Obligations and Contracts -- Jurado Reviewer

7/22/2019 Obligations and Contracts -- Jurado Reviewer

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AUF School of Law Obligations and Contract

BOOK IVOBLIGATIONS and CONTRACTS

TITLE I OBLIGATIONS

Art. 1156. Obligation is a juridical necessity to

give, to do or not to do.

Juridical necessity to comply with a prestation-Sanchez Roman

Legal relation established between one person andanother, whereby the latter is bound to thefulfillment of a prestation which the former maydemand from him. - Manresa

Civil obligation vs Naturalobligation

Gives to the obligeeor creditor the rightof enforcing itagainst the obligoror debtor in a courtof justice.(right of action)

effect Cannot beenforced by courtaction

Positive law source Equity and naturallaw.

Requisites of Obligation

juridical or legal tie

-bilateral-unilateral

active subject

passive subject

fact, prestation or service

**As a general rule, the form of the obligation is notan essential element/requisite. Except (the non-compliance of the following formalities would havethe effect of rendering the contract agreement voidor inexistent):

---donation of personal property whose

value exceeds P5,000.00, contract inwriting. (Art. 748, CC)---sale of a piece of land or any interesttherein through an agent, authority of suchagent be in writing. (Art. 1874, CC)---Interests in a contract of simple loan ormutual, agreement with respect to such bein writing. (Art. 1956, CC)---anticheresis, principal amount and

interest be specified in writing. (Art. 2134,CC)---Donation of immovable property be madein a public document and the acceptancebe made in the same document or separate

public document (Art. 749, CC)---contribution of immovable property orreal rights to common fund (partnership)must be in a public instrument withattached inventory signed by the parties.(Art. 1771, 1773, CC)---Chattel Mortgage, personal propertymust be recorded in the Chattel MortgageRegister (Art. 2140, CC)---sale or transfer of large cattle, suchtransfer or sale must be registered. (Sec.22, Act No. 1147, Art. 1581, CC)

Classifications of obligation

Primary Secondary

pure and conditional

with a period

alternative andfacultative

joint and solidary

divisible and indivisible

with a penal clause

legal, conventional,penal

real and personal

determinate andgeneric

unilateral and bilateral

individual andcollective

accessory and

principal

classifications according to Manresa

As to juridical quality -Natural-civil-mixed

As to parties -Unilateral and bilateral-individual andcollective

As to object -Determinate andgeneric-simple and multiple-positive and negative-real and personal-possible andimpossible-divisible and divisible-principal and accessory

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As to perfection andextinguishment

-Pure-conditional-with term or period

Art. 1157. Obligations arise from:lawcontractsquasi contractsacts or omissions punished by law; andquasi-delicts

**The addition of lege has been criticized astheoretically erroneous.

**The enumeration is exclusive.

Art. 1158. Obligations derived from law are notpresumed. Only those expressly determinedin this Code or in special laws aredemandable, and shall be regulated by theprecepts of the law which establishes them;and as to what has not been foreseen, by theprovisions of this Book. (1090)

**obligations derived from law cannot bepresumed. (unlike other obligations)

**requisites to determine whether an obligationarises from law or from other sources.

law that establishes or recognizes the obligationact or condition upon which the obligation isbased.

** when the law merely recognizes the existence ofan obligation generated by an act which mayconstitute a contract, quasi-contract, criminaloffense, or quasi-delict and its only purpose is toregulate such obligation, then the ACT itself is thesource of the obligation and NOT the law.

Pelayo vs Llauron-obligation of support between

spouses.Art. 2014 obligation of the winner in a gambling toreturn the money to the one who lost.

Art. 1159. Obligations arising from contractshave the force of law between the contractingparties and should be complied with in good

faith. (1091a)

Contract-meeting of minds between two personswhereby one binds himself, with respect to theother, to give something or to render some service.

Consensual contracts- contracts perfected bymere consent, and from that moment the partiesare bound not only to the fulfillment of what hasbeen expressly stipulated but also to all of theconsequences which according to their nature maybe in keeping with good faith, usage and law.

Real Contracts- perfected upon the delivery ofthe obligation.

Obligation arises from the moment ofperfection of the contract.

Reciprocal obligation- parties are mutuallyobliged to do or to give something.

Unilateral obligation- only one party (obligor) isobliged to do or to give something.

**Obligations arising from contract are governedprimarily by the agreement of the contractingparties.

Compliance in good faith- performance inaccordance with the stipulations, clauses, termsand conditions of the contract.

Unjust enrichment

**In default of agreement, the provisions of theCivil Code regulating such obligations areapplicable.

General Rule: The contract is the law between thecontracting parties.

Ex: Macasaet vs COA

exception to general rule:Agcaoili vs GSIS

Art. 1160. Obligations derived from quasi-

contracts shall be subject to the provisions ofChapter 1, Title XVII, of this Book. (n)

Quasi-contracts- juridical relations arising fromlawful, voluntary, and unilateral acts, by virtuewhich the parties become bound to each other,based on the principle that no one shall be unjustly



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enriched or benefited at the expense of others.

Case: Traders Union vs NLRC

Negotiorum gestio Solutio indebiti

Arises whenever aperson voluntarily takescharge of the agency ormanagement of thebusiness or property ofanother withoutauthority from the latter

Arises whenever aperson unduly deliversa thing through mistaketo another who has noright to demand it.

The gestor or officiousmanager shall beobliged to continue suchagency or managementuntil the termination of

the affair and itsincidents

The person to whom thedelivery has beenunduly made shallreturn the propertydelivered or the money

paid.

Presumptive consent- consent given by law ifthere is no express consent given by the otherparty--gives rise to multiple juridical relations resulting inobligations for delivery of the thing or rendering ofservice.

Art. 1161. Civil obligations arising fromcriminal offenses shall be governed by thepenal laws, subject to the provisions of article2177, and of the pertinent provisions ofChapter 2, Preliminary Title, on HumanRelations, and of Title XVIII of this Book,regulating damages. (1092a)

Art. 100, RPCexcept: treason, rebellion, illegal possession offirearms and gambling.

Enforcement of civil liability1. institution of criminal and civil actions- civil

action impliedly instituted, except:i. express waive of the civil actionii. reservation of right to institute it

separately, oriii. institution of the civil action prior to the

criminal action.2. independent civil action3. other civil actions arising from offense

Effect of Acquittal

Ground foracquittal

effect Evidenceneeded

Guilt notproven beyondreasonabledoubt

Civil action torecoverdamagesbased on thesame act oromission MAYstill beinstituted

Preponderanceof evidence

Non-existenceof facts for thecommission ofthe offense

Civil action torecoverdamages is nolonger possible.

Effect of Independent Civil ActionGeneral rule: The civil action to recover from theperson criminally liable is not independent from thecriminal action.Separate civil action- the right to file a civil actionshall depend upon the result of the criminal action.

Commencing the civil action prior the criminalaction- once the criminal action is instituted, theaction to recover damages shall be suspended.

Examples of entirely separate and independent

civil action: the civil action is based on an obligation

not arising from the act complained of asoffense or felony.

Such action may proceedindependently of the criminal actionand regardless of the result of thelatter.

Culpa contractual- Negligence in theperformance of a contract

culpa aquiliana- Negligence as asource of obligation (quasi-delict)

Law grants to the injured party the right toinstitute a civil action separate and distinctfrom the criminal action.

Interferences by public officers oremployees or by private individualswith civil rights and liberties

defamation

fraud



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physical injuries

refusal or neglect of a city or municipalpolice to render aid or protection incase of danger to life or property.

Reservation of right to file separate and distinctcivil action- is a substantive right;

-procedural requirement under Sec. 2 ofRule 111 of the New Rules of Court is notmandatory.-this was amended by Sec. 3 of Revised Rules ofcriminal Procedure 2000.

Art. 1162. Obligations derived from quasi-delicts shall be governed by the provisions ofChapter 2, Title XVII of this Book, and byspecial laws. (1093a)

Quasi-delict- fault or negligence of a person who,by his acts or omission, connected or unconnectedwith, but independent from, any contractualrelation, causes damage to another person.-covers not only those that are not punished by lawbut also those acts which are voluntary andnegligent4 reasons: cited in Barredo vs Gracia

***A single act can give rise to various obligationsPersons liable- the person directly responsible for

the damage incurred and: The father, and, in case of his death or

incapacity, the mother, are liable for anydamages caused by the minor childrenwho live with them.

Guardians are liable for damages done byminors or incapacitated persons subject totheir authority and living with them.

