INTRO - MODULE 7: Obligations [WEEK 8] 1

MODULE 7
OBLIGATIONS
WEEK 8

OBLIGATIONS

 DEFINITION. – Under Article 1156 of the

New Civil Code, an obligation “is a juridical necessity to
give, to do or not to do.”

 This definition, however, has been criticized

as defective because it views obligations only from the
side of the debtor.

 The better definition of obligation,

according to retired Justice J.B.L. Reyes, is that given by
Arias Ramos, thus:

“An obligation is a juridical relation

whereby a person (called the creditor) may
demand from another (called the debtor), the
observance of a determinate conduct (the
giving, doing or not doing), and in case of
breach, may demand satisfaction from the
assets of the latter.”
INTRO - MODULE 7: Obligations [WEEK 8] 2

 ESSENTIAL REQUISITES. – There can

be no obligation if any one of the following essential
requisites is lacking:

(a) Passive Subject (also called the debtor or obligor) –

The passive subject is the person who is bound to the
fulfilment of the obligation; he who has the duty to
perform the obligation.

(b) Active subject (also called the creditor or obligee)

– The active subject is the person who has the right to
demand the fulfilment of the obligation.

(c) Object or prestation (also called the subject matter

of the obligation) – The prestation is the conduct
required to be observed by the debtor. There are three
prestations specified in Article 1156, namely:
INTRO - MODULE 7: Obligations [WEEK 8] 3

 to give – to deliver a thing, such as a car or

money.

 to do – to do an act, such as to sing in a concert,

or to construct a house.

 not to do – not to do an act, such as not

building a fence on the outer limits of one’s
property, or not going to the casino for 2
months.

(d) Vinculum or juridical tie (also called the efficient

cause) – The juridical or legal tie binds or connects the
parties to the obligation. The source of an obligation
(Article 1157, NCC) determines the juridical tie.

 Illustrative Example: T is a grade school

teacher. M is the mother of a grade-schooler. T promised
to tutor the child of M for P800.00 per hour from June to
October, 2020.

We have here TWO OBLIGATIONS. The FIRST is

the obligation of T to tutor the child of M. In this
obligation:

 T is the passive subject because he has the duty to

perform the prestation – to tutor the child of M.
INTRO - MODULE 7: Obligations [WEEK 8] 4

 M is the active subject because he has the right to

demand from T the performance of the prestation.
 Tutoring the child is the prestation (“to do”) of the
obligation.
 The tutorial contract between T and M, which is the
source of the obligation, is the juridical tie. The juridical
tie is the sanction which will compel T to fulfil his
obligation if he does not want to perform his obligation
under the tutorial contract.

The SECOND is the obligation of M to pay T for his

tutorial services after T performs his obligation. In this
obligation:

 M now becomes the passive subject who has the duty

to pay T the tutorial fee in the amount of P800.00 per
hour.
 T becomes the active subject who has the right to
demand payment for his tutorial services after
performance of his obligation.
 Paying the tutorial fee in the amount of P800.00 per
hour is the prestation (“to give”) of the obligation.
 The juridical tie is the same – the tutorial contract
between T and M.
INTRO - MODULE 7: Obligations [WEEK 8] 5

 Why is the performance of an obligation

a JURIDICAL NECESSITY?
 The juridical necessity to perform an
obligation means the need to perform the obligation if the
debtor wants to avoid the legal consequences or penalty
for non-performance of the obligation. In other words,
there is a juridical necessity on the part of the debtor to
perform his obligation because if he fails to do so, he can
be made liable by the creditor in court.


TWO KINDS OF OBLIGATIONS
FROM THE VIEWPOINT OF SANCTION. –
INTRO - MODULE 7: Obligations [WEEK 8] 6

(a) Civil Obligation – If the obligation to be performed

by the debtor is a civil one, the creditor is given by law the
right to compel the debtor to perform the prestation. This
means that in case of non-performance by the debtor, the
creditor has the right to file an action in court for specific
performance. After due hearing, the court will then order
the debtor to comply with or fulfil his obligation.

