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DIFFERENT KINDS OF OBLIGATIONS

Classification of obligations
1. Pure obligation
2. Conditional obligation
3. Obligation with a period
4. Alternative obligation
5. Facultative obligation
6. Joint obligation
7. Solidary obligation
8. Divisible obligation
9. Indivisible obligation
10. Obligation with a penal clause

Pure and conditional obligations

Pure obligation, defined
A pure obligation is a debt which is not subject to any conditions and no specific date is
mentioned for its fulfillment. A pure obligation is immediately demandable.

Example: D obliges himself to pay C P 1,000,000. The obligation is immediately

demandable because there is no condition & no date is mentioned for its fulfillment.

Conditional obligation, defined

A conditional obligation is one whose demandability or extinguishment depends upon the
happening of a condition.

The execution of which is suspended by a condition which has not been accomplished
and subject to which it has been contracted.
Example: “I will support your studies in college if Mr. A dies.” The obligation becomes
demandable only after Mr. A dies. When the condition happens, it gives rise to an
obligation. This condition is referred to as suspensive condition.

Example: “I will support your studies in college until Mr. A dies.” Here, the obligation is
demandable at once. When the condition happens, it extinguishes the obligation. This
condition is referred to as resolutory condition.

Condition, defined
Condition is a future event, which may or may not happen. It is a future and uncertain
event, fact, or circumstance whose existence or occurrence is necessary for the existence
or determining the extent of an obligation or liability
Classification of condition
1. Suspensive and resolutory
a. Suspensive condition – a future event, the happening of which will give
rise to the obligation. This is also known as condition antecedent or
precedent. (example: I oblige myself to deliver a red car to A if she
passes the CPA board exam)
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b. Resolutory condition – a future event, the happening of which

extinguishes the obligation. It is demandable at once but upon
happening of the condition, it shall be extinguished. This is also referred
to as condition subsequent. (example: I oblige myself to give P2,000
monthly to B until he passes the CPA board exams)

2. Potestative, casual and mixed

a. Potestative – depends upon the will of one of the contracting parties
a.1. Potestative on the part of the debtor –
▪ If suspensive - the obligation is VOID.
Even if the condition is fulfilled, it will not cure the defect.
(example: M promises to pay X the sum of P10,000 if M will marry
this year)
▪ If resolutory – the obligation is valid. (example: M promises to pay
X P10,000 as monthly allowance until M marries this year)

a.2. Potestative on the part of the creditor – the obligation is valid

whether the condition is suspensive or resolutory.
(examples: “M promises to pay X the sum of P10,000 if X marries
this year,” “M promises to pay X P10,000 as monthly allowance until
X marries this year)

b. Casual – depends upon chance or upon the will of a third person.

(example: X will deliver a Honda car to B, if Ms. Philippines will be
crowned as Ms. Universe 2020)

c. Mixed – depends upon the will of one of the contracting parties and
partly upon the chance of the will of a third person. (example: X will give
P100,000 to A, if A marries B this year)

3. Possible and impossible

a. Possible – capable of fulfillment by its nature and by law
b. Impossible – not capable of fulfillment because of its nature or due to
operation of law. In this case, the obligation and the conditions are VOID.
(example: “I will give you my condo unit if you can bring to me the Eiffel
Tower”, “I will pay you P100,000 if you will deliver to X 10 grams of
shabu”)

Note: if the condition is not to do an impossible thing, it shall be deemed

as not having been agreed upon (Art.1183 NCC). Hence, the obligation
is valid and demandable. (example: “I will give you P500 if you will not
bring me an internal organ of a dinosaur,” “I will pay you P10,000 if you
will not deliver me 10 grams of shabu”)
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4. Positive and negative

a. Positive – the condition that some future event will happen. The
obligation is extinguished if after the lapse of the future event, the
condition did not happen, or it has indubitable that the event will not
happen. (examples: “F obliges to give C P100,000 if C will marry M this
year”. The obligation to give is extinguish if (a) C does not marry M this
year, or (b) if M dies, or marries anther than C, thus C cannot anymore
marry her. The obligation is extinguished on such date since the
condition to marry will not take place anymore.

b. Negative – the condition that some event will not happen at a

determinate time. The obligation becomes effective as soon as the time
indicated has elapsed or it has become evident that the event will not
occur. (example: F oblige to give C P100,000 if C will not marry M this
year. The obligation becomes effective if (a) C does not marry M this
year, (b) C marries another this year, or (c) M dies, or marries another
than C. The obligation becomes effective on that date since the condition
to marry will not be fulfilled anymore.