Owners or directors of an establishment orbusiness are equally liable for anydamages caused by their employees whileengaged in the branch of the service inwhich employed, or on occasion of theperformance of their duties.

Employers with respect to damagescaused by their employees and householdhelpers acting within the scope of theirassigned tasks, even though the former arenot engaged in any business or industry.

The State when it acts through a specialagent, but not if the damage shall have

been caused by the official upon whomproperly devolved the duty of doing the actperformed, in which case the provisions ofthe next preceding article shall beapplicable.

Finally, teachers or directors of arts andtrades are liable for any damages causedby their pupils or apprentices while they areunder their custody.

The liability shall cease in case the personsmentioned therein prove that they exercised all thediligence of a good father of a family to prevent thedamage.

Requisites of liability

There exist a wrongful act or omissionimputable to the defendant by reason of hisfault or negligence.

There exist a damage or injury which mustbe proved by the person claiming recovery.

There must be a direct causal connectionbetween the fault or negligence and thedamage or injury. (proximate cause)

Quasi-delict vs Crime

Private right Nature ofright

violated

Public right

Compensation

orindemnification(reparation ofinjury suffered

by theindividual)

Form of

redress

Punishment

(fine,imprisonment, or

both)

It exist in anyact or omissionwherein fault ornegligenceintervenes

Legal basisof liability

Exists when thereare penal lawsclearly penalizingsuch crime

Civil liability liability Criminal and civil

liability

Criminal intentnot necessary

Condition ofthe mind

Criminal intentnecessary

Preponderanceof evidence

evidence Beyondreasonable doubt

Can be compromise Can never be



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compromised compromised.

Quasi-delict covers not only acts not punishable bylaws but it also includes acts which are criminal incharacter, whether intentional, voluntary or

negligent. (Elcano vs Hill)

Two distinct faults(Padua vs Robles, Justice Barredo)

culpa criminal- civil liability arising fromcrimes

culpa-aquiliana- liability arising from civilnegligence.

-recovery of damages twice for the same negligentact is omission is precluded.

-the extinction of the civil liability referred in Par (e)

of Sec. 3, Rule 111 refers exclusively to liabilityfounded on Art. 100 of RPC, whereas the civilliability for the same act considered as quasi delictis not extinguished even by a declaration in thecriminal case that the criminal act charged has nothappened or has not been committed by theaccused.(Elcano vs Hill)

Diligence of employers:

Quasi-delict Crimes

Art. 2180 of CC Art. 103 of RPC

Primary liability Subsidiary liability

Employer can avoidliability after proving thathe exercised duediligence

Liability is absolute andcannot be avoided byproof of diligence.

Applies to all employerswhether they areengaged in enterpriseor not.

Applies only toemployers engaged insome kind of businessor industry.

ubi jus ibi remedium- unvindicated civil wrongs

--The death of the accused after arraignment andduring the pendency of the criminal action shallextinguish the civil liability arising from the delict.

**Although the relation between the contractingparties is purely contractual a quasi-delict can stillbe committed in view of the manner in which the

contract is violated.Neglect or malfeasance of thecarrier's employees could giveground for an action for damages.Damages here are proper because

the stress of respondent's action isplaced upon his wrongfulexpulsion, which is a violation of a

public duty by petitioner- air carrier a case of quasi-delict. (AirFrance vs Carrascoso, G.R. No. L-21438. September 28, 1966.)

Chapter 2NATURE AND EFFECTS OF OBLIGATION

Art. 1163-1166 Obligation to Give

diligence of a good father of a family-standard normal state of diligence-ordinary diligence-

obligations to give

determinate- the object is particularlydesignated or physically segregated fromall others of the same class (Art. 1163applies particularly to determinate object)

generic- the object is merely designatedby its class or genus without any particular

designation or physical segregation from allothers of the same class. (e.g. money)

***Art. 1163 is a guaranty that the debtor willcomply with the obligation.

Nature of right of the creditor--The obligee/creditor has the right to thething which is the object of the obligation aswell as the fruits thereof from the time theobligation to deliver it arises. (Art. 1164)

Obligation When obligation todeliver arises

Those arising from

law

quasi-delicts

quasi-contracts

The specific provisionsof law determine whenthe delivery should bemade.



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crimes

contracts Moment of perfection ofthe contract. (Art. 1537)

Subject to a

suspensivecondition

From the moment the

condition happens.

With suspensiveterm or period

Upon the expiration ofthe term or period

Personal right- a right pertaining to a person todemand from another the fulfillment of a prestationto give, to do, or not to do.

(jus ad rem) right enforceable onlyagainst a definite person or groupof persons

before delivery in obligations togive

Real right- right pertaining to a person over aspecific thing, without passive subject individuallydetermined against whom such right may bepersonally forced. (ownership, possession,easement)

(jus in re) right enforceable against thewhole world

acquired once the thing and the fruitsare delivered.

Rights of Creditor Obligations of Debtor

determinate obligations

1. to compel specificperformance

2. to recover damagesfor breach of theobligation.

3. Entitlement to fruitsand interests of thething at the timethe obligation todeliver it arises.

1. to perform theobligationspecifically

2. to take care of thethings with properdiligence of a goodfather of a family.

3. To deliver allaccessions andaccessories of thethings even thoughthey may not havebeen mentioned.

4. To be liable fordamages in case ofbreach of obligationby reason of delay,fraud, negligence or

contravention of thetenor thereof.

Generic obligations

1. to ask for

performance ofthe obligations

2. to ask that theobligation becomplied with atthe expense ofthe debtor.

3. To recoverdamages for thebreach ofobligation.

1. To deliver a thing

which is neither ofsuperior nor inferiorquality.

2. To be liable fordamages in case ofbreach of obligation

None exemption from liability because ofcasofortuito:delayreason: There would have been no loss if thedebtor had complied with the obligation to deliverthe object without delay.

promise to two or more different personsreason: It would be impossible to comply with bothobligations therefore the debtor already madehimself liable for damages.

Accessions- all of those things which are

produced by the object of the obligation as well asall of those which are naturally or artificiallyattached thereto.

Accession discreta- natural, industrial andcivil fruits

accession industrial building, planting,and sowing

accession natural- allusion, alvusion,abandoned river beds, and islands formedin navigable rivers.

Accession with respect to movableproperty.

Accessories- all of the things which have for theirobject the establishment, use or preservation ofanother thing which is more important and to whichthey are not incorporated or attached.

embellishments

**The liability of debtor for damages in case ofbreach of obligation, extends only to breach which



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is voluntary in character and not to one which isinvoluntary (fortuitous event)

**Only a determinate thing can be destroyed by afortuitous event, generic things can never perish.

(genus nunquam peruit)

Art. 1167.Obligation to Do

(positive personal obligation)

**If the obligor fails to do what he has obligatedhimself to do, the obligee can have the obligationperformed or executed at the expense of the latterand recover damages .

**This type of obligation recognizes individualfreedom, the obligor cannot be compelled to do

what he has obligated himself to do.Remedy for obligee/creditor: performance of theobligation at the expense of the obligor

**If the object of the prestation is the personal andspecial qualification (i.e. artist) of the obligor, theremedy for the obligee is to recover damagesunder Art. 1170 of the Civil Code.

Rights available to the obligee(in case there has been a performance of theobligation but in contravention of the tenor thereof)

to have the obligation performed at theexpense of the obligor

to ask that what has been poorly done beundone

to recover damages for breach ofobligation

Case:Chavez vs GonzalesTanguilig vs Court of Appeals

Article 1168.Obligation NOT to Do

(negative personal obligation)-fulfilled or realized so long the obligor does not dowhat is forbidden

Remedy for obligee in case of breach:

to have it undone at the expense of theobligor (Art. 1168)exception (cannot be undone):

effects of the act are definite incharacter.

physical and legal impossibility

to ask for damages (Art. 1170)

mora is not applicable

**In obligation not to do, the obligation is eitherfulfilled or not fulfilled

Art. 1169.Delay in the fulfillment of obligation

Voluntary Involuntary

Default (mora),deceit/fraud (dolo),negligence (culpa), or in

manner thatcontravenes the tenorthereof

Inability to complybecause of anunforeseen event, or

which though foreseenis inevitable.

Obligor is liable fordamages

Obligor has no liabilityfor damages

General Rule: Unless there is no demand there isno delay.

***In reciprocal obligation, the moment the otherparty complied with his obligation failure to complywill cause the other party to be in delay

Default(mora)- signifies delay in the fulfillment ofan obligation with respect to time.

