Obli 147-229

DIFFERENT KINDS OF OBLIGATIONS Arts.
1192-1193
Obligations with a Period
Idem; Distingished from condition. — A term or period

must not be confused with a condition. As we have already seen,
a condition is a future and uncertain fact or event upon which an
obligation is made to depend. Hence, the two may be distinguished
from each other in the following ways:
(1) As to requisites: While a term or period refers to an inter-
val of time which is future and certain, a condition refers to a fact or
event which is future and uncertain.
(2) As to fulfillment: While a term or period is an interval of
time which must necessarily come, although it may not be known
when, a condition is a future and uncertain fact or event which may
or may not happen.97
(3) As to influence on obligation: While a term or period
merely exerts an influence upon the time of the demandability or
extinguishment of an obligation, a condition exerts an influence
upon the very existence of the obligation itself.98
(4) As to retroactivity of effects: While a term or period does
not have any retroactive effect unless there is an agreement to the
contrary, a condition has retroactive effects.
(5) As to effect of will of debtor: When a term or period is left
exclusively to the will of the debtor, the existence of the obligation is
not affected, but when a condition is left exclusively to the will of the
debtor, the very existence of the obligation is affected.99
Classification of Term or Period. — A term or period may
be classified as follows:
(1) Suspensive or resolutory.— According to the first and
second paragraphs of Art. 1193, a period may be suspensive (ex die)
or resolutory (in diem). It is suspensive when the obligation becomes
demandable only upon the arrival of a day certain; it is resolutory
when the obligation is demandable at once, although it is terminated
upon the arrival of a day certain. Day certain is defined in the third
paragraph of the article. Thus, if A donates a parcel of land to B to be
delivered after his death, there is a suspensive term. The time of the
97
Ibid., p. 370.
98
Ibid., p. 371.
99
Arts. 1197, 1182, Civil Code.
147
Arts. 1192-1193 OBLIGATIONS
death of the donor is a day certain because it must necessarily come,

although it may not be known when. On the other hand, if C donates
the usufruct or use and enjoyment of a house and lot to D for ten
years, the term is resolutory. As soon as the donation is perfected, D
can demand the delivery of the house and lot immediately. However,
after the expiration of ten years, he will have to return the house
and lot to the donor.
(2) Legal, conventional or judicial. — A period may also be
legal, conventional or judicial. It is legal when it is granted by law;
conventional, when it is stipulated by the parties; and judicial, when
it is fixed by the courts. Examples of legal periods are those provided
for in Arts. 1606, 1623, 1682, and 1687 of the Code. Judicial periods
will be discussed at length in a subsequent part of this section.
(3) Definite or indefinite. — A period may also be definite or
indefinite. This classification can be deduced from the provision of
the third paragraph of Art. 1193 which states that a day certain is
understood to be that which must necessarily come, although it may
not be known when. From this it is evident that a period is definite
when the date or time is known beforehand, and indefinite when it
can only be determined by an event which must necessarily come to
pass, although it may not be known when.
If the happening of a future event is fixed by the parties for
the fulfillment or extinguishment of an obligation, what is the
nature of the obligation — is it with a term or is it conditional? This
question requires a qualified answer. If the event will necessarily
happen or come to pass, although it may not be known when, the
event constitutes a day certain; hence, the obligation is one with a
term.100 However, if the uncertainty consists in whether the event
will happen or come to pass, such event constitutes a condition;
hence, the obligation is conditional.101 Thus, if the death of a person
is fixed by the parties for the demandability or extinguishment of
the obligation, it is clear that the obligation is one with a term or
period because death is an event which will certainly come, although
the date or time when it will come is uncertain. The same is true
when the parties enter into a contract whereby it is agreed that the
obligation cannot be performed “while the war goes on.” Although
100
Art. 1193, par. 3, Civil Code.
101
148
DIFFERENT KINDS OF OBLIGATIONS Arts. 1192-1193
the date of the termination of the war may be uncertain yet there
is no question that the termination of the war must necessarily
come.102 However, if the obligor or debtor binds himself to perform
his obligation as soon as he has obtained a loan of P400,000 from a
certain bank, it is clear that the granting of such loan is not definite.
Consequently, it cannot be considered a day certain, for it may or it
may not happen, the obligation is conditional.103
Effects of Term or Period. — If the term or period is sus-
pensive, the fulfillment or performance of the obligation is demand-
able only upon the arrival of the day certain or the expiration of the
term.104 What is therefore suspended by the term is not the acquisi-
tion of the right or the effectivity of the obligation but merely its de-
mandability. In other words, the obligation itself becomes effective
upon its constitution or establishment, but once the term or period
expires it becomes demandable. However, if the term or period is
resolutory, the fulfillment or performance of the obligation is de-
mandable at once, but it is extinguished or terminated upon the ar-
rival of the day certain or the expiration of the term.105
Phil. National Bank vs. Lopez Vito

52 Phil. 41
This action is for the recovery of a mortgage credit. It

appears that the defendant spouses had mortgaged certain
realty to secure the payment of a loan of P24,000 granted to
them by the plaintiff. It was agreed under the mortgage contract
that payment was to be made in ten annual installments at an
interest of 8 per cent per annum. Defendants, however, failed
to pay the sums corresponding to six yearly installments. The
question presented is with regard to the effect of defendants’
failure to pay those installments which are due and demandable
upon those which, normally, are not yet due and demandable.
Held: “It is undeniable that the effect of the period agreed
upon by the parties is to suspend the demandability of the
obligation, in accordance with Article 1125 (now Art. 1193) of the
Civil Code, which provides that obligations for the performance
102
Nepomuceno vs. Narciso, 84 Phil. 542.
103
Berg vs. Magdalena Estate, 92 Phil. 110; see also Smith, Bell & Co. vs. Sotelo
Matti, 44 Phil. 874.
104
105
149
of which a day certain has been fixed shall be demandable

only when that day arrives. But the defendants’ right to avail
themselves of the period was by the will of the contracting
parties themselves made subject to the resolutory condition
contained in paragraph 5 of the contract. Said condition has
resolutory effects, since its fulfillment resolves the period
and leaves the creditor at liberty to demand the performance
of the debtor’s obligation and to proceed to the foreclosure of
the mortgage. According to the contract entered into by the
parties, the obligation of the mortgagors was to pay the debt
in yearly installments on a fixed day of each year, until it has
been fully satisfied, but in case of nonfulfillment of any of the
stipulations and conditions of the mortgage, such as the failure
to pay any of the annual installments, the mortgagee could
declare said stipulations and conditions violated and proceed to
the foreclosure of the mortgage in accordance with law. We are
of the opinion that the nonfulfillment of the conditions of the
contract renders the period ineffective, and makes the obligation
demandable at the will of the creditor.”
Idem; Effect of fortuitous event. — In obligations with a

term or period, any stipulation in the contract to the effect that in
case of a fortuitous event the contract shall be deemed suspended
during the term or period does not mean that the happening of the
fortuitous event shall stop the running of the term or period agreed
upon. Its only effect is to relieve the contracting parties from the
fulfillment of their respective obligations during the term or period.106
Problem — X Co. and Y Co. entered into a contract

whereby the latter agreed that the sugar cane which it will
produce shall be milled by the former for a period of 30 years. It
was stipulated that in case of any fortuitous event, the contract
shall be suspended during said period. For 4 years during the
last war and for 2 years after liberation when the mill of X Co.
was being rebuilt, Y Co. failed to deliver its sugar cane to the
central of X Co. After the expiration of the 30-year period, Y
Co. stopped the delivery of its sugar cane to the central of X Co.
Subsequently, X Co. brought an action against Y Co. in order
to compel the latter to deliver its sugar cane for 6 additional
years on the ground that the fortuitous event had the effect of
stopping the running of the term or period agreed upon. Will the
action prosper? Reasons.
106
Victoria Planters vs. Victorias Milling Co., 97 Phil. 318.
150
Answer — The facts stated in the above problem are exactly

the same as those in the case of Victorias Planters vs. Victorias
Milling Co., 97 Phil. 318, where the SC held that the effect of
a fortuitous event upon the term or period agreed upon is not
to stop the running of the term or period but merely to relieve
the contracting parties from the fulfillment of their respective
obligations during the pendency of the event. According to the
SC:
“Fortuitous event relieves the obligor from fulfilling
a contractual obligation. The stipulation in the contract
that in the event of flood, typhoon, earthquake, or
other force majeure, war, insurrection, civil commotion,
organized strike, etc., the contract shall be deemed
suspended during said period, does not mean that the
happening of any of these events stops the running of the
period agreed upon. It only relieves the parties from the
fulfillment of their respective obligations during that time
— the planters from delivering sugar cane and the central
from milling it. x x x To require the planters to deliver
the sugar cane which they failed to deliver during the four
years of the Japanese occupation and the two years after
liberation when the mill was being rebuilt is to demand
from the obligors the fulfillment of an obligation which
was impossible of performance at the time it became due.
Memo tenetur ad impossibilia. x x x The performance of
what the law has written off cannot be demanded and
required. The prayer that the plaintiffs be compelled to
deliver was impossible, if granted, would in effect be an
extension of the term of the contract entered into by and
between the parties.’’
Art. 1194. In case of loss, deterioration or improvement

of the thing before the arrival of the day certain, the rules of
Article 1189 shall be observed.107
Art. 1195. Anything paid or delivered before the arrival
of the period, the obligor being unaware of the period or
believing that the obligation has become due and demandable,
may be recovered, with the fruits and interests.108
107
New Provision.
108
Art. 1126, Spanish Civil Code, in amended form.
151
Art. 1196 OBLIGATIONS
Effect of Advanced Payment or Delivery. — Under

Art. 1195 of the Code, if the obligor, being unaware of the period
or believing that the obligation has become due and demandable,
paid or delivered anything before the arrival or expiration of the
period, he may recover what he has paid or delivered with fruits and
interests. This rule is different from that found in Art. 1126 of the
Spanish Civil Code which states that the obligor may recover only
the fruits or interests which the obligee may have received from the
thing. The Code Commission explains the reason for the change in
the following manner:
“The present article (Art. 1126, Civil Code of Spain) is

unjust. The thing or sum not being due when it was delivered or
paid, why should only the interest be returned? Why should not
the thing or sum delivered be returned to the debtor if he was
unaware of the period or if he believed that the obligation had
become due and demandable? The present article is contrary to
the manifest intention of the parties.’’109
It is obvious that the above article (Art. 1195) can only apply
to obligations to give. It is also obvious that before the rule can be
applied the payment or delivery must have been made by the debtor
either because he was unaware of the period or he believed that the
obligation had become due and demandable. Consequently, if the
payment or delivery was made voluntarily or with knowledge of the
period or of the fact that the obligation has not yet become due and
demandable, there can be no right of recovery whatsoever.
Art. 1196. Whenever in an obligation a period is

designated, it is presumed to have been established for the
benefit of both the creditor and debtor, unless from the tenor
of the same or other circumstances it should appear that the
period has been established in favor of one or of the other.110
Benefit of Term or Period. — The general rule is that
when a period is designated for the performance or fulfillment of an
obligation, it is presumed to have been established for the benefit of
both the creditor and the debtor. Consequently, as a general rule, the
109
Report of the Code Commission, pp. 130-131.
110
Art. 1227, Spanish Civil Code.
152
DIFFERENT KINDS OF OBLIGATIONS Art. 1196
creditor cannot demand the performance of the obligation before the

expiration of the designated period; neither can the debtor perform
the obligation before the expiration of such period.111 Thus, it has
been held that in a monetary obligation contracted with a period,
the debtor has no right, unless the creditor consents, to accelerate
the time of payment even if the tender includes an offer to pay not
only the principal, but also the interests in full.112 This is very well
illustrated by the case of De Leon vs. Syjuco.113 In 1944, during the
Japanese occupation, the debtor borrowed P216,000 in Japanese
military notes from the creditor, promising to pay “within one year
from May 5, 1948” in the legal tender of the Philippines. In the later
part of 1944, after the Americans had landed in the Philippines,
he tendered payment of the principal including interest up to
the date of maturity. The creditor refused to accept the payment.
Subsequently, he deposited the entire amount with the clerk of
court. After liberation, he brought an action against the creditor to
compel him to accept the amount deposited. The Supreme Court,
however, held that the refusal of the creditor to accept the tender of
payment was justified in view of the fact that the term or period in
this case is presumed to have been established for the benefit of both
the creditor and the debtor in accordance with Art. 1196 of the Code;
consequently, the consignation made by the debtor is not valid. It
may be argued that the creditor has nothing to lose and everything
to gain by the acceleration of payment. There are, however, several
reasons why the creditor cannot be compelled to accept payment.
They are: first, payment of interest; second, the creditor may want
to keep his money invested safely instead of having it in his hands,
in which case, by fixing the period, he is thus able to protect himself
against sudden decline in the purchasing power of the currency
loaned especially at a time when there are many factors that
influence the fluctuation of the currency;114 and third, under the
Usury Law, there is a special prohibition of payment of interest in
advance for more than one year.115
111
8 Manresa, 5th Ed., Bk. 1, p. 381; Sarmiento vs. Javellana, 38 Phil. 880.
112
Nicolas vs. Matias, 89 Phil. 126; De Leon vs. Syjuco, 90 Phil. 311; Osorio vs.
Salutillo, 48 Off. Gaz. 103; Garcia vs. De los Santos, 49 Off. Gaz. 4830; Ochoa vs.
Lopez, CA, 50 Off. Gaz. 5890.
113
90 Phil. 311.
114
Ponce de Leon vs. Syjuco, 90 Phil. 311.
115
Nicolas vs. Matias, 89 Phil. 126.
153
Idem; Exception. — However, if it can be proved either from

the tenor of the obligation or from other circumstances that the
period or term has been established in favor of the creditor or of the
debtor, the general rule or presumption will not apply. Hence, if it
should appear that such period has been established for the benefit
of the creditor, he may demand the fulfillment or performance of
the obligation at any time, but the obligor or debtor, on the other
hand, cannot compel him to accept payment before the expiration of
the period. If it should appear that the period has been established
in favor of the obligor or debtor, he may oppose any premature
demand on the part of the obligee or creditor for performance of the
obligation, or if he so desires, he may renounce the benefit of the
period by performing his obligation in advance.116 Thus, if the debtor
executed a promissory note promising to pay his indebtedness to the
creditor “al plazo de cinco años contados desde esta fecha’’ or within
a period of five years to be counted from this date, it is evident that
the term or period is for the benefit of the debtor; consequently, he
can compel the creditor to accept the payment at any time within
the stipulated period.117 But if the debtor executed a promissory
note promising to pay his indebtedness “four years after date,’’ the
presumption is that the term or period is for the benefit of both the
creditor and the debtor; consequently, the debtor cannot compel the
creditor to accept the payment until after the expiration of the four-
year period.118
Art. 1197. If the obligation does not fix a period, but from

its nature and the circumstances, it can be inferred that a
period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when
it depends upon the will of the debtor.
In every case, the courts will determine such period as
may under the circumstances have been probably contem-
plated by the parties. Once fixed by the courts, the period
cannot be changed by them.119
116
8 Manresa, 5th Ed., Bk. 1, pp. 381-382.
117
Sia vs. Court of Appeals, 48 Off. Gaz. 5259.
118
Garcia vs. De los Santos, 49 Off. Gaz. 4830.
119
154
Judicial Term or Period. — A term or period is judicial when

the duration thereof is fixed by a competent court in accordance with
the causes expressly recognized by law. Once fixed by a competent
court, the period can no longer be judicially changed.120
Idem; When court may fix term. — Under Art. 1197, there
are two cases where the courts are empowered to fix the duration
of the term or period. They are: first, if the obligation does not fix a
period, but from its nature and the circumstances it can be inferred
that a period was intended by the parties; and second, if the duration
of the period depends upon the will of the debtor. We might add a
third — if the debtor binds himself to pay when his means permit
him to do so.121 Strictly speaking, however, this case properly falls
within the purview of the second, because in such a case the power
to determine when the obligation will be fulfilled is in effect left
exclusively to the will of the debtor.
If the obligation does not fix a period, but from its nature and
the circumstances it can be inferred that a period was intended, the
courts may fix the duration thereof.122 Thus, where the donor donated
to the city of Manila a parcel of land subject to the condition that
it shall be converted into a public square, but the deed of donation
is silent with regard to the term or period for the fulfillment of
the condition, it is evident from the very nature of the condition
that a term or period is intended by the parties for its fulfillment;
consequently, the court may fix the duration thereof.123 The same
is true if the parties failed to fix a definite period within which the
obligor was to complete the construction of a house. It is clear that
in such a case they intended some period but did not specify it;
consequently, the fulfillment of the obligation cannot be demanded
from the obligor until after the courts have fixed the period for
compliance therewith, and such period has arrived.124
It must be observed, however, that the mere silence of the
obligation with regard to the term or period for its fulfillment does
not necessarily mean that the courts are empowered to fix the
duration thereof. In the first place, the remedy cannot be applied to
120
Art. 1197, Civil Code.
121
122
123
Barretto vs. City of Manila, 7 Phil. 416.
124
Concepcion vs. People of the Phil. 74 Phil. 163.
155
contracts for services in which no period was fixed by the parties.

