OBLIGATIONS - PART 1

Law

Obligation Concept

An obligation is a juridical necessity to give, to do, or not to do. (Art 1156 , Civil Code of the Philippines) Juridical necessity means that the court may be asked to order the performance of an obligation if the debtor does not fulfill it. If an obligation cannot be enforce through the court, it may be disregarded with impunity.

Requisites of obligation

Active subject (creditor/obligee)

Passive subject (debtor/obligor)

Prestation

Efficient Cause

One who has right to demand performance of the obligation

One who is obliged to perform the obligation

The object or subject matter of the obligation. It may consist of giving, doing or not doing something

The vinculum or legal or juridical tie w/c binds the parties to an obligation. The efficient cause may be any of the five sources of obligation

Example

D is obliged to transport the goods of C from Manila to Cebu under a contract of carriage. C is the active subject;

D is the passive subject;

the transport of the goods is the prestation,

the contract of carriage is the efficient cause.

Civil Obligation Natural ObligationAs defined in Art.1156 is

based on positive law; hence, it is enforceable by court action.

Is based on natural law, it is not enforceable by court action. the obligation, however, exists in equity and moral justice, such that if the debtor voluntarily performs it, he can no longer recover what he has given.

Civil Obligation and Natural Obligation distinguished

Example: M is the maker of a promissory note with P as the payee for P20,000.00. if M does not pay on due date, P can enforce payment by filing a court action. If P does not file a court action against M within ten years from due date which is prescriptive period for actions upon a written contract, the obligation becomes a natural obligation and P losses the right to enforce payment by court action. However if M voluntarily makes the payment although the obligation has prescribed, M will no longer be allowed to recover the payment bec. In equity and moral justice , he still owed P the amount of P20,000.00.

Sources of Obligation: LawA rule of conduct, just, and obligatory laid down

by legitimate authority to common observance and benefit. Obligations derived from law are not presumed. Only those expressly determined in the Civil Code or in Special law are demandable and shall be regulated by percepts of law which establishes them, and as to what has not been foreseen, by the provisions on Obligations. (Art 1158)

Examples: the National Internal Revenue Code which provides for the payment of taxes; the Anti-Mendicancy Law which prohibits the giving of alms to beggars.

Sources of Obligation: Contracts

Is a meeting of minds between 2 persons whereby one binds himself, with respect to the other, to give something or render some service (Art.1305).

Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. ( Art 1159)

Examples: a contract of lease which provides for the payment of rental by the lessee; a contract of sale which requires the seller to deliver the thing sold and the buyer to pay the price.

Sources of Obligation: Quasi- Contracts

Negotiorum gestio- voluntary administration of the property, business or affairs of another without his consent or authority. This creates the obligation to reimburse the gestor for necessary and useful expenses. ( Art 2150)

Solutio indebiti- payment by mistake which was not due when paid. This creates obligation to return the payment.

Certain lawful , voluntary and unilateral acts giving rise to a juridical relation to the end that no one shall be unjustly enriched at the expense of another. (Art 2142)

Sources of Obligation: Acts or omissions punishable by law

These are crimes or felonies. The commission of a crime makes the offender civilly liable. Such civil liability includes restitution, reparation of the damage caused, and indemnification of consequential damages.

Example: if D steals the carabao of C, D’s liability consist of returning the carabao, paying for its value if he cannot return it, and indemnifying the consequential damages suffered not only by C but also of his family or by a third person by reason of the crime. This will be in addition to any prison term or other penalty that may be imposed by the court.

Sources of Obligation: Quasi delicts (tort or culpa aquilliana)

These are acts or omissions that cause damage to another, there being no contractual relation between the parties. (Art 2176)

Example: if a person, while cleaning his window, causes a flower pot to fall through his negligence thereby injuring someone passing by, the former is liable for damages to the latter.

Nature and Effect of Obligation

Determinate and generic thing

A thing is determinate when it is particularly designated or physically segregated from all others of the same class. ( Art 1460) Examples: A 2002, Toyota Corolla with engine no.123456, body 546611, and plate no. FRS 840; my only wristwatch; the house located at 234 Moret St., Sampaloc, Manila

A thing is indeterminate or generic when it is not particularly designated or physically from all others of the same class, i.e, one of a class. Examples: a horse, a car, P10,000.

AS a rule the loss of a determinate thing through a fortuitous event extinguishes the obligation. (Art 1262)

Obligations of one obliged to give a determinate thing

1. To take good care of the thing with the diligence of a good father of a family unless the law requires another standard of care. ( Art 1163)

Diligence of a good father of a family means the ordinary care that an average person exercises in taking care of his property.

2. To deliver the thing

This involves placing the thing in the possession and control of the creditor either actually or constructively.

3. To deliver the fruits of the thing. (Art1164)

The fruits of a thing may be Natural fruits- are the spontaneous products of the soil

and the young and other products of animals. The trees that grow naturally on the soil w/out the intervention of man and the colt delivered by a mare are natural fruits.

Industrial fruits are those produced by land of any kind through cultivation or labor. Examples are rice, corn, and other crops produced through the human intervention of human labor.

Civil Fruits are those which are the results of a juridical relation such as the rent of a building, price of lease of land and other property and the amount of perpetual or life annuities.The creditor has the right to the fruits of a thing from the time

the obligation to deliver it arises. However , he shall acquire no real right over it until the thing has been delivered to him. ( Art 1164)

When obligation to deliver the thing arisesa. w/out period or condition – upon the perfection

of the obligation.b. with period or condition – upon arrival of the

term of fulfillment of the conditionThus, if D is obliged to give C a specific car on

Christmas day next year, the obligation to deliver arises on the arrival of such date. Or if the obligation of D is to give C if C passes the CPA examination, then the obligation to deliver arises only upon the fulfillment of such condition.Rights of the Creditor

a. personal Right- this is a right that may be enforced by one person on another, such as the right of the creditor to demand the delivery of the thing and its fruits from the debtor.

b. real right- this refers to the right or power over a specific thing, such as possession or ownership , which is a right enforceable against the whole world. This is the right acquired by the creditor over the thing and its fruits when they have been delivered to him.

4. To deliver its accessions and accessories even if they have not been mentioned.

a. Accessions- they include everything that is produced by a thing or is incorporated or attached thereto, either naturally or artificially,. Such as alluvium, the soil gradually deposited by the current of a river on a river bank, or whatever built, planted or sown on a parcel of land.

b. Accessories- those joined to or included with the principal thing for the latter’s better use, perfection or enjoyment ( such as the keys to a car or a house, or bracelet of a wristwatch.)

Remedies of the Creditor

1. If the debtor fails to perform his obligation

a. to compel the debtor to make the delivery. (Art 1165)

b. to demand damages from the debtor. ( Art 1170) Example:

D is obliged to give C a specific car. On due date, C demands the delivery but D does not deliver. In this case, C can compel D to deliver the car because there is no other person in possession or control it. C can also demand payment of damages from him.

2. If the debtor fails to perform his obligation to deliver a generic thing

To ask that the obligation be complied with at the expense of the debtor. (Art.1165)

To demand damages from the debtor. ( Art 1170) Example: D is obliged to deliver 10 sacks of rice to C.

If D does not perform his obligation as stipulated, C can obtain 10 sacks of rice from other sources at the expense D. C can do so because the thing is generic and thus can be replaced with the same kind. C can also ask for damages from D.

