OBLIGATIONS AND CONTRACTS

Title. I. - OBLIGATIONS
CHAPTER 1
GENERAL PROVISIONS
Art. 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts –when they arise from lawful, voluntary and unilateral acts
which are enforceable
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a) -a negligent act or omission which causes harm or
damage to the person or property of another
Art. 1158. Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable, and shall be regulated
by the precepts of the law which establishes them; and as to what has not been
foreseen, by the provisions of this Book. (1090)
Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. (1091a)

Compliance in good faith- compliance or performance in accordance with the
stipulations or terms of the contract or agreement.

Art. 1160. Obligations derived from quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this Book. (n)
Art. 1161. Civil obligations arising from criminal offenses shall be governed by
the penal laws, subject to the provisions of Article 2177, and of the pertinent
provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII
of this Book, regulating damages. (1092a)
Art. 1162. Obligations derived from quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this Book, and by special laws. (1093a)

CHAPTER 2
NATURE AND EFFECT OF OBLIGATIONS
Art. 1163. Every person obliged to give something is also obliged to take care of
it with the proper diligence of a good father of a family, unless the law or the
stipulation of the parties requires another standard of care. (1094a)

Determinate thing is identified by its individuality. The debtor cannot substitute it
with another although the latter is of the same kind and quality without the
consent of the creditor.
A generic thing is identified only by its specie. The debtor can give anything of the
same class as long as it is of the same kind.

Duties of debtor in obligation to deliver a generic thing
(1) To deliver a thing which is of the quality of the quality intended by the parties
taking into consideration the purpose of the obligation and other circumstances.
(2) To be liable for damages in case of fraud, negligence, or delay, in the performance
of his obligation, or contravention of the tenor thereof.
Art. 1164. The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it until
the same has been delivered to him. (1095)
Kinds of Fruits
(1) Natural fruits -products of the soil and the young and other products of animals
(grass, all trees and plants)
(2) Industrial fruits –produced by lands of any kind through cultivation or labor (e.g.
sugar cane, vegetables, rice)
(3) Civil fruits –derived by virtue of a juridical relation (e.g. rents of buildings, prices of
leases of lands and other properties)
Right of creditor to the fruits
The creditor is entitled to the fruits of the thing to be delivered from the time of
the obligation to make the delivery arises. The intention of the law is to protect the
interest of the obligee should the obligor commit delay, purposely or otherwise, in the
fulfillment of his obligation.
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in
addition to the right granted him by Article 1170, may compel the debtor to make
the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery. (1096)
Remedies of creditor in real obligation
(1) in a specific real obligaton (obligation to deliver a determinate thing), the creditor
may exercise the following remedies or rights in case the debtor fails to comply
with his obligation
a. demand specific performance or fulfillment (if it is still possible) of the
obligation with a right to indemnity for damages
b. demand rescission or cancellation (in certain cases) of the obligation also
with a right to recover damages
c. demand payment of damages only, where it is the only feasible remedy
(2) a genereic real obligation (obligation to deliver a generic thing) can be performed
by a third person since the object is expressed onl according to its family or genus.
It is not necessary for the creditor to compel the debtor to make the delivery,
although he may ask for performance of the obligation. In any case, the creditor
has the right to recover damages under Article 1170 in case of breach or violation
of the obligation.
Where the debtor delays or has promised delivery to separate creditors
Paragraph 3 gives 2 instances when a fortuitous event does not exempt the debtor
from responsibility. It likewise refers to a determinate thing. An indeterminate thing cannot
be the object of destruction by a fortuitous event because genus nunquam perit (genus
never perishes).

