Obligations Premidterms Reviewer

OBLICON PREMIDTERMS REVIEWER P a g e |1
OBLIGATIONS criminal offense or quasi-delict and its only purpose

GENERAL PROVISIONS is to regulate such obligation, then the act itself is
(Arts. 1156-1162) the source of the obligation and not the law. (8
Define obligations. Manresa, 5th Ed., Bk. 1, 48.)
ANS: An obligation is a juridical necessity to give, Thus, if A loses a certain amount to B in a game of
to do or not to do. (Art 1156, NCC.) chance, according to Art. 2014 of the NCC, the
former may recover his loss from the latter, with
What are the essential requisites of an legal interest from the time he paid the amount lost.
obligation? It is evident that the source of the obligation of B to
ANS: An obligation has four (4) essential requisites. refund to A the amount which he had won from the
They are: latter is the law itself.
(1) A juridical or legal tie, which binds the parties to (Leung Ben vs. O’Brien, 38 Phil. 182,) The same
the obligation and which may arise either from can be said with regard to the obligation of the
bilateral or unilateral acts of persons; spouses to support each other (Art. 291, NCC;
(2) An active subject known as the creditor or Pelayo vs. Lauron, 12 Phil. 453.), the obligations of
obligee, who can demand the fulfillment of the employers under the Workmen’s Compensation Act
obligation; (Bautista vs. Federico O. Borromeo, Inc., 30 SCRA
(3) A passive subject known as the debtor or 119.), the obligations of the owners of the dominant
obligor, from whom the obligation is juridically and servient estates in legal easements (Arts. 634,
demandable; and et. seq.,
(4) The fact, prestation or service which constitutes NCCJ and others scattered in the NCC and in
the object of the obligation. (Giorgi, Teoria de las special laws.
Obligaciones, Vol. 1, p. 13.)
In obligations to give, when does the creditor
What are the sources of obligations? acquire a right to the thing which constitutes the
ANS: The sources of obligations are the following: object of the obligation as well as to the fruits
(1) Law; thereof?
(2) Contracts; ANS: We must distinguish between the time when
(3) Quasi-contracts; the creditor acquires a personal right to the thing
(4) Acts or omissions punished by law; and and the fruits thereof and the time when he acquires
(5) Quasi-delicts. (Art. 1157, NCC,) a real right thereto.
According to Art. 1164 of the NCC, the creditor
According to Art. 1158 of the NCC, obligations acquires a right to the fruits of the thing from the
derived from law are not presumed. Now, how moment that the obligation to deliver such thing
can we determine whether an obligation arises arises. When does the obligation to deliver arise? In
from law or from some other source, such as a obligations arising from the law, quasi-contracts,
contract, a quasi-contract, a criminal offense, or criminal offenses, and quasi-delicts, the obligation
a quasi-delict? Give examples. to deliver arises from the time designated by the
ANS: It must be noted that in the generation of an provisions of the NCC or of special laws creating or
obligation, there is always a concurrence between regulating them. In obligations arising from
the law which establishes or recognizes it and an act contracts, the obligation to deliver arises from the
or condition upon which the obligation is based. moment of the perfection of the contract, unless
According to Manresa, when the law establishes the there is a stipulation to the contrary. From this it is
obligation and the act or condition upon which it is clear that before the delivery of the thing and the
based is nothing more than a factor for determining fruits thereof, the creditor has merely a personal
the moment when it becomes demandable, then the right against the debtor — a right to ask for the
law itself is the source of the obligation; however, delivery of the thing and the fruits. Once the thing
when the law merely recognizes or acknowledges and the fruits are delivered, then he acquires a real
the existence of an obligation generated by an act right over them, a right which is enforceable against
which may constitute a contract, quasi-contract, the whole world.
(1) To deliver a thing which must be neither of