 This is the kind of obligation referred to in

Article 1156. The entire Title I on Obligations, therefore,
has reference only to civil obligations.


Illustrative Example: Dennis owes Cristina
P100,000.00 due for payment on December 15, 2020. As
evidence of the debt, Dennis signs a promissory note 1
dated June 15, 2020 in favour of Cristina. On December
15, 2020, if Dennis does not pay his debt, Cristina can file
an action in court to compel Dennis to pay the
P100,000.00. In this case, the obligation of Dennis to pay
his P100,000.00 debt to Cristina is a civil obligation arising
from a written contract.
1
What a promissory note looks like –

June
15, 2020

I promise to pay to the order of Cristina the amount of P100,000.00 on

December 14, 2020.
(Sgd.) Dennis
INTRO - MODULE 7: Obligations [WEEK 8] 7

(b) Natural Obligation – A natural obligation,2 on the

other hand, is not based on positive law and does not arise
from any of the sources of obligations under Article 1157.
In this kind of obligation, even if the debtor does not
perform his obligation, the creditor cannot file an action in
court to make the debtor perform a natural obligation.
However, if the debtor voluntarily fulfils a natural
obligation, he can no longer recover from the creditor the
thing delivered or the service rendered which is the
subject matter of the natural obligation.

 Illustrative Example:
Under Article 11443 of
the Civil Code, the promissory note signed by Dennis in the
above example can no longer be enforced after ten years
counted from December 14, 2020, the maturity date of
the promissory note. After ten years then, the obligation
of Dennis ceases to be a civil one but now becomes simply

2
ART. 1423. Obligations are civil or natural. Civil obligations give a right
of action to compel their performance. Natural obligations, not being based
on positive law but on equity and natural law, do not grant a right of action to
enforce their performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by reason
thereof. Some natural obligations are set forth in the following articles.

3
ART. 1144. The following actions must be brought within ten years from
the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
INTRO - MODULE 7: Obligations [WEEK 8] 8

a natural obligation. Therefore, after ten years, Cristina

can no longer collect her P100,000.00 credit from Dennis
even if she files an action in court. But if Dennis
voluntarily pays the P100,000.00, say on June 30, 2031,
Cristina is given by law (Art. 14244) the right to retain the
payment.


TWO KINDS OF OBLIGATIONS
FROM THE VIEWPOINT OF SUBJECT
MATTER. –

(a) Real obligation (obligation to give) – In this kind of

obligation, the prestation or subject matter of the
obligation is a thing which the debtor must deliver to the
creditor. (e.g., an obligation to deliver a book)

(b) Personal obligation (obligation to do or not to do) – In

this kind of obligation, the prestation or subject matter of the
obligation is an act to be done or not to be done. There are two
kinds of personal obligations :

4
ART. 1424. When a right to sue upon a civil obligation has lapsed by
extinctive prescription, the obligor who voluntarily performs the contract
cannot recover what he has delivered or the value of the service he has
rendered.
INTRO - MODULE 7: Obligations [WEEK 8] 9

(b.1) Positive personal obligation (obligation to

do) – This is an obligation to render service. ( e.g., the obligation
of an engineer to construct a building for the owner)

(b.2) Negative personal obligation (obligation not

to do) – This is an obligation not to do an act. ( e.g., the obligation
of an actor or actress not to sign contracts with other stations)

 SOURCES OF OBLIGATIONS. – Article

1157 of the Civil Code provides that obligations may arise
from:

(a) Law – Obligations derived from law are not

presumed; only those expressly provided by statute are
demandable. (Art. 1158, NCC.)

 Example: the duty to pay taxes; and the

duty of the husband and wife to support each
other
INTRO - MODULE 7: Obligations [WEEK 8] 10

(b) Contracts – An obligation arises from contract

when a person by voluntary agreement legally binds
himself to give something or to render service to another.
(Art. 1305, NCC.) Their agreement has the force of law
between them provided it is not contrary to law, morals,
good customs, public order, or public policy. (Arts. 1159 &
1306, NCC.)

