Oblicon Reviewer

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INTRODUCTION

INTRODUCTION TO LAW

Law – means any rule of action or any system of uniformity 2 General Groups

 Law (in the strict legal sense) – promulgated and enforced by state  Law (in the non-legal sense) – not promulgated and enforced by state General Divisions of Law

 Divine Law

o Law of religion and faith; concerns itself with the concept of sin and salvation

o Divulged to mankind by direct revelation

o Sanction lies in assurance of certain rewards and punishments in the present life or life to come

 Natural Law

o Divine inspiration in man of the sense of justice, fairness & righteousness

o Internal dictates of reason alone

o Impressed in man as the core of his higher self o Regarded as reasonable basis of state law  Moral Law

o Mores or ways of life

o Totality of norms of good and right conduct

o No definite legal sanction for violation of purely moral law o Not absolute; shapes/influences state law

 Physical Law

o Uniformities of actions and orders of sequence  State Law

o Only law promulgated and enforced by state

Characteristics of (state) Law

1. It is a rule of conduct –tells us what to do and what not to do. It dictates behavior

2. It is obligatory- a positive command imposing a duty to obey and involving a sanction which forces obedience 3. It is promulgated by legitimate authority

4. It is of common observance and benefit- intended by man to serve man Necessity and functions of law

What would life be without law? Society has a need for internal order which is as constant as the need for external defense. What does law do? Law secures justice, resolves social conflict, orders society, protects interests, and controls social relations. No society can last and continue without means of social control, without rules of social order binding on its members.

“Ultimate end of the law is justice” Sources of Law

1. Constitution –a written instrument; ―highest law of the land‖

2. Legislation- declaration of legal rules by a competent authority. Acts passed are called: enacted or statute law.

3. Administrative or Executive orders, regulations and rulings- issued by administrative officials under legislative authority. Valid only when they are not contrary to the laws and Constitution

4. Judicial decisions or jurisprudence- decisions of the courts.

5. Custom- consists of habits and practices which through long and uninterrupted usage have become acknowledged and approved by society as binding rules of conduct.

6. Other sources

Law compared with other means of social control

 Laws are made and administered by the only institutions in society authorized to act in behalf of the entire citizenry. Churches, for example, only act for their members

 Only legal institutions within the society can make rules, regulations and orders with which the entire citizenry must comply. Rules of social & economic organizations govern only limited members

 Citizens of state cannot free themselves from the impact of its rules and regulations unless they choose to leave the area which the state is sovereign. People can terminate their membership in organizations to do this.

 Sanctions or techniques of control through law are more varied and complex than that available to organizations.  Before law ―operates‖ on an individual, various procedural steps are required.

Organization of Courts

1. Regular courts- Supreme courts, Court of Appeals, Regional Trial Courts, etc.

2. Special courts- special anti-graft court: Sandiganbayan, and Court of Tax Appeals – doesn’t entertain other cases 3. Quasi-judicial agencies- they involve also the settlement or adjudication of controversies or disputes

Classification of Law  As to its purpose:

1. Substantive law- portion of the body of law creating and defining rights and duties

2. Adjective law – also called remedial or procedural law; portion of the body of law prescribing the manner or procedure by which rights may be enforced or their violations redressed

 As to its subject matter:

1. Public law- body of legal rules which regulates the rights and duties arising from the relationship of the state to the people 2. Private law- body of rules which regulates the relations of individuals with one another for purely private ends.

Law on obligations and Contracts

The law on obligations and contracts is the body of rules which deals with the nature and sources of obligations and the rights and duties arising from agreements and the particular contracts

Civil Code of the Philippines

When we speak of civil law, we refer to the law found primarily on our civil code. The Civil Code of the Philippines is based mainly on the Civil Code of Spain which took effect on December 7, 1889.

Conclusive presumption of knowledge of law

“Ignorance of law excuses no one from compliance therewith” “Everyone, therefore, is conclusively presumed to know the law.”

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OBLIGATIONS

CHAPTER 1

Article 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

Obligation – from Latin word obligation. It is a tie or bond recognized by law by virtue of which one is bound to in favor of another to render something: giving a thing, doing a certain act or not doing a certain act.

Juridical necessity- in case of non-compliance, courts of justice can be called upon to enforce the obligation’s fulfillment. (* if an obligation cannot be enforced, it is a natural obligation)

Essential Requisites of an obligation

1. A passive object (debtor or obligor)- he who has a duty 2. An active object (creditor or obligee)- he who has a right

3. Object or prestation (subject matter) – conduct required to be observed by debtor: to do, not to do or to give 4. A juridical or legal tie (efficient cause)- binds or connects the parties to the obligation

Forms of Obligations – manner in which obligation is manifested. May be oral, or in writing, or partly oral and partly in writing. Obligation vs. Right vs. Wrong

 Obligation – act or performance which law will enforce  Right – the power to demand from another any prestation

 Wrong- act or omission of one party in violation of the legal rights of another. Kinds of Obligation according to subject matter

1. Real obligation – obligation to give; subject matter is a thing

2. Personal obligation – obligation to do or not to do; subject matter is an act a. Positive personal obligation- obligation to do

b. Negative personal obligation – obligation not to do

Article 1157. Obligations arise from:

1. Law;

2. Contracts;

3. Quasi-Contracts;

4. Acts or omissions punished by law; and

5. Quasi-delicts. (1089a)

Sources of obligations

1. Law – imposed by law itself

2. Contracts – arise from stipulation of the parties

3. Quasi-Contracts- arise from lawful voluntary and unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another.

4. Crimes or acts or omissions punished by law- arise from civil liability which is a consequence of a criminal offense

5. Quasi-delicts or torts- arise from damages caused by another through an act or omission with fault or negligence but no contractual relation exists between the parties

Article 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provision of this Book. (1090)

Legal laws are not presumed because they are considered a burden to the obligor. *special laws – all other laws not in contained in the Civil Code.

Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (1091a)

*contracts or voluntary agreements are valid and enforceable  Binding force- have the force of law

 Requirement of a valid contract- not contrary to law, morals, good customs, public order, and public policy.

 Compliance in good faith – compliance or performance in accordance with the stipulations or terms of the contract or agreement.

Quasi-Contractual obligations- A juridical relation resulting from lawful, voluntary, unilateral acts by virtue of which the parties become bound to each other to the end that no one will be unjustly enriched at the expense of another.

Kinds of Quasi-contracts

1. Negotiorum gestio – voluntary management of the property or affairs of another without the knowledge or consent of the latter.

2. Solutio indebiti- juridical relation which is created when something is received when there is no right to demand it and it was unduly delivered through mistake.

Article 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of article 2177, nd of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of Title XVIII of this Book, regulating damages. (1092a)

*every person criminally liable for an act or omission is also civilly liable  Restitution (return)

 Reparation for the damages caused and  Indemnification for consequential damages

Article 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this book, and by special laws. (1093a)

Quasi-delicts- an act or omission by a person (tort feasor) which causes damage to another giving rise to an obligation to pay for the damage done. Requisites of quasi-delict

1. There must be an act or omission 2. There must be fault or negligence 3. There must be damage caused

4. There must be a direct relation of cause and effect between the act or omission and the damage; and 5. There is no pre-existing contractual relation between the parties

Crime VS. Quasi-delict

CHAPTER 2: Nature and Effect of Obligations

Article 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a)

Specific or determinate thing- Particularly designated or physically segregated others of the same class. It is identified by its individuality. The debtor cannot substitute it with another without the consent of the creditor

Generic or indeterminate thing- Refers only to a class or genus which cannot be pointed out with particularity and is identified only by its specie. The debtor can give anything of the same class.

Duties of debtor in obligation to give a determinate thing 1. Preserve the thing

a. Diligence of a good father of a family. b. Another standard of care

c. Factors to be considered - The diligence depends upon the nature of the obligation and corresponds with the circumstances of the person, of the time, and of the place. The debtor is not liable if his failure to preserve the thing is not due to his fault or negligence but to fortuitous events or force majeure.

d. Reason for debtor's obligation. — The debtor must exercise diligence to insure that the thing to be delivered would subsist in the same condition as it was when the obligation was contracted.

2. Deliver the fruits of the thing.

3. Deliver the accessions and accessories. 4. Deliver the thing itself

5. Answer for damages in case of non-fulfillment or breach.  Criminal/ malicious intent or criminal

negligence  Punishment

 Affects public interest  Criminal & civil liability  Cannot be compromised  Guilt must be proved beyond

reasonable doubt

 Negligence

 Indemnification of offended party  Private interest

 Civil liability

 May be settled by the parties  Fault or negligence proved by

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1. Deliver a thing which is the quality intended 2. Be liable for damages

Article 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095)

Different Kinds of fruits

1. Natural fruits- spontaneous products of the soil, the young & products of animals. 2. Industrial fruits - are produced by lands of any kind through cultivation or labor. 3. Civil fruits- are those derived by virtue of a relation.

Right of creditor to the fruits

The creditor is entitled to the fruits of the thing to be delivered from the time the obligation to make delivery arises. When obligation to deliver fruits arises

1. From the time of the perfection of the contract.

2. Upon the fulfillment of the condition or arrival of the term

3. Arises from the perfection of the contract even if the obligation is subject to a suspensive condition or a suspensive period where the price has been paid.

4. Determined by the specific provisional of the law applicable. Personal Right VS. Real Right

Ownership acquired by delivery

Creditor does not become the owner until the specific thing has been delivered to him. Hence, when there has been no delivery yet, the proper court action of the creditor is not one for recovery of possession and ownership but one for specific performance or rescission of the obligation

Article 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.

If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096)

Remedies of creditor in real obligation

1. In a specific real obligation (obligation to deliver a determinate thing), the creditor may exercise the following remedies or rights in case the debtor fails to comply with his obligation.

a. demand specific fulfillment of obligation w/ a right to indemnity for damages; b. demand cancellation of the obligation w/ a right to recover damages;or c. demand payment of damages only where it is the only feasible remedy. *the very thing itself must be delivered and only debtor can comply

2. A generic real obligation (obligation to deliver a generic thing), can be performed by a third person since the object is expressed only according to its family or genus.

Responsibility of debtor who delays/has promised delivery to separate creditors.

Paragraph 3 gives two instances when a fortuitous event does not exempt the debtor from responsibility. It likewise refers to a determinate thing. An indeterminate thing cannot be the object of destruction by a fortuitous event because genus nunquam perit (genus never perishes).

