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Oblicon chapter 3 - DIFFERENT KINDS OF

OBLIGATIONS
Accountancy (University of Northern Philippines)

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CHAPTER 3
DIFFERENT KINDS OF
OBLIGATIONS
1. PURE OBLIGATIONS 1. As to the Effect of Obligation
- obligations whose performance a. Suspensive Condition - when
does not depend upon a future and the fulfillment of the
uncertain event or upon a past event condition results in the
unknown to the parties and is acquisition of rights arising
demandable at once. out of the obligation.
b. Resolutory Condition - when
2. CONDITIONAL OBLIGATIONS the fulfillment of the
- an obligation the happening or condition results in the
extinguishment of which depends extinguishment of rights
upon the happening of a future and arising out of the obligation.
uncertain event.
2. As to the Origin of Condition
Characteristics of Condition: a. Potestative Condition - one
1.It is a future and certain event which depends upon the will
upon which an obligation or of one of the contracting
provision is made to depend; parties;
2.Even though the event is i. Simple Potestative -
uncertain, it should be possible; presupposes not only a
3.The condition must be imposed manifestation of will but
by the will of the party and not a also the realization of an
necessary legal requisite; external act of a 3rd party.
4.Past event but unknown to parties ii. Purely Potestative - if it
( the knowledge to be acquired in depends solely and
the future of a past event which at exclusively upon the will
the moment is unknown to parties of the debtor, it is void for
interested - it is only in that sense the debtor cannot fulfill
that the event is deemed an obligation arising from
uncertain) his own choice. But it is
valid if it depends on the
Effects of Failure to Comply with will of the creditor.
Condition:
1. If condition is imposed on the b. Casual Condition - depends
perfection of a contract - results exclusively upon chance,
in the failure of the contract; or will of a third person, or
2. If condition is imposed on the partially by chance and
performance of the obligation - partially by will of a third
gives the other party an option person, or other factors and
either to refuse to proceed with not upon the will of the
the compliance of the obligation contracting parties.
or to waive the condition.
c. Mixed Condition - depends
Classifications of Conditions: upon the will of one of the

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contracting parties and other a. Divisible Condition - when the

circumstances including the condition is susceptible of
will of third persons or partial realization.
chance.
b. Indivisible Condition - when
3. As to Possibility the condition is not susceptible
a. Possible Condition - when of partial condition.
the condition is capable of
realization according to Principle of Indivisibility of
nature, law, public policy or Conditions
good customs. The indivisibility of the
condition passes to the heirs of
b. Impossible Condition - the debtor: hence, some heirs
when the condition is not cannot demand partial
capable of realization performance of the obligation
according to nature, law, by offering to fulfill part of the
public policy, morals or condition corresponding to
good customs. them.

General Rule (GR): If the Exceptions: The condition may be

obligation is divisible, the divisible:
impossible conditions shall a. By nature of the condition
annul the obligation which b. By stipulation
depends upon them. c. By law.

Exceptions (XPNs): 6. As to Plurality of Conditions

a. Pre-existing obligation a. Conjunctive Condition - there
b. Divisible Obligation are several conditions, which
c. Negative Impossible Things must all be realized;
d. Testamentary deposition
b. Alternative Condition - there
4. As to Mode are several conditions, but only
a. Positive Condition - condition one must be realized.
that some event happen at a
determinate time shall 7. As to Form
extinguish the obligation as a. Express Condition - condition
soon as the time expires or is stated expressly
become indubitable that the
event will not take place. b. Implied Condition - condition
is tacit
b. Negative Condition - condition
that some event will not happen Effects of Suspensive Condition
at a determinate time shall - before the fulfillment, obligee
render the obligation effective acquires a mere hope or expectancy,
from the moment the time has protected by law.
elapsed of it has become evident a. Before fulfillment - demandability
that the event cannot occur. and the acquisition of the rights
arising from the obligation is
5. As to Divisibility suspended. Obligation of obligor to
comply with the prestation is held in

