Law Reviewer: Obligations and Contracts - Sem 1, 2024-25 PDF

1 LAW 1101 OBLIGATIONS AND CONTRACTS SEM 1, 2024-25 Definition of Law and Business Law...

1 LAW 1101 OBLIGATIONS AND CONTRACTS SEM 1, 2024-25 Definition of Law and Business Law Body of rules which regulates the rights and duties Law is an ordinance of reason, promulgated for the arising from the relationship between the State and its common good by one who has authority over society. inhabitants. (as defined by St. Thomas Aquinas) It is that mass of rules of conduct formulated by the It includes the following: legitimate power of the State for common observance 1. International Law – consists of those rules and and benefit. principles which govern the relations and dealing of nations with each other. The most basic, simple and concise definition of law was 2. Constitutional Law It simply governs the relations defined by Sanchez Roman, a Spanish Civilist and he defined Law as: between the State and its citizens. “A RULE OF CONDUCT , JUST AND OBLIGATORY 3. Administrative Law – it fixes the organization and PROMULGATED BY LEGITIMATE AUTHORITY FOR THE determines the competence of the authorities that COMMON OBSERVANCE AND BENEFIT.” execute the law and indicates to the individual remedies for the violation of his rights. Sources of Law 4. Political Law – deals with the organization and operation of the governmental organs of the State 1. CONSTITUTION and defines the relations of the state with the The fundamental law that governs a nation in its relation inhabitants of its territory. to its citizens. All laws must conform and comply with 5. Criminal Law – guaranties the coercive power of the the provisions of the Constitution, otherwise it becomes law so that it will be obeyed. Governs the methods unconstitutional. of trial and punishment of crimes. 2. ADMINISTRATIVE OR EXECUTIVE ORDERS, B. INDIVIDUAL or PRIVATE LAW REGULATIONS AND RULINGS The fundamental law that governs a nation in its relation Those law which govern the private relation person. to its citizens. All laws must conform and comply with the provisions of the Constitution, otherwise it becomes It includes the following: unconstitutional. 1. Civil Law – branch of law which has for its double 3. JUDICIAL DECISIONS OR JURISPRUDENCE purpose the organization of the family and the regulation of property. It is defined as the mass of Judicial decisions or interpreting the laws or the Constitution shall form a part of the legal system of the precepts which determines and regulate the Philippines. (Art. 8, New Civil Code) Judicial decisions, relation of assistance, authority and obedience though, are part of the legal system in the Philippines among the members of a society for the protection still are not laws for if this were so, the Courts exists for of private interests. stating what the law is, but not for giving it. Judicial decisions, though not law, are evidence of what the law 2. Commercial Law – defined as a whole body of means. This is why they are part of the legal system in the Philippines. So, f an interpretation is placed by the substantial jurisprudence applicable to the rights, Supreme Court upon a law, it constitute in a way, part intercourse and relation of persons engaged in of the law since the Courts interpretation merely commerce, trade or mercantile pursuits. (Black’s establishes the legislative intent. law dict. 338) 4. CUSTOM 3. Procedural Law – defined as the branch of law It consists of those habits and practices which through which prescribes the method of enforcing rights or long and uninterrupted usage have become obtaining redress for their invasion, Procedural law acknowledged and approved by society as binding rule otherwise known as Remedial Law, as of conduct. Thus, it has been a custom for a person to enter and exit a door. Once a person uses the window distinguished from Substantive law which creates, for his entrance and exit, it runs counter to the custom defines and regulate rights. of use of the door. Even our Lord said as a good shepherd, if a person does not pass the gate, he is a thief for a marauder. Purpose of Law 5. OTHER SOURCES Law creates rights as well as obligations. Where there is a right, there is also an obligation. To add, the principle of justice and equity, decisions of foreign tribunals, opinions of text writers and even A right is a legally demandable claim by a person religion may also be sources of law. against another. Violation of a right entitles a person to a remedy under the law. Classifications of Human Law An obligation is a legal necessity to do or not to do an A. GENERAL or PUBLIC LAW act.  2 OBLIGATIONS AND CONTRACTS DEFINITION OF OBLIGATION (ART. 1156, NCC) b. Negative personal obligation or the obligation not to do or not to give. An obligation is a juridical necessity to give, to do or not to do (Art. 1156, NCC). Example: A binds himself not to build an edifice on a portion of his land so as not to obstruct B’s OBLIGATION – originate from the latin word obligatio, right of way over said land. means tying or binding. The term obligatio was derived from the words ―ob and ligare which means CLASSIFICATION OF OBLIGATIONS to bind or tie together. Ligare is the source of several common words such as ligament and ligation. 1. Pure and Conditional Obligations (Arts. 1179-1192); “An obligation is a juridical relation whereby a person 2. With a Period (called the creditor) may demand from another (called (Arts. 1193-1198); the debtor), the observance of a determinate conduct 3. Alternative and Facultative (the giving, doing, or not doing), and in case of (Arts. 1199-1206); breach, may demand the satisfaction from the assets 4. Joint and Solidary Obligations of the latter” (Arias Ramos). (Arts. 1207-1222); 5. Divisible and Indivisible Obligations “A legal relation established between one person and (Arts. 1223-1225); another, whereby the latter is bound to the fulfillment 6. With a Penal Clause (Arts. 1226-1230). of a prestation which the former may demand of him.” (Jurado, 12th ed, 2010) KINDS OF OBLIGATIONS ELEMENTS OF AN OBLIGATION A. Viewpoint of Sanction 1. Civil obligations – give a right of action to 1. An active subject (obligee or creditor) – the party compel their performance. who is entitled to demand the fulfillment of the obligation; the one who has a right; the party in 2. Natural obligations – not based on positive law whose favor the obligation is constituted. but on equity and natural law; do not grant a right of action to enforce their performance, but 2. A passive subject (obligor or debtor) –the party after voluntary fulfillment by the obligor, they who is bound to fulfill the obligation; the one who authorize retention of what has been delivered or has the duty of giving, doing, or not doing; rendered by reason thereof. 3. The object or prestation (the subject matter of 3. Moral obligations – those that cannot be the obligation) – the conduct or service to be enforced by court action but which are binding on observed by the debtor; the party who makes it in conscience and natural law. 4. The efficient cause (the vinculum or juridical tie) – that which binds the parties to the obligation; the Civil and Natural Obligation Distinguished cause or source of the obligation. CIVIL NATURAL OBLIGATION OBLIGATION Obligation being a Juridical Necessity (Art. 1156) (Art. 1423) It is a juridical necessity because in case of non- Based on positive law Based on equity and compliance, the courts of justice may be called upon natural law to force its fulfillment or in default thereof, the economic value that it represents. Enforceable by court Not enforceable by court action or action Prestation power/authority An obligation; more specifically, it is the subject matter of an obligation – and may consist of giving a NATURAL OBLIGATIONS thing, doing or not doing a certain act. (ARTS. 1423 -1430, NCC) DIFFERENT KINDS OF PRESTATIONS Definition of Natural Obligations Those based on equity and natural law, which do not 1. Real obligation (obligation to give), one in which grant a right of action to enforce their performance, the subject matter is a thing which the obligor must but after voluntary fulfillment by the obligor, authorize deliver to the obligee. the retention of what has been delivered or rendered