Article 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned. (1097a)

Accessions - the fruits of a thing or additions to a thing

Accessories- things joined to or included with the principal thing for the latter's embellishment, better use, or completion Right of creditor to accessions and accessories

 Power to demand another to give, do or not to do

 Active and Passive subject  Against a particular person

 Right over a specific thing without a definite passive object

 Active without a definite passive subject

The general rule is that all accessions and accessories are considered included in the obligation to deliver a determinate thing although they may not have been mentioned, unless otherwise stipulated

Article 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. (1098)

Situations in Article 1167

1. The debtor fails to perform an obligation to do;

2. The debtor performs an obligation to do but con-trary to the terms thereof; or 3. The debtor performs an obligation to do but poor manner.

Remedies of creditor in positive personal obligation

1. If the debtor fails to comply with his obligation to do, the creditor has the right:

a. to have the obligation performed by himself, or by another, unless personal considerations are involved, at the debtor's expense; b. to recover damages.

2. In case the obligation is done in contravention of the terms of the same or is poorly done, it may be ordered (by the court) that it be undone if it is still possible to undo what was done.

Performance by a third person

A personal obligation can be performed by a third person unless it is specific. Thus, remedy is indemnity for damages.

Article 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. (1099a)

Remedy of creditor in negative personal obligation – undoing the forbidden act plus damages

Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extra-judicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist: 1. When the obligation or the law expressly so declares; or

2. When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

3. When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. (1100a)

Delay

 Ordinary delay - merely the failure to perform an obligation on time.

 Legal delay or default - the failure to perform an obligation on time which failure constitutes a breach of the obligation. Kinds of delay or default

 Mora solvendi - the delay on me part of the debtor to fulfill his obligation (to give or to do);

 Mora accipiendi - the delay on the part of the credi-tor to accept the performance of the obligation; and  Compensatio morae - the delay of the obligors in reciprocal obligations (like in sale)

No delay in negative personal obligations

Delay is impossible for the debtor fulfills by not doing Requisites of delay or default by the debtor

1. failure of the debtor to perform his (positive) obligation on the date agreed upon;

2. demand (not mere reminder or notice) made by the creditor upon the debtor to comply with his obligation which demand may be either judicial or extra-judicial; and

3. failure of the debtor to comply with such demand Effects of Delay

1. The following are the effects of mora solvendi:

a. The debtor is guilty of breach or violation of the obligation;

b. He is liable to the creditor for interest (in case of obligations to pay money) or damages. In the absence of extra-judicial demand, the interest shall commence from the filing of the complaint; and

c. He is liable even for a fortuitous event when the obligation is to deliver a determinate thing. However, if the debtor can prove that the loss would have resulted just the same even if he had not been in default, the court may equitably mitigate or reduce the damages.

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*In an obligation to deliver a generic thing, the debtor is not relieved from liability for loss due to a fortuitous event. He can still be compelled to deliver a thing of the same kind or held liable for damages.

2. The effects of mora accipiendi are as follows: a. The creditor is guilty of breach of obligation;

b. He is liable for damages suffered, if any, by the debtor; c. He bears the risk of loss of the thing due;

d. Where the obligation is to pay money, the debtor is not liable for interest from the time of creditor's delay; and e. The debtor may release himself from the obligation by the consignation or deposit in court of the thing or sum due.

3. In compensatio morae, the delay of the obligor cancels the delay of the obligee and vice, versa. The net result is that there is no default or delay on the part of both parties.

*If the delay of one party is followed by that of the other, the liability of the first infractor shall be equitably tempered or balanced by the courts. If it cannot be determined which of the parties is guilty of delay, the contract shall be deemed extinguished and each shall bear his own damages. When demand is not necessary to put debtor in delay

 When the obligation so provides.  When the law so provides.  When demand would be useless.

 When there is performance by a party in reciprocal obligations.

Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. (1101)

Grounds for liability

1. Fraud (deceit or dolo). - it is the deliberate or intentional evasion of the normal fulfillment of an obligation. As a ground for damages, it implies some kind of malice or dishonesty and it cannot cover cases of mistake and errors of judgment made in good faith. It is synonymous to bad faith. 2. Negligence (fault or culpa). - It is any voluntary act or omission, there being no malice, which prevents the normal fulfillment of an obligation. 3. Delay (mora)

4. Contravention of the terms of the obligation. - This is the violation of the terms and conditions stipulated in the obligation. The contravention must not be due to a fortuitous event or force majeure.

Fraud VS. Negligence

Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. (1102a)

*fraud is so serious and evil that its employment to avoid the fulfillment of one’s obligation is discouraged *waiver of action for future fraud is void as being against the law and public policy

*waiver of action for past fraud is valid and considered as an act of generosity and magnanimity of the aggrieved party. The effect of fraud is renounced

Article 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. (1103)

*the debtor is also liable for damages resulting from his negligence. Validity of waiver of action arising from negligence

 An action for future negligence may be renounced except where the nature of the obligation requires the exercise of extraordinary diligence as in the case of common carriers.

 Where negligence shows bad faith, it is considered equivalent to fraud. Any waiver of an action for future negligence of this kind is, therefore, void.

Kinds of negligence according to source of obligation

1. Contractual negligence (culpa contractual) - negligence in contracts resulting in their breach. Article 1172 refers to culpa contractual. This kind of negligence is not a source of obligation. It merely makes the debtor liable for damages in view of his negligence in the fulfillment of a preexisting obligation.