In obligations to give, what are the different superior nor inferior quality. (Art. 1246, NCC.)
rights which are available to the creditor? (2) To pay damages in case of breach of the
ANS: We must distinguish between the rights which obligation, (Art.
are available to the creditor when the obligation is 1170, NCC.)
determinate and those which are available to him
when the obligation is indeterminate or generic. A bound himself to deliver to B a 21-inch 1983
If the obligation is determinate in the sense that the model
object thereof is particularly designated or TV set, and the 13 cubic feet White
physically segregated from all others of the same Westinghouse refrigerator, with Motor No.
class, the rights of the creditor are: WERT-385, which B saw in A’s store, and to
(1) To compel specific performance. (Art. 1165, par. repair B’s piano. A did none of these things.
1, NCC.) May the court compel A to deliver the TV set and
(2) To recover damages in case of breach of the the refrigerator and repair the piano? Why? If
obligation. not, what relief may the court grant B? Why?
(Art. 1170, NCC.) (1983)
If the obligation is indeterminate or generic, the ANS: B cannot compel A to deliver the 21-inch
rights of the creditor are: 1983 model TV set. The reason is obvious. The
(1) To ask for performance of the obligation. (Art. obligation is a generic obligation because the object
1246, is designated merely by its class or genus without
NCC.) any particular designation or physical segregation
(2) To ask that the obligation be complied with at from others of the same class. An action for specific
the expense of the debtor. (Art. 1165, par. 2S NCC.) performance is, therefore, legally and physically
(3) To recover damages in case of breach of the impossible. Consequently, the remedy of B is to ask
obligation. for the delivery of a 21-inch 1983 model TV set
(Art. 1170, NCC.) which must be neither of superior nor inferior
quality. This is explicitly recognized by the NCC.
In obligations to give, what are the different As a matter of fact, he can even ask that the
duties or obligations which are imposed upon the obligation be complied with at the expense of A.
debtor or obligor? Additionally, he can ask for damages. These
ANS: Again we must distinguish between the duties remedies are also explicitly recognized by the NCC.
or obligations which are imposed upon the debtor if In the case of the refrigerator, the situation is
the obligation is determinate and those which are different. The court may compel A to comply with
imposed if the obligation is indeterminate or the obligation specifically. The reason is obvious.
generic. The obligation is determinate. Under the NCC, if
If the obligation is determinate, the duties which are the debtor or obligor refuses or is unable to comply
imposed upon the debtor are: with his obligation, assuming that the obligation is a
(1) To deliver the thing which he has obligated determinate obligation to give, the remedy of the
himself to give. creditor or obligee is to bring an action against the
(2) To take care of the thing with the proper debtor or obligor for specific performance.
diligence of a good father of a family. (Art. 1163, Additionally, he can recover damages.
NCC.) On the other hand, the court, cannot compel A to
(3) To deliver all accessions and accessories. (Art. repair the piano. The reason is also obvious. The
1166, NCC.) obligation of A is an obligation to do. In this type of
(4) To pay damages in case of breach of the obligation, the law recognizes the individual's
obligation. (Art. freedom to choose between doing that which he has
1170,NCC.) promised to do and not doing it. It falls within what
If the obligation is indeterminate or generic, the commentators call a personal act, of which courts
duties which are imposed upon him are: may not compel compliance as it is an act of
violence to do so. The remedy, therefore, of B is to
have the obligation executed at the expense of A. ANS: There are three (3) kinds of default or mora.
Additionally, he can recover damages from A. They are:
{Note: The above answer is based on Arts. 1165, (1) Mora solvendi, or the delay of the obligor or
par, 1, 1167 and 1170, NCC.) debtor to perform his obligation. This delay is called
mora solvendi ex re when the obligation is an
If the object of the obligation to give is lost or obligation to give or mora solvendi ex persona
destroyed through a fortuitous event, can the when the obligation is an obligation to do.
debtor or obligor still be held liable for damages? (2) Mora accipiendi, or the delay of the obligee or
ANS: It depends. If the obligation is determinate, as creditor to accept the delivery of the thing which is
a general rule, the obligor or debtor cannot be held the object of the obligation.
liable for damages. (Art. 1174, NCC.) If the (3) Compensatio morae, or the delay of the parties
obligation, however, is indeterminate or generic, the or obligors in reciprocal obligations.
debtor or obligor can still be held liable for
damages. (Art. 1263, NCC.) This is so because only In obligations to give or to do, when does the
a determinate thing or object can be destroyed by a obligor or debtor incur in delay?
fortuitous event. An indeterminate or generic thing, ANS: The debtor incurs in delay from the time the
on the other hand, can never perish (genus creditor judicially or extrajudicially demands from
numquam peruit). him the fulfillment of his obligation and in spite of
Thus, if the debtor had obligated himself to deliver such demand, he is unable to comply with the
to the creditor a specified automobile and such obligation. (Art. 1169, par. 1, NCC.)
automobile is destroyed by a fire of accidental
origin before he has incurred in delay, he can no When is demand by the creditor not necessary in
longer be held liable for damages, but if he had order that delay may exist?
merely obligated himself to deliver to the creditor ANS: Demand by the creditor shall not be necessary
an automobile without any particular designation or in order that delay may exist:
without physical segregation, and subsequently, the (1) When the obligation or the law expressly so
automobile belonging to him was lost or destroyed declares; or
through a fortuitous event, he can still be held (2) When from the nature and the circumstances of
liable. the obligation it appears that the designation of the
time when the thing is to be delivered or the service
Under the NCC, what are the different acts or is to be rendered was a controlling motive for the
omissions of the obligor or debtor which will establishment of the contract; or
result in the breach of the obligation for which (3) When demand would be useless, as when the
he can be held liable for damages? obligor has rendered it beyond his power to
ANS: They are: perform. (Art. 1169, par. 2, NCC.)
(1) Default or mora;
(2) Fraud or dolo; “A” borrowed P2,000 from “B” on December 1,
(3) Negligence or culpa; and 1956. He executed a promissory note promising
(4) Contravention of the tenor of the obligation. to pay the indebtedness on December 1, 1958.
(Art. 1170, Upon the arrival of the designated date for
NCC.) payment is demand necessary in order that “A”
shall incur in delay?
What is meant by default or moral ANS: This question must be answered in the
ANS: Default or mora signifies the idea of delay in affirmative. It is obvious that the first exception is
the fulfillment of an obligation. In other words, it is not applicable. According to decisions of the
the non fulfillment of an obligation with respect to Supreme Court as well as the authoritative opinion
time. of Manresa, in order that the first exception
provided for in Art. 1169 of the NCC can be
What are the different kinds of default or mora? applied, it is indispensable that the obligation or the
law should expressly add that the obligor shall incur
in delay if he fails to fulfill the obligation upon the present only at the time of the birth of the
arrival of the designated date or that upon the arrival obligation;
of such date demand shall not be necessary. (Bayala (2) The first is employed for the purpose of evading
vs. Silang Traffic Co., 73 Phil. 557; Adiarte vs. the normal fulfillment of an obligation, whereas the
Court of Appeals, 92 Phil. 758; 8 Manresa, 5th., second is employed for the purpose of securing the
Ed., Bk. 1, p. 127.) consent of the other party to enter into the contract.
(3) The first results in the nonfulfillment or breach
“A” and “B” entered into a contract of of the obligation, whereas the second, if it is the
partnership for the purpose of buying and selling reason for the other party upon whom it is employed
textbooks, with the former as capitalist partner for entering into the contract, results in the vitiation
and the latter as industrial partner. It was agreed of his consent.
that-“A* shall contribute P50,000 to the common (4) The first gives rise to a right of the creditor or
fund on January 5,1986. Upon the arrival of the oblige to recover damages from the debtor or
designated date for payment, is demand obligor, whereas the second gives rise to a right of
necessary in order that “A” shall incur in delay? the innocent party to ask for the annulment of the
ANS: Demand is not necessary in this case in order contract if the fraud is causal (dolo causante) or to
that recover damages if it is incidental (dolo incidente).
“A” shall incur in delay. According to the NCC, (See Arts. 1170, 1171, 1338,1344, NCC.)
where one of the partners who has undertaken to
contribute a sum of money to the common fund at a What is meant by negligence or culpa?
specific date fails to do so, he becomes a debtor of ANS: The fault or negligence of the obligor consists
the partnership not only for the amount which he in the omission of that diligence which is required
has promised to contribute but also for interest and by the nature of the obligation and corresponds with
damages from the time he should have complied the circumstances of the persons, of the time, and
with his obligation. (Art. 1788, NCC.) the place. When negligence shows bad faith, the
provisions of Arts. 1171 and 2201, paragraph 2,
In reciprocal obligations, when does one of the shall apply.
party incur in delay? If the law or contract does not state the diligence
ANS: In reciprocal obligations, neither party incurs which is to be observed in the performance, that
in delay if the other does not comply or is not ready which is expected of a good father of a family shall
to comply in a proper manner with what is be required. (Art. 1173, NCC.)
incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other What is the test of negligence?
begins. (Art. 1169, par. 3, NCC.) ANS: The test by which we can determine the
existence of negligence in a particular case may be
What is meant by fraud or dolo? stated as follows: Did the defendant in doing the
ANS: Fraud or dolo consists in the conscious and alleged negligent act use the reasonable care and
intentional proposition to evade the normal caution which an ordinarily prudent person would
fulfillment of an obligation. (8 Manresa, 5th Ed., have used in the same situation? If not, then he is
Bk. 1, p. 168.) guilty of negligence. The law here in effect adopts
the standard supposed to be supplied by the
Distinguish fraud in the performance of a imaginary conduct of the discreet pater familias of
preexisting obligation from fraud in the the Roman Law. (Picart vs. Smith, 37 Phil. 809;
perfection of a contract (dolo causante and dolo Cangco vs. Manila Railroad Co., 38
incidente). Phil. 768.)
ANS: The two (2) may be distinguished from each
other in the following ways: Distinguish between culpa contractual and culpa
(1) The first is present only during the performance acquiliana.
of a preexisting obligation, whereas the second is ANS: Culpa contractual (Arts. 1170, 1172, 1173,
and related provisions of the NCC on contracts) and
culpa aquiliana. (Art. 2176, et seq., NCC.) may be the latter only. In this case, the source of the liability
distinguished from each other as follows. of D and his employer is the quasi-delict (culpa
(1) In culpa contractual, there is a pre-existing aquiliana) committed by D. (Arts. 2176, 2180,
contractual relation; in culpa aquiliana, there is NCC.) The liability of both is direct and primary.
none, D’s employer can relieve himself of liability by
(2) In the first, the negligence of the defendant is proving due diligence of a good father of a family in
merely an incident in the performance of an the selection and supervision of his drivers. (Art.
obligation; in the second, it is substantive and 2180, NCC.)
independent. (b) Heirs ofY: On the other hand, the heirs of Y may
(3) In the first, the source of the liability of the proceed against D’s employer only. The source of
defendant is the breach of contract; in the second, the liability of D’s employer, is this case, is the
the source is the defendant’s negligent act or breach of his contract of carriage with Y (culpa
omission itself. contractual). His liability is direct and primary. He
(4) In the first, proof of the contract and of its cannot relieve himself of liability by proving due
breach is sufficient prima facie to warrant recovery; diligence of a good father of a family. (Art. 1759,
in the second, the negligence of the defendant must NCC.) This is so because under our law on common
be proved. carriers, we do not adhere to the principle of
(5) In the first, the liability of employers is based respondeat superior; we adhere to the principle that
upon the principle that the negligence of the there is always an implied duty of a common carrier
employee is conclusively presumed to be the to carry the passenger safely to his place of
negligence of the employer; in the second, it is destination.
based upon the principle that the negligence of the However, although not available as a defense, such
employee is prima facie presumed to be the proof of due diligence may serve to mitigate the
negligence of the employer. employer's liability.
(6) In the first, proof of due diligence in the
selection and supervision of employees is not What is a fortuitous event? Is there any
available as a defense; in the second, it is available difference between fortuitous event and force
as a defense. majeure?
ANS: A fortuitous event is an event which cannot be
Taxi driver D, driving recklessly, killed foreseen, or which though foreseen, is inevitable.
pedestrian (Art. 1174, NCC.)
P and his passenger Y. Discuss the source of the Ordinarily, the terms “fortuitous event” and “force
obligation of D and of his employer to P and to Y, majeure” are used interchangeably. There is,
and the defense available to the employer. (1977) however, a technical difference.
ANS: There are three (3) overlapping sources of the
obligation of D and of his employer. They are: “Force majeure” is a term that is applicable only to
(1) Under the Revised Penal Code: The heirs of P those fortuitous events which are dependent upon
and Y may proceed against D and his employer human intervention, such as wars, strikes, riots, etc.,
under the Penal Code. In this case, the source of while “fortuitous event” is the general term that is
liability of D and of his employer is the crime applicable regardless of whether the event is
committed by D (culpa criminal). The liability of D independent of or dependent upon human
is direct and primary (Art. 100, RPC.); the liability intervention.
of his employer is subsidiary.
(Art. 103, RPC.) The latter cannot relieve himself of Give and define the different kinds of fortuitous
liability by proving due diligence of a good father of events.
a family. This is so because of the very nature of his ANS: Fortuitous events may be either: (1)
obligation. Fortuitous event proper (Act of God) or force
(2) Under the New Civil Code: majeure (fuerza mayor). The first refers to an event
(a) Heirs of P: The heirs of the pedestrian P may which is absolutely independent of human
proceed against both D and his employer, or against intervention, while the second refers to an event
which is dependent upon human intervention other reason of a fortuitous event or “caso fortuito” are as
than that of the obligor. (2) Ordinary or follows:
extraordinary. The first refers to an event which (1) The cause of the breach of the obligation must
usually happens or which could have been be independent of the human or of the will of the
reasonably foreseen, while the second refers to an debtor;
event which does not usually happen and which (2) the event must be either unforseeable or
could not have been reasonably foreseen. (Art. unavoidable; (3) the event must be such as to render
1680, NCC.). it impossible for the debtor to fulfill his obligation
in a normal manner; and (4) the debtor must be free
What is the rule regarding fortuitous events? from any participation in, or aggravation of the
(1970) injury to the creditor
ANS: Except in cases expressly specified by the
law, or when it is otherwise declared by stipulation, A received from X a pendant with diamonds
or when the nature of the obligation requires the valued at P4,500 to be sold on commission basis
assumption of risk, no person shall be responsible or to be returned on demand. In the evening of
for those events which could not be foreseen, or February 1, 1961, while walking home to her
which though foreseen, were inevitable. (Art. 1174, residence, two men snatched her purse
NCC.) A review of the records in the case of containing the pendant and ran away.
Mindex Resources Devt. vs. Morillo, G.R. No. Subsequently, the snatchers were apprehended
138123, March 12, 2002, shows that petitioner and charged. During the pendency of the
failed to exercise reasonable care and caution that criminal case, X brought an action against A for
an ordinarily prudent person would have used in the recovery of the pendant or of its value and
same situation. Petitioner failed to employ damages.
reasonable foresight, diligence and care that would The latter interposed the defense of fortuitous
have exempted it from liability resulting from the event, but the former contends: (a) that the
burning of the truck. Negligence is that conduct that defense of fortuitous event is untenable because
naturally or reasonably creates undue risk or harm there was negligence on the part of the
to others. It may be a failure to observe that degree defendant; and (b) that if the defense is tenable,
of care, precaution or vigilance that the nevertheless, there must be a prior conviction for
circumstances justly demand; or to do any other act robbery before it can be availed of. Decide the
that would be done by a prudent and reasonable case.
person, who is guided by consideration that ANS: The factual setting of the above problem is
ordinarily regulate the conduct of human affairs. In identical to that of Austria vs. CA (39 SCRA 527). In
other words, there must be an entire exclusion of that case, the SC held that defendant is not liable.
human agency from the cause of injury or loss.
(Real vs, Belo, G.R. No.146224, January 26, 2007.) To constitute a caso fortuito that would exempt a
In the Real vs. Sisenando case, the Court held that it person from responsibility, it is necessary:
is established by evidence that the fire originated (1) that the event must be independent of the will of
from leaking fumes from the LPG stove and tank the debtor;
installed at petitioner’s fastfood stall and her (2) that it must be either unforeseeable or
employees failed to prevent the fire from spreading unavoidable;
and destroying the other fastfood stalls. Such (3) that the occurrence must render it impossible for
circumstances do not support the petitioner’s theory the debtor to fulfill the obligation in a normal
of fortuitous event. manner; and
(4) that the debtor must be free of participation in,
What are the conditions which must concur in or aggravation of the injury to the creditor.
order that the above rule can be applied? All of the above requisites or conditions are present
ANS: The conditions which must concur in order in this case. It is undeniable that in order to
that the obligor shall be exempted from liability by completely exonerate the debtor by reason of a
fortuitous event, such debtor must, in addition to the
casus itself, be free of any concurrent or could not be foreseen, or which though foreseen,
contributory fault or negligence. We believe, were inevitable,” (Art. 1174, NCC.) It is, therefore,
however, that her act in travelling alone in the not enough that the event could not have been
evening, carrying jewelry of considerable value, foreseen or anticipated, as is commonly believed,
cannot be considered as either concurrent or but it must be one impossible to foresee or to avoid.
contributory negligence. While it may be so The mere difficulty to foresee the happening is not
considered now, we are not persuaded that the same impossible to foresee the same. Hence, the
rule should obtain ten years previously when the proximate cause of the accident cannot be classified
robbery in question took place, for at that time as a fortuitous event. Consequently, defendant is
criminality had not by far reached the levels liable, (Republic vs. Luzon Stevedoring Corp., 21
attained in the present day. There is likewise no SCRA 279.)
merit in the contention that to allow the fact of
robbery to be recognized in this case before A was injured while he was a passenger in a bus
conviction is secured in the criminal action, would operated by X Co. The proximate cause of the
prejudice the latter case, or would result in accident was the failure of the steering knuckle
inconsistency should the accused obtain an acquittal to work causing the driver to lose control of the
or should the criminal case be dismissed. It must be wheel as a result of which the bus fell into a
realized that a court finding that a robbery has ditch. Can the operator now relieve itself of
happened would not necessarily mean that those liability by claiming that the real cause of the
accused in the criminal action would be found accident was a fortuitous event? Suppose that
guilty of the crime; nor would a ruling that those the proximate cause of the accident was a tire
actually accused did not commit the robbery be blowout, would that make a different in your
inconsistent with a finding that a robbery did take answer?
place. The evidence to establish these facts would ANS: The operator cannot relieve itself of liability
not necessarily be the same. by claiming that the real cause of the accident was a
fortuitous event. The weight of authority sustains
A barge belonging to the Luzon Stevedoring the view that a passenger is entitled to recover
Corporation, while passing under the Nagtahan damages from the carrier for an injury resulting
Bridge in Manila, rammed the bridge supports from a defect in an equipment purchased from a
causing damage thereto. manufacturer, unless extraordinary diligence has
In this action for damages instituted by the been exercised with regard to inspection and
Government against the defendant corporation, application of the necessary tests. For the purpose of
the latter interposed the defense that there was this doctrine, the manufacturer is considered in law
no negligence or fault on its part and that the the agent of the carrier. The rationale of the carrier’s
proximate cause of the accident was a fortuitous liability is that the passenger has no privity with the
event. Decide the case. manufacturer and, therefore, has no remedy
ANS: As far as the negligence of the defendant whatever against him, while the carrier usually has.
corporation is concerned, it is clear that the doctrine (Necesito vs. Paras, 104 Phil. 75.) If the proximate
of res ipsa loquitur is applicable. It is undeniable cause of the accident is a tire blowout, that will not
that the unusual event that the barge, exclusively make a difference in my answer so long as it can be
controlled by defendant, rammed the bridge established that the bus involved in the accident was
supports raises a presumption of negligence on the running fast immediately before the accident and
part of defendant or its employees manning the that the cause of the blowout could have been
barge or the tugs that towed it. In the ordinary discovered if the bus had been subjected to a more
course of events, such a thing does not happen if rigid check-up before its use. This was the doctrine
proper care is used. enunciated in La Mallorca vs. De Jesus (17 SCRA
As far as the defense of fortuitous event is 23).
concerned, caso {Note: The question of whether or not a defective
fortuito by definition refers to those extraordinary part of a vehicle, such as a defective brake, or a tire
events not foreseeable or avoidable, “events that blowout can be classified per se as a fortuitous
event was again taken up by the SC in Tugade us. (2) Where such liability is declared by stipulation of
CA, 85 SCRA 226. In this case, a Holden car was the parties. Thus, if the contracting parties expressly
badly damaged when it was bumped from behind by agree that the debtor can be held liable even in case
a Blue Car Taxi driven by petitioner. The latter of fortuitous events, such an agreement shall be
admits that the accident was caused by the faulty binding.
brakes of the taxicab but he contends that the (3) Where the nature of the agreement requires the
sudden malfunctioning of the brakes at that assumption of risk. This is an aspect of what is
particular moment before the accident was known as the doctrine of assumption of risk. As
something which even the due diligence of a good applied to obligations, it refers to a situation in
father of a family could not have prevented. which the obligor or debtor, with full knowledge of
Consequently, the cause of the accident is a the risk, voluntarily enters into some obligatory
fortuitous event. He then invokes a long line of relation with the creditor or obligee. It is based on
decisions of the CA in order to support his theory. the principle of volenti non fit injuria — no wrong
Speaking through Justice [now deceased Chief is done to one who consents. This is illustrated by
Justice] Fernando, the SC declared that the primary obligations arising from insurance contracts and
reason why the petition was given due course was to workmen’s compensation acts.
clarify the state of the law and thus hopefully avoid Cite three (3) instances where a person is made
any further lurking doubt on the matter. civilly liable for failure to comply with his
Speaking of the decisions of the C A cited by obligations although he was prevented from
petitioner in support of his theory, the SC reminded doing so by a fortuitous event. (1983)
the petitioner of what Justice J.B.L. Reyes once said ANS: In the following instances, a person is still
that “the SC, by tradition and in our system of civilly liable for failure to comply with his
judicial administration, has the last word on what obligation although he was prevented from doing so
the law is; it is the final arbiter of any justiciable by a fortuitous event:
controversy. There is only one SC from whose (1) When by law, the debtor is liable even for
decisions all other courts should take their fortuitous events;
bearings.” (2) When by stipulation of the parties, the debtor is
Speaking of the merits of the theory of petitioner, liable even for fortuitous events;
the SC finally held that the doctrine enunciated in (3) When the nature of the obligation requires the
La Mallorca vs. De Jesus [17 SCRA 23], Lasam assumption of risk;
vs. Smith [45 Phil. 657], and Necesito vs. Paras (4) When the object of the obligation is lost and the
[104 Phil, 75] controls. Defective brakes, tire loss is due partly to the fault of the debtor;
blowouts and others of a similar nature cannot be (5) When the object of the obligation is lost and the
classified as fortuitous events per se within the loss occurs after the debtor has incurred in delay;
meaning of the law. (6) When the debtor promised to deliver the same
thing to two or more persons who do not have the
What are the exceptions to the rule that the same interest;
obligor or debtor cannot be held liable for breach (7) When the obligation to deliver arises from a
of the obligation by reason of a fortuitous event? criminal offense; and
Illustrate. (8) When the obligation is generic.
ANS: The exceptions to the rule that the obligor or (Note: Any 3 of the 8 should be a correct answer.
debtor cannot be held liable for breach of the Nos. 1, 2 and 3 are based on Arts. 1174 and 1262,
obligation by reason of a fortuitous event are as NCC; Nos. 4, 5, and 6 are based on Arts. 1165 and
follows: 1262, NCC; while Nos. 7 and 8 are based on Arts.
(1) Where such liability is expressly specified by 1268 and 1263, NCC.)
the law. This may be illustrated by provisions of the
NCC, such as those found in Arts. 552, par. 2, 1165, What are the remedies which are available to the
par. 3, 1268, 1942, 1979, 2147, 2148, and 2159, creditor in order to protect his rights against the
NCC. debtor?
ANS: Under Art. 1177 of the NCC, there are 3 payment. Sara paid her debt and the interest
general remedies which are available to the creditor claimed by Julia. After rethinking, Sara
for the protection and enforcement of his right demanded back from Julia the amount she had
against the debtor. They are: first, to exhaust the paid as interest. Julia claims she has no
property in possession of the debtor; second, to be obligation to return the interest paid by Sara
subrogated to all of the rights and actions of the because it was a natural obligation which Sara
debtor save those which are inherent in his person voluntarily performed and can no longer recover.
(accion subrogatoria); and third, to impugn all of Do you agree? Explain. (4%)
the acts which the debtor may have done to defraud B. Distinguish civil and natural obligations. (2%)
him (accion pauliana). (2015 BAR)
The second and third, however, are subsidiary to the
first. SUGGESTED ANSWER:
Jacinto Tanguilig constructed a windmill system a) No, the case is not one of a natural obligation
for Vicente Herce, Jr. for P60,000 with a one-year because even if the contract of loan is verbal, the
guaranty. delay of Julia made her liable for interest upon
Herce made a downpayment of P30,000 and an demand by Sara. This is not a case of a natural
installment payment of PI5,000, leaving a obligation but a civil obligation to pay interest by
balance of Pi5,000. He refused to pay the balance way of damages by reason of delay. (Article 1956;
because the windmill system collapsed after a Article 1169; Article 2209 Civil Code)
strong wind hit the place. Is Tanguilig exempt b) A civil obligation is based on positive law which
from liability due to fortuitous event? gives a right of action to compel their performance
ANS: No. In order for a party to claim exemption in case of breach. A natural obligation is based on
from liability due to fortuitous event, one requisite equity and natural law and cannot be enforced by
is that the event must be either unforeseeable or court action but after voluntary fulfilment by the
unavoidable. A strong wind in this case cannot be obligor, they authorize the retention of what may
fortuitous, unforeseeable, or unavoidable. On the have been delivered or rendered by reason thereof.
contrary, a strong wind should be present in places (Article 1423, Civil Code)
where windmills are constructed, otherwise the
windmills will not turn. Given the newly- Distinguish briefly but clearly between:
constructed windmill system, the same would not
have collapsed had there been no inherent defect in Civil obligation and natural obligation. (2004 Bar
it which could only be attributable to Tanguilig. Question)
When the windmill failed to function properly, it
became incumbent upon Tanguilig to repair it in SUGGESTED ANSWER:
accordance with his guaranty and bear the expenses
therefor. (Tanguilig vs. CA and Herce, G.R. No. Civil obligation is a juridical necessity to give, to do
117190, SC First Div., J. Bellosillo, January 2, and not to do. It gives the creditor the legal right to
1997.) compel by an action in court the performance of
such obligation. A natural obligation is based on
equity and natural law. There is no legal right to
BAR Q&A’s compel performance thereof but if the debtor
voluntarily pays it, he cannot recover what was
Classification of Obligations paid.
Q: A. Sara borrowed PS0,000.00 from Julia and Pedro promised to give his grandson a car if the
orally promised to pay it within six months. latter will pass the bar examinations. When his
When Sara tried to pay her debt on the gth grandson passed the said examinations, Pedro
month, Julia demanded the payment of interest refused to give the car on the ground that the
of 12% per annum because of Sara's delay in
OBLICON PREMIDTERMS REVIEWER P a g e | 10
condition was a purely potestative one. Is he

