CHAPTER THREE Conditional Obligation - one whose effectivity is subordinated to the
DIFFERENT KINDS OF OBLIGATIONS fulfillment or non-fulfillment of a future and uncertain act or event.
Sec. 1. - Pure and Conditional Obligations
Art. 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.
Pure Obligation- one whose effectivity or extinguishment does not
depend upon the fulfillment or non-fulfillment of a condition or upon
the expiration of a term or period.
Elements:
a) Not subject to a condition
b) Not subject to a term
 Characterized by the quality of immediate demandability,
but there must be a reasonable period of grace.
 *Immediate demandability: It does not mean outright but
speaks of a reasonable time; depends on the nature and
complexity of the obligation.
 Simple Obligation does not equal to pure Obligation.
Former speaks of an obligation with only one prestation,
while the latter speaks of an obligation that does not
depend on a condition or period.
Obligations that are immediately demandable:
1. Pure obligations (Art 1179)
2. Obligations with resolutory condition (Art. 1179, par.2)
3. Obligations with resolutory period (Art. 1193, par.2)
4. Obligations with a condition not to do an impossible thing
(Art. 1183, par.2)
2 Types of Events:
1. Condition – a future and uncertain event upon which the
acquisition and resolution of rights is made to depend by those who
execute the juridical act
Characteristics:
 Future
 Uncertain – may or may not happen
 Possibility
2. Term/Period – an interval of time, which, exerting an influence on
an influence on an obligation as a consequence of a juridical act,
either suspends its demandability or produces its extinguishment.
Characteristics:
 Future
 Certain although not known when it will happen
**Suspensive Condition and Term – Happening of which will arise to
acquisition of rights
**Resolutory Condition and Term – Happening of which will result to
the extinguishment of an obligation
Is a past event unknown to the parties be considered as a condition?
According to Sir Ulan, quoting Tolentino, a past event
cannot be “future and uncertain”, which are the elements of a
condition, and thus cannot be one. What can be a condition is the
future knowledge or proof of a past event unknown to the parties, but
NOT the event itself. Thus the contract or obligation arises, not when
the event happened or the fact came into existence, which would be
in the past, but when the proof of such fact or event is presented,
which would be in the future.
Example: I will give you P50,000 if you could prove that Rizal
returned to the Catholic Church before he died.
Classification of Conditions:
1. Suspensive or Resolutory
 Suspensive – when the fulfillment of the condition results in
the acquisition of rights arising out of the obligations.
 Resolutory – when the fulfillment of the condition results in
the extinguishment of rights arising out of the obligation.
2. Potestative, Casual, or Mixed
 Potestative – when the fulfillment of the condition depends
upon the will of a party to the obligation.
 Casual – when the fulfillment of the condition depends
upon chance and/or upon the will of a third person
 Mixed – when the fulfillment of the condition depends partly
upon the will of a party to the obligation and partly upon
chance and/or will of a third person
3. Possible or Impossible
 Possible – when the condition is capable of realization
according to nature, law, public policy or good customs
 Impossible – when the condition is not capable of
realization according to nature, law, public policy or good
customs
4. Positive or Negative
 Positive – when the condition involves the performance of
an act
 Negative – when the condition involves the omission of an
act.
5. Divisible or Indivisible
 Divisible – when the condition is susceptible of partial
realization
 Indivisible – when the condition is not susceptible of partial
realization
6. Conjunctive or Alternative
 Conjunctive – when there are several conditions, all of
which must be realized
 Alternative – when there are several conditions, but only
one must be realized
7. Express or Implied
 Express – when the condition is stated expressly
 Implied – when the condition is tacit
Art. 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.
 fulfillment of the condition depends upon the sole will of the
 Should the debtor bind himself to pay when his means debtor, the conditional obligation shall be void. If it depends
permit him to do so, the obligation is one with a period and upon chance or upon the will of a third person, the obligation
not subject to a condition shall take effect in conformity with the provisions of this Code.
 Since the duration of the period is left to the discretion of
the debtor, it is subject to 1197 or where the courts shall fix
the duration of the period by which he shall pay the 2 kinds of Potestative:
obligation. Thus in cases falling under this article, creditor  simple potestative condition – presupposes not only a
should file an action to fix a period for the payment of the manifestation of will but also the realization of an external
obligation. act
e.g. “if you sell your house”; “If I go to Madrid, I promise to sell you
Indications of a term or period: my house”.
When the debtor binds himself to pay –
 when his means permit him to do so  purely potestative condition1 – depends solely and
 little by little exclusively upon the will
 as soon as possible
 from time to time e.g. “if I like it” or “if I deem it proper”; “I promise to sell you my house
on such date if I deem it convenient.”
 as soon as I have the money
 in partial payment Note:
 when in the position to pay Simple potestative condition approaches very well the nature of a
mixed condition. (Caguioa) Hence, it is valid.
Purely or strict potestative condition on the other hand destroys the
Art. 1181. In conditional obligations, the acquisition of rights, as efficacy of the legal tie. Note that it is only when the potestative
well as the extinguishment or loss of those already acquired, condition depends exclusively upon the will of the debtor that the
shall depend upon the happening of the event which constitutes conditional obligation is void. (Tolentino)
the condition.  Simple potestative – valid;
 purely potestative (creditor)– valid; purely potestative
(debtor) - void

a) Potestative on the part of the Creditor

- if the fulfillment of the condition is dependent upon the sole will of
the creditor the obligation is VALID

Suspensive Resolutory Example: I will give you a car on the condition that you go to Baguio
on or before Dec 10, 1965.
Condition precedent Condition subsequent
Results in the acquisition of Results in the extinguishment of b) Potestative on the part of the Debtor
rights arising out of the rights arising out of the
Potestative
obligations Casual obligations Mixed
i) Suspensive condition:
fulfillment of the fulfillment of the fulfillment of the condition
the - If a suspensive condition is solely dependent upon the will of the
The happening of the condition The happening of
obligation depends condition depends obligation depends debtor, the obligation is VOID.
gives birth to the obligation. extinguishes obligation
upon the will of a upon chance/or upon the will of a party
party not todemandable
the upon until
the willtheof immediately effective
a to the obligation and and Example: I’ll give you a diamond ring if I go to Tokyo this year.
happening of the
obligations thirdevent which demandable,
person partly upon without prejudice
chance
constitutes the condition to and/or
the will
happening
of a third of the ii) Resolutory condition:
resolutory
person. condition -A condition which is both potestative and resolutory is VALID, even
though the fulfillment of the condition is dependent upon the will of
If the condition is not E f fulfilled,
f e c t s If the condition is not fulfilled,
the debtor
no juridical tie is created. juridical relation is consolidated.
dependent on the The obligation The obligation and the
What is acquired
creditor: and thebycondition
the What is acquired
condition shallby the obligee
take Example: I’ll give you a car until I return from Baguio.
- obligee in and
condition the shall
constitution of in effect.
take effect. the constitution
(valid of the
and
the obligation (valid
obligation, is only mereand obligation are rights that are
enforceable)
hope
VALID and expectancy,
enforceable) subject to threat or danger of Art. 1183. Impossible conditions, those contrary to good
protected by law. extinction. customs or public policy and those prohibited by law shall
dependent on the annul the obligation which depends upon them. If the obligation
debtor: is divisible, that part thereof which is not affected by the
- condition and Art. impossible or unlawful condition shall be valid.
obligation, VOID 1182. The condition not to do an impossible thing shall be
(suspensive) When considered as not having been agreed upon.
Exception: the
- condition and 1
Referred to by Caguioa as strict potestative
obligation, VOID
(resolutory)
Possible conditions – those which are valid and allowed by law;
proper conditions.
Impossible conditions – contrary to good customs or public policy
or prohibited by law.
2 kinds:
1. Physically impossible – when the realization of the event
constituting the condition is incompatible with or contrary to nature.
2. Juridically impossible – when contrary to law, morals, good
customs, and public policy.
* Illicit conditions – those which tend to restrain or fetter the exercise
of those rights or powers arising from the natural or civil liberties of
man
* Immoral conditions – those which tend to compel a person to
execute an act contrary to good customs.
Note: In the case of illicit and immoral conditions, the illicit act
provided for in the contract must refer to that of one of the parties but
not where the illicit act is the act of a third person. The illicit character
of the act is not determined by the act or fact in itself, but by its
effects upon one of the parties.
Applicability:
The article applies only to contracts. It has no application to
gratuitous obligation (simple and remuneratory donations and
testamentary dispositions).
Effects:
1. Impossible condition on obligation to give/to do
(positive & suspensive)
 obligation is annulled
Example: I’ll give you P40,000 if you go to the moon this year.
2. Impossible condition on obligation not to do
 obligation is void (deemed not having been agreed upon);
hence obligation remains valid & subsequent => becomes
pure and simple
Example: D obliged himself to give C P40,000 if C does not go to the
moon this year.
*Impossible condition imposed on gratuitous obligation:
 condition is deemed not imposed; hence obligation is valid
and becomes pure and simple
Requisites for the nullity of an obligation with impossible
conditions:
1. Conditions are positive and suspensive
2. Obligation is a contract
3. Impossibility exists at the time of the creation of the
obligation
Art. 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.
Art. 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.
Positive conditions – those that depend on the fulfillment of an
event.
Negative conditions – those which depend on the non-happening of
an event.
 If the condition is positive (that an event should occur
within a determinate period, the obligation is extinguished
from the moment the period lapses or it has become
indubitable that the event will not take place.
Example: I’ll give you a car if you marry X on or before Dec
10, 1992. My obligation to give the car is extinguished if on
Dec 11, 1992 X is still single or if before Dec 10, 1992 X
dies, because by then it is evident that you can no longer
marry X.
 If the condition is negative (that some event would not
happen within a determinate time), the obligation becomes
effective from the moment the period lapses, or if it has
become evident that the event cannot occur.
Example: I’ll give you my car if you do not marry X on or
before Dec 10, 1992. If on Dec 11, 1992 you have not
married X, you can demand delivery of the car. If X dies
before Dec 11, 1992 you can, on the death of X demand
delivery of the car without waiting for Dec 11, 1992,
because it is evident that you can no longer marry X.
Art. 1186. The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment.
Constructive Fulfillment of Conditions
If the debtor prevents the creditor from fulfilling the condition of the
obligation, the condition is deemed fulfilled and the obligation
demandable.
It is essential that the obligor must have actually prevented the
obligee from complying and that it must have been voluntary and
willful.
Requisites:
1. Condition is suspensive
2. Debtor actually prevents the fulfillment of the condition
3. He acts voluntary/intention
Example: Dean Ulan will give Anjo P50,000 if Dean Ulan and Dean
Jara will run around the campus. If only Dean Jara only ran, Art 1186
will apply UNLESS if it was not Dean Ulan’s intention and fault not to
run.
*Underlying principle: A party to a contract may not be excused from
performing his promise by the non-occurrence of an event which he
himself prevented.
Exception:
• If in preventing the fulfillment of the condition the debtor
acts pursuant to a right, the condition will NOT be deemed fulfilled.
Applicable to:
• Suspensive and potestative (creditor)
• Suspensive and casual
• Suspensive and mixed
ART.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 recompensated. 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.
Retroactive effects of fulfillment of suspensive condition
(1) In obligations to give- An obligation to give subject to a
suspensive condition becomes demandable only upon the fulfillment
of the condition. However, once the condition is fulfilled, its effects
shall retroact to the day when the obligation was constituted.
When is an obligation constituted?
When the essential elements which give rise thereto concur.
Condition is not an essential element; it is only an accidental element
of the obligation.
The reason is because the condition is only accidental element of a
contract. An obligation can exist without being subject to a condition.
Consequently, once the event which constitutes the condition is
fulfilled thus resulting in the effectivity of the obligation, its effects
must logically retroact to the moment when the essential elements
which gave birth to the obligation have taken place and not to the
moment when the accidental element was fulfilled.
*Note:applicable only to consensual contracts (perfected upon
meeting of the minds) and not to real contracts(perfected by delivery)
(2) In obligations to do or not to do- No definite rule. The courts
are empowered by the use of sound discretion and bearing in mind
the intent of the parties, to determine in each case, the retroactive
effect of the suspensive condition that has been complied with. It
includes the power to decide that the fulfillment of the condition shall
have no retroactive effect or from what date such retroactive effect
shall take effect.
Retroactive effects as to fruits and interests in obligations to
give
• In reciprocal obligations-No retroactivity since the fruits and
interests are deemed to have been mutually compensated.
Example: On Jan 10, 1992 D obliged himself to give C a certain
ricefield and C agreed to give D a certain fishpond provided X passes
the CPA examinations. If X passes the CPA exam on Aug 10, 1992, C
is obliged to deliver the fishpond to D and D is obliged to deliver the
ricefield to C. However D is not obliged to deliver the fruit of the
ricefield to C. Neither is C required to give the fruits of the fishpond to
D.
• In unilateral obligations- There is usually no retroactive
effect because they are gratuitous. The debtor receives nothing from
the creditor. Thus, fruits and interests belong to the debtor unless
from the nature and other circumstances of the obligation it should be
inferred that the intention of the person constituting the same was
different.
Example: On Jan 10, 1992 D obliged himself to give C a certain
ricefield provided C passes the CPA exams. If on Aug 10, 1992 C
passes the CPA exams, D obliged to deliver the ricefield to C but not
the fruits received from Jan 10, 1992
Exceptions to the rule of retroactivity:
1. Real contracts
2. Successive contracts (those contracts whose fulfillment is
realized within a period of time; e.g. contract of lease, contract of
labor, life annuities)
Reason for retroactivity: The condition is only accidental, not
essential element of the obligation.
Limitation of Retroactivity Effect:
 If thing is lost through fortuitous event, debtor suffers the
loss because he is still the rightful owner. (basis: Art. 1164
-- ownership or personal right is only vested upon delivery)
Art.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.
Rights pending fulfillment of suspensive condition
(1) Rights of creditor- He may take or bring appropriate actions
for the preservation of his right, as the debtor may render
nugatory the obligation upon the happening of the condition.
 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 adeverse possessors to interrupt
the running prescriptive period;
 To have the rights annotated in the registry.
(2) Rights of the debtor- He is entitled to recover what he has
paid by “mistake” prior to the happening of the suspensive
condition.
Art. 1188, par. 1- Protection for the creditor
– file an injunction to stop the debtor
– does not necessarily always involves court action in spite
the wordings of the law.
i.e. registration
Art. 1188, par. 2- protection for the debtor
Obligation subject to Obligation subject to
suspensive condition period/term
There is no certainty if the It is certain that the
obligation will be fulfilled obligation will be fully
demandable and
enforceable.
Interests and fruits shall also Interests and fruits shall also
be delivered when the debtor be delivered when the
paid/delivered by mistake. debtor paid/delivered by
mistake.
Art. 1189. When the conditions have been imposed with the
intention of suspending the efficacy of an obligation
improvement, loss or deterioration of the thing during the
pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the
obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he
shall be obliged to pay damages; it is understood that
the thing is lost when it perishes, or goes out of
commerce, or disappears in such a way that its
existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without fault of the debtor,
the impairment is to be borne by the creditor.
(4) If it deteriorates through the fault of the debtor, the
creditor may choose between the rescission of the
obligation and its fulfillment, with indemnity for
damages in either case;
(5) If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor;
(6) If the thing is improved at the expense of the debtor, he
shall have no right that that granted to the
usufructuary.
Requisites:
(1) The obligation is a real obligation (to give);
(2) The object is a specific or determinate thing;
(3) The obligation is subject to a suspensive condition
(resolutory is also applicable accdg to ULAN)
(4) The condition is fulfilled; and
(5) There is loss, deterioration, or improvement of the thing
during the pendency of the condition
Application: The loss, deterioration or improvement should take
place after the obligation is perfected and before the condition is
fulfilled.
LOSSES
When is a thing lost?
a) When it perishes
b) When it goes out of commerce
c) When it disappears in such a way that its existence is unknown or
it cannot be recovered.
Loss without debtor’s fault
- The debtor’s obligation is extinguished if the thing is lost without
his fault
Loss due to debtor’s fault
- The debtor’s is obliged to pay damages if the thing is lost due
to his fault
DETERIORATION
What is deterioration?
A thing deteriorates when its value is reduced or impaired without the
fault of the debtor
Without debtor’s fault
- Impairment to be borne by the creditor
With debtor’s fault
- Obligation is converted into one of indemnity for damages
- The creditor can choose between:
a) Rescission plus damages, or
b) Fulfillment of the obligation plus damages
IMPROVEMENT
What is improvement?
- A thing is improved when its value is increased or enhanced by
nature or by time
a) By nature or by time
- shall inure to the benefit of the creditor
b) At the debtor’s expense
- debtor shall have no other right than that granted to a usurfructory
Art. 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 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.
Effect of Resolutory Obligation BEFORE fulfillment
 Obligor/debtor has hope or expectancy during the
pendency of the condition
 If resolutory condition happens, debtor will reacquire
whatever he may have paid or delivered to the
obligee/creditor