Example: Seller binds himself to deliver a car to by reason thereof (Art. 1423, NCC). buyer. They are obligations without a sanction, susceptible of 2. Personal obligation (obligation to do or not to voluntary performance, but not through compulsion do), is that in which the subject matter is an act to by legal means (4 Tolentino, Civil Code). be done or not to be done. NOTE: The binding tie of these obligations is in the Two kinds of personal obligation: conscience of man, for under the law, they do not have a. Positive personal obligation or obligation to the necessary efficacy to give rise to an action. do or to render service. Example: A binds himself to paint the fence of B.  1 Natural and Civil Obligations Distinguished EXTRA-CONTRACTUAL OBLIGATIONS NATURAL CIVIL Extra-Contractual obligations (Arts. 2142-2175). or OBLIGATION OBLIGATION Quasi-contracts Based on equity and Based on positive law. natural law. 1. Negotiorum Gestio – (unauthorized management) or the voluntary Not enforceable by Enforceable by court management of the property or affairs of another court action. action. without the knowledge or consent of the latter. Natural and Moral Obligations Distinguished 2. Solutio Indebiti NATURAL – (undue payment) or that juridical relation which OBLIGATION MORAL OBLIGATION arises when something is received where there is no There is a juridical tie There is no juridical tie right to demand it and it was unduly delivered between the parties whatsoever. through mistake. which is not enforceable Innominate Contacts by court action. a. Do ut des – I give that you may give. b. Do ut facias – I give that you may do. Voluntary fulfillment of Voluntary fulfillment of a c. Facio ut des – I do that you may give. a natural obligation by moral obligation does d. Facio ut facias – I do that you may do. the obligor produces not produce any legal legal effects which the effect which courts will Quasi-delict courts will recognize recognize and protect. A fault or act of negligence (or omission of care) which and protect. causes damage to another, there being no pre- existing contractual relations between the parties. Examples of natural obligations enumerated Requisites to hold a person liable under quasi- under the Civil Code delict (FDD) 1. Performance after the civil obligation has 1. There must be fault or negligence attributable to prescribed; the person charged; 2. Reimbursement of a third person for a debt that has prescribed; 2. There must be damage or injury; and 3. Restitution by minor after annulment of contract; 3. There must be direct relation of cause and effect 4. Delivery by minor of money or fungible thing in between the fault or negligence on the one hand fulfillment of an obligation; and the damage or injury on the other hand 5. Performance after an action to enforce civil (proximate cause). obligation has failed; 6. Payment by heir of debt exceeding the value of property inherited; and NATURE AND EFFECT OF OBLIGATIONS 7. Payment of legacy after a will has been declared (ARTS. 1163-1178, NCC) void. OBLIGATION TO GIVE (ART. 1163, NCC) B. Viewpoint of Subject Matter 1. Personal obligation – to do or not to do; General rule: Every person obliged to give something 2. Real obligation – to give; is also obliged to take care of it with the proper 3. Determinate or specific – when the object is diligence of a good father of a family particularly designated or physically segregated from all others of the same class; Exception: When the law or the stipulation of the 4. Generic – when the object is designated merely parties requires another standard of care, slight or by its class or genus; extraordinary diligence, such law or stipulation must 5. Limited generic thing – when the generic prevail. object are confined to a particular class, e.g., an obligation to deliver one of my horses Diligence of a Good Father of a Family (Tolentino, Volume IV, p. 91). That which is required by the nature of the obligation and corresponds with the circumstances of person, D.Viewpoint of Person Obliged time, and place (Art. 1163, NCC). 1. Unilateral – only one party is bound; 2. Bilateral – both parties are bound. Rights of the Creditor to the Fruits The creditor has a right to the fruits of the thing from SOURCES OF OBLIGATIONS (ARTS. 1156 - 1157, the time the obligation to deliver it arises. However, NCC) he shall acquire no real right over it until the same has Sources: (LACQQ) been delivered to him (Art. 1164, NCC). 1. Law – (Art. 1158, NCC); 2. Acts or omissions punished by law (obligations ex a. Before delivery – personal right; delicto) – (Art. 1161, NCC); b. After delivery – real right. 3. Contracts –obligations arising from contracts which have the force of law between the contracting parties and should be complied with in good faith (Art. 1159, NCC); 4. Quasi-contracts – (Art. 1160, NCC); 5. Quasi-delicts (tort or culpa aquiliana) –(Art. 1162, NCC).  2 Personal and Real Right Distinguished 3. To demand payment of damages when it is the only feasible remedy; PERSONAL RIGHT REAL RIGHT 4. If the obligor delays, or has promised to deliver the same thing to two or more persons Jus ad rem, a right Jus in re, a right who do not have the same interest, he shall enforced only against a enforced against the be responsible for any fortuitous event until definite person or group whole world. he has effected delivery. of persons. B. Generic A right pertaining to the A right pertaining to a 1. To ask for performance of the obligation; person to demand from person over a specific 2. To ask that obligation be complied with another, as a definite thing, without a passive at the expense of the debtor; passive subject, the subject individually. 3. To recover damages in case of breach of fulfillment of a Determined against obligation. prestation to give, to whom such right may do or not to do. be personally enforced. When obligation to deliver the thing and the fruits arises: 1. If the source of obligation is law, quasi TWO INSTANCES WHERE A FORTUITOUS EVENT contracts, delict, quasi-delict – It arises from DOES NOT EXEMPT COMPLIANCE (Art. 1165, par. the time designated by the law creating or 3, NCC) regulating them. 1. If the obligor is in default; 2. If the obligor is guilty of bad faith (for having 2. If the source is contract – It arises upon its promised to deliver the same thing to two or perfection unless there is a stipulation to the more persons who do not have the same contrary. interest). OBLIGATIONS TO DO (ART.1167, NCC) “Ordinary delay” distinguished from “Default” Ordinary delay is different from legal delay (default). If a person obliged to do something fails to do it, the The first is merely non-performance at the stipulated same shall be executed at his cost. time; default is that delay which amounts to a virtual non-fulfillment of the obligation. The same rule shall be observed if he does it in contravention of the tenor of his obligation. NOTE: As a rule, to put a debtor in default, there must Furthermore, it may be decreed that what has been be a demand for fulfillment, whether judicially or poorly done be undone (Art. 1167, NCC). extrajudicially. OBLIGATIONS NOT TO DO (ART. 1168, NCC) Accessories – those joined to or included with the principal for the latter’s better use, perfection, or When the obligation consists in not doing, and the enjoyment (e.g., the keys to a house). obligor does what has been forbidden him, it shall also be undone at his expense (Art. 1168, NCC). Accessions – additions to or improvement upon a thing. These include alluvium and whatever is built, “In obligations not to do (negative personal planted, or sown on a person’s parcel of land. obligations), the object of the obligation is fulfilled or realized so long as that which is forbidden is not done OBLIGATIONS OF THE DEBTOR by the obligor” (Jurado, 2010. Summary of the rules regarding remedies A. DETERMINATE OR SPECIFIC available to the creditor in obligations to 1. Specific performance; give, to do and not to do. 2. Take care of the things with the proper diligence of a good father of a family unless Obligation Specific Equivalent Substitut another standard of care is required by law or performan performanc e stipulated by the parties (Art.1163, NCC); ce e performa nce 3. Deliver all accessions and accessories of the To give: a. Determinate √ √ X things although not mentioned (Art.1166, thing NCC). √ √ √ b. Determinable thing B. INDETERMINATE OR GENERIC 1. To deliver the things intended by the parties To do: taking into account the purpose of the a. Very personal X √ obligation, intent of the parties and other b. Not very X √ √ circumstances; personal 2. To be liable for damages in the performance of obligations due to delay fraud, negligence Not to do X √ √ or contravention of the tenor thereof (Art.1170, NCC). Specific performance is the performance of RIGHTS OF A CREDITOR IN A REAL OBLIGATION the prestation itself. TO GIVE (Art. 1165, NCC) In obligations to do or not to do, specific A. Determinate performance is not available since it will go 1. To compel specific performance with right to against the constitutional prohibition against be indemnified for damages; involuntary servitude. 