Chapter 3 2

Chapter3 and
DIFFERENTKINDSOFOBLIGATIONS (f)Obligationswithapenalclause.(Arts.12261230.)(2) Secondary
classificationofobligationsundertheCivilCode:
Classificationsofobligations.
. (a) Unilateralandbilateralobligations(Arts.
(1)PrimaryclassificationofobligationsundertheCivilCode:
11691191.);
. (a) Pure and conditional obligations (Arts.

. (b)Realandpersonalobligations(Arts.1163
11791192.);
1168.);
. (b) Obligations with a period (Arts. 1193

. (c) Determinateandgenericobligations(Art.
1198.);
1165.);
. (c) Alternative (Arts. 11991205.) and

. (d) Civilandnaturalobligations(Art.1423.);
facultativeobligations
and
(Art.1206.);
. (e)Legal,conventional,andpenalobligations.
. (d)Jointandsolidaryobligations(Arts.1207 (Arts.1157,
1222.);
1159,1161.)
. (e)Divisibleandindivisibleobligations(Arts.
(3) ClassificationofobligationsaccordingtoSanchezRoman: (a)By
12231225.);
theirjuridicalqualityandefficaciousness:
. 1)Natural.accordingtonaturallaw; . 2) positive or negative (see Art. 1168.);
. 2)Civil.accordingtocivillaw;and
. 3)realorpersonal;
. 3) Mixed. according to both natural and
civillaw. . 4) possible or impossible (see Arts. 1183,
1306.);
OBLIGATIONS
. 5)divisibleorindivisible;
(b)
. 6)principaloraccessory(seeArt.1226.);and
(c)
7)simpleorcompound(seeArt.1199.);ifcompound,itmaybe:
Bythepartiesorsubject:
. a) conjunctive. demandable at the same

. 1)unilateralorbilateral;
time;or
. 2) individual or collective (see Arts. 1207,
. b) distributive. either alternative or
1208.);and
facultative.
. 3)jointorsolidary.
(d)Bytheirjuridicalperfectionandextinguishment:
Bytheobjectoftheobligationorprestation:
. 1)Pureorconditional;and
. 1)specificorgeneric;
. 2) With a period. (Vol. 8, pp. 2024.)
oOo
SECTION1.PureandConditionalObligations Florianovs.Delgado,11Phil.154[1908].)butthedurationthereofwill
dependuponthenatureoftheobligationandthecircumstances.(Art.
ART.1179.Everyobligationwhoseperformancedoesnotdepend
1197.)
uponafutureoruncertainevent,oruponapasteventunknownto
Adistinctionmustbemadebetweentheimmediatedemandabilityofa
theparties,isdemandableatonce.
pureobligationanditsfulfillmentbytheobligorwhomaybegranted
Everyobligationwhichcontainsaresolutoryconditionshallalsobe
bythecourtareasonableperiodforperformance.Theperiodremains
demandable,withoutprejudicetotheeffectsofthehappeningof pureevenwheresuchperiodisfixedbythecourt.
theevent.(1113)
(2)DpromisestopayCP26,900.00uponreceiptbyDofhisshare
Meaningofpureobligation. fromtheestateofXorupondemandofC.TheobligationofDis
immediately due and demandable, for C may rely on the wording

Apureobligationisonewhichisnotsubjecttoanyconditionandno
upondemand.(Payvs.Vda.dePalanca,57SCRA18[1974].)
specific date is mentioned for its fulfillment and is, therefore,
immediatelydemandable. Meaningofconditionalobligation.
EXAMPLES: Aconditionalobligationisonewhoseconsequencesaresubjectinone
wayoranothertothefulfillmentofacondition.
(1) D obliges to pay C P10,000.00. The obligation is immediately
demandableifthereisnoconditionandnodateismentionedforits 97
fulfillment. Of course, if the loan has just been contracted by D, a

97
periodmusthavebeenintendedbythepartiesforperformance(see
98OBLIGATIONSArt.1179
Meaningofcondition. Theyare:
Conditionisafutureanduncertainevent,uponthehappeningofwhich, (1)Suspensivecondition(conditionprecedentorconditionantecedent)
theeffectivityorextinguishmentofanobligation(orrights)subjectto oronethefulfillmentofwhichwillgiverisetoanobligation(orright).
itdepends. Inotherwords,thedemandabilityoftheobligationissuspendeduntil
the happening of afuture anduncertainevent whichconstitutes the

Characteristicsofacondition.
condition.
(1)Futureanduncertain.Inordertoconstituteaneventacondition,
(a)Actually,thebirth,perfectionoreffectivityofthecontractsubject
itisnotenoughthatitbefuture;itmustalsobeuncertain.Thefirst
toaconditioncantakeplaceonlyifandwhentheconditionhappensor
paragraphofArticle1179obviouslyusesthedisjunctive or between
isfulfilled.Ifthesuspensiveconditiondoesnottakeplace,theparties
futureanduncertaintodistinguishpureobligationfromboththe
wouldstandasiftheconditionalobligationhadneverexisted.(Gaite
conditionalobligationandonewithaperiod.Bethatasitmay,the
vs.Fonacier,2SCRA830[1961];Jovenvs.CourtofAppeals,183
wordorshouldbeand.
SCRA171[1990];Chengvs.Genato,300SCRA722[1998];Gonzales
(2) Past but unknown. A condition may refer to a past event vs.HeirsofThomasandPaulaCruz,314SCRA585[1999];Insular
unknowntotheparties. (infra.) Ifitreferstoafutureevent,bothits Life Assurance Co., Ltd. vs. Toyota BelAir, Inc., 550 SCRA 70
veryoccurrenceandthetimeofsuchoccurrencemustbeuncertain; [2008].)
otherwise,itisnotacondition.
(b)Itmustappearthattheperformanceofanactorthehappeningofan
Aconditionmustnotbeimpossible.(seeArt.1183.) eventwasintendedbythepartiesasasuspensivecondition,otherwise,
itsnonfulfillmentwillnotpreventthe
Twoprincipalkindsofcondition.
Art. 1179 DIFFERENT KINDS OF OBLIGATIONS 99 Pure and conditioneduponthesamebeingsignedbyallthedebtors.
ConditionalObligations
Facts:ByagreementofCandD,theseparatedebtsofthebrothersA,
perfection of a contract. (see Arts. 1305, 1315, 1319.) Thus, where B, and C to D were liquidated and consolidated into only one
thereisnoprovisioninacontractofsaledeclaringitwithouteffect obligationinapromissorynotesignedbyCwhoacknowledgedhis
untilaftertheopeningofaletterofcreditbythebuyerasrequiredby indebtedness.DsignedthenoteonconditionthatCwouldobtainthe
theseller,theomissiontosoopendoesnotpreventtheperfectionofthe signaturesofAandBtherebycreatingajointobligationagainstthe
contract,suchopeningbeingonlyamodeofpaymentandisnotamong three.Cneversecuredtheirsignaturesuntilhisdeath.
theessentialrequirementofacontractofsaleenumeratedinArticles
InanactionagainstAandBbyDtorecovertheirrespectivesharesin
1305and1475.1 (JohannesSchuback&Sonsvs.CourtofAppeals, 2 theindebtedness,AandBcontendedthatsincetheirsignatureswere
227SCRA717[1993].) notaffixedtothedocument,Dwasboundtoacknowledgeitasacredit
onlyagainstCwhosignedit.
(c)Therecanbenorescission(seeArt.1191.)ofanobligationthatis
stillnonexistent,thesuspensiveconditionnothavingbeenfulfilled. Issue:IsDboundtoacknowledgethedocumentasacreditonlyagainst
(LuzonBrokerageCo.,Inc.vs.MaritimeBuildingCo.,Inc.,46SCRA C?
381 [1972]; Rillo vs. Court of Appeals, 274 SCRA 461 [1997];
Held:No.Thecontractcontainedreciprocalobligations(seeArt.1169,
Gonzales vs. Heirs of Thomas and Paul Cruz, supra; Padilla vs.
lastpar.)whichweretobefulfilledbyeachofthesigners,thatis,on
Paredes,328SCRA434[2000].)
thepartofCtosecuresignaturesofAandBtotheinstrument,and
ILLUSTRATIVE CASES:
1.Acknowledgmentsignedbyoneofthedebtorsofadocumentis
1Art.1475.Thecontractofsaleisperfectedatthemomentthereisa couldsignifynothinguntilthesignaturesofAandBhadbeensecured.
meetingofmindsuponthethingwhichistheobjectofthecontractand (Martinezvs.Cavives,25Phil.581[1913].)
upontheprice.
Fromthatmoment,thepartiesmayreciprocallydemandperformance, 2.Saleofvesselisconditioneduponproofthatselleris,infact,owner
subjecttotheprovisionsofthelawgoverningtheformofcontracts. of
(1450a) property.
Facts: S,owner,andB,purchaser,agreeduponthesaleofavessel
2SeethiscaseunderArticle1319. providedthatthetitlepaperstothesamewereinproperform.Thetitle
wasinthenameofanotherandSpromisedtoperfecthistitletothe
100 vessel.BeforecompliancebySwiththeconditionexactedbyB,and
whilethevesselwasinSspossession,itsankduetoaseverestorm.
OBLIGATIONSArt.1179
Issue:IsBunderobligationtopaythepriceofthevessel?
thenonthepartofD,torecognizeitasajointobligationofA,B,andC
coveringtheirindebtednesstohim. Held:No.Thesaleofthevesselwasnotperfected,becauseofthenon
compliancebySofaconditionprecedenttoitsperfection,towit:the
UntilCobtainedthesignaturesofAandB,Dwasnotinanyway
productionoftheproperpapersshowingthathewas,infact,theowner
boundtoacknowledgeitasanythingmorethananexecutorycontract
ofthevesselinquestion.Consequently,thelossofthevesselmustbe
containing a condition precedent which was to be performed by C
bornebyS,theowner,andnotbyBwhoonlyintendedtopurchaseit
before Ds obligation was due. Mere continued silence on his part
andwasunabletodosobecauseoffailureofStocomplywiththesaid Held:No.Thiscontentionisinordinatelytechnicalandalsodevoidof
condition.Article1262isnotapplicable. (Romanvs.Grimalt,6Phil. merit.Thereisnothingatallintheordinance(No.2969ofQuezon
96[1906];seeBorromeovs.Franco,5Phil.49[1905],infra.) City)
Art. 1179 DIFFERENT KINDS OF OBLIGATIONS 101 Pure and
3.Conditionclaimedwasnotcontemplatedbytheparties. ConditionalObligations
Facts:BobligedhimselftopaySthebalanceofthepurchasepriceofa whichmakestheacceptancebythesaidagencyaconditionprecedent
subdivisionlotwithintwoyearsfromthecompletionbySoftheroads beforeastreetmaybeconsideredconstructed.Suchconditionwasnot
therein.Sbroughtsuittoforeclosetherealestatemortgageexecutedby withinthecontemplationoftheparties.(Enriquezvs.Ramos,73SCRA
Btosecurethepaymentoftheunpaidprice,forfailureofBtopaythe 116[1976].)
mortgageindebtednessnotwithstandingthecompletionoftheroads,a
(2) Resolutorycondition(conditionsubsequent) oronethefulfillment
conditionforthepaymentofthesame.
ofwhichwillextinguishanobligation(orright)alreadyexisting.
Bcontendsthattheroadsarenotyetcompletedinthetechnical,legal
ILLUSTRATIVE CASES:
sense,becausethefinalsayoracceptancebytheCapitalCityPlanning
1.Donationsubjecttoresolutoryconditiontransferstitlebutrevocable
CommissionofQuezonCityhadnotyetbeensecured.
fornoncompliancewithcondition.
Issue:IsthiscontentionofBtenable?
Facts:RdonatedtoT(ProvinceofTarlac)aparceloflandsubjectto
theconditionthatitwastobeusedfortheerectionofacentralschool
andapublicpark,theworktocommencewithintheperiodofsix(6)
monthsfromthedateoftheratificationbythepartiesofthedeedof compliedwith.Thenoncompliancewiththeconditionis,however,a
donation.ThedonationwasacceptedbyTandtitletothepropertywas sufficientcauseforrevocation.(Parksvs.Prov.ofTarlac,49Phil.142
transferredtoit.Subsequently,RsoldthelandtoC. [1926].)
Cclaimedthatsincetheconditionimposedwas not compliedwith,
therewasnodonation.
2.Transferofownershipofpropertysoldshallbecomeabsoluteupon
Issue:Istheconditionsuspensiveorsubsequent? paymentbyvendeeofvendorsdebttothirdparties;void,ifpaidbythe
vendorhimself.
Held: Itisaconditionsubsequent.Thecharacteristicofacondition
precedent is that the acquisition of right is not effected while said Facts: SsoldtoBaparceloflandinconsiderationoftheobligation
condition is not complied with or is not deemed complied with. assumedbyBtopaywhatthevendor(S)owedtoseveralpartiesmen
Meanwhile, nothing is acquired and there is only an expectancy of tionedinthedeed;ifSpaidhisdebts,thesaleshallbecomeinoperative
right.Consequently,whenaconditionisimposed,thecomplianceof
102
whichcannotbeeffectedexceptwhentherightisdeemedacquired,
OBLIGATIONSArt.1179
suchconditioncannotbedeemedaconditionprecedent.
andvoid,butthatifBpaidthesamedebtsbyreasonofSsfailuretodo
Inthepresentcase,theconditioncouldnotbecompliedwithexcept
so,thesalemadeshallbecomeabsoluteandirrevocableautomatically,
aftergivingeffecttothedonation.Thedoneecouldnotdoanyworkon
withouttheneedofexecutinganyotherdeedofconveyance.Bpaidthe
thedonatedlandifthedonationhadnotreallybeeneffectedbecauseit
debtsofS.
wouldbeaninvasionofanotherstitle,forthelandwouldhavecon
tinuedtobelongtothedonorsolongastheconditionimposedwasnot
Uponpresentationofthecorrespondinginstruments,thecertificateof entering into a contract of absolute sale. (see Coronel vs. Court of
titleissuedinthenameofSwascancelledandatransfercertificateof Appeals,263SCRA15[1996].)Thefailuretofulfilltheconditionis
titlewasissuedinBsname. notconsideredabreach,casualorserious,butsimplyaneventwhich
preventstheobligationofthesellertoconveytitlefromacquiringany
Issue: Isthecontractoneofequitablemortgageorasalesubjecttoa
obligatoryforce.(Rillovs.CourtofAppeals,274SCRA461[1997].)
resolutorycondition?

