INSTRUCTIONS

1. Read and understand the discussion and explanation carefully and answer each
Problem thoroughly.

2. Write your answers in a separate sheet of paper. In your answers, use the numbering
system in the questionnaire. Answer the questions legibly, clearly, and concisely.

3. Your answer should demonstrate your ability to analyze the facts, apply the pertinent
laws, and arrive at a sound or logical conclusion. Always support your answer with the
pertinent laws.

A MERE "YES" OR "NO" ANSWER WITHOUT ANY CORRESPONDING

EXPLANATION OR DISCUSSION WILL NOT BE GIVEN FULL CREDIT. THUS,
ALWAYS BRIEFLY BUT FULLY EXPLAIN YOUR ANSWERS ALTHOUGH THE
QUESTION DOES NOT EXPRESSLY ASK FOR AN EXPLANATION. DO NOT
REWRITE OR REPEAT THE QUESTION ON YOUR ANSWER SHEETS.

DISCUSSION

Section 1 – Pure and Conditional Obligations

1179. Every obligation whose performance does not depend upon a future or uncertain event,
or upon a past event unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event.

CONDITION – an event which is both future and uncertain upon which the existence or
extinguishment of an obligation is made to depend.

PURE OBLIGATION – an obligation which does not contain any condition or term upon which
the fulfillment is made to depend; immediately demandable by the creditors and the debtor
cannot be excused from not complying with his prestation.

CONDITIONAL OBLIGATION – an obligation subject to a condition.

a) Suspensive Obligation – its fulfillment gives rise to an obligation; the demandability
of the obligation or the effectivity of the contract can take place only after the
condition has been fulfilled.
b) Resolutory Obligation – its happening extinguishes the obligation which is already
existing;

1180. When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.

 Speaks of a period depending on the will of the DEBTOR. If its purpose is to delay,
immediate action is allowed. The court fixes the terms.

PERIOD – a future and certain event upon the arrival of which, the obligation subject to it either
arises or is extinguished.

INDICATIONS OF A TERM OR PERIOD:

When the debtor binds himself to pay –
 when his means permit him to do so
 little by little
 as soon as possible
 from time to time
 as soon as I have the money
 in partial payment
 when in the position to pay

1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or

loss of those already acquired, shall depend upon the happening of the event which
constitutes the condition.

Suspensive Condition – the acquisition of rights by the creditor depends upon the happening of
the event which constitutes the condition; if such condition does not take place, it would be as
of the conditional obligation had never existed.
(e.g. promise to give a car after graduating from law school as cum laude)

Resolutory Condition – the rights and obligations already existing are under threat of extinction
upon the happening or fulfillment of such condition.
(e.g. donation by reason of marriage – the celebration of marriage is a resolutory condition; if
the marriage did not push through, the donation may be revoked)

1182. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third
person, the obligation shall take effect in conformity with the provisions of this Code.

 Applies only to suspensive conditions.

3 KINDS OF CONDITIONS UNDER THIS ARTICLE:

1. POTESTATIVE – a suspensive condition which depends upon the will of one of
the contracting parties = if at the sole will of the debtor, it is void; if at the
creditor’s, still valid. this is to prevent the establishment of illusory obligations.
2. CASUAL – the condition depends upon chance or the will of a third person;(i.e.
cellphone warranty)
3. MIXED – the condition depends partly upon the will of the parties and partly
upon chance or the will of a third person; (example ni Atty. De Chavez: passing
the bar)

PROBLEM NO.

I will give you Php 10,000 if I can sell my land this year.
If I succeed in selling my land this year, am I under
obligation to give you Php 10,000?

1183. Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the impossible or unlawful condition
shall be valid.
The condition not to do an impossible thing shall be considered as not having been agreed
upon.

POSSIBLE CONDITION – if it is capable of realization or actualization according to nature, law,

public policy or good customs.

2 KINDS OF IMPOSSIBLE CONDITIONS:

1. Physically Impossible – cannot exist or cannot be done in its nature;
2. Legally Impossible – contrary to law, good customs, or public policy.

When a conditional obligation is VOID – impossible conditions annul the obligation which
depends upon them; the obligor knows his obligation cannot be fulfilled, he has no intention to
comply with his obligation.

When a conditional obligation is VALID – if the condition is negative (not to do an impossible

thing), it is disregarded and the obligation is rendered pure and valid.

Only the affected obligation is void, if the obligation is divisible, and the part thereof not
affected by the impossible condition is valid.

Only the condition is void if there is already a pre-existing obligation and it does not depend
upon the fulfillment of the condition which is impossible.

1184. The condition that some event happen at a determinate time shall extinguish the
obligation as soon as the time expires or if it has become indubitable that the event will not
take place.

Positive condition – refers to the fulfillment of an event or performance of an act

Negative condition – refers to the non-fulfillment or non-performance of an act.