2. To demand rescission of the obligation with right to recover damages;  3 Equivalent performance is the payment of EFFECTS OF DEFAULT damages A. Mora Solvendi Debtor is liable for interest in obligations to pay Substitute performance is when someone money, or damages. In the absence of extra judicial demand, the interest shall commence from the filing else performs or something else is of the complaint. performed at the expense of the debtor. Debtor is liable even for fortuitous event when the obligation is to deliver a specific thing. But the courts BREACHES OF OBLIGATIONS may equitably mitigate damages if debtor proves that the loss would have still resulted even if he had not COMPLETE FAILURE TO PERFORM been in default. 1. Involuntary – debtor is unable to comply with his For generic things, debtor may still be compelled to obligation because of a fortuitous event; deliver a thing of the same kind or be held liable for NOTE: Debtor is not liable for damages. damages. 2. Voluntary – debtor, in the performance of the B. Mora Accipiendi obligation, is guilty of: The obligor bears the risk of the thing due. a. Default (mora); b. Fraud (dolo); For the obligation to pay money, debtor is not liable c. Negligence (culpa); for interest from the time of creditor’s delay. d. Breach through contravention of tenor of the obligation. Debtor may release himself from the obligation by consignation of the thing due. NOTE: Debtor is liable for damages. C. Compensatio Morae DEFAULT, DELAY OR MORA Delay of the obligor cancels delay of the obligee and vice versa. 1. Mora Solvendi – delay of the debtor to perform his obligation. It may be: No actionable default on the part of both parties. a. Ex re – obligation is to give; b. Ex persona – obligation is to do. If delay of one party is followed by that of the other, the liability of the first infractor shall be equitably There is no mora solvendi in: balanced by the courts. If it cannot be determined a. Negative obligation – one can never be late which of the parties is guilty of delay, the contract in not doing or not giving something; shall be deemed extinguished and each shall bear his b. Natural obligation – the performance is own damages (Art. 1192, NCC). optional on the part of the debtor. UNILATERAL OBLIGATION 2. Mora Accipiendi – delay of the creditor/obligee Those obliged to deliver or to do something incur in in accepting delivery of the thing which is the delay (default) from the time the obligee judicially or object of the obligation; extra-judicially demands from them the fulfillment of Requisites: their obligation (Art. 1169, NCC). a. Offer of performance by the debtor who has the required capacity; General rule: Demand is essential. No demand, no b. Offer is to comply with the prestation as it delay. Mere expiration of the period fixed by the should be performed; and parties will not cause delay. Commencement of a suit c. Creditor refuses the performance without just is sufficient form of demand (Palmares vs. CA, G.R. cause. No. 126490, March 31, 1998). 3. Compensatio Morae – delay of the parties or Exceptions: However, the demand by the creditor obligors in reciprocal obligations. shall not be necessary in order that delay may exist when: Rules as Regards Mora Solvendi and Mora a. The obligation expressly so provides; Accipiendi b. The law expressly so declares; c. The time for fulfillment of the obligation is of the MORA SOLVENDI MORA ACCIPIENDI essence of the contract; There is no mora The creditor is guilty of d. Demand would be useless as when the obligor has solvendi in negative default when he rendered it beyond his power to perform; obligations (one cannot unjustifiably refuses to e. The obligor expressly acknowledged that he really be late in not doing or accept payment or is in default (but it should be noted that his mere giving). performance at the time asking for extension of time is not an that the same can be acknowledgment of the existence of default on his done. part). There is no mora If an obligation arises ex solvendi in natural delicto (as a result of a NOTE: If the obligation consists in the payment of a obligations. crime), the debtor- sum of money, and the debtor incurs in delay, the criminal is responsible indemnity for damages, there being no stipulation to for the loss, even though the contrary, shall be the payment of the interest this be through a agreed upon, and in the absence of stipulation, the fortuitous event, unless legal interest, which is six percent per annum (Art. the creditor is in mora 2209, NCC). accipiendi.  4 RECIPROCAL OBLIGATIONS (Art. 1169, par. 3, NCC) Definition of Negligence or Culpa Created or established at the same time, out of the Any voluntary act or omission, there being no malice same cause and which result in mutual relationship which prevents the normal fulfillment of the between the parties. Reciprocal obligations depend obligation. upon each other for performance. NEGLIGENCE OR CULPA IN THE PERFORMANCE General rule: Fulfillment by both parties should be OF OBLIGATION simultaneous; one party incurs in delay from the moment the other party fulfills his obligation, while he Responsibility arising from negligence in the himself does not comply or is not ready to comply in performance of every kind of obligation is also a proper manner with what is incumbent upon him. demandable, but such liability may be regulated by the courts, according to the circumstances (Art. 1172, Exception: When different dates for the performance NCC). of the obligation have been fixed by the parties. Demand is necessary only in such cases. Stipulations regarding Future Negligence: 1. Gross negligence can never be excused in advance Grounds for Liability (Damages) in Performance for this would be contrary to public policy; of Obligations (Art. 1170, NCC) 2. Simple negligence may, in certain cases, be 1. Fraud (Deceit or dolo) – Art. 1171, NCC; excused or mitigated. 2. Negligence – Art. 1172, NCC; 3. Default – if imputable to the debtor; 4. Violation of the terms of the obligation (unless KINDS OF NEGLIGENCE excused in proper cases by fortuitous events). Civil Negligence Fraud or Dolo a. Culpa contractual – fault or negligence of Conscious and intentional proposition to evade the obligor by virtue of which he is unable to normal fulfillment of an obligation. perform his obligation arising from a pre- existing contract; Implies some kind of malice or dishonesty and cannot cover cases of mistake and errors in judgment made b. Culpa aquiliana/quasi-delict – fault or in good faith. In such case, the obligor can be held negligence of a person, whose failure to liable for damages. observe the required diligence to the obligation causes damage to another; FRAUD IN THE PERFORMANCE OF OBLIGATION c. Culpa criminal – fault or negligence which Responsibility arising from fraud is demandable in all results in the commission of a crime. obligations. Any waiver of an action for future fraud is void (Art. 1171, NCC). Fraud Distinguished from Negligence Effect of Waiver of Past or Future Fraud FRAUD (DOLO) NEGLIGENCE (CULPA) Any waiver for future Liability for past fraud There is deliberate There is merely fraud is void may be waived. intention to cause abandonment, damage or prejudice. inattention, carelessness, lack of KINDS OF FRAUD diligence, lack of 1. Fraud in obtaining consent; foresight or lack of a. Causal; and skill. b. Incidental. Waiver of