***The mere stipulation of a date when theobligation is due does not by itself dispense withthe necessity of a demand, unless there is anexpress stipulation (either by law or contract) thatthe debtor will incur delay without need of ademand.

Kinds of mora

mora solvendi- default on the part of thedebtorkinds of mora solvendi

ex re-refers to obligation to give

ex persona- refers to obligation to do

mora accipiendi- default on the part of thecreditor to accept the delivery of the objectof the obligation



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compensatio morae- default of both partiesin reciprocal obligations

Requisites to declare in default

that the obligation be demandable and

already liquidated that the debtor delays performance

that the creditor requires theperformance judicially or extra judicially

**In positive obligation, default arises from themoment the creditor demands the performance ofthe obligation.

Judicially- through a complaint

extra-judicially- oral or written demand

When demand not necessary

when there is an express stipulation to thateffect

where the law so provides

when the period is the controlling motive orthe principal inducement for the creation ofthe obligation (when time is of the essence)

where demand would be useless

**Negative obligations are not subject to delay.

Reciprocal obligation-created or established atthe same time, out of the same cause and whichresults in the mutual relationship of creditor and

debtor between the parties.-obligations which are conditioned upon

each other-conditional obligation

**In case of delay, the liability of the obligor subsisteven if the thing which constitutes the object ofobligation may have been destroyed or lostthrough fortuitous events.

The moment the other party has complied with hisobligation, delay on the other begins.

Exception: If there are different dates for theperformance of the obligation, apply the generalrule in 1169 (demand is needed).

(Art. 1170-1173)

Fraud (dolo)- consist in the conscious andintentional proposition to evade the normalfulfillment of an obligation

-present at the time of birth of anobligations

kinds of fraud

criminal fraud

civil fraudFraud in theperformance ofan obligation

vs Fraud in theconstitution orestablishment ofan obligation

During theperformance of anexisting obligation

Whenpresent

At the time of thebirth of anobligation.

Evading normalfulfillment of anobligation

purpose Securing theconsent of theother party toenter into thecontract

Non-fulfillment orbreach of theobligation

result Vitiation of theconsent of theother party

Recover damagesfrom thedebtor/obligor

Remedyfor the

innocentparty

Causal fraud-Annulment of thecontract.Incidental fraud-recover damages

***Malice or dishonesty is implied as a ground for

damages.

***Fraud or dolo is synonymous with bad faith.

***Waiver or renunciation of liability made inanticipation of the fraud is VOID. (Art. 1171)

***Waiver or renunciation of liability made after thefraud has already been committed is VALID.

***What is renounced is the effect of fraud or theright of the party to indemnity.

Extent of recoverable damages:

all damages which may be attributable tothe breach or non-fulfillment of theobligation, regardless of whether suchconsequences are natural or unnatural,probable or improbable, foreseeable orunforeseeable.

Moral and exemplary damages



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Negligence (culpa)- omission of that diligencewhich is required by the nature of the obligationand corresponds with the circumstances of theperson, the time, and of the place.

-absence of due care required by thenature of the obligation

***Diligence of good father of a family (paterfamilias) is the standard diligence required if thecontract does not state the diligence which is to beobserved in the performance of the obligation.

Kinds of negligence

Culpacontractual

vs Culpaaquiliana

Negligence in

the performanceof a contract

definition Negligence as a

source ofobligation.(quasi-delict)

Incident of theperformance ofan obligation

characteristic

Substantive andindependent

Pre-existingcontractualrelation

Partyrelationship

There may ormay not be apre-existingcontractualrelationship

Breach of contract Source ofobligation Defendant'snegligent act oromission

Existence of thecontract and itsbreach

What needsto be proven

Negligence ofthe defendant

Proof of diligence is nota defense

Availabilityof diligence

Prof of diligenceis a validdefense

Negligence vs Fraud

Negligence vs Fraud

Culpa Dolo

Voluntary act oromission

characteristic Conscious andintentionalproposition toevade thefulfillment of anobligation

Art. 1173 (if thenegligenceshows bad faith)

Governing rule Art. 1173, par.1

Valid (unless thenature of thewaiver is againstpublic policy)

Waiver ofaction (future)

Void

proximate cause- cause which is a natural andlogical consequence uninterrupted by anintervening cause, without which the damage willnot have happened.

Negligence

Bad faith Good faith

If present, the

provisions of Art. 1173and Art 2201, par.2 willapply.

Liability will only be on

natural and probableconsequences of thebreach of obligation

***Damages resulting from negligence is reducedor mitigated if there was contributory negligence ofthe obligee.Other circumstances that can mitigate thedamages:

when the plaintiff himself contravenes theterms of the contract;

where the plaintiff has derived some benefitas a result of the contract;

in cases where exemplary damages are tobe awarded, where the defendant actedupon advice of counsel;

where the loss would have resulted in anyevent;

where upon filing of the action, thedefendant has done his best to lessen theplaintiff's loss or injury.

***If the negligent act of the obligee is theproximate cause of the event which led to thedamage or injury complained of, he cannotrecover.

***The phrase in any manner that contravenesthe tenorof the obligation includes not only anyillicit act which impairs the strict fulfillment of theobligation but also every kind of defectiveperformance.

Test of negligence:Use the reasonable care and caution which an



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ordinary prudent person would have used in thesame situation.

(Art. 1174)Fortuitous event (caso fortuito)- event whichcould have not been foreseen, or though foreseen,

were inevitable.Act of God Force majeure

Independent of humanintervention

events that arise fromlegitimate or illegitimateacts of persons otherthan the obligor.

As to foreseeability

Ordinary extraordinary

General rule: If the reason for the non-compliancein the obligation is a fortuitous event, the obligor is

exempted from liability whatsoever.EXCEPT:

1. where such liability is expressly specifiedby law;

2. where it is declared by stipulation of theparties;

3. where the nature of the obligation requiresthe assumption of risk.

-(volenti non fit injuria) no wrong isdone to one who consents

***Art. 1174 applies only to determinate obligationsand not to generic ones.

***res ipsa loquitur

***The caso fortuito must me the SOLE andproximate cause of the incident, to avail of it as adefense.

***Co-mingling negligence on the part of theobligor forfeits the defense of caso fortuito.

Essential conditions for Art. 1174 to apply:1. that the event must be independent of the

will of the obligor;2. that the event must be either foreseeableor inevitable;

3. that the event must be of such a characteras to render it impossible for the obligor tofulfill his obligation in a normal manner;

4. that the obligor must be free from anyparticipation in the aggravation of the injuryto the obligee.

***expiration of agreement:The case of Bacolod-Murcia vs CA comparedand contrasted with PhilComSat vs Globe.

***Southeastern College vs CA- typhoon is a casofortuito

***Co vs CA- carnapping of a vehicle is notconsidered a caso fortuito.

***Tanguilig vs CA windmill case

(Art. 1175)Usury- contracting for or receiving something inexcess of the amount allowed by law for the loanor forbearance of money, goods or chattels.-taking of more interest for the use of money,

goods, or chattels or credits than the law allows.

Usury Law (Act No. 2655) and other lawsamending it- special law referred to in Art. 1175.

Central Bank Circular No. 224 (Dec. 1, 1982)- nomore ceiling in interest rates on loans.

***Loan or forebearance of money-12% interest inthe default of interest stipulated by law or theparties, 6% interest for obligation not involvingforbearance or loan.

***12% interest per annum from the time thejudgment has become final if t.

(Art. 1176)***There is a presumption that the interests hasbeen paid if on the face of the receipt that thecreditor issued to the obligor that the principal hasbeen paid without reservation with respect to theinterest. (in accordance with Art. 1253)

***If the debtor is issued a receipt by the creditor

acknowledging payment of a latter installmentwithout reservation to prior installments, there isalso a presumption that such prior installmentshave already been paid.

***For the presumption to arise, the receipt shouldclearly state that the payment is for the installmentfor a latter installment or as payment for the



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interest. (Manila Trading vs Medina)

(Art. 1177)Remedies of creditor to protect credits:

1. to exhaust the property in possession of

the debtor;(Art. 2236, CC)2. to be subrogated to all of the rights and

actions of the debtor to save those whichare inherent in hi person. (accionsubrogatoria)Conditions:

that the debtor is indebted to thecreditor;

the creditor must be prejudiced bythe inaction of the debtor toproceed against the third person;

the creditor must have first pursuedall of the properties of the debtorwhich are not exempt fromexecution.