POSITIVE SUSPENSIVE CONDITION

The obligation is extinguished:
1. As soon as the TIME EXPIRES without the event taking place;
2. As soon as it has become certain that the EVENT WILL NOT TAKE PLACE although the
time specified has not yet expired.

** TIME is the condition – should happen for the obligation to extinguish.

1185. The condition that some event will not happen at a determinate time shall render the
obligation effective from the moment the time indicated has elapsed, or if it has become
evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled at such time as may have
probably been contemplated, bearing in mind the nature of the obligation.

** This is a condition of non-happening of a future event.

The obligation shall become effective and binding:

a) From the moment the time indicated has elapsed without the event taking place;
b) From the moment it has become evident that the event cannot occur, although the time
indicated has not yet elapsed.
1184 -vs- 1185

1184 1185
(POSITIVE (NEGATIVE
SUSPENSIVE) SUSPENSIVE)
Jose obliges himself to give Jose obliges himself to give
the pregnant woman the pregnant woman Maria
Maria P5000 if she would P5000 if she would NOT
give birth on or before give birth on December 30.
December 30.
a. Jose is LIABLE if a. Jose is NOT LIABLE if
Maria gives birth on or Maria gives birth on
before December 30. December 30.
b. Jose is NOT LIABLE if b. Jose is LIABLE if Maria
Maria gives birth after DID NOT give birth on
December 30. December 30 – if Maria
gives birth BEFORE or
AFTER December 30.
c. If Maria would have a c. If Maria would have a
miscarriage before miscarriage before
December 30, the December 30, the
obligation is obligation is deemed
EXTINGUISHED. FULFILLED.

PROBLEM NO.

I will give you a specific car if you will marry X this year.
What is my obligation if:

1. If you marry X on December 25?

2. If on December 25, X died, without marriage?
3. If this year has ended, no marriage taking place,
but both parties are alive?

PROBLEM NO.
 I will give you a specific car if you will NOT marry X
this year. What is my obligation if:

1. If you marry X on December 25?

2. If on December 25, X died, without marriage?
3. If this year has ended, no marriage taking place,
but both parties are alive?

1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
 This provision speaks of the DOCTRINE OF CONSTRUCTIVE FULFILLMENT

- REQUISITES:
1. The condition is SUSPENSIVE;
2. The obligor ACTUALLY PREVENTS the fulfillment of the condition;
3. He acts VOLUNTARILY.

 Malice or fraud is not required, as long as his purpose is to prevent the fulfillment of the
condition.
 No person shall profit by his own wrong.

1187. The effects of a conditional obligation to give, once the condition has been fulfilled,
shall retroact to the day of the constitution of the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon the parties, the fruits and interests during the
pendency of the condition shall be deemed to have been mutually compensated. If the
obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless
from the nature and circumstances of the obligation it should be inferred that the intention
of the person constituting the same was different.
In obligations to do and not to do, the courts shall determine, in each case, the retroactive
effect of the condition that has been complied with.

 Applies only to fulfilled suspensive conditions.

 Retroactive statute
 The effects of the obligation is deemed to commence not from the fulfillment of the
obligation but from the day of its constitution (similar to the legitimation of a natural
child)

 The article does not require the delivery of fruits or payment of interests accruing
(accumulating) before the fulfillment of the suspensive condition.

 Obligations to do or not to do – the retroactive effect shall be determined by the court

 using its sound discretion without disregarding the intentions of the parties.

PROBLEM NO.

On June 25, 2020, S will sell his parcel of land to B for

1,000,000, if B will pass his Board Examination on May
25, 2022.
1. Who is the owner of the land after the promise
was made up to May 25, 2022?
2. Who is the owner of the land if on May 25, 2022,
B passed the examination? When is the
ownership vested?
3. One year after the promise was made or on May
25, 2021, S sold the land to X. Is the sale valid?
4. Supposing on May 25, 2022, B passed the
examination, how will the dispute between B and
X be resolved?

1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions
for the preservation of his right.
The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition.

Preservation of the rights of CREDITOR – the debtor may render nugatory (not serious, ignore)
the obligation upon the happening of the obligation.
 Action for prohibition restraining the alienation of the thing pending the happening of
the suspensive condition;
 Action to demand security if the debtor has become insolvent;
 Action to set aside alienations made by the debtor in fraud of creditors;
 Actions against adverse possessors to interrupt the running prescriptive period.
 To have his rights annotated in the registry.

Rights of the DEBTOR – entitled to recover what has been paid by mistake prior to the
happening of the suspensive condition.

1189. When the conditions have been imposed with the intention of suspending the efficacy
of an obligation to give, the following rules shall be observed in case of the improvement,
loss or deterioration of the thing during the pendency of the condition:
LOSS
(1) debtor without fault – obligation is extinguished
(2) debtor with fault – obligation to pay damages

DETERIORATION
1. debtor without fault – impairment is to be borne by the creditor
2. debtor with fault – creditor chooses: rescission of obligation, fulfillment,
indemnity

IMPROVEMENT
1. by nature or time – improvement: inure to the benefit of the creditor
2. at the expense of the debtor – granted to the usufructuary

1190. When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received.
In case of the loss, deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be applied to the party who
is bound to return.
As for the obligations to do and not to do, the provisions of the second paragraph of Article
1187 shall be observed as regards the effect of the extinguishment of the obligation.

