Atty.
Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Pure Obligation
• One whose effectivity or
extinguishment does not
depend upon the fulfillment or
non-fulfillment of a condition
or upon the expiration of a
term or period, and which, as a
consequence, is characterized
by the quality of immediate
demandability
• Although the creditor can
demand the performance of the
obligation immediately, the
quality of immediate
demandability is not infringed
or violated when a reasonable
period is granted for
performance
Conditional Obligation
• A condition may be defined as a
future and uncertain fact or
event upon which an obligation
is made to depend
• One whose effectivity is
dependent on the fulfillment or
non-fulfillment of a future and
uncertain fact or event
• The event must not only be
future, but it must also be
uncertain
Kinds of Conditions
1. Suspensive – when the
fulfillment of the condition
results in the acquisition of
rights arising out of the
obligation
2. Resolutory – when the
fulfillment of the condition
results in the extinguishment
of rights arising out of the
obligation
3. Potestative – when the
fulfillment of the condition
depends upon the will of a
party to the obligation
4. Casual – when the fulfillment
of the condition depends upon
chance and/or upon the will of
a third person
5. Mixed – when the fulfillment of
the condition depends partly
upon the will of a party to the
obligation and partly upon
chance and/or the will of a
third person
6. Possible – when the condition
is capable of realization
according to nature, law,
public policy or good
customs 7. Impossible – when
the
condition is not capable of
realization according to nature,
law, public policy or good
customs
8. Positive – when the condition
involves the performance of an
act
9. Negative – when the condition
involves the omission of an act
10. Divisible – when the
condition is susceptible of
partial realization
11. Indivisible – when the
condition is not susceptible of
partial realization
12. Conjunctive – when there
are several conditions, all of
which must be realized
13. Alternative – when there are
several conditions, but only
one must be realized
14. Express – when the
condition is stated
expressly 15. Implied – when
the
condition is tacit
Suspensive vs. Resolutory
• A suspensive condition is a
future and uncertain event
upon the happening or
fulfillment of which rights
arising out of the obligation are
acquired
• The birth or effectivity of the
obligation is suspended until
the happening of the event
which constitutes the condition

Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
• A resolutory condition, on the
other hand, is a future and
uncertain event upon the
happening or fulfillment of
which rights already acquired
by virtue of the obligation are
extinguished or lost
• In a resolutory condition, the
juridical relation which is
established as a result of the
obligation is subject to the
threat of extinction
Effect of suspensive or resolutory
condition
• If the condition is suspensive,
the acquisition of rights shall
depend upon the happening of
the event which constitutes the
condition. In other words, the
obligation becomes effective upon
the happening of the
condition. The creditor
acquires a mere hope or
expectancy upon the
constitution of the obligation •
If the condition is resolutory, it
becomes demandable
immediately after its
establishment. However,
although rights are
immediately vested to the
creditor, such rights are always
subject to the danger of
extinction
Potestative, Casual, Mixed
Conditions
• A purely potestative condition
is one whose fulfillment
depends exclusively upon the
will of either one of the parties •
A casual condition is one whose
fulfillment depends
exclusively upon chance
Page 1 of 13
and/or upon the will of a third
person
• A mixed condition is one whose
fulfillment depends jointly
upon the will of either one of
the parties to the obligation
and upon chance and/or the
will of a third person
Effect of potestative
conditions • If the fulfillment of
the
potestative condition depends
exclusively upon the will of the
creditor, then the condition as
well as the obligation is valid • If
the fulfillment of the
potestative condition depends
exclusively upon the will of the
debtor, then the condition as well
as the obligation is void • This is
applicable to a
suspensive condition
Effect of casual conditions •
When the fulfillment of the
condition depends upon
chance and/or the will of a
third person, the obligation
including the condition shall
take effect
Effect of mixed conditions • When
the fulfillment of the condition
depends partly upon the will of a
party to the
obligation and partly upon
chance and/or the will of a
third person, then the
obligation including the
condition shall take effect
Possible and Impossible
Conditions
• A condition is possible when it
is capable of realization
 according to its nature, law, good
customs and public policy • A
condition is impossible when it is
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Effects of impossible conditions
• Impossible conditions which are
contrary to law, good
customs or public policy shall
annul the obligation which
depends upon them
• If the obligation is divisible,
that part which is not affected
by the impossible or unlawful
condition shall be valid
• If the condition is not to do an
impossible thing, it shall be
considered as not having been
agreed upon. The obligation
then becomes pure and
immediately demandable
Positive and Negative Conditions
• A condition is positive if it involves
the performance of an act or the
fulfillment of an
event
• A condition is negative if it
involves the non-performance
