Art. 1156. OBLIGATION DEFINITION - An obligation is a juridical necessity to give, to do, or not to do.

Active subject Obligee or Creditor Possessor of a right.

Passive subject Obligor or Debtor Has the duty of gicing, doing or not doing.

Object or Prestatation Object to give, act to do or not to do Subject matter of the prestation

Cause Vinculum or Juridical Tie The reason why the obligation exist.

Form Manner in the obligation.

Elements of an Obligation:

Law 1.Contracts2.Quasi-Contracts3.Acts or Ommissions Punishable by Law4.Quasi-delicts5.

Law Ex Lege Duty to pay the taxes or to support one's family.

Contracts Ex contractu Duty to repay a loan.

Quasi-contracts Ex quasi contractu Duty to refund an "over change" of money.

Crimes or Acts or Omissions punished by Law Ex malefici or ex delicto Return a stolen carabao.

Quasi-delicts or Torts Ex quasi-delicto or ex-quasi malefacio Repair a damage due to negligence.

Art. 1157. SOURCES OF OBLIGATION - The following are the different sources of obligation:

Art. 1158. LAW - 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.

**Governed by the Law itself.**Agrements of the parties not necessary.**Only those expressly provided are enforceable.

Do ut des - I give that you may give.1.Do ut facias - I give that you may do.2.Facio ut des - i do that you may give.3.Facio ut facias - I do that you may do.4.

So-called Innominate Contracts ("contratos innominados")

Art. 1159. CONTRACTS, EX-CONTRACTU, CULPA-CONTACTUAL - Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

Art. 1160. QUASI-CONTRACTS, DELICTS, QUASI EX-DELICTO - Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book.

Juridical relation resulting from a lawful, voluntary, and unilateral act, and which has for its purpose the payment of indemnity to the end that no one shall be unjustly enriched orr benefited at the expense of another.

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QUASI-CONTRACTS

A person voluntarily takes charge of another's abandoned business or property without the owner's authority.-

Negotiorun gestio (Officious Management)1.

Something is received when there is no right to demand it and it was unduly delivered thry mistake.-

Solutio Indebiti (Undue payment)2.

Kinds of Quasi-Contracts:

Art. 1161. CRIMES, ACTS OR OMISSIONS PUNISHABLE BY LAW, EX-DELICTU, EX, MALEFACIO, CULPA CRIMINAL - Civil onligations arising from the criminal offenses shall be governed by the penal laws, subject to the provision of Article 2177, and of the pertinent provisi ons of Chapter 2, Preliminary Title, on Human Relations, and of the title XVIII of this book, regulating damages.

Civil liability is a necessary consequence of criminal liability (Art. 100, RPC)-

Gen. Rule

Criminal Contempt1.Gambling2.Traffic violations3.

Crimes without criminal liability:-

Offended party reserves the right to institute it separately.-

Obligations arising acts or omissions claimed to be criminal;1.The law so provides independent civil action:-

Exceptions:

OBLIGATIONS AND CONTRACTS - PRELIM REVIEWERTuesday, December 07, 2010

2:56 PM

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Obligations arising acts or omissions claimed to be criminal;1.Violation of constitutional rights and liberties of individuals;2.Defamation, fraud or physical injuries;3.Refusal or failure of members of police force to render protection to life or property.4.

When a cirminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action UNLESS the offended party waives the civil action, reserves the right to institute it separately or institutes civil action prior to criminal action.

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RCP, Rule 111

Restitution1.Reparation of the damage caused2.Indemnification for consequential damages.3.

Extent of Civil liability (Art 104, RPC)

Art. 1162. QUASI-DELICTS, EX QUASI-MALEFACIO, CULPA AQUILIANA, TORTS - Obligations derived from quasi-delicts shall be governed by the probisions of Chapter 2, Title XVII of this Book, and by special laws.

Unjust Enrichment (Quasi- contract)1.Unilateral declaration of will2.Abuse of rights (Quasi-delict)3.

New Sources of Obligation:

Duty on the part of the defendant to protect the plaintiff from injury of which the latter complains 1.Failure to perform such duty2.An injury to the plaintiff through such failure.3.

Elements of Negligence

Negligence as a source of obligation-

Culpa Aquiliana (a quasi-delict)1.

Negligence in the performance of a contract-

Culpa Contractual 2.

Criminal negligence-

Culpa Criminal3.

Kinds of Negligence

Distinctions between Culpa Aquiliana and Culpa Contractual

CULPA AQUILIANA CULPA CONTRACTUAL

Negligence as a source of Obligation Negligence in the performance of a contract

Fault or negligence which constitute an indipendent source of obligation between the parties not previously bound

Fault or negligence of a debtor as an incident in the fulfillment of a contract.

Negligence should be the approximate cause of damage.

Distinctions between Quasi-delicts and Crimes

AS TO QUASI DELICT CRIMES

Nature of the right violated

Private rights; wrong against the individual Public rights, wrong against the state

Condition of the mind Criminal intent is not necessary. Possible that there will be no criminal charge but only civil liability.

Criminal intent is necessary.

Legal basis of liability Actionable in any act or omissions wherein fault or negligence intervenes Not as broad as quasi-delict, there must be a law punishing it.

Liability for damages To the injured party Some do not have civil liability (when nobody is injured)

Forms of redress Reparation of the injury suffered by the injured party Fine and punishment

Amount of evidence Preponderance of evidence Beyond reasonable doubt

Compromise Can be compromised as any other civil liability Can never be compromised.

Requisites of Liability under Quasi-DelictsWrongful act1.Damage or injury2.Direct causal connection.3.

Art. 1163. OBLIGATION TO GIVE - 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.