5. Divisible and indivisible

a. Divisible – when capable of partial performance.
The law provides (Art. 1183 NCC) that, if the obligation is divisible, the
part thereof which is not affected by the impossible or unlawful condition
shall be valid. Thus, if B obliges himself to give C a car if C graduated
cum laude or higher in college, and P50,000 if C can forge his school
records and make it appear that it is the school records of B. The
obligation to deliver the car arises when C graduated cum laude or
higher in college. The condition to forge school records is unlawful.
Hence, even C complied such condition, he cannot demand the payment
of P50,000.
b. Indivisible – not capable of partial performance by its nature or by law or
by agreement of the parties. (example: B promises to give C a car if C
graduated cum laude or higher, and passes the CPA board exams. C
must comply both conditions – graduating cum laude or higher AND
passing the CPA board exam, before he can ask for the delivery of the
car.

Effects of fulfillment of suspensive condition (Art. 1187)

General Rule: The effect of the fulfillment of the suspensive condition retroacts to the
day of the constitution of the obligation. Thus, if on Jan. 1, 2019, A promises to give a
car to B if B passes the CPA exams. B passes the CPA exam on May 2019. Upon
fulfillment of the condition, B is considered the owner of the car since Jan 1, 2019.

Exceptions: there shall be no retroactive effect with respect to the fruits and interests as
follows:
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1. In reciprocal obligations, the fruits and interests shall be deemed to have mutually
compensated, i.e., each party shall keep the fruits and interests received by him
prior to the fulfillment of the condition.
Example: On June 1, 2017, A agreed to sell his land to B, and B likewise agreed
to pay the price of P500,000 to A, on the condition that B would marry X. It was
only on June 1, 2019, or two years later, that B marries X. From June 1, 2017 to
May 31, 2019, A is entitled to keep the fruits and/or produce of the land, while B is
likewise entitled to keep the interests on the price.
2. In unilateral obligation, the debtor keeps the fruits and interests received before
the fulfillment of the condition. Thus, if on June 1, 2017, A promise to give B a
parcel of land if B would marry X. it was only on July 1, 2019 that the condition was
fulfilled. During the pendency of the condition, A can keep the fruits and produce
of the said land.

Rights of the parties before the fulfillment of the condition (Art. 1188)
1. Creditor – he may bring the appropriate actions for the preservation of
his right. A creditor may register his claim with the Registry of Deeds
(in case of land), if appropriate, or notify third persons of his claim.
2. Debtor - he may recover what during the same time he has paid by
mistake in case of a suspensive condition.

Rules in case of loss, deterioration or improvement of DETERMINATE thing before

the fulfillment of the suspensive condition (Art. 1189)
1. Loss of the thing
a. Without debtor’s fault – the obligation is extinguished
b. With debtor’s fault – debtor is 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;
Examples:
(a) thing perishes – A promises to give C a particular house if C marries this year.
During the pendency of the condition, a fire broke out in the neighborhood, and
houses were burned and turned to ashes, including the subject house.
(b) goes out of commerce – A promised to deliver to B a pair of Philippine eagle if
B passes the veterinary exams. During the pendency of the condition, a law
was passed prohibiting the sale, private breeding, and domestication of
Philippine eagle.
(c) disappears or cannot be recovered – A promised to give B a certain diamond
ring soon as A disembarks to a Philippine port. During A’s travel, the said
diamond ring was dropped and sank in the Pacific Ocean, that it’s recovery
would be impossible.
Note: to exempt from liability, the debtor/obligor MUST NOT be at fault. Thus, in
the first example, if A places inflammable materials in his house which causes the
fire, then A must pay C damages if C marries this year.
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2. Deterioration of the thing

a. Without the fault of the debtor - the impairment is to be borne by the
creditor;
b. With debtor’s fault - the creditor may choose between the (a) rescission
of the obligation and (b) its fulfillment, with indemnity for damages in
either case;
Deterioration is the decline in the quality of equipment or structures over a period of
time due to the chemical or physical action of the environment. It includes the physical
wear and tear of the thing, and damages that do not result to a total loss of the thing.