Example: I’ll give you a car until you should pass the CPA exams.
Effect of Resolutory Obligation AFTER fulfillment
 If resolutory condition is not fulfilled, such rights are
consolidated – absolute
Retroactivity of Effect
 Effect of signifying the non-existence of the obligation and
what is non-existent must not give rise to any effect
whatsoever
 Return to each other what they have received
 Right to demand reimbursement for all expenses which he
may have incurred in the production, gathering, and
preservation of the said fruits.
Art. 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 Obligations
 are those which arise from the same cause and in which each
party is a debtor and creditor of the other, such that the
performance of one is designed to be the equivalent and the
condition for the performance of the other
 Effect: When an obligation has been rescinded or resolved, it is
the duty of the court to require the parties to surrender whatever
may have received from the other; in other words, the parties
must be placed as far as practicable in their original situation.
Tacit Resolutory Condition (Par.1)
Principle: If one of the parties fails to comply with what is imcumbent
upon him, there is a right on the part of the other to rescind or
“resolve” the obligation.
Remedies:
(1) Action for specific performance (fulfillment) of the obligation
with damages; or
(2) Action for rescission of the obligation also with damages.
*Should be invoked judicially (par 3) except when
stipulated in the contract
Limitations on right to demand rescission:
(1) Resort to the courts- The injured party has to resort to the
courts to assert his rights judicially
(2) Power of court to fix period- The court has discretionary
power to allow a period within which a person in default
may be permitted to perform his obligation if there is a just
cause for giving time to the debtor, as where the default
incurred was not willful or could be excused in view of the
surrounding circumstances.
(3) Right of third person (par 4)- If the thing subject matter of
the obligation is in the hands of a third person who acted in
good faith, rescission is not available as a remedy
(4) Substantial violation- The general rule is that rescission will
not be granted for slight breaches of contract; the violation
should be substantial as to defeat the object of the parties
in making the agreement.
(5) Waiver of right- The right to rescind may be waived,
expressly or impliedly.
*Note: Where the contract itself contains stipulations regarding
automatic rescission without judicial interbention upon violation of the
terms of the contract, the right to rescind is not implied but expressly
stated then judicial permission to cancel or rescind the contract is no
longer necessary. The injured party should give notice to the other
party of the rescission and his chosen remedy.
Art. 1192. In case both the 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.
Rules:
1. the liability of the first infractor shall be equitably tempered by the
courts.
 fair to both parties because the second infractor also
derived, or thought he would derive, some advantage for
his own act or neglect
2. 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
 it is presumed that both at about the same time tried to
reap some benefit
 1. Future
Term/Period Condition 2. Certain
Interval of time which requisites Refers to a fact or 3. Possible, legally and physically
is future and certain event which is future
and uncertain A day certain – understood to be that which must necessarily come,
although it may not be known when
Interval of time that fulfillment A future and uncertain
must necessarily fact or event that may Certainty of event may be either:
come, although it may or may not happen. a) absolutely known (e.g.: May 23, 2010)
not be known when b) relatively known (e.g.: fixing a period several days after
Merely exerts an Influence on Exerts an influence May 23, 2010)
influence upon the obligation upon the very c) totally unknown (day when a person dies)
time of the existence of the
demandability or obligation itself. Classification of Term/Period
extinguishment of an
obligation. A. According to source
1. Voluntary/ conventional – fixed by the will of the parties
No retroactive effects Retroactive Has retroactive effects 2. Legal – fixed by law
unless there is an effects 3. Judicial – fixed by the courts
agreement to the
contrary. B. According to effect
When a term or a Effect of will of When a condition is 1. Suspensive (ex die or dies a quo) – when the obligation is
period is left the debtor left on the exclusive demandable only when the day comes
exclusively to the will will of the debtor, the 2. Resolutory (in diem or dies ad quem) – when the obligation takes
of the debtor, the existence of the effect at once but terminates upon the arrival of the day certain
existence of the obligation is affected
obligation is not (Void) C. According to definiteness
affected (potestative condition) 1. Definite – when the period is fixed
(potestative term or 2. Indefinite – when the term or period is not fixed
period)
D. According to expression
1. Express – when the period is stipulated in the obligation
2. Tacit – when from the nature or circumstances, it can be inferred
that a period was intended

Sec. 2 – Obligations with a Period
E. According to nature
1. Ordinary – that which would not prevent the obligation from being
fulfilled despite the lapse of the same in accordance with the rules
governing delay or mora.
2. Essential – which requires that the obligation be performed
precisely and exclusively at the time stipulated without there being a
possibility of its being fulfilled

Art. 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 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.
Term or Period- interval of time, which exerting an influence on an
obligation as a consequence of a juridical act, either suspends its
demandability or produces its extinguishment.
Obligations with a period- obligations whose
demandability or extinguishment is subject to the expiration of a term
or a period.
Requisites:
Effect of Term or Period
 Suspensive – demandable only upon the arrival of the day
certain or expiration of the term
 Resolutory – fulfillment is demandable at once but it is
extinguished or terminated upon the arrival of the day
certain or expiration of the term
Effect of Fortuitous Event
The stipulation that in the event of force majeure, the contract shall
be deemed suspended during the said period does not mean that the
happening of any of those events stops the running of the period the
contract agreed upon to run.
Art. 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.
This is only applicable to obligations to give a determinate thing
 Art. 1195. Anything paid or delivered before the arrival of the 2. Interest income
period, the obligor being unaware of the period or believing 3. Safe investment (e.g. Protection against the sudden decline in
that the obligation has become due and demandable, may be the purchasing power of the currency loaned)
recovered, with the fruits and interests.
Art. 1197. If the obligation does not fix a period, but from its
nature and the circumstances it can be inferred that a period was
Effect of Advance Payment or Delivery
intended, the courts may fix the duration thereof.
-If obligor is unaware or believing that payment is due and
The courts shall also fix the duration of the period when it
demandable, paid, or delivered something before the arrival of the
depends upon the will of the debtor.
period, he may recover what he has paid or delivered with fruits and
In every case, the courts shall determine such period as may
interest.
under the circumstances have been probably contemplated by
-apply on “to give”
the parties. Once fixed by the courts, the period cannot be
-If it is voluntary done or done with knowledge that it is not yet due,
changed by them
there can be no right to recover.
-This is construed in relation to Solutio indebiti or payment of what
Judicial term or period - when fixed by a competent court, the period
is not due.
can no longer be judicially changed (Art. 1197, par. 3). It becomes a
- This pertains to the recovery of thing or money itself, plus the fruits
law governing the contract between the party.
or interest accruing from the moment of payment to the date of
recovery
General Rule: Courts are without power to fix period
There is no recovery (Tolentino)
Exceptions: When the Court may fix a period
1. When the obligation is reciprocal, and there has been premature
1. When the obligation does not fix a period, but from its nature and
performance on both sides
the circumstances it can be inferred that a period was intended by
2. When the obligation is a loan on which the debtor bound to pay
the parties
interest
2. If the duration of the period depends upon the will of the debtor
3. When the period is exclusively for the benefit of the creditor,
3. If the debtor binds himself to pay when his means permit him to
because the debtor by paying in advance loses nothing
do so  period.
Art. 1196. Whenever in an obligation a period is designated, it is
presumed to have been established for the benefit of both the Cannot be applied to:
creditor and the debtor, unless from the tenor of the same or - Contracts for services in which no period was fixed by the
other circumstances it should appear that the period has been parties
established in favor of one of the other. - Pure obligations

