GENERAL PROVISIONS

OBLIGATION – originate from the latin word obligatio, means tying or binding.

Civil obligations – it is a juridical necessity to give, to do or not to do. It gives a right of action to compel their performance.
 Juridical necessity to give, to do or not to do (1156)
 Right of action to compel their performance
 Right to enforce the obligation against the obligor in a court of law in case of breach

ELEMENTS:
1. Active subject (obligee/creditor/lender/plaintiff/he who has the right) – the one in whose favor the obligation is
constituted
2. Passive subject - obligor/debtor/borrower/defendant/he who has the obligation) – the one who has the duty of giving,
doing or not doing
3. Object – prestation; the conduct which has to be observed by the debtor/obligor
4. Vinculum Juris/ juridical tie /legal tie/ causa/ causa debendi/ causa obligations – This arise form law, contract, quasi
contract, delict and quasi delict.

Natural obligations - not being based on positive law but on equity and natural law, do not grant a right of action to enforce
their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof. (Art. 1423)
 Based on equity and natural law
 Duty not to recover what has voluntary been paid although payment was no longer required.
 Basic understanding of right and wrong
 Based on conscience

Some illustration of Natural obligation

1. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily performs
the contract cannot recover what he has delivered or the value of the service he has rendered. (Art. 1424)

Prescription - one acquires ownership and other real rights through the lapse of time in the manner and under the conditions
laid down by law.

Prescriptive period of an action

Actions to recover movables (Art. 1140) 8 years
Real actions over immovables (Art. 1141) 30 years
A mortgage action (Art. 1142) 10 years
a. Written Contract 10 years
b. Obligation created by law
c. Upon a judgment (Art. 1144)
a. Oral contract
b. Quasi-contract (Art. 1145) 6 years
a. Injury to the rights of the plaintiff
b. Quasi-delict (Art. 1146) 4 years
a. Forcible entry
b. Unlawful detainer (Art. 1147) 1 year

2. When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally
bound to pay because the action thereon has prescribed, but the debtor later voluntarily reimburses the third person,
the obligor cannot recover what he has paid. (1425)
3. When a minor between eighteen and twenty-one years of age who has entered into a contract without the consent of
the parent or guardian, after the annulment of the contract voluntarily returns the whole thing or price received,
notwithstanding the fact the he has not been benefited thereby, there is no right to demand the thing or price thus
returned. (1426)
4. When a minor between eighteen and twenty-one years of age, who has entered into a contract without the consent
of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation,
there shall be no right to recover the same from the obligee who has spent or consumed it in good faith. (1427)
5. When, after an action to enforce a civil obligation has failed the defendant voluntarily performs the obligation, he
cannot demand the return of what he has delivered or the payment of the value of the service he has rendered. (1428)
6. When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he
received by will or by the law of intestacy from the estate of the deceased, the payment is valid and cannot be
rescinded by the payer. (1429)
7. When a will is declared void because it has not been executed in accordance with the formalities required by law, but
one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause
in the defective will, the payment is effective and irrevocable. (1430)

RFBT-Bernarte-Obligations
Sources of obligation (Art. 1157)
1. Law (obligation ex lege)– It is not presumed (Art. 1158)
a. Law
• Taxes, duty of husband and wife to support family, minimum wage, 13th month pay law, workmen
compensation act.

