OBLIGATIONS AND CONTRACTS - PRELIM REVIEWER

Tuesday, December 07, 2010 2:56 PM

Art. 1156. OBLIGATION DEFINITION - An obligation is a juridical necessity to give, to do, or not to do. Elements of an Obligation:
Active subject Obligee or Creditor Possessor of a right.

Passive subject
Cause

Obligor or Debtor
Vinculum or Juridical Tie

Has the duty of gicing, doing or not doing.
The reason why the obligation exist.

Object or Prestatation Object to give, act to do or not to do Subject matter of the prestation Form Manner in the obligation.

Art. 1157. SOURCES OF OBLIGATION - The following are the different sources of obligation: 1. 2. 3. 4. 5. Law Contracts Quasi-Contracts Acts or Ommissions Punishable by Law Quasi-delicts Law
Contracts Quasi-contracts

Ex Lege
Ex contractu Ex quasi contractu

Duty to pay the taxes or to support one's family.
Duty to repay a loan. Duty to refund an "over change" of money.

Crimes or Acts or Omissions punished by Law Ex malefici or ex delicto Quasi-delicts or Torts

Return a stolen carabao.

Ex quasi-delicto or ex-quasi malefacio Repair a damage due to negligence.

Art. 1158. LAW - Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable , and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book.

**Governed by the Law itself. **Agrements of the parties not necessary. **Only those expressly provided are enforceable. Art. 1159. CONTRACTS, EX-CONTRACTU, CULPA-CONTACTUAL - Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. So-called Innominate Contracts ("contratos innominados") 1. Do ut des - I give that you may give. 2. Do ut facias - I give that you may do. 3. Facio ut des - i do that you may give. 4. Facio ut facias - I do that you may do.
Art. 1160. QUASI-CONTRACTS, DELICTS, QUASI EX-DELICTO - Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book. QUASI-CONTRACTS - Juridical relation resulting from a lawful, voluntary, and unilateral act, and which has for its purpose the payment of indemnity to the end that no one shall be unjustly enriched orr benefited at the expense of another. Kinds of Quasi-Contracts: 1. Negotiorun gestio (Officious Management) - A person voluntarily takes charge of another's abandoned business or property without the owner's authority. 2. Solutio Indebiti (Undue payment) - Something is received when there is no right to demand it and it was unduly delivered thry mistake.

Art. 1161. CRIMES, ACTS OR OMISSIONS PUNISHABLE BY LAW, EX-DELICTU, EX, MALEFACIO, CULPA CRIMINAL - Civil onligations arising from the criminal offenses shall be governed by the penal laws, subject to the provision of Article 2177, and of the pertinent provisi ons of Chapter 2, Preliminary Title, on Human Relations, and of the title XVIII of this book, regulating damages. Gen. Rule - Civil liability is a necessary consequence of criminal liability (Art. 100, RPC) Exceptions: - Crimes without criminal liability: 1. Criminal Contempt 2. Gambling 3. Traffic violations - Offended party reserves the right to institute it separately. - The law so provides independent civil action: 1. Obligations arising acts or omissions claimed to be criminal;

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Damage or injury 3. Extent of Civil liability (Art 104. there must be a law punishing it.Negligence in the performance of a contract 3.contract) 2. Art. Rule: Pending delivery. Legal basis of liability Actionable in any act or omissions wherein fault or negligence intervenes Not as broad as quasi-delict. reserves the right to institute it separately or institutes civil action prior to criminal action. Requisites of Liability under Quasi-Delicts 1. Obligations arising acts or omissions claimed to be criminal. Possible that there will be no criminal charge but only civil liability. notes Page 2 . OBLIGATION TO GIVE . 3. Stipulation of the parties requiring another standard of care. Culpa Criminal .Obligations derived from quasi-delicts shall be governed by the probisions of Chapter 2. CULPA AQUILIANA. Wrongful act 2. Defamation. Negligence should be the approximate cause of damage.Negligence as a source of obligation 2. An injury to the plaintiff through such failure. QUASI-DELICTS. Required by Law b. fraud or physical injuries. Abuse of rights (Quasi-delict) Elements of Negligence 1. Restitution 2. Exception: a. 1162. TORTS . 1163. Refusal or failure of members of police force to render protection to life or property. Title XVII of this Book. Culpa Aquiliana (a quasi-delict) . Unilateral declaration of will 3. Failure to perform such duty 3. New Sources of Obligation: 1. Rule 111 . EX QUASI-MALEFACIO. Art. wrong against the individual Public rights. Duty on the part of the defendant to protect the plaintiff from injury of which the latter complains 2. 4.1. the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action UNLESS the offended party waives the civil action. Culpa Contractual . Liability for damages To the injured party Some do not have civil liability (when nobody is injured) Forms of redress Amount of evidence Compromise Reparation of the injury suffered by the injured party Preponderance of evidence Can be compromised as any other civil liability Fine and punishment Beyond reasonable doubt Can never be compromised. RCP. Condition of the mind Criminal intent is not necessary. and by special laws. Kinds of Negligence 1. Unjust Enrichment (Quasi. Gen.Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family.Criminal negligence Distinctions between Culpa Aquiliana and Culpa Contractual CULPA AQUILIANA Negligence as a source of Obligation CULPA CONTRACTUAL Negligence in the performance of a contract Fault or negligence which constitute an indipendent source of obligation between the Fault or negligence of a debtor as an incident in the parties not previously bound fulfillment of a contract. the debtor /passive subject has the obligation to take care of the object with the proper diligence of a good father of a family. Distinctions between Quasi-delicts and Crimes AS TO QUASI DELICT CRIMES Nature of the right violated Private rights. 2. unless the law or the stipulation of the parties requires another standard of care. Reparation of the damage caused 3. RPC) 1. Indemnification for consequential damages.When a cirminal action is instituted. Violation of constitutional rights and liberties of individuals. wrong against the state Criminal intent is necessary. Direct causal connection.