Furthermore. or by another. house) upon a land is not sufficient to convey title or any right to the land. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. Unless otherwise stipulated. it may be decreed that what has been poorly done be undone. it shall also be undone at his expense. If a person obliged to do something fails to do it. Thus. Performance by a third person A personal obligation to do. is prohibited under the Constitution. 1169. to recover damages (2) in case the obligation is done in contravention of the terms of the same or is poorly done. like a real obligation to deliver a generic thing. at the debtor’s expense b. (1097a) (1) Accessions –fruits of a thing or additions to or improvements upon a thing (the principal). This same rule shall be observed if he does it in contravention of the tenor of the obligation. When the obligation consists in not doing. better use. (1098) Situations contemplated in Article 1167 (1) The debtor fails to perform an obligation to do (2) The debtor performs an obligation to do but contrary to the terms thereof (3) The debtor performs an obligation to do but in poor manner Remedies of creditor in positive personal obligation (1) if the debtor fails to comply with his obligation to do. 1167. to have the obligation performed by himself. can be performed by a third person. In order that they will be excluded. (2) Accessories –things joined to or included with the principal thing for the latter’s embellishment. This rule is based on the principle of law that the accessory follows the principal. and the obligor does what has been forbidden him. Art. the creditor has the right: a. the same shall be executed at his cost. a specific performance cannot be ordered in a personal obligation to do because this may amount to involuntary servitude which.g. But the lease of a building or house naturally includes the lease of the lot on which it is constructed for the possession of the lot is implied in the lease of the improvement. or completion Right of creditor to accessions and accessories The general rule is that all accessions and accessories are considered included in the obligation to deliver a determinate thing although they may not have been mentioned. 1168. even though they may not have been mentioned. The obligation to give a determinate thing includes that of delivering all its accessions and accessories. there must be a stipulation to that effect. While the debtor can be compelled to make the delivery or a specific thing. .Art. as a rule. unless personal considerations are involved. it may be ordered (by the court) that it be undone if it is still possible to undo what was done. a sale of the improvements (e. an obligation to deliver the accessions and accessories of a thing does not include the latter. (1099a) Art. Art. 1166.

or (3) When demand would be useless. 1171. Must be due to a fortuitous event Art. or delay. according to the circumstances. 1170. there being malice. which prevents the normal fulfillment of an obligation (3) Delay (mora) (4) Contravention of the terms of the obligation –violation of the terms and conditions stipulated in the obligation. as when the obligor has rendered it beyond his power to perform. neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. negligence. and those who in any manner contravene the tenor thereof. (1100a) Delay (1) Ordinary delay –the failure to perform an obligation on time (2) Legal delay or default or mora –failure to perform an obligation on time which failure constitutes a breach of the obligation Requisites of delay or default by the debtor (1) failure of the debtor to perform his (positive) obligation on the date agreed upon (2) demand made by the creditor upon the debtor to comply with his obligation which demand may be either judicial (when a complaint is filed in court) or extra-judicial (when made outside of court. (1103) . are liable for damages. (1102a) Art. In reciprocal obligations. the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare. 1172. Responsibility arising from fraud is demandable in all obligations. delay by the other begins.However. orally or in writing) (3) failure of the debtor to comply with such demand When demand is not necessary to put debtor in delay (1) when obligation so provides (2) when the law so provides (3) when time is of the essence (4) when demand would be useless (5) when there is performance by a party in reciprocal obligations Art. From the moment one of the parties fulfills his obligation. Any waiver of an action for future fraud is void. (1101) Grounds for liability (1) Fraud (deceit or dolo) –the deliberate or intentional evasion of the normal fulfillment of an obligation (2) Negligence (fault or culpa) –any voluntary omission. or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. Responsibility arising from negligence in the performance of every kind of obligation is also demandable. but such liability may be regulated by the courts. Those who in the performance of their obligations are guilty of fraud.

If the law or contract does not state the diligence which is to be observed in the performance. is demandable at once. shall give rise to the presumption that said interest has been paid. The receipt of a later installment of a debt without reservation as to prior installments. shall likewise raise the presumption that such installments have been paid. 1177. all rights acquired in virtue of an obligation are transmissible. Subject to the laws. The receipt of the principal by the creditor without reservation with respect to the interest. . chattels or credits Art. they may also impugn the acts which the debtor may have done to defraud them. The creditors. shall apply. Usurious transactions shall be governed by special laws. if there has been no stipulation to the contrary. (n) Ususry –contracting for or receiving interest in excess of the amount allowed by law for he loan or use of money. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons. (1112) Transmissibility of rights (1) Prohibited by law (2) Prohibited by stipulation of the parties CHAPTER 3 DIFFERENT KINDS OF OBLIGATIONS SECTION 1. 1176. 1179. were inevitable. save those which are inherent in his person. (1104a) Art. no person shall be responsible for those events which could not be foreseen. is inevitable Art. or when it is otherwise declared by stipulation. after having pursued the property in possession of the debtor to satisfy their claims. (1105a) Fortuitous event –any event which cannot be foreseen. may exercise all the rights and bring all the actions of the latter for the same purpose. that which is expected of a good father of a family shall be required. goods. or which though foreseen. or which. . Every obligation whose performance does not depend upon a future or uncertain event. (1110a) Presumption –inference of a fact ot actually known arising form its usual connecton with another which is known or proved Art.Art. or upon a past event unknown to the parties. the provisions of Articles 1171 and 2201. though foreseen. of the time and of the place. paragraph 2. 1178. Except in cases expressly specified by the law. (1111) Art. 1174. When negligence shows bad faith. 1175. or when the nature of the obligation requires the assumption of risk. 1173.Pure and Conditional Obligations Art.

