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Subject Code: BALOBCOX
Subject Title: Law on Obligations and Contracts
Subject Description: This is a study of the Philippine law on obligations and contracts. The
first part of the course deals with obligations, specifically its nature
and effect, the various kinds of obligations and its mode of
extinguishment. The second part is a study of the Philippine law on
contracts, its essential requisites, the forms of contract, the rules of
interpretation of contract and the various kinds of defective contracts
under Philippine Law. The Philippine law on obligations and
contracts is primarily based on the provisions of Book IV of the Civil
Code of the Philippines. The course also includes a study of Natural
Obligations under Title III, Book IV and Estoppel under Title IV,
Book IV, also of the Civil Code of the Philippines.
No. of Units: 3
Class Schedule:
Section Synchronous
ACT203/AIS201 Monday 3:00pm to 7:00pm
ACT202 Friday 3:00pm to 7:00pm
ACT201 Saturday 3:00pm to 7:00pm
Course Learning Outcomes:
Effective Communicator The student will be able to explain their

knowledge of legal concepts and principles on
obligations and contracts, and use this in
clearly expressing their ideas in class
discussions and required output.
Critical and Creative Thinker The student will be aware of one’s rights and
duties arising from various obligations that
may be incurred or may result from everyday
personal and business activity.
Technically Competent The student can provide a correct legal analysis
of the pertinent provisions on obligations and
contracts, which he or she can manifest in class
discussions, papers, and other required output.
Upon completion of the course, students are expected to have developed:
1. Working knowledge of the basic principles of laws and contracts;
SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph
2. Familiarization of different contracts and their terms and conditions;
3. Ability to determine the validity of the terms and conditions contained in a written contract
through a contract review exercise; and
4. Ability to prepare a simple and basic contract that is sufficient in form and substance.
About the instructor: Atty. Paula Bianca F. De Jesus
Contact Information: pfdejesus@nu-baliwag.edu.ph (by email or Microsoft teams)
Topics: (week 4)
Module 3: Kinds of Obligations (Part 2)
1. Joint and Solidary

2. Divisible and Indivisible
3. Obligations with a Penal Clause
DISLAIMER: The information content provided in this course material is designed to provide
helpful information on the subjects discussed. Some information’s are compiled from different
materials and summarized from different books. Some information’s are based on contributors'
perspective and understanding. References are provided for informational purposes only and do
not constitute endorsement of websites or other sources. Readers should be aware that the
websites/electronic references listed in this course material may change. Hence, the contributors do
not claim any information presented in the materials and do not reflect their own work.
KINDS OF OBLIGATIONS
(Part 2)
I. Pre-test / Activity:
1. Restate at least three points (each in complete sentence) that you remember from last
week’s lecture. Anyone who volunteers to do so at the start of each class will be given
additional class participation points.
2. State briefly (not more than three sentences) how last week’s lesson relates to today’s
lesson based on what you have read from this material and its recommended readings. This
will count towards class participation for the session.
II. Learning Outcomes
At the end of the topic the students should be able to know the different kinds of obligations.
III. Content:
SECTION 4
Joint and Solidary Obligations
Kinds of obligations according to the number of parties
1. Individual obligation – one where there is only one (1) obligor or one (1) oblige
2. Collective obligation – one where there are two (2) or more debtors and/or two (2) or
more creditors. It may be joint or solidary.
Plurality of Subjects
The rules concerning joint and solidary obligations require a plurality of subjects (creditors,
debtors or both) and have no application when there is only one creditor and one debtor,
even if the payment of the debt is to be made by several individuals representing one and the
same interests of debtor.
Meaning of Joint Obligation.

A joint obligation is one in which each of the debtors is answerable only for a proportionate
part of the debt, and each one of the creditors is entitled to a proportionate part of the credit.
Illustration:
Miguel and Fidel are jointly indebted to Domingo for the amount of P200,000.
As such, Miguel is liable to Domingo for the amount of P100,000 only, while Fidel
is also liable to Domingo for the same amount of P100,000.
Domingo, the creditor, is entitled to demand from Miguel and Fidel P100,000 each.
Meaning of Solidary Obligation.