b. Quasi contract (obligation ex quasi contractu) (Chapter 1, Title XVII) – juridical relation resulting from lawful,
voluntary and unilateral (LUV) act to the end that no one shall be unjustly enriched or benefited at the expense
of another.
Rule: No meeting of the mind hence consent of the parties is not required. It is quasi contract not an implied
contract.
 Nominate quasi contract
❖ Solutio indebiti – Something is received when there is no right to demand it, and it was unduly
delivered thru mistake, the recipient has the duty to return it.
❖ Negotiorum gestio – When a person voluntary takes charge of another’s abandoned business
or property without the owner’s authority where reimbursement must be made for necessary
and useful expenses.
Requisites:
i. Property or business is abandoned or neglected
ii. The manager is unauthorized (express or implied)
iii. The unauthorized manger voluntary take charge the abandoned property.
 Innominate quasi contract
i. Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a
stranger, the latter shall have a right to claim the same from the former, unless it appears that
he gave it out of piety and without intention of being repaid.
ii. Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those
relatives who were obliged to give support to the deceased, said relatives shall reimburse the
third person, should the latter claim reimbursement.
iii. Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person
unjustly refuses to give support to the latter, any third person may furnish support to the needy
individual, with right of reimbursement from the person obliged to give support. The provisions
of this article apply when the father or mother of a child under eighteen years of age unjustly
refuses to support him.
iv. Art. 2167. When through an accident or other cause a person is injured or becomes seriously
ill, and he is treated or helped while he is not in a condition to give consent to a contract, he
shall be liable to pay for the services of the physician or other person aiding him, unless the
service has been rendered out of pure generosity.
v. Art. 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction
by another person without the knowledge of the owner, the latter is bound to pay the former just
compensation.
vi. Art. 2169. When the government, upon the failure of any person to comply with health or safety
regulations concerning property, undertakes to do the necessary work, even over his objection,
he shall be liable to pay the expenses.
vii. Art. 2170. When by accident or other fortuitous event, movables separately pertaining to two or
more persons are commingled or confused, the rules on co-ownership shall be applicable.
viii. Art. 2171. The rights and obligations of the finder of lost personal property shall be governed by
articles 719 and 720.
ix. Art. 2172. The right of every possessor in good faith to reimbursement for necessary and useful
expenses is governed by article 546.
x. Art. 2173. When a third person, without the knowledge of the debtor, pays the debt, the rights
of the former are governed by articles 1236 and 1237.
xi. Art. 2174. When in a small community, a nationality of the inhabitants of age decide upon a
measure for protection against lawlessness, fire, flood, storm or other calamity, anyone who
objects to the plan and refuses to contribute to the expenses but is benefited by the project as
executed shall be liable to pay his share of said expenses. Art. 2175. Any person who is
constrained to pay the taxes of another shall be entitled to reimbursement from the latter.

c. Delict (obligation ex maleficio or delicto)

Governing rules:
1. Pertinent provisions of the RPC and other penal laws subject to Art 2177 Civil Code.
 Art 100, RPC – Every person criminally liable for a felony is also civilly liable.
 Responsibility for fault or negligence under quasi delict is entirely separate and distinct from the civil
liability arising from negligence under the Penal Code (delict) . But the plaintiff cannot recover damages
twice for the same act or omission of the defendant. (Art. 2177)
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 2. Chapter 2, Preliminary title, on Human Relations (Civil Code)
3. Title 18 of Book IV of the Civil Code – on damages

Civil liability arising from crime includes:

1. Restitution – The thing itself must be returned or restored.
2. Reparation - The court shall determine the amount of damage, taking into consideration the price of the
thing, whenever possible, and its special sentimental value to the injured party
3. Indemnification - Indemnification for consequential damages shall include not only those caused the injured
party, but also those suffered by his family or by a third person by reason of the crime.

Effect of acquittal in criminal case:

▪ When acquittal is due to reasonable doubt – no civil liability
▪ When acquittal is due to exempting circumstances – there is civil liability
▪ When there is preponderance of evidence – there is civil liability

d. Quasi delict (obligation ex quasi maleficio or quasi delicto) (Chapter 2, Title XVII and special law) – Act or omission
causes damage to another, there being fault or negligence, is obliged to pay for the damage done there being no
pre-existing contractual relation between the parties. (Art, 2176)
Elements:
 There must be fault or negligence attributable to the person charged
 There must be damage or injury
 There must be a direct relation of cause and effect between the fault or negligence on the one hand and
the damage or injury on the other hand (proximate cause)
Obligation expressly arising from Quasi delict
1. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by
the minor children who live in their company.
2. Guardians are liable for damages caused by the minors or incapacitated persons who are under their
authority and live in their company.
3. The owners and managers of an establishment or enterprise are likewise responsible for damages caused
by their employees in the service of the branches in which the latter are employed or on the occasion of their
functions.
4. Employers shall be liable for the damages caused by their employees and household helpers acting within
the scope of their assigned tasks, even though the former are not engaged in any business or industry.
5. The State is responsible when it acts through a special agent; but not when the damage has been caused
by the official to whom the task done properly pertains.
6. Teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils
and students or apprentices, so long as they remain in their custody.
7. The possessor of an animal or whoever may make use of the same is responsible for the damage which it
may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should
come from force majeure or from the fault of the person who has suffered damage. (2183)

2. Contract (obligation ex contractus) – is meeting of mind between two (2) person whereby one binds himself with
respect to another to give something or render some service. (Art. 1306) Contracts have the force of law between the
contracting parties and should be complied with in good faith. (Art. 1159)