therefore. upon the happening of which. as well as the extinguishment or loss of those already acquired. those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. the obligation is valid. without prejudice to the effects of the happening of the event. immediately demandable. • Potestative condition –a suspensive condition which depends upon the sole will of one of the contracting parties • When suspensive condition depends upon will of debtor (1) conditional obligation void (e. the conditional obligation shall be void. When the fulfillment of the condition depends upon the sole will of the debtor. . the debtor will not deliver. 1183. the obligation shall be deemed to be one with a period. When the debtor binds himself to pay when his means permit him to do so.Every obligation which contains a resolutory condition shall also be demandable. (1) future and uncertain (2) past but unknown (3) must not be impossible 2 Principal kinds of conditions (1) Suspensive Condition –fulfillment of which will give rise to an obligation (2) Resolutory Condition –fulfillment of which will extinguish an obligation (or right) already existing Art. In conditional obligations. subject to the provisions of Article 1197.g. (1115) • If the performance of an obligation is dependent on the will of the debtor. (1113) Pure condition –one which is not subject to any condition and no specific date is mentioned for its fulfillment and is.   Art. Impossible conditions. shall depend upon the happening of the event which constitutes the condition. the obligation is valid. In all likelihood.) (2) Only the condition void When suspensive condition depends upon will of creditor. the acquisition of rights. the obligation shall take effect in conformity with the provisions of this Code. the obligation is illusory. Causes the extinguishment of rights already acquired. 1180. (n) Period –a future and certain event upon the arrival of which the obligation subject to it either arises or is extinguished Art. When resolutory condition depends upon will of debtor. 1181. 1182. Conditional obligation –one whose consequences are subject in one way or another to the fulfillment of a condition Condition –future and uncertain event. the extinguishment of an obligation (or right) subject to it depends. If it depends upon chance or upon the will of a third person. I will pay your if I want. (1114) Effects of happening of a condition (1) acquisition of rights (2) loss of rights already acquired Art.

1189. that part thereof which is not affected by the impossible or unlawful condition shall be valid. If the obligation is unilateral. the debtor shall appropriate the fruits and interests received. (1121a) Art. the condition shall be deemed fulfilled at such time as may have probably been contemplated. The condition not to do an impossible thing shall be considered as not having been agreed upon. bring the appropriate actions for the preservation of his right. Effects of Impossible Conditions (1) Conditional obligation void (2) Conditional obligation valid Art. 1188. The creditor may. 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. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or if it has become indubitable that the event will not take place. 1184. In obligations to do and not to do.If the obligation is divisible. If no time has been fixed. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. (1116a) 2 Kinds of Impossible Conditions (1) Physically impossible conditions (2) Legally impossible conditions –against the law. 1185. (1119) Art. once the condition has been fulfilled. shall retroact to the day of the constitution of the obligation. 1186. good customs. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give. (1120) Art. the following rules shall be observed in case of the improvement. (1117) Art. the courts shall determine. unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. or if it has become evident that the event cannot occur. 1187. the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. when the obligation imposes reciprocal prestations upon the parties. (1118) Art. etc. in each case. bearing in mind the nature of the obligation. . the obligation shall be extinguished. the retroactive effect of the condition that has been complied with. before the fulfillment of the condition. loss or deterioration of the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor. Nevertheless. The effects of a conditional obligation to give.