correct or not? (2%) (2000 Bar Question) Q: Gary is a tobacco trader and also a lending
investor. He sold tobacco leaves to Homer for
SUGGESTED ANSWER: delivery within a month, although the period for
delivery was not guaranteed. Despite Gary's
No, he is not correct. First of all, the condition is not efforts to deliver on time, transportation
purely potestative, because it does not depend on problems and government red tape hindered his
the sole will of one of the parties. Secondly, even if efforts and he could only deliver after 30 days.
it were, it would be valid because it depends on the Homer refused to accept the late delivery and to
sole will of the creditor (the donee) and not of the pay on the ground that the agreed term had not
debtor (the donor). been complied with. As lending investor, Gary
granted a Pl,000,000 loan to Isaac to be paid
Sources of Obligations within two years from execution of the contract.
As security for the loan, Isaac promised to
Q: What are obligations without an agreement”? deliver to Gary his Toyota Innova within seven
Give five examples of situations giving rise to this (7) days, but Isaac failed to do so. Gary was thus
type of obligation. (2007) compelled to demand payment for the loan
before the end of the agreed two-year term. (2013
SUGGESTED ANSWER: BAR)
1) Was Homer justified in refusing to accept the
“Obligations without an agreement” are obligations tobacco leaves? (1%) (2012 BAR)
that do not arise from contract such as those arising (A) Yes. Homer was justified in refusing to accept
from: the tobacco leaves. The delivery was to be made
1. delicts; within a month. Gary's promise of delivery on a
2. quasi-delicts; "best effort" basis made the delivery uncertain.
3. solution indebiti; The term, therefore, was ambiguous.
4. negotiorum gestio; and (B) No. Homer was not justified in refusing to
5. all other obligations arising from law. accept the tobacco leaves. He consented to the
terms and conditions of the sale and must abide
DPO went to a store to buy a pack of cigarettes by it. Obligations arising from contract have the
worth P225.00 only. He gave the vendor, RRA, a force of law between the contracting parties.
P500-peso bill. The vendor gave him the pack (C) Yes. Homer was justified in his refusal to
plus P375.00 change. Was there a discount, an accept the delivery. The contract contemplates
oversight, or an error in the amount given? an obligation with a term. Since the delivery was
What would be DPO’s duty, if any, in case of an made after 30 days, contrary to the terms agreed
excess in the amount of change given by the upon, Gary could not insist that Homer accept
vendor? How is this situational relationship the tobacco leaves.
between DPO and RRA denominated? Explain. (D) No. Homer was not justified in refusing to
(5%) (2004 Bar) accept the tobacco leaves. There was no term in
the contract but a mixed condition. The
SUGGESTED ANSWER: fulfillment of the condition did not depend
purely on Gary's will but on other factors, e.g.,
There was error in the amount of change given by the shipping company and the government.
RRA. This is a case of solutio indebiti in that DPO Homer should comply with his obligation.
received something that is not due him. He has the
obligation to return the P100.00; otherwise, he will ANSWER:
unjustly enrich himself at the expense of RRA. (Art. B (obligations arising from contracts have the force
2154, Civil Code) of law) or D (the obligation is not with the term but
with a mixed condition –although the facts are not
Nature and Effect of Obligations clear enough if it was stated in the contract that the
other factors like transportation or government for extension of time, claiming that its labor
regulations would be a factor) problems is a case of fortuitous event, but this
was denied by XY Corp. When it became certain
2) Can Gary compel Isaac to pay his loan even that the construction could not be finished on
before the end of the two-year period? (1%) time, XY Corp. sent written notice canceling the
(2012 BAR) contract, and requiring AB Corp. to immediately
(A) Yes, Gary can compel Isaac to immediately vacate the premises.
pay the loan. Non-compliance with the promised Can the labor unrest be considered a fortuitous
guaranty or security renders the obligation event? (1%) (2008)
immediately demandable. Isaac lost his right to
make use of the period. SUGGESTED ANSWER:
(B) Yes, Gary can compel Isaac to immediately
pay the loan. The delivery of the Toyota Innova The labor unrest in this case is not a fortuitous
is a condition for the loan. Isaac's failure to event. The requisites of fortuitous event are:
deliver the car violated the condition upon which (1) the event must be independent of human will or
the loan was granted. It is but fair for Gary to at least of the debtor’s will; (2) the event could not
demand immediate payment. be foreseen, or if foreseen, is inevitable; (3) the
(C) No, Gary cannot compel Isaac to event must have rendered impossible debtor’s
immediately pay the loan. The delivery of the car compliance of the obligation in a proper manner;
as security for the loan is an accessory contract; and (4) the debtor must not be guilty of concurrent
the principal contract is still the P 1,000,000 loan. negligence (Lasam v Smith, 45 Phils. 657 [1924]).
Thus, Isaac can still make use of the period. All the requisites are absent in this case. AB Corp.
(D) No, Gary cannot compel Isaac to could have anticipated the labor unrest which was
immediately pay the loan. Equity dictates that caused by delays in paying the laborer’s wages. The
Gary should have granted a reasonable extension company could have hired additional laborers to
of time for Isaac to deliver his Toyota Innova. It make up for the work slowdown.
would be unfair and burdensome for Isaac to pay
the P1,000,000 simply because the promised Must AB Corp. return the 50% downpayment?
security was not delivered. (2%) (2008)
ANSWER: SUGGESTED ANSWER:

A – Article 1198 Isaac lost his right to make use of
the period because he failed to furnish the guaranty No, under the principle of quantum meruit, AC
or security in consideration of which Gary agreed to Corp. has the right to retain payment corresponding
the period to his percentage of accomplishment less the
amount of damages suffered by XY Corp. because
AB Corp. entered into a contract with XY Corp. of the delay or default.
whereby the former agreed to construct the .
research and laboratory facilities of the latter. Are the following obligations valid, why, and if
Under the terms of the contract, AB Corp. they are valid, when is the obligation
agreed to complete the facility in 18 months, at demandable in each case?
the total contract price of P10 million. XY Corp. A. If the debtor promises to pay as soon as he has
paid 50% of the total contract price, the balance the means to pay;
to be paid upon completion of the work. The B. If the debtor promises to pay when he likes;
work started immediately, but AB Corp. later C. If the debtor promises to pay when he
experienced work slippage because of labor becomes a lawyer;
unrest in his company. AB Corp.’s employees D. If the debtor promises to pay if his son, who is
claimed that they are not being paid on time; sick with cancer, does not die within one year.
hence, the work slowdown. As of the 17th month, (2003 Bar)
work was only 45% completed. AB Corp. asked SUGGESTED ANSWER:
a. The obligation is valid. It is an obligation subject What is a fortuitous event? Is there any difference
to an indefinite period because the debtor binds between fortuitous event and force majeure?
himself to pay when his means permit him to do so
(Article 1180, NCC). When the creditor knows that ANS: A fortuitous event is an event which cannot be
the debtor already has the means to pay, he must file foreseen, or which though foreseen, is inevitable.
an action in court to fix the period, and when the (Art. 1174, NCC.)
definite period as set by the court arrives, the Ordinarily, the terms “fortuitous event” and “force
obligation to pay becomes demandable (Article majeure” are used interchangeably. There is,
1197, NCC). however, a technical difference.
b. The obligation “to pay when he likes” is a
suspensive condition the fulfillment of which is “Force majeure” is a term that is applicable only to
subject to the sole will of the debtor and, therefore, those fortuitous events which are dependent upon
the conditional obligation is void. (Article 1182, human intervention, such as wars, strikes, riots, etc.,
NCC). while “fortuitous event” is the general term that is
c. The obligation is valid. It is subject to a applicable regardless of whether the event is
suspensive condition, i.e. the future and uncertain independent of or dependent upon human
event of his becoming a lawyer. The performance of intervention.
this obligation does not depend solely on the will of
the debtor but also on other factors outside the Give and define the different kinds of fortuitous
debtor's control. events.
d. The obligation is valid. The death of the son of
cancer within one year is made a negative ANS: Fortuitous events may be either: (1)
suspensive condition to his making the payment. Fortuitous event proper (Act of God) or force
The obligation is demandable if the son does not die majeure (fuerza mayor). The first refers to an event
within one year (Article 1185, NCC). which is absolutely independent of human
intervention, while the second refers to an event
Q: Kristina brought her diamond ring to a which is dependent upon human intervention other
jewelry shop for cleaning. The jewelry shop than that of the obligor. (2) Ordinary or
undertook to return the ring by February 1, extraordinary. The first refers to an event which
1999. When the said date arrived, the Jewelry usually happens or which could have been
shop informed Kristina that the job was not yet reasonably foreseen, while the second refers to an
finished. They asked her to return five days later. event which does not usually happen and which
On February 6. 1999, Kristina went to the shop could not have been reasonably foreseen. (Art.
to claim the ring, but she was Informed that the 1680, NCC.).
same was stolen by a thief who entered the shop
the night before. Kristina filed an action for What is the rule regarding fortuitous events? (1970)
damages against the jewelry shop which put up
the defense of force majeure. Will the action ANS: Except in cases expressly specified by the
prosper or not? (5%) (2000 Bar) law, or when it is otherwise declared by stipulation,
or when the nature of the obligation requires the
SUGGESTED ANSWER: assumption of risk, no person shall be responsible
for those events which could not be foreseen, or
The action will prosper. Since the defendant was which though foreseen, were inevitable. (Art. 1174,
already in default not having delivered the ring NCC.) A review of the records in the case of
when delivery was demanded by plaintiff at due Mindex Resources Devt. vs. Morillo, G.R. No.
date, the defendant is liable for the loss of the thing 138123, March 12, 2002, shows that petitioner
and even when the loss was due to force majeure. failed to exercise reasonable care and caution that
an ordinarily prudent person would have used in the
same situation. Petitioner failed to employ
reasonable foresight, diligence and care that would
have exempted it from liability resulting from the apprehended and charged. During the pendency of
burning of the truck. Negligence is that conduct that the criminal case, X brought an action against A for
naturally or reasonably creates undue risk or harm recovery of the pendant or of its value and damages.
to others. It may be a failure to observe that degree The latter interposed the defense of fortuitous event,
of care, precaution or vigilance that the but the former contends: (a) that the defense of
circumstances justly demand; or to do any other act fortuitous event is untenable because there was
that would be done by a prudent and reasonable negligence on the part of the defendant; and (b) that
person, who is guided by consideration that if the defense is tenable, nevertheless, there must be
ordinarily regulate the conduct of human affairs. In a prior conviction for robbery before it can be
other words, there must be an entire exclusion of availed of. Decide the case.
human agency from the cause of injury or loss.
(Real vs, Belo, G.R. No.146224, January 26, 2007.) ANS: The factual setting of the above problem is
In the Real vs. Sisenando case, the Court held that it identical to that of Austria vs. CA (39 SCRA 527).
is established by evidence that the fire originated In that case, the SC held that defendant is not liable.
from leaking fumes from the LPG stove and tank
installed at petitioner’s fastfood stall and her To constitute a caso fortuito that would exempt a
employees failed to prevent the fire from spreading person from responsibility, it is necessary:
and destroying the other fastfood stalls. Such (1) that the event must be independent of the will of
circumstances do not support the petitioner’s theory the debtor;
of fortuitous event. (2) that it must be either unforeseeable or
unavoidable;
What are the conditions which must concur in order (3) that the occurrence must render it impossible for
that the above rule can be applied? the debtor to fulfill the obligation in a normal
manner; and (4) that the debtor must be free of
ANS: The conditions which must concur in order participation in, or aggravation of the injury to the
that the obligor shall be exempted from liability by creditor.
reason of a fortuitous event or “caso fortuito” are as
follows: All of the above requisites or conditions are present
(1) The cause of the breach of the obligation must in this case. It is undeniable that in order to
be independent of the human or of the will of the completely exonerate the debtor by reason of a
debtor; fortuitous event, such debtor must, in addition to the
(2) the event must be either unforseeable or casus itself, be free of any concurrent or
unavoidable; contributory fault or negligence. We believe,
(3) the event must be such as to render it impossible however, that her act in travelling alone in the
for the debtor to fulfill his obligation in a normal evening, carrying jewelry of considerable value,
manner; and cannot be considered as either concurrent or
(4) the debtor must be free from any participation contributory negligence. While it may be so
in, or aggravation of the injury to the creditor considered now, we are not persuaded that the same
(Lasam vs. Smith, 45 Phil. 657; Republic vs. Luzon rule should obtain ten years previously when the
Stevedoring Corp., 21 SCRA 279; Juntilla vs. robbery in question took place, for at that time
Fontanor, 136 SCRA 624; Mindex Resources Dev’t. criminality had not by far reached the levels
vs. Morillo, supra, Virginia Real vs. Sisenando H. attained in the present day.
Belo, G.R. No. 146224, January 26, 2007).
There is likewise no merit in the contention that to
A received from X a pendant with diamonds valued allow the fact of robbery to be recognized in this
at P4,500 to be sold on commission basis or to be case before conviction is secured in the criminal
returned on demand. In the evening of February 1, action, would prejudice the latter case, or would
1961, while walking home to her residence, two result in inconsistency should the accused obtain an
men snatched her purse containing the pendant and acquittal or should the criminal case be dismissed. It
ran away. Subsequently, the snatchers were must be realized that a court finding that a robbery
has happened would not necessarily mean that those that the real cause of the accident was a fortuitous
accused in the criminal action would be found event? Suppose that the proximate cause of the
guilty of the crime; nor would a ruling that those accident was
actually accused did not commit the robbery be a tire blowout, would that make a different in your
inconsistent with a finding that a robbery did take answer?
place. The evidence to establish these facts would
not necessarily be the same. ANS: The operator cannot relieve itself of liability
by claiming that the real cause of the accident was a
A barge belonging to the Luzon Stevedoring fortuitous event. The weight of authority sustains
Corporation, while passing under the Nagtahan the view that a passenger is entitled to recover
Bridge in Manila, rammed the bridge supports damages from the carrier for an injury resulting
causing damage thereto. In this action for damages from a defect in an equipment purchased from a
instituted by the Government against the defendant manufacturer, unless extraordinary diligence has
corporation, the latter interposed the defense that been exercised with regard to inspection and
there was no negligence or fault on its part and that application of the necessary tests. For the purpose of
the proximate cause of the accident was a fortuitous this doctrine, the manufacturer is considered in law
event. Decide the case. the agent of the carrier. The rationale of the carrier’s
liability is that the passenger has no privity with the
ANS: As far as the negligence of the defendant manufacturer and, therefore, has no remedy
corporation is concerned, it is clear that the doctrine whatever against him, while the carrier usually has.
of res ipsa loquitur is applicable. It is undeniable (Necesito vs. Paras, 104 Phil. 75.) If the proximate
that the unusual event that the barge, exclusively cause of the accident is a tire blowout, that will not
controlled by defendant, rammed the bridge make a difference in my answer so long as it can be
supports raises a presumption of negligence on the established that the bus involved in the accident was
part of defendant or its employees manning the running fast immediately before the accident and
barge or the tugs that towed it. In the ordinary that the cause of the blowout could have been
course of events, such a thing does not happen if discovered if the bus had been subjected to a more
proper care is used. rigid check-up before its use. This was the doctrine
As far as the defense of fortuitous event is enunciated in La Mallorca vs. De Jesus (17 SCRA
concerned, caso fortuito by definition refers to those 23).
extraordinary events not foreseeable or avoidable,
“events that could not be foreseen, or which though What are the exceptions to the rule that the obligor
foreseen, were inevitable,” (Art. 1174, NCC.) It is, or debtor cannot be held liable for breach of the
therefore, not enough that the event could not have obligation by reason of a fortuitous event? Illustrate.
been foreseen or anticipated, as is commonly
believed, but it must be one impossible to foresee or ANS: The exceptions to the rule that the obligor or
to avoid. The mere difficulty to foresee the debtor cannot be held liable for breach of the
happening is not impossible to foresee the same. obligation by reason of a fortuitous event are as
Hence, the proximate cause of the accident cannot follows:
be classified as a fortuitous event. Consequently, (1) Where such liability is expressly specified by
defendant is liable, (Republic vs. Luzon the law. This may be illustrated by provisions of the
Stevedoring Corp., 21 SCRA NCC, such as those found in Arts. 552, par. 2, 1165,
279.) par. 3, 1268, 1942, 1979, 2147, 2148, and 2159,
NCC.
A was injured while he was a passenger in a bus
operated by X Co. The proximate cause of the (2) Where such liability is declared by stipulation of
accident was the failure of the steering knuckle to the parties. Thus, if the contracting parties expressly
work causing the driver to lose control of the wheel agree that the debtor can be held liable even in case
as a result of which the bus fell into a ditch. Can the of fortuitous events, such an agreement shall be
operator now relieve itself of liability by claiming binding.
for the protection and enforcement of his right