 With deliberate intention to cause damage or injury

 Waiver for future fraud is void  Must be clearly proved  Liability can’t be reduced or

mitigated by courts

 No malice

 Waiver are allowed

 Presumed from the violation of a contractual obligation

 Liability may be reduced according to circumstances

2. Civil negligence (culpa aquiliana) - negligence which by itself is the source of an obligation between the parties not so related before by any preexisting contract. It is also called tort or quasi-delict; and

3. Criminal negligence (culpa criminal) - negligence resulting in the commission of a crime. The same negligent act causing damages may produce civil liability arising from a crime, or create an action for a quasi-delict.

*In negligence cases, the aggrieved party may choose between a criminal action under Article 100 of the Revised Penal Code or a civil action for damages under Article 2176 of the Civil Code. What is prohibited under Article 2177 of the Civil Code is to recover twice for the same negligent act. Effect of negligence on the part of the injured party

When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded.

Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (1104a)

Fault or Negligence- negligence is the failure to observe for the protection of the interests of another person Factors to be considered

1. Nature of the obligation 2. Circumstances of the person 3. Circumstances of time 4. Circumstances of the place Measure of liability for damages

In contract and quasi-contracts, obligor who acted in good faith is liable for damages of natural and probable consequences of the breach of obligations, and which parties have foreseen or reasonably could have foreseen at obligation’s constitution.

For fraud, bad faith, malice or wanton attitude, obligor is responsible for all damages which may be reasonably attributed to the non-performance of the obligation

Kinds of diligence required

 that agreed upon by the parties, orally or in writing;

 in the absence of stipulation, that required by law in the particular case

 if both the contract and law are silent; then the dili-gence expected of a good father of a family

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a)

Fortuitous event- any event which cannot be foreseen, or which, though foreseen, is inevitable Fortuitous event distinguished from force majeure

1. Acts of man. - Strictly speaking, fortuitous event is an event independent of the will of the obligor but riot of other human wills. 2. Acts of God -They refer to what is called manure or those events which are totally independent will of every human being. Kinds of fortuitous events

1. Ordinary fortuitous events - those events which are common and which the contracting parties could reasonably foresee

2. Extra-ordinary fortuitous events - those events which are uncommon and which the contracting parries could not have reasonably foreseen Requisites of a fortuitous event

1. The event must be independent of the human will or at least of the debtor's will 2. The event could not be foreseen, or if foreseen, is inevitable;

3. The event must be of such a character as to render it impossible for the debtor to comply with his obligation in a normal manner;

4. The debtor must be free from any participation in, or the aggravation of, the injury to the creditor, that is, there is no concurrent negligence on his part

Rules as to liability in case of fortuitous event 1. When expressly specified by law

a. The debtor is guilty of fraud, negligence, or delay, or contravention of the tenor of the obligation.

b. The debtor has promised to deliver the same (specific) thing to two or more persons who do not have the same interest. c. The obligation to deliver a specific thing arises from a crime.

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2. When declared by stipulation

3. When the nature of the obligation requires the assumption of risk

Article 1175. Usurious transactions shall be governed by special laws. (n)

Simple loan or mutuum - a contract whereby one of the parties delivers to another: money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. It may be gratuitous or with a stipulation to pay interest.

Usury - contracting for or receiving interest in excess of the amount allowed by law for the loan or use of money, goods, chattels or credits Requisites for recovery of interest

1. The payment of interest must be expressly stipulated; 2. The agreement must be in writing; and

3. The interest must be lawful

*a stipulation for the payment of usurious interest is void, that is, as if there is no stipulation as to interest

Article 1176. The receipt of the principal by the creditor, without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid.

The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the presumption that such installments have been paid. (1110a)

Presumption - meant the inference of a fact not actually known arising from its usual connection with another which is known. Two kinds of presumption

1. Conclusive presumption. - one which cannot be contradicted, like the presumption that everyone is conclusively presumed to know the law; 2. Disputable (or rebuttable) presumption. - one which can be contradicted or rebutted by presenting proof to the contrary, like the presumption

established in Article 1176.

When presumptions in Article 1176 do not apply

1. With reservation as the interest. - The presumptions established in Article 1176 do not arise where there is a reservation that no payment has been made as to interest or prior installments, as the case may be.

2. Receipt without indication of particular installment paid. - The presumption in paragraph 2 of Article 1176 is not applicable if the receipt does not recite that it was issued for a particular installment due as when the receipt is only dated.

3. Payment of taxes. - Article 1176 does not apply to payment of taxes. There is no presumption that previous taxes have been paid by the payment of later ones.

4. Non-payment proven. - Of course, Article 1176 is not applicable where the non-payment of prior obligations has been proven. A presumption cannot prevail over a proven fact.

Article 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them. (1111)

Remedies available to creditors for the satisfaction of their claims  exact fulfillment with the right to damages;

 pursue the leviable property of the debtor;

 "after having pursued the property in possession of the debtor," exercise all the rights (like the right to redeem) and bring all the actions of the debtor (like the right to collect from the debtor of his debtor) except those inherent in or personal to the person of the latter (such as the right to vote, to hold office, to receive legal support, to revoke a donation on the ground of ingratitude, etc.);

 ask the court to rescind or impugn acts or contracts which the debtor may have done to defraud him when he cannot in any other manner recover his claim.