Held: Thecontractisobviouslyaperfectedcontractofsaleandsub
3.Vendorseeksrescissionofsaleforviolationbyvendeeofrestriction
ject to a resolutory condition. The property is not given as a mere
securityforaloanwhichisthemanifestpurposeofacontractof imposedincontractofsalebetweenvendorandpreviousowner(first
mortgagebutinsteaditmakesaconditionaltransferofownership vendor).
whichbecomesautomaticallyabsoluteandfinaluponperformanceof
Facts:Thecontractofsaleofthree(3)lotsbetweenS(PHHC)andB
theconditionagreedupon,namely,paymentbyBofwhatSowedthe
providedthatonlyconstructionexclusivelyforresidentialpurposes
parties mentioned in the deed of conveyance. (Rodriguez, Sr. vs.
shallbebuiltontheproperty,termsthereoftobebindinguponthe
Francisco,2SCRA648[1961].)
successorsandassigneesoftherespectiveparties.Subsequently,Bsold
Note:Inacontracttoselloninstallments,uponthefulfillmentofthe two (2) lots to Meralco which established a substation within the
positivesuspensiveconditionwhichisthefullpaymentofthepurchase property.
price,ownershipwillnotautomaticallytransfertothebuyeralthough
Becauseoftheseverenoisefromthesubstation,Bfiledacomplaint
the property may have been previously delivered to him. The
fortherescissionofthesale.
prospectivesellerstillhastoconveytitletotheprospectivebuyerby
Issue: HasBtherightofactionagainstMeralcoforviolationofthe (2)Ifthefirstdoesnottakeplace,thetieoflaw(juridicalorlegaltie)
restrictionimposedinthecontractbetweenSandB? doesnotappear,whileifitistheother,thetieoflawisconsolidated;
and
ConditionalObligations (3)Untilthefirsttakesplace,theexistenceoftheobligationisamere
hope, while in the second, its effects flow, but over it, hovers the
Held:No.ItisSwhichhastherightofactionagainstanyassigneeof
possibilityoftermination.(see8Manresa130131.)
B.ScannotrescindthecontractbetweenBandMeralcobecauseitwas
notapartytoit.Ssredresswouldbetodirectlyseekcancellationof Note:Adistinctionmustbemadebetweenaconditionimposedonthe
thetitleofMeralco,andtorepossessthepropertyasprovidedinits perfectionof acontractandthat imposedonthe performanceofan
contractwithB.(ManilaElectricCompanyvs.CourtofAppeals,114 obligation. Failure to comply with the first condition results in the
SCRA173[1982].) failure of a contract, while failure to comply with the second(e.g.,
conditionthatthesellershallejectthesquattersonthepropertysold
Distinctionsbetweensuspensiveandresolutoryconditions.
withinacertainperiod),onlygivestheotherpartytheoptioneitherto
Thedifferencebetweenthetwoconditionsisveryclear;bothbearan refuse to proceed with the sale or to waive the condition. (Lim vs.
influence on the existence of the obligation, but in diametrically CourtofAppeals,263SCRA569[1996];seeArt.1545;Babasavs.
opposedmanner. Court of Appeals, 290 SCRA 532 [1998]; Jardine Davies, Inc. vs.
CourtofAppeals,333SCRA684[2000].)
(1)Ifthesuspensiveconditionisfulfilled,theobligationarises,whileif
it is the resolutory condition that is fulfilled, the obligation is Whenobligationdemandableatonce.

extinguished;
Anobligationisdemandableatonce
. (1) when it is pure (Art. 1179, par. 1.); deemeduncertain.Thisknowledgedetermineswhethertheobligation
willariseornot.(see8Manresa120121.)
. (2)whenitissubjecttoaresolutorycondition EXAMPLE:
(Ibid., par. 2.); or

SistheownerofaparceloflandwhichisbeingclaimedbyX.Last
week,theSupremeCourthasrenderedafinaldecisionupholdingthe
. (3) whenitissubjecttoaresolutoryperiod. rightofS.However,Shasnotyetreceivedthenoticethathehadwon
(Art. 1193, par. 2.) thecase.Now,SobligedhimselftosellthelandtoBforadefinite
price,shouldhewinthecaseagainstX.
104OBLIGATIONSArt.1180 Underthefacts,SwouldbeboundtosellthelandtoBuponreceiptof
Pasteventunknowntotheparties. thenoticethathehadwonthecaseagainstX.
ART.1180.Whenthedebtorbindshimselftopaywhenhismeans
Aconditionreallyrefersonlytoanuncertainandfutureevent.Apast
eventcannotbesaidtobeaconditionsincethedemandabilityofan permithimtodoso,theobligationshallbedeemedtobeonewitha
obligationsubjecttoaconditiondependsuponwhethertheeventwill period,subjecttotheprovisionsofArticle1197.(n)
happenorwillnothappen.
Wheredurationofperioddependsuponthewillofdebtor.
Whatisreallycontemplatedbythelawistheknowledgetobeacquired
A period isafuture and certaineventuponthearrivalofwhichthe
inthefutureofapasteventwhichatthemomentisunknowntothe
obligationsubjecttoiteitherarisesorisextinguished.
parties interested, for it is only in that sense that the event can be
(1)Thedebtorpromisestopaywhenhismeanspermithimtodoso. (f) inpartialpayments(LevyHermanosvs. Paterno, 18Phil. 353
Theobligationshallbedeemedtobeonewithaperiod.Inthiscase, [1911].);and
whatdependsuponthedebtorswillisnotwhetherheshouldpayor
(g)whenIaminapositiontopay.(seeLudingHahnvs.Lazatin,
notforindeedhebindshimselftopay.Whatisleftonlytohiswillis
1911[Unrep.],105Phil.135,891[1959].)
thedurationoftheperiod.Ifthedebtorandthecreditorcannotagreeas
Obligations with a period are discussed in the next Section. (Arts.
tothespecifictimeforpayment,thecourtshallfixthesameonthe
11931198.)
applicationofeitherparty.(Art.1197,par.2.)
ART.1181.Inconditionalobligations,theacquisitionofrights,as
(2) Other cases. As when the debtor binds himself to pay:
(a)littlebylittle(Seonevs.Francisco,24Phil.309[1913].); wellastheextinguishmentorlossofthosealreadyacquired,shall
depend upon the happening of the event which constitutes the

condition.(1114)
Effectofhappeningofcondition.
(b)assoonaspossible(Gonzalesvs.Jose,66Phil.369[1938].);
This article reiterates the distinction between a suspensive (or

(c)fromtimetotime;
antecedent)conditionandaresolutory(orsubsequent)condition.
(d)assoonasIhavethemoney(Patentevs.Omega,93Phil.218
(1) Acquisition of rights. In obligations subject to a suspensive
[1958].);
condition,theacquisitionofrightsbythecreditordependsuponthe
(e)atanytimeIhavethemoney(Sorianovs.Abalos,84Phil.206
happeningoftheeventwhichconstitutesthecondition.
[1949].);
Whatcharacterizesthiskindofobligationisthefactofitsefficacyor to the sale, so that without approval by the mortgagee, no sale is
obligatory force (as distinguished from its demandability) is perfected and the seller remains the owner and mortgagor of the
subordinatedtothehappeningofafutureanduncertainevent;sothatif propertyandassuchretainstherighttoredeemtheforeclosedproperty.
thesuspensiveconditiondoesnottakeplace,thepartieswouldstandas (Ramosvs.CourtofAppeals,279SCRA118[1997].)
iftheconditionalobligationhadneverexisted(Gaitevs.Fonacier,2
ILLUSTRATIVE CASES:
SCRA831[1961].),orbeforethesuspensiveconditionhastakenplace,
1. Right of owner to receive payment for use of his vessel is
what is acquired by the creditor is a mere hope or expectancy of
conditioned
acquiringaright.(seeArt.1188,par.1.)
upon contract for lighterage being awarded to lessee by the
(a)Thesurrenderofthesweepstakesticketisaconditionprecedentto
government.
thepaymentoftheprize.(Santiagovs.Millar,68Phil.39[1939].)
Facts:XbounditselftopayacertainamountdailyfortheuseofYs
lorchasduringtheperiodthattheyshouldbeinXspossessionand
(b)WheretheloansofXfromYweresupposedtobecomedueonlyat control,subjecttotheconditionthatXwouldsucceedinsecuringthe
the timeY receives from Zthe proceeds of the approved financing entire contract for lighterage from the Government. Said contract
scheme,andZrefusedtomakereleases,theconditionfortheloandid embracedtwoservices:emergencyandregular.Xwasabletosecure
nothappenandXisnot,therefore,liabletoY.(RosePackingCorp., onlytheemergencyservice,theregularservicehavingbeenawardedto
Inc.vs.CourtofAppeals,167SCRA309[1988].) another.
(c)Insaleswithassumptionofmortgage,theassumptionofmortgage
bythebuyerisaconditionprecedenttothesellermortgagorsconsent
After using the lorchas, X immediately notified Y and tendered Art. 1181 DIFFERENT KINDS OF OBLIGATIONS 107 Pure and
paymentcorrespondingtothedaysthelorchaswereinusepursuantto ConditionalObligations
saidemergencyservice.ThepaymentwasrefusedbyY.
receivefromthesaleofsaidgoods,andthatinthecontraryevent,both
Issue: IsXliableforthedayshedidnotusethelorchaswhilethey (DandS)undertaketopaytoCsuchsumsasDmayfailtoturninas
wereinhiscontrol? abovestated.
Held: No.TheobligationassumedbyXwasaconditionalone.Since InanactionbyCtorecovertheamountofthepromissorynote,Cdid
he was able to secure only a part of the lighterage services, his notprovethathehasnot,infact,receivedallthemoneyderivedfrom
obligationtopayforallthedayshehadthelorchasinhiscontroldid thesaleofthegoodsmentioned.
notarise.(Lichaucovs.FiguerasHnos,7Phil.339[1907].)
Issue:IsSliableonthenote?
Held:No.SdidnotundertakeabsolutelytopaytheindebtednessofD.
2.Rightofcreditortobepaidbysuretyisconditioneduponfailureof Hisobligationwassubjecttoasuspensivecondition:thefailureofDto
debtor to deliver to creditor proceeds of sales of merchandise delivertoCthetotalproceedsofthesalesofthemerchandiseforthe
purchasedbydebtorfromcreditor. invoicevalueofwhichthenotewasgiven.Thatconditionnothaving
takenplace,itfollowsthatShadincurrednoliability.(Wise&Co.vs.
Facts:D,asprincipal,andS,assurety,executedapromissorynotein
KellyandLim,37Phil.696[1918].)
favor of C for the price of goods purchased by D from C, upon
conditionthatDwillpayovertoCattheendofeachmonthallsums (2) Loss of rights already acquired. In obligations subject to a
whichhemay resolutorycondition,thehappeningoftheeventwhichconstitutesthe
condition produces the extinguishment or loss of rights already ILLUSTRATIVECASES:
acquired.
1. Rightofapartytoreceiveashareofprofitsofacompanytobe
EXAMPLES: rehabilitated shall cease to exist upon his failure to advance the
necessaryfundswithintheperiodstipulated.
(1)SsoldtoBaparceloflandsubjecttoSsrightofrepurchase.The
ownership already acquired by B under the contract shall be Facts: X agreed to advance P75,000.00 for the rehabilitation of Y
extinguishedorlostshouldSexercisehisrightofrepurchase. (miningCompany)whichhadbeencompletelydestroyedbyflood,for
(2)AleasecontractexpresslystipulatesthatR,lessor,mayterminate 108
theleaseincasehischildrenshallneedtheleasedpremises.Here,the
OBLIGATIONSArt.1181
happeningoftheconditiondependsuponthewillofathirdperson
whichXwastoreceivea certainnumber ofsharesof the unissued
Rs children. (see Ducusin vs. Court of Appeals, 122 SCRA 280
stocksthereof,itbeingstipulatedthattheamountwastobepaidtoY
[1983].)
withinsix(6)monthsfromtheexecutionofthecontract,andthatupon
(3)R(donor)donateslandtoE(donee)ontheconditionthatthelatter
defaultofeitherparty,theobligationoftheothershallbedischarged.
would build upon the land a school. The condition imposed is a
Xfailedtoraisethenecessaryfunds.Ywasabletosecurethefunds
resolutoryone.Ifthereisnocompliancewiththecondition,Rmay
fromothersources.Itwasrehabilitatedandprofitswererealized.
revokethedonationandallrightswhichEmayhaveacquiredunderit
shall be deemed lost or extinguished. (Central Phil. University vs. Issue: IsXentitledtoashareofsaidprofitsandtotheissuanceof
CourtofAppeals,246SCRA511[1995].) sharesofstockinaccordancewiththeagreement?
Held:No.Thisisatypicalcaseofaresolutoryconditionunderthecivil Held: No, and, therefore, its nonfulfillment did not resolve the
law. The contract expressly provides that upon the happening of a obligationof Sto sell. Itis a mere incidental stipulation which the
future and uncertain negative event, the obligation created by the partiessawfittoincludeintheiragreement.(Borromeovs.Franco,5
agreement shall cease to exist. The right of X was expressly Phil.49[1905];seeRomanvs.Grimalt,6Phil.96[1906],supra.)
subordinatedtoaresolutorycondition,towit:hisfailuretoraisethe

necessary funds within the period agreed upon. (Hanlon vs.
3.Rightofpossessionoflandshallterminateifanyofowners
HaussermanandBeam,40Phil.796[1920].)
grandchildrendecidestobuildhouseonproperty.