(3) Where the nature of the agreement requires the against the debtor. They are: first, to exhaust the
assumption of risk. This is an aspect of what is property in possession of the debtor; second, to be
known as the doctrine of assumption of risk. As subrogated to all of the rights and actions of the
applied to obligations, it refers to a situation in debtor save those which are inherent in his person
which the obligor or debtor, with full knowledge of (accion subrogatoria); and third, to impugn all of the
the risk, voluntarily enters into some obligatory acts which the debtor may have done to defraud him
relation with the creditor or obligee. It is based on (accion pauliana).
the principle of volenti non fit injuria — no wrong The second and third, however, are subsidiary to the
is done to one who consents. This is illustrated by first.
obligations arising from insurance contracts and
workmen’s compensation acts. Jacinto Tanguilig constructed a windmill system for
Vicente Herce, Jr. for P60,000 with a one-year
Cite three (3) instances where a person is made guaranty.
civilly liable for failure to comply with his Herce made a downpayment of P30,000 and an
obligations although he was prevented from doing installment payment of PI5,000, leaving a balance
so by a fortuitous event. (1983) of Pi5,000. He refused to pay the balance because
the windmill system collapsed after a strong wind
ANS: In the following instances, a person is still hit the place. Is Tanguilig exempt from liability due
civilly liable for failure to comply with his to fortuitous event?
obligation although he was prevented from doing so
by a fortuitous event: ANS: No. In order for a party to claim exemption
(1) When by law, the debtor is liable even for from liability due to fortuitous event, one requisite
fortuitous events; is that the event must be either unforeseeable or
(2) When by stipulation of the parties, the debtor is unavoidable. A strong wind in this case cannot be
liable even for fortuitous events; fortuitous, unforeseeable, or unavoidable. On the
(3) When the nature of the obligation requires the contrary, a strong wind should be present in places
assumption of risk; where windmills are constructed, otherwise the
(4) When the object of the obligation is lost and the windmills will not turn. Given the newly-
loss is due partly to the fault of the debtor; constructed windmill system, the same would not
(5) When the object of the obligation is lost and the have collapsed had there been no inherent defect in
loss occurs after the debtor has incurred in delay; it which could only be attributable to Tanguilig.
(6) When the debtor promised to deliver the same When the windmill failed to function properly, it
thing to two or more persons who do not have the became incumbent upon Tanguilig to repair it in
same interest; accordance with his guaranty and bear the expenses
(7) When the obligation to deliver arises from a therefor. (Tanguilig vs. CA and Herce, G.R. No.
criminal offense; and 117190, SC First Div., J. Bellosillo, January 2,
(8) When the obligation is generic. 1997.)
(Note: Any 3 of the 8 should be a correct answer.
Nos. 1, 2 and 3 are based on Arts. 1174 and 1262, What are the different classes of obligations
NCC; Nos. 4, 5, and 6 are based on Arts. 1165 and according to the NCC?
1262, NCC; while Nos. 7 and 8 are based on Arts. ANS: The following is the primary classification of
1268 and 1263, NCC.) obligations under the NCC:
(1) Pure, conditional, and with a term or period
What are the remedies which are available to the (Arts. 1179- 1198.);
creditor in order to protect his rights against the (2) Alternative and facultative (Arts. 1199-1206.);
debtor? (3) Joint and solidary (Arts. 1207-1222.);
(4) Divisible and indivisible (Arts. 1223-1225.);
ANS: Under Art. 1177 of the NCC, there are 3 (5) With and without a penal clause. (Arts. 1226-
general remedies which are available to the creditor 1230.)
ANS: In its legal acceptation, a condition may be

There are, however, other classifications of a defined as a future and uncertain event upon which
secondary character which can be gathered from an obligation is subordinated or made to depend.
scattered provisions of the Code, such as (1) natural (Escriche, Law Dictionary.) From this definition, it
and civil (Arts. 1156, 1423.), (2) legal, conventional is evident that it has two requisites: first, futurity;
and penal (Arts. 1158-1162.), (3) real and personal and second, uncertainty.
(Arts. 1156, 1163-1168.), (4) determinate and
generic (Arts. 1163 1164.), (5) positive and Can an uncertain but past event be considered a
negative (Arts. 1163-1168.), (6) accessory and condition?
principal (Arts. 1166, 1230.), (7) unilateral and
bilateral (Art 1191.), (8) single and multiple (Arts. ANS: Our answer must be qualified. It must be
119, 1206.), and (9) individual and collective. (Art. noted that the event itself can never constitute a
1207.) condition because in order to be classified as a
condition, the requisites offuturity and uncertainty
What is meant by a pure obligation? are required. Neither can it constitute a term or
ANS: A pure obligation is one whose effectivity or period because in order to be classified as a term or
extinguishment does not depend upon the period, the requisites of futurity and certainty are
fulfillment or nonfulfillment of a condition or upon required. But the proof or ascertainment of the fact
the expiration of a term or period, and which, as a or event, as distinguished from the fact or event
consequence, is characterized by the quality of itself, may constitute either a condition or a term
immediate demandability. (Art 1179, par. 1, NCC.) depending upon the circumstances of each case.
What is the most distinctive characteristic of pure Thus, if the past event is already known to the
obligations? whole world but unknown to the parties, so that the
proof or ascertainment thereof; will surely come to
ANS: The most distinctive characteristic of a pure pass, although it may not be known when, it is clear
obligation is its immediate demandability. This that it constitutes a term or period, such as when A
quality, however, must not be understood in such a promises to pay B a certain sum of money if the
way as to lead to absurb interpretations which latter can prove by proper authorities that the NCC
would literally require the obligor or debtor to of the Philippines took effect on August 30, 1950.
comply immediately with his obligation. A On the other hand, if the past event is unknown to
distinction must be made between: (1) the the whole world as well as to the parties, so that the
immediate demandability of the obligation; and (2) proof or ascertainment thereof may or may not
its performance or fulfillment by the obligor or happen, it is also clear that it constitutes a condition,
debtor. Although the obligee or creditor can demand such as when A promises to pay B a certain sum of
the performance of the obligation immediately, the money if the latter can prove by proper evidence
quality of immediate demandability is not infringed that Rizal did not retract
or violated when a reasonable period is granted for Freemasonry.
performance. (8 Manresa, 5th Ed., Bk.l, pp. 305-
306.) How are conditions classified?
ANS: Conditions are traditionally classified as
What is meant by conditional obligation? follows:
(1) Suspensive — when the fulfillment of the
ANS: An obligation is said to be conditional when condition results in the acquisition of rights arising
its effectivity is subordinated to the fulfillment or out of the obligation.
non-fulfillment of a future and uncertain fact or (2) Resolutory — when the fulfillment of the
event. condition results in the extinguishment of rights
arising out of the obligation.
What is a condition and what are its requisites?
(1) Potestative ■— when the fulfillment of the