In such contracts the period of employment is understood to be
implicitly fixed, in default of express stipulation, by the period for
the payment of the salary of the employee, in accordance with the
custom universally observed throughout the world.125 In the second
place, it cannot be applied to pure obligations.126 Thus, according to
Manresa:
“While that which is contemplated by the first paragraph

of this article appears to be a limitation upon the efficacy and
the immediate demandability of pure obligations, in reality, it
is different; in pure obligations there is no intention to grant a
period, otherwise they would not be pure; under this paragraph,
such an intention exists. For this reason in the case of the first,
there is no limitation upon the demandability of the obligation by
the creditor; rather its fulfillment by the debtor is facilitated; on
the other hand, in the case of the second, since there is actually
a period, there is a limitation upon that demandability.”127
If the duration of the term or period depends exclusively upon

the will of the debtor, the court may also fix the duration thereof.128
This rule is just and logical, because, otherwise, there would
always be the possibility that the obligation will never be fulfilled
or performed. Thus, where the debtor has executed a promissory
note promising to pay his indebtedness to the creditor “in partial
payments,”129 or “little by little,’’130 or “as soon as possible,”131 or “as
soon as he has money,’’132 it is clear that the duration of the term or
period for the fulfillment of the obligation depends exclusively upon
the will of the debtor; consequently, the remedy of the creditor is to
bring an action against the debtor in accordance with the provision
of Art. 1197 in order to ask the court to fix the duration thereof. The
same remedy is also available to the lessor where it is expressly
stipulated in the contract of lease that the duration of the lease shall
125
Barretto vs. Santa Marina, 26 Phil. 440.
126
People’s Bank vs. Odom, 64 Phil. 126.
127
8 Manresa 158, quoted in Patente vs. Omega, 49 Off. Gaz. 4846.
128
129
Levy Hermanos vs. Paterno, 18 Phil. 353.
130
Seone vs. Franco, 24 Phil. 309.
131
Gonzales vs. Jose, 66 Phil. 369.
132
Patente vs. Omega, 49 Off. Gaz. 4846.
156
depend exclusively upon the will of the lessee.133 And where there is
an agreement between the employer and the union representatives
representing its employees and laborer regarding the payment
of salary differentials which had remained unpaid because of the
exhaustion of the funds appropriated for the purpose, the obligation
to pay said salary differentials may be considered as one with a
term whose duration has been left to the will of the debtor, so that
pursuant to Art. 1197 of the Code, the remedy of the employees
and laborers is to ask the courts to fix the duration of the term, it
being admitted that in a going concern the availability of funds for
a particular purpose is a matter that does not necessarily depend
upon the cash position of the company but rather upon the judgment
of its board of directors.134
Gonzales vs. Jose

66 Phil. 369
This action was instituted by the plaintiff to recover from

the defendant the amount of two promissory notes worded as
follows:
“I promise to pay Mr. Benito Gonzales the sum of four
hundred three pesos and fifty-five centavos (P403.55) as soon as
possible.
Anterior ........................................................... P71.10

474.65
Sept. 12, 1922 .................................................. 300.00
Balance ............................................................ 174.65
“Manila, June 22, 1922.
(Sgd.) “FLORENTINO DE JOSE’’

“Quezon, Nueva Ecija’’
“I promise to pay Mr. Benito Gonzales the sum of three

hundred and seventy-three pesos and thirty centavos (P373.30)
as soon as possible.
(Sgd.) “FLORENTINO DE JOSE”
133
Eleizegui vs. Manila Lawn Tennis Club, 2 Phil. 309.
134
Tiglao vs. Manila Railroad Co., Off. Gaz. 179.
157
“Defendant appealed from the decision of the Court of

First Instance of Manila ordering him to pay the plaintiff the
sum of P547.95 within thirty days from the date of notification
of said decision, plus the costs.
In his answer the defendant interposed the special
defenses that the complaint is uncertain inasmuch as it does
not specify when the indebtedness was incurred or when it
was demandable, and that, granting that the plaintiff has any
cause of action, the same has prescribed in accordance with law.
Resolving the defense of prescription, the trial court held that
the action for the recovery of the amount of the two promissory
notes has not prescribed in accordance with Article 1128 (now
Art. 1197) of the Civil Code, which provides:
“Art. 1128. If the obligation does not specify a term,

but it is to be inferred from its nature and circumstances
that it was intended to grant the debtor time for its
performance, the period of the term shall be fixed by the
court.
“The court shall also fix the duration of the term
when it has been left to the will of the debtor.”
It is practically admitted by the parties that the obligations
arising from the two promissory notes should be governed by
said article, inasmuch as it was the intention of the plaintiff,
evidenced by the terms of the said notes, to grant the debtor a
period within which to pay the debts. The four errors assigned
by the defendant turn on the applicability of Article 1128 (now
Art. 1197) and on the prescription of the action brought by the
plaintiff. The defendant contends that Article 1113 (now Art.
1179) of the Civil Code should be applied inasmuch as the
obligations derived from the promissory notes were demandable
from the time of their execution, and adds that even supposing
that Article 1128 is applicable, the action to ask the court to fix
the period had already prescribed in accordance with Section
43(1) of the Code of Civil Procedure.
The Supreme Court, speaking through Justice Imperial
held:
“We hold that the two promissory notes are governed
by Article 1128 (now Art. 1197) because under the terms
thereof the plaintiff intended to grant the defendant a
period within which to pay his debts. As the promissory
notes do not fix this period, it is for the court to fix the
same. (Eleizegui vs. Manila Lawn Tennis Club, 2 Phil.
309; Barretto vs. City of Manila, 7 Phil. 416; Floriano vs.
158
Delgado, 11 Phil. 154; Levy Hermanos vs. Paterno, 18

Phil. 353.) The action to ask the court to fix the period
has already prescribed in accordance with Section 43(1) of
the Code of Civil Procedure. This period of prescription is
ten years, which has already elapsed from the execution
of the promissory note until the filing of the action on
June 1, 1934. The action which should be brought in
accordance with Article 1128 (now Art. 1197) is different
from the action for the recovery of the amount of the notes,
although the effects of both are the same, being, like other
civil actions, subject to the rules of prescription.
“The action brought by the plaintiff having already
prescribed, the appealed decision should be reversed
and the defendant absolved from the complaint, without
special pronouncement as to the costs in both instances.
So ordered.”
Problem — D borrowed P2,000 from C in 1958. The debt

is evidenced by a promissory note executed by D wherein he
promised to pay as soon as he has money or as soon as possible.
C has made repeated demands upon D for payment, but up to
now no payment has been made. Suppose that C will bring an
action against D for payment of the debt, will the action prosper?
(1973 Bar Problem)
Answer — No, the action will not prosper. In similar cases
decided by the Supreme Court (Gonzales vs. Jose, 66 Phil. 369;
Patente vs. Omega, 49 Off. Gaz. 4846), it was held, that where
the debtor promises to pay his obligation as soon as he has
money or as soon as possible, the duration of the term or period
depends exclusively upon the will of the debtor; consequently,
the only remedy of the creditor is to bring an action against the
debtor in accordance with Art. 1197 of the Civil Code for the
purpose of asking the court to fix the duration of the term or
period. It is only after the duration of the term or period has
been fixed by the court that any other action involving the
fulfillment or performance of the obligation can be maintained.
This has always been the consistent doctrine in this jurisdiction.
From what has been stated, it is quite clear that the effect of a
potestative term or period is very different from that of a potestative
condition. The latter cannot be left to the will of the debtor because
it affects the very existence of the obligation itself, since what is
delegated to the debtor is the power to determine whether or not
the obligation shall be fulfilled; the former, on the other hand, can
159
be left to the will of the debtor because its influence does not go as
far as to determine the existence of the obligation, since what is
delegated to the debtor is merely the power to determine when the
obligation shall be fulfilled, but in order to prevent the obligation
contracted from becoming ineffective by nonfulfillment the courts
must fix the duration of the term or period.135
This article also applies to a lease agreement, where a contract
of lease clearly exists. Thus, the SC in the case of Millare vs.
Hernando (151 SCRA 484), it held that the first paragraph of Article
1197 is clearly inapplicable, since the Contract of Lease did in fact
fix an original period of five years, which had expired. It is also clear
from paragraph 13 of the Contract of Lease that the parties reserved
to themselves the faculty of agreeing upon the period of the renewal
contract. The second paragraph of Article 1197 is equally clearly
inapplicable since the duration of the renewal period was not left to
the will of the lessee alone, but rather to the will of both the lessor
and the lessee. Most importantly, Article 1197 applies only where a
contract of lease clearly exists. Here, the contract was not renewed
at all, there was in fact no contract at all the period of which could
have been fixed.
Idem; Nature of action. — The only action that can be
maintained under Art. 1197 is an action to ask the court to fix the
duration of the term or period. It is only after the duration has
been fixed by a proper court that any other action involving the
fulfillment or performance of the obligation can be maintained.136
Thus, an action brought purely for the collection of a debt which falls
within the purview of the article is obviously improper, because the
fulfillment of the obligation itself cannot be demanded until after
the court has fixed the period for its compliance and such period has
expired.137 Consequently, so long as such period has not yet been
fixed by the court, legally, there can be no possibility of any breach of
contract or of failure to perform the obligation, and if it so happens
that this point was never raised before the trial court, the creditor
cannot be allowed to raise it for the first time on appeal.138
135
8 Manresa 158, quoted in Patente vs. Omega, 49 Off. Gaz. 4846.
136
Eleizegui vs. Manila Lawn Tennis Club, 2 Phil. 309; Seone vs. Franco, 24 Phil.
309; Gonzales vs. Jose, 66 Phil. 369.
137
Ungson vs. Lopez, CA, 50 Off. Gaz. 4297, citing Gonzales vs. Jose, 66 Phil. 369,
and Concepcion vs. People of the Phil., 74 Phil. 62.
138
Pages vs. Basilan Lumber Co., 104 Phil. 882.
160
In the case of Pacific Banking Corp. vs. CA (173 SCRA 102),

the Supreme Court reiterated the rule that if the obligation has
no fixed period, a party is precluded from enforcing it. Thus, it
held that even the pledge which modified the fixed period in the
original promissory note, did not provide for date of payment of
installments, nor of any fixed date of maturity of the whole amount of
indebtedness. Accordingly, the date of maturity of the indebtedness
should be determined by the proper court under Art. 1197 of the
Civil Code. Hence, the disputed foreclosure and subsequent sale
were premature.
It is not, however, necessary that the creditor, in his complaint,
must expressly ask the court to fix the duration of the term or
period. Where the essential allegations of the pleadings describe an
obligation with an indefinite period, the court can fix the duration of
such period although the complaint does not ask for such relief. For
this purpose two ultimate facts should be alleged in the complaint.
They are: (1) facts showing that a contract was entered into imposing
on one of the parties an obligation in favor of the other; and (2) facts
showing that the performance of the obligation was left to the will
of the obligor, or clearly showing or from which an inference can be
reasonably drawn that a period was intended.139
It must also be noted that the action recognized in Art. 1197
may also prescribe like any ordinary civil action. Thus, in an action
to ask the court to fix the duration of the period for the performance
of an obligation which is evidenced by a promissory note filed after
the lapse of ten years from the time of the execution of the note, it
was held that the action had already prescribed.140
Idem; Effect of judicial period. — Once fixed by the courts,
the period can no longer be judicially changed.141 This is so because
from the very moment the parties gave their consent to the period
fixed by the court, said period acquires the nature of a covenant; in
other words, it becomes a law governing their contract; consequently,
the courts can have no power to change or modify the same.142
139
Schenker vs. Gemperle, 5 SCRA 1042.
140
Gonzales vs. Jose, 66 Phil. 369.
141
142
Barretto vs. City of Manila, 11 Phil. 624.
161
Problem — “M’’ and “N’’ were very good friends. “N’’ bor-
rowed P10,000.00 from “M.” Because of their close relationship,
the promissory note executed by “N’’ provided that he would pay
the loan “whenever his means permit.” Subsequently, “M’’ and
“N’’ quarelled. “M” now asks you to collect the loan because he is
in dire need of money.
What legal action, if any, would you take in behalf of “M”?
(1980 Bar Problem)
Answer — “M” must bring an action against “N’’ for the
purpose of asking the court to fix the duration of the term or
period for payment. According to the Civil Code, when the
debtor binds himself to pay when his means permit him to do so,
the obligation shall be deemed to be one with a period, subject
to the provisions of Art. 1197. In other words, it shall be subject
to those provisions of the Code with respect to obligations with a
term or period which must be judiciary fixed. Thus, in the instant
case, the court shall determine such period as may under the
circumstances have been probably contemplated by the parties.
Once determined or fixed, it becomes a part of the covenant
of the two contracting parties. It can no longer be changed by
them. If the debtor defaults in the payment of the obligation
after the expiration of the period fixed by the court, the creditor
can then bring an action against him for collection. Any action
for collection brought before that would be premature. This is
well-settled.
(Note: The above answer is based on Arts. 1180 and
1197 of the Civil Code and on Gonzales vs. Jose, 66 Phil. 369;
Concepcion vs. People of the Phil. 74 Phil. 62; Pages vs. Basilan,
104 Phil. 882, and others.)
Alternative Answer — Normally, before an action for
collection may be maintained by “M” against “N,’’ the former
must first bring an action against the latter asking the court to
fix the duration of the term or period of payment. However, an
action combining such action with that of an action for collection
may be allowed if it can be shown that a separate action for
collection would be a mere formality because no additional proofs
other than the admitted facts will be presented and would serve
no purpose other than to delay. Here, there is no legal obstacle
to such course of action.
(Note: The above alternative answer is based on Borromeo
vs. Court of Appeals, 47 SCRA 65.
Probably, if we combine the two answers given above, the
result would be a much more impressive answer.)
162
Problem — “A” Corporation, engaged in the sale of subdi-

vision residential lots, sold to “B” a lot of 1,000 square meters.
The contract provides that the corporation should put up an ar-
tesian well with tank, within a reasonable time from the date
thereof and sufficient for the needs of the buyers. Five years
thereafter, and no well and tank have been put up by the cor-
poration, “B” sued the corporation for specific performance. The
corporation set up a defense that no period having been fixed,
the court should fix the period. Decide with reason. (1982 Bar
Problem)
Answer — The action for specific performance should be
dismissed on the ground that it is premature. It is clear that
the instant case falls within the purview of obligations with a
term or period which must be judicially fixed. Thus, “B” instead
of bringing an action for specific performance, should bring an
action asking the court to determine the period within which
“A’’ Corporation shall put up the artesian well with tank. Once
the court has fixed the period, then such period as fixed by the
court will become a part of the covenant between the contracting
parties. It can no longer be changed by them. If the Corporation
does not put up the artesian well with tank within the period
fixed by the court, “B” can then bring an action for specific
performance.
Alternative Answer — Normally, before an action for
specific performance may be maintained by “B” against “A’’
Corporation, the former must first bring an action against the
latter asking the court to fix the duration of the term or period to
install the artesian well with tank. However, an action combining
such action with that of an action for specific performance may
be allowed if it can be shown that a separate action for specific
performance would be a mere formality because no additional
proofs other than the admitted facts will be presented and would
serve no purpose other than to delay. Here, there is no obstacle
to such cause of action.
(Note: The above answers are based on Art. 1197 of the
Civil Code and on decided cases. Either answer should be
considered correct.)
Art. 1198. The debtor shall lose every right to make use
of the period:
(1) When after the obligation has been contracted, he
becomes insolvent, unless he give a guaranty or security for
the debt;
163
(2) When he does not furnish to the creditor the guar-

anties or securities which he has promised;
(3) When by his own acts he has impaired said guar-
anties or securities after their establishment, and when
through a fortuitous event they disappear, unless he imme-
diately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the period;
(5) When the debtor attempts to abscond.143
Extinguishment of Debtor’s Right to Period. — According

to the above article, there are five different grounds or causes for
the extinguishment of the debtor’s right to make use of the term or
period.
With respect to the first, the word “insolvent” must not be
understood in its technical sense so as to require a judicial declaration
in accordance with the Insolvency Law; it must be understood in
its ordinary or popular sense. Consequently, it includes any case in
which it would not be possible financially for the debtor to comply
with his obligation. This situation is, of course, predicated upon
the proposition that the insolvency of the debtor arose after the
constitution of the obligation.144 However, if there is a guaranty or
security for the debt, the debtor, in spite of his insolvency, does not
lose his right to the period.
With respect to the second, when the debtor does not furnish
the stipulated guaranty or security, it is but logical that he shall
lose his right to the term or period. Thus, where the debtor not only
failed to register the mortgage over a parcel of land in favor of the
creditor in order to secure the loan, but even mortgaged the same
parcel of land in favor of the Rehabilitation Finance Corporation in
order to secure another loan, it was held that the former obligation
became pure and without any condition, and consequently, the loan
became due and immediately demandable.145
143
Art. 1129, Spanish Civil Code, in modified form.
144
8 Manresa, 5th Ed., Bk. 1, p. 388.
145
Daguhoy Enterprises, Inc. vs. Ponce, 50 Off. Gaz. 5267. To the same effect
Laplana vs. Garchitorena, 48 Phil. 163.
164
With respect to the third, attention must be called to the

difference between the effect of impairment and the effect of
disappearance as applied to the guaranty or security. The rules may
be restated as follows: (1) If the guaranty or security is impaired
through the fault of the debtor, he shall lose his right to the benefit
of the period; however, if it is impaired without his fault, he shall
retain his right. (2) If the guaranty or security disappears through
any cause, even without any fault of the debtor, he shall lose his
right to the benefit of the period. In either case, however, the debtor
shall not lose his right to the benefit of the period if he gives a new
guaranty or security which is equally satisfactory.
Problem — A executed in favor of B a promissory note for

P10,000, payable after two years, secured by a mortgage on a
certain building valued at P20,000. One year after the execution
of the note, the mortgaged building was totally destroyed by a
fire of accidental origin. Can B demand from A the payment of
the value of the note immediately after the burning without
waiting for the expiration of the term? Reasons. (1932 Bar
Problem)
Answer — Yes, B can demand from A the payment of
the value of the note immediately after the burning without
waiting for the expiration of the term, unless A immediately
gives another security or guaranty which is equally satisfactory.
This is clear from the provision of No. 3 of Art. 1198 of the Civil
Code which declares that when by his own acts the debtor has
impaired the guaranty or security, or when through a fortuitous
event the guaranty or security disappears, the debtor shall lose
the benefit of the term or period. It must be observed that there
is a difference between the effect of impairment and the effect of
disappearance as applied to the security or guaranty. The rules
may be restated as follows: (1) If the guaranty or security is
impaired through the fault of the debtor, he shall lose his right
to the benefit of the period; however, if it is impaired without
his fault, he shall retain his right. (2) If the guaranty or security
disappears through any cause, even without any fault of the
debtor, he shall lose his right to the benefit of the period. In
either case, however, the debtor shall not lose his right to the
benefit of the period if he gives a new guaranty or security.
The fourth and fifth cases are new provisions. Whether the
debtor violates any undertaking, in consideration of which the credi-
tor agreed to the period, or he attempts to abscond, the rule that he
shall lose his right to the benefits of the period is proper.
165
Song Fo vs. Oria

33 Phil. 3
This is an action commenced by plaintiff to recover the

purchase price of a launch which was sold to the defendant for
P16,000 payable in quarterly installments of P1,000 and for
which the said launch was mortgaged as security. The records
show that the launch was delivered to the defendant in Manila
but it was wrecked while enroute to his place of business in
Samar. The records also show that no part of the purchase price
has yet been paid to the plaintiff. The lower court rendered
judgment for P6,000 on the ground that this amount represents
the unpaid installments which are due and demandable under
the contract. The plaintifs, however, contend that the judgment
should include the whole amount.
Held: “Coming now to examine the contentions of the
plaintiffs on their appeal, we think that the trial judge erred in
declining to render judgment in their favor for the total amount
of the purchase price of the launch. He appears to have relied
upon the provisions of Article 1126 (now Art. 1193) of the Civil
Code but to have overlooked the correlated provisions of Article
1129 (now Art. 1198) of the same code.
“The security for the payment of the purchase price of the
launch itself having disappeared as a result of the unforeseen
event (vis major) and no other security having been substituted,
therefore, the plaintiffs were clearly entitled to recover judgment
not only for the installments of the indebtedness due under the
terms of the contract at the time when they instituted their
action, but also for all installments which but for the loss of the
vessel, had not matured at the time.’’
Problem — A sold his entire interest in 24,000 tons of
iron ore to B for P75,000, P10,000 of which was actually paid
upon the signing of the contract. With respect to the balance of
P65,000, it was agreed that it “will be paid from the first amount
derived from the sale of the ore.’’ To insure payment thereof, B
delivered to A a surety bond which provided that the liability of
the surety liability would automatically expire after the lapse of
two years. Inasmuch as the ore had not yet been sold and the
surety bond had expired without being renewed and the balance
had not yet been paid in spite of repeated demands, A finally
brought an action against B for the recovery of said balance.
B, however, interposed the defense that his obligation to pay
is conditional and that inasmuch as the condition has not yet
been fulfilled, therefore, it is not yet due and demandable. Is
this defense tenable?
166
Alternative and Facultative Obligations
Answer — This defense is untenable. The sale of the iron

ore is not a condition precedent to the payment of the balance
but only a suspensive term or period. There is no uncertainty
whatsoever with regard to the fact of payment; what is
undetermined is merely the exact date of payment. Normally,
therefore, A will have to wait for the actual sale of the iron ore
before he can demand from B for the payment of the unpaid
balance. However, inasmuch as by his own act B has impaired
the guaranty or security after its establishment without giving
another one which is equally satisfactory, it is clear that he has
now lost the benefit of the term or period. Consequently, the
case now falls squarely within the purview of pars. 2 and 3 of
Art. 1198 of the NCC. (Gaite vs. Fonacier, 112 Phil. 728.)
Section 3. — Alternative and Facultative