 Refers to the fulfillment of a resolutory condition.

 When the resolutory condition happened, the obligation is considered as if it did not
exist.
 The parties are bound to return or restore whatever they have received from each other
– “reciprocal restitution”
 Donation by reason of marriage – if the marriage does not happen, such donation should
be returned to the donor.
 Loss, deterioration and improvement – governed by 1189.
 In obligations to do and not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.

PROBLEM NO.

I will give you a specific horse if you will pass your May
30, 2021 Board Examination.
1. If on May 20, 2021 the horse gave birth to a colt,
what is your right after passing the Board
Examination?
2. What if the horse gave birth to a colt by artificial
insemination at my expense, what is your right
 after passing the Board Examination?

I will give you a specific car if you will pass your May
30, 2021 Board Examination.
3. If on May 20, 2021 I installed an air-conditioning
unit inside the car because of the dry season
spell, what is your right after passing the Board
Examination?

1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired
the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

RECIPROCAL – arise from same causse; each is a debtor and creditor of the other

RESCISSION – resolution or cancellation of the contract

 Applies only to reciprocal obligations where two parties are mutually debtor and
creditor of each other in the same transaction. The cause must be identical ad the
obligations must arise simultaneously.
 The party who can demand rescission should be the party who is ready, willing, and
able to comply with his own obligations while the other is not capable to perform his
own.

REMEDIES:
1. Specific performance or fulfillment of obligation with damages;
2. Rescission of contract with damages.

Effect of rescission: the parties must surrender whatever they have received from the other, and
the obligation to pay is extinguished.

If there is an express stipulation of automatic rescission between parties – such resolution shall
take place only after the creditor has notified the debtor of his choice of rescission subject to
judicial scrutiny.
1192. In case both parties have committed a breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If it cannot be determined which of the
parties first violated the contract, the same shall be deemed extinguished, and each shall bear
his own damages.

FIRST INFRACTOR KNOWN

The liability of the first infractor should be equitably reduced. – equitably offset each other’s
damages.

FIRST INFRACTOR CANNOT BE DETERMINED

The court shall declare the extinguishment of the obligation and each shall bear his own
damages.

Section 2 – Obligations with a Period

1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable
only when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day
certain.
A day certain is understood to be that which must necessarily come, although it may not be
known when.
If the uncertainty consists in whether the day will come or not, the obligation is conditional,
and it shall be regulated by the rules of the preceding Section.

PERIOD / TERM – consists in a space or length of time upon the arrival of which, the
demandability or the extinguishment of an obligation is determined; it may be definite (exact date or
time is known) or indefinite (arrival of date is unknown but sure to come).
- Future + Certain event

GENERAL CLASSIFICATIONS:
a) EX DIE / SUSPENSIVE PERIOD – from a day certain give rise to the obligation;
suspensive effect.
b) IN DIEM / RESOLUTORY PERIOD – arrival of a term certain terminated the
obligation; resolutory effect.

Term – length of time sure to come

Condition – fact or event uncertain to come

Basis Period/Term Condition

1. TIME Always refers Can refer to past
to FUTURE events unknown
 to the parties
2. Sure to happen May or may not
FULFILLMEN at an exact date happen.
T or indefinite
time but sure
to come.
3. INFLUENCE Merely fixes May cause the
the time for the arising or
demandability cessation of the
or performance obligation.
of obligation.

REQUISITES:
1. Future
2. Certain, sure to come
3. Physically or legally possible

1194. In case of loss, deterioration or improvement of the thing before the arrival of the day
certain, the rules in Article 1189 shall be observed.

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.

 The payment or delivery is done before the arrival of the period.

CONSEQUENCES:
1. If he was not aware of the period or he believes that the obligation has become
due and demandable – he can recover what he paid or delivered including fruits
and interests;
2. If he was aware and he paid voluntarily – he cannot recover the delivery made; it
is deemed a waiver of the benefit of the term and the obligation is considered
already matured.

 The presumption is that the debtor knew that the debt was not yet due. He has the
burden of proving that he was unaware of the period.

1196. Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of both the creditor and the debtor, unless from the tenor of the
same or other circumstances it should appear that the period has been established in favor of
one or of the other.

 PRESUMPTION: Obligation with a period is for the benefit of both the creditor and
 debtor.
 EXCEPTION: when it appears that the period is for the benefit of one or the other

 This cannot apply when the court was authorized by the parties to fix a reasonable term.