Gen. Rule: Pending delivery, the debtor /passive subject has the obligation to take care of the object with the proper diligence of a good father of a family.

Required by Lawa.Stipulation of the parties requiring another standard of care.b.

Exception:

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Stipulation of the parties requiring another standard of care.b.

** Non nudis pactis , sed traditione domina rerum trasferentum - Ownership of things is transferred not only by mere agreements but ny delivery.

Power belonging to a person over a specific thing , without a passive subject individually determined , against whom such right may be personally exercised.

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Rights of Ownership

Rights of Possession

Examples□

Gives a person a direct and immediate power over a thing, which is susceptible of being exercised not only against a determinate person but against the whole world.

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REAL RIGHTS - to give

Power belonging to one person to demand of another , as a definite passive subject, the fulfillment of a prestation.-

PERSONAL RIGHTS - to do or not to do

Art . 1164. RIGHT TO FRUITS - The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acqu ire no real right over it until the same has been delivered to him.

Art. 1165. DETERMINATE VS INDETERMINATE OBJECT - 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.

To compel specific performance-

To recover damages , in case of breach of obligation, exclusive or in addition to specific performance .-

Entitlement of fruits, interests from the time obligation to deliver arises.-

DETERMINATE OBJECT

To ask for performance of obligation-

To ask that the obligation be omplied with at the expense of the debtor. -

To recover damages in case of breach of contract.-

GENERIC OBJECT/PRESTATION

1st Par: Right to compel delivery (determinate/specific prestation)

2nd par: Action for substituted performance (creditor may ask compliance by 3rd person at debtor's expense )

3rd Par: Right to damages

Art. 1166. RIGHT TO ACCESSORIES AND ACCESSIONS - The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned.

Obligation to deliver the object includes with it the accessories and accessions.-

Gen. Rule - (DETERMINATE PRESTATION)

Required by lawa.Exclusion is expressly stipulated by the partiesb.

Exception to the Rule:

Those things which are used for the preservation of another thing or more important, have for their object the completion of the latter for which they are indispensable or convenient.

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ACCESSORIES

Includes everything which is produced by a thing, or which is incorporated or attached thereto, either naturally or artificially .-

ACCESSIONS

NOTE: Provide examples.

Art. 1167. OBLIGATION TO DO - If a person obliged to do something fails to do it, the same shall be executed at his cost.This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decree d that what has been poorly done be undone.

1st Par Failure to do: May be executed by a 3rd person subject for reimbursement by the debtor.

2nd Par Contravention of the tenor of the obligation: action for damages

3rd Par Poorly Done: To undo what has been undone, action for damages???

** No action for compliance because that would be involuntary servitude (unconstitutional)

Not to do what should be done.1.To shoulder the cost to undo what should not have been undone.2.To pay damages.3.

Duties of Obligor:

Art. 1168. OBLIGATION NOT TO DO - When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense.

Art. 1169. CONCEPT OF DELAY/DEFAULT - 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.However, the demand by the creditor shall not be necessary in order that delay may exist:

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However, 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; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing i s to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper m anner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.

Nonperformance of obligation as agreed to time.-

DELAY (MORA)

UNILATERAL OBLIGATION - there is no delay when there is no demand.RECIPROCAL OBLIGATION -The performance of one demands/____ the performance of the other.

If extrajudicial - date of demanda.If uncertain - date of filing of complaint b.

When to determine the demand period for purposes of computing of payment of interests of charges):-

Demand may ba in any form provided it can be proved.-

Demand must refer to the prestation that is due and not another.-

Even if without demand, debtor incurs delay if he expressly acknowledges his delay.-

Gen. Rule: Creditor should make demand before debtor incurs delay.

Obligation itself indicates that there is a perioda.Law has a specific period for the performanceb.

Law expressly so declares:1.

Insertion of the clause "without further notice"-

Express stipulation by the parties2.

Designation of time is the controlling motive.3.

Caused by some act or fault of the debtora.Impossibility caused by some fortuitous eventb.

Demand would be useless. 4.

** There can only be delay in POSITIVE Obligations and no delay in NEGATIVE and NATURAL OBLIGATIONS.

Exceptions to the Rule:

KINDS OF MORA

Delay on the part of the DEBTOR.-

Requisites of MORA SOLVENDI

Prestation is demandable and already liquidated.a)The debtor delays performance (fault is on the debtor)b)

Mere reminder is not a demand because benevelonce and tolerance of the creditor has ended.-

That the creditor demands judicially or extrajudicially.c)

Effects of MORA SOLVENDI

Determinate prestation - delay places the risk of the thing on the debtora)Damagesb)

MORA SOLVENDI 1.

Delay on the part of the CREDITOR.-

Offer of performance by the debtor who has the required capacitya)Offer must be to comply with the prestation as it should be performedb)Creditor refuses the performance without just causec)

Requisites of MORA ACCIPIENDE

Responsibility of the debtor of the thing is reduced or limited to fraud and gross negligence.a)Debtor is exempted from the risk of the loss of the thing, which automaticall pass to the creditor.b)All expenses incurred by the debtor for the preservation of the thing after the delay will be chargeable to the creditor.c)The creditor becomes liable for the damages.d)The debtor may relieve himself of the obligation by the consignation of the thing.e)

Effects of MORA ACCIPIENDE

MORA ACCIPIENDE2.

Parties to a bilateral contract can regulate the order in whch they shall comply with their reciprocal prestation.-

One is not compelled to perform his prestation when the other contracting party is not yet prepared to perform his prestation .-

Default of one COMPENSATES the default of the other.-

Effect of COMPENSATIO MORAE

COMPENSATIO MORAE3.