OBLIGATION NOT TO DO . 1st Par: 2nd par: 3rd Par: Right to compel delivery (determinate/specific prestation) Action for substituted performance (creditor may ask compliance by 3rd person at debtor's expense ) Right to damages Art. 1164. . against whom such right may be personally exercised.The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises.If a person obliged to do something fails to do it. □ Examples  Rights of Ownership  Rights of Possession PERSONAL RIGHTS .The obligation to give a determinate thing includes that of delivering all its accessions and accessories. he may ask that the obligation be complied with at the expense of the debtor. 2nd Par Contravention of the tenor of the obligation: action for damages 3rd Par Poorly Done: To undo what has been undone. ACCESSIONS . even though they may not have been mentioned.To ask that the obligation be omplied with at the expense of the debtor. 1169.To recover damages . Required by law b.Ownership of things is transferred not only by mere agreements but ny delivery.Gives a person a direct and immediate power over a thing.to do or not to do . To pay damages. RIGHT TO FRUITS . either naturally or artificially . If the thing is indeterminate or generic. CONCEPT OF DELAY/DEFAULT . OBLIGATION TO DO . the creditor. NOTE: Provide examples. REAL RIGHTS .To recover damages in case of breach of contract.Entitlement of fruits. 1st Par Failure to do: May be executed by a 3rd person subject for reimbursement by the debtor. Art.Power belonging to a person over a specific thing . in case of breach of obligation. in addition to the right granted him by Article 1170.to give . Rule . RIGHT TO ACCESSORIES AND ACCESSIONS . DETERMINATE OBJECT . as a definite passive subject. the same shall be executed at his cost. Exclusion is expressly stipulated by the parties ACCESSORIES . which is susceptible of being exercised not only against a determinate person but against the whole world. 1167. DETERMINATE VS INDETERMINATE OBJECT . it may be decree d that what has been poorly done be undone. Furthermore. This same rule shall be observed if he does it in contravention of the tenor of the obligation. or has promised to deliver the same thing to two or more persons who do not have the same interest. .Includes everything which is produced by a thing. However. Not to do what should be done.Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.To ask for performance of obligation . he shall acqu ire no real right over it until the same has been delivered to him. However. or which is incorporated or attached thereto. it shall also be undone at his expense. and the obligor does what has been forbidden him.To compel specific performance . he shall be responsible for any fortuitous event until he has effected the delivery. 1166.(DETERMINATE PRESTATION) . sed traditione domina rerum trasferentum . To shoulder the cost to undo what should not have been undone.When the obligation consists in not doing. exclusive or in addition to specific performance . Art . may compel the debtor to make the delivery. . ** Non nudis pactis . Art. have for their object the completion of the latter for which they are indispensable or convenient. If the obligor delays. GENERIC OBJECT/PRESTATION . Duties of Obligor: 1.When what is to be delivered is a determinate thing. Exception to the Rule: a. Stipulation of the parties requiring another standard of care. the fulfillment of a prestation. without a passive subject individually determined .b.Those things which are used for the preservation of another thing or more important.Power belonging to one person to demand of another . Gen. Art. 2. 1165. 1168. the demand by the creditor shall not be necessary in order that delay may exist: notes Page 3 . action for damages??? ** No action for compliance because that would be involuntary servitude (unconstitutional) Art. 3. interests from the time obligation to deliver arises.Obligation to deliver the object includes with it the accessories and accessions.

COMPENSATIO MORAE . Gen.One is not compelled to perform his prestation when the other contracting party is not yet prepared to perform his prestation .date of filing of complaint . b) Debtor is exempted from the risk of the loss of the thing. If uncertain . . Demand would be useless. UNILATERAL OBLIGATION . .When to determine the demand period for purposes of computing of payment of interests of charges): a. c) All expenses incurred by the debtor for the preservation of the thing after the delay will be chargeable to the creditor. delay by the other begins. In reciprocal obligations.Even if without demand. neither party incurs in delay if the other does not comply or is not ready to comply in a proper m anner with what is incumbent upon him. . 4. the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare. Requisites of MORA SOLVENDI a) Prestation is demandable and already liquidated.Nonperformance of obligation as agreed to time. Effects of MORA SOLVENDI a) Determinate prestation . Effect of COMPENSATIO MORAE . as when the obligor has rendered it beyond his power to perform.Parties to a bilateral contract can regulate the order in whch they shall comply with their reciprocal prestation.  CESSATION OF EFFECTS OF MORA/INSTANCES WHERE THERE IS NO DELAY notes Page 4 . or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing i s to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. DELAY (MORA) . a. debtor incurs delay if he expressly acknowledges his delay. KINDS OF MORA 1. Obligation itself indicates that there is a period b. Express stipulation by the parties . .Default of one COMPENSATES the default of the other. b) The debtor delays performance (fault is on the debtor) c) That the creditor demands judicially or extrajudicially.Demand must refer to the prestation that is due and not another.Delay on the part of the DEBTOR. From the moment one of the parties fulfills his obligation.Delay on the part of the CREDITOR. or (3) When demand would be useless. If extrajudicial .there is no delay when there is no demand. Designation of time is the controlling motive. Impossibility caused by some fortuitous event ** There can only be delay in POSITIVE Obligations and no delay in NEGATIVE and NATURAL OBLIGATIONS. MORA ACCIPIENDE . RECIPROCAL OBLIGATION -The performance of one demands/____ the performance of the other. MORA SOLVENDI .delay places the risk of the thing on the debtor b) Damages 2. . Caused by some act or fault of the debtor b.Demand may ba in any form provided it can be proved. Law expressly so declares: a.Mere reminder is not a demand because benevelonce and tolerance of the creditor has ended. Requisites of MORA ACCIPIENDE a) Offer of performance by the debtor who has the required capacity b) Offer must be to comply with the prestation as it should be performed c) Creditor refuses the performance without just cause Effects of MORA ACCIPIENDE a) Responsibility of the debtor of the thing is reduced or limited to fraud and gross negligence.date of demand b. Law has a specific period for the performance 2.Insertion of the clause "without further notice" 3. Rule: Creditor should make demand before debtor incurs delay. which automaticall pass to the creditor. e) The debtor may relieve himself of the obligation by the consignation of the thing.However. 3. Exceptions to the Rule: 1. d) The creditor becomes liable for the damages.