. upon the fulfillment of said conditions. (1123) Art. or fulfillment of the obligation with damages (5) Improvement of thing by nature or by time (6) Improvement of thing at expense of debtor Art. the provisions of the second paragraph of Article 1187 shall be observed as regards the effect of the extinguishment of the obligation. The power to rescind obligations is implied in reciprocal ones. with indemnity for damages in either case. or disappears in such a way that its existence is unknown or it cannot be recovered. 1191. (3) When the thing deteriorates without the fault of the debtor. (1122) Kinds of loss (1) Physical loss –when thing perishes (2) Legal loss –when thing goes out of commerce (3) Civil loss –existence is unknown Rules in case of loss. even after he has chosen fulfillment. the improvement shall inure to the benefit of the creditor. are laid down in the preceding article shall be applied to the party who is bound to return. with the payment of damages in either case. he shall have no other right than that granted to the usufructuary. In case of the loss.(2) If the thing is lost through the fault of the debtor. deterioration or improvement of the thing. deterioration. the creditor may choose between the rescission of the obligation and its fulfillment. only the impaired part (4) Deterioration of thing through debtor’s fault: rescission of the obligation with damges. the parties. or improvement of thing during pendency of suspensive condition (1) Loss of thing without debtor’s fault: obligation is extinguished. (5) If the thing is improved by its nature. with respect to the debtor. he shall be obliged to pay damages. the provisions which. (4) If it deteriorates through the fault of the debtor. shall return to each other what they have received. 1190. not liable for damages (2) Loss of thing through debtor’s fault: liable for damages (3) Deterioration of thing without debtor’s fault: liable for damages. As for the obligations to do and not to do. The injured party may choose between the fulfillment and the rescission of the obligation. He may also seek rescission. When the conditions have for their purpose the extinguishment of an obligation to give. in case one of the obligors should not comply with what is incumbent upon him. or by time. (6) If it is improved at the expense of the debtor. if the latter should become impossible. or goes out of commerce. the impairment is to be borne by the creditor. it is understood that the thing is lost when it perishes.

Obligations for whose fulfillment a day certain has been fixed. (1126a) Art. the liability of the first infractor shall be equitably tempered by the courts. Once fixed by the courts. but from its nature and the circumstances it can be inferred that a period was intended. (1127) Art. and it shall be regulated by the rules of the preceding Section. Whenever in an obligation a period is designated. 1193. may be recovered. Obligations with a resolutory period take effect at once. it is presumed to have been established for the benefit of both the creditor and the debtor. A day certain is understood to be that which must necessarily come. unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other. This is understood to be without prejudice to the rights of third persons who have acquired the thing. the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. 1197.Obligations with a Period Art. the period cannot be changed by them. If it cannot be determined which of the parties first violated the contract. 1194. 1196. (1125a) Art. but terminate upon arrival of the day certain. In case both parties have committed a breach of the obligation. 1195. . In case of loss. the obligor being unaware of the period or believing that the obligation has become due and demandable. the courts may fix the duration thereof. (1124) Art. in accordance with Articles 1385 and 1388 and the Mortgage Law. the rules in Article 1189 shall be observed. If the uncertainty consists in whether the day will come or not. (1128a) . shall be demandable only when that day comes. (n) Art. unless there be just cause authorizing the fixing of a period. Anything paid or delivered before the arrival of the period. the obligation is conditional. although it may not be known when. In every case. and each shall bear his own damages. If the obligation does not fix a period. (n) When both parties are guilty of breach (1) First infractor known –the liability of the 1st infractor should be equitably reduced (2) First infractor cannot be determined –obligation will be extinguished and both liable for own damages SECTION 2. 1192.The court shall decree the rescission claimed. deterioration or improvement of the thing before the arrival of the day certain. the same shall be deemed extinguished. The courts shall also fix the duration of the period when it depends upon the will of the debtor. with the fruits and interests.