3. to impugn all of the acts which the debtormay have done to defraud him. (accion

pauliana)

Accion subrogotoria- the right of the creditor toexercise all of the rights of the debtor to bring all ofthe actions against third persons.-the creditor merely acts in the name and for theaccount of the debtor.EXCEPTION: Rights which are purely personal in

the sense that they are inherent n the person of thedebtor. (i.e. family rights)

Accion pauliana- impugning or attacking frauddirectly by means of a rescissory action at theinstance of the creditors who are prejudiced.

-subsidiary in character.

(Art. 1178)General rule: Rights of obligations or those rightswhich are acquired by virtue of an obligation aretransmissible in character.Exceptions:

1. where they are not transmissible in theirvery nature (i. e. purely personal rights);

2. where there are stipulations by the partiesthat they are not transmissible;

3. where they are not transmissible byoperation of law.

CHAPTER THREE

DIFFERENT KINDS OF OBLIGATIONS

Sec. 1. - Pure and Conditional Obligations

(Art. 1179)

Pure Obligation- one whose effectivity orextinguishment does not depend upon thefulfillment or non-fulfillment of a condition or uponthe expiration of a term or period;

characterized by the quality ofimmediate demandability, but theremust be a reasonable period of grace.

Condition- future and uncertain fact or event uponwhich an obligation is subordinated or made todepend.Term/period- a term will surely pass and may ormay not know when exactly; characterized by

futurity and certaintycondition- it may or may not happen

Conditional obligations- one whose effectivity issubordinated to the fulfillment or non-fulfillment of afuture and uncertain act or event.

Kinds of conditional obligation:1. Suspensive vs Resolutory

(Art. 1181)

Suspensive ResolutoryCondition precedent Condition subsequent

Results in theacquisition of rightsarising out of theobligations

Results in theextinguishment of rightsarising out of theobligations

The happening of thecondition gives birth tothe obligation.

The happening of thecondition extinguishesobligation

If the condition is notfulfilled, no juridical tie is

created.

If the condition is notfulfilled, juridical relation

is consolidated.

What is acquired by theobligee in theconstitution of theobligation is only merehope and expectancy,protected by law.

What is acquired by theobligee in theconstitution of theobligation are rights thatare subject to threat ordanger of extinction.



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2. Potestative, casual, and mixed(cause upon which the fulfillment depends)

(Art. 1182)

Potestative casual mixed

fulfillment ofthe obligationdepends uponthe will of aparty to theobligations

fulfillment of theconditiondepends uponchance/or uponthe will of athird person

fulfillment of theobligationdepends uponthe will of aparty to theobligation andpartly uponchance and/orwill of a thirdperson.

E f f e c t s

dependent on

the creditor-condition andobligation,VALID

dependent onthe debtor-condition andobligation,VOID

The obligation

and thecondition shalltake effect.(valid andenforceable)

The obligation

and thecondition shalltake effect.(valid andenforceable)

***The precept in the first sentence of Art. 182 isapplicable only to a suspensive condition. Hence,Resolutory + Potestative = VALID obligation andcondition (explanation at pp.114, Jurado)

***to avoid illusory obligation- Reason for theinvalidity of potestative condition dependent on thedebtor.

***Payment for previous indebtedness/pre-existingobligation although the condition is purelypotestative, affects the validity of the condition butkeeps the validity of the obligation because theobligation is not dependent upon the condition.

Simple potestative - valid; presupposes not justthe manifestation of the will but also the realizationof an external act.

pure potestative void; envisioned by Art. 1182

3. Possible vs Impossible

(Art. 1183)

Possible Impossible

when the condition iscapable of realizationaccording to nature,law, public policy, orgood customs.

when the condition isnot capable of realization according tonature, law, publicpolicy, or good customs.(contrary to goodcustoms or public policy,illicit, illegal)

E f f e c t s

The obligation and thecondition is valid andenforceable.

Annulment of theobligation that aredependent of suchimpossible condition**but is there is a pre-

existing obligation,therefore not dependentupon the fulfillment ofthe obligation for itsperfection, only theCONDITION is void, notthe obligation.

***If the impossible condition is attached to anobligation, the obligation itself is Void.

***If the impossible condition is attached to asimple donation or testamentary disposition, thecondition is not imposed, although the donationor testamentary disposition itself is valid.

***Total Absence of seriousness- reason why thelaw invalidate the impossible condition & thedependent obligation.EXCEPTION: gratuitous disposition/donation;because the moving force here is the generosity ofthe donor.

***The impossibility of the condition should bedetermined at the time the obligation is made or

constituted. 4. Positive vs Negative(Art. 1185)

Positive Negative

condition involves theperformance of an act

condition involves theomission of an act.

The event will happen The event will NOT



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or take place. happen or take place.

E f f e c t s

The obligation isextinguished as soon

as the time expires or ifit becomes indubitablethat the event will nottake place.

The obligation isrendered effective from

the moment the timeindicated has elapsed,or if it has becomeevident that the eventcannot occur.

***The intention of the parties, taking intoconsideration the nature of the obligation, shallgovern if no time has been fixed for the fulfillmentof the condition. The same rule applies toPOSITIVE CONDITION.

Constructive Fulfillment of SuspensiveCondition- The condition shall be deemed fulfilledwhen the obligor voluntarily prevents [the obligeefrom]its fulfillment [of the condition].(Art. 1186)

-applicable only to Suspensive conditionsand not to Resolutory conditions.

***The prevention must have been done for theprecise purpose of preventing the condition.

Effects of Suspensive Condition (Art. 1188)

Before Fulfillment After Fulfillment

Demandability as wellas the acquisition oreffectivity of rightsarising from theobligation is suspended.

The obligation arisesand becomes effective.

The right of the creditoris mere hope &expectancy.

The right of the creditoris perfected. (becomeseffective & demandable)

Effects are retroactive(applicable only toconsensual contracts)

Art. 1188, par. 1- Protection for the creditor file an injunction to stop the debtor

does not necessarily alwaysinvolves court action in spite thewordings of the law.

i.e. registration

Art. 1188, par. 2- protection for the debtor

Obligation subject tosuspensive condition

Obligation subject toperiod/term

There is no certainty ifthe obligation will befulfilled

It is certain that theobligation will be fullydemandable andenforceable.

Interests and fruits shallalso be delivered whenthe debtor paid/delivered bymistake.

Interests and fruits shallalso be delivered whenthe debtor paid/delivered bymistake.

Reason for retroactivity: The condition is onlyaccidental, not essential element of the obligation.

*** The principle of retroactivity must be temperedby principles of justice and practicability.

In obligations to give

the principal obligation as well as thefruits should be delivered

in unilateral obligations, the debtorshall appropriate the fruits and interestsreceived, unless there is a contraryintention on his part

in obligations to do or not to do

Courts shall determine in each case theretroactive effect of the condition thathas been complied with.

***In reciprocal obligations the fruits and interestmust be equally compensated between the parties.

***In unilateral obligation, the debtor shallappropriate the fruits and interests received unlessthe intention is different.

***In personal obligations, the courts will have todetermine in each case the retroactive effect of thecondition that has been complied.

Effect of Loss, Deterioration, or Improvement(Art. 1189)1. If the thing is lost without the fault of the

debtor, the obligation shall beextinguished;

2. If the thing is lost through the fault of thedebtor, he shall be obliged to paydamages; it is understood that the thing islost when it perishes, or goes out of



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commerce, or disappears in such a waythat its existence is unknown or it cannotbe recovered;

3. When the thing deteriorates without thefault of the debtor, the impairment is to be

borne by the creditor;4. If it deteriorates through the fault of the

debtor, the creditor may choose betweenthe rescission of the obligation and itsfulfillment, with indemnity for damagesin either case;

5. If the thing is improved by its nature, or bytime, the improvement shall inure to thebenefit of the creditor;

6. If it is improved at the expense of thedebtor, he shall have no other right thanthat granted to the usufructuary.

***Rule in Art. 1189 are natural consequences ofthe principle of retroactivity.

***Predicated on the fulfillment of the condition.

***Refer only to conditional obligations to give adeterminate thing

usufruct- right or enjoyment of a thing, theproperty of which is vested in another and to drawfrom the same all the profit, utilities, and advantageit may produce without altering the form/substanceof the thing.