 Example: the obligation to pay a loan or

indebtedness by virtue of a contract of loan; and
the obligation of the employer to pay wages to its
employees based on an employment contract

(c) Quasi-contracts – A quasi-contract is a juridical

relation between two persons created out of certain
lawful, voluntary, and unilateral acts giving rise to certain
obligations on the part of one with respect to the other to
the end that no one shall be unjustly enriched or benefited
at the expense of another. (Art. 2142, NCC.) While there
INTRO - MODULE 7: Obligations [WEEK 8] 11

is no agreement, consent is presumed so that the recipient

of benefits or favors may not be unjustly enriched.

 Principal kinds – Quasi-contracts may take

the form of a negotiorum gestio, a solutio indebiti, or other
forms (Arts. 2164-2175) thereof.

 Negotiorum gestio is the voluntary

management of the property or affairs of another without
the knowledge or consent of the latter (Art. 2144). On the
other hand, solutio indebiti is the juridical relation which is
created when something is received when there is no right
to demand it, and it was unduly delivered through mistake
(Art. 2154).

 Illustrative Examples:

 Negotiorum gestio – Juan went to Baguio with his

family without leaving somebody to look after his house in
Manila. While in Baguio, a big fire broke out near his
INTRO - MODULE 7: Obligations [WEEK 8] 12

house. Through the efforts of his neighbor Maria, Juan’s

house was saved from being burned, on the occasion of
which she incurred expenses.

Question: Under the facts, will Juan be obliged to

reimburse Maria for the expenses which she incurred in an
effort to save his house from being gutted by the fire?

Answer: In this case, Juan has the obligation to reimburse

Maria for said expenses, although he did not actually give
his consent to the act of Maria in saving his house. His
obligation arises from and is based on the principle of
quasi-contract, wherein the law makes him liable on
account of his having assumed benefits from the act of
Maria. The law seeks to prevent unjust enrichment on the
part of Juan.

 Solutio indebiti – Danny owes Cristel P100,000.00. If

Danny pays Tina believing that she was authorized to
receive payment on behalf of Cristel, an obligation arises
on the part of Tina to return what she has unduly received
from Danny. Also, if Danny pays Cristel, but pays her
P200,000.00 by mistake, an obligation based on solutio
indebiti also arises on the part of Cristel to return to Danny
the excess of P100,000.00.

 Other quasi-contracts under the Civil Code –

INTRO - MODULE 7: Obligations [WEEK 8] 13

“Art. 2164. When, without the knowledge of

the person obliged to give support, it is given by a
stranger, the latter shall have a right to claim the
same from the former, unless it appears that he gave
it out of piety and without intention of being repaid.
(1894a)”

“Art. 2167. When through an accident or other

cause a person is injured or becomes seriously ill,
and he is treated or helped while he is not in a
condition to give consent to a contract, he shall be
liable to pay for the services of the physician or
other person aiding him, unless the service has been
rendered out of pure generosity.”

“Art. 2175. Any person who is constrained to

pay the taxes of another shall be entitled to
reimbursement from the latter.

(d) Acts or omissions punished

by law (crime or delict) – Under
Article 100 of the Revised Penal
Code, every person criminally liable
for a felony is also civilly liable.

Hence, a person who causes injury to another by means of

a criminal offense is legally bound to make compensation
for the injury so occasioned by his criminal act. This is the
civil obligation which arises from a crime or delict.
INTRO - MODULE 7: Obligations [WEEK 8] 14

 Scope of civil liability – The extent of civil

liability for damages arising from crimes is governed by the
Revised Penal Code and the Civil Code. This civil liability
includes:

 Restitution;
 Reparation for the damag e caused; and
 Indemnification for consequential damages.
(Art. 104, RPC)

 Illustrative Example: Dondie stole the car

of Celestina. If Dondie is convicted of car theft, the
court will order Dondie:

 To return the car or to pay for its value if

it was lost or destroyed;
 To pay for any damage caused to the
car; and
 To pay such other damages suffered by
Celestina as a consequence of the
crime.

(e) Quasi-delict (tort or culpa aquiliana) – A quasi-

delict is an act or omission by a person (tortfeasor) which
causes damage to another in his person, property, or
rights, giving rise to an obligation to pay for the damage
INTRO - MODULE 7: Obligations [WEEK 8] 15

done, there being fault or negligence, but there is no pre-

existing contractual relation between the parties.