Facts: X,owner of aresidential lot,executedanagreementwithY
2.Nonfulfillmentofamereincidentalstipulationinacontractofsale.
underwhichXshallreapthefruitsofthericelandofYwhileYshall
Facts:SagreedtosellaparceloflandtoB.Underthecontract,Bwas
havetherighttobuildhishouseonthelotofX,subjecttothecondition
givenacertainperiodwithinwhichtoarrangeandcompletethepapers
thatifanyofthegrandchildrenofXdecidestobuildhisorherhouse
relatingtotheproperty.Srefusedtoproceedwiththesaleinviewof
onthelot,Yshallbeobligedtoreturnthesame.Undertheagreement,
thefailureofBtocompletethetitlepapers.
X and Y are prohibited to encumber or alienate their respective
Bbroughtactionforspecificperformance. propertieswithouttheconsentoftheother.
Issue:IstheagreementonthepartofBtocompletethetitlepapersa Art. 1181 DIFFERENT KINDS OF OBLIGATIONS 109 Pure and
conditionsubsequent? ConditionalObligations
C,agrandchildofX,nowseekstorecovertheproperty,claimingthat Facts: PHHC(PeoplesHomesiteandHousingCorp.),agovernment
heneedsthesamefortheconstructionofhishousethereon. instrumentality,soldalottoBsubjecttotheresolutoryconditionthatB
shallconstructaresidentialhouseonthelotwithinaperiodofone(1)
Issue:IsCentitledtorecoverthelot?
yearfromthesigningofthecontract,noncompliancewithwhichshall
Held: Yes. The mutual agreement between X and Y each party
resultinthecontractbeingdeemedannulledandcancelled.
enjoyingmaterialpossessionoftheotherspropertyissubjecttoa
Bfailedtocomplywiththeconditionofthecontract.
resolutory condition the happening of which has the effect of
terminatingtherightofpossessionanduse.Theagreementindicates Issue: WhatistheeffectofBsnoncompliancewiththeresolutory
thatthereisnointentiononthepartofthepartiestoconveyownership conditionofbuildingahouse?
of their respective properties. (Baluran vs. Navarro, 79 SCRA 309

Held: The contract is resolved by operation of law. B acquires no
[1977].)
vestedrighttothelotwhichrevertstoPHHC.PHHC,however,may
Effectofnoncompliancewithresolutorycondition. waive the effects of said resolutory condition. (Baez vs. Court of
Appeals,59SCRA15[1974].)
Whereacontractissubjecttoaresolutorycondition,noncompliance
withornonfulfillmentoftheconditionresolvesthecontractbyforce
oflawwithoutneedofjudicialintervention. 2.Saleissubjecttotwoconditionsandonlyoneisfulfilled.
ILLUSTRATIVE CASES: Facts:SsoldtoBaparceloflandsubjecttotheconditionthatBmakes
1.Saletobedeemedcancelleduponfailuretoconstructhouseonland adownpaymentofP100,000.00andthattheGovernmentacceptsthe
bidofStopurchaseGovernmentproperty.Bmadethedownpayment
soldwithinacertainperiod.
whichwasacceptedbyS.However,theGovernmentdidnotacceptthe donation was accepted by the District Supervisor of the Bureau of
bidofS. Public Schools through an Affidavit of Acceptance and/or
ConfirmationofDonation.
110
Theschoolbuildingthatwassupposedtobeallocatedforthedonated
OBLIGATIONSArt.1181
parceloflandcouldnotbereleasedsincethegovernmentrequiredthat
Issue:Havingacceptedthedownpayment,isSboundtosell?
it be built upon a one (1) hectare parcel of land. To remedy this
Held:No.AcceptancebySofthepartpaymentofP100,000.00shows predicament,theDistrictSupervisorandalotownerenteredintoadeed
thatthesalewasconditionallyconsummatedorpartlyexecutedsubject ofexchangewherebythedonatedlotwasexchangedwithabiggerlot
totheacceptanceofSsbidbytheGovernment.Thenonacceptanceof ownedbythelatter.Schoolbuildingswereconstructedonthenewsite.
Ssbidisinthenatureofanegativeresolutorycondition.(seeVillonco
Issue: Inexchangingthedonatedlotwithabiggerlot,didthedonee
RealtyCo.vs.Bormacheco,Inc.,65SCRA352[1975].)
violatetheconditioninthedonation?
Held:No.(1)Meaningofterms.Whatdoesthephraseexclusively
3.Thelandwhichwasdonatedontheconditionthatitshouldbeused usedforschoolpurposesconvey?Schoolissimplyaninstitutionor
exclusivelyforschoolpurposesonlywasexchangedbythedoneefora placeofeducation.Purposeisdefinedasthatwhichonesetsbefore
biggerlandwhichwasusedforthesamepurpose. him toaccomplishor attain;anend,intention, or aim, object, plan,
project. Term is synonymous with the ends sought, an object to be

Facts: Inthedeedofdonationexecutedbyrespondentsspouses,they
attained, an intention, etc. Exclusive means excluding or having
imposedtheconditionthatthe5,600squaremeterparceloflandshould
power to exclude (as by preventing entrance or debarring from
be used exclusively and forever for school purposes only. This
possession, participation, or use); limiting or limited to possession, obligationshalltakeeffectinconformitywiththeprovisionsofthis
controloruse. Code.(1115)
(2) Purposeofdonationremainsthesame. Withouttheslightest Classificationsofconditions.

doubt,theconditionforthedonationwasnotinanywayviolatedwhen
Conditionsmaybeclassifiedasfollows:(1)Astoeffect.
thelotdonatedwasexchangedwithanotherone.Thepurposeforthe
donationremainsthesame,whichisfortheestablishmentofaschool. (a)Suspensive.thehappeningofwhichgivesrisetotheobligation;
Theexclusivityofthepurposewasnotalteredoraffected.Infact,the and
exchange of the lot for a much bigger one was in furtherance and
(b)Resolutory.thehappeningofwhichextinguishestheobligation.
enhancement of thepurpose of thedonation. The acquisition of the
. (2)Astoform.
biggerlotpavedthewayforthereleaseoffundsfortheconstructionof
BagongLipunanschoolbuildingwhichcouldnotbeaccommodated . (a)Express.theconditionisclearly
stated; and
. (b)Implied.theconditionismerely
bythelimitedareaofthedonatedlot.(Republicvs.Silim,356SCRA
inferred.
1[2001].)
ART.1182.Whenthefulfillmentoftheconditiondependsuponthe
solewillofthedebtor,theconditionalobligationshallbevoid.Ifit
depends upon chance or upon the will of a third person, the

. (3) As to possibility. (b)Negative.theconditionconsistsintheomissionofanact.
(a)Possible.theconditioniscapableoffulfillment,legally
(6) Astonumber.
(a)Conjunctive.thereareseveralconditionsandallmustbe
and physically; and

fulfilled;and
(b)Impossible.theconditionisnotcapableoffulfillment,
(b)Disjunctive.thereareseveralconditionsandonlyoneorsomeof
legallyorphysically.(4)Astocauseororigin.
themmustbefulfilled.
(a) Potestative. theconditiondependsuponthewillofoneofthe

(7) As to divisibility.
contractingparties;
(a)Divisible.theconditionissusceptibleofpartial
(b)Casual.theconditiondependsuponchanceoruponthewillofa
performance;and
thirdperson;and
(b) Indivisible. the condition is not susceptible of partial
(c)Mixed.theconditiondependspartlyuponchanceandpartlyupon
performance.
thewillofathirdperson.
Meaningofpotestativecondition.
(5)Astomode.
A potestativeconditionisaconditionsuspensiveinnatureandwhich
(a)Positive.theconditionconsistsintheperformanceofanact;and
dependsuponthesolewillofoneofthecontractingparties.
112
Wheresuspensiveconditiondependsuponthewillofdebtor.
OBLIGATIONSArt.1182
(1) Conditional obligation void. Where the potestative condition andopportunityforthedoneetofulfillwhathasbeenchargeduponit
dependssolelyuponthewillofthedebtor,theconditionalobligation by the donor. (Central Phil. University vs. Court of Appeals, 246
shallbevoidbecauseitsvalidityandcomplianceislefttothewillof SCRA511[1995].)
thedebtor(Art.1308.)anditcannot,therefore,belegallydemanded. 3
Inordernottobeliable,thedebtorwillnotjustfulfillthecondition.
Thereisnoburdenonthedebtorandconsequently,nojuridicaltieis
created.(Art.1156.)
EXAMPLES:
3Whatmaydependupontheexclusivewillofthedebtoristhetime
(1)IwillpayyouifIwant.
withinwhichtheconditionshallbefulfilled.Inacase,thecondition
imposedbythedonor,i.e.,buildingofamedicalschoolupontheland (2) I will pay you after I receive a loan from a bank. (Berg vs.
donated,dependedupontheexclusivewillofthedoneeastowhenthis MagdalenaEstate,Inc.,92Phil.110[1953].)
conditionshallbefulfilled.Whenthedoneeacceptedthedonation,it
. (3) I will pay you after I recover what D
bounditselftocomplywiththeconditionthereof.Ithasbeenheldthat
owes me.
itsabsoluteacceptanceofthedonationandacknowledgmentofthe
obligation provided therein were sufficient to prevent the statute of

. (4) I will pay you after I have harvested
limitations from barring the action of the donor upon the original
fish. (Trillana vs. Quezon
contract which was the deed of donation. The starting point for
bringingtheactionbeganwiththeexpirationofareasonableperiod
College,Inc.,93Phil.383[1953].) ILLUSTRATIVE CASES:
1. Validity of stipulation in a contract of employment that grant of

(5)IwillpayyouuponthesaleofthehouseinwhichIlive.(Osmea
bonus
vs.Rama, 14Phil.99[1909];seeGaitevs. Fonacier, 2SCRA831
[1961],citedunderArt.1193.) shalldependuponthediscretionoftheboardofdirectors.
(6)Iwillpayyouthepriceoftheforestconcessionyousoldmeupon Facts: On the basis of the stipulation inserted in the contract of
myoperationofthesame.(Tiblevs.Aquino,65SCRA207[1975].) employmentthatEwouldbeentitledtosuchfurtheramountintheway
ofbonusastheboardofdirectorsmightseefittogrant,Econtendsthat
(7)Thecontractofleaseprovidesthattheleaseshallcontinueforas
he is entitled to a bonus to be fixed by the court as a reasonable
longasthelesseeneededthepremisesandcanmeetandpaythe20%
participationintheincreasedprofitsofthefactoryunderhiscare.
increaseeverythreeyears.(LaoLimvs.CourtofAppeals,191SCRA
150[1991].) Issue:Whatisthelegaleffectofthestipulation?
Inalltheabovecases,boththeconditionsandtheobligationsarevoid. Held: Apromiseofthischaractercreatesalegalobligationbinding
TheconditionsinexamplesNumbers2to6aretantamounttoadebtor upon the promissor, although in its actual results it may not
tellingthecreditorthathewouldpayhisobligationwhenandifhe infrequentlyprovetobeillusory.Suchpromiseisnotnugatory,under
wants.InexampleNo.7,theeffectivityandfulfillmentofthecontract Article1182,asembodyingaconditiondependentexclusivelyuponthe
ofleasedependsexclusivelyupontheuncontrolledchoiceofthelessee. willoftheobligor.NorcanitbeheldinvalidunderArticle1308which
declaresthatthevalidityandperformanceofacontractcannotbeleftto
thewillofoneofthecontractingparties.
114 Ebroughtactionfortherecoveryofthepurchaseprice,claimingthat
thestipulationisvoid.
OBLIGATIONSArt.1182
Issue: Does the payment of the purchase price by the vendee (D)
Theuncertaintyoftheamounttobepaidbywayofbonusisalsono
dependsuponhiswill?
obstacletothevalidity of the contract (see Article 1349.) since the
contractitselfspecifiesthemannerinwhichtheamountpayableisto Held:No.Inthiscase,thepaymentofthepurchasepriceisconditioned
bedetermined,namelybytheexerciseofthejudgmentanddiscretion uponthefullsettlementbyDofthevariousdebtsencumberingthe
of theemployer. (Liebnowvs. Phil. Vegetable Oil Co., 39Phil. 60 estate.Wemustnotlosesightofthefactthatthesedebtswerethenso
[1918].) numerous and pressing that all of them exceeded the value of the
property itself, with all its improvements making it practically

worthless. Of course, the stipulation implied that D was under the
2.Validityofstipulationthatvendeeshallpaythepurchasepriceupon
obligation to liquidate them as soon as possible, applying all the
settlementbyhimofvariousdebtsencumberinghisproperty.
productsfromtheestatewhichcouldbedisposedoftosuchpayment.
Facts:Adeedofsaleofahaciendacontainsthefollowingstipulation:
Takingthisstipulationinthissense,itcannotbesaidthatthedutyof
assoonasDhaspaidhisdebtstoBandC,ortoanyotherpersonor
paying P20,000.00 depended exclusively upon Ds will. With those
entity to whom D is in debt at present, or shall in future become
obligationsuponhim,andhisowngoodintentionsandearnestdesire
indebtedonaccountoftheexploitationoftheEspaaEstate,Dshall
whichmustbepresumedintheabsenceofevidencetothecontrary,
paytoE,theamountofP20,000.00accordingtothefollowingterms.x
there are still other factors determining the payment of the
xx.
aforementioneddebts,factorsasessentialastheyareindependentof
Dswill,andsubjecttothosedifficultiesandhindranceswhichattend S contends that the contract is void because the fulfillment of the
theexploitationofasugarplantationinthecircumstancesasshownby conditionstipulateddependsupontheexclusivewillofthedebtor.
therecord.Therefore,Article1182isnotapplicabletothiscase.
Issue: Does the payment of the purchase price by the vendee (B)
(Martinvs.Boyero,55Phil.762[1913].)
dependsuponhiswill?

