Obligation (1).pptx

Obligation An obligation is a juridical necessity to give, to do or not do. (Art.1156, Civil Code of the Philippines)

Juridical necessity means that the court may be asked to order the performance of an obligation if the debtor does not fulfill it. If an obligation cannot be enforced through the courts, it may be disregarded with impunity.

Requisites of obligation 1. Active subject (creditor or obligee) - The party who has the right to demand performance of the obligation. 2. Passive subject (debtor or obligor) - The party who is obliged to perform the obligation. 3. Prestation - The object or subject matter of the obligation. It may consist of giving, doing or not doing something. . 4. Efficient cause - The vinculum or the legal or juridical tie which binds the parties to an obligation. The efficient cause of an obligation may be any of the the sources of obligation.

Examples: 1. D is obliged to give C P50,OOO.00with interest at 12% per annum on December 31,2015 pursuant to a contract of loan. D is the passive subject; C is the active subject; the giving of P50,OOO.00with 12% interest is the prestation; and contract of loan is the efficient cause. The the obligation here is unilateral, i.e., only one party is required to perform a particular conduct.

Examples: D is obliged to transport the goods of C from Manila to Cebu, and C is obliged to pay D P1,OOO.00as transport costs, under a contract of carriage. 'As regards the transport of the goods which is the prestation, C is the active subject and D is the-passive subject. As regards the payment of transport costs which is the prestation, C is the passive subject and D is the active subject. The contract of carriage is the efftcient cause for the obligations of both D and C. The obligations here are bilateral, i.e., each party is required to perform a particular conduct.

Civil obligation and natural obligation distinguished Civil obligation and natural obligation distinguished A civil obligation (as defined in Art. 1156) is based on positive law; hence, it is enforceable by court action.

A natural obligation, hand, isbybased natural law; hence, iton is the not other enforceable courton action. The obligation, however, exists in equity and moral justice, such that if the debtor voluntarily performs it, he can no longer recover what he has given.

Example: M is the maker of a promissory note with P as payee for P20,OOO.OO. If M does not pay on due date, P can enforce payment by filing a court action. If P does not file a court action against M within 10 years from due date which is the prescriptive period for actions upon a written contract, ~ loses the right to enforce payment court action. However, if M voluntarily makes thebypayment to P although the obligation has prescribed, M will no longer be allowed to recover the payment because in equity and moral justice; he still owed P the amount of P20,OOO.OO.

Sources of obligation ( Art. 1157) 1. Law

- A rule of conduct, just and obligatory, laid down by legitimate authority for common observance and benefit. (Sanchez Roman). Obligations derived from law are not presumed. Only more expressly determined 'in the Civil Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions on Obligations. (Art 1158) Examples: The National Internal Revenue Code which provides for the payment of taxes; the Anti-Mendicancy Law which prohibits the giving of alms to beggars.

2. Contracts - A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305). Obligations arising from contracts have the force of between the and should be law complied with in contracting good faith parties (Art. 1159)

Examples: A contract of lease which provides for the payment of rental by the lessee; A contract of sale which requires the seller to deliver the thing sold and the buyer to pay the price.

3. Quasi-contracts - They refer to certain lawful, voluntary and unilateral acts giving rise to a juridical relation to the end that no one shall be unjustly enriched at the expense of another. (Art. 2142).

Examples: (Quasi-contracts) Negotiorum gestio - This refers to' the voluntary administration of the property, business or affairs of another without his consent or authority. It creates the obligation to reimburse the gestor for necessary and useful expenses. (Art. 2150)

Example: (Quasi-contracts) D and C are the owners of adjacent vegetable farms. One day, D was not around to tend to his farm, When C noticed that D had not been around' for almost a week, he himself cultivated the soil and placed fertilizer on it, watered the plants, removed the weeds and wilted leaves, C incurred necessary and useful expenses in the process. D must reimburse C for such expenses. Otherwise, he will be unjustly enriching himself at C's expense,

Example: (Quasi-contracts) Solutio indebiti - This refers to payment by mistake of an obligation which was not due when paid. It creates the obligation to return the payment (Art. 2154) Example: D, the payee of check for P5,000,00 cashes it with the drawee bank, but the teller gives him P10,000.00 by mistake. D is duty bound to return the excess of P5,000.00 to the bank. Otherwise, he will be unjustly enriching himself at the expense of another.

Other Quasi-contracts: 1. When without the knowledge of the person obliged to give support, it is given by a

stranger, the latter shall have the right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being paid in return.

2. When funeral expenses are borne by a third person, without knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third persons; 3. When through an accident or other cause a persons is injured or become serioulsly ill, and he is treated or helped while he is in be a condition give consent to a contract, henot shall liable forto the services of the physician or other person aiding him, unless the services has been rendered out of pure generosity.

4. Acts or omission punishable by law (Delicts); Example: The obligation of a thief to return the car stolen by him.

5. Quasi delict or Torts. Example: a. The obligation of the head of a family that lives in building or a part thereof to answer for damages caused by things thrown or falling from the same. b. The obligation of the possessor of an animal to pay for the damages which it may have caused.

NATURE AND EFFECT OF O BLIGATIONS Concept A thing' is determinate when it is particularly designated or physically segregated from all others of the same class. (Art.1460). Examples: A 2009 Toyota Corolla with engine no.123456 body no. 546611, and plate no. FRS 840; my only wristwatch; the house located at 234 Moret Street, Sampaloc, Manila; my horse nam ed "Black Stallion." A thing is indeterminate or generic when it is not particularly designated or physically separated from all others of the same class, i.e, one of a class. Examples: A horse, a car,

Importance of knowing whether a thing is determinate or generic As a rule, the loss of a determinate thing through a fortuitous event extinguishes the obligation. (Art. 1262)

Obligations of one obliged to give a determinate thing. 1. To take good care of the thing with the diligence of a good father of a family unless the law or agreement of the parties requires another standard of care. (Art. 1163) Diligence of a good father of a family means the ordinary care that an average person exercises in taking care of his property.

2. To deliver the thing. (Art. 1163) This involves placing the thing in the possession or control of the creditor either actually or constructively.

3. To deliver the fruits of the thing. (Art. 1164) a. Kinds of fruits 1. Natural fruits - They are the spontaneous products of the soil and the young and other products of animals. (Art. 442) Thus, the trees that grow naturally on the soil without the intervention of man and For the the coltyoung delivered by a mare are natural fruits. and other products of animals, they are natural fruits even with the intervention of human labor.

2. Industrial fruits - They refer to those produced by land of any kind through cultivation or labor. (Art. 442) Examples are rice, corn and other crops produced through the intervention of human labor. 3. Civil fruits - They refer to fruits which are the result of a juridical relation such as the rent of a building, price of lease of land and other property and the amount of perpetual or life annuities. (Art. 442)

b. When creditor has a right to the fruits of a determinate thing The creditor has the- right to the fruits of a thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the thing has been delivered to him. (Art11164)

c. When obligation to deliver the thing arises 1). If the obligation is a pure obligation or one whose performance is not subject to a suspensive period or suspensive condition, the obligation to deliver arises from perfection..