CESSATION OF EFFECTS OF MORA/INSTANCES WHERE THERE IS NO DELAY

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Express renunciationa.

Creditor grants the extension of the timea)Creditor agrees to a NOVATION of the obligation (replacement)b)

Implied renunciationb.

Renunciation by the creditor1.

Prescription of action2.

** Natural delay - Equity** Legal delay - Agreement

Art. 1170. - INSTANCES IN LIABILITY FOR DAMAGES - Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

FRAUD (DOLO)A.Voluntary execution of the wrongful act, or a willfull ommission, knowing and intending the effects which naturally and necessarily arise from such acts.

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Deliberate and intentional evasion of the normal fulfillment of obligations.-

Fraud in the performance of pre-existing obligation-

Cannot cover mistake and errors of judgement made in good faith, ergo synonymous to bad faith (dishonest purpose or some obliquity and conscious doing of wrong)

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Fraud in the performance1.

Dolo causantea.Dolo incidenteb.

Fraud in the execution/birth of the contract2.

Kinds of Fraud:

FRAUD DOLO CAUSANTE DOLO INCIDENTE

WHEN PRESENT

During the performance of a preexisting obligation

During the perfection of a contract

During the perfection of a contract

PURPOSE Evade the normal fulfillment of obligation

Secure the consent of another to enter into a contract

Secure the consent of another to enter into contract BUT fraud was not the principal inducement in making the contract

RESULTS IN Breach of the obligation Vitiation of consent: voidable contract

Does not result to vitiation of consent

GIVES RISE TO

Right in favor of creditor to recover damages

Right of the innocent party to annul the contract

Gives rise to to a right of the innocent party to claim for damages

Note: Renunciation of future fraud is against public policy.

Time of ComissionA.Fraud may be past or future.

Fraud in obtaining consent1.

Dolo causante (causal fraud)a)Dolo incidente (incidental fraud)b)

Fraud in performing a contract 2.

MeaningB.

Liability for fraud

Art. 1171. DAMAGES ARISING FROM FRAUD - Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.

Art. 1172. NEGLIGENCE - Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.

Distinction between Fraud and Negligence

DOLO CULPA

There is deliberate intention to cause damage or prejudice Although voluntary, no deliberate intention

Liability arising cannot be mitigated Can be reduced

Waiver of action to enforce liability due to future fraud is void. Waiver of action to enforce civil liability due to future culpa may be allowed.

Art. 1173. DEGREES OF CULPA - 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, of the time and of the place. When negligence shows bad fai th, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a g ood father of a family shall be required.

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**When negligence in bad faith, fault will apply.

Stipulated by the parties,1.If without 1, that required by law.2.If without 2, deligence of a good father of a family.3.

Gen. Rule:

Art. 1174. FORTUITOUS EVENTS - Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.

Gen. Rule - No liability on the part of the debtor

Specified by law1.Declaration/stipulation by the parties2.Assumption of risk3.

Exceptions:

Cause of the unforeseen events and unexpected occurrence or the failure of the debtor to comply with his obligation must be independent of the human free will.

1.

Impossible to foresee or impossible to avoid.2.Occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner.3.Obligor must be free from any participation in the aggravation of the injury resulting to the creditor (no concurrent negligence).4.

Requisites of Fortuitous Events:

When the effect is found to be partly resulting from the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God (NPC v CA)

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Effect of concurrent negligence:

Art. 1175. USURIOUS TRANSACTIONS - Usurious transactions shall be governed by special laws.

Rate of interest

Art. 1176. RESERVATION - The receipt of the principal by the creditor without reservation with respect to the interest, shall give rise to the presump tion 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 presumpti on that such installments have been paid.

If the debt produces interests, payment of the principal shall not be deemed to have been made unless the interests have been covered.-

Presumptions are rebuttable.-

Gen Rule

1st Par C paid P5,000 (Principal) in the month of January. Assumption is that INTEREST (P50.00) is said to have been paid also

2nd Par C paid for P5,050 in the months Jan, Feb and April. Assumption is that March has also been paid.

Examples: Principal: P5,000.00 Interest: P50/month

1st Par Receipt should reveal that such payment does not include the interest.

2nd Par Receipt should reveal that payment made on April is for March parment.

** Reservation should be made:

Art. 1177. SUCCESSIVE RIGHTS OF THE CREDITOR - The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in hi s person; they may also impugn the acts which the debtor may have done to defraud them.

Demand for the fulfillment of the specific performance.1.Right to attahment of the properties which the debtor may own (writ of attachment)2.Accion subrogatoria3.Accion pauliana4.

SUCCESSIVE RIGHTS OF THE CREDITOR:

Action the creditor may exercise in place of the negligent debtor in order to preserve or recover for the patrimony of the debtor the product of such action, and then obtain therefrom the satisfaction of his own credit.

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Insolvency of the debtora.Malicious or negligent inaction of the debtorb.The credit of a person against the third person is certain, demandable and liquidatedc.Debtor's right against the 3rd person must be patrimonial. (inheritable)d.

Requisites of Accion Subrogatoria

ACCION SUBROGATORIA

Creditors have the rights to revoke acts which the debtor may have done to defraud them.-

ACCION PAULIANA

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Credit should be prior to the alienation1.Debtor has a subsequent contract giving advantage to a third person2.Fraudelent act3.3rd person who received is an accomplice4.

Requisites of Accion Pauliana

ACCION SUBROGATORIA ACCION PAULIANA

Not essential that credit is prior to the alienation Credit should be prior to the alienation

Intent to defraud creditors is required If contract rescinded is onerous, there must be fraudelent intent

No period of prescription Period of prescription is 4 years.