3. If the debtor fails his obligation in obligation to do

a. if the debtor fails to perform the obligation or performs it but contravenes the tenor thereof- The creditor may have the

obligation executed at the expense of the debtor. ( Art 1167)

He may also demand damages from the debtor. (Art.1170)

Example :D is obliged to construct a hollow block fence for C. By the agreement the fence will be 2 m high and 10m long, fine finished and painted. If D does not perform his obligation, C can ask another person to, or he himself may, construct the fence at the expense of D. C can also claim for damages from D. C cannot compel D to perform the obligation because compulsion will violate D’s right against involuntary servitude. If D construct the fence but did not follow the measurements agreed upon. C will have the same right.

b. If the debtor performs the obligation but does it poorly Creditor may have the same

be undone at the debtor’s expense, ( Art.1167)

Creditor may also demand damages from the debtor. (Art.1170)

Example: If in the same illustration, D constructs the fence following the measurements but it was not properly aligned, the finishing was rough , and materials used were substandard. C can have the fence be demolished by another person or even by himself at D’s expense. C can also demand damages from D.

4. If the debtor does what has been forbidden him.

a. the creditor may demand that what has been done be undone.

He may also demand damages from the debtor (Art1168) Example: B bought a farm lot from S. However the

only access from the road to B’s lot is the lot of D. So B entered into contract with D for right of way over a period of ten years and paid a sum therefore. It was agreed that for the duration of the contract D would not construct any fence between B’s lot and his. Sometime thereafter, however, D constructed a fence in violation of the agreement. B may demand that D remove the fence at D’s expense and pay damages.

Grounds for liability to pay damages

FraudNegligenceDelayContravention of the tenor of the obligation.

(Art.1170)

Damages

Distinguished from injury:Damages refer to harm done and the sum of

money that may be recovered.Injury refers to the wrongful, unlawful or

tortuous act. It is the legal wrong to be redressed.

Kinds of damages Actual or compensatory damages- these refer to the pecuniary loss,

(such as loss in business or profession) that may be recovered. It includes the value of loss suffered and profits not realized. (Art2199)

Moral damages- they include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. (Art 2217)

Nominal damages-damages to vindicate a right. (Art2221) Temperate or moderate damages- they are more than nominal but less

than compensatory damages, but may be recovered if the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. (Art2224)

Liquidated damages-those agreed upon by the parties to a contract, to be paid in case of breach. (Art.2226)

Exemplary or corrective damages- imposed by way of example or correction for public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art2229)

Proof of Pecuniary Loss

Actual Damages- proof is required unless provided by law or stipulation. (Art.2199)

Other Damages- proof is not required in order that moral, nominal, temperate or liquidated or exemplary damages may adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. (Art.2216)

IS THE DELIBERATE OR INTENTIONAL EVASION BY THE DEBTOR OF HIS OBLIGATION IN A NORMAL MANNER. THIS ACTUALLY REFERS TO FRAUD COMMITTED AT THE TIME OF THE PERFORMANCE OF THE OBLIGATION.

Fraud

Kinds of fraud in general

a. According to meaning1.) Fraud in Obtaining Consent

Casual Fraud( dolo causante)- fraud w/out which consent would not have been given. Renders the contract voidable. Example: B bought a ring from S who told him that the ring was

embellished w/ diamonds. However, S knew all along that the embellishment was not diamond but ordinary glass. B here gave his consent because of the fraud employed by S; hence, the contract is voidable.

Incidental fraud or Dolo incidente- fraud w/out which consent would have still been given but the person giving it would have agreed on different term. The contract is valid but the party employing it shall be liable for damages. Example: C hired D to teach in the school of C. D placed in his application

that he had earned units in MBA. However, D actually dropped the subjects for the said units. If C would have hired D even if D did not complete the said units but that he would have given a lower salary to d, the fraud committed by D was only incidental but it would entitle C to recover damages.

Kinds of fraud in general

2. Fraud in the performance of the obligationThis is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing obligation; hence, the fraud has no effect on the validity of the contract since it was employed after the perfection. However, the party employing it shall be liable for damages. (Art1170) Example: B ordered 10 bags of powder soap from S who

agreed to deliver the same after 2 days. On due date, S delivered 10 bags of powder soap which he mixed with chalk. This is the fraud in the performance of obligation which entitles B to recover damages. The fraud, however, does not have any effect on the validity of the contract.

Kinds of fraud in general

b. According to the time of commission Future Fraud – a waiver of an action for future fraud

cannot be made. If there is an agreement for its waiver, the same is void. (Art1171) Thus, the debtor will still be liable for damages if he commits fraud in the performance of his obligation despite the waiver.

Past Fraud- a waiver of an action for past fraud may be made since the commission of fraud can no longer be encouraged. Such waiver is an act of liberality on the part of the creditor.

IT IS THE OMISSION OF THAT DILIGENCE WHICH IS REQUIRED BY THE OBLIGATION AND CORRESPONDS WITH THE CIRCUMSTANCES OF THE PERSON, ON THE TIME, AND OF THE PLACE. ( ART.1173) .

Negligence

In the absence of agreement the debtor must observe the diligence of a good father of a family.

Examples: If the obligation is to deliver a specific window glass, the debtor

must ensure that the glass is well-protected when he transports it as required by the nature of the obligation. Otherwise , he will be negligent.

A baby-sitter, 21 years old, strong and healthy, will be negligent if she sleeps while on duty considering the circumstances of her person were considered when she was hired for the job.

If the driver of a car drives at night without any headlight, he will be considered negligent considering that the circumstances of nighttime requires such light.

If the same car driver drives at 50 km per hour along a busy street where many people are crossing, he will be negligent because the circumstances of the place require that he should drive slowly.

Kinds

Culpa Contractual (contractual Negligence)- negligence in the performance of a contract (such as the negligence committed by the driver of a bus when a passenger is hurt during a trip because there is here a breach of contract of carriage.) Here the master-servant rule applies, i.e., the negligence of the servant is the negligence of the master. Accordingly, the defense of a good father of family in the selection and supervision of the employees is not a defense on the part of the employer although it may mitigate the liability. Thus, in the example, the negligence of the bus driver is also the negligence of the bus owner.

Kinds

Culpa Aquiliana (civil negligence or tort or quasi-delict or culpa extra-contractual) – these are acts or omissions that cause damage to another, there being no contractual relation between the parties. (Art.2176)The master-servant rule does not apply. Hence, the defense of a good father of a family in the selection and supervision of employees is a defense on the part of the employer to escape liability. Thus, if a pedestrian is hit by a bus through the reckless driving of the driver, the latter’s negligence is not the negligence of the owner.

Kinds

Culpa Criminal (Criminal Negligence)- Negligence that results in the commission of a crime.Defense of a good father of a family is not proper because the employee’s guilt is automatically the employer’s civil guilt if the former is insolvent.The passenger of the bus may bring a court action not only for culpa contractual against the bus owner, but also one for culpa criminal against the bus driver for physical injuries through reckless imprudence. In the same way, the pedestrian may bring not only a suit for culpa aquiliana against the driver and the owner, but also culpa criminal against the bus driver for physical injuries through reckless imprudence.

IS THE NON FULFILLMENT OF AN OBLIGATION WITH RESPECT TO TIME

Delay ( default or Mora)

Note: There is no delay in obligation not to do as one cannot be in delay for not doing something

Kinds

Mora solvendi- delay on the part of the debtor. Ex re- delay in real obligations(obligation to give) Ex persona- delay in personal obligations (obligation

to do)Mora accipiendi- delay on the part of the

creditor. This exist when the creditor refuses to accept the thing due without justifiable reason.