(5) When the debtor attempts to abscond. If through the creditor's acts the debtor cannot make a choice according to the terms of the obligation. all the things which are alternatively the object of the obligation have been lost. . (1134) Art. A person alternatively bound by different prestations shall completely perform one of them. in consideration of which the creditor agreed to the period. unless he gives a guaranty or security for the debt. 1199. 1204. (1132) Art. Hence. or the compliance of the obligation has become impossible. 1201. The creditor cannot be compelled to receive part of one and part of the other undertaking. however. The creditor shall have a right to indemnity for damages when. or that of the service which last became impossible. 1203. (4) When the debtor violates any undertaking. he becomes insolvent. 1202. unless it has been expressly granted to the creditor. he cannot make a choice according to the terms of the obligation. through the creditor’s fault. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound. (1133) Art. . (2) When he does not furnish to the creditor the guaranties or securities which he has promised. (1129a) SECTION 3.Alternative Obligations Art. (3) When by his own acts he has impaired said guaranties or securities after their establishment. and when through a fortuitous event they disappear. The choice shall produce no effect except from the time it has been communicated. is not bound to rescind Art. (1131) Art. the right given to the debtor to rescind the contract and recover damages if. The indemnity shall be fixed taking as a basis the value of the last thing which disappeared. unlawful or which could not have been the object of the obligation. The debtor shall have no right to choose those prestations which are impossible. the latter may rescind the contract with damages. The debtor shall lose every right to make use of the period: (1) When after the obligation has been contracted. The right of choice belongs to the debtor. (n) When debtor may rescind contract It is the very nature of an alternative obligation that the debtor can make his choice without the consent of the creditor. through the fault of the debtor. unless he immediately gives new ones equally satisfactory. 1200. only one is practicable. The debtor.Art. 1198.

. There is a solidary liability only when the obligation expressly so states.Damages other than the value of the last thing or service may also be awarded. When only one prestation has been agreed upon. When the choice has been expressly given to the creditor. some or all of the prestations should become impossible. (n) SECTION 4. but the obligor may render another in substitution. 1206. also with indemnity for damages. (1137a) Art. or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear. through the fault of the former. But once the substitution has been made. the credits or debts being considered distinct from one another. The loss or deterioration of the thing intended as a substitute. the obligation is called facultative. with a right to damages. he shall perform the obligation by delivering that which the creditor should choose from among the remainder. and/or each one of the creditors has a right to demand from any of the debtors. has disappeared. 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.Joint and Solidary Obligations Art. 1205. the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors. The same rules shall be applied to obligations to do or not to do in case one. (1136a) Art. 1207. (2) If the loss of one of the things occurs through the fault of the debtor. Solidary obligation –one where each of the debtors is bound to render. Until then the responsibility of the debtor shall be governed by the following rules: (1) If one of the things is lost through a fortuitous event. or when the law or the nature of the obligation requires solidarity. or the price of that which. or that each one of the latter is bound to render. the choice by the creditor shall fall upon the price of any one of them. entire compliance with the prestation. If from the law. (1135a) Art. the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. 1208. through the negligence of the obligor. subject to the Rules of Court governing the multiplicity of suits. the obligor is liable for the loss of the substitute on account of his delay. does not render him liable. entire compliance with the prestation When obligation solidary . (3) If all the things are lost through the fault of the debtor. the creditor may claim any of those subsisting. (1138a)   Joint obligation –one where the whole obligation is to be paid or fulfilled proportionately by the different debtors and /or is to be demanded b the different creditors. negligence or fraud. or that which remains if only one subsists.

1211. such share shall be borne by all his co-debtors. (1140) Art. without prejudice to the provisions of Article 1219. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. Art. (1142a) Art. 1209. in proportion to the debt of each. 1215. as well as he who collects the debt.(1) the obligation expressly states so (2) the law requires solidarity (3) the nature of the obligation requires solidarity Solidarity is not presumed The presumption where there are two or more persons in the same obligation is that it is joint. Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions. 1210. the others shall not be liable for his share. Novation. 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. made by any of the solidary creditors or with any of the solidary debtors. (1145a) . and the debt can be enforced only by proceeding against all the debtors. judicial or extrajudicial. shall be liable to the others for the share in the obligation corresponding to them. The debtor may pay any one of the solidary creditors. If the payment is made before the debt is due. 1216. but if any demand. 1213. because of his insolvency. The indivisibility of an obligation does not necessarily give rise to solidarity. (1139) Art. 1217. has been made by one of them. If the division is impossible. compensation. with the interest for the payment already made. Payment made by one of the solidary debtors extinguishes the obligation. no interest for the intervening period may be demanded. confusion or remission of the debt. (n) Art. He who made the payment may claim from his co-debtors only the share which corresponds to each. Nor does solidarity of itself imply indivisibility. If two or more solidary debtors offer to pay. The creditor who may have executed any of these acts. (n) Art. the right of the creditors may be prejudiced only by their collective acts. 1214. (1141a) Art. payment should be made to him. (1143) Art. A solidary creditor cannot assign his rights without the consent of the others. reimburse his share to the debtor paying the obligation. shall extinguish the obligation. If one of the latter should be insolvent. the creditor may choose which offer to accept. but not anything which may be prejudicial to the latter. Each one of the solidary creditors may do whatever may be useful to the others. When one of the solidary debtors cannot. 1212. (1144a) Art.