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suspense until the fulfillment of
condition.
** Anything paid by mistake
during such time may be recovered.
b. After Fulfillment - the obligation
arises or becomes effective; obligor
can be compelled to comply with
what is incumbent upon him.
Effects of Resolutory Condition
a. Before fulfillment - right
recognized in Art. 1188, par. 1 of
the CC in case of a suspensive
condition should likewise be
available in obligations with a
resolutory condition.
b. After fulfillment - whatever
may have been paid or delivered
by one or both of the parties
upon the constitution of the
obligation shall have to be
returned upon the fulfillment of
the condition. There is a return to
the status quo.
Effects of Potestative Condition
a. When it depends exclusively upon
the will of creditor, the condition
and obligation is valid.
b. When it depends exclusively upon
the will of the debtor in case of a
suspensive condition, the
condition and obligation are
void.
c. When it depends exclusively upon
the will of the debtor in case of
resolutory condition, the
condition and obligation is valid.
Note: If the obligation is a pre-existing
one, and does not depend for its
existence upon the fulfillment by the
debtor of the potestative condition
unaffected the obligation itself. Here, the
condition is imposed not on the birth of
the obligation but on its fulfillment
(valid obligation).
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Effect of Casual Condition: The
obligation and condition shall take
effect.
Effect of Mixed Condition: The
obligation and condition shall take
effect.
Effects of Impossible Conditions:
1. Conditional obligation is void - both
obligation and condition are void.
2. Conditional obligation is valid - if
condition is negative, it is disregarded
and obligation is rendered pure and
valid.
3. Only the affected obligation is void
- if the obligation is divisible, the part
not affected by the impossible
condition shall be valid.
4. Only the condition is void - if
obligation is pre-existing, not
depending on fulfillment of the
condition which is impossible for its
existence, only the condition id void.
5. Condition considered not imposed -
if impossible/unlawful condition is
attached to a simple or remunetory
donation as well as to a testamentary
disposition, condition is considered
not imposed while the obligation is
valid.
NOTE: The impossibility of the
condition must exist at the time of the
creation of the obligation; a supervening
impossibility does not affect the
existence of the obligation.
Effects of Positive and Negative
Condition:
In positive condition, obligation is
extinguished as soon as th e time expires
or if it becomes indubitable that the
event will not take place.
In negative condition, the obligation
is effective from the moment the time
indicated has lapsed, or if it has become
evident that the event cannot occur,
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although the time indicated has not yet object of the obligation. The
lapsed. principle only applies to
consensual contracts.
The intention of the parties, taking 2. Contracts in which the condition
into consideration the nature of the arising therefrom can only be
obligation, shall govern if no time has realized within successive
been fixed for the fulfillment of the periods or intervals. (e.g. lease,
condition. hire of service, life annuity)

Doctrine of Constructive Fulfillment Retroactive Effects as to the Fruits

of Suspensive Condition
Condition is deemed fulfilled when
the obligor actually prevented the
obligee from complying with the
condition. Prevention must be voluntary
or willful in character.
** Doctrine applies only to
suspensive condition. It can have no
application to an external contingency
which is lawfully within the control of
the obligor.
** The mere intention of the debtor
to prevent its happening or the mere
placing of ineffective obstacles to its
compliance, without actually preventing
fulfillment is insufficient.
and Interests in Obligations to give:
1. In Reciprocal Obligations: no
retroactivity - mutually compensated
(fruits may be natural, industrial or
civil)
2. In Unilateral Obligations: no
retroactivity; debtor appropriates the
fruits and interests received because it
is usually gratuitous unless intention
was otherwise, as inferred from nature
and circumstances.
In obligations to do and not to do
(personal obligations): NO fixed rule.
Courts are empowered to determine
the retroactive effect of the suspensive
condition. This rule also applies to an
obligation with a resolutory condition.

Requisites of Constructive Rights of the Creditor Before the

Fulfillment: Fulfillment of the Condition:
1. Condition is suspensive. The creditor may, before the
2. Debtor actually prevents the fulfillment of the obligation, bring the
fulfillment of the condition; and appropriate action for the reservation of
3. He acts voluntarily. his rights.

Principle of Retroactivity in Rights of the Debtor Before the

Suspensive Condition Fulfillment of the Condition:
The principle of retroactivity, under 1. The debtor may recover what he
the CC, Art. 1187, is limited to the paid by mistake before the
effects of the obligation. The cause of happening of the suspensive
action for the enforcement of the condition;
obligation must still be computed from 2. If the payment was for a determinate
the moment of the happening of the thing, debtor may file an accion
suspensive condition. reivindicatoria;
3. If the payment was for an
Rule on retroactivity has no indeterminate thing, there is solutio
application to: indebiti;
1. Real contracts because they are 4. If payment was made with
perfected only by delivery of the knowledge of the condition, debtor

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impliedly waives the condition and 3. If thing deteriorates without the fault
cannot recover; of the debtor, impairment to be
5. If payment was with knowledge but borne by the creditor.
the condition did not happen, the 4. If the thing deteriorates through the
debtor can recover lest the creditor fault of the debtor, creditor may
will be unjustly enriched; and choose between fulfillment and
6. If payment is not by mistake, debtor rescission with damages in either
is deemed to have impliedly waived case.
the condition; he cannot recover 5. If improvement is through nature or
what he has prematurely paid once time, inures to the benefit of
the suspensive condition is fulfilled. creditor;
6. If the improvement is at the expense
of the debtor, rights similar to that
granted to the usufructuary.
LOSS, DETERIORATION OR
IMPROVEMENT PENDING THE Note: Consequently, the debtor cannot
HAPPENING OF THE ask reimbursement for the expenses
CONDITION: incurred for useful improvements of or
improvements for mere pleasure. He can
LOSS only ask reimbursement for necessary
A thing is lost when it: expenses.
a. Perishes
b. Goes out of commerce of men
c. Disappears in such a way that its The above rules apply to the
existence is unknown or it cannot be following:
recovered a. Determinate things only because the
genus of a thing never perishes
DETERIORATION (genus nun quam peruit)
Any reduction or impairment in the b. Obligation with a period; or
substance or value of a thing which does c. Those who have a duty to return in
not amount to loss; the thing is less than case of loss, deterioration or
when the obligation was constituted. improvement of the thing in an
obligation with a resolutory
IMPROVEMNET condition
Anything added to, incorporated in,
or attached to the thing that is due. The happening of a resolutory
condition does not ipso jure revert
3. REAL OBLIGATIONS ownership in the original debtor; he
merely becomes entitled to the delivery
In obligations to Give): which would give him ownership a new.
The thing pending the happening of
the condition, in case of improvement, 4. RECIPROCAL OBLIGATIONS
loss, or deterioration, the following rules Those which are created or
shall be observed: established at the same time, out of the
1. If loss is without the fault of the same cause, and which result in mutual
debtor, obligation is extinguished. relationships of creditor and debtor
2. If loss through the fault of the debtor, between the parties.
obliged to pay damages.
G. R. If none of the parties fails to
comply with what is incumbent

