Obligation and Contracts

Definition:

Obligations is the most important, most abstract and most difficult of all
of civil law. It is the entirety of private law. If you don’t know obligations and
contracts, you will never understand commercial law.

The term “obligations” was derived from the words “ob” and “ligare”
which means “to bind or tie together”. “Ligare” is the source of several common
words such as “ligament” and “ligation”. (Ligation and Vasectomy have the
same purpose: to tie and to cut off, the fallopian tube, for the former, and the
vas deferens, for the latter.)

“Obligatio” was initially a physical act of being chained (with shackles).

Before, under Roman law, if the debtor cannot pay, the creditor can bring him
to the magistrate and the magistrate can authorize the creditor to cuff the
debtor and offer him for sale for 3 days, the proceeds of which go to the
creditor. The debtor then becomes a slave. If he is not bought, the creditor
can have him chopped into little pieces or have him sold to the barbarians.

As time passed, cruelty softened. By the time of Cicero, “ligatio” does not
mean vinculum of chains but vinculum juris (bond of law). Obligation became
metaphorical and not literal.

Chapter 1 – General Provisions (Articles 1156 – 1162)

1. Obligation
- According to Art 1156 of the New Civil Code “An Obligation
is a juridical necessity to give, to do or not to do.”
- Tie or bond recognized by the law by virtue of which one is
bound in favor of another to render something – and this
may consist in giving a thing, doing a certain act, or not
doing a certain act.
2. Quasi-contract
- Those juridical relations arising from lawful, voluntary and
unilateral acts, based on the principle that no one shall be
unjustly enriched or benefited at the expense of another.
(Art. 2142)
3. Compliance in good faith
- Means compliance or performance accordance with the
stipulations or terms of the contract or agreement.
4. Wrong
- (cause of action), according to its legal meaning, is an act
or omission of one party in violation of the legal right or
rights of another.
5. Solution indebiti
- Juridical relation which is created when something is
received when there is no right to demand it and it was
unduly delivered through mistake. The requisites are: (1)
there is no right to receive the thing delivered; and (2) the
thing was delivered through mistake.
6. Divisible and indivisible obligations
- Divisible : condition is susceptible of partial realization
- Indivisible: condition is not susceptible of partial realization
7. Penal clause
- It is an accessory obligation attached to the principal
obligation to assure greater responsibility in case of breach.
8. Obligation with a penal clause
- one to which an accessory undertaking is attached for the
purpose of insuring its performance by virtue of which the
obligor is bound to pay a stipulated indemnity or perform a
stipulated prestation in case of brerach.
9. Joint penal clause
- cumulative penal clause; when both the principal
obligation and the penal clause can be enforced 

a. Essential requisites of an obligation.

1. Passive subject (debtor or obligor) – the person who is
bound to the fulfillment of the obligation; he who has a
duty
2. Active subject (creditor or oblige) – the person who is
entitled to demand the fulfillment of the obligation; he who
has a right
3. Object or prestation (subject matter of the obligation) –
the conduct required to be observed by the debtor.
4. Juridical or legal tie (efficient cause) – that which binds or
connects the parties to the obligation.

b. Why are obligations under the Civil Code a judicial necessity?

- Obligation is a juridical necessity because in case of
noncompliance, the courts of justice may be called upon by
the aggrieved party to enforce its fulfillment or, in default
thereof, the economic value that it represents.

c. Elements or requisites in order that a person may acquire a

right of action in court against another to enforce the
performance of the latter’s obligation
1. Legal right in favor of a person (creditor/oblige/plaintiff)
2. A correlative legal obligation on the part of another
(debtor/obligor/defendant); to respect or not to violate said
right; and
3. An act or omission by the latter in violation of said right
with resulting injury or damage to the former.
d. May a person incur obligations even without entering into any
contract or voluntary agreement
- Yes. Art 1157 : obligations arise from:
1. Law
2. Contracts
3. Quasi-contracts
4. Acts or omission punished by law
5. Quasi-delict

Examples:
a. Rolena saw at about one (1:00p.m) in the afternoon a child alone
in a shopping mall. The child who strayed from Maritz, his mother
was in tears and appeared very hungry. Out of pity, Rolena took
him into a restaurant to eat for which he spent Php150.00. Maritz
did not give her consent to the good deed of Rolena. Furthermore,
 they were on their way home before the child got lost. Is Rolena
entitled to be reimbursed by Maritz for the amount of Php150.00.

