Topic Name > Subheading > Memorize > Simple Explanation > Examples

Topic 3: Different Kinds of Obligations

Section 1 – Pure and Conditional Obligations

Article 1179
Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once.

Every obligation which contains a resolutory condition shall also be demandable,

without prejudice to the effects of the happening of the event.

●​ Obligations whose performance is NOT dependent

upon a condition or a period.
●​ Demandable at once/immediately demandable.
●​ Example:
Pure Obligations 1.​ (Kirito promised Alice a brand new laptop.
2.​ D obliges himself to pay C P1,000. The
obligation is immediately demandable
because there is no condition and no date
is mentioned for its fulfillment.

●​ Obligations whose performance depends upon:

❖​ Future and uncertain events; or
❖​ Upon past events unknown to the parties
●​ Example:
1.​ Kirito promised Alice a brand new laptop if
Conditional Obligations
Alice passes her exam tomorrow (future
and uncertain)
2.​ A promised to sell his land to B on the
condition that A wins his case against X.
(past event unknown to the parties)

Article 1180
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, subject to the provisions of article
1197.

Article 1181
In conditional obligations, the acquisition of rights, as well as the extinguishment or
loss of those already acquired, shall depend upon the happening of the event which
constitutes the condition.

Article 1182
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When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third
person, the obligation shall take effect in conformity with the provisions of this Code.

Types of Conditions (According to Effect on Obligation)

●​ Conditions that cause the birth/give rise of the

obligation.
●​ Example:
1.​ Taki promised Mitsuha a diamond ring if
Mitsuha graduates valedictorian from her
class.
Suspensive Condition
2.​ I will sell you the land if it is adjudicated to
me in the division of my deceased father’s
estate. My obligation is demandable only
after the condition is fulfilled–my
becoming the owner of the land. In the
meantime, I am not liable to you.

●​ Conditions that cause the extinguishment of the

obligation.
Resolutory Condition ●​ Example:
1.​ Taki bound himself to shoulder Mitsuha’s
tuition fee until she graduates.

Types of Conditions (According to whose will it depends)

●​ Fulfillment depends upon the will of one of the

parties [maybe potestative on the part of creditor
or debtor]
●​ Example: Debtor
1.​ Kaneki obliged himself to give Touka a
specific car if he [Kaneki] will go to the
mall tomorrow. [Potestative-suspensive
condition] Effect: Void.
Potestative Condition
2.​ Kaneki obliged himself to shoulder
Tourka’s living expenses until he wanted
to. [Potestative-resolutory condition]
Effect: Valid
●​ Example: Creditor
1.​ Kaneki obliged himself to give Touka a
golden bracelet if Touka will go to the mall
tomorrow. [Potestative-suspensive
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condition] Effect: Valid

2.​ Kaneki lets Touka live under his house
until Touka wants to go home.
[Potestative-resolutory] Effect: Valid

Casual Condition ●​ Fulfillment depends upon chance and/or will of a

third person.

●​ Fulfillment depends partly upon the will of one of

Mixed Condition the parties and partly upon chance and/or will of a
third person.

Article 1183.
Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the impossible or unlawful condition
shall be valid.

The condition not to do an impossible thing shall be considered as not having been
agreed upon

Types of Impossible Conditions

●​ Conditions that are naturally impossible to

happen/fulfill.
Physically Impossible ●​ Examples
Conditions 1.​ Fly to the moon
2.​ Not rain the Philippines for a decade
3.​ Can carry canvas of palay on your shoulder

●​ Conditions that are naturally possible to

happen/fulfill but are contrary to law, morals,
good customs, public order, or public policy.
●​ Examples:
1.​ Kill someone [against the law]
Legally Impossible
2.​ Be a mistress of someone [against moral]
Conditions
3.​ Slap your father [against good customs]
4.​ Advocate the overthrow of government
[against public order]
5.​ Not appear as witness in a criminal case
[against public policy]

Effects of Impossible Condition

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●​ Example:​
A oblige himself to pay B P1,000 if A will fly.
Both the Obligation and ●​ Both the obligation and Condition is void because
Condition is VOID A which is the obligor knows that his obligation
cannot be fulfilled. He has no intention to comply
with his obligation.

●​ If the condition is negative, that is, not to do an

impossible thing, it is disregarded and the
obligation will become pure and valid. Therefore,
Both the Obligation and it is demandable at once.
●​ Example:
Condition is VALID
(1)​ I will sell you my land if you do not carry
20 cavans of palay on your shoulder.
(2)​I will give you my land if you do not give a
dog that talks.

●​ If the obligation is divisible, the part thereof not

affected by the impossible condition shall be valid.
●​ Example:
(1)​ I will give you P10,000 if you sell my land,
Only the affected
and a car if you kill Pedro.
obligation is void
●​ The obligation to give P10,000 is
valid but the obligation to give a car
is void because it is dependent
upon an impossible condition.

●​ If the obligation is pre-existing, therefore not

dependent to the fulfillment of an impossible
condition, only the condition is void.
●​ Example:
Only the Condition is void
(1)​ D borrowed P10,000 from C. If C later
agreed to kill X before D pays him, the
condition “to kill X” is void but not the
pre-existing obligation to pay C.

Article 1184
The condition that some event happen at a determinate time shall extinguish the
obligation as soon as the time expires or if it has become indubitable that the event will
not take place.

Article 1185
The condition that some event will not happen at a determinate time shall render the
obligation effective from the moment the time indicated has elapsed, or if it has become
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evident that the event cannot occur.

If no time has been fixed, the condition shall be deemed fulfilled at such time as may
have probably been contemplated, bearing in mind the nature of the obligation

●​ The obligation is extinguished as soon as the time

expires without the event taking place and as soon
as it has become indubitable that the event will
not take place even if the time has not expired yet.
●​ Example: X obliges himself to give B P10,000 if B
will marry C before B reaches the age of 23.
(1)​ X is liable if B marries C before he reaches
the age of 23.
Positive Condition
(2)​If B marries C at the age of 23 or after that,
X is not liable anymore because the time
specified expires.
(3)​If C died before he reaches 23 and B has
not yet married him, then the Obligation is
extinguished because it has become
indubitable that the event will not take
place even if the time has not yet expired.

●​ The obligation shall be effective and demandable

as soon as the time expires without the event
taking place and as soon as it has become
indubitable that the event will not take place even
if the time has not expired yet
●​ Example: X bound himself to give B a land if X
will not marry C on December 30.
(1)​ X is not liable to B if X marries C before
Dec 30.
(2)​X is liable to B if B did not marry C on Dec
Negative Condition
30 or after that. The condition is fulfilled
upon the expiration of the time.
(3)​If C died before Dec 30, the obligation of X
to B shall be effective.
●​ Example 2: X bound himself to give B a land if X
will not marry C until X and C are both ready to be
a family.
(1)​ The obligation is deemed fulfilled at such
time that X and C are already ready to be a
family (if they are already financially
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capable) even if no time has been fixed.

Article 1186
The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.

(1)​ The condition is suspensive

(2)​The obligor/creditor actually prevents the
fulfillment of the condition
(3)​He acts voluntarily

●​ Example 1: Suspensive condition

(1)​ S promised to sell his land to Y if Y would
be able to secure a loan from a certain
bank. Later on, S changed his mind about
selling his land. He induced the bank not
to give Y a load. What will happen to the
condition?
: The condition is deemed complied with
and S is liable to sell his land. S should not
be allowed to profit by his own fault or bad
Requisites faith.
(2)​However, if S acted within her rights (e.g.
to protect her property), she shall not be
forced to sell his property to Y.
●​ Example 2: Resolutory Condition
(1)​ X obliges himself to allow Y to occupy the
former's house in Manila as long as X is
assigned by their company in the province.
When Y learned that X would be
transferred to Manila, he was able to
induce the president of the company to
assign another person in place of X.
: Obligation of X is extinguished because
the fulfillment of the resolutory condition
was voluntarily prevented by Y. Hence, Y
must vacate the house.

Article 1187
The effects of a conditional obligation to give, once the condition has been fulfilled,
shall retroact to the day of the constitution of the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon the parties, the fruits and interests during
the pendency of the condition shall be deemed to have been mutually compensated. If the
obligation is unilateral, the debtor shall appropriate the fruits and interests received,
unless from the nature and circumstances of the obligation it should be inferred that the
intention of the person constituting the same was different.
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In obligations to do and not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.

Retroactive Effect of fulfillment of Suspensive Condition

●​ An obligation to give subject to a suspensive

condition becomes demandable only upon the
fulfillment of the condition. However, Once the
condition is fulfilled, its effects should retroact to
the day when the obligation was constituted.
●​ Example: On January 20, S agreed to sell his
parcel of land to B for P50,000 should B lose a
case involving the recovery of another parcel of
land. On April 10, S sold his land to C. B lost the
case on December 4.
In Obligations to Give
○​ Who is entitled to the land? Before Dec 4,
B had no right to demand the sale of the
land by S. When the condition, however,
was fulfilled on Dec 4, it is as if B was
entitled to the land beginning January 20.
Hence, as between B and C, B will have a
better right over the land.
○​ If the land was sold by B to D on May 15, D
would still have a better right as against C
since the sale by B will be considered valid.

●​ With respect to the retroactive effect of the

fulfillment of a suspensive condition, in
obligations to or not to do, no fixed rule is
provided.
●​ The courts are empowered by the use of sound
discretion and bearing in mind the intent of the
parties, to determine, in each case, the retroactive
effect of the suspensive condition that has been
In Obligations to do or
complied with.
not to do
●​ Example: C obliged himself to condone the debt of
D, his lawyer, should the latter win C’s case in the
Supreme Court.
○​ What happens when D wins: Once D wins,
C’s promise to forgive the debt takes effect.
The debt is retroactively considered as
forgiven from the moment the agreement
was made, not just from the day the
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condition was fulfilled.