2) If the obligation is subject to a suspensive period or suspensive condition, the obliqation to deliver arises upon the arrival of the term or the fulfillment of the condition. Thus, if 0 is obliged to give C a specific car on Christmas day next year, the obligation to deliver arises only on the arrival of such date. Or if the obligation of 0 is to give C such car if C passes the CPA Examination, then the obligation to deliver arises only upon the fulfillment of such condition.

d. Rights of the creditor 1) Personal right - This is a right that may be enforced by one person on another, such as the right of the creditor to demand the delivery of the thing and its fruits from the debtor. This is also called jus in personam or jus ap rem. 2) Real right - This refers to the right or power over a specific thing, such against as possession ownership, is a right enforceable the whole or world. This iswhich the right acquired by the creditor over the thing and its fruits when they have been delivered to him. This is also called jus in reo

4. To deliver its accessions and accessories even if they have not been mentioned. (Art. 1160) a. Accessions - They include everything that is produced by a thing or is incorporated or attached thereto, either naturally or artificially, (Art. 440) such as alluvium, the soil gradually deposited by the current of a river on a river bank, or whatever is built, planted or sown on a parcel of land. b. Accessories - Those joined to or included with the principal thing for the latter's better use, perfection or enjoyment (such as the keys to a car or a house, or the bracelet of a wristwatch).

Remedies of the creditor Remedies of the creditor 1. If the debtor fails to perform his obligation to deliver a determinate thinga. a.

To compel the debtor to make the delivery.(Art. 1165) .

b. To

demand damages from the debtor. (Art. 1170)

Example: D is obliged to give C a specific car. On due date, C demands delivery but D does not deliver. In this case, C can compel D to deliver the car because there is no other person in possession or control of it. C can also demand payment of damages from him.

2. After the debtor fails to perform his obligation to deliver a generic a. To ask that the obligation be complied with at the expense of the debtor. (Art. 1165) b. To demand damages from the debtor. (Art. 1170) Example: D is obliged to deliver 10 sacks of rice to C. It D does not perform his obligation as stipulated, C can obtain 10 sacks of rice from other sources at the expense of D. C can do so because the thing is generic and thus can be replaced with the same kind. C can also ask for damages from D.

3. If the debtor fails to perform his obligation in obligations to do a. If the debtor fails to perform the obligation or performs it but contravenes the tenor thereof1) Creditor may have the obligation executed at the expense of the debtor. (Art. 1161) 2) He may also demand debtor. (Art. 1170)

damages from the

Example:

D is obliged to construct a hollow block fence for C. By agreement, the fence will be 2 meters high and 10 meters long, fine-finished and painted. If D does not perform his obligation, C can ask another person to, or he himself may, construct the fence at the expense of D. . C can also ask for damages from D. C cannot compel D to perform the obligation because compulsion will violate D's right against involuntary servitude. If D constructs the fence but did not follow the measurements agreed upon (i.e., there was contravention of the tenor of the obligation), C will have the same rights 1) Creditor may have the same expense. (Art. 1167)

be undone at debtor's

2) Creditor may also demand damages from the debtor. (Art.1170)

Example: If in the same illustration above, D constructs the fence following the measurements but it was not properly aligned, the finishing was rough, and materials used were substandard, C can have the fence be demolished by another person or even by himself at D's. expense. C can also demand damages from D.

4. If the debtor does what has been forbidden him a. The creditor may demand that what has been done be undone. b. He may also demand damages from the debtor. (Art.1168) Example: B bought a farm lot from S. However, the only access from the road to B's lot is the lot of D. So B entered into a contract for a right It ofwas wayagreed over athat period years and paid with a sumD therefor. for of the10duration of the contract D would not construct any fence between B's lot and his. Sometime thereafter, however, D constructed a fence in violation of the agreement. B may demand that D remove the fence at D's expense.and pay damages.

Grounds for liability to pay damages 1. Fraud 2. Negligence 3. Delay 4. Contravention of the tenor of the obligation. (Art. 1170.)

Damages 1. Concept, distinguished from injury Damages refer to the harm done and the sum of money that may be recovered. Injury refers to the wrongful, unlawful or tortuous act. It is the legal wrong to be redressed.

Kinds of damages (MENTAL) a. Moral damages - They include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, . moral shock, social humiliation, and similar injury. (Art. 2217) b. Exemplary or corrective damages - These are imposed by way of example or correction for public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art. 2229) c. Nominal damages - They refer to damages to vindicate a right. (Art. 2221) d. Temperate or moderate damages - They are more than nominal but less than compensatory damages, but may be recovered if the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. (Art. 2224) e. Actual or compensatory damages - These refer to the pecuniary loss, (such as loss in business or profession) that may be recovered. It includes the value of the loss suffered and profits not realized. (Art. 2199) f. Liquidated damages - Those agreed upon by the parties to a contract, to be paid in case of breach. (Art. 2226)

Fraud 1. Concept Fraud is the deliberate or intentional evasion' by the debtor of the normal compliance of his obligation. Under Art.1170, this actually refers to the fraud committed by the debtor at the time of the performance of his obligation.

Kinds of fraud in general a. According to meaning

1) Fraud in obtaining consent a) Causal fraud or dolo causante - This refers to fraud without which consent would not have been given. It renders the contract voidable. Example: B bought a ring from S who told. him that the ring was with diamond. However,but S knew all alsrc that embellished the embellishment was not diamond ordinary glass. B here gave his consent because of the fraud employed by S, hence, the contract is voidable.

b) Incidental fraud or dolo incidente - This refers to fraud without which consent would have still been given but the person giving it would have agreed on different terms. The contract is valid but the party employing it shall be liable for damages. Example: C hired D to teach in the school of C. D placed in his application that he had earned units in MBA. However, D had actually dropped the subjects for the said units. If C would have hired D even if D did not complete the said units but that he would have given a lower salary to D, the fraud committed by D was only incidental but it would entitle C to recover damages.

2) Fraud in the performance of the obligation This is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing obligation; hence, the fraud has -no effect on the validity of the contract since it was employed after perfection. However, the party employing it shall be liable for damages. (Art. 1170) Example: B ordered 10 bags of powder soap from S who agreed to deliver the same after 2 days. On due date, S delivered 10 bags of powder soap which he mixed with chalk. This is fraud in the performance of an obligation which entitles B to recover damages. The fraud, however, does not have any effect on the validity of the contract.

b. According to time of commission 1) Future fraud A waiver of an action for future fraud cannot be made. If there is an agreement for its waiver, the same is void. (Art. 1171)' Thus, the debtor will still be liable for damages if he commits fraud in the performance of his obligation despite the waiver. 2) Past fraud A waiver of an action for past fraud may be made, since the commission of fraud can no longer be encouraged. Such waiver is an act of liberality on the part of the creditor.

Negligence 1. Concept 

It is the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time, and of the place. (Art. 1173). It is the failure to observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury. (National Power Corporation vs. Heirs of Noble Casionan, supra; Guillang vs. Bedania, G.R. No. 1629a7, May 21, 2009) .

The test of negligence is whether the defendant in doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. (GuiJlangvs. Bedania, supra) If the law or contract does not state the diligence which is to be observed in the performance of the obligation, the debtor must observe the ~iligence of a good father of a family.