Distinction of Accion subrogatoria versus Pauliana

Art. 1178. TRANSMISSIBILITY OF RIGHTS - Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary.

All rights acquired by virture of an obligation are transmissible-

Gen Rule

Express stipulation1.Nontransmissibility by their nature2.Non transmissbility by law3.

Exception

A- debtor; B-creditorIf A dies, B can claim against the estate of A.

If B dies, B's right to claim is transmissible to his heirs.

CHAPTER III: DIFFERENT KINDS OF CIVIL OBLIGATIONS

Example:

PRIMARY OBLIGATION

Pure, with a term, alternative and facultative, joint and solidary, divisible and indisible, with a penal clause.

SECONDARY OBLIGATION

Unilateral and bilateral, real and personal, determinate & generic, positive and negative, legal, conventional and penal, individual and collective, accessory and principal, simple or multiple, possible and impossible.

Art. 1179. PURE VS CONDITIONAL OBLIGATION - Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once.

Performance does not depent on anything.-

PURE

Obligation arises by the happening of the event-

Suspensivea)

Obligation is extinguished by the happening of the event-

Resolutoryb)

2 KINDS OF CONDITION□

Aquisition of rights/extinguishment of right depends on the event which consitutes condition.-

CONDITIONAL

PURE obligation is DEMANDABLE AT ONCE.-

Resolutory is DEMANDABLE AT ONCE.-

Gen. Rule

Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happ ening of the event.

Future and Uncertain event1.Possible2.Unknown past 3.Term - not certain but must necessarily happen.4.

Conditions:

Art. 1180. OBLIGATION DEPENDENT ON TIME - When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.

** Creditor has to ask the court to fix a period. **Court can not force the debtor to comply. **Both parties can still agree to change the period fixed by the court.**Correlate with Art. 1197.

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Art. 1181. CONDITIONAL OBLIGATION - In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.

** Correlate with 1179.

Art. 1182. KINDS OF CONDITION (cause or origin)- When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in c onformity with the provisions of this Code.

Kinds of Condition as to cause or origin:

Depends upon the will of one of the parties.-

** If fulfillment depends solely on the will of the DEBTOR - VOID** If fulfillment depends solely on the will of the CREDITOR - VALID**Resolutory Potestative (Facultative) - VALID

POTESTATIVE1.

Depends exclusively upon chance or will of the third person or other factors and not upon the contracting parties.-

** Always valid

CASUAL2.

Depends upon the will of the contracting parties and other circumstance.-

MIXED3.

Art. 1183. IMPOSSIBLE CONDITIONS - Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid.The condition not to do an impossible thing shall be considered as not having been agreed upon.

Gen Rule - Obligations are extinguished.

Pre-existing obligation1.Divisible obligation2.Simple and renumentary obligation3.Testamentary disposition4.Negative impossible things5.

Exceptions:

Physical1.Juridical - contrary to law, morals, good customs, and public policy,and those which restricts constitutional rights.2.

Impossibility may either be:

** Effective for a determinate time.** Obligation expires when the time has lapsed or if it has become indubitable that the event will not take place.** If there is no perio, rule on PAR 2 of ART 1185 is controlling.

Art. 1184. POSITIVE OBLIGATIONS - 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.

Art. 1185. NEGATIVE CONDITIONS - The condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time indicated has elapsed, or if it has become evident that the event cannot occur.If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, beari ng in mind the nature of the obligation.

2nd Par Taking into account the nature of the obligation, the time which the parties contemplated is controlling.

Art. 1186. CONSTRUCTIVE OR PRESUMED FULFILLMENT - The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

With intention of the obligor/creditor to prevent fulfillment of the condition with actual prevention of the compliance.-

Constructive Fulfillment

Reason: One must not be made to be excused by his own fault.

Art. 1187. RECIPROCAL OBLIGATIONS - The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fr uits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shal l appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention o f the person constituting the same was different.In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that ha s been complied with.

Gen Rule: Retroacts to the DAY the OBLIGATION was CONSTITUTED.

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RECIPROCAL1.

Fruits and interests shall retain in each possession. (This will be deemed constituted.-

Example: A will sell the car to B if A passes the Bar Exam

UNILATERAL OBLIGATION:2.

Fruits and interests should be with A.-

Example: A will give B 100K if A passes the Bar Exam

PAR. 1

Art. 1188. ACTION TO PRESERVE AND RECOVER - The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right.The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition.

1st Par Action to preserve creditors rights Ex. Ask for security if the debtor is about to be insolvent; ask the court to prevent alienation or concealment pendente conditionae.

2nd Par Right to debtor to recover what was paid by mistake

Note: if payment was not by mistake: 1. If the condition is fulfilled, no recovery because of retroactivity2. If the condition is not fulfilled, there should be a recovery unless a pure donation was intended.

Art. 1189. EFFECT OF OBLIGATION - When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the c ondition:(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered; (3) When the thing deteriorates without the fault 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 between the rescission of the obligation and its fulfillment, with indemnity for damages in either case; (5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor; (6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.

WITHOUT FAULT WITH FAULT

LOSS Obligation is extinguished Value of the thing + damages (Art. 1170)

DETERIORATION Creditor bears the impairment Creditor can demand in two ways:1. Fulfillment + damages; OR2. Rescision + damages

IMPROVEMENT (by nature)Benefits the creditor (retroactivity of conditional obligations

(by the debtor)- Usufructory Rights, the debtor can:1. take away the improvement provided this will not cause destruction to the pricipal object.2. usufruct

Gen Rule - where the improvement is not susceptible of being taken away, usufruct (together with accessories). There should be consent by both parties.