Obligations
Concept. — When an obligation comprehends several objects

or prestations it may be either conjunctive or distributive. It is
conjunctive when all of the objects or prestations are demandable
at the same time; it is distributive when only one is demandable.
The latter, in turn, may be either alternative or facultative. It is
alternative when it comprehends several objects or prestations which
are due, but it may be complied with by the delivery or performance
of only one of them; it is facultative when it comprehends only one
object or prestation which is due, but it may be complied with by the
delivery of another object or the performance of another prestation
in substitution.146
It is, therefore, clear that the characteristic feature of an
alternative obligation is that various objects being due, the payment
or performance of one of them, determined by the election which,
as a general rule, pertains to the obligor or debtor, is sufficient.147
The characteristic feature of a facultative obligation, on the other
hand, is that only one object or prestation is due, but the obligor or
debtor may deliver another object or perform another prestation in
substitution.148
146
8 Manresa, 5th Ed., Bk. 1, p. 393; 3 Castan, 7th Ed., pp. 75-76.
147
Ibid.
148
167
Art. 1199. A person alternatively bound by different

prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of one
and part of the other undertaking.149
Art. 1200. The right of choice belongs to the debtor, un-
less it has been expressly granted to the creditor.
The debtor shall have no right to choose those presta-
tions which are impossible, unlawful or which could not
have been the object of the obligation.150
Right of Choice in Alternative Obligations. — In alterna-

tive obligations, the general rule is that the right of choice belongs or
pertains to the debtor.151 Thus, where the debtor borrowed a certain
amount from the creditor, and in the promissory note which he had
executed it is expressly stipulated that he can fulfill his obligation
either by the payment of the amount of the indebtedness or by the
delivery of a house and lot at an appraised valuation, it was held
that such obligations are alternative in character.152 Consequently,
upon the maturity of the note, the debtor can comply with the obli-
gation by paying the agreed amount or by delivering the house and
lot. Under the general rule stated in Art. 1200, he alone has the
right to make the choice. Once he has made it, and such choice is
duly communicated to the creditor, the obligation becomes simple.
There are, however, two exceptions to the general rule. They
are: first, when the right of choice has been expressly granted to
the creditor;153 and second, when it has been expressly granted to
a third person. Although the Code does not expressly recognize the
second,there is no reason why it should not be allowed, since it is not
contrary to law, morals, good customs, public order or public policy.
Idem; Limitations upon right of choice. — The limitations
to the right of choice are given in the second paragraph of Art. 1200.
According to this provision, the debtor cannot choose those prestations
or undertakings which are impossible, unlawful or which could not
149
150
151
152
Agoncillo and Marino vs. Javier, 38 Phil. 244.
153
168
have been the object of the obligation. “Prestations which could not
have been the object of the obligation” refer to those undertakings
which are not included among those from which the obligor may
select, or to those which are not yet due and demandable at the
time the selection is made, or to those which, by reason of accident
or some other cause, have acquired a new character distinct or
different from that contemplated by the parties when the obligation
was constituted.154 It must be noted that what is contemplated by
the provision of the second paragraph of Art. 1200 is a case in which
the right to choose or select is not lost or extinguished altogether,
because there are still other objects or prestations from which the
debtor can choose or select.
Art. 1201. The choice shall produce no effect except from

the time it has been communicated.155
When Choice Takes Effect. — The rule stated in the above

article is applicable whether the right of choice is exercised by the
debtor, or by the creditor, or by a third person. No special form is
required for the communication or notification. Hence, any form may
be employed provided that the other party is properly notified of the
selection. Nevertheless, considering the fact that the choice shall
produce no effect except from the time the other party is notified
of the selection and the fact that the proof of such notification is
incumbent upon him who made the selection, it is always much
better to make the notification either in a notarized document or in
any other authentic writing.156
Can the creditor to whom the selection had been duly
communicated impugn such selection? In other words, before the
choice or selection shall be binding upon the creditor, is it necessary
that he must give his consent thereto? In a certain case, decided by
the Supreme Court, where the alternative obligations of the obligor
consisted of paying the insured value of the house or rebuilding
it, and such obligor notified the obligee that it shall rebuild the
house, the court declared that the “object of the notice is to give
the creditor or obligee opportunity to express his consent, or to
154
155
156
169
impugn the election made by the debtor and only after said notice
shall the election take legal effect when consented to by the creditor,
or if impugned by the latter, when declared proper by a competent
court.’’157 It is, however, submitted that this doctrine is not sound.
Consent or concurrence of the creditor to the choice or selection
made by the debtor is not necessary before the choice or selection
can produce effect. To hold otherwise would destroy the very nature
of the right to select and the alternative character of the obligation
for that matter. Thus, according to Dean Capistrano: “The law does
not require the creditor’s concurrence to the choice; if it did, it would
have destroyed the very nature of alternative obligations, which
empowers the debtor to perform completely one of them.’’158
Idem; Effect upon obligation. — Once the choice is made
by the debtor (or by the creditor or by a third person as the case
may be), the obligation ceases to be alternative from the moment
the selection has been communicated to the other party. From
that moment, both debtor and creditor are bound by the selection.
In other words, the debtor can only comply with his obligation
by performing the prestation which has been selected, while the
creditor can only demand compliance in accordance there with. “An
election once made is binding on the person who makes it, and he
will not therefore be permitted to renounce his choice and take an
alternative which was at first opened to him.”159
Art. 1202. The debtor shall lose the right of choice when
among the prestations whereby he is alternatively bound,
only one is practicable.160
When Only One Prestation Is Practicable. — According
to the above article, when among several prestations whereby the
debtor is alternatively bound, only one prestation can be performed
because all of the others are impracticable, the debtor loses his right of
choice altogether. In other words, the obligation loses its alternative
character; it becomes a simple obligation. The provision of the above
article, however, must be distinguished from the provision of the
157
Ong Guan Can vs. Century Insurance Co., 46 Phil. 592.
158
3 Capistrano, Civil Code, 1950 Ed., p. 131. To the same effect — 4 Tolentino
Civil Code, 1956 Ed., p. 196.
159
Reyes vs. Martinez, 55 Phil. 492.
160
170
second paragraph of Art. 1200. Under the first, there is only one
prestation which can be performed; under the second, there are still
two or more which can be performed. Under the first, the obligation
is converted into a simple one because the debtor loses his right of
election; under the second, the obligation is still alternative because
the debtor can still exercise his right of election.
Art. 1203. If through the creditor’s acts the debtor cannot

make a choice according to the terms of the obligation, the
latter may rescind the contract with damages.161
When Choice Is Rendered Impossible. — The above article

does not have any counterpart in the Spanish Civil Code. The rule,
however, is logical. Since the debtor’s right of choice is rendered
ineffective through the creditor’s fault, his only possible recourse
will be to bring an action to rescind the contract with damages.
Art. 1204. The creditor shall have a right to indemnity

for damages when, through the fault of the debtor, all the
things which are alternatively the object of the obligation
have been lost, or the compliance of the obligation has
become impossible.
The indemnity shall be fixed taking as a basis the value
of the last thing which disappeared, or that of the service
which last became impossible.
Damages other than the value of the last thing or service
may also be awarded.162
Art. 1205. When the choice has been expressly given to
the creditor, the obligation shall cease to be alternative from
the day when the selection has been communicated to the
debtor.
Until then the responsibility of the debtor shall be
governed by the following rules:
(1) If one of the things is lost through a fortuitous event,
he shall perform the obligation by delivering that which the
161
New provision.
162
171
creditor should choose from among the remainder, or that

which remains if one only subsists;
(2) If the loss of one of the things occurs through the
fault of the debtor, the creditor may claim any of those
subsisting, or the price of that which, through the fault of
the former, has disappeared, with a right to damages;
(3) If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon the price of
any one of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or
not to do in case one, some or all of the prestations should
become impossible.163
Effect of Loss of Objects of Obligation. — It is evident

that Art. 1204 is applicable only to a case where the right of choice
belongs to the debtor, while Art. 1205 is applicable only to a case
where the right belongs to the creditor. In other words, the first
article is the general rule, while the second is the exception.
What is the effect upon the obligation if one or some or all of
the things or prestations which are alternatively the object of the
obligation have been lost or cannot be complied with? The answer
to this question must depend upon two factors or circumstances
— first, whether the right of choice belongs to the debtor or to the
creditor, and second, whether the loss or impossibility was due to a
fortuitous event or to the fault of the debtor.
Idem; If right of choice belongs to the debtor. — If the
right of choice belongs to the debtor and the loss or impossibility is
due to a fortuitous event, then the provisions of Arts. 1174, 1262 and
1266 of the Code are applicable. The debtor cannot be held liable
for damages. Consequently, if one of the things is lost or one of the
prestations cannot be performed by reason of a fortuitous event,
the debtor must still comply with the obligation by delivering or
performing that which he shall choose from among the remainder; if
all of the things, except one, are lost, or all of the prestations, except
one, cannot be performed by reason of a fortuitous event, the debtor
must still comply with his obligation by delivering or performing
163
172
that which remains; and if all of the things are lost or all of the
prestations cannot be performed by reason of a fortuitous event, the
debtor is released from the obligation.
But if the loss or impossibility is due to the fault of the debtor,
then the provisions of Art. 1204 are applicable. Consequently, if all
of the things are lost or all of the prestations cannot be performed
due to the fault of the debtor, the creditor shall have a right to
indemnity for damages. Such indemnity shall be fixed taking as a
basis the value of the last thing to be lost or that of the service which
last became impossible. However, if one, or more, but not all, of the
things are lost or one or some, but not all, of the prestations cannot
be performed due to the fault of the debtor, the creditor cannot hold
the debtor liable for damages. This is so because the debtor can still
comply with his obligation.
Idem; If right of choice belongs to creditor. — If the right
of choice belongs to the creditor and the loss or impossibility is due to
a fortuitous event, then the provisions of Arts. 1174, 1262 and 1266,
which are reiterated in No. 1 of the second paragraph of Art. 1205,
are applicable. The debtor cannot be held liable. Consequently, what
had been stated in the preceding section can also be applied here.
But if the loss or impossibility is due to the fault of the debtor,
then the provisions of Nos. 2 and 3 of the second paragraph of Art.
1205 are applicable. Consequently, if all of the things are lost or all
of the prestations cannot be performed due to the fault of the debtor,
the creditor may claim the price or value of any one of them with
indemnity for damages. However, if one or some, but not all, of the
things are lost, or one or some, but not all, of the prestations cannot
be performed due to the fault of the debtor, the creditor may claim
any of those subsisting without any liability on the part of the debtor
for damages or the price or value of that, which through the fault of
the former, was lost or could not be performed, with indemnity, for
damages.
Art. 1206. When only one prestation has been agreed

upon, but the obligor may render another in substitution,
the obligation is called facultative.
The loss or deterioration of the thing intended as a
substitute, through the negligence of the obligor, does not
173
render him liable. But once the substitution has been made,
the obligor is liable for the loss of the substitute on account
of his delay, negligence or fraud.164
Nature of Facultative Obligations. — According to the
above article, a facultative obligation is defined as an obligation
wherein only one object or prestation has been agreed upon by the
parties to the obligation, but which may be complied with by the
delivery of another object or the performance of another prestation
in substitution. It is evident that the characteristic feature of this
type of obligation is that only one object or prestation is due, but if
the obligor fails to deliver such object or to perform such prestation,
he can still comply with his obligation by delivering another object
or performing another prestation in substitution. Thus, where the
debtor executed a promissory note promising to pay his indebtedness
to the creditor at a specified date and in case of failure to do so, he
shall execute a deed of mortgage over a certain property belonging
to him in favor of the creditor, it was held that the obligation is
facultative.165 Consequently, the provisions of Art. 1206 of the Civil
Code may be applied.
Idem; Distinguished from alternative obligations. —
Facultative obligations may be distinguished from alternative obli-
gations in the following ways:
(1) As to objects due: In facultative obligations only one object
is due, while in alternative obligations several objects are due.
(2) As to compliance: Facultative obligations may be complied
with by the delivery of another object or by the performance of
another prestation in substitution of that which is due, while
alternative obligations may be complied with by the delivery of one
of the objects or by the performance of one of the prestations which
are alternatively due.
(3) As to choice: In the first, the right of choice pertains only
to the debtor, while in the second, the right of choice may pertain
even to the creditor or to a third person.
(4) As to the effect of fortuitous loss: In the first, the loss or
impossibility of the object or prestation which is due without any
164
New provision.
165
Quizana vs. Redugerio, 50 Off. Gaz. 2444.
174
fault of the debtor is sufficient to extinguish the obligation, while in

the second, the loss or impossibility of all of the objects or prestations
which are due without any fault of the debtor is necessary to
extinguish the obligation.
(5) As to effect of culpable loss: In the first, the culpable loss
of the object which the debtor may deliver in substitution before the
substitution is effected does not give rise to any liability on the part
of such debtor; in the second, the culpable loss of any of the objects
which are alternatively due before the choice is made may give rise
to a liability on the part of the debtor.
Idem; When substitution takes effect. — Although Art. 1206
is silent with respect to the time or moment when the substitution
will take effect, it is clear that the provision of Art. 1201 can be
applied by analogy. Of course, there is no question that the only
one who is empowered to make the substitution is the debtor. In
order that the creditor will be bound by the substitution, however,
it is necessary that he must communicate such fact to the said
creditor. Once the latter has been notified of the substitution, then
the obligation ceases to be facultative; it is finally converted into a
simple obligation to deliver the thing or to perform the prestation
which has been substituted.
Idem; Effect of loss of substitute. — Before the substitution
is made by the obligor, the loss or deterioration of the thing intended
as a substitute, through the negligence of the said obligor, does
not render him liable.166 Hence, there seems to be an implication
that if the loss or deterioration is through the bad faith or fraud of
the obligor, then he is liable. As a matter of fact, Dean Capistrano
says: “Whether the debtor is liable in case he acts with bad faith,
the Code Commission thought it better to leave to the courts
to decide. However, it may be pointed out that, as a matter of
principle, there should always be liability for bad faith.”167 It must,
however, be observed that if the debtor can be held liable for the
loss or deterioration of the thing intended as a substitute, will this
not destroy the facultative nature of this type of obligation? It is,
therefore, submitted that whatever may be the cause of the loss
or deterioration of the thing intended as a substitute, such loss or
deterioration shall not render the debtor liable.
166
167
3 Capistrano, Civil Code, 1950, Ed., p. 135.
175
Once the substitution has been made, however, the debtor shall
be liable for the loss or deterioration of the substitute on account of
his delay, negligence or fraud.168 This rule is logical because once
the substitution is made, the obligation is converted into a simple
one with the substituted thing or prestation as the object of the
obligation.
Section 4. — Joint and Solidary Obligations
Concept. — When there is a concurrence of two or more

creditors or of two or more debtors in one and the same obligation,
the obligation may be either joint (obligación mancomunada) or
solidary (obligación solidaria). A joint obligation may be defined as
an obligation where there is a concurrence of several creditors, or
of several debtors, or of several creditors and debtors, by virtue of
which each of the creditors has a right to demand, and each of the
debtors is bound to render, compliance with his proportionate part of
the prestation which constitutes the object of the obligation. In other
words, each of the creditors is entitled to demand the payment of only
a proportionate part of the credit, while each of the debtors is liable
for the payment of only a proportionate part of the debt. A solidary
obligation, on the other hand, may be defined as an obligation where
there is a concurrence of several creditors, or of several debtors, or
of several creditors and several debtors, by virtue of which each of
the creditors has a right to demand, and each of the debtors is bound
to render, entire compliance with the prestation which constitutes
the object of the obligation. In other words, each of the creditors is
entitled to demand the payment of the entire credit, while each of
the debtors is liable for the payment of the entire debt.169
Idem; Comparative jurisprudence. — In the case of
Jaucian vs. Querol,170 the Supreme Court had occasion to discuss the
comparative jurisprudence on the subject. According to the Court:
“In Spanish law the comprehensive and generic term

by which to indicate multiplicity of obligations arising from
plurality of debtors or creditors, is mancomunidad, which term
includes (1) mancomunidad simple or mancomunidad properly
168
169
Art. 1207, Civil Code; 3 Castan, 7th Ed., pp. 65-66.
170
38 Phil. 707.
176
Joint and Solidary Obligations
such and (2) mancomunidad solidaria. In other words, the

Spanish system recognizes two species of multiple obligation,
namely, the apportionable joint obligation and the solidary joint
obligation. The solidary obligation is, therefore, merely a form of
joint obligation.
“The idea of the benefit of division as a feature of simple
joint obligation appears to be a peculiar creation of Spanish
jurisprudence. No such idea prevailed in the Roman law, and it
is not recognized either in the French or in the Italian system.
“The conception is a badge of honor to Spanish legislation,
honorably shared with the Spanish-American, since French and
Italian codes do not recognize the distinction or difference just
expounded between the two sorts of multiple obligation. (Giorgi,
Theory of Obligation, Span. Ed., Vol. 1, p. 77).
“Considered with reference to comparative jurisprudence,
liability in solidum appears to be the normal characteristic
of the multiple obligation, while the benefit of division in the
Spanish system is an illustration of the abnormal, evidently
resulting from the operation of a positive rule created by the
lawgiver. This exceptional feature of the simple joint obligation
in Spanish law dates from an early period; and the rule in
question is expressed with simplicity and precision in a passage
transcribed into the Novisima Recopilación follows:
“If two persons bind themselves by contract, simply and
not otherwise, to do or accomplish something, it is thereby to be
understood that each is bound for one-half, unless it is specified
in the contract that each is bound in solidum, or it is agreed
among themselves that they shall be bound in some other
manner, and this notwithstanding any customary law to the
contrary. x x x’ (Law X, Title I, Book X, Novisima Recopilación,
copied from law promulgated at Madrid in 1488 by Henry IV).
“The foregoing exposition of the conflict between the
juridical conception of liability incident to the multiple
obligation, as embodied respectively in the common law system
and the Spanish Civil Code, prepares us for a few words of
comment upon the problem of translating the terms which
we have been considering from English into Spanish or from
Spanish to English.
“The Spanish expression to be chosen as the equivalent
of the English word “joint” or “jointly’’ must, of course, depend
upon the idea to be conveyed; and it must be remembered
that the matter to be translated may be an enunciation either
177
of a common law conception or of a civil law idea. In Sharruf

vs. Tayabas Land Co. and Ginainati (37 Phil. Rep. 655), a
judge of one of the Courts of First Instance in these Islands
rendered judgment in English declaring the defendants to be
‘jointly’ liable. It was held that he meant ‘jointly’ in the sense
of ‘mancomunadamente’ because the obligation upon which the
judgment was based was apportionable under Article 1138 (now
Art. 1208) of the Civil Code. This mode of translation does not,
however, hold where the word to be translated has reference to
a multiple common law obligation, as in Article 698 of the Code
of Civil Procedure. Here it is necessary to render the word ‘joint’
by the Spanish word ‘solidaria.’
“In translating the Spanish word ‘mancomunada’ into
English a similar difficulty is presented. In the Philippine
Islands at least we must probably continue to tolerate the
use of the English word ‘joint’ as an approximate equivalent,
ambiguous as it may be to a reader indoctrinated with the ideas
of the common law. The Latin phrase pro rata is a makeshift
the use of which is not to be commended. The Spanish word
‘solidaria’ is properly rendered in English by the word ‘solidary,’
though it is not inaccurate here to use the compound expression
‘joint and several.’ The use of the Latin phrase ‘in solidum’ is also
permissible. We close these observations with the suggestion
that a person writing in English may at times find it conducive
to precision to use the expanded expression ‘apportionable joint
obligation’ and ‘solidary joint obligation’ as conveying the full
juridical sense of ‘obligación mancomunada’ and ‘obligacion
solidaria,’ respectively.’’
Art. 1207. The concurrence of two or more creditors or