of an act or the non-fulfillment
of an event
Effects of positive and negative
conditions
• The condition that some event
happen at a determinate time
shall extinguish the obligation
as soon as the time expires or
if it becomes inevitable that the
event will not take place
• The condition that some event
will not happen at a
determinate time shall render
the obligation effective from the
moment the time indicated has
elapsed, or if it has become
evident that the event cannot
occur
• If no time has been fixed for the
not capable of realization
according to its nature, law, good
customs, or public policy
Page 2 of 13
fulfillment of the condition, the
intention of the parties
shall govern
Constructive fulfillment of
suspensive conditions
• The condition shall be deemed
fulfilled when the obligor
voluntarily prevents its
fulfillment
• It is necessary that the obligor
must have actually prevented
the obligee from complying
with the condition, and said
prevention must have been
willful in character
Reciprocal Obligations
• Reciprocal obligations are
those which are created or
established at the same time,
out of the same cause, and
which result in mutual
relationships of creditor and
debtor between parties
• If one of the parties fails to
comply with what is incumbent
upon him, there is a right on
the part of the other party to
rescind
Necessity of Judicial
Action • The right to
rescind the
obligation is a right which
belongs to the injured party
alone
• It is essential that it must be
invoked judicially
• The party entitled to rescind
must invoke judicial aid by
filing the proper action for
rescission
• Where the contract itself
contains a provision by virtue
 of which the obligation maybe
cancelled or extinguished by
the injured party in case of
breach, judicial permission to
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Effect of Rescission
• When an obligation has been
rescinded, it is the duty of the
court to require the parties to
surrender whatever they may
have received from the other
• The parties will be placed in
their original situation before
the obligation
• The rescission of a contract can
no longer be demanded when
he who demands it is no
longer in a position to return
whatever he may be obliged to
restore, neither can it be
demanded when the thing
which is the object of the
contract is already legally in
the possession of a third
person in good faith
Obligations with a Period
• Obligations with a period are
those whose demandability or
extinguishment is subject to the
expiration of a term or
period
Distinctions between a term or
period and a condition
1. Regarding requisites: A term or
period refers to an interval of
time which is future and
certain, while a condition
refers to a fact or event which
is future and uncertain
2. Regarding fulfillment: A term
or period is an interval of time
which must necessarily come
although it may not be known
rescind the contract is no
longer necessary
Page 3 of 13
when, while a condition is a
future and uncertain fact or
event which may or may not
happen
3. Regarding influence on the
obligation: A term or period
merely exerts an influence
upon the time of the
demandability or
extinguishment of an
obligation, while a condition
exerts an influence upon the
very existence of the obligation
itself
4. Regarding retroactivity of
effects: A term or period does
not have any retroactive effect
unless there is an agreement to
the contrary, while a condition
has retroactive effects
5. Regarding effect of the will of
the debtor: When a term or
period is left exclusively to the
will of the debtor, the existence
of the obligation is not affected,
but when a condition is left
exclusively to the will of the
debtor, the very existence of
the obligation is affected
Classifications of Term or Period
1. Suspensive (ex die) – when the
obligation becomes
demandable only upon the
arrival of a day certain
2. Resolutory (in diem) – when the
obligation is demandable at
once, although it is terminated
upon the arrival of a day
certain
• A day certain is that which
 must necessarily come,
although it may not be known
when
3. Legal – when it is granted by
law
4. Conventional – when it is
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
7. Indefinite – when it can only be
determined by an event which Benefit of Term or Period
must necessarily come to pass,
although it may not be known
when
Effect of fortuitous event in
obligations with a term or
period • In obligations with a term
or period, the fortuitous event
merely relieves the contracting
parties from the fulfillment of
their respective obligations
during the term or period
• The contract shall be deemed
suspended during the term or
period does not mean that the
happening of the fortuitous
event shall stop the running of
the term or period agreed upon
Effect of advanced payment
or delivery
• If the obligor, being unaware of
the period or believing that the
obligation has become due and
demandable, paid or delivered
anything before the arrival or
expiration of the period, he
may recover what he has paid
or delivered with fruits and
interests
• If the payment or delivery was
made with knowledge of the
period or of the fact that the
obligation has not yet become
due and demandable, there
can be no right of recovery
• This can only apply to
stipulated by the parties
5. Judicial – when it is fixed by
the courts
6. Definite – when the date or
time is known beforehand
Page 4 of 13
obligations to give
• The general rule is that when a
period is designated for the
performance of an obligation, it
is presumed to have been
established for the benefit of
both the creditor and the
debtor
• The creditor cannot demand