○​ No interest earned: Because C’s intention
was to completely extinguish the debt, he
cannot claim any interest on the amount
owed during the period while they were
waiting for the outcome of the case (the
"pending condition" time). In other words,
the debt is wiped out completely without C
benefiting from any interest.
●​ Suppose, in the preceding example, the obligation
contracted by C was to construct gratis the house
of D upon the fulfillment of the condition.
○​ What happens when D wins: Once the
condition is fulfilled (D wins), C has to
build the house for free. However, the
obligation is not retroactive. C only has to
start building the house from the time D
wins the case.
○​ No retroactive payment: C is not
responsible for paying interest or any other
monetary value for the time before D won
the case because building a house is not
something that can be retroactively applied
(you can’t go back in time and build a
house). The nature of this obligation (to do
something, i.e., build a house) is different
from forgiving a debt, so the retroactive
effect does not apply here.

Retroactive Effects as to Fruits and Interests in Obligation to Give

●​ There is no retroactivity because the fruits and

interests received during pendency of the
condition are deemed to have been mutually
compensated.
●​ Example: In the first example under the
In Reciprocal Obligations proceeding topic, when B lost the case in court on
December 4, S must deliver the land and B must
pay 50,000 pesos.
○​ Fruits from the land: "Fruits" refer to
benefits or income from the land, like
crops or rent, that S may have collected
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while waiting for the court decision.

■​ Since there’s no retroactive effect, S
can keep the fruits of the land that
were earned before December 4. S
does not have to give any of that
income to B.
○​ No interest from B: Likewise, B does not
owe any legal interest on the 50,000 pesos
during the period before December 4. B
only has to pay the 50,000 pesos, not any
additional interest for the time that passed
before the case was decided.

●​ There is usually no retroactive effect because they

are gratuitous. The debtor receives nothing from
the creditor. Thus, fruits and interests belong to
the debtor unless from the nature and other
circumstances of the obligations it should be
inferred that the intention of the person
constituting the same was different.
○​ Suppose in the same example, the promise
of S was to donate the parcel of land to B.
■​ What happens during the pending
condition: From January 20 to
December 4 (while they were
waiting for the condition to be
fulfilled), S may have received
In Unilateral Obligations fruits (like crops or rent) from the
land.
■​ S keeps the fruits and interests:
Normally, because this is a
unilateral obligation (a promise to
donate), the law says that S can
keep all the fruits and interests
from the land that were earned
before December 4. There is no
retroactive effect unless the
agreement says otherwise.
■​ Exception: If it was stated or
implied that S would turn over the
fruits once the condition was
fulfilled (for example, if it was
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agreed that S would provide an

accounting of all the income
received during that time), then S
would have to give the fruits to B.
But if there is no such agreement, S
keeps the fruits.

Article 1188
The creditor may, before the fulfillment of the condition, bring the
appropriate actions for the preservation of his right.

The debtor may recover what during the same time he has paid by mistake in
case of a suspensive condition.

Rights Pending fulfillment of suspensive condition

●​ He may take or bring appropriate action for the

preservation of his right, as the debtor may render
nugatory the obligation upon the happening of the
condition. Thus, he may go to court to prevent the
alienation or concealment of the property the
debtor has bound himself to deliver, or to have his
right annotated on the title of the property in the
registry of deeds.
Rights of Creditor
●​ Example: Ohma promised Karla a specific dog for
her birthday.
○​ If the dog shows signs of sickness, Karla
may take or bring appropriate action for
the preservation of the dog even before her
birthday.
○​ What if the dog dies? Then Ohma must pay
the damages.

●​ He is entitled to recover what he has paid by

mistake prior to the happening of the suspensive
condition. This right is granted to the debtor
because the creditor may or may not be able to
fulfill the condition imposed and hence, it is not
Rights of Debtor
certain that the obligation will arise. This is a case
of solutio indebiti, which is based on the principle
no one shall enrich himself at the expense of
another.
●​ Example: Karla has a P10,000 debt to Ohma
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payable after 3 years. 1 year before maturity,

having thought that 3 years already elapsed, paid
Ohma the P10,000 debt.

Article 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.

Kinds of Loss

●​ When a thing perishes as when a house is burned

Physical Loss
and reduced to ashes.

●​ When a thing goes out of commerce or when a

Legal Loss
thing heretofore legal becomes illegal.

●​ When a thing disappears in such a way its

Civil Loss existence is unknown; or even if known, it cannot
be recovered or of law.

Rules in case of loss, deterioration, or improvement of thing during pendency

of suspensive condition
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Loss Deterioration Improvement

Through
Fortuitions
The creditor (the person
event/nature Debtor’s the creditor benefits
who is supposed to receive
/ liability is from this
the item) must accept it in
without extinguished improvement.
its deteriorated state.
debtor’s
fault

Creditor may choose

between:
(1)​ Rescission & If the item is improved
damages [The because the debtor
creditor can choose spent money or effort
to rescind (cancel) on it during the
the contract and be waiting period, the
compensated for debtor is treated like a
Through Debtor is
damages.] usufructuary. A
Debtor’s liable for
(2)​Fulfillment & usufructuary is
Fault/Action damages
damages [the someone who has the
creditor can choose right to use and benefit
to still accept the from someone else’s
item in its property for a period
deteriorated state, of time but doesn’t
but the debtor must own it.
pay for the damages
caused.]

Article 1190.
When the conditions have for their purpose the extinguishment of an obligation to give,
the parties, upon the fulfillment of said conditions, shall return to each other what they
have received.

In case of the loss, deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be applied to the party
who is bound to return.

As for the obligations to do and not to do, the provisions of the second paragraph of article
1187 shall be observed as regards the effect of the extinguishment of the obligation.

Effects of Fulfillment of Resolutory Condition

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●​ What this means: When the condition is fulfilled,

both parties are obligated to return what they
received from each other. The idea is to put both
parties back in the position they were before the
obligation existed.
●​ Example 1: X obliges himself to allow Y to use the
former’s car until X returns from the province.
Upon the return of X from the province, Y must
give back the car.
In Obligations to Give ○​ The effect of the happening of the
condition is to annul the obligation as if it
had never been constituted at all. In this
case the parties intend the return of the
car.
●​ Example 2: X binds himself to give Y P1,000 a
month until Y passes the CPA Examination. If Y
passes the CPA examination, he need not return
the amount he has received. It is clear that the
parties do not intend the return of the same.

●​ If the obligation not to do is extinguished: The

In Obligations not to Do party is no longer required to refrain from the
action.

●​ Example: X obliges himself to allow Y to use the

former’s car until X returns from the province.
Upon the return of X from the province, Y must
give back the car.
○​ X is the debtor and Y is the creditor,
Application of Article
pending fulfillment of the resolutory
1189 to the return of
condition the return of X from the
items:
province. Upon the happening of the
condition, X becomes the creditor with a
right to demand the return of the car and
Y, the debtor with the obligation to return
the car.

Article 1191
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation,
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with the payment of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.

This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.

Remedies in Reciprocal Obligations

●​ The party who suffers because the other party

didn’t fulfill their obligation can choose between
two options:
○​ Fulfillment: They can demand that the
Choice of Remedies other party still fulfill their obligation.
○​ Rescission: They can cancel the contract.
●​ In either case, the injured party can also demand
damages (compensation for any losses caused by
the non-fulfillment).

●​ Article 1191 gives the remedy of rescission (or

cancellation) when one party fails to comply with a
reciprocal obligation.
●​ This is different from Article 1381, which
addresses rescission in cases where the contract
causes unjust harm or damage, not due to a
Remedy of Rescission for party’s breach.
Non-Compliance ●​ It’s also different from canceling a contract
because of defective consent, where the issue is
that one party was forced or misled into agreeing
to the contract.
●​ Article 1191 is about ensuring fairness in reciprocal
obligations and restoring the balance when one
party doesn’t fulfill their part of the agreement.

●​ What this means: If a party requests rescission,

the court generally must approve the request,
Court may grand guilty unless there’s a just cause to delay the rescission.
party term for The court may, for example, decide to give the
performance party more time to fulfill their obligation if there is
a valid reason.
●​ Example: If B was delayed in paying the 100,000
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pesos because of a temporary financial problem,

the court might give B extra time to pay before
approving the rescission.

●​ If the injured party first chooses to demand

fulfillment, but it later becomes impossible for the
other party to fulfill the obligation (e.g., because of
circumstances that arise later), the injured party
Remedies are Alternative can then switch and choose rescission instead.
●​ Example: If A initially demands that B pay the
100,000 pesos, but then B becomes bankrupt and
can’t pay, A can change their mind and choose to
rescind the contract, taking back the car instead.

Limitations on Right to Demand Rescission

●​ What it means: The rescission described in Article

1191 must be done through the courts. This means
that the injured party cannot just decide to cancel
the contract on their own; they need to go to court
to seek this remedy.
●​ Example 1: If A wants to rescind a contract with B
due to B's failure to pay for the land, A must file a
lawsuit in court to ask for the rescission. The court
will decide whether to grant it based on the
Resort to the Courts circumstances.
●​ What it means: The other party (the one accused
of non-compliance) must be given a chance to
defend themselves. This is part of the principle of
due process—everyone has the right to be heard in
a legal proceeding.
●​ Example: In A's case, if A files for rescission
against B, the court will schedule a hearing where
B can present their side of the story before the
court decides on the rescission.

