SECTION 4.

- JOINT AND SOLIDARY OBLIGATIONS

 
Art. 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.

Art. 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.

Obligations may be classified according to the number of parties involved,

such as:

1. INDIVIDUAL Obligation – where there is one debtor and one creditor

2. COLLECTIVE Obligation – where there are two or more debtors and two
or more creditors.

Q. What are the two kinds of Collective Obligations? Characterize each.

1. JOINT OBLIGATION (also known as MANCOMUNADA SIMPLE or PRO RATA or

Proportionate) – each of the debtors is liable only for a proportionate part of
the debt, and each creditor is entitled only to a proportionate part of the
credit. [Simply put - “Each to his own” ]

2. SOLIDARY OBLIGATION – each debtor is liable for the whole obligation; each
creditor may enforce the entire obligation to any one of the debtors who may
be obliged to pay it in full. [“One for All, All for One” ]

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Q. If a collective obligation does not provide for the manner of enforceability or liability of
the multiple parties, what is the legal presumption provided by law?

A. The presumption is that the obligation is JOINT or mancomunada, if multiple

persons are liable under a contract or judgment and there is NO express
provision making each one liable for the entire obligation. Each debtor is liable
only for their proportionate part of the obligation. (Arts. 1207 & 1208)

Q. Why is solidary liability not legally presumed?

A. Because it is burdensome on the debtors. It increases their responsibilities and
liabilities.

Q. What are the EXCEPTIONS to the legal presumption that the obligation is Joint?

A. EXCEPTIONS: There is solidary liability if required by:

i. the LAW, or;

ii. the Nature of Obligation, or;

iii. Express Stipulation by the Parties to the contract.

Note: SC Ruling - Oriental Commercial vs. Abeto, 60 Phil. 723

 After judgment becomes final, without the court stating in the judgment that
liability is joint and several, the court has no power to amend & convert
defendant’s liability to a solidary obligation.

 It can no longer issue an order of execution for solidary responsibility of

defeated parties.

 This is true even if in the written contract originally executed by the parties,
and the obligation contracted by the sureties, was joint and several in
character.

Read: SC Cases cited in Paras annotated book

- Note the difference in SC decisions in the cases of: Compania General de Tabacos v.
Obed, 13 Phil. 391 vs. the case of Oriental Commercial Co. v. Abeto, 60 Phil. 723

ILLUSTRATE: JOINT OBLIGATION = Pro Rata Liability

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 “WE promise to pay P2,000 every month from Jan. 30, 2010 to Jan. 30, 2011.”
Signed – Debtor X Signed – Debtor Y

Q. What are the LEGAL CHARACTERISTICS OR EFFECTS OF A JOINT OBLIGATION?

1.) Each DEBTOR is liable only for a proportionate part of the entire debt.
Reason: there are as many separate debts as there are debtors.

Example: SEVERAL DEBTORS, ONLY ONE CREDITOR (Passive Joint Obligation - multiple
debtors) : A, B, C owe X P30,000. There are 3 debts but only one credit. Absent express
contrary agreement, the liability of A,B,C is joint - that is, A,B,C is liable to pay creditor X for
only P10,000 each. Creditor X cannot collect the entire sum from any one of them, only
their share of P10,000 each.

2.) Each CREDITOR, if there are several, is entitled to only a proportionate part
of the credit. (Active Joint Obligation-multiple creditors)
Reason: there are as many separate credits as there are creditors.

Example: Debtor A obtained a loan of P3M (P1M each) from creditors X, Y, Z (whose share
in the creditr is P1M each). Here, there is only one debt but 3 credits. Creditors - X, Y, Z
can each collect only P1M from debtor A.

3.) Demand by one creditor upon one debtor, produces the effects of default
only between them, but not with respect to others.

Joint Debtors A, B, C owe creditor X P3M, which will fall due on May 7, 2000 with 1.5%
interest and P1% penalty charge for every month of delay. Creditor X demanded payment
from debtor A on May 7, 2000.
If debtor A does not pay he will be liable to pay both principal plus interest & penalty.
But debtors B & C are not yet liable to pay interest & penalty charges, until creditor X
demands payment from them.

4.) The interruption of prescription by the judicial demand of one creditor

upon a debtor, does not benefit the other creditors, nor interrupt the
prescription as to the other debtors.

Joint debtors A, B, C owe creditors X & Y P3M which will fall due on May 7, 2000. Each
debtor has a P1M liability/share in the debt to X & Y. On May 5, 2010, before prescription
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 sets in, only creditor- X filed an action for collection of the sum of money against A, but X
failed to include debtors B & C as he does not know their current whereabouts.