the performance of the
obligation before the expiration
of the designated period,
neither can the debtor perform
the obligation before the
expiration of said period
When may the courts fix the term
or period
1. If the obligation does not fix a
period, but from its nature and
circumstances it can be
inferred that a period was
intended by the parties
2. If the duration of the period
depends upon the will of the
debtor
• If the debtor binds himself to
pay when his means permit
him to do so
• The mere silence of the
obligation with regard to the
term or period for its
fulfillment does not necessarily
mean that the courts are
empowered to fix the period
thereof
• An action must be filed in court
asking to fix the duration of
 the term or period
Effect of Judicial Period
• Once fixed by the courts, the
period can no longer be
judicially changed
• The moment the parties gave
their consent to the period
fixed by the court, it becomes a
law governing their contract
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
• An obligation is facultative
when it involves only one
object which is due, but it may
be complied with by the
delivery of another object or
performance of another
prestation in substitution
Right of choice in alternative
obligations
• G.R.: In alternative obligations,
the right of choice belongs to
the debtor
• XPTNS:
1. When the right of choice has
been expressly granted to
the creditor
2. When the right of choice has
been expressly granted to a
third person
3. When only one prestation
can be performed because
all others are impracticable
Limitations upon the right of
choice
• The debtor cannot choose those
prestations which are
impossible, unlawful or which
could not have been the object
of the obligation
When does the choice take effect
• The choice shall be effective from
the time it is
communicated
Alternative and Facultative
Obligations
• An obligation is alternative
when it comprehends several
objects which are due, but it
may be complied with by the
delivery or performance of only
one of them
Page 5 of 13
• No special form is required for
the communication or
notification
How is the choice made
1. The choice can be expressly
made
2. Implied such as when only one
alternative remains
3. Constructive such as when the
debtor performed one obligation
and the same was voluntarily
accepted by the creditor
Effect of the choice upon the
obligation
• Once the choice is made by the
debtor, the obligation ceases to
be alternative from the moment
the selection has been
communicated to the other
party
• The debtor can only comply
with his obligation by
performing the prestation
which has been selected, and
the creditor can only demand
compliance in accordance with
the prestation selected
Facultative Obligations
• An obligation where only one
prestation has been agreed
upon by the parties, but which
may be complied with by the
delivery of another object or
performance of another
prestation in substitution
 • Only one prestation is due
Loss of substitute
When does substitution take
effect
• Once the creditor has been
notified of the substitution,
then the obligation ceases to be
facultative and is converted
into a simple obligation to
deliver the thing or to perform
the prestation which has been
substituted
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Distinctions between facultative
and alternative obligations 1.
Regarding objects due: In
facultative obligations only one
object is due, while in
alternative obligations several
objects are due
2. Regarding compliance:
Facultative obligations may be
complied with by the delivery
of another object or by the
performance of another
prestation in substitution of
that which is due, while
alternative obligations may be
complied with by the delivery
of one of the objects or
performance of one of the
prestations which are
alternatively due
3. Regarding choice: In facultative
obligations the right of choice
pertains only to the debtor,
while in alternative obligations
the right of choice may pertain
to the creditor or a third
person
4. Regarding effect of fortuitous
loss: In facultative obligations
the loss or impossibility of the
object or prestation which is
due without any fault of the
debtor is sufficient to
extinguish the obligation, while
• Before substitution is made,
the loss or deterioration of the
thing intended as substitute
does not render the debtor
liable
• Once substitution has been
made, the debtor shall be liable
for the loss or deterioration of
the substitute on account of
his delay, negligence or fraud
Page 6 of 13
in alternative obligations the
loss or impossibility of all of
the objects or prestations
which are due without any
fault of the debtor is necessary
to extinguish the obligation
5. Regarding effect of culpable
loss: In facultative obligations
the culpable loss of the object
which the debtor may deliver
in substitution before the
substitution takes effect does
not give rise to any liability on
the part of the debtor, while in
alternative obligations the
culpable loss of any of the
objects which are alternatively
due before the choice is made
may give rise to a liability on
the part of the debtor
Joint Obligations
• When there is a concurrence of
several creditors or debtors in
one and the same obligation,
there is a presumption that the
obligation is joint and not
solidary
• Each of the creditors has a
right to demand and each of
the debtors is bound to render
compliance with his
proportionate part of the
prestation
 Exceptions to the presumption of
joint obligations
1. When the obligation expressly
states that there is solidarity •
“Jointly and severally” or
“individually and collectively” 2.