Held: No.Sscontentionisuntenable.Inthefirstplace,shouldBfor
3. Validityofstipulationthatvendeeshallpaythepurchasepriceas
onereasonoranothershowlackofinterestincompellingthetenantsto
soon
vacatethepremises,asheagreedtodo,thereisnothingeitherinthe
astheoccupantsofthepropertysoldhavevacatedthesame. contract or in the law that could have barred S from taking the
necessary action to eject the tenants and thus compel B to pay the
Facts: S(seller)filedanactionforspecificperformanceofacontract
balance.
relatingtothesaleofaparceloflandwiththeimprovementsexisting
In the second place, should the tenants vacate the premises even
withoutademand,Bsobligationtopaythebalancewouldhavearisen
unavoidably.Itisclear,therefore,thatalthoughthefulfillmentofthe
thereonconsistingofaresidentialhouse.Thecontractstipulatesthat
condition depended partly upon the will of B, it likewise depended
thebalanceofP39,000.00willbepaidassoonasthepremiseshave
upon the will of S (obligee) himself and partly upon the tenants.
beenvacatedbythepresentoccupants,withthefurtherunderstanding
Consequently,thecontractisvalid.(Jacintovs.ChuaLeng,[C.A.]45
thatthebuyerwilltakecareforthepresentoccupantstovacatethe
O.G.2919.)
place.
5. Validity of stipulation under a building contract that in case of
4.Validityofstipulationthatvendeeshallpaythepurchasepriceafter increase of cost of project, the owner shall equitably make the
he appropriateadjustmentonmutualagreementoftheparties.
hasobtainedaloan. Facts: PrivaterespondentYFwascontractedbypetitionerSBTCto
construct the latters bank building in Davao City for the price of
Facts: Sofferedtosellhisundividedshareinapropertyknownas
P1,760,000.Theconstructionwasfinishedwithinthecontractedperiod
Crystal Arcade toB who accepted theoffer. It was agreed that the
purchasepriceshallbepaidbyBafterhehasobtainedaloanfroma 116
bankorfundsfromothersources.
OBLIGATIONSArt.1182
Issue: Isthefulfillmentoftheconditionforpaymentdependentupon
butYFwascompelledbyadrasticincreaseinthecostofconstruction
Bsexclusivewill?
materialstoincurexpensesofaboutP300,000ontopoftheoriginal
Held:Yes.Consequently,Ssobligationtoselldidnotarise.Underthe costSBTChadtheincreasedcostevaluatedandaudited.
termsoftheagreement,thereisnolegalwaybywhichScouldbe
When private respondent demanded payment of P259,417.23, peti
compelled to carry out his agreement to sell. (Berg vs. Magdalena
tioners YFs VicePresident and the banks architectural consultant
Estate,Inc.,92Phil.110[1953].)
were directed by the bank to verify and compute YFs claims of
increasedcost.ArecommendationwasthenmadetosettleYFsclaim
for P200,000.00. Despite this recommendation and several demands
from private respondent, SBTCfailedtomake payment. It denied

authorizinganyonetomakeasettlementofYFsclaimandlikewise project.OWNERshallequitablymaketheappropriateadjustmenton
denied any liability con tending that the absence of a mutual mutualagreementofbothparties.
agreementmadeYFsdemandprematureandbaseless.
Itarguedthatsincetherewasnomutualagreementbetweentheparties,
Itisnotdeniedthatprivaterespondentincurredadditionalexpensesin petitionersobligationtopayamountsabovetheoriginalcontractprice
constructingpetitionerbanksbuildingduetoadrasticandunexpected nevermaterialized.
increaseinconstructioncost.Infact,petitionerbankadmittedliability
Issue:IsSBTCliablefortheadditionalcostbasedonArticleIXofthe
forincreasedcostwhenarecommendationwasmadetosettleprivate
buildingcontract?
respondents claim for P200,000.00. YFs claim for the increased
Held: Inthepresent case, SBTCs arguments tosupportabsence of
amountwasadequatelyprovenduringthetrialbyreceipts,invoicesand
liabilityforthecostofconstructionbeyondtheoriginalcontractprice
othersupportingdocuments.
arenotpersuasive.
SBTClikewise deniedanyliabilityfor the additional cost based on
(1)ConditionforSBTCsliabilitydependentonitssolewill.Under
ArticleIXofthebuildingcontractwhichstates:
Article1182oftheCivilCode,aconditionalobligationshallbevoidif
Ifatanytimepriortothecompletionoftheworktobeperformed
itsfulfillmentdependsuponthesolewillofthedebtor.Inthepresent
hereunder, increase in prices of construction materials and/or labor
case,themutualagreement,theabsenceofwhichpetitionerbankrelies
shall supervene through no fault on the part of the contractor
whatsoever or any act of the government and its instrumentalities
which directly or indirectly affects the increase of the cost of the
upontosupportitsnonliabilityfortheincreasedconstructioncost,is theexpenseofthelatterwithoutjustorlegalground,shallreturnthe
ineffectaconditiondependentonpetitioner banks solewill, since sametohim.
privaterespondentwouldnaturallyandlogicallygiveconsenttosuch
TheabovequotedarticleispartofthechapteroftheCivilCodeon
anagreementwhichwouldallowhimrecoveryoftheincreasedcost.
HumanRelations,theprovisionsofwhichwereformulatedasbasic
(2)SBTCsnonliabilitywouldresultinunjustenrichment.Further, principlestobeobservedfortherightfulrelationshipbetweenhuman
itcannotbedeniedthatpetitionerbankderivedbenefitswhenprivate beings and for the stability of the social order, x x x designed to
respondentcompletedtheconstructionevenatanincreasedcost. indicate certain norms that spring from the fountain of good
conscience,xxxguidesforhumanconduct[that]shouldrunasgolden
Hence,toallowpetitionerbanktoacquiretheconstructedbuildingata
threadsthroughsocietytotheendthatlawmayapproachitssupreme
price far below its actual construction cost would undoubtedly
idealwhichistheswayanddominanceofjustice.(SecurityBank&
constituteunjustenrichmentforthebanktotheprejudiceofprivate
TrustCompanyvs.CourtofAppeals,249SCRA206[1995].)
respondent. Such unjust enrichment, as previously discussed, is not
allowedbylaw. (2)Onlytheconditionvoid.Iftheobligationisapreexistingone,
and,therefore,doesnotdependforitsexistenceuponthefulfillmentby
Article 22 of the Civil Code which embodies the maxim, Nemo ex
the debtor of the potestative condition, only the condition is void
alteriusincommododebetlecupletari (nomanoughttobemaderich
leavingunaffectedtheobligationitself.Here,theconditionisimposed
outofanothersinjury)states:
notonthebirthoftheobligationbutonitsfulfillment.
Art.22.Everypersonwhothroughanactofperformancebyanother,
EXAMPLE:
oranyothermeans,acquiresorcomesintopossessionofsomethingat
D borrowed P10,000.00 from C payable within two (2) months. depends upon the sole will of the debtor. The fulfillment of the
Subsequently,DpromisedtopayCafterDsellshiscartowhichC conditionmerelycausestheextinguishmentorlossofrightsalready
agreed.Inthiscase,onlytheconditionisvoidbutnotthepreexisting acquired.(Art.1181.)Thedebtorisnaturallyinterestedinitsfulfill
obligationofDtopayC. ment.
118OBLIGATIONSArt.1182 Thepositionofthedebtorwhentheconditionisresolutoryisexactly
thesameasthatofthecreditorwhentheconditionissuspensive.
Wheresuspensiveconditiondependsuponthewillofcreditor.
Aconditionwhichisbothpotestative(orfacultative)andresolutory
Iftheconditiondependsexclusivelyuponthewillofthecreditor,the
may be valid, even though the condition is left to the will of the
obligationisvalid.
obligor.(RustanPulp&PaperMills,Inc.vs.IntermediateAppellate
EXAMPLE: Court,214SCRA665[1992];Taylorvs.UyTieng,infra.)
Iwillpayyoumyindebtednessuponyourdemand. ILLUSTRATIVECASES:
The obligation does not become illusory. Normally, the creditor is 1. Validityofstipulationinacontractofemploymentthatacontract
interested in the fulfillment of the obligation because it is for his may be cancelled by the employer in case of nonarrival within a
benefit.Itisuptohimwhethertoenforcehisrightornot. certainperiodofaspecificmachineryforacontemplatedfactory.
Whereresolutoryconditiondependsuponthewillofdebtor. Facts:RcontractedtheservicesofEassuperintendentofanoilfactory
whichtheformercontemplatedestablishing.Atthetimethisagreement
Iftheconditionisresolutoryinnature,liketherighttorepurchaseina
salewithpactoderetro,theobligationisvalidalthoughitsfulfillment
wasmade,themachineryforthecontemplatedfactoryhadnotbeen somecausenothavingitsorigininRsownactorwillifhewereunder
acquired.Aprovisioninthecontractisasfollows: apositiveobligationtocausethemachinerytoarrive.Thecontract,
however,expressesnosuchpositiveobligation.(Taylorvs.UyTieng,
Itisunderstoodandagreedthatshouldthemachinerytobeinstalledin
43Phil.873[1922].)
thesaidfactoryfail,foranyreason,toarriveintheCityofManila,
withinaperiodofsixmonthsfromdatehereof,thiscontractmaybe
cancelledbythepartyofthesecondpart(R)atitsoption,
2. After the expiration of its porterage contract with the Manila
Art.1182 InternationalAirport,theporteragecontractorwasinformedinaletter
oftheMIAAuthorityGeneralManagerthatitmaycontinueoperating
DIFFERENTKINDSOFOBLIGATIONS119PureandConditional
saidserviceuntilfurthernoticefromus.
Obligations
Facts: KServicesbeganprovidingportersforthedomesticpassenger
suchcancellation,however,nottooccurbeforetheexpirationofsix
terminaloftheManila(nowNinoyAquino)InternationalAirportunder
months.
aprovisionalpermitthatwasreneweduntilDecember1984.Although
Themachinerydidnotarrive.
the parties did not review their contract for the succeeding year, K
Issue: Is the condition obnoxious to the first sentence contained in Servicescontinuedasporteragecontractor.KServicesreceivedaletter
Article1182? fromthethenMIAAGeneralManager,therelevantportionofwhich
stated:Duethecertainadministrativeproblems,thatarepreventingus
Held:No.Theconditionisvalideventhoughitismadetodependupon
fromtakingover,pleasecontinueoperatingsaidservice untilfurther
thewilloftheobligor(R)asitisresolutoryinnature.Rwouldbeliable
noticefromus.
evenintheabsenceofproofshowingthatthenonarrivalwasdueto
KServicesallegedthatitwasinitiallyhesitanttoacceptMIAAsoffer. Issue: Whether K Services was entitled to the writ of preliminary
However,itcontinuedtoprovideportersforDomesticTerminalIand injunctiongrantedbythetrialcourt.
expandeditsoperationstocoverDomesticTerminalIIuponthealleged
Held: No. (1) Extension would only be until further notice.
verbal assurance of MIAAs officers that MIAAs policy was to
While it may be conceded that private respondent was allowed to
relinquish porterage operations to the private sector. K Services
continue operating the porterage service after the expiration of the
likewiseclaimedthatMIAAofficersalsogaveverbalassurancethatK
contractastheabovelettershows,thereisnoquestion,however,that
Services would not be replaced with another porterage contractor
privaterespondentwasonlyallowedtooperateuptoacertaintime,
withoutapublicbiddinginwhichKServicescouldparticipate.
specified therein as until further notice from us. Indeed, there is
OnDecember1,1992,thenewGeneralManagergavewrittennoticeto nothing in said letter to indicate that private respondent has until
KServicestowindupitsoperationsasManagementhasdecidedto forevertooperatetheporterageserviceasprivaterespondentwould
takeovertheaforecitedservicesattheDomesticPassengerTerminalsI like to make it appear. The fact that the authority to continue the
andII. porterage service was specified up to a certain period is a clear
indicationthatpetitionerdidnotintendtoallowprivaterespondentto
KServicesopposedthetakeover.Itfiledapetitionforprohibitionwith
operate the porterage service for as long as it pleases. Perforce, it
preliminaryinjunction.
limitedsuchprivilegetoacertainperiodoruntilfurthernotice.
120
(2)Phraseprovidedaresolutoryfacultativecondition.Wherethe
OBLIGATIONSArt.1182
termsofacontractareclear,leavingnodoubtontheintentionofthe
contractingparties,theCourthasheldthattheliteralmeaningofthe
stipulationsshallcontrol.Thephraseuntilfurthernoticeprescribeda
limittotheextensionofthecontractconditionedonafutureevent, (2)WhereSbindshimselftosellhislandtoSifhewinsacasewhich
specifically,thereceiptbyKServicesofnoticeofterminationfrom ispendingbeforetheSupremeCourt.
MIAA.Ineffect,thephraseprovidedaresolutoryfacultativecondition.
Itshouldbenotedthatuntilisawordoflimitation,usedordinarilyto
restrict that which precedes to what immediately follows it, and its
(2)Whenthefulfillmentoftheconditiondoesnotdependonthewillof
officeistofixsomepointoftimeorsomeeventuponthearrivalor
theobligor,butthatonathirdpersonwhocaninnowaybecompelled
occurrence of which what precedes will cease to exist. (Manila
tocarryitout,anditisfoundbythecourtthattheobligorhasdoneall
InternationalAirportAuthorityvs.CourtofAppeals,397SCRA348
inhispowertocomplywithhisobligation,hispartofthecontractis
[2003].)
deemedcompliedwithandhehasarighttodemandperformanceofthe
Casualcondition.
contractbytheotherparty.(seeSmithBell&Co.vs.SoteloMatti,44
(1)Ifthesuspensiveconditiondependsuponchanceoruponthewillof Phil.875[1923],underArt.1193.)
athirdperson,theobligationsubjecttoitisvalid.
Mixedcondition.
EXAMPLES:
Theobligationisvalidifthesuspensiveconditiondependspartlyupon
(1)WhereX,buildingcontractor,obligeshimselfinfavorofYowner, chanceandpartlyuponthewillofathirdperson.
torepairatXsexpenseanydamagethatmaybecausedtothebuilding
EXAMPLE:
byanyearthquakeoccurringwithinten(10)yearsfromthedateofthe
WhereX,buildingcontractor,obligeshimselfinfavorofY,owner,to
completionofitsconstruction.
repairatXsexpense,anydamagetothebuildingtakingplaceafteran
earthquakeiffoundbyapanelofarbitratorsthatconstructiondefects thesalecouldnotbecarriedoutortheproceedsthereofsenttothe
contributedinanywaytothedamage. Philippines.
BothconditionsmusttakeplaceinorderthatXsobligationwillarise. The Court of Appeals held that payment of the advances did not
becomedueuntiltheadministratixreceivedthepurchasepricefromthe
ILLUSTRATIVE CASES:
buyeroftheproperty.
1.Validityofstipulationthatdebtorshallpaycreditadvancesmadeto
Issue: Istheobligationsubjecttoaconditionexclusivelydependent
himassoonashereceivesfundsfromthesaleofhisproperty.
uponthewillofD?
Facts:DpromisedtopayCcertaincreditadvancesmadetohimbyC
122
assoonashereceivesfundsderivedfromthesaleofhispropertyin
Spain. OBLIGATIONSArt.1182
Thewilltosellonthepartofthedebtor(intestate)waspresentinfact, Held: No.(1) Conditiondefendantuponothercircumstances. The
orpresumedlegallytoexist,althoughthepriceandotherconditions conditionalsodependsuponothercircumstancesbeyondthecontrolor
thereof were still within his discretion and final approval. But in powerofD.Iftheconditionwereifhedecidestosellhishouse,or
additiontotheacceptabilityofthesaletohim(obligor),therewerestill if he likes to pay the sums advanced, or any other condition of
otherconditionsthathadtoconcurtoeffectthesales,mainlythatofthe similarimportimplyingthatuponhim(debtor)alonepaymentwould
presenceofabuyer,ready,able,andwillingtopurchasetheproperty depend, the condition would be potestative, dependent exclusively
undertheconditionsdemandedbythevendor.Withoutsuchabuyer uponhiswillordiscretion.
Thecondition, as stated above, implies that the obligor had already
decidedtosellhishouse,oratleastthathehadmadehiscreditors
2. Underthecontractofleaseofelectriclightposts,thetermthereof
believe that he had done so, and all that was needed to make the
shallbeaslongasthelesseehasneedforthepostsbutthetermination
obligationdemandableisthatthesalebeconsummatedandtheprice
oftheleaseissubjectalsotochanceorthewillofathirdperson.
thereofremittedtothePhilippines.
Facts:PetitionerN,atelephonecompany,andprivaterespondentC,a
(2)Condition,amixedone.Theconditionoftheobligationwasnot
privatecorporation,enteredintoacontractfortheusebytheformerin
apurelypotestativeone,dependingexclusivelyuponthewillofthe
the operation of its telephone service the electric light posts of the
obligor,butamixedonedependingpartlyuponthewilloftheobligor
latter,inconsiderationtotheinstallation,freeofcharge,often(10)
andpartlyuponchance,i.e.,thepresenceofabuyerofthepropertyfor
telephoneconnectionsfortheuseofCinspecifiedplaces.
thepriceandundertheconditionsdesiredbytheobligor.(Hermosavs.
Thecontractprovides,interalia:
Longara,93Phil.977[1953].)
(a)Thatthetermorperiodofthiscontractshallbeaslongastheparty
Paras,C.J.,dissenting:Itisveryobviousthatthematterofthesaleof
ofthefirstpart[N]hasneedfortheelectriclightpostsofthepartyof
thehousewasvestedonthesolewilloftheobligor,unaffectedbyany
thesecondpart[C]itbeingunderstoodthatthiscontractshallterminate
outside consideration or influence. The majority admit that if the
whenforanyreasonwhatsoever,theparty
conditionwereifhedecidestosellhishouse,orifhelikestopaythe
sumsadvanced,thesamewouldbepotestative.Ithinkamereplayof Art.1182
wordsisinvokedasIcannotseeanysubstantialdifference.Inthecase
DIFFERENTKINDSOFOBLIGATIONS123PureandConditional
atbar,thetermsarestillsubjecttothesolejudgmentifnotwhims
Obligations
andcapricesofD.Infact,nosalewaseffectedduringhislifetime.
ofthesecondpartisforcedtostop,abandoned[sic]itsoperationasa condition, is correct. However, it must have overlooked the other
publicserviceanditbecomesnecessarytoremovetheelectriclight conditionsinthesameprovision,towit:
post[sic];
xxxitbeingunderstoodthatthiscontractshallterminatewhenfor
Apart from applying Article 1267, the Court of Appeals held the any reason whatsoever, the party of the second part (private
contract was subject to a potestative condition which rendered the respondent)isforcedtostop,abandoned(sic)itsoperationasapublic
conditionalobligationvoid. serviceanditbecomesnecessarytoremovetheelectriclightpost(sic);
whicharecasualconditionssincetheydependonchance,hazard,orthe
Regardingthisissue,Nallegesthatthereisnothingpurelypotestative
willofathirdperson.
abouttheprestationsofeitherpartybecauseNspermissionforfreeuse
oftelephonesisnotmadetodependpurelyonitswill,neitherisCs Insum,thecontractissubjecttomixedconditions,thatis,theydepend
permissionforfreeuseofitspostsdependentpurelyonitswill. partlyonthewillofthedebtorandpartlyonchance,hazardorthewill
of a third person, which do not invalidate the aforementioned