NATURE AND EFFECT OF OBLIGATIONS

Kinds of obligation according to subject matter

1. Real obligation
a. Specific or determinate object – when it is particularly designated or physical segregated from all other of the
same class. (Art. 1460)
Effect of Loss of determinate thing
❖ Without fault of the debtor – obligation extinguish
❖ With fault of the debtor – Obligation is not extinguished. The debtor is liable for damages.
b. Generic or indeterminate – Thing refers to a class, to a genus and cannot be pointed out with particularity.
Effect of Loss of generic thing
❖ With or without fault of the debtor – The obligation remains based on the doctrine of Genus nunquam
perit (Generic never perishes)
2. Personal obligation
a. Positive personal obligation (to do)
b. Negative personal obligation (not to do)

Duty of debtor to deliver specific thing

1. To preserve the thing (1163)
General Rule:
Page 3 of 12 (RFBT-Bernarte-Obligations)
 To exercise diligence of a good father of a family (ordinary diligence)
Exception:
a. Law (ex: common carrier; bank)
b. Stipulation
2. To deliver the fruits (Art. 1164)
Kinds of fruits under the Civil Code
a. Natural fruit – Spontaneous product of the soil, and the young and other products of animals. (No human
intervention) (Art. 442)
b. Industrial fruit - Produce by lands of any kind through cultivation or labor. (ibid)
c. Civil fruit – are rents of building, price of lease of lands and other property and the amount of perpetual or life
annuities or other similar income. (ibid)
Rule: The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. The obligation
to deliver the fruits arises from:
a. If subject to suspensive condition – upon fulfillment of the condition
b. If subject to suspensive period – upon arrival of the period
c. If the obligation arises from law, quasi contract, delict, quasi delict – By provision of law
3. To deliver the accessions and accessories (1166)
 Accessions - fruits of a thing/ addition/ improvement upon a thing. (i.e. House/trees on a land)
 Accessories – thing joined with the principal for embellishment, better use or completion (i.e. Key of house,
bracelet of a watch)
4. To deliver the thing itself
Kinds of delivery
a. Actual
b. Constructive
i. Traditio symbolica – delivery of key
ii. Traditio brevi manu – A possessor of a thing not as an owner, becomes the possessor as owner (i.e.
Lessor sells the thing leased to the lessee)
iii. Taditio longa manu – mere consent or agreement of the parties. (pointing out the object)
iv. Traditio constitutum possessorium – A possessor of a thing as an owner retains possession no longer
as an owner, but in some other capacity. This is the opposite of tradition brevi manu. (i.e. A possessor
vendor stay as tenant on the vendee)
v. Execution of a public instrument
Rule:
• Before delivery of the thing – the creditor has personal right (jus in personam or jus ad rem). (Art. 1164)
• The creditor acquires real right (jus in re) only at the time of delivery.
5. Damages in case of breach
With the fault of the debtor (Art. 1170)
I. Fraud (dolo)
a. Dolo causante - (consent is defective –voidable)
b. Dolo incidente (fraud in performance – damages)
Period
a. Future fraud – Responsibility arising from fraud is demandable in all obligation. Any waiver of an action
for future fraud is void. (1171) same rule in case of negligence which shows bad faith. (1173)
b. Past fraud – can be waive
II. Negligence (culpa) – consists in the omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of the time and of the place. (Art. 1173) The
responsibility arising from negligence in the performance of every kind of obligation is also demandable, but
such liability may be regulated by the courts, according to the circumstances. (Art. 1172)
a. Culpa contractual – There is negligence in the performance of the obligation
b. Culpa criminal – Obligation arise because of negligence that constitute a criminal offense (Delict)
c. Culpa Aquiliana – Obligation arise because of negligence that do not constitute a criminal offense (Quasi
delict)

Degree of Culpa under the Roman Law:

1. Culpa lata – grave negligence
2. Culpa levis – ordinary negligence
3. Culpa levissima – slight negligence

FRAUD DISTINGUISHED FROM NEGLIGENCE

FRAUD NEGLIGENCE
There is deliberate intent to cause damage. There is no deliberate intent to cause damage.
Liability cannot be mitigated. Liability may be mitigated.
Waiver for future fraud is void. Waiver for future negligence may be allowed in certain cases:
a. If gross – it cannot waive in advance; against public policy
b. If simple – it may be excused in certain cases.
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 III. Delay (mora)
a. Ordinary delay – Failure to perform the obligation on the period fixed by the parties without demand
whether judicial or extrajudicial
b. Legal delay – Failure to perform the obligation on the period fixed by the parties after demand by the
creditor whether judicial or extrajudicial.
1. Mora solvendi - Delay of debtor
i. Mora solvendi ex re – Delay on the part of the debtor in obligation to give.
ii. Mora solvendi ex persona – Delay on the part of the debtor in a positive personal obligation
Note: There is no legal delay in a negative obligation (i.e., Obligation not to give or obligation
not to do)
2. Mora accipiendi – default on the part of creditor. The creditor is guilty of default when he unjustifiably
refuses to accept payment or performance at the time payment/performance can be done.
3. Compensatio morae – when both the debtor and the creditor are in default (in reciprocal obligations);
The effect is as if there is no legal delay.
Elements of legal delay:
 The obligation must be due, enforceable and already liquidated or determinate in amount
 There must be non-performance
 There must be a demand whether judicial or extrajudicial unless demand is not necessary to
put the debtor in a legal delay.
Effects of legal delay:
 If determinate thing, the debtor bears the risk of loss even if the object is loss by a fortuitous
event
 The debtor is liable for damages/interest
 Resolution (Art 1170, in proper cases)
General Rule: No demand whether judicial or extrajudicial, no delay (Art. 1169)
Reason: The law presume that the creditor give the debtor an extended period of performance.
Exception:
1. Law (i.e Partnership, payment of taxes)
2. Stipulation
3. Time is of the essence
✓ When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract. (i.e birthday party, wedding)
4. When demand would be useless, as when the obligor has rendered it beyond his power to perform
5. Performance of one party in case of reciprocal obligation

IV. Contravention of tenor of obligation

Without fault of the debtor
Requisites of fortuitous event (Nakpil & Sons vs. CA):
1. The cause of the breach of the obligation must be independent of the will of the debtor
2. The event must be either unforeseeable or unavoidable
3. The event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner
4. The debtor must be free from any participation in, or aggravation of injury to the creditor
General Rule:
No person shall be responsible in case of a fortuitous event (Art. 1174)
Exception:
1. Law
a. Legal delay
b. Promised to deliver the same thing to 2 or more persons who do not have the same interest
c. Lost of generic thing
d. Obligation arising from crime
2. Stipulation
3. Assumption of risk/loss

Duty of debtor (Generic thing)

1. To deliver the thing based on quality intended by the parties.
2. To be held liable for damages in case of breach.
Duty of the debtor in an obligation to do (Positive personal obligation)
1. If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule
shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be
decreed that what has been poorly done be undone. (1167)
Duty of the debtor in an obligation not to do (Negative personal obligation)
1. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall
also be undone at his expense. (1168)
Page 5 of 12 (RFBT-Bernarte-Obligations)
3 kinds of Performance:
1. SPECIFIC PERFORMANCE - performance of the prestation itself
2. SUBSTITUTE PERFORMANCE - someone else performs or something else is performed at the expense of debtor
3. EQUIVALENT PERFORMANCE – damages
Real Obligation Personal Obligation
Remedies
Specific Generic To do Not to do
SPECIFIC PERFORMANCE Y Y No Undo the things already
done
SUBSTITUTE PERFORMANCE N Y Can only be demanded if Undo the things already
the obligation is not done t debtor’s expense
strictly personal
EQUIVALENT PERFORMANCE Y Y Y Y
RESCISSION/CANCELLATION Y Y Y

Damages (MENTAL)
1. Moral – Include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation and similar injury.
2. Exemplary or corrective – imposed by way of example or correction for the public good. It may be awarded if the
defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. (bad faith).
3. Nominal – Adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Awarded
in every case where any property right has been invaded. (Damages awarded to vindicate a right)
4. Temperate – More than nominal but less than actual. Awarded when some pecuniary loss has been suffered but its
amount cannot, from the nature of the case be proved with certainty. (Exact amount of damage cannot be ascertained)
5. Actual or compensatory – value of loss suffered but also include profits which the creditor failed to obtain. Pecuniary
loss must be duly proved.
6. Liquidated – those agreed upon by the parties to a contract to be paid in case of breach. (Damage predetermined
beforehand)

✓ Usurious transaction shall be governed by special law. (1175)

✓ Presumption (1176)
a. Receipt of principal without reservation as to interest - interest is already paid
b. Receipt of a later installment of debt without reservation as to prior installment – later installment have been
paid.