Art. 1160 - Obligations derived from quasi-contracts shall be subject

to the provisions of Chapter 1, Title XVII, of this Book. (n)

In this case, Rolena is entitled to be reimbursed by Maritz for

the amount of Php 150, on the principle of quasi-contract.

b. While the car of Krizia was parked by the roadside, it was bumped
at the rear by a jeep belonging to Krystal. Only the car of Krizia
suffered damage. Under the circumstances, does it follow that
Krystal is liable to Krizia for the damage?

Art. 1162 -  Obligations derived from quasi-delicts shall be governed

by the provisions of Chapter 2, Title XVII of this Book, and by special
laws. (1093a)

In this case, he is under obligation to pay the damage caused

to Krizia by his act although there is no pre-existing contractual
relation between them because he is guilty of fault of negligence.

c. In the same problem, has Krizia the right to ask indemnity from
George, employer of Krizia, on the ground the when the accident
occurred Krizia was then on his way to transact business with a
client of George?

Art. 1158 - Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are
demandable, and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the
provisions of this Book. (1090)

d. Jhen (debtor) borrowed Php10,000 from Ana (creditor). On the due

date of loan, Jhen could not pay Ana because he lost to a robber
the Php10,000 intended for Ana. In addition, he suffered financial
reverses, and he was short of cash even of his current family’s
needs. Is Jhen legally justified to refuse to pay Ana?

Art. 1159 - Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith. (1091a)

Chapter II : Nature and Effect of Obligations ( Articles 1163 - 1178)

DEFINITIONS:

1. GENERIC/ INDETERMINATE THINGS

- A thing that refers only to a class or genus to which it pertains and
cannot be pointed out with particularity.
2. PERSONAL RIGHTS
- Is the right or power of a person (creditor) to demand from another
(debtor) as a definite passive subject, the fulfillment of the latter’s
obligation to give, to do, or not to do.

3. LEGAL DELAY OR DEFAULT

- Is the failure to perform an obligation on time which failures
constitutes a breach of the obligation.

4. FORTUITIOUS EVENT
- Any event which be foreseen, or which, though foreseen, is inevitable.
- An event which is either impossible to foresee or impossible to avoid.
General Rule: No person liable to fortuitous event.
Exceptions:
1. Law states
2. Stipulation/contract states
3. Assumption of risk
4. Delay
5. Debtor promises deliver to 2/more persons who do not have same
interest (bad faith
EFFECTS OF FORTUITOUS EVENT to thing to be delivered
- extinguish the obligation if determinate; generic does not extinguish the
obligation

5. DILIGENCE OF A GOOD FATHER OF A FAMILY

- Refers to the diligence equated with ordinary care; or
- Refers to diligence which an average (a reasonably prudent) persons
exercise over his own property.

1. RULES AS TO THE LIABILITY OF A PERSON FOR LOSS/ DAMAGES

RESULTING FROM A FORTUITOUS EVENT (article 1174)
1. When expressly specified by law
a. The debtor is guilty of fraud, negligence, or delay, or
contravention of the tenor of the obligation;
b. The debtor has promised to deliver the same (specific) thing
two or more persons who do not have the same interest;
c. The obligation to deliver a specific thing arises from a crime;
and
d. The thing to be delivered by stipulation.
2. When declared by stipulation
3. When the nature of the obligation requires the assumption of risk.

2. WHAT RIGHTS ARE GIVEN BY LAW TO THE CREDITOR IN CASE

THE DEBTOR FAILS TO COMPLY WITH HIS OBLIGATION TO
DELIVER A SPECIFIC THING? (article 1165)
- In an obligation, to deliver a determinate thing, the very thing itself
must be delivered. Consequently, only the debtor can comply with the
obligation. The creditor is granted the right to compel the debtor to
make the delivery in addition to the right granted in Article 1170.

3. WHAT ARE INCLUDED TO BE DLIVERED IN AN OBLIGATION TO

GIVE A DEFINITE THING? EXPLAIN THEM. (article 1166)
- Accessions. Fruits of a thing/ additions to or improvements upon a
thing.
 - Accessories. Things joined to or included with the principal thing for
the latter’s embellishment, better use, or completion.