condition depends upon the will of a party to the On June 5, I960, DP delivered possession of his
obligation. house and lot in the Poblacion of Polo, Bulacan to
(2) Casual — when the fulfillment of the condition AB who, in turn delivered to the former possession
depends upon chance and/or upon the will of a third of his 2-hectare rice land. Both properties were
person. unregistered. They executed a document entitled
(3) Mixed — when the fulfillment of the condition “Barter” which, among others, provided that both
depends partly upon the will of a party to the parties shall enjoy the material possession of their
obligation and partly upon chance and/or the will of respective properties; that neither party shall
a third person. encumber, alienate or dispose of their respective
(1) Possible — when the condition is capable of properties as bartered without the consent of the
realization according to nature, law, public policy, other; and that DP shall be obliged to return the
or good customs. property to AB when the latter’s son shall attain
(2) Impossible — when the condition is not capable majority and decide to return DP’s property.
of realization according to nature, law, public After AB’s death and his son S attained majority in
policy, or good customs. 1977, the latter demanded for the return of the two
(1) Positive — when the condition involves the (2) hectares of rice land which had then increased
performance of an act. tremendously in value. DP refused and so S filed an
(2) Negative — when the condition involves the action for recovery of the land. Will the action
nonperformance of an act. prosper? Why? (1979)
(1) Divisible ~ when the condition is susceptible of
partial realization. ANS: Yes, the action will prosper. The stipulations
(2) Indivisible — when the condition is not in the barter agreement are clear. All that the parties
susceptible of partial realization. intended was to transfer the material possession and
f. (1) Conjunctive — when there are several use of the subject properties to the other. There was,
conditions, all of which must be realized. therefore, no conveyance of their right of
(2) Alternative — when there are several conditions, ownership. In fact, the parties retained their rights to
one of which must be realized. alienate their right of ownership, a right which is an
g. (1) Express — when the condition is stated element of ownership. What was, therefore,
expressly. transferred was merely their right of usufruct. But
(2) Implied — when the condition is tacit. (8 then, the document also says that DP shall be
Manresa, 5th Ed.} Bk. 1, pp. 323-324.) obliged to return the property to AB when the
latter’s son shall attain majority and decide to return
Distinguish between the effects of suspensive and DPs property. The mutual agreement, therefore, was
resolutory conditions upon the obligation. subject to a resolutory condition the happening of
which would extinguish or terminate their right of
ANS: It is evident that a resolutory condition affects usufruct over the subject properties. The facts are
the obligation to which it is attached in a manner clear. Said condition has already been fulfilled.
which is diametrically opposed to that of a (Baluran vs. Navarro, 79 SCRA 309,)
suspensive condition. If the suspensive condition is
fulfilled the obligation arises or becomes effective; Give the effects of potestative, casual and mixed
if the resolutory condition is fulfilled, the obligation conditions upon the obligation.
is extinguished. If the first is not fulfilled, no ANS: If the condition is potestative in the sense that
juridical relation is created; if the second is not its fulfillment depends exclusively upon the will of
fulfilled, the juridical relation is consolidated. In the debtor, the conditional obligation shall be void.
other words, in the first, rights are not yet acquired, (Art. 1182, NCC.)
but there is a hope or expectancy that they will soon If the condition is potestative in the sense that its
be acquired; in the second, rights are already fulfillment depends exclusively upon the will of the
acquired, but subject to the threat of extinction. (8 creditor, the conditional obligation shall be valid.
Manresa, 5th Ed., Bk. 1, p. 311.) This is so because the provision of the first sentence
of Art. 1182 extends only to conditions which are declaration or statement was merely an assumption
potestative to the obligor or debtor. Besides, the and the same was not the actual ruling. (Hermosa
creditor is naturally interested in the fulfillment of vs. Longara.)
the condition since it is only by such fulfillment that Hence, the condition is valid. And it cannot be said
the obligation arises or becomes effective. (Art. that if the debtor so desires, he can always prevent
1181, NCC; 8 the sale. According to the NCC (Art. 1186.), if he
Manresa, 5th Ed., Bk. 1, p. 327.) prevents the consummation of the sale voluntarily,
If the condition is casual in the sense that its the condition would be deemed or considered
fulfillment depends upon chance and/or upon the complied with. (Ibid.)
will of a third person, the obligation shall be valid.
(Art. 1182, NCC.) Suppose that in the above problem, the debtor
If the condition is mixed in the sense that its promised to pay his obligation as soon as he has
fulfillment depends partly upon the will of a party to received the funds derived from the sale of the
the obligation and partly upon chance and/or the property if he finally decides to sell it, will that
will of a third person, the obligation shall be valid, make a difference in your answer?
(Smith, Bell & Co. vs. Sotelo, 44 PhiL 875; Hermos
vs, Longara, 93 Phil. 971.) ANS: Yes. In such case, it is evident that the
condition is potestative with respect to the debtor
Suppose that the debtor executed a promissory note because its fulfillment would then depend
promising to pay his obligation to the creditor as exclusively upon his will. Consequently, the
soon as he has received funds derived from the sale condition is void. (Hermosa vs. LongaraJ The
of his property in a certain place, is the condition validity of the obligation is, of course, not affected,
potestative or mixed? because the rule stated in Art. 1182 of the NCC to
the effect that when the fulfillment of the condition
ANS: According to the SC in the case of Hermosa depends upon the sole will of the debtor, the
vs. Longara, 93 Phil. 971, the condition is mixed conditional obligation itself shall be void, is
because its fulfillment depends not only upon the applicable only when the obligation shall depend for
will of the debtor but also upon the concurrence of its perfection upon the fulfillment of the condition
other factors, such as the acceptability of the price and not when the obligation is a pre-existing one.
and other conditions of the sale, as well as the (See Trillana vs. Quezon Colleges, 93 Phil. 383.)
presence of a buyer, ready, able and willing to
purchase the property, Art. 1182 of the NCC declares that when the
fulfillment of the condition depends upon the sole
Suppose that in the above problem, the debtor will of the debtor, and conditional obligation shall
promised to pay his obligation if a house belonging be void. Is this rule absolute in the sense that it is
to him is sold, will that make a difference in your applicable to all conditional obligations regardless
answer? of the nature of the condition as well as of the
obligation?
ANS: It will not make a difference in my answer.
The condition is still mixed because its fulfillment ANS: The rule is not absolute. There are two (2)
depends not only upon the will of the debtor but well-known limitations. They are as follows:
also upon the concurrence of other factors, such as (1) The rule is applicable only to a suspensive
the acceptability of the price and other conditions of condition. Hence, if the condition is resolutory and
the sale, as well as the presence of a buyer, ready, potestative, the obligation is valid even if the
able and willing to purchase the property. fulfillment of the condition is made to depend upon
the sole will of the debtor. This is logical because it
True, apparently, in Osmeha vs. Rama (14 PhiL 99), is but natural that the debtor is interested in the
the Supreme Court declared that the above fulfillment of the condition since it is only by such
condition is potestative with respect to the debtor, fulfillment that he can reacquire the rights which
but a closer perusal of the case will show that the have already been vested in the creditor upon the
constitution of the obligation. In other words, the mere hope or expectancy, nevertheless, it is a hope
position of the debtor when the condition is or expectancy that is protected by the law.
resolutory is exactly the same as the position of the According to Art. 1188 of the NCC, the creditor
creditor when the condition is suspensive. (Taylor may, before the fulfillment of the condition, bring
vs. Uy Tieng Piaos 43 Phil 873.) the appropriate actions for the preservation of his
(2) The rule that even the obligation itself shall be right.
void is applicable only to an obligation which (2) The second defense is untenable. According to
depends for its perfection upon the fulfillment of the Art. 1186 of the NCC, the condition shall be
potestative condition and not to a preexisting deemed fulfilled when the obligor voluntarily
obligation. Thus, if the debtor binds himself to pay a prevents its fulfillment. The act of the Board of
previous indebtedness as soon as he decides to sell Directors of the Phil. Long Distance Co. in
his house, although the condition is void because of abrogating the pension plan certainly falls within
its potestative character, the obligation itself is not the sphere or purview of this rule.
affected since it refers to a pre-existing (3) The third defense is also untenable. This is so
indebtedness. because the defense of fortuitous event is available
'Trillana vs. Quezon Colleges, 93 Phil 383.) only if the obligation is determinate and not if the
obligation is generic. Here, the obligation; is clearly
Before the war, the Phil. Long Distance Co. (PLDT) generic since it involves the payment of money.
adopted a pension plan for its employees by virtue From the foregoing, it is clear that the case should
of which all employees who have reached the age of be decided in favor of the plaintiffs.
50 years and who have rendered 20 years or more
service may be retired with a pension. After the war, Suppose that an obligation is subject to a suspensive
the Board of Directors of the Company passed a condition, but before the fulfillment of the condition
resolution abrogating the pension plan. the object of the obligation was lost or it has
Subsequently, sixty employees who were affected deteriorated, or improvements were made thereon,
filed a complaint against the Company claiming what is the effect of such loss, or deterioration, or
monetary benefits under the pension plan. The improvements if the condition is finally fulfilled?
Company interposed the following defenses: (1)
that the obligation to pay a pension to the plaintiffs ANS: When the conditions have been imposed with
is subject to certain suspensive conditions; the intention of suspending the efficacy of an
consequently, such plaintiffs have no personality to obligation to give, the following rules shall be
ask for monetary benefits until after such conditions observed in case of the improvement, loss or
are fulfilled; deterioration of the thing during the pendency of the
(2) that even granting without admitting that they condition:
have, they (1) If the thing is lost without the fault of the debtor,
are not entitled to such benefits until after the the obligation shall be extinguished;
conditions are fulfilled; and (3) that war losses had (2) If the thing is lost through the fault of the debtor,
extinguished the Company's obligation to proceed he shall be obliged to pay damages; it is understood
with the pension plan. If you are the judge, how will that the thing is lost when it perishes, or goes out of
you decide the case? Reasons. commerce, or disappears in such a way that its
existence is unknown or it cannot be recovered;
ANS: The facts of the above problem are exactly (3) When the thing deteriorates without the fault of
the same as those in the case of PLDT Co. vs. the debtor, the impairment is to be borne by the
Jeturian, 97 Phil. 981, where the Supreme Court creditor;
decided in favor of the plaintiffs. For purposes of (4) If it deteriorates through the fault of the debtor,
clarity, let us take up the defenses advanced by the the creditor may choose between the rescission of
defendant company separately. the obligation and its fulfillment, with indemnity for
(1) The first defense is untenable. While it is true damages in either case;
that when an obligation is subject to a suspensive
condition, what is acquired by the creditor is only a
(5) If the thing is improved by its nature, or by time, stipulated in the contract, is Article 1191 of the
the improvement shall inure to the benefit of the NCC applicable? Why?
creditor;
(6) If it is improved at the expense of the debtor, he ANS: Art. 1191 is not applicable. Where the
shall have no other right than that granted to the contract itself contains a resolutory provision by
usufructuary. (Art. 1189, NCC.) virtue of which the obligation may be cancelled or
extinguished in case of breach, judicial permission
Are the above rules also applicable if the condition to rescind the contract is no longer necessary.
is resolutory? (Hanlon vs. Hausermann, 40 Phil. 796; De la Rama
ANS: Yes, (Art. 1190, NCC.) However, in applying Steamship Co. vs. Tan, 99 Phil. 1034.) The use of
these rules, the “debtor” is the person obliged to the word “implied” in the article supports this
return the object of the obligation in case of conclusion. The right to rescind is “implied” only if
fulfillment of the condition, while the “creditor” is’ not expressly granted; no right can be said to be
the person to whom the thing or object must be implied if expressly recognized. Consequently, in
returned. the instant case, Art. 1191 is not applicable. The rule
that is applicable is found in Art. 1592 under the law
What is meant by reciprocal obligations? on sales.
ANS: Reciprocal obligations are those which are L leased a house to J. The contract stipulates that in
created or established at the same time, out of the case of non-payment of the rent, L can eject J
same cause, and which result in mutual without court action. J defaulted for two months. As
relationships of creditor and debtor between the a result, L ejected him.
parties. Can J claim damages because the renunciation of
his day in court as stipulated in the contract is void?
What is the effect if one of the obligors in reciprocal (1977)
obligations should not comply with what is
incumbent upon him? ANS: J cannot claim damages because the
renunciation of his day in court as stipulated in the
ANS: The power to rescind obligations is implied in contract is void. True, under the NCC, in reciprocal
reciprocal ones, in case one of the obligors should obligations there is always a tacit resolutory
not comply with what is incumbent upon him. condition that if one party is unable to comply with
The injured party may choose between the what is incumbent upon him, the injured party has
fulfillment and the rescission of the obligation, with the power to rescind the obligation. (Art
the payment of damages in either case. He may also 1191.) This is reiteratedin the law on lease. (Art,
seek rescission, even after he has chosen fulfillment, 1659.) True also, it is a well-settled rule that the
if the latter should become impossible. The court injured party must invoke judicial aid. But then, this
shall decree the rescission, unless there be just cause rule can be applied only to a case where the
authorizing the fixing of a period. obligation is silent with respect to the power to
This is understood to be without prejudice to the rescind. The right to rescind is implied only if not
rights of third persons who have acquired the thing, expressly granted; no right can be said to be implied
in accordance with Articles if expressly recognized. This is also well-settled. In
1385 and 1388 and the Mortgage Law. (Art. 1191, the instant case, the right of L to eject J without a
NCC.) court action in case of non-payment of the rent was
expressly recognized in the contract itself. What L
A sold a parcel of land to B for P20,000. In the deed did was merely to enforce what was agreed upon.
of sale, there is a stipulation that the purchase price
shall be paid on a certain date and that in case of (a) Are the provisions of Art. 1191 of the NCC
failure to pay on such a date, A can rescind the applicable to obligations arising from contracts of
contract. Suppose that B fails to pay on the date lease or of partnership? Explain.
(b) What must be the nature or character of the parties first violated the contract, the same shall be
breach which will justify the injured party in deemed extinguished, and each shall bear his own
bringing an action either for fulfillment of the damage.
obligation plus damages or for rescission plus (Art. 1192, NCC.)
damages?
Define obligations with a term or period.
ANS: (a) In the case of obligations arising from a ANS: Obligations with a term or period may be
contract of lease, what are applicable are the defined as those whose demandability or
provisions of Art. 1659 of the NCC and not those of extinguishment are subject to the expiration of a
Art. 1191. Although Art. 1659 is practically a term or period.
restatement of Art. 1191, yet there is a difference.
Under Art. 1191, courts have the discretionary What is meant by a term or period? What are its
power to refuse the rescission of contracts if in their requisites?
judgment the circumstances of the case warrant the
fixing of a term within which the obligor may fulfill ANS: A term or period is an interval of time, which,
the obligation, while under Art. 1659, there is no exerting an influence on an obligation as a
such discretionary power granted to courts. (Mina consequence of a juridical act, either suspends its
and Bacalla vs. Rodriguez, CA, 40 Off. Gaz. 65.) demandability or produces its extinguishments.
In the case of obligations arising from a contract of (8 Manresa, 5th Ed., Bk. 1, p. 370.) Its requisites
partnership, as a general rule, Art. 1191 is are: first, futurity, and second, certainty.
applicable. However, this article cannot be applied
where one of the partners fails to pay the whole Distinguish between a condition and a term or
amount which he has bound to contribute to the period.
common fund. This is so because in such case Arts. ANS: A condition and a term or period may be
1786 and 1788 of the NCC are applicable. distinguished from each other in the following
These provisions are particular provisions. ways: (1) In general; A condition refers to an event,
Consequently, they prevail over the general while a term or period refers to an interval of time.
provisions of Art. 1191 which refer to the resolution (2) As to requisites: A condition has for its requisites
of reciprocal obligations in general. (Saneho vs. futurity and uncertainty, while a term or period has
Lizarraga, 55 Phil. 601) for its requisites futurity and certainty.
(b) The general rule is that rescission will not be (3) As to fulfillment: A condition may or may not
permitted for a slight or casual breach of the happen, while a term or period will surely come to
contract, but only for such breaches as are pass, although it may not be known when.
substantial or fundamental as to defeat the object of (4) As to influence upon obligation: A condition
the parties in making the agreement. Consequently, exerts an influence upon the very existence of the
a delay in payment for a small quantity of molasses obligation itself, while a term or period exerts an
for some 20 days is not such a violation of an influence only upon its demandability.
essential condition as warrants rescission for (5) As to retroactivity of effects: A condition has
nonperformance. retroactive effects, while a term or period does not
(Song Fo vs. Hawaiian-Philippine Co., 47 Phil. 821; have retroactive effects unless there is an agreement
Villanueva vs. Yulo, L-12985, December 29, 1959; to the contrary.
Universal Food Corp. vs. CA, 33 SCRA 1.) (6) As to effect of will of debtor: When a condition
is left exclusively to the will of the debtor, the very
Suppose that both of the parties in reciprocal validity of the obligation is affected; when the
obligations have committed a breach thereof, who duration of a term or period is left exclusively to the
shall be liable? will of the debtor, the obligation is still valid.
Give and define the different kinds of terms or
ANS: The first infractor shall be liable, but his periods.
liability shall be equitably tempered by the courts.
However, if it cannot be determined which of the
ANS: (1) Suspensive or resolutory ~ According to no question that the termination of the war must
the first and second paragraphs of Art. 1193, a necessarily come. (Nepomuceno vs. Narciso, 84
period may be suspensive (ex die) or resolutory (in Phil. 542.) However, if the obligor binds himself to
diem). It is suspensive when the obligation becomes perform his obligation as soon as “he shall have
demandable only upon the arrival of a day certain; it obtained a loan” from a certain bank, it is clear that
is resolutory when the obligation is demandable at the granting of such loan is not definite.
once, although it is terminated upon the arrival of a Consequently, it cannot be considered a day certain;
day certain. hence, the obligation is conditional. (Berg vs.
Magdalena Estate, Inc., 92 Phil. 110.)
(2) Legal, conventional or judicial ™ A period may
also be legal, conventional or judicial. It is legal, X Co. and Y Co. entered into a contract whereby the
when it is granted by law; conventional, when it is latter agreed that the sugar cane which it will
stipulated by the parties; and judicial, when it is produce shall be milled by the former for a period
fixed by the courts. of 30 years. It was stipulated that in case of any
fortuitous event, the contract shall be suspended
(3) Definite or indefinite — A period may also be during said period. For four (4) years during the last
definite or indefinite. This classification can be war and for two (2) years after liberation when the
deduced from the provision of the third paragraph mill of X Co. was being rebuilt, Y Co. failed to
of Art. 1193, which states that a day certain is deliver its sugar cane to the central of X Co. After
understood to be that which must necessarily come, the expiration of the 30-year period, Y Co. stopped
although it may not be known when. From this it is the delivery of its sugar cane to the central of X Co.
evident that a period is definite when the date or Subsequently, X Co. brought an action against Y
time is known beforehand, and indefinite when it Co. in order to compel the latter to deliver its sugar
can only be determined by an event which must cane for six (6) additional years on the ground that
necessarily come to pass, although it may not be the fortuitous event had the effect of stopping the
known when. running of the term or period agreed upon. Will the
action prosper? Reasons.
If the happening of a future event is fixed by the.
parties for the fulfillment or extinguishment of an ANS: The facts stated in the above problem are
obligation, what is the nature of the obligation — is exactly the same as those in the case of Victorias
it with a term or is it conditional? Planters vs. Victorias Milling Co., 97 Phil. 318,
where the SC held that the effect of a fortuitous
ANS: Our answer must be qualified. If the event event upon the term or period agreed upon is not to
will necessarily come, although the date or time stop the running of the term or period but merely to
when it will come may be uncertain, the event relieve the contracting parties from the fulfillment
constitutes a day certain; hence, the obligation is of their respective obligations during the pendency
one with a term. (Art. 1193, par. 4, NCC.) However, of the event. According to the SC:
if the uncertainty consists in whether the day will “Fortuitous event relieves the obligor from fulfilling
come or not, the event constitutes a condition; a contractual obligation. The stipulation in the
hence, the obligation is conditional. (Art. 1193, par. contract that in the event of flood, typhoon,
4, NCC.) Thus, if the death of a person is fixed by earthquake, or other force majeure, war,
the parties for the demandability or extinguishment insurrection, civil commotion, organized strike, etc.,
of the obligation, it is clear that the obligation is one the contract shall be deemed suspended during said
with a term or period because death is an event period, does not mean that the happening of any of
which will certainly come, although the date or time these events stops the running of the period agreed
when it will come is uncertain. The same is true upon. It only relieves the parties from the
when the parties enter into a contract whereby it is fulfillment of their respective obligations during
agreed that the obligation cannot be performed that time — the planters from delivering sugar cane
“while the war goes on.” Although the date of the and the central from milling it. x x x To require the
termination of the war may be uncertain, yet there is planters to deliver the sugar cane which they failed
to deliver during the four years of the Japanese D borrowed P2,000 from C in 1958. The debt is
occupation and the two years after liberation when evidenced by a promissory note executed by D
the mill was being rebuilt is to demand from the wherein he promised to pay as soon as he has
obligors the fulfillment of an obligation which was money or as soon as possible. C has made repeated
impossible of performance at the time it became demands upon D for payment, but up to now no
due. Memo tenetur ad impossibilia. payment has been made. Suppose that C will bring
an action against D for payment of the debt, will the
The performance of what the law has written off action prosper? (1973)
cannot be demanded and required. The prayer that
the plaintiffs be compelled to deliver was ANS: No, the action will not prosper. In similar
impossible, if granted, would in effect be an cases decided by the Supreme Court (Gonzales vs.
extension of the term of the contract entered into by Jose, 66 Phil. 369; Patente vs. Omega, 49 Off. Gaz.
and between the parties.” 4846.), it was held where the debtor promises to pay
his obligation as soon as he has money or as soon as
In obligations with a term or period, for whose possible, the duration of the term or period depends
benefit is the term or period? exclusively upon the will of the debtor;
consequently, the only remedy of the creditor is to
ANS: When a period is designated for the bring an action against the debtor in accordance
performance of an obligation, it is presumed to be with Art. 1197 of the NCC for the purpose of asking
for the benefit of both the creditor and the debtor. the court to fix the duration of the term or period. It
Consequently, the former cannot demand the is only after the duration of the term or period has
performance of the obligation before the expiration been fixed by the court that any other action
of the designated period; neither can the latter involving the fulfillment or performance of the
compel the latter to perform the obligation before obligation can be maintained. This has always been
the expiration of such period. This rule, however, is the consistent doctrine in this jurisdiction.
not absolute. If it can be proved either from the (Gonzales vs. Jose, 66 Phil. 369; Concepcion vs.
tenor of the obligation or from other circumstances People, 74 Phil. 62; Ungson vs. Lopez, CA, 50 Off.
that the period has been established for the benefit Gaz. 4297; Pages vs. Basilan Lumber Co., 104 Phil.
of either the creditor or the debtor, the general rule 882.)
is no longer applicable. (Art, 1196, NCC.)
“M” and “N” were very good friends. “N” borrowed
What are the different cases or instances under the P10,000.00 from “M” Because of their close
NCC where the courts are empowered to fix the relationship, the promissory note executed by “N”
duration of a term or period? provided that he would pay the loan “whenever his
means permit.” Subsequently, “M” and “N”
Under Art. 1197, NCC there are two (2) cases where quarrelled. “M” now asks you to collect the loan
the courts are empowered to fix the duration of the because he is in dire need of money. What legal
term or period. They are: 1st, if the obligation does action, if any, would you take in behalf of “M”?
not fix a period but from its nature and (1980)
circumstances it can be inferred that a period was
intended by the parties; and 2nd, if the duration of ANS: “M” must bring an action against “N” for the
the period depends upon the will of the debtor. We purpose of asking the court to fix the duration of the
might add a 3rd — if the debtor binds himself to term or period for payment. According to the NCC,
pay when his means permit him to do so. (Art. when the debtor binds himself to pay when his
1180, NCC.) Strictly speaking, however, this case means permit him to do so, the obligation shall be
properly falls within the purview of the second, deemed to be one with a period, subject to the
because in such a case the power to determine when provisions of Art. 1197. In other words, it shall be
the obligation will be fulfilled is in effect left subject to those provisions of the Code with respect
exclusively to the will of the debtor. to obligations with a term or period which must be
judicially fixed. Thus, in the instant case, the court
shall determine such period as may under the a mere formality because no additional proofs other
circumstances have been probably contemplated by than the admitted facts will be presented and would
the parties. Once determined or fixed, it becomes a serve no purpose other than to delay. Here, there is
part of the covenant of the two (2) contracting no obstacle to such course of action.
parties. It can no longer be changed by them. If the
debtor defaults in the payment of the obligation What are the different cases or instances under the
after the expiration of the period fixed by the court, NCC when the debtor shall lose every right to make
the creditor can then bring an action against him for use of the term or period? (1973)
collection. Any action for collection brought before
that would be premature. This is well-settled. ANS: The debtor shall lose every right to make use
of the period:
A Corporation, engaged in the sale of subdivision (1) When after the obligation has been contracted,
residential lots, sold to “B” a lot of 1,000 square he becomes insolvent, unless he gives a guaranty or
meters. The contract provides that the corporation security for the debt;
should put up an artesian well with tank, within a (2) When he does not furnish to the creditor the
reasonable time from the date thereof and sufficient guaranties or securities which he has promised;
for the needs of the buyers. Five years thereafter, (3) When by his own acts he has impaired said
and no well and tank have been fixed, up by the guaranties or securities after their establishment,
corporation, “B” sued the corporation for specific and when through a fortuitous event they disappear,
performance. The corporation set up a defense that unless he immediately gives new ones equally
no period having been fixed, the court should fix the satisfactory;
period. Decide with reason. (1982) (4) When the debtor violates any undertaking in
consideration of which the creditor agreed to the
ANS: First Answer: The action for specific period; and
performance should be dismissed on the ground that (5) When the debtor attempts to abscond. (Art.
it is premature. It is clear that the instant case falls 1198, NCC.)
within the purview of obligations with a term or
period which must be judicially fixed. Thus, “B” A executed in favor of B a promissory note for
instead of bringing an action for specific P10,000, payable after two years, secured by a
performance, should bring an action asking the mortgage on a certain building valued at P20,000.
court to determine the period within which “A” One year after the execution of the note, the
Corporation shall put up the artesian well with tank. mortgaged building was totally destroyed by a fire
Once the court has fixed the period, once the courts, of accidental origin. Can B demand from A the
let us say, has declared that the period is six months, payment of the value of the note immediately after
then that will become part of the covenant between the burning without waiting for the expiration of the
the contracting parties. It can no longer be changed term? Reasons.
by them. If the Corporation does not put up the
artesian well with tank within the period fixed by ANS: Yes, B can demand from A the payment of the
the court, “B” can then bring an action for specific value of the note immediately after the burning
performance. without waiting for the expiration of the term,
unless A immediately gives another security or
Second Answer: Normally, before an action for guaranty which is equally satisfactory. This is clear
specific performance may be maintained by “B” from the provision of No. 3 of Art. 1198 of the NCC
against “A” Corporation, the former must first bring which declares that when by his own acts the debtor
an action against the latter asking the court to fix the has impaired the guaranty or security, or when
duration of the term or period to install the artesian through a fortuitous event the guaranty or security
well with tank. However, an action combining such disappears, the debtor shall lose the benefit of the
action with that of an action for specific term or period. It must be observed that there is a
performance may be allowed if it can be shown that difference between the effect of impairment and the
a separate action for specific performance would be effect of disappearance as applied to the security or
guaranty. The rules may be restated as follows: (1)