1. that which is expected of a g ood father of a family shall be required.The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons. . according to the circumstances.Those who in the performance of their obligations are guilty of fraud.Agreement Art. Fraud in the execution/birth of the contract a.Cannot cover mistake and errors of judgement made in good faith. knowing and intending the effects which naturally and necessarily arise from such acts. . Dolo causante b. no deliberate intention Can be reduced Waiver of action to enforce liability due to future fraud is void. Implied renunciation a) Creditor grants the extension of the time b) Creditor agrees to a NOVATION of the obligation (replacement) 2. . 1173. A.INSTANCES IN LIABILITY FOR DAMAGES . paragraph 2. Any waiver of an action for future fraud is void. Liability for fraud A. B. Prescription of action ** Natural delay . Express renunciation b. FRAUD (DOLO) . 1170. Waiver of action to enforce civil liability due to future culpa may be allowed. shall apply. If the law or contract does not state the diligence which is to be observed in the performance. NEGLIGENCE . and those who in any manner contravene the tenor thereof. Fraud in performing a contract a) Dolo causante (causal fraud) b) Dolo incidente (incidental fraud) Art.Voluntary execution of the wrongful act. of the time and of the place. Note: Renunciation of future fraud is against public policy.Responsibility arising from negligence in the performance of every kind of obligation is also demandable. DEGREES OF CULPA . Meaning 1. Renunciation by the creditor a. notes Page 5 .Responsibility arising from fraud is demandable in all obligations. 1171. Fraud in the performance 2. When negligence shows bad fai th. Fraud in obtaining consent 2. Art. Dolo incidente FRAUD WHEN PRESENT During the performance of a preexisting obligation DOLO CAUSANTE During the perfection of a contract DOLO INCIDENTE During the perfection of a contract PURPOSE RESULTS IN Evade the normal fulfillment of obligation Breach of the obligation Secure the consent of another to enter into a contract Vitiation of consent: voidable contract Secure the consent of another to enter into contract BUT fraud was not the principal inducement in making the contract Does not result to vitiation of consent GIVES RISE TO Right in favor of creditor to recover damages Right of the innocent party to annul the contract Gives rise to to a right of the innocent party to claim for damages Art.Equity ** Legal delay . 1172. ergo synonymous to bad faith (dishonest purpose or some obliquity and conscious doing of wrong) Kinds of Fraud: 1.Fraud in the performance of pre-existing obligation . Time of Comission Fraud may be past or future.Deliberate and intentional evasion of the normal fulfillment of obligations. or delay. or a willfull ommission. are liable for damages. the provisions of Articles 1171 and 2201. Distinction between Fraud and Negligence DOLO CULPA There is deliberate intention to cause damage or prejudice Liability arising cannot be mitigated Although voluntary. DAMAGES ARISING FROM FRAUD . negligence. but such liability may be regulated by the courts.

Except in cases expressly specified by the law. Specified by law 2.Creditors have the rights to revoke acts which the debtor may have done to defraud them. no person shall be responsible for those events which could not be foreseen. Demand for the fulfillment of the specific performance.Presumptions are rebuttable. Accion pauliana ACCION SUBROGATORIA . 4. save those which are inherent in hi s person. 3.The receipt of the principal by the creditor without reservation with respect to the interest. Assumption is that March has also been paid. RESERVATION . Gen.If the debt produces interests. fault will apply. may exercise all the rights and bring all the actions of the latter for the same purpose. Examples: Principal: P5. payment of the principal shall not be deemed to have been made unless the interests have been covered.**When negligence in bad faith. Assumption of risk Requisites of Fortuitous Events: 1. . 2. and then obtain therefrom the satisfaction of his own credit. 1174.00 Interest: P50/month 1st Par C paid P5.000 (Principal) in the month of January. ** Reservation should be made: 1st Par Receipt should reveal that such payment does not include the interest. The receipt of a later installment of a debt without reservation as to prior installments. they may also impugn the acts which the debtor may have done to defraud them. shall give rise to the presump tion that said interest has been paid.Usurious transactions shall be governed by special laws. The credit of a person against the third person is certain.000. Assumption is that INTEREST (P50. (inheritable) ACCION PAULIANA . Occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. Gen Rule . notes Page 6 . or when it is otherwise declared by stipulation. Declaration/stipulation by the parties 3. SUCCESSIVE RIGHTS OF THE CREDITOR: 1. 2. demandable and liquidated d. Impossible to foresee or impossible to avoid. Requisites of Accion Subrogatoria a. after having pursued the property in possession of the debtor to satisfy their claims. Rule .No liability on the part of the debtor Exceptions: 1. Art. deligence of a good father of a family.The creditors. If without 2.050 in the months Jan. 2. 1175. Obligor must be free from any participation in the aggravation of the injury resulting to the creditor (no concurrent negligence). SUCCESSIVE RIGHTS OF THE CREDITOR . or which. If without 1. Accion subrogatoria 4. Rate of interest Art. the whole occurrence is then humanized and removed from the rules applicable to the acts of God (NPC v CA) Art. Cause of the unforeseen events and unexpected occurrence or the failure of the debtor to comply with his obligation must be independent of the human free will. Art. USURIOUS TRANSACTIONS . FORTUITOUS EVENTS . shall likewise raise the presumpti on that such installments have been paid. Insolvency of the debtor b. 3. or when the nature of the obligation requires the assumption of risk. Rule: 1. Debtor's right against the 3rd person must be patrimonial.00) is said to have been paid also 2nd Par C paid for P5. Feb and April. Right to attahment of the properties which the debtor may own (writ of attachment) 3.When the effect is found to be partly resulting from the participation of man. were inevitable. Gen. Malicious or negligent inaction of the debtor c.Action the creditor may exercise in place of the negligent debtor in order to preserve or recover for the patrimony of the debtor the product of such action. whether due to his active intervention or neglect or failure to act. 1177. that required by law. though foreseen. Effect of concurrent negligence: . Stipulated by the parties. 1176. 2nd Par Receipt should reveal that payment made on April is for March parment.

1197.Subject to the laws. Credit should be prior to the alienation 2. Art. 1179. is demandable at once. Possible 3. Future and Uncertain event 2.Obligation arises by the happening of the event b) Resolutory . Nontransmissibility by their nature 3. simple or multiple.  If B dies. 1180. Term .Obligation is extinguished by the happening of the event Gen. Gen Rule . there must be fraudelent intent Period of prescription is 4 years. □ 2 KINDS OF CONDITION a) Suspensive . PURE VS CONDITIONAL OBLIGATION . accessory and principal. Fraudelent act 4. positive and negative.not certain but must necessarily happen.debtor. alternative and facultative. **Both parties can still agree to change the period fixed by the court. Art. PURE . joint and solidary. notes Page 7 . all rights acquired in virtue of an obligation are transmissible.All rights acquired by virture of an obligation are transmissible Exception 1. Not essential that credit is prior to the alienation Credit should be prior to the alienation Art. individual and collective. if there has been no stipulation to the contrary. TRANSMISSIBILITY OF RIGHTS . with a term. ** Creditor has to ask the court to fix a period. real and personal. Conditions: 1. **Correlate with Art.Aquisition of rights/extinguishment of right depends on the event which consitutes condition. **Court can not force the debtor to comply.Resolutory is DEMANDABLE AT ONCE.Requisites of Accion Pauliana 1. possible and impossible.When the debtor binds himself to pay when his means permit him to do so. Express stipulation 2.PURE obligation is DEMANDABLE AT ONCE. B-creditor  If A dies.Every obligation whose performance does not depend upon a future or uncertain event. 1178. without prejudice to the effects of the happ ening of the event. CHAPTER III: DIFFERENT KINDS OF CIVIL OBLIGATIONS PRIMARY OBLIGATION SECONDARY OBLIGATION Pure. or upon a past event unknown to the parties. divisible and indisible. OBLIGATION DEPENDENT ON TIME . Rule . the obligation shall be deemed to be one with a period. . subject to the provisions of Article 1197. Non transmissbility by law Example: A. conventional and penal. Unilateral and bilateral. B can claim against the estate of A. with a penal clause. CONDITIONAL . B's right to claim is transmissible to his heirs. Unknown past 4. 3rd person who received is an accomplice Distinction of Accion subrogatoria versus Pauliana ACCION SUBROGATORIA Intent to defraud creditors is required No period of prescription ACCION PAULIANA If contract rescinded is onerous.Performance does not depent on anything. legal. Every obligation which contains a resolutory condition shall also be demandable. Debtor has a subsequent contract giving advantage to a third person 3. determinate & generic.