4. SUPPOSE YHE OBLIGATION OF THE DEBTOR IS TO DO SOMETHING

AND HE FAILS TO DO IT OR PERFORMS IT IN CONTRAVENTION OF
THE AGREEMENT, WHAT ARE THE REMEDIES AVAILABLE TO THE
CREDITOR? (article 1167)
1. If the debtor fails to comply with his obligation to do, the creditor
has the right:
a. To have the obligation performed by himself, or by another,
unless personal considerations are involved, at the debtor’s
expenses;
b. To recover damages.
2. In case the obligation is done in contravention of the terms of the
same/ poorly done, it may be ordered (by the court upon
complaint) that it be undone if it is still possible to undo what was
done.

5. CAN A DEBTOR BE PUT IN DELAY AND CONSEQUENTLY INCUR

LIABILITY EVEN WITHOUT DEMAND FROM CREDITOR? EXPLAIN.
(article 1169)

No, one of the conditions that must be present before delay/ default by
the debtor can exist is the demand mad by the creditor. The creditor has
the burden of proving that demand has been made.

6. MAY AN ACTION ARISING FROM FRAUD BE WAIVED? EXPLAIN.

No, in fraud, there is deliberate intention to cause damage or injury. The

waiver of liability is void.

7. MAY AN ACTION ARISING FROM NEGLIGENCE BE WAIVED?

EXPLAIN.

Yes, in negligence, there’s no such intention to cause damage and injury.

In certain sense, waiver is allowed.

I. PROBLEMS

1. Amado (seller) sold to Ramon (buyer) on July 5, a horse named Silver

to be delivered on July 20. However, on July 15, Amado sold again
and delivered the horse to Joseph. Who has a better right to Silver?

Joseph acquires ownership over the horse as Amado delivered Silver on

July 15. Amado shall be liable to Ramon for Damages. “Creditor does
not become the owner until the specific thing has been delivered to
him.”

2. Julius sold to Jigz a specific refrigerator which Julius agreed to

deliver not later than July 31, Julius did not deliver the refrigerator
on said date. Is Julius guilty of legal delay?

No, If Julius does not deliver the refrigerator on July 31, Julius is only in
ordinary delay in the absence of any demand from Jigz although a period
had been fixed for the fulfillment of the obligation. Hence, there is no
breach of the obligation and Julius is not liable for damages.
 3. Don promised to deliver to Rufy a female horse named Suzie on July
10. Suzie gave birth to a colt on July 5.
a. What are the obligations of Don?
o Accessory Obligation. Don has accessory duty to take care of
the horse with the diligence of a good father of a family.
b. Who has a right to the colt?
o Don. it is stated that “All fruits shall pertain to the vendee from
the day on which the contract was perfected. “ Since the colt
was born before the obligation to deliver, S has the right over it.
c. Who is the lawful owner of Suzie in case it was sold and
delivered by Don to Jun on July 8?
o Jun, ownership and other rights over the horse are acquired
and transmitted in a consequence of delivery.

4. Pauleen (debtor) borrowed P20,000 from Pamela (creditor) payable

after one (1) year? Is Pauleen liable to pay interest?

No, in order that the interest may be recovered, the payment of

interest must be expressly stipulated. From the given facts, the
interest is not expressly stipulated.

5. Allysa (lessor) issued a receipt that Joan (lessee) has paid the rent
for the months of March, 2008. Can Allysa still collect from Joan
the rents for January and February 2008?

No, as Allysa issued a receipt for the month of March, the

presumption is that, the rents for the months of January and
February had already been paid.