Compensatio morae- delay in the reciprocal obligation, both parties are in default. Here, it is as if there is no delay.

When debtor incurs delay in obligations to give or to do requisites

General rule: The debtor incurs in delay from the time the creditor demands fulfillment of the obligation but the debtor fails to comply with such demand (no demand, no delay as a rule). The following are the requisites of delay; a. the debtor does not perform his obligation on the date it is

due. The creditor demand the performance of the obligation. The debtor does not comply with creditor’s demand.Example: D owes C P5,000.00. the obligation is due on May 15.

If D does not pay him on May 15, he is not yet in delay. But if C makes a demand on him to pay on that date or thereafter and D does not comply, then D will be in delay

Exceptions, i.e., delay will exists even w/out demand

When the law so stipulates Thus where the law provides for the payment of penalty if the obligation is not

performed on due date (such as in the case of taxes), then demand shall not be necessary.

When the obligation expressly so declares. Hence, no demand is necessary if a lease contract provides that the rental shall be paid

by the lessee within the first five days of the month in advance w/out need of demand. When the time is of the essence of the contract.

Thus where a rent a car company is obliged to provide for the bridal car during a wedding at a particular date, time and place, the said company is liable if it fails to perform the said obligation notwithstanding the absence of demand since time was a controlling motive for establishment of the contract.

When demand would be useless. Thus the debtor will be in delay even without demand from the creditor if the thing he is

obliged to deliver has been destroyed through his fault or he has delivered it to another person.

In reciprocal obligations, where the obligation arise out of the same cause and must be fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by the other begins notwithstanding the absence of demand.

Effects of Delay

The debtor shall be liable for the payment of damages. (Art1170)

If the obligation consists in the delivery of a determinate thing, he shall be responsible for any fortuitous event until he has effected the delivery. (Art1165)

EVENTS THAT COULD NOT BE FORESEEN, OR WHICH, THOUGH FORESEEN ARE INEVITABLE. (ART

1174)

EXAMPLES ARE: NATURAL CALAMITIES OR ACTS OF GOD SUCH AS EARTHQUAKE, TYPHOON AND

LIGHTNING, AND ACTS OF MAN(“FORCE MAJEURE”) SUCH AS WAR AND ARMED ROBBERY.

Fortuitous Events

Characteristics

The cause must be independent of the debtor’s will

There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen.

The occurrence of the event must be of such character as to render it impossible for the debtor to perform his obligation in a normal manner.

Liability for fortuitous event

General Rule:No person shall be liable for fortuitous events, i.e., his obligations will be extinguished

Exceptions to rule: When the law expressly provides for

liability even in the case of fortuitous events(such as that provided in Art.1165 where the obligor is liable for fortuitous events if he delays or has promised to deliver the same thing to two or more persons who do not have the same interest).

When the parties have declared liability even in case of fortuitous event.

When the nature of the obligation requires the assumption of risk( such as the obligation of an insurer who must pay the policy holder even if the loss is cause by a fortuitous event if the cause thereof is the risk insured against).

1. T H E R E C E IP T OF T H E P R IN C IPAL W IT H O U T R E S E RVAT IO N A S T O I N T E R E S T S H A L L GI VE R IS E T O T H E P R E S U M P T I ON T H AT T H E IN T E R E S T H AS B E E N PAID.

2. T H E R E C E IP T OF A L AT E R IN S TA LL M E N T W I T H O U T R E S E RVAT IO N AS T O P R I O R I NS TAL L M E N T S, S H A L L GI VE R I S E T O T H E P R E S U M P T I ON T H AT S U C H P R I O R I N S TAL L M E NT S H AV E B E E N PA ID.

T h e a b o v e p r e s u m p t i o n s a r e d i s p u t a b l e h e n c e , t h e y m a y b e r e b u t t e d b y co n t r a r y e v i d e n ce . I f t h e p r e s u m p t i o n i s co n c l u s i v e , t h e n n o e v i d e n c e t o t h e co n t r a r y m a y b e a d m i t t e d .

Presumptions on receipt of principal or of later installment (these are disputable

presumptions and evidence may be introduces to the contrary by the creditor.) (Art 1176)

Remedies of creditor to enforce payment of his claims against debtor (Art1177)

1. Pursue the property in the possession of the debtor except those exempt by law.

1. This is usually by the attachment where the creditor files a court action to exact fulfillment with a prayer that the court sets aside a property belonging to the debtor. If the court decides in favor of the creditor the debtor does not pay, the property attached will be ordered sold and the proceeds thereof applied to the payment of the obligation.

2. Exercise all the rights and bring all the action of the debtor except those personal to him (accion subrogatoria).

1. Example: A owes D. D owes C. If C files a court action against D to collect, he may ask the court to order A not to pay D so that in the event that the court rules in favor of C. A will be required to pay C. In effect, C is exercising the right to collect from A which is a right that belongs to D.

3. Impugn the acts which the debtor may have done to defraud his creditors (accion pauliana)

1. D owes C P50,000.00. to defraud C, D sells his lot, his only property to B who knows of the fraudulent intention of D. C may ask the court to order the rescission of the sale made by D.

Rule on transmissibility of rights and exceptions thereto(Art.1178)

Exceptions:1. If the law prohibits the transmission of the right.

1. Thus the rights of a general partner in a partnership are not transmitted to his heirs upon his death.

2. If the parties agreed against the transmission.2. Thus the right is not transmitted to an assignee or to the heirs if

there was a stipulation to that effect between the parties.3. If the right is by nature not transmissible

3. Example: S was granted a scholarship grant by a school after a series of examination and interviews. S, however, dies with two years remaining before he finishes his studies. The right of S to enjoy the scholarship grant is not transmitted to his heir because it is strictly personal.

General rule: All the rights acquired in virtue of an obligation are transmissible. (Thus, a creditor may assign his credit to a third person or such right is transmitted to the heirs upon his death).

1. P U R E O B L I G AT I O N2. C O N D I T I O N A L O B L I G AT I O N3. O B L I G AT I O N W / A P E R I O D4. A LT E R N AT I V E O B L I G AT I O N5. FA C U LTAT I V E O B L I G AT I O N6. J O I N T O B L I G AT I O N7. S O L I D A RY O B L I GAT I O N8. D I V I S I B L E O B L I G AT I O N9. I N D I V I S I B L E O B L I G AT I O N10. O B L I G AT I O N W / A P E N A L C L A U S E

Different Kinds of Obligations

A PURE OBLIGATION IS ONE WITHOUT A TERM OR CONDITION AND IS

DEMANDABLE AT ONCEExample: I promise to give you P5,000.00. This is

immediately demandable since there is no term that must expire or a condition that must happen for the obligation to be demandable.

Pure Obligation

• IS ONE WHOSE DEMANDABILITY OR EXTINGUISHMENT DEPENDS UPON THE

HAPPENING OF A CONDITION• Examples: 1. I will give you my car if you pass

the CPA Examinations. The condition here is suspensive. You nay not demand the delivery of my car until you pass the CPA examination..

• 2. “ I will let you use my car until you pass the CPA Examination. The condition is resolutory. You may demand the delivery of my car now but you must return it to me when you pass the CPA examination.

Conditional obligation

Condition

Classification Suspensive and resolutory Potestative, casual and mixed Possible and impossible Positive and negative Divisible and indivisible

Concept: it is an uncertain event which wields an influence on legal relationship.

Suspensive and Resolutory

Suspensive- the happening of which give rise to the obligation. This is also called condition antecedent or condition precedent. The demandability of the obligation is suspended until the happening of the condition.

