OBLIGATIONS ON LAW AND CONTRACTS

Mid-term Reviewer

CHAPTER I: OBLIGATIONS b. Reparation - court determines the amount of

damage: price of a thing, sentimental value, etc.
I. OBLIGATION - A juridical necessity to give, to do, or not to do (Art. c. Indemnification of consequential damages -
1156), one with the character of enforceability. includes damages suffered by the family of the
injured party or by a third person by reason of
● ESSENTIAL REQUISITES OF AN OBLIGATION: the crime.
○ Passive Subject (debtor or obligor) - person bound
to the fulfillment of obligation. ● Effect of acquittal in criminal case:
○ Active Subject (creditor or obligee) - entitled to a. when acquittal is due to reasonable doubt → no
civil liability
demand the obligation. b. when acquittal is due to exempting
○ Object or Prestation (subject matter of the circumstances → there is civil liability
obligation) - conduct required to be observed by the c. when there is preponderance of evidence →
debtor. there is civil liability
○ Juridical or Legal Tie (efficient cause) - binds or
connects the parties to the obligation.
5. Quasi-Delicts (torts) - arise from damage caused to another
through acts or omissions, there being fault or negligence, but
no contractual relation between the parties.
II. KINDS OF OBLIGATION
● Requisites
a. omission
REAL OBLIGATION PERSONAL OBLIGATION b. negligence
c. damage cause to the plaintiff
● Obligation to ● Obligation to do (positive d. direct relation of omission, being the cause, and
give. personal obligation) or not to the damage, being the effect
e. no pre-existing contractual relations between
do (negative personal parties
obligation).

● Subject matter is ● Subject matter is an act to be CRIMES DISTINGUISHED FROM QUASI-DELICTS

a thing. done or not to be done.

BASIS DELICTS QUASI-DELICTS

1. INTENT Criminal Negligence

III. SOURCES OF OBLIGATION (ART 1157)
2. INTEREST Affects public Affects private interest
1. Law - Imposed by the law itself.
interest
● Obligations are not presumed and must be set forth in
the law. (Art. 1158) 3. LIABILITY Criminal and civil Civil liability
liability
2. Contracts - Arise from stipulation of the parties
4. PURPOSE Punishment Indemnification
● Have force of law between contracting parties and
must be complied with in good faith. (Art. 1159) 5. COMPRO Cannot be Can be compromised
MISE compromised
3. Quasi-Contracts - Arise from lawful, voluntary and unilateral
acts which are enforceable to the end that no one shall be 6. GUILT Beyond reasonable Preponderance of
doubt evidence
unjustly enriched or benefited at the expense of another.

● KINDS OF QUASI-CONTRACTS

Negotiorum Gestio Solutio Indebiti

● Unauthorized ● Undue Payment CHAPTER II: NATURE AND EFFECTS OF OBLIGATION

Management

● Arises whenever a ● Arises whenever a I. SPECIFIC VS GENERIC

person voluntarily takes person unduly delivers a
charge of the agency or thing.
the property of another
without any power or Specific/Determinate Thing Generic/Interminate Thing
authority from the latter.
Particularly designated or Not particularly designated or
physically segregated others of physically segregated from all
the same class. others of the same class.
4. Acts or Omissions Punished by Law (crime) - Arise from
civil liability which is the consequence of criminal offense (Art. The debtor cannot substitute it It means that a thing cannot be
1161). with another although the specifically determined from
● Scope of civil liability: substitute is of the same kind things of the same class. The
and quality without the consent thing can be replaced by another
a. Restitution - restoration of property previously of the creditor. thing that is of the same quality
taken away; the thing itself shall be restored,
even though it be found in the possession of a
third person who has acquired it by lawful
means, saving to the latter his action against
the proper person who may be liable to him
 II. DIFFERENT KINDS OF FRUITS VII. DUTIES AND RIGHTS OF DEBTOR AND CREDITOR IN
SPECIFIC AND GENERIC ITEMS
1. Natural Fruits are spontaneous products of the soil,
and the young and other products of animals. Examples:
Grass, all trees and plants on lands produced WITHOUT the DUTIES OF THE RIGHT OF THE
intervention of human labor. DEBTOR CREDITOR