future fraud is Waiver of an action to void. enforce liability may be 2. Fraud in performing a contract; allowed in certain a. Dolo causante (causal fraud); and cases. b. Dolo incidente (incidental fraud). Must be clearly proved. Presumed from a breach of a contractual Civil Frauds Distinguished relation. Liability cannot be Liability may be INCIDENTAL FRAUD CAUSAL FRAUD mitigated by the courts. reduced according to (dolo incidente) (dolo causante) circumstances. (Art. 1170, NCC) (Arts. 1338 and 1344, NCC) Effect of victim’s own negligence and of his Present only during the Present only during contributory negligence (Art. 2179, NCC) performance of a pre- the time of birth or When the plaintiff’s own negligence was the existing obligation. perfection of the immediate and proximate cause of his injury, he obligation. cannot recover damages (because there is no culpa Purpose is to evade the Purpose is to secure aquiliana on the part of the defendant). normal fulfillment of the the consent of the obligation. other to enter into the If the plaintiff’s negligence was only contributory, the contract. immediate and proximate cause of the injury, being Results in the non- Results in the vitiation the defendants lack of due care, the plaintiff may fulfillment or breach of of consent. recover damages but the courts shall mitigate the the obligation. damages to be awarded. Gives rise to the right of Gives rise to the right the obligee to recover of the innocent party Diligence normally required is ordinary diligence damages from the debtor. to annul the contract. or diligence of a good father of a family. A valid obligation. A voidable obligation. The fault or negligence of the obligor consists in the omission of that diligence which is required by the  5 nature of the obligation and corresponds with the do not have the same interest (Art. 1165, par. 3, circumstances of the persons, of the time and of the NCC); place. 5. When the object of the prestation is generic. When negligence shows bad faith, the provisions of Arts. 1171 and 2201, par. 2 shall apply (Art. 1173 par. Rule on combination of fortuitous event and 1, NCC). negligence 1. If the fortuitous event was the proximate cause, KINDS OF DILIGENCE the obligation is extinguished; a. That agreed upon by the parties; 2. If the negligence was the proximate cause, the b. In the absence of (a), that required by the law. obligation is not extinguished. It is converted into c. In the absence of (b), that expected of a good a monetary obligation for damages. father of family (bonum pater familias). REMEDIES AVAILABLE TO CREDITOR IN CASES IN CONTRAVENTION OF THE TENOR OF THE OF BREACH OBLIGATION 1. Specific performances A voluntary breach of obligation which includes not Exact fulfillment of the obligation by specific or only illicit act which impairs the strict and faithful substitute performance with a right to damages in fulfillment of the obligation, but also every kind of either case; defective performance. Exception: Purely personal act. If there has been a performance of the obligation, but in contravention of the tenor thereof; Example: The talent or prestige of an artist. In such case, there is no other remedy of the The following rights are available to the obligee: obligee except to proceed against the obligor for 1) To have the obligation performed at the damages under Art. 1170 of the Civil Code. expense of the obligor; 2) To ask that what has been poorly done be 2. Rescission undone; and (resolution in reciprocal obligations) 3) To recover damages because of breach of In case of reciprocal obligations, petition the court obligation. to resolve the contract; FORTUITOUS EVENT AS A LEGAL EXCUSE FOR 3. Pursue the leviable property of the debtor BREACH OF OBLIGATION (ART. 1174, NCC) (those not exempt from attachment under the law); An event which could not be foreseen, or which, though foreseen was inevitable. 4. Subsidiary remedies of creditor to protect credit (Art. 1177, NCC) Requisites: (I-U-I-F) 1. Event must be independent of the will of the a. ACCION DIRECTA obligor; (Arts. 1608, 1652, 1729, 1893, NCC) 2. It must either be unforeseeable or inevitable; Right of the lessor to go directly to sublessee for unpaid rents of the lessee (Art.1652, NCC); 3. Must be of such a character as to render it impossible for the obligor to fulfill his obligation in a normal manner; and Right of the laborers or persons who furnish 4. Obligor must be free from any participation in materials for a piece of work undertaken by a the aggravation of the injury resulting to the contractor to go directly to the owner for any obligee. unpaid claims due to the contractor (Art. 1729, NCC). NOTE: It must not only be the proximate cause but it must be the only and sole cause. Right of the vendor to bring an action against Contributory negligence of the debtor renders him every possessor whose right is derived from the liable despite the fortuitous event. vendee, even if in the second contract no mention Courts may equitably mitigate damages. should have been made of the right to repurchase, without prejudice to the provisions of the LIABILITY IN CASE OF FORTUITOUS EVENT Mortgage Law and the Land Registration Law with General rule: No person shall be responsible for respect to third persons (Art. 1608, NCC). those events which could not be foreseen, or which, though foreseen, were inevitable(Art. 1174, NCC). The right of the principal to bring an action against Exceptions: The debtor is responsible for fortuitous the substitute with respect to the obligations event in the following cases: which the latter has contracted under the 1. When expressly declared by law, (e.g., Arts. substitution in cases of; 551(2), 1165(3), 1268, 1942, 2147, 2148 and (1) When he was not given the power to appoint 2159, NCC); one; 2. When expressly declared by stipulation or (2) When he was given such power, but without contract; designating the person, and the person 3. When the nature of the obligation requires the appointed was notoriously incompetent or assumption of risk; insolvent (Art. 1892, NCC). 4. When the obligor is in default or has promised to deliver the same thing to two or more persons who  6 b. BENEFIT OF EXCUSSION effects of the happening of the event (Art. 1179, Right to exhaust the property in possession of the NCC). debtor, generally by attachment, subject to The effectivity or extinguishment does not depend on exemptions provided by law; the fulfillment or non-fulfillment of a condition or on the expiration of a term or period, and is immediately c. ACCION SUBROGATORIA demandable. Right to be subrogated to all the rights and actions of the debtor save those which are inherent in the NOTE: The quality of immediate demandability is not person of the debtor; violated when a reasonable period is granted for performance. d. ACCION PAULIANA CONDITIONAL OBLIGATIONS Right to impugn all the acts which the debtor may have done to defraud the creditor by means of In conditional obligations, the acquisition of rights as rescissory action at the instance of the creditor well as the extinguishment or loss of those already who is prejudiced. acquired, shall depend upon the happening of the event which constitutes the condition (Art. 1181, NOTE: The second and third remedies are subsidiary NCC). to the first. It can only be availed of in the absence of any other legal remedy to obtain reparation for the Effectivity is subordinated to the fulfillment or non- injury. fulfillment of a future and uncertain fact or event. Extinguishment of Interest and Prior Characteristics of a Condition: Installments (Art. 1176, NCC) a. Future and uncertain; The receipt of the principal by the creditor without b. Past event but unknown to parties (the knowledge reservation with respect to the interest, shall give rise to be acquired in the future of a past event which to the presumption that said interest have been paid. at that moment is unknown to parties interested The presumptions in Art.1176 do not apply when there – it is only in that sense that the event is deemed is a reservation made orally or in writing. to be uncertain); c. Not impossible. Transmissibility of rights acquired by virtue of an obligation (Art. 1178, NCC) Condition and Term Distinguished General rule: Rights acquired by virtue of an obligation are transmissible in character. CONDITION TERM An uncertain event which Term – That which Exceptions: wields an influence on a necessarily must 1. Where they are not transmissible by their very legal relationship; come (like 2012) nature, such as in the case of a purely personal whether the parties right; It is a “future AND know when it will uncertain event,” not “a happen or not (like 2. Where they are not transmissible by operation of future OR uncertain death, since this is law; event.”; sure). 