●​ What it means: The court has the discretion to

allow a grace period for the party in default (the
one who did not fulfill their obligation) to meet
Power of Court to Fix
their obligations, provided there is a valid reason
Period
for the delay.
●​ Example: If B failed to pay due to a temporary
financial crisis and can show evidence of this, the
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court may allow B some additional time to make

the payment instead of immediately granting A’s
request for rescission.

●​ What it means: If the subject matter of the

obligation is already in the possession of a third
party who acted in good faith, rescission cannot be
applied. This protects innocent third parties who
may be affected by the rescission.
Right of Third Person
●​ Example: If B sells the land to C (a third party)
after A and B’s contract, and C did so in good faith
(without knowing about A’s claim), A cannot
rescind the contract against B and also take back
the land from C.

●​ What it means: Rescission will generally not be

granted for slight or minor breaches of contract.
The violation must be substantial enough to defeat
the purpose of the agreement.
●​ Example: If A and B entered a lease agreement
Substantial Violation
and B is late in paying rent by a few days on four
occasions, the court may find this to be a minor
breach and may not grant rescission, as these
delays do not fundamentally alter the lease
agreement’s purpose.

●​ What it means: A party can waive their right to

rescind, either explicitly (stating it clearly) or
implicitly (through their actions). For instance,
accepting partial payment or a form of security
can imply that the right to rescind is waived.
Waiver of Right
●​ Example: If A sells land to B and accepts a portion
of the payment as security, this might be seen as A
implicitly waiving the right to rescind the contract
for non-payment. Instead, A would seek to recover
the remaining balance owed.

Rescission without previous judicial decree

●​ What it means: The parties to a contract can agree

Where automatic
in writing that if one party violates the contract,
rescission expressly
the contract will be automatically canceled
stipulated
without needing to go to court.
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●​ Example: Suppose A and B sign a contract for the

sale of goods, stating, "If B fails to pay the total
price by the due date, the contract will be
automatically rescinded without any court
intervention." In this case, if B doesn’t pay on
time, A can rescind the contract based on the
agreed stipulation.
●​ Notice Requirement: Even if the contract allows
for automatic rescission, A must send a written
notice to B about the rescission. If B does not
oppose the rescission, it becomes legally effective.
If B objects, A must then seek a court ruling to
resolve the dispute.

●​ What it means: If both parties have not yet

performed their obligations (i.e., the contract is
still executory), and one party is ready and willing
to fulfill their part while the other is not, the
willing party can rescind the contract without
Where contract still needing prior court approval.
executory ●​ Example: Let’s say A agrees to paint B’s house. A
is prepared to start the work, but B refuses to
allow access to the house. A can declare that the
contract is rescinded because B is not complying,
and no automatic rescission clause is needed in
this case..

Article 1192
In case both parties have committed a breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If it cannot be determined which of the
parties first violated the contract, the same shall be deemed extinguished, and each shall
bear his own damages

Where Both Parties are Guilty of Breach

●​ One party violated his obligation; subsequently,

the other also violated his part of the obligation. In
First Infractor Known
this case, the liability of the first infractor should
be equitably reduced.

●​ One party violated his obligation followed by the

First Infractor cannot be
other, but it cannot be determine which of them
Determined
was the first infractor. The rules is that the
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

contract shall be deemed extinguished and each

shall bear his own damages.​
​
In effect, the court shall not provide remedy to
either of the parties, who must suffer the damages
allegedly sustained by them.
●​ Example: S sold his television set to B. The
agreement is that the set shall be delivered on
October 1 at the house of B and payment shall be
made by B upon delivery. S did not deliver the set
on October 1 in spite of a demand made by B. Five
days later, S delivered the set but B incurred in
delay in paying the purchase price.
○​ In a suit between S and B, the liability of S
for damages should be equitably tempered
by the court, taking in consideration the
breach also of the obligation on the part of
B.
○​ If both alleged that the other was the first
infractor and the court cannot determine
who of the two is telling the truth, the
contract shall be deemed extinguished and
each shall bear his own damages. This
means that the contract shall not be
enforced.

Section 2 – Obligations with a Period

Article 1193
Obligations for whose fulfillment a day certain has been fixed, shall be demandable only
when that day comes.

Obligations with a resolutory period take effect at once, but terminate upon arrival of the
day certain.

A day certain is understood to be that which must necessarily come, although it may not
be known when.

If the uncertainty consists in whether the day will come or not, the obligation is
conditional, and it shall be regulated by the rules of the preceding Section.

Obligation with a Period ●​ One whose effects or consequences are subjected

Topic Name > Subheading > Memorize > Simple Explanation > Examples

in one way or another to the expiration or arrival

of said period or term.

●​ A period is future and certain event upon the

arrival of which the obligation (or right) subject to
Period or Term it either arises or is terminated. It is a day certain
which must necessarily come, although it may not
be known when, like the death of a person.

Period and Condition Distinguished

●​ A period is a certain event which must happen

sooner or later at a date known beforehand or a
As to fulfillment
time which cannot be determined.
●​ A condition is an uncertain event.

●​ A period refers only to the future

As to time ●​ A condition may refer also to a past event
unknown to the parties

●​ A period merely fixes the time for the

efficaciousness of the obligation. If suspensive, it
cannot prevent the birth of the obligation in due
As to influence on the
time; if resolutory, it does not invalidate the fact
obligation
that the obligation existed.
●​ A condition causes an obligation to either arise or
cease.

●​ A period which depends upon the will of the

debtor empowers the court to fix the duration
As to effect, when left to
thereof.
debtor’s will
●​ A condition depends upon the sole will of the
debtor invalidates the obligation.

●​ The arrival of a period does not have any

retroactive effect unless there is an agreement to
As to retroactivity of
the contrary.
effects
●​ The happening of a condition has retroactive
effect.

Kinds of Period or Term (According to Effect)

Suspensive Period (ex ●​ The obligation begins only from a day certain
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

die) upon the arrival of period.

●​ Examples
○​ I will pay you 30 days from today
○​ I will support you from the time your
father dies
○​ I will pay you when my means permit me
to do so

●​ The obligation is valid up to a day certain and

terminates upon arrival of the period.
Resolutory Period (in
○​ I will give you P500 a month until the end
diem)
of the year
○​ I will support you until you die

Kinds of Period or Term (According to Source)

Legal Period ●​ When it is provided for by laws

Conventional or
●​ When it is agreed to by the parties
Voluntary Period

Judicial Period ●​ When it is fixed by the court

According to Definiteness

Definite Period ●​ When it is fixed or know when it will come

●​ When it is not fixed and it is not known when it

Indefinite Period
will come

Article 1194
In case of loss, deterioration or improvement of the thing before the arrival of the day
certain, the rules in article 1189 shall be observed

Article 1195
Anything paid or delivered before the arrival of the period, the obligor being unaware of
the period or believing that the obligation has become due and demandable, may be
recovered, with the fruits and interests.

●​ Applies only to obligation to give

Payment before arrival of ●​ Allows the recovery of what has been paid by
period mistake before the fulfillment of a suspensive
condition subject to solutio indebiti.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ The presumption is that the debtor knew that the

debt was not yet due. He has the burden of
proving that he was unaware of the period. Where
the duration of the period depends upon the will
of the debtor, payment by him amounts, in effect,
to his determination of the arrival of the period.​
​
The obligor may no longer recover the thing or
money once the period has arrived but he can
recover the fruits or interests thereof from the
date of premature performance to the date of
Debtor presumed aware
maturity of the obligation.
of period
●​ Example: D owes C P10,000 which was supposed
to be paid on December 31 this year. By mistake, B
paid his obligation on December 31 last year.
○​ Assuming that today is June 30, D can
recover the P10,000 plus P600 which is
the interest for one half year at the legal
rate of 12% or a total of P10,600. But D
cannot recover, except the interest, if the
debt had already matured.
○​ Neither can there be a right to recovery if D
had knowledge of the period.

Article 1196.
Whenever in an obligation a period is designated, it is presumed to have been established
for the benefit of both the creditor and the debtor, unless from the tenor of the same or
other circumstances it should appear that the period has been established in favor of one
or of the other.

●​ When a period is specified in an obligation (i.e.,

when payment or performance is due), it is
generally presumed to benefit both the creditor
(the party owed) and the debtor (the party owing).
●​ This means that the time frame is intended to
Presumption as to benefit provide a fair opportunity for both parties to fulfill
of period their obligations.
●​ The presumption is rebuttable.
●​ Example: On January 1, D borrowed from C
P10,000 payable on December 31 at 10% interest.
D cannot pay before December 31 without the
consent of C. Neither can C compel D to pay
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

before the expiration of the term.

○​ It is presumed that the period is
designated (Dec 31) for the benefit of both.
○​ In a contract of loan with interest, the term
is generally for the benefit of both the
lender and the borrower.
○​ This is also the case even when there is no
interest stipulated but where under the
contract, the creditor receives, in place of
interest, other benefits by reason of the
period.
○​ Obviously, in the above example, D can pay
C before Dec 31 provided that the payment
includes the interest for one year. Where
the obligation of D is to deliver, say 100
bags of rice, C cannot be compelled to
accept performance before the expiration
of the period especially if he would be
prejudiced or inconvenienced thereby.

Exceptions

●​ He cannot be compelled to pay prematurely, but

he can, if he desires to do so.
●​ Example: D borrowed from C P10,000 to be paid
Term is for the benefit of within one year without interest.
the debtor alone ○​ In this case, the period of one year should
be deemed intended for the benefit of D
only. Therefore, he can pay any time but he
cannot be compelled to pay before 1 year.