Art. Pre-existing obligation 2.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. Juridical . Gen Rule . good customs. 1184. the obligation shall take effect in c onformity with the provisions of this Code.The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.Depends exclusively upon chance or will of the third person or other factors and not upon the contracting parties. as well as the extinguishment or loss of those already acquired. MIXED . Negative impossible things Impossibility may either be: 1. CONDITIONAL OBLIGATION .In conditional obligations. Simple and renumentary obligation 4.When the fulfillment of the condition depends upon the sole will of the debtor. Art. In obligations to do and not to do. If the obligation is unilateral. or if it has become evident that the event cannot occur. morals. KINDS OF CONDITION (cause or origin). the fr uits and interests during the pendency of the condition shall be deemed to have been mutually compensated. Art.VOID ** If fulfillment depends solely on the will of the CREDITOR . notes Page 8 . ** Always valid 3. Divisible obligation 3. the condition shall be deemed fulfilled at such time as may have probably been contemplated. unless from the nature and circumstances of the obligation it should be inferred that the intention o f the person constituting the same was different.VALID 2. Exceptions: 1. 1182. Physical 2. 1185. shall retroact to the day of the constitution of the obligation.Obligations are extinguished. CONSTRUCTIVE OR PRESUMED FULFILLMENT .Depends upon the will of the contracting parties and other circumstance. Reason: One must not be made to be excused by his own fault. the acquisition of rights.With intention of the obligor/creditor to prevent fulfillment of the condition with actual prevention of the compliance. the courts shall determine. POSITIVE OBLIGATIONS . Art. and public policy. The condition not to do an impossible thing shall be considered as not having been agreed upon.contrary to law. the retroactive effect of the condition that ha s been complied with. the conditional obligation shall be void. Art. shall depend upon the happening of the event which constitutes the condition. If no time has been fixed. 1181.The effects of a conditional obligation to give. CASUAL . that part thereof which is not affected by the impossible or unlawful condition shall be valid. IMPOSSIBLE CONDITIONS .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. 1186. Kinds of Condition as to cause or origin: 1. ** Effective for a determinate time. Nevertheless. NEGATIVE CONDITIONS . POTESTATIVE .and those which restricts constitutional rights. beari ng in mind the nature of the obligation. Gen Rule: Retroacts to the DAY the OBLIGATION was CONSTITUTED.Impossible conditions. Constructive Fulfillment . the debtor shal l appropriate the fruits and interests received. rule on PAR 2 of ART 1185 is controlling. the time which the parties contemplated is controlling. once the condition has been fulfilled.Art.VALID **Resolutory Potestative (Facultative) . If the obligation is divisible. in each case.Depends upon the will of one of the parties. 1183. ** Obligation expires when the time has lapsed or if it has become indubitable that the event will not take place. those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. 1187. 2nd Par Taking into account the nature of the obligation. ** Correlate with 1179. when the obligation imposes reciprocal prestations upon the parties. ** If fulfillment depends solely on the will of the DEBTOR . Testamentary disposition 5. RECIPROCAL OBLIGATIONS . Art. ** If there is no perio. If it depends upon chance or upon the will of a third person.

Rescision + damages (by the debtor) . EFFECT OF OBLIGATION . he shall have no other right than that granted to the usufructuary. Art. the impairment is to be borne by the creditor. RESOLUTORY CONDITION . deterioration or improvement of the thing. Note: if payment was not by mistake: 1. the creditor may choose between the rescission of the obligation and its fulfillment. shall return to each other what they have received. (5) If the thing is improved by its nature. usufruct (together with accessories). loss or deterioration of the thing during the pendency of the c ondition: (1) If the thing is lost without the fault of the debtor. or disappears in such a way that its existence is unknown or it cannot be recovered. He may also seek rescission. usufruct IMPROVEMENT (by nature) Benefits the creditor (retroactivity of conditional obligations Gen Rule .where the improvement is not susceptible of being taken away.Fruits and interests shall retain in each possession. Fulfillment + damages.When the conditions have for their purpose the extinguishment of an obligation to give.Right to cancel or resolve the contract or reciprocal obligation in ase of non-fulfillment on the part of one. 1190.The creditor may. even after he has chosen fulfillment. 1191. 1st Par Fulfillment of condition: return to each 2nd Par Loss. There should be consent by both parties. he shall be obliged to pay damages. (This will be deemed constituted.The power to rescind obligations is implied in reciprocal ones.PAR. improvement (Art 1191) 3rd Par Obligations to do and not to do (1187) : REVERSAL OF PERSONALITY Art. or goes out of commerce. the parties. notes Page 9 . This is understood to be without prejudice to the rights of third persons who have acquired the thing. upon the fulfillment of said conditions. UNILATERAL OBLIGATION: Example: A will give B 100K if A passes the Bar Exam . 1188. Ask for security if the debtor is about to be insolvent. RIGHT TO RESCIND . the obligation shall be extinguished. are laid do wn in the preceding article shall be applied to the party who is bound to return. take away the improvement provided this will not cause destruction to the pricipal object. with respect to the debtor. with indemnity for damages in either case. In case of the loss. deterioration. 1170) DETERIORATION Creditor bears the impairment Creditor can demand in two ways: 1. 1189. 2nd Par Right to debtor to recover what was paid by mistake Art. Art. OR 2. 1 1. 2. the improvement shall inure to the benefit of the creditor. The injured party may choose between the fulfillment and the rescission of the obligation. 1st Par Action to preserve creditors rights Ex. before the fulfillment of the condition. if the latter should become impossible. (2) If the thing is lost through the fault of the debtor. RECIPROCAL Example: A will sell the car to B if A passes the Bar Exam . the provisions of the second paragraph of Article 1187 shall be observed as regar ds the effect of the extinguishment of the obligation. unless there be just cause authorizing the fixing of a period. If the condition is fulfilled. with the payment of damages in eit her case.Fruits and interests should be with A. it is understood that the thing is lost when it perishes. bring the appropriate actions for the preservation of his right. (6) If it is improved at the expense of the debtor. ask the court to prevent alienation or concealment pendente conditionae. the provisions which. WITHOUT FAULT LOSS Obligation is extinguished WITH FAULT Value of the thing + damages (Art. 2. there should be a recovery unless a pure donation was intended. The court shall decree the rescission claimed. in case one of the obligors should not comply with what is incumbent upon him. Given to the injurred party who may choose to demand Fulfillment or Rescision. in accordance with Art icles 1385 and 1388 and the Mortgage Law. RIGHT TO RESCIND . the following rules shall be observed in case of the improvement. the debtor can: 1.When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give. (4) If it deteriorates through the fault of the debtor. As for the obligations to do and not to do. (3) When the thing deteriorates without the fault of the debtor. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. If the condition is not fulfilled.Usufructory Rights. ACTION TO PRESERVE AND RECOVER . no recovery because of retroactivity 2. or by time.