of two or more debtors in one and the same obligation does
not imply that each one of the former has a right to demand,
or that each one of the latter is bound to render, entire
compliance with the prestation. There is a solidary liability
only when the obligation expressly so states, or when the
law or the nature of the obligation requires solidarity.171
Nature of Collective Obligations in General. — According
to the above article, when there is a concurrence of several creditors
or of several debtors or of several creditors and debtors in one and the
same obligation, there is a presumption that the obligation is joint
171
178
and not solidary. Consequently, where the obligation is silent with

respect to the nature or character of the right of the creditors or of
the liability of the debtors, each of the creditors is entitled to demand
only for the payment of his proportionate share of the credit, while
each of the debtors can be compelled to pay only his proportionate
share of the debt.172 Thus, if A, B and C had executed a promissory
note binding themselves to pay an indebtedness of P9,000 to X, Y, and
Z, since the note is silent with respect to the character of the right
of the creditors as well as the liability of the debtors, the obligation
is, therefore, presumed to be joint.173 Upon maturity of the note the
only right of each creditor would be to demand for the payment of
his proportionate share of the credit, which in this particular case
is presumed to be P3,000.174 Each debtor, on the other hand, can
be compelled to pay only for his proportionate share of the debt.
Therefore, if X, for instance, will proceed against A for payment, the
only amount which he can collect from the latter would be P1,000.
Consequently, if he wants to collect his entire proportionate share
of P3,000, he must proceed not only against A, but also against B
and C.
Idem; Exceptions. — There are, however, three exceptional
cases or instances where collective obligations are solidary and not
joint. They are: first, when the obligation expressly states that there
is solidarity; second, when the law requires solidarity; and third,
when the nature of the obligation requires solidarity.175 In all of
these cases, each creditor is entitled to demand for the payment
of the entire credit, while each debtor can be compelled to pay for
the entire debt. Thus, if A, B, and C are solidarily bound to pay an
indebtedness of P9,000 to X, Y, and Z, anyone of the creditors can
proceed against one, or some, or all of the debtors for the payment
of the entire credit.176
Before the first exception can be applied, the solidary character
of the obligation must be made in express terms.177 It is not, how-
172
Pimentel vs. Gutierrez, 14 Phil. 49; White vs. Enriquez, 15 Phil. 113; Agoncillo
vs. Javier, 38 Phil. 424; Ramos vs. Gibbon, 67 Phil. 371; Inciong, Jr. vs. Court of Ap-
peals, June 26, 1996, 257 SCRA 580.
173
174
175
176
177
Gonzales vs. La Previsora Filipina, 74 Phil. 165.
179
ever, necessary that the agreement shall employ precisely the word
“solidary” in order that the obligation will be so; it is enough that
the agreement will say, for example, that each one of them can be
obligated for the aggregate value of the obligation.178 Thus, where
the debtors agreed to pay the obligation “jointly and severally,”179
or “individually and collectively”180 everyone of them can be held re-
sponsible for the payment of the entire obligation. Another example
is where the promissory note expressly states that the three signato-
ries therein are “jointly and severally liable.’’ Any one, some or all of
them may be proceeded against for the entire obligation. The choice
is left to the solidary creditor to determine against whom he will
enforce collection. (Inciong, Jr. vs. Court of Appeals, June 26, 1996,
257 SCRA 580.)
Examples of the second exception are those provided for in
Arts. 927, 1824, 1911, 1915, 2146, 2157, and 2194 of the Civil Code.
Another example would be that provided for in Art. 110 of the Revised
Penal Code regarding the liability of principals, accomplices, and
accessories of a felony.
Examples of the third exception are obligations arising from
criminal offenses and torts. The responsibility of two or more
persons guilty of a criminal offense or liable for a tort is solidary.
This is so because of the very nature of the obligation itself. It must
be noted, however, that under Art. 110 of the Revised Penal Code, it
is expressly stated that the responsibility of principals, accomplices,
and accessories, each within their respective class, is solidary, and
under Art. 2194 of the Civil Code, it is also expressly stated that
the responsibility of two or more persons liable for a quasi-delict is
solidary. Apparently, the obligations comprehended by the exception
on which we are commenting are also included within the scope of
the second exception. There are, however, some torts which cannot
be classified as quasi-delicts because the element of negligence
does not enter as an essential requisite, such as interferences with
human relations, nuisances, infringements of copyrights, patent or
trademark, unfair competition and several others. Responsibility of
joint tortfeasors in such cases is solidary because the nature of the
178
Ysmael & Co. vs. Salinas and Delgado, 73 Phil. 601.
179
Parot vs. Gemora, 7 Phil. 24.
180
Oriental Commercial Co. vs. La Fuente, CA, 38 Off. Gaz. 947.
180
obligation requires it. Thus, in a certain case, the Supreme Court

declared:
“It may be stated as a general rule that joint tortfeasors

are all the persons who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of
a tort, or who approve of it after it is done for their benefit. They
are each liable as principals to the same extent and in the same
manner as if they had performed the wrongful act themselves.
Joint tortfeasors are jointly and severally liable for the tort
which they commit. The person injured may sue all of them or
any number less than all. Each is liable for the whole damage. It
is no defense for one sued alone, that the others who participated
in the wrongful act are not joined with him as defendants; nor
is it any excuse for him that his participation in the tort was
insignificant as compared with that of the others.’’181
Art. 1208. If from the law, or the nature of the wording

of the obligations to which the preceding article refers the
contrary does not appear, the credit or debt shall be presumed
to be divided into as many equal shares as there are creditors
or debtors, the credits or debts being considered distinct
from one another, subject to the Rules of Court governing
the multiplicity of suits.182
Joint Divisible Obligations. — The most fundamental effect

of joint divisible obligations is that each creditor can demand only
for the payment of his proportionate share of the credit, while each
debtor can be held liable only for the payment of his proportionate
share of the debt.183 As a corollary to this rule, the credit or debt
shall be presumed, in the absence of any law or stipulation to the
contrary, to be divided into as many shares as there are creditors
and debtors, the credits or debts being considered distinct from
one another, subject to the Rules of Court governing multiplicity of
suits.184 From these rules which are expressly declared by the Code, it
necessarily follows that a joint creditor cannot act in representation
181
Worcester vs. Ocampo, 22 Phil. 42. To the same effect: Verzosa vs. Lim, 45
Phil. 416; Torebillas vs. Soques, CA, 46 Off. Gaz. 5618; Padilla vs. Hipomia, CA, G.R.
No. 4272-R, Feb. 17, 1951.
182
183
184
181
of the others; neither can a joint debtor be compelled to answer for

the liability of the others. Consequently, if there is a breach of the
obligation by reason of the act of one of the debtors, the damages
due to its breach must be borne by him alone.185 Similarly, if there
is any defense which is purely personal to one of the debtors, he
alone can avail himself of such defense.186 Thus, it has been held
that payment or acknowledgment by one of the joint debtors will
not stop the running of the period of prescription as to the others.187
This doctrine is in conformity with the opinion of Manresa to the
effect that one of the necessary consequences of the rule stated in
what is now Art. 1208 of the Civil Code is that “the interruption of
prescription by the claim of a creditor addressed to a single debtor
or by an acknowledgment made by one of the debtors in favor of one
or more of the creditors is not to be understood as prejudicial to or in
favor of the other debtors or creditors.’’188
Problem No. 1. — A, B, and C executed a promissory note

binding themselves to pay P9,000 to X, Y, and Z. The note is now
due and demandable.
(a) Can the creditors proceed against A alone for
payment of the entire obligation? Why?
(b) Can X alone proceed against A, B and C for payment
of the entire obligation? Why?
(c) Suppose that X proceeds against A alone for
payment, how much can he collect? Why?
(d) Suppose that C is insolvent, can A and B be held
liable for his share in the obligations? Why?
(e) Suppose that the obligation was about to prescribe,
but X wrote a letter to A demanding for payment of the entire
debt, will this have the effect of interrupting the running of the
period of prescription? Why?
Answer — (a) The creditors cannot proceed against A alone
for the payment of the entire obligation. Since the promissory
note is silent with respect to the right of the creditors as well as
the liability of the debtors, the obligation is, therefore, presumed
185
Moller’s Ltd. vs. Sarile, 97 Phil. 985.
186
187
Agoncillo vs. Javier, 38 Phil. 424.
188
8 Manresa 182, cited in Agoncillo vs. Javier, 38 Phil. 424.
182
to be joint (Art. 1207, CC). Consequently, the only right of such

creditors if they proceed against A alone for payment would be
to collect from him P3,000, which is his proportionate share in
the obligation. (Ibid.) Once the amount is collected, it will then
be divided equally among X, Y and Z. This is so because, under
the law, in the absence of any legal provision or stipulation of
the parties to the contrary, the credit or debt shall be presumed
to be divided into as many equal shares as there are creditors
or debtors, the creditors or debts being considered distinct from
one another (Art. 1208, CC).
(b) X alone cannot proceed against A, B and C for the
payment of the entire obligation for the same reason stated in
the previous paragraph. The most that he will be able to collect
from the three debtors will be his proportionate share in the
obligation which is P3,000 (Arts. 1207, 1208, CC). As far as the
debtors are concerned, because of the principle that in joint
obligations the credit or debt shall be presumed to be divided
into as many equal shares as there are creditors or debtors, the
credits or debts being considered distinct from one another (Art.
1208, CC), the liability of each will be only with respect to his
share in the P9,000. Consequently, X can collect only P1,000
from A, P1,000 from B, and P1,000 from C.
(c) If X proceeds against A alone for payment, the most
that he will be able to collect will be only P1,000. The reason has
already been stated in the previous paragraph.
(d) If C is insolvent, his co-debtors cannot be held liable
for his share in the obligations. This necessarily follows from
the principle that in joint obligation, the credit or debt shall
be presumed to be divided into as many equal shares as there
are creditors or debtors, the credits or debts being considered
distinct from one another (Art. 1208, CC).
(e) The demand made by X upon A, for the purpose
of interrupting the running of the period of prescription, shall
prejudice the latter only, but not the other debtors. Consequently,
if after ten years, X, Y and Z should bring an action against A,
B and C to collect the debt, the defense of prescription would be
absolute insofar as B and C are concerned, but partial insofar as
A is concerned. In other words, A can still be compelled to pay
P1,000 to X. The reason for this is the fact that the principle of
mutual agency is not applicable in joint obligations. (Agoncillo
vs. Javier, 38 Phil. 424.)
Problem No. 2. — X, Y and Z owe A and B P12,000 in a
joint obligation. How many obligations exist in this case, who
183
are the parties in each obligation and for how much? Why?
(1971 Bar Problem)
Answer — There are six obligations in the above case. The
parties and the amount of each obligation are:
(1) X as debtor for P2,000 in favor of A as creditor;
(2) X as debtor for P2,000 in favor of B as creditor;
(3) Y as debtor for P2,000 in favor of A as creditor;
(4) Y as debtor for P2,000 in favor of B as creditor;
(5) Z as debtor for P2,000 in favor of A as creditor;
(6) Z as debtor for P2,000 in favor of B as creditor.
The above answers are clearly deducible from Art. 1208
of the Civil Code which declares that if the obligation is joint,
the credit or debt shall be presumed to be divided into as many
equal shares as there are creditors or debtors, the credits or
debts being considered as distinct from one another, subject
to the Rules of Court governing the multiplicity of suits. Take
the credit of P12,000 for instance. Since there are two creditors
there will also be two credits of P6,000 for each creditor. In the
case of the debt of P12,000, since there are three debtors there
will also be three debts of P4,000 against each debtor. Now, as
far as A, the first creditor, is concerned, if he wants to collect his
credit of P6,000, he must proceed against all the debtors. Thus
he will be able to collect P2,000 from X, P2,000 from Y, another
P2,000 from Z. The same is true in the case of B, the second
creditor.
Art. 1209. If the division is impossible, the right of the

creditors may be prejudiced only by their collective acts, and
the debt can be enforced only by proceeding against all the
debtors. If one of the latter should be insolvent, the others
shall not be liable for his share.189
Joint Indivisible Obligations. — A joint indivisible
obligation is in a sense somewhat midway between the joint and
the solidary obligation, although it still retains the two fundamental
characteristics of the former — first, that no creditor can act in
representation of the others, and second, that no debtor can be
189
184
compelled to answer for the liability of the others. However, unlike

joint divisible and solidary obligations, in this type of obligation,
which is joint with respect to the parties and indivisible with respect
to the fulfillment of the obligation, the following characteristics are
also present:
(1) If there are two or more debtors, the fulfillment of or
compliance with the obligation requires the concurrence of all of the
debtors, although each for his own share.190 Consequently, according
to the Code, the obligation can be enforced only by proceeding against
all of the debtors.191 Thus, if A, B, and C obligated themselves to
deliver jointly a certain horse to X, since the obligation is both joint
and indivisible, X can compel its fulfillment only by proceeding
against A, B and C.
(2) If there are two or more creditors, the concurrence or
collective act of all the creditors, although each for his own share,
is also necessary for the enforcement of the obligation. This is so
because the obligation is joint, and therefore, a creditor cannot act in
representation of the others, and it is also indivisible, and therefore,
not susceptible of partial fulfillment. It must be noted, however,
that, unlike the case of the debtors, the Code is silent with respect
to this point, although Art. 1209 states that the creditors may be
prejudiced only by their collective acts.
Idem; Effect of breach. — Since in a joint indivisible obli-
gation, compliance can only be enforced by proceeding against all
of the debtors, it necessarily follows that if one of the joint debtors
fails to comply with his undertaking, the obligation can no longer
be fulfilled or performed. Consequently, it is converted into one of
indemnity for damages. However, the debtors who may have been
ready to fulfill or perform what was incumbent upon them 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 obliga-
tion consists.192
Idem; Effect of insolvency of a debtor. — If one of the joint
debtors should be insolvent, the others shall not be liable for his
190
Manresa, 5th Ed., Bk. 1, pp. 422, 466.
191
192
185
share.193 This rule is, of course, logical because to hold otherwise

would destroy the joint character of the obligation.
The different effects of a joint indivisible obligation with
respect to the debtors may be illustrated by this example: A, B, and
C, partners in business, bind themselves jointly to deliver a certain
race horse, worth P300,000, to X at the end of January, 1980. X
can compel the performance of the obligation only by proceeding
against all of the obligors or debtors.194 However, if any one of the
debtors, let us say, A, cannot or refuses to comply with his share in
the undertaking, the obligation is converted into one of indemnity
for damages.195 A shall be liable to X for his corresponding share of
the price of the horse plus damages, while B and C shall be liable
only for their corresponding shares of the price without damages.196
If B is insolvent, the others shall not be liable for the payment of his
share.197 The right of X as against B will, therefore, be the same as
the right of a creditor against an insolvent debtor.
Idem; Interruption of period of prescription. — If there
are two or more creditors or debtors, will the claim of a creditor
addressed to a single debtor or the acknowledgment made by one of
the debtors in favor of one or more of the creditors be sufficient to
interrupt the period of prescription? According to one view, since Art.
1209 merely provides that the right of the creditors may be prejudiced
only by their collective acts, it can, therefore, be inferred that should
the act of a joint creditor be per se beneficial to the others, as for
instance the interruption of the period of prescription, the act of one
would be sufficient.198 According to another view, the act of a joint
creditor which would ordinarily interrupt the period of prescription
would not be valid because the indivisible character of the obligation
requires collective action of the creditors to be effective. If a written
demand is made by one creditor only, the debtor upon whom the
demand is made cannot pay to him alone; payment must be made to
all. Hence, the act of one alone is ineffective.199 It is submitted that
the latter view is more logical.
193
194
Ibid.
195
196
Ibid.
197
198
199
4 Tolentino, Civil Code, 1956, pp. 213-214, citing De Buen and others.
186
Art. 1210. The indivisibility of an obligation does not

necessarily give rise to solidarity. Nor does solidarity of
itself imply indivisibility.200
Indivisibility and Solidarity. — The rule stated in the above

article is logical. Indivisibility and solidarity are not identical. They
may be distinguished from each other in the following ways:
(1) As to nature: Indivisibility refers to the prestation which
constitutes the object of the obligation, while solidarity refers to the
legal tie or vinculum, and consequently, to the subjects or parties of
the obligation.
(2) As to requisites: Plurality of subjects is not required in
indivisibility, while it is indispensable in solidarity.
(3) As to effect of breach: In indivisible obligations, when the
obligation is converted into one of indemnity for damages because
of breach, indivisibility of the obligation is terminated; in solidary
obligations, when there is liability on the part of the debtors because
of breach, the solidarity among the debtors remains.201
Art. 1211. Solidarity may exist although the creditors

and the debtors may not be bound in the same manner and
by the same periods and conditions.202
Kinds of Solidarity. — Solidarity may be active (among

creditors), passive (among debtors), or mixed (among creditors and
debtors).203 Solidarity of creditors (active solidarity) may be defined
as a tie or vinculum existing among several creditors of one and
the same obligation by virtue of which each of them, in relation
to his co-creditors, possesses the character of creditor only with
respect to his share in the obligation, but in relation to the common
debtor or debtors, represents all of the other creditors. Solidarity
of debtors (passive solidarity), on the other hand, may be defined
as a tie or vinculum existing among several debtors of one and the
same obligation by virtue of which each of them, in relation to his
co-debtors, possesses the character of debtor only with respect to his
200
New provision.
201
202
Art. 1140, Spanish Code.
203
4 Sanchez Roman 50; Giorgi, Teoria de las Obligaciones, Vol. 1, p. 89.
187
share in the obligation, but in relation to the common creditor or

creditors, represents all of the other debtors.204
Idem; Effect of active solidarity in general. — The
most fundamental effect of active solidarity is the creation of a
relationship of mutual agency among the solidary creditors by
virtue of which each creditor is empowered to exercise against the
debtor or debtors not only the rights which correspond to him, but
also all the rights which correspond to the other creditors, with the
consequent obligation to render an accounting of his acts to such
creditors. In the words of Manresa:
“The essence of solidarity among the creditors consists of

the power of each to claim and exercise the rights of all, with the
consequent obligation to pay to each what properly corresponds
to him upon the exercise of said rights. There is, therefore, equal
mutual representation from which none can be excluded without
destroying the solidary character of the obligation. Hence, the
essential feature of this obligation is that of mutual agency
among the active subjects of the obligation, who are empowered
to exercise not only their own rights, but also that of the others,
against any debtor or debtors, with the consequent obligation to
render an accounting of his acts to the other creditors.’’205
It is this relationship of mutual agency which is the basis of the

different rules stated in Arts. 1212 to 1215 of the Code.
Idem; Effect of passive solidarity in general. — In passive
solidarity, each solidary debtor, insofar as the creditor or creditors
are concerned, is the debtor of the entire amount; however, with
respect to his co-debtors, he is a debtor only to the extent of his share
in the obligation.206 Hence, the most fundamental effect of solidarity
among the debtors is the liability of each debtor for the payment
of the entire obligation, with the consequent right to demand
reimbursement from the others for their corresponding shares once
payment has been made.
Idem; id. — Distinguished from suretyship. — Passive sol-
idarity must be distinguished from solidary guaranty (suretyship).
204
Giorgi, Teoria de las Obligaciones, Vol. 1, pp. 90, 115.
205
206
3 Castan, 7th Ed., p. 73.
188
According to the second paragraph of Art. 2047 of the Code, a soli-

dary guarantor or surety (fiador in solidum) is a person who binds
himself solidarily with the principal debtor. Hence, it is evident that
a solidary debtor and a surety are similar in the sense that they are
both solidarily liable to the creditor for the payment of the entire
obligation. Strictly speaking, however, they may be distinguished
from each other as follows:
(1) A solidary debtor, unlike a surety, is liable not only for
the payment of the debt of another, but also for the payment of a
debt which is properly his own;
(2) If a solidary debtor pays the entire amount of the
obligation, he has a right to demand reimbursement from his co-
debtors of the shares which correspond to them in the obligation,
whereas if a surety pays the entire amount of the obligation, he has
a right to demand reimbursement from the principal debtor of the
entire amount that he has paid; and
(3) The rights of a solidary debtor are more limited than those
of a surety. Thus, in passive solidarity an extension of time granted
by the creditor to one of the solidary debtors for the payment of the
obligation without the knowledge or consent of the other solidary
debtors would not have the effect of releasing the latter from their
obligation,207 but in suretyship such an extension granted to the
principal debtor would release the surety from the obligation.208
While a guarantor may bind himself solidarily with the principal
debtor, the liability of a guarantor is different from that of a solidary
debtor. Thus, Tolentino explains guarantor is different from that of
a solidary debtor. Thus, Tolentino explains: “A guarantor who binds
himself in solidum with the principal debtor under the provisions
of the second paragraph does not become a solidary co-debtor to
all intents and purposes. There is a difference between a solidary
co-debtor and a fiador in solidum (surety). The latter, outside of
the liability he assumes to pay the debt before the property of the
principal debtor has been exhausted, retains all the other rights,
actions and benefits which pertain to him by reason of the fiansa;
while a solidary co-debtor has no other rights than those bestowed
207
Inchausti & Co. vs. Yulo, 34 Phil. 978.
208
Villa vs. Garcia Bosque, 49 Phil. 126; Stevenson vs. Climaco, CA 36 Off. Gaz.
1571.
189
upon him in Section 4, Chapter 3, Title I, Book IV of the Civil Code.’’