 The benefit of the term may be the subject of stipulation of the parties.
1. Term is for the benefit of the debtor alone – he cannot be compelled to pay
prematurely, but he can if he desires to do so.
- Example: A obliges himself to pay B within 5 years. A cannot be compelled to pay
prematurely, but he can pay anytime within 5 years (A will benefit because he can pay anytime
he wants as long as it is within 5 years; B will not benefit from the interests if A decides to pay
early).
2. Term is for the benefit of the creditor – He may demand fulfillment even before
the arrival of the term but the debtor cannot require him to accept payment
before the expiration of the stipulated period.
- Example: A borrows money from B and is obliged to make the payment on December 5. B may
compel A to make the payment before December 5, but A may not compel B to receive the
payment before December 5 (B will benefit from the interests that will accrue before December
5).

 The creditor may have reasons other than the maturity of interest, that’s why, unless the
creditor consents, the debtor has no right to accelerate the time of payment even if the
premature tender includes an offer to pay the principal and interest in full.

PROBLEM NO.

On December 25, 2020, D binds himself to pay C

Php16,000 with 14% interest annually on December 25,
2025.
Is this obligation with a period for the benefit of the
debtor? Creditor? Or both the creditor and debtor?
Explain your answer.

1197. If the obligation does not fix a period, but from its nature and the circumstances it can
be inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the
debtor.
In every case, the courts shall determine such period as may under the circumstances have
been probably contemplated by the parties. Once fixed by the courts, the period cannot be
changed by them.
JUDICIAL PERIOD – period designated by the court.
CONTRACTUAL PERIOD – period fixed by the parties in their contract.

Court will fix a period:

1. When no period is mentioned, but it is inferable from the nature and circumstances of
the obligation that a period was intended by the parties.
2. When the period is dependent upon the will of the debtor.

 If the obligation does not state and intend a period, the court is not authorized to fix a
period.
 The court must fix the duration of the period to prevent the possibility that the
obligation may never be fulfilled or to cure a defect in a contract whereby it is made to
depend solely upon the will of one of the parties.

Court cannot fix the period:

1. If there is a period agreed upon by the parties and it has already lapsed or
expired.
2. From the very moment the parties give their acceptance and consent to the
period fixed by the court, it becomes a law governing their contract.

1198. The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a
guaranty or security for the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has
promised;
(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed
to the period;
(5) When the debtor attempts to abscond.

The period is disregarded and the obligation becomes pure and immediately demandable:
[IGIVA]

 [I] When debtor becomes insolvent;

 The insolvency need not be judicially declared. It is sufficient that debtor could
not pay his debts due to lack of money or funds.
 [G] When the debtor does not furnish guaranties or securities;
 [I] When guaranties or securities given have been impaired or have disappeared;
 If security was lost through debtor’s fault - impairment
 If security was lost through fortuitous event - disappearance
 [V] When debtor violates an undertaking;
If such undertaking is the reason for the creditor to agree with such period.
 [A] When debtor attempts to abscond (escape).
Mere attempt to abscond is sufficient. It is an indication of bad faith.

Section 3 – Alternative Obligations

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.

OBLIGATIONS WITH PLURAL PRESTATIONS:

1. CONJUNCTIVE/COMPOUND OBLIGATION - an obligation where the debtor has to
perform ALL the several prestations in the contract to extinguish the obligation.
2. ALTERNATIVE OBLIGATION – an obligation where the debtor is required to fulfill
ONLY ONE of the several prestations to extinguish the obligation.
3. FACULTATIVE OBLIGATION – an obligation where the debtor is bound to perform
ONLY ONE prestation, with a reserved right to choose another prestation as
SUBSTITUTE for the principal.

1200. The right of choice belongs to the debtor, unless it has been expressly granted to the
creditor.
The debtor shall have no right to choose those prestations which are impossible, unlawful or
which could not have been the object of the obligation.

Implied grant to the creditor is not allowed. If it does not appear on the agreement as to whom
among them has the right to choose, it is the debtor who can choose.

1201. The choice shall produce no effect except from the time it has been communicated.

1. The choice shall not produce any legal effect until it has been duly communicated to
the other party.
2. It can be done in writing, verbally, impliedly, or any unequivocal means.
3. Once the choice has been communicated to the other party:
1. The obligation is now LIMITED only to the PRESTATION CHOSEN, with all the natural
consequences flowing therefrom;
2. The choice is IRREVOCABLE.
a. The performance of prestation without announcing the choice to the creditor is NOT
BINDING.
b. The consent of the other party is NOT REQUIRED in making the choice – that will in
effect frustrate the clear intention of the law and the nature of the alternative obligation.
c. If there is delay in the making of choice – punish the one who is supposed to exercise the
right of choice for the delay he caused – court may order the debtor to make a choice, or
creditor to make the choice within certain period, or court makes the choice.
1202. The debtor shall lose the right of choice when among the prestations whereby he is
alternatively bound, only one is practicable.

 There being but one prestation available, this prestation becomes a simple obligation.

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.