A solidary obligation is one in which each of the debtors is liable for the whole obligation
and each of the creditors may demand compliance of the entire obligation.
Illustration:
Cecil and Fely are the solidary debtors of Rupert for the amount of P200,000.
Hence, either of them may be compelled by Rupert to pay the whole amount of
P200,000. So Rupert can demand from Cecil to pay the amount of P200,000. Rupert
can also demand from Fely the amount of P200,000.
If Cecil pays P200,000, then the obligation is extinguished and the paying debtor
(Cecil) is entitled to be reimbursed by her co-debtor (Fely) for her part of the debt,
which is P100,000.
Article 1207. The concurrence of two or more creditors or of two or more debtors in one and
the same obligation does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the prestation. There is a
solidary liability only when the obligation expressly so states, or when the law or the nature of
the obligation requires solidarity.
General Rule: Every civil obligation is presumed to be JOINT. That is, that each one of the
creditors may demand from each of the debtors his proportionate part of the credit and that
each one of the debtors is liable only for his proportionate part of the debt.
Exception: Solidary Liability exists only in the following cases:
a. When the obligation so provides;

b. When the law so provides;
c. When the nature of the obligation requires solidarity.
Terms indicating Solidary Liability.
• Joint and several

• In solidum
• Solidaria
• Individually and collectively
KINDS OF SOLIDARITY:
1. Active Solidarity. When the solidarity exists among the creditors only.
Illustration:
Teresa promises to pay Susie, Marlene or Joan the amount of P300,000. The
obligation is solidary.
In this case, any one of the creditors can demand from Teresa the whole amount of
P300,000. But Teresa cannot be compelled to pay more than P300,000.
If Teresa pays Susie the whole amount of P300,000, then the obligation is
extinguished.
2. Passive Solidarity. When the solidarity takes place among the debtors only.
Illustration:
Efren, Edmundo and Reynaldo are solidarily indebted to Raymundo the amount of
P300,000.
Each debtor may be required by Raymundo to pay the entire amount of P300,000.
Raymundo may also demand payment from both Efren and Edmundo, or from
Edmundo and Reynaldo or from all of them at the same time.
Raymundo may not, however, demand more than P300,000.
3. Mixed Solidarity. When the solidarity exists both among the creditors and the
debtors at the same time.
Illustration:
Florenz, Ezer and Leonido are solidary debtors and Enrique, Miguel and Recaredo
are solidary creditors for the amount of P300,000.
Each one of the debtors, namely Florenz, Ezer and Leonido, is liable to pay the
entire amount of P300,000 to any of the solidary creditors Enrique, Miguel and
Recaredo.
Creditor Recaredo alone may demand from any one of debtors, from some or all of
them the payment of the amount of P300,000. The same right belongs to creditors
Enrique and Miguel. On the other hand, Florenz alone or Ezer alone or Leonido
alone may pay any one of the demanding creditors or any creditor (if there is no
demand), the entire amount of P300,000. Payment by one of the solidary debtors
will cause the extinguishment of the obligation.
Article 1208. If from the law, or the nature or the wording of the obligations to which the
preceding article refers the contrary does not appear, the credit or debt shall be presumed to
be divided into as many shares as there are creditors or debtors, the credits or debts being
considered distinct from one another, subject to the Rules of Court governing the multiplicity
of suits.
Art. 1208 refers to a joint obligation. The law presumes that obligations are merely joint
because a joint obligation is less burdensome and less difficult to perform unlike a
solidary obligation which creates unusual and extraordinary burden upon the debtor or
debtors.
Article 1209. If the division is impossible, the right of the creditors may be prejudiced only by
their collective acts, and the debt can be enforced only by proceeding against all the debtors.
If one of the latter should be insolvent, the others shall not be liable for his share.
Art 1209 refers to a joint indivisible obligation, where the subject matter of the