3. When prohibited by stipulation of the parties. NOTE: Death because of KINDS OF CIVIL OBLIGATIONS AIDS is a condition, since death may be due to CLASSIFICATION OF OBLIGATIONS other causes. Primary classification by the Civil Code: When an Obligation is Demandable At Once a. Pure as distinguished from conditional; (Art. 1179, NCC) b. Pure as distinguished from that with a period; 1. When it is pure; c. Alternative or facultative as distinguished from 2. When it is subject to a resolutory condition. conjunctive; d. Joint as distinguished from solidary; Effects of failure to Comply with Condition e. Divisible as distinguished from indivisible; 1. Failure to comply with the condition imposed on f. With a penal clause as distinguished from those the perfection of a contract results in the failure of without. the contract; 2. Failure to comply with the condition imposed on Secondary classification by the Civil Code: the performance of the obligation, gives the other a. Unilateral as distinguished from bilateral (Arts. party an option either to refuse to proceed with 1168, 1191, NCC); the compliance of the obligation or to waive the b. Real and personal (Arts. 1154 – 1165, NCC); condition. c. Determinate and generic (Arts. 1167,1168, NCC); d. Positive and negative (Arts. 1167, 1168, NCC); An obligation deemed to be one with a period e. Legal, conventional, penal (Arts. 1156, 1158, When the debtor binds himself to pay when his means 1159, 1161); permit him to do so, the obligation shall be deemed to f. Civil and natural. be one with a period, subject to the provisions of Art. 1197 (Art. 1180, NCC). PURE OBLIGATIONS TRADITIONAL CLASSIFICATIONS OF Every obligation, whose performance does not depend CONDITION upon a future or uncertain event, or upon a past event Suspensive – fulfillment of condition results in unknown to the parties, is demandable at once. acquisition of rights arising out of the obligation; Every obligation which contains a resolutory condition Resolutory – fulfillment of the condition results shall also be demandable, without prejudice to the in extinguishment of the right arising out of the obligation.  7 should be inferred that the intention of the person Potestative – fulfillment of the condition depends constituting the same was different. on the will of a party to the obligation; Casual – fulfillment of the condition depends on In obligations to do and not to do, the courts shall chance and/or the will of a third person; determine, in each case, the retroactive effect of the Mixed – fulfillment of the condition depends condition that has been complied with. partly on the will of a party to the obligation and partly on chance and/or the will of a third person. B. RESOLUTORY CONDITION The obligation arises or becomes demandable Possible – condition is capable of realization immediately after its constitution or establishment according to nature, law, public policy or good (Art. 1179, NCC). Rights are acquired and customs; immediately vested in the obligee or creditor, but Impossible – condition is not capable of such rights are always subject to the threat of realization according to the nature, law, public danger of extinction. policy or good customs. Before fulfillment Positive – involves performance of an act; The obligor or debtor is placed in a position which Negative – involves the omission of an act. is very similar to that of the obligee or creditor in obligations with a suspensive condition. Like the Divisible – susceptible of partial realization; latter, he has also a hope or expectancy during Indivisible – not susceptible of partial the pendency of the condition (Art. 1190, NCC). realization. After fulfillment Conjunctive – there are several conditions, which When the condition is fulfilled, rights are must all be realized; consolidated and they become absolute. Alternative – there are several conditions, but only one must be realized. Whatever may have been paid or delivered by one or both of the parties upon the Expressed – condition is stated expressly; constitution of the obligation shall have to be Implied – condition is tacit. returned upon the fulfillment of the condition. There is a return to the status quo (Ibid). SUSPENSIVE AND RESOLUTORY CONDITIONS (ART. 1181, NCC) C. POTESTATIVE CONDITION (Art. 1182, NCC) In conditional obligations, the acquisition of rights, as 1. When it depends exclusively upon the well as the extinguishment or loss of those already will of debtor in case of a suspensive acquired, shall depend upon the happening of the condition – both the condition and obligation event which constitutes the condition. are void. To allow such condition would be to sanction illusory obligation, in direct EFFECTS OF FULFILLMENT OF VARIOUS contravention of the principle announced in CONDITIONS Art. 1308, NCC. A. SUSPENSIVE CONDITION Obligation shall only be effective upon the 2. When it depends exclusively upon the fulfillment of the condition. Before the happening will of the debtor in case of a resolutory of the event which constitutes the condition, the condition – both the condition and obligation obligee acquires a mere hope or expectancy, are valid. The position of the debtor is exactly protected by law (Art. 1181, NCC). the same as the creditor in a suspensive condition and does not render the obligation Before fulfillment illusory. The demandability as well as the acquisition of rights arising from the obligation is suspended. NOTE: If the obligation is a pre-existing one, Obligor/debtor’s obligation to comply with the and does not depend for its existence upon the prestation is held in suspense until the fulfillment fulfillment by the debtor for the potestative of condition. Anything paid by mistake during condition, only the condition is void leaving such time may be recovered (Art. 1188, NCC). unaffected the obligation itself. Here, the condition is imposed not on the birth of the After the fulfillment obligation but on its fulfillment (valid The obligation arises or becomes effective. The obligation). obligor/debtor can be compelled to comply with what is incumbent upon him. If a condition is declared void but the obligation is still valid, the SC ruled that in PRINCIPLE OF RETROACTIVITY EFFECT (Art. converting the obligation into a pure and 1187, NCC) demandable one, an arrangement may be The effects of a conditional obligation to give, once the enforced which is not within the contemplation condition has been fulfilled, shall retroact to the day of the parties. The best solution is to consider of the constitution of the obligation. the parties as having intended a period within which the valid obligation is to be complied Nevertheless, when the obligation imposes reciprocal with such that the creditor should ask the prestations upon the parties, the fruits and interests court to fix a period for compliance (Patente during the pendency of the condition shall be deemed vs. Omega, G.R. No. L-4433, May 29, 1953). to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it  8 EFFECTS OF POTESTATIVE CONDITIONS EFFECT OF SUSPENSIVE CONDITIONS BEFORE (ART. 1182, NCC) FULFILLMENT If the obligation depends upon a suspensive condition, a. A potestative condition whose fulfillment depends the demandability as well as the acquisition or the exclusively upon the will of the creditor - the effectivity of rights arising from the obligation is condition as well as the obligation are valid. suspended pending the happening or fulfillment of the condition. During the pendency of the condition, the b. A potestative condition whose fulfillment depends obligee or creditor has only a mere hope or exclusively upon the will of the debtor - not only expectancy which, however, is protected by law. the condition but even the obligation itself are void. EFFECT OF SUSPENSIVE CONDITIONS AFTER FULFILLMENT NOTE: The precept contained in the first sentence of Upon the fulfillment of the condition the obligation Art. 1182 operates only with respect to a suspensive becomes effective. The creditor’s mere hope or condition. Hence, if the condition is resolutory and, at expectancy is perfected. It becomes effective and the same time potestative, the obligation as well as demandable. The obligor or debtor can then be the condition is valid even if the fulfillment of the compelled to comply with what is incumbent upon condition is made to depend upon the sole will of the him. obligor. EFFECT OF IMPROVEMENT, LOSS OR Potestative: Casual or Mixed DETERIORATION BEFORE THE HAPPENING OF A Casual Condition (Ibid) SUSPENSIVE CONDITION IN OBLIGATION TO The obligation and the condition shall take effect. DO OR NOT TO DO (ART. 1189, NCC) A casual condition is one whose fulfillment depends exclusively upon chance and/or upon the A. Loss will of a third person. 