Resolutory- the happening of which extinguishes the obligation. This is also called condition subsequent. The obligation is demandable at once but it shall be extinguished upon the happening of the condition.

Potestative, Casual and Mixed

Potestative-depends upon the will of one of the contracting parties. Postestative on the part of the debtor

If suspensive-the obligation is void. Even if the condition is fulfilled, the obligation is not demandable. (Example: D is to give C P50,000.00 if D goes to Baguio.)

If resolutory-the obligation is valid.(Example: D is to allow the use of his car by C until D returns from Baguio.)

Potestative on the part of the creditor- the obligation is valid whether the condition is suspensive or resolutory. (Example: D is to give C P50,000 if C goes to Baguio.)

Casual- depends upon chance or upon the will of a third person. (Example: D is to give C P50,000.00 if D wins first prize in the lotto on a bet he had placed this morning.)

Mixed- depends partly on the will of one of the parties and partly upon chance or upon the will of a third person. (Example: D is to give C P50,000.00 if C will marry X.)

Possible and impossible

Possible- capable of fulfillment in its nature and by law.

Impossible- not capable of fulfillment in its nature or due to operation of law, such as “if you can swim across the Pacific Ocean” or “if you kill X”. In this case the obligation and condition are void. (Art1183)

Note if the condition not to do an impossible thing, it shall be deemed as not having been agreed upon. (Art1183) Thus, the obligation is immediately demandable. (Example: D is to give C 50,000 if C does not swim across the Pacific Ocean.)

Positive and negative

Positive- the condition that some event happen at a determinate time. Here, the obligation is extinguished as soon as the time expires or it has become indubitable that the event will not take place. (Art.1184) Example: D is to give C P50,000.00 if C will marry X on or before

June 30,2004. the obligation will be extinguished on July 1,2004 if C has not yet married X as of June 30,2004. if X dies on June 1,2004 before C has married her, then the obligation is extinguished on such date because there is no more doubt that the marriage will not take place.

Negative- the condition that some event will not happen at a determinate time. Here the obligation becomes effective as soon as the time indicated has elapsed or it has become evident that the event will not occur. (Art1185) Example: D is to give C P50,000.00 if C will not marry X on or

before June 30,2004. the obligation becomes effective on July 1, 2004 if C has not yet married X as of June 30,2004. If X dies on June 1,2004 before C has married her, then the obligation becomes effective on such date because there is no more doubt that the marriage will not take place.

Divisible and Indivisible

Divisible- capable of partial performance. Under Art. 1183, if the obligation is divisible that part thereof

which is not affected by the impossible or unlawful condition shall be valid. Examples: a.) D is to give C a car if C finishes his law course,

and P1,000,000.00 if C tops the bar Examination. If D finishes his law course, he may demand the delivery of the car. However, he may not demand the payment of P1,000,000.00 if C does not top the Bar. b.) D is to give C a car if he finishes his law course and P1,000,000.00 if C can get a copy of the test questions in the Bar Examination in advance. Even if both the conditions are fulfilled, C can only ask for the delivery of a car from D because the second condition is unlawful

Indivisible-not capable of partial performance by its nature or by law or agreement of the parties

Example: D is to give C a car if C finishes his law course and tops the Bar. C must comply with both conditions before he can ask for the delivery of a car from D.

Effect of fulfillment of Suspensive Condition (Art.1187)

Exceptions: there shall be no retroactive effect with respect to the fruits and interest as follows: 1. in reciprocal obligations, the fruits and interest shall be deemed to have

been mutually compensated, i.e., each party shall keep the fruits and interest received by him prior to the fulfillment of the condition. Example: On May 1, 2001, S agreed to sell his land to B and B agreed to

pay the price of P50,000.00 if X finishes his Accounting degree on March 15,2004. X finished his degree as stipulated. It was as if S was entitled to the price and B to the land beginning on May 1,2001. however, S shall keep the fruits on the land and B the interest during the pendency of the condition.

2. In unilateral obligations, the debtor keeps the fruits and interest received before the fulfillment of the condition. Example: on May 1,2001, S promised to give B his land if B passed the

Bar Examination in February 2004. B has passed the Bar Examination as stipulated. It was as if B was entitled to the land beginning on May 1, 2001. however S keep the fruits on the land during the pendency of the condition.

General Rule: The effect of the fulfillment of the suspensive condition retroacts to the day of the constitution of the obligation.

Rights of the parties before the fulfillment of the condition (Art1188)

Creditor- he may bring the appropriate actions for the preservation of his right, such as registering his claim with the Register of Deeds, if appropriate, to notify all the third persons.

Debtor- he may recover what he has paid by mistake.

Rules in case of loss of a determinate thing before the fulfillment of the suspensive

condition (Art1189)

Concept of Loss- a thing is considered lost when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or cannot be recovered.

Loss of a thing: Without debtor’s fault- obligation extinguished. With debtor’s fault- debtor is obliged to pay damages.

Example: D is obliged to give C a specific house if C passes the CPA examination. If the house is destroyed in a fire without the fault of D before C passes the CPA examination, D’s obligation is extinguished even if C, thereafter, passes the CPA examination. But if the house is destroyed through the fault of D such as when he placed inside the house highly flammable chemicals which caused the fire, then D shall be obliged to pay damages should C pass the CPA Examination.

Rules in case of deterioration of a determinate thing before the fulfillment of the suspensive condition

(Art1189)

Deterioration of the thing Without debtor’s fault- impairment shall be borne by the

creditor, i.e., no liability on the part of the debtor to pay damages.

With debtor’s fault- the creditor may choose between the following remedies: Rescission, plus damages. Fulfillment, plus damages

Example: D is obliged to give a specific car to C if C finishes his economics degree. The deterioration of the car due to wear and tear before C finishes economics degree will be borne by C when C later finishes the said degree. However, if the car is damaged in an accident due D’s fault, C, when he finishes economics degree may rescind the contract and ask for damages or ask D to deliver the car in its deteriorated condition plus damages.

Rules in case of improvement of a determinate thing before the fulfillment of the suspensive condition

(Art1189)

Improvement of the thing By nature or by time- the improvement shall inure to the benefit of the creditor,

Example: D is obliged to give his violin to C if C finishes his course in music. If the quality produce by the violin had improved between the time that D’s obligation was constituted and the completion of his course in music, then such improvement shall inure the benefit of C.

At the expense of the debtor-debtor will have the rights granted to a usufructuary, i.e., he can have enjoyment of the use of the improved thing and its fruits. He may remove the improvement if no damage is caused to the principal thing. If the improvement cannot be removed without causing damage to the principal thing, the thing and the improvement shall be delivered to the creditor without any right on the part of the debtor to indemnity. He may, however, set off the improvement against any damage to the thing. Example: D is obliged to give his only car to C if C finishes his economics

degree. Before C finished the said degree, D had the car repainted. In this case, D can continue using the car in its improved condition. Upon the completion by C of his economics degree, D cannot remove the painting because it will cause damage to the car. However, if he had caused a dent on the car due to his fault, he may set off the cost of repainting against the cost of damage brought by such dent.

Rules in case the fulfillment of Resolutory condition (Art.1190)

Upon the fulfillment the resolutory condition, the obligation is extinguished.

The parties shall return to each other what they have received.

In case of loss, deterioration or improvement of the thing, the provision in the above rule (Art1189), which pertain to the debtor shall be applied to the party who is bound to return.