Thus, it has been held that the debtor is not liable for the physical wear and tear of the
car pending the fulfillment of the suspensive condition. However, if a car is damaged
because of accident due to debtor’s fault or negligence, the creditor may choose
between (a) rescission of the contract and ask for damages, or (b) demand delivery
of the car in its deteriorated state plus damages.

3. Improvement of the thing

a. By nature or time – the improvement shall inure to the benefit of the
creditor. (example: A promised to give C a parcel of land if C passes the
CPA board exams. It was only after 5 years that C finally passes the
CPA exams. In the meantime, the land was now covered with timber and
other vegetation that grows to the said land without any cultivation made
by parties. After the fulfillment of the suspensive condition, A must
deliver to C the land together with the timber and vegetations.

b. At the expense of the debtor - he shall have no other right than that
granted to the usufructuary.
Art. 562. Of the New Civil Code defines usufructuary. Usufruct gives a
right to enjoy the property of another with the obligation of preserving its
form and substance, unless the title constituting it or the law otherwise
provides.

The debtor may remove the improvement if no damage will be caused

to the principal thing. If the improvement cannot be removed without
damage from the principal thing, he shall deliver the thing together with
its improvement to the creditor without any right on the part of the debtor
to indemnity. He may, however, set-off the improvement against any
damage to the thing.

Rules in case of fulfillment of resolutory condition (Art. 1190)

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

Obligation with a period, defined
It is an obligation whose demandability or extinguishment is dependent on the occurrence
or happening of a future event which must necessarily come.

Examples of obligation with a period:

(a) “X promises to deliver a 6-wheel truck to A on December 10, 2019.” The obligation
becomes demandable on December 10, 2019 by reason arrival of the period.
(b) “X obliged himself to give A the sum of P100,000 two years from today.” The
obligation becomes demandable only two years from today by reason of expiration
of the period.
(c) “X delivered a 6-wheel truck to B for the latter’s personal use until December 31,
2019.” The obligation is demandable at once but will be extinguished on December
14, 2019, upon the arrival of the period.
(d) “X obliged himself to give A P100,000 semi-annually until two years from today.”
The obligation is demandable at once but will be extinguished two years from
today, after the lapse of the period.

Happening or arrival of the period gives rise to an obligation such as in the above
examples (a) and (b). The period with a suspensive effect is known as ex die. Here, the
obligation becomes demandable upon the lapse of the period. (Art. 1193)

Concept of period and day certain

Period is a space of time which determines the effectivity or extinguishment of an
obligation. If “X promises to pay Y the amount of P10,000 60 days from today,” or “X
promises to give P500 to A until 60 days from today,” the lapse of 60-day period will
determine whether the obligation will arise or will be extinguished.

A day certain is a future event, which must necessarily come although it may not be known
when. (Art. 1193) An example of this is the death of a person, which will sure to come,
although the exact date cannot be known.

Period distinguished from condition

Period Condition

As to fulfillment Future event that must Future event which may or may
necessarily come, at a date not happen
known beforehand, or at a time
that cannot be determined

As to time Always refer to the future May refer to the future or to a

past event unknown to the
parties

As to influence on Merely fixes the time for the Cause an obligation to arise or
the obligation efficaciousness of an obligation extinguish
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Other kinds of period