Examples: a. If the obligation is to deliver a specific window glass, the debtor must ensure that the glass, considering its fragility, is well-protected when he transports it as required by the nature of the obligation. Otherwise, he will be negligent. b. A baby-sitter, 21 years old strong and healthy, will be negligent if she sleeps while on duty considering that the circumstances of her person were considered when she was hired for the job.

c. If the driver of a car drives at night without any headlight, he will be considered negligent considering that the circumstances of night time require such light. d. If the same car driver drives at 50 kilometers per hour along a busy street where many people are crossing, he will be negligent because the circumstances of the place. require that he should drive slowly.

Kinds: a. Culpa contrectuei (contractual negligence) This is negligence' in the performance of a contract (such as the negligence committed by the driver of a bus when a passenger is hurt during a trip because there is here a breach of contract of carriage) Here, the master-servant rule applies, ie.,· the negligence of the servant is the· negligence of the master. Accordingly, the defense of a good father of a family in the selection and supervision of employees is not a defense on the part of the employer although it may mitigate the liability. Thus, in the example, the negligence of the bus driver is also the negligence of the bus owner.

Saludaga vs. Far Eastern University G.R.No.

179337, April 30, 2008



Facts: S, a student of X University, was shot and wounded by G, a security guard of the school, while inside the campus. S sued X University for damages on the ground that it breached its obligation under the enrollment contract to provide students with a safe and secure environment and an atmosphere conducive to learning. In defense, X University pleaded fortuitous event on the ground that it could not have reasonably foreseen nor avoided the accident since G was not its employee, and that it complied with its obligation to ensure a safe environment for its students by having exercised due diligence in selecting the security services of the SA Security Agency.



Held: Respondent school is liable for damages for breach of contract due to negligence in providing a safe learning environment. It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding of relief.guards The school failed that it undertook steps to ascertain thatright the security assigned to to it prove actually possessed the required qualifications. A learning institution should not be allowed to completely relinquish security matters in its premises to the security agency it hired. To do so would result in contracting away its inherent obligation to ensure a safe learning environment for its students. The defense of fortuitous event or force majeure must also fail. An act .of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of the loss sustained.

b. Culpa aquiliana (civil negligence or tort or quasi-delict or culpa extra-contractual) These are acts or omissions that cause damage to another, there beinq no contractual relation between the parties. (Art. 2176) The master-servant rule does not apply. Hence, the defense of a good father of a family in the selection and supervision of employees is a defense on the part of the employer to escape liability. Thus, if a pedestrian is hit by a bus through the reckless driving of the driver, the latter's negligence is not the negligence of the owner.

c. Culpa criminal (criminai negligence) This is negligence that results in the commission of a crime. Defense of a good fath er of a family is not proper because the employee's guilt is automatically the employer's civil guilt if the former is insolvent. The passenger of the bus may bring a court action not only for culpa contractual against the bus owner, but also one for culpa criminal against the bus driver for physical injuries through reckless imprudence. In the same way, the pedestrian may bring not only a suit for culpa aquiliana against the driver and the owner, but also one forculpa criminal against the bus driver for physical injuries through reckless imprudence.

Delay or default or mora Concept Delay or default or mote respect to time.

is the 'non-fulfillment of an obligation with

Kinds a. Mora solvendi - Delay on the part of the debtor.

1) Ex re - Delay in real obligations (obligations to give).. 2) Ex persona - Delay in personal obligations (obligations to do). b. Mora accipiendi - Delay on the part of the creditor. This exists when the creditor refuses to accept the thing due without justifiable reason. c. Compensatio morae - Delay in reciprocal obligations, Le., both parties are in default. Here, it is as if there is no delay.

When debtor incurs in delay in obligations to give or to do, requisites: General rule: The debtor incurs in delay from the time the creditor demands fulfillment of the obligation but the debtor fails to comply with such demand

no delay, as a rule).

(no demand,

The following are the requisites

of delay: a. The debtor does not perform his obligation on the date it is due. b. The creditor demands the performance of the obligation. c. The debtor does not comply with the creditor's demand.

Example: D owes C P5,OOO.OO. The obligation is due on May 15. If D does not pay on May 15, he is not yet in delay. But if C makes a demand on him to pay on that date or thereafter and D does not comply, then D will be in delay.

Exceptions, i.e., delay will exist even without demand in the following cases (Art. 1169): a. When the law so provides. Thus, where the law provides for the payment of penalty if the obligation is not performed on due date (such as in the case of taxes), then demand shall not be necessary.

b. When the obligation expressly so declares. Hence, no demand is necessary if a lease contract provides that "(T)he rental shall be paid by the Lessee within the first five days of the month in advance without need of demand." c. When time is of the essence of the contract. Thus, where a rent-a-car company is obliged to provide for the bridal a wedding date, time and place, the car saidduring company is liableatifaitparticular fails to perform the said obligation notwithstanding the absence of demand since time was a controlling motive for the establishment of the contract.

d. When demand would be useless. Thus, the debtor will be in delay even without demand from the creditor if the thing he is obliged to deliver has been destroyed through his fault or he has delivered it to another person. e. In reciprocal obligations, where the obligations arise out of the same cause and must be fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by the other begins notwithstanding the absence of demand. Note: There is no delay in an obligation not to do as one cannot be in delay for not doing something.

Effects of delay a. The debtor shall be liable for the payment of damages. (Art. 1170) b. If the obligation consists in the delivery of a determinate thing, he shall be responsible for any fortuitous event until he has effected the delivery. (Art. 1165)

Fortuitous events 1. Concept Fortuitous events are those events that could not be . foreseen, or which, though foreseen, are inevitable. (Art. 1174). It is not enough that the event should not been foreseen or anticipated, but it must be one impossible to foresee or avoid. (Sicam vs. Jorge, GR. No. 159617, August 8, 2007) Examples: Natural calamities or acts of God such as earthquake, typhoon and lightning; and acts of man ("force majeure") such as war and armed robbery.

Elements a. The cause must be independent of the debtor's will. b. There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen. c. The occurrence of the event must be of such character as to render it impossible for the debtor to perform his obligation in a normal manner. (See Sicam vs. Jorge, G.R No. 159617, August 8,2007, for similar elements or characteristics.)

Liability for fortuitous events

General rule: No person shall be liable for fortuitous events, i.e., his obligation will be extinguished.

Exceptions to the rule (Art. 1174): a. When the law. expressly provides for liability even in case of fortuitous events (such as that provided in Art.1165 where the obligor is liable for fortuitous events if he delays or has promised to deliver the same thing to two or more persons who do not have the same interest). b. When the parties have declared liability even in case of fortuitous event. c. When the nature of the obligation requires the assumption of risk (such as the obligation of an insurer who must pay the policy holder even if the loss is caused by a fortuitous event if the cause thereof is the risk insured against).

Burden of proving loss due to fortuitous event The burden of proving that the loss was due to fortuitous event rests on him who invokes it. And, in order for a fortuitous event to exempt one from liability, it is necessary that he must have committed no negligence or misconduct that may have occasioned the loss. (Sicam vs. Jorge, supra)

Presumptions on receipt of principal or of later installment (these are disputable presumptions and evidence may be introduced to the contrary by the creditor) (Art. 1176)

1. The receipt of the principal without reservation as, to interest, shall give rise to the presumption that the interest has been paid. 2. The receipt of a later installment without reservation as to prior installments, shall give rise to the presumption that such prior installments have been paid. The above presumptions are disputable; hence, they may be rebutted by contrary evidence. If the presumption is conclusive, then no evidence to the contrary may be admitted.