Certain 3. while "IF" . In this case. Requisites of a Period: 1. Kinds of Period: 1. Suspensive 3. BREACH OF BOTH PARTIES . 1194. Liability of first infractor 2. Rule for rescision.. If the obligation has NOT BEEN PERFORMED yet. Possible A DAY CERTAIN . JUST PREPAYMENT Apply the Doctrine of Estoppel notes Page 10 .when parties "intended to" ** Phrases as "As soon as" . Expression a. court will leave them as they are. Future 2. the court may: a. Dying Difference between period and condition: AS TO CONDITION PERIOD Fulfillment Influence on the obligation Event is uncertain future. 1195. 2. although it may not be known when. the injurred party should apply to the court a decree of rescision. shall be demandable only when that day comes. If the INJURED PARTY has already PERFORMED. CANNOT extrajudicially rescind IF the other party OPPOSES the RESCISION.Period. Resolutory b. unknown past. and it shall be regulated by the rules of the preceding Section. Effects: . OBLIGATIONS WITH A PERIOD . future and possible.In case of loss. the obligor being unaware of the period or believing that the obligation has become due and demandable. 1193. A day certain is understood to be that which must necessarily come. Legal b. the same shall be deemed extinguished. Ex. Art. IMROVEMENT . can refuse to perform if the other party is not yet ready to comply. If it can't be determined.Obligations for whose fulfillment a day certain has been fixed. but terminate upon arrival of the day certain.conditional Art. Art. Definiteness a. 1192. the liability of the first infractor shall be equitably tempered by the courts.Sought to be avoided thus this article is applied. Time Will of the debtor May refer to unknown past It depends on the will of the debtor. extrajudicial declaration of the party willing to perform would suffice. Implied .fixed date or time b. Fix a date for the debtor to perform b. PAYMENT BEFORE MATURITY . deterioration or improvement of the thing before the arrival of the day certain.Anything paid or delivered before the arrival of the period. If the uncertainty consists in whether the day will come or not. (Does not carry with it retoractive effect. LOSS.Given to the injurred party who may choose to demand Fulfillment or Rescision. Definite . Sources: a. with the fruits and interests. Event is Certain. Art. No effect on existence but only in their demadability or performance. 1.same with conditional a. If it cannot be determined which of the parties first violated the contract. may be recovered. the rules in Article 1189 shall be observed. Indefinite 4. Exceptions: 1. Judicial .In case both parties have committed a breach of the obligation. 1. the obligation is conditional. this merely impowers the court to fix a period. must be possible Gives rise or extinguishes the obligation. Gen. and each shall bear his own damages. Conditional/Stipulated by the parties c. UNJUST PAYMENT (Solutio indebiti) . Rule: POWER TO RESCIND is IMPLIED in RECIPROCAL ones. Express b.a day which will necessarily come.fixed by court 2. Obligations with a resolutory period take effect at once. DETERIORATION. Always to the future If dependent on the debtor. This right is not absolute.

Violation of any undertaking 5.The debtor shall lose every right to make use of the period: (1) When after the obligation has been contracted. Obligation is payable on demand 3. When period is fixed by law 2. CONJUNCTIVE 2 or more prestations must be performed.Tenor of the obligation as to who will be favored. in consideration of which the creditor agreed to the period. Failure to furnish the guarantee or security 3.With knowledge on the period.. notes Page 11 . it is presumed to have been established for the benefit of both the creditor and the debtor.Before the debt matures (principal) . 4. ALTERNATIVE .right prescribes 5 years after premature payment. 1196. Impairment of guarantee by his own acts or by FE . Gen Rule . unless he immediately gives new ones equally satisfactory. (2) When he does not furnish to the creditor the guaranties or securities which he has promised. When to recover: . unless he gives a guaranty or security for the debt.Only one must be performed among the choices B.Benefit of both parties. The creditor cannot be compelled to receive part of one and part of the other undertaking. Once fixed by the courts. 2. FACULTATIVE . Art.2 or more prestations the debtor may choose from among.If the obligation does not fix a period.Whenever in an obligation a period is designated. A. Term is specified by parties ** Correlate this article with Art.One principal prestation but 2 or more substitute. INSTANCES WHERE THE DEBTOR LOSE THE RIGHT TO MAKE USE OF THE PERIOD . No period fixed in the obligation. 1197. 1180. 1199. (5) When the debtor attempts to abscond. ** Note: On or Before Definite date Debtor benefited Both Upon demand Creditor benefited Art. (3) When by his own acts he has impaired said guaranties or securities after their establishment. If it depends upon the will of the debtor Instances where the Courts cannot fix a period: 1. the courts may fix the duration thereof.After debt matures (interest) . Attempt to abscond. In every case. (4) When the debtor violates any undertaking. .Use of OR. Instances where the court fixes the period: 1. he becomes insolvent.Apply the Doctrine of Estoppel .EXCEPTION: guarantee or security 2. Art. . the period cannot be changed by them.Presumption is ALTERNATIVE.EXCEPTION: present a new one equally satisfactory. BENEFIT OF THE DESIGNATION OF THE PERIOD .A person alternatively bound by different prestations shall completely perform one of them. 1198. but from its nature and the circumstances it can be inferred that a period was intended. Exception . Instances where the debtor loses the right to make use of the period: 1. Insolvency . ALTERNATIVE OBLIGATIONS . Gen Rule: . unless from the tenor of the same or other circumstances it should appea r that the period has been established in favor of one or of the other. the courts shall determine such period as may under the circumstances have been probably contemplated by the p arties. INSTANCES WHERE THE COURT FIXES THE PERIOD . The courts shall also fix the duration of the period when it depends upon the will of the debtor. and when through a fortuito us event they disappear. Art. DISJUNCTIVE .if creditor is in bad faith.

