Joint and Solidary Obligations

Obligations Based on Number of Parties

• Individual obligations involve one obligor (debtor) and one obligee (creditor).
  • For example, John promising to pay Anna ₱100 constitutes an individual obligation, with John as the debtor and Anna as the creditor.
• Collective obligations involve two or more debtors or creditors.

Joint Obligations

• Each debtor is responsible for a specific share of the total obligation.
  • If John and Mark jointly owe Anna ₱100 and agree to each pay ₱50, this is a joint obligation.

Solidary Obligations

• Each debtor is fully responsible for the entire obligation.
  • If John and Mark owe Anna ₱100 in solidum, Anna can demand the full amount from either John or Mark.

Presumption of Joint Obligations

• The law presumes an obligation with multiple debtors or creditors is joint unless otherwise specified.
  • Each debtor has their own debt.
  • Each creditor has their own credit.
  • Each debt and credit is separate.
  • Each debtor is responsible for their portion.
  • Each creditor is entitled to their portion of the payment.
  • If John, Mark, and Paul jointly owe Anna and Betty ₱9,000, each debtor owes ₱3,000.
• This presumption can be challenged if parties explicitly agree to solidary liability, allowing each debtor to be liable for the full amount.
• Courts aim to avoid multiple lawsuits, even with presumed joint obligations, to streamline proceedings for both debtors and creditors.

Terminology for Joint Liability

• Mancomunada/Mancomunadamente: Spanish terms indicating joint liability where each debtor is responsible for their share.
• Pro rata: Latin term meaning "in proportion," indicating each debtor is liable only for their part.
• Proportionately: Liability is divided according to agreed shares.

Establishing Solidary Liability

• An obligation is solidary when the contract explicitly states it or when solidarity is required by law or the nature of the obligation.

Terminology for Solidary Liability

• Jointly and/or severally
• Solidaria
• In solidum
• Together and/or separately
• Individually and/or collectively
• Juntos o separadamente (Spanish for "together or separately")
• Phrases like "I promise to pay" signed by multiple persons

Types of Solidarity by Parties

• Passive Solidarity: Among debtors
  • Any one debtor can be held responsible for the entire obligation.
• Active Solidarity: Among creditors
  • Any one creditor can demand full payment.
• Mixed Solidarity: Involves both debtors and creditors.
  • Each debtor is responsible for the whole amount, and each creditor can demand full compliance.

Types of Solidarity by Source

• Conventional Solidarity: Agreed in a contract; if not specified, the obligation is joint.
• Legal Solidarity: Imposed by law, even without agreement.
• Real Solidarity: Arises from the nature of the obligation.

Basic Tenets

• Solidarity is not presumed; it must be expressly stated or required by law.

Joint Indivisible Obligations

• The obligation is indivisible if the object cannot be physically divided.
  • If multiple debtors owe a single, indivisible object, they must fulfill the obligation together, or one debtor must perform completely on behalf of the others.
  • For example, if John, Mark, and Paul owe Anna one car, they must deliver it together or have one of them deliver it on behalf of all.

Indivisibility vs. Solidarity

Uniform Solidary Obligation

• All parties are bound by the same terms and conditions.
  • If John, Mark, and Paul owe Anna ₱300,000, each is solidarily liable for the full amount under the same terms.

Non-Uniform Solidary Obligation

• Parties have different terms or conditions in their obligations.
  • John must pay ₱100,000 in cash, Mark must pay ₱100,000 in installments, and Paul must pay ₱100,000 after 6 months; they are still solidarily liable for the full debt.

Rules on Soldiarity

• Solidarity applies even if debtors have different terms
  • Each creditor can demand payment from any debtor for the full debt.
  • Each debtor is responsible for the entire debt to all creditors.
• A creditor can sue any solidary debtor for the full amount, considering unexpired terms.
• Once terms expire, the creditor can claim the remaining balance.
• Parties can agree that any solidary debtor is responsible for the entire debt.

Solidary Creditor Actions

• A solidary creditor can take actions that benefit the other creditors but cannot take actions that harm them.
• If a solidary creditor extinguishes the debt, they must compensate the other creditors for damages caused.
  • Discount negotiations by a solidary creditor benefit all, while wrongful cancellation requires compensating the others.
• A solidary creditor cannot transfer their rights to another person without the consent of the other creditors to ensure trust.

Payment in Solidary Obligations

• A debtor can pay any solidary creditor, but if one demands payment, the debtor must pay that creditor to avoid confusion.
  • If the debtor pays someone else, it only counts for that creditor's share, and the debtor still owes the rest unless the paid creditor shares the money.
  • If John, Mark, and Paul are solidary creditors of ₱30,000, payment to John settles the debt, but payment to Paul for ₱10,000 leaves ₱20,000 still owed to John and Mark.
• A creditor can demand the full amount from any one or more solidary debtors, applying only to solidary, not joint, obligations.
  • If John, Mark, and Paul are solidary debtors of ₱90,000, the creditor can demand ₱90,000 from John alone, even if Mark and Paul are also debtors.
• When one debtor pays the full debt, the obligation is fully extinguished, the paying debtor can ask the others to reimburse their shares plus interest.
  • Non-paying debtors no longer have solidarity and now owe only the paying debtor, and if one debtor cannot pay, the others must cover that share proportionally.
  • If a solidary creditor receives payment, they must share it with the other creditors.
  • If John, Mark, and Paul owe ₱90,000 in solidum and John pays in full, Mark and Paul must reimburse John ₱30,000 each plus interest.