Remedies of creditor to enforce payment of his claims against debtor (Art. 1177) 1. Pursue the property in the possession of the debtor, except those exempt by law. This is usually by attachment where the creditor files a court action to exact fulfillment with a prayer that the court set aside a property belonging to the debtor. If the court decides infavor of the creditor and the debtor does not pay, the property attached will be ordered sold and the proceeds thereof applied to the payment of the obligation.

Exercise all the rights and bring all the actions of the debtor except those personal to him (accion subrogatoria). Example: A owes D. D owes C. If C files a court action against D to collect, he may ask the court to order A not to pay D so that in the event that the court rules in favor of C, A will be required to pay C. InAeffect, rightto toD. collect from whichCisisaexercising right that the belongs

Impugn the acts which the debtor may have done to defraud his creditors (accion pauliana). This remedy must be of last resort. The creditor must have taken the successively the foregoing measures before he can bring this action. (Metrobank vs International Exchange Bank, G.R. No. 176008,August10, 2011) Example: D owes C P50,000.00. To defraud C, D sells his lot, his only property, to B who knows of the fraudulent intention of D. C may ask the court to order the rescission of the sale made by D. Once the sale is rescinded and the lot is returned to D, C may ask the court to order its attachment and its sale at public auction, and the proceeds of the sale applied in payment of his claim.

DIFFERENT KINDS OF OBLIGATIONS (Primary classification under the Civil Code) 1. Pure obligation 2. Conditional obligation 3. Obligation with a period 4. Alternative obligation 5. Facultative obligation 6. Joint obligation 7. Solidary obligation 8. Divisible obligation 9. Indivisible obligation 10. Obligation with a penal clause.

Pure and Conditional Obligations Pure obligation, concept A pure obligation is one without a term or condition and is demandable at once. Example: I promise to give you P5,000.00. This is immediately demandable since there is no term that must expire or a condition that must happen for the obligation to be demandable.

Conditional obligation, concept A conditional obligation is one whose demandability or extinquishrnent depends upon the happening of a condition. Examples: (1.) "I will give you my car if you pass the CPA Examination." The condition here is suspensive. You may not demand the delivery of my car until you pass the CPA Examination. (2.) "I will let you use my car until you pass the CPA Examination." The conditionhere is resolutoiy. You may demand the delivery of my Car now but you must return it to me when you pass the CPA Examination.

Condition Concept It is an uncertain event which wields an influence on a legal relationship. (Manresa) Classification

a. Suspensive and resolutory 1) Suspensive - This is a condition the happening of which gives rise to the obligation. This is also called condition antecedent or condition precedent. The demandability of the obligation is suspended until the happening of the condition. 2) Resolutory - This is a condition the happening of which extinguishes the obligation. This is also called condition subsequent. The obligation is demandable at once but it shall be extinguished upon the happening of the condition.

b. Potestative, casual and mixed 1) Potestative - A condition that depends upon the will of one of the contracting parties.

a) Potestative on the. part of the debtor (1) If suspensive - The obligation is void. (Art. 1182) Even if the condition is fulfilled, the obligation. is not demandable. (Example: D is to give C P50,OOO.OO if D goes to Baguio.) (2) If resolutory - The obligation is valid. (Example: D is to allow the use of his car by C until D returns from Baguio.)

b) Potestative on the part of the creditor - The obligation is valid whether the condition is suspensive or resolutory. Examples: (1) 0 is to give C P50,000.00 if C goes to Baguio. (2) 0 is to allow the use of his car by C until C returns from Baquio.

2) Casual - A condition that depends upon chance or upon the will of a third person. Examples: (1) 0 is to give C PSO,OOO.OifO0 wins first prize in the lotto on the bet he placed this morning. (2) D is to give C P50,000.00 if X goes to Baguio. 3) Mixed - A condition that depends partly upon the will of one of the parties and partly upon chance or upon the will of a third person. (Example: 0 to give C P50,000.00 if C will marry X.)

c. Possible and impossible 1) Possible - One that is capable of fulfillment in its nature and by law. 2) Impossible - One that is not capable of fvlfillment in its nature or due to operation of law, such as "if you can swim across the Pacific Ocean" or "if you kill X'. In this case, the obligation and the condition are void. (Art.1183). Note: If the condition is not to do an impossible thing, it shall be deemed as not having been agreed upon. (Art. 1183) Thus, the obligation is immediately demandable. (Example: 0 is to give C P50,000.00 if C does not swim across the Pacific Ocean.)

d. Positive and negative 1) Positive - This is a condition that some event happen at a determinate time. Here, the obligation is extinguished as soon as the time expires or it has become indubitable that the event will not take place. (Art. 1184) Example: 0 is to give C P50,000 00 if c will marry X on or before June 30, 2015. The obligation will be extinguished on July 1, 2015 if C has not yet married X as of June 30, 2015. If X dies on June 1, 2015 before C has married her, then the obligation is extinguished on such date because there is no more doubt that the marriage will not take place.

2) Negative - This is a condition that some event will not happen at a determinate time. Here, the obligation becomes effective as soon as the time indicated has elapsed or it has become evident that the event will not occur. (Art. 1185) Example: D is to give C P50,000.00 if C will not marry X on or before June 30, 2015. The obligation becomes effective on July 1, 2015 if C has not yet married X as of June 30, 2015. 'If X dies on June 1, 2015 before C has married her, then the obligation becomes effective on such date because there is no more doubt that the marriage will not take place.

e. Divisible and indivisible 1) Divisible -

One that is capable of partial performance.

Under Art. 1183, if the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. Examples (a): D is to give C a car if C finishes his law course, and P1,000,000.00 if C tops the Bar Examination. If D finishes his law course, he may demand the delivery of the car. However, he may not demand the payment of P1,000,000.do if he does not top the Bar. (2) D is to give C a car if C finishes his law course and, P1,000,000.00 if C can get a copy of the test questions in the Bar Examination in advance. Even if both conditions are fulfilled, C can only ask for the delivery of a car from D because the second condition is unlawful.

2) Indivisible - One that is not capable of partial performance by its nature or by law or agreement of the parties. Example: D is to give C a car if C finishes his law course and tops the Bar. C must comply with both conditions before he can ask for the delivery of a car from D.

Effect of fulfillment of suspensive condition (Art.1187) General rule: The effect of the fulfillment of the suspensive condition retroacts to the day of the constitution of the obligation. Exceptions: There shall be no retroactive effect with respect to the fruits and interests as follows: 1. In reciprocal obligations, the fruits and interests shall be deemed to have been mutually compensated, i.e., each party shall keep the fruits and interest received by him prior to the fulfillment of the condition. Example: On May 1, 2011, S agreed to sell his land to B and B agreed to pay the price of P50,OOO.OOif X finishes his Accounting degree on March 15, 2015. X finished his Accounting degree as stipulated. It was as if S was entitled to the price and B to the land beginning on May 1, 2011. However, S shall keep the fruits on the land and B the interest on the price during the pendency of the condition.

2. In unilateral obligations, the debtor keeps the fruits and interests received before the fulfillment of the condition. Example: On May 1, 2012, S promised to give B his land if B passed the Bar Examination in February 2015. B passed the Bar Examination as stipulated. It was as if B was entitled to the land beginning on May 1, 2012. However, still keep the fruits on the land during the pendency of the condition.