Lossa thing is considered lost when it:

1. perishes;2. goes out of commerce impossible to

legally transfer or re-acquire3. disappears in such a way that its existence

is unknown or it cannot be recovered

Improvementsnatural accessions: alluvion, avulsion,abandoned river beds, island formed

***The debtor cannot ask for reimbursement forexpenses incurred for useful improvements orimprovements for pleasure.

***the debtor may have the right to remove suchimprovements provided it is possible to do sowithout damage to the thing or property.

Effect of Resolutory Condition:

Before Fulfillment After Fulfillment

The obligation is subjectto the threat of extinction.

The rights vested in theobligation isextinguished.

Placed in the sameposition with creditor inobligation withsuspensive condition.

Whatever is paid ordelivered to any of theparties should bereturned (return tostatus quo)

***There are no exceptions in the retroactive effectof resolutory condition; what was delivered need tobe returned.

***The fulfillment of a resolutory condition signifiesthe nonexistence of the obligation, what isnonexistent must no give rise to any effectwhatsoever.

******There is no provision of mutual compensationof fruits and interests but in connection with theconcept of justice, restitution in Art. 1190 carrieswith it the consequence of reimbursement for allthe expenses incurred for the production,gathering, and preservation of the fruits.

***Mutual restitution is absolute in resolutory

conditions because the obligation is extinguished,and it ceases to have effect thus does not carrywith it fruits and interests.***In obligations to do or not to do, the retroactiveeffects shall depend upon the discretion of thecourts.

***Art. 1189 is also applicable with regard theeffects of loss, deterioration, and improvements ofthings during the pendency of resolutory condition.

***In Resolutory condition the debtor is the

person obliged to return while the creditor is theperson to whom the thing must be returned.

Reciprocal obligations(Art. 1191)

remedy for the injured party: rescission orfulfillment



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Reciprocal obligation-created or established atthe same time, out of the same cause and whichresults in the mutual relationship of creditor anddebtor between the parties.

-characterized by reciprocity; one obligation

is correlative of the other.-bilateral in character.-tacit resolutory condition.

***General rule: If one of the parties fails tocomply with what is incumbent upon him,there is aright on the part of the other to rescind (or resolve)the obligation.

Right of rescission- belongs to the injured partyalone.

-must be invoked judicially by filing theproper action of rescission.

not absolute; the court is given thediscretionary power to fix a periodwithin which the obligor in default maybe permitted to comply with what isincumbent upon him.

implied in reciprocal obligations(Art.1191, par. 1)

***If the contract contains a resolutory provision byvirtue of which the obligation may be canceled orextinguished by the injured party in case of breachof obligation, judicial permission to cancel or

rescind the contract is no longer necessary. But theCourt may confirm such extra judicial rescission.

***If there is no express provision of rescission inthe contract, rescission should be invoked

judicially.

***The termination of a contract must not becontrary to law, morals, good customs, publicorder, or public policy.

***Notice is always important in rescission so thealleged infractor can question the propriety of the

rescission.

***Art. 1191 is not applicable to contracts ofpartnership. There are special provisions thatgovern the latter, thus the general provision will notprevail. The same applies to sales of real property(Recto Law) and sales of personal property byinstallment (Maceda Law).

***Rescission will only be rendered when thebreach is substantial so as to defeat the object ofthe parties in entering into the agreement.Case: Song Fo & Co. vs Hawaiian-Philippine

Co.

Alternative remedies to the injured party:--fulfillment of the obligation with payment fordamages (Specific performance with damages)--rescission of the obligation with payment fordamages (resolution with damages)Case: Songcuan vs IAC

***The injured party can still seek the rescission orresolution of the obligation even if he has opted tochoose the fulfillment of such obligation iffulfillment should become impossible.

Case:Ayson-Simon vs Adamos

***In awarding damages...

In case or rescission

only those elements of damages can be admitted thatare compatible with the idea ofrescission.

In case of specificperformance

Only the elements of damagescan be admitted which arecompatible with the idea ofspecific performance.

Effects of Rescission:

it is the duty of the court to require theparties to surrender whatever they mayhave received from the other (withoutprejudice to the obligation of the party whowas not able to comply with what isincumbent upon him).

Rescission can no longer be demandedwhen he who demands is no longer in theposition to return whatever he may beobliged to restore; neither can it bedemanded when the thing which is the

object of the contract is already in thepossession of a 3rd party who obtained it ingood faith.

Remedy for the latter will be an actionfor the transfer or conveyance fordamages.

If 3rd person obtained the property in badfaith, the injured party can still go after the



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property.

If it can't really be recovered, theremedy is for the injured party toproceed against 3rd person who actedin bad faith for damages.

***There can be partial rescission or fulfillmentunder Art. 1191.Case: Central Bank vs CA

***Rescission calls for mutual restitution. (Laperalvs Solid Homes)

***If there is arbitration in the contract, arbitrationshould be resorted to before asking for rescission(Korean Technology vs Lerma)

Effect of breach by both parties(Art. 1192)

Rules:1. the liability of the first infractor shall beequitably tempered by the courts.

-fair to both parties because thesecond infractor also derived, orthought he would derive, someadvantage for his own act orneglect

2. If it cannot be determined which of the

parties first violated the contract, the sameshall be deemed extinguished, and eachshall bear his own damages

-it is presumed that both at aboutthe same time tried to reap somebenefit

Sec. 2. - Obligations with a Period

Term or Period- interval of time, which exerting aninfluence on an obligation as a consequence of a

juridical act, either suspends its demandability orproduces its extinguishment.

Obligations with a period- obligations whosedemandability or extinguishment is subject to theexpiration of a term or a period.

Term/Period Condition

Interval of time requisites Refers to a fact

which is futureand certain

or event which isfuture anduncertain

Interval of timethat mustnecessarilycome, although itmay not beknown when

fulfillment A future anduncertain fact orevent that mayor may nothappen.

Merely exerts aninfluence uponthe time of thedemandability orextinguishment ofan obligation.

Influenceon

obligation

Exerts aninfluence uponthe veryexistence of theobligation itself.

No retroactive

effects unlessthere is anagreement to thecontrary.

Retroactive

effects

Has retroactive

effects

When a term or aperiod is leftexclusively to thewill of the debtor,the existence ofthe obligation isnot affected(potestative term

or period)

Effect ofwill of the

debtor

When acondition is lefton the exclusivewill of the debtor,the existence ofthe obligation isaffected (Void)(potestative

condition)

Classification of term or period1. suspensive or resolutory

a) suspensive (ex die) - demandable onlyupon the arrival of a day certain.

b) resolutory (in diem) demandable atonce, although it is terminated upon thearrival of a day certain

***day certain- which must necessarilycome, although it may not be known when.

2. legal, conventional, or judiciala) legal- term or period granted by law

b) conventional- stipulated by the partiesc) judicial- fixed by the courts

3. definite or indefinitea) definite- the date or time is known

beforehandb) indefinite- can only be determined by

an even which must necessarily cometo pass, although it may not be known



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when

effects of term or period:

suspensiveterm or period

the demandability of the obligationis extinguished, not the acquisition

of right or the effectivity of theobligation.

Resulotoryterm or period

The fulfillment or performance ofthe obligation is demandable atonce, but it is extinguished orterminated upon the arrival of theday certain or the expiration of theterm.

Case: PNB vs Lopez Vito

***Acceleration clause is a clause where upondefault of the debtor with one or more payment will

make the whole obligation demandable. This is avalid provision in contracts.

Effect of fortuitous event- relieve the contractingparties from the fulfillment of their respectiveobligations during the term or period.Case: Victoria's Planters vs Victorias MillingCo.

effect of advance payment or delivery- obligorcan recover what he has paid or delivered withfruits or interests. (Art. 1195)-applicable only to obligations to give

***There can be no right of recovery if the obligordelivers the thing voluntarily or with knowledge ofthe period or term or the fact that the obligation hasnot yet become due and demandable.

(Art. 1196)

General rule: a period designated for theperformance or fulfillment of an obligation ispresumed to have been established for the benefit

of both the creditor and the debtor.Case: de Leon vs Syjuco

***If the tenor of the obligation or from othercircumstances that the term or period has beenestablished in favor of the creditor or of the debtor,the general rule will not apply.