Effects of Payment After Prescription or Illegality

• Expired (prescribed): Payment cannot be reimbursed because the obligation is no longer valid.
• Become illegal: Payment cannot be recovered since the debt was invalidated by law.

Prescriptive Periods

• Written contract, obligation by law, or judgment = 10 years (Art. 1144)
• Oral contract or quasi-contract = 6 years (Art. 1145)
• Injury to rights or quasi-delict = 4 years (Art. 1146)
• If a debtor has already paid, a later remission (waiver) does not apply to them.
• If remission happens before payment, the debtor can challenge the validity before paying.

Key Terms for Debt Forgiveness

• Remission = Forgiveness of a debt.
• Waiver = Giving up a right or claim.
  • John, Mark, and Paul owe ₱90,000; John pays his share; later, the creditor forgives Mark’s debt, John cannot claim a refund because he already paid.
• If a solidary debtor is granted remission, they cannot ask the other debtors to reimburse them because remission is a gift.

Exceptions to Remission

• Novation (replacing the old obligation)
• Compensation (offsetting debts)
• Confusion (debtor and creditor become the same person) occur
  • John, Mark, and Paul owe ₱90,000; the creditor forgives Paul, John and Mark cannot pay his forgiven share.

Divisible and Indivisible Obligations

• Divisible Obligation: Can be performed in parts or steps, such as delivering goods in installments.
• Indivisible Obligation: Must be performed entirely at once, like delivering a specific car.
• Determination of divisibility depends on the purpose of the obligation or intentions of the parties.
• Even if physically divisible, an obligation may be indivisible by agreement. Some obligations are naturally indivisible.
• The term "things" refers to tangible and intangible obligations, such as services and deliveries.

Types of Division

• Qualitative Division: Division based on quality, not quantity. (e.g., A receives a house and appliances, while B gets a rice field and cash.)
• Quantitative Division: Division based on equal portions. (e.g., Dividing a cake into equal slices.)
• Ideal or Intellectual Division: Conceptual division without physical separation. (e.g., Co-owners agree on a vacation home usage schedule)

Types of Indivisibility

• Legal Indivisibility: Imposed by law, even if division is possible. (e.g., A law requiring that a contract remain whole.)
• Conventional Indivisibility: Parties agree not to divide (e.g., Contract explicitly stating partial performance is not allowed.)
• Natural Indivisibility: The obligation is indivisible by its very nature. (e.g., Promise to give a specific car.)
• The entire obligation must be fulfilled unless an agreement allows partial performance.

Contractual Obligations

• A creditor cannot be forced to accept partial fulfillment unless legally or contractually permitted.

Principal and Accessory Obligations

• Principal Obligation: Exists independently and does not rely on another obligation for validity.
• Accessory Obligation: Attached to a principal obligation and cannot stand alone.
• An obligation with a penal clause includes a penalty if a party fails to fulfill the main obligation, deterring non-compliance.
• A penal clause specifies a penalty or fee payable if the main obligation is unfulfilled, for the purposes of encouraging performance,.

Reasons for Penalties

• To substitute the penalty for indemnity (damages) and interest payments in case of breach.
• To punish the debtor for failing to fulfill the obligation.
• A penal clause is an obligation, while a condition.
• A penal clause can be enforced if the main obligation is unfulfilled, whereas a condition cannot be demanded.
• Legal Penal Clause: Imposed by law.
• Conventional Penal Clause: Agreed upon by the parties in a contract.
• The penalty removes the need to prove actual damages when an obligation is breached, but parties may agree to add interest on top of the penalty.

When a Creditor may recover damages

• When damages are explicitly agreed to in the contract.
• When the debtor refuses to pay the penalty
• When the debtor commit fraud
• The penalty is meant to enforce performance, not replace it.
• The debtor can only choose to pay the penalty if this is explicitly allowed in the agreement.
• The penal clause is enforced if the main obligation is not performed, if the obligation is completed, the creditor cannot demand the penalty,.
• The creditor can choose between demanding performance or enforcing the penalty, unless specified in their contracts.
• IF the debtor commit fraud then the creditor can demand BOTH the penalty and additional damages.

Cumulative Penalties

• Joint (Cumulative) if the debtor explicitly has the option to pay the penalty instead of fulfilling the obligation.
• A debtor cannot escape a financial obligation by merely paying a penalty.
• If the creditor has the right to demand both the performance and the penalty, this can be enforced even if not explicitly stated in the contract.