Rights' of the parties before the fulfillment of the condition (Art.1188) 1. Creditor - He may bring the appropriate actions for the preservation of his right, such as registering his claim with the Register of Deeds, if appropriate, to notify all third persons, or asking the debtor to provide a security if the debtor is about to become insolvent. 2. Debtor - He may recover what he has paid by mistake.

Effect when the debtor voluntarily prevents fulfillment of the condltion The condition is deemed fulfilled if the debtor voluntarily prevents its fulfillment (Art. 1186); hence, the obligation becomes immediately. demandable. Here, there must be an intent on part of the debtor to prevent compliance with the condition and actually prevents its fulfilment. Example: D promised to give P10,OOO.OOto C, a marathon athlete, if C finishes the race during the athletic meet. However, on the eve of the scheduled race, D put a substance. on the drink of C who experienced weakening after taking the drink, and hence, was not able to join the race. Here, D must give P10,OOO.OtOo C since the condition is deemed fulfilled

Rules in case of loss, deterioration or improvement of determinate' thing before the fulfill ment of the suspen sive condition (Art. 1189)

1. Loss of the thing a.

Without debtor's fault - Obligation is extinguished.

b.

With debtor's fault '- Debtor is obliged to pay damages.

Concept of loss , A thing is considered lost when it perishes, or goes out of. commerce or disappears in such a way that its existence is unknown 9r it cannot be recovered. Example: D is obliged to give C a specific house if C passes the CPA Examination. If the house is destroyed in a fire without the fault of D before C passes the CPA Examination, D's obligation is extinguished even if C, thereafter, passes the CPA Examination. But if the house is destroyed through the fault of D such as when he placed inside the house highly flammable chemicals which caused the fire, then D shall be obliged to pay damages should C pass the CPA Examination..

2. Deterioration of the thing· a. Without debtor's fault - The impairment shall be borne by the creditor, i.e., no liability on the part of the debtor to pay damages. b. With debtor's fault - The creditor may choose between: 1) Rescission, plus damages 2) Fulfillment, plus damages Example: D is obliged to give a specific car to C if C finishes his economics degree. The deterioration of the car due to wear and tear before C finishes his economics degree will be borne by C when C later finishes the said degree. However, if the car is damaged in an accident due to D's fault, C, when he finishes his economics degree may rescind the contract' and ask for damages, or ask D to deliver the car in its deteriorated condition plus damages.

3. Improvement of the thing a. By nature or by time - The improvement shall inure to the benefit of the creditor. Example: D is obliged to give his violin to C if C finishes his course in music. If the quality of the tone produced by the violin had improved between the time that D's obligation was constituted and the completion by C of his course in music, then such improvement shall inure to the benefit of C.

b. At the expense of the debtor - The debtor will have the rights granted to a usufructuary, i.e., he 'can have enjoyment of the use of the improved thing and its fruits. He may remove the improvement if no damage is caused to the principal thing. If the improvement cannot be removed without causing damage to the principal thing, the thing and the improvement shall be delivered to the creditor without any right on the part of the debtor to indemnity. He may, however, set off the improvements against any damage to the thing. (Arts. 579 and 580)

Example: D is obliged to give his only car to C if C finishes his economics degree. Before C finished the said degree, D had the car repainted. In this case, D can continue using the car in its improved condition. Upon the completion by C of his economics degree, D cannot remove the paint because it will cause damage to the car. However, if he had caused a dent on the car due to his fault, he may set off the cost of repainting against the cost of damage brought by such dent.

Rule in case of fulfillment of resolutory condition (Art. 1190) 1. Upon the fulfillment of the resolutory condition, the obligation is extinguished. 2. The parties shall return to each other what they have received. 3. In case of loss, deterioration or improvement of the thing, the provisions in the above rule (Art. 1189), which pertain to the debtor shall be applied to the party who is bound to return.

Reciprocal obligation, concept A reciprocal obligation is one that arises from the same cause and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obliqation of the other. (Goldloop Properties, Inc. vs. Government Service Insurance System, G.R. No. 171076, August 1, 2012). Reciprocal obligations are to be performed simultaneously so that the performance of one is conditioned upon the simultaneous fulfillment of the other. (Jalandoni vs. Cabalum Commercial School, 61216-R, July 15, 1980) Example: S sold his Toyota car to B for P200,000.00. The delivery of the car by S is dependent upon the payment of the price by B.

Obligations with a Period

Obligation with a period, concept An obligation with a period is one whose demandability or extinguishment is subjected to the expiration of the term which must necessarily comecertain .. In other words, there is a day when the obligation will arise or cease.

Examples: (1) D is obliged to give his car to C on May 1, 2015. On May 1, 2015, the obligation becomes demandable by reason of the expiration of the term or period. The period here is one with a suspensive effect or ex die. (2) On January 1, 2015, D allowed C to use his car until May 1, 2015. The obligation is demandable on January 1,.2015 but on May 1, 2015, D's- obligation to let C use his car is extinguished by reason of the expiration of the term. The period here is- one with a resolutory effect or in diem. C must therefore return the car.

Concept of period and day certain Period is a space of time which determines the effectivity or extinguishment of an obligation. Thus, the space of time between January 1, 2015 and January 1, 2016 is a period the lapse of which will cause an obligation to arise or cease. A day certain is that which must necessarily come although it may not be known when. (Art. 1193) An example is the death of a person which will necessarily come. Thus, if the obligation of D is to give C P10,OOO.OO when X dies, the obligation is one with a period.

Period distinguished from condition. 1. As to fulfillment A condition is an event that mayor may not happen; a period is an event that must necessarily come, at a gate known beforehand, or at a time that cannot be determined. 2. As to time A condition may refer to the future or to a past event . unknown to the parties; a period always refers to the future. 3. As to influence on the obligation A condition an obligation arise or to (8 cease; a period fixes the time for the causes efficaciousness of antoobligation. Manresa 153, merely 154) 4. As to the will of the debtor A period that depends upon the will of the debtor authorizes the court to fix its duration. (Art. 1197, par. 2), while a condition that depends upon the will of the debtor which is suspensive shall annul the obligation. (Art.1182).

Kinds of period 1. Ex die - This is a period with a suspensive effect. Here, the obligation becomes demandable upon the lapse of the period. (Art. 1193) 2. In diem - This is a period with a resolutory effect. Here, the obligation is demandable at once but is extinguished upon the lapse of the period: (Art. 1193) Other kinds are: 1. 2. 3.

Legal - A period that is fixed by law. Voluntary - This is fixed by the parties. judicial - One that is fixed by the court.

Problem: "I Willpay you my debt when my means permit me to do so." Is this an obligation with a period or with a condition?

Answer: This is an obligation with a period. Here, the remedy of the creditor is to ask the court to fix the period. (Art. 1180, 1197) Once the court has fix:edthe period, it may no longer change it as it becomes a part of the agreement by the parties.

Presumption as to who has the benefit of the period Whenever a period is designated in an obligation, it shall be presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the obligation or other circumstances, it should appear that it has been established for the benefit of only one of the parties. (Art. 1196). Therefore, the debtor cannot be compelled to perform, and the creditor cannot be compelled to accept ~erformance, before the term expires.

Example: D borrowed Pi 0,000.00 from C on January 1, 2015. The loan bears interest at 10% per annum with both principal and interest being due on December 31, 2015. Before December 31, 2015, C cannot compel D to pay and deprive him of the use of the money until the said date. Neither may D compel C to accept payment before December 31, 2015 and deprive C of the interest for remaining term.