1. Without debtor’s fault – obligation is extinguished. Mixed Condition (Ibid) 2. With debtor’s fault – obligation is converted The obligation and condition shall take effect. It is into one of indemnity for damages. one whose fulfillment depends jointly upon the will of either one of the parties to the obligation and NOTE: A thing is lost when it perishes, goes out upon chance and/or upon the will of a third of commerce, or disappears in such a way that its person. existence is unknown or it cannot be recovered. DOCTRINE OF CONSTRUCTIVE FULFILLMENT OF B. Deterioration SUSPENSIVE CONDITION (Art. 1186, NCC) 1. Without debtor’s fault – impairment is to be Requisites: borne by the creditor. 1. The obligor must have actually prevented the 2. With debtor’s fault – creditor may choose obligee from complying with the condition; between bringing an action for rescission of 2. Such prevention must have been voluntary or the obligation or for specific performance, with willful in character; damages in either case. 3. Condition is suspensive. C. Improvements It applies only to suspensive conditions and not to 1. By the thing’s nature or by time – resolutory conditions. It can have no application to an improvement shall inure to the benefit of the external contingency which is lawfully within the creditor. control of the obligor (Taylor vs. Uy Tieng Pao, G. R. 2. At the debtor’s expense – debtor shall have No. l-16109, October 2, 1922). no other right than that granted to a usufructuary (see Arts. 579 and 580, NCC). The mere intention of the debtor to prevent its happening or the mere placing of ineffective obstacles NOTE: Art. 1189, NCC applies only if: to its compliance, without actually preventing 1. The suspensive condition is fulfilled; and fulfillment, is not sufficient (Manresa). 2. The object is specific (not generic). EFFECT OF THE HAPPENING OF SUSPENSIVE OR EFFECT OF RESOLUTORY CONDITIONS BEFORE RESOLUTORY CONDITION (ART. 1187, NCC) FULFILLMENT(ART. 1190, NCC) Retroactivity of Effect- refers to the retroactive In obligations with resolutory condition the right of the character of the effects of fulfillment of the condition. obligee or creditor is always subject to the threat of The condition imposed is only an accidental, not an extinction during the pendency of the condition. The essential, element of the obligation. Under this obligor or debtor is placed in a similar position of the principle, once the condition is fulfilled its effects must obligee or creditor in obligations with a suspensive logically retroact to the moment when the essential condition that like the creditor, the debtor has also a elements which gave birth to the obligation have mere hope or expectancy during the pendency of the taken place and not to the moment when the condition. In which case the debtor can avail of the accidental element was fulfilled. remedies accorded to a creditor provided under the first paragraph of Art. 1188. The principle of retroactivity can only apply to consensual contracts. It can have no application to EFFECT OF RESOLUTORY CONDITIONS AFTER real contracts, such as deposit, pledge or FULFILLMENT(ART. 1190 PAR. 3, NCC) commodatum which can be perfected by delivery. Neither can it have any application to those contracts If the resolutory condition is not fulfilled rights are in which the obligation arising therefore can only be consolidated. They become absolute in character. realized within successive periods or intervals, such as lease, hire of service, life annuity, and similar If the resolutory condition is fulfilled, rights are contracts (Jurado). extinguished altogether. In which case, whatever may have paid or delivered by one or both of the parties upon the constitution of the obligation shall have to be  9 returned upon the fulfillment of the condition. In short 2. Resolutory (in diem) – arrival of day certain a return to the status quo. terminates the obligation; 3. Legal – granted by law; RIGHT TO RESCIND (Art. 1191, NCC) 4. Conventional – stipulated by parties; The power to rescind obligation is implied in reciprocal 5. Judicial – fixed by courts; ones, in case of the obligors should not comply with 6. Definite – date/time is known beforehand; what is incumbent upon him. 7. Indefinite – can only be determined by an event which must necessarily come to pass although it The injured party may choose between the fulfillment may not be known when (e.g. death); and the rescission of the obligation, with the payment 8. Express – when it is specifically stated; of damages in either case. He may also seek 9. Tacit – as when a person undertakes to do some rescission, even after he has chosen fulfillment, if the work which can be done only during a particular latter should become impossible. season; 10. Original period; The court shall decree the rescission claimed, unless 11. Period of grace (Tolentino, Vol. IV, p. 188). there be just cause authorizing the fixing of period. NOTE: ‘A DAY CERTAIN’ – that which must This is understood to be without prejudice to the right necessarily come, although it may not be known of third person who have acquired the thing, in when. accordance with Articles 1385 and 1388 and the Mortgage Law. Term/Period and Condition Distinguished Right to Rescind Not Absolute TERM/PERIOD CONDITION The court is given discretionary power to fix a period Interval of time which is Fact or event which is within which the obligation in default may be future and certain. future and uncertain. permitted to comply with what is incumbent upon the arties (Art. 1191, par. 3, NCC). But the discretionary Interval of time which Future and uncertain power of the court cannot be applied to reciprocal must necessarily come fact or event which may obligations arising from a contract of lease because although it may not be or may not happen. they are governed by Art. 1659, NCC. known when. Waiver of Right The right to rescind may be waived, expressly or Exerts an influence Exerts an influence impliedly (Sps. Francisco vs. DEAC Construction, Inc., upon the time of upon the very existence et al, G.R. No. 171312, February 4, 2008). demandability or of the obligation itself. extinguishment of an Effect of Breach by Both Parties (Art. 1192, NCC) obligation. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be Effect of Fortuitous Event In Obligations with a equitably tempered by the courts. Term or Period 1. It only relieves the contracting parties from the If it cannot be determined which of the parties first fulfillment of their respective obligations during violated the contract, the same shall be deemed the term/period; extinguished, and each shall bear his own damages. 2. Fortuitous event does not interrupt the running of the period or term agreed upon. OBLIGATIONS WITH A PERIOD OR A TERM (ART. 1193, NCC) PRESUMPTION THAT PERIOD IS FOR THE BENEFIT OF BOTH DEBTOR AND CREDITOR Obligations with a Period (ART. 1196, NCC) Those whose demandability or extinguishment is subject to the expiration of a term or period. General rule: When a period is designated for the performance or fulfillment of an obligation, it is for the Term or Period benefit of both parties. An interval of time, which, exerting an influence on an obligation as a consequence of a juridical Does not have any Has retroactive effects act, either suspends its demandability or produces its retroactive effect unless extinguishment there is an agreement to the contrary. NOTE: What is suspended by the term is not the acquisition of the right or the effectivity of the When it is left When it is left obligation but its demandability. exclusively to the will of exclusively to the will of the debtor, the the debtor, the very Requisites for a Valid Period or Term: (FCP) existence of the existence of the 1. It must refer to the future; obligation is not obligation is affected. 