OBLIGATIONS AND

CONTRACTS
LECTURE 8
By: Atty. Wilfred Francis B. Martinez
Quiz #2
 You have 30 mins to answer the quiz.
 Use a half-sheet yellow pad paper for the quiz. Use as
many sheets of paper as necessary.
 Do not use an pen with erasable ink.
 Refrain from talking or interacting with your seatmate
during the quiz.
Kinds of Obligations
1. Pure and Conditional Obligations
2. Obligations with a Period
3. Alternative and Facultative Obligations
4. Joint and Solidary Obligations
5. Divisible and Indivisible obligations
6. Obligations with a Penal Clause
Joint and Solidary Obligations
Joint and Solidary Obligations
 Joint Obligation
 Each of the creditors is entitled to demand the payment of only a
proportionate part of the credit, while each of the debtors is
liable for the payment of only a proportionate part of the debt.
 An obligation where the whole obligation is to be paid or fulfilled
proportionately by the different debtors and/or is to be
demanded proportionately by the different creditors.
Joint and Solidary Obligations
 Example:
1. X, Y, and Z obligated themselves to pay A, B, and C the amount
of P9,000.00 pro rata. Once the obligation becomes due and
demandable, A, B, and C may only claim their proportionate
share to the debt, while X, Y, and Z will only be liable to pay
their proportionate share. A,B, and C, cannot claim the whole
amount from only one of them. In this case:
 X is liable P1,000.00 to pay A.
 X is liable P1,000.00 to pay B.
 X is liable P1,000.00 to pay C.
 Y is liable P1,000.00 to pay A.
 Y is liable P1,000.00 to pay B.
 Y is liable P1,000.00 to pay C.
Joint and Solidary Obligations
 Example (cont’d):
 Z is liable P1,000.00 to pay A.
 Z is liable P1,000.00 to pay B.
 Z is liable P1,000.00 to pay C.
2. X, Y, and Z obligated themselves to pay Maria the amount of
P9,000.00. Once the obligation becomes due and demandable,
Maria may only claim from X, Y, and Z their proportionate share
in the debt. Maria, is not allowed to collect the entire debt from
only one of them.
 She may collect P3,000.00 from each.
 She may not collect the entire amount from only one of them.
Joint and Solidary Obligations
 Solidary Obligation
 Each of the creditors is entitled to demand the payment of the
entire credit, while each of the debtors is liable for the payment
of the entire debt.
 Example:
1. X, Y, and Z obligated themselves to pay A, B, and C the amount
of P9,000.00. Once the obligation becomes due and demandable,
A, B, and C may claim the entire obligation from any of the
solidary debtors.
2. X, Y, and Z obligated themselves to pay Maria the amount of
P9,000.00. Once the obligation becomes due and demandable,
Maria may claim from anyone of the debtors the entire amount.
Joint and Solidary Obligations
 Solidary Obligation
 General Rule:
 If the obligation does not expressly say if the obligation of the parties
is joint or solidary, the presumption of law is that the obligation is
joint.
 Exception:
 If the parties expressly agree that the obligation is solidary.
 If the law mandates that the obligation be solidary.
 If the nature of the obligation is solidary.
Joint and Solidary Obligations
 How to identify whether an obligation is joint or solidary?
 Joint Obligations:
 The use of the words, “pro-rata”, “man comunada”, “we promise to
jointly pay”, joint, proportionately, or other similar words.
 When the contract is signed by two or more persons and the words “we
promise to pay.”
 Solidary Obligations:
 It is not necessary for the word “solidary” to appear in the contract.
 It is enough that the obligation declares that each one of the debtors is
able to pay the entire obligation on his own.
 The use of the words “solidarily”, “severally”, “in solidium”, and other
similar words.
 When the contact is signed by two or more persons and the words “I
promise to pay” is found in the contract.
Joint and Solidary Obligations
 Solidary Obligation; other rules:
 Effect of payment of one of the solidary debtors:
 If one of the solidary debtors pays the whole amount, the entire
obligation is extinguished.
 Rights of the debtor who paid the whole amount
 The one who paid will have the immediate right to claim for
reimbursement of their share in the obligation.
 The one who paid will also have the right to claim interest from the
other debtors if they have not paid their share by the time the
obligation became demandable.
 Each one of the solidary creditors may do whatever may be useful
to his fellow creditors, however, he cannot do something that may
prejudice or damage them.
Joint and Solidary Obligations
 Solidary Obligation; other rules (cont’d):
 What happens if one of the creditors in a solidary obligation,
forgives the entire debt in favor of one of the solidary debtors.
 The obligation is fully extinguished. The other creditors can no longer
collect, while the debtor who was forgiven has no right to
reimbursement.
 If the forgiveness of the debt is only partial, the obligation still
survives, however, the amount forgiven will be deducted.
 If the other creditors objected to the forgiveness of the debt, but one
of them still forgave the entire debt despite protest, then the other
creditors can go after the forgiving creditor for reimbursement.
Joint and Solidary Obligations
 Solidary Obligation; other rules (cont’d):
 A solidary creditor cannot assign his rights without the consent of
the other creditors.
 This rule is not applicable if the solidary creditor is assigning his rights
to his fellow solidary creditor.
 If there has been no demand as of yet, and the debtor/s wishes to
pay. They may approach any of the solidary debtors and give
payment.
 This rule is not applicable where one of the creditors already made a
demand. In this case, the debtors must give payment to the
demanding creditor.
