (pre-payment) if he so wishes.
B. THE CREDITOR ALONE
The creditor cannot be compelled to accept performance BEFORE the arrival of the
period, but he may VALIDLY DEMAND performance if he so wishes.
The creditor may decline pre-payment for various reasons.
COMPUTATION OF PERIOD
FIXING OF A PERIOD
- Art. 1197, NCC GENERAL RULE: Courts are not authorized to fix the period.
EXCEPTIONS: Instances when the courts may fix the duration of the period.
A. If the obligation does not fix a period, but from its nature and circumstances, it
can be inferred that a period is intended.
B. If the period depends upon the will of the debtor (Art. 1197, NCC)
If the performance of the obligation depend upon the sole will of the debtor,
the obligation is void.
C. In case of breach of reciprocal obligation, the courts may fix the period (instead
of ordering rescission) if there is a just cause for the same (Art. 1191, NCC)
LOSS OF THE BENEFIT OF THE PERIOD

- Art. 1198, NCC GENERAL RULE:
The obligation is not demandable before the lapse of the period.
EXCEPTIONS:
Instances provided under Art. 1198, NCC.
EFFECT OF ART. 1198:

Period is disregarded and the obligation becomes a PURE OBLIGATION, demandable
at once.
A. When after the obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
B. When the debtor does NOT FURNISH to the creditor the guaranties or securities
he has promised;
C. When by his own act, 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;
D. When the debtor violates any undertaking the creditor agreed to the period; and
E. When the debtor attempts to abscond.
ALTERNATIVE AND FACULTATIVE OBLIGATIONS
OBLIGATIONS ACCORDING TO OBJECT

A.SIMPLE OBLIGATION
There is only one object.
B. COMPOUND OBLIGATION
There are two or more objects.
1. Conjunctive Obligation - there are two or more objects and all of them are due.
2. Distributive Obligation - there are multiple objects and one object must be
performed to extinguished the obligation.
DISTRIBUTIVE OBLIGATION
A. ALTERNATIVE OBLIGATION
Two or more objects are due, but the performance of one is sufficient (Art. 1199,
NCC)
B. FACULTATIVE OBLIGATION
Only one object is due but the debtor may substitute another object. (Art. 1206,
NCC)
ALTERNATIVE OBLIGATIONS
- Art. 1199, NCC
RULE:
A person alternatively bound by different prestation, shall completely perform any
of them.
LIMITATION:
The creditor cannot be compelled to receive part of one and part of the other
undertaking.
RIGHT OF CHOICE
-Art. 1200, NCC GENERAL RULE:
The right of choice belongs to the debtor.
EXCEPTION:
When the choice has been expressly given to the creditor. (Art. 1205, NCC)
LIMITATIONS TO THE RIGHT OF CHOICE
The Debtor cannot choose those prestations which are:

A. A.Impossible;
B. Unlawful;
C. C.Could not have been the object of the
D. obligation; or,
E. D.Only one prestation is practicable. (Art. 1202, NCC)
EFFECTIVITY
- Art. 1201, NCC
The choice shall produce NO EFFECT except from the time it has been
COMMUNICATED.
Once selection has been communicated, it becomes IRREVOCABLE.

Communication may be in WRITING or ORAL.
NB: In case the person entitled to choose does not make his choice, the other party can
go to court for a third party to choose.
IMPAIRMENT OF THE RIGHT TO CHOOSE

Art. 1203, NCC
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.
IN CASE OF LOSS OF ALTERNATIVE PRESTATIONS

- Art. 1204, NCC
RULES/EFFECTS OF LOSS:
A. LOSS IS DUE TO FORTUITOUS EVENT

1. ALL OBJECTS ARE LOST - the obligation of the debtor isEXTINGUISHED.
2. ONLY ONE OF THE OBJECTS REMAIN - The debtor must deliver to the creditor
the remaining object.
NB: The obligation ceases to be alternative and it has become a simple
obligation.
3. TWO OR MORE OF THE OBJECTS REMAIN - The debtor must deliver that
which he shall choose from among the remainder.
The obligation remains an alternative obligation.
NB: Obligation ceases to be alternative and it has become a simple obligation.
B. LOSS DUE TO THE DEBTOR'S FAULT

1. ALL OF THE OBJECTS ARE LOST - The creditor shall have the right to
indemnity for damages based on the value of the last thing which disappeared or
service which becomes impossible. (Art. 1204, NCC) Damages other than the
value of the last thing or service may also be awarded.
NB: Consequently, the obligation still subsist retaining its alternative character.
C. LOSS DUE TO CREDITOR'S FAULT

1. ALL OF THE OBJECTS ARE LOST - The obligation of the debtor is
extinguished.
NB: Consequently, the obligation ceases to be alternative and it has become a
simple obligation.
3. TWO OR MORE OBJECTS REMAIN - The debtor must deliver that which he
shall choose from among the remainder.
NB: Consequently, the obligation remains to be alternative.
D. THE RIGHT OF CHOICE BELONGS TO THE CREDITOR AND LOSS IS DUE TO

THE DEBTOR'S FAULT
1. ALL OF THE OBJECTS ARE LOST - The creditor shall choose the price of any of
the objects with indemnity for damages.
2. ONLY ONE OF THE OBJECTS REMAIN - The creditor may choose the obiect
which remains and the debtor cannot be held liable for damages.
NB: Creditor may also choose the value of one of the lost objects plus damages.
3. TWO OR MORE OF THE OBJECTS REMAIN - The remedies are:
a. The debtor must deliver that which the creditor choose from among the
remainder. Debtor is not liable for damages; or,
b. Creditor may choose any of the objects which were lost. Debtor is liable for
the value of the thing chosen plus damages.
FACULTATIVE OBLIGATIONS
• Art. 1206, NCC
Only one prestation has been agreed upon, but the obligor may render another in
substitution.
ALTERNATIVE OBLIGATION v. FACULTATIVE OBLIGATION
EFFECT OF LOSS OR DETERIORATION OF SUBSTITUTE IN FACULTATIVE

OBLIGATIONS
Art. 1206, NCC
A. BEFORE SUBSTITUTION
The loss or deterioration of the thing intended as a substitute, through the negligence of
the obligor, does not render him liable.
B. AFTER SUBSTITUTION
Once the substitution has been made, the obligor is liable for the loss of the substitute
on account of his delay, negligence, or fraud.
NB: Once substitution is made, the obligation is converted into a simple obligation.
JOINT AND SOLIDARY OBLIGATIONS
COLLECTIVE OBLIGATION
A. JOINT OBLIGATION (MANCOMUNADA)

The whole obligation is to be PAID OR FULFILLED PROPORTIONATELY by different
debtors and/or is to be DEMANDED PROPORTIONATELY by different creditors. (Art.
1208, NCC)
B. SOLIDARY OBLIGATIONS (SEPARADAMENTE)

One where each one of the debtors is bound to render, and/or each of the creditors has
a right to demand from any of the debtors the ENTIRE COMPLIANCE of the prestation.
(Art. 1207, NCC)
GENERAL RULE
•Art. 1208, NCC
Obligation is presumed to be JOINT if there is concurrence of two or more creditors or
of two or more debtors in one and the same obligation.
EXCEPTIONS
•THE OBLIGATION IS SOLIDARY IF:
a.The obligation expressly so states that there is solidarity.
b.The law requires solidarity.
c.The nature of the obligation requires solidarity.
EFFECTS OF JOINT OBLIGATIONS
a. A joint creditor cannot act in representation of the others. Neither can a joint
debtor be compelled to answer for the liability of the others.
b. The effect of demand or interruption of prescription is limited only to a particular
creditor or debtor who made or received the demand or interruption.
c. The extinguishment of the obligation of one of the debtors do not necessarily
extend to the shares of his co-debtors.
d. The nullity or vices of obligation affecting one of the debtors do not necessarily
e. The insolvency of one of the debtors does not increase the liability of his co-
debtors.
JOINT INDIVISIBLE OBLIGATIONS

• Art. 1209, NCC
DEFINITION: The obligation of the parties are JOINT and the nature of the object is
INDIVISIBLE.
CHARACTERISTICS OF A JOINT INDIVISIBLE OBLIGATION:

a. No joint creditor can act in representation of the other joint creditor or creditors.
b. No joint debtor can be compelled to fulfill the obligation of the other joint debtors.
NB: All the creditors should collectively make a demand and all the debtors should
perform their respective obligation.
REMEDY IN CASE OF BREACH

• Art. 1224, NCC
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.
INDIVISIBILITY V. SOLIDARITY
Art. 1210, NCC
The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.
DISTINCTION:
SOLIDARY OBLIGATIONS (It should be expressed that there be solidary)
AS TO SOURCE
A. LEGAL SOLIDARITY
Solidarity imposed by law
B. CONVENTIONAL SOLIDARITY
Agreed upon by the parties.
C. REAL SOLIDARITY
Imposed by the nature of the obligation.
AS TO THE PARTIES BOUND

A.ACTIVE SOLIDARITY (MUTUAL AGENCY)
Solidarity of creditors.
B. PASSIVE SOLIDARITY (MUTUAL GUARANTY)
Solidarity of debtors.
C. MIXED SOLIDARITY
Solidarity among debtors and creditors.
NB: Either creditor may demand and either debtor may pay subject to reimbursement.
AS TO UNIFORMITY
A.UNIFORM SOLIDARITY
Parties are bound by the same stipulation.
B. NON-UNIFORM OR VARIED SOLIDARITY
Parties are subject to different stipulations.
BENEFICIAL ACTS AND PREJUDICIAL ACTS OF SOLIDARY CREDITORS

Art. 1212, NCC RULE:
Each one of the solidary creditors may do whatever may be useful or beneficial to the
others but not anything which may be prejudicial to the latter.
EFFECT:
As far as the debtor or debtors are concerned, a prejudicial act performed by a solidary
creditor shall be valid and binding because of the principle of mutual
representation/agency which exist among the creditors. However, as far as the solidary
creditors are concerned, the creditor who performed the act shall incur the obligation of
indemnifying the others for damages.
ASSIGNMENT OF RIGHTS
•Art. 1213, NCC GENERAL RULE:
A solidary creditor cannot assign his rights.
EXCEPTION:
The assignment is allowed if it is with the consent of ALL the other solidary creditors.
PAYMENT OR PERFORMANCE TO SOLIDARY CREDITORS

• Art. 1214, NCC GENERAL RULE:
The debtor may pay any one of the solidary creditors.
EXCEPTION:
If a demand, judicial or extrajudicial, has been made by one of the solidary creditors,
payment should be made to him.
EFFECTS OF NOVATION, COMPENSATION, CONFUSION OR REMISSION OF

DEBT IN SOLIDARY OBLIGATIONS
• Art. 1215 in relation to Art. 1231, 1291, 1278, 1275 and 1270,NCC
Art. 1231, NCC - refers to the modes of extinguishing obligations.
A. Novation (Art. 1291, NCC);
DEFINITION: It is a mode of extinguishing an obligation by changing the object,
or principal conditions, or by substituting the person of the debtor, or by
subrogating a third person in the rights of the creditor.
B. Compensation (Art. 1278, NCC);
DEFINITION: A mode of extinguishing obligation wherein it shall take place when
two persons, in their own right are creditors and debtors of each other.
NB. Also known as set-off
C. Confusion or Merger of Rights (Art. 1275, NCC); and,
DEFINITION:
The obligation is extinguished from the time the characters of the debtor and
creditor are merged in the same person.
D. Remission or Condonation (Art. 1270, CC)
DEFINITION: an act of liberality by virtue of which the obligee, without receiving
any price or equivalent, renounces the enforcement of the obligation, as a result
of which it is extinguished in its entirety or in that part or aspect of the same to
which it refers.
Essentially gratuitous, and requires the acceptance by the obligor.
HOWEVER, remission or condonation effected AFTER FULL PAYMENT is of
NO EFFECT as there is nothing more to remit or condone. (Art. 1219, NCC)
ENFORCEMENT AGAINST SOLIDARY DEBTORS

Art. 1216, NCC
The creditor may proceed against any one of the solidary debtors or some or all against
them simultaneously.
EFFECTS:
• The choice is left to the solidary creditor to determine against whom he will enforce
collection.
• The creditor may sue any of the solidary debtors; he need not implead all of them
as they are not indispensable parties.
• The creditor may also choose to collect only part of the debt from some of the
solidary debtors, and the remaining part from the other solidary debtors. Such
course of action does not convert the solidary obligation into a joint one.
• The demand 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.
PAYMENT BY SOLIDARY DEBTORS

Art. 1217, NCC
• 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.
• The paying solidary debtor can demand reimbursement from his co-debtors for
their proportionate share with legal interest from the time of payment.
• The receiving creditor is jointly liable to the others for their corresponding shares.
RIGHT OF DEBTOR-PAYOR TO REIMBURSEMENT

RULE: He who made the payment may claim from his co-debtors only the share which
corresponds to each with interest for the payment already made.
1. If payment is made before the debt is due, no interest for the intervening period
may be demanded.
2. 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.
EFFECT OF PAYMENT AFTER OBLIGATION HAS PRESCRIBED OR BECOME

ILLEGAL
•Art. 1218, NCC
RULE: The debtor-payor is NOT ENTITLED to reimbursement from his co-debtors if his
payment is made after the obligation has PRESCRIBED or become ILLEGAL.
EFFECT OF REMISSION
• REMISSION OF A SHARE AFTER PAYMENT (Art. 1219, NCC)
The debtor whose share was "remitted" must still pay his share to reimburse the debtor-
payor.
• REMISSION OF THE ENTIRE DEBT (Art. 1220,NCC)
The remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors.
The debtor who obtained the remission did not pay or lose anything.
RULES IN CASE OF LOSS OR IMPOSSIBILITY OF PERFORMANCE

• Art. 1221, NCC
A. WITHOUT FAULT OR DELAY - Obligation is extinguished.
B. WITH FAULT OR DELAY - ALL of the solidary debtors shall be liable to the
creditor for the price and the payment of damages and interest.
HOWEVER, this is without prejudice to their action against the guilty or negligent
debtor.
C. WITHOUT FAULT BUT ONE SOLIDARY DEBTOR INCURS DELAY - same as
letter B.
DEFENSES OF SOLIDARY DEBTORS

Art. 1222, NCC
A solidary debtor may, in actions filed by the creditor, avail himself of the following
defenses:
A. DEFENSES WHICH ARE DERIVED FROM THE NATURE OF THE
OBLIGATION (TOTAL DEFENSE) Defenses which pertain to the validity or
enforceability of the obligation.
B. DEFENSES WHICH ARE PERSONAL TO HIM OR PERTAIN TO HIS OWN
SHARE (TOTAL OR PARTIAL DEFENSE)
C. DEFENSES WHICH PERSONALLY BELONG TO THE OTHER DEBTORS (or
pertains to their share) (PARTIAL DEFENSE)
DIVISIBLE AND INDIVISIBLE OBLIGATIONS

A. DIVISIBLE OBLIGATION
An obligation is divisible when it can be validly performed in parts without the essence
of the obligation being changed.
B. INDIVISIBLE OBLIGATION
An obligation is indivisible when it cannot be validly performed in parts, whatever may
be the nature of the thing which is the object thereof.
DISTINGUISHED FROM DIVISIBILITY OF THINGS

A. DIVISIBLE THING
A thing is divisible when if separated into parts, the essence is not changed or its
value is not decreased disproportionately.
B. INDIVISIBLE THING
A thing is indivisible when if separated into parts, its essence is changed or its
value is decreased disproportionately.
THREE KINDS OF DIVISION
A.QUANTITATIVE DIVISION
The division is quantitative when the thing can be materially divided into parts and such
parts are HOMOGENOUS to each other. QUANTITY RATHER THAN QUALITY
B. QUALITATIVE DIVISION
The thing can be materially divided, but the parts are not homogenous to each other.
QUALITY RATHER THAN QUANTITY ex. land for a, car for b etc
C. IDEAL OR INTELLECTUAL DIVISION
When the thing can only be separated into ideal or undivided parts, not material parts.