Judicial term or period(Art. 1197)

Judicial term or period- when fixed by acompetent court, the period can no longer be

judicially changed (Art. 1197, par. 3).-becomes a law governing the contract

between the party

Cases when court can fix term:

if the obligation does not fox a period, but itcan be inferred that a period was intendedby the parties

cannot be applied to contract forservices in which no period was fixedby the parties. In such contracts theperiod of employment is understood tobe implicitly fixed, in default of express

stipulation, by the period of thepayment of the salary of the employee,in accordance with the customuniversally observed throughout theworld.

cannot be applied to pure obligations

if the duration of the period depends uponthe will of the debtor

just and logical, because otherwise,there would always be the possibilitythat the obligation will never be fulfilledor performed.

if the debtor binds himself to pay when hismeans permit him to do so.

Case: Gonzales vs Jose

***No other action can prosper unless the courthas fixed the duration of the term or period.

***In potestative term or period, in order to preventthe obligation contracted from becoming ineffectiveby non fulfillment, the courts must fix the durationof the term or period.

***So long as such period has not been fixed bythe court, legally there can be no possibility of anybreach of contract or of failure to perform theobligation. Such cannot be raised for the first timeon appeal.

***Art. 1197 applies to a lease agreement, where acontract of lease clearly exists.



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***It is not necessary that the creditor will expresslyask in the complaint for the court to fix the period,such may be granted although the complaint doesnot ask for such relief.

***Two ultimate facts that need to be alleged in thecomplaint to describe an obligation with anindefinite period.

1. Facts showing that the contract wasentered imposing on one of the parties anobligation in favor of the other

2. facts showing that the performance of theobligation was left to the will of the obligor,or clearly showing, or from which aninference can be reasonably drawn that aperiod was intended.

***The action recognized by Art. 1197 may also

prescribe like any ordinary civil action. (Gonzalesvs Jose)

Extinguishment of Debtor's right to Period(Art. 1198)

(1) When after the obligation has beencontracted, he becomes insolvent, unlesshe gives a guaranty or security for the debt;(a) insolvency needs no judicial declaration(b) includes any case in which it would be

impossible financially for the debtor tocomply with his obligations

(c) such insolvency must not be pre-existing; arose after the constitution ofthe obligation

(d) if there is a guaranty or security for thedebt, the debtor, in spite of insolvency,does not lose his right to the period.

(2) When he does not furnish to the creditorthe guaranties or securities which he haspromised;(a) such failure renders the original

obligation pure and without anycondition, and consequently, the loanbecome due and demandable.

(3) When by his own acts he has impaired saidguaranties or securities after theirestablishment, and when through afortuitous event they disappear, unless he

immediately gives new ones equallysatisfactory;(a) there is a difference between effects of

impairment and effects of disappearance

1. if the guaranty or security isimpaired through the fault of thedebtor, he shall lose his right to thebenefit of the period;

2. if it is impaired without his fault, heshall retain his right;

3. if the guaranty or securitydisappears through any cause,even without the fault of the debtor,he shall lose his right to the benefitof the period

4. in either case of impairment ordisappearance, the debtor will not

lose his right to period if he gives anew guaranty or security which isequally satisfactory.

(4) When the debtor violates any undertaking,in consideration of which the creditoragreed to the period;

(5) When the debtor attempts to abscond.(a) Mere attempt of the debtor disappear

or run away from his obligation.

Sec. 3. - Alternative and Facultative Obligations

5. Conjunctive vs Alternative

Conjunctive Alternative

there are severalconditions, all of whichmust be realized

there are severalconditions but only onemust be realized.

Conjunctive obligation- all of the objects of theobligation are demandable at the same time

distributive obligation- when only one object ofthe obligation is demandable.

Alternative- comprehends several objectsor prestation which are due, but it may becomplied with by the delivery or performance of only one of them.

Performance of one of the obligation issufficient



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Facultative- comprehends only one objector prestation which is due, but it may becomplied with by the delivery of anotherobject or the performance of anotherprestation in substitution.

Alternative Obligations(Art. 1200)

General rule: The right of choice belongs orpertains to the debtor.

***Once the debtor has made the choice, and suchchoice is duly communicated to the creditor, theobligation becomes simple.

Exceptions:

when the right of choice belongs orpertains to the creditor

when it has been expressly granted to athird person.

Limitation to the right of choice:

debtor cannot choose those prestations orundertakings that are impossible, unlawful,or which could not have been the object ofthe obligation.

Prestations which could not have been the object

of prestation undertakings that are not included among

others those from which the obligor mayselect, or

those which are not yet due anddemandable at the time the selection ismade, or

those by reason of accident or some othercause, have acquired a new characterdistinct or different from that contemplatedby the parties when the obligation wasconstituted.

***Par. 2 of Art. 1200 contemplates a case in whichthe right to choose or select is NOT lost orextinguished altogether.

(Art. 1201)***Applicable to cases in which the choice isdependent on the debtor, creditor, or third person.

***Communication is needed to make the choiceeffective.

***No special form for the communication or

notification of choice, although it is always better tomake the notification either in a notarizeddocument or in any other authentic writing.

***Debatable: Can the creditor to whom theselection has been duly communicated impugnsuch selection?

***Once the choice is made by the debtor (orcreditor, or 3rd person) and such selection has beencommunicated, the obligation ceases to bealternative. The loss of the object of prestation

chosen and communicated extinguishes theliability.

(Art. 1202)

***When only one prestation is practicable, thedebtor loses his right of choice altogether. Theobligation becomes simple.

Art. 1202 Art. 1200, par. 2

Only one prestationwhich can be performed

There are still two ormore prestations that

can be performed.

Obligation is convertedto a simple onebecause the debtorloses his right of election

The obligation is stillalternative because thedebtor can still exercisehis right of election.

***When the debtor's right of choice is renderedineffective through the creditor's fault, the onlypossible remedy for the debtor is to bring an actionfor the rescission of the contract with damages.

(Art. 1203)

Art. 1204 Art. 1205

Right of choice ofdebtor

Right of choice of Creditor

General rule exception



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Factors to consider in knowing the effect of loss ofthe object of prestation

to whom the right of choice belong?

What is the cause of the loss of the objectof prestation? (fortuitous event or fault of

the debtor)

(for Summary of Effects of Loss of Obligation, seeAnnex A )

Facultative Obligations(Art. 1206)

Facultative obligation- obligation wherein onlyone object or prestation has been agreed upon bythe parties to the obligation, but which may becomplied with by the delivery of another object orthe performance of another prestation in

substitution.

Facultative vs Alternative

Only one object Object due Several objects

By the deliveryof another objector by theperformance ofanotherprestation insubstitution

compliance By the delivery ofone of theobjects or by theperformance ofone of theprestations whichare alternatively

due.Pertains only tothe debtor

choice May pertain tothe debtor, orcreditor, or thirdperson

Loss or impossibility ofthe objectextinguishes theobligation

Effect offortuitous

loss

Loss of all theobjects of prestation isnecessary toextinguish theobligation

Does not giverise to liability onthe part of thedebtor

Effect ofculpableloss

May give rise toa liability on thepart of the debtor

***Art. 1201 is applicable by analogy with respectto the time or moment when the substitution will

take effect.

***Communication is needed to make thesubstitution effective.

***Whatever may be the cause of the loss ordeterioration of the thing intended as a substitute,such loss shall not render the debtor liable. - DeanCapistrano

***Once the substitution has been made, thedebtor shall be liable for the loss or deterioration ofthe substitute on account of his delay, negligence,or fraud.

***Once the substitution is made, the obligation isconverted into a simple one.

Sec. 4. - Joint and Solidary Obligations

Joint obligation - obligation where there is aconcurrence of several creditors, or of severaldebtors, or of several creditors and debtors, byvirtue of which each of the creditors has a right todemand, and each of the debtors is bound torender, compliance with his proportionate part ofthe prestation which constitutes the obligation

obligacion mancomunada

Solidary obligation obligation where there is aconcurrence of several creditors, or of severaldebtors, or of several creditors and debtors, byvirtue of which each of the creditors has a right todemand, and each of the debtors is bound torender, entire compliance with the prestation whichconstitutes the obligation

obligacion solidaria

Collective Obligations(Art. 1207)

General rule: If there is a concurrence of several

creditors, or of several debtors, or of severalcreditors and debtors,the presumption is that theobligation is JOINT and not solidary.Exceptions:

1. when the obligation expressly states thatthere is solidarity;

jointly and severally

individually and collectively



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2. when the law requires solidarity; and,

Art. 927, 1824, 1911, 1915, 2146,2157, and 2194 NCC

Art. 110, RPC3. when the nature of the obligation requires

solidarity. Obligations arising from criminal

offenses or torts

Joint Divisible Obligations(Art. 1208)

***Each creditor can demand only for the paymentof his proportionate share of the credit, while thedebtors can be held liable only for the payment ofhis proportionate share of the debt.