A N O B L I G AT I O N W I T H A P E R I O D I S O N E W H O S E D E M A N D A B I L I T Y O R E X T I N G U I S H M E N T I S SU B J E C T ED T O T H E E X P I R AT I O N O F T H E T E R M W H I C H M U ST N E C E SSA R I LY C O M E . I N O T H ER W O R D S, T H ER E I S A D AY C E RTA I N W H E N T H E O B L I G AT I O N W I L L A R I S E O R C E A S E .

E xa m p le : 1 . D i s o b l i g e d t o g i v e h i s c a r t o C o n m a y 1 , 2 0 0 3 , t h e o b l i g a t i o n b e c o m e s d em a n d a b l e b y r e a s o n o f t h e e x p i r a t i o n o f t h e t e r m o r p er i o d . T h e p e r io d h e r e i s o n e w i t h s u s p e n s i v e e ff e c t o r ex d i e . 2 . o n J a n u a r y 1 . 20 0 3 , D a l l o w e d C t o u s e h i s c a r u n t i l M a y 1 , ’ 0 3 . T h e o b l ig a t i o n i s d e m a n d a b l e o n J a n u a r y 3 1 , 2 0 0 3 b u t o n M a y 1 , ‘ 0 3 , D ’ s o b l ig a t i o n t o l e t C u s e h i s c a r i s e x t in g u i s h ed b y r e a s o n o f t h e e x p i r a t i o n o f t h e t e r m t h e p e r i o d h e r e i s o n e w i t h a r e s o l u t o r y eff e c t o r i n d i em . C m u s t t h er e f o r e r e t u r n th e c a r.

Obligation with a Period

Concept of a period and day Certain

Period is a space of time which determines the effectivity or extinguishment of an obligation. Thus, the space of time between January 1,2001 and January 1, 2002 is a period the lapse of which will cause an obligation to arise or cease.

A day certain is that which must necessarily come although it may not be known when. (Art.1193) An example is the death of a person which necessarily come. Thus, if the obligation of D is to give C P10,000.00 when X dies, the obligation is one with a period.

Period distinguished from Condition

As to fulfillment A condition is an event that may or may not happen, a

period is an event that must necessarily come, at a date known beforehand or at a time that cannot be determined.

As to time A condition may refer to the future or to a past event

unknown to the parties, a period always refers to the future.

As to influence on the obligation A condition causes an obligation to arise or to cease, a

period merely fixes the time for the efficaciousness of an obligation.

Kinds of Period

Ex die- period with a suspensive effect. Here the obligation becomes demandable upon lapse of the period.(Art1193)

In diem- period with a resolutory effect. Here, the obligation is demandable at once but is extinguished upon the lapse of the period.(Art1193)

Other kinds are: Legal- one that is fixed by law. Voluntary- this is fixed by the parties. Judicial- one that is fixed by the court.

Problem: “I will pay you my debt when my means permit me to do so” is this an obligation with a period or with a condition?

Answer: This is an obligation with a period. Here the remedy of the creditor is to ask the court to fix the period.(Art1180,1197) Once the court has fixed the period, it may no longer change it as it becomes a part of the agreement by the parties.

Presumption as to who has the benefit of the period

Whenever a period is designated in an obligation, it shall be presumed to have been established for the benefit of both the creditor and debtor, unless from the tenor of the obligation or other circumstances, it should appear that it has been established for the benefit of only one of the parties. (Art1196)

Therefore, the debtor cannot be compelled to perform and the creditor cannot be compelled to accept performance, before the term expires. Example: D borrowed P10,00 from c on January 1, 2004. The

loan bears interest at 10% per annum with both principal and interest being due on December 31,2004. Before December 31,2004, C cannot compel D to pay and deprive him the use of the money until the said date. Neither may D compel C to accept payment before December 31,2004 and deprive C of the interest for remaining term.

Period is for the benefit of one of the parties

For the benefit of the debtor- He cannot be compelled to perform his obligation before the expiration of the term, but he may choose to perform before such expiration at his option. Example: D is obliged to pay C P10,000.00 on or before

December 31,2oo4. D cannot be compelled to pay before December 31,2004. However, he may choose to pay at any time before December 31,2004 or on December 31,2004 at his choice.

For the benefit of the creditor- He cannot be compelled to accept performance before expiration of the term, but he may choose to demand performance before such expiration. Example: On November 1,2003, D borrowed from C

P10,000.00 “collectible” on or before June 30,2004. C may demand payment on June 30,2004 or at any time before the said date. However, D cannot compel him to accept the payment at any time before June 30,2004.

When debtor loses his right to make use of the period if it is for his benefit; (Art1198), i.e.; the creditor may demand immediate

payment

When he becomes insolvent, unless he gives a guaranty or security for the debt. When he fails to furnish the guaranties or securities that he has promised.

Example: D borrowed P20,00 from C promising to pledge his ring to C to secure the debt within one month. C gave D one year to pay the loan. D, however, failed to pledge his ring within the period agreed upon. In this case, C can demand immediate payment even before the agreed due date thereof.

When he impairs the said guaranties or securities by his own acts or when through a fortuitous event they disappear, unless he gives new ones equally satisfactory. Example: D obtained a loan from C, the same being secured by a chattel mortgage on D’s

car. The loan is payable within one year. On the seventh month, the car was razed by fire. C can demand immediate payment unless D gives another security that is equally satisfactory. This is true even if the cause of the loss or impairment was not due to the fault of D.

When he violates any undertaking in consideration of which the creditor agreed to the period. Example: C granted a loan of P50,00.00 to D giving D one year provided D did not

engage in any gambling until he has paid the debt. If D enters a casino to play in the slot machine, say after one month, C can already demand immediate payment.

When he attempts o abscond. Example: Thus if the debtor has been disposing all his property with an attempt to leave

his place of business or residence to escape his creditors, such creditors can demand immediate payment of his debts although their maturity date is not yet due.

•SIMPLE - WHERE THERE IS ONLY ONE PRESTATION

•COMPOUND -WHEN THERE ARE SEVERAL PRESTATIONS ARE DUE BUT ALL MUST BE PERFORMED

• Conjunctive: several prestations are due but all must be performed• Example: D is to give C a specific ring, a specific watch and a specific

bracelet to C. D must deliver all the items to C.• Distributive or disjunctive- this may either be alternative or

facultative.

Alternative and Facultative Obligations

Alternative Obligation

An alternative obligation is one where several prestations are due but the complete performance of one of them is sufficient to extinguish the obligation. (Art1199) Example: D is obliged to give a specific ring, a specific

watch or a specific bracelet to C. The delivery of any of the three articles will extinguish the obligation .

Right to choose prestation:The Right of choice belongs to the debtor unless it has been

expressly given to the creditor. (Art1199)

Limitation on debtor’s right to choose

The debtor must completely perform the prestation chosen. He cannot compel the creditor to receive part of one and part of another undertaking. (Art.1199)

He cannot choose those prestations which are impossible, unlawful or which could not have been the object of the obligation. (Art.1199)

When obligation ceases to be alternative and becomes simple obligation

When the debtor has communicated his choice to the creditor. (Art1201)

When among the prestations whereby the debtor is alternatively bound, only one is practicable. (Art.1202)

When the creditor has communicated his choice to the debtor, if the creditor has been expressly given the right of choice. (Art 1205)

Rules in Case of loss of things or impossibility of services which are alternatively the object of the

obligation

1. When the right of choice is with the debtor (Art.1204)

1. If only one or some are lost through the debtor’s fault, the debtor may deliver any of the remainder, or that which remains if only one subsists

2. If all are lost through a fortuitous event, the obligation is extinguished (based on the rule that no person shall be responsible for fortuitous event).