Benefit of Term or Period Steps/Nature of the Action

1. Ask the court to fix the duration of the term or period
General Rule: When a period is designated for the performance or 2. If time elapsed, compel.
fulfillment of an obligation, it is presumed to have been established for
the benefit of both the creditor and the doctor.  Presumption Effect of Term
Once the period has been fixed by the court, it becomes part of the
contract, and it cannot be subsequently changed or extended by the
Exception: If it be proved that either from the tenor of the obligation or
court without the consent of both the parties.
from other circumstances that term has been established in favor of
the creditor of the debtor
Two Ultimate Facts:
1. Facts showing that a contract was entered into imposing on one of
Term is for the benefit of both parties (Presumption)
the parties an obligation in favor of the other
The creditor cannot demand payment and the debtor cannot make an
2. Facts showing that the performance of the obligation was left to
effective tender and consignation of payment before the period
the will of the obligor, or clearly showing or from which an inference
stipulated.
can be reasonably drawn that a period was intended.
Term is for benefit of creditor only (Exception)
Art. 1198. The debtor shall lose every right to make use of the
- Creditor may demand payment anytime, but the debtor cannot
period: [IGIVA]
compel him to accept payment before the period expires (e.g.:
(1) When after the obligation has been contracted, he
contract of loan where interest is stipulated)
becomes insolvent, unless he gives a guarantee or
- Right to refuse any payment before the expiration of the term could
security for the debt;
be waived by acceptance of full or partial payment
(2) When he does not furnish to the creditor the
guaranties and securities which he has promised;
Term is for benefit of debtor only (Exception)
(3) When by his own acts he has impaired said guaranties
Debtor may oppose premature demand for payment, but may validly
and securities after their establishment, and when
pay at any time before the period expires (e.g. contract of loan where
no interest is stipulated)

Why a creditor cannot be compelled to accept payment

1. Tax avoidance
 through a fortuitous event they disappear2, 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.
Extinguishment of debtor’s Right to Period
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or security for the
debt;
 insolvency needs no judicial declaration
 includes any case in which it would be impossible financially for
the debtor to comply with his obligations
 such insolvency must not be pre-existing; arose after the
constitution of the obligation
 if there is a guaranty or security for the debt, the debtor, in spite
of insolvency, does not lose his right to the period.
(2) When he does not furnish to the creditor the guaranties or
securities which he has promised;
 such failure renders the original obligation pure and without
any condition, and consequently, the loan become due and
demandable.
(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;
There is a difference between effects of impairment and effects of
disappearance
1. if the guaranty or security is impaired through the fault of
the debtor, he shall lose his right to the benefit of the period;
2. if it is impaired without his fault, he shall retain his right;
3. if the guaranty or security disappears through any cause,
even without the fault of the debtor, he shall lose his right to the
benefit of the period
4. in either case of impairment or disappearance, the debtor
will not lose his right to period if he gives a new guaranty or security
which is 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.
 Mere attempt of the debtor disappear or run away from his
obligation.
Section 3 – Alternative and Facultative Obligations
Art. 1199. A person alternatively bound by different prestations
shall completely perform one of them. The creditor cannot be
2
Not grammatical or ordinary meaning but sense of “loss” as
defined by law (Tolentino)
compelled to receive part of one and part of the other
undertaking. (1131)
Classification (CDAF)
1. Conjunctive – all prestations must be performed to extinguish
obligation
2. Disjunctive – one or some prestations must be performed to
extinguish obligation
3. Alternative – debtor must perform one of several alternatives,
choice belongs to debtor UNLESS expressly given to creditor
4. Facultative – one principal prestation but one or more
substitutes, choice belongs to DEBTOR ONLY
*Absent the indication that it is facultative, the presumption is
that it is ALTERNATIVE because creditor would be at a
disadvantage if the obligation is facultative. Facultative is never
presumed.
Art. 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. (1132)
Concept:
Alternative Obligation - obligation wherein various things are due,
but the payment of one of them is sufficient, determined by the
choice which as a general rule belongs to the debtor (Luna)
Election by Debtor
 In alternative obligations, the debtor has the right to choose
the method of meeting the obligation, unless the creditor has
expressly reserved that right to himself.
Election by Others
 The right to choose may be granted to the creditor.
 The choice may also be entrusted by the parties to a third
person.
- Although this has not been expressly recognized, there is
no reason why it should not be allowed, since it is not contrary
to law, morals, good customs, public order or public policy.
 The grant must be expressed, it cannot be implied.
Exceptions/ Limitations on the Right to Choose by the Debtor (I-
Ex-IOU-OP-PFB)
1. The debtor cannot choose part of one and part of the other
undertaking.
a. The creditor cannot be compelled to receive part
of one and part of the other undertaking. [Article
1199, paragraph 2 in relation to Article 1248]
b. There is a presumption of indivisibility
2. He loses the right to choose when the right of choice is
expressly granted to the creditor.
c. The right of choice belongs to the debtor, unless
it has been expressly granted to the creditor.
[Article 1200]
3. 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. [Article 1200, paragraph
 2]
d. The presence of such undertaking does not
annul the obligation, it as an alternative one if
there are other lawful and possible subjects.
e. Prestations which could not have been the
objects of the obligation refers to:
 prestations which turn out to be
different from what the parties supposed and
which do not serve the purpose for which the
obligation was contracted;
 prestations which are not yet due and
demandable;
 prestations which, by reason of
accident or some other cause, have acquired
a new character distinct or different from that
contemplated by the parties when the
obligation was constituted.
4. The debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one is
practicable. [Article 1202]
f. Applies to specific things only
g. The obligation ceases to be alternative, and is
converted into a simple obligation to perform the
only practicable prestation.
h. The impossibility of the other prestations,
however, must not be due to the creditor’s acts.
For in such case article 1203 applies.
i. This article applies only when debtor has the
right to choose.
j. In cases where creditor is granted the right to
choose, article 1205 will apply.
5. The debtor loses the right to choose if the period is fixed
solely for the benefit of the creditor and that period has not
arrived yet. (According to Sir Ulan  )
k. 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. [Article 1196]
Art. 1201. The choice shall produce no effect except from the
time it has been communicated. (1133)
Notice of Selection or Choice (OWUT) -
Maybe in any form provided it is sufficient to make the other
party know that the election has been made. It is not subject to
any form and may be made:
1. orally;
2. in writing;
3. tacitly;
4. other unequivocal means
Tacit declaration may be seen (PAS):
1. in the performance of the debtor who has the right to
choose;
2. in the acceptance of a prestation by a creditor when he has
the right of selection; or
3. when the creditor sues for the performance of the
prestation.
N.B.
1. When the debtor, to whom the right of choice pertains,
performs one of the prestations with the intent to discharge the
obligation, he is released because the selection made may be
implied in the fact of performance.
2. Once the choice is made by the debtor (or by the creditor or
by a third person as the case may be), the obligation ceases to
be alternative from the moment the selection has been
communicated to the other party. From that moment, both
debtor and creditor are bound by the selection.
3. A selection once made is binding on the person who makes it,
and he will not therefore be permitted to renounce his choice
and take an alternative which was first opened to him.
Creditor’s Consent
 The law does not require the other party to consent to the
choice made by the party entitled to choose.
 A mere declaration of the choice, communicated to the
other party, is sufficient; it is a unilateral declaration of will.
Plurality of Subjects
 When there are various debtors or creditors, and the
obligation is joint, the consent of all is necessary to make the
selection effective, because none of them can extinguish the
entre obligation.
 If the obligation is solidary, and there is no stipulation to the
contrary, the choice by one will be binding personally upon him,
but not as to the others.
Condition or Term
 The selection made by one party cannot be subjected by
him to a condition or term unless the other party consents
thereto.
When Choice is Effective
The choice made by the debtor shall produce legal effect only
from the time it is communicated to the creditor. Once the choice is
communicated to the creditor, the debtor will no longer be permitted
to renounce his choice and take an alternative whcih was first open
to him (Reyes vs. Martinez, 55 Phil. 492).
N.B.
1. choice is made by the:
a. debtor - debtor shall communicate the choice to the creditor
(D ----> C)
b. creditor - creditor shall communicate the choice to the debtor
(C ----> D)
c. third person - third person shall communicate the choice to
both the debtor and the creditor (T ---> D and C)
2. The making of a choice is NOT a right, but a DUTY. (Jurado)
Effect of Choice (LCI)
 The effect of notice of choice is to limit the obligation to the
object or prestation selected, with all the consequences which
the law provides.
 The obligation is converted to a simple obligation to
perform the prestation chosen.
 Once the selection has been communicated, it becomes
irrevocable.
Rationale: To allow a change in the selection after it has been
communicated to the other party, is to expose the latter to
damages arising from preparations he may make on the
 assumption that the prestation selected is the one to be
performed
Error as to the Obligation
 When the debtor performs one of the prestations, believing
that he has a simple obligation (an ignorance of the
alternatives and on his right to choose), there is no
declaration of the selection, nor a binding performance of
the obligation. There is payment of what is not due, and the
debtor can recover the se, in accordance with the
provisions of the law on Quasi-Contracts.
Delay in the Making of Choice
Who will make a selection when the entitled party to choose
delays in making his selection?
 The German Doctrine stated that the right to choose
passes automatically to the other party when there is delay
on the part of the party entitled to choose. (according to
Tolentino, this is acceptable under our law)
Can the creditor enforce the obligation if the debtor has not yet
made his choice?
 It is the debtor’s duty to select at the time when the
performance should be effected. If he does not do so, the
creditor cannot enforce the obligation. However, the choice
can be made by him (creditor) by applying the principle of
Article 1167 on obligations to do.
 When the obligation consists of not doing, and
the obligor does what has been forbidden him, it
shall be undone at his expense. [Article 1167]
 The debtor in such case should be deemed to have
waived his right to choose in favor of the creditor who may
exercise such right.
Article 1202. The debtor shall lose the right of choice when
among the prestations whereby he is alternatively bound, only
one is practicable.
Obligation Becomes Simple
Debtor cannot choose impossible or unlawful prestations. If
all the prestations, except one, are impossible or unlawful, it follows
that the debtor can choose and perform only that one. The obligation
ceases to be alternative, and is converted into a simple obligation to
perform the only feasible or practicable prestation. Impossibility of the
prestations must not be due to the creditor's acts, for in such case,
Article 1203 shall apply. (Tolentino)
According to Luna, alternative obligation is converted into a
simple obligation when (Cc-Cd-Op):
a. when the choice is made by the debtor is communicated to the
creditor (8 Manresa 181)
b. when the choice has been given to the creditor and the latter's
choice is communicated to the debtor (Article 1205)
c. when among the prestations whereby the debtor is alternatively
bound, only one Is practicable (Article 1202)
Where Creditor may Choose
The article applies only when the debtor has the right to
choose. When the creditor is granted the right to choose, Article 1205
will apply when only one prestation remains practicable, either
through fortuitous event or due to the fault of the debtor.
Art. 1203. If through the creditor's acts the debtor cannot make a
choice according to the terms of the obligation, the latter may
rescind the contract with damages.
Impossibility Due to the Creditor
 This article is based on the principles of justice.
 If through the creditor’s act the debtor cannot make a choice,
he may (RPR):
 rescind the contract with damages
 elect to perform that which remains if there is only one
prestation possible (Tolentino)
 elect those still remaining if several are still possible
(Tolentino)
 Reason for 2nd and 3rd: The rescission does not take place
automatically but at his option.
Example
1. A contractor, for the consideration of P50,000, agreed to either
build a house for X on the latter's residential lot, or construct a road
to his hacienda. X sells his residencial lot. Because of the
impossibility of the prestation to build the house, the contractor may
either construct the road to the hacienda, or rescind the contract; in
the latter case, he may recoveras damages whatever profits he could
have realized if he had constructed the house and received the
consideration of P50,000.
2. D obliged himself to paint the house of C or to paint C's car. If
before the due date of the obligation, C sells his car, D can rescind
the obligation plus damages.
Art. 1204. The creditor shall have a right to indemnity for
damages when, through the fault of the debtor, all the things
which are alternatively the object of the obligation have been
lost, or the compliance of the obligation has become
impossible.
The indemnity shall be fixed taking as a basis the value of the
last thing which disappeared, or that of the service which last
became impossible.
Damages other than the value of the last thing or service may
also be awarded. (1135a)
Effect of Loss of Object
This article applies to cases in which the debtor has the right to
choose (this is the General Rule). Article 1205 is applicable only
when the right of choice belongs to creditor (exception).
Loss by Fault of the Debtor
He (debtor) will become liable for damages under the terms of this
article only when all the prestations become impossible through
his fault.
a. Loss of all - The debtor shall pay the value of the thing lost, plus
damages. However, if all the things disappear at the same time,
the debtor may choose the value of any of them, plus damages.
 (Luna)
b. Loss of some - The debtor may, without incurring any liability to
pay damages, deliver any of the remainder, or that which
remains if only one subsists. (Luna)
Effect of Fortuitous Event
a. If all the prestations become impossible - the obligation is
extinguished, the debtor is not liable for damages
b. If one of the things is lost or one of the prestations cannot be
performed - the debtor must still comply with the obligation by
delivering or performing that which he shall choose from
among the remainder
c. If all the things are lost except one - the debtor must still
comply with delivering or performing that which remains
d. If one or more prestations due become impossible, leaving only
one prestation which becomes impossible by fault of the
debtor - debtor will be liable for damages, with the value of
the last prestation as the basis.
Loss of some due to debtor's fault and the last thing due to
fortuitous event
a. If some of the prestations become impossible by fault of debtor,
and then the remaining prestation become impossible by
fortuitous event - the debtor is liable under this article, but the
basis of the damages will be the value of the last prestation
which become impossible through the debtor’s fault.
N.B. From and after the loss except one of the various things,
whether due to fortuitous event or the debtor's fault, the debtor
shall lose the right of choice (Article 1202) and the obligation
converted into a simple obligation. Hence, the loss of the last
subsisting prestation due to a fortuitous event extinguishes the
obligation. (Luna)
(3) If all the things are lost through the fault of the debtor,
the choice by the creditor shall fall upon the price of
any one of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do
in case one, some or all of the prestations should become
impossible.
Selection by the Creditor
 When the creditor has the right to choose, his selection
takes effect from the moment it is communicated to the debtor.
 Selection can be express or tacit
There is tacit selection when the creditor accepts a
prestation offered by the debtor, or brings an action for the
enforcement of the prestations.
Effect of Creditor’s Delay
 The debtor will not incur delay in the performance of the
obligation, even if there is a definite period fixed.
- Creditor is considered to have waived the period.
 There will be delay on the part of the debtor only
when the obligation has become a simple one by
exercise of the creditor of his right to choose.
 Creditor does not make his selection before the period fixed
- debtor's duty to perform does not arise because the
particular prestation to be performed has not been
determined
- creditor in such case must be considered in his own inaction
to have waived the period
Art. 1206. When only one prestation has been agreed upon, but
the obligor may render another in substitution, the obligation is
called facultative.