***Joint creditor cannot act in representation of theothers; neither can debtor be compelled to answerfor the liability of the others.

***The payment or acknowledgement by one of thejoint debtors will not stop the running of the periodof prescription as to the others.

Joint Indivisible Obligations(Art. 1209)

-midway between joint and solidary obligationscharacteristics:

no creditor can act in representation of the

other no debtor can be compelled to answer for

the liability of the others.

joint with respect of the parties

indivisible with respect the fulfillment of theobligation

2 or more debtors 2 or more creditors

The fulfil lment of orcompliance with theobligation requires the

concurrence of all thedebtors, although eachfor his own share

The concurrence orcollective act of all thecreditors, although

each for his own share,is necessary for theenforcement of theobligation.

The obligation can beenforced only byproceeding against all

Not susceptible ofpartial fulfillment.

the debtors

***If one of the joint debtors fails to comply with hisundertaking, the obligation can no longer befulfilled or performed.

***The debtors who are ready to fulfill what wasincumbent upon them shall not contribute to theindemnity beyond the corresponding portion of theprice of the thing or of the value of the service inwhich the obligation consists. (Art. 1224)

***If one of the joint debtors be insolvent, theothers shall not be liable for his share.

***Debatable: If there are two or more creditors ordebtors, will the claim of a creditor addressed to a

single debtor or the acknowledgment made by oneof the debtors in favor of one or more creditors besufficient to interrupt the period of prescription?

***Indivisibility and solidarity are NOT identical.

Indivisibility vs Solidarity

Prestationwhichconstitute theobject of theobligation.

nature Legal tie or vinculum, andconsequently tothe parties ofthe obligation.

Plurality of subjects notrequired

requisites Plurality of subjects isindispensable.

Terminatedwhen theobligation isconverted intoone of indemnity fordamages

Effect ofbreach

Remains eventhough there isa liability on thepart of thedebtorsbecause of breach.

Kinds of solidarity

active among creditors tie or vinculum existing among several

creditors of one and the sameobligations by virtue of which each ofthem, in relation to his co-creditors,possesses the character of a creditoronly with respect to his share of theobligation but in relation to other debtor



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or debtors, represents all othercreditors.

Mutual representation

passive among debtors

tie or vinculum existing among several

debtors of one and the sameobligations by virtue of which each ofthem, in relation to his co-debtors,possesses the character of a debtoronly with respect to his share of theobligation, but in relation to othercreditor or creditors, represents allother debtors.

each solidarity debtors, as far as thecreditors are concerned, is the debtorto the entire amount

mixed among creditors and debtors

fundamental effect of active solidarity- creationof a relationship of mutual agency amongsolidary creditors by virtue of which the creditor isempowered against the debtor or debtors not onlythe rights which corresponds to him, but also allthe rights which correspond to the other creditors,with the consequent obligation to render anaccounting of his acts to such creditors.(equal mutual representation)

***relationship of mutual agency, basis of the

difference of the rules in Art. 1212 and 1215.

fundamental effect of passive solidarity- liabilityof each debtor for the payment of the entireobligation, with the consequent right to demandreimbursement from the others for theircorresponding shares, once payment has beenmade.

Passive solidarydebtor

Surety

Both are solidarily liable to the creditor for the

payment of the entire obligations

Liable for the paymentof the debt of anotherbut also for the paymentof a debt which isproperly his own.

Liable for the debt ofanother.

If he pays the entire If the surety pays the

obligation, he has aright to demandreimbursement from hisco-debtor of their sharein the obligation.

entire obligation, heacquires a right toreimbursement from theprincipal debtor of theentire amount he has

paid.

An extension of timegranted by the creditorto one of the solidarydebtors without theknowledge of the othersolidary debtors wouldnot have the effect ofreleasing the latter fromtheir obligation.

An extension of timegranted by the creditorto the principal debtorwould release thesurety from theobligation.

***Uniform bond or tie- when the creditors anddebtors are bound in the same manner and by thesame conditions or periods.

***Varied bond or tie- when the creditors anddebtors are not bound in the same manner and bythe same conditions or periods.

***In Art. 1211, the right of the creditor is limited tothe recovery of the share owed by the debtorwhose obligation has become mature leaving insuspense his right to recover the sharescorresponding to the debtors whose obligationshave not yet matured.Case: Inchausti & Co. vs Yulo

(Art. 1212)

Effects of Prejudicial acts of a creditor to...

debtor/debtors valid and binding becauseof the principle of mutual representationwhich exists among the creditors

solidary creditors the creditor whoperformed the act shall incur the obligationof indemnifying the others for damages.

***Art. 1212 refers to effect of prejudicial acts uponthe relationship of the creditor among themselves.

***Art. 1215 refers to the effect of prejudicial actsupon the entirely different relationship of thecreditors with the debtor or debtors. Shall result inthe extinguishment of the obligation



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***Prejudicial acts:

novation

compensation

confusion

remission

***The act of extinguishment, which is prejudicial tothe co-creditors, will be valid so as to extinguishthe claim against the debtors, but not with respectto the co-creditors whose right subsists and can beenforced against the creditor who performed theact alone.

Assignment of right(Art. 1213)

***Consent of other creditors in the assignment ofrights by another solidary creditor is needed.

***mutual agencyEffects if assigned without the consent:

1. if assigned to another co-creditor, there isno violation of the precept stated in Art.1213; Valid assignment

2. if the assignment is made to a third person,there is a violation of the precept in Art.1213; Invalid assignment

(Art. 1214)***Any creditor may demand (judicial or extra

judicial) the payment or performance of theobligation from one, some, or all of the debtors.

***Payment to be made on the creditor who madethe demand and to no other. If there is no demand,payment may be made by the debtor to anyone ofthe solidary creditors.

***In mixed solidarity, judicial or extra judicial

demand prohibits the debtor upon whom thedemand is made from making payment to anycreditor other than to the one who made thedemand; does not extend to other debtors uponwhom no demand has been made.

(Art. 1215)

Novation change or substitution of an obligationby another, resulting in its extinguishment ormodification, either by...

changing its object or principal condition, or

if prejudicial the creditor who effected

the novation shall reimburse the othersfor damages incurred by them

if beneficial the creditor who effectedthe novation is able to secureperformance of the new obligation,such creditor shall be liable to theothers for the share which correspondsto them, not only in the obligation, butalso in the benefits.

substituting another in place of the debtor,or creditor shall be liable to the acts of thenew debtor in case there is a deficiency inperformance or in case damage is incurredby the other solidary creditors

subrogating a third person in the rights ofthe creditor.

The obligation of the debtor andcreditor is not in reality extinguished.

If effected by subrogating a thirdperson in the rights of all the solidarycreditors, the creditor liable for suchnovation is liable to the creditors for theshare which corresponds to them in theobligation.

extinguishes the obligation but it creates anew one in lieu of the old.

The co-creditor who does not participate inthe novation of the obligation can have ashare in the benefits of the modification butnot in possible losses.

General rule: Extension of time for the payment ofthe obligation does not constitute novation.

***needed in order that an obligation may beextinguished by another which substitutes it.

Express declaration of novation

incompatibility of the old and newobligation.

***In suretyship, extension of time given to theprincipal debtor by the creditor without the consentof the surety extinguishes the latter's liability,except when the surety is liable for differentpayments or upon series of installments.



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Compensation weighing two obligationssimultaneously in order to extinguish them to theextent that the amount of one is covered by theamount of the other.

Confusion refers to the merger of the qualities ofcreditor and debtor in one and the same personwith respect to one and the same obligation.

Partial compensation or confusion:

there may be some doubt as to the part ofthe obligation to which the confusion orcompensation shall be applied.

Apply the rules on Application of payment

Total compensation or confusion:

obligation is extinguished altogether andwhat is left is the ensuing liability forreimbursement within each group

Remission act of pure liberality by virtue ofwhich the creditor, without having received anycompensation or equivalent, renounces his right toenforce the obligation, thereby extinguishing thesame either in its entirety or in the part or aspectthereof to which the remission refers.

Effects:

covers entire obligation:

total extinguishment of the obligation. the entire juridical relation is terminated

for the benefit of one of the debtors andcovers his entire share of the obligation.

Totally releases the debtor from thecreditors.

But the debtor is still bound to his co-debtors

for the benefit of one of the debtors andcovers only a part of his share of theobligation.

His character as a solidary debtor is not

affected covers the entire share of a solidary debtor

in the obligation or only part thereof.