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upon him, there is a right on the 2. The decree of rescission shall be

part of the other to rescind (or without prejudice to the rights of
resolve) the obligation (tacit third persons who have acquired
resolutory condition) the thing in accordance with Art.
1385 and 1388 and Mortgage
** Mere failure on the part of the party Law.
to comply with what is incumbent upon
him does not ipso jure produce the Art, 1191 of the Civil Code does not
rescission or resolution of the obligation. apply to the following:
It requires restitution or bringing 1. Contracts of partnership where a
parties back to its original status prior to paertner fails to pay the whole
the contract. amount which he has bound to
contribute to the common fund.
Requisites of Rescission: 2. Sales of real or personal property
1. One of the parties failed to comply by installments. The first being
with that is incumbent upon him; governed by Maceda Law while
2. The injured party choose rescission the latter by Recto Law.
over fulfillment or performance is
no longer possible; Recto Law
3. The breach is substantial so as to - also known as Installment Sales
defeat the object of the parties in Law
making the agreement. This law covers contracts of sale of
personal property by installments (Act
**Right to rescind not absolute. The No. 4122). It is also applied to contracts
court is given discretionary power to fix purporting to be leases of personal
the period within which the obligor in property with option to buy, when the
default may be permitted to comply with lessor has deprived the lessee of the
what is incumbent upon him (CC, Art. possession or enjoyment of the thing.
1191, par3). But the discretionary power (PCI Leasing and Finance Inc vs.
of the court cannot be applied to Giraffe-X, G.R. No. 142618, July 12,
reciprocal obligations arising from a 2007)
contract of lease because they are
governed by Art. 1659 of the Civil Code. Alternative Remedies of injured party
in case of Sale of Personal Properties
Waiver of Right in Installment
- the right to rescind may be waived a. Specific Performance with
either expressly or impliedly. damages. - Creditor may demand for
the exact fulfillment of the
Effects of right to rescind obligation with damages.
1. If there is a stipulation granting G.R. If availed of, the unpaid seller
the right of rescission on the part can no longer choose other remedies.
of the aggrieved party and XPN: If fulfillment has become
express grant, any court decision impossible.
adjudging the proprietary of the
rescission extra-judicially made b. Rescission with damages. - Cancel
is not the revocatory act of the obligation if buyer fails to pay 2
rescission but merely declaratory or more installments. This remedy
or an affirmation of the is deemed chosen when:
revocation. i. Notice of rescission is sent

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ii. Takes possession of subject 2. Buyer paid less than 2 years

matter of sale installment
iii. Files action for rescission a. Grace period is not less than 60
days from due date
c. Foreclosure. - creditor may b. Cancellation if failure to pay
foreclose the chattel mortgage if within 60 days
buyer fails to pay 2 or more c. 30 days notice before final
installments. cancellation
*** There can be partial rescission and
Maceda Law partial fulfillment under Art. 1191 of the
- also known as the Realty Civil Code.
Installment Buyer Act.
Provides for certain protection to Effects of rescission:
particular buyers of real estate payable 1. Duty upon the court to require the
on installments against onerous and parties to surrender whatever they
oppressive conditions (RA6552). may have received from the other
Applicable to contract to sell real (without prejudice to the obligation
properties on installment basis. of the party who was not able to
comply with what is incumbent
Transactions/Sale covered by Maceda upon him); or
Law: 2. Can no longer be demanded when
- Residential Real Estate he who demands is no longer in the
position to return whatever he may
Transactions/Sale excluded in Maceda be obliged to restore; neither can it
Law: be demanded when the thing which
a. Industrial Lots is the object of the contract is
b. Commercial buildings ( commercial already in the possession of a third
lots by implication) person who obtained it in good faith.
c. Sale to tenants under agrarian laws. Remedy: Proceed against the party
responsible for the transfer or
Rights granted to buyers: conveyance for damages.
1. Buyer paid at least 2 years
installment: Effects of Breach by Both Parties:
a. Pay without interest the balance a. The liability of the first infractor
within grace period of 1 month shall be equitably tempered by the
for every year of installment courts;
payment. Grace period to be b. If it cannot be determined which of
exercised once every five (5) the parties first violated the contract,
years. the same shall be deemed
b. When no payment - canceled; extinguished, and each shall bear his
buyer is entitled to 50% of what own damages.
he has paid plus 5% for every
year but not exceeding 90% of 5. OBLIGATIONS WITH A
payments made. PERIOD
Note: Cancellation to be - Obligations whose
effected 30 days form notice and fulfillment a day certain has been
upon payment of cash surrender fixed, shall be demandable only
value. when that day comes. Obligations
with a resolutory period takes effect