REMEDIES OF CREDITOR AGAINST THE DEBTOR

1. Exact performance - specific, substitute, equivalent
2. Attach and execute debtor's property which are not exempt (Art 2236)
3. Accion subrogatoria - Exercise all rights and actions except those inherent in the person (parental authority, hold
office, carry out agency
Requisites:
a. Creditor must have right of return against debtor
b. The debt is due and demandable
c. There is a failure of the debtor to collect his own debt from 3rd persons either through malice or negligence
d. Debtor's assets are insufficient
e. The right of account is not purely personal
4. Accion pauliana - (impugn or rescind acts or contracts done by the debtor to defraud the creditors.
Requisites of Accion Pauliana:
a. That the plaintiff asking for rescission, has a credit prior to the alienation, although demandable later;
b. That the debtor has made a subsequent contract conveying a patrimonial benefit to a third person.
c. That the creditor has no other legal remedy to satisfy his claim, but would benefit by rescission of the conveyance
to the third person;
d. That the act being impugned is fraudulent;
e. That the third person who received the property conveyed, if by onerous title, has been an accomplice in the
fraud. (Anchor Savings Bank vs. Henry Furigay, et al, G.R. No. 191178, March 13, 2013)
General Rule:
All rights acquired in virtue of an obligation are transmissible (Art. 1178)
Exception:
1. Law
2. Stipulation
3. Strictly personal

DIFFERENT KINDS OF OBLIGATIONS

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Primary classification of obligation under the civil Code
I. Pure –without condition and period
 Immediately demandable
II. Conditional
a. Effect
 Suspensive – give rise to obligation
 Resolutory – extinguish the obligation
b. Form
 Express – clearly stated
 Implied – merely inferred
c. Possibility
 Possible – capable of fulfillment
 Impossible (1183)
 Physically impossible – Nature of the thing
 Legally impossible – contrary to law, moral, good customs, public order or public policy
d. Cause or origin
 Potestative - depend upon will of one of the contracting parties (debtor/creditor) (1182)
 Casual – depend upon chance or will of a third person
 Mixed – partly upon chance and partly upon will of third person
e. Mode
 Positive – performance
 Negative – omission
f. Numbers
 Conjunctive – several conditions, all must be complied with
 Disjunctive – several conditions, one or some must be complied with
g. Divisibility
 Divisible – susceptible of partial performance
 Indivisible – not susceptible of partial performance

Conditional obligation
 Future and uncertain event or past event unknown to parties (1179)
 Resolutory condition immediately demandable
 When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one
with a period. (1180)
 Acquisition or extinguishment of obligation depend upon the happening of the condition (1181)
 Positive condition + determinate time = extinguish as soon as the time expire or become indubitable that the event
will not take place (1184)
 Negative condition + determinate time = Effective form the time indicated elapsed or evident that event cannot occur.
(1185)
 Constructive fulfillment - The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
(1186)
 Retroactivity of the conditional obligation. (1187)
a. Reciprocal – fruit and interest deemed mutually compensated
b. Unilateral – Debtor appropriate the fruits an interest except Nature and circumstances of obligation the intention
of the person constituting the same was different.
c. Obligation to do or not to do – court shall determine the retroactivity.
 Before condition is fulfilled (1188)
a. Creditor bring action for the preservation of his right
b. Debtor may recover payment by mistake.
 Loss, deterioration, improvement before condition is fulfilled
Without fault (Debtor) With fault (Debtor)
Loss Extinguish Damages
Deterioration Impairment borne by the creditor Rescission or fulfillment + damages
Nature or Time Expense of the debtor
Improvement Benefit of the creditor The debtor is given only the right of a usufructuary

 Condition for purpose of extinguishing obligation (resolutory) – return to each other what they have received. In case
of loss, deterioration or improvement
– same rule above to the party bound to return. (1190)
 Power to rescind is implied in reciprocal obligation in case one of the obligor should not comply with what is incumbent
upon him. (1191)
a. Injured party may choose fulfillment or Rescission + damages.
b. Court decree the rescission unless there is just cause authorizing the fixing of a period.
 Both parties committed a breach (1192)
a. First infractor shall be equitably tempered.
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 b. If cannot determined the first infractor – Obligation extinguish and each shall bear own damages.