•Art. 1224, NCC REVIEW:
a.Definition;
b.Characteristics; and,
c.Remedy in case of Breach.
DETERMINING DIVISIBILITY
A. OBLIGATIONS ARE DEEMED INDIVISIBLE:
1. Obligations to give definite things.
2. Obligations which are not susceptible of partial fulfillment.
3. Obligations provided by law to be indivisible even if the thing or service is
physically divisible.
4. Obligations intended by the parties to be indivisible even if the thing or service is
physically divisible.
B. OBLIGATIONS ARE DEEMED DIVISIBLE:
1. Obligations which have for their object the execution of a certain number of days
of work.
2. Obligations which have for their object the accomplishment of work by metrical
units.
3. Obligations which by their nature are susceptible of partial fulfillment.
DIVISIBILITY OR INDIVISIBILITY OF OBLIGATIONS NOT TO DO

RULE:
Character of the prestation in each particular case shall determine divisibility or
indivisibility.
OBLIGATION WITH A PENAL CLAUSE
PENAL CLAUSE
DEFINITION: An accessory obligation which the parties attach to a principal obligation
for the purpose of insuring the performance thereof by imposing on the debtor a special
prestation in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.
Ex. lease of contract,
FUNCTIONS OF A PENAL CLAUSE

A penal clause serves:
a. a.To strengthen the coercive force of the
b. obligation;
c. To provide for liquidated damages resulting from a breach of the obligation; and,
d. To punish the obligor.
EFFECT OF NULLITY
Art. 1230, NCC
1. The nullity of the penal clause does NOT carry with it that of the principal
obligation.
2. The nullity of the principal obligation carries with it that of the penal clause.
WHEN IS PENALTY DEMANDABLE?

RULE:
A penalty is demandable in case of NONPERFORMANCE or LATE PERFORMANCE
Or IRREGULAR or INADEQUATE FULFILLMENT of the main obligation.
KINDS OF PENALTY
AS TO ORIGIN
A. A.LEGAL PENALTY: When it is provided for by law.
B. CONVENTIONAL PENALTY: Constituted by agreement of the parties.
AS TO PURPOSE
A. COMPENSATORY PENALTY
Established for the purpose of indemnifying the actual damages suffered by the
oblige or creditor in case of breach of the obligation.
B. PUNITIVE PENALTY
Established for the purpose of punishing the obligor debtor in case of breach of
obligation.
AS TO EFFECT
A. A.SUBSIDIARY PENALTY
Only the penalty may be demanded in case of breach.
B. JOINT PENALTY
When the injured party may demand the enforcement of both the penalty and the
EFFECT OF PENALTY
GENERAL RULE:
In obligations with a penal clause, the penalty shall SUBSTITUTE the indemnity for
damages and the payment for interest in case of non-compliance.
NB: Proof of actual damages suffered by the creditor is not necessary in order that
penalty may be demanded. (Art. 1228, NCC)
EXCEPTIONS: PENALTY AS CUMULATIVE REMEDY

Damages may still be demanded (in addition to penalty in the following exceptional
cases:
1. When there is a stipulation to the contrary;
2. When the obligor refuses to pay the penalty; or,
3. When the obligor is guilty of fraud in the fulfillment of the obligation (Art. 1226,
NCC)
PURPOSE: to punish the obligor for the breach
LIMITATIONS
A. ON THE PART OF THE DEBTOR:
A debtor cannot exempt himself from the performance of the obligation by paying
the penalty agreed upon.
Penalty is NOT a substitute for the performance of the principal obligation.
EXCEPTION: Save in the case where the right has been EXPRESSLY reserved
for the debtor.
B. ON THE PART OF THE CREDITOR
The creditor cannot demand the fulfillment of the obligation and the satisfaction of
the penalty at the same fime. (Art.1227, NCC)
EXCEPT: If the right has been clearly granted to the creditor.
HOWEVER, if affer 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.
REDUCTION OF PENALTY
PENALTY MAY BE REDUCED BY THE COURTS IF THERE IS:
A. PARTIAL OR IRREGULAR COMPLIANCE
The judge shall equitably reduced the penalty when the principal obligation has
been partly or irregularly complied with by the debtor.
B. INIQUITOUS OR UNCONSCIONABLE PENALTY
Even if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
FACIORS IN FIXING THE AMOUNT OF PENALTY

a. The type, extent and purpose of the penalty;
b. The nature of the obligation;
c. The mode of the breach and its consequences;
d. The supervening realities; and,
e. The standing relationship of the parties.
INTEREST
•CIRCULAR NO. 799, July 5, 2013
The rate of interest for loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express contract as to such rate of interest
is 6% per annum
ZARA'S GIFTS & DECORS, INC. VS. MIDTOWN INDUSTRIAL SALES, INC. (G.R. NO.
225433, AUGUST 28, 2019).
MODIFIED THE GUIDELINES ON THE IMPOSITION OF INTEREST
With regard to an award of interest in the concept of actual and compensatory

damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum

of money, re., a loan or forbearance of money, goods, credits or
judgments, the interest due shall be that which is stipulated by the parties
in writing, provided it is not excessive and unconscionable, which, in the
absence of a stipulated reckoning date, shall be computed from default,
e., from extrajudicial or judicial demand in accordance with Article 1169 of
the Civil Code, UNTIL FULL PAYMENT, without compounding any interest
unless compounded interest is expressly stipulated by the parties, by law
or regulation. Interest due on the principal amount accruing as of judicial
demand shall SEPARATELY earn legal interest at the prevailing rate
prescribed by the Bangko Sentral na Plipinas, from the time of judicial
demand UNTIL FULL PAYMENT
2. In the absence of stipulated interest, in a loan or forbearance of money,

goods, credits or judgments, the rate of interest on the principal amount
shall be the prevailing legal interest prescribed by the Bangko Sentral na
Pilipinas, which shall be computed from default, i.e., from extrajudicial or
judicial demand in accordance with Article 1169 of the Civil Code, UNTIL
FULL PAYMENT, without compounding any interest unless compounded
interest is expressly stipulated by law or regulation. Interest due on the
principal amount accruing as of judicial demand shall SEPARATELY earn
legal interest at the prevailing rate prescribed by the Bangko Sentral ng
Pilipinas, from the time of judicial demand UNTIL FULL PAYMENT.
3. When the obligation, not constituting a loan or forbearance of money,

goods, credits or judgments, is breached, an interest on the amount of
damages awarded may be imposed in the discretion of the court at the
prevailing legal interest prescribed by the Bangko Sentral ng Pilipinas,
pursuant to Articles 2210 and 2011 of the Civil Code. No interest,
however, shall be adjudged on unliquidated claims or damages until the
demand can be established with reasonable certainty. Accordingly, where
the amount of the claim or damages is established with reasonable
certainty, the prevailing legal interest shall begin to run from the time the
claim is made extrajudicially or judicially (Art. 1169, Civil Code) UNTIL
FULL PAYMENT, but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run
only from the date of the judgment of the trial court (at which time the
quantification of damages may be deemed to have been reasonably
ascertained) UNTIL FULL PAYMENT. The actual base for the
computation of the interest shall, in any case, be on the principal amount
finally adjudged, without compounding any interest unless compounded
interest is expressly stipulated by law or regulation.
ESCALATION CLAUSE V. ACCELERATION CLAUSE
ESCALATION CLAUSE
Stipulation that allows the raising of the interest rates if a market ceiling for interest
rates are met.
ACCELERATION CLAUSE
A clause in a contract that states that if a payment is missed, or some other default
occurs, then the contract is fully due immediately. Ex: morgages

Art. 1187, NCC
Retroactive Effects of Fulfillment of Suspensive Condition
Retroactivity is limited only to the effects of the obligation.
Once the obligation has been fulfilled, it shall retract to the day of the constitution of the
obligation.
QUESTION: On January 1, Joseph promised to give Imee his dog named Cosmo if
Imee passes the board examination for physicians. On January 5, Joseph promised to
give Mon that same dog if Mon passes the board exam for dentists. Imee passed the
exams for physicians on November 5 while Mon passed the board exams for dentistry
ahead on November 1. Who has a better right to the dog?
ANSWER: Imee has a better right. Joseph's obligation to Imee was constituted ahead of
that of Mon. 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.
B. IN OBLIGATIONS TO DO OR NOT TO DO
Courts are empowered to determine retroactive effect of the suspensive condition that
has been complied with.
RETROACTIVE EFFECTS AS TO THE FRUITS AND INTEREST IN OBLIGATIONS

TO GIVE
A.IN RECIPROCAL OBLIGATIONS
There is NO RETROACTIVE EFFECI.

The fruits and interest during the pendency of the condition shall be deemed to have
been mutually compensated.
QUESTION: On January 1, Raphael agreed to sell his dog named Chowder to Grace
for P15,000.00 if Eric wins as barangay captain on February 1. On January 5, the dog
gave birth to a puppy. If Eric wins the election on February 1, who will have the right to
the puppy - Raphael or Grace?
ANSWER: Raphael will have a better right. He doesn't need to deliver the puppy and
Grace doesn't need to pay him the interest even though the effects of a conditional
obligation to give retroacts to the constitution of the obligation. This is because when the
obligation imposes reciprocal prestations upon the parties, the fruits and interest during
the pendency of the condition shall be deemed to have been mutually compensated.
B. IN UNILATERAL OBLIGATIONS
There is NO RETROACTIVE EFFECT
The debtor shall appropriate the fruits and interest received, unless from from the nature
and circumstances of the obligation, it should be inferred that the intention of the person
constituting the same was different.
RATIONALE: Unilateral Obligations are gratuitous.
RIGHTS PENDING/BEFORE THE FULFILLMENT OF THE SUSPENSIVE CONDITION

• Art. 1188, NCC
A. RIGHT OF THE CREDITOR
The creditor may bring the appropriate actions for the preservation of the thing, which
includes:
a. Creditor may sue to enjoin the debtor from doing things that would cause the loss
or deterioration of the object of the obligation;
b. To enjoin the debtor from concealing his property;
c. To compel execution of public instruments; or,
d. Creditor may cause also the registration of deeds of sale or mortgage.
B. RIGHTS OF THE DEBTOR
If the debtor has paid by mistake, he may recover the same. (Solutio Indebiti)
If the debtor paid with the knowledge of the condition and not by mistake, he impliedly
waives the condition.
RULES IN CASE OF IMPROVEMENT, LOSS, OR DETERIORATION OF THE THING

BEFORE THE FULFILLMENT OF THE SUSPENSIVE CONDITION
- Art. 1189, NCC
REQUISITES FOR APPLICATION OF ART. 1189, NCC:
A The obligation is a real obligation;
B The object is a specific or determinate thing;
C The obligation is subject to a suspensive condition; and,
D There is loss, improvement, or deterioration of the thing during the pendency of the
condition.
RULES ON LOSS OF A THING PENDING FULFILLMENT OF SUSPENSIVE

CONDITION
•BASIC CONCEPTS:
LOSS DEFINED. A thing is lost when it:
a. Perishes;
b. Goes out of commerce; or,
c. Disappears in such a way that its existence is unknown or cannot be recovered.
KINDS OF LOSS:
A. PHYSICAL LOSS
When the thing perishes.
B. LEGAL LOSS
When the thing goes out of commerce.
C. CIVIL LOSS
When its existence is unknown or if it is know, it cannot be recovered.
A.IF THE THING IS LOST WITHOUT THE FAULT OF THE DEBTOR

The obligation shall be extinguished.
B. IF THE THING IS LOST THROUGH THE FAULT OF THE DEBTOR
The debtor shall be obliged to pay damages.
RULES ON DETERIORATION OF A THING PENDING FULFILLMENT OF

SUSPENSIVE CONDITION
A. WHEN THE THING DETERIORATES WITHOUT THE FAULT OF THE DEBTOR
The impairment is to be borne by the creditor.
B. WHEN THE THING DETERIORATES IHROUGH THE FAULT OF THE DEBTOR
The creditor may choose between (l) Rescission of the obligation, or (2) its Fulfillment,
with indemnity for damages in either case.
RULES ON IMPROVEMENT OF A THING PENDING FULFILLMENT OF

SUSPENSIVE CONDITION
A. IF THE THING IS IMPROVED BY ITS NATURE OR BY TIME
Improvement shall inure to the benefit of the creditor.
B. IF THE THING IS IMPROVED AT THE EXPENSE OF THE DEBTOR
The debtor shall have no other right than that granted to a usufructuary.
USUFRUCT - gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless title constituting it or the law otherwise
provides.
NB: Debtor cannot ask reimbursement for the expenses incurred for useful
improvements or for expenses of mere pleasure.
NB: Set-off may apply.
RESOLUTORY CONDITIONS
• Q Art. 1190, NCC
• Art. 1181, NCC - definition of resolutory conditions
• Art. 1179, NCC - resolutory conditions are demandable at once.
• Art. 1186 - Constructive Fulfillment (also applies to ResolutoryConditions)
EFFECTS:
a. OBLIGATIONS TO GIVE - the parties upon fulfillment of the condition, shall
return to each other what they have received.
b. OBLIGATIONS TO DO OR NOT TO DO - The courts shall determine, in each
case, the retroactive effect of the condition that has been complied with.
EXAMPLES OF NATURAL OBLIGATIONS

A. PERFORMANCE OF PRESCRIBED OBLIGATIONS.
Art. 1424, NCC
Contract of Loan. The creditor does not collect the amount after 10 years. Creditor can
no longer file an action. Debtor, despite the lapse of the prescriptive period and knowing
that the debt has already prescribed, pays the creditor. Such debtor can no longer
recover such payment.
B. REIMBURSEMENT OF PAYMENTS FOR PRESCRIBED OBLIGATIONS,

ART. 1425, NCC A is indebted to B but the collection of such debt has already
prescribed and therefore can no longer be collected. If C pays the debt to B, and later
on A voluntary reimburses C, such payment is considered valid. A cannot recover such
amount from B.
C. RETURN BY "MINOR" OF A THING OR PRICE RECEIVED OR PERFORMANCE

BY A "MINOR", Arts. 1426 and 1427, NCC
IMPORTANT. Art. 234, FC, as amended by RA 6809, the age of majority is 18 years
old.
A minor, who voluntarily makes payment or restitution of what he has obtained by
contract, even though he has no obligation to make payments or restitution can no
longer recover what he has returned.
E. PAYMENT BY HEIR IN EXCESS OF HIS INHERITANCE. ART. 1429, NCC

A is indebted to B for P50,000.00. A later dies with C as his heir who is entitled only to
P25,000.00 from the estate of A. If C voluntarily pays B P50,000.00, he can no longer
recover such amount.
F. PAYMENT OF LEGACY UNDER A DEFECTIVE WILL.