obligation or the prestation is physically or legally incapable of division.
Joint Indivisible Obligation is midway between joint and solidary for the reason that
although it preserves the two characteristics of the joint obligation in that (a) no creditor
can do an act prejudicial to the others, and (b) no debtor can be made to answer for the
others. The peculiarity of this obligation, however, is that its fulfillment requires the
consent of all the debtors, although each for his part. On the side of the creditors,
collective action is also required for acts which may be prejudicial.
Illustration:
A, B and C are jointly liable to give D a car valued at P240,000. On the date of
delivery, A and B are willing to deliver but C is not.
In this case, D has no cause of action against C for the delivery of the car because,
as a joint debtor, C is liable only for a proportionate part of the obligation which is
P80,000. Since the object (car) is indivisible, the debt can only be enforced by
proceeding against all the debtors for compliance is not possible unless they act
together.
Pursuant to Article 1224 of the Civil Code of the Philippines, 1 the liability is
converted into one for damages. So, A, B and C will be liable for P80,000 each or
a total of P240,000 which is the value of the car without increase of responsibility
for A and B. C, the unwilling debtor, shall be liable for damages to D for having
violated the obligation.
Article 1210. The indivisibility of an obligation does not necessarily give rise to solidarity. Nor
does solidarity of itself imply indivisibility.
Indivisibility and solidarity are two different significations. The first refers to the object
of the obligation while the second refers to the legal tie that binds the parties.
Illustration:
1. Ana and Elsa obliged themselves to deliver to Olaf a specific car. The object
(car) of the obligation is indivisible.
Although the object is indivisible, that does not mean that the obligation of Ana
and Elsa to Olaf is solidary, of solidarity has not been agreed upon.
1
ARTICLE 1224. A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors
does not comply with his undertaking. The debtors who may have been ready to fulfill their promises shall not
contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the service in
which the obligation consists.
In this case, Ana and Elsa are still jointly liable to Olaf.
2. Ana and Elsa solidarily obliged themselves to deliver to Olaf ten bottles of
whisky on the birthday of Olaf.
The liability of Ana and Elsa is solidary by express agreement of the parties.
But the obligation is divisible.
Article 1211. Solidarity may exist although the creditors and the debtors may not be bound in
the same manner and by the same periods and conditions.
The liabilities of the parties in solidary obligations may be governed in different

manners, and by different periods and conditions. Although governed in different
manners, and by different periods and conditions, it does not alter the solidary nature of
the obligation.
Illustration:
Gonzales and Ramirez are indebted solidarily to Santos in the amount of P100,000
payable as follows: If demand is made by Santos to Gonzales for P100,000, it must
be made on May 15th. If demand is made by Santos to Ramirez, it must be made on
May 30th.
Here, the fact that the due dates of the obligation differ depending on who of the
debtors is asked to pay, the obligations is still solidary.
Article 1212. Each one of the solidary creditors may do whatever may be useful to the others,
but not anything which may be prejudicial to the latter.
The essential feature of the obligation in its active form is that it is a mutual agency. For
this reason, each one of the solidary creditors may do anything that will benefit the
other creditors, but not to an act which will result to their prejudice. So, a solidary
creditor may collect the entire obligation for the benefit of the others.
Illustration:
Tomas owes Salvador and Cipriano the amount of P100,000. The obligation is
solidary.
In this case, when the debt becomes due and demandable, either Salvador or
Cipriano may make judicial or extrajudicial demand from Tomas, for payment of
Tomas’ debt will redound to the benefit of both Salvador and Cipriano.
Solidary creditor cannot do an act prejudicial to other creditors. In the above