●​ He may demand fulfillment even before the arrival

of the term but the debtor cannot require him to
accept payment before the expiration of the
Term is for the benefit of stipulated period.
the creditor ●​ Example: D borrowed from C P10,000 payable on
Dec 31 with stipulation that D cannot make
payment before the lapse of the period but C may
demand fulfillment even before said date.

Article 1197
If the obligation does not fix a period, but from its nature and the circumstances it can be
inferred that a period was intended, the courts may fix the duration thereof.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

The courts shall also fix the duration of the period when it depends upon the will of the
debtor.

In every case, the courts shall determine such period as may under the circumstances have
been probably contemplated by the parties. Once fixed by the courts, the period cannot be
changed by them.

Court Generally without power to fix a period

●​ When the court fixes the period.

●​ If the obligation does not state a period and no
period is intended, the court is not authorized to
fix a period. The courts have no right to make
contracts for the parties.
Judicial Period ●​ Example: D obliges himself to pay C P10,000.
Since the obligation does not fix a period, not even
the court may fix the period.
○​ The reason is because the contract is the
law between the parties and its terms
cannot be changed by court.

Exceptions to the General Rule

●​ The obligation does not fix a period but it can be

inferred from its nature and the circumstances
that a period was intended.
●​ Example 1: D agreed to construct the house of C.
The parties failed to fix the period within which
the construction is to be made.
○​ Here, the court can fix the term for it is
evident that the parties intended that D
should construct the house within a certain
No period is fixed but a
period.
period was intended
●​ Example 2: B bought lumber from the store of S
on credit. The period for payment in the invoice is
left bank.
○​ From the nature of the obligation, it can be
inferred that a period is intended.
●​ Example 3: S sold a parcel of land to B with a right
of repurchase. No term is specified in the contract
for the exercise of right.
○​ The court is authorized to fix the period.
Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ When the debtor binds himself to pay when his

Duration of the Period
means permit him to do so, the obligation shall be
depends upon the will of
deemed to be one with a period, subject to the
the debtor
provisions of article 1197.

Legal Effect where suspensive period/condition depends upon the will of

debtor

●​ When a period depends solely on the debtor's will,

the existence of the obligation itself remains valid
and unaffected.
●​ The obligation exists, but the time for its
performance is left to the debtor’s discretion. This
means that the debtor can decide when to fulfill
the obligation, but it doesn’t negate the fact that
the obligation is still binding.
Existence of Obligation
●​ Example: Example: D agrees to pay C 10,000
pesos, but the time for payment is left to D’s
discretion (no fixed deadline).
○​ In this case, the obligation to pay still
exists, but D can choose when to make the
payment. The creditor (C) must wait until
D chooses to pay, and C cannot force D to
make payment before D decides to do so.

●​ If the obligation is subject to a condition that

depends solely on the debtor's will, the conditional
obligation is void.
●​ This is because the fulfillment of the obligation
itself is completely at the discretion of the debtor,
making the obligation uncertain and non-binding.
●​ Unlike a period (which only affects the timing of
performance), a condition is essential to the
Validity of Obligation creation or fulfillment of the obligation. If the
condition depends solely on the debtor, the
obligation has no true basis since it can be entirely
avoided at the debtor’s whim.
●​ Example: D promises to pay C 10,000 pesos if D
feels like it.
○​ This is an example of an invalid
conditional obligation, as the fulfillment of
the obligation (payment of 10,000 pesos)
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

depends entirely on D’s will. Since D can

choose never to pay, the obligation is void
because there is no real guarantee that it
will ever be fulfilled.

Period of Fixed cannot be changed by the courts

●​ If there is a period agreed upon and it has already

lapsed, the court cannot fix another period.
●​ Example: A borrows 100,000 pesos from B, to be
Period agreed upon the
paid within six months.
parties
●​ If A fails to pay within six months, the court
cannot extend the payment period because the
time frame was agreed upon by both A and B.

●​ From the very moment the parties give their

acceptance and consent to the period fixed by the
court, said period acquires the nature of contract,
because the effect of such acceptance and consent
by the parties the same as if they had expressly
agreed upon it, and having been agreed upon by
them, it becomes a law governing their contract.
However, the parties may modify the term by a
new agreement.
Period fixed by the courts ●​ Example: C is obligated to deliver goods to D but
no time frame was agreed upon in the contract.
○​ The court steps in and fixes a period of 30
days for delivery.
○​ Once C and D agree to the 30-day period, it
becomes binding as if they had initially
agreed to it themselves.
○​ Later, if both parties agree, they can extend
or shorten the period without needing
further court intervention.

Article 1198.
The debtor shall lose every right to make use of the period:

(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;
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

(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

When Obligation can be demanded before lapse of period

●​ If the debtor is unable to pay his debts or his

assets are less than his liabilities (even if not
declared by the court), the creditor can demand
immediate payment.
●​ Example: D owes C P10,000 due and payable on
Dec. If D becomes insolvent, say on Sept 10, C can
When the Debtor demand immediate payment from D even before
becomes Insolvent maturity unless it gives sufficient guarantee or
security.
○​ The insolvency in this case does not need
to be judicially declared. It is sufficient that
the assets of D are less than his liabilities
or D is unable to pay his debts as they
mature.

●​ If the debtor had promised to provide a guarantee

(such as mortgaging a property to secure the debt)
but fails to do so, the creditor can demand
When Debtor does not
immediate payment.
furnish guaranties or
●​ Using the same example, D promised to mortgage
securities promised
his house to secure the debt. If he fails to furnish
said security as promised, he shall lose his right to
the period.

●​ If the security provided (like a mortgage or bond)

is damaged or becomes less valuable through the
When guaranties or
debtor’s fault, or disappears entirely (due to a
securities given have
fortuitous event), the creditor can demand
been impaired or have
immediate payment unless the debtor provides an
disappeared
equally satisfactory new security.
●​ Example: If the debt is secured by a mortgage
Topic Name > Subheading > Memorize > Simple Explanation > Examples

based on the example given, on the house of D but

the house was burned through his fault, the
obligation also becomes demandable unless D
gives a new security equally satisfactory.
○​ In this case, the house need not be totally
destroyed as it is sufficient that the
security be impaired by the act of D. But in
case of a fortuitous event, it is required
that the security must disappear.
○​ If the security given deteriorates in such
manner as to become illusory, it must be
deemed to have disappeared or lost as
contemplated.
○​ If the debt is secured by a bond, the failure
of D to renew the bond or replace it with
an equivalent guarantee upon its
expiration will likewise give C the right to
demand immediate payment.

●​ If the debtor agrees to do something as part of the

agreement (like repair something) and fails to do
so, the creditor can demand immediate payment.
When Debtor violates an ●​ Example: Now, suppose that C agreed to the
undertaking period in consideration of the promise of D to
repair the piano of C. The violation of this
undertaking by D gives C the right to demand
immediate payment of the loan.

●​ If the debtor attempts to flee or hide to avoid

paying the debt, the creditor can demand
immediate payment. This shows bad faith and
results in the loss of the debtor’s right to the
agreed period.
When Debtor attempts to
●​ Example: Before the due date of the obligation, D
abscond
changed his address without informing X and with
the intention of escaping from his obligation. This
act of D is a sign of bad faith which results in the
loss of his right to the benefit of the period
stipulated.

Section 3 – Alternative Obligations

Article 1199
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

A person alternatively bound by different prestations shall completely perform one of

them.

The creditor cannot be compelled to receive part of one and part of the other undertaking.

●​ One wherein various prestations are due but the

Alternative Obligation performance of one of them is sufficient as
determined by the choice which, as general rule,
belongs to the debtor.

Kinds of Obligation according to Object

●​ One where there is only one (1) prestation.

Simple Obligation
●​ Example: D obliged himself to deliver a piano to C.

●​ One where there are two (2) or more prestations.

It may be:
○​ Conjunctive Obligation – one where there
are several prestations and all of them are
due
○​ Distributive Obligation – one where two
Compound Obligation (2) or more prestations is due. It may be:
■​ Alternative Obligation – one where
several prestations are due but the
performance of one is sufficient.
■​ Facultative Obligation – one where
only one prestation is due but the
debtor may substitute another.

Article 1200.
The right of choice belongs to the debtor, unless it has been expressly granted to the
creditor.

The debtor shall have no right to choose those prestations which are impossible, unlawful
or which could not have been the object of the obligation.

Right of Choice, as a rule, given to debtor

●​ Belongs to the debtor

●​ By way of exception, it may be exercised by the
Right to choose the creditor but only when expressly granted to him.
prestation ●​ Example 1: D insured his house with C, an
insurance company. It is agreed that if the house is
destroyed or damaged, D may either pay the
Topic Name > Subheading > Memorize > Simple Explanation > Examples

damage or loss or “reinstate or rebuild the house”.

○​ Since nothing is said in the contract as to
who has the right of choice, it belongs to C.
●​ Example 2: S binds himself to deliver item one or
item two to B on December 10 and to
communicate his choice on or before December 5.
○​ If S delays in making his choice, B cannot
exercise the right because it is not
expressly granted to him.

Right of Choice of Debtor not Absolute

●​ Prestations are void

●​ Example: S promised to deliver B any of the
following:
a.​ 10 sacks of rice, or
Impossible
b.​ a Bulova wrist watch, or
c.​ soil from Jupiter
○​ S cannot choose to deliver soil from
Jupiter as it is physically impossible.