ART. 1430, NCC
A provided in his holographic will that his car shall go to his driver B. Later, the
holographic will turns out to be partly typewritten and therefore void. If despite the nullity
of the will, A's heirs, still voluntarily gives the legacy of the car to B, it shall be valid and
cannot be revoked anymore.
ESSENTIAL ELEMENTS OF OBLIGATIONS

Every obligation has four (4) essential elements:
E Juridical Tie (Vinculum Juris);
F Object or prestation;
G Active Subject, also known as the Obligee or
H Creditor; and, Passive Subject, also known as the Obligor or Debtor.
JURIDICAL TIE OR VINCULUM JURIS

Also known as the legal relationship or tie that binds the parties to the object of the
obligation.
The efficient cause or the very reason for the existence of the obligation, and it arises
from the various sources of obligation enumerated in
Art. 1157, NCC.
OBJECT OF THE OBLIGATION

Also known as the PRESTATION.
Defined as the particular conduct required to be observed by the obligor (debtor) and
which can be demanded by the obligee (creditor).
ACTIVE AND PASSIVE SUBJECTS

A.OBLIGEE - denominated as the ACTIVE SUBJECT because he is the one who
has the power to demand the performance of the prestation.
B. OBLIGOR - denominated as the PASSIVE SUBJECT because his action is
dependent upon the action of the obligee.
ILLUSTRATION
Porserfina borrowed Money from Porforio
SUBJECT-PERSONS:
Porserfina is the debtor, the obligor or the passive subject;
Porforio is the creditor, the oblige or the active subject
OBJECT or PRESTATION:
The lending of money is the object or prestation
JURIDICAL TIE or VINCULUM JURIS
The agreement to loan the money
QUESTION: May intention give rise to an obligation?

ANSWER: No. A mere intention cannot give rise to an obligation to give, to do or not to
do. One cannot be bound by what he proposes or plans to do or accomplish.
A Letter of Intent is not a contract between the parties thereto because it does not bind
one party, with respect to the other, to give something, or to render some service.
(UMCUPAI v. BRYC-V Development Corporation, et. al., GR
No. 179653, July 31, 2009)
Art. 1157, NCC

Obligations arise from the following sources:
A. Law;
B. Contracts;
C. Quasi-Contracts;
D. Acts or Omissions punished by law (Delicts); and,
E. Quasi-delicts.
NB: The enumeration is EXCLUSIVE.
LAW (OBLIGATIO EX LEGE)

Art. 1158, NCC
Obligations imposed by the law itself.
It is imposed by the State and imbued with some public considerations.
IMPORTANT: Obligations derived from law are NOT PRESUMED.
PELAYO v. LAURON, January 12, 1904
A. CONTRACTS (OBLIGATIO EX CONTRACTU)

Art. 1159, NCC
DEFINITION: A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service. (Art.
1305, NCC)
IMPORTANT: Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. (Obligatory force of
contracts)
B. QUASI-CONTRACT (OBLIGATIO EX CUASI CONTRACTU)

Art. 1160, NCC and Arts. 2142-2175, Chapter I,
Title XVII of Book IV, NCC
DEFINITION: Quasi-contracts are obligations arising from certain lawful, voluntary and
unilateral acts, to the end that no one shall be unjustly enriched or benefitted at the
expense of another (Art. 2142, NCC)
PRINCIPLES (BASIS)
A. It is presumed that a person agrees to that which will benefit him;
B. Nobody wants to enrich himself unjustly at the expense of another; and,
C. We must do unto others what we want them to do unto us under the same
circumstances.
KINDS OF QUASI-CONTRACTS
Two (2) Principal Kinds of Quasi-Contracts:

A. NEGOTIORUM GESTIO (Management of Business)
B. SOLUTIO INDEBITI (Payment of what is not due)
A. NEGOTIORUM GESTIO
DEFINITION:
Negotiorum Gestio arises when a person, called the officious manager or gestor,
voluntarily takes charge of the agency or management of the business or property
of another which has been neglected or abandoned, without any power from the
latter. (Art. 2144, NCC)
REQUISITES OF NEGOTIORUM GESTIO
In order for Negotiorum Gestio to arise, the following requisites must concur:
A . A person, called the officious manager or gestor, voluntarily assumes the agency
or management of the business or property of another;
B . The property or business is neglected or abandoned;
C . There is no authorization from the owner, either expressly or impliedly; and,
D . The assumption of agency or management is done in good faith.
NEGOTIORUM GESTIO DOES NOT ARISE

A . When the property or business is not neglected or abandoned, in which case, the
provisions of the NCC relating to unauthorized contracts shall govern; or,
B . If, in fact, the officious manager has been tacitly authorized by the owner, in
which case, the rules on agency shall apply.
OBLIGATIONS CREATED IN NEGOTIORUM GESTIO

A. On the part of the Officious Manager/ Gestor:
a. Once the gestor intervenes, he cannot quit and abandon the property or
business.
b. To observe the diligence of a good father of a family; and,
c. If the owner suffers damage by reason of the fault or negligence of the gestor, he
is liable to pay damages to the owner.
B. On the part of the Owner:
1. The owner of the business of property becomes liable to the gestor for:
a. Obligations incurred in his interest;
b. Necessary and Useful Expenses; and,
c. Damages suffered by the gestor in the performance of his duties.
EXTINGUISHMENT OF NEGOTIORUM GESTIO

Modes of Extinguishing Negotiorum Gestio:
A. Repudiation of the Officious Manager;
B. Putting an end to such officious management by the owner;
C. Death, civil interdiction, insanity or insolvency of the owner or the gestor; or,
D. Withdrawal from the management by the gestor, but without prejudice to his
liability for damages should the owner suffers damage.
B. SOLUTIO INDEBITI
DEFINITION.
If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. (Art. 2152, NCC)
NEMO EX ALTERIUS INCOMMODE DEBET LECUPLETAR!"
"No man ought to be made rich out of another's injury."
Art. 22 of the CC - "Every person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him'
ELEMENTS OF SOLUTIO INDEBITI

The following are the elements of solutio indebiti:
A. A payment is made when there exists no binding relation between the payor, who
has no duty to pay, and the person who received the payment; and,
B. The payment is made through mistake, and not through liberality or some other
cause.
OBLIGATIONS OF DEBTOR IN SOLUTIO INDEBITI

A. Obligation to return.
NB: A creditor-debtor relationship is created whereby the payor becomes the creditor
who then has the right to demand the return of payment made by mistake, and the
person who has no right to receive such payment is obligated to return the same.
B. If the Debtor acted in bad faith, he has the obligation to pay legal interest, or shall be
liable for fruits received. He shall likewise be answerable for any loss or impairment of
the thing or for damages.
OTHER FORMS OF QUASI-CONTRACT

A. Giving of Legal Support by a stranger.
B. Payment of Funeral Expenses by a third person.
C. Acts of a Good Samaritan
D. Third person pays the debt or taxes of another.
E. Acts in consideration of the general welfare.
C. DELICT OR CRIME (OBLIGATIO EX DELICTO)

Art. 1161, NCC
Civil Obligations arising from criminal offenses shall be governed by the penal laws,
subject to the following provisions of the Civil Code:
a. Art. 211, NCC - Prohibition on Double Recovery;
b. The pertinent provisions of Chapter 2, Preliminary Title, on Human Relations;
and,
c. The pertinent provisions of Title XVII of Book IV, regulating damages.
Civil Liability Arising from Crime

Art. 100, RPC
Every person criminally liable for a felony is also civilly liable.
Dual Character of a Crime:
A. As an offense against the State because of the disturbance of the social order;
and
B. As an offense against private persons injured by the crime.
SCOPE OF CIVIL LIABILITY

1. Restitution
2. Reparation of the damage caused
3. Indemnification for consequential damages.
EFFECT OF ACQUITTAL
Two (2) Kinds of Acquittal:
A. Acquittal on the ground that the accused is not the author of the crime (Innocence)
EFFECT: Extinction of the Civil Liability
B. Acquittal based on reasonable doubt on the guilt of the accused.

EFFECT: Not Exempt from Civil Liability which may be proven by preponderance of
evidence.
EFFECT OF DEATH OF ACCUSED PENDING APPEAL

A. As to his criminal liability
EFFECT: Totally extinguished by his death (Art. 89, NCC)
B. As to his Civil Liability:
EFFECT:
a. Civil Liability Ex Delicto - it is also extinguished.
b. Civil Liability arising from other sources of obligation - survives notwithstanding
the death of the Accused.
DEEMED INSTITUTED
GENERAL RULE: When a criminal action is instituted, the civil action for the recovery of
civil liability arising from the offense charged shall be deemed instituted with the criminal
action.
EXCEPTION: Unless the Offended Party -
A. Waives the Civil Action;
B. Reserves the right to institute a separate civil action; or,
C. Institutes the civil action prior to the criminal action.
INDEPENDENT CIVIL ACTION

In the following cases, an offended party may file an independent civil action, which
shall proceed independently of the criminal action and shall require only preponderance
of evidence:
1. Civil action based on an obligation not arising from an act or omission
complained of as a felony. ( Art. 31, NCC)
2. Violation of Civil or constitutional rights and liberties (Art. 32, NCC)
3. Defamation, Fraud and Physical Injuries (Art. 33, NCC)
4. Failure of a policeman or peace officer to render aid or protection to any person
in case of danger to life of property. (Art. 34, NCC)
5. Art. 2176 - Quasi-Delicts
D. QUASI-DELICT (OBLIGATIO EX CUASI DELICTO)

Art. 1162, NCC
Applicable Law: Obligations derived from quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of Book IV, and by special laws.
DEFINITION: Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called quasi-delict.
NEGLIGENCE - failure to exercise the standard of care that a reasonably prudent

person would have exercised in a similar situation.
REQUISITES
To sustain a claim based on Quasi-Delict, the following requisites must concur:
1. There must be an act or omission constituting fault or negligence;
2. Damage caused by the said act or omission;
3. Causal relation between the damage and the injury; and,
4. No pre-existing contractual relation between the parties.
CLASSIFICATION
Negligence as a source of obligation may be classified into three (3):
A. CULPA CONTRACTUAL
The parties have a pre-existing contractual relations; the negligence is an incident of the
performance of the contractual obligation, and serves to increase the liability arising
from the contractual obligation.
B. CULPA AQUILIANA
The parties generally have no pre-existing contractual relations; it is the negligence
itself which creates the obligation
NB: Air France v. Carrascoso, 1966

"The existence of a contract between the parties does not bar the commission of a tort
(quasi-delict) by one against the other and the consequent recovery of damages,
therefore, when the act that breaks the contract is also tort".
C. CULPA CRIMINAL
Criminal Negligence punished by law
(Art. 365, RPC)
KINDS OF OBLIGATIONS ACCORDING TO SUBJECT MATTER
Two (2) Kinds of Obligation:
1. REAL OBLIGATION
"OBLIGATION TO GIVE"
SM: A THING which the obligor must deliver to the obligee.
2. PERSONAL OBLIGATION
"OBLIGATION TO DO OR NOT TO DO"
SM: An ACT to be done or not to be done.
SIGNIFICANCE OF DISTINCTION
A. A determinate or specific thing is identified by its individuality. The obligor cannot
substitute it with another although the latter is of the same kind and quality
without the consent of the obligee/creditor.
B. A generic thing is identified only by its specie. The debtor can give anything of
the same class as long as it is of the same kind.
DUTIES/OBLIGATIONS OF A DEBTOR IN A SPECIFIC REAL OBLIGATION
A. Art. 1163, NCC - TO PRESERVE OR TAKE CARE OF THE THING DUE.

General Rule: The obligor has the INCIDENTAL DUTY to take care of the thing due with
proper diligence of a good father of a family pending delivery.
Exception:
1. If the law requires another standard of care.
2. The stipulation of the parties requires another standard of care. (PROHIBITION:
degree of diligence is stated by law)
B. Art. 1164, NCC - TO DELIVER THE FRUITS OF THE THING.

DELIVERY - the formal act of transferring something, such as a deed; the giving or
yielding possession or control of something to another.
DIFFERENT KINDS OF FRUITS:
1. Natural Fruits;
2. Industrial Fruits; and,
3. Civil Fruits.
REAL RIGHT (JUS IN RE) v. PERSONAL RIGHT (JUS IN PERSONAM)

REAL RIGHT - Right over a thing. It is enforceable against everyone.
Ex. Eric has a silver BMW. He has a real right to that particular car.
PERSONAL RIGHT - A right enforceable against a specific person.