(1) If the debtor could not make a choice due to the creditor’s act of making the
prestations impossible, debtor may RESCIND the contract with damages -
rescission takes place at the initiative of the debtor.
(2) If the debtor is being prevented to choose only a particular prestation, and there
are others available, he is free to choose from them, after notifying the creditor of
his decision.

1204. The creditor shall have a right to indemnity for damages when, through the fault of the
debtor, all the things which are alternatively the object of the obligation have been lost, or
the compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the last thing which disappeared,
or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded.

 If the impossibility of all the objects of the alternative obligation is caused by the debtor,
the creditor is entitled to damages.
 If such impossibility is caused by a fortuitous event, the obligation is extinguished and
the debtor is released from responsibility, unless the contrary is stipulated by the parties.
 The creditor cannot claim for damages if the debtor can still perform the remaining
prestations.
 The damages that may be recovered is based on the last thing which disappeared or the
service which became impossible. This last one is converted into a simple obligation.

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:

A. only one thing lost – fortuitous event – creditor chooses from the remainder – debtor
delivers the choice to creditor;
B. only one remains – debtor delivers the same to the creditor;
C. only one thing lost – fault of the debtor
1. creditor may choose any one of the remainders;
2. creditor may choose the price or value of the one which was lost;
3. may choose 1 or 2 plus damages
 D. all things lost – fault of the debtor – creditor may choose the price of ANYONE of the
things, with damages if warranted.

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.

 This article applies only when the right of choice has been expressly granted to the
creditor.

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 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.

 If loss or deterioration happened before substitution is made, obligor is not liable; after
substitution is communicated, he is liable for loss (through delay, negligence or fraud)

PROBLEM NO.

D obliged himself to give C, object No. 1, or object No. 2.

The contract giving rise to the obligation did not
mention the right to choose. On the date of maturity, can
C demand from D the delivery of the object No.1?

PROBLEM NO.

D obliged himself to give C, object No. 1, but if D wants,

he may give object No. 2 as substitute. If object No. 2 is
lost due to fortutitous event before substitution, what is
the right of C?

Section 4 – Joint and Solidary Obligations

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.

INDIVIDUAL OBLIGATION – one debtor and one creditor

COLLECTIVE OBLIGATION – two or more debtors and two or more creditors

1. JOINT – entire obligation is to be paid or performed proportionately by the

debtors;
2. SOLIDARY – each one of the debtors are obliged to pay the entire obligation, each
one of the creditors has the right to demand from any of the debtors, the
fulfillment of the entire obligation;
A. Passive Solidarity – solidarity on the part of the DEBTORS
B. Active Solidarity – solidarity on the part of the CREDITORS.
 SOLIDARITY SHOULD BE EXPRESSED – law, stipulation, nature of obligation.
 When the obligation is ambiguous, it must be considered as joint obligation.

CONSEQUENCES OF SOLIDARITY:
1. Passive Solidarity – full payment made by anyone of the solidary debtors extinguishes
the obligation. The one who paid can claim reimbursement from his co-debtors as
regards their corresponding shares in the obligation.
A, B, & C are solidary debtors of D in the sum of P900.
D can demand payment of the entire obligation when it becomes due, from any one of the
debtors or from all of them at the same time.
If C paid the whole P900 to D, he may claim reimbursement from A and B.

2. Active Solidarity – full payment to any of the creditors extinguishes the obligation. The
creditor who received the entire amount will be liable to pay the corresponding shares of
his co-creditors in accordance with their internal agreement.
Garfield owes the sum of P40,000 to Mickey, Minnie, Donald, and Pluto, who are solidary
creditors. Garfield can pay anyone of them. If Mickey received the P40,000, he is liable to pay
the corresponding shares of his co-creditors.

MIXED SOLIDARITY

a. Solidary Debtors, Joint Creditors

 P9,000.00 – total debt
Debtors (Solidary) Creditors (Joint)
Aida pays John = P 4,500.00
P4,500.00
Lorna pays Marsha P 4,500.00
P4,500.00
Fe

b. Joint Debtors, Solidary Creditors

 P 9,000.00 – total debt
Debtors (Joint) Creditors (Solidary)
Aida (P 3,000.00) John (can claim from
debtors)
Lorna (P 3,000.00) Marsha (-same-)
Fe (P 3,000.00)

1208. If from the law, or the nature or the wording of the obligations to which the preceding
article refers the contrary does not appear, the credit or debt shall be presumed to be divided
into as many shares as there are creditors or debtors, the credits or debts being considered
distinct from one another, subject to the Rules of Court governing the multiplicity of suits.

 This provision speaks of JOINT DIVISIBLE OBLIGATION.

 When there is a concurrence of several creditors or of several debtors in one and in the
same obligation, there is a presumption that the obligation is joint.
 Each of the creditors shall be entitled to demand only the payment of his proportionate
share of the credit.
 Each of the debtors may be compelled to pay only his proportionate share of the debt.
 The credits or debts shall be considered distinct from one another.