(Inciong, Jr. vs. Court of Appeals, June 26, 1996, 257 SCRA 580).
Idem; Effect of varied conditions or periods. — The
vinculum or bond which binds the creditors and the debtors in
solidary obligations may be either uniform or varied, depending
upon whether they are bound in the same manner and by the same
conditions or periods or not.209 Consequently, the relationship of
solidarity is not destroyed by the fact that the obligation of one debtor
is conditional, the obligation of another is with a term or period,
and the obligation of a third is pure. Neither is the character of
solidarity destroyed if the debtors are bound by different conditions
or by different periods. A creditor in such cases, can still commence
an action against anyone of the debtors for compliance with the
entire obligation minus the portion or share which corresponds to
the debtor affected by the condition or period.210 Thus, if A, B, and C
borrowed P60,000 from X binding themselves jointly and severally
to pay the entire obligation, but in the promissory note executed
by them there is a stipulation that in the case of A, the obligation
shall become due and demandable on June 15, 1972; in the case of
B, it shall become due and demandable on June 15, 1974; and in the
case of C, it shall become due and demandable on June 15, 1976,
and subsequently, immediately, after June 15, 1972, X brought an
action for collection of the entire obligation against A alone because
of the latter’s failure to pay despite repeated demands, will the
action prosper? Undoubtedly, the obligation here is solidary. This is
clear from the provision of Art. 1211 of the Civil Code. However, in
solidary obligations of this type, the right of the creditor is limited
to the recovery of the share owed by the debtor whose obligation has
already matured leaving in suspense his right to recover the shares
corresponding to the other debtors whose obligations have not yet
matured. This restriction does not destroy the solidary character
of the obligation, because, ultimately, he can still compel one and
the same debtor, if that is his wish, to pay the entire obligation.
Therefore, in the instant case, X can collect only P20,000 from A,
which is the latter’s share in the obligation. He shall have to wait for
June 15, 1974, when B’s obligation shall have matured, and for June
15, 1976, when C’s obligation shall have also matured. On June 15,
209
4 Sanchez Roman 50.
210
Inchausti & Co. vs. Yulo, 34 Phil. 978.
190
1974, he can collect P20,000 from either A or B. On June 15, 1976,

he can again collect another P20,000 from either A or B or C.
Inchausti & Co., vs. Yulo

34 Phil. 978
On August 12, 1909, six brothers and sisters, defendant

among them, executed an instrument admitting their solidary
indebtedness to the plaintiff for P253,446.42, at 10% interest
per annum, payable in five annual installments, the first
installment to be paid on June 13, 1910. Because of default in
the payment of the first installment, plaintiff, in accordance
with the acceleration clause expressly agreed upon, brought this
action on March 27, 1911, against Gregorio Yulo for the payment
of the entire indebtedness plus interests. Subsequently, on May
12, 1911, three of the debtors, Francisco, Manuel and Carmen,
entered into an agreement with plaintiff, evidenced by a notarial
instrument, by virtue of which the amount of the indebtedness
was reduced to P225,000, at 6% interest per annum, payable
in eight annual installments, the first installment to be paid
on June 30,1912. Some of the questions now raised are the
following: (1) Can the plaintiff sue Gregorio Yulo alone,
considering that there are other debtors? (2) What is the effect
of the partial remission of the debt made by the creditor in favor
of three of the debtors? (3) What is the effect of the extension of
time for payment granted by the creditor to three of the debtors?
The Supreme Court, speaking through Chief Justice Arellano,
held:
“With respect to the question as to whether the plaintiff
can sue the defendant alone, it cannot be doubted that, the
debtors, having obliged themselves in solidum, the creditor can
bring its action in toto against any one of them, inasmuch as
this was surely its purpose in demanding that the obligation
contracted in its favor should be solidary, and even though the
creditor may have stipulated with some of the solidary debtors
diverse installments and conditions, as in this case, Inchausti
& Co. did with its debtors Manuel, Francisco and Carmen Yulo
through the instrument of May 12, 1911, this does not lead to
the conclusion that the solidarity stipulated in the instrument of
August 12, 1909, is broken, as we already know the law provides
that ‘solidarity may exist even though the debtors are not bound
in the same manner and for the same periods and under the
same conditions.’’ (Art. 1140, Civil Code — now Art. 1211, New
Civil Code.)
191
“With respect to the question involving the effect of the

partial remission, the obligation being solidary, the remission
of any part of the debt made by a creditor in favor of one or
more of the solidary debtors necessarily benefits the others,
and therefore, there can be no doubt that, in accordance with
the provision of Article 1143 (now Art. 1215) of the Civil Code,
the defendant has the right to enjoy the benefits of the partial
remission of the debt granted by the creditor.
“Wherefore, we hold that although the contract of May 12,
1911, has not novated that of August 12, 1909, it has affected that
contract and the outcome of the suit brought against Gregorio
Yulo alone for the sum of P253,445.42; and in consequence
thereof, the amount stated in the contract of August 12, 1909,
cannot be recovered but only that stated in the contract of May
12, 1911, by virtue of the remission granted to the three of the
solidary debtors in this instrument, in conformity with what is
provided in Article 1143 (now Art. 1215), Civil Code, cited by the
creditor himself.
“With respect to the question involving the effect of the
extension of time for payment granted to the other solidary
debtors, Gregorio Yulo cannot allege as a defense to the action
that it is premature. When the suit was brought on March 27,
1911, the first installment of the obligation had already matured
on June 30, 1910, and with the maturity of this installment,
the first not having been paid, the whole debt had matured,
according to the express agreement of the parties. Neither could
he invoke a like exception for the shares of solidary co-debtors
Pedro and Concepcion Yulo, they being in identical condition as
he. But as regards Francisco, Manuel and Carmen Yulo, none
of the installment payable under their obligation, contracted
later, had as yet matured. The first payment, as already stated,
was to mature on June 30, 1912. This exception or personal
defense of Francisco, Manuel and Carmen Yulo ‘as to that part
of the debt for which they were responsible’ can be set up by
Gregorio Yulo as a partial defense to the action. The part of
the debt for which these three are responsible is three-sixths
of P225,000, or P112,500, so that Gregorio Yulo may claim
that, even acknowledging that the debt for which he is liable
is P225,000, nevertheless not all of it can now be demanded of
him, for that of it which pertains to his co-debtors is not yet due,
a state of affairs which not only prevents any action against the
persons who were granted the term which has not yet matured,
but also against the other solidary debtors who being ordered to
pay could not now sue for a contribution, and for this reason the
action will be only as to P112,500.
192
It has been said in the brief of the appellee that the

prematurity of the action is one of the defenses derived
from the nature of the obligation, according to the opinion of
the commentator of the Civil Code, Mucius Scaevola, and
consequently, the defendant Gregorio Yulo may make use of it in
accordance with Article 1146 (now Art. 1222) of the Civil Code.
It may be so and yet, taken in that light, the effect would not
be different from that already stated in this decision; Gregorio
Yulo could not be freed from making any payment whatever but
only from the payment of the part of the debt which corresponds
to his co-debtors Francisco, Manuel and Carmen. The same
author, considering the case of the opposing contention of two
solidary debtors as to one of whom the obligation is pure and
unconditional and as to the other it is conditional and is not
yet demandable, and comparing the disadvantages which must
flow from holding that the obligation is demandable with those
which must follow if the contrary view is adopted, favors this
solution of the problem.
“ ‘There is a middle ground (he says), from which we can
safely set out, to wit, that the creditor may of course demand
the payment of his credit against the debtor not favored by any
condition or extension of time.’ And further on, he decides the
question as to whether the whole debt may be recovered or only
that part unconditionally owing or which has already matured,
saying ‘Without failing to proceed with juridical rigor, but
without failing into extravagances or monstrosities, we believe
that the solution of the difficulty is perfectly possible. How? By
limiting the right of the creditor to the recovery of the amount
owed by the debtor bound unconditionally or as to whom the
obligation has matured, and leaving in suspense the right to
demand the payment of the remainder until the expiration
of the term or the fulfillment of the condition. But what then
is the effect of solidarity? How can this restriction of right be
reconciled with the duty imposed upon each one of the debtors to
answer for the whole obligation? Simply this, by recognizing in
the creditor the power, upon the performance of the condition or
the expiration of the term, of claiming from any one or all of the
debtors that part of the obligation affected by those conditions.
(Scaevola, Civil Code, 19, 800 and 801)
“It has been said also by the trial judge in his decision that
if a judgment be entered against Gregorio Yulo for the whole
debt of P253,445.42 he cannot recover from Francisco, Manuel
and Carmen Yulo that part of the amount which is owed by
them because they are obliged to pay only P225,000 and this
193
in eight installments none of which was due. For this reason he

was of the opinion that he (Gregorio Yulo) cannot be obliged to
pay his part of the debt before the contract of May 12, 1911, may
be enforced, and consequently, he decided the case in favor of
the defendant, without prejudice to the plaintiff proceeding in
due time against him for his proportional part of the joint debt.
“But in the first place, taking into consideration the
conformity of the plaintiff and the provision of Article 1143 (now
Art. 1215) of the Civil Code it is no longer possible to sentence the
defendant to pay the P253,445.42 of the instrument of August
12, 1909, but if anything, the P225,000 of the instrument of May
12, 1911. In the second place, neither is it possible to curtail the
defendant’s right of recovery from the signers of the instrument
of May 12, 1911, for he was justly exonerated from the payment
of that part of the debt corresponding to them by reason of there
having been upheld in his favor the exception of an unmatured
installment which pertains to them. In the third place, it does
not seem just. Mucius Scaevola considers it ‘absurd,’ that, there
being a debtor who is unconditionally obliged as to whom the
debt has matured, the creditor should be forced to await the
realization of the condition (or the expiration of the term). Hence,
the contract of May 12, 1911 has affected the action and the suit,
to the extent that Gregorio Yulo has been able to make in his
favor the defense of remission of part of the debt, thanks to the
provision of Article 1143 (now Art. 1222), because it is a defense
derived from the nature of the obligation, so that although the
said defendant was not a party to the contract in question,
yet because of the principle of solidarity he was benefited by
it. The defendant Gregorio Yulo cannot be ordered to pay the
P253,445.42 claimed from him in the suit here, because he has
been benefited by the remission made by the plaintiff to three of
his co-debtors, many times named above.
“Consequently, the debt is reduced P225,000. But, as
it cannot be enforced against the defendant except as to the
three-sixths part which is what he can recover from his joint co-
debtors Francisco, Manuel, and Carmen, at present judgment
can be rendered only as to the P112,500. We, therefore, sentence
the defendant Gregorio Yulo to pay the plaintiff Inchausti &
Co. P112,500, with the interest stipulated in the instrument of
May 12,1911, from March 15, 1911, and the legal interest on
this interest due, from the time that it was claimed judicially in
accordance with Article 1109 (now Art. 2212) of the Civil Code,
without any special finding as to cost. The judgment appealed
from is reversed. So ordered.”
194
Art. 1212. Each one of the solidary creditors may do

whatever may be useful to the others, but not anything
which may be prejudicial to the latter.211
Effect of Beneficial and Prejudicial Acts. — As a conse-
quence of the relationship of mutual agency existing among the soli-
dary creditors, each one of them may do whatever may be useful or
beneficial to the others, but not anything which may be prejudicial
to the latter.212 Hence, each solidary creditor may demand the pay-
ment or performance of the entire obligation from one, some or all of
the debtors.213 Such a demand will have the effect of benefiting not
only the solidary creditor who made it, but also the other solidary
creditors. Consequently, if the entire obligation is paid, the latter
will have the right to demand from the creditor who received the
payment the shares corresponding to them in the obligation.214 As
far as prejudicial acts are concerned, we must distinguish between
the effect of such acts upon the relationship of the solidary creditors
with the debtor or debtors, and the effect upon the entirely different
relationship of the solidary creditors among themselves. 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 which exists among the creditors; howev-
er, as far as the solidary creditors are concerned, the creditor who
performed the act shall incur the obligation of indemnifying the oth-
ers for damages.215 There is, therefore, no incompatibility between
the rule regarding prejudicial acts stated in Art. 1212 and the rule
regarding novation, compensation, confusion or remission stated in
Art. 1215. The first refers to the effect of prejudicial acts upon the
relationship of the creditors among themselves; the second refers
to the effect upon the entirely different relationship of the creditors
with the debtor or debtors. It is clear that the Code sanctions the ef-
ficacy of prejudicial acts such as novation, compensation, confusion
or remission as far as the debtor or debtors are concerned, but not
as far as the other solidary creditors are concerned.216 Consequently,
according to Art. 1215, the novation, compensation, confusion or re-
211
212
213
rts. 1214, 1216, Civil Code.
214
215
216
195
mission of the debt shall result in the extinguishment of the obliga-

tion, but the solidary creditor responsible for the act shall be liable
to the others for the share in the obligation corresponding to them.
Art. 1213. A solidary creditor cannot assign his rights

without the consent of the others.217
Effect of Assignment of Rights. — The rule or precept stated
in the above article is based on the opinion of Manresa and other
Spanish commentators, that since active solidarity is essentially a
mutual agency, and therefore, is predicated upon mutual confidence
which implies that the personal qualifications of each of the solidary
creditors had been taken into consideration when the obligation was
constituted, it is only proper that a solidary creditor cannot assign
his rights without the consent of the others.
What is the effect if a solidary creditor assigns his rights
without the consent of the other solidary creditors? The answer to
this question shall have to be qualified. If the assignment is made
to anyone of the other solidary creditors, it is clear that there is no
violation of the precept stated in Art. 1213, because in such case
there can be no invasion of the personal or confidential relationship
existing among the solidary creditors. However, if the assignment
is made to a third person, there would be a clear violation of the
precept, in which case the other solidary creditors, as well as the
debtor or debtors, are not bound to recognize the validity or the
efficacy of the assignment. This is, of course, without prejudice to
the liability of the creditor-assignor to the other solidary creditors
for damages which may have been incurred by them as a result of
the prohibited assignment.
Art. 1214. The debtor may pay any one of the solidary
creditors; but if any demand, judicial or extrajudicial, has
been made by one of them, payment should be made to him.218
Effect of Demand by a Creditor. — Any solidary creditor
may demand the payment or performance of the obligation from one,
some or all of the debtors. This is, of course, a logical consequence
217
New provision.
218
196
of the rule stated in Art. 1212 that each creditor may do what is
beneficial to the others. Such a demand may be either judicial or
extrajudicial. In such case, payment shall be made only to the
creditor who made the demand and to no other. However, in the
absence of any judicial or extrajudicial demand, payment may be
made by the debtor to anyone of the solidary creditors.219
In case of mixed solidarity, a judicial or extrajudicial demand
would prohibit the debtor upon whom the demand is made from
making a payment to any creditor other than to the one who made
the demand. This prohibition, however, does not extend to the other
debtors upon whom no demand has been made and so each of such
debtors can still validly tender payment to a creditor other than to
the creditor who made the demand.220
Art. 1215. Novation, compensation, confusion or remis-

sion of the debt, made by any of the solidary creditors or
with any of the solidary debtors, shall extinguish the obliga-
tion, without prejudice to the provisions of Article 1219.
The creditor who may have executed any of these acts, as
well as he who collects the debt, shall be liable to the others
for the share in the obligation corresponding to them.221
Effect of Novation. — Novation is the change or substitution
of an obligation by another, resulting in its extinguishment or
modification, either by changing its object or principal condition, or
by substituting another in place of the debtor, or by subrogating a
third person in the rights of the creditor.222 The peculiar feature of
this mode of extinguishing obligations is that while it extinguishes
the obligation, it creates a new one in lieu of the old. Hence, the
liability of the solidary creditor who effected the novation to the
other solidary creditors shall depend upon the character of the
new obligation which is created. If the novation of the obligation
is effected by changing its object or principal condition, the new
obligation which is created may be either prejudicial or beneficial
219
220
221
222
197
to the other solidary creditors depending upon the circumstances

of each particular case. If it is prejudicial, the solidary creditor
who effected the novation shall reimburse the others for damages
incurred by them; if it is beneficial and the creditor who effected the
novation is able to secure performance of the new obligation, such
creditor shall be liable to the others for the share which corresponds
to them, not only in the obligation, but also in the benefits. If the
novation is effected by substituting another person in place of the
debtor, the solidary creditor who effected the novation is liable for
the acts of the new debtor in case there is a deficiency in performance
or in case damages are incurred by the other solidary creditors as a
result of the substitution. If the novation is effected by subrogating
a third person in the rights of the solidary creditor responsible for
the novation, the obligation of the debtor or creditors is not in reality
extinguished, because in this type of novation the relation between
the other creditors not substituted and the debtor or debtors is still
maintained. However, if the novation is effected by subrogating a
third person in the rights of all the solidary creditors, the creditor
responsible for such novation is liable to the other creditors for the
share which corresponds to them in the obligation.223
As a general rule, extension of time for the payment of the ob-
ligation given by the creditor to a solidary debtor does not consti-
tute a novation with respect to the other solidary debtors, because
in order that an obligation may be extinguished by another which
substitutes it, it is necessary that it should be so expressly declared
or that the old and the new obligation are incompatible with each
other on every point. However, if the creditor proceeds against the
solidary debtor or debtors to whom no extension was given for pay-
ment of the whole obligation, such debtor or debtors can set up the
partial defense of extension of time as regards that part of the debt
for which the debtor or debtors to whom the extension was given are
responsible.224 In suretyship, however, the rule is that an extension
of time granted to the principal debtor by the creditor without the
consent of the surety extinguishes the latter’s liability;225 but where
a surety is liable for different payments, such as installments or
223
Ibid., pp. 444-445.
224
Art. 1222, Civil Code; Inchausti & Co. vs. Yulo, 34 Phil. 978.
225
Art. 2079, Civil Code; Asiatic Petroleum Co. vs. Hizon, 45 Phil. 532; National
Bank vs. Veraguth, 50 Phil. 253.
198
rents, or upon a series of promissory notes, an extension of time as to