1203. there are two instances that may arise: 1. 2.The choice shall produce no effect except from the time it has been communicated. ** If only one is praticable. only one is practicable.Debtor has the right to choose Exception . **If the debtor is unable to choose.water from Mars. 1st Par 1. obligation is extinguished. the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor.Use of AND Art. Gen Rule . or that of the service which la st became impossible. Becomes SIMPLE/PURE OBLIGATION 3. unless it has been expressly granted to the creditor. **Unliateral declaration of will . Until then the responsibility of the debtor shall be governed by the following rules: notes Page 12 . Art. 2. Becomes IRREVOCABLE. obligation is VOID. ** Notice may be in any form. B . CHOICE . Example: A . Art. Compliance has become impossible 2nd Par Indemnity: VALUE of the LAST thing lost + DAMAGES 3rd Par Damages other than the value of the last thing or service may also be awarded ** Apllies only to cases where the debtor has the right to choose. Damages other than the value of the last thing or service may also be awarded. Art.. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound.SIMPLE OBLIGATION. **If all prestations are impossible or unlawful.car Art.The creditor shall have a right to indemnity for damages when. all the things which are alternatively the object of the obligation have been lost.1 kilo of shabu. All objects have been lost 2. Limit the obligation to the object selected. or the compliance of the obligation has become im possible.Express stipulation Limitations to the Rule: 1. The debtor shall have no right to choose those prestations which are impossible. Right to choose goes to the creditor because this constitutes a waiver of the right of the debtor. 1200.If through the creditor's acts the debtor cannot make a choice according to the terms of the obligation. Not unlawful 3. 1205. ALTERNATIVE . Not impossible 2. unlawful or which could not have been the ob ject of the obligation. SUBSTITUTED PERFORMANCE . 1202.when the debtor does not want to make a choice. the creditor may ask the court for a 3rd party to choose.the other party need not consent on the choice made by one. C. RIGHT TO INDEMNITY FOR DAMAGES . CREDITOR IS AT FAULT . through the fault of the debtor. Art.2 or more prestations must be performed. Should be the object of the obligation Effects of Notice of Choice: 1.When the choice has been expressly given to the creditor. 1201. . Solidary The choice of one is the choice of the rest. Logic: Because the debtor has been deprived of the right to choose. obligation is converted to simple/pure obligation. ** FE causes the loss of the thing communicated. **Right to choose is not lost by the mere fact that the party entitled to choose delays in making his choice. CREDITOR HAS THE RIGHT OF CHOICE . The indemnity shall be fixed taking as a basis the value of the last thing which disappeared. creditor's consent thereto would bring about a NOVATION of the obligation. EXCEPTION to the RULES above: . the latter may rescind the contract with damages.Debtor has chosen a prestation which could not have been the object of the obligation.The right of choice belongs to the debtor. 1204. RIGHT OF CHOICE . For Plurality: Joint all of them must guve their consent.

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. (2) If the loss of one of the things occurs through the fault of the debtor. Mancomunada simple 3. Nature of the obligation 4. some or all of the prestations should become i mpossible. proportionate. and when the substitution has been made and the substitute object was lost. the object is still at the possession of the debtor. 1207. extinguished. Charge of condition is imposed upon heirs 5.If the debtor chose to deliver the substitute which was subsequently lost. 1208. also with indemnity for damages.If loss is due to FE. the creditor may choose on the remaining 2. Art. the debtor MUST preserve all prestations. entire compliance with the prestation.Compliance is in parts. "we promise to pay" used by two or more signers Art. (3) If all the things are lost through the fault of the debtor. SOLIDARY OBLIGATION . negligence or fraud . Creditor can't demand substitute. JOINT OBLIGATION . it doesn't matter Exception: . IF: 1. 2. Words used to indicate Joint obligation: 1.Compliance of the obligation an be done in its entirety. Gen Rule: .If from the law. **Only one prestation bu allows for substitution. through the fault of the former. the creditor may choose for the value of any object + damages. the obligor is liable for the loss of the substitute on account of his delay. Law 2. which is still in force in respect to those which have no vice Creditor can choose from the remainder Obligation is extinguished.When only one prestation has been agreed upon. If loss is due to FAULT of the debtor.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. But once the substitution has been made. Mancomunada 2. (right to reimbursement) JOINT . The loss or deterioration of the thing intended as a substitute. Exceptions: 1.If the inteded substitute is lost. One is lost due to FE. with a right to damages. the accessory being only the means to facilitate payment Nullity of one prestation does not invalidate the obligation Nullity of the principal invalidates the obligation. has disappeared.JOINT □ Concurrence of several debtors/creditors does not necessarily assume that all of them an demand to fulfill. Gen Rule: . Pending selection by creditor. Pro rata 4. Value of the object lost + damages 3. Distinction between Alternative and Facultative Obligations: AS TO ALTERNATIVE FACULTATIVE Contents of the obligation Nullity of prestations Variuos prestations all of which constitute parts of the obligation Only the principal constitutes the obligation. loss of one alternative gives rise to liability. Debtor is liable for loss of PRINCIPAL. or the nature or the wording of the obligations to which the preceding article refers the contrary does notes Page 13 . creditor may: a. or the price of that which. There is a solidary liability only when the obligation expressly so states. he shall perform the obligation by delivering that which the cre ditor should choose from among the remainder. or that which remains if only one subsists. through the negligence of the obligor. If ALL are lost through the fault of the debtor. the obligation is called facultative. BUT may be given to the creditor Effect of loss Extinguishment: Impossibility of ALL (fortuitous events) Effect of loss (fault Debtor is not liable if there are still available of debtor) If choice belongs to creditor. Choice Debtor. or that each one of the latter is bound to render. but the obligor may render another in substitution. Stipulated by the parties 3. Imputed by final judgement upon several litigants SOLIDARY . The same rules shall be applied to obligations to do or not to do in case one. debtor is still liable. obligation still subsists. Choose from among the remaining + damages b. . the creditor may claim any of those subsisting. does not render him l iable. Only the DEBTOR Extinguishment: Impossibility of the PRINCIPAL. the choice by the creditor shall fall upon the price of any o ne of them. FACULTATIVE . or when the law or the nature of the obligation requires sol idarity. Art. 1206.