1. Legal – one that is fixed by law (examples: taxpayers shall file and pay their annual
tax due on or before April 15 of the year following the taxable period; within 30
days from notice of tax assessment, the taxpayer must file his protest with the BIR,
otherwise, the assessment become final and executory).
2. Voluntary period – one that is fixed by both parties. (example: X obliged himself to
finish the construction of the house of Y within 90 days from today)
3. Judicial period – one that is fixed by the court (example: the court may order the
parties to submit their respective memoranda or position paper within 30 days after
the termination of Pre-trial)

Pay when his means permit him to do so

An obligation which states “I will pay you P100,000 when my means permit me to do so,”
has been held by the court to be an obligation with a period. The creditor has the right to
demand from the debtor to fix the period of payment. Otherwise, the creditor may ask the
court to fix the period in accordance with Art. 1180 and 1197 of the Civil Code, and once
the court has fixed the period, the parties are bound thereto and they may no longer
change it as it becomes part of their agreement.

Art. 1197 provides, “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. The courts shall also fix the duration of the period when it depends upon
the will of the debtor.”

Who has the benefit of the period?

Article 1196 of the Civil Code provides, “whenever a period is designated in an obligation,
it shall be presumed to have been established for the benefit of both the creditor and the
debtor, unless from the tenor of the obligation or other circumstances, it should appear
that it has been constituted for the benefit of only one of the parties.”

Therefore, the debtor cannot be compelled to perform, and the creditor cannot be
compelled to accept performance, before the term expires.

Thus, it has been held that when a debtor borrow money from a creditor, with a stipulation
that the loan shall bear interest of 12% per annum, and both the principal and interest
payable at maturity two years from the execution of the Promissory Note, the debtor
cannot be compelled to pay, and the creditor cannot be compelled to receive payment
prior to the maturity date of the Promissory Note. The debtor will be deprived by the use
of money until maturity, and the creditor, likewise, will be deprived to earn interest for the
remaining term.

When period is for the benefit of one of the parties

1. For the benefit of the debtor – he cannot be compelled to pay or perform his
obligation before the expiration of the term. However, he may choose to perform
his obligation before such expiration at his option.
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Example: “W promises to pay Z the amount of P100,000 on or before December

31, 2019.” W cannot be compelled to pay the amount before December 31, 2019.
W, however, has the option to pay his obligation on maturity date or at any time
before December 31, 2019.

2. For the benefit of the creditor – he cannot be compelled to accept payment or

performance before the expiration of the term. He can, however, choose to
demand performance before such expiration at his option.

Example: “W promises to pay Z the amount of P100,000 on or before December

31, 2019, at the option of Z,” or “W borrowed from Z the amount of P100,000
collectible on or before December 31, 2019.” Z may demand payment on
December 31, 2019 or at any time before the said date. Z, however, cannot be
compelled to accept payment before the maturity date.

When debtor losses his right to make use of the period

When debtor loses the right to make use of the period, the obligation becomes
demandable at once, and the creditor may demand performance even before the arrival
of the period or the expiration of the term. The following rules shall apply under Art. 1198:

1. When after the obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;

Insolvency refers to the incapacity to pay debts upon the date when they become
due in the ordinary course of business. It is the condition of an individual whose
property and assets are inadequate to discharge the person's debts.

Thus, if “A obliged himself to pay B the amount of P20,000 on December 31, 2019.
On June 30, 2019, total assets of A is P500,000 while his total liabilities was
P800,000, the obligation becomes demandable at once. B may compel payment
on June 30, 2019, unless A gives guaranty or security for the debt.

2. When he does not furnish to the creditor the guaranties or securities which he has
promised;

Example: X borrowed money from Y the amount of P50,000 payable on November

10, 2019. To secure the payment of the said loan, X promised to pledge his
diamond ring to Y five days after the receipt of amount. X, however, failed to deliver
the thing pledged to Y within the period agreed upon. Here, Y can demand
immediate payment even before the maturity date of the obligation.

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;
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Example: A obtained a loan from B in the amount of P500,000, payable on

December 31, 2019, secured with a real estate mortgage over their residential
house and lot. On December 1, 2018, the house was burned after B stored
inflammable materials in his house. B may demand payment immediately even
without waiting for the expiration of term. This is true even if the cause of loss,
damage or impairment was not due to the fault of B.