●​ Prestations are void

●​ Example: S promised to deliver B any of the
following:
d.​ A kilo of a dangerous drug
Unlawful e.​ A parcel of land
f.​ Two carat diamond ring
g.​ Kill C
○​ S can only choose the parcel of land or the
two carat diamond ring

●​ Prestations are void

●​ Example: D borrowed from C P30,000. It was
agreed that D would give C (a) his horse, or (b)
P30,000 or (c) his German Piano.
Could not have been the ○​ Now D has two(2) horses– a race horse
object of the obligation worth P30,000 and a horse for calesa that
cannot be sold for more than P5,000.
○​ D cannot choose the horse for calesa as it
could not have been the object of the
obligation.

Only One Prestation is ●​ Example: S will deliver to B (a) his horse, or (b)
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

Practicable his carabao, or (c) his refrigerator.

○​ The horse and the carabao were lost
without the fault of S. S has no more choice
but deliver the refrigerator since it is the
only one practicable.

Part of One Prestation

●​ The debtor cannot choose part of one prestation
and Part of Another
and part of another prestation
Prestation

Article 1201
The choice shall produce no effect except from the time it has been communicated.

Communication of Notice that Choice has been made

●​ Until the choice is made and communicated, the

Effect of Notice
obligation remains alternative.

●​ The burden of proving that such communication

has been made is upon him who made the choice.
The law does not require any particular form
regarding the giving of notice. It may, therefore,
be made orally or in writing expressly or
Proof and Form of notice impliedly.
●​ Example: S obliged himself to deliver to B his car,
or his race horse. S chose the car and properly
informed B of his choice.
○​ The obligation becomes a simple obligation
to deliver the car.

Article 1202
The debtor shall lose the right of choice when among the prestations whereby he is
alternatively bound, only one is practicable.

Article 1203
If through the creditor's acts the debtor cannot make a choice according to the terms of
the obligation, the latter may rescind the contract with damages.

●​ If a creditor does something that stops the debtor

from making a choice, as the debtor is supposed to
When Debtor may
under the terms of the obligation, the debtor can
Rescind Contract
cancel the contract and ask for compensation
(damages) for the harm caused.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ Example: D borrowed from C P10,000. It was

agreed that instead of P10,000 D can deliver any
of item one, item two, or tem three.
○​ If through the fault of C, item one was
destroyed, D can cancel the contract if he
wants. In case of rescission, the amount of
P10,000 must be returned to D with
interest. C, in turn, must pay the D the
value of item one plus damages.
○​ If D choose not to rescind, he may choose
item two or item three with a right to
recover the value of item one with
damages. If D chooses item one, his
obligation is extinguished. D is not liable
for damages.

Article 1204
The creditor shall have a right to indemnity for damages when, through the fault of the
debtor, all the things which are alternatively the object of the obligation have been lost, or
the compliance of the obligation has become impossible.

The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared, or that of the service which last became impossible.

Effect of loss of objects of obligation

●​ If some of the objects are lost even through the

fault of the debtor, he may still choose the other
Some of the objects
options because the creditor is not liable to
anything.

●​ If a debtor is given different choices of things to

deliver or services to provide, but due to the
debtor’s fault, all the options are lost or made
impossible, the creditor has the right to be
compensated. The compensation will be based on
the value of the last thing lost or the service last
All of the objects
made impossible.
●​ Example: D owes C an obligation to deliver either
Item One, Item Two, or Item Three.
○​ Through D's fault, Item One and Item Two
are lost.
○​ Later, Item Three is also destroyed due to
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

D's fault.
○​ Since all the items have been lost because
of D's fault, C is entitled to compensation.
The compensation will be calculated based
on the value of Item Three, as it was the
last item to be destroyed.
○​ If the items were lost through a fortuitous
event, the obligation will be extinguished.

Article 1205
Article 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

●​ In alternative obligations, the right of choice

When Right of choice
belongs to the debtor but the debtor may expressly
belongs to creditor
give the right of choice to the creitr.

Rules in case of loss before creditor has made choice

●​ If one of the things is lost due to an event beyond

anyone’s control (like a natural disaster), the
debtor still has to perform the obligation by
Though a fortuitous event
delivering whatever remains, or the creditor may
choose from the remaining options. If only one
option is left, the debtor must deliver that.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ If the loss of one of the items is due to the debtor’s

fault, the creditor can choose to receive any of the
Through debtor’s fault
remaining options or demand the price of the lost
item, along with damages.

When all the things are ●​ If all the items are lost due to the debtor’s fault,
lost through the debtor’s the creditor can demand the price of any one of
fault the items, plus compensation for damages.

Article 1206
When only one prestation has been agreed upon, but the obligor may render another in
substitution, the obligation is called facultative.

The loss or deterioration of the thing intended as a substitute, through the negligence of
the obligor, does not render him liable. But once the substitution has been made, the
obligor is liable for the loss of the substitute on account of his delay, negligence or fraud.

●​ One where only one prestation has been agreed

upon but the obligor may render another in
substitution.
Facultative Obligation
●​ Example: D is obliged to deliver a car to C, but D
has the option to deliver a motorcycle as a
substitute instead.

Effect of Loss

●​ If the substitute item is lost or damaged due to the

debtor’s negligence before the substitution is
made, the debtor is not liable. This is because the
obligation is still to deliver the original prestation,
and the substitute item has no legal bearing until
Before Substitution the substitution is made.
●​ Example: If D is supposed to deliver the car but
keeps the motorcycle as a possible substitute and
the motorcycle is damaged due to D's negligence
before substitution, D is not liable for the loss of
the motorcycle.

●​ Once the substitution is made (i.e., the debtor

chooses to render the substitute prestation instead
After Substitution of the original one), the substitute becomes the
obligation, and the debtor is now liable for any
loss or damage to the substitute caused by delay,
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

negligence, or fraud.
●​ Example: If D chooses to deliver the motorcycle
instead of the car and the motorcycle is lost due to
D's negligence after the substitution, D will be
liable for the loss of the motorcycle.

Section 4 – Joint and Solidary Obligations

Article 1207
The concurrence of two or more creditors or of two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand, or that each
one of the latter is bound to render, entire compliance with the prestation. There is a
solidary liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.

Article 1208
If from the law, or the nature or the wording of the obligations to which the preceding
article refers the contrary does not appear, the credit or debt shall be presumed to be
divided into as many shares as there are creditors or debtors, the credits or debts being
considered distinct from one another, subject to the Rules of Court governing the
multiplicity of suits.

Kinds of Obligations according to the number of parties

Individual Obligation ●​ Only one(1) obligor and one (1) obligee

●​ There are two (2) or more debtors and/or two(2)

Collective Obligation
or more creditors. It may be joint or solidary.

Joint and Solidary Obligations

●​ Each creditor is entitled to only their respective

share of the obligation, and each debtor is bound
to only their share of the obligation. They are not
Joint Obligation obligated to perform or fulfill the entire obligation
unless otherwise stated.
●​ Words used: Jointly, Conjoint, Mancomunada
simple, pro rata, or proportionate

●​ Each creditor may demand full performance of the

obligation, and each debtor is bound to fulfill the
Solidary Obligation entire obligation.
●​ Words used: Joint and Severally, In solidum,
Mancomunada Solidaria, Juntos o
Topic Name > Subheading > Memorize > Simple Explanation > Examples

separadamente, or individually and collectively

Kinds of Solidarity according to the parties bound

●​ Solidarity on the part of the debtors, where any

Passive one of them can be made liable for the fulfillment
of the entire obligation.

●​ Solidary on the part of creditors, where any one of

Active them can demand fulfillment of the entire
obligation.

●​ Solidary on the part of the debtors and creditors,

where each one of the debtors is liable to render,
Mixed
and each one of the creditors has a right to
demand, entire compliance with the obligation.

Kinds of Solidary according to source

●​ Where solidarity is agreed upon by the parties. If

Conventional nothing is mentioned in the contract relating to
solidarity, the obligation is joint.

Legal ●​ When solidarity is imposed by the law.

●​ Where solidarity is imposed by the nature of the

Real
obligation.

Scenarios

●​ Debtors – A, B, C – Joint
●​ Creditors – X, Y, Z – Joint
●​ How much is the share of A, B, C in the debt?
○​ P3,000 each
●​ How much is the share of X, Y, Z in the debt?
○​ P3,000
A, B, and C are bound to ●​ How much is B liable to pay?
pay X, Y, and Z P9,000 ○​ P3,000
●​ How much can Z collect?
○​ P3,000
●​ How much is B liable to X?
○​ P1,000
●​ How much can Z collect from A?
○​ P1,000
Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ Debtors – A, B, C – Joint
●​ Creditors – X, Y, Z – Solidary
●​ How much is the share of A, B, C in the debt?
○​ P3,000 each
●​ How much is the share of X, Y, Z in the debt?
○​ P3,000
A, B, C are bound to pay ●​ How much is B liable to pay?
solidary creditors X,Y, Z ○​ P3,000
P9,000 ●​ How much can Z collect?
○​ P9,000 (the whole obligation)
●​ How much is B liable to X?
○​ P3,000 (because they are solidary
creditors)
●​ How much can Z collect from A?
○​ P3,000

●​ Debtors – A, B, C – Solidary
●​ Creditors – X, Y, Z – Joint
●​ How much is the share of A, B, C in the debt?
○​ P3,000 each
●​ How much is the share of X, Y, Z in the debt?
○​ P3,000
Solidary debtors A, B, C
●​ How much is B liable to pay?
are bound to pay X,Y, Z
○​ P9,000(the whole obligation)
P9,000
●​ How much can Z collect?
○​ P3,000
●​ How much is B liable to X?
○​ P3,000 (because they are solidary debtors)
●​ How much can Z collect from A?
○​ P3,000

●​ Debtors – A, B, C – Solidary
●​ Creditors – X, Y, Z – Solidary
●​ How much is the share of A, B, C in the debt?
○​ P3,000 each
Solidary debtors A, B, C ●​ How much is the share of X, Y, Z in the debt?
are bound to pay solidary ○​ P3,000
creditors X,Y, Z P9,000 ●​ How much is B liable to pay?
○​ P9,000 (the whole obligation)
●​ How much can Z collect?
○​ P9,000
●​ How much is B liable to X?
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

○​ P9,000
●​ How much can Z collect from A?
○​ P9,000

Article 1209
If the division is impossible, the right of the creditors may be prejudiced only by their
collective acts, and the debt can be enforced only by proceeding against all the debtors. If
one of the latter should be insolvent, the others shall not be liable for his share.