one or more will not affect the liability of the surety for the others.226
Effect of Compensation and Confusion. — Compensation
is a figurative operation of weighing two obligations simultaneously
in order to extinguish them to the extent that the amount of one
is covered by the amount of the other.227 Confusion, on the other
hand, refers to the merger of the qualities of creditor and debtor
in one and the same person with respect to one and the same
obligation.228 If the confusion or compensation is partial, there may
be some doubt as to the part of the obligation to which the confusion
or compensation shall be applied. In such case, the question is
resolved by applying the rules established in this Code regarding
application of payment. This is, of course, without prejudice to the
right of the other creditors who have not caused the confusion or
compensation to be reimbursed to the extent that their rights are
diminished or affected. If the confusion or compensation is total, the
obligation is extinguished altogether and what is left is the ensuing
liability for reimbursement within each group, the creditor causing
the confusion or compensation being obliged to reimburse the other
creditors, and the debtors benefited by the extinguishment of the
obligation being obliged to reimburse the debtor who made the
confusion or compensation possible.229
Effect of Remission. — Remission is an act of pure liberality
by virtue of which the creditor, without having received any
compensation or equivalent, renounces his right to enforce the
obligation, thereby extinguishing the same either in its entirety or
in the part or aspect thereof to which the remission refers.230 The
remission or condonation referred to in Art. 1215 may be total or
partial, effected by one, some, but not all, of the solidary creditors
in favor of one, some or all of the debtors. Whether total or partial,
the obligation is extinguished in its entirety or in that part or aspect
thereof to which the remission refers, giving rise to a liability on
the part of the creditor or creditors responsible for the remission to
reimburse the others for the share in the obligation corresponding to
226
Villa vs. Garcia Bosque, 49 Phil. 126.
227
228
4 Sanchez Roman 421.
229
230
Ibid., p. 673.
199
them. However, as among the creditors responsible for the remission,

such liability does not arise.231
As far as the solidary debtors are concerned, the effects of
remission may be summarized as follows:
(1) If the remission covers the entire obligation, then the
obligation is totally extinguished and the entire juridical relation
among the debtors is terminated altogether. This is true whether the
remission is for the benefit of all of the debtors or of only one of them.
As a matter of fact, the Code in Art. 1220 expressly declares that the
remission of the whole obligation, obtained by one of the solidary
debtors, does not entitle him to reimbursement from his co-debtors.
This rule is based on the character of remission as an act of pure
liberality. In reality, the remission of a debt is a donation. Hence,
if the whole obligation is condoned through the efforts of a solidary
debtor or for his benefit, he is not entitled to any reimbursement
from his co-debtors.232
(2) If the remission is for the benefit of one of the debtors
and it covers his entire share in the obligation, he is completely
released from the creditor or creditors, but he is still bound to his
co-debtors. Consequently, if one of the latter subsequently pays the
balance of the obligation which is not condoned and he proceeds
against the others for reimbursement of their respective shares in
the obligation, but one of them is insolvent, the debtor for whose
benefit the remission had been effected, shall still have to share in
the portion which corresponds to the insolvent.
(3) If the remission is for the benefit of one of the debtors and
it covers only a part of his share in the obligation, his character as a
solidary debtor is not affected; it continues both with respect to the
creditor or creditors and with respect to the other debtors.
Whether the remission covers the entire share of a solidary
debtor in the obligation or only a part thereof, if the creditor or
creditors proceed against any one of the other solidary debtors for
the payment of the entire obligation, such debtor can always avail
himself of the defense of partial remission.233
231
Ibid., pp. 440-443.
232
Ibid.
233
Art. 1222, Civil Code; Inchausti & Co. vs. Yulo, 34 Phil. 978.
200
It must be noted, however, that the above rules cannot be

applied in case the debt had already been totally paid by anyone of
the solidary debtors before the remission was effected.234 Otherwise,
there would always be the possibility that the creditor might
fraudulently condone the share of a solidary debtor whom he desires
to favor even after the debt had already been totally paid by another
solidary debtor.235
Effect of Payment to a Creditor. — If one of the solidary
creditors is able to collect the entire amount of the debt from one
or some or all of the solidary debtors, the obligation is totally
extinguished, although there arises a consequent obligation on
his part to render an account to his co-creditors. Under the law,
he can be held liable to the others for the share in the obligation
corresponding to them.236
Art. 1216. The creditor may proceed against any one of

the solidary debtors or some or all of them simultaneously.
The demand made against one of them shall not be an obstacle
to those which may subsequently be directed against the
others, so long as the debt has not been fully collected.237
Effect of Demand upon a Debtor. — Since any one of the
solidary debtors can be held liable for the payment of the entire
obligation, it is but logical that the creditor may proceed against
any one or some or all of them simultaneously.238 Furthermore, the
demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others so long as
the debt has not been fully collected.239 Thus, where the guarantor
binds himself solidarily with the principal debtor to pay the latter’s
debt, he cannot and should not complain that the creditor should
thereafter proceed against him to collect his credit. This is so
because the creditor may proceed against any one of the solidary
debtors or against all of them simultaneously, the fact that action
has been brought or that payment has been enforced against one of
234
235
236
237
238
239
Ibid.
201
them not being a bar thereto so long as there remains a balance to

collect.240 And it cannot be contended that the failure of the creditor
to include the solidary guarantor or surety as a defendant in the
first suit implies a waiver of his right of action against such surety,
since under the law the bringing of an action against the principal
debtor to enforce the payment of the obligation is not inconsistent
with, and does not preclude, the bringing of another to compel the
surety to fulfill his obligation under the surety agreement.241
A creditor’s right to proceed against the surety exists indepen-
dently of his right to proceed against the principal. Under Article
1216 of the Civil Code, the creditor may proceed against any one of
the solidary debtors or some or all of them simultaneously. The rule,
therefore, is that if the obligation is joint and several, the creditor
has the right to proceed even against the surety alone. Since, gener-
ally, it is not necessary for a creditor to proceed against a principal
in order to hold the surety liable, where, by the terms of the con-
tract, the obligation of the surety is the same as that of the principal,
then as soon as the principal is in default, the surety is likewise in
default, and may be sued immediately and before any proceedings
are had against the principal. Perforce, in accordance with the rule
that, in the absence of statute or agreement otherwise, a surety is
primarily liable, and with the rule that his proper remedy is to pay
the debt and pursue the principal for reimbursement, the surety
cannot at law, unless permitted by statute and in the absence of
any agreement limiting the application of the security, require the
creditor or obligee, before proceeding against the surety, to resort to
and exhaust his remedies against the principal, particularly where
both principal and surety and equally bound. (Palmares vs. Court of
Appeals, March 31, 1998, 288 SCRA 426.)
The Supreme Court further stated in the aforementioned case
of Palmares vs. Court of Appeals that “in this regard, we need only
to reiterate the rule that a surety is bound equally and absolutely
with the principal, and as such, is deemed an original promissor
and debtor from the beginning. This is because in suretyship, there
is but one contract, and the surety is bound by the same agreement
which binds the principal. In essence, the contract of a surety starts
with the agreement.
240
La Yebana vs. Valenzuela, 67 Phil. 482.
241
Phil. Nat. Bank vs. Confesor, CA, 37 Off. Gaz. 3295.
202
“A surety is not even entitled as a matter of right to be given

notice of the principal’s default. Even if it were otherwise, demand
on the sureties is not necessary before bringing suit against them
since the commencement of the suit is a sufficient demand. On this
point, it may be worth mentioning that a surety is not even entitled,
as a matter of right, to be given notice of the principal’s default.
Inasmuch as the creditor owes no duty of active diligence to take
care of the interest of the surety, his mere failure to voluntarily give
information to the surety of the default of the principal cannot have
the effect of discharging the surety. The surety is bound to take
notice of the principal’s default and to perform the obligation. He
cannot complain that the creditor has not notified him in the absence
of a special agreement to that effect in the contract of suretyship.’’
“A surety is liable as much as his principal is liable and
absolutely liable as soon as default is made without any demand
upon the principal whatsoever or any notice of default. The alleged
failure of respondent corporation to prove the fact of demand on the
principal debtors, by not attaching copies thereof to its pleadings,
is likewise immaterial. In the absence of a statutory or contractual
requirement, it is not necessary that payment or performance of
his obligation be first demanded of the principal, especially where
demand would have been useless; nor is it a requisite, before
proceeding against the sureties, that the principal be called on to
account. The underlying principle therefore is that a suretyship
is a direct contract to pay the debt of another. A surety is liable
as much as his principal is liable, and absolutely liable as soon as
default is made, without any demand upon the principal whatsoever
or any notice of default. As an original promisor and debtor from
the beginning, he is held ordinarily to know every default of his
principal. (Palmares vs. Court of Appeals, supra.)
As a general rule, the death of either the creditor or the debtor
does not extinguish the obligation. Obligations are transmissible to
the heirs, except when the transmission is prevented by the law,
the stipulation of the parties or the nature of the obligation. Only
obligations that are personal or are identified with the persons
themselves are extinguished by death. Sec. 5 of Rule 86 of the Rules
of Court expressly allows the prosecution of money claims arising
from a contract against the estate of a deceased debtor. Evidently,
those claim are not extinguished. What is extinguished is only the
203
obligee’s action or suit filed before the court, which is not then acting
as a probate court.
As provided in the case of Stronghold Insurance Company
Inc vs. Republic-Asahi Glass Corporation, whatever monetary
liabilities or obligations the deceased Jose Santos (the proprietor
of JDS Construction which executed a performance bond jointly
and severally with petitioner-surety) had under his contracts
with respondent Republic-Asahi were not intransmissible by their
nature, by stipulation or by provision of law. Hence,death did not
result in the extinguishment of those obligations or liabilities, which
merely passed on to the estate of Santos. Death is not a defense that
he or his estate can set up to wipe out the obligations under the
performance bond. Consequently, the petitioner as surety cannot use
his death to escape its monetary obligation under its performance
bond. As a surety, petitioner is solidarily liable with Santos in
accordance with Art. 2017, in relation to Art. 1216 of the New Civil
Code. The surety’s obligation is not an original and direct one for the
performance of his own act, but merely accessory or collateral to the
obligation contracted by the principal. Nevertheless, although the
contract of a surety is in essence secondary only to a valid principal
obligation, his liability to the creditor or promisee of the principal is
said to be direct, primary and absolute; In other words, he is directly
and equally bound with the principal.
The death of the principal debtor will not work to convert,
decrease or nullify the substantive right of the solidary creditor.
Despite the death of the principal debtor, respondent may still
sue petitioner alone, in accordance with the solidary nature of the
latter’s liability under the performance bond. Under the law and
jurisprudence, respondent may sue, separately or together, the
principal debtor and the petitioner , in view of the solidary nature
of their liability (Stronghold Insurance Company Inc. vs. Republic-
Asahi Glass Corporation, supra).
Art. 1217. Payment made by one of the solidary debtors

extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors
only the share which corresponds to each, with the interest
for the payment already made. If the payment is made before
204
the debt is due, no interest for the intervening period may be

demanded.
When one of the solidary debtors cannot, because of
his insolvency, reimburse his share to the debtor paying the
obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each.242
Art. 1218. Payment by a solidary debtor shall not entitle
him to reimbursement from his co-debtors if such payment is
made after the obligation has prescribed or become illegal.243
Effect of Payment by a Debtor. — Where payment is made

by one of the solidary debtors, the effect is either the total or partial
extinguishment of the obligation depending upon whether the entire
amount of the debt is paid or only a part thereof.
Once payment is made by one of the solidary debtors of the
entire obligation, there arises immediately a consequent right of
such debtor to claim from his co-debtors the share which corresponds
to them, with interest for the payment already made.244 This right,
however, is not available to a debtor who makes the payment after
the obligation has prescribed or has become illegal.245
As a rule, the interest shall be computed from the time payment
was made. However, if payment was made before the debt became
due, no interest during the intervening period may be demanded.246
In other words, the interest shall be computed not from the time
payment was made, but from the time the debt became due. Thus, if
A, B, and C became indebted jointly and severally to X for P30,000
and it was agreed that such debt shall be paid on December 1, 1966,
but instead payment was made by A on June 1, 1965, he can demand
from B and C only the share which corresponds to each in the
obligation, as well as the interest thereon from December 1, 1966.
What would be the effect if one of the solidary debtors cannot,
because of his insolvency, reimburse his share to the debtor paying
the obligation? According to the third paragraph of Art. 1217, such
242
243
New provision.
244
245
246
205
share shall be borne by all his co-debtors, in proportion to the debt

of each.
Idem; Nature of right of debtor. — It must be observed that,
under the law, before the payment is actually made, the right of
the solidary debtor to demand reimbursement from his co-debtors is
merely contingent and conditional. Once payment has already been
made, the right becomes real and existing. The old obligation in
favor of the creditor is extinguished, but a new obligation is created
in favor of the solidary debtor who made the payment. There is,
therefore, no real case of subrogation.247
Bank of the P.I. vs. McCoy

52 Phil. 831
This action was originally instituted by plaintiff bank

against McCoy and six other solidary debtors for the payment
of an indebtedness of P16,000. When the case was ready for
hearing, McCoy entered into a compromise with plaintiff and
paid P12,000 in satisfaction of the debt. The question now is
— can McCoy be substituted as plaintiff against her former co-
defendants for the purpose of compelling them to reimburse to
her their proportionate shares in the obligation?
Held: “By paying off the claim which was originally the
subject of litigation, the executrix was subrogated to the rights
of the original plaintiff, and if the situation was one involving
a joint and several liability on the part of all of the original
defendants, the executrix, upon paying off the claim, necessarily
acquired the right to prosecute the action for contribution against
her co-defendants. But it is said that the amendment by which
the executrix was permitted to substitute the original plaintiff
had the effect of changing the cause of action entirely, since the
original action was founded upon a debt supposedly owing to the
bank from the seven defendants, whereas after the instant debt
was paid, the only right of action vested in the executrix was the
right to obtain contribution. It must be remembered, however,
that if the original action had proceeded to its end against all of
the defendants, the court, in giving judgment, would have taken
account of the obligation of each to contribute his proportionate
share to the payment of the judgment, and what has been finally
done, as the case shaped itself here, is to give effect to the same
247
Wilson vs. Berkenkotter, 49 Off. Gaz. 1410.
206
obligation. It was in our opinion a proper case of substitution of

parties resulting from the subrogation of one of the defendants
to the right of the plaintiff.”248
Wilson vs. Berkenkotter

49 Off. Gaz. 1410
On June 30, 1938, Berkenkotter, Wilson and Gulick

executed a promissory note promising jointly and severally
to pay an indebtedness of P90,000 to the Chartered Bank of
India, Australia and China plus interest. Payment was made
by Berkenkotter in November, 1944, with Japanese military
notes. After liberation, Berkenkotter demanded from his co-
debtors reimbursement of their shares in the obligation. Wilson
tendered payment of P625.51 in accordance with the Ballantyne
Schedule, which Berkenkotter refused to accept. As a result,
Wilson deposited the amount in the Court of First Instance of
Manila and finally brought this action to compel Berkenkotter to
accept the said amount. The question now is — is the Ballantyne
Schedule applicable?
Held: “In several cases involving the application of the
Ballantyne Schedule, this Court has held that said schedule
is applicable to obligations contracted during the Japanese
occupation where said obligations are made payable on demand
or during said Japanese occupation but not after the war or at
a specified date speculating on the continuation or cessation of
the war at the time of payment. If the obligation on the part
of Wilson to pay Berkenkotter the amount paid by the latter
to wipe out their debt to the Bank was created during the
occupation, then the Ballantyne Schedule is applicable, but if
said obligation was created before the war, particularly on the
date when plaintiff and defendant signed the promissory note
in favor of the Bank then the Ballantyne Schedule may not be
applied.
“Counsel for the appellant contends that said obligation
was created in 1938 because by signing the promissory note,
Wilson impliedly undertook to pay anyone of his co-debtors who
might pay off the whole debt. He also claims that by paying the
This doctrine seems to be in direct conflict with the doctrine enunciated in

248
the case of Wilson vs. Berkenkotter that in a case of this sort there is no real case of
subrogation. It is submitted, however, that when the Court held that “the executrix
was subrogated to the rights of the original plaintiff,’’ it was only referring, not to sub-
rogation in its technical sense, but to substitution of parties in its procedural sense.
207
entire loan in 1944 to the Bank, appellant became a subrogee of

said Bank and the entire credit was transmitted to him with all
the rights inherent therein against the debtor or against third
persons. (Art. 1212 — now Art. 1303, Civil Code.)
“We regret to disagree. When appellant paid the entire
loan plus interests in November, 1944, the whole obligation was
extinguished. The solidary co-debtors were no longer under any
obligation to the Bank but a new obligation was created in favor
of the appellant to enforce his claim against the appellee. That
is why the appellant to enforce his claim against the appellee
has based his claim not on the obligation created in 1938 in
favor of the Bank by virtue of the promissory note signed by the
co-debtors, but on his having paid the entire loan. The present
is not a real case of subrogation as contended by appellant
because as Manresa says, in a case like the present the original
obligation is extinguished and a new one is created. In other
words, appellant does not, as claimed by his counsel, step into
the shoes of the Bank. He cannot enforce the original obligation
created in 1938. The Bank could collect the whole amount of the
loan from any one of the solidary co-debtors, and in fact did from
one of them. This, the appellant may not do just because he paid
the entire loan.
“In conclusion, we find and hold that the obligation in
favor of the appellant to pay to him the share of the appellee in
the original loan was created during the Japanese occupation,
particularly in November 1944, and so comes under the ruling of
this Court regarding the application of the Ballantyne Schedule.
Finding no reversible error in the decision appealed from the
same is hereby affirmed. No costs.’’
Art. 1219. The remission made by the creditor of the

share which affects one of the solidary debtors does not
release the latter from his responsibility towards the co-
debtors, in case the debt had been totally paid by anyone of
them before the remission was effected.249
Art. 1220. The remission of the whole obligation,
obtained by one of the solidary debtors, does not entitle him
to reimbursement from his co-debtors.250
249
250
New provision.
208
Art. 1221. If the thing has been lost or if the prestation

has become impossible without the fault of the solidary
debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all shall
be responsible to the creditor, for the price and the payment
of damages and interest, without prejudice to their action
against the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the per-
formance has become impossible after one of the solidary
debtors has incurred in delay through the judicial or extra-
judicial demand upon him by the creditor, the provisions of
the preceding paragraph shall apply.251
Effect of Loss or Impossibility of Performance. — The

rules stated in the above articles merely reiterate the rules stated
in Arts. 1174, 1262, and 1266 of the Code. They may be restated as
follows:
(1) If the loss of the thing or the impossibility of complying
with the prestation which constitutes the object of the obligation
is not due to the fault of the solidary debtors, the obligation is
extinguished.
(2) If the loss or impossibility is due to the fault of one of
the solidary debtors, the obligation is converted into an obligation of
indemnity for damages, but the solidary character of the obligation
remains. The creditor can still proceed against one, or some,
or all of the debtors for the payment of the price, plus damages,
without prejudice to the subsequent right of action of the debtor or
debtors who paid to proceed against the guilty or negligent debtor
for reimbursement. This rule may be illustrated by the following
example: A, B, and C bound themselves solidarily to deliver thirty
cavans of rice, valued at P3,000 to X at a specified date. The rice had
already been segregated at the time of the perfection of the contract.
All of the thirty cavans, however were lost through the fault of C.
What are the rights and obligations of the parties? Anyone of the
debtors can, of course, be held liable for the payment of the price
or value of the rice, plus damages. Hence, if X decides to proceed
against A alone, undoubtedly, the latter can be held responsible not
251
209
only for the price or value of the thirty cavans of rice, but even for
damages. However, once A has settled his obligation to X, he can
then proceed against the guilty debtor, C, for reimbursement of the
entire amount which he has paid to X, plus interest.
(3) If the loss or impossibility is due to a fortuitous event
after one of the debtors had already incurred in delay, again the
obligation is converted into an obligation of indemnity for damages,
but the solidary character of the obligation remains. Anyone, or
some, or all of the debtors can be held responsible for the price, plus
damages but without prejudice to the right of action of the debtor or
debtors who paid to proceed against the debtor responsible for the
delay.
Art. 1222. A solidary debtor may, in actions filed by the

creditor, avail himself of all defenses which are derived from
the nature of the obligation and of those which are personal
to him, or pertain to his own share. With respect to those
which personally belong to the others, he may avail himself
thereof only as regards that part of the debt for which the
latter are responsible.252
Defenses Available to a Solidary Debtor. — The creditor
or creditors may proceed against any of the solidary debtors or
all of them simultaneously for the payment of the obligation, but
whether only one or all of the solidary debtors are sued jointly, any
solidary debtor may interpose against the claim of the creditor or
creditors any of the following defenses: first, defenses derived from
the very nature of the obligation; second, defenses personal to him or
pertaining to his own share; third, defenses personal to the others,
but only as regards that part of the debt for which the latter are
responsible.253
Examples of the first are payment or performance, res judicata,
prescription, those which invalidate the contract such as mistake,
violence, intimidation, undue influence, fraud, and others of a
similar nature.254 Examples of the second are minority, insanity and
other defenses which are purely personal to the debtor. The third,
252
253
Art. 1222, Civil Code; Narvaez vs. De Leon, CA, 47 Off. Gaz. 160.
254
Chinese Chamber of Commerce vs. Pua Te Ching, 16 Phil. 405.
210
on the other hand, is merely a partial defense. Thus, if a mother and

her two minor children had signed a promissory note promising to
pay a certain indebtedness jointly and severally, and subsequently,
the creditor proceeds against the mother for the payment of the
entire obligation, undoubtedly, the latter can interpose the defense
of minority of her co-signers, but such defense will benefit her
only with regard to that part of the debt for which the minors are
responsible.255 Similarly, if the creditor has granted to some of the
solidary debtors an extension of time for payment by virtue of a new
contract entered into with such debtors, the debtor against whom the
action for payment of the entire obligation is brought can interpose
the defense of extension of time for payment, but only with regard to
that part of the debt for which the debtors benefited by the extension
are responsible.256
Problem — A, B and C borrowed P12,000 from X on June