Period is for the benefit of one of the parties 1. For the benefit of the debtor - He cannot be compelled to perform his obligation before the expiration of the term, but he may choose to perform before such expiration at his option. Example: D is obliged to pay C P1 0,000.00 on or before December 31, 2015. D cannot be compelled to pay before December 31, 2015. However, he may Choose to pay at any time before December 31,2015 or on December 31,2015 at his option. 2. For the benefit of the creditor - He cannot be compelled to accept performance before expiration of the term, but he may choose to demand performance before such expiration at his option.. Example: On November 1, 2014, D borrowed from C P10,000.00. "collectible" on or before June 30, 2015. C may demand payment on June 30, 2015 or at any time before the said date. However, D cannot compel him to accept the payment at any time before June 30, 2015.

When debtor loses his right to make use of the period if it is for his benefit; (Art. 1198), i.e., the creditor

may demand

immediate payment

1. When he becomes insolvent, unless he gives a guaranty or security for the debt. 2. When he fails to furnish the guaranties or securities that he has promised. Example: D borrowed P20,000.00 from .C promising to pledge his ring to C to secure the debt within one month. C gave D one year to pay the loan. D, however, failed to pledge his ring within the period agreed upon. In this case, C can demand immediate payment even before the agreed due date thereof.

3. When he impairs the said guaranties or securities by his own acts, or when through a fortuitous eventthey disappear, unless he gives new ones equally satisfactory. Example: D obtained a loan from C, the same being secured by a chattel mortgage on D's car. The loan is payable within one year. On the seventh month, the car was razed by fire. C can demand immediate payment unless 0 gives another security that is equally satisfactory. This is true even if the cause of the Joss or impairment was not due to the fault of D.

4. When he violates any undertaking in consideration of which the creditor agreed to the period. Example: C granted a loan of P50,OOO.OO to D giving D one year to pay provided D did not engage in any gambling until he has paid the debt. If D enters a casino to play in the slot machine, say after one month, C can already demand immediate payment.

5. When he attempts to abscond. Thus, if the debtor has been disposing all his property with an attempt to leave his place of business or residence to escape his creditors, such creditors can demand immediate payment of his debts although their maturity date is not yet due.

Alternative Obligations and Facultative Obligations Kinds of obligations according to the number of prestations 1. Simple - One where there is only one prestation. 2. Compound - One when there are several prestations. This may be: a. Conjunctive - Here, several prestations are due but all must be performed. Example:

D is to give C a specific ring, a specific watch and a

specific bracelet to C. D must deliver all the items to C. b.Distributive or disjunctive or facultative..

This may either be alternative

Alternative obligation, concept An alternative obligation is one where several prestations are due but the complete performance of one of them is sufficient to extinguish the obligation. (Art. 1199) Example: D is obliged to give a specific ring, a specific watch or a specific bracelet to C. The delivery of any of the three articles will extinguish the obligation.

Right to choose prestation The right of choice belongs to the debtor, unless it has been expressly given to the creditor. (Art. 1199)

Limitations on debtor's right to choose 1. The debtor must completely perform the prestation chosen. He cannot compel the creditor to receive part of one and part of another undertaking. (Art. 1199) 2. He cannot choose those prestations which are impossible, unlawful or which could not have been the object of the obligation. (Art. 1199)

When obligation ceases to be alternative and becomes a simple obligation. 1. When the debtor has communicated his choice to the creditor. (Art. 1201) 2. When among the prestations whereby the debtor is alternatively bound, only one is practicable. (Art. 1202) 3. When the creditor has communicated his choice to the debtor, if the creditor has been expressly given the right of choice. (Art.1205)

Rules in case of loss of things or impossibility of services which are alternatively the object of the obligation. 1. When right of choice is with the debtor (Art. 1204) a. If only one or some are lost through a fortuitous event or through the debtor's fault, the debtor may deliver any of the remainder, or that which remains if only one subsists. b. If all are lost through a fortuitous event, the obligation is extinguished (based on the rule that no person shall be responsible for fortuitous event). c. If all are lost through the debtor's fault, the debtor shall pay the value of the last thing that was lost plus damages.

Examples: D is to give C a specific ring, a specific bracelet or a specific wristwatch. The obligation is silent as to who will choose the item to be delivered. Therefore, the right of choice belongs to D.

a. If the ring is lost through a fortuitous event, D may deliver the bracelet or the wristwatch. The same rule applies if the ring is lost through the fault of D. In the case of the latter, D shall have no liability for damages because he can still perform his obligation by choosing to deliver the bracelet or the wristwatch, b. If the ring and the bracelet are lost through a fortuitous event or through D's fault, the obligation is converted into a simple obligation to deliver the wristwatch. There is no liability for damages on the part of D even if the loss is due to his fault because he can s!ill perform his obligation. It was as if D chose to deliver the wristwatch. c. If all things are lost due to a fortuitous event, D's obligation is extinguished.

d. If the ring and the bracelet are lost through a fortuitous event, the obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost due to the fault of D, D shall pay damages. e. If the ring, the bracelet and the wristwatch are lost one after the other due to D's fault, D shall pay the value of the wristwatch, the last item that was lost, plus damages. f. If the ring and the bracelet are lost through D's fault, the obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost

When right of choice is expressly granted to the creditor (Art. 1205) When right of choice is expressly granted to the creditor (Art.1205) a. If only one or some are lost through a fortuitous event, the debtor shall deliver that which the creditor should choose among the remainder, or that which remains if only one subsists. b. If all are lost through a fortuitous event, the obligation shall be extinguished. c. If only one or some are lost through the debtor's fault, the creditor may claim any of those subsisting, or the price of those which were lost through the debtor's fault plus damages. d. If all are lost through the debtor's fault, the creditor may claim the price of any of them plus damages.

Examples: D is to give C a specific ring, a specific bracelet or a specific wristwatch. The parties agreed that C shall have the right of choice.

a. If the ring is lost through a fortuitous event, D shall deliver either the bracelet or the wristwatch at the choice ofC.

b. If all are lost through a fortuitous event, D's obligation is extinguished. c. If the ring and the bracelet are lost through a fortuitous event, D shall deliver the wristwatch which is the remaining item. The obligation becomes a simple obligation to deliver the wristwatch. If the wristwatch is thereafter lost due to D's fault, D shall pay damages.

d. If the ring and the bracelet are lost due to D's fault, the obligation does not become a simple obligation to deliver the wristwatch. C can still choose from the payment of the price of the ring or the bracelet with damages, or the delivery of the wristwatch. e. If all are lost due to the fault of D. C may claim the price of any of them plus damages.

Facultative obligation, concept An obligation where only one prestation is due but the debtor may render another in substitution. Example: D is obliged to give a specific ring to C with the agreement that D may deliver a specific watch as a substitute.

Rules in case of loss of principal thing and substitute. 1. Before substitution (i.e., before the debtor has informed the creditor of the substitution) a. Principal thing 1) If lost due to fortuitous event, the obligation is extinguished. 2) If lost due to the debtor's fault, debtor shall pay damages.

b. Substitute The loss of the substitute whether through a fortuitous event or through the debtor's fault imposes no additional obligation on the debtor because it is not yet due. The debtor has still to deliver the principal thing.