Example: D obliged himslef to give C a specific ring or a specific
watch, or a specific radio.
a. the ring, watch or radio are all lost due to fire and without the
fault of D = obligation is extinguish
b. the ring, watch and radio are lost in that order due to the fault of
D = D is obliged to pay the value of the radio plus damages
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. (n)
Distinguished From Facultative

Art. 1205. When the choice has been expressly given to the AS TO ALTERNATIVE FACULTATIVE
creditor, the obligation shall cease to be alternative from the day There are various Only the principal constitutes
Contents of
when the selection has been communicated to the debtor. prestations all of which the obligation , the accessory
the
constitute parts of the being only a means to
Until then the responsibility of the debtor shall be governed by obligation
obligation facilitate payment
the following rules: May be complied with by May be complied with by the
the delivery of one of the delivery of another object or
(1) If one of the things is lost through a fortuitous event, he As to objects or by the by the performance of
shall perform the obligation by delivering that which the compliance performance of one of the another prestation in
creditor should choose from among the remainder, or prestations which are substitution to that which is
that which remains if only one subsists; alternatively due due.\
Nullity of The nullity of one The nullity of the principal
(2) If the loss of one of the things occurs through the fault prestation prestation does not prestation (i.e. when the
of the debtor, the creditor may claim any of those invalidate the obligation object is unlawful or outside
which is still in force with the commerce of man)
subsisting, or the price of that which, through the fault
respect to those which invalidates the obligation.
of the former, has disappeared, with a right to damages; have no vice.
 Creditor cannot demand the Simple Obligation
Creditor can choose from substitute even when this is a. concept - A simple obligation is anobligation where only one
the remainder valid. prestation has been agreed upon (Luna)
The right to choose may Only the debtor can choose b. example - D obliged himslef to give C a specific car on
Choice
be given to the creditor the substitute prestation October 4, 1976.
Impossibility of the principal
prestation is sufficient to
Only the IMPOSSIBILITY extinguish the obligation,
Compound or Conuctive Obligation
Effect of a. concept - A compound or conuctive obligation is an obligation
OF ALL the prestations even if the substitute is
Loss wherein various things are due and is extinguished only by the
due without fault of the possible.
(fortuitous performance of all of them (Luna)
debtor extinguishes the
event)
obligation Loss of substitute does not b. example - D obliged himself to give C on Oct. 4, 1976 a radio
make debtor liable, unless and a piano. To be able to extinguish his obligation D is obliged
substitution has been made to give C on Oct. 4, 1976 both the radio and the piano.
The debtor is not liable if
other prestations are still When Substitution Takes Effect
The debtor is liable
Effect of available.
 The rule with respect to alternative obligations can be applied
Loss
(through If choice belongs to
Loss of the substitute before by analogy; that is, from the time the debtor communicates to
substation does not render the creditor that he elects to perform the substitute prestation.
fault) creditor, loss of one
debtor liable - From this moment, the substitute prestation is the only
alternative gives rise to
liability. one that is due.
 If the principal prestation thereafter becomes impossible,
Nature of Facultative Obligation even by fortuitous event, the debtor would not be relieved but
 Defined as an obligation wherein only one object or prestation would still be obliged to perform the substitute prestation that
has been agreed upon by the parties of the obligation, but he has chosen.
which may be complied with by delivery of another prestation - His obligation has become a simple one to perform the
in substitution. substitute prestation, and he will be liable for damages
 Characteristic feature- only one prestation is due, for his delay, neglect or bad faith in the performance.
- But if the obligor fails to deliver such object or to
perform such prestation, he can still comply with this Section 4 – Joint and Solidary Obligations
obligation by delivering another object or performing another
prestation in substitution. Art. 1207. The concurrence of two or more creditors or of two or
 Example: D obliged himself to give C a specific Rolex watch more debtors in one and the same obligation does not imply
with the understanding that D could give his diamond ring as a that each one of the former has a right to demand, or that each
substitute. one of the latter is bound to render, entire compliance with the
prestation. There is a solidary liability only when the obligation
Loss of the Principal Thing expressly so states, or when the law or the nature of the
 Due to fortuitous event - the obligation is extinguished and the obligation requires solidarity. (1137a)
debtor is not obliged to give the substitute
Joint Obligation (mancomunada simple/ pro rata)
 Due to the debtor's fault - the debtor shall answer for the loss
- one in which each of the debtors is liable only for a proportionate
of the thing due to his fault
part of the debt, and each debtor is entitled to only a
proportionate part of the credit
Loss of Substitute
*example: A, B, and C jointly executed a promissory note worded as
 Before the substitution is effected, it is not the prestation that follows:
is due; only the principal prestation is due and enforceable by "We promise to pay to the order of X P9,000.
the creditor at that time. (Sgd.) A, B, and C."
- whether due to fortuitous event of fault of the debtor: -A is liable for P3,000, B for P3,000 and C for P3,000.
does not affect the debtor's liability to deliver the
principal thing (Luna) Solidary Obligation (mancomunada solidaria/ joint and several
-If the substitute prestation becomes impossible due or in solidum)
to the fault or negligence of the debtor, the obligation - one in which each debtor is liable for the entire obligation, and each
is not affected and he cannot be held liable for creditor is entitled to demand the whole obligation.
damages. (Tolentino)
- Whatever may be the cause of impossibility of the When Solidary Exists
substitute prestation is immaterial. General Rule: The mere concurrence of two or more creditors or
two or more debtors in one and the same obligation does NOT
 After the substitution imply solidarity.
a. due to fortuitous event - obligation is extinguished
b. due to the debtor's fault - debtor shall be liable for the Kinds of Solidarity (APM)
loss or deterioration of the substitute (on the account of his a. Active - solidarity among creditors
delay, negligence or fraud) *example: A obliged himself to pay P30,000 to solidary
creditors B, C, anf D. Each of the creditors is entitled to demand
payment of the whole P30,000. Thus, B, or C, or D can demand
payment of P30,000 from A.
b. Passive - solidarity among debtors
*example: A, B and C executed a promissory note worded
as follows:
"I promise to pay X or order the sum of P30,000.
(Sgd.) A, B, and C."
- X is entitled to demand payment to demand the payment of
P30,000 from A, or from B, or from C.
c. Mixed - solidarity on the part of the creditors and debtors
*example: A, B, and C executed a promissory note worded
as follows:
"We do hereby slidarily promise to pay to the order of solidary
creditors L, M, and N the sum of P30,000.
(Sgd.) A, B, and C
- L, or M, or N shall be entitled to demand payment of the whole
P30,000 from A, or from B or from C.
Joint debtors - solidary creditors
*example: A and B executed a promissory note worded as follows:
"We promise to pay to solidary creditors C and D P10,000.
(Sgd.) A, B"
- C or D as solidary creditors shall be entitles to demand payment of
the whole P10,000 . But since t he debtors are bound jointly,
C or D shall be entitled to demand payment of no more than P5,000
from A and another P5,000 from B.
Solidary debtors - joint creditors
*example: A and B executed a promisory note worded as follows:
"We do hereby solidarily promise to pay to the order of C and D
P10,000.
(Sgd.) A, B"
- As solidary debtors, A or B may be compelled to pay the whole
P10,000. But since the creditors are bound jointly, C is entitled to
demand the payment of P5,000 from A, or B and D is entitled to
demand payment of the other P5,000 from A or B.
Art. 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.
(1138a)
Joint Obligation
a. The debt shall be divided into as many equal shares as there
are creditors or debtors, the credits on the debts being
considered disticnt from each other. (Luna)
b. In case of non-payment, only one action should be files in
court. (Luna)
Presumption of Joint Character
When two persons are liable under a contract or under
judgment, and no words appear in the contract or the judgment to
make each liable for the entire obligation, the presumption is that
their obligation is joint.
3 Exceptions to the presumption (ELN):
a. when the obligation expressly states that there is solidarity
b. when the law requires solidarity
c. when the nature of the obligation requires solidarity
Effect of Joint Liability
a. the 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, but
not with respect to others.
b. the interruption of prescription by the judicial demand of one
creditor upon a debtor does not benefit the other creditors nor
interrupt the prescription as to the other debtors. Similarly,
partial payment or acknowledgment made by one of several
joint debtors does not stop the running of the statute of
limitations as to the others.
c. the vices of each obligation arising from personal defect of a
particular creditor or debtor does not affect the obligation or
rights of the others.
d. the insolvency of a debtor does not increase the responsibility
of his co-debtors, nor does it authorize a creditor to demand
anything from his co-creditors.
e. in Joint Divisible Obligation (JDO)
- the defense of res judicata is not extended from one
debtor to another.
- nature of the obligation is susceptible to partial fulfillment
(Dean Ulan)
- example: A and B jointly obliged themselves to give C the
sum of P60.00.
Art. 1209. If the division is impossible, the right of the creditors
may be prejudiced only by their collective acts, and the debt can
be enforced only by proceeding against all the debtors. If one of
the latter should be insolvent, the others shall not be liable for
his share. (1139)
Joint Indivisible Obligations (JIO)
- Several debtors and creditors, but the prestation is indivisible,
the obligation is joint, unless solidarity has been stipulated.
- preserves the two characteristics of the joint obligation, in that
no creditor can do an act prejudicial to others, and no debtor
can be made to answer for the others. However, its fulfillment
requires the concurrence of all the debtors although each for his
part. On the side of the creditors, collective action is expressly
required for acts which may be prejudicial.
- example: A and B jointly obliged themselves to give C a
specific cow.
Effects on Creditors (according to Luna)
a. To be able to compel performance of th eobligation, all the
creditors should act collectively. A demand by one or some but
less than all the creditors is not effective.
b. The right of the creditors may be prejudiced only by their
collective acts.
- all creditors renounce the obligation: extinguished
- renunciation made by one creditor w/o consent of the
other: only the share of the former is extinguished; other
creditors can no longer demand the delivery of the thing;
obligation is converted into an obligation to pay its value
Effects on Debtors (according to Luna)
a. The debt can be enforced only on proceedings against all the
creditors. A demand against one or some but less than all the
debtor/debtors against whom the demand has been made are
not obliged to deliver the thing.
b. extinguish the obligation - payment should be made to all the
creditors
c. if any of the debtors is insolvent - the other shall not be liable
for his share
obliged themselves to give C a specific horse
2. according to Dean Ulan
a. if one of the debtors refuses to deliver the thing, the
other debtors cannot enforce the delivery (the obligation
becomes divisible)
b. refusal of the debtor to deliver the thing without just
cause - liable for damages
Art. 1211. Solidarity may exist although the creditors and the
debtors may not be bound in the same manner and by the same
periods and conditions. (1140)