CONSEQUENCES OF JOINT OBLIGATION:

1. Each debtor – liable for a proportionate part of the entire debt;
Thales, Socrates, Plato, & Aristotle owe P100 to Bruce Lee
= 4 debts and 1 credit
Each of them owes Bruce Lee P25
Bruce Lee cannot collect the entire P100 from any one of them.
2. Each creditor – entitled to a proportionate part of the credit;
Piggy owes P100 to Froggy and Fishy
= 1 debt and 2 credits
Froggy can only collect 50 from Piggy,
Same with Fishy
3. Demand made by one creditor upon one debtor produces the effects of default only as
between them, but not with respect to the others;
Bubbles demanded payment from Buttercup; Buttercup was in default. This does not mean that
the others are in default too because Bubbles did not demand from them.
4. The interruption of prescription caused by the demand made by one creditor upon one
 debtor will not benefit the co-creditors;
Wittgenstein extended the period in which Tarski should have paid his debt to him. This does
not mean that the same extension applies to Tarski's debt to Davidson.
5. The insolvency of one debtor will not increase the liability of his co-debtors, nor will it
allow a creditor to demand anything from the co-creditors.
If Husserl and Merleau-Ponty are debtors of Sartre for P1,000,000.00 and Husserl becomes
insolvent, the liability of Merleau-Ponty will only be P500,000.00 representing his proportional
share of ½ in the whole obligation.

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.

JOINT INDIVISIBLE OBLIGATION – an obligation where solidarity is not provided and the
prestation or object is not susceptible of division; its fulfillment requires the concurrence of all
debtors, while doing each one’s parts.

Batman and Robin jointly obliged themselves to deliver a brand new Toyota Fortuner worth
P1,500,000.00 to Superman. The object, a vehicle, is indivisible. They must deliver the thing
jointly. In case of breach, the obligation is converted into monetary obligation for indemnity for
damages. Batman and Robin will be liable only for P 750,000.00 each.

 The act of one is not binding (others must concur)

1210. The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.

 Solidarity is expressed in the stipulations of the party, law governing the obligation, or
the nature of the obligation.

INDIVISIBLE OBLIGATION – an obligation where the prestation or object to be delivered

cannot be performed by parts without altering its essence or substance.

Basis Indivisibility Solidarity

1. Nature Refers to the Refers to the tie
prestation of the existing between
contract parties of the
obligation (who
is liable)
2. Number of Does not Requires
subjects / require plurality of
parties plurality of parties
 parties
3. Effect of Obligation is The liability, even
breach of converted into if converted into
obligation monetary indemnity for
obligation for damages,
indemnity for remains solidary.
damages – each
debtor is liable
only for his
part in the
indemnity.

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.

 The solidarity of the debtors is not affected even if different terms and conditions are
made applicable to them.
 Enforcement of the terms and conditions may be made at different times. The
obligations which have matured can be enforced while those still undue will have to be
awaited. Enforcement can be made against any one of the solidary debtors although it
can happen that a particular obligation chargeable to a particular debtor is not yet due.
He will be answerable for all the prestations which fall due although chargeable to the
other co-debtors.

Sad Face, Happy, and Fanny got a loan of P150 from Smiley. They signed a promissory note
solidarily binding themselves to pay Smiley under the following terms:
Sad Face will pay P50 with 3% on December 30, 2006
Happy will pay P50 with 4% on December 30, 2007
Fanny will pay P50 with 5% on December 30, 2008
On December 31, 2006, Smiley can collect his P50 with 3% from any one of the debtors, but not
the whole P150 because it is not yet entirely due. The maturity of the other amounts should still
be awaited. If maturity comes, Smiley can collect from any of the debtors, because they are
expressly solidary in liabilities, and not affected by the secondary stipulations.

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.

 Every solidary creditor is benefited by the useful acts of any one of them.
 If a solidary creditor performs an act which is not fair to his co-creditors, the act may
have valid legal effects or the obligation of the debtor due to them may be extinguished,
but the performing creditor shall be liable to his co-creditors.

 Question: May solidary creditors perform an act that is beneficial to others?

1213. A solidary creditor cannot assign his rights without the consent of the others.

Assign – transfer of right

 The assignee does not become a solidary creditor, and any payment made upon him by
the debtor does not extinguish the obligation. He is considered a STRANGER, and his
acts are not binding to the solidarity.

 DOCTRINE OF MUTUAL AGENCY - In solidary obligations, the act of one is act of the
others.
 Exceptions to the doctrine:
1. Art. 1212 – a creditor may not perform an act prejudicial to other creditors
2. Art. 1213 – a creditor cannot transfer his right without consent

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.

 The debtor can pay any one of the solidary creditors. Such payment when accepted by
any of the solidary creditors will extinguish the obligation.
 To avoid confusion on the payment of the obligation, the debtor is required to ay only to
the demanding creditor and that payment is sufficient to effect the extinguishment of the
obligation.
 In case two or more demands made by the other creditors, the first demand must be
given priority.