2. Industrial Fruits are those produced by lands of To give ● Preserve the thing. ● To compel delivery;
any kind through cultivation or labor. Examples: Sugar cane, specific The obligor has the ● To the fruits from
vegetables, rice; and all products of lands brought about by thing incidental to take the time the
reason of human labor. care of the thing obligation to deliver
due with the arises;
diligence of a good ● To the accessions
3. Civil Fruits are those derived by virtue of a juridical father of a family and accessories
relation. Examples: Rents of buildings, price of leases of ● Deliver the fruits of even if not
lands and other properties a thing (Art. 1164) mentioned;
● Deliver the ● Not to be
Accessions and compelled to
III. PERSONAL RIGHT VS REAL RIGHT Accessories Of the receive a different
thing. (Art. 1166) one, although of
1. Personal right is the right or power of a person ● Pay damages in the same value as,
(creditor) to demand from another (debtor), as a definite case of fraud, or more valuable
passive subject, the fulfillment of the latter’s obligation to negligence, delay, than that which is
give, to do, or not to do. It is binding or enforceable only or contravention of due; and
tenor of the ● To recover
against a particular person.
obligation. (Art. damages in case of
1170) breach, exclusive
2. Real right is the right or interest of a person over or in addition to
a specific thing (like ownership, possession, mortgage) specific
without a definite passive subject against whom the right performance.
may be personally enforced. It is binding or enforceable
To give ● To deliver a thing ● To demand the
against the whole world.
generic which is of the debtor to comply
quality intended by with the obligation
the parties taking to deliver the thing
IV. DELIVERY ( ACTUAL VS. CONSTRUCTIVE) into consideration (Art. 1165)
the purpose of the ● To demand that the
1. Actual or Constructive delivery (tradition) - the property obligation and obligation with by a
other third person at the
changes hands physically.
circumstances. expense of the
(Art. 1246) debtor;
Example: A buys cake from B. The delivery made by B is the ● To be liable for ● To recover
actual delivery of the thing due. damages in case damages in case of
of fraud, breach (Art 1165);
negligence, or and
2. Constructive Delivery - the physical transfer of the delay, in the ● To refuse delivery
property is implied. performance of his of a thing different
obligation, or in kind or quality,
contravention of although of the
V. OWNERSHIP ACQUIRED THROUGH DELIVERY the tenor thereof. same value as, or
more valuable than
Ownership and other real rights over property are acquired that which is due
(Art. 1244)
and transmitted in consequence of certain contracts by tradition (Art.
712.) or delivery. To do ● To do it When the debtor fails to
● To shoulder the perform his obligation to
The meaning of the phrase "he shall acquire no real right over cost if someone do do or performs it but
it contravenes the tenor
it until the same has been delivered to him," is that the creditor does ● To undo what has thereof:
not become the owner until the specific thing has been delivered to poorly done a. The creditor may
have the obligation
him. Hence, when there has been no delivery yet, the proper court executed at the
action of the creditor is not one for recovery of possession and expense of the
debtor. (Art. 1167)
ownership but one for specific performance or rescission of the b. The creditor may
obligation. (see Art. 1165.) demand damages
from the debtor.
VI. ACCESSORIES VS. ACCESSIONS (Art. 1170)
When the debtor performs
his obligation but poorly
Article 1166. The obligation to give a determinate thing includes that done
of delivering all its accessions and accessories, even though they may a. The creditor may
have the same be
not have been mentioned. undone at the
debtor's expense
1. Accessions - they include everything that is produced by a (Art. 1167)
b. The creditor may
thing or is incorporated or attached thereto, either naturally or
demand damages
artificially. (440a) from the debtor.
2. Accessories - those joined to or included with the principal (Art. 1170)

thing for the latter’s better use, perfection or enjoyment. Not to ● Not to do what When the debtor performs
do should not be done what has been forbidden
● To shoulder the of him
cost to undo what a. The creditor may
should have not demand what has
have been done been done be
● To pay damages undone.
 b. The creditor may
demand damages BASIS MORA MORA COMPENSA
from the debtor. SOLVENDI ACCIPIENDI TIO MORAE

EFFECTS 1) debtor – 1. creditor – the default of

liable for liable for one
damages damages compensates
● REMEDIES AVAILABLE TO CREDITORS FOR THE and interests 2. creditor – the default of
SATISFACTION OF THEIR CLAIMS 2) debtor – bears the risk the other;
liable for the of loss of the their
loss of a thing respective
1. exact fulfillment (specific performance) with the right to damages; thing due to 3. debtor – liabilities
a fortuitous not liable for shall be
2. pursue the leviable not exempt from attachment under the law) event interest from offset
the time of equitable.
property of the debtor;
creditor’s
delay
3. "after having pursued the property in possession of the debtor," 4. debtor –
exercise all the rights (like the right to redeem) and bring all the release
himself from
actions of the debtor (like the right to collect from the debtor of his the obligation
debtor) except those inherent in or personal to the person of the latter
(such as the right to vote, to hold office, to receive legal support, to ● WHEN DEMAND IS NOT NECESSARY RIGHTS AND

revoke a donation on the ground of ingratitude, etc.); and REMEDIES OF PARTIES IN DELAY