If the guaranty or security is impaired through the ANS: Alternative obligations refer to those juridical
fault of the debtor, he shall lose his right to the relations which comprehend several objects or
benefit of the period; however, if it is impaired prestations which are due, but the payment or
without his fault, he shall retain his right. (2) If the performance of one of them would be sufficient. On
guaranty or security disappears through any cause, the other hand, facultative obligations refer to those
even without any fault of the debtor, he loses his juridical relations where only one object or
right to the benefit of the period. In either case, prestation has been agreed upon by the parties to the
however, the debtor shall not lose his right to the obligation, but the obligor may deliver or render
benefit of the period if he gives a new guaranty or another in substitution.
security.
Distinguish facultative from alternative obligations.
A sold his entire interest in 24,000 tons of iron ore
to B for P75,000, PI0,000 of which was actually ANS: Facultative obligations may be distinguished
paid upon the signing of the contract. With respect from alternative obligations in the following ways:
to the balance of P65,000, it was agreed that it “will (1) As to object due: In facultative obligations only
be paid from the first amount derived from the sale one object is due, whereas in alternative obligations
of the ore.” To insure payment thereof, B delivered several objects are due.
to A a surety bond which provided that the liability (2) As to compliance: Facultative obligations may
of the surety liability would automatically expire be complied with by the delivery of another object
after the lapse of two years. Inasmuch as the ore had or the performance of another prestation in
not yet been sold and the surety bond had expired substitution of that which is due, whereas
without being renewed and the balance had not yet alternative obligations may be complied with by the
been paid in spite of repeated demands, A finally delivery of one of the objects or by the performance
brought an action against B for the recovery of said of one of the prestations which are alternatively due.
balance. B, however, interposed the defense that his (3) As to right of choice: In the first, the right of
Obligation to pay is conditional and that inasmuch choice pertains only to the debtor, whereas in the
as the condition has not yet been fulfilled, therefore, second, the right of choice may pertain even to the
it is not yet due and demandable. Is this defense creditor or to a third person.
tenable? (4) As to effect of fortuitous loss: In the first, loss or
impossibility of the object or prestation which is
ANS: This defense is untenable. The sale of the iron due without any fault of the debtor is sufficient to
ore is not a condition precedent to the payment of extinguish the obligation, whereas in the second, the
the balance but only a suspensive term or period. loss or impossibility of all of the objects or
There is no uncertainty whatsoever with regard to prestations which are due without any fault of the
the fact of payment; what is undetermined is merely debtor is necessary to extinguish the obligation.
the exact date of payment. Normally, therefore, A (5) As to effect culpable loss: In the first, the
will have to wait for the actual sale of the iron ore culpable loss of the object which the debtor may
before he can demand from B for the payment of deliver in substitution before the substitution is
the unpaid balance. However, inasmuch as by his effected does not give rise to any liability on the
own act B has impaired the guaranty or security part of such debtor; in the second, the culpable loss
after its establishment without giving another one of any of the objects which are alternatively due
which is equally satisfactory, it is clear that he has before the choice is made may give rise to a liability
now lost the benefit of the term or period. on the part of the debtor.
Consequently, the case now falls squarely within the
purview of pars. 2 and 3 of Art. 1198 of the NCC. (a) In alternative obligations, who has the right to
(Gaite vs. Fonacier, 112 Phil. 728.) choose or select the object to be delivered or the
prestation to be performed among those which are
Define alternative and facultative obligations. alternatively due?
(1988)
(b) When are the parties bound by the choice or second, whether the loss is due to a fortuitous event
selection? or to the fault of the debtor.
(c) May the creditor impugn the choice or selection? If right of choice belongs to debtor — If the loss is
due to a fortuitous event, the effects may be
ANS: (a) In alternative obligations the right to summarized as follows:
choose or select the object to be delivered or the (1) If two (2) or more of the objects remain, the
prestation to be performed among those which are obligation still subsists retaining its alternative
alternatively due pertains as a general rule to the character.
debtor. (Art. 1200, NCC.) There are, however, two (2) If only one remains, the obligation still subsists,
(2) exceptions. They are: first, when the right has but it ceases to be alternative. In other words, it has
been expressly granted to the creditor (Art. 1200, become a simple obligation to deliver the remaining
NCC.); and second, when it has been expressly object.
granted to a third person. Although the NCC does (3) If none remains, the obligation is extinguished.
not. Expressly recognize the second, there is no In all of the above cases, the debtor cannot be held
reason why it cannot be allowed, since anyway it is liable for damages, applying the provisions of Arts.
not contrary to law, morals, good customs, public 1174,1262 and 1266 of the NCC.
order or public policy. If the loss is due to the fault of the debtor, the
(b) The parties are bound by the choice or selection effects may be summarized as follows:
from the very moment that it has been (1) If two (2) or more of the objects remain, the
communicated by the party who has the right to obligation still subsists retaining its alternative
make it to the other party. (Art. 1201, NCCJ character. The debtor in such a case cannot be held
(c) Assuming that the choice was made by the liable for damages because he can still comply with
debtor and that it has been properly communicated his obligation.
to the creditor, it is submitted that the latter cannot (2) If only one remains, the obligation still subsists,
impugn the choice or selection. but it ceased to be alternative. In other words, it has
It must be noted, however, that in an obiter dictum become a simple obligation to deliver the remaining
in Ong Guan Can vs. Century, Inc., Co. (46 Phil. object. The debtor in such a case cannot be held
592), where the alternative obligations of the liable for damages because he can still comply with
obligor consisted of paying the insured value of the his obligation.
house or rebuilding it, and the obligor notified the (3) If none remains, the obligations is converted into
obligee that it shall rebuild the house, the Supreme an obligation to indemnify for damages. The
Court stated that the oblige may impugn the indemnity shall consist of the value of the last
selection. We believe that this is unsound. Consent object to be lost plus consequential damages. (Art.
of the creditor or obligee to the choice or selection 1204, NCC.)
made by the debtor is not necessary before such If right of choice belongs to creditor — If the loss is
choice or selection can produce effect. To hold due to a fortuitous event, the effects are the same as
otherwise, would destroy the very nature of the right where the right of choice belongs to the debtor.
to select and the alternative character of the If the loss is due to the fault of the debtor, the
obligation for that matter. effects may be summarized as follows:
(1) If two (2) or more of the objects remain, the
In obligations where there are three (3) or more obligation still subsists retaining its alternative
objects which are alternatively due, if one, or more, character. If the creditor chooses any of those
or all of the objects are lost or destroyed, what are remaining, the debtor cannot be held liable for
the effects of such loss or destruction upon the damages; however, if he chooses any of those which
obligation as well as upon the liability of the were lost, the debtor is liable for the value of the
debtor? object plus damages.
(2) If only one remains, the obligation still subsists,
ANS: The answers to this question shall depend but it ceases to be alternative. In other words, it has
upon two (2) factors — first, whether the right of become a simple obligation to deliver the remaining
choice belongs to the debtor or to the creditor; and object or to indemnify for damages depending upon
the discretion of the creditor. If the latter chooses virtue of which each of the creditors has a right to
the object remaining, the debtor cannot be held demand, while each of the debtors is bound to
liable for damages; however, if he chooses any of render, compliance with his proportionate part of
those which were lost, the debtor is liable for the the prestation which constitutes the object of the
value of the object plus damages. obligation. In other words, each of the creditors is
(3) If none remains, the obligation is converted into entitled to demand the payment of only a
an obligation to indemnify for damages. The proportionate part of the credit, while each of the
indemnity shall consist of the price of the object debtors is liable for the payment of only a
chosen by the creditor plus consequential damages. proportionate part of the debt. A solidary obligation,
(Art. 1205, NCC.) on the other hand, may be defined as an obligation
where there is a concurrence of several creditors, or
In facultative obligations, if the substitute is lost or of several debtors, or of several creditors and
destroyed through the fault of the debtor, is he liable debtors, by virtue of which each of the creditors has
for damages? a right to demand, while each of the debtors is
bound to render entire compliance with the
ANS: If the loss or destruction took place after the prestation which constitutes the object of the
substitution has been made, undoubtedly, the debtor obligation. In other words, each of the creditors is
is liable for damages. This is logical because once entitled to demand the payment of the entire credit,
the substitution is effected by the debtor duly while each of the debtors is liable for the payment
notifying the creditor of such fact, the obligation is of the entire debt. (See Art. 1207, NCC)
converted into a simple one with the substitute as Obligations may be classified as either “joint” or
the object of the obligation. If the loss or destruction “solidary.”
took place before the substitution could be effected, “Joint” or “jointly” or “conjoin” means mancum or
we believe that the debtor cannot be held liable for mancomunada or pro rata obligation; on the other
damages. It is, of course, true that Art. 1206 of the hand “solidary obligations” may be used
NCC provides that before the substitution is made interchangeably with “joint and several,” Thus, the
by the obligor, the loss or deterioration of the thing usage of the term “joint and solidary” is confusing
intended as a substitute, through the negligence of and ambiguous.
the said obligor, does not render him liable. Hence The ambiguity, notwithstanding, liability, if proven,
there seems to be an implication that if the loss or is solidary.
deterioration is due to the bad faith or fraud of the This characterization finds basis in Art. 1207 of the
debtor, then he is liable. As a matter of fact, Dean NCC, which provides that obligations are generally
Capistrano sustains the view that the debtor is liable considered joint, except when otherwise expressly
as a matter of principle, although he admits that the stated or when the law or the nature of the
intention of the Code Commission was to leave the obligation requires solidarity. However, obligations
problems to the courts to decide. (NCC, Vol. 3, p. arising from tort are, by their nature, always
135.) It must, however, be observed that if the solidary. (Lafarge Cement Phils, vs. Continental
debtor can be held liable, will this not destroy the Cement Corp., G.R. No. 155173, November 23,
facultative nature of the obligation? 2004.)
Define joint and solidary obligations. (1988) Where there is a concurrence of several creditors, or
of several debtors, or of several creditors and
ANS: When there is a concurrence of two (2) or debtors in one and the same obligation — what is
more creditors or of two (2) or more debtors in one the nature of the obligation — is it joint or solidary?
and the same obligation, such obligation may be
either joint (obligation mancomunada) or solidary ANS: As a general rule, the obligation is joint.
(obligation solidaria). A joint obligation may be According to Art.
defined as an obligation where there is a 1207 of the NCC, there is a presumption that in case
concurrence of several creditors, or of several of concurrence of two (2) or more creditors or of
debtors, or of several creditors and debtors, by two (2) or more debtors in one and the same
obligation, the obligation is joint. In such case, each payment of the entire debt, will this have the effect
creditor is entitled only to demand for the payment of interrupting the running of the period of
of his proportionate share of the credit, while each prescription?
debtor can be compelled only to pay for his
proportionate share of the debt. The presumption, ANS: (a) The creditors cannot proceed against A
however, is disputable in character. The obligation alone for the payment of the entire obligation. Since
is solidary when the obligation expressly so states, the promissory note is silent with respect to the right
or when the law or the nature of the obligation of the creditors as well as the liability of the debtors,
requires solidarity. the obligation is, therefore, presumed to be joint.
(Art. 1207, NCC.) Consequently, the only right of
What are the characteristics of joint divisible such creditors if they proceed against A alone for
obligations? payment would be to collect from him P3,000,
ANS: The characteristics of joint divisible which is his proportionate share in the obligation.
obligations are as follows: (Ibid.) Once the amount is collected, it will then be
(1) Each creditor can demand only for the payment divided equally among X, Y and Z. This is so
of his proportionate share of the credit, while each because, under the law, in the absence of any legal
debtor can be held liable only for the payment of his provision or stipulation of the parties to the
proportionate share of the debt. contrary, the credit or debt shall be presumed to be
(Arts. 1207,1208, NCC.) divided into as many equal shares as there are
(2) A joint creditor cannot act in representation of creditors or debtors, the credits or debts being
the other creditors, while a joint debtor cannot be considered distinct from one another. (Art, 1208,
compelled to answer for the acts or liability of the NCC.)
other debtors. (b) X alone cannot proceed against A, B and C for
the payment of the entire obligation for the same
Three persons execute a promissory note promising reason stated in the previous paragraph. The most
to pay their indebtedness to their common creditor that he will be able to collect from the three debtors
within a stipulated period without declaring that will be his proportionate share in the obligation
they are liable solidarily. Can one of them be which is P3,000. (Arts. 1207,1208, NCC.) As far as
compelled to pay the entire obligation? the debtors are concerned, because of the principle
that in joint obligations the credit or debt shall be
ANS: No. According to Art. 1207 of the NCC, the presumed to be divided into as many equal shares as
obligation is presumed to be joint. In this type of there are creditors or debtors, the credits or debts
collective obligation, a debtor can be compelled to being considered distinct from one another (Art.
pay only his proportionate share of the obligation. 1208, NCC.), the liability of each will be only with
This is evident from the provisions of Art. 1208 of respect to his share in the P9,000. Consequently, X
the same Code. can collect only PI,000 from A, PI,000 from B, and
PI,000 from C.
A, B and C executed a promissory note binding (c) If X proceeds against A alone for payment, the
themselves to pay P9,000 to X, Y and Z. The note is most that he will be able to collect will be only
now due and demandable. PI,000. The reason has already been stated in the
(a) Can the creditors proceed against A alone for previous paragraph.
payment of the entire obligation? Why?
(b) Can X alone proceed against A, B and C for (d) If C is insolvent, his co-debtors cannot be held
payment of the entire obligation? Why? liable for his share in the obligation. This
(c) Suppose that X proceeds against A alone for necessarily follows from the principle that in a joint
payment, how much can he collect? Why? obligation, the credit or debt shall be presumed to
(d) Suppose that C is insolvent, can A and B be held be divided into as many equal shares as there are
liable for his share in the obligation? Why? creditors or debtors, the credits or debts being
(e) Suppose that the obligation was about to considered distinct from one another. (Art. 1208,
prescribe, but X wrote a letter to A demanding for NCC.)
(e) The demand made by X upon A, for the purpose A and B sold 1,000 sacks of rice to X and Y and, on
of interrupting the running of the period of X’s request, delivered them to him. X resold the
prescription, shall prejudice the latter only, but not rice, without turning over any part of it or its price
the other debtors. Consequently, if after ten years, to Y.
X, Y and Z should bring an action against A, B and May Y compel A and B to deliver what he bought?
C to collect the debt, the defense of prescription If so, to what extent? (1983)
would be absolute insofar as B and C are concerned,
but partial insofar as A is concerned. In other words, ANS: Yes, Y may compel A and B to deliver what
A can still be compelled to pay PI,000 to X. The he bought from them. However, A and B can be
reason for this is the fact that the principle of mutual compelled to deliver only 250 sacks of rice each.
agency is not applicable in joint obligations. The reason is simple. The obligation is joint.
(Agoncillo vs. Javier, 38 Phil. 424.) Since the obligation does not state that it is solidary
and since it is clear that the law or the nature of the
X, Y and Z owe A and B the amount of P12,000 in a obligation does not require solidarity, therefore, the
joint obligation. How many obligations exist in this presumption is that the obligation is joint
case? — joint with respect to X and Y and joint with
Who are the parties in each obligation and for how respect to A and B.
much? Consequently, the delivery by A and B of 1,000
Why? (1971) sacks of rice to X did not extinguish their obligation
to Y. Under the law, they are still liable to Y. In
ANS: There are six (6) obligations in the above other words, since the share of Y in the credit is
case. The parties and the amount of each obligation presumed to be to the extent of 600 sacks of rice,
are: therefore, A is presumed to be liable to Y to the
(1) X as debtor for P2,000 in favor of A as creditor; extent of 250 sacks of rice, while B is also
(2) X as debtor for P2,000 in favor of B as creditor; presumed to be liable to Y to the extent of 250 sacks
(3) Y as debtor for P2,000 in favor of A as creditor; of rice.
(4) Y as debtor for P2,000 in favor of B as creditor;
(5) Z as debtor for P2,000 in favor of A as creditor; (a) What are the characteristics which distinguish a
(6) Z as debtor for P2,000 in favor of B as creditor. joint indivisible obligation from a joint divisible
obligation?
The above answers are clearly deducible from Art. (b) In a joint indivisible obligation, what is the
1208 of the effect if anyone of the debtors should fail to comply
NCC which declares that if the obligation is joint, with his undertaking?
the credit or debt shall be presumed to be divided
into as many equal shares as there are creditors or ANS: (a) Although in a joint indivisible obligation,
debtors, the credits or debts being considered as the creditor cannot act in representation of the
distinct from one another, subject to the Rules of others and the debtor cannot be compelled to
Court governing the multiplicity of suits. Take the answer for the acts or liability of the others because
credit of P12,000 for instance. Since there are two of its joint character, yet it is easily distinguishable
(2) creditors there will also be two (2) credits of from a joint divisible obligation because of the
P6,000 for each creditor. In the case of the debt of presence of the following characteristics:
P12,000, since there are three (3) debtors there will (1) If there are two (2) or more debtors, compliance
also be 3 debts of is P4,000 against each debtor. with the obligation requires the concurrence of all
Now, as far as A, the first creditor, is concerned, if of them, although each for his own share.
he wants to collect his credit of P6J000, he must Consequently, the obligation can be enforce only by
proceed against all the debtors. Thus, he will be able proceeding against all of the debtors. (Art. 1209,
to collect P2,000 from X, P2,000 from Y, and NCC.)
another P2,000 from Z. The same is true in the case
of B, the second creditor.
(2) If there are two (2) or more creditors, the (4) If two (2) or more persons have appointed an
concurrence of all of them, although each for his agent for a common transaction or undertaking, they
own share, is also necessary for the enforcement of shall be solidarily liable to the agent for all the
the obligation. This is so because the obligation is consequences of the agency, (Art. 1915, NCC.)
joint, and therefore, a creditor cannot act in (5) When there are two (2) or more bailees to whom
representation of the others, and it is also a thing is loaned in the same contract, they are liable
indivisible, and therefore, not susceptible of partial solidarily. (Art. 1945, NCC.)
fulfillment. (6) The responsibility of two (2) or more officious
(b) If anyone of the debtors in a joint indivisible managers shall be solidary, unless the management
obligation should fail to comply with his was assumed to save the thing or business from
undertaking, the obligation is converted into one of imminent danger. (Art. 2146, NCC.)
indemnity for damages. However, the debtor who (7) The responsibility of two (2) or more payees,
may have been ready to comply with what is when there has been payment of what is not due is
incumbent upon him shall not contribute to the solidary. (Art. 2157, NCC.)
indemnity beyond the corresponding portion of the (8) The responsibility of two (2) or more persons
price of the thing or of the value of the service in who are liable for a quasi delict is solidary. (Art.
which the obligation consists. On the other hand, 2194, NCC.)
the debtor who failed or refused to comply with his (9) Several and subsidiary liability of principals,
undertaking shall pay not only his share of such accomplices, and accessories of a felony. —
price or value, but also all of the damages suffered Preference in payment. — Notwithstanding the
by the creditor of creditors as a result of the provisions of the next preceding article, the
nonfulfillment of the obligation. (Art. 1224, NCC.) principals, accomplices and accessories, each within
their respective class, shall be liable severally (in
When is an obligation solidary? solidum) among themselves for their quotas, and
subsidiarily for those of the other persons liable.
ANS: An obligation is solidary in the following The subsidiary liability shall be enforced, first
cases: against the property of the principals, next against
(1) When the obligation expressly so states; that of the accomplices, and lastly against that of the
(2) When the law requires solidarity; and accessories. (Art. 110, R.P.C.)
(3) When the nature of the obligation requires
solidarity. (Art. 1207, NCC.) What are the different kinds of solidarity?
86. What are the obligations where the law requires ANS; Solidarity may be: (1) active (among the
solidarity? creditors); (2) passive (among the debtors); or (3)
mixed (among the creditors and the debtors at the
ANS: The obligations where the law requires same time). (4 Sanchez Roman 50; Giorgi, Teoria
solidarity are the following: de las Ohligaciones, Vol. 1, p. 89.)
(1) If two (2) or more heirs take possession of the
estate, they shall be solidarily liable for the loss or What is meant by active and passive solidarity?
destruction of a thing devised or bequeathed, even
though only one of them should have been What is their effect in general?
negligent. (Art. 927, NCC.) ANS: Solidarity of creditors (active solidarity) may
(2) All partners are liable solidarily with the be defined as a tie or vinculum among several
partnership for everything chargeable W the creditors of one and the same obligation by virtue of
partnership under Articles 1822 and which each of them, in relation to his cocreditors
1823, (Art. 1824, NCC.) possesses the character of creditor only with respect
(3) Even when the agent has exceeded his authority, to his share in the obligation, but in relation to the
the principal is solidarily liable with the agent if the common debtor or debtors, represents all of the
former allowed the latter to act as though he had full other creditors. (Giorgi, Teoria de las Obligaciones,
power. .(Art. 1911, NCC.) Vol. 1, p. 90.)
The most fundamental effect of active solidarity is Four foreign medical students rented the apartment
the creation of a relationship of mutual agency of Thelma for a period of one year. After one
among the solidary creditors by virtue of which semester, three (3) of them returned to their home
each creditor is empowered to exercise against the country and the fourth student transferred to a
debtor or debtors not only the rights which boarding house. Thelma discovered that they left
correspond to him, but also all the rights which unpaid telephone bills in the total amount of
correspond to the other creditors with the PI00,000.00. The lease contract provided that the
consequent obligation to render an accounting of his lessees shall pay for the telephone services in the
acts to such creditors. Solidarity of debtors (passive leased premises. Thelma demanded that the fourth
solidarity) may be defined as a tie or vinculum student pay the entire amount of the unpaid
among several debtors of one and the same telephone bills, but the latter is willing to pay only
obligation by virtue of which each of them, in 1/4 of it. Who is correct? Why? (2001)
relation to the common creditor or creditors,
represents all of the other debtors, and in relation to ANS: The fourth student is correct. His liability is
his co-debtors, possesses the character of debtor only joint. Hence, pro rata. There is solidary
only with respect to his share in the obligation. (See liability only when the obligation expressly so state
Giorgi, Teoria de las Obligaciones, Vol. 1, p. 115.) or when the law or nature of the obligation requires
In passive solidarity, each solidary debtor, insofar as solidarity. (Art. 1207, NCC.) The contract of lease
the creditor or creditors are concerned, is the debtor in the instant case does not, in any way, stipulate
of the entire amount; however, with respect to his solidarity.
co-debtors, he is the debtor only to the extent of his
share in the obligation. (3 Castan, 7th Ed., p. 73.) (a) Can solidarity exist although the creditors and
Hence, the most fundamental effect of solidarity debtors may not be bound in the same manner and
among the debtors is the liability of each debtor for by the same periods and conditions?
the payment of the entire obligation, with the (b) A, B and C borrowed PI2,000 fromX. This debt
consequent right to demand reimbursement from the is evidenced by a promissory note wherein the three
others for their corresponding shares once payment (3) bound themselves to pay the debt jointly and
has been made. severally. However, according to the note, A can be
compelled to pay only on June 15, 1962; B can be
Distinguish between solidarity and indivisibility. compelled to pay only on June 15, 1964; while C
can be compelled to pay only on June 15, 1966.
ANS: Solidarity and indivisibility may be On June 15,1962, X made a demand upon A to pay
distinguished from each other in the following the entire indebtedness, but the latter paid only
ways: P4,000. Subsequently, because of A’s refusal to pay
(1) As to nature: Solidarity refers to the legal tie or the balance, X brought an action against him for the
vinculum, and consequently, to the parties of the collection of the amount. Will such action prosper?
obligation, whereas, indivisibility refers to the Reasons.
prestation which constitutes the object of the
obligation. ANS: (a) Yes, solidarity may exist although the
(2) As to requisites: Plurality of subject is creditors and the debtors may not be bound in the
indispensable in solidarity, whereas it is not same manner and by the same periods and
required in indivisibility. conditions. This rule is expressly recognized in Art.
(3) As to effect of breach: In solidarity, when the 1211 of the NCC.
obligation is converted into one of indemnity for (b) For the present, the action will not prosper. It is
damages because of breach, the solidary character course true that the obligation here is solidary and
of the obligation remains, whereas in indivisibility, that its solidary character is not destroyed by the
the indivisible character of the obligation is fact that the debtors are bound by different periods
terminated. for payment as expressly provided for in Art. 1211
of the NCC. However, in solidary obligations of this
type, the right of the creditor is limited to the
recovery of the amount owed by the debtor whose for his benefit, he is not entitled to any
obligation has already matured, leaving in suspense reimbursement from his co-debtors.
his right to recover the shares corresponding to the (2) If the remission is for the benefit of one of the
other debtors whose obligations have not yet debtors and it covers his entire share in the
matured. This restriction upon the creditor’s right obligation, he is completely released from the
does not destroy the solidary character of the creditor or creditors, but he is still bound to his co-
obligation, because, ultimately, he can still compel debtors. Consequently, if one of the latter
one and the same debtor, if that is his wish, to pay subsequently pays the obligation which is not
the entire obligation. Therefore, in the instant case, condoned and he proceeds against the others for
X shall have to wait for June 15, 1964, when B’s reimbursement of their respective shares in the
obligation shall have matured, and for June 15, obligation, but one of them is insolvent, the debtor
1966, when C’s obligation shall have also matured. for whose benefit the remission had been effected,
On June 15,1966, he can collect P4,000 from either shall still have to share in the portion which
A or B. On June 15, 1966, he can again collect corresponds to the insolvent.
another P4,000 from either A or B or C. (See (3) If the remission is for the benefit of one of the
Ynchausti vs. Yulo, 34 Phil 978.) debtors and it covers only a part of his share in the
obligation, his character as a solidary debtor is not
What is the effect of remission of a solidary affected; it continues both with respect to the
obligation effected by the solidary creditor upon the creditor or creditors and with respect to the other
obligation itself, upon the relationship of the debtors. Whether the remission covers the entire
creditors among themselves, and upon the share of a solidary debtor in the obligation or only a
relationship of the debtors among themselves? part thereof, if the creditor or creditors proceed
Explain. against any one of the other solidary debtors for the
payment of the entire obligation, such debtor can
ANS: Upon the obligation: If the remission is total, always avail himself of the defense of partial
the entire obligation is extinguished; if it is partial, remission, but only as regards that part of the
the obligation is extinguished in that part or aspect obligation for which the debtor benefited by the
thereof to which the remission refers. (Art. 1215, remission is responsible. (Art. 1222, NCC;
NCC.) Ynchausti & Co. vs. Yulo, 24 Phil. 978.)
Upon the solidary creditor: The solidary creditor
responsible for the remission shall be liable to the (a) As a general rule, does the death of either the
other solidary creditors for the shares in the creditor or the debtor extinguish obligations that are
obligation corresponding to them. (Ibid.) transmissible to the heirs? (b) Are monetary
Upon the solidary debtors: As far as the solidary obligations under a contract of surety
debtors are concerned, the effects of remission may intransmissible by their nature, by stipulation, or by
be summarized as follows: provision of law? (c) Will the death of the principal
(1) If the remission covers the entire obligation, debtor convert, decrease or nullify the substantive
then the obligation is totally extinguished and the right of the solidary creditor?
entire juridical relation among the debtors is
terminated altogether. This is true whether the ANS: (a) As a general rule, the death of either the
remission is for the benefit of all of the debtors or of creditor or the debtor does not extinguish the
only one of them. obligation. Obligations are transmissible to the
As a matter of fact, the NCC in Art. 1220 expressly heirs, except when the transmission is prevented by
declared that the remission of the whole obligation, the law, the stipulation of the parties or the nature of
obtained by one of the solidary debtors, does not the obligation.
entitle him to reimbursement from his co-debtors. Only obligations that are personal or are identified
This rule is based on the character of remission as with the persons themselves are extinguished by
an act of pure liberality. In reality, the remission of a death. Sec. 5 of Rule 86 of the Rules of Court
debt is a donation. Hence, if the whole obligation is expressly allows the prosecution of money claims
condoned through the efforts of a solidary debtor or arising from a contract against the estate of a
deceased debtor. Evidently, those claim are not partial extinguishment of the obligation depending
extinguished. What is extinguished is only the upon whether the entire amount of the debt is paid
obligee’s action or suit filed before the court, which or only a part thereof.
is not then acting as a probate court.
(b) In the case of Stronghold Insurance Company Once payment is made by one of the solidary
Inc. (petitioner-surety) vs. Republic-Asahi Glass debtors of the entire obligation, there arises
Corporation (respondent,), whatever monetary immediately a consequent right of such debtor to
liabilities or obligations the deceased Jose Santos claim from his co-debtors the share which
(the proprietor of JDS Construction which executed corresponds to them, with interest for the payment
a performance bond jointly and severally with already made. (Art. 1217, par. 2, NCC.) This right,
petitioner-surety) had under his contracts with however, is not available to a debtor who makes the
respondent Republic-Asahi were not intransmissible payment after the obligation has prescribed or has
by their nature, by stipulation or by provision of become illegal. (Art. 1218, NCC.)
law. Hence, death did not result in the As a rule, the interest shall be computed from the
extinguishment of those obligations or liabilities, time payment was made. However, if payment was
which merely passed on to the estate of Santos, made before the debt became due, no interest during
Death is not a defense that he or his estate can set the intervening period may be demanded. In other
up to wipe out the obligations under the words, the interest shall be computed not from the
performance bond. Consequently, the petitioner as time payment was made, but from the time the debt
surety cannot use his death to escape its monetary became due. Thus, if A, B and C became indebted
obligation under its performance bond. As a surety, jointly and severally to X for P30,000 and it was
petitioner is solidarily liable with Santos in agreed that such debt shall be paid on December 1,
accordance with Art. 2017, in relation to Art. 1216 1956, but instead payment was made by A on June
of the NCC. The surety’s obligation is not an 1, 1955, he can demand from B and C only the
original and direct one for the performance of his share which corresponds to each in the obligation
own act, but merely accessory or collateral to the plus the interest thereon from December 1,1956.
obligation contracted by the principal. Nevertheless, What would be the effect if one of the solidary
although the contract of a surety is in essence debtors cannot, because of his insolvency,
secondary only to a valid principal obligation, his reimburse his share to the debtor paying the
liability to the creditor or promisee of the principal obligation? According to the third paragraph of Art.
is said to be direct, primary and absolute; in other 1217, such share shall be borne by all his co-
words, he is directly and equally bound with the debtors, in proportion to the debt of each.
principal.
If one of the solidary debtors pays the entire
(c) The death of the principal debtor will not work obligation, is such debtor subrogated to all of the
to convert, decrease or nullify the substantive right lights of the creditor?
of the solidary creditor. Despite the death of the
principal debtor, respondent may still sue petitioner ANS: Such debtor is not subrogated to all of the
alone, in accordance with the solidary nature of the rights of the creditor.
latter’s liability under the performance bond. Under It must be observed that, under the law, before the
the law and jurisprudence, respondent may sue, payment is actually made, the right of the solidary
separately or together, the principal debtor and the debtor to demand reimbursement from his co-
petitioner, in view of the solidary nature of their debtors is merely conditional and contingent. Once
liability. payment has already been made, the right becomes
real and existing. The old obligation in favor of the
What is the effect of payment made by one of the creditor is extinguished, but a new obligation is
solidary debtor? Explain. created in favor of the solidary debtor who made the
payment. There is, therefore, no real case of
ANS: Where payment is made by one of the subrogation. (Wilson vs. Berkentkotter, 49 Off. Gaz.
solidary debtors, the effect is either the total or 1410.)
What are the defenses which are available to a ANS: (a) A can avail himself of both defenses.
solidary debtor if the creditor proceeds against him Under Art. 1222 of the NCC, there are three (3)
alone for the payment of the entire obligation? Give kinds of defenses which are available to a solidary
examples of each. debtor if the creditor proceeds against him alone for
ANS: The creditor or creditors may sue either any payment of the entire obligation. They are 1st,
of the solidary debtors or all of them simultaneously defenses derived from the nature of the obligation;
> but whether only one or all of the solidary debtors 2nd, defenses personal to him or pertaining to his
are sued jointly, any solidary debtor may interpose share; and 3rd, defenses personal to the others, but
against the claim of the creditor or creditors any of only as regards that part of the debt for which the
the following defenses: 1st, defenses derived from latter are responsible. It is evident that both defenses
the nature of the obligation; 2nd, defenses personal interposed by A fall within the purview of the third.
to him or pertaining to his own share; and 3rd,
defenses personal to the others, but only as regards (b) Since A can avail himself of both defenses, and
that part of the debt for which the latter are since such defenses are not absolute but merely
responsible. partial in character, undoubtedly, X can collect from
Examples of the 1st are payment or performance, A the following: (a) P4,000 corresponding to the
res adjudicata, prescription, those which invalidate share of A in the obligation; and (b) an amount
the contract such as violence, intimidation, fraud, equivalent to the extent that B had been benefited
undue influence or mistake, and others of a similar by his share in the obligation, applying the rule
nature. Examples of the 2nd are minority, insanity enunciated in Art. 1399 regarding the effect if the
and other defenses which are purely personal to the defect of a contract consists in the incapacity of one
debtor. The 3rd is, as a rule, merely a partial of the contracting parties. As far as the share
defense. Thus, if one of the debtors was only a corresponding to C is concerned, X must wait for
minor at the time of the perfection of the contract, the expiration of the two (2) years extension which
or if the creditor has granted an extension of time he had given to C before he can collect such share
for payment to one of the debtors, the debtor against from A.
whom the action for payment is brought can
interpose the defense of minority and extension of Define divisible and indivisible obligations.
time for payment, but only with regard to that part
of the debt for which the debtor personally affected ANS: Divisible obligations are those which have as
is responsible. their object a prestation which is susceptible of
partial performance without the essence of the
A, B and C borrowed P12,000 from X on June 1, obligation being changed. Indivisible obligations,
1976. They executed a promissory note binding on the other hand, are those which have as their
themselves jointly and severally to pay the object a prestation which is not susceptible of
obligation on June 1, 1978. partial performance, because otherwise the essence
For failure to pay, X brought an action against A for of the obligation will be changed. (3 Castan, 7th
payment of the entire obligation plus interests. A Ed., p. 92.) The obligation is clearly indivisible
interposed the following defenses: (1) that B was because the performance of the contract cannot be
only a minor at the time of the celebration of the done in parts, otherwise, the value of what is
contract and that such fact was known to X; and (2) transferred is diminished. (Nazareno vs. CA, G.R.
that X had granted an extension of two (2) years to No. 138842, October 18, 2000.)
C within which to pay.
(a) Can A avail himself of these defenses? (a) When is a thing divisible or indivisible?
(b) Granting that A can avail himself of these (b) Give and define the different kinds of division.
defenses, what would be the effect upon his liability, (c) Distinguish between the divisibility of an
assuming that he can establish both defenses by obligation and the divisibility of the thing which
competent evidence? constitutes the object of the obligation.
Reasons.
(d) If the thing which constitutes the object of the