Art. 1190. RESOLUTORY CONDITION - When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received. In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid do wn in the preceding article shall be applied to the party who is bound to return.As for the obligations to do and not to do, the provisions of the second paragraph of Article 1187 shall be observed as regar ds the effect of the extinguishment of the obligation.

1st Par Fulfillment of condition: return to each

2nd Par Loss, deterioration, improvement (Art 1191)

3rd Par Obligations to do and not to do (1187) : REVERSAL OF PERSONALITY

Art. 1191. RIGHT TO RESCIND - The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in eit her case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Art icles 1385 and 1388 and the Mortgage Law.

Right to cancel or resolve the contract or reciprocal obligation in ase of non-fulfillment on the part of one.-

Given to the injurred party who may choose to demand Fulfillment or Rescision.

RIGHT TO RESCIND

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Given to the injurred party who may choose to demand Fulfillment or Rescision.-

This right is not absolute, the injurred party should apply to the court a decree of rescision.1.Gen. Rule: POWER TO RESCIND is IMPLIED in RECIPROCAL ones.

If the obligation has NOT BEEN PERFORMED yet, extrajudicial declaration of the party willing to perform would suffice, can refuse to perform if the other party is not yet ready to comply.

1.

Fix a date for the debtor to performa.Rule for rescision.b.

If the INJURED PARTY has already PERFORMED, CANNOT extrajudicially rescind IF the other party OPPOSES the RESCISION. In this case, the court may:

2.

Exceptions:

Art. 1192. BREACH OF BOTH PARTIES - In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.

Liability of first infractor1.If it can't be determined, court will leave them as they are.2.

Art. 1193. OBLIGATIONS WITH A PERIOD - Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.A day certain is understood to be that which must necessarily come, although it may not be known when.If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules of the preceding Section.

Future1.Certain2.Possible3.

Requisites of a Period:

Ex. DyingA DAY CERTAIN - a day which will necessarily come.

Difference between period and condition:

AS TO CONDITION PERIOD

Fulfillment Event is uncertain future, unknown past, must be possible

Event is Certain, future and possible.

Influence on the obligation

Gives rise or extinguishes the obligation. No effect on existence but only in their demadability or performance. (Does not carry with it retoractive effect.

Time May refer to unknown past Always to the future

Will of the debtor It depends on the will of the debtor. If dependent on the debtor, this merely impowers the court to fix a period.

Legala.Conditional/Stipulated by the partiesb.Judicial - fixed by courtc.

Sources:1.

Resolutorya.Suspensiveb.

Effects: - same with conditional2.

Definite - fixed date or timea.Indefiniteb.

Definiteness3.

Expressa.Implied - when parties "intended to"b.

Expression4.

Kinds of Period:

** Phrases as "As soon as" - Period, while "IF" - conditional

Art. 1194. LOSS, DETERIORATION, IMROVEMENT - In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in Article 1189 shall be observed.

Art. 1195. PAYMENT BEFORE MATURITY - Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered, with the fruits and interests.

Sought to be avoided thus this article is applied.-

UNJUST PAYMENT (Solutio indebiti)

Apply the Doctrine of EstoppelJUST PREPAYMENT

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Apply the Doctrine of Estoppel-

With knowledge on the period.-

Before the debt matures (principal)-

After debt matures (interest) - if creditor is in bad faith. - right prescribes 5 years after premature payment.-

When to recover:

Art. 1196. BENEFIT OF THE DESIGNATION OF THE PERIOD - Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appea r that the period has been established in favor of one or of the other.

Benefit of both parties.-

Gen Rule

Tenor of the obligation as to who will be favored.-

Exception

On or Before Debtor benefited

Upon demand Creditor benefited

Definite date Both

** Note:

Art. 1197. INSTANCES WHERE THE COURT FIXES THE PERIOD - If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.The courts shall also fix the duration of the period when it depends upon the will of the debtor.

No period fixed in the obligation.1.If it depends upon the will of the debtor2.

Instances where the court fixes the period:

When period is fixed by law1.Obligation is payable on demand2.Term is specified by parties3.

** Correlate this article with Art. 1180.

Instances where the Courts cannot fix a period:

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the p arties. Once fixed by the courts, the period cannot be changed by them.

Art. 1198. INSTANCES WHERE THE DEBTOR LOSE THE RIGHT TO MAKE USE OF THE PERIOD - The debtor shall lose every right to make use of the period:(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt;(2) When he does not furnish to the creditor the guaranties or securities which he has promised;(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuito us event they disappear, unless he immediately gives new ones equally satisfactory;(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;(5) When the debtor attempts to abscond.

EXCEPTION: guarantee or security-

Insolvency1.

Failure to furnish the guarantee or security2.

EXCEPTION: present a new one equally satisfactory.-

Impairment of guarantee by his own acts or by FE3.

Violation of any undertaking 4.Attempt to abscond.5.

Instances where the debtor loses the right to make use of the period:

Art. 1199. ALTERNATIVE OBLIGATIONS - A person alternatively bound by different prestations shall completely perform one of them. The creditor cannot be compelled to receive part of one and part of the other undertaking.

Presumption is ALTERNATIVE.-

Gen Rule:

2 or more prestations the debtor may choose from among. -

Use of OR.-

Only one must be performed among the choices-

ALTERNATIVEA.

One principal prestation but 2 or more substitute.-

FACULTATIVEB.

DISJUNCTIVE

2 or more prestations must be performed.CONJUNCTIVE

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2 or more prestations must be performed.-

Use of AND-

Art. 1200. RIGHT OF CHOICE - The right of choice belongs to the debtor, unless it has been expressly granted to the creditor.The debtor shall have no right to choose those prestations which are impossible, unlawful or which could not have been the ob ject of the obligation.