 Illustrative Examples:

 Nathan broke the window of

Shiela’s house while playing softball.
The accident would not have
happened had Nathan played a little
farther from Shiela’s house.
In this case, Nathan has the obligation to pay the
damage caused to Shiela by his act although there
is no pre-existing contractual relation between
them.

 George was driving under the influence

of alcohol at a speed of 120 kph. He hit the car of
Bess, causing damage to the car which required
repairs amounting to P100,000.00. Bess was also
physically injured, and she incurred medical
expenses in the amount of P200,000.00. In this
case, the damage was caused by the negligence of
George in over-speeding and driving under the
influence of alcohol. This will make him liable in
damages to Bess for a total amount of
P300,000.00.
INTRO - MODULE 7: Obligations [WEEK 8] 16

 Under Article 2183 of the Civil Code,

“(T)he possessor of an animal or whoever may
make use of the same is responsible for the
damage which it may cause, although it may
escape or be lost. This responsibility shall cease
only in case the damage should come from force
majeure or from the fault of the person who has
suffered damages. (1905)”

 NATURE OF OBLIGATIONS. –

 Debtor’s duty to preserve the thing – Every

person under an obligation to give something (real
obligation) is also duty-bound to take care of the thing
with the proper diligence of a good father of a family. This
is the rule, and the exception arises only when the law or
the agreement of the parties demand a higher standard of
care. (Art. 1163, NCC.)

 Illustrative Example – Dindo binds

himself to deliver his pet Dalmatian to Carla. Pending
delivery, Dindo has the additional or accessory duty
to take care of the dog with the diligence of a good
father of a family, like feeding the dog regularly and
keeping it in a safe place. In other words, Dindo must
exercise that diligence which he would exercise over
INTRO - MODULE 7: Obligations [WEEK 8] 17

another dog belonging to him and which he is not

under obligation to deliver to Carla. If the dog dies,
or is lost, or becomes sick as a consequence of
Dindo’s failure to exercise proper deligence, he shall
be liable to Carla for damages. This accessory
obligation of Dindo to take care of the horse is
demandable even if no mention thereof is made in
the parties’ contract.

 Creditor’s right to the fruits of the thing –

The creditor has the right to all the fruits of the thing –
natural, industrial, and civil – from the time the debtor’s
obligation to deliver the thing arises (i.e., the maturity date
of the obligation or when the obligation can be demanded
by the creditor). However, no real right is acquired by the
creditor over the thing until delivery has been made to
him. (Art. 1164, NCC.)

 Illustrative Example – On 15 August

2020, Denny promised to deliver her Beagle to Charie
on 15 September 2020. On 5 September 2020,
Denny’ beagle gave birth to four puppies. On 15
September 2020, Charie demanded for delivery of
the Beagle. It was only on 20 September 2020 that
Denny was able to deliver the Beagle to Charie.
INTRO - MODULE 7: Obligations [WEEK 8] 18

Question: On 20 September 2020, when Denny

delivers the Beagle to Charie, will she be likewise
obliged to deliver to Charie the four puppies?

Answer: Article 1164 states that the creditor has a

right to the fruits of the thing from the time the
obligation to deliver it arises – which refers to the
date when the creditor can demand performance of
the obligation. Under the facts, the creditor can
demand performance of the obligation only on the
date specified by the parties, which is on 15
September 2020. Since the puppies (which refer to
the natural fruits of the thing) of the Beagle were
born on 5 September 2020, before the obligation of
Denny to deliver the dog arose, then the puppies
shall still pertain to the ownership of the debtor
Denny. If the puppies were born on 15 September
2020, even if actual delivery was made on 20
September 2020, it is already Charie who will be
entitled to the puppies.

 Creditor’s rights to the thing’s accessions

and accessories – If what is to be delivered is a
determinate thing, the debtor must deliver not only the
very specific thing, but also all its accessions and
INTRO - MODULE 7: Obligations [WEEK 8] 19

accessories, even though they may not have been

mentioned.