4. ask the court to rescind or impugn acts or contracts which the However, the demand by the creditor shall not be necessary in order

debtor may have done to defraud him when he cannot in any other that delay may exist:

manner recover his claim. (see Arts. 1380-1389.)

(1) When the obligation or the law expressly so
declares;

VIII. DELAY (2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when the
1. Ordinary delay - lapse of agreed time but no demand yet. thing is to be delivered or the service is to be rendered was
2. Legal delay - lapse of agreed time but demand has already controlling motive for the establishment of the contract; or
been made.
(3) When demand would be useless, as when the
obligor has rendered it beyond his power to perform.
Article 1169. Those obliged to deliver or to do something incur in
delay from the time the obligee judicially or extrajudicially demands In reciprocal obligations, neither the party incurs in

from them the fulfillment of their obligation. delay if the other does not comply or is not ready to comply in
a proper manner with that is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the
GENERAL RULE: No legal delay without judicial or extrajudicial other begins. (1100a)
demand.

BASIS MORA MORA COMPENSATIO

SOLVENDI ACCIPIENDI MORAE IX. FRAUD

DEFINI delay of the delay of the delay of the - Deliberate and intentional evasion of the fulfillment of an
TION debtor to perform creditor to parties or obligors
his obligation. It accept the in reciprocal obligation
may be: delivery of the obligation ● DAMAGES (CAUSAL VS. FRAUD)
a. Ex re – thing w/c is the
obligation is to object of the
give obligation Causal Fraud Incidental Fraud
b. Ex persona –
obligation is to do Fraud employed at the time of Fraud committed in the
execution of a contract in order performance of a pre- existing
REQUI 1. failure of the 1. Offer of GENERAL RULE: to secure consent. obligation which gives rise to an
SITES obligor to perform performance by Fulfillment of action for damages.
obligation on the the debtor who parties should be
DATE agreed has the required simultaneous The remedy for causal fraud is The remedy for incidental fraud
upon; capacity EXCEPTION: annulment because of vitiation is payment of damages..
2. demand (j/ej) 2. Offer must be Contrary of consent
by the creditor to comply with stipulation (e.g.
3. failure to the prestation installment plans)
comply with such as it should be
demand performed ● FUTURE FRAUD - According to the time of commission, fraud
3. Creditor
refuses the may be past or future. A waiver of an action for future fraud is
performance void (no effect) as being against the law and public policy. A
without just
cause contrary rule would encourage the perpetration of fraud
because the obligor knows that even if he should commit
fraud, he would not be liable for it, thus making the obligation
illusory (i.e. not real)
 X. NEGLIGENCE - Omission of that diligence which is required by the 2. The event could not be foreseen, ir if foreseen, is
nature of the obligation and corresponds with the circumstances of the inevitable;
persons, of the time and of the place 3. The event must be of such a character as to render it
impossible for the debtor to comply with his obligation in a
NOTE: Negligence can be waived unless the nature of the normal manner; and
obligation or public policy requires extraordinary diligence as in
4.The debtor must be free from any participation in, or the
common carrier.
aggravation of, the injury to the creditor, that is, there is no
concurrent negligence on his part.
CULPA CULPA AQUILINA CULPA CRIMINAL
CONTRACTUAL (CIVIL (CRIMINAL The Absence of any of the above requisites( all of which must be
(CONTRACTUAL NEGLIGENCE / NEGLIGENCE) proved) would prevent the obligor from being exempt from liability.
NEGLIGENCE) QUASI-DELICT)
● EXEMPTIONS
a) Negligence is (a) Negligence here a) Negligence here
1. When expressly specified by law- The special strictness of
merely incidental, is direct, substantive, is direct,
incident to the and independent. substantive, and the law is justified
performance of an independent of a 2. The debtor is guilty of fraud, negligence, or delay, or
obligation already contract contravention of the tenor of the obligation.
existing because of a 3. The debtor has promised to deliver the same thing to two or
contract. more persons who do not have the same interest.
4. The obligation to deliver a specific thing arises from a crime.
b) There is a b) No pre-existing (b) No pre-existing
preexisting obligation obligation (except of obligation (except 5. The thing to be delivered is generic
(a contract, either course the duty to be the duty never to 6. When declared by stipulation parties- must be clearly
express or implied). careful in all human harm others). expressed.
actuations). 7. The nature of the obligations requires the assumption of
risk
(c) Proof needed c) Proof needed — c) Proof needed in a
preponderance of preponderance of crime — proof of
A person is not, as a rule, responsible for loss or damage caused to
evidence. evidence. guilt beyond
reasonable doubt. another resulting from the non- performance of his obligation due to
fortuitous events. His obligation is extinguished.
Defense of “good (d) Defense of “good (d) This is not a
father of a family” in father, etc,” is a proper defense for
the selection and proper and complete culpa criminals.
supervision of defense (insofar as Here the XII. PRESUMPTIONS 1176:
employees is not a employers or employee’s guilt is
proper complete guardians are automatically the
PRINCIPLE UNDER ARTICLE 1176
defense in culpa concerned) in culpa employer’s civil
contractual (though aquiliana. guilt, if the former is
this may MITIGATE insolvent. The receipt of a later installment of a debt without reservation
damages). as to prior installments, shall likewise raise the presumption that such
(e) As long as it is (e) Ordinarily, the (e) Accused is installments have been paid.
proved that there victim has to prove presumed innocent
Before the presumption that a prior installment had been paid
was a contract, and the negligence of the until the contrary is
that it was not defendant. This is proved, so may arise, the receipt may specify the installment for which payment
carried out, it is because his action is prosecution has the
is made.
presumed that the based on alleged burden of proving
debtor is at fault, and negligence on the the negligence of
it is his duty to prove part of the defendant. the accused.
● Kinds of Presumption:
that there was no
negligence in a. Conclusive presumption – one which cannot be contradicted
carrying out the
like the presumption that everyone is conclusively presumed to
terms of the contract.
the law.
b. Disputable (or rebuttable) presumption – one which cannot be
contradicted or rebutted by presenting proof to the contrary
XI. FORTUITOUS EVENTS - Event which cannot be foreseen, or
which, though foreseen, is inevitable. like the presumption established in Article 1176.