Article 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary. (1112)

Transmissibility of rights

All rights acquired in virtue of an obligation are generally transmissible Exceptions

 Prohibited by law. - When prohibited by law like the rights in partnership, agency, and commodatum which are purely personal in character. o By the contract of partnership - two or more persons bind themselves to contribute money, property or industry to a common fund, with the

intention of dividing the profits among themselves

o By the contract of agency - a person binds himself to render some service or to do something in repre-sentation or on behalf of another, with the consent or authority of the latter.

o By the contract of commodatum - one of the par-ties delivers to another something not consumable (e.g., car) so that the latter may use the same for a certain time and return it. Commodatum is essentially gratuitous.

 Prohibited by stipulation of the parties. - When prohibited by stipulation of the parties, like the stipulation that upon the death of the creditor, the obligation shall be extin-guished, or that the creditor cannot assign his credit to. an-other. Such stipulation, being contrary to the general rule, must be clearly proved, or, at the very least, clearly implied from the provisions of the contract itself.

CHAPTER 3; Sec.1: Pure and Conditional Obligations

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

Every obligation which contain in a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event. (1113)

Pure Obligation- one which is not subject to any condition and no specific date is mentioned for its fulfillment and is, therefore, immediately demandable Conditional Obligation- one whose consequences are subject in one way or another for the fulfillment of a condition

Condition- a future and uncertain event, upon happening of which, the effectively or extinguishment of an obligation (or right) subject to it depends Characteristics of a Condition

 Future and uncertain  Past but unknown

*a condition must not be impossible

2 principal kinds of condition: Suspensive VS. Resolutory

When obligation is demandable at once  when it is pure;

 when it is subject to any resolutory condition; or  when it is subject to a resolutory period.

Past event unknown to the parties- a past event cannot be a condition. Only the knowledge to be acquired in the future of a past event which is at the moment uncertain to the parties can determine if an obligation will arise or not.

Article 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of article 1197. (n)

Where duration of period depends upon the will of debtor

*period is a future and certain event upon the arrival of which the obligation subject to it either arises or is extinguished

1. The debtor promises to pay when his means permit him to do so- The obligation shall be deemed to be one with a period. In this case, what depends upon the debtor’s will is not whether he should pay or not for indeed he binds himself to pay. What is left only to his will is the duration of the period.

2. Other Cases– As when the debtor binds himself to pay: a. ―Little by Little‖

b. ―as soon as possible‖ c. ―from time to time‖

d. ―at any time I have the money:‖ e. ―in partial payments‖

f. ―when I am in a position to pay‖

Article 1181. In conditional obligations, the acquisition of rights as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. (1114)

 Condition precedent or condition antecedent

 One the fulfillment of which will give rise to an obligation (or right).  If it does not take place, tie of the

law does not appear

 Until it takes place, obligation is a mere hope

 Condition subsequent

 One the fulfillment of which will extinguish an obligation (or right) already existing.

 If it does not take place, tie of the law is consolidated

 Until it takes place, obligation’s effects flow, but it hovers the possibility of termination

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1. Acquisition of Rights- In obligations subject to a suspensive condition, the acquisition of rights by the creditor depends upon the happening of the event which constitutes the condition

2. Loss of Rights already Acquired- In obligations subject to a resolutory condition, the happening of the event which constitutes the condition produces the extinguishment or loss of rights already acquired

Article 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provision of this Code. (1115)

Classifications of Conditions  As to effect

o Suspensive – the happening of which gives rise to the obligatory; o Resolutory – the happening of which extinguishes the obligation.  As to form

o Express – the condition is clearly stated; and o Implied – the condition is merely inferred.  As to possibility

o Possible – the condition is capable of fulfillment, legally and physically; and o Impossible – the condition is not capable of fulfillment, legally or physically.  As to cause or origin

o Potestative – the condition depends upon the will of one of the contracting parties; o Casual – the condition depends upon chance or upon the will of a third person; and o Mixed – the condition depends partly upon chance and partly upon the will of a third person  As to mode

o Positive – the condition consists in the performance of an act; and o Negative – the condition consists in the omission of an act.  As to numbers

o Conjunctive – there are several conditions and all must be fulfilled;

o Disjunctive – there are several conditions and only one or some of them must be fulfilled.  As to divisibility

o Divisible – the condition is susceptible of partial performance; and o Indivisible – the condition is not susceptible of partial performance When suspensive condition depends upon sole will of debtor

 Conditional obligation void- Where the potestative condition depends solely upon the will of the debtor, the conditional obligation shall be void because its validity and compliance is left to the will of the debtor and it cannot, therefore, be easily demanded.

 Only the condition void- If the obligation is a pre-existing one and, therefore, does not depend for its existence upon the fulfillment by the debtor of the potestative condition, only the condition is void leaving unaffected the obligation itself

Where resolutory condition depends upon will of debtor

The fulfillment of the condition merely causes the extinguishment or loss of rights already acquired. The debtor is naturally interested in its fulfillment. *The position of the debtor when the condition is resolutory is exactly the same as that of the creditor when the condition is suspensive

When suspensive condition depends partly upon will of debtor

Conditional obligations whose fulfillment depends partly upon the will of the debtor and partly upon the will of a third person, or upon chance are perfectly valid

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

The condition not to do an impossible thing shall be considered as not having been agreed upon. (1116a)

*applies only to cases where the impossibility already existed at the time the obligation was constituted

Two Kinds of Impossible Conditions

1. Physically impossible conditions- when they, in nature of things, cannot exist or cannot be done

2. Legally impossible conditions- when they are contrary to law, morals, good customs, public order, or public policy. Effects of Impossible Conditions

 Conditional Obligation Void- Impossible conditions annul the obligation which depends upon them.