When the law requires
solidarity
3. When the nature of the
obligation requires solidarity
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
• In the absence of any law or
stipulation to the contrary, 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
• A joint creditor cannot act in
representation of the others,
neither can a joint debtor be
compelled to answer for the
liability of the others
Joint Indivisible Obligations • This
type of obligation is joint with
respect to the parties and
indivisible with respect to the
fulfillment of the obligation
• If there are two or more
debtors, the fulfillment of the
obligation requires the
concurrence of all of the
debtors, although each for his
own share. The obligation can
only be enforced by proceeding
against all of the debtors
• If there are two or more
creditors, the concurrence or
collective act of all creditors is
also necessary for the
enforcement of the obligation,
although each for his own
share
Joint Divisible Obligations • Each
creditor can demand only for the
payment of his
proportionate share of the
credit, while each debtor can
be held liable only for the
payment of his proportionate
share of the debt
Page 7 of 13
Effect of Breach
• Since compliance can only be
enforced by proceeding against
all the debtors, it follows that if
one of the joint debtors fails to
comply with his undertaking,
the obligation can no longer be
fulfilled
• It is converted into one of
indemnity for damages
• The debtors who may have
been ready to fulfill his
obligation shall not contribute
to the indemnity beyond the
corresponding portion of the
price of the thing or value of
the service
Effect of insolvency of a debtor • If
one of the joint debtors should be
insolvent, the others shall not be
liable for his share
Solidary Obligations
• Each of the creditors is entitled
to demand the payment of the
entire credit, while each of the
debtors is liable for the
payment of the entire debt
• Solidarity may be active
(among the creditors), passive
(among the debtors), or mixed
(among creditors and debtors)

Effect of active solidarity
• The creation of mutual agency
among solidary creditors by
virtue of which each creditor is
empowered to exercise against
the debtor or debtors not only
the rights available to him, but
also all the rights which
correspond to the other
creditors
Effect of passive solidarity • The
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Effect of beneficial and prejudicial
acts
• Each solidary creditor may
demand the payment or
performance of the entire
obligation from one, some or all
of the debtors. Such demand
will have the effect of
benefitting all the creditors. If
the entire obligation is paid,
the other creditors will have
the right to demand from the
creditor who received the
payment the share
corresponding to them in the
obligation
• As far as the debtors are
concerned, a prejudicial act
performed by a solidary
creditor shall be valid and
binding due to mutual
representation among solidary
creditors. However, as far as
the solidary creditors are
concerned, the creditor who
performed the act shall incur
the obligation of indemnifying
the others for damages
Demand by a creditor
• Any solidary creditor may
fundamental effect of solidarity
among debtors is the liability of
each debtor for the payment of
the entire
obligation, with the consequent
right to demand
reimbursement from the other
debtors for their corresponding
shares once payment has been
made
Page 8 of 13
demand the payment or
performance of the obligation
from one, some or all of the
debtors.
• Demand may be judicial or
extrajudicial
• Payment shall be made only to
the creditor who made the
demand
• In the absence of any judicial
or extrajudicial demand,
payment may be made by the
debtor to anyone of the
solidary creditors
Payment to a Creditor
• If one of the solidary creditors
is able to collect the entire
amount of the debt from one,
some or all of the solidary
debtors, then the obligation is
totally extinguished
• However, the creditor can be
held liable to the other
creditors for their share in the
obligation
Demand upon a debtor
• Demand made against one of
the solidary debtors 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
Effect of payment by a debtor •
Where payment is made by one of
the solidary debtors, the
effect is either total or partial
extinguishment of the
obligation depending upon
whether the entire amount of
the debt is paid or not
• Once payment is made by one of
the solidary debtors of the
entire obligation, there arises
an immediate consequent right
of such debtor to claim from
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Defenses available to a solidary
debtor if one or all of them are
sued jointly
1. Defenses derived from the
nature of the obligation (Ex:
payment, prescription, those
which invalidate the
contract)
2. Defenses personal to him or
pertaining to his own share
(Ex: minority, insanity and
other purely personal defenses) 3.