1, 1966. They executed a promissory note binding themselves
jointly and severally to pay the obligation on June 1, 1968. For
failure to pay, X brought an action against A for payment of
the entire obligation plus interests. A interposed the following
defenses: (1) that B was only a minor at the time of the
celebration of the contract and that such fact was known to X;
and (2) that X had granted an extension of two years to C within
which to pay.
(1) Can A avail himself of these defenses?
(2) Granting that A can avail himself of these defenses,
what would be the effect upon his liability, assuming that he can
establish both defenses by competent evidence? Reasons.
Answer — (a) A can avail himself of these defenses. Under
Art. 1222 of the Civil Code, there are three kinds of defenses
which are available to a solidary debtor if the creditor proceeds
against him alone for payment of the entire obligation. They
are: first, defenses derived from the nature of the obligation;
second, defenses personal to him or pertaining to his share; and
third, defenses personal to the others, but only as regards that
part of the debt for which the latter are responsible. It is evident
that both defenses interposed by A fall within the purview of the
third.
255
Braganza vs. Villa Abrille, 105 Phil. 456.
256
Inchausti & Co. vs. Yulo, 34 Phil. 978; Narvaez vs. De Leon, CA, 47 Off. Gaz.
160.
211
(b) Since A can avail himself of both defenses, and since

such defenses are not absolute but merely partial in character,
undoubtedly, X can collect from A the following: (a) P4,000
corresponding to the share of A in the obligation; and (b) an
amount equivalent to the extent that B had been benefitted by
his share in the obligation, applying the rule enunciated in Art.
1399 regarding the effect if the defect of a contract consists in
the incapacity of one of the contracting parties. As far as the
share corresponding to C is concerned, X must wait for the
expiration of the two years extension which he had given to C
before he can collect such share from A.
Section 5. — Divisible and Indivisible Obligations
Concept. — Obligations may be divisible or indivisible.

Divisible obligations are those which have as their object a prestation
which is susceptible of partial performance without the essence of
the obligation being changed. Indivisible obligations, on the other
hand, are those which have as their object a prestation which is not
susceptible of partial performance, because, otherwise, the essence
of the obligation will be changed.257
Relation to Divisibility or Indivisibility of Things. —
The divisibility of an obligation must not be confused with the
divisibility of the thing or prestation which constitutes the object
of the obligation. The former refers to the performance of the
prestation which constitutes the object of the obligation; the second
refers to the prestation itself. This does not mean, however, that the
divisibility or indivisibility of the object can have no effect upon the
divisibility or indivisibility of the obligation itself. On the contrary,
the divisibility or indivisibility of the object is a very important factor,
probably the most important, in determining whether the prestation
which constitutes the object of the obligation is susceptible of partial
performance or not.258
When is a thing or object divisible or indivisible? According
to Spanish commentators, a thing is indivisible when, if separated
into parts, its essence is changed or its value is decreased dispropor-
tionately. On the other hand, a thing is divisible when, if separated
257
258
212
DIFFERENT KINDS OF OBLIGATIONS Arts 1223-1224
Divisible and Indivisible Obligations
into parts, its essence is not changed or its value is not decreased
disproportionately, because each of the parts into which it is divided
are homogenous and analogous to each other as well as to the thing
itself. Hence, it is an essential condition, in order that a thing shall
be considered divisible, that it must be possible to reconstruct the
thing itself into its condition prior to the division by uniting the dif-
ferent parts into which it had been divided. There are three kinds of
division. They are quantitative, qualitative and ideal or intellectual.
The division is quantitative when the thing can be materially di-
vided into parts and such parts are homogenous to each other, such
as when the parts are actually separated from each other as in the
case of movables, or when the limits of the parts are fixed by metes
and bounds as in the case of immovables. The division is qualita-
tive when the thing can be materially divided, but the parts are not
exactly homogenous, such as in the partition of an inheritance. The
division is ideal or intellectual when the thing can only be separated
into ideal or undivided parts, not material parts, as in the case of
co-ownership.259
Art. 1223. The divisibility or indivisibility of the things

that are the object of obligations in which there is only one
debtor and only one creditor does not alter or modify the
provisions of Chapter 2 of this Title.260
Art. 1224. A joint indivisible obligation gives rise to
indemnity for damages from the time anyone of the debtors
does not comply with his undertaking. The debtors who may
have been ready to fulfill their promises shall not contribute
to the indemnity beyond the corresponding portion of the
price of the thing or of the value of the service in which the
obligation consists.261
Effect of Divisible or Indivisible Obligations. — Where

there is only one creditor and only one debtor, the divisibility or
indivisibility of the obligation is of little significance as implied
by Art. 1223. As a general rule, the creditor cannot be compelled
partially to receive the prestation in which the obligation consists;
259
4 Sanchez Roman 93-94.
260
261
213
neither may the debtor be required to make partial payments.262

There are, however, three exceptions to this rule. These are: first,
when the obligation expressly stipulates the contrary, second, when
the different prestations constituting the objects of the obligation
are subject to different terms and conditions; and third, when the
obligation is in part liquidated and in part unliquidated.263
Where there is a plurality of debtors and creditors, the effect of
the divisible or indivisible character of the obligation shall depend
upon whether the obligation is joint or solidary. If it is solidary, the
provisions of Art. 1211 to Art. 1222 are applicable; if it is joint and at
the same time divisible, the provision of Art. 1208 is applicable; and
if it is joint and at the same time indivisible, the provisions of Arts.
1209 and 1224 are applicable.
Idem; Breach of joint indivisible obligations. — In
joint indivisible obligations, such as the delivery of a horse or an
automobile, the obligation can be enforced only by proceeding against
all of the debtors.264 If anyone of the debtors should fail or refuse
to comply with the obligation, it is converted into one of indemnity
for damages.265 However, the debtors who may have been ready to
comply with what is incumbent upon them 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.
The debtor who failed or refused to comply with his obligation shall
bear the burden of paying all of the damages suffered by the creditor
or creditors as a result of the nonfulfillment of the obligation. If the
other debtors also suffered damages as a result of the transformation
of the obligation into one of indemnity, they may also recover such
damages from the debtor who was at fault.266
Art. 1225. For the purposes of the preceding articles,

obligations to give definite things and those which are not
susceptible of partial performance shall be deemed to be
indivisible.
262
263
Ibid., 8 Manresa, 5th Ed., Bk. 1, pp. 363-365.
264
See Art. 1209, Civil Code.
265
266
8 Manresa, 5th Ed., Bk. 1, p. 469; 3 Castan, 7th Ed., p. 92.
214
DIFFERENT KINDS OF OBLIGATIONS Art 1225
Divisible and Indivisible Obligations
When the obligation has for its object the execution of a

certain number of days of work, the accomplishment of work
by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.
However, even though the object or service may be
physically divisible, an obligation is indivisible if so provided
by law or intended by the parties.
In obligations not to do, divisibility or indivisibility
shall be determined by the character of the prestation in
each particular case.267
Determination of Divisibility or Indivisibility. — If the pr-

estation which constitutes the object of the obligation is susceptible
of partial compliance, the obligation is divisible; if it is not suscepti-
ble of partial compliance, the obligation is indivisible. Consequently,
the true test of divisibility is whether the obligation is susceptible of
partial compliance or not. This is clear from the provision of the first
paragraph of Art. 1225. In the words of Sanchez Roman, the pivotal
fact is the possibility or impossibility of partial prestation.268 This
susceptibility of partial compliance should be understood, not in the
sense of the possibility or impossibility of the delivery of a thing or
of the performance of an act in separate parts, but in the sense of
the possibility of realizing the end or purpose which the obligation
seeks to attain. Hence, the purpose of the obligation is the control-
ling circumstance. This applies not only to obligations to give, but
also to obligations to do or not to do.269
Idem; In obligations to give. — It is in obligations to give
that the divisible or indivisible nature of the thing which consti-
tutes the object of the obligation is the most important factor to be
considered in determining whether the obligation is susceptible of
partial compliance or not. This is clear from the provisions of the
first and third paragraphs of Art. 1225.
If the obligation is to give something which is definite or
which by its very nature is indivisible, it is evident that it is not
susceptible of partial compliance. Hence, it shall be deemed to be
267
268
4 Sanchez Roman 95.
269
Ibid.
215
indivisible.270 This rule is absolute in character. While it is true

that the divisibility or indivisibility of the thing which constitutes
the object of the obligation is not the ultimate test which we must
apply in order to determine whether the obligation is divisible or
indivisible, nevertheless, it is also true that when such object is by
its very nature indivisible, as in the case of a chair or a horse, the
obligation is necessarily indivisible.
However, if the obligation is to give something which by its
nature is divisible, the general rule is that the obligation is also
divisible since it is evidently susceptible of partial compliance. Thus,
it has been held that an obligation to give or to do several things
at several times is divisible. This rule is not absolute in character,
because by express provision of the Code “even though the object
may be physically divisible, the obligation is considered indivisible
if it is so provided by the law or it is so intended by the parties.”271
With respect to the second exception, the intention of the parties
that the obligation is indivisible in character may be either express
or implied. In the latter case, it may be inferred or presumed
either: (1) from the fact that, although the object of the obligation
can be separated into parts, yet each part constitutes a necessary
complement of the other parts; or (2) from the very purpose of the
obligation itself which requires the delivery of all the parts.272
Idem; In obligations to do. — In obligations to do, if the
obligation is to perform some prestation or service which by its very
nature is not susceptible of partial performance, it shall be deemed
indivisible.273 This rule is absolute in character. If the obligation
is to perform some prestation or service which by its very nature
is susceptible of partial performance, the general rule is that it is
divisible. Certain qualifications, however, must be made.
In the first place, in order to determine whether an obligation
to do is divisible or indivisible, the object or purpose of the obliga-
tion must always be considered. This is evident from the provision
of the second paragraph of Art. 1225. According to this provision —
the obligation shall be considered divisible when it has for its object:
(1) the execution of a certain number of days of work; or (2) the
270
271
272
273
216
Obligations with a Penal Clause
accomplishment of work by metrical units; or (3) the accomplishment

of analogous things which by their nature are susceptible of partial
performance.
In the second place, although it is true that if the obligation has
for its object a prestation or service which is susceptible of partial
performance it is, as a rule, divisible, yet it may still be indivisible
if so provided by law or intended by the parties.274 This intention of
the parties may either be express or implied. Thus, where a certain
contractor obligates himself to construct several apartment buildings
within a certain compound, there is no doubt that the prestation is
susceptible of partial performance. However, if it is the express or
presumed intention of the parties to the contract that the obligation
is indivisible, all of the apartment buildings must be constructed in
order that the obligation can be considered as performed.
Idem; In obligations not to do. — With respect to obligations
not to do, whether it is divisible or indivisible shall depend upon the
character of the prestation in each particular case.275 Therefore, the
determination of the character of the obligation will depend upon
the sound discretion of the court.
Section 6. — Obligations with a Penal Clause
Concept. — An obligation with a penal clause may be defined

as one to which an accessory undertaking is attached for the purpose
of insuring its performance by virtue of which the obligor is bound
to pay a stipulated indemnity or perform a stipulated prestation
in case of breach. From this definition it is clear that the penal
clause or penalty is an accessory obligation attached to the principal
obligation by virtue of which the obligor is bound to pay a stipulated
indemnity or to perform a stipulated prestation in case of breach of
the obligation.276
Purpose of Penalty. — The penal clause or penalty has a
three-fold purpose. They are:
(1) Función coercitiva o de garantia — to insure the perfor-
mance of the obligation;
274
275
276
3 Castan, 7th Ed., p. 97; 8 Manresa, 5th Ed., Bk. 1, pp. 477-478.
217
(2) Función liquidatoria — to liquidate the amount of

damages to be awarded to the injured party in case of breach of the
principal obligation; and
(3) Función estrictamente penal — in certain exceptional
cases, to punish the obligor in case of breach of the principal obliga-
tion.277
It is evident that the second is compensatory, while the third
is punitive in character; the first, on the other hand, is the general
purpose regardless of whether the penalty is compensatory or
punitive.
Kinds of Penalty. — Penalties may be classified as follows:
(1) As to origin — Legal or conventional. It is legal when it
is constituted by law; it is conventional when it is constituted by
agreement of the parties.
(2) As to purpose — Compensatory or punitive. It is compen-
satory when it is established for the purpose of indemnifying the
damages suffered by the obligee or creditor in case of breach of the
obligation; it is punitive when it is established for the purpose of
punishing the obligor or debtor in case of breach of the obligation.
(3) As to effect — Subsidiary or joint. It is subsidiary when
only the penalty may be demanded in case of breach of the obligation;
it is joint when the injured party may demand the enforcement of
both the penalty and the principal obligation.
Art. 1226. In obligations with a penal clause, the penalty

shall substitute the indemnity for damages and the payment
of interests in case of noncompliance, if there is no stipulation
to the contrary. Nevertheless, damages shall be paid if the
obligor refuses to pay the penalty or is guilty of fraud in the
fulfillment of the obligation.
The penalty may be enforced only when it is demandable
in accordance with the provisions of this Code.278
277
3 Castan, 7th Ed., pp. 100-101.
278
218
Effect of Penalty, General Rule. — As previously stated,

the penal clause may be considered either as reparation or substi-
tute for damages or as a punishment in case of breach of the obliga-
tion. Considered as a reparation or compensation, the question of
damages is resolved once and for all, since the stipulated indemnity
or prestation represents a legitimate estimate made by the contract-
ing parties of the damages caused by the nonfulfillment or breach of
the obligation. Consequently, proof of actual damages is not neces-
sary in order that the stipulated penalty may be demanded. Con-
sidered strictly as a punishment, the question of damages is not yet
resolved. Consequently, the right to damages, besides the penalty,
still subsists. Therefore, if the injured party desires to recover the
damages actually suffered by him in addition to the penalty, he
must prove such damages.279
As a general rule, the penalty is fixed by the contracting parties
as a compensation or substitute for damages in case of breach of the
obligation. This is evident from the provision of the first paragraph of
Art. 1226. It is, therefore, clear that the penalty in its compensatory
aspect is the general rule, while the penalty in its strictly penal
aspect is the exception. Thus, if the parties to a contract of sale
payable in several installments agree that should the vendee fail
to pay the amount corresponding to each installment in due time,
the vendor may rescind the contract and at the same time keep the
amount already paid, it is clear that such an agreement has for its
purpose not only to insure the performance of the obligation, but
also to measure beforehand the damages which would result from
noncompliance. At any rate the penal clause does away with the
duty to prove the existence and measure of the damages caused by
the breach.280
Manila Racing Club vs. Manila Jockey Club

69 Phil. 55
The records show that the parties entered into a contract

of sale of a parcel of land for P1,200,000, payable in five
installments. It was agreed that should the vendee fail to pay
279
280
Manila Racing Club vs. Manila Jockey Club, 69 Phil. 55. For other cases il-
lustrating the general rule — see Palacios vs. Mun. of Cavite, 12 Phil. 140; Navarro
vs. Mallari, 45 Phil. 242; Araneta vs. Paterno, 49 Off. Gaz. 45.
219
the amount corresponding to each installment in due time, the

vendor may rescind the contract and keep the amount paid. The
vendee was able to pay only the first two installments amounting
to P100,000. As a result, the vendor rescinded the contract. This
action now is brought by the vendee against the vendor for the
purpose of recovering the forfeited amount on the ground that
the agreement is contrary to law, morals and public order.
Held: “The clause of the contract referring to the forfeiture
of the P100,000 already paid, should the purchaser fall to pay
the subsequent installments, is valid. It is in the nature of a
penal clause which may be legally established by the parties
(Articles 1152 and 1255 — now Arts. 1226 and 1306, Civil Code.)
In its double purpose of insuring compliance with the contract
and of otherwise measuring beforehand the damages which
result from noncompliance, it is not contrary to law, morals or
public order because it was voluntarily and knowingly agreed
upon by the parties. Viewing concretely the true effects thereof
in the present case, the amount forfeited constitutes only
eight per cent of the stipulated price, which is not excessive if
considered as the profit which would have been obtained had
the contract been complied with. There is, moreover, evidence
that the defendants, because of this contract, had to reject
other propositions to buy the same property. At any rate, the
penal clause does away with the duty to prove the existence and
measure of the damages caused by the breach.
Caridad Estate vs. Santero

71 Phil. 114
This action is brought by the vendor against the vendee

for the recovery of the property sold because of the failure to pay
the stipulated installments in due time. In the contract of sale, it
was agreed that should the vendee fail to pay the installments in
due time, the vendor shall have the right to rescind the contract
and at the same time keep any and all sums already paid. It is
now contended by the vendee that such a stipulation constitutes
a pactum commissorium, which is prohibited by what is now
Art. 2088 of the New Civil Code.
Held: “Taking up the argument that the stipulation has
resulted in pactum commissorium, we are of the opinion that the
objection is without legal basis. Historically and in point of strict
law, pactum commissorium, referred to in Articles 1859 and 1884
(now Arts. 2088 and 2137) of the Civil Code, presupposes the
existence of mortgage or pledge or that of antichresis. (Alcantara
220
vs. Alinea, 8 Phil. 111.) Upon this account, it becomes hardly

conceivable, although the argument has been employed here
rather extravagantly, that the idea of pactum commissorium
should occur in the present contract of sale, considering that, it
is admitted, that the person to whom the property is forfeited is
the real and equitable owner of the same because the title would
not pass until payment of the last installment. At most, the
provision in point, as the parties themselves have indicated in
the contract, is a penal clause which carries the express waiver
of the vendee to any and all sums he had paid when the vendor,
upon his inability to comply with his duty, seeks to recover
possession of the property, as conclusive recognition of the right
of the vendor to said sums, and avoids unnecessary litigation
designated to enforce fulfillment of the terms and conditions
agreed upon. Said provisions are not unjust or inequitable and
does not, as appellant contends, make the vendor unduly rich at
his cost and expense.’’
Idem; Exceptions. — There are three exceptions to the

rule that the penalty shall substitute the indemnity for damages
and the payment of interests in case of noncompliance with the
principal obligation. They are: first, when there is a stipulation to
the contrary, second, when the obligor is sued for refusal to pay the
agreed penalty; and third, when the obligor is guilty of fraud.281 In
all of these cases, it is evident that the purpose of the penalty is to
punish the obligor. Consequently, the obligee can recover from him
not only the penalty, but also the damages or interests resulting
from the breach of the principal obligation.282
Bachrach Motor Co. vs. Espiritu