 Example –
 The delivery of a lot includes the delivery of
the house standing thereon.

 The delivery of the house includes the

delivery of the keys to its doors.

 The delivery of the car includes the delivery

of its air-conditioning unit.

 The delivery of farmland planted with

mango tress includes the delivery of the mango
trees planted thereon.

 Problem – Selena agreed to sell her 5-

hectare farmland to Bobby for P10 million. On the
date agreed upon for the signing of the Deed of
Sale and payment of the purchase price, Selena
was asking from Bobby an additional payment of
P3 million corresponding to the value of the mango
trees planted thereon.

Question: Can Selena legally compel Bobby to pay

the additional P3 million on top of the original
INTRO - MODULE 7: Obligations [WEEK 8] 20

contract price agreed upon for the purchase of the

farmland?

Answer: NO. In the absence of any specific

agreement between the parties, the purchase price
for the land originally agreed upon already includes
the accessions on the land – that is, the mango
trees planted thereon. The delivery of the
accessions to the land are deemed included in the
obligation of the debtor-seller to deliver, although
it may not have been mentioned in the parties’
contract.

 EFFECT OF OBLIGATIONS. –

(a) Specific thing and generic thing distinguished –

(a.1) Specific or determinate thing – A thing is

said to be specific or determinate when it is particularly
designated or physically segregated from all others of the
INTRO - MODULE 7: Obligations [WEEK 8] 21

same class. (Examples: The watch I am wearing; the car

sold by X; my dog named “Porbida”; the house at the
corner of Rizal and Del Pilar Streets; the Toyota Car with
Plate No. ABC-123; this cavan of rice; the money I gave
you.
(a.2) Generic or indeterminate thing – A thing is
generic or indeterminate when it refers only to a class or genus to
which it pertains and cannot be pointed out with particularity.
(Examples: a Bulova calendar watch; a black 2018 model Toyota
Camry; a police dog; a cavan of rice; the sum of P100,000.00)

(b) Effect of a fortuitous event –

(b.1) Meaning of fortuitous event – A fortuitous

event is any event which cannot be foreseen, or which,
though foreseen, is inevitable. (Art. 1174, NCC.) Stated
otherwise, it is an event which is either impossible to
foresee or impossible to avoid.

The essence of a fortuitous event consists of being

a happening independent of the will of the debtor and
which happening, makes the normal fulfillment of the
obligation impossible. (Examples: Fire, robbery,
earthquake, flood, eruption of volcano)
INTRO - MODULE 7: Obligations [WEEK 8] 22

(b.1) Effect of loss of the thing due to a

fortuitous event – As a general rule, in an obligation to
deliver a specific or determinate thing, the loss or
destruction of the thing due to a fortuitous event
extinguishes the obligation (Art. 1262, NCC).

In an obligation to deliver a generic or

indeterminate thing, the loss or destruction of anything of
the same kind does not extinguish the obligation. It is
based on the principle that a generic thing never perishes
(genus nunquam perit). The debtor can still be compelled
to deliver a thing of the same kind (Art. 1263, NCC).

 Example: Lito obliged himself to deliver

to Ludy “his 2018 Ford Explorer pick-up” on 15 September
2020. If the vehicle is destroyed by flood on 10 September
2020, the obligation of Lito to Ludy on 15 September 2020
will be extinguished. In other words, Lito will no longer be
obliged to deliver the vehicle to Ludy on maturity date.
Neither will he be liable to Ludy for damages on account of
non-delivery because the loss of the vehicle was due to
causes beyond his control, or due to a fortuitous event.

Assume instead that the pick-up was lost due to

the fault of Lito because Lito slammed the pick-up to a
Meralco post while overspeeding, resulting in the total
INTRO - MODULE 7: Obligations [WEEK 8] 23

wreck of the vehicle. In this case, the failure of Lito to

deliver the car to Ludy being due to his fault or negligence,
he will be liable to deliver to Ludy the value of the car, plus
consequential damages suffered by Ludy on account of its
non-delivery.