1215. Novation, compensation, confusion or remission of the debt, made by any of the
solidary creditors or with any of the solidary debtors, shall extinguish the obligation,
without prejudice to the provisions of Article 1219.
The creditor who may have executed any of these acts, as well as he who collects the debt,
shall be liable to the others for the share in the obligation corresponding to them.

NOVATION – obligations are modified by:

1. Changing their object or principal conditions;
2. Substituting the person of the debtor; and
3. Subrogating (placing) a third person in the rights of the creditor. [Art. 1291, CC]

COMPENSATION – takes place when two persons, in their own right, become creditors and
debtors of each other
 the amount of one is covered by the amount of the other
Erap borrowed P100 from Fernando.
Fernando borrowed P75 from Erap.
Erap’s obligation to Fernando is now P25 only, because the original obligation was offset by
Fernando’s supposed-to-be obligation to Erap.

CONFUSION – takes place when the characters of creditor and debtor are merged in the same
person.
Tito pays his debt to Vic with a check payable to “cash”.
Vic paid his debt to Joey with the same check.
Joey paid his debt to Tito, with the same check Tito issued to Vic.
Tito becomes paid by his own check. He becomes the debtor and the creditor of himself at the
same time.

REMISSION – the gratuitous abandonment by the creditor of his right; acceptance of the obligor
is necessary.

 These 4 modes of extinguishing obligations are acts prejudicial to the other solidary co-
creditors because these have the effect of extinguishing the debt or obligation which is
due to all of them.
 The only recourse of the co-creditors is to let the one who executed any of those acts be
liable for the shares corresponding to all his co-creditors (in their internal agreement).

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.

 When there is passive solidarity, the creditor can proceed against:

1. Any of the solidary debtors;
2. Some of the solidary debtors;
3. All of the solidary debtors, simultaneously.

Extrajudicial demands - first demand shall not prevent subsequent demands on the other co-
debtors, if co-debtor first to have been required to fulfill obligation did not act on it.

1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to
the debtor paying the obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each.
Payment – consists in the delivery of the thing or the rendition (rendering) of the service whish
is the object of the obligation.

Interest – compensation for the use of borrowed money

Partial payment – the solidary debtor who made the partial payment is entitles to be
reimbursed only for such amount of money which he had paid and which exceeds his own
share in the obligation.

If one of the debtors is insolvent and could not pay his share in the obligation, all solidary
debtors including the paying debtor shall share proportionately in the settlement of the
corresponding share of the insolvent debtor. [In short, his co-debtors will save his ass.]

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.

No reimbursement if:

1. Obligation PRESCRIBES
 The creditor did not make any demand for more than 10 years.
2. Obligation becomes ILLEGAL
 Law has been passed, making such prestation illegal.

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.

 Atty De Chavez: Ito ay provision sa tanga... (siyempre, 'pag nagbayad na, wala nang
obligation, wala na ding ire-remit...)

 Any belated (delayed) remission by the creditor of the share of any of the debtor has no
effect on the internal relationship of the co-debtors.

Payment before remission: A, B, and C solidarily owe D P1,500.00. B paid the entire obligation.
After which, D remitted the share of C. B can collect P500.00 each from A and C even if the
share of C in the obligation had been remitted.

Remission before payment: A, B, and C solidarily owe D P1,500.00. D remitted the share of C.
Thereafter, B paid the entire obligation. B can collect P500.00 from A but not from C. However,
B may ask D to give back P500, which is the supposed-to-be share of C.

 After the prior payment of the entire obligation, there is nothing to remit because the
obligation had been extinguished.
1220. The remission of the whole obligation, obtained by one of the solidary debtors, does
not entitle him to reimbursement from his co-debtors.

 There is nothing to be reimbursed because he did not spend any money, the remission
being a gratuitous act.

1221. If the thing has been lost or if the prestation has become impossible without the fault
of the solidary debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all shall be responsible to the creditor, for
the price and the payment of damages and interest, without prejudice to their action against
the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has become impossible
after one of the solidary debtors has incurred in delay through the judicial or extrajudicial
demand upon him by the creditor, the provisions of the preceding paragraph shall apply.

Loss of the thing or impossibility of prestation –

1. NO FAULT – solidary debtors – obligation is extinguished
2. FAULT of any one of them – all are liable because of their mutual agency
3. FORTUITOUS EVENT – delay on the part of the debtors – all will be liable

 If the thing due was not lost, but there is merely a delay, fraud or negligence on the part
of one of the solidary debtors, all (including the innocent) debtors will share in the
payment of the PRINCIPAL prestation. The damages and interest imposed will be borne
by the guilty debtor.
 Obligation to deliver is converted into an obligation to pay indemnity when there us loss
or impossibility of performance.

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.

DEFENSES OF A SOLIDARY DEBTOR:

1. Defense arising from the nature of the obligation – such as payment, prescription,
remission, statute of frauds, presence of vices of consent, etc.
2. Defenses which are personal to him or which pertains to his own share alone – such as
minority, insanity and others purely personal to him.
3. Defenses personal to the other solidary creditors but only as regards that part of the debt
for which the other creditors are liable.
Section 5 – Divisible and Indivisible Obligations

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.