● EFFECTS
● When presumptions of the Article do not apply:
Essence of a fortuitous event consists of being a happening 1. With reservation as to interest – the reservation may be made
independent, makes the normal fulfillment of the obligation
in writing or verbally.
impossible.
2. Receipt for a part of principal – applies to the receipt of the last
Determinate Thing Generic Obligation installment of the entire capital, not a mere fraction thereof.
3. Receipt without indication of particular installment paid – the
Obligation is extinguished. Obligation is not extinguished
based on a rule that the genus Article is not applicable if the receipt does not recite that it was
never perishes. issued for a particular installment due as when the receipt is
only dated.
General rule: A person is not responsible for loss or damage caused 4. Payment of Taxes – the Article does not apply to the payment
to another resulting from the non-performance of his obligation due of taxes. Taxes payable by the year are not installments of the
to fortuitous events. same obligation.
5. Non-payment proven – this is where the non-payment of the
● REQUISITES
prior obligations has been proven. Between a proven fact and
1.The event must be independent of the human will or at least a presumption pro tanto, the former stands, and the latter falls.
of the debtor’s will;
XIII. TRANSMISSIBILITY OF RIGHTS 6. Impossible Conditions - conditions which are impossible, contrary
to good customs, or prohibited by law.
Art. 1178: Rights acquired by virtue of an obligation are generally
transmissible or assignable. The exception to this rule are the ● General rule: They shall annul the obligation which depends
following: upon them
● Exceptions:
1. Prohibited by law - when prohibited by law like the rights in
a. Pre -existing obligation - only impossible condition is
partnership, agency, and commodatum which are purely
void, not the obligation.
personal in character.
b. If obligation is divisible - the part which is not affected
(a) By the contract of partnership
by the impossible or unlawful condition shall be valid.
(b) By the contract of agency
c. If attached to a simple or remuneratory, or
(c) By the contract of commodatum
testamentary disposition, condition is considered as
2. Prohibited by stipulation of the parties - when prohibited by
not imposed, obligation is valid
stipulation of the parties, like the stipulation, that upon the
d. Conditions not to do an impossible thing - it shall be
death of the creditor, the obligation shall be extinguished, or
considered as not having being agreed upon.
the creditor cannot assign his credit to another.
Consequently, it becomes pure and immediately
demandable.