Chapter 3 – Different Kinds of Obligations (Articles 1179 - 1230)

Section 1: Pure and Conditional Obligations

Definition
Condition
- Future and uncertain event, upon the happening of which, the
effectivity or extinguishment of an obligation subject to it depends.
Civil loss
- When a thing disappears in such a way that its existence is
unknown; or even known, it cannot be recovered, whether as a
matter of fact of or of law.
Reciprocal obligation
- 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.
a. Pure obligation
- One which is not subject to any condition and no specific
date is mentioned for its fulfillment and is, therefore,
immediately demandable.
b. Potestative obligation
- A condition suspensive in nature and which depends upon
sole will of one of the contracting parties

Suspensive condition
 - The fulfillment of which will give rise to an obligation
- Demandability of the obligation is suspended until the happening
of the uncertain event which constitutes the condition
Resolutory condition
- The fulfillment of which will extinguish the obligation already
existing

Art. 1181 - In conditional obligations, the acquisition of rights, as well

as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event which constitutes the condition. (1114)

Arts. 1180 – 1183

Article 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. (n)

Article 1182. When the fulfillment of the condition depends upon

the sole will of the debtor, the conditional obligation shall be void. If it
depends upon chance or upon the will of a third person, the
obligation shall take effect in conformity with the provisions of this
Code. (1115)

Article 1183. (2) The condition not to do an impossible thing shall

be considered as not having been agreed upon

Art. 1186
The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment. (1119)

Art. 1187 (1)

The effects of a conditional obligation to give, once the condition
has been fulfilled, shall retroact to the day of the constitution of
the obligation. Nevertheless, when the obligation imposes
reciprocal prestations upon the parties, the fruits and interests
during the pendency of the condition shall be deemed to have been
mutually compensated. If the obligation is unilateral, the debtor
shall appropriate the fruits and interests received, unless from the
nature and circumstances of the obligation it should be inferred
that the intention of the person constituting the same was
different.

Art. 1189
(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 the 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;
 Examples:

1. Becca (debtor) borrowed Php 20,000 from Vilma (creditor) payable

on or before August 30. Before the arrival of the due date, Vilma
agreed to the promise of Ludiemi to pay C if B wants. Can C insist
the B pay not later than August 30?

Article 1182. When the fulfillment of the condition depends upon the

sole will of the debtor, the conditional obligation shall be void. If it
depends upon chance or upon the will of a third person, the obligation
shall take effect in conformity with the provisions of this Code. (1115)

2. Suppose in the same problem, Becca obliges himself to pay Vilma

Php10,000 after Vilma has paid his obligation to Ludiemi. Is the
obligation valid?

Article 1182. When the fulfillment of the condition depends upon the

sole will of the debtor, the conditional obligation shall be void. If it
depends upon chance or upon the will of a third person, the obligation
shall take effect in conformity with the provisions of this Code. (1115)

3. Oliver (seller) agreed to sell to Prime (buyer) a specific car for

Php200,000, delivery of the car and the payment of the price to be
made on June 15. Suppose Oliver delivered the car on June 15 but
Prime failed to pay the price, what are the remedies of Oliver?

Article 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. (1124)

4. Majo sold a parcel of land to Pola for Php240,000 payable in

installments of Php20,000 a year. The land was delivered to Pola
who obtained ownership thereof. After Pola had paid Php200,000,
he could no longer continuing paying in view of financial reverses
but he was willing to pay the balance of Php40,000 if given more
time. Thereupon, Majo sued for rescission under Article 1191. If
you were the judge, would you grant rescission?

Article 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. (1124)

5. Alex (debtor) binds himself to pay Caloy (creditor) a sum of money.

Give the three cases when the obligation of Alex is demandable at
once by Caloy?

Article 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. (1113)

Article 1193. (2) Obligations with a resolutory period take effect at once,

but terminate upon arrival of the day certain.

Section 2: Obligations with a period

Definitions:

Obligation with a period

- one whose effects or consequences are subjected In one way or another
to the expiration or arrival of said period or term.
Period
- a future and certain event upon the arrival of which the obligation
subject to it either arises or is terminated.
Indefinite period
- a day certain which must necessarily come, although it may not be
known then when. Like the death of a person.

1. Article 1195. Anything paid or delivered before the arrival of the

period, the obligor being unaware of the period or believing that the
obligation has become due and demandable, may be recovered, with
the fruits and interests. (1126a)
2. Art 1197  If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was intended,
the courts may fix the duration thereof.

3. Art. 1198 The debtor shall lose every right to make use of the period:

(1) When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the debt;

(2) When he does not furnish to the creditor the guaranties or securities
which he has promised;
 (3) When by his own acts he has impaired said guaranties or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new ones equally satisfactory;

(4) When the debtor violates any undertaking, in consideration of which

the creditor agreed to the period;

(5) When the debtor attempts to abscond. (1129a)

Example

1. Donna (debtor) borrowed Php10,000 from Princess (creditor) at

15% interest per annum payable on December31. Can Donna
require Princess to accept payment before December 31?