If there was fault on the part of any one of them. does not entitle him to reimbursement from his co-debtors. in its delivery or performance. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors. 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. is not capable of partial fulfillment Art. . If through a fortuitous event. 1219. (1148a) SECTION 5. 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. all shall be responsible to the creditor. (n) Art. he may avail himself thereof only as regards that part of the debt for which the latter are responsible. (1149)   Divisible obligation –the object of which.Art. When the obligation has for its object the execution of a certain number of days of work. the accomplishment of work by metrical units. 1224. A solidary debtor may. the provisions of the preceding paragraph shall apply. 1220. in case the debt had been totally paid by anyone of them before the remission was effected. (1150) Art. or analogous things which by their nature are susceptible of partial performance. or pertain to his own share. without prejudice to their action against the guilty or negligent debtor. 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.Divisible and Indivisible Obligations Art. 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. 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. (n) Art. . A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with his undertaking. 1218. (1147a) Art. The remission of the whole obligation. is capable of partial fulfillment Indivisible obligation –the object of which in its delivery or performance. (1146a) Art. it shall be divisible. 1221. in actions filed by the creditor. obtained by one of the solidary debtors. avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him. 1223. 1225. 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. 1222. With respect to those which personally belong to the others. for the price and the payment of damages and interest. the obligation shall be extinguished.

making the consequences of such breach as onerous as it may be possible. . In obligations with a penal clause. (1151a) SECTION 6. in which case. damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. However. Art. morals. if there is no stipulation to the contrary. In obligations not to do. as a stipulation in a contract. i.However. divisibility or indivisibility shall be determined by the character of the prestation in each particular case. 1226. The penalty. intended to primarily to induce its fulfillment Penal clause –an accessory undertaking attached to an obligation to assume greater liability in case of breach.Obligations with a Penal Clause Art. is demandable only if there is breach of the obligation and it is not contrary to law. an obligation is indivisible if so provided by law or intended by the parties. the creditor may recover damages caused by such fraud *The penalty may be enforced only when it is demandable in accordance with the provisions of the Civil Code. even though the object or service may be physically divisible. 1227. (1152a)     Principal obligation –can stand by itself and does not depend for its validity or existence upon another obligation Accessory obligation –attached to a principal obligation and. 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. or to punish the debtor for the non-fulfillment or violation of his obligation *Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be enforced. the obligation is not fulfilled. *if the obligation cannot be fulfilled due to a fortuitous event. therefore. if after the creditor has decided to . cannot stand alone Obligation with a penal clause –contains an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal prestation. unless this right has been clearly granted him. Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the penalty at the same time. or is partly or irregularly complied with Purposes of a penal clause (1) to insure their performance by creating an effective deterrent against breach. etc. in which case the creditor may recover legal interest thereon (3) when the obligor is guilty of fraud in the fulfillment of the obligation. the penalty is not demandable. When creditor may recover damages (1) when so stipulated by the parties (2) when the obligor refuses to pay penalty. the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance. Nevertheless.e. The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. (2) To substitute penalty for the indemnity for damages and payment of interests in case of non-compliance.

The nullity of the penal clause does not carry with it that of the principal obligation. (n) *The creditor may enforce the penalty whether he suffered damages or not. (5) By compensation. 1228. Even if there has been no performance. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. the performance thereof should become impossible without his fault. *Damages recoverable in addition to penalty must be proved. and prescription. The nullity of the principal obligation carries with it that of the penal clause. fulfillment of a resolutory condition. (1154a) When penalty may be reduce by the courts (1) when there is partial or irregular performance (2) when the penalty agreed upon is iniquitous or unconscionable Art. 1229. (1155) CHAPTER 4 EXTINGUISHMENT OF OBLIGATIONS GENERAL PROVISIONS Art. are governed elsewhere in this Code. But he cannot recover more than the stipulated penalty even if he proves that the amount of his damages exceeds penalty. Art.Payment or Performance .” Art. Obligations are extinguished: (1) By payment or performance: (2) By the loss of the thing due: (3) By the condonation or remission of the debt. (6) By novation. Other causes of extinguishment of obligations. . the penalty may be enforced.require the fulfillment of the obligation. (1156a) SECTION 1. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. rescission. such as annulment. 1230. 1231. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. (1153a) *The debtor cannot just pay the penalty instead of performing the obligation except when “this right is expressly reserved for him. (4) By the confusion or merger of the rights of creditor and debtor.