52 Phil. 346
These two cases were tried together. The first case

involves an action brought by the plaintiff corporation for the
recovery of P10,477.82 from the defendant which is the unpaid
balance of the purchase price of a two-ton White truck which
the latter had bought from the former. In addition, the said
plaintiff corporation also asks for 12 per cent of the said amount
281
282
Bachrach Motor Co. vs. Espiritu, 52 Phil. 346; Government vs. Lim, 61 Phil.
737; Luneta Motor Co. vs. Moral 73 Phil. 80; Cabarroguis vs. Vicente, 107 Phil. 340;
De Venecia vs. del Rosario, 18 SCRA 792.
221
as stipulated interest and 25 per cent thereon as stipulated

penalty. The second case involves a second action brought by
the plaintiff corporation for the recovery of P4,208.28 from the
same defendant which is the unpaid balance of the purchase
price of a one-ton truck of the same make as the first which
the latter had bought from the former. In addition, the said
plaintiff corporation also asks for 12 per cent of the said amount
as stipulated interest and 25 per cent thereon as penalty. The
basis of the action in each case is a contract of sale wherein the
parties agreed that 12 per cent interest would be paid upon the
unpaid portion of the price at the execution of the contracts, and
in case of nonpayment of the total debt upon its maturity, 25 per
cent thereon, as penalty. The lower court which tried the cases
together rendered judgments in plaintiff’s favor in accordance
with the contracts. From these judgments, defendant appealed
to the Supreme Court. He contends that the 25 per cent penalty
upon the debt, in addition to the interest of 12 per cent per
annum, would make the contract usurious.
Held: “Such a contention is not well founded. Article
1152 (now Art. 1226) of the Civil Code permits the agreement
upon a penalty apart from the interest. Should there be such
an agreement, the penalty, as was held in the case of Lopez vs.
Hernaez (32 Phil. 631), does not include the interest and as such
the two are different and distinct things which may be demanded
separately. According to this, it is not to be added to the interest
for the determination of whether the interest exceeds the rate
fixed by the law, since said rate was only fixed for the interest.
But considering that the obligation was partly performed, and
making use of the power given to the court by Article 1154 (now
Art. 1229) of the Civil Code, this penalty is reduced to 10 per
cent of the unpaid debt.’’
Cabarroguis and Cabarroguis vs. Vicente

107 Phil. 340
Telesforo B. Vicente, owner and operator of the jeepney
on which plaintiff, Antonia A. Cabarroguis, was a passenger
entered into a compromise agreement with plaintiff obligating
himself to pay to her the sum of P2,500 as damages for the
physical injuries sustained by her when the said jeepney
on which plaintiff was a passenger hit another vehicle. An
additional amount of P200 was provided as liquidated damages
in the agreement in case defendant fails to complete payment
within 60 days. A balance of P1,000 of the amount was left
unpaid and as defendant failed, and, notwithstanding repeated
222
demands, refused to comply with his obligation, plaintiff,

assisted by her husband, brought suit in the Municipal Court
which rendered, after hearing, a judgment in plaintiffs favor.
On appeal the Court of First Instance sentenced defendant to
pay to plaintiff the amount of P1,200 with interest at legal rate
from the date of the filing of the complaint until full payment.
Hence, this appeal. Is the decision correct?
Held: In obligations with a penal clause, the penalty
shall substitute the indemnity for damages and the payment
of interest, except when the contrary is stipulated; or when the
obligor refuses to pay the penalty; or when the obligor is guilty
of fraud in the fulfillment of the obligation. (Art. 1226, Civil
Code.) Applying the law it is evident that no interest can be
awarded on the principal obligation, the penalty of P200 agreed
upon having taken the place of the payment of such interest and
the indemnity for damages, the case not falling under any of the
exceptions.
The case, however, takes a different aspect with respect
to the penalty attached to the principal obligation. It has been
held that in obligations for the payment of a sum of money
when a penalty is stipulated for default, both the principal
obligation and the penalty can be demanded by the creditor.
(Government vs. Lim, et al., 61 Phil. 737; Luneta Motor Co.
vs. Moral, 73 Phil. 80.) Defendant having refused to pay when
demand was made by plaintiff, the latter clearly is entitled to
interest on the amount of the penalty. Art. 2210 of the new Civil
Code also provides that in the discretion of the court, interest
may be allowed upon damages awarded for breach of contract.
This interest is recoverable from the time of delay, i.e., from the
date of demand, either judicial or extrajudicial. There being no
showing as to when demand for payment was made, plaintiff
must be considered to have made such only from the filing of the
complaint.
Decision modified in the sense that interest shall be al-
lowed only on the amount of the penalty.
Idem; Enforceability of penalty. — According to the second

paragraph of Art. 1226, the penalty may be enforced only when it
is demandable in accordance with the provisions of the Civil Code.
Consequently, upon the breach or nonfulfillment of the principal
obligation by the obligor or debtor, the penalty stipulated becomes
demandable, provided that it is not contrary to law, morals, good
223
customs, public order or public policy.283 However, where both of

the contracting parties are unable to comply with their respective
obligations, although the breach is not willful or culpable, such as
when it is due to a fortuitous event, since the law must work both
ways, the penal clause cannot, as a consequence, be invoked by
anyone of them to the prejudice of the other.284
Art. 1227. The debtor cannot exempt himself from the

performance of the obligation by paying the penalty, save
in the case where this right has been expressly reserved
for him. Neither can the creditor demand the fulfillment
of the obligation and the satisfaction of the penalty at the
same time, unless this right has been clearly granted him.
However, if after the creditor has decided to require the
fulfillment of the obligation, the performance thereof should
become impossible without his fault, the penalty may be
enforced.285
Limitation upon Right of Debtor. — The debtor cannot

exempt himself from the performance of the principal obligation by
paying the stipulated penalty. There is, however, an exception to
this rule and that is when the right has been expressly reserved for
him.286
Limitation upon Right of Creditor. — On the other
hand, the creditor cannot demand the fulfillment of the principal
obligation and the satisfaction of the stipulated penalty at the same
time, unless this right has been clearly granted to him.287
If the principal obligation is not complied with, the creditor
can choose between demanding the fulfillment of the obligation and
demanding the satisfaction of the penalty. He cannot, however,
demand both at the same time. If he chooses to demand the fulfillment
of the obligation, and the performance thereof should become
283
Yu Tek & Co. vs. Gonzales, 29 Phil. 384; Ibarra vs. Aveyro, 37 Phil. 273;
Bachrach vs. Golingco, 39 Phil. 138; Manila Racing Club vs. Manila Jockey Club, 69
Phil. 55.
284
Reyes vs. Formoso, CA, 46 Off. Gaz. 5621.
285
286
287
Ibid.
224
impossible without his fault, he may still demand the satisfaction

of the penalty.288 If there was fault on the part of the debtor, he
may demand not only the satisfaction of the penalty, but also the
payment of damages.289 If he chooses to demand the satisfaction
of the penalty, he cannot afterwards demand the fulfillment of the
obligation.
It will be observed that under the first sentence of the article,
in order that the debtor can exempt himself from the performance
of the obligation by paying the penalty, the right must be expressly
reserved for him. Under the second sentence, however, in order that
the creditor can demand the fulfillment of the obligation and the
satisfaction of the penalty at the same time, the right must be clearly
granted to him. From this, it can be inferred that a tacit or implied
grant is admissible under the second.
Art. 1228. Proof of actual damages suffered by the cred-

itor is not necessary in order that the penalty may be de-
manded.290
Proof of Actual Damages. — The above provision is appli-
cable only to the general rule stated in Art. 1226 and not to the
exceptions. Consequently, if the penalty is fixed by the contracting
parties for the purpose of compensating or substituting the indem-
nity for damages and the payment of interests, proof of actual dam-
ages suffered by the obligee or creditor is not necessary in order that
the penalty may be demanded. Hence, in this sense, the penalty is
exactly identical with what is known as “liquidated damages’’ under
Art. 2226 of the Civil Code. However, if there is stipulation to the
contrary, or if the obligor or debtor is sued for refusal to pay the
agreed penalty, or if the obligor or debtor is guilty of fraud, then
the obligee or creditor can demand not only the satisfaction of the
agreed penalty, but even damages. In such case, in order to be able
to recover such damages in addition to the penalty, he must prove
the amount of damages which he had actually suffered.
288
Ibid.
289
Art. 1226, 2nd sentence, Civil Code.
290
New provision.
225
Lambert vs. Fox

26 Phil. 558
Plaintiff and defendant, majority stockholders of a

certain corporation, entered into a contract by virtue of which
it was agreed that should either party dispose of his holdings
in the company to anybody within one year from the time of
the signing of the contract, he shall pay P1,000 as liquidated
damages. For breach of the agreement, plaintiff commenced this
action in order to collect P1,000 from the defendant. The latter
now contends that since plaintiff is unable to prove damages
suffered by him, he cannot be compelled to pay.
Held: “In this jurisdiction, there is no difference between
a penalty and liquidated damages, as far as legal results are
concerned. Whatever difference exists between them as a matter
of language, they are treated the same legally. In either case
the party to whom payment is to be made is entitled to recover
the sum stipulated without the necessity of proving damages.
Indeed one of the primary purposes in fixing a penalty or in
liquidating damages, is to avoid such necessity.’’291
Art. 1229. The judge shall equitably reduce the penalty

when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts
if it is iniquitous or unconscionable.292
When Penalty May Be Reduced. — Under Art. 1229, the

court may equitably reduce the stipulated penalty in the following
instances: first, if the principal obligation has been partly complied
with; second, if the principal obligation has been irregularly complied
with; and third, if the penalty is iniquitous or unconscionable even if
there has been no performance.
The first contemplates a case in which some, but not all, of
the prestations are complied with by the debtor, while the second
contemplates a case in which all of the prestations are complied
with, but not in accordance with the tenor of the agreement. Hence,
291
To the same effect: Palacios vs. Mun. of Cavite, 12 Phil. 140; Manila Racing
Club vs. Manila Jockey Club, 69 Phil. 55. See Arts. 2226, et seq., for “liquidated dam-
ages.’’
292
226
the first refers to the quantity or quality of the performance, while

the second refers to the form.293 Thus, the Supreme Court, in the
case of Jison vs. CA (164 SCRA 346), it held that in obligations with
a penal clause, the judge shall equitably reduce the penalty when
the principal obligation has been partly or irregularly complied with
by the debtor. (Art. 1229; Hodges v. Javellana, G.R. No. L-17247,
April 28, 1962, 4 SCRA 1228.) In this connection, the Court said:
“It follows that, in any case wherein there has been a partial or
irregular compliance with the provisions in a contract for special
indemnification in the event of failure to comply with its terms, courts
will rigidly apply the doctrine of strict construction and against the
enforcement in its entirety of the indemnification, where it is clear
from the terms of the contract that the amount or character of the
indemnity is fixed without regard to the probable damages which
might be anticipated as a result of a breach of the terms of the contract
or, in other words, when the indemnity provided for is essentially
a mere penalty having for its principal object the enforcement of
compliance with the contract . . . (Laureano vs. Kilayco, 32 Phil.
194 [1915].) This principle was reiterated in Makati Development
Corp. vs. Empire Insurance Co. (G.R. No. L-21780, June 30, 1967,
20 SCRA 557) where the Court affirmed the judgment of the Court
of First Instance reducing the subdivision lot buyer’s liability from
the stipulated P12,000.00 to P1,500.00 after finding that he had
partially performed his obligation to complete at least fifty percent
(50%) of his house within two (2) years from March 31, 1961, fifty
percent (50%) of the house having been completed by the end of April
1961. The third, on the other hand, contemplates a case in which the
only question raised is whether the amount of the stipulated penalty
is reasonable or unconscionable. Hence, the obligor may ask for the
reduction of the penalty, even if there has been no performance of
the principal obligation. It must be noted that this ground was not
found in the former Code. However, it has always been recognized
by the Supreme Court as a separate ground for the reduction of
the stipulated penalty by the courts. Thus, it has been held that
while the parties are free to stipulate a particular amount which
the debtor must pay by way of attorney’s fees and costs in case of
non-fulfillment of the obligation, it is within the sound discretion of
293
8 Manresa, 5th Ed., Bk. 1, p. 491; see Laureano vs. Kilayco, 32 Phil. 850; Chua
Gui Seng vs. Gen. Sales Supply Co., 91 Phil. 153; Ramos vs. Salcedo, CA, 48 Off. Gaz.
729.
227
the court to determine whether the amount should be reduced or not

depending upon whether it is excessive or reasonable.294 As a matter
of fact, it has been held that the amount stipulated may be reduced
even if it is not contrary to law, morals, good customs, public order,
or public policy,295 provided it is unreasonable or unconscionable.
Question — Can the Court delete the penalty clause?

Answer — Yes. The stipulated penalty can be deleted in
cases such as when there has been substantial performance in
good faith by the obligor (Art. 1234, NCC.), when the penalty
clause itself suffers from fatal infirmity, or when exceptional
circumstances so exists as to warrant it. (Garcia vs. CA, 167
SCRA 815; Palmares vs. CA, 288 SCRA 423; Ibarra vs. Aveyro,
37 Phil. 278; Ligutan vs. CA, et al., G.R. No. 138677, Feb. 12,
2002.)
Umali vs. Miclat

105 Phil. 1007
The records show that defendant Umali, president and

general manager of Maharlika Pictures, Inc., had executed a
contract by which he agreed to pay a certain amount to plaintiff
Miclat for services rendered by the latter. In the contract, it
is expressly stipulated that if defendant should fail to pay the
amount after the lapse of 30 days, he shall pay a subcharge of
10% for every 30 days of default until the amount has been fully
paid. Because of failure of the defendant to pay the amount
within the period stipulated, plaintiff brought this action to
recover the amount, plus the penalty and damages. After
trial, the lower court rendered judgment ordering defendant
to pay the amount, plus 10% subcharge for every 30 days of
default, and 6% interest per annum from the date of the filing
of the complaint as damages. Defendant now claims that the
subcharge of 10% for every 30 days of default is unconscionable
because it is tantamount to imposing an interest of 10% a month
and, therefore, should be reduced, and that the award of 6%
interest per annum by way of damages is contrary to law, since
according to Art. 1226 of the Civil Code, the penalty shall be a
substitute for damages or interests.
294
Manila Trading Co. vs. Tamarao Plantation Co., 47 Phil. 513; Tan Tua Sia vs.
Yu Biao, 56 Phil. 707; Turner vs. Casabar, 65 Phil. 490.
295
Bachrach vs. Golingco, 39 Phil. 138.
228
Held: “There is merit in the contention that the surcharge

is unconscionable. While this subcharge partakes of the nature
of a penal clause which the parties may stipulate under the
law, however, one cannot deny that the same is unconscionable.
Making use of the discretion that the law grants this Court on
the matter (Art. 1229, Civil Code), a subcharge of 20% per annum
would be reasonable. On the other hand the contention that the
portion of the decision which orders the payment of 6% interest is
contrary to law on the ground that defendant is already ordered
to pay the penalty agreed upon is untenable. Under Art. 1226 of
the new Civil Code, the penalty takes the place of interest only
if there is no stipulation to the contrary, and even then damages
may still be collected if the obligor refuses to pay the penalty. In
this case not only is there an express stipulation to pay damages
in addition to the penalty, but defendant has failed to pay his
obligation as well as the penalty. The imposition of the interest
is, therefore, justified.”
Art. 1230. The nullity of the penal clause does not carry
with it that of the principal obligation.
The nullity of the principal obligation carries with it
that of the penal clause.296
Nullity of Obligation or Penalty; Effect. — If the principal

obligation is void, it necessarily follows that the penal clause shall
also be void.297 This rule is, of course, logical considering the fact
that the penalty is merely an accessory obligation. However, if the
penal clause is void, the validity of the principal obligation is not
affected,298 since the efficacy of such obligation is not dependent
upon the efficacy of the penal clause.
296
297
298
Ibid.
229

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DIFFERENT KINDS OF OBLIGATIONS Arts.

Idem; Distingished from condition. — A term or period

death of the donor is a day certain because it must necessarily come,

Phil. National Bank vs. Lopez Vito

This action is for the recovery of a mortgage credit. It

of which a day certain has been ﬁxed shall be demandable

Idem; Effect of fortuitous event. — In obligations with a

Problem — X Co. and Y Co. entered into a contract

Answer — The facts stated in the above problem are exactly

Art. 1194. In case of loss, deterioration or improvement

Effect of Advanced Payment or Delivery. — Under

“The present article (Art. 1126, Civil Code of Spain) is

Art. 1196. Whenever in an obligation a period is

creditor cannot demand the performance of the obligation before the

Idem; Exception. — However, if it can be proved either from

Art. 1197. If the obligation does not ﬁx a period, but from

Judicial Term or Period. — A term or period is judicial when

contracts for services in which no period was ﬁxed by the parties.

“While that which is contemplated by the ﬁrst paragraph

If the duration of the term or period depends exclusively upon

Gonzales vs. Jose

This action was instituted by the plaintiff to recover from

Anterior ........................................................... P71.10

(Sgd.) “FLORENTINO DE JOSE’’

“I promise to pay Mr. Benito Gonzales the sum of three

(Sgd.) “FLORENTINO DE JOSE”

“Defendant appealed from the decision of the Court of

“Art. 1128. If the obligation does not specify a term,

Delgado, 11 Phil. 154; Levy Hermanos vs. Paterno, 18

Problem — D borrowed P2,000 from C in 1958. The debt

In the case of Paciﬁc Banking Corp. vs. CA (173 SCRA 102),

Problem — “A” Corporation, engaged in the sale of subdi-

(2) When he does not furnish to the creditor the guar-

Extinguishment of Debtor’s Right to Period. — According

With respect to the third, attention must be called to the

Problem — A executed in favor of B a promissory note for

Song Fo vs. Oria

This is an action commenced by plaintiff to recover the

Answer — This defense is untenable. The sale of the iron

Section 3. — Alternative and Facultative

Concept. — When an obligation comprehends several objects

Art. 1199. A person alternatively bound by different

Right of Choice in Alternative Obligations. — In alterna-

Art. 1201. The choice shall produce no effect except from

When Choice Takes Effect. — The rule stated in the above

Art. 1203. If through the creditor’s acts the debtor cannot

When Choice Is Rendered Impossible. — The above article

Art. 1204. The creditor shall have a right to indemnity

creditor should choose from among the remainder, or that

Effect of Loss of Objects of Obligation. — It is evident

Art. 1206. When only one prestation has been agreed

fault of the debtor is sufﬁcient to extinguish the obligation, while in

Section 4. — Joint and Solidary Obligations

Concept. — When there is a concurrence of two or more

“In Spanish law the comprehensive and generic term

such and (2) mancomunidad solidaria. In other words, the

of a common law conception or of a civil law idea. In Sharruf

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

and not solidary. Consequently, where the obligation is silent with

obligation requires it. Thus, in a certain case, the Supreme Court

“It may be stated as a general rule that joint tortfeasors

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