Class Participation (SW12)
1. Pedro, Juan, and Benito obtained a loan from Jonathan
worth P15,000.00. In the loan agreement, the debtors
promised to pay Jonathan on 4 August 2018 and that their
liability is solidary. Assuming that the debt is already due
and demandable.
a) Who can Jonathan go after for the payment of the loan?
b) How much can Jonathan collect?
2. Lorenzo, Kazel, and Jesse obligated themselves to pay
P12,000.00 to Samuel and Aya. In their agreement, the
parties agreed that the obligation of the debtors is joint.
The debt is already due and demandable.
a) Who, among the 2 creditors, can collect the debt?
b) How much can that creditor collect?
Kinds of Obligations
1. Pure and Conditional Obligations
2. Obligations with a Period
3. Alternative and Facultative Obligations
4. Joint and Solidary Obligations
5. Divisible and Indivisible obligations
6. Obligations with a Penal Clause
Divisible and Indivisible Obligations
Divisible and Indivisible Obligations
 Divisible Obligations:
 An obligation is divisible when, as its object, has a prestation
which is susceptible of partial performance without the essence
of the obligation being changed.
 Example: Construction of a wall, cleaning service for a house,
delivery of rice, etc.

 Indivisible Obligations:
 An obligation is divisible when, as its object, has a prestation
which is not susceptible of partial performance without the
essence of the obligation being changed.
 Example: Selling of a house, delivery of a car, etc.
Divisible and Indivisible Obligations
 Divisible Thing/Object:
 A thing is divisible when, if separated into parts, its essence is
not changed or its value is not decreased disproportionately
because each of the parts into which it is divided are
homogenous and analogous to each other as well as to the thing
itself.
 Indivisible Thing/Object:
 A thing is indivisible when, if separated into parts, its essence is
changed or its value is decreased disproportionately.
Divisible and Indivisible Obligations
 General Rule:
 If the thing which constitutes the object of the obligation is
divisible, as a general rule, the obligation itself is also divisible.
 Exceptions:
1. Express provision of law
2. Agreement of the parties
 Example:
 Juanito obligated himself to deliver 5lbs (2.27kg) of rice to Benito.
 General Rule: Rice is divisible by its nature, thus, as a general rule,
Juanito may deliver only half of it (2.5lb) as partial performance.
 Exception: If Juanito and Benito agrees that that Juanito’s obligation to
deliver the whole 5lb of rice as a whole and that, delivering anything
less than 5lb of rice on the day it is due is a breach of Juanito’s
obligation.
Kinds of Obligations
1. Pure and Conditional Obligations
2. Obligations with a Period
3. Alternative and Facultative Obligations
4. Joint and Solidary Obligations
5. Divisible and Indivisible obligations
6. Obligations with a Penal Clause
Obligations with a Penal Clause
Obligations with a Penal Clause
 Definition:
 An obligation with a penal clause is one with an accessory
undertaking by virtue of which the obligor assumes a greater
liability in case of breach of the obligation.
 It takes the place of damages and/or interest in case of breach
or non-compliance.
 What are the purposes of a Penal Clause?
1. An attempt to ensure that the debtor faithfully complies with his
obligation under the contract.
2. To liquidate that amount of damages to be awarded to the
injured party incase of breach.
3. To punish the party who breaches their obligation.
Obligations with a Penal Clause
 Example situation:
 X (borrower) and Y (lender) entered into a loan agreement. In
the contract, both parties agreed that if X does not pay the full
amount of the loan on the day it becomes due, X will be liable
for a 5% monthly interest. On the date of the deadline, X refuses
to pay Y despite demand. Y goes to court and ask that the agreed
upon interest rate be imposed.
 In this instance, the court ruled in favor of Y and properly imposed
the penalty of 5% because it is the agreed upon penalty in case of
breach. The court also notes that the purpose of the penal clause is
to strengthen the coercive force of the obligation.
Obligations with a Penal Clause
 Can the court reduce or delete the penalty imposed upon by
the parties?
 Yes, but only after the court has examined all aspects of the case
including the nature of the obligation, how the obligation was
breached, the relationship of the parties, and other reasons that the
court may deem proper.
 Conditions:
1. Partial performance of the obligation;
2. Irregular performance of the obligation; and
3. The penalty is excessive.
 When shall the penalty be considered as a substitute for
damages or interests?
 General Rule:
 In obligations with a penal clause, the penal clause replaces the
damages and/or interest imposed by the law.
Obligations with a Penal Clause
 When shall the penalty be considered as a substitute for
damages or interests?
 Exceptions:
1. When the parties agree otherwise. (Example: Debtor and Creditor
agrees that, incase of non-performance, the debtor will be liable for
an additional 3% monthly interest rate, plus damages.)
2. When the obligor/debtor is sued in court for refusal to pay the
agreed penalty. (Example: A and B entered into an agreement. If A
fails to pay B on the agreed upon date, a will be liable to pay B an
extra P100.00. If A delays in payment, and refuses to pay the
penalty of P100.00, then B will be entitled to: (a) the full amount;
(b) the P100.00 penalty; and (c) damages by way of interest.
3. When the obligor/debtor is found to be guilty of fraud.
Thank you.
 Please prepare for LONG EXAM #2 next meeting.
 90 points.
 Coverage: DIFFERENT KINDS OF OBLIGATIONS (from
Pure and Conditional Obligations until Obligations with
a Penal Clause)