4. When the debtor violates any undertaking, in consideration of which the creditor
agreed to the period;

Example: M obtained a loan of P100,000 from P for purpose of starting up a small

business. The loan maturity date is December 31, 2019. However, M spent the
money for their family travel in Hongkong. Here, P can demand immediate
payment from M for violation of the undertaking in consideration of the loan
granted.

5. When the debtor attempts to abscond.

Example: X obtained a loan of P100,000 from A payable 60 days thereafter. After

the receipt of the loaned amount, X started to dispose his properties with the
intention of leaving his residence or place of business to escape creditors. A can
demand payment from X immediately even though the obligation has not yet
matured.

Alternative and Facultative Obligations

Kinds of obligation according to the number of prestation

1. Simple – where there is only one prestation
2. Compound – when there are several prestations. This may be –
a. Conjunctive – several prestation are due, and ALL must be performed.
(example: D obliged himself to deliver a car, a motorbike and a vacuum
cleaner to C.)
b. Distributive or disjunctive – there are several prestations, but only one
or some of the prestations are due.
- maybe alternative or facultative
Alternative obligation, defined
An obligation is alternative when two things are equally due, under an alternative. The
obligor is bound to render only one of two or more items of performance. Under Art. 1199
of the NCC, a person alternatively bound by different prestations shall completely perform
one of them, is sufficient to extinguish an obligation.

For example, A agrees to give B, upon a sufficient consideration, a horse, a second-hand

car or piano. The delivery of any of the three items will extinguish the obligation.
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Who has the right to choose?

Under Art. 1200, the right of choice belongs to the debtor, unless it has been expressly
granted to the creditor, subject to the following limitations:
a. The debtor must completely perform the prestation chosen. The creditor cannot be
compelled to receive part of one and part of the other undertaking
b. 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.

When obligation ceases to be an alternative obligation

1. Art. 1201 - When the debtor has communicated his choice to the creditor
2. Art. 1202 – When among the prestations whereby the debtor is alternatively bound,
only one prestation is practicable.
3. Art. 1205 – when the creditor has communicated is choice to the debtor, if the
creditor has been expressly given the right of choice.

Loss of the things and/or impossibility of services in alternative obligation

Under 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.
Damages other than the value of the last thing or service may also be awarded.

Example: D obliged himself to deliver to E a specific race horse, a 2018 Toyota Corolla
model with Plate No. ABA 106, or a specific diamond ring. The obligation does not specify
who will have the right to choose. Hence, the law states that the right to choose is granted
to D, the obligor.
a. If the specific race horse is lost, with or without the fault of D, or lost through a
fortuitous event, D may deliver any of the prestation left - a 2018 Toyota corolla
model with Plate No. ABA 106, or a specific diamond ring. D cannot be held liable
for damages since he can still perform his obligation by delivering any of the two
prestations left.
b. If both the specific race horse lost and the specific diamond is lost, with or without
the fault of D, or lost through a fortuitous event, D may deliver the prestation left -
a 2018 Toyota corolla model with Plate No. ABA 106. D cannot be held liable for
damages since he can still perform his obligation by delivering the prestation left.
The obligation is converted into a simple obligation.
c. If all the prestations are lost through fortuitous event, D’s obligation is extinguished.
d. If all the prestations are lost through the fault of D, D is liable for damages
equivalent to the value of the last prestation lost, plus damages.
e. If both the specific race horse lost and the specific diamond are lost through the
fault of D, D may still deliver the prestation left - a 2018 Toyota Corolla model with
Plate No. ABA 106. The obligation is converted into a simple obligation. If later the
said car was lost through fortuitous event, the obligation of D is extinguished.
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When right of choice is expressly granted to the creditor

Under 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.