However, if the obligation of Lito to Ludy is to

deliver a generic thing, such as “a 2018 Ford Explorer pick-
up”, even if the thing is lost by virtue of a fortuitous event,
Lito will still be obliged to deliver to Ludy on maturity date
another vehicle of the same make and model as that
promised and which was lost.

(c) Effect of delay –

(c.1) Meaning of delay – The word “delay” as

used in the law is not to be understood according to its
meaning in common parlance. A distinction, therefore,
should be made between ordinary delay and legal delay
(default or mora) in the performance of an obligation.

(c.2) Ordinary delay – Ordinary delay is merely

the failure to perform an obligation on time.

(c.3) Legal delay/default/mora – Legal delay is

the failure to perform an obligation on time, and after the
creditor or obligee demands, either judicially or
extrajudicially, the performance of the obligation (Art.
INTRO - MODULE 7: Obligations [WEEK 8] 24

1169, par. 1, NCC). “Delay” which gives ground to a claim

for damages under Article 1170 of the Civil Code refers to
“legal delay” and not to “ordinary delay.”

 Illustrative Example: Dennis

owes Carina P100,000.00 due for
payment on 1 June 2020. The
parties also agreed that if Dennis is
not able to pay on due date, he will
be liable for penalty interest as
damages at the rate of 2% per
month.

Question 1: If Dennis is not able to pay on 1 June 2020,

but pays Carina his debt only on 1 September 2020, will
Dennis be liable for penalty interest amounting to 6%
corresponding to three months computed from 1 June
2020?

Answer: NO. In this case, Dennis is only guilty of ordinary

delay and will not be liable for penalty interest as
damages. Hence, on 1 September 2019, Dennis will be
obliged to pay Carina only the amount of P100,000.00.

Question 2: Assume in the above problem that Carina did

not demand from Dennis payment of her credit on
maturity date on 1 June 2020. Instead, she demanded
from Dennis payment of the P100,000.00 on 1 July 2020.
INTRO - MODULE 7: Obligations [WEEK 8] 25

After the demand was made, Dennis made payment of his

obligation only on 1 September 2020. How much will
Dennis be liable to pay Carina on this date?

Answer: From the facts, Dennis will be considered in legal

delay only from 1 July 2020, the date when Carina made
the demand upon him for the payment of his obligation.
Hence, Dennis will be liable for damages amounting to two
months penalty interest computed from 1 July 2020, until
its payment on 1 September 2020. Dennis will, therefore,
be liable to pay Carina on 1 September 2020 the principal
amount of P100,000.00, plus two months penalty interest
equivalent to P4,000.00 (P100,000.00 x .04) – a total of
P104,000.00.

 KINDS OF OBLIGATIONS. –

(9.1) Pure and conditional obligations –

 Pure obligation – It is an obligation without

a condition or a term (or period) and, therefore, is
demandable at once (Art. 1179, NCC).

 Example: I promise to give you my

BMW car.
INTRO - MODULE 7: Obligations [WEEK 8] 26

 Conditional obligation – It is an obligation,

the performance of which is subject to the fulfilment of a
condition (Art. 1181, NCC).

 Example: I promise to give you my

BMW car if you will pass the 2019 BAR
Examinations. In this case, I will be obliged to
deliver my BMW car to you only if you will pass
the 2019 BAR Examinations. If you fail the BAR
Examinations, my obligation will not arise.

(9.2) Obligations with a period – An obligation with a

period is one whose demandability is subjected in one way
or another to the expiration or arrival of said period or
term (Art. 1193, NCC).

 Example: I promise to give you my

BMW car on 15 April 2021. In this case, you will
have the right to demand performance of this
obligation only upon the arrival of the period
specified in our contract – that is, 15 April 2021.
I cannot be compelled to perform my obligation
before this date.

(9.3) Alternative and facultative obligations –

 Alternative Obligation – In an alternative

obligation, several prestations are due, but the
INTRO - MODULE 7: Obligations [WEEK 8] 27

performance of only one of them extinguishes the

obligation (Art. 1199, NCC).