d. any of the debtors refuses to deliver the thing - obligation is Kinds of solidarity (APM):
converted into an obligation to pay the value of the thing a. Active solidarity - one that exists among creditors.
 the value of the thing shall be shared by all debtors Creation of a relationship of mutual agency among the solidary
 whole damages shall be borne by the debtor who creditors by virtue of which each debtor is empowered to exercise
does not comply with this undertaking against the debtor or debtors not only the rights which correspond to
him, but also all the rights which correspond to the other creditors,
Effect of breach - if one of the joint debtors fails to comply with his with the consequent obligation to render an accounting of his acts to
undertaking the obligation can no longer be fulfilled or performed. such creditor.
The obligation now is converted into one of indemnity for damages.
Juridical Effects:
Effect of insolvency of a debtor - if one of the joint debtors shall be 1. Since it is a reciprocal agency, the death of a solidary creditor does
insolvent, the others shall not be liable for his share. not transmit the solidary to each of his heirs but to all of them taken
together.
N.B. Absence of stipulation of how much is the actual share of the 2. Each creditor represents the others in the act of receiving
debtors, the presumption is equal. (Dean Ulan) payment, and in all other acts which tend to secure the credit or
make it more advantageous. Hence, if he receives only a partial
Art. 1210. The indivisibility of an obligation does not necessarily payment, he must divide it among the other creditors. He can
give rise to solidarity. Nor does solidarity of itself imply interrupt the period of prescription or render the debtor in default, for
indivisibility. (n) the benefit of all other creditors.
3. One creditor, however, does not represent the others in such acts
Indivisibility Solidarity as novation, compensation and remission. In these cases, even if the
As to nature Prestation which Legal tie or debtor is released, the other creditors can still enforce their rights
constitutes the object vinculum to the against the creditor who made the novation, compensation or
of the obligation subjects of the remission.
obligation 4. The credit and its benefits are divided equally among them to
divide differently. Hence, once the credit is collected, an accounting
As to requisites Plurality of subjects is Plurality of
and distribution of the amount collected should follow.
not required subjects is
5. The debtor may pay to any solidary creditor, but if a judicial
indispensable
demand is made on him, he must pay only to the plaintiff.
As to effect of When the obligation When there is
6. Each creditor may renounce his right even against the will of the
breach is converted into one liability on the part
debtor, and the latter need not thereafter pay the obligation to the
of indemnity for of the debtors
former.
damages because of because of
the breach, breach, the
b. Passive solidarity - one that exists among debtors.
indivisibility of the solidarity among
Each debtor can be made to answer for the others, with the right on
obligation is the debtors
the part of the debtor-payor to recover from the others their
terminated remains
respective shares. Similar to mutual guaranty.
N.B. 1. according to Luna: Juridical Effects:
a. solidarity does NOT imply indivisibility (An obligation 1. Each debtor can be required to pay the entire obligation; but after
may be divisible even if it is solidum) payment, he can recover from the co-debtors their respective shares.
b. indivisibility does NOT imply solidarity (mere fact that 2. The debtor who is required to pay may set up by way of
the object of the obligation is not susceptible of partial compensation his own claim against the creditor, in this case, the
performance does not mean that each of the debtor is effect is the same as that of payment.
liable for the entire obligation.) 3. The total remission of debt in favor of a debtor releases all the
c. example of: debtors; but when remission affects only the share of one debtor, the
 solidary divisible obligation: A and B solidarily other debtors are still liable for the balance of the obligation.
obliged themselves to give C P50,000 on March 15, 4. All the debtors are liable for the loss of the thing due even if such
2011 and P50,000 on May 1, 2011. loss is caused by the fault of only one of them, or by fortuitous event
 solidary indivisible obligation: A and B solidarily after one of the debtors has incurred delay.
5. The interruption of prescription as to one debtor affects all the
others; but renunciation by one debtor of prescription already had
does not prejudice the others, because the extinguishment of the
obligation by prescription extinguishes also the mutual representation
among the solidary debtors.
6. The interests due by reason of the delay of one of the debtors are
borne by all of them.
c. Mixed solidarity- on the part of both creditors and debtors
N.B. According to Luna:
Solidarity does NOT require that the parties be bound in the same
manner. An obligation is solidary if the parties agreed or the law
intended it to be in solidum.
*example:
X, Y and Z solidarily onliged themselves to give C P15,000
according to the following terms:
X to pay on demand;
Y, in 2012;
Z, if C passes the CPA exam.
- Today, C can demand payment of P5,000, the share of X
out of the P15,000, against X or Z. This is so because the
shares of Y and Z have not yet matured. In 2012, C can
demand P5,000, the share of Y against X and Z. The
moment C passes the CPA exams, C may demand P5,000,
the share of Z against any of the three debtors.
Art. 1212. Each one of the solidary creditors may do whatever
may be useful to others, but not anything which may be
prejudicial to the latter.
- consequence of the relationship of mutual agency existing among
solidary creditors
Beneficial acts of the creditor (DIDS):
 may demand the obligation to one, some or all debtors;
 may interrupt prescription;
 constitute the debtor in default; or
 bring suit so that the obligation may produce interest.
Effect of beneficial act: if obligation has been performed, the other
creditors will have the right to demand from the creditor who received
the payment the shares corresponding to them.
Prejudicial acts of the creditor:
Remission is an act that is literally prejudice to the creditors, but it is
authorized under Article 1215, along with novation, compensation,
and merger or confusion.
To harmonize:
Art. 1212 = effect of the prejudicial acts among the creditors
themselves
Art 1215 = effect of the prejudicial acts among the creditors and the
debtor/s. *which are valid*
*Creditors have rights that subsist and can be enforced against the
creditor who performed the act alone. (Tolentino)
Effect of prejudicial act: indemnifying the other creditors for
damages.
Mutual Agency
Solidary obligation implies mutual agency. Hence, each one of the
creditors may, even without the knowledge of the other, do whatever
may be useful to them. Although prejudicial acts will produce legal
effect and extinguish the obligation of the debtor, the same will not,
however, be valid against the creditors who did not give their
consent.
*example: D is indebted to solidary creditors A dn B for P10,000. A
may, even without the knowledge of B, demand the payment of
P10,000 because each one of the solidary creditors may do whatever
may be useful to the other creditors may do whatever may be useful
to the other creditors even without the knowledge of the latter. If w/o
the knowledge of A, B remits the obligation, the obligation of D would
be extinguished, but B is obliged to give to A his share of P5,000.
Art. 1213. A solidary creditor cannot assign his rights without
the consent of the others.
- solidary creditor is an agent of the other creditors
- mutual agency implies mutual confidence which may take into
account the personal qualifications of each creditor
Effects of Unauthorized transfer:
It is implied, that such cannot be made, and the co-creditors and
debtors are not bound to recognize the assignment, and the
assignee is not regarded as a solidary creditor.
- payment to that assignee is considered a payment to a third person
and will not extinguish the obligation
- a suit filed by such assignee will not interrupt the prescription
- the creditor-assignor still has a liability to his co-creditors for
damages which may have been incurred by them as a result of the
assignment
If the assignment is made to a co-creditor, consent is not necessary
because the mutual confidence from the other creditors already exist.
Art. 1214. The debtor may pay any one of the solidary creditors;
but if any demand, judicial or extrajudicial, has been made by
one of them, payment should be made to him.
Judicial Demand:
Generally, each solidary creditor is a tacit mutual representative of
each other in demanding payment. But, if one creditor sues the
debtor/s, the tacit representation by the other creditors is considered
revoked.
 Creditors who did not sue will lose their representation of
the others
 A payment to the creditor/s who did not sue will be
considered as payment to a third person, in so far as the
shares of the others in the credit are concerned.
 If payee did not turn the shares of the other creditors who
demanded, the debtor can still be required to pay the
creditor-plaintiff minus the share of the payee
The action, however, does not definitely eliminate the other creditors,
but only during the time the effect of the actions exist. If action is
dismissed, the other creditors may in turn sue the debtor.
Extrajudicial Demand:
Demand made extrajudicial has the same effect as judicial demand in
terminating the mutual representation of among the solidary creditors
and making the creditor who demanded as the agency alone.
Tolentino: If one creditor should make an extrajudicial demand, and
then takes no further step to enforce collection in court, all the other
creditors are barred forever from filing an action to demand payment
judicially, and the debt may never be collected. In this case, such
same effect is juridically erroneous and impractical.
 If all or several creditors demand payment separately, the debtor
should pay the first one who notified him.
 If they demand at the same time, or in a single action or written
demand, the debtor preserves his right to choose whomever
payment will be made by him
 If partial payment has been made before the demand arises, the
debtor can pay the creditor the full obligation minus the
obligation he already performed. To not do so will result in unjust
enrichment.
 In mixed solidarity, the debtors who were not demanded by the
creditor to pay him can still pay the other creditors who did not
make the demand.
Payment of Solidary Obligation
General Rule: payment to any one of the solidary creditor
extinguishes the obligation. If any demand has been made by any of
the creditors, the debtor against whom the demand was made should
pay only to that creditor. If he pays to any other creditor, the payment
is not valid.
Example
A and B are solidary indebted to solidary creditors C and D in
the amount of P10,000. A may pay P10,000 to C or D. However, if a
demand is made only to A
Art. 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 the 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 – extinguishment of an obligation by the substitution or
change of the obligation by a subsequent which extinguishes or
modifies the first, either by changing the object or principal
conditions, or by substituting the person of the debtor, or by
subrogating a third person in the third rights of the creditor.
The solidary debtor may release the others by binding himself alone
in their place in favor of the creditor. The debtor who effects the
novation cannot, by himself, bind the other to a new debt without
their consent.
Mere extension of time for payment given by the creditor to a solidary
debtor does not release the others from the obligation.
*In suretyship: as sureties are bound in solidum, material alteration
made by the creditor and the principal debtor, without the knowledge
and consent of the sureties, completely discharges the sureties from
all liability in the contract of suretyship.
An extension of time granted to the debtor by the creditor
extinguishes the liability of the others, but where the sureties are
liable for different payments, an extension of time with one or more
will not affect the liability of the sureties for the others.
Dation in payment – the delivery of a specific object as a substitute
for the performance of the obligation
 if in a form of a promise, it amounts to a novation
 it should be treated as a payment, as it is essentially so
Compensation – a mode of extinguishment to the concurrent
amount, the obligation of those persons who in their own right are
reciprocally debtors and creditors of each other
Confusion – merger of qualities of creditor and debtor in one and the
same person with respect to one and the same obligation
If the compensation or confusion is partial, and there is doubt as to
what part of the debt it should be applied, the rules on application of
payments shall govern. If it is total, the obligation is extinguished,
leaving the liability for reimbursement within each group.
Remission – is an act of pure liberality by virtue of which, the
creditor, without having received any compensation or equivalent,
renounces his right to enforce the obligation, thereby extinguishing
the same either in its entirety or in the part or aspect thereof to which
the remission refers.
 When one creditor makes the remission = extinguishes the
obligation to the extent which is made, but the creditor shall be
liable to his co-creditors for their shares
 When several of the creditors make the remission = all will
be liable for the shares of the creditors who did not remit, and if
one is insolvent, his share shall be made up by the others who
concurred in the remission.
 Remission covers the entire obligation = obligation is totally
extinguished, the entire juridical relation among the debtors is
terminated altogether
 Remission in favor of the debtor, if partial = character as
solidary debtor still remains
 Remission in favor of the debtor, if full = ceases to have
any relation with the creditors, unless the continuation of his
solidary relation has been expressly reserved. However he is
still bound with respect to his co-debtors, in case of insolvency
of one debtor, the released debtor still has to pay his share in
the portion of the insolvent. He also cannot recover anything
from his co-debtor, since remission is a gratuitous act.
* Rules with regards to the debtors shall not apply when the debt was
fully paid by anyone of the debtors before the remission was made.
Effects of the Acts:
 Between creditors and debtors – any of the acts will extinguish
the obligation, therefore no creditor may sue the debtor after
such act
 Between co-creditors – any act of them in extinguishing the
obligation shall not prejudice the rights of the other creditors to
recover their shares in the obligation to the creditor who effected
any of the acts mentioned.
 Between co-debtors – the debtor whose obligation was
extinguished cannot recover from his other co-debtors more
than their respective shares in whatever he may have given up
or lost as the consideration for the extinguishment of the
obligation
 In total compensation, he can recover from the others their
respective shares in the obligation, since he has given his
own credit to extinguish the obligation
 In merger, if one co-debtor acquires the whole credit, he
can still demand from the other debtors their respective
shares
 In remission, the debtor whose remission was made cannot
recover anything from the other debtors since he gives or
loses nothing.