Art. 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the
following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the
condition:
1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
2. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is
lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot
be recovered;
3. When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;
4. If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and
its fulfillment, with indemnity for damages in either case;
5. If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;
6. If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.

III. With a period - Future and certain. If uncertain it is conditional. (1193)

A. Effect
1. Suspensive (Ex die) – arrival- give rise to obligation. Before arrival of the period no right to demand. (1193)
 Payment before arrival of the period (Payment made by mistake), the debtor is unaware of the period – may
recover with the fruits and interests. (1195)
 Loss, deterioration, improvement before arrival of the period. Apply Art 1189.
2. Resolutory (In diem) – arrival- extinguish the obligation. The obligation is immediately demandable.
B. Source
1. Legal – provided by law
2. Conventional/voluntary – by agreement
3. Judicial – fixed by the court
C. Definiteness
1. Definite – fixed or known when it will come
2. Indefinite – not fixed or not known when it will come.

General Rule: The court is not authorized to fix a period: (Reason: The court cannot make a contract for the parties)
Exception: Court authorizes to fix the period. (1197)
a. No period fixed but period was intended (nature and circumstances)
b. Period depend upon the sole will of the debtor.
✓ Court shall determine such period as probably contemplated by the parties. Once fixed by the courts, the
period cannot change by them. (by the court not party)

General Rule: Whenever period is designated, it is presumed for the benefit of both creditor and debtor except when expressly
provided otherwise. (1196) Hence, neither the creditor can demand performance, nor the debtor pay before arrival of the
period.
Exception: The debtor shall lose every right to make use of the period: (1198) Hence, immediately demandable.
1. When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the
debt;
2. When he does not furnish to the creditor the guaranties or securities which he has promised;
3. When by his own acts, he has impaired said guaranties or securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
5. When the debtor attempts to abscond.

IV. Alternative obligation

a. Simple – only one prestation is due
b. Compound
1. Conjunctive – Several prestation and all are due
2. Distributive – 2 or more prestation is due
i. Alternative – several prestation are due but performance of one is sufficient.
ii. Facultative – Only one is due but debtor may substitute

Gen rule: Right of choice belong to the debtor (1200) except when expressly grated to the creditor.
Limitation on the right of choice:
a. Impossible
b. Unlawful
c. Not the object of obligation
d. Only one is practicable (1202). In this case, the debtor loss the right of choice and the alternative obligation is
converted into a simple obligation.
 Choice produces no effect except from the time it has been communicated. (1201)
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  Communication of choice convert alternative obligation to a simple obligation. (1205)
 Creditor fault, the debtor cannot make a choice = rescind the contract + damages (1203)
 All object loss – Debtor is liable for damages (last object)

Right of choice: General rule: right of choice belongs to debtor

a. The choice is with debtor
1. If only 1 is left either because of fortuitous events or due to debtor's acts, perform what is left. The effect is
that the debtor loses the right of choice
2. if the choice is limited because of the creditor's acts, the debtor has the right of resolution and damages
3. if all are lost due to debtor, the creditor is entitled to damages
4. if some are lost, the debtor can choose from the remaining
b. The choice is with creditor
1. if one or some are lost due to fortuitous event, the creditor chooses the remainder
2. if one or some is lost because of the fault of debtor, the creditor may choose either the remainder or the value
of any which disappeared, and damages in either case
3. if all is lost due to the debtor's fault, the creditor may choose the value of any if some is lost due to debtor's
fault, the creditor chooses the remainder
4. if all is lost due to fortuitous event, obligation is extinguished
5. if all is lost due to creditor's fault, the obligation is extinguished

Summary: Rule on loss

1. Debtor choice – Last item lost
2. Creditor’s choice - Any item lost through the fault of the debtor

Art. 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day
when the selection has been communicated to the debtor. Until then the responsibility of the debtor shall be governed by the
following rules:
1. If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering that which the
creditor should choose from among the remainder, or that which remains if only one subsists;
2. If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting,
or the price of that which, through the fault of the former, has disappeared, with a right to damages;
3. If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any one
of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do in case one, some or all of the prestations should become
impossible. (1136a)

V. Facultative - When only one prestation has been agreed upon, but the obligor may render another in substitution (1206)
Before substitution
 Loss of the object without fault – not liable
 Loss of the object with fault of the debtor – Liable
 Loss/deterioration of the substitute with or without fault of the debtor – Not liable
After substitution
 Loss of the object with or without fault – not liable
 Loss of the substitute with fault – liable
 Loss of the substitute without fault – not liable
Rule:
 Right of choice always to debtor
 Only one prestation is due but the debtor may substitute