 Conditional obligation valid- If the condition is negative, that is, not to do an impossible thing, it is disregarded and the obligation is rendered pure and valid

 Only the condition void- If the obligation is a pre-existing obligation, therefore, does not depend upon the fulfillment of the condition which is impossible, for its existence, only the condition is void.

Article 1184. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or if it has become indubitable that the event will not take place. (1117)

Positive condition

*The above article refers to positive (suspensive) condition – happening of an event at a determinate time. The obligation is extinguished:  As soon as the time expires without the event taking place; or

 As soon as it has become indubitable that the event will not take place although the time specified has not expired.

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

If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, bearing in mind the nature of the obligation. (1118)

Negative condition

*The above provision speaks of a negative condition – that an event will not happen at a determinate time. The obligation shall become effective and binding:

 From the moment the time indicated has elapsed without the event taking place; or

 From the moment it has become evident that the event cannot occur, although the time indicated has not yet elapsed.

**If no time is fixed, the circumstances shall be considered to arrive at the intention of the parties. This rule may also be applied to a positive condition.

ARTICLE 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. (1119)

Constructive Fulfillment of Suspensive Condition: 3 Requisites 1. The condition is suspensive

2. The obligor actually prevents the fulfillment of the condition 3. He acts Voluntarily

*The law does not require that the obligor acts with malice or fraud as long as his purpose is to prevent fulfillment of the condition. He should not be allowed to profit from his own fault or bad faith

Constructive Fulfillment of Resolutory Condition

Art 1186 applies also to an obligation subject to a resolutory condition with respect to the debtor who is bound to return what he has received upon the fulfillment of the condition

Article 1187. The effects of a conditional obligation to give, once the condition has been fulfilled shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties the fruits and interests during the

pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different.

In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. (1120)

Retroactive effects of fulfillment of suspensive condition

 In obligation to give- An obligation to give subject to a suspensive condition becomes demandable only upon the fulfillment of the condition  In obligations to do or not to do- With respect to the retroactive effect of the fulfillment of a suspensive condition, in obligations to do or not to do, no

fixed rule is provided

Retroactive effects as to fruits and interests in obligations to give

 In reciprocal obligations- There is no retroactivity because the fruits and interests received during the pendency of the condition are deemed to have been mutually compensated

 In unilateral obligations- There is usually no retroactive effect because they are gratuitous. The debtor receives nothing from the creditor

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

The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. (1121a)

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1. Rights of creditor – He may take or bring appropriate actions for the preservation of his right, as the debtor may render nugatory the obligation upon the happening of the condition

2. Rights of debtor – He is entitled to recover what he has paid by mistake prior to the happening of the suspensive condition

Article 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of improvement, loss or deterioration of the thing during the pendency of the condition:

1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

2. If the thing is lost through the fault of the debtor, he shall be obliged to pay the damages; it is understood that a thing is lost when it perishes, or goes out of commerce, or disappears in a way that its existence is unknown or it cannot be recovered

3. When the thing deteriorates without the fault of the debtor;

4. If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for other damages in either case;

5. if the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;

6. if it is Improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary. (1122)

*Usufruct – is the right to enjoy the use and fruits of a thing belonging to another Requisites of Application of Article 1189

1. The obligation is a real obligation;

2. The object is a specific or determinate thing; 3. The obligation is subject to a suspensive condition; 4. The condition is fulfilled; and

5. There is loss, deterioration, or improvement of the thing during the pendency of the condition 3 kinds of losses

1. Physical loss- when a thing perishes 2. Legal loss- thing goes out of commerce 3. Civil loss- a thing’s existence becomes unknown

Rules in case of loss deterioration,or improvement of a thing during pendency of a suspensive condition 1. Loss of a thing without the debtor’s fault- as a general rule, a person is not liable for a fortuitous event 2. Loss of thing through debtor’s fault- the creditor will be entitled to demand damages

3. Deterioration of a thing without debtor’s fault- creditor will have to suffer the deterioration or impairment

4. Deterioration of a thing through debtor’s fault- rescission of the obligation with damages or fulfillment of the obligation with damages 5. Improvement of thing by nature or time- improvement shall inure to the benefit of the creditor

6. Improvement of thing at the expense of the debtor- the debtor will have the right granted to a usufructuary with respect to improvements made on the thing held in usufruct

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

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

As for obligations to do and not to do, the provisions of the second paragraph of Article 1187 shall be observed as regards the effect of the extinguishment of the obligation. (1123)

Effects of fulfillment of resolutory condition

1. In obligations to give – when the resolutory condition in an obligation to give is fulfilled, the obligation is extinguished and the parties are obliged to return to each other what they have received under the obligation.

2. In obligations to do or not to do – the courts shall determine the retroactive effect of the fulfillment of the resolutory condition. *The fulfillment of the resolutory condition converts the creditor into debtor and the debtor into creditor.