Held:Contractsubjecttomixedconditions. Nsallegationsmust
provision.(NagaTelephoneCo.,Inc.vs.CourtofAppeals,230SCRA
beupheld inthis regard. A potestative conditionisa condition, the
351[1994].)
fulfillmentofwhichdependsuponthesolewillofthedebtor,inwhich
case, the conditional obligation is void. Based on this definition, Wheresuspensiveconditiondependspartlyuponthewillofdebtor.
respondentcourtsfindingthattheprovisioninthecontract,towit:
AccordingtoManresa,theuseofthewordexclusive(nowsole)
(a)Thatthetermorperiodofthiscontractshallbeaslongastheparty makesitclearthatconditionalobligationswhosefulfillmentdepends
ofthefirstpart(petitioner)hasneedfortheelectriclightpostsofthe partlyuponthewillofthedebtorandpartlyuponthewillofathird
partyofthesecondpart(privaterespondent)xxx,isapotestative
person, or uponchanceare perfectlyvalid. (Jacintovs. Chua Leng, Article1183referstosuspensiveconditions.Itappliesonlytocases
[C.A.]45O.G.2919,citing4Manresa126.) wheretheimpossibilityalreadyexistedatthetimetheobligationwas
constituted. If the impossibility arises after the creation of the

obligation,Article1266governs.
Itisbelieved,however,thatifthecompliancewiththeobligationstill
Twokindsofimpossibleconditions.
dependsuponthatpartoftheconditionwhosefulfillmentdependsupon
thewillofthedebtor,theobligationisvoidasitiswithinhispowerto Theyare:
complyornottocomplywiththesame.Thesituationisthesameasif
(1) Physicallyimpossibleconditions. whenthey, inthe natureof
theconditiondependsentirelyuponthewillofthedebtor.
things,cannotexistorcannotbedone;and
ART.1183.Impossibleconditions,thosecontrarytogoodcustoms
(2) Legallyimpossibleconditions. whentheyarecontrarytolaw,
or public policy and those prohibited by law shall an nul the
morals,goodcustoms,publicorder,orpublicpolicy.
obligationwhichdependsuponthem.Iftheobligationisdivisible,
Effectofimpossibleconditions.
that part thereof which is not affected by the impos sible or
unlawfulconditionshallbevalid. (1) Conditional obligation void. Impossible conditions annul the
Theconditionnottodoanimpossiblethingshallbeconsideredas obligation which depends upon them.4 Both the obligation and the
conditionarevoid.Thereasonbehindthelawisthattheobligorknows
nothavingbeenagreedupon.(1116a)
hisobligationcannotbefulfilled.Hehasnointentiontocomplywith
WhenArticle1183applies.
hisobligation.
4Art. 873. Impossible conditions and those contrary tolawor good (3) Onlytheaffectedobligationvoid. Iftheobligationisdivisible,
customsshallbeconsideredasnotimposedandshallinnomanner thepartthereofnotaffectedbytheimpossibleconditionshallbevalid.
prejudicetheheir,evenifthetestatorshouldotherwiseprovide. EXAMPLE:
Art.727.Illegalorimpossibleconditionsinsimpleandremuneratory IwillgiveyouP10,000.00ifyousellmyland,andacar,ifyoukill
donationsshallbeconsideredasnotimposed. Pedro.
TheobligationtogiveP10,000.00isvalidbuttheobligationtogivea
Art. 1184 DIFFERENT KINDS OF OBLIGATIONS 125 Pure and carisvoidbecauseitisdependentuponanimpossiblecondition.
(4) Only the condition void. If the obligation is a preexisting
In conditional testamentary dispositions and in simple and obligation,and,therefore,doesnotdependuponthefulfillmentofthe
remuneratorydonations,theruleisdifferent. conditionwhichisimpossible,foritsexistence,onlytheconditionis
void.
(2)Conditionalobligationvalid.Iftheconditionisnegative,thatis,
nottodoanimpossiblething,itisdisregardedandtheobligationis EXAMPLE:
rendered pure and valid. (par. 2.) Actually, the condition is always
DincurredanobligationintheamountofP10,000.00infavorofC.If
fulfilledwhenitisnottodoanimpossiblethingsothatitisthesameas
ClateragreedtokillXbeforeDpayshim,theconditiontokillXis
iftherewerenocondition.Thenegativeconditionmaybenottogive
voidbutnotthepreexistingobligationofDtopayC.
animpossiblething.
ART. 1184. The condition that some event happen at a deter
minate time shall extinguish the obligation as soon as the time

expiresorifithasbecomeindubitablethattheeventwillnottake . (a) X is liable if Y marries W before he
place.(1117) reaches the age of 23.
Positivecondition.
. (b)XisnotliableifYmarriesWattheageof
The above article refers to a positive (suspensive) condition the
23 or after he reaches
happening of an event at a determinate time. The obligation is
extinguished:
theageof23.Inthiscase,thetimespecified,beforereachingtheageof
23,hasexpiredwithoutthecondition(marryingW)beingfulfilled.The
(1)assoonasthetimeexpireswithouttheeventtakingplace;or obligationisextinguishedassoonasYbecomes23yearsold.
126OBLIGATIONSArt.1185 (c)IfYdiesattheageof22withouthavingmarriedW,theobligation
isextinguishedbecauseithasbecomeindubitablethatthecondition
(2)assoonasithasbecomeindubitablethattheeventwillnottake
will not take place. In this case, the obligation of X is deemed
placealthoughthetimespecifiedhasnotyetexpired.
extinguishedfromthedeathofY,althoughthetimespecified(before
EXAMPLE: reachingtheageof23)hasnotyetexpired.
XobligeshimselftogiveYP10,000.00ifYwillmarryWbeforeY ART. 1185. The condition that some event will not happen at a
reachestheageof23.
determinate time shall render the obligation effective from the
momentthetimeindicatedhaselapsed,orifithasbecomeevident
thattheeventcannotoccur.
Ifnotimehasbeenfixed,theconditionshallbedeemedfulfilledat EXAMPLE:
such time as may have probably been contemplated, bearing in

XbindshimselftogiveYP10,000.00ifYisnotyetmarriedtoWon
mindthenatureoftheobligation.(1118) December30.
Negativecondition. (a)XisnotliabletoYifYmarriesWonDecember30orpriorthereto.
Theaboveprovisionspeaksofanegativeconditionthataneventwill (b)XisliabletoYifonDecember30YisnotmarriedtoWorifY
nothappenatadeterminatetime.(seeArt.879.)Theobligationshall marries W after December 30. In the latter case, the condition (not
becomeeffectiveandbinding: marrying W) is fulfilled upon the expiration of the time indicated,
whichisDecember30.
(1)fromthemomentthetimeindicatedhaselapsedwithouttheevent
takingplace;or (c)SupposeWdiesonNovember20withouthavingbeenmarriedto
Y.Theobligationisrenderedeffectivebecauseitiscertainthatthe
(2) from the moment it has become evident that the event can not
conditionnottomarryWwillbefulfilled.Inthiscase,theobligation
occur,althoughthetimeindicatedhasnotyetelapsed.
becomes effective from the moment of Ws deathonNovember 20
Ifnotimeisfixed,thecircumstancesshallbeconsideredtodetermine
althoughthetimeindicated(December30)hasnotyetelapsed.
theintentionoftheparties.Thisrulemayalsobeappliedtoapositive
ART. 1186. The condition shall be deemed fulfilled when the
condition.
obligorvoluntarilypreventsitsfulfillment.(1119)
ConditionalObligations Constructivefulfillmentofsuspensivecondition.
Therearethree(3)requisitesfortheapplicationofthisarticle: to buy the property upon the terms prescribed by X. To evade the
paymentofthecommissionagreedupon,Xhimselfsoldtothebuyer
. (1) The condition is suspensive;
thepropertyatalowerpricewithouttheaidofY.
128
. (2) The obligor actually prevents the
fulfillment of the condition; OBLIGATIONSArt.1186
Inthiscase,itcanbesaidthatthedueperformancebyYofhisun
and dertaking,theconditionforthepaymentofthecommission,waspur
poselypreventedbyX,andisdeemedfulfilled.
(3)Heactsvoluntarily.
(2)SpromisedtosellhislandtoYifYwouldbeabletosecurealoan
Thelawdoesnotrequirethattheobligoractswithmaliceorfraudas
fromacertainbank.Lateron,Schangedhismindaboutsellinghis
longashispurposeistopreventthefulfillmentofthecondition.He
land.HeinducedthebanknottogiveYaloan.
shouldnotbeallowedtoprofitfromhisownfaultorbadfaithtothe
prejudiceoftheobligee.Inareciprocalobligationlikeacontractof Undertheabovearticle,theconditionisdeemedcompliedwithandS
sale, both parties are mutually obligors and also obligees. (see Art. isliabletosellhisland.Sshouldnotbeallowedtoprofitbyhisown
1167.) faultorbadfaith.
EXAMPLES: (3)SupposetheinducementmadebySwaspromotedbysomeother
reason,isthereconstructivefulfillment?Yes.Thelawdoesnotrequire
(1)XagreedtogiveYa5%commissionifthelattercouldsellthe
thatSactwithmaliceorfraudaslongashispurposeistopreventthe
formerslandatacertainprice.Yfoundabuyerwhodefinitelydecided
fulfillmentofthecondition.ButArticle1186doesnotapplyiftheact WiththepurposeofdefeatingLsclaimforattorneysfees,WandH
oftheobligorisintheexerciseofaright. enteredintoanagreement.
(4)XagreedtopaintthehouseofYforP50,000aftercompletion. Issue: Should the condition for the payment of attorneys fees be
BeforeXcouldcompletethejob,YhiredZ,anothercontractor,who deemedfulfilled?
finished the painting. The condition painting of the house is