7. Positive Condition - obligation shall be extinguished as soon as

CHAPTER 3: DIFFERENT KINDS OF OBLIGATIONS
the time expires or it has become indubitable that the event will not
I. PURE AND CONDITIONAL OBLIGATIONS take place.

8. Negative Condition - obligation shall be rendered effective from

Pure Obligation - is one which is not subject to any condition and the moment the time indicated has elapsed, or it has become evident
no specific date is mentioned for its fulfillment and is, therefore, that the event will not occur.
immediately demandable.

Conditional Obligation - is one whose consequences are subject

II. Reciprocal Obligation
in one way or another to the fulfillment of a condition.

Obligations which are established from the same cause, such that one
Condition - future and uncertain event, or past but unknown
obligation is correlative to the other. It results in a mutual relationship
between the creditor and the debtor. It is performed simultaneously, so
KINDS OF CONDITION that the performance of one is conditioned upon the simultaneous
fulfillment of the other.
1. Suspensive Condition - happening of condition gives rise to
obligation. Tacit Resolutory Condition: if one of the parties fails to comply with
what is incumbent upon him, there is a right on the part of the other to
● EFFECTS
rescind the obligation. The power to rescind is given to the injured
1. Acquisition of rights.
party (Tolentino, 1987).
2. Effectivity retroacts to the day of the constitution of the
obligation Rescission of Reciprocal Obligations (Art. 1191, CC)
3. No retroactivity with reference to fruits or interest and
prescription ● Right to rescind is implied in reciprocal obligations thus where
4. Creditor may preserve rights one party fails to comply with this obligation under a contract,
5. Debtor may recover payment by mistake or without the other party has the right to either demand the performance
mistake or ask for the resolution of the contract.
● Based on the breach of faith committed by the person who is
2. Resolutory Condition - happening of condition extinguishes supposed to comply with the obligation as compared to the
obligation. rescission referred to in Art. 1308 which involves the damage
or lesion, or injury to the economic interest of a person.
● EFFECTS
● Where both parties have committed a breach of obligation, the
1. Loss of rights.
liability will be shouldered by the first infractor. This shall be
2. No retroactive effect
determined by the courts. However, if it cannot be determined
3. Obligation extinguished
who was the first infractor, the contract shall be deemed
4. Restore to each other what was received plus
extinguished and each shall bear his own damages (Art.1192).
interests/fruits

3. Potestative Condition - dependent on sole will of one party; if on

UP v. Delos Angeles (1970): The injured party may extra-judicially
part of the debtor and suspensive - void. rescind the contract on account of the breach of the other party.
However, this is without prejudice to the option of the other party to
4. Casual Condition - suspensive condition depends upon chance or resort to the courts in order to determine if the rescission made is valid,
if not, the party who rescinded the contract will be sentenced to pay
upon the will of a third person, the obligation subject to it is valid.
damages.

5. Mixed Condition - the obligation is valid if the suspensive condition

depends partly upon chance and partly upon the will of a third person
 ● Where the other party does not oppose the extra-judicial
declaration of rescission, such declaration shall produce legal
● What is the effect of the term being for the benefit of either
effect.
the creditor or the debtor?
● Effect is retroactive therefore invalidating and unmaking the
1. When it is for the benefit of the Creditor – Creditor
juridical tie between the contracting parties, leaving things in
may demand the performance of the obligation at any
their status before the celebration of the contract.
time but the debtor cannot compel him to accept
payment before the expiration of the period (e.g. “on
demand”)
III. OBLIGATIONS WITH A PERIOD
2. When it is for the benefit of the Debtor – Debtor may
oppose any premature demand on the part of the
WITH A PERIOD - An obligation which depends on a future and
creditor for performance of the obligation, or if he so
certain event (See Arts 1193, 1196)
desires, he may renounce the benefit of the period by
WHEN STIPULATION SAYS “PAYABLE WHEN ABLE” - IT IS WITH performing his obligation in advance. (Manresa)
A PERIOD, REMEDY:

1. Agreement among parties

● What is the effect of a fortuitous event in an obligation
2. Court shall fix period of payment when parties unable to agree
with a period?
KINDS: - It only relieves the contracting parties from the
fulfillment of their respective obligation during the term
1. Resolutory- (condition subsequent) or one the
or period.
fulfillment of which will extinguish an obligation (or
right) already existing.
2. Suspensive- (condition precedent or condition
● When may the court fix the period?
antecedent) or one the fulfillment of which will give rise
1. If the obligation does not fix a period, but from its
to an obligation (or right). In other words, the
demandability of the obligation is suspended until the nature and circumstances it can be inferred that a

happening of a future and uncertain event which period was intended by the parties
constitutes the condition. 2. If the duration of the period depends upon the will of
the debtor
3. In case of reciprocal obligations, when there is a just

TERM CONDITION cause for fixing the period

4. If the debtor binds himself when his means permit him
Interval of time which is future Fact or event which is future or
and certain uncertain or a past event to do so
unknown to the parties

Time w/c must necessarily come Future and uncertain fact or

although it may not be known event which may or may not
when happen ● When may a debtor lose his right to make use of the
period?
Exerts an influence upon the Exerts an influence upon the
time of demandability or very existence of the obligation 1. Insolvency of the debtor, unless security is provided
extinguishment of an obligation itself
2. Did not deliver security promised
Does not have any retroactive Have retroactive effect 3. Impaired security through his own acts or through
effect unless there is an
agreement to the contrary fortuitous event, unless he gives a new security equally

When it is left exclusively to the When it is left exclusively to the satisfactory (if impairment is without the fault of DR, he
will of the debtor, the existence will of the debtor, obligation is shall retain the right)
of the obligation is affected void
4. Violates undertaking in consideration of extension of
period
5. Debtor attempts to abscond (Art. 1198, NCC)
● For whose benefit is the period constituted?

General Rule:

- When a period has been agreed upon for the IV. ALTERNATIVE AND FACULTATIVE OBLIGATION

performance or fulfillment of an obligation, it is

A. Alternative Obligations
presumed to have been established for the benefit of
both the creditor and the debtor. Several prestations are due but the performance of one is
sufficient (De Leon, 2003).
Exception:
Right of Choice
- When it appears from the tenor of the period or other
circumstances that it was established for the benefit of The right of choice belongs to the debtor, unless it has been
one of the parties. expressly granted to the creditor.
The debtor shall have no right to choose those prestation's which are
remainder without
impossible, unlawful or which could not have been the object of the damages
obligation.
One Remains Debtor to deliver that Debtor to deliver that
which remains which remains
Right of choice, as a rule, given to debtor.

As a general rule, the right to choose prestation belongs to the

debtor. Art. 1205: Creditor’s Choice

Limitations to the right of choice

Fortuitous Event Debtor’s Fault

The right of choice of the debtor is subject to limitations. Thus- All Lost Debtor is released Creditor may claim
from the obligation the price/value of
(1) The debtor cannot choose those prestation which are; any of them with
indemnity for
a. impossible, damages
b. unlawful, or
Some Debtor to deliver that Creditor may claim
c. which could not have been the object of the obligation which he shall any of those
(2) The debtor has no more right of choice, when among the choose from among subsisting without a
the remainder right to damages OR
pres-tations whereby he is alternatively bound, only one is price/value of the
practicable. (Art. 1202.) thing lost with right to
damages
(3) The debtor cannot choose part of one prestation and part
of another prestation. (Art 1192, part 2) One Remains Creditor may claim Creditor may claim
any of those the remaining thing
subsisting without a without a right to
When choice shall produce effect
right to damages OR damages OR the
price/value of the price/value of the
Art. 1201: Choice shall produce no effect except from the time it has thing lost with right to thing lost with right to
been communicated. The effect of the notice is to limit the obligation damages damages
of the object or prestation selected. Notice of selection or choice may
be in any form provided it is sufficient to make the other party know
that the selection has been made. It can be:

● Oral
● in writing
● Tacit
● ny other equivocal means

B. Facultative Obligation
● Choice of the debtor when communicated to the creditor does
Only one prestation has been agreed upon but the debtor may render
not require the latter’s concurrence.
another in substitution (De Leon, 2003)
● When the choice is rendered impossible through the creditor’s
fault, the debtor may bring an action to rescind the contract
with damages (Art.1203).
Effect of Loss of Substitute
Obligation is converted into a simple obligation when:
Before Substitution is Made After Substitution is Made
● When the person who has the right of choice has
communicated his choice (Art. 1201) If due to bad faith or fraud of The loss or deterioration of the
obligor: obligor is liable substitute on account of the
● When only one prestation is practicable (Art. 1202) obligor’s delay, negligence or
fraud