Ex. Fiona is expecting a delivery from Shrek of a blue BMW. Fiona has a personal
right to demand from Shrek the delivery of that car.
RIGHT OF THE CREDITOR TO THE FRUITS
Art. 1164, NCC
By law, the creditor is entitled (real right) to the fruits of the thing to be delivered from
the time the obligation to make delivery of the thing arises.
RATIONALE:
To protect the interest of the obligee should the obligor commit delay, purposely or
otherwise, in the fulfillment of the obligation.
KINDS OF DELIVERY (TRADITIO) DELIVERY MAY EITHER BE:

A. ACTUAL DELIVERY
The act of giving real and immediate possession to the obligee or to his agent.
Physically, the property changes hands.
B. CONSTRUCTIVE DELIVERY
An act that amounts to a transfer of title or possession by operation of law when actual
delivery is impractical or impossible
IMPLIED PHYSICAL TRANSFER
KINDS OF CONSTRUCTIVE DELIVERY

A. TRADITIO SIMBOLICA (Symbolic Delivery)
B. TRADITIO LONGA MANU (Delivery by mere consent or pointing out of the
object)
C. TRADITIO BREVI MANU (Delivery by short hand)
D. TRADITIO CONSTITUTUM POSSESORIUM (Opposite of Traditio Brevi Manu)
E. TRADITIO/DELIVERY BY EXECUTION OF LEGAL FORMS AND
SOLEMNITIES
C. Art. 1166, NCC - TO DELIVER ALL ACCESSIONS AND ACCESSORIES, EVEN

THOUGH THEY MAY NOT HAVE BEEN MENTIONED.
ACCESSION - Art. 440, NCC

It signifies all those things which are produced by the thing which is the object of the
obligation as well as those which are naturally or artificially attached thereto.
ACCESSORIES
It signifies all those things which have for their object the embellishment, use or
preservation of another thing which is more important and to which they are
incorporated or attached.
GENERAL RULE:
ACCESSORY FOLLOWS THE PRINCIPAL even if it may not have been
mentioned.
EXCEPTION:
There is a stipulation to that effect.
D. Art. 1170, NCC - TO PAY DAMAGES IN CASE OF BREACH OF OBLIGATION

Four (4) grounds for liability under Art. 1170:
1. Fraud (Deceit/Dolo);
2. Negligence (Fault/Culpa)
3. Delay (Mora)
4. Contravention of the terms of the obligation.
ART. 1170 - BREACH OF OBLIGATION
KINDS OF BREACH OF OBLIGATION
A. VOLUNTARY BREACH OF OBLIGATION
This arises either by fraud, negligence, delay and in any manner that contravenes the
tenor of the obligation. The debtor/obligor may be held liable for damages if these will
result in the breach of obligation.
B. INVOLUNTARY BREACH OF OBLIGATION

This arises due to FORTUITOUS EVENT. The obligor/debtor will be exempted from
liability.
GROUNDS - VOLUNTARY BREACH OF OBLIGATION

1. FRAUD OR DOLO KINDS:
A. DOLO CAUSANTE OR CAUSAL FRAUD

A deception used by one party prior to or simultaneous with the contract, in order
to secure the consent of the other. The deceit employed must be serious.
B. DOLO INCIDENTE OR INCIDENTAL FRAUD

Fraud committed in the performance of an obligation already existing because of a
contract. Fraud is employed for the purpose of evading the normal fulfillment of an
obligation.
2. NEGLIGENCE
B. CULPA CRIMINAL
Fault or negligence which results in the commission of a crime.
CONCEPT OF NEGLIGENCE
Art. 1173, NCC defines negligence as the OMISSION of that DEGREE OF DILIGENCE
which is required by the nature of the obligation and corresponding to the circumstances
of persons, time and place.
Negligence is the failure to observe, for the protection of interest of another person, that
degree of care and vigilance, which the circumstances justly demand, whereby such
other person suffers injury. (NPC v. Heirs of Noble Casionan, 572 SCRA 71)
DEGREES OF NEGLIGENCE
a. SLIGHT NEGLIGENCE - failure to exercise great or extraordinary care.
b. ORDINARY NEGLIGENCE - want of ordinary care and diligence, that is, such
care and diligence as an ordinarily prudent person would exercise under the
same or similar circumstances.
c. GROSS NEGLIGENCE - materially greater than ordinary diligence, and consist of
an entire absence of care or an absence of slight care or diligence. It implies a
thoughtless disregard for consequences or an indifference to the rights and
welfare of others.
RULE: The greater the danger, the greater the degree of care required.
PROOF OF NEGLIGENCE
BURDEN OF PROOF, Sec. 1, Rule 131 ROC

Burden of proof is the duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of evidence required by law
RULE: The burden of proving negligence that is the proximate cause of the quasi-delict
is on the one alleging the same. A person claiming damages for the negligence of
another has the burden of proving the existence of such fault or negligence causative
thereof.
NEGLIGENCE must be established. If it is not established, there can be no damages.
DAMNUM ABSQUE INJURIA (DAMAGE WITHOUT LEGAL INJURY)
CONCEPT: there can be damage without injury in those instances in which the loss or
harm was not the result of a violation of a legal duty.
In damnum absque injuria cases, the injured person alone bears the consequences
because the law affords no remedy for damages resulting from an act that does not
amount to a legal injury or wrong.
DOCTRINE OF LAST CLEAR CHANCE

• Doctrine of Supervening Negligence;
• Doctrine of Discovered Peril;
• Humanitarian Doctrine
• Danger Rule; or
• Rule of Davies v. Mann.
CONCEPT AND DEFINITION

The doctrine presupposes a perilous situation created or existing through the
negligence of both parties, but assumes, and makes it a condition of the application of
the doctrine, that there was a time after the negligence occurred when defendant could
have, and the injured person could not have averted the accident.
Plaintiff was guilty of antecedent negligence; the defendant is still liable because he had
the last clear chance of avoiding the injury.
A person who has the last clear chance or opportunity of avoiding an accident,
notwithstanding the negligent acts of his opponent or that of a third person imputed to
the opponent as considered in law solely responsible for the consequences of the
accident.
ELEMENTS OR CONDITIONS OF THE DOCTRINE OF LAST CLEAR CHANCE

To establish a cause of action under this doctrine, the following evidence should be
proved:
1. That the plaintiffs was in a position of danger and, by his own negligence,
become unable to escape from such position by the use of ordinary care, either
because it became physically impossible for him to do so or because he was
totally unaware of the danger;
2. The defendant knew that the plaintiff was in a position of danger and further
knew, or in the exercise of ordinary care, should have known, that the plaintiff
was unable to escape therefrom; and,
3. That thereafter defendant had the last clear chance to avoid the accident by the
exercise of ordinary care but failed to exercise such last clear chance, and the
accident occurred as a proximate result of such failure.
TEST OF NEGLIGENCE
PICART V. SMITH (March 15, 1918)
"Did the Defendant in doing the alleged negligent act use that reasonable care and
caution which an ordinary prudent person would have used in the same situation? If not,
then he is guilty of negligence."
QUESTION: What would constitute the conduct of a prudent man in a given situation?
ANSWER: What would constitute the conduct of a prudent man in a given situation
must of course be always determined in the light of human experience and in view of
the facts involved in the particular case.
Reasonable men can be expected to take care only when there is something before
them to suggest or warn danger.
"Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued?"
FORESEEABILITY
Conduct is said to be negligent when a prudent man in the position of a tortfeasor would
have foreseen that an effect harmful to another was sufficiently probable to warrant his
foregoing conduct or quarding against his consequences.
DOCTRINE OF RES IPSA LOQUITOR

"The thing or the transaction speaks for itself"
Where the thing which causes injury is shown to be under the management of the
defendant and the accident is such as in the ordinary course of things does not happen
if those who have the management use proper care, it affords reasonable evidence in
the absence of an explanation by the defendant, that the accident arose from want of
care. (Layugan v. IAC, 167 SCRA 316)
ELEMENTS/CONDITIONS
a) That the accident was of a kind which does not ordinarily occur unless someone
is negligent;
b) That the instrumentality or agency which caused the injury was under the
exclusive control of the person charged with negligence; and,
c)That the injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured.
MEDICAL MALPRACTICE
A particular form of negligence which consist in the failure of a physician or surgeon to
apply to his practice of medicine that degree of care and skill which is ordinarily
employed by the profession in general, under similar conditions and in like surrounding
circumstances. (Reyes, et. Al., v. Sisters of Mercy Hospital, Oct. 3, 2000)
DOCTOR-PATIENT RELATIONSHIP
CONSENSUAL CONTRACT
A doctor-patient relationship is created when a patient engages the services of a

physician and the latter accepts or agrees to provide care to the patient.
NB: The mere fact that an individual approaches a physician and seeks diagnosis,
advice or treatment does not create the duty of care unless the physician agrees.
ELEMENTS OF MEDICAL MALPRACTICE

To constitute medical malpractice, the following elements must concur:
1. Duty;
2. Breach;
3. Injury; and,
4. Proximate Causation.
DUTIES OF A DOCTOR
a. To inform the patient fully of his conditions, and the result of the test made;
b. If the physician discovers, or should know or discover, that the patient's ailment is
beyond his knowledge or technical skill, ability or capacity to treat with likelihood
of reasonable success, he is also under duty to disclose that fact to the patient,
and advise him of the necessity of other or different treatment;
c. Duty to advise his patient to consult a specialist or one qualified in a method of
treatment which the physician is not qualified to give;
d. and
e. Duty not to ABANDON the patient and to continue attendance until all the
conditions for his rightful withdrawal are complied with.
EVIDENTIAL RULES
QUESTION: What kind of evidence is needed to prove that a medical or health
professional committed medical malpractice or negligence?
ANSWER: EXPERT TESTIMONY is needed to prove medical malpractice or
negligence.
QUESTION: Why is an expert opinion needed to establish and prove medical

malpractice?
ANSWER: Malpractice actions are determinable only in the light of scientific knowledge,
it has been recognized that expert testimony is usually necessary to support the
conclusion of causation.
QUESTION: What kind of testimony based on scientific knowledge is needed to prove

medical malpractice?
ANSWER: (a) Evidence as to the recognized standards of the medical community in the
particular kind of cases; and, (b) a showing that the physician negligently departed from
this standard in his treatment.
ACTS CONSTITUTING MEDICAL NEGLIGENCE

a. Wrong diagnosis;
b. Unwarranted Abandonment;
c. . Operating without patient's consent where a patient is in possession of his
faculties and no emergency exists;
d. Failing to give the patient or his family or attendants all necessary and proper
instructions as to the care and attention to be given to the patient and the
cautions to be observed;
e. Allowing a foreign substance to enter or remain in the body of the person
operated on, and this extends to the sponges and pads;
f. Failing to give warning when attending to a patient afflicted with contagious
disease;
g. Writing an erroneous prescription; and,
h. Issuing wrongful certificate of insanity or imbecility.
EXAMPLES OF CASES WHERE THE DOCTRINE OF RES IPSA LOQUITOR WAS

APPLIED
a. Leaving a foreign object in the body of the patient after an operation;
b. Injuries sustained on a healthy part of the body which was not under, or in the
area of treatment;
c. Removal of the wrong part of the body when another part was intended;
d. Knocking out a tooth while a patient's jaw was under anesthetics for the removal
of his tonsils; and,
e. Loss of an eye while the patient was under the influence of aesthetics, during or
following an operation for appendicitis, among others.
CAPTAIN OF THE SHIP DOCTRINE

In medical negligence cases, it is not only the physician or other medical professional
who is directly involved in the operation that can be made liable. A surgeon in charge of
the operation can also be made liable for the negligence committed by their assistants if
the latter is under their control when the operation and the resulting injury happened.
BORROWED SERVANT RULE

The Borrowed Servant Doctrine imputes liability in a surgeon for the negligence
committed by operating room personnel regardless of the identity of the employer of the
latter. (Nogales v. Capitol Medical Center, CA-G.R. CV No. 45641, Feb. 6, 1998)
DOCTRINE OF CORPORATE RESPONSIBILITY OR THE PRINCIPLE OF

APPARENT AUTHORITY
Even when no employment relationship exists between the hospital and medical
practitioner but it is shown that the hospital holds out to the patient that the doctor is its
agent, the hospital may be vicariously liable.
REQUISITES:
a. The hospital, or its agent, acted in a manner that would lead a reasonable person
to conclude that the individual who was alleged to be negligent was an employee
or agent of the hospital;
b. Where the acts of the agent create the appearance of authority, the plaintiff must
also prove that the hospital had knowledge of and acquiesced in them; and,
c. The plaintiff acted in reliance upon the conduct of the hospital or its agent,
consistent with ordinary care and prudence.
DOCTRINE OF INFORMED CONSENT

In a situation where the physician-patient relationship is said to arise, there also arises a
corresponding duty or obligation on the part of the physician to disclose to the patient
whatever grave risks of injury that might be incurred from a proposed course of
treatment.
ESSENTIAL ELEMENTS:
a. The physician had a duty to disclose material risks;
b. They failed to disclose or inadequately disclosed those risks;
c. As a direct and proximate result of the failure to disclose, the patient consented
to treatment he otherwise would not have consented to; and,
d. The plaintiff was injured by the proposed treatment.
DOCTRINE OF UNLAWFUL RESTRAINT

A patient cannot be detained in a hospital for nonpayment of the hospital bill. If the
patient cannot pay the hospital or physician's bill, the law provides a remedy for them to
pursue, that is, by filing the necessary suit in court for recovery of such fee or bill.
RA No. 9439, AN ACT PROHIBITING THE DETENTION OF PATIENTS IN
HOSPITALS AND MEDICAL CLINICS ON GROUNDS OF NONPAYMENT OF
HOSPITAL BILLS OR MEDICAL EXPENSES
3. DELAY, DEFAULT OR MORA