Example: D obliged himself to deliver to E a specific race horse, a 2018 Toyota corolla
model with Plate No. ABA 106, or a specific diamond ring. The obligation specifically
stipulates that the right to choose belongs to E.
a. If the specific race horse is lost through a fortuitous event, D may deliver any
of the prestation left - a 2018 Toyota Corolla model with Plate No. ABA 106,
or a specific diamond ring at the choice of D.

b. If both the specific race horse lost and the specific diamond is lost through a
fortuitous event, D may deliver the prestation left - a 2018 Toyota Corolla
model with Plate No. ABA 106. The obligation is converted into a simple
obligation. If later the car was lost though the fault of D, he shall be liable for
damages.
c. If all the prestations are lost through fortuitous event, D’s obligation is
extinguished
d. If all the prestations are lost through the fault of D, E may claim the price of any
of the prestation, plus damages.
e. If both the specific race horse lost and the specific diamond are lost through
the fault of D, the obligation is converted NOT into a simple obligation. E may
choose between delivery of the thing left - a 2018 Toyota Corolla model with
Plate No. ABA 106, OR payment of price of the horse or the ring, plus damages.

Facultative obligation, defined

An obligation where only one prestation is due, but the debtor may deliver another in
substitution.

Rules in case of loss of the principal thing and substitute

1. Before substitution (before the debtor informed the creditor his intention to deliver
the substitute)
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a. Loss of principal thing

▪ If through fortuitous event – the obligation is extinguished
▪ If through the fault of the debtor – the debtor shall pay damages
b. Loss of the substitute – no effect. Whether the loss of the substitute is
through fortuitous event or though the fault of the debtor, the debtor is
not liable. He must still deliver the principal thing.
2. After substitution (after the debtor informed the creditor his intention to deliver the
substitute)
a. Loss of the principal thing - no effect. After the substitution, the
obligation is converted into a simple obligation. The thing now due is
the substitute. Whether the loss of the principal thing is through
fortuitous event or though the fault of the debtor, the debtor is not liable.
He must now deliver the substitute.
b. Loss of the substitute
▪ If through fortuitous event – the obligation is extinguished
▪ If through the fault of the debtor – the debtor shall pay damages

Alternative obligation Facultative obligation

As to number of Several prestations are due, Only one prestation is due

prestation/s but the performance of one – the principal.
extinguishes the obligation.
As to void or impossible If there are one or more void If the principal thing is
prestation prestation, the other/s may void, the obligation is not
still be valid, hence, the valid. The debtor is not
obligation remains required to deliver the
substitute

As to who has the right Belongs to the debtor, Always belong to the
of choice unless expressly given to the debtor
creditor

Joint and Solidary Obligations

Joint and solidary obligations, defined
Joint and several obligations is a form of liability that is used in civil cases where two or
more people are found liable for damages. In a joint and solidary obligation, there is a
concurrence of two or more debtors and/or two or more creditors in one and the same
obligation
Joint obligation arises when each debtor is liable only for proportionate part of debt and
each creditor is entitled only to a proportionate part of the credit. In the absence of
contrary stipulations, obligations of two or more debtors or collectibles of two or more
creditors are presumed joint.
Examples:
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1. Joint debtor – “A and B borrowed money amounting to P80,000 from C”. Here, A is
liable only to pay C for P40,000 and B is likewise liable to C for P40,000, their
proportionate share in the liability.
2. Joint creditor – “A borrowed money from X and Y the amount of P50,000.” On due
date, X can only collect P25,000 from A, and likewise Y can also collect P25,000 from
A, their proportionate shares in the credit.
3. Joint debtors and joint creditors – “A and B borrowed P300,000 from X, Y, and Z. The
liability/rights of the parties are as follows:
A is liable to X for P 50,000 X can collect from A for P 50,000
to Y for P 50,000 from B for P50,000
to Z for P 50,000
B is liable to X for P 50,000 Y can collect from A for P 50,000
to Y for P 50,000 from B for P50,000
to Z for P 50,000
Z can collect from A for P 50,000
from B for P50,000

Solidary obligation arises when the parties agreed that each debtor is liable for the
whole obligation, and each creditor is entitled to demand payment of the whole
obligation. In short, it’s an obligation under which any of two or more obligors can be
held liable for the entire performance like payment of a debt.
Other terms for solidary obligation are:
1. jointly and severally
2. individually and collectively
3. in solidum
4. mancomunada solidaria
5. juntos o separademente

Kinds of Solidary obligations

1. Passive solidarity (solidarity on the part of the debtors)
Example: A and B jointly and severally borrowed money amounting to P80,000 from
C”. Here, C can demand payment of full amount from either A or B. If A pays the
P80,000, he can demand reimbursement from B of the latter’s share of P40,000.