If due to the negligence of the obligor is liable

obligor: obligor is not liable because
Effect of Loss of Objects substitution is made, the
obligation is converted into a
Art. 1204: Debtor’s Choice simple one with the substituted
thing as the object of the
obligation.
Fortuitous Event Debtor’s Fault

All Lost Debtor is released Creditor shall have a

from the obligation right to indemnity for
damages based on VI. JOINT AND SOLIDARY OBLIGATIONS (ART. 1207-1222)
the value of the last
thing which A. JOINT OBLIGATIONS
disappeared or
service which One where a concurrence of several creditors, or of several debtors,
become impossible or of several creditors and debtors, by virtue of which, each of the
Some Debtor to deliver that Debtor to deliver that creditors has a right to demand, and each of the debtors is bound to
which he shall which the creditor render compliance with his proportionate part of the prestation which
choose from among shall choose from
the remainder among the constitute the object of the obligation (Obligacion Mancomunada).
Presumption: Obligation is presumed joint if there is a concurrence otherwise would destroy the joint character of
of several creditors, of several debtors, or of several creditors and the obligation.
debtors in one and the same obligation (Art. 1207).

Exceptions: Joint Divisible Obligations Joint Indivisible Obligations

1. When the obligation expressly stated that there is solidarity
In case of breach where one of the
2. When the law requires the solidarity In case of breach of obligation joint debtors fails to comply with his
by one of the debtors, damages undertaking, the obligation can no
3. When the nature of the obligation requires solidarity longer be fulfilled or performed.
due must be borne by him alone Thus action must be converted into
4. When the nature or condition is imposed upon heirs or legatees, indemnity for damages.
and the testament expressly makes the charge or condition in solidum

5. When the solidary responsibility is imputed by a final judgment

upon several defendants
● Plurality of Creditors: If one or some of the
creditors demands the prestation, the debtor
may legally refuse to deliver to them, he can
Principal Effects of Joint Liability
insist that all the creditors together receive the
1. Demand by one creditor upon the debtor, produces the effects of
thing, and if any of them refuses to join the
default only with respect to the creditor who demanded and the debtor
others, the debtor may deposit the thing in court
on whom the demand was made, but not with respect to others
by way of consignation (Tolentino, 1987)
2. Interruption of prescription by the judicial demand of one creditor
upon a debtor, does not benefit the other creditors nor interrupt the
prescription as to other debtors B. SOLIDARITY OBLIGATION

3. Vices of each obligation arising from the personal defect of a An obligation where there is concurrence of several creditors, or of
particular debtor or creditor does not affect the obligation or right of several debtors, or of several creditors and several debtors, by virtue
the others of which, each of the creditors has the right to demand, and each of
the debtors is bound to render, entire compliance with the prestation
4. Insolvency of a debtor does not increase the responsibility of his which constitutes the object of the obligation (Obligacion Solidaria).
co-debtors, nor does it authorize a creditor to demand anything from
his co-debtors
Indivisibility Solidarity

5. Defense of res judicata is not extended from one debtor to another

Refers to the prestation which Refers to the legal tie or vinculum,
constitutes the object of the and consequently to the subjects
Joint Divisible Obligation obligation or parties of the obligation
Art. 1208: Each creditor can demand only for the
payment of his proportionate share of the credit, while Plurality of subjects is not Plurality of subjects is
each debtor can be liable only for the payment of his required indispensable

proportionate share of the debit

Presumption: Credit or debt shall be presumed to be divied into as In case of breach, obligation is When there is liability on the part
many equal shares as there are creditors or debtors. converted into indemnity for of the debtors because of the
damages because the breach, the solidarity among
● Joint creditor cannot act in representation of the indivisibility of the obligation is the debtors remains
others, neither can a joint debtor be compelled terminated
to answer for the liability of others.