Held:Yes.Bearinginmindthenatureof,andthecircumstancesunder
deemed fulfilled under Article 1186 and Ys obligation to pay X
whichthecontractofserviceswereenteredinto,theoccurrenceofthe
P50,000isconvertedtoapureobligation.(seeOngvs.Bogalbal,501
eventuponwhichtheamountofsaidservicesdependedwasrendered
SCRA490[2006].)
impossiblebyW.Hadshefiledsaidactionfordivorceandsecureda
ILLUSTRATIVE CASES: decree,saidconjugalpartnershipwouldhavebeendissolvedandthen
1.Agreementwasenteredintotodefeatclaimforcontingentattorneys liquidated,andtheshareofWwouldhavebeenfixed,andthenthe
fees. Art. 1186 DIFFERENT KINDS OF OBLIGATIONS 129 Pure and
Facts: ThecontractofservicesprovidesthatthecontingentfeesofL
(lawyer) shall be 2% of the share of (Mrs.) W in the conjugal attorneysfeesdueLwouldhavebeendetermined.Theconditionwas
partnershipbetweenherandherhusband,H.Thiscontractwasmade deemedfulfilled.(Rectovs.Harden,100Phil.427[1956].)
principally,incontemplationofasuitfordivorcethatWintendedto

fileandoftheliquidationoftheconjugalpartnership.
2.Conditionstobeentitledtoalifepensioncannotbefulfilledbecause
of
theabolitionbycompanyofpensionplan. donation,thereisnostatutoryrequirementthatacceptanceoftheplan
should be express. The assent or acceptance of the employees is

Facts: Before the war, PLDT established a pension plan for its
inferablefromtheirenteringtheemployofthecompany,ontheirstay
employeesbyvirtueofwhichanemployeeshallbeentitledtoalife
thereinaftertheplanwasmadeknown.
pensionundercertainconditions(i.e.,age50and20yearsofservice).
Aftertheliberation,becauseofwarlosses,theBoardofDirectorsof Similarly,theexcusethatitswarlossesextinguishedthecompanys
PLDT abolished the pension plan. Beneficiaries to the pensionplan obligation to proceed with the pension plan is not meritorious. Its
brought action against PLDT claiming monetary benefits due them obligationwasagenericone(topaymoney)andsuchobligationsare
undertheplan. notextinguishedbylossorinabilitytoraisefunds.(seeArt.1263.)
(Phil.LongDistanceCo.vs.Jeturian,97Phil.981[1955].)
Issue: Shouldtheconditionsimposedinthepensionplanbedeemed
fulfilled?
3. Obligationoflessortogivenoticewasnotfulfilledbecauseitwas
Held:Yes.PLDTmaynotdisregardtheplanatwillonthegroundthat
made
until the conditions are met, it has no duties whatever toward the
employees. The pension was not a mere offer of gratuity by the knowntohimaftertheperiodwithinwhichtonotifyexpired.
company,inspiredbynootherpurposethantobenefititsemployees.
Facts: Thesuretybondrequiresthelessor(creditor)toreporttothe
In reality, the plan sought to induce the employees to continue suretyanyviolationoftheleasecontractbythelessee(debtor)within
indefinitely in the service and to spur them to greater efforts in its five (5) days, otherwise the bond will be null and void. The lessee
serviceandincreasedzealinitsbehalf.Theplanripenedintoabinding defaulted on November 5. The fiveday period to notify expired,
contract upon its implied acceptance by its employees. Not being a therefore,onNovember10.
130 XobligeshimselftoallowYtooccupytheformershouseinManilaas
long as X is assigned by their company in the province. When Y

OBLIGATIONSArt.1187
learnedthatXwouldbetransferredtoManila,hewasabletoinduce
However,thelessorreceivedacopyofthebondfromthesuretyonly
thepresidentofthecompanytoassignanotherpersoninplaceofX.
on November 21 when the lessor learned of the existence of the
The obligation of X is extinguished because the fulfillment of the
condition.
resolutoryconditionwasvoluntarilypreventedbyY.Hence,Ymust
Issue:Isthesuretyabsolvedofitsliabilitytothelessor?
vacatethehouse.(seeArt.1190.)
Held: No. By not notifying the lessor earlier, the surety must be
ART.1187.Theeffectsofaconditionalobligationtogive,oncethe
deemedtohavewaivedtheconditionastorentalsalreadydue,sincea
condition has been fulfilled, shall retroact to the day of the
conditionisdeemedfulfilledwhentheobligorvoluntarilypreventsits
constitution of the obligation. Nevertheless, when the obligation
fulfillment. (Pastoralvs.MutualSecurityInsuranceCorp.,14SCRA
imposes reciprocal prestations upon the parties, the fruits and
1011[1965].)
interestsduringthependencyoftheconditionshallbedeemedto
Constructivefulfillmentofresolutorycondition.
havebeenmutuallycompensated.Iftheobligationisunilateral,
Article 1186 applies also to an obligation subject to a resolutory the debtor shall appropriate the fruits and in terests received,
conditionwithrespecttothedebtorwhoisboundtoreturnwhathehas unless from the nature and circumstances of the obligation it
receiveduponthefulfillmentofthecondition. shouldbeinferredthattheintentionofthepersonconstitutingthe
samewasdifferent.
EXAMPLE:
Inobligationstodoandnottodo,thecourtsshalldetermine,in Itwouldseemthattheruleonretroactivityhasnoapplicationtoreal
each case, the retroactive effect of the condition that has been contractsastheyareperfectedonlybydeliveryoftheobjectofthe
compliedwith.(1120) obligation.(seeArt.1316.)
EXAMPLE:
ConditionalObligations OnJanuary20,SagreedtosellhisparceloflandtoBforP100,000.00
shouldBloseacaseinvolvingtherecoveryofanotherparcelofland.
Retroactiveeffectsoffulfillmentofsuspensivecondition.
OnApril10,SsoldhislandtoC.BlostthecaseonDecember4.
(1) In obligations to give. An obligation to give subject to a
BeforeDecember4,BhadnorighttodemandthesaleofthelandbyS.
suspensiveconditionbecomesdemandableonlyuponthefulfillmentof
Whenthecondition,however,wasfulfilledonDecember4,itisasifB
thecondition.However,oncetheconditionisfulfilled,itseffectsshall
wasentitledtothelandbeginningJanuary20.Hence,asbetweenBand
retroacttothedaywhentheobligationwasconstituted.(par.1;see
C,Bwillhaveabetterrightovertheland.(Itisrequired,however,
Enriquezvs.Ramos,73SCRA116[1976].)
underthePropertyRegistrationDecree[Pres.DecreeNo.1529,Sec.
Thereasonisbecausetheconditionisonlyanaccidentalelementofa
51.],thatthepromiseofSbeannotatedonthebackofthecertificateof
contract.(seeArt.1318.)Anobligationcanexistwithoutbeingsubject
titleofthepropertytobebindingagainstthirdpersonslikeC.)
toacondition.Hadthepartiesknownbeforehandthatthecondition
IfthelandwassoldbyBtoDonMay15,Dwouldstillhaveabetter
wouldbefulfilled,theywouldhaveboundthemselvesunderapure
rightasagainstCsincethesalebyBwillbeconsideredvalid.
obligation.Hence,theobligationshouldbeconsideredfromthetimeit
isconstitutedandnotfromthetimetheconditionisfulfilled.
(2)Inobligationstodoornottodo.Withrespecttotheretroactive istoextinguishthedebt.Here,thefulfillmentoftheconditionhasa
effectofthefulfillmentofasuspensiveconditioninobligationstodo retroactiveeffect.
ornottodo,nofixedruleisprovided.Thisdoesnotmean,however,
(2)Suppose,intheprecedingexample,theobligationcontractedbyC
thatintheseobligationstheprincipleofretroactivityisnotapplicable.
was to construct gratis the house of D upon the fulfillment of the
Thecourtsareempoweredbytheuseofsounddiscretionandbearing
condition.
in mind the intent of the parties, to determine, in each case, the
Inthiscase,unlessthecontraryclearlyappears,thereisnoretroactive
retroactiveeffectofthesuspensiveconditionthathasbeencomplied
effectiftheconditionisfulfilled,takingintoconsiderationthenatureof
with.(par.2.)Itincludesthepowertodecidethatthefulfillmentof
theobligationandtheintentoftheparties.Therefore,Cisnotliableto
payinterestonthemoneyvalueoftheobligationfortheintervening
theconditionshallhavenoretroactiveeffectorfromwhatdatesuch period.
retroactiveeffectshallbereckoned.
Retroactiveeffectsastofruitsandinterestsinobligationstogive.
EXAMPLES:
(1) Inreciprocalobligations. Thereisnoretroactivitybecausethe
(1)CobligedhimselftocondonethedebtofD,hislawyer,shouldthe fruitsandinterestsreceivedduringthependencyoftheconditionare
latterwinCscaseintheSupremeCourt. deemedtohavebeenmutuallycompensated.Thisruleisnecessaryfor
purposes of convenience since the parties wouldnot have torender

In this case, upon the fulfillment of the condition, C shall not be
mutual accounting of what they have received. Fruits here may be
entitled,unlessthecontraryhasbeenstipulated,totheearnedinterests
natural,industrial,orcivilfruits.(seeArt.442.)
ofthecapitalduringthependencyoftheconditionastheintentionofC
EXAMPLE: Suppose, inthe same example, the promise of S was todonate the
parceloflandtoB.
Inthefirstexampleundertheprecedingtopic,whenBlostthecasein
court on December 4, S must deliver the land and B must pay Uponthefulfillmentofthecondition,Shastodeliverthelandbuthe
P50,000.00. hastherighttokeeptohimselfallthefruitsandinterestshemayhave
receivedduringthependencyofthecondition,thatis,fromJanuary20
S does not have to give the fruits received from the land before
toDecember4,unlessacontraryintentionbySmaybeinferred,as
December4andBisnotobligedtopaylegalinterestsontheprice
whenitisstipulatedthatoncetheconditionisfulfilled,Sshallrender
sincethefruitsandinterestsreceivedaredeemedtohavebeenmutually
anaccountingoffruitsreceivedduringitspendency.
compensated.
ART. 1188. The creditor may, before the fulfillment of the

(2) Inunilateralobligations. Thereisusuallynoretroactiveeffect
condition,bringtheappropriateactionsforthepreservationofhis
becausetheyaregratuitous.Thedebtorreceivesnothingfromthe
right.
ConditionalObligations Thedebtormayrecoverwhatduringthesametimehehaspaidby
mistakeincaseofasuspensivecondition.(1121a)
creditor.Thus,fruitsandinterestsbelongtothedebtorunlessfromthe
natureandothercircumstancesitshouldbeinferredthattheintention Rightspendingfulfillmentofsuspensivecondition.
ofthepersonconstitutingthesamewasdifferent.
(1)Rightsofcreditor.Hemaytakeorbringappropriateactionsfor
EXAMPLE: thepreservationofhisright,asthedebtormayrendernugatorythe
obligationuponthehappeningofthecondition.Thus,hemaygoto
courttopreventthealienationorconcealmentofthepropertyofthe Notethatthepaymentbeforethefulfillmentoftheconditionmustbe
debtorortohavehisrightannotatedintheregistryofproperty.The by mistake; otherwise, the debtor is deemed to have impliedly
ruleinparagraphoneappliesbyanalogytoobligationssubjecttoa waived the condition. In any case, he cannot recover what he has
resolutorycondition.(seeArt.1190,par.1.) prematurelypaidoncethesuspensiveconditionisfulfilled.Butifthe
conditionwasnotfulfilled,thedebtorshouldbeallowedtorecoverany
(2) Rightsofdebtor. Heisentitledtorecoverwhathehaspaidby
paymentmadeevenifthedebtorhaspaidnotbymistake.
mistakepriortothehappeningofthesuspensivecondition.Thisrightis
grantedtothedebtorbecausethecreditormayormaynotbeableto ILLUSTRATIVECASE:
fulfill the condition imposed and hence, it is not certain that the
Underacontracttosellaparcelofland,fullpaymentwasnotmadeby
obligationwillarise.Thisisacaseofsolutioindebitiwhichisbasedon
thevendeebecauseofthenonfulfillmentofasuspensivecondition,
the principle that no one shall enrich himself at the expense of
whichpropertywaslatersoldabsolutelybythevendortoanother.
another.5
Facts:SandBenteredintoacontracttosellaparceloflandevidenced
5Art.2159.Whoeverinbadfaithacceptsanunduepayment,shallpay byamemorandumofagreementwhichstipulates, interalia,thatS,
vendor,reservestoherselfownershipandpossessionoftheproperty
legalinterestifasumofmoneyisinvolved,orshallbeliableforfruits
until full payment of the purchase price by B and that the balance
received or which should have been received if the thing produces
thereofwaspayablewithinsix(6)monthsfromthedateSwouldnotify
fruits.
BthatthecertificateoftitleofthepropertycouldbetransferredtoB.
Subsequently,Sexecutedadeedofabsolutesaleofthepropertyin
134OBLIGATIONSArt.1188 favorofT.
ItappearedthatSexertedeffortstoregistertheproperty,andBhadno xxxxxx
intentiontobuythepropertyandwasonlyinterestedindealingwith
Art.2160.Hewhoingoodfaithacceptsanunduepaymentofathing
otherbuyerstomakeaprofit.Sevenpleadedwithhimseveraltimesto
certainanddeterminateshallonlyberesponsiblefortheimpairment
purchasetheproperty,lesstheexpensesofregistration,astherewere
orlossofthesameoritsaccessoriesandaccessionsinsofarashehas
otherinterestedbuyers.
therebybeenbenefited.Ifhehasalienatedit,heshallreturnthepriceor
Issue:IsBentitledtorecoverthepropertyinquestionfromT? assigntheactiontocollectthesum.(1897)
Held:No.Therewasnoactualsale.OnthepartofB,nofullpayment
wouldbemadeuntilacertificateoftitleofthepropertywasreadyfor
transferinhisname.
Under the second paragraph of Article 1188, even if B did not