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at once but terminate upon the agreement to the

arrival of the day certain. contrary
When it is left When it is left
**A day certain is understood to be that exclusively to the will exclusively upon the
which must necessarily come, although of the debtor, the will of the debtor, the
it may not be known when. If the existence of the very existence of the
uncertainty consists on whether the day obligation is not obligation is affected
will come or not, the obligation is a affected; empowers the
conditional one. court to fix the
duration of the
Term/Period obligation
Interval of time, which, exerting am Must be possible, Must be possible,
influence on an obligation as a otherwise, obligation is otherwise, obligation is
consequence of a juridical act, wither void. void
suspends its demandability or produces
its extinguishment. Kinds of Period/Term:
1. As to Effect
a. Suspensive Period (Ex die) -
obligation whose fulfillment a day
Requisites of Period: certain has been fixed, shall be
1. Future demandable only when that day
2. Certain comes.
3. Possible, legally and physically *** If a fortuitous event supervenes,
the obligor is merely relieved of the
**What is suspended by the term is obligation to fulfill the obligation at
not the acquisition of right or the that time and does not stop the
effectivity of the obligation but its running of the period.
demandability.
*** Fortuitous event does not
When period of prescription begins: interrupt the running of the period.
- it commences from the time the
term in the obligation arrives, for it is b. Resolutory Condition (In
only from that date that it is due and Diem) - Obligations with a
demandable. resolutory period take effect at
once but terminate upon arrival
Distinctions between Term/Period and of the day certain.
Condition
TERM/PERIOD CONDITION 2. As to Expression
Interval of time which Fact or event which isa. Express Period - when
is future and certain future and uncertain specifically stated
Must necessarily come, May or may notb. Implied Period - when it can be
although it may not be happen deduced that the parties
known when intended a period such as in case
Exerts an influence Exerts an influence of Art. 1180 of the CC when one
upon the time of upon the very existence promises to pay when able.
demandability or of the obligation itself
3. As to Definiteness
extinguishment of an a. Definite Period - refers to a
obligation fixed known date or time
No retroactive effect Has retroactive effect b. Indefinite Period - even which
unless there is an will necessarily happen but the

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date of its happening is G.R. Courts are without power to fix

unknown. period.
XPNs:
*** The uncertainty of the event of 1. If the obligation does not fix a
occurrence does not convert into a period, but from its nature and
condition so long as there is no circumstances it can be inferred that
uncertainty whether the event will a period was intended. (CC, Art.
happen or not. 1197)
2. If the duration of the period depends
4. As to Source upon the will of the debtor. (CC,
a. Conventional - made by the Art. 1197, par.2)
agreement of the parties 3. If under the circumstances, the
b. Legal - period fixed by law such parties have contemplated a period
as Arts. 1682 and 1687 (CC, Art. 1197, par.3)
c. Judicial - set by courts in case 4. If the debtor binds himself when his
of implied and indefinite period. means permit him to do so (CC, Art.
1180)
Effect of Advance Payment or
Delivery: When debtor loses right to make use
- In obligation to give, the obligor of period
can recover what he has paid or 1. He becomes insolvent, unless he
delivered with fruits and interests. gives a guaranty or security for the
debt, the insolvency need not be
Note: There can be no right of judicially declared.
recovery if the obligor delivers the thing 2. He does not furnish to the creditor
voluntarily or with the knowledge of the the guaranties or securities which he
period or term or the fact that the has promised.
obligation has not yet become due and 3. If, after their establishment, the
demandable. guaranty or security is impaired
Period for the Benefit of the Creditor through the fault of the debtor, he
- Creditor may demand the shall lose his right to the benefit of
fulfillment of the obligation at any time the period; however, if it is impaired
but the obligor cannot compel him to without his fault, he shall retain his
accept payment before the expiration of right.
the period (ex. “on demand”) 4. If the guaranty or security
disappears through any cause, even
Period for the Benefit of the Debtor without the fault of the debtor.
- Debtor cannot be compelled to 5. He violates any undertaking, in
perform obligation prematurely, but he consideration of which the creditor
can do so if he desires. agreed to the period. (ex. If an
employee commits a substantial
Judicial Term/Period breach of his employment contract,
- it is the period/term which is fixed the employer may terminate the
by the court in accordance with the employment)
causes expressly recognized by law. 6. He attempts to abscond. (CC, Art.
Once fixed, the period can no longer be 1197)
judicially changed.
7. CONJUNCTIVE OBLIGATION
When Court may fix period: - when all the objects or prestations
are demandable at the same time.