Debtor has the right to choose-

Gen Rule

Express stipulation-

Exception

Not impossible1.Not unlawful2.Should be the object of the obligation3.

Limitations to the Rule:

Limit the obligation to the object selected. 1.Becomes SIMPLE/PURE OBLIGATION2.Becomes IRREVOCABLE.3.

Effects of Notice of Choice:

** Notice may be in any form.**Unliateral declaration of will - the other party need not consent on the choice made by one.**Right to choose is not lost by the mere fact that the party entitled to choose delays in making his choice.

SUBSTITUTED PERFORMANCE - when the debtor does not want to make a choice, the creditor may ask the court for a 3rd party to choose.

1.

Right to choose goes to the creditor because this constitutes a waiver of the right of the debtor.2.

**If the debtor is unable to choose, there are two instances that may arise:

Art. 1201. CHOICE - The choice shall produce no effect except from the time it has been communicated.

Debtor has chosen a prestation which could not have been the object of the obligation, creditor's consent thereto would bring about a NOVATION of the obligation.

-

EXCEPTION to the RULES above:

Joint all of them must guve their consent.

Solidary The choice of one is the choice of the rest.

For Plurality:

Art. 1202. ALTERNATIVE - SIMPLE OBLIGATION. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable.

**If all prestations are impossible or unlawful, obligation is VOID.

Example: A - water from Mars, B - 1 kilo of shabu, C- car

** If only one is praticable, obligation is converted to simple/pure obligation.

Art. 1203. CREDITOR IS AT FAULT - If through the creditor's acts the debtor cannot make a choice according to the terms of the obligation, the latter may rescind the contract with damages.

Logic: Because the debtor has been deprived of the right to choose.

Art. 1204. RIGHT TO INDEMNITY FOR DAMAGES - The creditor shall have a right to indemnity for damages when, through the fault of the debtor, all the things which are alternatively the object of the obligation have been lost, or the compliance of the obligation has become im possible.The indemnity shall be fixed taking as a basis the value of the last thing which disappeared, or that of the service which la st became impossible.

1st Par All objects have been lost1.Compliance has become impossible2.

2nd Par Indemnity: VALUE of the LAST thing lost + DAMAGES

3rd Par Damages other than the value of the last thing or service may also be awarded

** Apllies only to cases where the debtor has the right to choose.** FE causes the loss of the thing communicated, obligation is extinguished.

Damages other than the value of the last thing or service may also be awarded.

Art. 1205. CREDITOR HAS THE RIGHT OF CHOICE - When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor.Until then the responsibility of the debtor shall be governed by the following rules:

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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, he shall perform the obligation by delivering that which the cre ditor should choose from among the remainder, or that which remains if only one subsists; (2) If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared, with a right to damages; (3) If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any o ne of them, also with indemnity for damages.The same rules shall be applied to obligations to do or not to do in case one, some or all of the prestations should become i mpossible.

One is lost due to FE, obligation still subsists, the creditor may choose on the remaining 2;1.

Choose from among the remaining + damagesa.Value of the object lost + damagesb.

If loss is due to FAULT of the debtor, creditor may:2.

If ALL are lost through the fault of the debtor, the creditor may choose for the value of any object + damages.3.

Pending selection by creditor, the object is still at the possession of the debtor, the debtor MUST preserve all prestations. IF:

Art. 1206. FACULTATIVE - When only one prestation has been agreed upon, but the obligor may render another in substitution, the obligation is called facultative.The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor, does not render him l iable. But once the substitution has been made, the obligor is liable for the loss of the substitute on account of his delay, negligence or fraud .

**Only one prestation bu allows for substitution.

If the inteded substitute is lost, it doesn't matter-

Gen Rule:

If the debtor chose to deliver the substitute which was subsequently lost, debtor is still liable.-

If loss is due to FE, extinguished.-

Exception:

Distinction between Alternative and Facultative Obligations:

AS TO ALTERNATIVE FACULTATIVE

Contents of the obligation

Variuos prestations all of which constitute parts of the obligation

Only the principal constitutes the obligation, the accessory being only the means to facilitate payment

Nullity of prestations

Nullity of one prestation does not invalidate the obligation which is still in force in respect to those which have no vice

Creditor can choose from the remainder

Nullity of the principal invalidates the obligation.

Obligation is extinguished. Creditor can't demand substitute.

Choice Debtor, BUT may be given to the creditor Only the DEBTOR

Effect of loss (fortuitous events)

Extinguishment: Impossibility of ALL Extinguishment: Impossibility of the PRINCIPAL, and when the substitution has been made and the substitute object was lost.

Effect of loss (fault of debtor)

Debtor is not liable if there are still available

If choice belongs to creditor, loss of one alternative gives rise to liability.

Debtor is liable for loss of PRINCIPAL.

Concurrence of several debtors/creditors does not necessarily assume that all of them an demand to fulfill.□

JOINT -

Gen Rule:

Law1.Stipulated by the parties2.Nature of the obligation3.Charge of condition is imposed upon heirs4.Imputed by final judgement upon several litigants5.

Exceptions:

Compliance of the obligation an be done in its entirety. (right to reimbursement)-

SOLIDARY

Compliance is in parts, proportionate.-

JOINT

Mancomunada1.Mancomunada simple2.Pro rata3."we promise to pay" used by two or more signers4.

Words used to indicate Joint obligation:

Art. 1207. SOLIDARY OBLIGATION - The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires sol idarity.

Art. 1208. JOINT OBLIGATION - If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does

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not appear, the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors, the cre dits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits.

**Refer above

Mancomunada solidaria1.Joint and several2.In solidum3."I promise to pay" ... Followed by the signature of two or more persons.4.Individually and collectively5.