 Example: I promise to give you any of

the following on 15 September 2020: My ruby
ring worth P250,000.00, my Omega watch
worth P350,000.00, or my Lenovo laptop worth
P300,000.00. In this alternative obligation, if I
choose to deliver my ruby ring to you on 15
September 2020, my obligation will already
have been extinguished (Art. 1200, NCC).

 Facultative obligation – A facultative

obligation is one where only one prestation has been
agreed upon, but the obligor is given the right to give or
render another prestation in substitution (Art. 1206, NCC).

 Example: I promise to give you my

BMW car worth P5 million on 15 September
2020, but I may give you as a substitute instead
my Toyota Land Cruiser worth P6 million if my
sister needs my BMW car for her transport
needs.

(9.4) Joint and solidary obligations (Arts. 1207 & 1208,

NCC) –
INTRO - MODULE 7: Obligations [WEEK 8] 28

 Joint obligation – It is one where the whole

obligation is to be paid or fulfilled proportionately by the
different debtors and/or is to be demanded
proportionately by the different creditors. In this
obligation, the obligor can be made to answer only for a
part of the entire liability.

 Example: Jona, Janna and Jean

borrowed P600,000.00 from Carl. They bound
themselves as joint debtors. On maturity date,
Carl can hold Jona liable only for her
proportionate share in the amount of
P200,000.00.

 Solidary obligation – It is one 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.

 Example: In the above example, if the

obligation of the debtors is solidary, Carl can
collect from Jona the entire P600,000.00 on
maturity date.

(9.5) Divisible and indivisible obligations (Art. 1225,

NCC) –
INTRO - MODULE 7: Obligations [WEEK 8] 29

 Divisible obligation – It is one where the

prestation in the obligation is capable of partial
performance.
 Example: Darius promised to pay Anne
his P500,000.00 debt in two equal installments:
P250,000.00 due on 15 August 2020, and the
balance of P250,000.00 due on 15 February
2021.

 Indivisible obligation – It is one where the

prestation in the obligation is capable of partial
performance.

 Example: Darius promised to deliver to

Anne his Toyota Altis on 15 October 2020.
Here, the subject matter of the obligation is not
capable of partial performance because the car
cannot be divided into two.

(9.6) Obligation with a penal clause – An obligation

with a penal clause is one which contains an accessory
undertaking to pay a previously stipulated indemnity or
penalty in case of breach of the principal prestation, which
is intended primarily to insure its fulfillment. The penalty
shall then substitute the indemnity for damages and the
payment of interest in case of non-compliance (Art. 1226,
NCC).
INTRO - MODULE 7: Obligations [WEEK 8] 30

 Example: Roy agreed to finish the

painting job of the Cultural Center Building
within 60 days. It was stipulated that in case of
delay, Roy will be liable to pay a penalty of
P3,000.00 per day of delay. If Roy fails to finish
the painting job within 60 days, and it was only
on the 65th day that he finished the job, Roy
will be liable to pay a penalty of P15,000.00.

 EXTINGUISHMENT OF
OBLIGATIONS. – Obligations are extinguished by any
of the following causes: (Art. 1231, NCC)

(10.1) By payment or performance – Payment means

not only the delivery of money, but also the performance,
in any other manner, of an obligation (Art. 1231, NCC).
When a debtor pays damages or penalty in lieu of the
fulfillment of an obligation, there is also payment.

(10.2) By loss of the thing due – It is understood that a

thing is lost when it perishes (physical loss), or goes out of
commerce (legal loss), or disappears in such a way that its
existence is unknown or it cannot be recovered (civil loss).
(Art. 1189, par. 2, NCC.)

(10.3) By the condonation or remission of the debt –

Condonation or remission is the gratuitous abandonment
INTRO - MODULE 7: Obligations [WEEK 8] 31

by the creditor of his right to exact payment of the

obligation. It is thus a form of donation. (Art. 1270, NCC.)

(10.4) By confusion or merger of the rights of creditor

and debtor– Confusion or merger is the meeting in one
person of the qualities of creditor and debtor with respect
to the same obligation (Art. 1275, NCC).