Defenses which are personal to
others, but only as regards
that part of the debt which the
latter are responsible
Divisible or Indivisible Obligations
• Divisible obligations are those
which have as their object a
prestation which is susceptible of
partial performance without the
essence of the obligation being
changed
• Indivisible obligations are
those which have as their
object a prestation which is not
susceptible of partial
performance because the
essence of the obligation will be
changed
his co-debtors the share which
corresponds to them. This right
is not available to a debtor who
makes the payment after the
obligation has prescribed or
has become illegal
Effect if one of the solidary
debtors cannot reimburse his
share due to insolvency
• If one of the solidary debtors
cannot reimburse his share to
the debtor who paid the entire
obligation due to insolvency,
then such share shall be borne
by all his co-debtors in
proportion to the debt of each
Page 9 of 13
Divisibility of the Obligation vs.
Divisibility of the Thing or
Prestation
• Divisibility of the obligation
refers to the performance of the
prestation which constitutes
the object of the obligation,
while divisibility of the thing
refers to the prestation itself
When is a thing divisible
• A thing is indivisible when, if
separated into parts, its
essence is changed or its value
is decreased disproportionately •
A thing is divisible when, if
separated into parts, its
essence is not changed or its
value is not decreased
disproportionately
• In order that a thing shall be
considered divisible, it must be
possible to reconstruct the
thing itself into its condition
prior to the division by uniting
the different parts into which it
had been divided
Effect of divisible or indivisible
obligations
• If there is only one creditor and
 only one debtor, the creditor
cannot be compelled to
partially receive the prestation
in which consists the
obligation, and neither may the
debtor be required to make
partial payments
• If there is plurality of debtors
and creditors, apply the rules
in joint and solidary
obligations
Obligations to give
• If the obligation to give
something which by its very
nature is indivisible, then it is
evident that it is not
susceptible of partial
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
• If the obligation is to perform
some prestation or service
which by its very nature is
susceptible of partial
performance, the general rule
is that it is divisible
Obligations not to do
• Whether it is divisible or
indivisible shall depend upon
the character of the prestation
in each particular case
• The determination of the
character of the obligation will
depend upon the sound
discretion of the court
Obligations 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
compliance. Hence, it is
deemed to be indivisible
• If the obligation is to give
something which by its nature
is divisible, the general rule is
that the obligation is also
divisible since it is evidently
susceptible of partial
compliance
Obligations to do
• If the obligation is to perform
some prestation or service
which by its very nature is not
susceptible of partial
performance, it shall be
deemed indivisible
Page 10 of 13
in case of breach
• The penal clause or penalty is
an accessory obligation
attached to the principal
obligation
Purposes of Penalty
1. To insure the performance of
the obligation (General
Purpose)
2. To liquidate the amount of
damages to be awarded to the
injured party in case of breach
of the principal obligation
(Compensatory)
3. In exceptional cases, to punish
the obligor in case of breach of
the principal obligation
(Punitive)
Kinds of Penalty
1. Regarding origin: Legal or
Conventional. It is legal when it
is constituted by law; it is
conventional when it is
constituted by agreement of
the parties
 2. Regarding purpose:
Compensatory or Punitive. It is Effect of Penalty
compensatory when it is
established for the purpose of
indemnifying the damages
suffered by the creditor in case
of breach of the obligation; it is
punitive when it is established
for the purpose of punishing
the debtor in case of breach of
the obligation
3. Regarding effect: Subsidiary or
Joint. It is subsidiary when
only the penalty may be
demanded in case of breach of
the obligation; it is joint when
the injured party may demand
the enforcement of both the
penalty and the principal
obligation
• It depends if the penal clause
is considered as reparation or
punishment
• As reparation or compensation
for damages, the question of
damages is resolved since the
stipulated indemnity
represents a legitimate
estimate made by the
contracting parties of the
damages caused by the non