Art. 1216. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The
demand made against one of them shall not be an obstacle to
those which may subsequently be directed against the others,
so long as the debt has not been fully collected.
- the solidary debtors may be sued simultaneously in one suit or
successively in different actions.
- this article is not of public interest, therefore the parties may validly
stipulate that the solidary debtors can only be sued simultaneously or
provide for the order in which the debtors may be sued individually.
Passive Solidarity and Suretyship:
Similarities:
1. stands for some person
2. after payment, may require that they be reimbursed
Distinctions:
Solidary Debtor Surety
Liable not only for his co- Liable only for his debtor’s
debtor’s obligation, but also for obligation
his own
Responsibility to co-debtor is Responsibility to co-debtor is
primary subsidiary
Extension of time given by the Extension of time given by the
creditor would not release the creditor would release a surety
solidary debtor or solidary guarantor
Liability of Solidary Debtors:
 the creditors may bring an action against the debtors and
sureties, either alone or together with the principal debtor,
even if the surety is not included in the first suit.
 If the principal debtor is held in default, the surety is also held
in default, since his obligation is as the same as the principal
 Solidary co-debtor is not released from his liability even if the
creditor brought an action against a co-debtor first, caused
execution on the properties of such co-debtor, which was later
voluntarily relinquished due to a valid third-party claim
Judgment as Regards Creditors:
 If it is favorable to the creditor, it inures to the benefit of co-
creditors.
 If it is adverse to the creditor-plaintiff, it can be set up against
the other co-creditors in subsequent actions, unless it is founded
on a cause personal to the creditor-plaintiff in the first action.
Judgment as Regards Debtors:
 If it is favorable to the creditor-plaintiff, but the defendant-debtor
is insolvent, the other debtors can still be sued until the debt is
fully paid. Judgment against one debtor cannot be enforced
against the others; a new action is needed. A judgment rendered
against several defendants can be revived against only one of
them.
 If it is favorable to the defendant-debtor, it amounts to an
extinguishment of the obligation with respect to him, and it must
necessarily inure to the benefit of the other co-debtors, except
when the cause is personal to the defendant-debtor.
Art. 1217. Payment made by one of the solidary debtors
extinguishes the obligation. If two or more solidary debtors offer
to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only
the share which corresponds to each, with the interest for the
payment already made. If the payment is made before 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
Payment by a Solidary Debtor:
- results in the release from liability of the other debtors to the
creditor.
- Where one of several persons who are sued upon a joint and
several liability elects to pay the whole, such person may be properly
substituted in the same action as plaintiff for the purpose of enforcing
contribution from his forme associates.
- Gives birth to a right in favor of the paying debtor, and imposes on
the other co-debtors the duty to pay him their shares in the
discharged obligation.
- The right of the paying co-debtor to be reimbursed is not based on
the original obligation but upon the payment made by him, hence he
is only entitled to claim from his co-debtors the share pertaining to
each with interest on the amount advanced.
 If partial payment has been made, the solidary debtor can only
recover reimbursement from the co-debtor only in so far as hi
payment exceeded his share of the obligation.
 In reimbursement, when the solidary debtor pays the total
obligation, the resulting obligation of the other co-debtors to
reimburse him becomes joint.
 If one, by insolvency, cannot pay his share in the
reimbursement, the others, including the one who paid, shall
bear such share proportionately.
Note: Kat and our other classmates said that since the article stated
“in proportion to the debt of each”, the share of the insolvent should
not be divided equally among the remaining co-debtors, but should
be dependent in their share, in cases when each debtor is required
to pay different amounts of debt. To get this, according to Rayn, we
should first add the shares of the remaining co-debtors, and after get
the proportion of each debtor based on the sum. For example, A, B,
and C are solidary debtors to pay a total of $900,000. A will pay
$400,000, B will pay $300,000, and C will pay $200,000. A paid the
whole amount already but B became insolvent. So add A and C’s
share first = 400,000+200,000=600,000. Then divide the shares from
the sum, A=4/6 or 2/3 and C=3/6 or 1/3. Then apply it to B’s share,
which is $300,000. A’s share=(2x300,000)/3=.200,000 and C’s
share=(1x300,000)/3=100,000. I’m not sure if this is really right but I
hope it helps. =)Art. 1218. Payment by a solidary debtor shall not
entitle him to reimbursement from his co-debtors if such payment is
made after the obligation has prescribed or become illegal. (n)
 No reimbursement if:
 Obligation PRESCRIBES
 Obligation becomes ILLEGAL (Law has been
passed, making such prestation illegal)
 Prescriptive period of actions:
 Within 10 years (upon a written contract, upon an
 obligation created by law)
 Within 6 years (upon an oral contract, upon a
quasi-contract)
 Within 4 years (upon an injury to the rights of the
plaintiff, upon a quasi-delict)
 The statute of limitations, however, may be
superseded or modified by a contract between
parties.
 Neither can a solidary debtor who pays the obligation which has
already prescribed recover from the creditor has been paid by him
 In other cases, where the obligation no longer exists, he can
recover from the creditor the amount paid, under the rules on quasi-
contract.
Art. 1219. The remission made by the creditor of the share
which affects one of the solidary debtors does not release the
latter from his responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them before the
remission was effected. (1146a)
 To exempt the co-debtor whose part is thus subsequently remitted
will give way to fraud.
 Any belated (delayed) remission by the creditor of the share of any
of the debtor has no effect on the internal relationships of the co-
debtors.
 A, B, 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.
 After the prior payment of the entire obligation, there is nothing to
remit because the obligation has been extinguished.
 A, B, 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.
 What is the effect of the insolvency of anyone of the remaining
debtors?
In the above case, there are three views:
 The creditor should bear the loss due to insolvency. Thus, in the
example given the share of the insolvent debtor is P2,000, and each
of the other four debtors should contribute P500 to cover it. The P500
due from the debtor whose share was remitted, is considered as
included in the remission; hence, the debtor who paid the full balance
of P8,000 can recover the P500 from the creditor as a payment of
what is not true.
 Tolentino: This view presumes that the creditor has
remitted more than the share of the debtor he has
favoured; it is juridically unsound to consider a gratuitous
act as extending beyond the intent of the grantor-creditor.
The rule is that gratuitous acts should be restrictively
construed as to permit the least transmission of rights.
 The remission of the share of the one of the debtors does not
affect his obligation to contribute to the share of an insolvent co-
debtor. In other words, in the given example the debtor whose share
was remitted must pay P500 to the debtor who paid the entire
balance of P8,000.
 Tolentino: This view is justified by: In every solidarity, there is a
dual relationship—(1) the relation between the creditor and the
debtors; (2) the relation among the debtors themselves. When a
creditor remits the share of any debtor, he can affect only the first
relation, because he is totally a stranger to the second relation. This
relationship among the debtors is expressly governed by law in the
last paragraph of Art. 1217, which imposes on every co-debtor the
duty of contributing to the share of the insolvent debtor. This is a
provision that does not affect the creditor, and no act of the creditor
should affect the relation to the debtors under it. the credit cannot
therefore, by his act exempt any debtor from the obligation imposed
by it.
 The share of the insolvent must be divided only among the other
co-debtors, excluding the one whose share has been remitted. In
other words, the debtor who paid the whole obligation of P8,000, in
the example given, can recover only from the other two solvent
debtors who shall reimburse one-third each of the amount paid to the
creditor
 Tolentino: Like the first, this is also unacceptable
because it makes the remission of the share of
one debtor increase the burden of the other
debtors without their consent.
Art. 1220. The remission of the whole obligation, obtained by
one of the solidary debtors, does not entitle him to
reimbursement from his co-debtors. (n)
 There is nothing to be reimbursed because he did not not spend
any money, the remission being a gratuitous act.
Art. 1221. If the thing has been lost or if the prestation has
become impossible without the fault of the solidary debtors, the
obligation shall be extinguished.
If there was fault on the part of any one of them, all shall be
responsible to the creditor, for the price and the payment of
damages and interest, without prejudice to their action against
the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the 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. (1147a)
 Application is limited to the case of non-performance because of
the loss of the thing or impossibility of the prestation that is due—
 Fortuitous event (debtor has no fault or delay)—
obligation is extinguished
 Fault of any of the debtor—all are liable because
of their mutual agency
  Fortuitous event (after a debtor has incurred in delay)
—obligation is converted into obligation to pay indemnity,
consisting of the price, damages and interest. The creditor
can recover such to any of the debtors, guilty or not. In the
event that the innocent debtor pays the indemnity, the guilty
should reimburse him. The guilty debtor shoulders all the
consequences of the loss because of his fault and delay;
hence, he cannot reimburse from the innocent ones the
indemnity.
 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.
Art. 1222. A solidary debtor may, in actions filed by the creditor,
avail himself of all defenses which are derived from the nature
of the obligation and of those which are personal to him, or
pertain to his own share. With respect to those which personally
belong to the others, he may avail himself thereof only as
regards that part of the debt for which the latter are responsible.
(1148a)
 Defenses available to a solidary debtor when sued by the creditor:
 Defenses derived from the nature of the
obligation—those which may contribute to
weaken or destroy the vinculum juris existing
between the debtor and creditor such as
payment, prescription, remission, statute of
frauds, presence of vices of consent, etc.
 Defenses personal to the debtor-defendant—may
be either total or partial; such as minority, insanity
and others purely personal to him; if the personal
takes the form of special terms or conditions
affecting his part of the obligation, he may utilize
them only with respect to his part, but he can still
be sued for the portions not subject to the terms
or conditions because he is solidary liable.
 Defenses personal to the other solidary debtors
—the debtor being sued may also set up
defenses which are personal to the other solidary
debtors, whether such defenses affect the
capacity or consent of such debtors or only refer
to terms or conditions affecting their shares.
SECTION 5. - Divisible and Indivisible Obligations
Art. 1223. The divisibility or indivisibility of the things that
are the object of obligations in which there is only one
debtor and only one creditor does not alter or modify the
provisions of Chapter 2 of this Title. (1149)
 A thing is considered indivisible when if divided into
parts, its value is diminished disproportionately. A thing is
divisible is when each one of the parts into which it is
divided forms a homogenous and analogous object to
the other parts as well as to the thing itself
 Kinds of division—
1. Qualitative - thing is not entirely
homogenous ex. A and B are heirs of C.
They agreed to divide their inheritance
as follows: to A – a house and lot home
appliances and to B – a rice field, a car
and P10,000 cash.
2. Quantitative-thing divided is
homogenous; the parts themselves may
be separated ex. If the inheritance is a
rice field, the partition is by metes and
bounds into equal parts.
3. Ideal—when the parts are not separated
in a material way, but there are assigned
to several persons the undivided
portions pertaining to them, as in co-
ownership ex. suppose the car and the
rice field, in the first example, were
inherited by both A and B. As co-owners,
their one-half shares in the car are not
separable in a material way but only
mentally. Similarly, before the land is
actually divided between A and B, they
are merely co-owners, and neither one
of them can say that he is the absolute
owner of a specific portion thereof.
 Divisible obligation—one which is susceptible of
performance; the debtor can legally perform the
obligation by parts and the creditor cannot demand a
single performance of the entire obligation
 Indivisible obligation—when it cannot be performed in
parts
 Divisibility or indivisibility of the obligation—refers to
the performance of the prestation and not to the thing
which is object thereof; it should not be confused with
the divisibility of the thing. The thing may be divisible, yet
the obligation may be indivisible.
Example: D obliged himself to deliver to B a specific
car on November 15. This obligation is indivisible
because it is not capable of partial performance. The car
must be delivered at one time as a whole.
Kinds of Indivisibility:
(1) Legal indivisibility – where a specific
provision of law declares as indivisible, obligations
which, by their nature, are divisible (Art. 1225, par.3)
(2) Conventional indivisibility – where the will of
the parties makes as indivisible, obligations which,
by their nature, are divisible (Art. 1225, par.3)
 (3) Natural indivisibility – where the nature of
the object or prestation does not admit of division,
e.g., to give a particular car, to sing a song etc.
Where there is only one creditor and one debtor,
the latter has to perform the obligation in its totality,
whether or not the prestation is divisible. Unless
there is an express stipulation to that effect, says
Article 1248, the creditor cannot be compelled
partially to receive the prestations in which the
obligation consists; and in accordance with Article
1232, an obligation is not deemed paid unless the
thing or service in which the obligation consists has
been completely delivered or rendered, as the case
may be.
Art. 1225. For the purposes of the preceding articles,
obligations to give definite things and those which
are not susceptible of partial performance shall be
deemed to be indivisible.
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. (1151a)