 Example: Andy borrows P1 million from

Binky. In consideration thereof, Andy makes a
promissory note in favor of Binky. Binky
indorses the note to Carlos because she owes
him P1 million, and Carlos accepts Andy’s
promissory note in payment of Binky’s debt.
Carlos, in turn, indorses the promissory note to
Andy because Carlos owes Andy P1 million, and
Andy has no choice but to accept his own
promissory note. As the maker of the
promissory note, Andy is the debtor on the
note. Here is a situation where the characters
of creditor and debtor are merged in the same
person – Andy. The obligation of Andy to pay
the amount of the promissory note is then
extinguished by confusion or merger.

(10.5) By compensation – Compensation, be it total or

partial, shall take place when two persons, in their own
INTRO - MODULE 7: Obligations [WEEK 8] 32

right, are creditors and debtors of each other (Art. 1278,

NCC).

 Example: Arnel owes Betsy P100,000.00

due for payment on 10 September 2020. In
another obligation, Betsy owes Arnel the
amount of P80,000.00, likewise due on 10
September 2020. Here, partial compensation
as to extinguish the parties’ obligations to the
concurrent amount of P80,000.00 will
automatically take place on 10 September
2020. So, Arnel shall be liable to pay Betsy on
10 September 2020 only the amount of
P20,000.00.

If the two debts are of the same

amount, there shall be total compensation (Art.
1281, NCC). The two debts shall be
extinguished without actual transfer of money
between the parties.

(10.6) By Novation – It is the substitution or change of

an obligation by another, which extinguishes or modifies
the first, either (1) by changing its object or principal
conditions, or (2) by substituting another in place of the
debtor, or (3) by subrogating a third person in the rights of
the creditor (Art. 1291, NCC).
INTRO - MODULE 7: Obligations [WEEK 8] 33

 Example: Siony agreed to deliver to Bart

a car. Later, they entered into another contract
whereby, instead of Siony delivering a car, she
would deliver ten air-conditioning units to Bart.
The obligation to deliver the car is now
extinguished by the obligation to deliver the
ten air-conditioners. The change here involves
the object or subject matter of the obligation.

(10.7) Other causes of extinguishment of obligations

are annulment, rescission, fulfillment of a resolutory
condition, and prescription.

 Read the following cases in their original text:

 GSIS vs. Spouses Deang, G.R. No. 135644, 17

September 2001.

 Pelayo vs. Lauron, G.R. No. L-4089, 12 January

1909.

 Jimenez vs. City of Manila, G.R. No. 71049, 29

May 1987.

 Rotea vs. Delopio, G.R. No. L-45310, 14 April

1939.

 Ramie Textiles, Inc. vs. Mathay, Sr., G.R. No. L-

32364, 30 April 1979.
INTRO - MODULE 7: Obligations [WEEK 8] 34

 Virata vs. Ochoa, G.R. No. L-46179, 31 January

1978.

REMINDER: PLEASE Memorize the following articles of

the Civil Code – 1156, 1157, 1164, 1165, par. 3, 1169, par.
1, 1170, 1173 & 1174.

* * * END * * *
HAPPY READING & LEARNING!


SOURCES of NOTES:

The discussions outlined in this module

have been collectively lifted from the
cases cited and commentaries made by
the authors in the references cited
below:

1. Alconera, Virgilio P. Obligations and Contracts.

Quezon City: Central Book Supply, Inc., 2009.

2. Dascil, Rodelio T. Threshold to the Legal

Profession: An Introduction to Law. Manila: Rex Book
Store, 2013.
INTRO - MODULE 7: Obligations [WEEK 8] 35

3. De Leon, Hector S. The Law on Obligations and

Contracts. Manila: Rex Book Store, 2011.

4. Gamboa, Melquiades J. An Introduction to

Philippine Law. Quezon City: Central Lawbook Publishing
Co., Inc., 1969.

5. Martin, Ruperto G. Introduction to Philippine Laws.

Manila: Premium Book Store, 1986.

6. Suarez, Rolando A. Introduction to Law. Manila:

Rex Book Store, Inc., 2017.

FOOD FOR THOUGHT

INTRO - MODULE 7: Obligations [WEEK 8] 36