Joint Indivisible Obligation ● The indivisibility of an obligation does not necessarily give rise
to solidarity. Nor does solidarity itself imply indivisibility. (Art.
Art. 1209: no creditor can act in representation of the 1211)
other; no debtor can be compelled to answer for the
liability of the others. Kinds of Solidary Obligations
● If there are two or more debtors, the fulfillment
1. Active (solidarity among creditors): Each creditor has the authority
of or compliance with the obligation requires the
to claim and enforce the rights of all, with the resulting obligation of
concurrence of all the debtors, although each
paying everyone of what belongs to him.
for his own share and for the enforcement of
the obligation ● Creation of a relationship of mutual agency among
● In case of breach where one of the joint debtors co-creditors. A solidary creditor cannot assign his rights
fails to comply with his undertaking, the without the consent of the others. (Art. 1213)
obligation can no longer be fulfilled or ● Each debtor may pay to any solidary creditor, but if any
performed. Consequently, it is converted into demand, judicial or extrajudicial, has been made by one of
one of indemnity for damages. them, payment must be made to him. (Art. 1214)
● In case of insolvency of one of the debtors, the
others shall not be liable for his shares. To hold
2. Passive (solidarity among debtors): Each debtor can ● The interruption of prescription as to one debtor
be made to answer for the others, with the right on the affects all the others; but the renunciation by
part of the debtor-payor to recover from the others their one debtor of prescription already had does not
respective shares. prejudice the others
● Creation of a relationship of mutual guaranty 3. Mixed: Solidarity among creditors and debtors
● Solidarity is not destroyed by the fact that the
among co-debtors
obligation of each debtor is subject to different
● The total remission of the debt in favor of a
conditions or periods. The creditor can
debtor releases all the debtors
commence an action against anyone of the
● All the debtors are liable for the loss of the
debtors for the compliance with the entire
thing due, even if such loss is caused by the
obligation minus the portion or share which
fault of only one of them and for delay, even if it
corresponds to the debtor affected by the
is caused by just one of them
condition or period.

Effects of Modes of Extinguishment

Assignment of Rights in Novation Compensation & Remission Loss or Impossibility

Solidarity Obligations Confusion

The Solidary creditor If prejudicial, the If it partial, the rules If entire obligations, If not debtors faults the obligation
cannot assign his right solidary creditor who regarding application obligations is totally is extinguished
because it is predictable effected the novation of payment shall extinguished
upon mutal confidence, shall reimburse the apply (w/o) prejudice
UNLESS, the (1) the others for damages to the right of other If for the benefit of one if thru debtors’ OR fortuitous
assignment is to a incurred by them; creditors who have of the debtors covering event after delay, the obligation is
co-creditor; (2) not caused the his entire share, he is converted into indemnity for
assignment is with if beneficial and confusion or completely released from damages but the solidary character
consent of co-creditor secured by one, shall be compensation to be the creditor/s of the obligations remains.
liable to the others for the reimbursed to the
share (obligations & If for the benefit of one
extent that their
benefits) which of the debtors and it
rights are diminished
correspond to them covers only part of his
or affected
share, his character as a
If by substituting a If total, the solidary debtors is not
third person in obligations is affected
creditor’s rights, the extinguished, whats
obligations is not in left is the ensuing
reality extinguished as liability for
the relation between the reimbursement
other creditors and the
debtors is maintained

Effects of Prejudicial and Beneficial Acts (Art.1212)

Defenses Available to a Solidary Debtor (Art. 1222)
1. Each one of the solidary creditors may do whatever may be useful
or beneficial to the others, but not anything which may be prejudicial 1. Those derived from the nature of the obligation
to the latter.
2. Those personal to him
2. As far as the debtors are concerned, a prejudicial act performed by
3. Those pertaining to his own share
a solidary creditor is binding.

4. Those personally belonging to other co- debtors but only as

3. As between the solidary creditors, the creditor who performed such
regards that part of the debt for which the latter are responsible.
act shall incur the obligation of indemnifying the others for damages.
Effects

Demand Upon a Solidary Payment by a Debtor

Creditor

The demand made against one Full payment made by one of the
of them shall not be an obstacle solidary debtors extinguishes the
to those which may obligation. (Art. 1217)
subsequently be directed
against the others so long as the
debt has not been fully collected
(Art 1216.)

The creditor may proceed If two or more solidary debtors

against any one of the solidary offer to pay, the creditor may
debtors or all simultaneously choose which offer to accept.
(Art. 1216) (Art. 1217)

A creditor’s right to proceed The solidary debtor who made

against the surety exists the payment shall have the right
independently of his right to to claim from his co-debtors the
proceed against the principal share which corresponds to
them with interest, UNLESS
barred by prescription or
illegality. (Art. 1218)

● When a solidary debtor pays the entire obligation, the resulting

obligation of the co- debtors to reimburse him becomes joint
● If payment was made before the debt became due, no interest
during the intervening period may be demanded. (Art. 1217
par. 2)
● When one of the solidary debtors cannot
reimburse his share to the debtor paying the
obligation due to insolvency, such share shall
be borne by all his co-debtors, in proportion to
the debt of each. (Art. 1217, par. 2)