2010 B. Example: D1 and D2 are debtors of C1.000 on Dec 21.000 subject for reimbursement of the other co-debtor who did not pay. the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors. obligation is converted to MONETARY Consideration. 2013.000 on Dec 21. Joint divisible obligation . 1209. the cre dits or debts being considered distinct from one another. Creditors must proceed against all the joint debtors.If the division is impossible. subject of A/B may pay the whole P10. INDIVISIBLE JOINT OBLIGATION . P10. Extent of liability of the debtor a.juridical tie that binds the obligation May be: 1. 2012.Creditor must proceed to all the debtors.Pay P5. B.Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions. 2012 If X demands on Jan 1.SOLIDARITY .Pay P5. B/C may pay. Joint Indivisible 3. Nor does solidarity of itself imply indivisibility. One will be liable for his proportionate share. If one is insolvent. INDIVISIBLIT . 5.000) notes Page 14 . subject to the Rules of Court governing the multiplicity of suits.defense res judicata does is not extended to the others 2. 1210. A and B must pay pay P5. Joint Divisible 2. Extent of the Right of the Creditor a.000 + damages for the delay. SOLIDARY DESPITE DIFFERENT TERMS AND CONDITIONS . Art. b. Defect of one debtor does not affect the obligation or the others c. Co-debtors bot liable for the share of the insolvent debtor. A. and the debt can be enforced only by proceeding against all the debtors. 2011. the other is not liable. Joint and several 3. Solidary Divisible 4. **Refer above Words used to indicate JOINT Obligations 1. 1212.Each one of the solidary creditors may do whatever may be useful to the others. 1211. 1. If A is insolvent. Insolvency of one does not increase the responsibility of the others nor does it authorize a creditor demand anything from his codebtors d. 2011 C.. Debtor must deliver to all creditors. Demand by one creditor upon one debtor produces the effects of default only with respect to the creditor who demanded and the debtor on whom the demand was made. If X demands on Jan. the others shall n ot be liable for his share. . 4. Art. SOLIDARY CREDITORS . C2 and C3 who are solidary creditors (P30. A/B/C may pay the whole P20. or C must pay P20.The indivisibility of an obligation does not necessarily give rise to solidarity.. "I promise to pay" .not appear. **To each his own. Effects of Joint Indivisible Obligation: 1. 5. In solidum 4. Divisible vs Indivisible . reimbursement of the other co-debtor who did not pay Art.000 plus damages for the delay. Interruption of prescription of the judicial demand of one creditor upon the debtor does not benefit the other creditors nor interrupt the prescription as to the other debtors. A will only If X demands on Jan 1. Example: A.000 + damages for the delay. 3. Solidary Indivisible Art. Mancomunada solidaria 2. Individually and collectively Effects of Joint Obligations 1. 2. Only with respect to his particular share b. If one of the latter should be insolvent. Followed by the signature of two or more persons.Pay P10. Demand must be made upon all creditors. the right of the creditors may be prejudiced only by their collective acts. If one does not comple. but not anything which may be prejudicial to the latter. 1.000 on Dec 21.object of the obligation Joint vs Solidary . Creditors prejudiced only by their collective acts 2.000 subject for reimbursement by A.

He who made the payment may claim from his co-debtors only the share which corresponds to each. **payment to any other will not extinguish the obligation except insofar as the payee's share is concerned. D1 will bear half the share of D3. shall be liable to the others for the share in the obligation corresponding to them. in case the debt had been totally paid by anyone of them before the remission was effected. Art. . Example: D1. reimburse his share to the debtor paying the obligation.000. Rule .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. novation. . shall extinguish the obligation. without prejudice to the provisions of Article 1219.The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. payment must be made to solidary creditor who made the demand (judicial or extrajudicial). 1218. DEMAND OF CREDITOR . Exception . so long as the debt has not been fully collected. compensation.Assignee is the co-creditor Example: .Will be discussed on the Chapter on Extinguishment. the creditor may choose which offer to accept. because of his insolvency. . converted into joint obligation as to co-debtors.C1 assigned his right to X (TP).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.Assignment should be with the consent of C2. but if any demand. notes Page 15 . Gen rule . D2. as well as he who collects the debt. EXTINGUISHMENT .If with CONSENT of the other co-creditors.Example: . in proportion to the debt of each. such share shall be borne by all his co-debtors.Payment made by one of the solidary debtors extinguishes the obligation. D2 paid P2. . EFFECTS OF PAYMENT . compensation. 1216. If D3 is insolvent.Novation. C3 and C4 for it to be valid.The debtor may pay any one of the solidary creditors.Prohibited.A solidary creditor cannot assign his rights without the consent of the others.D2 cannot ask for reimbursement from D1. 1213. Gen.The debtor may pay any one of the solidary creditors. confusion or remission of the debt. If two or more solidary debtors offer to pay.Solidary creditor cannot assign his rights. ** If remission or condonation is prior to payment. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others. CREDITOR TO DEBTOR .000. 1214. 1215.If there is demand. extinguishment of the obligation 2nd Par Reimbursement by the other co-debtors. payment should be made to him. C1 condoned/remitted the liability of D1. share + interest from the time of maturity of obligation) 3rd Par By insolvency of one debtor he can not reimburse his share. 1217. Art. Art. REMISSION OR CONDONATION . If the payment is made before the debt is due.Remission. no interest for the intervening period may be demanded. Exceptions . Art. made by any of the solidary creditors or with any of the solidary debtors. ASSIGNMENT OF RIGHT . Period of Prescription is: Written 10 years Verbal 6 years Art. thus D1 must pay P500. with the interest for the payment already made. The creditor who may have executed any of these acts. Art. When one of the solidary debtors cannot.Valid as to the debtor but bot with respect to the co-creditors whose rights subsists and can be enforced against the creditor who performed prejudicial acts . he can assign his rights to a Third Party . has been made by one of them. 1219. merger/confusion ** Correlate with Art 1215. judicial or extrajudicial. 1st Par Anyone of the solidary debtor can pay.Prejudicial Act . PRESCRIPTIVE PERIOD . Art. and D3 owes C1 P3. it brings abour the desired effect.