2. Active solidarity (solidarity on the part of the creditors)

Example: A borrowed money from X and Y, solidary creditors, the amount of P50,000.”
On due date, either X or Y can demand full payment from A. If A pays X the whole
amount, the obligation is extinguished and X must deliver to Y the latter’s share in the
credit amounting to P25,000.

3. Mixed solidarity (solidarity on both part of the debtors and creditors)

Example: “A and B, in solidum, borrowed P300,000 from X, Y, and Z, solidary
creditors. On due date, either X, Y or Z can demand full payment from either A or B.
▪ Assuming A paid to X the P300,000 – the obligation is extinguished. B must reimburse
A the amount of P150,000 for the latter’s share in the obligation. X must likewise
deliver to Y the P100,000 and Z for P100,000, their respective share in the credits.
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▪ Assuming A partially paid X for only P200,000. – the obligation is not yet extinguished.
Either X, Y, or Z can demand from either A or B, the unpaid balance.

Rules is case there is concurrence of two or more debtors and/or two or more
creditors in one and the same obligation
General rule: the obligation is presumed joint.
Exceptions: there is solidary liability only in the following cases:
1. When the obligation expressly so states, as when parties agreed to be
bound solidarily
2. When the law so requires
Example: Article 1915 provides that if two or more persons have appointed
an agent for a common transaction or undertaking, they shall be solidarily
liable to the agent for all the consequences of the agency.
3. When the nature of the obligation requires solidarity.
Liability of partners for the compensation for injuries or death of their
workers under the Workmen Compensation Act is solidary.

Under Art. 1207 of the New Civil Code, it states that “there is solidary
liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.

Since the Workmen's Compensation Act was enacted to give full protection
to the employee, reason demands that the nature of the obligation of the
employers to pay compensation to the heirs of their employee who died in
line of duty, should be solidary; otherwise, the purpose of the law could not
be attained.

Rules on solidary obligation***

1. Solidarity may exist although the creditors and the debtors may not be bound in
the same manner and by the same periods and conditions (Art. 1211)
Example: X, Y and Z, solidary debtors, are indebted to M for P 90,000. The parties
further agreed that the share of X shall be payable on demand; Y after Y passes
the CPA exams; and Z on December 31, 2019. The following are the effects of this
obligation
▪ M may demand the payment of X’s share in the obligation for P30,000 anytime
from either X, Y or Z, or both or all of them.
▪ If Y passes the CPA exams (assuming he passes the exam before Dec. 31,
2019), M may demand the payment of Y’s share in the obligation for P30,000
from either X, Y or Z. If there was no previous payment made, M may demand
payment of P60,000 (comprising X and Y shares in the obligation) from either
X, Y, or Z, or both or all of them.
▪ On December 31, 2019, M may demand the payment of Z’s share in the
obligation for P30,000 from either X, Y or Z, or both or all of them. If there was
no previous payment made, M may demand payment of P90,000 (comprising
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X, Y and Z’s shares in the obligation) from either X, Y, or Z, or both or all of

them.

2. 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 (Article 1212).
Thus, it was held that a solidary creditor can demand payment in behalf of the
other creditors should he have knowledge of the circumstances where the
debtor/s loses the right to make use of the period. But a solidary creditor cannot
renounce the debt in favor of the debtor/s without the latter’s consent as this
will cause prejudice to the other creditors.

3. A solidary creditor cannot assign his rights without the consent of the others
(Art.1213)
Assignment is the act by which one person transfers to another, or causes to
vest in that other, the whole of the right, interest, or property which he has in
any realty or personalty, in possession or in action, or any share, interest, or
subsidiary estate therein.