2. It must be certain (sure to come) but can be affected; it empowers extended. (If eliminated subsequently by mutual the court to fix the agreement, the obligation becomes pure and duration of the immediately demandable); obligation. 3. It must be physically and legally possible, otherwise the obligation is void. Must be possible; Must be possible; otherwise, obligation is otherwise, obligation is Classification of Term/Period void. void. 1. Suspensive (ex die) – obligation becomes demandable only upon the arrival of a day certain;  10 Exception: If it can be proved either from the tenor ALTERNATIVE AND FACULTATIVE of the obligation or from other circumstances that the OBLIGATIONS period or term has been established in favor of the (ART. 1199, NCC) creditor or of the debtor. ALTERNATIVE FACULTATIVE EFFECT IF SUSPENSIVE PERIOD IS FOR THE OBLIGATIONS OBLIGATIONS BENEFIT OF BOTH DEBTOR AND CREDITOR Several objects are Only one object is due. The creditor cannot demand the performance of the due. obligation before the expiration of the designated period; neither can the debtor perform the obligation May be complied with May be complied with before the expiration of such period (Jurado 12th Ed, by delivery of one of by the delivery of 2010). the objects or by another object or by the performance of one of performance of another EFFECT IF PERIOD IS FOR THE BENEFIT OF THE the prestations which prestation in CREDITOR ALONE are alternatively due. substitution of that The creditor may demand the fulfillment of the which is due. obligation at any time but the obligor cannot compel him to accept payment before the expiration of period Choice may pertain to Choice pertains only to (e.g. “on demand”). debtor, creditor, or the debtor. third person. EFFECT IF PERIOD IS FOR THE BENEFIT OF THE DEBTOR Loss/impossibility of all Loss/impossibility of the Debtor may oppose any premature demand on the objects/prestations due object/ prestations due part of the obligee for performance of the obligation, to fortuitous event shall to fortuitous event is or he may renounce the benefit of the period by extinguish the sufficient to extinguish performing his obligation in advance. obligation. the obligation. INSTANCES WHEN DEBTOR LOSES RIGHT TO Culpable loss of any of Culpable loss of the MAKE USE OF PERIOD (Art. 1198, NCC) the objects object which the debtor (IGIVA) alternatively due before may deliver in 1. When after the obligation has been contracted, he the choice is made may substitution before the becomes insolvent, unless he gives a guaranty or give rise to liability on substitution is effected security for the debt (the insolvency need not be the part of the debtor. does not give rise to judicially declared); any liability on the part 2. When he does not furnish to the creditor the of the debtor. guaranties or securities which he has promised; 3. When by his own act he has impaired said guaranties or securities after their establishment, ALTERNATIVE OBLIGATION and when through fortuitous event they disappear, unless he immediately gives new ones Right of Choice in Alternative Obligation equally satisfactory; (Art. 1200, NCC) 4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the General rule: Right of choice belongs or pertains to period; the debtor. 5. When debtor attempts to abscond. Exceptions: NOTE: If impairment is without the fault of the debtor, 1. When the right of choice has been expressly he shall retain the right. granted to creditor; and 2. When it has been expressly granted to a third When may Court Fix the Term or Period person. (Art. 1197, NCC) If the obligation does not fix a period, but from its When Choice Takes Effect nature and circumstances, it can be inferred that a In alternative obligations, the choice shall produce no period was intended, the courts may fix the duration effect except from the time it has been communicated thereof. to the other party (Art. 1201, NCC). The courts shall also fix the duration of the period NOTES: No special form is required for the when it depends upon the will of the debtor. communication or notification. Hence, any form may be employed provided that the other party is properly In every case, the courts will determine such period notified of the selection. It may be orally or in writing, as may under the circumstances have been probably express or implied. contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. Once the debtor’s choice is communicated, the creditor’s consent or concurrence is not required. To General rule: Courts are without power to fix period hold otherwise would destroy the very nature of the or term. right to select and its alternative character. Exceptions: 1. If the obligation does not fix a period, but from its Once the choice is made it can no longer be renounced nature and circumstances it can be inferred that a and parties are bound thereto. period was intended by the parties; 2. If the duration of the period depends upon the will When choice is rendered impossible through the of the debtor; and creditor’s fault, the debtor may bring an action to 3. If the debtor binds himself when his means permit rescind the contract with damages (Art. 1203, NCC). him to do so (Art. 1180, NCC).  11 When Alternative Obligation Converted To substitution, the debtor must communicate such fact Simple Obligation to the said creditor. Once the latter has been notified 1. When the person who has a right of choice of the substitution, then the obligation ceases to be (debtor, creditor or third person, as the case may facultative; it is finally converted into a simple be) has communicated his section to the other obligation to deliver the thing or to perform the party; prestation which has been substituted. 2. When only one prestation is practicable as the debtor loses his right of choice altogether (Art. Effect of loss of Substitute in Facultative 1202, NCC). Obligations A. Before substitution is made EFFECT OF LOSS OF OBJECTS OF ALTERNATIVE 1. If due to bad faith or fraud of obligor – obligor OBLIGATION (ARTS. 1204- 1205, NCC) is liable; 2. If due to the negligence of the obligor – obligor A. When right of choice belongs to debtor is not liable. 1. Loss or impossibility is due to a fortuitous event NOTE: According to Jurado: “It is submitted that a. All are lost – debtor is released from the whatever may be the cause of the obligation and cannot be held liable for loss/deterioration of the thing intended as a damages; substitute, such loss or deterioration shall not b. Some but not all are lost – comply with render the debtor liable.” the obligation by delivering or performing that which he shall choose from among B. After substitution is made the remainder; If on account of the obligor’s delay, negligence or c. Only one remains – comply with the fraud – obligor is liable because once substitution obligation by delivering or performing that is made, the obligation is converted into a simple which remains. one with the substituted thing as the object of the obligation. 