Arts. 1169-1170
DEFINITION: failure to perform the obligation in due time because of DOLO or CULPA.
A debtor is deemed to have violated his obligation to the creditor from the time the latter
makes a demand. Once the creditor makes a demand, the debtor incurs MORA or
DELAY.
KINDS OF DELAY
A. ORDINARY DELAY
Merely the failure to perform an obligation on time
B. LEGAL DELAY OR DEFAULT OR MORA
Failure to perform an obligation on time which failure constitutes a breach of obligation.
REQUISITES NECESSARY FOR A FINDING OF LEGAL DEFAULT/MORA

a. The obligation is demandable and liquidated;
b. The debtor delays performance; and,
c. The creditor judicially or extrajudicially requires the debtor's performance.
KINDS OF LEGAL DELAY/DEFAULT OR MORA
II. MORA SOLVENDI

DEBTOR'S DEFAULT. Delay in the fulfillment of an obligation, by reason of a
cause imputable to the debtor.
KINDS OF MORA SOLVENDI:
1. MORA SOLVENDI EX RE - delay in an obligation to give
2. MORA SOLVENDI EX PERSONA - Delay in an obligation to do.
II. MORA ACCIPIENDI

CREDITOR'S DEFAULT. Delay of the obligee or creditor to accept the delivery of
the thing which is the object of the obligation.
III. COMPENSATIO MORAE

MUTUAL DELAY. Default on the part of both parties because neither has
completed their part in their reciprocal obligations
EFFECTS OF DELAY
A. MORA SOLVENDI:
1. The debtor is guilty of breach or violation of the obligation;
2. He is liable to the creditor for interest (obligation to pay money) or damages (in
other obligations); and,
3. He is liable even for fortuitous event when the obligation is to deliver a
determinate thing.
B. MORA ACCIPIENDI
C. COMPENSATIO MORAE
The delay of the obligor cancels the delay of the obligee and vice versa.
There is NO DEFAULT or DELAY on the part of both parties.
WHEN DEMAND IS NOT NECESSARY IN ORDER THAT DELAY MAY EXIST ON

THE PART OF THE DEBTOR
Art. 1169, NCC
A. When the obligation or stipulation so provides.
Parties expressly waive demand.
Example:
Promissory Note: " promise to pay to the order of Y (payee) P10,000.00 on February 13,
2020, without need of demand."
B. When the law so provides.
Example:
A. Payment of income tax, donor's tax, estate tax under the NIRC; or
B. Partnership - contribution of partners.
C.When from the NATURE and CIRCUMSTANCES of the obligation it appears that the
designation of the time was the controlling motive for the establishment of the contract.
D. When demand would be useless.

When the obligor has rendered it beyond his power to perform.
E. When there is performance by a party in reciprocal obligations.

The performance of one is conditioned upon the simultaneous fulfillment on the part of
the other. A party fulfills, or is ready to fulfill his obligation, delay by the other begins.
4. CONTRAVENTION OF THE TENOR OF THE OBLIGATION

Violation of a contract or breach of contract.
REMEDIES OF THE CREDITOR WHEN DEBTOR FAILS TO COMPLY WITH HIS

OBLIGATION
Art. 1165, NCC
A. DEMAND FOR SPECIFIC PERFORMANCE
CONCEPT: The right of the creditor or obligee to compel the debtor to make
delivery.
NB: In addition, the creditor can claim for damages if the debtor in the performance of
his obligation is guilty of FRAUD, NEGLIGENCE, DELAY or CONTRAVENTION OF
THE TENOR OF HIS OBLIGATION (Art. 1170, NCC)
B. DEMAND RESCISSION OR CANCELLATION OF THE OBLIGATION

(RECIPROCAL OBLIGATIONS); no Screen Shot
C. DEMAND DAMAGES EITHER WITH OR WITHOUT EITHER OF THE FIRST TWO

(2) REMEDIES
Art. 1170, NCC
Coupled with any of the four (4) grounds for liability.
GENERIC REAL OBLIGATIONS
OBLIGATIONS OF A DEBTOR OR OBLIGOR IN GENERIC REAL OBLIGATIONS:
A. TO DELIVER A GENERIC OR INDETERMINATE THING WHICH MUST NEITHER

BE SUPERIOR OR INFERIOR IN QUALITY. (Art. 1246, NCC)
RULE OF MEDIUM QUALITY or PRINCIPLE OF EQUITY
If there is a disagreement between the parties, the law steps in and determines whether
the contract has been complied with or not according to circumstances.
NB: The benefits of this Article (Art. 1246) may be waived by the creditor by accepting
the thing of inferior quality and by the debtor by delivering a superior quality
B. TO PAY DAMAGES IN CASE OF BREACH OF OBLIGATION

Art. 1170, NCC
Four (4) grounds of liability: Fraud, Negligence, Delay or Contravention of the tenor of
the obligation.
RIGHTS OF THE CREDITOR IN GENERIC REAL OBLIGATIONS

A. To ask for the performance of the obligation.
(Art. 1246, NCC)
B. To ask that the obligation be complied with at the expense of the debtor. (Art. 1165,
2nd par., NCC)
C. To recover damages in case of breach of the obligation. (Art. 1170, NCC)
PERSONAL OBLIGATIONS
RIGHTS OF THE CREDITOR OR OBLIGE IN CASE OF NONPERFORMANCE
Art. 1167, NCC
1. To have the obligation performed or executed at the expense of the obligor.
EXCEPT: When the prestation consist of an act where the personal and special
qualification of the obligor is the principal motive for the establishment of the obligation.
INSTANCES
a. If the debtor fails to perform an obligation to do.
b. If the debtor performs the obligation to do but contrary to the terms thereof.
c. If the debtors performs an obligation to do but in a poor manner.
2.As to what has been poorly done be undone;
3.To recover damages under Art. 1170, NCC; and,
4.Art. 1244, 2nd paragraph, NCC - "In obligations to do or not to do, an act or
forbearance cannot be substituted by another act or forbearance against the obligee's
will.
NEGATIVE PERSONAL OBLIGATIONS

RIGHTS OF A CREDITOR (Art. 1168, NCC)
A. Have it undone at the expense of the obligor; and,
B. To ask for damages under Art. 1170, NCC
GROUNDS – INVOLUNTARY BREACH OF OBLIGATION
FORTUITOUS EVENT
Art. 1174, NCC
DEFINITION: Any event which cannot be foreseen, or which, though foreseen, is
inevitable.
CONCEPT:
B. Act of God;
C. Act of Man;
D. Ordinary Fortuitous Event; or,
E. Extraordinary Fortuitous Event.
DISTINCTION
A. ACT OF GOD - natural occurrences such as floods, typhoons, or earthquakes.
B. ACT OF MAN - riots, strikes, or wars.
C. ORDINARY FORTUITOUS EVENT - an event which usually happens or which
could have been reasonably foreseen.
D. EXTRAORDINARY FORTUITOUS EVENT - An event which does not usually
happen and which could not have been reasonably foreseen. (Art. 1680, NCC)
RULE
Art. 1174, NCC
GENERAL RULE: NO LIABILITY - No person shall be responsible for fortuitous events.
To exempt the obligor from liability for a breach of an obligation due to a fortuitous
event, the following requisites must concur:
1. The cause of the breach of the obligation must be independent of the will of
the debtor;
2. Unavoidable
3. The event must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner; and,
4. The debtor must be free from any participation in, or aggravation of the
injury to the creditor.
EXCEPTIONS:
A. In cases expressly specified by the law. (Art. 1174, NCC)
Examples:
a. Art. 1165, NCC (genus never perishes)
b. Arts. 2147 & 2148, NCC (Negotiorum Gestio)
c. Art. 1268, NCC (proceeds from a criminal offense)
d. Art. 1942, NCC (obligations of a bailee)
e. Art. 2159, NCC (solutio indebiti)
f. Art. 1979, NCC (obligations of a depositary)
B. When it is declared by stipulation. (Art. 1174, NCC)
C. When the nature of the obligation requires the ASSUMPTION OF RISK. (Art.
1174, NCC)
DOCTRINE OF ASSUMPTION OF RISK

It refers to a situation in which the obligor or debtor with full knowledge of the risk
voluntarily enters into some obligatory relation with the creditor or the obligee.
VOLENTI NON FIT INJURIA - "No wrong is done to one who consents".
D. If the obligor DELAYS, or has promised to deliver the same thing to two or more
persons who do not have the same interest. (Art. 1165, NCC)
E. When the obligor is guilty of CONTRIBUTORY FAULT OR NEGLIGENCE. (Art.
1170, NCC)
OTHER PROVISIONS
Art. 1175 - USURIOUS TRANSACTIONS
USURY - exaction of excessive interest. It is contracting for or receiving something in
excess of the amount allowed by law for the loan or use of money, goods, chattels or
credit.
REQUISITES FOR RECOVERY OF INTEREST:
A. The payment of interest must be expressly stipulated;
B. The agreement must be in writing; and,
C. The interest must be lawful.
RULE
Circular No. 905 of the Central Bank, adopted on December 22, 1982, has expressly
removed the interest ceilings prescribed by the Usury Law.
Thus, the Usury Law is now "Legally inexistent" or "Ineffective".
HOWEVER, courts may modify interest rates when found to be iniquitous or

unconscionable under circumstances.
Art. 1176
1176 - PRESUMPTION REGARDING INTEREST AND INSTALLMENTS.

PRESUMPTION - a legal inference or assumption that a fact exist, based on the known
or proven existence of some other fact or group of facts.
KINDS OF PRESUMPTIONS:
A. DISPUTABLE PRESUMPTION
B. CONCLUSIVE PRESUMPTION
Art. 1176, NCC

FIRST PARAGRAPH: The receipt of the principal by the creditor without reservation
with respect to the interest, shall give rise to the presumption that said interest has been
paid.
SECOND PARAGRAPH: The receipt of the later installment of a debt without
reservation as to prior installments, shall likewise raise the presumption that such
installments have been paid.
ART. 1177, NCC - ENFORCEMENT OF CREDITOR'S REMEDIES SUCCESSIVE
MEASURES:
A. Exact payment - Specific Performance plus damages.
B. ACCION SUBROGATORIA - Exercise all rights and actions of the debtor, save
those personal to him;
C. ACCION PAULIANA - Seek rescission of the contracts executed by the debtor in
fraud of their rights
ACCION PAULIANA - an action by the creditor to rescind fraudulent acts of the debtor.
REQUISITES OF ACCION PAULIANA

a. That the plaintiff asking for rescission has credit prior to the alienation, although
demandable later;
b. That the debtor has made a subsequent contract conveying a patrimonial benefit
to a third person;
c. That the creditor has no other legal remedy to satisfy his claim, but would benefit
by rescission of the conveyance to the third person;
d. That act being impugned is fraudulent; and,
e. That the third person who received the property conveyed, if by onerous title, has
been an accomplice in the fraud. (Anchor Savings Bank v. Purigay, 13 March
2013)
ILLUSTRATE:
FACTS: Roman owes Manalo P100,000.00. Blessie owes Roman P50,000.00. Roman
wasn't able to pay Manalo. Roman thereafter donated his car to Santiago. What
remedies are available to Manalo when the obligation becomes due and demandable?
ANSWER: The following remedies are available to Manalo (in order)

1. Specific Performance;
2. Accion Subrogatoria; or,
3. Accion Pauliana
ART. 1178, NCC - TRANSMISSIBILITY OF OBLIGATIONS
GENERAL RULE: All rights acquired in virtue of an obligation are transmissible, subject
to laws or stipulations to the contrary.
EXCEPTIONS: Rights and obligations are not transmissible: (Art.1311, NCC)

1. By nature;
2. By stipulation of the parties; or,
3. By provision of law.
KINDS OF OBLIGATIONS
C. PRIMARY CLASSIFICATION OF OBLIGATIONS

D. SECONDARY CLASSIFICATION OF OBLIGATIONS
PRIMARY CLASSIFICATION OF OBLIGATIONS

I. PURE and CONDITIONAL OBLIGATIONS
(Arts. 1179-1192, NCC)
PURE OBLIGATION - An obligation which is demandable at once.
CONDITIONAL OBLIGATION - an obligation whose fulfillment or extinguishment
depends upon a future and uncertain event.
II. OBLIGATIONS WITH A PERIOD
(Arts. 1193-1198, NCC)
An obligation whose fulfillment or extinguishment depends upon a future and
certain event.
III. ALTERNATIVE AND FACULTATIVE OBLIGATIONS
(Arts. 1199-1206, NCC)
ALTERNATIVE OBLIGATION - an obligation which involves multiple prestation but
debtor will only perform one prestation.
FACULTATIVE OBLIGATION - an obligation which involves a principal prestation
and a substitute prestation.
IV. JOINT AND SOLIDARY OBLIGATIONS
(Arts. 1207-1222, NCC)
JOINT OBLIGATIONS - an obligation where each debtor can be made to pay only
his share in the obligation.
SOLIDARY OBLIGATIONS - an obligation where one debtor can be made to pay
for the whole obligation subject to reimbursement.
V. DIVISIBLE AND INDIVISIBLE OBLIGATIONS
(Arts. 1223-1225, NCC)
DIVISIBLE OBLIGATION - an obligation whose performance of the prestation can
be fulfilled in parts.
INDIVISIBLE OBLIGATION - an obligation whose performance of the prestation
cannot be fulfilled in parts.
VI. OBLIGATIONS WITH A PENAL CLAUSE
(Arts. 1226-1230, NCC)
An obligation which contains an undertaking to assume greater liability in case of
breach of said obligation.
SECONDARY CLASSIFICATION OF OBLIGATIONS

I. LEGAL, CONVENTIONAL, AND PENAL OBLIGATIONS
(Arts. 1158, 1159 and 1161, NCC)
LEGAL OBLIGATION - an obligation which arises from law.
CONVENTIONAL OBLIGATION - an obligation which arises from contracts.
PENAL OBLIGATION - an obligation which arises from the commission of a crime.
II. REAL AND PERSONAL OBLIGATIONS
(Arts. 1163-1168, NCC)
REAL OBLIGATIONS - an obligation to give
PERSONAL OBLIGATION - an obligation to do or not to do.
III. DETERMINATE AND GENERIC OBLIGATIONS
(Arts. 1163-1166, NCC)
DETERMINATE OBLIGATION - an obligation that is individualized and can be
GENERIC OBLIGATION - an obligation that is not individualized and cannot be
IV. POSITIVE AND NEGATIVE OBLIGATIONS
(Arts. 1167-1168, NCC)
POSITIVE OBLIGATION - an obligation to give or to do.
NEGATIVE OBLIGATION - an obligation not to do.
V. UNILATERAL AND BILATERAL OBLIGATIONS
(Art. 1191, NCC)
UNILATERAL OBLIGATION - an obligation which only one party is bound to
perform an obligation.
BILATERAL OBLIGATION - an obligation where both parties are reciprocally
bound to perform an obligation.
VI. CIVIL AND NATURAL OBLIGATIONS
(Arts. 1156 and 1453, NCC)
CIVIL OBLIGATIONS - an obligation which, if not fulfilled when it becomes due
and demandable, gives a right of action to compel their performance.
NATURAL OBLIGATIONS - an obligation which, not being based on positive law
but on equity and natural law, do not grant a right of action to enforce their
performance, but after voluntary fulfillment by the obligor, they authorize the
retention of what has been delivered or rendered by reason thereof.
VII. ACCESSORY AND PRINCIPAL OBLIGATIONS
(Arts. 1166 and 1230, NCC)
ACCESSORY OBLIGATION - an obligation where its existence depends upon a
PRINCIPAL OBLIGATION - an obligation which exists without depending upon
another obligation.
VIII. INDIVIDUAL AND COLLECTIVE OBLIGATIONS
INDIVIDUAL OBLIGATION - an obligation which involves only one subject.
COLLECTIVE OBLIGATION - an obligation which involves multiple subjects.
PURE AND CONDITIONAL OBLIGATIONS
CONDITION v. PERIOD
CONDITION
An uncertain and future event which wields an influence on a legal relationship.
PERIOD
A future and certain event which necessarily must come whether the parties know
when it will happen or not.
QUESTION: May a past event be considered a condition?