2. After substitution a. Principal thing The loss of the principal thing whether through a fortuitous event or through the debtor's fault imposes no additional obligation on the debtor because the thing due is already the substitute. After the substitution has been communicated, the thing due is the substitute. The obligation also ceases to be a facultative obligation and becomes a simple obligation. b. Substitute 1) If lost through a fortuitous event, the obligation is extinguished. 2) If lost through the debtor's fault, the debtor shall pay damages.

Alternative obligation and facultative obligation, distinguished Alternative obligation 1. Several prestations are due, but the performance of one is sufficient to extinguish the debt.

Facultative ob ligation 1. Only one prestation, principal obligation, is due.

the

prestations,

2. If the principal obligation is void,

the others may still be valid, hence, the obligation remains

the debtor is not required to give the substitute.

3. The right of choice is with the debtor, unless expressly given to the creditor.

3.

2. If there are void

The right of choice belongs to the debtor only.

Alternative obligation

4. If all prestations are impossible except one, that which is possible must still be given.

Facultative obligation

4. If the principal obligation is impossible, the debtor is not required to give the substitute.

Joint and Solidary Obligations Joint and solidary obligations, concept In a joint or solidary obligation, there is a concurrence of two or more debtors and/or two or more creditors in one and the same obligation. In a joint obligation, each debtor is liable only for a proportionate part of the debt, and each creditor is entitled only to a proportionate part of the credit. Examples: (1) A

and B are indebted to X for P10,000.OO A is liable only for P5,OOO; B is liable only for P5,OOO.OO

(2) A

owes X and Y P8,OOO.OO. X can collect only P4,OOO.OO; Y can collect only P4,OOO.OO.

In a solidary obligation, each debtor IS liable for the whole obligation, and each creditor is entitled to demand payment of the whole obligation.

Kinds of solidary obligation 1. Passive solidarity - This is solidarity on the part of the debtors Example: A and B, solidary debtors, are indebted to X for P10,OOO.OO.X can demand payment of P10,OOO.OOfrom either A or B. If A pays X P10,OOO.OOth, e obligation IS extinguished. A can demand reimbursement of P5,OOO.OfOrom B representing the latter's share in the debt. 2. Active solidarity - This is solidarity on the part of the creditors. Example: A owes X and Y, solidary creditors. P8,OOO.OO.Either X or Y may demand payment of P8,OOO.OO from A. If A pays X P8,OOO.OOth,e obligation is extinguished. X must give P4,OOO.OOto Y representing the latter's share in the credit.

3. Mixed solidarity or solidarity on the part of both debtors and creditors. Example: A and B, solidary debtors owe X and Y, solidary creditors, P12,OOO.00. X or Y may collect from A or B the total sum of P12,OOO.00. If A 'pays X P12,000.00, the obligation is extinguished. B must reimburse A P6,000 00. On the other hand, X must give P6,OOO.00to Y.

Other terms for solidary obligation 1. Jointly and severally 2. Individually and collectively 3. In solidum 4. Mancomunada solidaria 5. Juntos 0 separadamente

Other terms for joint obligation 1. Proportionately 2. Pro rata 3. Mancomunada 4. Mancomunada simple

General rule if there is a concurrence of two or more debtors and/or two or more creditors in one and the same obligation. The obligation is presumed to be joint when there is a concurrence of two or more debtors and/or two or more creditors in one and the same obligation. There is solidary liability only in the following cases: 1. When the obligation expressly so states. 2. When the law requires solidarity. Examples: a. When two or more persons nave appointed an agent for a common transaction or undertaking, they shall be solidarily liable for the consequences of the agency. (Art. 1915) b. Where the instrument containing the words U I promise to pay" is signed by two or more persons, they are deemed to be jointly and severally liable thereon.

3. When the nature of the obligation requires solidarity. Example: SG, a security guard of AB Partnership, was killed by criminal elements in line of duty. The heirs of S demanded compensation under the Workmen's Compensation Law (WCL) for the whole amount from A. partner. A claimed that he should be liable only for one-half thereof, the other half to be shouldered by B. his partner. since their liability IS only joint as the law was silent on the nature of liability. The court ruled that the partners' liability is solidary since the nature of their obligation requires solidarity. The evident intention of the WCL is to give full protection to workers. This purpose would be defeated if the employers' liability were only joint. (See Liwanag. et al vs. WCC, L-12164. May 22, 1959.)

A, B and C are obliged to give X, Y and Z P27,OOO.OOH.ow many distinct debts are there in the obligation? Answer: Since the obligation is presumed to be joint, there are 9 distinct debts -9S follows: 1. 2. 3.

A owes X P3,000. 00. A owes Y P3, 000. 00. A owes Z P3, 000. 00.

4.

B owes X P3, 000. 00.

5. 6.

B owes Y P3, 000. 00. B owes Z P3, 000. 00.

7.

C owes X P3, 000. 00.

B.

C owes Y P3, 000. 00.

9.

C owes Z P3,000. 00.

Example: A, B and C, joint debtors, are obliged to give X, Y and Z, solidary creditors, P18,OOO.OO How much may X collect and from whom?

Answer: X, being a solidary creditor, may collect the sum of P18, 000. 00. However, since the debtors are joint debtors, he may collect only P6,000 from each of them. After collecting the sum of P18,000. 00, X must give Y and Z's share of P6,000. 00 each.

A, Band C, solidary debtors, are obliged to give X, Y and Z, joint creditors, P18,OOO.00.How much may A be held liable? Answer: A, being a solidary debtor, may be held liable for P18,000.00. However, since the creditors are joint creditors, each of them may collect only P6,000.00 from A. If A pays the whole amount of P18,000.00 to the creditors, A can demand reimbursement of P6,000.00 each from Band C. A, Band C, solidary debtors, are obliged to give X, Y and Z, solidary creditors, P18,000.00. How much may Z collect and from whom? Answer: Z may collect P18,OOOfrom any of the solidary debtors each of whom may be held liable for the entire obligation. If Z collects P18,000.00 from A, Z must give X and Y P6,OOO.00each. A, on the other hand, can demand reimbursement from Band C at P6,000.00 each.

Some problems when there is unequal sharing in the debt and/or credit A and B owe X and Y P10,OOO.00T. he share of A in the debt is 40%, while that of B is 60%. The share of X in the credit is 70%, while that of Y is 30%. ' 1. Joint debtors and joint creditors A can be held liable for not more than P4,OOO.00 (40% of P10,OOO.00, while B, not more than P6,OOO.00 (60% of P10,OOO.00). X can collect not more than P7,OOO.00 (70% of P10,OOO.00), while Y, not more than P3,OOO.00 (30% of P10,000.OO.) a. How much may X collect from A? from B? From A, X may collect P2,800.00 (40% of P7,000.00.), collect P4,200.00 (60% of P7,000.00.) (Alternative computation:

A,

(P4,000.00

P2,800.00); B, (P6,000.00 x 70% = P4,200.00)

From B, X may

x 70% =

b. How much may Y collect from A? from B? From A, Y may collect P1,200.00 (40% of P3,000.00). From B, Y may collect P1,800.00 (60% of P3,000.00.) (Alternative

computation:

A, (P4,OOO.00 x 30% = P1,200.00); B, (P6,OOO.00 x 30% = P1,800.00)

2. Joint debtors and solidary creditors (active solidarity) a. How much may X collect from A? from B? X, being a solidary creditor, may collect the whole amount of P10,OOO.00. However, since the debtors are joint debtors, he cannot collect more than P4,OOO.OOfrom A, and not more than P6,OOO.00 from B. After collecting the amount of P10,OOO.00, he must give P3,OOO.00 to Y representing the latter's share in the credit. b. How much may Y collect from A? from B? If Y is the one collecting, may collect the whole amount of P10,OOO.00. However, since the debtors are joint debtors, he cannot collect more than P4,OOO 00 from A, and not more than P6,OOO.00 from B. After collecting the amount of P10,OOO.00, he must give P7,OOO.00 to X representing the latter's share in the credit.