Words used to indicate JOINT Obligations

Only with respect to his particular sharea.Defect of one debtor does not affect the obligation or the othersb.Insolvency of one does not increase the responsibility of the others nor does it authorize a creditor demand anything from his co-debtors

c.

Joint divisible obligation - defense res judicata does is not extended to the others d.

Extent of liability of the debtor1.Effects of Joint Obligations

Demand by one creditor upon one debtor produces the effects of default only with respect to the creditor who demanded and thedebtor on whom the demand was made.

a.

Interruption of prescription of the judicial demand of one creditor upon the debtor does not benefit the other creditors nor interrupt the prescription as to the other debtors.

b.

Extent of the Right of the Creditor2.

Art. 1209. INDIVISIBLE JOINT OBLIGATION - If the division is impossible, the right of the creditors may be prejudiced only by their collective acts, and the debt can be enforced only by proceeding against all the debtors. If one of the latter should be insolvent, the others shall n ot be liable for his share.

**To each his own.

Creditor must proceed to all the debtors.-

Demand must be made upon all creditors.1.

If one is insolvent, the other is not liable.2.

Creditors prejudiced only by their collective acts1.Co-debtors bot liable for the share of the insolvent debtor.2.Creditors must proceed against all the joint debtors.3.If one does not comple, obligation is converted to MONETARY Consideration. One will be liable for his proportionate share.4.Debtor must deliver to all creditors. 5.

Effects of Joint Indivisible Obligation:

Art. 1210. INDIVISIBLIT - SOLIDARITY - The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility.

Divisible vs Indivisible - object of the obligationJoint vs Solidary - juridical tie that binds the obligation

Joint Divisible1.Joint Indivisible2.Solidary Divisible3.Solidary Indivisible4.

May be:

Art. 1211. SOLIDARY DESPITE DIFFERENT TERMS AND CONDITIONS - Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions.

Example:

A- Pay P5,000 on Dec 21, 2010 B- Pay P5,000 on Dec 21, 2011 C- Pay P10,000 on Dec 21, 2012

If X demands on Jan. 1, 2011, A will only pay P5,000 + damages for the delay.

If A is insolvent, B/C may pay, subject of reimbursement by A.

If X demands on Jan 1, 2012, A and B must pay P10,000 plus damages for the delay.

A/B may pay the whole P10,000 subject for reimbursement of the other co-debtor who did not pay

If X demands on Jan 1, 2013, A, B, or C must pay P20,000 + damages for the delay.

A/B/C may pay the whole P20,000 subject for reimbursement of the other co-debtor who did not pay.

Art. 1212. SOLIDARY CREDITORS - Each one of the solidary creditors may do whatever may be useful to the others, but not anything which may be prejudicial to the latter.

Example:D1 and D2 are debtors of C1, C2 and C3 who are solidary creditors (P30,000)

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Prohibited.-

Valid as to the debtor but bot with respect to the co-creditors whose rights subsists and can be enforced against the creditor who performed prejudicial acts

-

Remission, novation, compensation, merger/confusion-

Example:-

Prejudicial Act

** Correlate with Art 1215.

Art. 1213. ASSIGNMENT OF RIGHT - A solidary creditor cannot assign his rights without the consent of the others.

Solidary creditor cannot assign his rights.-

Gen. Rule

If with CONSENT of the other co-creditors, he can assign his rights to a Third Party-

Assignee is the co-creditor-

Exceptions

Assignment should be with the consent of C2, C3 and C4 for it to be valid.-

C1 assigned his right to X (TP).-

Example:

Art. 1214. DEMAND OF CREDITOR - The debtor may pay any one of the solidary creditors; but if any demand, judicial or extrajudicial, has been made by one of them, payment should be made to him.

The debtor may pay any one of the solidary creditors.-

Gen rule

If there is demand, payment must be made to solidary creditor who made the demand (judicial or extrajudicial).-

Exception

**payment to any other will not extinguish the obligation except insofar as the payee's share is concerned.

Art. 1215. EXTINGUISHMENT - Novation, compensation, confusion or remission of the debt, made by any of the solidary creditors or with any of the solidary debtors, shall extinguish the obligation, without prejudice to the provisions of Article 1219.The creditor who may have executed any of these acts, as well as he who collects the debt, shall be liable to the others for the share in the obligation corresponding to them.

Will be discussed on the Chapter on Extinguishment.-

Art. 1216. CREDITOR TO DEBTOR - The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.

Art. 1217. EFFECTS OF PAYMENT - Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.

1st Par Anyone of the solidary debtor can pay; extinguishment of the obligation

2nd Par Reimbursement by the other co-debtors; share + interest from the time of maturity of obligation)

3rd Par By insolvency of one debtor he can not reimburse his share, converted into joint obligation as to co-debtors.

Written 10 years

Verbal 6 years

Period of Prescription is:

Art. 1218. PRESCRIPTIVE PERIOD - 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.

Art. 1219. REMISSION OR CONDONATION - The remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from his responsibility towards the co-debtors, in case the debt had been totally paid by anyone of them before the remission was effected.

** If remission or condonation is prior to payment, it brings abour the desired effect.

D2 cannot ask for reimbursement from D1.-

If D3 is insolvent, D1 will bear half the share of D3, thus D1 must pay P500.

D1, D2, and D3 owes C1 P3,000. C1 condoned/remitted the liability of D1. D2 paid P2,000.Example:

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If D3 is insolvent, D1 will bear half the share of D3, thus D1 must pay P500.-

Art. 1220. EFFECT OF REMISSION - The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle him to reimbursement from his co-debtors.