example, Cipriano cannot renounce the debt of Tomas and inform Tomas that he does
not have to pay him and Salvador the debt because in such case it is prejudicial to the
interest of the other solidary creditor. If he does, then he shall be liable to Salvador for
the latter’s share in the credit.
Article 1213. A solidary creditor cannot assign his rights without the consent of the others.
Illustration:
Alexa is indebted to solidary creditors Henry and Jessie. Jessie cannot just assign
his rights to Penny without the consent of Henry.
The reason rests on the extraordinary mutual trust and confidence among solidary
creditors and it may happen that the other creditor may not want to have dealings
with the person to whom the debt will be assigned.
Article 1214. The debtor may pay any one of the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by one of them, payment should be made to him.
The rule is that the debtor may pay any one of the solidary creditors. But when a
demand, judicial or extrajudicial, has been made by one of them, to avoid confusion, as
well as prejudice to the more diligent creditor, payment should be made to him.
Otherwise, the obligation will not be extinguished expect insofar as the creditor-payee’s
share is concerned in case the latter does not give to the other creditors their shares in
the payments.
Illustration:
Luis owes Jose and Abelardo solidary the amount of P1,000. Luis may pay either
Jose or Abelardo and payment to any one of them will extinguish the obligation.
But if Jose makes an extrajudicial demand on Luis, payment must be made to Jose
and not to Abelardo.
Article 1215. Novation, compensation, confusion or remission of the debt, made by any of the
solidary creditors or with any of the solidary debtors, shall extinguish the obligation, without
prejudice to the provisions of article 1219.
The creditor who may have executed any of these acts, as well as he who collects the debt,
shall be liable to the others for the share in the obligation corresponding to them.
Novation (Art. 1291), compensation (Art. 1278), confusion (Art. 1275) and remission
(Art. 1270) are modes or causes of extinguishment of obligations.
Illustration: (Novation)
Anel owes Bon and Carlo solidarily the amount of P100,000. Later, Anel agrees
with Bon and Carlo that instead of Anel paying Bon and Carlo the P100,000,
payment shall be made by Michael.
There is novation here because there is a renewal of an obligatory relation by the

change of the person of the debtor.
Article 1216. The creditor may proceed against any one of the solidary debtors or some or all
of them simultaneously. The demand made against one of them shall not be an obstacle to
those which may subsequently be directed against the others, so long as the debt has not been
fully collected.
The creditor may sue any of the solidary debtors or all of the simultaneously. An action
instituted against one shall not be a bar to those which may be subsequently brought
against the others, as long as the debt has not been entirely satisfied.
Illustration:
Matt, Ralph and Joey promise to pay Edwin the amount of P300,000. The
obligation is solidary.
At maturity, Edwin may collect the debt from Matt alone. If Matt fails to pay, then
Edwin can go against Ralph, and if Ralph fails to pay then he can go against Joey.
The other alternative for Edwin is for him to collect at once from Matt and Ralph,
or from all of the simultaneously.
Article 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two
or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the
debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to
the debt of each.
Since payment is a mode of extinguishing an obligation, payment by one of the solidary

debtors extinguishes the obligation. In case two or more debtors offer to pay, the
creditor may choose which offer to accept.
After the payment of the debt by a solidary debtor, he in turn becomes the creditor of
his co-debtors for their shares of the debt.
If a solidary debtor cannot reimburse the amount due the co-debtor who paid the debt,
then all the other debtors, including the one who paid the debt, shall bear
proportionately the insolvent debtor’s share.
Illustration:
Matt, Ralph and Joey were solidarily indebted to Edwin in the amount of P300,000
payable on June 1, 2022. On June 1, 2022, Matt paid Edwin the whole amount of
P300,000.
The effect of Matt’s payment was to extinguish the obligation.
If Matt and Ralph at the same time offered to pay the debt, then it was up to Edwin
which offer to accept.
If the offer of Matt was accepted by Edwin, then Matt now becomes the creditor of
his co-debtors (Ralph and Joey).
By reason of Matt’s payment, Ralph should reimburse Matt P100,000 pertaining to