ART. 1189. When the conditions have been imposed with the
mistakenly make partial payments, inasmuch as the suspensive
intentionof suspendingtheefficacyofanobligationtogive, the
conditionwasnotfulfilleditisonlyfairandjustthatBbeallowedto
followingrulesshallbeobservedincaseoftheimprovement,loss
recoverwhathehadpaidSinexpectancythattheconditionwouldbe
ordeteriorationofthethingduringthependencyofthecondition:
fulfilled;otherwise,therewouldbeunjustenrichmentonthepartofS.
Inthiscase,theheirsofSwereorderedtoalsopayBinterestat12% (1)Ifthethingislostwithoutthefaultofthedebtor,theobligation
perannumonthesumreceivedbySfromthetimetheRegionalTrial shallbeextinguished;
Courtrendereditsoriginaldecision. (Buotvs.CourtofAppeals,357
SCRA846[2001].)
(2)Ifthethingislostthroughthefaultofthedebtor,heshallbe . (1) The obligation is a real obligation;
obligedtopaydamages;itisunderstoodthatthethingislostwhen
itperishes,orgoesoutofcommerce,ordisappearsinsuchaway . (2) The object is a specific or determinate
thatitsexistenceisunknownoritcannotberecovered; thing;
(3)Whenthethingdeteriorateswithoutthefaultofthedebtor,the
impairmentistobebornebythecreditor; . (3) Theobligationissubjecttoasuspensive
condition;
(4)Ifitdeterioratesthroughthefaultofthedebtor,thecreditor
may choose between the rescission of the obligation and its

. (4) The condition is fulfilled; and
fulfillment,withindemnityfordamagesineithercase;
(5) If the thing is improved by its nature, or by time, the

. (5) There is loss, deterioration, or
improvementshallinuretothebenefitofthecreditor;
improvement of the thing during
(6)Ifitisimprovedattheexpenseofthedebtor,heshallhaveno
otherrightthanthatgrantedtotheusufructuary.(1122) thependencyofthehappeningononecondition.
RequisitesforapplicationofArticle1189. Kindsofloss.
Article1189appliesonlyif: Lossincivillawmaybe:
(1)Physicalloss.whenathingperishesaswhenahouseisburned DobligedhimselftogiveChiscarworthP100,000.00ifCsellsDs
andreducedtoashes;or property.ThecarwaslostwithoutthefaultofD.
(2)Legalloss.whenathinggoesoutofcommerce(e.g.,whenitis TheobligationisextinguishedandDisnotliabletoCevenifCsells
expropriated)orwhenathingheretoforelegalbecomesillegal theproperty.Aperson,asageneralrule,isnotliableforafortuitous
event.(Art.1174.)
(2)Lossofthingthroughdebtorsfault.EXAMPLE:
(e.g., duringtheJapaneseoccupation,Americandollars hadbecome
impossiblesincetheirusewasforbiddenbythebelligerentoccupant); Inthesameexample,ifthelossoccurredbecauseofthenegligenceof
or D,Cwillbeentitledtodemanddamages(Art.1170.),i.e.,P100,000.00
plusincidentaldamages,ifany.
(3) Civil loss. when a thing disappears in such a way that its
existence is unknown (e.g., a particular dog has been missing for (3)Deteriorationofthingwithoutdebtorsfault.Athingdeteriorates
sometime);orevenifknown,itcannotberecovered(Art.1189[2].), whenitsvalueisreducedorimpairedwithorwithoutthefaultofthe
whetherasamatteroffact(e.g., aparticularringisdroppedfroma debtor.
shipatsea)oroflaw(e.g.,apropertyislostthroughprescription).(see
EXAMPLE:
Art.1262.)
Ifthecarfiguredinanaccident,asaresultofwhichitswindshieldwas
Rulesincaseofloss,etc.ofthingduringpendencyofsuspensive
brokenandsomeofitspaintswerescratchedawaywithoutthefaultof
condition.
D,therebyreducingitsvaluetoP80,000.00,Cwillhavetosufferthe
(1)Lossofthingwithoutdebtorsfault.EXAMPLE: deteriorationofimpairmentintheamountofP20,000.00.(Art.1174.)
Art. 1189 DIFFERENT KINDS OF OBLIGATIONS 137 Pure and TheimprovementshallinuretothebenefitofC.InasmuchasCwould
ConditionalObligations sufferincaseofdeteriorationofthecarthroughafortuitousevent,itis
butfairthatheshouldbecompensatedincaseofimprovementofthe
(4)Deteriorationofthingthroughdebtorsfault.
carinstead.
EXAMPLE:
(6)Improvementofthingatexpenseofdebtor.EXAMPLE:
Inthiscase,Cmaychoosebetween:
Duringthependencyofthecondition,Dhadthecarpaintedanditsseat
(a)Rescission(orcancellation)oftheobligationwithdamages;inthe
coverchangedathisexpense.
case D is liable to pay P100,000.00, value of the car before its
Inthiscase,Dwillhavetherightgrantedtoausufructuarywithrespect
deteriorationplusincidentaldamages,ifany;or
toimprovementsmadeonthethingheldinusufruct.6
(b)Fulfillmentoftheobligationalsowithdamages(seeArt.1191.);in
thiscase,DisboundtoCtogivethecarandpayP20,000.00plus 6Art.562.Usufructgivesarighttoenjoythepropertyofanotherwith
incidentaldamages,ifany.
the obligation of preserving its form and substance, unless the title
(5)Improvementofthingbynatureorbytime.Athingisimproved constitutingitorthelawotherwiseprovides.(467)
whenitsvalueisincreasedorenhancedbynatureorbytimeoratthe
Art.579.Theusufructuarymaymakeonthepropertyheldinusufruct
expenseofthedebtororcreditor.(seeArt.1187.)
suchusefulimprovementsorexpensesformerepleasureashemay
EXAMPLE: deemproper,providedhedoesnotalteritsformorsubstance;buthe
shall have no right to be indemnified therefor. He may, however,

Supposethemarketvalueofthecarincreased,whogetsthebenefit?
remove such improvements, should it be possible to do so without Asforobligationstodoandnottodo,theprovisionsofthesecond
damagetotheproperty.(487) paragraphofArticle1187shallbeobservedasregardstheeffectof
Art.580.Theusufructuarymaysetofftheimprovementshemayhave theextinguishmentoftheobligation.(1123)
madeonthepropertyagainstanydamagetothesame.(488)
Effectsoffulfillmentofresolutorycondition.
(1) In obligations to give. When the resolutory condition in an
138 obligationtogiveisfulfilled,theobligationisextinguished(Art.1181.)
and the parties are obliged to return to each other what they have
OBLIGATIONSArt.1190
receivedundertheobligation.(par.2.)
ART. 1190. When the conditions have for their purpose the
(a)Thereisareturntothestatusquo.Inotherwords,theeffectofthe
extinguishment of an obligation to give, the parties upon the
fulfillmentoftheconditionisretroactive.
fulfillmentofsaidconditions,shallreturntoeachotherwhatthey
(b)Theobligationofmutualrestitutionisabsolute.Itappliesnotonly
havereceived.
tothethingsreceivedbutalsotothefruitsandinterests.
Incaseoftheloss,deteriorationorimprovementofthething,the
(c)Incasethethingtobereturnedislegallyinthepossessionofa
provisionswhich,withrespecttothedebtor,arelaiddowninthe
thirdpersonwhodidnotactinbadfaith(seeArt.1384,par.2.),the
preceding article shall be applied to the party who is bound to
remedyofthepartyentitledtorestitutionisagainsttheother.
return.
(d) In obligations to give subject to a suspensive condition, the
retroactivityadmitsofexceptionsaccordingtowhethertheobligation
isbilateralorunilateral.(seeArt.1187.)Here,therearenoexceptions, Theeffectofthehappeningoftheconditionistoannultheobligation
whethertheobligationisbilateralorunilateral. asifithadneverbeenconstitutedatall.Inthiscase,thepartiesintend
thereturnofthecar.
The reason for the difference is quite plain. The happening of the
suspensiveconditiongivesbirthtotheobligation.Ontheotherhand, (2)Inobligationstodoornottodo.Insomeobligations,thecourts
thefulfillmentoftheresolutoryconditionproducestheextinguishment shalldeterminetheretroactiveeffectofthefulfillmentoftheresolu
oftheobligationasthoughithadneverexisted.(see8Manresa149 torycondition(par.2.)asinthecasewheretheconditionissuspensive.
150.)Theonlypossibleexceptioniswhentheintentionofthepartiesis (Art.1187,par.2.)Thecourtsintheexerciseofdiscretionmayeven
otherwise. disallow retroactivity taking into account the circumstances of each
case.
(e) If the condition is not fulfilled, the rights acquired by a party
becomevested. ApplicabilityofArticle1189topartywithobligationtoreturn.
Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 139 Pure and In the example above, D is the debtor andC, the creditor, pending
ConditionalObligations fulfillment of the resolutory condition the return of D from the
province.Uponthehappeningofthecondition.Dbecomesthecreditor
EXAMPLE:
witharighttodemandthereturnofthecarandC,thedebtor,withthe
DobligeshimselftoallowCtousetheformerscaruntilDreturns
obligationtoreturnthecar.
fromtheprovince.UponthereturnofDfromtheprovince,Cmust
Statedinanotherway,thehappeningofaresolutoryconditionhasthe
givebackthecar.
same effect on the creditor as the suspensive condition has, on the
debtoranobligationarises.Thefulfillmentoftheresolutorycon
ditionconvertsthecreditorintodebtor,andthedebtorintocreditor. OBLIGATIONSArt.1191
Hence,theapplicabilityoftheprovisionsofArticle1189incaseof
ineithercase.Hemayalsoseekrescission,evenafterhehaschosen
loss,deterioration,orimprovementofthething;andpendingthefulfill
fulfillment,ifthelattershouldbecomeimpossible.
mentofthecondition,thepartiesareentitledtotherightsgrantedby
Article1188. Thecourtshalldecreetherescissionclaimed,unlesstherebejust
causeauthorizingthefixingofaperiod.
ART. 1191. The power to rescind obligations is implied in
reciprocalones,incaseoneoftheobligorsshouldnotcomplywith Thisisunderstoodtobewithoutprejudicetotherightsofthird
whatisincumbentuponhim. personswhohaveacquiredthething,inaccordancewithArticles
The injured party may choose between the fulfillment and the 1385and1388andtheMortgageLaw.8(1124)
rescission7oftheobligation,withthepaymentofdamages Kindsofobligationaccordingtothepersonobliged.
7Thisremedyincaseofbreachofobligationshouldnotbeconfused Theyare:
withrescissioninArticle1281, etseq. Undertheformerprovision,a (1) Unilateral. whenonlyonepartyisobligedtocomplywitha

distinctionexistedbetweenrescissionandresolution.(seeNoteunder prestation.
Art.1381.)
EXAMPLES:
140
Donation;Inacontractofloan,thelenderhastheobligationtogive. landregistrationproceedings.Thisdiscontinuancewasreiteratedin
Afterthelenderhascompliedwithhisobligation,thedebtorhasthe Pres. Decree No. 1529, the Property Registration Decree, which
obligationtopay. supersededActNo.496,asamended,theLandRegistrationAct.
(2)Bilateral.whenbothpartiesaremutuallyboundtoeachother.In
other words, both parties are debtors and creditors of each other.
Bilateralobligationsmaybereciprocalornonreciprocal.
(a) Reciprocalobligations arethosewhicharisefromthesamecause

EXAMPLE:
andinwhicheachpartyisadebtorandcreditoroftheother,suchthat
Inacontractofsaleintheabsenceofanystipulation,thedeliveryof
the performance of one is designed to be the equivalent and the
the thing sold by the seller is conditioned upon the simultaneous
conditionfortheperformanceoftheother.Thegeneralruleisthatthey
paymentofthepurchasepricebythebuyer,and viceversa. (seeArt.
aretobeperformedsimultaneouslyoratthesametimesuchthateach
1169,lastpar.)
partymaytreatthefulfillmentofwhatisincumbentupontheotherasa
suspensiveconditiontohisobligation(seeArt.1169,lastpar.),andits Theselleristhecreditorastothepriceanddebtorastothething,while
nonfulfillment,asatacitorimpliedresolutorycondition,givinghim thebuyeristhecreditorastothethinganddebtorastotheprice.
the right to demand the rescission of the contract, i.e., it may be