4. 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
(Art. 1214)

5. 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.
Examples:
a. A, B and C, solidary debtors, executed a negotiable promissory note in favor of
E for P10,000. E endorsed the note to F, F endorsed the note to G, G then
endorsed the note to C. The confusion in C extinguishes the whole obligation,
subject to the right of reimbursement from A and B for their respective shares.

b. A, B, and C, solidary debtors, are indebted to X, Y and Z, solidary creditors, for

P300,000. Because of personal family ties, Y renounced the debt. The whole
obligation is thus extinguished. The solidary debtors are benefitted from the
renunciation obtained by one of them. But the creditor who renounced the
obligation without the consent of other creditors shall be liable to pay for the
share of other creditors who did not give their consent to such act.

6. 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 (Article 1216)
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7. 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 (Article 1217)

8. 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 (Article 1218)
By prescription, the obligation loses its validity through passage of time. Under the
Philippine law, obligation prescribed after the lapse of ten (10) years from the last
demand was made.

9. 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 (Article 1219)

10. 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. (Article 1221)

11. 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 responsible (Article 1222)

Divisible and Indivisible Obligations

Divisible and indivisible obligation, defined
An obligation is divisible when the object of the performance is susceptible of division.
When the obligation has for its object the execution of a certain number of days of work,
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the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it is divisible.
Examples:
1. Capable to be executed for certain number of hours – obligation to construct the
fence in the house for 2 weeks, obligation to teach 3 hours a day for 1 semester;
2. Capable of measurement of work by metrical units – obligation to deliver 100 sacks
of rice, obligation to deliver 10,000 liters of gasoline
3. Analogous things susceptible of partial performance

An obligation is indivisible when the object of the performance, because of its nature or
because of the intent of the parties, is not susceptible of division. The following are
indivisible obligations:
1. Obligation to give a definite thing – obligation to give a specific race horse
2. Those not susceptible of partial performance – obligation to sing the national
anthem during Manny Pacquiao fight
3. Although the object is divisible, the law provides its indivisibility – such as when
the court award moral damages of P100,000 against the accused, partial
performance of the obligation is not allowed
4. Although the object is indivisible, the parties stipulate its invisibility – such as when
the obligation to deliver 10 sacks of rice and the parties agreed that the obligation
is indivisible, hence, the obligor cannot made partial delivery.

Obligation with a Penal Clause

Obligation with a penal clause, defined

An obligation with a penal clause is one which provide greater liability on the part of the
obligor in case of non-compliance.

A penal clause is an accessory undertaking to assume greater liability in case of breach.

It has a double function:
1. To provide for liquidated damages, and
2. To strengthen the coercive force of the obligation by the threat of greater
responsibility in the event of breach.

A penal clause is intended to prevent the obligor from defaulting in the performance of
his obligation. Thus, if there should be default, the penalty may be enforced

Example: D promises to deliver to E a specific car on September 30, 2019. The parties
agreed that should D fails to deliver on the specified date, D shall pay E the penalty of
P300,000.

Kinds of penal clause

1. Legal and conventional
a. Legal – imposed by law, such as a penalty of 25% p.a. interest and 25%-
50% surcharge imposed on the basic assessed tax for everyday of delay in
payment.
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b. Conventional – imposed by the agreement of parties.

2. Subsidiary and joint
a. Subsidiary – when only the penalty may be enforced
b. Joint – when both the obligation and the penalty may be enforced

Rules in obligation with a penal clause

General rule: the penalty takes the place of the damages and interest in case of non-
compliance. (compensation)

Exception: aside from penalty, damages and interests may also be demanded in the
following instances:
1. When there is stipulation to that effect
2. When the debtor refuses to pay the penalty
3. When the debtor is guilty of fraud in the performance of his obligation

Other rules applicable to obligations with a penal clause

1. 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 (Article 1227)
2. 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
3. Proof of actual damages suffered by the creditor is not necessary in order that the
penalty may be demanded (Article 1228)
4. 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. (Article 1229)
5. 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 (Article
1230)