his share with interest. Joey should also reimburse Matt another P100,000 as his
share, also with interest.
However, if Joey could not reimburse his share to Matt because of Joey’s
insolvency, then Ralph bears P50,000 by paying the same to Matt and Matt should
also bear the other half, ie, P50,000.
Article 1218. Payment by a solidary debtor shall not entitle him to reimbursement from his
co-debtors if such payment is made after the obligation has prescribed or become illegal.
This provision sets the rule that the payment made by a solidary co-debtor must be for a
validly existing and enforceable obligation so as to entitle him to reimbursement. If the
debt has been previously extinguished, no right to reimbursement accrues in his favor. A
solidary co-debtor who is not benefited by the payment is not obliged to make any
reimbursement.
Illustration: (When obligation has prescribed)
Fermin and Apolonio solidarily owed Jovencio the amount of P200,000 which fell
due more than 10 years ago. The indebtedness is evidenced by a written
instrument.
Under the law, Jovencio had a period of 10 years within which to enforce his rights
to collect from Fermin and Apolonio.
Jovencio did nothing to collect the debt from his debtors, hence his right to enforce
the debt against Fermin and Apolonio was lost by prescription.
Prescription extinguished the obligation of Fermin and Apolonio.
Supposing that after 10 years, Apolonio paid the debt to Jovencio, may he collect
the share corresponding to Fermin for reimbursement of the amount paid?
No. The obligation having prescribed, there is no debt to be paid. Neither of them
was obliged to pay Jovencio any amount.
Illustration: (After obligation has become illegal)
Antero and Leonardo bind themselves solidarily to deliver six carabaos to Nicanor
for slaughter purposes. Ten days before the agreed date fort delivery, a law
prohibiting the slaughter of carabao becomes effective.
Supposing Antero delivers the six carabaos to Nicanor just the same, can Antero
hold Leonardo for three of the carabaos delivered which correspond to his share?
No. Because delivery of carabaos for slaughter purposes is made after the
oblgiation has become illegal.
Article 1219. The remission made by the creditor of the share which affects one of the solidary
debtors does not release the latter from his responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them before the remission was effected.
Condonation or Remission is the gratuitous abandonment by the creditor of his right

against the debtor. It is a form of donation.
Effect of remission of share after payment. If payment is made first, the remission
(Art. 1270) or waiver is of no effect. There is no more obligation to remit. If remission
is made previous to the payment and payment is made, solution indebiti arises. It is
incumbent upon the debtor whose debt is remitted to rove the priority of the remission
to the payment to release him from responsibility towards his co-debtors.
Illustration:
Pineda and Alba were solidarily indebted to Pacheco in the amount of P400,000
due on May 1, 2022. On May 1 st, Pineda paid Pacheco the entire sum of P400,000
resulting in the extinguishment of the obligation.
On May 2, Pacheco renounces the obligation of Alba.
In spite of remission, Alba was obliged to reimburse Pineda P200,000.
This is because at the time the obligation of Alba was released, there was no more
obligation that could be renounced because it had been extinguished by Pineda’s
payment. The remission if favor of Alba had no effect at all.
Article 1220. The remission of the whole obligation, obtained by one of the solidary debtors,
does not entitle him to reimbursement from his co-debtors.
The reason is that the debtor who obtains remission pays nothing to the creditor.
Remission is essentially gratuitous. It is really a donation (Art. 1270). Observe that the
article applies only when the whole obligation is remitted.
Illustration:
Crispin and Meneses are solidarily indebted to Porfirio in the amount of P200,000.
Subsequently, Porfirio renounces the whole obligation in favor of Crispin,
resulting in the extinguishment of the obligation.
In such a case, is Crispin entitled to be reimbursed by Meneses for the latter’s