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

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

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

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and1388 and the Mortgage Law. (1124)

Kinds of obligation according to the person obliged

1. Unilateral – when only one party is obliged to comply with a prestation 2. Bilateral – when both parties are mutually bound to each other

a. Reciprocal obligation – those which arise from the same cause and in which each party is a debtor and creditor of the other, such that the performance of one is designed to be the equivalent and the condition of the performance of the other

b. Non-reciprocal obligation – those which do not impose simultaneous and correlative performance on both parties Remedies in reciprocal obligations

 Action for specific performance (fulfillment) of the obligation with damages; or  Action for rescission of the obligation also with damages

Court may grant guilty party term for performance

Applies only where the guilty party is willing to comply with his obligation but needs time to do so and not where he refuses to perform Remedies are alternative

Aggrieved party is privileged to choose only one of the remedies, and not both Limitation on right to demand rescission

*The right to rescind by the injured party is not absolute thus:  Resort to the courts

 Power of court to fix period  Rights of third person  Substantial violation  Waiver of right

Rescission without previous judicial decree

1. Where automatic rescission expressly stipulated- Where the contract itself contains such stipulation, the right to rescind is not ―implied‖ but expressly recognized

2. Where contract still executory- when there is no performance yet by both parties, but one is ready and willing to comply with what is incumbent upon him and the other is not, the willing party may, by his own declaration, rescind the contract without a previous judicial decree of rescission

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

Where both parties are guilty of breach

1. First infractor known- In this case, the liability of the first infractor should be equitably reduced

2. First infractor cannot be determined- The rule is that the contract shall be deemed extinguished and each shall bear his own damages. In effect, the court shall not provide remedy to either of the parties, who must suffer the damages allegedly sustained by them

CHAPTER 3; Sec.2: Obligations with a Period

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

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

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

If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules of the preceding section. (1125a)

Obligations with a period- one whose consequences are subjected in one way or another to the expiration of said period or term. Period or Term- a future and certain event upon the arrival of which the obligation (or right) subject to it either arises or is terminated. Period VS. Condition

 Certain event  Future

 If it depends on debtor’s will, it empowers the court to fix the duration thereof

 Unless there is an agreement to the

 Uncertain event

 May be unknown past event  If it depends on the debtor’s will,

obligation is invalidated  Happening of a condition has a

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 According to effect

a. Suspensive Period (ex die)- obligation begins only from a day certain upon the arrival of the period b. Resolutory Period (in diem)- obligation is valid up to a day certain and terminates upon arrival of the period  According to source

a. Legal Period- provided for by laws

b. Conventional or voluntary Period- agreed to by parties c. Judicial Period- fixed by the court

 According to definiteness

a. Definite Period- it is fixed or it is known when it will come b. Indefinite Period- not fixed or not known when it will come

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

Effect of loss, deterioration, or improvement before arrival of period *see comments under Article 1189

Article 1195. Anything paid or delivered before the arrival of the period, the obligor being unaware of the period, or believing that the obligation has become due and demandable, may be recovered, with the fruits, and interests. (1126a)

*applies only to obligations to give. It allows recovery of what has been paid by mistake. Debtor presume aware of period

Debtor has the burden of proving that he was unaware of the period. Obligor may no longer recover once the period arrives but he may still recover the fruits and interests.

No Recovery in Personal Obligations

It is physically impossible to recover the service rendered

Article 1196. Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances, it should appear that the period has been established in favor of one or of the other. (1127)

Presumption as to benefit of Period

Period is to be presumed to have been established for the benefit of both the creditor and the debtor; this presumption however, is rebuttable. Exceptions to the general rule

1. Term is for the benefit of the debtor alone- he cannot be compelled to pay prematurely, but he can, if he desires to do so.

2. Term is for the benefit of the creditor- he may demand fulfillment even before the arrival of the term but the debtor cannot require him to accept payment before the expiration of the stipulated period.

Computation of Period or Term  Year = 365 days  Month = 30 days  Day = 24 hours

 Nights = from sunset to sunrise

 If months are designated by name, days are computed respective to the month  In computing a period, 1st _{day is excluded and last day is included}

 If the last day is a Sunday or Legal holiday, time shall not run until the end of the next day

Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

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

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

Court generally without Power to fix a Period

If obligation does not state a period and no period is intended, the court is not authorized to fix a period. The courts have no right to make contracts for the parties.

Exceptions to the General Rule

1. No period is fixed but a period was intended

2. Duration of the period depends upon the will of the debtor Period fixed cannot be changed by courts

1. If there is a period agreed upon and it has already lapsed, the court cannot fix another period

2. From the very moment the parties give their acceptance and consent to the period fixed by the court, said period acquires the nature of a contract.

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

1. When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt; 2. When he does not furnish to the creditor the guaranties or securities which he hs promised;

3. When by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;

4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the period; 5. When the debtor attempts to abscond. (1129a)

When obligations can be demanded before the lapse of period *obligation becomes pure and immediately demandable

1. When debtor becomes insolvent

2. When debtor does no furnish guaranties or securities promised 3. When guaranties or securities given have been impaired or disappeared 4. When debtor violates an undertaking

5. When debtor attempts to abscond

CHAPTER 3; Sec.3: Alternative Obligations

Article 1199. A person alternatively bound by different prestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and part of the other undertaking. (1131)

Kinds of Obligation according to object

1. Simple Obligation- one where there is only one prestation

2. Compund Obligation – one where there are two or more prestations

a. Conjunctive Obligation- one where there are several prestations and all of them are due b. Distributive Obligation- one where one, two or more of the prestations is due

i. Alternative Obligations- one where several prestations are due but the performance of one is sufficient ii. Facultative Obligations- one where only one prestation is due but the debtor may substitute another

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

The debtor shall have no right to choose those prestations which are impossible, unlawful, or which could not have been the object of the obligation. (1132)

* Right to choose the prestation belongs to the debtor except when it is expressly granted to the creditor Right of choice of debtor not Absolute

1. Debtor cannot choose prestations which are: impossible, unlawful, or which could not have been the object of the obligation. These prestations are VOID

2. Debtor has no more right when- among the prestations whereby he is alternatively bound, only one is practicable.

Article 1201. The choice shall produce no effect except from the time it has been communicated. (1133)

Communication of notice that choice has been made

1. Effect of notice- until the choice is made and communicated, the obligation remains alternative. Once it is properly communicated, it is irrevocable and cannot be changed by one party without the consent of the other.