DISTINCTIONS BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS

ALTERNATIVE FACULTATIVE
a. Various things are due but the giving principally a. Only one thing is due but a substitute may be given to
of one is sufficient render payment/fulfillment easy
b. If one of prestation is illegal, others may be valid b. If principal obligations is void and there is no necessity
but obligation remains of giving the substitute; nullity of P carries with it nullity
of S
c. If it is impossible to give all except one, the last c. If it is impossible to give the principal, the substitute
one must still be given does not have to be given; if it is impossible to give the
substitute, the principal must still be given
d. Right to choose may be given either to debtor or d. The right of choice is given only to the debtor
creditor

VI. Joint /Solidary

A. Individual – one debtor and one creditor
B. Collective – Two or more debtor and two or more creditors
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 1. Joint – 2 or more debt/credit as there are debtor/creditor (mancomunada, mancomunadamente, pro rata,
proportionately, We promise to pay signed by 2 or more person)
2. Solidary - Each debtor/creditor is bound to pay/right to demand payment the entire compliance of the obligation
(Joint and/or severally, solidaria, in solidum, juntos o separademente, Individually and/or collectively, I promise
to pay signed by 2 or more persons, each will pay the whole value)

Gen Rule: Joint obligation

Exception:
a. Law
b. Stipulation
c. Nature of obligation requires solidarity (real solidarity)
Solidarity imposed by law (under the New Civil Code)
i. 2 or more heirs take possession of the estate - loss or destruction of a thing devised or bequeathed, even
though only one of them should have been negligent. (Art. 927)
ii. Death or injury is due to the negligence of a fellow worker, the latter and the employer shall be solidarily liable
for compensation. (Art. 1712)
iii. The collapse of building or structure within fifteen years (15) from completion of the structure, the engineer
or architect who supervises the construction shall be solidarily liable with the contractor. (Art 1723)
iv. Any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership
or with the authority of co-partners, loss or injury is caused to any person. (Art. 1822 and 1824
v. Partner received money or property from 3rd person and misapplies it or Partnership receives money or
property of a 3rd person and such property was misapplied by any partner while in partnership custody. (Art
1823 and 1824)
vi. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers. (Art. 1911)
vii. Two or more persons have appointed an agent for a common transaction or undertaking. - Liable to the agent
for all the consequences of the agency. (Art. 1915)
viii. Two or more bailees (Commodatum) to whom a thing is loaned in the same contract (1945)
ix. The responsibility of two or more officious managers (negotiorum gestio) shall be solidary, unless the
management was assumed to save the thing or business from imminent danger. (Art. 2146)
x. The owner and his driver in a motor vehicle mishaps, if the former, who was in the vehicle, could have, by
the use of the due diligence, prevented the misfortune. (Art. 2184)
xi. The responsibility of two or more persons who are liable for quasi-delict. (Art. 2194)
Solidarity under special Law (related law only)
xii. Liability of directors for watered stocks. (Sec. 65, BP 68)
xiii. When the director or trustee who willfully and knowingly vote for or assent to patently unlawful acts of the
corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty (Sec 31 BP 68)
xiv. Workmen compensation act
xv. Where an instrument containing the word "I promise to pay" is signed by two or more persons, they are
deemed to be jointly and severally liable thereon. (Sec 17, g, Act 2031)
xvi. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. (Sec 68, Act 2031)

Kinds of solidarity
1. Parties bound
a. Passive solidarity – Debtor
b. Active solidarity – Creditor
c. Mixed solidarity – both creditor and debtor
2. Source
a. Conventional – by agreement
b. Legal solidarity – imposed by law
c. Real solidarity – nature of the obligation
3. Legal tie
a. Uniform – bound by the same stipulation
b. Non-uniform or varied – not subject to the same stipulation

Invisibility vs solidarity
1. Prestation vs. juridical tie or legal tie
2. Debtor guilty of breach is only liable vs. all debtor are liable
3. Exist even only 1 debtor and 1 creditor vs. at least 2 debtor/creditor
4. Other debtor not liable in case of insolvency of one debtor vs. other debtor are proportionately liable

Solidarity creditor
 Can do useful to but not prejudicial to other solidary creditor
 Cannot assign without the consent of the other solidary creditor
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  Novation, compensation, confusion or remission by solidary creditor extinguish the obligation but liable to the other
solidary creditor
 Debtor may pay any one of the solidary creditor. Except when one of the solidary creditor demand judicial or
extrajudicial payment must be made to him.