3. If all are lost through the debtors fault, the debtor shall pay the value of the last thing that was lost plus damages.

Examples: D is to give C a specific ring, a specific bracelet or a specific wristwatch. The obligation is silent as to who will choose the item to be delivered. Therefore, the right of choice belongs to D.

a.) If the ring is lost through a fortuitous event. D may deliver the bracelet or the wristwatch. The same rule applies if the ring is lost through the fault of D. in the case of the latter, D shall have no liability because he can perform his obligation by choosing to deliver the bracelet or wristwatch

b.) If the ring and the bracelet are lost through a fortuitous event or through D’s fault, the obligation is converted into a simple obligation to deliver the wristwatch. There is no liability for damages on the part of D even if the loss is due to his fault because he can still perform his obligation. It was as if D chose to deliver the wristwatch.

c)If all the things are lost due to a fortuitous event D’s Obligation is extinguished.

d.) If the ring and the bracelet are lost through a fortuitous event, the obligation is becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost due to the fault of D, D shall pay damages.

e.) if the ring, the bracelet and the wristwatch are lost one after the other due to D’s faults, D shall pay the value of the wristwatch, the last item that was lost, plus damages

f.) If the ring and the bracelet are lost through D’s fault, the obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost due through a fortuitous event, D’s obligation is extinguished.

Rules in Case of loss of things or impossibility of services which are alternatively the object of the

obligation

2. When the right of choice is expressly granted to the creditor (Art.1205)1. If only one or some are lost through

a fortuitous event, the debtor shall deliver that which the creditor should choose among any the remainder, or that which remains if only one subsists.

2. If all are lost through a fortuitous event, the obligation is extinguished.

3. If only one or some are lost through the debtor’s fault, the creditor may claim any of those subsisting, or the price of those which were lost through the debtor’s fault plus damages.

4. If all are lost through the debtors fault, the creditor may claim the price of any of them plus damages.

Examples: D is to give C a specific ring, a specific bracelet or a specific wristwatch. The parties agreed that C shall have the right of choice.

a.) If the ring is lost through a fortuitous event. D shall deliver either the bracelet or the wristwatch at the choice of C.

b)If all the things are lost due to a fortuitous event D’s Obligation is extinguished.

c.) If the ring and the bracelet are lost through a fortuitous event, D shall deliver the wristwatch which is remaining item. The obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost due o the fault of D, D shall pay damages.

d.)If the ring and the bracelet are lost through D’s fault, the obligation does not become a simple obligation to deliver the wristwatch. C can still choose from the payment of the price of the ring or the bracelet with damages, or the delivery of the wristwatch.

e. ) If all are lost due to D’s faults, C may claim the price of any of them plus damages

Facultative obligation

An obligation where only one prestation is due but the debtor may render another substitution

Example: D is obliged to give a specific ring to C with the agreement that D may deliver a specific wristwatch as a substitute.

Rules in case of loss of Principal thing and substitute. (before substitution) (after substitution)

i.e: before the debtor has informed the creditor of the substitution

Principal thingIf lost due to fortuitous event,

the obligation is extinguished.

If lost due to debtor’s fault, debtor shall pay damages

SubstituteThe loss of the substitute

whether through a fortuitous event or through the debtor’s fault imposes no additional obligation on the debtor because it is not yet due. The debtor has still to deliver the principal thing.

Principal thingThe loss of the principal thing whether through a fortuitous event or through the debtor’s fault imposes no additional obligation on the debtor because the thing due is already the substitute. After the substitution has been communicated, the thing due is the substitute. The obligation also ceases to be a facultative obligation and becomes a simple obligation.

SubstituteIf the lost through a fortuitous event, the obligation is extinguished.If the lost through the debtor’s fault, the debtor shall pay damages.

Alternative and facultative distingished

Alternative obligation Several prestations are due

but the performance of one is sufficient to extinguish the debt.

If there are void prestations, the others may still be valid, hence the obligation remains.

The right of choice is with the debtor unless expressly given to the creditor.

If all the prestations are impossible except one, that which is possible must still be given.

Facultative obligation Only one prestation, the

principal obligation is due.

If the principal obligation is void, the debtor is not required to give the substitute.

The right of choice belongs to the debtor only

If the principal obligation is impossible, the debtor is not required to give the substitute.

•I N J O I N T A N D S O L I D D A RY O B L I G AT I O N S, T H E R E I S A C O N C U R R E N C E O F T W O O R M O R E D EB T O R S A N D/ O R T W O O R M O R E C R E D I T O R S I N O N E A N D T H E S A M E O B L I G AT I O N

•I N A J O I N T O B L I G AT I O N E A C H D E B T O R I S L I A B L E O N LY F O R A P R O P O RT I O N AT E PA RT O F T H E D E B T, A N D E A C H

C R E D I T O R I S E N T I T L E D O N LY T O P R O P O RT I O N AT E PA RT O F T H E C R ED I T.

• Examples: 1. A and B are indebted to X for P10,000.00. A is liable only for P5,000.00; B is liable only for P5,00.00.

• 2. A owes X and Y P8,000.00. X can collect only P4,000.00; Y can collect only P4,000.00.

•I N A SO L I D A RY O B L I G AT I O N E A C H D E B T O R I S L I A B L E F O R T H E W H O L E O B L I G AT I O N, A N D EA C H C R E D I T O R I S EN T I T L ED T O DE M A N D PAY M E N T O F T H E W H O L E

O B L I G AT I O N.

Joint and Solidary Obligations

Kinds of Solidary obligations

Passive solidarity- this is solidarity on the part of the debtors Example: A and B, solidary debtors, are indebted to X for

P10,000.00. X can demand payment of P10,000.00 from either A or B. If A pays X, 10,000.00. A can demand reimbursement from B his share of P5,000.00.

Active solidarity- this is solidarity on the part of the creditors Examples A owes X and Y, solidary creditors, P8,000.00. Either X

or Y may demand payment of P8,000.00 from A. If A pays X P8,000.00 the obligation is extinguished. X must give Y his share amounting to P4,000.00.

Mixed solidarity Example: A and B, solidary debtors, owes X and Y, solidary

creditors, P12,000.00. X or Y may collect from A or B the total sum of P12,000.00. if A pays X P12,000.00, the obligation is extinguished. B must reimburse A P6,000.00. On the other hand, X must give Y his share of P6,000.00.

Other terms for Solidary obligations

Jointly and severallyIndividually and collectivelyIn solidumMancomunada solidariaJuntos o separadamente

General rule if there is a concurrence of two or more debtors and/ or two or more creditors in one and the

same obligation.

The obligation is presumed to be joint when there is a concurrence of two or more debtors and/ or two or more creditors in one and the same obligation. There is solidary liability only in the following cases: 1. When the obligation expressly so states. 2. When the law requires solidarity.

Examples: 1. when two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable for the consequences of the agency. (Art.1915)

Where the instrument containing the words “ I promise to pay” is signed by two or more persons, they are deemed to be jointly and severally liable thereon. (Sec.17, Negotiable Instruments Law)

3. when the nature of the obligation requires solidarity. Example: S a security guard of AB Partnership, died in line of duty. The heirs of

S demanded compensation under the Workmen’s Compensation Law (WCC) for the whole amount from A, partner. A claimed that he should be liable only for one half thereof, the other half to be shouldered by B, his partner, since their liability is joint. The court ruled that the partners’ liability is solidary since the nature of their obligation requires solidarity. The evident intention of the WCC is to give full protection to workers. This purpose would be defeated if the employer’s liability were only joint.