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*** The choice shall produce

8. DISTRIBUTIVE OBLIGATION effect only upon communication of
- when only one of the prestations the choice to the other party.
or objects is demandable. It may either
be alternative or facultative. Notice of selection may be in
any form provided that it is
9. ALTERNATIVE OBLIGATION sufficient to make the other party
- one where out of two or more know that the election has been
prestations which may be given, only made. It may be::
one is due. a. Orally;
b. In writing; or
Limitation: c. Tacitly
The creditor cannot be i. Performance by the
compelled to receive part of one and debtor who has the right
part of the other undertaking. to choose or in the
acceptance of a
G.R. The right of choice belongs prestation by the
to the debtor. creditor when he has a
right of selection
XPNs: 1. Expressly granted to the ii. When the creditor sues
creditor. the debtor for the
2.Expressly granted to third performance of one of
person. the prestation.

Limitations upon the Right of Effects of Notice of Choice:

Choice: 1. Limits the obligation to the
The debtor shall have no right to choose object or prestation selected
those prestations which are: with all the consequences which
a. Impossible; the law provided;
b. Unlawful; 2. The obligation is converted to a
c. Which could not have been simple obligation, to perform
the object of the obligation. the prestation chosen;
(CC, Art. 1200, par.2;) 3. Once the selection has been
d. Undertakings that are not communicated, it becomes
included among others from irrevocable.
which the obligor may
select; Effect of Loss or Impossibility of
e. Those which are not yet due One or All Prestations
and demandable at the time - the debtor shall lose the right
the selection is made; of choice, when among the
f. Those by reason of accident prestations whereby he is
or some other cause, have alternatively bound, only one is
acquired a new character practicable.
distinct or different from
that contemplated by the *** When through the fault of
parties when the obligation the debtor, all the things which are
was constituted. alternatively the object of the
obligation have been lost or
compliance of the obligation has
become impossible unless due to

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fortuitous event, the creditor is c. Only one remains - deliver

entitled to indemnity for damages. that which remains

*** When the choice has been 2. Debtor’s Fault

expressly given to the creditor, the a. All are lost - creditor may
obligation shall cease to be claim the price/value of any
alternative from the day when the of them with indemnity for
selection has been communicated to damages
the debtor. (CC, Art. 1205, par1) b. Some but not all are lost -
creditor may claim any of
EFFECTS OF LOSS OF those subsisting without a
OBJECTS OF ALTERNATIVE right to damages or
OBLIGATION (Civil Code, Art. price/value of the thing lost
1204-1205) with right to damages

When choice belong to debtor:

1. Due to Fortuitous Event 10. FACULTATIVE OBLIGATION
a. All are lost - debtor is - An obligation wherein only one
released form the obligation object or prestation has been agreed
b. Some but not all are lost - upon by the parties to the obligation, but
deliver that which he shall which may be complied with by the
choose from among the delivery of another or the performance
remainder of another prestation in substitution.
c. Only one remains - deliver (CC, Art. 1206)
that which Effect of Loss of Substitute in
Facultative Obligation
2. Debtor’s fault
a. All are lost - creditor Loss of the Thing Intended as a
should have a right to Substitute
indemnity for damages Before substitute is made:
based on the value of the 1. If due to bad faith or
last thing which disappeared fraud of obligor -
or service which become obligor is liable
impossible 2. If due to the negligence
b. Some but not all are lost - of the obligor - obligor
deliver that which he shall is not liable
choose from among the
remainder without damages After substitution is made:
c. Only one - deliver that 1. The loss or deterioration of the
which remains substitute on account of the
obligor’s delay, negligence or
When choice belongs to creditor: fraud - obligor is liable because
1. Due to Fortuitous Event once substitution is made, the
a. All are lost - debtor is obligation is converted into a
released from the obligation simple obligation.
b. Some but not all are lost -
deliver that which he shall ALTERNATIVE VS. FACULTATIVE
choose from among the OBLIGATIONS
remainder ALTERNATIVE FACULTATIVE
As to Nature