1196. Whenever in an obligation a period is designated, it is

presumed to have been established for the benefit of both the creditor
and the debtor, unless from the tenor of the same or other
circumstances it should appear that the period has been established in
favor of one or of the other. (1127)

2. Elaiza binds himself to give Php10,000 to Carla upon the

death of the father of Elaiza. Is the obligation of Elaiza conditional
or one with a period.

1193 (3). A day certain is understood to be that which must

necessarily come, although it may not be known when.

3. Shobe obtained a loan from Jun in the amount of Php50,00,

payable on August 10. As security for his debt, Shobe mortgaged
his car in favor of Jun. The car however, was substantially
damaged without the fault of Shobe. What rights, if any, does Jun
have under the law? May Jun demand payment from shobe even
before August 10?

1198 (3) A day certain is understood to be that which must necessarily

come, although it may not be known when.

Section 3: Alternative Obligations

ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.

5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be substituted.

ALTERNATIVE prestations LOST w/ debtor’s fault

Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
2. All prestations lost/become impossible due to debtor’s fault.
 ALTERNATIVE OBLIGATION
several prestations due, giving one
is sufficient
right to choose (debtor) unless
granted to creditor
If 1 of the prestation is illegal, nullity of principal carries w/ it nullity of
others may be valid, obligation
remains
loss/impossibility of ALL
prestations due, w/o debtor’s
fault, extinguishes obligation
FACULTATIVE OBLIGATION
one prestation due, but can be
subtituted
right to choose DEBTOR ONLY
accessory/
substitute
loss/impossibility of presta-tion due, w/o
debtor’s fault, extinguishes obligation

(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR

IN ALTERNATIVE OBLIGATION
1. If 1 of prestations lost through fortuitous event, shall still be perform by
choosing (creditor) from the remainder.
2. If 1 of prestations lost through debtor’s fault, creditor may claim any of
remainders w/ damages.
3. If ALL prestations lost through debtor’s fault, creditor choose price w/
damages.

RULES on LOSS/DETERIORATION of the thing intended as SUBSTITUTE

in FACULTATIVE OBLIGATION
1. If there is a loss/deterioration of thing intended as substitute, debtor is NOT
liable if NOT HIS FAULT.
But if substitution is already made, debtor is liable for loss of substitute when
in DELAY, NEGLIGENCE, or FRAUD.

SECTION 4: JOINT AND SOLIDARY OBLIGATIONS

Definition

Joint Obligation
- The whole obligation is to be paid or fulfilled proportionately of the
different debtors and/or is to be demanded proportionately by the
different creditors.
Solidary Obligation
- Where each one of the debtors is bound to render, and/or each one
of the creditors has a right to demand from any of the debtors, entire
compliance with the prestation.
Active Solidarity
- Solidarity on the part of the creditors, where any one of them can
demand a fulfillment of the entire obligation.
Joint Indivisible Obligation
- Parties are merely proportionately liable to object/ subject matter
which is not physically divisible into different parts.
Solidary Divisible Obligations
- Parties are merely proportionately liable to the object/ subject matter
which are physically divisible into different parts.
Discussions
Solidarity not presumed.
- The presumption where there are two or more debtors in
the same obligation is that it is joint.
- The reason is that solidary obligations are very
burdensome for they create unusual rights and liabilities.
- The law tends to favor the debtors in presuming that they
are bound jointly and not solidarily.

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.

= Payment to any of the solidary creditors.

Article 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.

= Effect of condonation or remission, etc. where:

a. The obligation is joint – In a joint obligation, novation,
compensation, confusion, remission, prescription, and any other
modification or extinction does not extinguish or modify the
obligation except with respect to the creditor or debtor affected,
without extending its operation to other part of the debt or of the
credit.

Article 1216. The creditor may proceed against 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.

b. The obligation is solidary - The condition shall be deemed fulfilled

when the obligor voluntarily prevents its fulfillment. (1119)

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.

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.