share?
No. Because remission is essentially gratuitous. Crispin has paid nothing for the
extinguishment of the debt; Crispin has paid nothing for the extinguishment of the
debt.
As solidary debtors, they share not only in the payment but also in the liberality of
the creditor.
Article 1221. If the thing has been lost or if the prestation has become impossible without the
fault of the solidary debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all shall be responsible to the creditor, for
the price and the payment of damages and interest, without prejudice to their action against
the guilty or negligent debtor.
If through a fortuitous event, the thing is lost or the performance has become impossible after
one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand
upon him by the creditor, the provisions of the preceding paragraph shall apply.
If the thing is lost or the prestation becomes impossible, the liability of the solidary
debtors depends upon whether or not there is fault or delay.
Illustration: (If the thing is lost or becomes impossible)
Jacinto and Cosme bind themselves solidarily to deliver a specific fishing boat to
Ambrosio on May 30th. If before May 30, the fishing boat is lost because a strong
typhoon, then the obligation of Jacinto and Cosme to Ambrosio is extinguished.
If the fishing boat however was lost because of the fault of Jacinto, then both
Jacinto and Cosme shall be liable to Ambrosio for the price of the fishing boat,
with damages and interest.
Cosme, however, can, if he pays, recover from Jacinto, the obligor at fault, what he
(Cosme) has paid to Ambrosio.
Illustration: (If the thing is lost through fortuitous event when there is delay)
Supposing in the example above, Ambrosio demands the delivery of the fishing
boat on May 30th but Jacinto fails to deliver it.
On June 3rd, the fishing boat is lost due to a strong typhoon, may Ambrosio
demand of Jacinto and Cosme the price of the fishing boat, as well as damage and
interest?
Yes. Because although the loss of the thing due thru a fortuitous event ordinarily
extinguishes the obligation, the rules does not apply where one of the solidary
debtors is already in default at the time of the loss.
Article 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all
defenses which are derived from the nature of the obligation and of those which are personal
to him, or pertain to his own share. With respect to those which personally belong to the
others, he may avail himself thereof only as regards that part of the debt for which the latter
are responsible.
Illustration: (Defense Personal to the Debtor)
A, B and C are solidarily indebted to X in the amount of P600,000. At the time the
obligation was incurred, A was a minor.
If X sues A for the debt, A may set up his minority as a defense to free him from
payment of the whole obligation.
If X sues B and C, may either one of them set up the minority of A as a defense?
Yes, but only for the purpose of evading liability for A’s share in the obligation.
Hence, either B or C may be compelled to pay only P400,000.
SECTION 5
Divisible and Indivisible Obligations
Article 1223. The divisibility or indivisibility of the things that are the object of obligations in
which there is only one debtor and only one creditor does not alter or modify the provisions of
Chapter 2 of this Title.
Divisible Obligation. One which is capable of partial performance.
Illustration:
Eugenio obliged himself to deliver to Bernard 6 sacks of salt as follows: 3 sacks of

salt to be delivered by Eugenio on April 1st, another 3 sacks of salt to be delivered
on May 1st.
The obligation of Eugenio to Bernard to deliver salt is divisible because the parties
intended partial performance.
Indivisible Obligation. Negatively speaking, an indivisible obligation is one which is

not capable of partial performance.
Illustration:
In the preceding example, if Eugenio and Bernard agreed that all the 6 sacks of salt
should be delivered on April 1, then notwithstanding that the object of the
obligation is physically divisible nevertheless, it is indivisible because the parties
intended complete performance at one given time.
Basis for distinction. In the determination of whether the obligation is divisible or

indivisible, the controlling factor is whether the parties intended partial performance or
not.
Hence, the object of the obligation may be physically divisible, yet it may be indivisible,
if so provided by law or intended by the parties.
THREE CLASSES OF DIVISIONS
1. Qualitative – depends on quality rather than quantity.