fulfillment or breach of the
obligation. As such, proof of
actual damages is not
necessary in order that the
stipulated penalty may be
demanded

Page 11 of 13
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
1. When there is a stipulation to
• As a punishment, the question the contrary
of damages is not yet resolved. 2. When the obligor is sued for
Consequently, the right to refusal to pay the agreed
damages, besides the penalty, penalty
still subsists. As such, if the 3. When the obligor is guilty of
injured party desires to recover fraud
damages actually suffered by • In all these cases, the purpose
him in addition to the penalty, of the penalty is to punish the
he must prove such damages debtor
• As a general rule, the penalty
is fixed by the contracting Enforceability of Penalty
parties as a compensation for • Upon the breach or non
damages in case of breach of fulfillment of the principal
the obligation obligation by the debtor, the
• Therefore, penalty in its penalty stipulated becomes
compensatory aspect is the demandable, provided it is not
general rule, while penalty in contrary to law, morals, good
its strictly penal aspect is the customs, public order or public
exception policy
• Where both of the contracting
Exceptions to the rule that the parties are unable to comply
penalty shall substitute the with their respective
indemnity for damages obligations, although the
 breach is not willful or
culpable, such as a fortuitous
event, since the law must work
both ways, the penal clause
cannot be invoked by anyone
of them to the prejudice of the
other as a consequence
Limitation on the right of the
debtor
• The debtor cannot exempt
himself from the performance
of the principal obligation by
paying the stipulated penalty
• An exception is when the right
has been expressly reserved for
him
Limitation on the right of the
creditor
• The creditor cannot demand
the fulfillment of the principal
obligation and the satisfaction of
the stipulated penalty at the
Atty. Michael Vincent Cauilan
NOTES ON KINDS OF
OBLIGATIONS
Effect of nullity of obligation or
penalty
• If the principal obligation is
void, it follows that the penal
clause shall also be void
• If the penal clause is void, the
validity of the principal
obligation is not affected
Cases to Digest
1. Direct Funders Holding
Corporation vs. Lavina (373
SCRA 645)
2. Heirs of Spouses Sandejas vs.
Lina (351 SCRA 183)
3. Buot vs. Court of Appeals (357
SCRA 846)
4. Perez vs. Court of Appeals (323
SCRA 613)
5. Ducusin vs. Court of Appeals
(122 SCRA 280)
6. Taylor vs. Uy Tieng (43 Phil
873)
7. Taylor vs. Uy Tieng (43 Phil
same time, unless this right has
been clearly granted to
him
• If the principal obligation is not
complied with, the creditor can
choose between demanding the
fulfillment of the obligation and
demanding the satisfaction of
the penalty
Instances when the court may
equitably reduce the stipulated
penalty
1. If the principal obligation has
been partly complied with
(Quantity)
2. If the principal obligation has
been irregularly complied with
(Quality)
3. If the penalty is
unconscionable even if there
has been no performance
(Unreasonable or Excessive)
Page 12 of 13
760)
8. BPI Investment Corporation vs.
Court of Appeals (377 SCRA
117)
9. Heirs of Luis Bacus vs. Court
of Appeals (371 SCRA 295)
10. Ong vs. Court of Appeals
(310 SCRA 1)
11. Goldenrod, Inc vs. Court of
Appeals (299 SCRA 400)
12. Development Bank of the
Philippines vs. Court of
Appeals (344 SCRA 492)
13. Song Fo & Co. vs.
Hawaiian Philippine Co. (47
Phil 821)
14. Philippine Amusement
Enterprise, Inc. vs. Natividad
(21 SCRA 284)
15. Laforteza vs. Machuca
(333 SCRA 643)
16. Ang vs. Court of Appeals
(170 SCRA 286)
17. Power Commercial and
Industrial vs. Court of Appeals
 (274 SCRA 597)
18. Reyes vs. Martinez (55
Phil 492)
19. PH Credit Corporation vs.
Court of Appeals (370 SCRA
155)
20. Parot vs. Gemora (7 Phil 94)
21. Smith, Bell & Co. vs.
Court of Appeals (267 SCRA
530)
22. Philippine Integrated Labor
Assistance Corporation vs.
NLRC (264 SCRA 418)
23. Continental Cement
Corporation vs. Asea Brown
Boveri, Inc. (659 SCRA 137)
24. Florentino vs. Supervalue
Inc. (533 SCRA 156)
25. Floriano vs. Delgado (11
Phil 154)
26. People’s Bank vs. Odom (64
Phil 128)
27. Santiago vs. Millar (68
Phil 39)
28. Luneta Motor Co. vs.
Abad (67 Phil 23)
29. Escueta vs. Pando (76
Phil 256)
30. Phil. National Bank vs.
Lopez Vito (52 Phil 41)
31. Victoria Planters vs.
Victorias Milling Co. (97 Phil
318)
32. Sarmiento vs. Javellana (38
Phil 880)
33. De Leon vs. Syjuco (90
Phil 311)
34. Concepcion vs. People of the
Phil. (74 Phil 163)
35. Cabarroguis and
Cabarroguis vs. Vicente (107
Phil 340)
Page 13 of 13