3. Solidary debtors and joint creditors (passive solidarity) a. How much may A be held liable and by whom? A may be held liable for the whole amount of P10,OOO.00. However, since the creditors are jolntly bound, X can collect from him not more than P7,OOO 00, and Y, not more than P3,OOO.00. After A has paid the debt, he can demand reimbursement from B in the amount of P6,OOO.00. b.How much may B be held liable and by whom? B may be held liable for the whole amount of P10,OOO.00. However, since the creditors are jolntly bound, X can collect from him not more than P7,OOO.00, and Y, not more than P3,OOO.00. After B has paid the debt, he can demand reimbursement from A in the amount of P4,OOO.00.

4. Mixed solidarity Here, either X or Y may collect from either A or B the whole amount of P10,OOO.OO. If A is the one paying, he can demand reimbursement from 8 in the amount of P6,OOO.OO. If the 8 is the one paying, he can demand reimbursement from A in the amount of P4,OOO.OO. If X is the one collecting, he must give P3,OOO.OO to Y. If Y is the one collecting, he must give P7,OOO.OO to X.

A and B are solidary debtors of X and Y, solidary creditors, in the amount of P20,OOO.OO. 1. If X renounces or remits the whole obligation without the consent of Y, will the obligation be extinguished? Answer: Yes, because the remission made by any solidary creditor extinguishes the whole obligation. (Art. 1215) However, X has to give Y's share of P10,000.00 since a solidary creditor may not do anything prejudicial to his co-solidary creditors. (Art. 1212) A solidary creditor who has caused the extinguishment of the obligation by 'remission, novation, compensation or confusion, or who has collected the debt, shall be liable to the others for the shares corresponding to them. (Art. 1215).

2. Suppose the remission of the whole obligation was obtained by A, may A demand reimbursement from 8? Answer: No, because the remission of the whole obligation obtained by one of the solidary debtors does not entitle him to reimbursement from his co-debtors (Aft 1220), remission being the gratuitous abandonment by the creditors of their rights to the obligation. 3. Suppose that X renounces or remits A's share amounting to P10,OOO.OO. However, it turned out that 8 had already paid P20,OOO.OO to Y two days before. May 8 still collect P10,OOO.OO from A representing A's share? Answer: Yes, B may still collect fromA P10,000.00. The remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from responsibility to his co-debtors, in case the debt has been totally paid by anyone of them before the remission was effected. (Art.1219) A's remedy will be to go after X or Y to col/ect the sum he paid to B.

A is indebted to X, Y and Z, solidary creditors, makes a demand against A, to whom shall A pay?

for P24,OOO.OO. Suppose X

Answer: A must pay to X. If A pays to another solidary creditor, say Y, the sum of P24,000.00, the payment, as a rule, is valid only with respect to V's share of PB,000.00. Thus, if X and Z do not receive their respective shares from Y, Acan still be held liable for P16,000.00. (See Art. 1214.)

Joint indivisible obligation, concept and characteristics A joint indivisible obligation is an obligation where the debtors or creditors are jointly bound but the prestation or object is indivisible. It has the following characteristics: 1. The creditors must act collectively, meaning, all of them must make the demand unless one is specifically authorized to act for the others.(Art. 1209) A demand made by one or some but not all of the creditors will not be effective. 2. The demand must be made against all the debtors since compliance is possible only if they act together. (Art. 1209) 3. The right of the creditors may be prejudiced only by their collective acts. Thus, a renunciation made by a joint creditor extinguishes only his own share. The obligation, however, is converted into an obligation to pay the value of the thing. If all joint creditors make the renunciation, the obligation is extinguished. (Art. 1209) 4. If one of the debtors does not comply with his undertaking, the obligation is converted into a monetary obligation to pay damages. The debtors who may have been ready to comply shall not contribute to the indemnity beyond the corresponding price of the thing or the value of the service in which the obligation consists. (Art. 1224)

Obligations with a Penal Clause ligation with a penal clause, concept An obligation with a penal clause is one which provides for a later liability on the part of the debtor in case of non-compliance The iessory undertaking on the part of the debtor is called the penal use. Example: D is obliged to construct a commercial building for C nin a period of three months. The parties agreed that should D fail to sh the construction of the building within the said period, D shall pay C 1,000.00 for every day of delay as penalty.

kinds of penal clause Legal and conventional a.

Legal-Imposed by law.

b. Conventional - Imposed by the agreement of the parties. Subsidiary and joint a. Subsidiary - When only the penalty may be enforced. b. Joint - When boththe obligation and the penalty may be enforced.

Rule in case obligation has a penal clause General rule: The penalty takes the place of the damages and interest in case of non-compliance. Exceptions, i.e., aside from the penalty, damages and interest may also be demanded: 1. When there IS a stipulation to that effect. A stipulation for the payment of interest and penalty apart from interest in case of delay is not contrary to law, morals, good customs or public policy. (Nicolas vs. Oel-Nacia Corporation, G. R. No 158026, April 23, 2008) For as long as the amounts stipulated are not exorbitant, not unconscionable or contrary to morals and public policy, the court will sustain the amounts agreed upon because obligations arising from contracts have the force of law between the parties and should be complied with in good faith. [Pryce Corporation vs. Philippine Amusement and Gaming Corp., 458 SCRA 164 (2005)]

2. When the debtor refuses to pay the penalty.

O is obliged to deliver 10 sacks of rice to C on May 10. The parties agreed that if 0 fails to deliver on due date, he will pay a penalty of P500.00. 1. Supposing that 0 failed to deliver on due date. may he just pay the penalty of P500.00?

Answer: No, because the debtor cannot exempt himself from the performance of the obligation by just paying the penalty, except when this right has been expressly reserved for him. (Art_.1227)

2. May C demand the delivery of 10 sacks of rice and the payment of the penalty at the same time upon'default of O?



Answer: No. The creditor cannot demand fulfillment of the obligation and the payment of the penalty at the same time except when this right has been clearly granted to him, or if after requiring fulfillment of the obligation, the performance thereof becomes impossible without his fault, he may also enforce the penalty. (Art. 1227)

When the court may reduce the penalty 1.

2.

When the obligation has been partly complied with by the debtor

When the obligation has been irregularly complied with by the debtor.

3. When the penalty is iniquitous or unconscionable even if there has been no performance. (Art. 1229)

Effect of nullity of principal

obligation, penal clause

1. of the principal obligation carries with the nullity of the penalcannot clause. The Thisnullity is so because the penal clause, being just an it accessory undertaking, stand by Itself

2. The nullity of the penal clause does not carry with it that of the principal obligation. This IS so because the principal obligation can stand by itself.