Problems

A,B and C are obliged to give X,Y and Z P27,00.00. How many distinct debts are there in the obligation?

Answer: since the obligation is presumed to be joint, there are 9 distinct debt as follows: A owes X P3,000.00. A owes Y P3,000.00. A owes Z P3,000.00. B owes X P3,000.00. B owes Y P3,000.00. B owes Z P3,000.00. C owes X P3,000.00. C owes Y P3,000.00. C owes Z P3,000.00.

A, B and C, joint debtors, are obliged o give X,Y and Z, solidary creditors, P18,000.00. How much may X collect and from whom?

Answer: X, being a solidary creditor, may collect the sum of P18,000.00. However, since the debtors are joint debtors, he may collect only P6,000.00 from each of them. After collecting the sum of P18,000.00, X must give Y and Z’s share of P6,000.00 each.

Problems

A,B and C, solidary debtors are obliged to give X,Y and Z, joint creditors, P18,000.00. How much may A be held liable?

Answer: A, being a solidary debtor may be held liable for P18,000.00. However, since the creditors are joint creditors, each of them may collect only P6,000.00 from A. If A pays the whole amount o the creditors, A can demand reimbursement of P6,ooo.oo each from B and C.

A,B and C, solidary debtors are obliged to give X,Y and Z, solidary creditors, P18,000.00. how much may Z collect from whom?

Answer: Z may collect P18,000.00 from any of the solidary debtors each of whom may be held liable for the entire obligation. If Z collects P18,000.00 from A, Z must give X and Y P6,000.00 each. A, on he other hand, can demand reimbursement from B and C at P6,000.00 each.

Problems: A and B are solidary debtors of X and Y, solidary creditors in the amount of P20,000.00.

If X renounces or remits the whole obligation without the consent of Y, will the obligation be extinguished?

Answer: Yes, because the remission made by any solidary creditor extinguishes the whole obligation. (Art.1215). However , X has to give Y’s share of P10,000.00 since solidary creditor may not do anything prejudicial to his co-solidary creditors. (Art.1212). A solidary creditor who has caused the extinguishment of the obligation by remission, novation, compensation or confusion, or who has collected the debt, shall be liable to the others for the shares corresponding to them. (Art.1215).

Suppose the remission of the whole obligation was obtained by A, may A demand reimbursement from B?

Answer: No, because the remission of the whole obligation obtained by one of the solidary debtor does not entitle him to reimbursement from his co-debtors (Art.1220), remission being the gratuitous abandonment by the creditors of their rights to the obligation

Suppose that X renounces or remits A share amounting to P10,000. However, it turned out that B had already paid P20,000.00 to Y two days before. May B still collect P10,000.00 from A representing A’s share?

Answer: Yes, B may still collect from A P10,000.00. the remission made by the creditor of the share which affects one solidary debtor does not release the latter from responsibility to his co-debtors, in case the debt has been totally paid by anyone of them before the remission was affected. (Art1219). A’s remedy will be to go after X or Y to collect the sum he paid to B.

Problems: A , B and C are solidary debtors, borrowed P30,000.00 from X. The obligation is evidenced by a promissory note signed by

the debtors.

X demands payment from A. However, A pays only P12,000.oo. May X still go after B and/or C?

Answer: Yes, X may still go after B or C or both of them for the balance of P18,000.00. 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 directed against the others, so long as the debt has not been fully collected. (Art1216).

If A pays X P30,000.00, what are the rights of A? Answer: A can demand from B and C at P10,000.00 each together with interest from

the date of payment. However, if payment is made by A before due date, he cannot collect interest during he intervening period, i.e., from date of payment to due date. (Art.1217)

A pays X P30,000.00. However, C has become insolvent. How much may A demand from B as reimbursement?

Answer: A may demand payment of P15,00.00 from B. If an insolvent debtor cannot reimburse his share to the debtor paying the obligation, such share be borne by all his co-debtors in proportion to the debt of each. (Art.1217). Thus, A and B shall bear C’s share at P5,000.00 each.

If A pays X P30,0000.00 more than 10 years after the note had become due, can he still demand reimbursement from B and C?

Answer: No, he can no longer demand reimbursement . Payment by solidary debtor after the obligation has prescribed does not entitle him to reimbursement. The same rule applies if payment is made after the obligation has become illegal. (Art.1218.)

Problems Problems: A ,B, C and D are solidary

liable to X for the delivery of a specific ring valued at P20,000.00. what is the rule if the ring is lost: 1. Through a fortuitous event?; 2. Through the fault of D?

Answers: 1. The obligation shall be extinguished. This is according to the rule that no person shall be responsible for fortuitous events.

2. All the solidary debtors shall be liable for the payment of the price of the ring plus damages and interest. However, the solidary debtor making the payment can recover whatever he has paid from the guilty debtor. Thus if X goes after A and A pays the price of ring and the damages and interest. A can demand reimbursement of P20,000.00 plus damages and interest from D, the guilty negligent debtor. (Art1221)

A is indebted to X, Y, and Z, solidary creditors for P24,000.00. Suppose X makes a demand against A, to whom shall A pay?

Answer; A must pay to X. if A pays another solidary creditor, say Y, the sum of P24,000.00, the payment as a rule is valid only with respect to Y’s share of P8,000.00. Thus, if X and Z do not receive their respective share from Y, A can still be held liable for P16,000.00 . (Art.1214)

Existence of solidarity despite different periods and conditions

Solidarity exist although the creditors and debtors may not be bound by the same periods and conditions (Art.1211)

Example: A, B and C are solidarily liable to X for P9,000.00. The parties stipulated that the share of A is payable on demand; the share of B on Christmas day next year; and the share of C, if X passes the Bar Examination.

X may demand payment of the share of A of P3,000.00 anytime from either A B or C. On Christmas day next year, X may demand payment of the share of B of P3,000.oo from either A, B or C. When X passes the Bar examination, he may demand payment of the share of C of P3,000.00 from either A, B or C.

Effect of unauthorized assignment of creditor’s right

The solidary creditors are bound by mutual trust and confidence. Hence, a solidary creditor cannot assign his right to a third person without the consent of the other solidary creditors (Art.1213) because the assignee may not enjoy the trust and confidence of the non-assigning creditors.

If the assignment is without the consent of the co-creditors, the assignment is not valid as to them. Accordingly, they can recover their respective shares from the assigning creditor in case the assignee who collected the debt fails to give them their shares.

Defenses available to solidary debtors

Those derived from the nature of the obligation (such as prescription of the obligation, illegality of cause).

Those personal to the debtor being sued, or those that pertain to his own share( such as incapacity of the debtor or non-fulfillment of a suspensive condition as to his share).

Those personal to the other debtors with respect to their own share(such as incapacity of another debtor or non-fulfillment of a suspensive condition with respect to the other debtors’ shares).

Joint indivisible obligation, concept and characteristics

A joint obligation is an obligation where the debtors or creditors are jointly bound but the prestation or object is indivisible. It has the following characteristics:

The creditors must act collectively meaning all of them must make the demand unless one is specifically unauthorized to act for the other. (Art1209). A demand made by one or some but not all of the creditors will not be effective.