 True test of divisibility: whether the obligation is

Art. 1224. A joint indivisible obligation gives rise to susceptible of partial compliance or not.
indemnity for damages from the time anyone of the  Factors which determine whether an obligation is
debtors does not comply with his undertaking. The divisible or not:
5. Will or intention of the parties
debtors who may have been ready to fulfill their
(expressed or implied)
promises shall not contribute to the indemnity beyond 6. Objective or purpose of the stipulated
the corresponding portion of the price of the thing or of prestation
the value of the service in which the obligation consists. 7. Nature of the thing
(1150) 8. Provisions of law affecting the prestation
 In indivisible obligations, partial performance is
 Indivisible joint obligation—the object is indivisible but equivalent to non-performance as confirmed by Article
the liabilities of the parties is joint 12333, which requires complete performance of the
4. To enforce it, Article 1209 has obligation, and Art. 12484, which forbids partial fulfilment,
established the necessity of collective except—
fulfilment and the action must be against 9. Where the obligation has been
all the debtors substantially performed in good faith,
 Solidarity and indivisibility in obligations are NOT the debtor may recover as is there had
identical; neither does one imply the other. been complete performance, minus the
damages suffered by the creditor (Art.
Solidarity Indivisibility 1234)
Refers to the vinculum and Refers to the prestation of 10. When the creditor accepts performance,
therefore principally to the the object of the obligation knowing its completeness, and without
subjects of the obligation protest, the obligation is deemed fully
Requires plurality of Not required performed (Art. 1235)
subjects  Severable and Entire Obligations
Such solidarity remains When the indivisible 11. Divisible and indivisible obligations are
even when there has been obligation is converted into not necessarily identical to severable
non-performance and the one to pay damages, the and entire contracts, respectively.
debtors become liable for reason for the indivisibility Whether the contract is severable and
damages ceases to exist, and each entire depends in general upon the
debtor becomes liable for
his part of the indemnity 3
Art. 1233. A debt shall not be understood to have been paid
The death of the debtor Affects the heirs of the unless the thing or service in which the obligation consists has
terminates the solidarity, debtor in that they remain been completely delivered or rendered, as the case may be.
which is not transmitted to bound to perform the same (1157)
4
the heirs prestation Art. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive
the prestations in which the obligation consists. Neither may
 If the obligation is solidary and indivisible, every debtor the debtor be required to make partial payments.
is liable for losses and damages, although those ready to However, when the debt is in part liquidated and in
perform can later recover from the guilty one. part unliquidated, the creditor may demand and the debtor
may effect the payment of the former without waiting for the
liquidation of the latter. (1169a)
 consideration to be paid, not upon its indivisible because of the nature of the subject
object matter.
Severable Entire 2. Obligations which are not susceptible to partial
Features the consideration consideration is performance
is expressly or by single; when the Examples: To sing a song; to dance the tinikling.
implication consideration is Here, the obligation is indivisible by reason of its
apportioned; the entire and single, the
purpose which requires the performance of all
part to be contract must be
performed by one held to be entire, the parts. Is the obligation still indivisible if there
party consists in although the subject are more than one participant? The obligation
several distinct matter may be becomes divisible as far as the participants are
and separate distinct and concerned, because it is capable of partial
items, and the independent items performance.
price is 3. Obligations provided by law to be indivisible
apportioned to even if thing or service is physically divisible.
each of them Examples: Under the law, taxes should be paid
Effect of If one part is If a part is illegal, the
within a definite period. Although money is
Illegality illegal, the part whole contract is
which is illegal is unenforceable. If, physically divisible, the amount of tax payable
void and cannot however, the parties must be delivered in toto, not partially.
be enforced, but have apportioned the 4. Obligations intended by the parties to be
that part which is different indivisible even if thing or service is physically
legal is considerations divisible.
enforceable. among the Examples: The obligation of D to give P1,000.00
respective to C on a certain date. Money is physically
covenants, and such divisible but the clear intention here is for D to
legal reciprocal
deliver P1,000.00 at one time and as a whole.
considerations and
covenants can be
Obligations deemed divisible:
separated from the
1. Obligations which have for their object the
illegal, the legal ones
can be enforced. execution of a certain number of days of work
Effect of If one of the undertakings is void because Example: The obligation of D to paint the house
nullity of its subject matter, but it is not illegal, of C, the painting to be finished in 10 days.
then the valid covenants may be Here, the obligation need not be fulfilled at one
enforced, whether the contract is time.
severable or not. 2. Obligations which have for their object the
Statute of Each sale for a The contract is accomplishment of work by metrical units.
frauds5 price below the affected by the Example: The obligation of D to make a table, 3
- contract statutory limit is not statute and must feet wide and 5 feet long; the obligation of D and
of sale of affected by the be in writing
B to deliver 20 cubic meters of sand. But the
chattels statute
Statute of A part payment or A part payment or obligation of D alone to deliver 20 cubic meters
frauds part delivery of part delivery will be of sand is indivisible.
-partial each item removes sufficient to remove 3. Obligations which by their nature are susceptible
delivery or that item from the the whole contract of partial performance
partial statute, but the from the operation Example: The obligation of D to teach
payment rest, if above the of the law. “Obligations and Contracts” for one year in a
statutory limit of university; the obligation of E to render 3 song
price, are still numbers in a program; the obligation of F to pay
within the statute.
a debt of P1,200.00 in 12 monthly installments
Obligations deemed indivisible: of P100.00 but each prestation to pay P100.00
1. Obligations to give definite things is indivisible as it is to be delivered at one time
Example: To give a particular electric fan; to and in its totality.
deliver a specific house. Here, the obligation is
Divisibility or indivisibility in obligations not to do
In negative obligations not to do, the character
5
of the prestation in each particular case shall determine
their divisibility or invisibility.
 Obligations to do and not to do are generally
invisible. Obligations to do stated in paragraph 2 of
Article 1225 of are divisible.
 Obligations and Contracts Reviewer 24
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Section 6- Obligations with a Penal Clause