000 in a lumpsum basis . so you can only compel me to give my share. Exceptions: a. With respect t o those which personally belong to the others. Personal to the Debtor . DEFENSES AVAILABLE TO SOLIDARY DEBTORS . 1220. If there was fault on the part of any one of them.Becomes indivisible 2.One capable of partial performance Indivisible .Law so provides ** A debt shall not be be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered as the case may be. without prejudice to their action against the guilty or negligent debtor. Effects of the Defenses: 1. for the price and the payment of damages and interest.Complete defense  Vices of consent  Cause of obligation has prescribed  Entire obligation is void  Voidable 2. DIVISIBLE/INDIVISIBLE OBLIGATION . Art. D1 will bear half the share of D3. Conventional . 1234) notes Page 16 . the thing is lost or the performance has become impossible after one of the solidary debtors h as incurred in delay through the judicial or extrajudicial demand upon him by the creditor.. 1222.  Example: the co-debtor's share is not yet due. in actions filed by the creditor. (1148a) Defenses Available to the Solidary Debtors are: 1. the provisions of the preceding paragraph shall apply.Complete defense (GEN RULE)  Minority  Insanity  Fraud .Avail himself thereof only as regards that part of the debt for which the latter is responsible. damages and interest Co-debtors have right against the guilty debtor Art. or pertain to his own share. does not entitle him to reimbursement from his co-debtors. thus D1 must pay P500. If personal to the debtor: only him will be benefited 3.The remission of the whole obligation. **Correlate with Art 1219.If D3 is insolvent. Art.Nature of the object Example: car 3. obtained by one of the solidary debtors. 1221.A solidary debtor may. If from Nature: all co-debtors will be benefited 2. damages and interest Co-debtors have right against the guilty debtor If with fault Liability: value.Partial Defense  Special terms or conditions affecting his part of the obligation  Non-fulfillment of condition imposed regarding his share 3. If through a fortuitous event. Divisible . (1147a) If without fault (FE or FM) No liability: obligation is extinguished If without fault but after default/delay With liability: value.If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors.Common agreement Example: Payment of P10. avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him.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. the obligation shall be extinguished. he may avail himself thereof only as regards that part of the debt for which the latter are responsible . 1223. all shall be responsible to the creditor. Obligation has been substantially performed in good faith (Art. Personal to the Creditor . Legal . Natural or absolute . Nature of the Obligation .Deliver in its entirety Kinds of Indivisibility 1. EFFECT OF REMISSION . If personal to the co-creditor: partial defense Art. EFFECT OF LOSS OR IMPOSSIBLITY .

Serve as a substitute . 1209. Serve as a punishment . (Fulfillment becomes Alternative) notes Page 17 . Nevertheless. Legal Penal Clause . the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance. When the creditor accepts performance. Art. Singing 1. the performance thereof should become impossible without his fault. Gen. obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. damages shall be paid if the obligor refu ses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. save in the case where this right has been expressly reserved for him. In obligations not to do. divisibility or indivisibility shall be determined by the character of the prestation in each parti cular case. Art.Exceptions: a.Indivisible IF: provided by law or stipulated by the parties 4th Par To do and not to do Ex.For the purposes of the preceding articles. and without protest. 1225. 3. even though the object or service may be physically divisible. **Correlate with Art. unless this right has been clearly granted him.In obligations with a penal clause.Serve as a punishment for non-fulfillment Kinds of Penalty 1. the accomplishment of work by metri cal units. REASONS FOR IMPOSING PENAL CLAUSE 1. First Classification: a.Mere non-performance of the principal obligation gives rise to damages. (1152a) PENAL CLAUSE . knowing its completeness.A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with his undertaking.When both the principal contract and the penal clause may be enforced in non-performance. 1226. Rule: . Express stipulation despite the presence of the penalty clause. Second Classification a.The debtore can not exempt himself from performance Exceptions: Express stipulation by the parties.Agreed by the parties 2.The debtor cannot exempt himself from the performance of the obligation by paying the penalty. PENAL OBLIGATIONS . Joint . To ensure compliance . b. INDIVISIBLE JOINT OBLIGATION .Imposed by law b. the obligation is deemed fully performed. Debtor refuses to pay the penalty imposed. Conventional Penal Clause . RULE ON PENALTY AND PRINCIPAL . if there is no stipulation to the contrary. PRESUMPTIONS OF INDIVISIBLE OBLIGATIONS .For indemnity and payment of interest 3. 3rd Par From Divisible . Neither can the creditor demand the fulfillment of the obligat ion and the satisfaction of the penalty at the same time. (1151a) 1st Par Indivisible Definite and not susceptible to partial performance Ex. (Art. Accomplishment by metrical units 3. Purpose is to pay a certain amount Determined by the character of the prestation 2nd Par Divisible Ex. Debtor is guilty of fraus in the fulfillment of the obligation.Penalty takes the palce of indemnity for damages and payment of interest Exceptions: 1. When the obligation has for its object the execution of a certain number of days of work. P5000 to be paid in lumpsum basis Ex. 1224. Execute work for a # of days 2. . Gen Rule: . 1234) b. Art.Makes heavier the obligation 2. Subsidiary . 2.Only the penalty may be asked. 1227. if after the creditor has decided to r equire the fulfillment of the obligation. an obligation is indivisible if so provided by law or intended by the parties. However. The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.Is an accessory undertaking to assume greater responsibility in case of breach. However.1234) Art. it shall be divisible. Obligation has been substantially performed in good faith (Art. or analogous things which by their nature are susceptible of partial performance. the penalty may be enforced. The debtors who may have been ready to fulfill their promises shall not contribute to the in demnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists. **Debtors ready to fulfill shall not be liable.

Even if there has been no performance. When the obligation has been partly complied with by the debtor.The nullity of the penal clause does not carry with it that of the principal obligation. PROVING ACTUAL DAMAGES NOT NEEDED . notes Page 18 . 1229. 1228.If Principal is Null. NULLITY OF PENAL CLAUSE . 2. (Fulfillment becomes Alternative) Gen Rule: . Reasons for Reduction of Penalty: 1.Creditor cannot demand both fulfillment and the penalty. .Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. Art.Exceptions: .The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. REDUCTION OF THE PENALTY BY THE COURTS .Express stipulation by the parties. Art. Exception: . Obligation is irregularly complies 3. Principal still exist.Express grant of such right. Penalty is iniquitous or unconscionable. The nullity of the principal obligation carries with it that of the penal clause. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. 1230. even if htere has been no performance at all. Art.If Penalty is Void. Penalty is void .

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