obligation to give is divisible, does it necessarily ANS: An obligation with a penal clause is one with
follow that the obligation is also divisible? Suppose an accessory undertaking by virtue of which the
that the thing is indivisible, does it necessarily obligor assumes a greater liability in case of breach
follow that the obligation to give is also indivisible? of the obligation. (8 Manresa, 5th Ed., Bk. 1, p.
477.)
ANS: (a) A thing is divisible when, if separated into
parts, its essence is not changed or its value is not What is meant by penal clause or penalty and what
decreased disproportionately, because each of the are its purposes?
parts into which it is divided are homogenous and
analogous to each other as well as to the thing itself. ANS: A penal clause is an accessory obligation
On the other hand, a thing is indivisible when, if attached to a principal obligation by virtue of which
separated into parts, its essence is changed or its the obligor is bound to pay a stipulated indemnity or
value is decreased disproportionately. (4 Sanchez to perform an agreed prestation for the purpose of
Roman 93-94.) insuring the performance of the principal obligation.
(b) The division of a thing may be quantitative, According to the NCC, “the penalty shall substitute
qualitative or ideal. The division is quantitative the indemnity for damages and the payment of
when the thing can be materially divided into parts interests in case of non-compliance, if there is no
and such parts are homogenous to each other, such stipulation to the contrary. Nevertheless, damages
as when the parts are separated from each other as shall be paid if the obligor refuses to pay the penalty
in the case of movables, or when the limits of the or is guilty of fraud in the fulfillment of the
parts are fixed by metes and bounds as in the case of obligation.” (Art. 1226.) It is, therefore, apparent
immovables. It is qualitative when the thing can be that a penal clause has 3 purposes. They are:
materially divided, but the parts are not (1) Funcion coercitiva o de garantia — to insure the
homogenous to each other, such as in the partition performance of the obligation;
of an inheritance. It is ideal or intellectual when the (2) Funcion liquidatoria — to liquidate the amount
thing can only be separated into ideal or undivided of damages to be awarded to the injured party in
parts, not material parts, as in the case of case of breach of the principal obligation; and
coownership. (4 Sanchez Roman 93-94.) (3) Funcion estrictamente penal — in certain
(c) The divisibility of an obligation refers to the exceptional cases, to punish the obligor in case of
performance of the prestation which constitutes the breach of the principal obligation.
object of the obligation, whereas the divisibility of
the thing or prestation which constitutes the object It is evident that the second is compensatory, while
of the obligation refers to the prestation itself. the third is punitive in character; the first, on the
(d) If the thing which constitutes the object of an other hand, is the general purpose regardless of
obligation to give is by its very nature divisible, the whether the penalty is compensatory or punitive.
general rule is that the obligation is also divisible
since it is evidently susceptible of partial What are the different kinds of penalties?
compliance. This rule is subject to the following
exceptions: ANS: Penalty may be classified as follows:
(1) that the obligation is indivisible by express (1) As to origin — legal or conventional. It is legal
provision of law; and (2) that it is indivisible by when it is constituted by law; it is conventional
intention of the parties. (Art. 1225, NCC.) when it is constituted by agreement of the parties.
If the thing which constitutes the object of the
obligation to give is by its very nature indivisible, (2) As to purpose — compensatory or punitive. It is
the obligation is also indivisible since it is evident compensatory when it is established for the purpose
that it is not susceptible of partial compliance. This of indemnifying the damages suffered by the
rule is absolute in character. (Ibid.) obligee or creditor in case of breach of the
obligation; it is punitive when it is established for
Define obligations with a penal clause.
the purpose of punishing the obligor or debtor in consequences, the supervening realities, the
case of breach of the obligation. standing relationship of the parties, and the like, the
application of which, is addressed to the sound
(3) As to effect — subsidiary or joint. It is discretion of the court. In Rizal Commercial
subsidiary when only the penalty may be demanded Banking Corporation vs. CA, 289 SCRA 242, the
in case of breach of the obligation; it is joint when Supreme Court has tempered the penalty charges
the injured party may demand the enforcement of after taking into account the debtor’s pitiful
both the penalty and the principal obligation. situation and its offer to settle the entire obligation
with the creditor bank. The stipulated penalty might
In a contract of loan between SBTC and the likewise be reduced when a partial or irregular
petitioners, there is a stipulated penalty of 5% per performance is made by the debtor. (Insular Bank of
month. No payment was made when the obligation Asia and America vs. Sps. Salazar, 159 SCRA 111;
became due and demandable. In a suit filed, the Ligutan vs. CA, G.R. No. 138677, February 12,
RTC rendered a judgment holding the defendants 2002.)
liable and imposed 5% per month penalty. The CA
reduced the penalty to 3% per month. When shall the penalty be considered as a substitute
Defendants sought to have the penalty totally erased for damages or interests? What are the exceptions?
before the Supreme Court contending that it is
grossly excessive, exorbitant and unconscionable. Is ANS: As a general rule, in obligations with a penal
their contention correct? clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of
ANS: Defendant’s contention is not correct. A non-compliance. (Art. 1226, par. 1, NCC.) In such
penalty is expressly recognized by law. (Art. 1226, case, proof of actual damages suffered by the
NCC.) It is an accessory undertaking to assume creditor is not necessary in order that the penalty
greater liability on the part of an obligor in case of may be demanded. (Art. 1228,
breach of an obligation. It functions to strengthen NCC.)
the coercive force of the obligation (SSS vs. There are three (3) exceptions to the rule that the
Moonwalk Development and Housing Corporation, penalty shall substitute the indemnity for damages
221 SCRA 119.), as well as to provide, in effect, for and the payment of interests in case of non-
what could be the liquidated damages resulting from compliance with the principal obligation. They are:
such a breach. 1st, when there is a stipulation to the contrary, 2nd,
The obligor would then be bound to pay the when the obligor is sued for refusal to pay the
stipulated indemnity without the necessity of proof agreed penalty; and 3rd, when the obligor is guilty
of on the existence and on the measure of damages of fraud. (Art. 1226, par. 1} NCC.) In all of these
caused by the breach. (Art. 1228, NCC.) Although a cases, it is evident that the purpose of the penalty is
court may not be at liberty to ignore the freedom of to punish the obligor. Consequently, the obligee can
the parties to agree on such terms and conditions as recover from him not only the penalty, but also the
they see fit that contravene neither law nor morals, damages resulting from the breach of the principal
good customs, public order or public policy, a obligation.
stipulated penalty, nevertheless, may be equitably
reduced by the courts if it is iniquitous or Is there any difference between the penalty in
unconscionable or if the principal obligation has obligations with a penal clause and liquidated
been partly or irregularly complied with. (Art. 1229, damages?
NCC.)
The question of whether a penalty is reasonable or ANS: As a general rule, there is none. In other
iniquitous can be partly subjective and partly words, the penalty in its compensatory aspect is
objective. Its resolution would depend on such exactly the same as the liquidated damages defined
factors as, but not necessarily confined to, the type, in Art. 2226 of the NCC. (Lambert vs. Fox, 26 Phil.
extent and purpose of the penalty, the nature of the 558.) In both cases, proof of actual damages
obligation, the mode of breach and its suffered by the creditor is not necessary. However,
the penalty in its punitive aspect is different from ANS: Under Art. 1229 of the NCC, the courts may
liquidated damages. Thus, when there is a equitably reduce the stipulated penalty in the
stipulation that the creditor can recover damages in following instances: first, if the principal obligation
addition to the penalty, or when the debtor is sued has been partly complied with; second, if the
for refusal to pay the penalty, or when such debtor is principal obligation has been irregularly complied
guilty of fraud, it is clear that in such cases the with; and third, if the penalty is iniquitous or
creditor can recover not only the agreed penalty but unconscionable even if there has been no
also damages suffered by him. performance.
By virtue of a compromise agreement, D became Can the court delete a penalty clause?
indebted to C for the amount of P2,500. An
additional amount of P200 was provided as ANS: Yes. The stipulated penalty can be deleted in
liquidated damages in the agreement in case D fails cases such as when there has been substantial
to complete payment within 60 days. The latter performance in good faith by the obligor (Art. 1234,
failed to pay inspite of repeated demands. NCC.), when the penalty clause itself suffers from
Subsequently, C brought an action against D. The fatal infirmity, or when exceptional circumstances
court sentenced defendant to pay to plaintiff the so exists as to warrant it. (Garcia vs. CA, 167 SCRA
amount of P2,500, with interest at legal rate from 815; Palmares vs. CA, 288 SCRA 423; Ibarra vs.
the date of the filing of the complaint until full Aveyro, 37 Phil. 278; Ligutan vs. CA, G.R. No.
payment. Is the decision correct? Reasons. 138677, February 12, 2002.)
ANS: The decision is not entirely correct. In A executed a contract by which he agreed to pay a
obligations with a penal clause, the penalty shall certain amount to B for services rendered by the
substitute the indemnity for damages and the latter.
payment of interests. (Art. 1226, NCC.) Applying In the contract, it is expressly stipulated that if A
the law, it is evident that no interest can be awarded should fail to pay the amount after the lapse of 30
on the principal obligation since the penalty of P200 days, he shall pay a surcharge of 10% for every 30
has taken the place of the payment of such interest. days of default until the amount has been fully paid.
But then there are exceptions to the rule that the Because of A’s failure to pay the amount within the
penalty shall substitute the indemnity for damages period stipulated, B brought this action to recover
and the payment of interests and one of them is the amount plus the penalty and damages. The
when the debtor refuses to pay the agreed penalty. lower court rendered the amount plus the penalty
The instant case, therefore, takes an entirely and damages. The lower court rendered a decision
different aspect with respect to the penalty. It has awarding to B not oily the surcharge but also 6%
been repeatedly held that in obligations to pay interest per annum by way of damages. A now
money when a penalty is stipulated for default, both claims that the surcharge of 10% for every 30 days
the principal obligation and the penalty can be of default is unconscionable because it is
demanded by the creditor. (Government vs. Lims 61 tantamount to imposing an interest at 10% a month
Phil. 737; Luneta Motor Co. vs. Moral, 73 Phil. 80.) and, therefore, should be reduced, and that the
Defendant having refused to pay when demand was award of 6% interest per annum by way of damages
made by plaintiff, the latter is clearly entitled to is contrary to law since according to Art.
interest on the amount of the penalty at legal rate 1226 of the NCC, the penalty shall be a substitute
from the time of default. (Cabarroguis vs. Vicente, for damages or interests. Decide the case.
107 Phil. 340.)
What are the different cases or instances under the