If the payment is done without the knowledge or against the will of the debtor. (n) *Recovery allowed in case of substantial performance in good faith. the third person cannot compel the creditor to subrogate him him in the latter’s accessory rights of mortgage. guaranty. . unless there is a stipulation to the contrary. except that if he paid without the knowledge or against the will of the debtor. The whole obligation is extinguished. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation. in any other manner. 1234. A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered. 1233. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter. of an obligation. If the obligation has been substantially performed in good faith. 1237. (n) *Recovery allowed when incomplete or irregular performance is waived. less damages suffered by the obligee. and without expressing any protest or objection. the obligor may recover as though there had been a strict and complete fulfillment. (1158a) Persons from whom the creditor must accept payment (1) the debtor (2) an person who has an interest in the obligation (like a guarantor) (3) a third person who has no interest in the obligation when there is stipulation that he can make payment *Creditor may refuse payment by third person Art. cannot compel the creditor to subrogate him in his rights. such as those arising from a mortgage. Requisites for the application of Article 1234 (1) there must be substantial performance (2) the obligor must be in good faith Art. 1232. Payment means not only the delivery of money but also the performance. When the obligee accepts the performance. knowing its incompleteness or irregularity. guaranty. or penalty. Whoever pays for another may demand from the debtor what he has paid.Art. (1157) Art. (n) *Payment –legal extinguishment of an obligation Art. the obligation is deemed fully complied with. (1159a) Right of a third person to subrogation Whoever pays on behalf of the debtor is entitled to subrogation if the payment is with the consent of the latter. as the case may be. he can recover only insofar as the payment has been beneficial to the debtor. Requisites for the application of Article 1235 (1) obligee knows that the performance is incomplete or irregular (2) he accepts the performance without expressing any protest or objection Art. 1236. 1235. or penalty.

Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the creditor. it shall be valid as to him and the payor although the debtor did not give his consent to the donation. (1163a) Art. or any person authorized to receive it.) Art. Payment shall be made to the person in whose favor the obligation has been constituted. 1241. (1164) . (3) If by the creditor's conduct. Payment made in good faith to any person in possession of the credit shall release the debtor. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation. In obligations to give. executor or administrator of the estate of a deceased. payment made by one who does not have the free disposal of the thing due and capacity to alienate it shall not be valid. or insofar as the payment has been beneficial to him. the debtor has been led to believe that the third person had authority to receive the payment. the third person acquires the creditor's rights. But the payment is in any case valid as to the creditor who has accepted it. which requires the debtor's consent. which requires he debtor’s consent to be valid. *the creditor cannot be compelled to accept payment where the person paying has no capacity to make it. to make a disposition of the thing due. Art. *If the creditor accepts the payment. Art. (1162a) Payment shall be made to: (1) the creditor or obligee (2) his successor in interest (3) any person authorized to receive it (e. or his successor in interest. Art. 1239. Such benefit to the creditor need not be proved in the following cases: (1) If after the payment. without prejudice to the provisions of Article 1427 under the Title on "Natural Obligations. 1238. (n) *Article 1238 “embodies the idea that no one should be compelled to accept the generosity of another. the payment is deemed a donation." (1160a) *free disposal of the thing due –the thing to be delivered must not be subject to any claim or lien or encumbrance of a third person *capacity to alienate –the person is not incapacitated to enter into contracts and not for the matter. Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing delivered.” If the paying third person does not intend to be reimbursed. (2) If the creditor ratifies the payment to the third person. guardian. 1242.g. 1240. etc.Legal subrogation by operation of law is presumed in certain cases.