2. Quantitative – one based on quantity rather than on quality.
3. Ideal – also known as moral, intellectual or mental division. This division exists
only in the minds of the parties.
Article 1224. A joint indivisible obligation gives rise to indemnity for damages from the time
anyone of the debtors does not comply with his undertaking. The debtors who may have been
ready to fulfill their promises shall not contribute to the indemnity beyond the corresponding
portion of the price of the thing or of the value of the service in which the obligation consists.
If any one of the debtors does not comply with his undertaking in a joint indivisible
obligation, the obligation is converted into one for damages. The creditor cannot ask for
specific performance or rescission because there is no cause of action against the other
debtors who are willing to fulfill their promise.
Illustration:
A and B jointly obliged themselves to deliver a specific car to C, worth P100,000.

At maturity of the obligation, B could not deliver because he had sold his interest
in the car to X.
Suppose C brought an action against A and B and the above-facts were proven,
together with the damage of P10,000 suffered by C for the breach of the obligation,
for how much should A and B be liable?
A should only be liable for P50,000, his corresponding portion of the price of the
cat, while B should be liable for P50,000 and the additional sum of P10,000 for
damages.
Article 1225. For the purposes of the preceding articles, obligations to give definite things and
those which are not susceptible of partial performance shall be deemed to be indivisible.
When the obligation has for its object the execution of a certain number of days of work, the
accomplishment of work by metrical units, or analogous things which by their nature are
susceptible of partial performance, it shall be divisible.
However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character of

the prestation in each particular case.
SECTION 6
Obligations with a Penal Clause
Penal Clause is an accessory undertaking to assume greater liability in case of breach.

It is a form of guaranty for the fulfillment of an obligation by establishing an
aggravation of responsibility. It is attached to obligations in order to insure their
performance.
Obligation with a penal clause is one which contains an accessory undertaking to pay
a previously stipulated indemnity in case of breach of the principal prestation, intended
primarily to induce its fulfillment.
Sources of penal clause.
1. Law or Legal Penal Clause. One provided by law. Example: A taxpayer who fails to
pay his tax on time is liable to pay a penalty fixed by law.
2. Contract or Conventional Penal Clause. One agreed upon by the parties. Example:
Apolonio obliged himself to construct the house of Sixto for P200,000 within six
months. They agreed that in case Apolonio could not deliver the house within six
months, Apolonio would suffer a penalty of P1,000 for each day of delay.
Purpose of Penal Clause. There are two purposes why a penal clause or penalty is
imposed:
First, as a punishment and in such case the right to damages subsists independently
of the penalty.
Second, as a reparation or to repair the damages sustained, in which case the penalty
takes the place of damages.
Article 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no stipulation to
the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the provisions of
this Code.
General Rule: In obligations with a penal clause, the penalty takes the place of
indemnity for damages and interest should the obligation not be complied with.
Exceptions:
1. If there is a stipulation
2. If the obligor refuses to pay the penalty
3. If the obligor is guilty of fraud in the fulfillment of the obligation.
Illustration.
Delia obliges herself to give Alicia P5,000 on December 25 th. They agree that if
Delia cannot give Alicia the P5,000 on December 25 th, Delia will pay Alicia
P1,000 penalty.
Under the circumstances, if Delia fails to give Alicia P5,000, then Alicia can
demand of Delia the payment of the penalty of P1,000 which will take place of
damages and payment of interest occasioned on the breach.
Article 1227. The debtor cannot exempt himself from the performance of the obligation by
paying the penalty, save in the case where this right has been expressly reserved for him.
Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the
penalty at the same time, unless this right has been clearly granted him. However, if after the
creditor has decided to require the fulfillment of the obligation, the performance thereof
should become impossible without his fault, the penalty may be enforced.
Generally, the debtor cannot just pay the penalty instead of performing the obligation.
Precisely, the purpose of the penalty is to secure compliance with his obligation. If the
debtor is allowed to pay the penalty, this would in effect make the obligation an
alternative one.
The debtor can exempt himself from the non-fulfillment of the obligation only when
this right has been expressly reserved for him.
Article 1228. Proof of actual damages suffered by the creditor is not necessary in order that
the penalty may be demanded.
To recover the penalty there is no need of proving damages. It is sufficient that there is
a breach of contract to entitle the party to the amount of the penalty since the penalty
takes the place of indemnity for damages.
Article 1229. The judge shall equitably reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.
It is within the sound discretion of the court to reduce the penalty when (1) there is
partial or irregular compliance with the obligation and (2) when it is iniquitous or
unconscionable (unfair or excessive).
The provision of the New Civil Code giving the judge power to equitably modify the
penalty when the principal obligation has been partly or irregularly fulfilled by the
debtor, refers to penalties prescribed in contracts.
Article 1230. The nullity of the penal clause does not carry with it that of the principal
obligation.
The nullity of the principal obligation carries with it that of the penal clause.
Since a penal clause is merely an accessory obligation, its nullity does not carry that of
the principal. However, if the principal obligation is void, the accessory obligation of
penalty is likewise void.
V. References
New Civil Code, available at https://www.officialgazette.gov.ph/1949/06/18/republic-act-
no-386/, particularly Book IV on Obligations and Contracts.
Hector S. De Leon, Jr., The Law on Obligations and Contracts Twelfth Edition (2021)