Legal Effects:
i.) Running of prescriptive period is interrupted/stopped as against debtor A. Creditor X
can collect debt from A.
ii.) But extinctive prescription will set in between creditor Y and A. As creditor-Y did not
make a timely demand he loses his right to demand payment from A.
iii.) Also, prescription will set in between creditors X & Y and the debtors B & C if no
demand or case is filed against them on or before May 7, 2010. By prescription, X & Y
lose their right to collect the debts of B & C.

5.) The insolvency of a debtor does not increase the liability of his co-debtors.
Neither does it allow a creditor to demand anything from his co-creditors.

Example: Debtors A, B, C obtained a loan of P3Million (P1M each) from X & Y. There are 3
debts and 2 credits. If Debtor A becomes insolvent and cannot pay his P1M debt to
Creditors X & Y, debtors B & C’s will not be liable for A’s P1M debt to creditors. Neither, can
X and Y collect the unpaid P1M debt of A from either B & C. Nor will X be able to demand
more (P0.5M) from Y as co-creditor of A, or vice-versa.

6.) The vices of each obligation arising from the personal defect of a particular
debtor or creditor will not affect the obligation or rights of the others.

Example: A (P1M) & B (P1M) are joint debtors of creditor X. But consent of A to the
contract was obtained thru any of the vices of consent (violence, intimidation, fraud,
undue influence). Here, debtor B is still liable to X for P1M. Only A can claim the defense of
lack of consent against creditor X to excuse him from the paying the debt.

7.) In joint divisible obligation, the defense of res judicata is not extended
from one debtor to another.

Source: Pineda, Obligations and Contracts, 2000, p.140-141

Note: Practical Problems p. 149, Pineda – to resolve

Art. 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.

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Article 1209 refers and applies to a JOINT INDIVISIBLE OBLIGATION

Q. What is a JOINT INDIVISIBLE OBLIGATION?

 When there are several debtors OR creditors whose juridical tie is Joint.
 What is Indivisible is the prestation or object of the obligation. It must be
delivered or performed as a whole. (example: obligation to deliver a house
or, a car, or other determinate or specific thing)
 Its fulfillment requires the concurrence of ALL the debtors, but each will be
liable only for his part. No debtor can be made liable for the others.
 If there are several creditors, no single creditor can do an act prejudicial to
others, collective action is required for acts to prejudice the other creditors.
Reason: because the credit of each one is separate from the credits of others.

Q. How is a JOINT INDIVISIBLE OBLIGATION PERFORMED?

A. If there are several creditors and only one debtor, the obligation can be
performed only by delivering the object to ALL the creditors jointly.

Debtor A is obliged to deliver an Arabian stallion named “Orcan” to creditors X Y & Z.

Here, A must deliver the horse Orcan to ALL creditors X, Y & Z to fully comply with his
joint indivisible obligation.

Q. Is delivery by a debtor to one of the creditors only, in a joint indivisible

obligation deemed a complete fulfilment of his obligation?

A. NO. A debtor who delivers the thing to one creditor only when there other
joint indivisible creditor/s, becomes liable for damages because of non-
performance to the other creditors, unless the latter have authorized the
recipient creditor to receive payment for all of them.

If only one or some of the creditors demand the prestation, the debtor can
legally refuse to deliver to them. Debtor can insist that all creditors together
receive the thing.

Q. What are the legal consequences if one of the debtors in a joint indivisible
obligation becomes insolvent, and thus, the indivisible prestation or object
can no longer be delivered or performed?

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A. If one of debtors becomes insolvent, his co-debtors shall NOT be liable for
his share. This is due to the joint character of the obligation even if the
object is indivisible. The obligation will then be converted to payment of
indemnity for damages where the debtors will be liable only for his own
original share in the obligation. The liability of the insolvent debtor is
excluded. (see example in Paras in Art. 1209)

Q. What is the remedy of a debtor if one or more creditors refuse to jointly

accept the thing delivered in a joint indivisible obligation?

A. If any of the creditors refuses to jointly accept the thing without a valid
reason, debtor may deposit the thing in court by way of consignation.

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

Q. WHAT IS MEANT BY “INDIVISIBILITY OF AN OBLIGATION” ?

A. Indivisibility of an obligation refers to the prestation or object of obligation,

which is not capable of partial performance, without altering or destroying its
essence or substance.

Example: Obligation to deliver a live horse. [Horse must be delivered alive, wholly and intact;
it cannot be delivered in parts or it destroys the essence of the object & subject matter
of the contract.]

Q. What are the DIFFERENCES between INDIVISIBILITY OF AN OBLIGATION and

SOLIDARITY OF AN OBLIGATION?

 In SOLIDARY OBLIGATIONS, each creditor may demand the full prestation

and each debtor has likewise the duty to comply with the entire prestation.

 In INDIVISIBLE JOINT OBLIGATIONS each creditor cannot demand more

than his share and each debtor is not liable for more than his share in the
obligation.

 Note: Study the Distinction Table on p. 154, Pineda; and Illustrations on p.155