The demand must be made against all the debtors since compliance is possible only if they act together. (Art1209)

The right of the creditors may be prejudices only by their collective acts. Thus, a renunciation made by a joint creditor extinguishes only his own share. The obligation, however, is converted into an obligation to pay the value of the thing. If all join creditors make the renunciation, the obligation is extinguished. (Art.1209)

If one of the debtors does not comply with his undertaking the obligation is converted into a monetary obligation to pay damages. The debtors who may have been ready to comply shall not contribute to the indemnity beyond the corresponding price of the thing or the value of the services in which the obligation consists. (Art.1224).

If one of the debtors is insolvent, the others shall not be liable for his share. (Art.1209)

Illustration: A, B, and C are jointly indebted to deliver a specific car valued at P900,000.00 to X, Y and Z.

1. X, Y and Z must make a demand against A, B and C for the delivery of the car.

2. If A is not ready to comply with his undertaking, the obligation to deliver the car is converted into an obligation to pay its value plus damages. B and C shall be obliged to pay P300,000.00 each. A, the defaulting debtor, shall be liable for P300,000.00 plus damages.

3. If A is insolvent, B and C shall be liable only for their respective share of P300,000.00 each.

4. If X renounces his right to the obligation without the consent of Y and Z, then only his proportionate share is extinguished. The obligation, however, is converted into a monetary obligation to pay P600,000.00 which must be given to Y at P300,00.00 and Z at P300,000.00 by A, B and C who will give P200,00.00 each.

Indivisibility and solidarity, concept and distinctions

The indivisibility of an obligation refers to the subject matter or object no being susceptible of partial performance. Solidarity on the other hand, refers o tie between the parties. One therefore, does not imply, or give rise to the other. (Art1210) Thus, there may be the following obligations:

Joint divisible obligation- Example: A and B are jointly obliged to C to construct a pavement 2m wide and 10m long.

Joint indivisible obligation- Example: A and B are jointly obliged o give a specific horse to C.

Solidary divisible obligation: Example: A and B are solidarily liable to pay C P10,000.00 in two equal installments.

Solidary indivisible obligation: Example: A and B are solidarily liable o give a specific horse to C.

•IS ONE CAPABLE OF PARTIAL PERFORMANCE (SUCH AS THE OBLIGATION TO DELIVER 10 SACKS OF RICE) . THE FF.

OBLIGATIONS ARE DEEMED DIVISIBLE (ART1225) :•1. WHEN THE OBLIGATION HAS FOR ITS OBJECT THE

EXECUTION OF A CERTAIN NUMBER OF DAYS OF WORK (SUCH AS AN OBLIGATION TO WORK FOR 1 WEEK.)

•2. WHEN THE OBLIGATION HAS FOR ITS OBJECT THE ACCOMPLISHMENT OF WORK BY METRICAL UNITS(SUCH AS OBLIGATION TO CONSTRUCT A PAVEMENT WHICH IS

10M LONG AND 2M WIDE.)•3. ANALOGOUS THINGS WHICH BY THEIR NATURE ARE

SUSCEPTIBLE TO PARTIAL PERFORMANCE.

Divisible Obligations

•I S O N E N O T C A PA B L E O F PA RT I A L P E R F O R M A N C E ( SU C H A S T H E O B L I G AT I O N T O D E L I V ER A S P E C I F I C C A R ) . T H E F F.

O B L I G AT I O N S A R E D E E M ED I N D I V I S I B L E ( A RT 1 2 2 5 ) :•1 . O B L I GAT I O N T O G I V E D E F I N I T E T H I N G S ( SU C H A S T O G I V E A

S P E C I F I C H O R S E . )•2 . T H O S E N O T SU S C E P T I B L E T O PA RT I A L P ER F O R M A N C E ( S U C H

A S T H E O B L I G AT I O N O F A S I N G E R T O S I N G 1 S O N G I N A P R O G R A M ) .

•3 . T H O S E W H E R E T H E O B JE C T O R S ERV I C E I S P H Y S I C A L LY D I V I S I B L E B U T I T I S I N D I V I S I B L E BY P R OV I S I O N O F L AW ( SU C H

A S W H E R E T H E O B L I G AT I O N I S T O PAY A S U M O F M O N E Y B U T T H E L AW P R OV I D E S T H AT T H E S U M M U S T B E PA I D I N F U L L ) .

•4 . T H O S E W H E R E T H E O B JE C T O R S ERV I C E I S P H Y S I C A L LY D I V I S I B L E B U T I T I S I N D I V I S I B L E BY T H E I N T E N T I O N O F T H E PA RT I ES. ( S U C H A S W H ER E T H E O B L I G AT I O N I S T O PAY A SU M

O F M O N EY B U T T H E PA RT I E S A G R E E D T H AT T H E S U M M U S T B E PA I D I N F U L L ) .

Indivisible Obligations

•AN OBLIGATION WITH A PENAL CLAUSE IS ONE WHICH PROVIDES FOR A GREATER LIABILITY ON THE PART OF

THE DEBTOR IN CASE OF NONCOMPLIANCE. THE ACCESSORY UNDERTAKING ON THE PART OF THE DEBTOR

IS CALLED THE PENAL CLAUSE. •EXAMPLE: D IS OBLIGED TO CONSTRUCT A COMMERCIAL BUILDING FOR C WITHIN A PERIOD OF THREE MONTHS. THE PARTIES AGREED THAT SHOULD D FAIL TO FINISH

THE CONSTRUCTION OF THE BUILDING WITHIN THE SAID PERIOD, D SHALL PAY C P1 ,000 .00 FOR EVERY DAY OF

DELAY AS PENALTY.

Obligation with a Penal Clause

Kinds of Penal Clause

Legal and conventionalLegal- imposed by lawconventional- imposed by the agreement of the

partiesSubsidiary and jointSubsidiary- -when only the penalty may be enforced.Joint- when both the obligation and the penalty may

be enforced.Proof is not required for actual damages suffered if there is a penalty:

Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. (Art.1228)

Rules in case obligation has a penal clause

General rule: The penalty takes the place of the damages and interest in case of noncompliance.

Exceptions: i.e.; aside from the penalty, damages and interest may also be demanded:

1.) When there is stipulation to that effect.2.) When the debtor refuses to pay the

penalty.3.) When the debtor is guilty of fraud in the

performance of the obligation.(Art1226) This is so because there is no waiver of an action for future fraud. (Art.1171)

Problem: D is obliged to deliver 10 sacks of rice to C on May 10. The parties agreed that if D fails to deliver on due date,

he will pay a penalty of P500.00.

Supposing d failed to deliver on due date, may he just pay penalty of P500.00?

Answer: No, because the debtor cannot exempt himself from the performance of the obligation by just paying the penalty, except when this right has been expressly reserved for him(Art.1227)

May C demand the delivery of 10 sacks of rice and the payment of the penalty the same time upon the default of D?

Answer: No. The creditor cannot demand fulfillment of the obligation and the payment of the penalty at the same time except when this right has been clearly granted to him, or if after requiring fulfillment of the obligation, the performance thereof becomes impossible without his fault, he may also enforce the penalty. (Art 1227)

When the court may reduce penalty:

1. When the obligation has been partly complied by the debtor.

2. When the obligation has been irregularly complied with by the debtor.

3. When the penalty is iniquitous or unconscionable even there has been no performance (Art.1229)

Effect of nullity of principal obligation, penal clause

1. The nullity of the principal obligation carries it with nullity of the penal clause. This is so because the penal clause, being just an accessory undertaking, cannot stand by itself.

2. The nullity of the penal clause does not carry with it that of the principal obligation. This is so because the principal obligation can stand by itself.