NCC where the courts may reduce the penalty ANS: There is merit in the contention that the
which Is attached to an obligation? surcharge is unconscionable. While this surcharge
partakes of the nature of a penal clause when the
parties may stipulate under the law, however, one
cannot deny that the same is unconscionable.

Making use of the discretion that the law grants to
the courts on the matter (Art. 1229, NCC.), a
surcharge of 20% per annum would be reasonable.
On the other hand, the contention that the payment
of 6% interest is contrary to law on the ground that
defendant is already ordered to pay the penalty
agreed upon is untenable. Under Art. 1226 of the
NCC, the penalty takes the place of interest only if
there is no stipulation to the contrary, and even then
damages may still be collected if the obligor refuses
to pay the penalty or is guilty of fraud.
In the case at bar, not only is there an express
stipulation to pay damages in addition to the
penalty, but defendant has failed to pay his
obligation as well as the penalty. The imposition of
the interest is, therefore, justified. (Umali vs.
Miclat, 105 Phil. 1109.)

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OBLICON PREMIDTERMS REVIEWER P a g e |1

OBLIGATIONS criminal offense or quasi-delict and its only purpose

(1) To deliver a thing which must be neither of

condition was a purely potestative one. Is he

ANSWER: SUGGESTED ANSWER:

for the protection and enforcement of his right

ANS: In its legal acceptation, a condition may be

(1) Potestative ■— when the fulfillment of the

guaranty. The rules may be restated as follows: (1)

(d) If the thing which constitutes the object of the

What are the different cases or instances under the

cannot deny that the same is unconscionable.

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