Joint Indivisible Obligation

●​ When the division of an obligation is impossible,

the rights of the creditors can only be exercised by
their collective acts. This means that all the
creditors must act together to enforce their rights.
Collective Action by ●​ Ex: A group of three creditors (A, B, and C) is
Creditors owed a specific piece of land by a debtor. Since the
land cannot be divided, A, B, and C must
collectively demand the delivery of the land. A
alone cannot enforce the obligation; all three
creditors must act together.

●​ The obligation can only be enforced by proceeding

against all the debtors collectively, meaning no
single debtor can be pursued individually unless
all debtors are involved in the enforcement
process.
Joint Enforcement
●​ Ex: A, B, and C are jointly liable to give D a car. On
Against Debtors
the date of delivery, A and B are willing to deliver
but C is not.
○​ Can A and B validly deliver the whole car
to C? The answer is no because C’s
willingness must be present.

●​ If one of the debtors becomes insolvent, the other

debtors are not responsible for covering his share
of the obligation. Each debtor is liable only for
their portion, and the creditors cannot force the
Insolvency of One Debtor solvent debtors to take on the insolvent debtor's
burden.
●​ Ex: Debtors X, Y, and Z jointly owe an indivisible
obligation to deliver a painting to creditors. If X
becomes insolvent, Y and Z are still responsible for
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

their portions of the obligation but are not

required to cover X's share.

Article 1210
The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.

Article 1211
Solidarity may exist although the creditors and the debtors may not be bound in the same
manner and by the same periods and conditions.

Kinds of Solidary according to the legal tie

●​ When he parties are bound by the same

Uniform
stipulations

●​ When the parties are not subject to the same

Non-Uniform
stipulations

Solidarity not affected by diverse stipulations

●​ It consists in the right of each creditor to enforce

Essence of Solidarity the rights of all and the liability of each debtor to
answer for the liabilities to all.

●​ The creditor may bring his action in toto against

any of the solidary debtors less the shares of the
Action against any of the
other debtors with unexpired terms or unfulfilled
solidary debtors
condition who are entitled to defense until Art.
1222.

Liabilities of any solidary ●​ The parties may stipulate that any solidary debtor
debtor for entire already bound may be made liable for the entire
obligation obligation.

Article 1212
Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter.

●​ Ex: A owes B and C, solidary creditors, the sum of

Action Beneficial to the P2,000.
other ●​ Action Beneficial to the other if either B or C
demands the obligation from A.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

Action prejudicial to the ●​ Action prejudicial to the other if either B or C

other renounces/rejects the obligation.

Article 1213
A solidary creditor cannot assign his rights without the consent of the others.

●​ A solidary creditor cannot unilaterally assign their

right to collect from the debtor without first
obtaining the agreement of the other solidary
creditors. This is to prevent disruptions in the
balance of rights and to ensure that any actions
affecting the obligation are done with the consent
Assignment of solidary
of all involved.
creditor of his rights
●​ Ex: Suppose A, B, and C are solidary creditors, and
D owes them P90,000. A cannot sell or transfer
their right to collect D’s debt to a third party (say,
X) without first getting the approval of B and C.
The reason is that A’s actions would directly affect
B and C, who share in the same obligation.

Article 1214
The debtor may pay any one of the solidary creditors; but if any demand, judicial or
extrajudicial, has been made by one of them, payment should be made to him.

●​ In a solidary obligation, the debtor is generally

allowed to pay any one of the solidary creditors.
Each solidary creditor has the right to demand
and receive the full amount of the obligation from
Payment to Any Solidary
the debtor.
Creditor
●​ Ex: A owes P50,000 to B and C, who are solidary
creditors. A can choose to pay either B or C, and
the payment to one discharges the obligation to
both.

●​ If one of the creditors has already made a demand,

whether judicial (through the courts) or
extrajudicial (outside of court, like a formal notice
or letter), the debtor is required to pay that
Exception: Demand by
particular creditor. The demand signifies that the
One Creditor
creditor is actively seeking fulfillment of the
obligation, giving them priority to receive the
payment.
●​ Ex: If B has already sent a formal letter
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

demanding payment from A, A is obligated to pay

B, even if C has not demanded payment. Paying B
fulfills A's obligation.

Article 1215
Novation, compensation, confusion or remission of the debt, made by any of the solidary
creditors or with any of the solidary debtors, shall extinguish the obligation, without
prejudice to the provisions of article 1219.

The creditor who may have executed any of these acts, as well as he who collects the debt,
shall be liable to the others for the share in the obligation corresponding to them.

●​ The creditor who carries out any of these acts, or

who collects the debt, becomes liable to the other
solidary creditors for their respective shares in the
obligation. This ensures fairness among all the
creditors.
●​ If one creditor takes action that discharges the
debt or collects it, they must compensate the other
creditors for their portion of the obligation, since
the whole debt was extinguished by their actions.
Liability of solidary
●​ Ex: A, debtor and B, C, D, solidary creditor in the
creditor in case of
amount of P30,000. If B validly condones the debt
Novation, compensation,
in the amount of P18,000 he shall be liable for
confusion or remission
P6,000 each to C and D. If B collects P15,000
from A, B must account for the P5,000 share each
of C and D.
○​ After condoning P18,000, B is liable to pay
P6,000 each to C and D for their share of
the condoned debt.
○​ After collecting P15,000 from A, B must
give P5,000 each to C and D as their
respective shares of the collected amount.

●​ Novation (replacing the original obligation with a

new one), compensation (offsetting debts),
confusion (when a debtor and creditor become the
same person), or remission (forgiveness of the
Effect
debt), executed by any of the solidary creditors or
debtors, will extinguish the entire obligation.
●​ These actions taken by one solidary creditor or
debtor affect the entire obligation, meaning the
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

other creditors or debtors are also released from

their responsibilities.

Article 1216
The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been
fully collected.

●​ Ex: Suppose X, Y, and Z are solidary debtors

owing C (the creditor) P60,000.
○​ C can demand the entire P60,000 from X
alone.
Rights of Creditor to ○​ If X only pays P30,000, C can still demand
Proceed Against any the remaining P30,000 from Y or Z, or
solidary debtor both, until the full amount is collected.
○​ The demands against one debtor do not
prevent subsequent claims against the
others, as long as the debt has not been
fully satisfied.

Article 1217
Payment made by one of the solidary debtors extinguishes the obligation. If two or more
solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency, reimburse his share to
the debtor paying the obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each.

(1)​ A, B, and C are jointly and severally liable to D and

E in the amount of P9,000 due on January 5.
(1)​Between the (a)​ If both A and B offer to pay D, on January
Solidary Debtors 5, the latter may choose which offer to
and Creditor(s) accept. If A pays the entire amount of
(2)​Among the solidary P9,000 on January 5, the obligation is
debtors extinguished.
(3)​Among the solidary (2)​The payment by A gives him the right to demand
creditors reimbursement from B and C P3,000 each with
interest from the date of payment but A is not
entitled to the reimbursement nor to interest for
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

any payment made before January 5. The

obligation of B and C to reimburse him with
interest will arise only from January 5.
(a)​ If C is insolvent, both A and B shall bear
his insolvency in proportion to their
shares. Hence, A can still ask B to pay an
additional sum of P1,500. Of course, A and
B can later on recover from C should the
latter’s finances improve.
(3)​D, in the above example, has the obligation to give
E his corresponding share in the credit.

Article 1218
Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors
if such payment is made after the obligation has prescribed or become illegal.

●​ A solidary debtor who makes a payment after the

obligation has prescribed (i.e., the debt is no
longer enforceable due to the lapse of time) or has
become illegal, is not entitled to reimbursement
from his co-debtors.
●​ If one of the solidary debtors pays the obligation
after it has prescribed or become illegal, they
Effect of Payment after
cannot seek reimbursement from the other
Obligation has prescribed
co-debtors.
or become illegal
●​ Ex: A, B, and C are solidary debtors who owe D
P90,000. The debt prescribes on January 1. If A
pays D on January 15 (after the obligation has
prescribed), A cannot demand P30,000 each from
B and C, because the obligation is no longer legally
enforceable, and A voluntarily paid a prescribed or
illegal debt.

Article 1219
The remission made by the creditor of the share which affects one of the solidary debtors
does not release the latter from his responsibility towards the co-debtors, in case the debt
had been totally paid by anyone of them before the remission was effected

●​ If a creditor remits or forgives the share of one

solidary debtor, this does not release that debtor
Effect from their responsibility towards the other
co-debtors, especially if the debt was fully paid by
one of them before the remission occurred.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

●​ Ex: Situation: A, B, and C are solidary debtors who

owe a total of P90,000 to creditor D. Each debtor
has a share of P30,000.
○​ Payment Made: Before D decides to forgive
any part of the debt, B pays the entire
P90,000 to D.
○​ Remission: Later, D decides to forgive A’s
share of P30,000.
○​ Outcome: A is forgiven of their P30,000
debt to D.
■​ However, since B paid the whole
amount before the remission, A still
owes B P30,000 to reimburse them
for the share of the debt that was
forgiven.