2. Proof and form of notice- the burden of proving that such communication has been made is upon him who made the choice. It may be orally, in writing, expressly or impliedly.

Article 1202. The debtor shall lose the right of choice when among the prestations whereby he is lternatively bound, only one is practicable. (1134)

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

When debtor may rescind the contract

Rescission creates the obligation to return the thigs which were the object of the contract together with their fruits, and the price with its interest. If through the creditor’s fault, debtor cannot make a choice according to the terms of the obligation, he may rescind the contract.

*the debtor, however, is not bound to rescind

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

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

Damages other than the value of the last thing or service may alos be awarded. (1135a)

Effect of Loss of objects of the obligation

1. Some of the objects- debtor is not liable since he has the right of choice and the obligation can still be performed

2. All of the objects- If it is through his fault, the creditor shall have the right to indemnity for damages since the obligation can no longer be complied with. If the loss is through a fortuitous event, the obligation is extinguished

Basis of Indemnity

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

Article 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor.

Until then the responsibility of the debtor shall be governed by the following rules:

1. If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering that which the creditor should choose from among the remainder, or that which remains if oly one subsists;

2. If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared, with a right to dmages;

3. If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any one of them, also with indemnity for damages.

The same rules shall also be applied to obligations to do or not to do in case one, some or all of the prestations should become impossible. (1136a)

*before the creditor makes the selection, the debtor cannot incur in delay Rules in case of loss before creditor has made choice

1. When a thing is lost through a fortuitous event- creditor can choose from among the remainder

2. When a thing is lost through debtor’s fault- creditor may claim from among the remainder with a right to damages or the price of the item lost also with a right to damages

3. When all the things are lost through debtor’s fault- creditor can demand the payment of any of the items with a right to indemnity for damages 4. When all the things are lost through a fortuitous event- the obligation shall be extinguished

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

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

Facultative obligation- one where only one prestation has been agreed upon but the obligor may render another in substitution. Effect of Loss

1. Before substitution- if the principal thin is lost through a fortuitous event, the obligation is extinguished; otherwise, the debtor is liable for damages. The loss of the intended substitute, with or without the debtor’s fault, does not make him liable.

2. After substitution- if the principal thing is lost, with or without the debtor’s fault, he is not liable. If the substitute is lost, his liability depends upon whether or not the loss was due to his fault.

Alternative VS. Facultative

 Several prestations are due nut compliance with one is sufficient  Right of choice may be debtor,

creditor or third person

 Loss of some of alternatives does not render obligation extinguished (through fortuitous event)

 If it depends on debtor’s choice, loss of one of the alternative does not

 Only one prestation is due but debtor is allowed to substitute it  Right of choice belongs only to

debtor

 Loss of thing due (because of fortuitous event) renders obligation extinguished

 Loss of thing due through debtor’s fault makes him liable

CHAPTER 3; Sec.4: Joint and Solidary Obligations

Article 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. (1137a)

Article 1208. If from the law, or the nature or the wording of the obligations to which the preceding article refers, the contrary does not appear, the credit or debt shall be presumed to be divided into as many equal share as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits. (1138a)

Kinds of obligations according to the number of parties

1. Individual obligation – one where there is only one obligor or one obligee; and

2. Collective Obligation – one where there are two or more debtors OR two or more creditors. It may be joint or solidary. Joint obligation - one where the whole obligation is to be paid or fulfilled proportionately by the different creditors

Solidary Obligation - one where each one of the debtors is bound to render, and/or each one of the creditors has a right to demand from any of the debtors, entire compliance with the prestation.

Collective obligation presumed to be joint

1. If A is liable to B for P9,000.00 there can be no problem regarding the determination of the following: a. the person liable to pay

b. the person entitled to demand payment c. the extent of the liability of the debtor; and d. the extent of the right of the creditor

2. Where there is a plurality of parties (two or more debtors and/or two or more creditors) and the share of each in the obligation specified, the correlative rights and obligations of the parties are known.

3. On the other hand, let us suppose that in the same obligation, the share of each debtor (or the share of each creditor, if there are two or more creditors) is not specified. In such case, the presumption is that the obligation is joint, and as consequence:

a. There are as many debts as there are debtors b. There are as many credits as there are creditors

c. The debts and/or credits are considered distinct and separate from one another d. Each debtor is liable only for a proportionate part of the debt

e. Each creditor is entitled only to a proportionate part of the credit The presumption established in Article 1208 is, however, rebuttable. * Presumption subject to rules on multiplicity of suits

Words used to indicate joint liability  Mancomunada

 Mancomunadamente  Pro rata

 Proportionately

 ―We promise to pay.‖ signed by two or more persons When obligation solidary

*There is solidary liability only when: 1. the obligation expressly so states 2. the law requires solidarity

3. the nature of the obligation requires solidarity