Partial remission is a valid defense ifthe creditors proceed against any oneof the solidary debtors for the paymentof the entire obligation.

***Such rules cannot be applied if the debt hadalready been totally paid by anyone of the solidarydebtors before the remission is effected.

***If one of the solidary creditor was able to collect

the entire amount from one or some, or all of thesolidary debtors, the obligation is totallyextinguished and that creditor must render anaccount to his co-creditors.

(Art. 1216)

***Creditor may proceed against any one, or some,

or all of the solidary debtors simultaneously.

***Bringing of an action against the principal debtorto enforce the payment of the obligation is notinconsistent with, and does not preclude thebringing of another to compel the surety to fulfill hidobligation under the surety agreement.

***A creditor's right to proceed against the suretyexist independently of his right to proceed againstthe principal.

***if the obligation is joint and several, the suretyhas the right to proceed even against the suretyalone.

***obligation of the surety is the same as that of aprincipal.

***The surety is not entitled, as a matter of right, tobe given notice of the principal's default.Commencement of the suit is a sufficient demand.

(Art. 1217)

***Where payment is made by one of the solidarydebtors, the effect is either the total of partialextinguishment depending upon whether the entireamount of the debt is paid or only part thereof.

***Once payment is made by one of the solidarydebtors of the entire obligation,, there arisesimmediately a consequent right of such debtor to



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claim from his co-debtors the share whichcorresponds to them, with interest for the paymentalready made.

***the right is not available to a debtor who makes

the payment after the obligation has prescribed orhas become illegal.

***The interest shall be computed not from the timepayment was made, but from the time the debtbecame due.

If one of the solidary debtors become insolvent, hisshare shall be borne by all his co-debtors, inproportion to the debt of each. (par. 3, Art. 1217)

(Art. 1219 1221)

Effect of Loss or Impossibility of Performance1. NOT due to the fault of the solidary

debtors

Obligation is extinguished2. Due to the fault of one of the solidary

debtors

the obligation is converted into anobligation of indemnity for damages,but the solidary character of theobligation remains

3. Fortuitous event

the obligation is converted into an

obligation of indemnity for damages,but the solidary character of theobligation remains

unjust enrichment reason or philosophy behindArt. 1220

***a solidary debtor who paid the entire amount ofthe obligation does not step into the shoes(subrogation) of the creditors because he does notacquire the same right to collect the entire amountof the obligation from his co-debtors. He is onlyentitled to the proportionate share of each of the

co-debtors.

(Art. 1222)***The creditor/s may proceed against any of thesolidary debtors or all of them simultaneously forthe payment of the obligation, but whether only oneor all of the solidary debtors are sued jointly, anysoliadary debtor may interpose against the claim of

the creditor or creditors:

Defenses available to a solidary debtor

defenses derived from the very nature ofthe obligation

payment or performance; res judicata;prescription; those which invalidate thecontract such as mistake, violence,undue influence, fraud, etc...

defenses personal to him or pertaining tohis own share

minority; insanity, etc..

defenses personal to the others, but onlyas regards that part of the debt for whichthe latter are responsible.

Merely a partial defense

Sec. 5 Divisible and Indivisible Obligations

6. Divisible vs Indivisible

Divisible Indivisible

condition is susceptibleof partial realization orperformance without theobligation in essencebeing changed.

condition is notsusceptible to partialrealization or performance because,otherwise, the essenceof the obligation will bechanged.

If separated into parts,

its essence is notchanged or its value isnot decreaseddisproportionately,because each of theparts into which it isdivided arehomogeneous andanalogous to eachother as well as thething itself.

If separated into parts,

its essence is changedor its value decreaseddisproportionately.

The divisibility of the [performance] obligation ISNOT divisibility of the thing or the prestation whichconstitutes the object of the obligation.

***The divisibility or indivisibility of the object itselfis a very important factor, probably the mostimportant, in determining whether the prestationwhich constitutes the object of the obligation issusceptible to partial performance, or not.



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***For a thing to be considered divisible, it isimportant that it must be possible for reconstructioninto its condition prior the division, by uniting thedifferent parts into which it had been divided.

Three kinds of Division

Quantitative when the thing can mematerially divided into parts and such partsare homogeneous to each other.

Movable- parts are actually separatedfrom each other

immovable- the limits of the parts arefixed by metes and bounds

Qualitative the thing can be materiallydivided but the parts are not exactlyhomogeneous. (i.e inheritance)

Ideal/Intellectual the thing can only beseparated into ideal or intellectual parts,not material parts. (i.e. co-ownership)

(Art. 1223)One debtor one creditor- the divisibility is of littlesignificance.General Rule: the creditor cannot be compelled topartially receive the prestation in which theobligation consists; neither may the debtor may therequired to make partial fulfillment.Exceptions:

when the obligation expressly stipulates

the contrary when the different prestations constituting

the objects of the obligation are subject todifferent terms and conditions.

When the obligation is in part liquidatedand in part unliquidated.

Plurality of debtors and creditors- the effect of thedivisibility or indivisibility of the obligation shalldepend whether the obligation is joint or solidary.

Joint

Divisible- Art. 1208 shall apply

Indivisible- Art. 1209 and 1224 Solidary Art. 1211- 1222 shall apply

(Art. 1224)Breach of joint indivisible obligation

the obligation can be enforced only byproceeding against all of the debtors

if any of the debtors fails or refuse to

comply with the obligation, it is convertedinto indemnity for damages

the debtor who failed or refused to complywith his obligation shall bear the burden ofpaying all of the damages suffered by the

creditors the other debtor may also recover for

damages form the debtor at fault.

(Art. 1225)True test of divisibility: WON the obligation issusceptible of partial compliance.

***The susceptibility of partial compliance shouldbe understood in the sense of the possibility ofrealizing the end or purpose which the obligation

seeks to attain. (Applies to obligations to give, todo, or not to do)

To giveThe divisibility or indivisibility of the obligation is themost important factor.

definite & indivisible obje ct- not susceptibleof partial fulfillment (Absolute rule)

divisible object- susceptible of partialperformance. except:

when the law provides for itsindivisibility which may be inferred or

presumed either; from the fact that although the

object of the obligation can beseparated in parts, yet each partconstitutes a necessarycomplement of the other parts

from the very purpose of theobligation itself

it is so intended by the parties

express

implied

To Do indivisible prestation - not susceptible of

partial fulfillment (Absolute rule)

In order to determine whether theprestation is divisible or not, the objector purpose of the obligation mustalways be considered

it is divisible when it has for its



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object...1. the execution of a certain number or

days of work,2. the accomplishment of work by

metrical units; or

3. the accomplishment of analogousthings which by their nature aresusceptible of partial performance.

Divisible prestation - susceptible of partialfulfillment, with certain qualifications.

when the law provides for itsindivisibility

it is so intended by the parties

Not to Do

The determination of the character of theobligation will depend upon the sounddiscretion of the court

Sec. 6 Obligations with Penal Clause

one in which an accessory undertaking isattached for the purpose of insuring itsperformance by virtue of which the obligorbound to pay a stipulated indemnity orperform a stipulated prestation in case ofbreach.

Penalty or penal clause is an accessoryobligation attached to the principal

obligation

Purposes of penalty:

insure the performance of the obligation(funcion coercitiva o de garantia); generalpurpose

liquidate the amount of damages to beawarded to the injured party in case ofbreach of the principal obligation (funcionliquidatoria); compensatory; pre-agreedamount for the damages

to punish the obligor in case of breach of

the principal obligation (funcionestrictamente penal); punitive

Kinds of penalty

As to origin

Legal Conventional

Constituted by law Constituted by

agreement of theparties

As to purpose

Compensatory

(for reparation)

Punitive

Established for thepurpose of indemnifyingthe damages sufferedby the obligee or creditor in case ofbreach

Established for thepurpose of punishingthe the obligor or debtorin case of breach

As to Effect

Subsidiary/Alternative Joint/Cumulative

Only the penalty may bedemanded in case of

breach

both the penalty and theprincipal obligation may

be demanded

(Art. 1226)***Penalty may be considered as reparation orsubstitute for damages or as a punishment in caseof breach of the obligation.

Reparation the question of damage is resolved,since the stipulated indemnity or prestationrepresents a legitimate estimate made by thecontracting parties of the damages caused by thebreach of the obligation.

proof of actual damage is not needed general rule

Punishment the question

Obligations and Contracts -- Jurado Reviewer

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