2. If the loss or impossibility is due to debtor’s fault NOTE: The creditor cannot be compelled to a. All are lost – creditor shall have a right to receive part of one and part of another indemnity for damages based on the value undertaking. of the last thing which disappeared or service which became impossible; JOINT AND SOLIDARY OBLIGATIONS b. Some but not all are lost – comply with the obligation by delivering or performing JOINT OBLIGATION (Obligacion Mancomunada) that which he shall choose from among An obligation where there is a concurrence of several the remainder without damages; creditors, or of several debtors, or of several creditors and debtors, by virtue of which each of the creditors 3. Only one remains – comply with the obligation has a right to demand, and each of the debtors is by delivering or performing that which bound to render compliance with his proportionate remains. part of the prestation which constitutes the object of the obligation. B. When right of choice belongs to creditor 1. Loss or impossibility is due to a fortuitous SOLIDARY OBLIGATIONS (Obligacion Solidaria) event An obligation where there is a concurrence of several a. All are lost – debtor is released from the creditors, or of several debtors, or of several creditors obligation and cannot be held liable; and debtors, by virtue of which each of the creditors b. Some but not all are lost – comply with has a right to demand, and each of the debtors is the obligation by delivering or performing bound to render entire compliance with the prestation that which he shall choose from among which constitutes the object of the obligation. the remainder; c. Only one remains – comply with the JOINT DIVISIBLE OBLIGATION obligation by delivering or performing that which remains. Nature of Collective Obligations (Art. 1207, NCC) The concurrence of two or more creditors or of two or 2. Loss or impossibility is due to debtor’s fault more debtors in one and the same obligation does not a. All are lost – creditor may claim the price imply that each one of the latter is bound to render, or value of any of them with indemnity for entire compliance with the prestations. There is a damages; solidary liability only when the obligation expressly so b. Some but not all are lost – creditor may states, or when the law or the nature of the obligation claim any of those subsisting without a requires solidarity. right to damages or the price or value of the thing lost with indemnity for damages. General rule: Obligation is presumed joint when there is a concurrence of several creditors OR of FACULTATIVE OBLIGATION (ART. 1206, NCC) several debtors OR of several creditors and debtors in one and the same obligation. An obligation wherein only one object or prestation has been agreed upon by the parties to the obligation, Exceptions: but which may be complied with by the delivery of 1. When the obligation expressly states that there is another or the performance of another prestation in solidarity; substitution (Art. 1206, NCC). 2. When the law requires solidarity; 3. When the nature of the obligation requires When Substitution Takes Effect solidarity; The debtor is empowered to make the substitution. In order, however, that the creditor will be bound by the  12 4. When a charge or condition is imposed upon heirs Indivisibility and Solidarity Distinguished or legatees, and the testament expressly makes the charge or condition in solidum (Manresa); INDIVISIBILITY SOLIDARITY 5. When the solidary responsibility is imputed by a As to It refers to the It refers to the final judgment upon several defendants. nature prestation which legal tie or constitutes the vinculum, and Principal Effects of Joint Divisible Obligations object of the consequently, to 1. Demand by one creditor upon one debtor obligation. the subjects or produces the effects of default only with respect parties of the to the creditor who demanded and the debtor on obligation. whom the demand was made, but not with respect to others; As to Plurality of Plurality of 2. Interruption of prescription by the judicial demand requisites subjects is not subjects is of one creditor upon a debtor does not benefit the required. indispensable. other creditors nor interrupt the prescription as to As to When the When there is other debtors; effect of obligation is liability on the 3. Vices of each obligation arising from the personal breach converted into part of the defect of a particular debtor or creditor does not one of indemnity debtors because affect the obligation or right of the others; for damages of breach, the 4. Insolvency of debtor does not increase the because of solidarity among responsibility of his co-debtors, nor does it breach, them remains. authorize a creditor to demand anything from his indivisibility of the co-debtors; obligation is 5. Defense of res judicata is not extended from one terminated. debtor to another (Tolentino, Vol. IV, pp. 219- 220). SOLIDARY OBLIGATION Presumption that Obligation is Joint Different Kinds of Solidarity (Art. 1208, NCC) A. First Classification If from the law, or the nature or the wording of the obligations to which the preceding article (Art. 1207, 1. Active Solidarity – a tie or vinculum existing NCC) refers the contrary does not appear, the credit among several creditors of one and the same or debt shall be presumed to be divided into as many obligation by virtue of which each of them, in shares as there are creditors or debtors, the credits or relation to his co-creditors, possesses the debts being considered distinct from one another, character of creditor only with respect to his share subject to the Rules of Court governing the multiplicity in the obligation, but in relation to the common of suits. debtor or debtors, represents all of the other creditors; NOTES: “We promise to pay,” when there are two or more Effect in general: The creation of a relationship signatures = joint liability. of a mutual agency by virtue of which each creditor is empowered to exercise against the “I promise to pay,” when there are two or more debtor or debtors not only the rights which signatures = solidary liability. correspond to him, but also those which correspond to other creditors, with the consequent NOTES: obligation to render an accounting of his acts to Each credit is distinct from one another; therefore a such creditors. joint debtor cannot be required to pay for the share of 2. Passive Solidarity– a tie or vinculum existing another debtor, although he may pay if he wants to among several debtors of one and the same (Art. 1209, NCC). obligation by virtue of which each of them, in relation to his co-debtors, possesses the character Insolvency of a joint debtor, others are not liable for of debtor only with respect to his share in the his share (Art. 1209, NCC). obligation, but in relation to the common creditor or creditors, represents all of the other debtors; JOINT INDIVISIBLE OBLIGATION Effect in general: The liability of each debtor for It is in a sense somewhat midway between the joint the payment of the entire obligation with the and the solidary obligation, although it still retains the consequent right to demand reimbursement from (2) fundamental characteristics of the former: the others for their corresponding share once 1. That no creditor can act in representation of the payment has been made. others; and 2. That no debtor can be compelled to answer for the 3. Mixed Solidarity – a tie or vinculum existing both liability of the others. among several creditors and debtors. Art. 1210, NCC B. Second Classification The indivisibility of an obligation does not necessarily 1. Conventional solidarity – that which has give rise to solidarity. Nor does solidarity of itself imply been agreed upon by the parties; indivisibility. 2. Legal solidarity – that imposed by the law. INDIVISIBILITY AND SOLIDARITY Indivisibility – refers to the subject matter. Solidarity – refers to the tie between the parties.  13 MUTUAL AGENCY AMONG SOLIDARY DEBTORS to the others for the share in the obligation (Nos. 4 & 5) (ARTS. 1214 – 1215, NCC) corresponding to them (Art. 1215, NCC). 1. The debtor may pay any one of the solidary Payment made by one of the solidary debtors creditors; but if any demand, judicial or extinguishes the obligation (Art. 1217, NCC). extrajudicial, has been made by one of them, payment should be made to him (Art. 1214, NCC); Effects: 1. Payment made by one of the solidary debtors extinguishes the obligation. If two or more 2. Novation, compensation, confusion or remission solidary debtors offer to pay, the creditor may of the debt, made by any of the solidary creditors choose which offer to accept; or with any of the solidary debtors, shall 2. He who made the payment may claim from his co- extinguish the obligation, without prejudice to the debtors only the share which corresponds to each, provisions of Article 1219. with the interest for the payment already made. If the payment is made before the debt is due, no The creditor who may have executed any of these interest for the intervenin