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Various prestations all Only the principalseveral creditors and debtors in one
of which constitute part prestation constitutesand the same obligation.
of the obligation the obligation, the
accessory being onlyExceptions:
the means to facilitate1. The obligation expressly states
payment that there is solidarity (ex.
As to the effect of the nullity of prestations “jointly and severall”,
Nullity of one of the Nullity of the principal “individually and collectively”,
prestation does not prestation invalidates “I promise to pay” followed by
invalidate the the obligation the signature of two or more
obligation which is still persons);
in force with respect to 2. The law requires solidarity (ex.
those which have no Tort, quasi-contracts, liability of
vice principals, accomplices and
As to Choice accessories of a felony,
Right to choose may be Only the debtor can obligations of devisees and
given to the creditor choose the substitute legatees, bailess in
As to the effect of fortuitous event commudatum;
Only the impossibility Impossibility of the3. Nature of the obligation requires
of all the prestations principal prestation is solidarity;
due without the fault of sufficient to extinguish 4. When a charge or condition is
the debtor extinguished the obligation, even if imposed upon heirs or legatees,
the obligation the substitute is and the testament expressly
possible. makes the charge or condition in
solidum; and
5. When a solidary responsibility
is imputed by a final judgement
upon several defendants.
JOINT AND SOLIDARY
OBLIGATIONS Principal Effects of Joint
11. JOINT Liability:
OBLIGATION(Obligacion 1. Vices of each obligation arising
Mancumunada) from the personal defect of a
- The whole obligation is to be pair particular debtor or creditor
or fulfilled proportionately by different does not affect the obligation or
debtors or demanded buy different right of the others;
creditors. 2. Insolvency of one debtor does
not make others responsible for
12. SOLIDARY OBLIGATION his share;
(Obligacion Solidaria) 3. Demand of the creditor on one
- Each one of the debtors is bound joint debtor puts him in default,
to render, and/or each one of the but not the others since the
creditors or of several debtors or of debts are distinct;
several creditors has a right to demand 4. When the creditor interrupts the
entire compliance with the prestation running of the prescriptive
period by demanding judicially
General Rule: from one, the others are not
Obligation is presumed to be joint if affected;
there are concurrence of several
creditors or of several debtors or of

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5. Defenses of one debtor, are not the obligation, it is converted into

necessarily available tot he one of indemnity for damages.
others.

*** Solidary liability is

determined by the tenor of the Indivisibility vs. Solidarity
contract, not by judicial admission
of the party. INDIVISIBILITY SOLIDARITY
Refers to the prestation Refers to the legal tie
JOINT DIVISIBLE that is not capable of or vinculum juris and
OBLIGATION partial performance consequently to the
- Each creditor can demand subjects or parties of
only for the payment of his the obligation
proportionate share of the credit; Exists even if there is Exists only if there is
each debtor can be held liable only only one creditor and more than one creditor
for the payment of his proportionate one debtor or more than one
share of the debt. debtor
Each creditor cannot Each creditor may
*** In case of breach of demand more than his demand the entire
obligation by one of the debtors, share and each debtor prestation and each
damages due must be borne by is n bound to pay more debtor is bound to pay
himself alone; if there is any than his share the entire prestation.
defense purely personal to one of Obligation is converted Solidarity remains
the debtors, he alone can avail into indemnity for
himself of such defense. damages; indivisibility
is terminated
JOINT INDIVISIBLE Only the debtors guilty All the debtors are
OBLIGATION of breach of obligation liable for the breach of
- Midway between joint and is liable for damages the obligations
solidary obligations, preserving the committed by a debtor
two characteristics of the joint Other debtors are not All debtors are
obligation, in that no creditor can liable if one debtor is proportionately liable
do an act prejudicial to others and insolvent for the insolvency of
no debtor can be made to answer for one debtor
the others.
*** The debtors who may have been
Characteristics: ready to fulfill or perform what was
1. No creditor can act in incumbent upon them shall not
representation of the other; contribute to the indemnity beyond
2. No debtor can be compelled to the corresponding portion of the
answer for the liability of price of the thing or the value of the
others; service in which obligation consists
(CC, Art. 1224).
*** In case of breach of joint
indivisible obligation, obligation can Soldarity - may exists although
be enforced only by proceeding creditors and debtors may not be
against all of the debtors. bound in the same manner and
by the same periods and
*** If anyone of the debtors conditions.
should fail or refuse to comply with

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Kinds of Solidarity: shares, if he pays the the entire amount he

1. As to Source entire amount of the has paid
a) Legal - imposed by law obligation
b) Conventional - agreed upon An extension of time An extension of time
by the parties granted by the creditor granted by the creditor
c) Real - imposed by the to one of the solidary to the principal debtor
nature of the obligation debtors without the would release the
knowledge of the other surety from the
2. As to Parties bound solidary debtors would obligation
a) Active - solidarity on the not have the effect of
part of the creditors, where releasing the latter
any one of them can from obligation
demand the fulfillment of
the entire obligation
b) Passive - solidarity on the ***Each one of the solidary
part of the debtors where creditors may do whatever may be
any one of them can be useful or beneficial to others, but not
made liable for the anything which may be prejudicial
fulfillment of the entire to the latter.
obligation.
c) Mixed - solidarity on the ***As far as the debtor/s is/are
part of the debtors and concerned, a prejudicial act
creditors, where each one of performed by a solidary creditor is
the debtors is liable to valid and binding as between the
render, and each one of the solidary creditors, the creditor who
creditors has a right to performed such act shall incur the
demand, entire compliance obligation of indemnifying the
with the obligation. others for damages.