ANSWER: No.
HOWEVER, a past event unknown to the parties may be considered a condition if
the ascertainment of a future knowledge of a past event will determine whether or
not an obligation will arise.
AS TO THE EFFECT OF OBLIGATIONS

B. SUSPENSIVE CONDITION
The happening of the condition gives rise to the obligation.
B. RESOLUTORY CONDITION
The fulfillment of the condition results in the extinguishment of the obligation.
DISTINCTION
SUSPENSIVE CONDITION RESOLUTORY CONDITION
If the condition is fulfilled, the obligation If the condition is fulfilled, the obligation is
arises or becomes effective. extinguished.
If the condition is NOT fulfilled, no If the condition is NOT fulfilled, juridical
juridical relation is created relation is consolidated.
Rights are NOT yet acquired, but there is Rights are already acquired but subject to
a hope or expectancy that they will soon the threat of extinction.
be acquired.
AS TO ORIGIN OF CONDITION
A. POTESTATIVE CONDITION
The fulfillment of the condition depends upon the will of either of the parties.
B. CASUAL CONDITION
The fulfillment of the condition depends upon chance and/or upon the will of a third
person.
C. MIXED CONDITION
The fulfillment of the condition depends partly upon the will of a party to the
obligation and partly upon chance and/or the will of a third person.
AS TO POSSIBILITY
A. POSSIBLE CONDITION
Capable of realization or fulfillment according to nature, law, public policy and
customs.
B. IMPOSSIBLE CONDITION
Not capable of realization according to nature, law, morals, good customs, public
policy and public order.
3. PHYSICAL IMPOSSIBLE CONDITION
4. LEGAL IMPOSSIBLE CONDITION
AS TO MODE
A. POSITIVE CONDITION
Involves the performance of an act.
B. NEGATIVE CONDITION
Involves the non-performance of an act.
AS TO DIVISIBILITY
A. DIVISIBLE CONDITION
The condition is susceptible of partial realization.
B. INDIVISIBLE CONDITION
The condition is not susceptible of partial realization.
AS TO NUMBERS
A.CONJUNCTIVE CONDITION
Several conditions, ALL of which must be realized.
B. ALTERNATIVE CONDITION
Several conditions, ONE which must be realized.
AS TO FORM
A.EXPRESS CONDITION
The condition is stated expressly.
B. IMPLIED CONDITION
The condition is tacit.
WHEN IS AN OBLIGATION DEMANDABLE AT ONCE

A. When it is a pure obligation;
B. When the obligation is subject to a resolutory condition; and,
C. When the obligation is subject to resolutory period.
RULES ON POTESTATIVE, CASUAL OR MIXED CONDITIONS
POTESTATIVE CONDITIONS:
A. POTESTATIVE CONDITION ON THE PART OF THE DEBTOR:
3. SUSPENSIVE CONDITION - both the condition and the obligation are VOID.
4. RESOLUTORY CONDITION - both the condition and the obligation are VALID.
B. POTESTATIVE ON THE PART OF THE CREDITOR - both obligation and condition
are VALID.
MIXED CONDITIONS
The conditional obligation is VALID.
RULES ON POSSIBLE AND IMPOSSIBLE CONDITIONS

IMPOSSIBLE CONDITIONS:
A. PHYSICALLY IMPOSSIBLE CONDITION
Conditions which are contrary to the law of nature.
B. LEGALLY IMPOSSIBLE CONDITIONS
Conditions which are unlawful or juridically impossible because it is contrary to
good customs, morals, public policy or public order.
GENERAL RULE: Impossible conditions shall annul the obligation which depends upon
them. (Art. 1183, NCC)
EXCEPTIONS:
4. If the obligation is DIVISIBLE, that part thereof which is not affected by the
impossible or unlawful condition shall be VALID.
5. The condition NOT TO DO an impossible thing shall be considered as not having
been agreed upon. (Art. 1183, NCC).The obligation remains valid and becomes a
pure obligation.
6. If the obligation is pre-existing and not depending on the fulfillment of the
impossible condition for its existence, only the condition is VOID.
RULES ON POSITIVE AND NEGATIVE CONDITIONS
I. POSITIVE CONDITIONS RULE:
In positive conditions, an obligation is extinguished as soon as the time expires or if it
becomes indubitable that the event will not take place. (Art.1184,NCC)
PROBLEM
FACTS: A and B entered into a Contract to Sell. A agreed to sell to B a 100 sq. m.
parcel of land. The purchase price is P5M to be paid in installment basis and subject to
the following conditions:
4. Failure to pay installments - a penalty of 2% interest per month shall be imposed;
5. If such default continues for a period of 6 months - seller has the right to cancel
the contract; and,
6. In case of cancellation, the seller shall return to the purchaser the amount he
received less penalties, unpaid charges and dues on the property.
B notified A that he will no longer continue to pay due to the adverse effects of
economic crisis in his business. B asked for the cancellation plus refund. A refused to
cancel and instead filed for specific performance demanding payment of the balance.
QUESTION: Should A refund the amount paid by B?

ANSWER: YES. Payment is a positive suspensive condition.
QUESTION: Is specific performance a proper action in this case?

ANSWER: NO. There is no breach of contract.
II. NEGATIVE CONDITIONS RULE:

In negative conditions, the obligation is effective from the moment the time indicated
has lapsed, or if it has become evident that the event cannot occur, although the time
indicated has not yet lapsed. (Art. 1185, NCC)
DOCTRINE OF CONSTRUCTIVE COMPLIANCE

Art. 1186, NCC
•Doctrine of Constructive Fulfillment of Suspensive Condition
•The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
REQUISITES:
A. The condition is suspensive;
B. The obligor actually prevents the fulfillment of the condition; and,
C. He acts voluntarily.
Once the obligation has been fulfilled, it shall retroact to the day of the constitution of
the obligation.
RECIPROCAL OBLIGATIONS
DEFINITION: Those which arise from the same cause and in which each party is a
debtor and creditor of the other.
The performance of one is conditioned upon the simultaneous fulfillment of the other.
From the moment one of the parties fulfills his obligation, delay by the other party
begins.
NON-RECIPROCAL OBLIGATIONS. Those which do not impose simultaneous or

correlative performance on both parties. The performance of one party is NOT
dependent upon the simultaneous performance by the other.
Ex. A owes B ten thousand pesos and B owes A carabao
REMEDIES IN RECIPROCAL OBLIGATIONS

CHOICE OF REMEDIES:
C. ACTION FOR SPECIFIC PERFORMANCE

Fulfillment of the obligation damages
D. ACTION FOR RESCISSION
With damages.
This has the effect of "unmaking" a contract, or its "undoing" from the beginning and not
merely its termination. To rescind means to declare a contract void at its inception and
put an end to it as though it never was.
NB: Rescission under Art. 1191, NCC applies when there is non-compliance by one of
the contracting parties in case of reciprocal obligation.

Refers to rescissable contracts
A remedy granted by law to contracting parties and even to third persons to secure
reparation of damages caused to them by a contract, even if this should be valid, by
restoration of things to their condition at the moment prior to the celebration of the
contract.
Contract is initially valid but produces a lesion or pecuniary damage to someone.
DISTINCTION
PROBLEM
FACTS: A offered to purchase from Spouses H & W their 300 sq. m. parcel of land
covered by TCT No. 1345 in the amount of P7M. Finding the offer acceptable, the
spouses executed a Memorandum of Agreement. A's lawyer prepared a DOS indicating
the purchase price as only P700K. This is to save on taxes. Upon signing the DOAS,
P700K was paid and a postdated check amounting to P6.3 M was given. The title was
transferred to A. When the check was presented for payment, the check was
dishonored for "DAIF". Spouses filed for rescission.
QUESTION: What remedy will apply? Art. 1191 or Art. 1381?
ANSWER: ART. 1191, NCC. Non-fulfillment by A of his obligation.
PROBLEM
FACTS: A and B are agents authorized to sell eight (8) parcels of land to the NHA. The
total purchase price is P24M. The NHA purchased the parcels of land to be developed
as a housing project. Deeds of Absolute Sale were executed covering the 8 parcels of
land. However, it was found out by the DEN that 3 parcels of land were landslide prone;
hence, not suitable for housing. NHA cancelled the Deeds of Sale covering the 3
parcels of land. A and B submit that NHA had no legal basis to rescind the DOAS of the
three parcels of land.
QUESTION: Is the cancellation of the DOAS by the NHA the same with rescission
under Art. 1191, NCC? If yes, is it a proper remedy?
ANSWER: No. Cancellation was due to the fact that the object of the sale was not
suitable for the purpose.
LIMITATIONS ON THE RIGHT TO DEMAND RESCISSION (Art. 1191, NCC)

F. RESORT TO COURTS; EXCEPTION - Judicial Rescission;
G. POWER OF THE COURT TO FIX THE PERIOD - The court has discretionary
power to allow a period within which a person in default may be permitted to
perform his obligation if there is just cause for giving time to the debtor.
H. RIGHTS OF THIRD PERSONS - Rescission creates mutual restitution.However,
if the thing is in the hands of a third person who acted in good faith, rescission is
not available as a remedy.
I. SLIGHT VIOLATION - Rescission will not be granted to slight breaches of
contract; or
J. WAIVER OF RIGHT - The right to rescind may be waived expressly or impliedly.
EFFECTS OF BREACH OF BOTH PARTIES

- Art. 1192, NCC
A. The liability of the first infractor shall be equitably tempered by the courts.
B. 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.
PROBLEM
FACTS: A, an architect-contractor entered into an "Owner-Contractor Agreement" with
B to build the swimming pool of the latter for 45 days with a contract price of P2M. The
billing shall be progressive depending on the accomplishment.
First, second and 3rd billing was paid. However, on the 4th billing, B refused to pay.
A abandoned the project and B refused to pay for the work. A was constrained to file an
action for the collection of sum of money. B filed a counterclaim for damages because
of A's abandonment.
QUESTION:
E. Is Art. 1192, NCC applicable in this case?
F. How will you apply Art. 1192, NCC?
G. Is A entitled to damages?
H. Is B entitled to his counterclaim?
OBLIGATIONS WITH A PERIOD
IN GENERAL
BASIC CONCEPTS:
DAY CERTAIN DEFINED -understood that which must necessarily come although it
may not be known when.
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. (Art. 1180, NCC)
TERM OR PERIOD DEFINED - An interval of time, which exertina an influence on an
obligation as a consequence of a judicial act, either suspends its demandability_ or
produces its extinguishment.
CONDITION v. PERIOD
AS TO EFFECT
C. SUSPENSIVE PERIOD (EX DIE)
Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when the day comes.
D. RESOLUTORY PERIOD (IN DIEM)
Takes effect at once, but terminate upon the arrival of the day certain.
AS TO EXPRESSION
C. EXPRESS PERIOD
When the period is specifically stated.
D. IMPLIED PERIOD
Not specifically stated but it can be deduced that the parties intended a period.
AS TO DEFINITENESS
C. DEFINITE PERIOD
When there is a fixed date or time.
D. INDEFINITE PERIOD
When there is no fixed date or time.
AS TO SOURCE
D. CONVENTIONAL PERIOD: Period is agreed upon by the parties
E. LEGAL PERIOD: Period is fixed by law
F. JUDICIAL PERIOD: Period fixed by the Courts.
LOSS, DETERIORATION OR IMPROVEMENT

Art. 1194, NCC
Same effect and rules as discussed in Art. 1189, NCC
ADVANCE PAYMENT BY MISTAKE

Art. 1195, NCC
◦ If the obligor is unaware of the period or believes that the obligation has become
due and demandable, and thus pays or delivers before the arrival of the period, he may
recover the thing paid or delivered, with fruits and interest.
NB: This article is only applicable to obligations to give.
NB: PRESUMPTION: It is presumed that the debtor is fully aware of the period. Hence,
he has the burden to prove otherwise.
Art. 1196, NCC

GENERAL RULE: The period is presumed established for the benefit of BOTH the
creditor and the debtor.
EFFECT: The debtor may not be compelled to perform the obligation BEFORE the
arrival of the period, and the creditor cannot be compelled to accept performance
BEFORE the arrival of the period.