(n) Art. the action derived from the original obligation shall be held in the abeyance. (1166a) Art. (1170) Art. the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. 1244. With regard to judicial costs. Neither may the debtor be required to make partial payments. an act or forbearance cannot be substituted by another act or forbearance against the obligee's will. Dation in payment. although the latter may be of the same value as. the payment shall be made wherever the thing might be at the moment the obligation was constituted. The purpose of the obligation and other circumstances shall be taken into consideration. the creditor cannot be compelled partially to receive the prestations in which the obligation consists. 1248. whereby property is alienated to the creditor in satisfaction of a debt in money. 1245.Art. Payment shall be made in the place designated in the obligation. (1169a) Art. Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall not be valid. or more valuable than that which is due. Unless it is otherwise stipulated. There being no express stipulation and if the undertaking is to deliver a determinate thing. the value of the currency at the time of the establishment of the obligation shall be the basis of payment. 1243. In the meantime. In case an extraordinary inflation or deflation of the currency stipulated should supervene. or when through the fault of the creditor they have been impaired. . (1165) Art. whose quality and circumstances have not been stated. and if it is not possible to deliver such currency. 1249. the extrajudicial expenses required by the payment shall be for the account of the debtor. then in the currency which is legal tender in the Philippines. 1246. (n) Art. when the debt is in part liquidated and in part unliquidated. the creditor cannot demand a thing of superior quality. unless there is an agreement to the contrary. The delivery of promissory notes payable to order. 1247. However. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. 1251. In obligations to do or not to do. (1167a) Art. Neither can the debtor deliver a thing of inferior quality. In any other case the place of payment shall be the domicile of the debtor. The debtor of a thing cannot compel the creditor to receive a different one. (1168a) Art. Unless there is an express stipulation to that effect. shall be governed by the law of sales. the Rules of Court shall govern. When the obligation consists in the delivery of an indeterminate or generic thing. The payment of debts in money shall be made in the currency stipulated. 1250.

shall only release the debtor from responsibility for the net proceeds of the thing assigned. If the debt produces interest. (1176a) . (1173) Art. the debt which is most onerous to the debtor. the additional expenses shall be borne by him.Application of Payments Art.Tender of Payment and Consignation Art. Unless the parties so stipulate. or does not appear at the place of payment. 1255. on the effect of the cession. He who has various debts of the same kind in favor of one and the same creditor. The agreements which. If the creditor to whom tender of payment has been made refuses without just cause to accept it. are made between the debtor and his creditors shall be governed by special laws. (5) When the title of the obligation has been lost. . unless there is stipulation to the contrary. (1171a) SUBSECTION 1. .If the debtor changes his domicile in bad faith or after he has incurred in delay. application shall not be made as to debts which are not yet due. or if application can not be inferred from other circumstances. (3) When. (4) When two or more persons claim the same right to collect. he refuses to give a receipt. the former cannot complain of the same. or when the application of payment is made by the party for whose benefit the term has been constituted. the debtor shall be released from responsibility by the consignation of the thing or sum due. These provisions are without prejudice to venue under the Rules of Court. may declare at the time of making the payment. 1252. If the debtor accepts from the creditor a receipt in which an application of the payment is made. (1175a) SUBSECTION 3. The debtor may cede or assign his property to his creditors in payment of his debts. among those due. When the payment cannot be applied in accordance with the preceding rules. . the payment shall be applied to all of them proportionately. 1256. 1253. unless there is a cause for invalidating the contract. If the debts due are of the same nature and burden. (1174a) SUBSECTION 2. Consignation alone shall produce the same effect in the following cases: (1) When the creditor is absent or unknown. to which of them the same must be applied. (2) When he is incapacitated to receive the payment at the time it is due. 1254. payment of the principal shall not be deemed to have been made until the interests have been covered. (1172a) Art. shall be deemed to have been satisfied.Payment by Cession Art. This cession. without just cause.

Art. If. 1259. 1257. the creditor should authorize the debtor to withdraw the same. in a proper case. or before a judicial declaration that the consignation has been properly made. 1260. before whom the tender of payment shall be proved. guarantors and sureties shall be released. The consignation having been made. (1180) Art. it must first be announced to the persons interested in the fulfillment of the obligation. 1258. the interested parties shall also be notified thereof. and the announcement of the consignation in other cases. the consignation having been made. Before the creditor has accepted the consignation. The consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulate payment. (1178) Art. (1181a) . the debtor may withdraw the thing or the sum deposited. Once the consignation has been duly made. (1178) Art. The co-debtors. allowing the obligation to remain in force. shall be charged against the creditor. Consignation shall be made by depositing the things due at the disposal of judicial authority. when properly made. he shall lose every preference which he may have over the thing. (1177) Art. The expenses of consignation. 1261. the debtor may ask the judge to order the cancellation of the obligation. In order that the consignation of the thing due may release the obligor.

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