3. As to Uniformity Effects of Assignment of Rights in

a) Uniform - parties are bound Solidary Obligations:
by the same stipulations GENERAL RULE: A solidary
b) Non-uniform or varied - creditor cannot assign his
parties are not subject to the right as it is predicated upon
same stipulations mutual confidence (ex.
personal qualification of each
Solidarity vs Surety creditor had been taken into
Passive Solidary Surety (Solidary consideration)
Debtor Guarantor)
Both are solidarily liable to the creditor for the EXCEPTIONS:
payment of the entire obligation 1. Assignment to a co-creditor
Liable not only for the Liable only for the debt 2. Assignment is with consent of
payment of the debt of of another co-creditor
another, but also for the
payment of a debt *** Payment in solidary obligation
which is properly his may be made to any of the solidary
own creditors, as a general rule, except if
Has a right to demand Acquires a right ofdemand, judicial or extra-judicial,,
reimbursement form reimbursement fromhas been made by one of them,
his co-debtors of their the principal debtor ofpayment should be made to him.

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Effect of Payment by a Debtor

Effect of Death of Principal - Payment made by one of the
Debtor solidary debtors either totally or
Under the law and partially extinguishes the obligation
jurisprudence, the creditor may sue, depending upon whether the entire
separately or together, the principal amount of debt is paid or only part
debtor and the surety, in view of the thereof.
solidary nature of their liability. The
death of the principal debtor will not - If two or more solidary
work to convert, decrease or nullify debtors offer to pay, the creditor
the substantive right of the solidary may choose which offer to accept it.
creditor. Evidently, despite the death (CC, Art. 1217, par1)
of the principal debtor, the creditor
may still sue the surety alone in *** No reimbursement if
accordance to soliday nature of the payment is made after the obligation
latter’s liability under the has prescribed or has become
performance bond. illegal. (CC, Art. 1218)

Effect of Payment to a Creditor Effect of Loss or Impossibility of

- If one of the solidary creditors Performance in Solidary
is able to collect the entire amount Obligation
of the debt from one or some or all 1. If it is not due to the fault and
of the solidary debtors, the before delay of the solidary
obligation is totally extinguished, debtors, the obligation is
although there arises a consequent extinguished. (CC, Art. 1221
obligation on his part to his part to par1)
render an account to his co- 2. If the loss or impossibility is due
creditors. to the fault of one of the solidary
debtors (CC, Art. 1221 par.2) or
Effect of Demand Upon a due to a fortuitous event after one
Solidary Debtor of the solidary debtors had already
- The demand made against one incurred in delay, the obligation is
of the solidary debtors shall not be converted into an obligation of
an obstacle to those which may indemnity for damages but the
subsequently be directed against the solidary character of the
others so long as the debt has not obligation remains. (CC, Art.
been fully collected. CC, Art. 1216) 1221, par.3)

The creditor may proceed

against any ony one of the solidary Defenses available to a Solidary
debtors or against all of them Debtor
simultaneously. (Art. 1216, CC) 1. Defenses derived from the
nature of the obligations - total
The creditor’s right to proceed defense; all the solidary debtors
against the surety exists are benefited.
independently of his right to
proceed against the principal Ex. Payment or performance
(Palmares vs. CA, G.R. No. 126490, Res judicata
March 31, 1998) Prescription

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Res judicata - refers to the rule the debt for which the latter are
that a final judgment or responsible - constitutes partial
decree on the merits by a defense only for the debtor-
court of competent defendant
jurisdiction is conclusive of
the rights of the parties or 13. DIVISIBLE OBLIGATIONS
their privies in all later suits - those which have as their object a
on all points and matters prestation which is susceptible of partial
determined in the former performance without the essence of
suit. obligation changed

Elements of res judicata: 14. INDIVISIBLE OBLIGATIONS

- those which have as their object a
(1) the former judgment or prestation which is susceptible of partial
order must be final; performance, otherwise, the essence of
obligation changed.
(2) the judgment or order must
be on the merits; THREE KINDS OF DIVISION:
1. Quantitative - the thing can be
(3) it must have been rendered materially divided into parts
by a court having jurisdiction and such parts are
over the subject matter and the homogeneous to each other.
parties; a. Movable Quantitative -
parts are actually separated
(4) there must be, between the from each other
first and the second action, b. Immovable Quantitative -
identity of parties, of subject the limits of the parts are
matter and cause of action. fixed by metes and bounds

2. Qualitative - the thing can be

2. Defenses personal to him - materially divided but the
constitutes total defense and parts are not exactly
partial defense. homogeneous (ex.
Inheritance)
Ex. Total Defense:
Minority 3. Ideal/Intellectual - the thing
Insanity cannot be separated into
material parts (ex. Co-
Partial Defense ownership)
Special terms or conditions
affecting his part of the Test of Divisibility: Whether the
obligation prestation is susceptible of partial
compliance.
3. Defenses pertaining to his own
share - constitute a partial *** In obligations to give, even
defense; only the debtor is though the object may be physically
benefited. divisible, the obligation is still
indivisible if it is provided by law or
4. Defenses personal to the others, it is so intended by the parties.
but only as regards that part of