**Correlate with Art 1219.

Art. 1221. EFFECT OF LOSS OR IMPOSSIBLITY - If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished.If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor.If through a fortuitous event, the thing is lost or the performance has become impossible after one of the solidary debtors h as incurred in delay through the judicial or extrajudicial demand upon him by the creditor, the provisions of the preceding paragraph shall apply. (1147a)

If without fault (FE or FM) No liability: obligation is extinguished

If without fault but after default/delay With liability: value, damages and interestCo-debtors have right against the guilty debtor

If with fault Liability: value, damages and interestCo-debtors have right against the guilty debtor

Art. 1222. DEFENSES AVAILABLE TO SOLIDARY DEBTORS - A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. With respect t o those which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible . (1148a)

Vices of consent

Cause of obligation has prescribed

Entire obligation is void

Voidable

Complete defense-

Nature of the Obligation1.

Minority

Insanity

Fraud

Complete defense (GEN RULE)-

Special terms or conditions affecting his part of the obligation

Non-fulfillment of condition imposed regarding his share

Partial Defense-

Personal to the Debtor2.

Example: the co-debtor's share is not yet due, so you can only compel me to give my share.

Avail himself thereof only as regards that part of the debt for which the latter is responsible.-

Personal to the Creditor3.

Defenses Available to the Solidary Debtors are:

If from Nature: all co-debtors will be benefited1.If personal to the debtor: only him will be benefited2.If personal to the co-creditor: partial defense3.

Effects of the Defenses:

Art. 1223. DIVISIBLE/INDIVISIBLE OBLIGATION - 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.

One capable of partial performance-

Divisible

Deliver in its entirety-

Indivisible

Common agreement-

Becomes indivisible-

Example: Payment of P10,000 in a lumpsum basis

Conventional1.

Nature of the object-

Example: car

Natural or absolute2.

Law so provides-

Legal3.

Kinds of Indivisibility

Obligation has been substantially performed in good faith (Art. 1234)a.Exceptions:

** A debt shall not be be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered as the case may be.

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Obligation has been substantially performed in good faith (Art. 1234)a.When the creditor accepts performance, knowing its completeness, and without protest, the obligation is deemed fully performed. (Art.1234)

b.

Exceptions:

Art. 1224. INDIVISIBLE JOINT OBLIGATION - A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors does not comply with his undertaking. The debtors who may have been ready to fulfill their promises shall not contribute to the in demnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists.

**Correlate with Art. 1209.**Debtors ready to fulfill shall not be liable.

Art. 1225. PRESUMPTIONS OF INDIVISIBLE OBLIGATIONS - For the purposes of the preceding articles, obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible.When the obligation has for its object the execution of a certain number of days of work, the accomplishment of work by metri cal units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible.However, even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties.In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each parti cular case. (1151a)

1st Par Indivisible Definite and not susceptible to partial performance Ex. Singing

2nd Par Divisible Execute work for a # of days1.Accomplishment by metrical units2.Purpose is to pay a certain amount3.

Ex.

3rd Par From Divisible - Indivisible IF: provided by law or stipulated by the parties Ex. P5000 to be paid in lumpsum basis

4th Par To do and not to do Determined by the character of the prestation Ex.

Art. 1226. PENAL OBLIGATIONS - In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refu ses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. (1152a)

Is an accessory undertaking to assume greater responsibility in case of breach.-

Mere non-performance of the principal obligation gives rise to damages.-

PENAL CLAUSE

Penalty takes the palce of indemnity for damages and payment of interest-

Gen Rule:

Express stipulation despite the presence of the penalty clause.1.Debtor refuses to pay the penalty imposed.2.Debtor is guilty of fraus in the fulfillment of the obligation.3.

Exceptions:

Makes heavier the obligation-

To ensure compliance1.

For indemnity and payment of interest-

Serve as a substitute2.

Serve as a punishment for non-fulfillment-

Serve as a punishment3.

REASONS FOR IMPOSING PENAL CLAUSE

Imposed by law-

Legal Penal Clause a.

Agreed by the parties-

Conventional Penal Clauseb.

First Classification:1.

Only the penalty may be asked.-

Subsidiary a.

When both the principal contract and the penal clause may be enforced in non-performance.-

Jointb.

Second Classification2.

Kinds of Penalty

The debtore can not exempt himself from performance-

Gen. Rule:

Express stipulation by the parties. (Fulfillment becomes Alternative)Exceptions:

Art. 1227. RULE ON PENALTY AND PRINCIPAL - The debtor cannot exempt himself from the performance of the obligation by paying the penalty, save in the case where this right has been expressly reserved for him. Neither can the creditor demand the fulfillment of the obligat ion and the satisfaction of the penalty at the same time, unless this right has been clearly granted him. However, if after the creditor has decided to r equire the fulfillment of the obligation, the performance thereof should become impossible without his fault, the penalty may be enforced.

notes Page 17

Express stipulation by the parties. (Fulfillment becomes Alternative)-

Exceptions:

Creditor cannot demand both fulfillment and the penalty.-

Gen Rule:

Express grant of such right.-

Exception:

Art. 1228. PROVING ACTUAL DAMAGES NOT NEEDED - Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded.

Art. 1229. REDUCTION OF THE PENALTY BY THE COURTS - The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

When the obligation has been partly complied with by the debtor.1.Obligation is irregularly complies2.Penalty is iniquitous or unconscionable, even if htere has been no performance at all.3.

Reasons for Reduction of Penalty:

Art. 1230. NULLITY OF PENAL CLAUSE - The nullity of the penal clause does not carry with it that of the principal obligation.

If Principal is Null, Penalty is void-

If Penalty is Void, Principal still exist. -

The nullity of the principal obligation carries with it that of the penal clause.

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