Examples:
- Article 1207. The concurrence of two or more creditors or of two or
more debtors in one and the same obligation does not imply that each
one of the former has a right to demand, or that each one of the latter
is bound to render, entire compliance with the prestation. There is a
solidary liability only when the obligation expressly so states, or when
the law or the nature of the obligation requires solidarity. (1137a)

- Article 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)

- Article 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.
(1145a)

a) Article 1212. Each one of the solidary creditors may do whatever may be
useful to the others, but not anything which may be prejudicial to the latter.
(1141a)

b) Article 1213. A solidary creditor cannot assign his rights without the
consent of the others. (n)

- Article 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. (1144a)

- Article 1221. (2) 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.

Section 5: Divisible and Indivisible Obligations

A. Divisible Obligations
- One which is susceptible of partial performance; that is , the debtor can
legally perform the obligation by parts and the creditor cannot demand a single
performance of the entire obligation.

B. Indivisible Obligations
- One which cannot be validly performed in parts Divisibility / Indivisibility
refers to the performance of the prestation and not to the thing which is the
object thereof. The thing may be divisible, yet the obligation may 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 (Art.1225,Par.2.)
- When there is plurality of debtors and creditors, the effect of divisibility /
indivisibility of the obligation depend upon whether the obligation is joint or
solidary.
- A joint indivisible obligation give rise to indemnity for damages from the
time anyone of the debtors does not comply with is undertaking. (Art. 1224)

Effect

- Creditor cannot be compelled partially to receive the prestation in which the

obligation consists; neither may the debtor be required to make the partial
payment (Art.1248), UNLESS:

- The obligation expressly stipulates the contrary.

- The different prestations constituting the objects of the obligation

are to different terms and conditions.

- The obligation is in part liquidated and in part unliquidated.

Section 6: Obligations with a Penal Clause

Definition
Obligation with a penal clause
- Is one which contains an accessory undertaking to pay a
previously stipulated indemnity incase of breach of the
principal prestation, intended primarily to induce its
fulfillment.
Penal Clause
- Is an accessory undertaking attached to an obligation to
assume greater liability in case of breach, i.e., the
obligation is not fulfilled, or is partly or irregularly complied
with.
Joint Penal Clause
- When both the principal obligation and the penal clause
can be enforced.

Discussions

Purposes of Penal Clause

(1) To insure their performance by creating an effective deterrent against

breach, making the consequences of such breach as anerous as it may be
possible. This is the general purpose of a penal clause; and

(2) To substitute a penalty for the indemnity for damages and the payment of
interests in case of non-compliance (Art. 1226.) ; or to punish the debtor for
the non-fulfillment or violation of his obligation.

In the first case, the purpose is reparation; in the second, punishment.

As to its purpose:

i. Compensatory penal clause.- when the penalty takes the place

of damages; and
ii. Punitive penal clause.-when the penalty is imposed merely as
punishment breach.
When creditor may recover damages:
The creditor, in addition to the penalty, may recover damages and
interests:

- When so stipulated by the parties;

- When the obligator refuses to pay the penalty, in which case the
creditor may recover legal interest thereon; or
- When the obligator is guilty of fraud in the fulfillment of the
obligation (Art.1226.) in which case the creditor may recover damages
cause by such fraud.

Penal clause presumed subsidiary.

- Once the obligation is fulfilled, the primary purpose of penalty to urge the
debtor to the performance is fulfilled and, therefore, there is no need for
demanding the penalty.

Art. 1227. ….”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…”

The general rule is that, a penal clause is subsidiary and not joint.

Examples:

- Generally, the debtor cannot just pay the penalty instead of performing the
obligation except when expressly given the right by the creditor to do so.

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)

If the debtor is allowed to pay the penalty, this would in effect make the
obligation alternative one.

Article 1199. A person alternatively bound by different prestations shall

completely perform one of them.

(1) The creditor cannot be compelled to receive part of one and part of the other
undertaking. (1131)

Yes. Because their contract contains a penal clause, all that the creditor
has to prove, to enforce the penalty, is the violation of the obligation by
the debtor.

Article. 1228. Proof of actual damages suffered by the creditor is not

necessary in order that the penalty may be demanded. (n)

Yes. The damages recoverable in addition to penalty must be proved.

According to Article 1229, “The judge shall equitably reduce the
penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.” (1154a)