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Subject Code: BALOBCOX

Subject Title: Law on Obligations and Contracts

Course Learning Outcomes:

Effective Communicator The student will be able to explain their

Upon completion of the course, students are expected to have developed:

1. Working knowledge of the basic principles of laws and contracts;

About the instructor: Atty. Paula Bianca F. De Jesus

Contact Information: pfdejesus@nu-baliwag.edu.ph (by email or Microsoft teams)

Module 3: Kinds of Obligations (Part 2)

1. Joint and Solidary

II. Learning Outcomes

Kinds of obligations according to the number of parties

Meaning of Joint Obligation.

Meaning of Solidary Obligation.

Exception: Solidary Liability exists only in the following cases:

a. When the obligation so provides;

Terms indicating Solidary Liability.

• Joint and several

Raymundo may not, however, demand more than P300,000.

But the obligation is divisible.

The liabilities of the parties in solidary obligations may be governed in different

Solidary creditor cannot do an act prejudicial to other creditors. In the above

There is novation here because there is a renewal of an obligatory relation by the

Since payment is a mode of extinguishing an obligation, payment by one of the solidary

The effect of Matt’s payment was to extinguish the obligation.

By reason of Matt’s payment, Ralph should reimburse Matt P100,000 pertaining to

Illustration: (When obligation has prescribed)

Prescription extinguished the obligation of Fermin and Apolonio.

Illustration: (After obligation has become illegal)

Condonation or Remission is the gratuitous abandonment by the creditor of his right

On May 2, Pacheco renounces the obligation of Alba.

In spite of remission, Alba was obliged to reimburse Pineda P200,000.

In such a case, is Crispin entitled to be reimbursed by Meneses for the latter’s

Illustration: (If the thing is lost or becomes impossible)

Illustration: (Defense Personal to the Debtor)

Hence, either B or C may be compelled to pay only P400,000.

Divisible Obligation. One which is capable of partial performance.

Eugenio obliged himself to deliver to Bernard 6 sacks of salt as follows: 3 sacks of

Indivisible Obligation. Negatively speaking, an indivisible obligation is one which is

Basis for distinction. In the determination of whether the obligation is divisible or

THREE CLASSES OF DIVISIONS

1. Qualitative – depends on quality rather than quantity.

A and B jointly obliged themselves to deliver a specific car to C, worth P100,000.

In obligations not to do, divisibility or indivisibility shall be determined by the character of

Penal Clause is an accessory undertaking to assume greater liability in case of breach.

Sources of penal clause.

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