Solidary debtor
 Creditor can proceed to any solidary debtor as long as the debt has not been fully collected
 Payment by one of solidary debtor extinguishes the obligation. If 2 or more debtors offers, the creditor may choose
which offer to accept.
 Solidary debtor who pay, may claim from his co-debtor + interest from the date of payment (except when not yet due,
no interest for intervening period)
 Insolvency of one of solidary debtor – to be borne by all his co-debtor in proportion to the debt of each. Payment by
solidary debtor after the obligation has prescribed or become illegal – Not entitled to reimbursement.
 Remission made by the creditor of the share of one of the solidary debtor – Does not release such solidary debtor
toward other co-debtor when the debt was totally paid before remission.
 Remission of whole obligation obtained by one of the solidary debtors – not entitled for reimbursement
 Loss without fault of any debtor– obligation extinguished
 Loss with fault of any debtor – All debtors are liable without prejudice to the action against guilty or negligent debtor.
 Loss due to fortuitous event after delay by any of the solidary debtor – same all debtors are liable.
 Claim for Compensation under Workmen’s compensation law. (Sec 2, workmen compensation law)
 Article 19, 20, 21, 22 of the Civil code (Human relations)

Defense of solidary debtor

a. Nature of the obligation – payment, fraud, prescription, remission, illegality, absence of consideration, res judicata,
non-performance of suspensive condition
b. Those personal to him - incapacity, mistake, violence, minority. (personal or complete defense)
c. Those personal to the other.

VII. Divisible – Capable of partial fulfillment

VIII. Indivisible – Not capable of partial fulfillment
Kinds of division
a. Qualitative division – based on quality
b. Quantitative division – based on quantity
c. Ideal or intellectual division – exist only in mind of the parties

Kinds of indivisibility
a. Legal indivisibility – by law
b. Conventional indivisibility - by agreement
c. Absolute or natural indivisibility – nature of the object/prestation

 Divisibility or indivisibility is determined by the purpose or intention of the parties not the possibility or impossibility of
partial performance. (except of nature indivisibility)
 Divisible or indivisible refer to the object of the obligation not on the cause or legal tie.
 Joint indivisible obligation give rise to indemnity for damages – one debtor does not comply with his undertaking.
a. Effect – Obligation is converted into one for damages. Specific performance or rescission is not a remedy because
the other debtors are willing to fulfill.
 Obligation to give definite thing and not susceptible of partial performance – Indivisible
 Object the execution of a certain number of days of work – Divisible
 Accomplishment of work by metrical units or analogous things
 Nature are susceptible of partial performance – Divisible
 Obligation not to do – Determined by the character of the prestation in each particular case.

IX. Obligation with a penal clause – Penalty shall substitute the indemnity for damages and the payment of interests in
case of non-compliance (absence of agreement).
a. Principal
b. Accessory

Kinds of penal clause

a. Origin
1. Legal penal clause - by law
2. Conventional penal clause – by agreement
b. Purpose
1. Compensatory penal clause – take the place of damages (1226)
2. Punitive penal clause – imposed as punishment for breach
c. Demandability or effect
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 1. Subsidiary or alternative penal clause - only penal clause can be enforce.
2. Joint or cumulative – both principal and penal clause can be enforced

 The penal clause shall substitute the indemnity for damages and the payment of interest in case of non- compliance.
(1226) However, Penalty may be enforced only when it is demandable.
 Proof of actual damages suffered by the creditor not necessary to enforce the penalty. (1228) However, damages
shall be paid
a. There is stipulation
b. Obligor refuses to pay the penalty
c. Guilty of fraud in the fulfillment of the obligation.
 Debtor cannot exempt himself from performance and to pay only the penalty (except when expressly granted to him).
Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the penalty at the same time,
unless this right has been clearly granted him. (1227) However, if creditor choose performance but become impossible
without his fault, the penalty may be imposed.

Causes for reduction of penalty:

a. Principal obligation has been partly or irregularly complied with;
b. Penalty is iniquitous or unconscionable
 Nullity of the penal clause does not carry of the principal obligation but the nullity of the principal carries with that of
the penal clause. (Rule: Accessory follows the principal)

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