Article 1220
The remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors

●​ if one of the solidary debtors obtains a remission

(forgiveness) of the entire obligation, that debtor
cannot seek reimbursement from the other
co-debtors.
●​ Example: A, B, and C are solidary debtors who
owe P90,000 in total to creditor D. Each debtor
has a share of P30,000.
○​ Forgiveness Granted: If D decides to
forgive the entire P90,000 debt that A
No right of
owes, A is fully released from the
reimbursement in case of
obligation.
remission
○​ Outcome: A cannot go to B or C and
demand P30,000 from each as
reimbursement for their shares of the debt.
■​ B and C are no longer liable to pay
anything since the entire debt was
forgiven, and A must bear the fact
that they received the benefit of the
remission without being able to
collect from the others.

Article 1221
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

If the thing has been lost or if the prestation has become impossible without the fault of
the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the creditor, for
the price and the payment of damages and interest, without prejudice to their action
against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become impossible
after one of the solidary debtors has incurred in delay through the judicial or extrajudicial
demand upon him by the creditor, the provisions of the preceding paragraph shall apply.

Rules in case thing has been lost or if the prestation has become impossible

●​ Ex: A, B, and C promised solidarily to deliver to D

a particular truck valued at P15,000.
○​ The obligation shall be extinguished if the
Loss is without fault and
truck is lost or destroyed through a
before delay
fortuitous event without the fault of A, B
and C and before they have incurred in
delay.

●​ Ex: If in the preceding example, the truck was lost

through the fault of C, A and B shall also be
responsible to D for the price of the truck as well
as damages although A and B were not at fault at
Loss is due to fault on the all.
part of a solidary debtor ○​ A and B, however, can recover from C, the
guilty or negligent debtor, the full amount
of such price and damages if A and B have
already contributed to the price of the
truck.

●​ If the truck was lost through a fortuitous event but

after a demand was made upon C, D can still
Loss is without fault but
recover damages from A or B or both of them
after delay
without prejudice to the right of action of the
latter against C following the same rule in No. 2.

Article 1222
A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which
are derived from the nature of the obligation and of those which are personal to him, or
pertain to his own share. With respect to those which personally belong to the others, he
may avail himself thereof only as regards that part of the debt for which the latter are
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

responsible.

Defenses available to a solidary debtor

●​ Ex: A and B are solidarily liable to C and the

amount of P4,000. The entire debt of A and B was
paid by D. In an action by C against A, the letter
Defenses derived from can raise the defense of payment by virtue of
the nature of the which the obligation was extinguished.
obligation ○​ A defense derived from the nature of the
obligation is a complete defense because it
nullifies the obligation or renders it
ineffective.

●​ Ex: If the action by C is against B and B was insane

Defenses personal to, or at the time the obligation was contracted, B can
which pertain to share of, put up the defense of insanity with respect to the
debtor sued– entire obligation. This defense is personal to B
alone. it is a complete defense.

Section 5 – Divisible and Indivisible Obligations

Article 1223
The divisibility or indivisibility of the things that are the object of obligations in which
there is only one debtor and only one creditor does not alter or modify the provisions of
Chapter 2 of this Title.

●​ An obligation is considered divisible if the subject

matter (thing or service) can be split or divided
into parts without altering its essence or nature.
●​ For example, if D owes C ₱10,000, this debt can be
paid in installments or in partial payments (e.g.,
₱5,000 now and ₱5,000 later).
●​ Example 2: D agreed to pay C P10,000 in four
equal monthly installments. The obligation is
Divisible Obligation
divisible because it is capable of partial
performance
○​ But if the agreement is that D will pay C on
a certain date the full amount of P10,000,
the obligation is indivisible although
money is physically divisible because the
intention of the parties is that the
obligation must be fulfilled at one time and
Topic Name > Subheading > Memorize > Simple Explanation > Examples

as a whole.

●​ An obligation is considered indivisible if it cannot

be divided without affecting its nature or essence.
This means the whole obligation must be
performed at once.
●​ For example, if D is obliged to deliver a specific
painting to C, the obligation is indivisible because
the painting itself cannot be divided without
losing its value as a singular item.
●​ Example 2: Suppose the agreement is that S will
deliver one-half of the car on Nov 15 and the other
Indivisible Obligation
half on Nov 30. Of course, it would be
inconceivable that B would agree to a partial
performance of the obligation, but let us just
assume he did. Will the obligation be divisible or
indivisible?
○​ The obligation is till indivisible and S must
deliver the whole car on Nov 15 or Nov 30.
A definite thing like a car, cannot be
severed into parts without altering its
essence or destroying its value.

Kinds of Division

●​ Based on quality
●​ Ex: A and B are heirs of C. They agreed to divide
Qualitative Division their inheritance as follows: to A– a house and lot
and home appliances and to B–a rice field, a car,
and a P10,000 cash.

●​ Based on quantity
●​ Ex. In the preceding example, if the inheritance
Quantitative Division
consists only of a rice field, it partition by meters
and bounds into two equal parts.

●​ Exists only in the minds of the parties

●​ Ex: Suppose the car and the rice field were
inherited by both A and B.
Ideal or Intellectual
○​ As co-owners, their one-half shares in the
Division
car are not separable in a material way but
only mentally. Similarly, before the land is
actually divided between A and B, they are
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

merely co-owners and neither one of them

can say that he is the absolute owner of a
specific portion thereof.

Kinds of Indivisibility

●​ his occurs when a specific provision of law

explicitly declares certain obligations to be
indivisible, even if they are inherently divisible.
●​ Example: A legal provision may state that an
Legal Indivisibility
obligation to pay a fine or a tax is indivisible. Even
if the amount could theoretically be paid in parts,
the law requires the whole amount to be settled at
once.

●​ This arises when the parties to an obligation agree

that it shall be treated as indivisible, regardless of
its inherent divisibility.
●​ Example: If A agrees to sell B a plot of land and
Conventional stipulates in their contract that the payment must
Indivisibility be made in full at the time of transfer, this
obligation is considered conventionally indivisible.
Even though the payment could be divided into
installments, the parties have chosen to treat it as
a single obligation.

●​ This refers to obligations where the nature of the

object or prestation does not permit division. This
type of indivisibility is inherent to the object itself.
●​ Example: An obligation to deliver a specific car or
Natural Indivisibility
a unique artwork is considered naturally
indivisible because you cannot divide the car or
artwork into parts without losing its identity and
value.

Article 1224.
A joint indivisible obligation gives rise to indemnity for damages from the time anyone of
the debtors does not comply with his undertaking. The debtors who may have been ready
to fulfill their promises shall not contribute to the indemnity beyond the corresponding
portion of the price of the thing or of the value of the service in which the obligation
consists.

Effects of ●​ If any one of the debtors fails to fulfill their

 Topic Name > Subheading > Memorize > Simple Explanation > Examples

non-compliance by a obligation, they become liable for damages from

debtor that moment on.
●​ The debtors who are ready to fulfill their
obligations are not held responsible for the entire
damage caused by the non-compliance of the
defaulting debtor. Instead, their liability is limited
to their respective shares of the obligation.

Article 1225
For the purposes of the preceding articles, obligations to give definite things and those
which are not susceptible of partial performance shall be deemed to be indivisible.

When the obligation has for its object the execution of a certain number of days of work,
the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.

In obligations not to do, divisibility or indivisibility shall be determined by the character of

the prestation in each particular case

Obligations deemed indivisible

Obligations to give
●​ Ex: To give a particular electric fan
definite things

Obligations which are not

susceptible of partial ●​ Ex. To sing a song
performance

●​ Under the law, taxes should be paid within a

Obligations provided by definite period. Although money is physically
law to be indivisible divisible, the amount of tax payable mus be
delivered in toto, nor partially.

●​ The obligation of D to give 1,000 pesos to C on a

certain date. Money is physically divisible but the
Obligations provided by clear intention here is for the to deliver 1,000
the parties to be pesos at one time and as a whole.
indivisible ○​ Suppose there are two debtors, D and E , is
the obligation still indivisible? No. The
obligation becomes divisible as far as D
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

and E are concerned because the delivery

of P1,000 can be done in parts.

Obligations deemed divisible

Obligations which have

●​ Ex: The obligation of D to paint the house of C the
for their object the
painting to be finished in 10 days here the
execution of a certain
obligation would not be fulfilled at one time.
number of days of work

●​ Ex: Obligation of D to make a table, 1.5 meters

Obligations which have
wide and 4 meters long; the obligation of D and B
for their object the
to deliver 20 cubic meters of sand.
accomplishment of work
○​ But the obligation of D alone to deliver 20
by metrical units
cubic meters is indivisible,

Obligations which by
their nature are ●​ The obligations of D to teach ObliCon for one year
susceptible of partial in a university.
performance

Divisibility or Indivisibility in Obligations Not to Do

●​ Ex. A property owner agrees not to build any

structures on their land for five years. This
obligation's divisibility will depend on whether the
specific restrictions allow for partial actions (e.g.,
building a fence but not a house).

Section 6 – Obligations with a Penal Clause

Article 1226
In obligations with a penal clause, the penalty shall substitute the indemnity for damages
and the payment of interests in case of noncompliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfillment of the obligation.

The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code.

●​ One which can stand by itself and does not depend

for its validity and existence upon another
Principal Obligation
obligation.
○​ Example: A person borrows $10,000 from
Topic Name > Subheading > Memorize > Simple Explanation > Examples

a bank. The primary duty to repay this

amount is the principal obligation.