EXCEPTIONS:
If the period has been established in favor of the following:
A.THE DEBTOR ALONE
The debtor may not be compelled to perform the obligation BEFORE the arrival of the
period, but he may VALIDLY DO SO (pre-payment) if he so wishes.
B. THE CREDITOR ALONE
The creditor cannot be compelled to accept performance BEFORE the arrival of the
period, but he may VALIDLY DEMAND performance if he so wishes.
The creditor may decline pre-payment for various reasons.
COMPUTATION OF PERIOD
FIXING OF A PERIOD
- Art. 1197, NCC GENERAL RULE: Courts are not authorized to fix the period.
EXCEPTIONS: Instances when the courts may fix the duration of the period.
D. If the obligation does not fix a period, but from its nature and circumstances, it
can be inferred that a period is intended.
E. If the period depends upon the will of the debtor (Art. 1197, NCC)
If the performance of the obligation depend upon the sole will of the debtor,
the obligation is void.
F. In case of breach of reciprocal obligation, the courts may fix the period (instead
of ordering rescission) if there is a just cause for the same (Art. 1191, NCC)
LOSS OF THE BENEFIT OF THE PERIOD

- Art. 1198, NCC GENERAL RULE:
The obligation is not demandable before the lapse of the period.
EXCEPTIONS:
Instances provided under Art. 1198, NCC.
EFFECT OF ART. 1198:

Period is disregarded and the obligation becomes a PURE OBLIGATION, demandable
at once.
F. When after the obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
G. When the debtor does NOT FURNISH to the creditor the guaranties or securities
he has promised;
H. When by his own act, 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;
I. When the debtor violates any undertaking the creditor agreed to the period; and
J. When the debtor attempts to abscond.
ALTERNATIVE AND FACULTATIVE OBLIGATIONS
OBLIGATIONS ACCORDING TO OBJECT

A.SIMPLE OBLIGATION
There is only one object.
B. COMPOUND OBLIGATION
There are two or more objects.
3. Conjunctive Obligation - there are two or more objects and all of them are due.
4. Distributive Obligation - there are multiple objects and one object must be
performed to extinguished the obligation.
DISTRIBUTIVE OBLIGATION
C. ALTERNATIVE OBLIGATION
Two or more objects are due, but the performance of one is sufficient (Art. 1199,
NCC)
D. FACULTATIVE OBLIGATION
Only one object is due but the debtor may substitute another object. (Art. 1206,
NCC)
ALTERNATIVE OBLIGATIONS
- Art. 1199, NCC
RULE:
A person alternatively bound by different prestation, shall completely perform any
of them.
LIMITATION:
The creditor cannot be compelled to receive part of one and part of the other
undertaking.
RIGHT OF CHOICE
-Art. 1200, NCC GENERAL RULE:
The right of choice belongs to the debtor.
EXCEPTION:
When the choice has been expressly given to the creditor. (Art. 1205, NCC)
LIMITATIONS TO THE RIGHT OF CHOICE
The Debtor cannot choose those prestations which are:

F. Impossible;
G. Unlawful;
H. Could not have been the object of the obligation; or,
I. Only one prestation is practicable. (Art. 1202, NCC)
EFFECTIVITY
- Art. 1201, NCC
The choice shall produce NO EFFECT except from the time it has been
COMMUNICATED.
Once selection has been communicated, it becomes IRREVOCABLE. Communication

may be in WRITING or ORAL.
NB: In case the person entitled to choose does not make his choice, the other party can
go to court for a third party to choose.
IMPAIRMENT OF THE RIGHT TO CHOOSE

Art. 1203, NCC
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.
IN CASE OF LOSS OF ALTERNATIVE PRESTATIONS

- Art. 1204, NCC
RULES/EFFECTS OF LOSS:
A. LOSS IS DUE TO FORTUITOUS EVENT

4. ALL OBJECTS ARE LOST - the obligation of the debtor isEXTINGUISHED.
NB: The obligation ceases to be alternative and it has become a simple
obligation.
The obligation remains an alternative obligation.
NB: Obligation ceases to be alternative and it has become a simple obligation.
B. LOSS DUE TO THE DEBTOR'S FAULT

4. ALL OF THE OBJECTS ARE LOST - The creditor shall have the right to
indemnity for damages based on the value of the last thing which disappeared or
service which becomes impossible. (Art. 1204, NCC) Damages other than the
value of the last thing or service may also be awarded.
NB: Consequently, the obligation still subsist retaining its alternative character.
C. LOSS DUE TO CREDITOR'S FAULT

4. ALL OF THE OBJECTS ARE LOST - The obligation of the debtor is
extinguished.
NB: Consequently, the obligation ceases to be alternative and it has become a
simple obligation.
6. TWO OR MORE OBJECTS REMAIN - The debtor must deliver that which he
shall choose from among the remainder.
NB: Consequently, the obligation remains to be alternative.
D. THE RIGHT OF CHOICE BELONGS TO THE CREDITOR AND LOSS IS DUE TO

THE DEBTOR'S FAULT
4. ALL OF THE OBJECTS ARE LOST - The creditor shall choose the price of any of
the objects with indemnity for damages.
5. ONLY ONE OF THE OBJECTS REMAIN - The creditor may choose the obiect
which remains and the debtor cannot be held liable for damages.
NB: Creditor may also choose the value of one of the lost objects plus damages.
6. TWO OR MORE OF THE OBJECTS REMAIN - The remedies are:
c. The debtor must deliver that which the creditor choose from among the
remainder. Debtor is not liable for damages; or,
d. Creditor may choose any of the objects which were lost. Debtor is liable for
the value of the thing chosen plus damages.
FACULTATIVE OBLIGATIONS
• Art. 1206, NCC
Only one prestation has been agreed upon, but the obligor may render another in
substitution.
ALTERNATIVE OBLIGATION v. FACULTATIVE OBLIGATION

EFFECT OF LOSS OR DETERIORATION OF SUBSTITUTE IN FACULTATIVE
OBLIGATIONS
Art. 1206, NCC
A. BEFORE SUBSTITUTION
The loss or deterioration of the thing intended as a substitute, through the negligence of
the obligor, does not render him liable.
B. AFTER SUBSTITUTION
Once the substitution has been made, the obligor is liable for the loss of the substitute
on account of his delay, negligence, or fraud.
NB: Once substitution is made, the obligation is converted into a simple obligation.
JOINT AND SOLIDARY OBLIGATIONS
COLLECTIVE OBLIGATION
A. JOINT OBLIGATION (MANCOMUNADA)

The whole obligation is to be PAID OR FULFILLED PROPORTIONATELY by different
debtors and/or is to be DEMANDED PROPORTIONATELY by different creditors. (Art.
1208, NCC)
B. SOLIDARY OBLIGATIONS (SEPARADAMENTE)

One where each one of the debtors is bound to render, and/or each of the creditors has
a right to demand from any of the debtors the ENTIRE COMPLIANCE of the prestation.
(Art. 1207, NCC)
GENERAL RULE
•Art. 1208, NCC
Obligation is presumed to be JOINT if there is concurrence of two or more creditors or
of two or more debtors in one and the same obligation.
EXCEPTIONS
•THE OBLIGATION IS SOLIDARY IF:
a.The obligation expressly so states that there is solidarity.
b.The law requires solidarity.
c.The nature of the obligation requires solidarity.
EFFECTS OF JOINT OBLIGATIONS
f. A joint creditor cannot act in representation of the others. Neither can a joint debtor
be compelled to answer for the liability of the others.
g. The effect of demand or interruption of prescription is limited only to a particular
creditor or debtor who made or received the demand or interruption.
h. The extinguishment of the obligation of one of the debtors do not necessarily
i. The nullity or vices of obligation affecting one of the debtors do not necessarily
j. The insolvency of one of the debtors does not increase the liability of his co-
debtors.

• Art. 1209, NCC
DEFINITION: The obligation of the parties are JOINT and the nature of the object is
INDIVISIBLE.
CHARACTERISTICS OF A JOINT INDIVISIBLE OBLIGATION:

c. No joint creditor can act in representation of the other joint creditor or creditors.
d. No joint debtor can be compelled to fulfill the obligation of the other joint debtors.
NB: All the creditors should collectively make a demand and all the debtors should
perform their respective obligation.
REMEDY IN CASE OF BREACH

• Art. 1224, NCC
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.
INDIVISIBILITY V. SOLIDARITY
Art. 1210, NCC
The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.
DISTINCTION:
SOLIDARY OBLIGATIONS (It should be expressed that there be solidary)
AS TO SOURCE
A. LEGAL SOLIDARITY
Solidarity imposed by law
B. CONVENTIONAL SOLIDARITY
Agreed upon by the parties.
C. REAL SOLIDARITY
Imposed by the nature of the obligation. Art 1207
AS TO THE PARTIES BOUND

A. ACTIVE SOLIDARITY (MUTUAL AGENCY)
Solidarity of creditors. They possess the character of their portion, in respect to the
debtor, any may demand compliance, and as such is obligated to give the share of the
other creditors
B. PASSIVE SOLIDARITY (MUTUAL GUARANTY)
Solidarity of debtors. A debtor represents the other debtors in front of the creditors,
but can demand reimbursement. A creditor may demand from any debtor.
C. MIXED SOLIDARITY
Solidarity among debtors and creditors.
NB: Either creditor may demand and either debtor may pay subject to reimbursement.
AS TO UNIFORMITY
A. UNIFORM SOLIDARITY
Parties are bound by the same stipulation.
B. NON-UNIFORM OR VARIED SOLIDARITY
Parties are subject to different stipulations. A and B indebted to X and Y 150,000
subect to different A is due on Dec 21, 2023, B is due when he passes the Bar
examination. On Dec 21, X and Y may demand 75, 000. Since it is solidary one can
demand from any debtor the obligation.
BENEFICIAL ACTS AND PREJUDICIAL ACTS OF SOLIDARY CREDITORS
Art. 1212, NCC
RULE:
Each one of the solidary creditors may do whatever may be useful or beneficial to the
others but not anything which may be prejudicial to the latter.
EFFECT:
As far as the debtor or debtors are concerned, a prejudicial act performed by a solidary
creditor shall be valid and binding because of the principle of mutual
representation/agency which exist among the creditors. However, as far as the solidary
creditors are concerned, the creditor who performed the act shall incur the obligation of
indemnifying the others for damages.
A and B indebted to C and D of 150 due on Dec 20, 2023. C or D may demand. Should
C condoned B, then C is responsible to pay damages to other creditors.
ASSIGNMENT OF RIGHTS
•Art. 1213, NCC GENERAL RULE:
A solidary creditor cannot assign his rights.
EXCEPTION:
The assignment is allowed if it is with the consent of ALL the other solidary creditors.
A, B and C indebted to E, G and F of 150, 000. F can only assign his right to G if all
creditors consent to be considered valid. Reason: transmissibility of rights
PAYMENT OR PERFORMANCE TO SOLIDARY CREDITORS

• Art. 1214, NCC GENERAL RULE:
The debtor may pay any one of the solidary creditors. A, B and C indebted to D, E and
F with 150,000 due Dec. 20, any of the debtor may pay to any creditor.
EXCEPTION:
If a demand, judicial or extrajudicial, has been made by one of the solidary creditors,
payment should be made to him.
EFFECTS OF NOVATION, COMPENSATION, CONFUSION OR REMISSION OF

DEBT IN SOLIDARY OBLIGATIONS
• Art. 1215 in relation to Art. 1231, 1291, 1278, 1275 and 1270,NCC
Art. 1231, NCC - refers to the modes of extinguishing obligations.
E. Novation (Art. 1291, NCC);
DEFINITION: It is a mode of extinguishing an obligation by changing the object,
or principal conditions, or by substituting the person of the debtor, or by
subrogating a third person in the rights of the creditor.
If x and y decide to instead deliver a laptop, give tv. And agreed with A without B
as creditor, the A is liable to pay B.
F. Compensation (Art. 1278, NCC);
DEFINITION: A mode of extinguishing obligation wherein it shall take place when
two persons, in their own right are creditors and debtors of each other.
NB. Also known as set-off. If a debtor decide to set off with a creditor, then debtor
and creditor are liable to their solidary debtors and creditors.
G. Confusion or Merger of Rights (Art. 1275, NCC); and,
DEFINITION:
The obligation is extinguished from the time the characters of the debtor and
creditor are merged in the same person. Ex. A and B indebted to C and D, C and
D indebted to E, and E indebted to A. A as debtor and creditor. B is liable to pay
to A
H. Remission or Condonation (Art. 1270, CC)
DEFINITION: an act of liberality by virtue of which the obligee, without receiving
any price or equivalent, renounces the enforcement of the obligation, as a result
of which it is extinguished in its entirety or in that part or aspect of the same to
which it refers.
Essentially gratuitous, and requires the acceptance by the obligor.
HOWEVER, remission or condonation effected AFTER FULL PAYMENT is of
NO EFFECT as there is nothing more to remit or condone. (Art. 1219, NCC)
X and Y indebted to A and B, A condones X in whole, the creditor who extends

condonation without consent of B, A is liable to B. Y is not liable to X in the
condonation.
ENFORCEMENT AGAINST SOLIDARY DEBTORS

Art. 1216, NCC
The creditor may proceed against any one of the solidary debtors or some or all against
them simultaneously.
EFFECTS:
• The choice is left to the solidary creditor to determine against whom he will enforce
collection.
• The creditor may sue any of the solidary debtors; he need not implead all of them
as they are not indispensable parties.
• The creditor may also choose to collect only part of the debt from some of the
solidary debtors, and the remaining part from the other solidary debtors. Such
course of action does not convert the solidary obligation into a joint one. Ex. 1000
debt of A, B and C. creditor can ask A to pay 500, B 300 and C 200.
• The demand 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.
PAYMENT BY SOLIDARY DEBTORS

Art. 1217, NCC
• 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.
• The paying solidary debtor can demand reimbursement from his co-debtors for
their proportionate share with legal interest from the time of payment.
• The receiving creditor is jointly liable to the others for their corresponding shares.
Obligation is solidary but when it comes to share, then it becomes jointly. A, B and C
indebted for 100, A paid the whole amount, A ask reimbursement from B and C jointly.
RIGHT OF DEBTOR-PAYOR TO REIMBURSEMENT

RULE: He who made the payment may claim from his co-debtors only the share which
corresponds to each with interest for the payment already made.
3. If payment is made before the debt is due, no interest for the intervening period
may be demanded.
4. 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.
EFFECT OF PAYMENT AFTER OBLIGATION HAS PRESCRIBED OR BECOME

ILLEGAL
•Art. 1218, NCC
RULE: The debtor-payor is NOT ENTITLED to reimbursement from his co-debtors if his
payment is made after the obligation has PRESCRIBED or become ILLEGAL.
EFFECT OF REMISSION
• REMISSION OF A SHARE AFTER PAYMENT (Art. 1219, NCC)
The debtor whose share was "remitted" must still pay his share to reimburse the debtor-
payor.
• REMISSION OF THE ENTIRE DEBT (Art. 1220,NCC)
The remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors.
The debtor who obtained the remission did not pay or lose anything.
RULES IN CASE OF LOSS OR IMPOSSIBILITY OF PERFORMANCE