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*** In obligations to do, the May become Never demandable

obligation shall be considered demandable upon
divisible when it has for its object: default of the
(CC, ART. 1225, par3) unpeformed obligaion
a. The execution of a number of and sometimes joinlty
days of work with it
b. The accomplishment of work by
metrical units Porpuse of Penalty:
c. The accomplishment of 1. Funcion coercitiva o de garantia
analogous things which by their - to insure the performance
nature are susceptible of partial of the obligation
performance. 2. Funcion liquidatoria - to
liquidate the amount of
damages to be awarded in
Effect of Divisible or Indivisible case of breach of the
Obligation: principal obligation
(compensatory)
G.R. Creditor cannot be compelled 3. Funcion estrictamente penal - in
partially to receive the prestation in certain exceptional cases, to
which the obligation consists; punish the obligor in case of
neither may the debtor be required breach of the principal
to make partial payments. obligation (punitive). Does
not resolve the question of
XPNs: damages.
1. When the stipulation expressly
stipulates the contrary; Kinds of Penalty:
2. When the different prestations 1. As to Origin
constituting the objects of the a. Legal - constituted by law
obligation are subject to b. Conventional - constituted by
different terms and conditions; the parties
and
3. When the obligation is in part 2. As to Purpose
liquidated and in part a. Compensatory or Reparatory
unliquidated. - indemnity for damages
b. Punitive - punishment for
15. OBLIGATION WITH A PENAL breach
CLAUSE
- an obligation to which an 3. As to Effect
accessory undertaking (penal a) Subsidiary - only penalty
clause/penalty) is attached for the may be demanded
purpose of insuring its performance by b) Joint or Complementary -
virtue of which the obligor is bound to both penalty and principal
pay a stipulated indemnity or perform a obligation may be
stipulated prestation in case of breach. demanded

PENAL CLAUSE VS. OBLIGATION WITH A PENAL

CONDITION CLAUSE VS. CONDITIONAL
PENAL CLAUSE CONDITION OBLIGATION
Constitutes an Does not constituteObligation
an with a Conditional
obligation obligation Penal Clause Obligation

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There is already an
No obligation before
obligation the guarantor is the
existing obligation
the suspensive same
form the very
condition happens Principal obligation Principal debtor cannot
beginning and the penalty can be be the guarantor of the
Penalty is dependent
Principal obligation
assumed by the same same obligation
upon the non-
itself is dependentperson
performance of the
upon the uncertain As a rule, penalty is Guaranty subsists even
principal obligation
event extinguished by the though the principal
nullity of the principal obligation is voidable,
OBLIGATIONWITH A PENAL obligation unenforceabe or a
CLAUSE VS. ALTERNATIVE natural one.
OBLIGATION

Obligation with a Alternative Effect of Penalty:

Penal Clause Obligation G.R. The penalty shall substitute
There is only one Two or more the indemnity for damages
prestation obligations are due and payment of interest in
Impossibility of the The impossibility of case of non-compliance.
principal extinguishes one, without the fault
also the penalty of the debtor, leavesXPNs:
the other subsisting a. When there is a stipulation to
The obligor cannot Debtor can choose the contrary;
choose to pay the which prestation tob. When the obligor refuses to pay
penalty to relieve fulfill the penalty; and
himself of the c. When the obligor is guilty of
principal, unless this fraud.
right is expressly
granted to him *** Penalty, as a stipulation in a
contract, is demandable only if there is a
OBLIGATIONWITH A PENAL breach of the obligation, and it is not
CLAUSE VS. FACULTATIVE contrary to law, morals, good customs,
OBLIGATION public order or public policy.
Obligation with a Facultative Limitation on the Right of the
Penal Clause Obligation Debtor in Obligations with a
Payment of the penalty Power of the debtor toPenal Clause (CC, Art. 1227)
in lieu of the principal make the substitution is
obligation can be made absolute G.R. Debtor cannot exempt himself
only by express from the performance of the
stipulation principal obligation by paying
The creditor can The creditor can never the stipulated penalty.
demand both the demand both
prestations prestations XPN: Unless this right has been
clearly and expressly granted
OBLIGATION WITH A PENAL to him.
CLAUSE VS. GUARANTY
Obligation with a Guaranty Limitation on the Right of the
Penal Clause Creditor in Obligations with a
Obligation to pay the Object of thePenal Clause (CC, Art. 1227)
penalty is different obligations of the
from the principal principal debtor and

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G.R. Creditor cannot demand the

fulfillment of the principal
obligation and demand the
satisfaction of the penalty at
the same time.

XPN: Unless the right has been

clearly granted to him.

*** If creditor has chosen

fulfillment of the principal
obligation and performance thereof
became impossible without his
fault, he may still demand
satisfaction of the penalty.
If there was fault on the part of
the debtor, creditor may demand not
only the satisfaction of the penalty
but also the payment of damages.

Cases when penalty may be

reduced: (CC, Art. 1229)
1. If the principal obligation has
been partly complied with;
2. If the principal obligation has
been irregularly complied with;
and
3. If the penalty is iniquitous or
unconscionable even if there has
been no performance.

Effect of Nullity of Obligation or

Penalty (Civil Code, Art. 1230)
- If principal obligation is void,
penal clause shall also be void
because the penalty is merely an
accessory obligation. But if penal
clause is void, principal obligation
is not affected.
-END-

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