●​ One which is attached to a principal obligation

and therefore, cannot stand alone.
○​ Example: In the same loan scenario, if the
borrower provides a piece of property as
Accessory Obligation collateral, the obligation to maintain the
collateral is an accessory obligation. This
collateral secures the main obligation (the
repayment of the loan) but has no purpose
if there’s no principal obligation.

Obligations with a Penal Clause

●​ One which contains an accessory undertaking to

pay previously stipulated indemnity in case of
breach of the principal prestation, intended
primarily to induce its fulfillment.
Obligation with a Penal
●​ This is a type of obligation where a penalty is
Clause
included as a secondary agreement. If the primary
obligation is breached, the penalty is automatically
due. The aim is to ensure that the debtor takes the
obligation seriously and complies fully.

●​ An accessory undertaking attached to an

obligation to assume greater liability in case of
breach, i.e., the obligation is not fulfilled, or is
partly or irregularly complied with.
●​ This is the specific clause or provision added to
Penal Clause
the obligation, requiring the debtor to assume a
greater liability if they breach the contract. This
could be for non-fulfillment, partial fulfillment, or
irregular fulfillment of the obligation. Essentially,
it sets an extra consequence for failing to comply.

(1)​ To insure their performance by creating an

effective deterrent against breach, making the
consequences of such breach as onerous as it may
Purposes of Penal Clause be possible.
(a)​ Example: A construction company agrees
to complete a building project by a specific
deadline. The contract includes a penal
Topic Name > Subheading > Memorize > Simple Explanation > Examples

clause stating that for every day of delay,

the company must pay a penalty. This
penalty motivates the company to stay on
schedule to avoid financial losses.
(2)​To substitute a penalty for the indemnity for
damages and the payment of interests in case of
non-compliance or to punish the debtor for the
non-fulfillment or violation of his obligation.
(a)​ Example: If a tenant fails to pay rent, the
lease agreement might impose a fixed
penalty instead of requiring the landlord to
prove specific financial damages. Here, the
penal clause acts as a ready-to-enforce
punishment and compensation.

In the first case, the purpose is reparation; in the second,

punishment.

Kinds of Penal Clause (as to origin)

Legal Penal Clause ●​ When it is provided by law

Conventional Penal ●​ When it is provided for by stipulation of the

Clause parties

Kinds of Penal Clause (as to its purpose)

Compensatory penal
●​ When the penalty takes the place of damages
clause

●​ When the penalty is imposed merely as

Punitive Penal Clause
punishment for breach

Kinds of Penal Clause (as to its demandability or effect)

●​ When only the penalty can be enforced

Subsidiary/Alternative ●​ For example, if a debtor breaches a contract, the
Penal Clause creditor can only demand the penalty, not both the
penalty and performance of the obligation.

●​ When both the principal obligation and the penal

Joint/Cumulative Penal clause can be enforced.
Clause ●​ This allows the creditor to enforce the obligation
as well as claim the penalty for the breach.
Topic Name > Subheading > Memorize > Simple Explanation > Examples

When Creditor may Recover Damages

(1)​ When so stipulated by the parties

(2)​When the obligor refuses to pay the penalty, in
which case the creditor may recover legal interest
thereon; or
When
(3)​When the obligor is guilty of fraud in the
fulfillment of the obligation, in which case the
creditor may recover damages caused by such
fraud.

●​ X promised to construct a house for Y. The

contract carried a penal clause that in case of
non-compliance, X would have to pay a penalty of
P100,000. X did not construct the house and, as a
consequence, Y suffered damage in the amount of
P40,000.
○​ In this case, the penalty of P100,000 shall
be paid. Y cannot recover more than
P100,000, the penalty stipulated, even if X
Example
proves that the damages suffered by Y is
only P40,000.
○​ If X refuses to pay the penalty, Y may
recover legal interest thereon, the interest
representing new damages brought about
by the non-payment of the penalty.
○​ If X is guilty of fraud (not mere fault) in
the fulfillment of his obligation, he is also
liable for the damages caused.

●​ The penalty may be enforced only when it is

demandable in accordance with the provisions of
the Civil Code. This means that the penalty, as a
stipulation in a contract, is demandable only if
there is a breach of the obligation and it is not
contrary to law, morals, good customs, public
When Penalty may be
order, or public policy.
enforced
●​ Thus if the obligation cannot be fulfilled due to a
fortuitous event, the penalty is not demandable.
Under Article 1229, the penalty may be reduced if
it is iniquitous (unfair) or
unconscionable(unreasonable) or in case there is
partial or irregular fulfillment.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

Article 1227
The debtor cannot exempt himself from the performance of the obligation by paying the
penalty, save in the case where this right has been expressly reserved for 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. However, if after the
creditor has decided to require the fulfillment of the obligation, the performance thereof
should become impossible without his fault, the penalty may be enforced.

●​ Generally, the debtor does not have the right to

simply pay the penalty instead of performing the
obligation. The purpose of a penal clause is to
encourage the actual fulfillment of the obligation,
not to allow an "easy out" by paying the penalty.
Penalty not substitute for However, an exception can be made if this right to
performance substitute the penalty for performance is explicitly
stated in the contract.
●​ Example: S is required to deliver to B certain
products, otherwise, he shall pay a penalty in the
amount of P10,000. Under the above article, S
cannot just pay

Penal Clause presumed Subsidiary

●​ Once the obligation is fulfilled, this purpose is

attained and, therefore, there is no need for
demanding the penalty.
●​ Example: S is required to deliver to B certain
products, otherwise, he shall pay a penalty in the
amount of P10,000. Under the above article, S
When there is
cannot just pay
Performance
○​ If S delivered the products after he has
incurred in delay and B accepted the
delivery, the penalty cannot also be
demanded by B unless such right is clearly
given to him in the contract in which case
the penal clause is joint.

●​ In case of non-compliance, the creditor may ask

for the penalty or require a specific performance.
When there is no ●​ Example: If S did not comply with his obligation,
performance B can choose between requiring fulfillment of the
principal obligation or satisfaction of the penalty.
○​ If B chose fulfillment, he may not
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

subsequently demand the payment of the

penalty unless fulfillment become
impossible without the debtor’s fault.
○​ If B chose and received the penalty, he may
not require the fulfillment of the obligation
which is deemed repudiated by both of
them.
○​ If the non-fulfillment of the obligation is
attributable to the fraud committed by S,
both the stipulated penalty and damages
suffered by B may be recovered by him.

When Penal Clause Joint

●​ The debtor has the right to pay penalty in lieu of

performance only when this right has been
expressly reserved for him.
●​ The borrower cannot claim that he is no longer
liable to pay his load after paying the penalty.
When Penal Clause Joint Otherwise, he will benefit from his
non-performance if the amount of the penalty is
less than that of the loan. With respect to the
creditor, he has the right to demand performance
and payment of penalty jointly when this right has
been clearly granted him.

Article 1228
Proof of actual damages suffered by the creditor is not necessary in order that the penalty
may be demanded

●​ When an obligation includes a penal clause, the

creditor is not required to prove that they actually
Penalty Demandable suffered damages in order to demand the penalty
without proof of actual from the debtor. The penalty itself is a form of
damages pre-agreed compensation for the breach, and its
enforceability is independent of any specific harm
caused to the creditor.

●​ In any of the three exceptions when damages may

Damages recoverable in
be recovered, the creditor must prove the amount
addition to penalty must
of such damages which he actually suffered
be proved
resulting from breach of the principal obligation.
 Topic Name > Subheading > Memorize > Simple Explanation > Examples

Article 1229
The judge shall equitably reduce the penalty when the principal obligation has been partly
or irregularly complied with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or unconscionable.

When Penalty may be reduced by the Courts

●​ The first refers to the extent or fulfillment, the

latter, to the manner. As a general rule, an
obligation is not deemed performed unless the
thing or service in which it consists has been
completely delivered or rendered, as the case may
When there is partial or
be.
irregular performance
●​ If the debtor has performed partially or
irregularly, courts may reduce the penalty to
reflect the level or quality of performance, rather
than imposing the full penalty intended for total
non-performance.

●​ Here, the penalty may be reduced even if there is

no performance at all. Even if iniquitous or
unconscionable liquidated damages, whether
intended as an indemnity or as a penalty, are not
When the penalty agreed
void, but subject merely to equitable reduction.
upon is iniquitous or
●​ Even if there’s no performance at all, if the penalty
unconscionable
amount is deemed unjustly harsh, the court can
reduce it. The purpose is to prevent the imposition
of overly burdensome penalties that would be
unjust or exploitative.

Article 1230
The nullity of the penal clause does not carry with it that of the principal obligation.

The nullity of the principal obligation carries with it that of the penal clause

●​ if the penal clause is found to be null (void or

invalid) due to reasons such as illegality or
unconscionability, it does not invalidate the
Effect of Nullity of the principal obligation.
Penal Clause ●​ Example: S agreed to sell merchandise to B. It is
provided in their agreement that in case of default.
S will deliver a prohibited drug as penalty.
○​ Here the obligation to sell merchandise is
Topic Name > Subheading > Memorize > Simple Explanation > Examples

still valid but the penalty is void. For

failure if S to comply with his obligation, B
may recover damages.

●​ If the principal obligation itself is nullified (for

example, due to illegality, fraud, or lack of
consent), this nullity extends to the penal clause.
●​ Reason: Since the penal clause exists only to
reinforce the principal obligation, if the main
obligation is void, there is no legal foundation for
the penal clause.
Effect of Nullity of the
●​ Example: S agreed to deliver to B two (2) grams of
Principal Obligation
prohibited drugs. The contract carries a penal
clause to the effect that in case of noncompliance
with the obligation, S would pay a penalty of
P10,000.
○​ Here, the nullity of the principal obligation
carries with it that the penal clause
although it is itself valid.