• Art. 1221, NCC
D. WITHOUT FAULT OR DELAY - Obligation is extinguished.
E. WITH FAULT OR DELAY - ALL of the solidary debtors shall be liable to the
creditor for the price and the payment of damages and interest.
HOWEVER, this is without prejudice to their action against the guilty or negligent
debtor.
F. WITHOUT FAULT BUT ONE SOLIDARY DEBTOR INCURS DELAY - same as
letter B.
Ex A and B indebted to C and D, but loss the object on due,
DEFENSES OF SOLIDARY DEBTORS
Art. 1222, NCC
A solidary debtor may, in actions filed by the creditor, avail himself of the following
defenses:
D. DEFENSES WHICH ARE DERIVED FROM THE NATURE OF THE
OBLIGATION (TOTAL DEFENSE) Defenses which pertain to the validity or
enforceability of the obligation. Ex. payment, lack of cause of action, condonation
can be used as total defense, since it extinguished the whole.
E. DEFENSES WHICH ARE PERSONAL TO HIM OR PERTAIN TO HIS OWN
SHARE (TOTAL OR PARTIAL DEFENSE) ex. insane, minor or subject to
suspensive condition or period for a debtor.
F. DEFENSES WHICH PERSONALLY BELONG TO THE OTHER DEBTORS (or
pertains to their share) (PARTIAL DEFENSE) A and B indebted to C of 100, B is
a minor, C can only ask A 50, not the whole.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
A. DIVISIBLE OBLIGATION
An obligation is divisible when it can be validly performed in parts without the essence
of the obligation being changed.
B. INDIVISIBLE OBLIGATION
An obligation is indivisible when it cannot be validly performed in parts, whatever may
be the nature of the thing which is the object thereof.
DISTINGUISHED FROM DIVISIBILITY OF THINGS

A. DIVISIBLE THING
A thing is divisible when if separated into parts, the essence is not changed or its
value is not decreased disproportionately.
B. INDIVISIBLE THING
A thing is indivisible when if separated into parts, its essence is changed or its
value is decreased disproportionately.
THREE KINDS OF DIVISION
A. QUANTITATIVE DIVISION
The division is quantitative when the thing can be materially divided into parts and such
parts are HOMOGENOUS to each other. QUANTITY RATHER THAN QUALITY
B. QUALITATIVE DIVISION
The thing can be materially divided, but the parts are not homogenous to each other.
QUALITY RATHER THAN QUANTITY ex. land for a, car for b etc
C. IDEAL OR INTELLECTUAL DIVISION
When the thing can only be separated into ideal or undivided parts, not material parts.
Ex. a co-own property 1 hectare by A,B and C, ideally one owns 1/3 but one does not
know where.
•Art. 1224, NCC REVIEW:
a.Definition;
b.Characteristics; and,
c.Remedy in case of Breach.
DETERMINING DIVISIBILITY
A. OBLIGATIONS ARE DEEMED INDIVISIBLE:
5. Obligations to give definite things.
6. Obligations which are not susceptible of partial fulfillment.
7. Obligations provided by law to be indivisible even if the thing or service is
physically divisible. Ex. estate tax, income tax though money is divisible.
8. Obligations intended by the parties to be indivisible even if the thing or service is
physically divisible. Ex. to give training today for 3 hrs.
B. OBLIGATIONS ARE DEEMED DIVISIBLE:
4. Obligations which have for their object the execution of a certain number of days
of work.
5. Obligations which have for their object the accomplishment of work by metrical
units. Ex. to plant 1hectare
6. Obligations which by their nature are susceptible of partial fulfillment.
DIVISIBILITY OR INDIVISIBILITY OF OBLIGATIONS NOT TO DO

RULE:
Character of the prestation in each particular case shall determine divisibility or
indivisibility. Ex. not to drink alcohol for 1 year, not to fail your subjects,
OBLIGATION WITH A PENAL CLAUSE
PENAL CLAUSE
DEFINITION: An accessory obligation which the parties attach to a principal obligation
for the purpose of insuring the performance thereof by imposing on the debtor a special
prestation in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.
Ex. lease of contract,
FUNCTIONS OF A PENAL CLAUSE

A penal clause serves:
e. a.To strengthen the coercive force of the
f. obligation;
g. To provide for liquidated damages resulting from a breach of the obligation; and,
h. To punish the obligor.
EFFECT OF NULLITY
Art. 1230, NCC
3. The nullity of the penal clause does NOT carry with it that of the principal
obligation.
4. The nullity of the principal obligation carries with it that of the penal clause.
WHEN IS PENALTY DEMANDABLE?

RULE:
A penalty is demandable in case of NONPERFORMANCE or LATE PERFORMANCE
Or IRREGULAR or INADEQUATE FULFILLMENT of the main obligation.
KINDS OF PENALTY
AS TO ORIGIN
C. LEGAL PENALTY: When it is provided for by law. Ex. taxes, use of money or
forbearance – case of Lara BSP case
D. CONVENTIONAL PENALTY: Constituted by agreement of the parties. If stated in
the construction of the contract.
AS TO PURPOSE
C. COMPENSATORY PENALTY
Established for the purpose of indemnifying the actual damages suffered by the
oblige or creditor in case of breach of the obligation.
D. PUNITIVE PENALTY
Established for the purpose of punishing the obligor debtor in case of breach of
obligation.
AS TO EFFECT
C. SUBSIDIARY PENALTY
Only the penalty may be demanded in case of breach. One can only invoke the
penalty. A is to construct swimming pool of A, in case of non-fulfillment of the
obligation then he pays 50k, one can only ask the penalty.
D. JOINT PENALTY
When the injured party may demand the enforcement of both the penalty and the
EFFECT OF PENALTY
GENERAL RULE:
In obligations with a penal clause, the penalty shall SUBSTITUTE the indemnity for
damages and the payment for interest in case of non-compliance.
NB: Proof of actual damages suffered by the creditor is not necessary in order that
penalty may be demanded. (Art. 1228, NCC)
EXCEPTIONS: PENALTY AS CUMULATIVE REMEDY

Damages may still be demanded (in addition to penalty in the following exceptional
cases:
4. When there is a stipulation to the contrary;
5. When the obligor refuses to pay the penalty; or,
6. When the obligor is guilty of fraud in the fulfillment of the obligation (Art. 1226,
NCC)
PURPOSE: to punish the obligor for the breach
LIMITATIONS
A. ON THE PART OF THE DEBTOR:
A debtor cannot exempt himself from the performance of the obligation by paying
the penalty agreed upon.
Penalty is NOT a substitute for the performance of the principal obligation.
EXCEPTION: Save in the case where the right has been EXPRESSLY reserved
for the debtor.
B. ON THE PART OF THE CREDITOR
The creditor cannot demand the fulfillment of the obligation and the satisfaction of
the penalty at the same fime. (Art.1227, NCC)
EXCEPT: If the right has been clearly granted to the creditor.
HOWEVER, if affer 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.
REDUCTION OF PENALTY
PENALTY MAY BE REDUCED BY THE COURTS IF THERE IS:

A. PARTIAL OR IRREGULAR COMPLIANCE
The judge shall equitably reduced the penalty when the principal obligation has
been partly or irregularly complied with by the debtor.
B. INIQUITOUS OR UNCONSCIONABLE PENALTY
Even if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
FACIORS IN FIXING THE AMOUNT OF PENALTY

f. The type, extent and purpose of the penalty;
g. The nature of the obligation;
h. The mode of the breach and its consequences;
i. The supervening realities; and,
j. The standing relationship of the parties.
INTEREST
•CIRCULAR NO. 799, July 5, 2013
The rate of interest for loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express contract as to such rate of interest
is 6% per annum
ZARA'S GIFTS & DECORS, INC. VS. MIDTOWN INDUSTRIAL SALES, INC. (G.R. NO.
225433, AUGUST 28, 2019).
MODIFIED THE GUIDELINES ON THE IMPOSITION OF INTEREST
With regard to an award of interest in the concept of actual and compensatory

damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum

of money, re., a loan or forbearance of money, goods, credits or
judgments, the interest due shall be that which is stipulated by the parties
in writing, provided it is not excessive and unconscionable, which, in the
absence of a stipulated reckoning date, shall be computed from default,
e., from extrajudicial or judicial demand in accordance with Article 1169 of
the Civil Code, UNTIL FULL PAYMENT, without compounding any interest
unless compounded interest is expressly stipulated by the parties, by law
or regulation. Interest due on the principal amount accruing as of judicial
demand shall SEPARATELY earn legal interest at the prevailing rate
prescribed by the Bangko Sentral na Plipinas, from the time of judicial
demand UNTIL FULL PAYMENT
2. In the absence of stipulated interest, in a loan or forbearance of money,

goods, credits or judgments, the rate of interest on the principal amount
shall be the prevailing legal interest prescribed by the Bangko Sentral na
Pilipinas, which shall be computed from default, i.e., from extrajudicial or
judicial demand in accordance with Article 1169 of the Civil Code, UNTIL
FULL PAYMENT, without compounding any interest unless compounded
interest is expressly stipulated by law or regulation. Interest due on the
principal amount accruing as of judicial demand shall SEPARATELY earn
legal interest at the prevailing rate prescribed by the Bangko Sentral ng
Pilipinas, from the time of judicial demand UNTIL FULL PAYMENT.
3. When the obligation, not constituting a loan or forbearance of money,

goods, credits or judgments, is breached, an interest on the amount of
damages awarded may be imposed in the discretion of the court at the
prevailing legal interest prescribed by the Bangko Sentral ng Pilipinas,
pursuant to Articles 2210 and 2011 of the Civil Code. No interest,
however, shall be adjudged on unliquidated claims or damages until the
demand can be established with reasonable certainty. Accordingly, where
the amount of the claim or damages is established with reasonable
certainty, the prevailing legal interest shall begin to run from the time the
claim is made extrajudicially or judicially (Art. 1169, Civil Code) UNTIL
FULL PAYMENT, but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run
only from the date of the judgment of the trial court (at which time the
quantification of damages may be deemed to have been reasonably
ascertained) UNTIL FULL PAYMENT. The actual base for the
computation of the interest shall, in any case, be on the principal amount
finally adjudged, without compounding any interest unless compounded
interest is expressly stipulated by law or regulation.
ESCALATION CLAUSE V. ACCELERATION CLAUSE
ESCALATION CLAUSE
Stipulation that allows the raising of the interest rates if a market ceiling for interest
rates are met.
ACCELERATION CLAUSE
A clause in a contract that states that if a payment is missed, or some other default
occurs, then the contract is fully due immediately. Ex: morgages

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KINDS OF OBLIGATIONS

A. PRIMARY CLASSIFICATION OF OBLIGATIONS

PRIMARY CLASSIFICATION OF OBLIGATIONS

SECONDARY CLASSIFICATION OF OBLIGATIONS

PURE AND CONDITIONAL OBLIGATIONS

QUESTION: May a past event be considered a condition?

AS TO THE EFFECT OF OBLIGATIONS

WHEN IS AN OBLIGATION DEMANDABLE AT ONCE

RULES ON POTESTATIVE, CASUAL OR MIXED CONDITIONS

RULES ON POSSIBLE AND IMPOSSIBLE CONDITIONS

QUESTION: Should A refund the amount paid by B?

II. NEGATIVE CONDITIONS RULE:

DOCTRINE OF CONSTRUCTIVE COMPLIANCE

PRINCIPLE OF RETROACTIVITY IN SUSPENSIVE CONDITION

NON-RECIPROCAL OBLIGATIONS. Those which do not impose simultaneous or

REMEDIES IN RECIPROCAL OBLIGATIONS

A. ACTION FOR SPECIFIC PERFORMANCE

- RESCISSION (Art. 1191, NCC)

- RESCISSION (Art. 1381, NCC)

Contract is initially valid but produces a lesion or pecuniary damage to someone.

QUESTION: What remedy will apply? Art. 1191 or Art. 1381?

LIMITATIONS ON THE RIGHT TO DEMAND RESCISSION (Art. 1191, NCC)

EFFECTS OF BREACH OF BOTH PARTIES

OBLIGATIONS WITH A PERIOD

TERM OR PERIOD DEFINED - An interval of time, which exertina an influence on an

LOSS, DETERIORATION OR IMPROVEMENT

ADVANCE PAYMENT BY MISTAKE

NB: This article is only applicable to obligations to give.

BENEFIT OF THE PERIOD

Art. 1196, NCC

BENEFIT OF THE PERIOD

LOSS OF THE BENEFIT OF THE PERIOD

EFFECT OF ART. 1198:

ALTERNATIVE AND FACULTATIVE OBLIGATIONS

OBLIGATIONS ACCORDING TO OBJECT

LIMITATIONS TO THE RIGHT OF CHOICE

The Debtor cannot choose those prestations which are:

Once selection has been communicated, it becomes IRREVOCABLE.

IMPAIRMENT OF THE RIGHT TO CHOOSE

IN CASE OF LOSS OF ALTERNATIVE PRESTATIONS

A. LOSS IS DUE TO FORTUITOUS EVENT

NB: Obligation ceases to be alternative and it has become a simple obligation.

B. LOSS DUE TO THE DEBTOR'S FAULT

C. LOSS DUE TO CREDITOR'S FAULT

D. THE RIGHT OF CHOICE BELONGS TO THE CREDITOR AND LOSS IS DUE TO

ALTERNATIVE OBLIGATION v. FACULTATIVE OBLIGATION

EFFECT OF LOSS OR DETERIORATION OF SUBSTITUTE IN FACULTATIVE

JOINT AND SOLIDARY OBLIGATIONS

A. JOINT OBLIGATION (MANCOMUNADA)

B. SOLIDARY OBLIGATIONS (SEPARADAMENTE)

JOINT INDIVISIBLE OBLIGATIONS

CHARACTERISTICS OF A JOINT INDIVISIBLE OBLIGATION:

REMEDY IN CASE OF BREACH

SOLIDARY OBLIGATIONS (It should be expressed that there be solidary)

AS TO THE PARTIES BOUND

BENEFICIAL ACTS AND PREJUDICIAL ACTS OF SOLIDARY CREDITORS

PAYMENT OR PERFORMANCE TO SOLIDARY CREDITORS