DIVISIBILITY – refers to the susceptibility of an obligation to be performed partially.

 Obligation to deliver 100 sacks of rice or a particular type
INDIVISIBILITY – refers to the non-susceptibility of an obligation to partial performance.
 Obligation to deliver a particular computer set

If a thing could be divided into parts and as divided, its value is impaired disproportionately,
that thing is INDIVISIBLE.

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.

JOINT INDIVISIBLE OBLIGATION – the object is indivisible but the liability of the parties is
joint.

 The unfulfilled undertaking (duty) is converted into a monetary obligation which is not
divisible.
 The guilty debtor is liable for damages.

1225. For the purposes of the preceding articles, obligations to give definite things and those
which are not susceptible of partial performance shall be deemed to be indivisible.
When the obligation has for its object the execution of a certain number of days of work, the
accomplishment of work by metrical units, or analogous things which by their nature are
susceptible of partial performance, it shall be divisible.
However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character of
the prestation in each particular case.

The following are considered INDIVISIBLE obligations:

1. Obligation to give definite things
2. Obligations which are not susceptible of partial performance
3. Even though the object or service may be physically divisible, it is indivisible if:
a. the law so provides
b. when the parties intended it to be indivisible
The following obligations are deemed DIVISIBLE:
1. When the object of the obligation is the execution of a certain number of days of work
2. When the object of the obligation is the accomplishment of work measured in units
3. When the object of the obligation is susceptible of partial compliance
4. When the object of the obligation is such that the debtor is required to pay in
installments

 If the contract is divisible, and a part of it is illegal, the illegal part is void, and the rest
shall be valid and enforceable.
 If the contract is indivisible, and a part of it is illegal, the entire contract is void.
 Partial performance of an indivisible obligation is tantamount to non-performance.

Section 6 – Obligations with a Penal Clause

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.

PENALTY CLAUSE
 Purposes: Jurado book
 This is an accessory obligation attached to the principal obligation, which imposes an
additional liability in case of breach of the principal obligation.
 It pushes the debtor to perform his obligation faithfully and without delay – within the
period agreed upon, or else, he suffers a fixed civil penalty without need of proving the
damages of the other party.

The penalty imposable is a substitute for the indemnity for:

a. damages
b. payment of interest in case of breach of obligation
1. unless the contrary is stipulated!

EXCEPTIONS – additional damages may be recovered from the following acts:

4. If the debtor refuses to pay the penalty
5. If the debtor is guilty of fraud in the fulfillment of the obligation
6. If there is express stipulation that the other damages or interests are demandable to
the penalty in the penal clause

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.

 A debtor cannot evade from payment of his principal obligation by choosing to pay the
penalty stipulated, except when the debtor is EXPRESSLY granted with the right to
substitute the penalty for the principal obligation. – an obligation with penalty clause
cannot be turned to facultative obligation unless expressly stipulated in the contract.
 The creditor cannot demand the stipulated fulfillment of the principal obligation and the
penalty at the same time, except
a. when the creditor was clearly given the right to enforce both the principal obligation
and penalty;
b. when the creditor has demanded fulfillment of the obligation but cannot be fulfilled
due to the
1. debtor’s fault – creditor may demand for penalty
2. creditor’s fault – he cannot claim the penalty
3. fortuitous event – principal obligation and penalty are extinguished

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

d. As long as the agreement or contract is breached.

e. The mere non-fulfillment of the principal obligation entitles the creditor to the penalty
stipulated.
f. The purpose of the penalty clause is precisely to avoid proving damages.

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.

JUDICIAL REDUCTION OF PENALTY

 Principal obligation – partly complied with by the debtor (but not in indivisible
obligation, because it is tantamount to non-compliance)
 Principal obligation – complied not in accordance with the tenor of the agreement (refers
to irregular performance)
 Penalty – iniquitous or unconscionable

 Judge’s power to reduce penalties are limited to private contracts.

INIQUITOUS OR UNCONSCIONABLE – when it is revolting to the conscience or common

sense; grossly disproportionate to the damages suffered.
PENALTY NOT ENFORCEABLE:
1. Impossible performance of principal obligation due to fortuitous events
2. Creditor prevented the debtor from fulfilling the obligation
3. Penalty is contrary to good morals or good customs
4. Both parties are guilty of breach of contract
5. Breach of contract by the creditor
6. None of the parties committed any willful or culpable violation of the agreement

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.

Because the penal clause is only an accessory to the principal obligation, it cannot exist alone.
If the penal clause is void, the principal obligation remains enforceable.

The nullity of penal clause does not mean the nullity of the principal.
 For example:
 In case of non-payment of P10,000, P1,000 per day as penalty shall be imposed. It is a void
contract but it is not an excuse that you don't have to pay the principal which is P10,000.