PURPOSE OF PENALTY
Principal Obligations- one which can stand by
itself and does not depend for its validity and
existence upon another Obligation.
Accessory Obligation- one which is attached to a
principal obligation and, therefore, cannot stand
alone.
Example: X promises to deliver to Y a specific
horse. (Principal Obligation) In case of non-
fulfillment, X shall pay a penalty of 100,000.00php.
 (Accessory Obligation)
1. Funcion coercitivao de grantia- insure
performance of obligation by creating an
effective deterrent against breach, making
the consequences of such breach onerous
as it may be possible. (Yulo vs. Chan Pe,
101 Phil. 134) This is the general purpose
of a penal clause.
2. Funcion liquidatoria- to liquidate the
amount of damages to be awarded to the
injured party in case of breach of the
principal obligation. (compensatory)

***The accessory obligation to give the payment of the 3. Funcion estrictamente penal- in certain
penalty of 10,000 php cannot stand alone. X cannot just exceptional cases, to punish the obligor in
pay the penalty. This obligation is attached to the case of breach of principal obligation or
fulfillment principal obligation which is to give the specific violation of his obligation (punitive)
horse.****
KINDS OF PENALTY (penal clause)
Penal Clause- is an accessory undertaking
attached to an obligation to assume greater liability 1. As to its origin:
in case of breach (non-fulfillment, partly fulfilled or a. Legal- penalty provided by law
irregularly complied with) b. Conventional- provided for by
stipulation of the parties
PENAL CLAUSE VS CONDITION 2. As to its purpose:
a. Compensatory- penalty takes the
Penal Clause Condition place of damages in case of
Still constitutes an Not an obligation breach
obligation (to give or to b. Punitive- penalty imposed merely
do) as punishment for breach
Demandable in default Never Demandable 3. As to effect or demandability:
of the unperformed a. Subsidiary or alternative- when
obligation and only the penalty can be enforced or
sometimes jointly with demanded
it b. Joint or Cumulative- when both the
principal obligation and the penal
Obligation with a Penal clause is one which clause can be enforced or
contains an accessory obligation attached to demanded
the principal obligation, which imposes an
Art. 1226. In obligations with a penal clause, the
additional liability or an accessory undertaking
penalty shall substitute the indemnity for damages
to pay a previously stipulated indemnity in case
and the payment of interests in case of
of breach of the principal obligation.
noncompliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid if the
***It pushes the debtor to perform his obligation obligor refuses to pay the penalty or is guilty of
faithfully and without delay – within the period fraud in the fulfillment of the obligation.
agreed upon, or else, he suffers a fixed civil penalty
without need of proving the damages of the other The penalty may be enforced only when it is
party***
demandable in accordance with the provisions of
this Code. (1152a)
***Measure beforehand the damages which would result
from non-compliance

GR: PENALTY: as compensation or substitute for
damages.
XPN: PENALTY: as punitive a form
GR: The penalty imposable is a substitute for the
indemnity for:
1. Damages (reparation)
 damages not needed; in case of
breach, the stipulated indemnity or
prestation represents a legitimate
estimate made by the contracting
parties.
2. payment of interest in case of breach of
obligation (compensation)
*** unless the contrary is stipulated
XPN: Damages or interests and penalty in case
of breach may be recovered from the following
acts:
1. If the debtor refuses to pay the penalty
2. If the debtor is guilty of fraud in the
fulfillment of the obligation
3. If there is express stipulation that the
other damages or interests are
demandable to the penalty in the penal
clause
 (purpose: to punish the obligor)
ENFORCEABILITY OF PENALTY
1. Penalty becomes demandable upon
breach.
2. Penalty must not be contrary to laws,
morals, good customs, public order or
public policy
3. ***In Reciprocal Obligation- non
compliance of parties although breach
is not willful like due to fortuitous event:
penal clause cannot be invoked***
Obligations and Contracts Reviewer 25
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Penalty substitutes for damages and interests
As a general rule, in an obligation with a penal
clause, the penalty takes the place of the indemnity
for damages and the payment of interests in case
of non-compliance (Art. 1226). Proof of actual
damages suffered by the creditor is not necessary
in order that the penalty may be enforced.
When creditor may recover damages
The creditor, in addition to the penalty, may
recover damages and interests:
(1) When so stipulated by the parties;
(2) When the obligor refuses to pay the
penalty, in which case the creditor may
recover legal interest thereon; or
(3) When the obligor is guilty of fraud in the
fulfilment of the obligation, in which case
the creditor may recover damages caused
by such fraud.
Example: D promised to construct a house for
C. The contract carried a penal clause that in
case of non-compliance, X would have to pay a
penalty of P50,000.00. X did not construct the
house and, as a consequence, Y suffered
damage in the amount of P40,000.00.
In this case, the penalty of P50,000.00 shall
be paid. Y cannot recover more than
P50,000.00, the penalty stipulated, even if he
proves that the damages suffered by him is
P60,000.00.
The penalty substitutes the indemnity for
the damage P40,000.00, unless there is a
stipulation to the contrary, in which case Y may
also recover the damages proved by him.
If X refuses to pay the penalty, Y may recover
legal interest thereon, the interest representing new
damages brought about by the non-payment of the
penalty.
If X is guilty of fraud (not mere fault) in the
fulfilment of his obligation, he is also liable for the
damages caused thereby in conformity with Article
1171. Proof of the fraud and the existence and
amount of damages is incumbent upon Y. But Y
need not prove fraud to recover the penalty.
When penalty may be enforced
The penalty may be enforced only when it is
demandable in accordance with the provisions
of the Civil Code. This means that the penalty,
as a stipulation in a contract, is demandable
only if there is a breach of the obligation and it
is not contrary to law, morals, good customs,
public order, or public policy. (Art. 1306)

Thus, if the obligation cannot be fulfilled
due to a fortuitous event, the penalty is not
demandable. Under Article 1229, the penalty
may be reduced if it is iniquitous or
unconscionable or in case there is partial or
irregular fulfillment.
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
Art. 1227. The debtor cannot exempt himself from
the performance of the obligation by paying the
penalty, save in the case where this right has been
expressly reserved for him. Neither can the creditor
demand the fulfillment of the obligation and the
satisfaction of the penalty at the same time, unless
this right has been clearly granted him. However, if
after the creditor has decided to require the
fulfillment of the obligation, the performance thereof
should become impossible without his fault, the
penalty may be enforced. (1153a)
LIMITATION UPON RIGHT OF CREDITOR
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GR: Debtor can’t exempt himself from the
performance of the principal obligation by
paying the stipulated penalty
XPN: Right EXPRESSLY RESERVED for him to
substitute penalty for the principal obligation
***An obligation with penalty clause cannot
be turned to facultative obligation unless expressly
stipulated in the contract.***
LIMITATION UPON RIGHT OF CREDITOR
GR: Creditor can’t demand fulfillment of
principal obligation and satisfaction of the
stipulated penalty at the same time.
XPN:
1. when the creditor was CLEARLY given/
GRANTED the right to enforce both the
principal obligation and penalty
2. When the creditor has demanded
fulfillment of the obligation but cannot
be fulfilled due to:
 debtor’s fault – creditor may
demand for penalty and damages
 without creditor’s fault – he can
demand the penalty
***if creditor chooses penalty he cannot
afterwards demand fulfillment of principal
obligation.
Example: S is required to deliver to B certain
products; otherwise, he shall pay a penalty in
the amount of P10,000.00. Under the above
article, S cannot just pay the penalty as a
 Obligations and Contracts Reviewer 27
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substitute for non-compliance of the principal Art. 1228. Proof of actual damages suffered by the
obligation except when he is expressly given creditor is not necessary in order that the penalty
the right by B to do so. may be demanded. (n)

Penal Clause presumed subsidiary

PROOF OF ACTUAL DAMAGE
General Rue: The creditor cannot demand
the fulfillment of the obligation and the Applicable on to Penal Clause which are as
satisfaction of the penalty at the same time. The compensation or substitute for damages or
payment of interest.
primary purpose of penalty is to urge the debtor
to the performance of the main obligation.
GR: Proof of Actual damages not needed in
(1) Where there is performance – no need
order for penalty to be demanded.
for demanding the penalty. The
exception arises when “this right has
been clearly granted” the creditor.
Under Articles 1227, therefore, the
general rule is that a penal clause is XPN: Stipulated penal clause as a punitive form-
subsidiary and not joint. damages besides penalty still subsist. Actual
(2) Where there is no performance – the proof for damages needed in case of:
creditor may ask for the penalty or
require specific performance. The
remedies are alternative and not
cumulative nor successive, subject to 1. If the debtor refuses to pay the penalty
the exception that the penalty may be 2. If the debtor is guilty of fraud in the
enforced if after the creditor has fulfillment of the obligation
decided to require fulfillment, the same 3. If there is express stipulation that the
should become impossible without his other damages or interests are
fault. If there was fraud on the part of demandable to the penalty in the penal
the debtor, the creditor may recover the clause
penalty as well as damages for non-
fulfillment.
Art. 1229. The judge shall equitably reduce the
penalty when the principal obligation has been
When Penal Clause is Joint partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty
The debtor has the right to pay penalty in
may also be reduced by the courts if it is iniquitous
lieu of performance only when this right has
or unconscionable. (1154a)
been expressly reserved for him. With respect
to the creditor, he has the right to demand
performance and payment of penalty jointly
when this right has been clearly granted him. It JUDICIAL REDUCTION OF PENALTY
is, therefore, not required that this right be
expressly reserved for him; an implied grant
clearly deducible from the evidence or the
1. When there is partial or irregular
nature of the obligation is sufficient. performance-

 partial- refers to the extent of the

fulfillment which not all prestations
are complied.
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------ END -----

 irregular- refers to the manner by

which all prestations but not in
accordance to the tenor.

2. When the penalty agreed upon is

iniquitous or unconscionable - even if
there was no performance at all. In the
court’s sound discretion to determine if
amount should be reduced because of
excessiveness.

 INIQUITOUS OR UNCONSCIONABLE –
when it is revolting to the conscience or
common sense; grossly
disproportionate to the damages
suffered.

 Judge’s power to reduce penalties are

limited to private contracts.

Art. 1230. The nullity of the penal clause does not

carry with it that of the principal obligation.

The nullity of the principal obligation carries with it

that of the penal clause. (1155)

PRINCIPAL OBLIGATION VOID = PENAL

CLAUSE ALSO VOID

 If the principal obligation is void it

necessarily follows that the penal clause
is also void- as the penal clause is only
an accessory obligation.

PENAL CLAUSE VOID = PRINCIPAL

OBLIGATION NOT NECESSARILY VOID.

 GR: The accessory follows the principal

and not vice versa. If only penal clause
is void, the principal obligation is still
valid and demandable. The penal clause
is just disregarded. The injured party
may recover indemnity for damages in
case of non-performance of the
obligation as if no penalty had been
stipulated (art. 170)