(b) Nonreciprocal obligations are those which do not impose
exercisedevenifitisnotprovidedintheagreementoftheparties.
simultaneous and correlative performance on both parties. In other
8Pres. Decree No. 892 has discontinued the system of registration words, the performance of one party is not dependent upon the
undertheSpanishMortgageLawandoftheuseofSpanishtitlesin simultaneousperformancebytheother.
EXAMPLES: obligationofBtoreconveyisnotdependentontheobligationofSto
lease.TheobligationofSisnotanessentialpartofthecontract.
(1)DborrowedfromCP50,000.00.C,ontheotherhand,borrowed
Dscar.TheperformancebyDofhisobligationtoCisnotconditioned Inotherwords,theobligationofStoleasethepropertytoBarisesonly
upontheperformancebyCofhisobligationandviceversa. afterBhadreconveyedthesametoS.(seeSangcuanvs.Intermediate
AppellateCourt,191SCRA28[1990].)
Although D and C are debtors and creditors of each other, their
obligations are not reciprocal. The obligation of D arises from the Remediesinreciprocalobligations.
contractofloan,whilethatofC,fromthecontractofcommodatum.
Article 1191 is the general provision on rescission of reciprocal
The obligations are not dependent upon each other and are not
obligations. It speaks of the right of the injured party to choose
simultaneous.Article1191appliesonlyifthereciprocityarisesfrom
betweenrescissionorfulfillmentoftheobligation,withtherightto
thesamecause.
claimdamagesineithercase.Itgovernswherethereisnoncompliance
(2)ThecontractbetweenSandBstates:IntheeventSexercisesthe byoneofthecontractingpartiesincaseofreciprocalobligations.
righttorepurchase[landsoldbyStoB]xxxandbecomestheowner
ofthepremises,heshallbeobligedtogiveBtherightofleaseand
executealeasecontract. Theremedygrantedispredicatedonabreachofobligationbytheother
party that violates the reciprocity between them. The breach con
Here, no reciprocal obligation is created between them for B to
templatedistheobligorsfailuretocomplywithan existing obliga
reconveythepremisesandforStoleasethemtoB.Therearetwo
tion,notafailureofaconditiontorenderbindingthatobligation.(see
separateanddistinctobligations,eachindependentoftheother.The
Ongvs.CourtofAppeals,310SCRA1[1999];InformationTechno
logyFoundationvs.CommissiononElections,419SCRA626[2004].) obligation. When a party asks for the rescission of a contract, he
Itwould,ofcourse,beuselesstorescindacontractthatisnolongerin impliedlyrecognizesitsexistence.
existence.(Yanezavs.CourtofAppeals,572SCRA413[2008].)
9Under a contract to sell, the nonpayment of the purchase price
Choiceofremedybyinjuredparty. rendersthecontractineffectiveandwithoutforceandeffect.Itisnota
breach ofcontractbutmerelyan event thatpreventsthesellerfrom

Incaseoneoftheobligorsdoesnotcomplywithwhatisincumbent
conveyingtitletothepurchaser.Article1191presupposesanobliga
upon him, the injured or aggrieved party may choose between two
tionalreadyextant.Thus,acauseofactionforspecificperformance
remedies:
doesnotarise.
(1)actionforspecificperformance(fulfillment)oftheobligationwith
10Torescindistodeclareacontractvoidinitsinceptionandtoputan
damages;9or
endtoitasthoughitneverwere.Itisnotmerelytoterminateitand
(2)actionforrescission10 oftheobligationalsowithdamages.(see releasepartiesfromfurtherobligationstoeachotherbuttoabrogateit
SoorajimulNagarmullvs.BinalbaganIsabelaSugarCompany,Inc.,33 fromthebeginningandrestorepartiestorelativepositionswhichthey
SCRA46[1970].) wouldhaveoccupiedhadnocontractevenbeenmade.Acomplaint
for the cancellation of the vendees adverse claim on the vendors

Rescissionapplicabletoreciprocalobligationsistobedistinguished
originalcertificateoftitleandfortherefundofthepaymentsmadeby
from rescissionfor lesioncontemplatedinArticle1380, et seq. and
the vendee cannot be considered as seeking the rescission of the
fromcancellationofacontractbased,forexample,ondefectinthe
contract of sale. Inother words, seekingdischarge from contractual
consent(seeArts.1318,1330.),andnotonthebreachbyapartyofhis
obligationsandofferforrestitutionbythevendorisnotthesameasthe
abrogationofthecontract.(Ocampovs.CourtofAppeals,233SCRA (b)Bmaydemandfromthecourttherescissionofthecontractalso
551[1994].) withdamages.
IfafterdeliveryofthecarbyS,itisBwhofailstomakegoodthe
price,suchfailure,intheabsenceofstipulationthatownershipofthe
TherescissionofasaleofimmovableisgovernedbyArticle1592.(see
thingshallnotpasstothepurchaseruntilhehasfullypaidtheprice
Note15.)
(Art.1478.),doesnotcausetheownershiptorevesttoS,unlessthe
bilateral contract of sale is first rescinded pursuant to Article 1191.
Nonpaymentonlycreateslikewisearighttodemandthefulfillmentof
EXAMPLE: theobligationor,incaseofasubstantialbreach,torescindthecontract
underArticle1191.(Balatbatvs. Court ofAppeals,261SCRA128

InacontractofsaleofacarbetweenSandB,itwasagreedthatS,the
[1996]; Heirs of P. Escanlar vs. Court of Appeals, 281 SCRA 177
owner,woulddeliverthecarandthenecessarydocumentdulysigned
[1997];Villaflorvs.Ocampo,280SCRA297[1997];Molinavs.Court
byhimtoBatthehouseofConDecember1,andBwoulddeliverthe
ofAppeals,398SCRA97[2003].)
paymentatthesameplaceandonthesamedate.
Whenapartydemandsrescissioninreciprocalobligationshe,ineffect,
IfSdoesnotcomplywithhisobligation.
treats the nonfulfillment by the other party of his obligation as a
(a)Bmay,inanactionforspecificperformance,demandthedelivery resolutorycondition.
ofthecarwithdamages;or
Breachofobligationonpartofplaintiff.
Breachofanobligationoccurswhenthereisafailureorrefusal,bya therightshouldtheotherobligorfailtocomplywithhisobligation,it
partywithoutlegalreasonorexcusetoperform,inwholeorinpartthe beingunjustthatbeheldboundtofulfillhisundertakingswhenthe
obligationorundertakingwhichisincumbentuponhim. otherviolateshis.
Undertheruleofexceptiononadimpleticontractus,thepartywhohas Existenceofeconomicprejudicenotrequired.
notperformedhispartoftheagreementisnotentitledtosue.(Marin
TheprincipalactionforrescissionfornonperformanceunderArticle
vs.Adil,130SCRA406[1984].)Wheretheplaintiffisthepartywho
1191mustbedistinguishedfromthesubsidiaryactionforrescissionby
didnotperformtheundertakingwhichhewasboundtoperformbythe
reasonof lesion ordamageunderArticle1381, etseq. Theeffectof
termsofthecontract,heisnotentitledtoinsistuponitsperformanceby
rescissionisalsoprovidedinArticle1385.Unlike,however,Article
thedefendant,orrecoverdamagesbyreasonofhisownbreach.(Seva
1385,Article1191isnotpredicatedonlesionoreconomicprejudiceto
vs.Berwin,48Phil.581[1926].)
oneofthepartiesbutonbreachoffaithbyoneofthemthatviolatesthe
Only the injured party can rescind a contract without violating the reciprocity between them. (Deiparine, Jr. vs. Court of Appeals, 221
principleofmutualityofcontracts(seeArt.1308.),whichprohibits SCRA503[1993];Franciscovs.DEAGConstruction,Inc.,543SCRA
644 [2008]; Congregation of the Religious of the Virgin Mary vs.

Orola, 553 SCRA 578 [2008].) The prevailing doctrine is that a
allowingthevalidityandperformanceofcontractstobelefttothewill
contractofsaleenteredintoinviolationofarightoffirstrefusalof
of one of the parties. (Lim vs. Court of Appeals, 263 SCRA 569
another person is rescissible. (Conculada vs. Court of Appeals, 367
[1996].)Thepartywhodidnotperformhispartoftheagreementhas
SCRA164[2001].)
norighttoinsistupontheperformanceoftheotherparty.Therightto
rescindmaybeexercisedevenintheabsenceofanystipulationgiving
Article 1385 applies to rescission of reciprocal obligations under theiroriginalsituationpriortotheinceptionofthecontract.Rescission
Article 1191. The applicability of Article 1191 is subject to other createstheobligationtoreturntheobjectofthecontract.Itrequiresa
provisionsoflaw. mutualrestitutionofthebenefitseachpartymayhavereceivedasa
resultofthecontract.Itcanbecarriedoutonlywhentheonewho
Effectofrescission.
demandsrescissioncanreturnwhateverhemaybeobligedtorestore.
Generally,torescindacontractisnotmerelytoterminateit,butto Torescindistodeclareacontractvoidandtoabrogateitfromitsin
abrogateandundoitfromthebeginning,thatis,notmerelytorelease ception. (Velarde vs. Court of Appeals, 361 SCRA 56 [2001];
the parties from further obligations to each other in respect to the Supercars Management & Development Corporation vs. Flores, 446
subjectofthecontract,buttoannulthecontractandrestoretheparties SCRA 34 [2004]; Laperal vs. Solid Homes, Inc., 460 SCRA 375
totherelativepositionswhichtheywouldhaveoccupiedasifnosuch [2005];Carrascoso,Jr.vs.CourtofAppeals,477SCRA666[2006];
contracthadeverbeenmade.(Serranovs.CourtofAppeals,457SCRA seeArt.1385.)
415 [2003]; RaquelSantos vs. Court of Appeals, 592 SCRA 169

ILLUSTRATIVECASES:
[2009].)Torescindacontractistoputanendtoit,abrogatingitinall
its party as though it never was. (Unlad Resources Dev. Corp. vs. 1.ApplicabilityofArticle1191tocontractoflease.
Dragon,560SCRA63[2008].)
Facts:E(lessee)boundhimselfnottomakeanyconstructionuponthe
Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 145 Pure and propertyleasedwithoutthepermissionofR(lessor),andincasehe
ConditionalObligations shoulddoso,itshallbeforthebenefitoftheproperty,withoutany
righttoaskforreimbursementforitscost.
IncaseofrescissionofcontractbasedonArticle1191,mutualres
titutionisrequiredtobringbacktheparties,asfaraspracticable,to
Thepartiesdidnotexpresslyprovideforrescissionincaseofbreachof Facts: Xbroughtactionfortherescissionofacontractofpartnership
thisstipulation. forfailureofYtocontributeallthecapitalhehadboundhimselfto
invest.
Issue:HasRtherighttoaskfortherescissionofthecontractoflease
forviolationoftheclauseinquestion? Issue:DoesArticle1191applytocontractsofpartnership?
Held:Yes.Obligationsarisingfromacontractofleasebeingreciprocal 146
suchobligationsaregovernedbyArticle1191whichdeclaresthatin
OBLIGATIONSArt.1191
this kind of obligations the power to rescind it in case one of the
Held: No.OwingtoYsfailuretopaytothepartnershipthewhole
obligorsshouldnotfulfillhispartisimplied.
amountwhichheboundhimselftocontribute,hebecameindebtedtoit
Rcouldhaveaskedforthefulfillmentoftheobligationnottoconstruct
fortheremainder(Art.1786,par.1.),withinterestandanydamages
anyworkuponhispropertywithouthispermission,andinsuchcase,it
occasionedthereby(Art.1988,par.1.),butXdidnottherebyacquire
wouldhavebeennecessarytoundoallthatwasdone,destroyingthe
therighttodemandrescissionofthepartnershipcontract.
construction,inordertoleasethepropertyinitsoriginalcondition;but
Article 1191 refers to resolution of obligations in general, whereas
ashemadeuseoftherightofrescissiongrantedhimbylaw,thecourt
Articles1786and1788especiallyrefertothecontractofpartnershipin
mustdecreetheresolutionaskedunlesstherebecausesjustifyingitto
particular. And it is a wellknown principle that special provisions
fixaterm.(Cuivs.SunChan,41Phil.523[1921].)
prevailovergeneralprovisions. (Sanchovs.Lizarraga,55Phil.601

[1931].)
2.ApplicabilityofArticle1191tocontractofpartnership.
relationshipbetweenthepartiesisnolongeroneofbuyerandseller
3. ApplicabilityofArticle1191toadeedofsalewithamortgageto becausethecontractofsalehasbeenperfectedandconsummated.Itis
secure alreadyoneofamortgagorandamortgagee.InconsiderationofEs
promise to pay on installment basis the sum he owes R, the latter

paymentofthebalanceofthepurchaseprice.
accepted the mortgage as security for the obligation. Es breach of
Facts: TheabovedeedofsalegrantstoR,thevendormortgagee,the
obligationisnotwithrespecttotheperfectedcontractofsalebutinthe
righttoforecloseintheeventofthefailureofE,thevendeemortgagor,
obligationscreatedbythemortgagecontract.
tocomplywithanyprovisionofthemortgage.Thereisnodisputethat
The remedy of rescission is not a principal action retaliatory in
the parties entered into a contract of sale as distinguished from a
characterbutbecomesasubsidiaryonewhichbylawisavailableonly
contracttosell.
intheabsenceofanyotherlegalremedy.(seeArt.1384.)Foreclosure
Issue:MayRavailoftheremedyofrescissionunderArticle1191on
hereisnotonlyaremedyaccordedbylawbutisaspecificprovision
reciprocalobligations?
found in the contract between the parties. (Suria vs. Intermediate
Held: No. R has fully complied with his part of the reciprocal AppellateCourt,151SCRA661[1987].)
obligationasevidencedbythetransfercertificateoftitleinEsname.

E, in turn, fulfilled his end of the bargain when he executed the
4. Action for rescission of contract with payment of liquidated
mortgage.
damages.
Thepaymentsonaninstallmentbasissecuredbytheexecutionofthe
Facts: For the exclusive right to publish a manuscript containing
mortgage took the place of a cash payment. In other words, the
commentariesontheRevisedPenalCodewrittenbyX,Ycorporation
Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 147 Pure and Held: Yes. It has been established that such letter was written and
ConditionalObligations deliveredtoY.Thisconstitutesdeliveryofthemanuscriptfordelivery
does not mean physical or material delivery thereof. But while the
agreedtopayXP30,000.00payableineight(8)quarterlyinstallments.
delayinthepaymentofthefirstquarterlyinstallmentmaynotamount
ThepartiesstipulatedthatshouldYfailtopayanyoftheinstallments
toabreachofcontracttojustifytheenforcementofthestipulationset
due,therestshallbedeemeddueandpayablewhetherthereisjudicial
forthinthecontractbecauseXacceptedpaymentwhichcompletedthe
orextrajudicialdemand.
fullamountoftheinstallmentdue,itappearingthatYmadenofurther
Forhispart,XobligatedhimselftodeliverthemanuscripttoYnot
payment on the subsequent installments due, the stipulation in the
laterthanDecember31,1948.
contracthastobeenforced.
XclaimsthatYbreachedthecontractwhenitfailedtopaythefull
The action brought by X is for resolution of reciprocal obligations
amountoftheinstallmentforthefirstquarter.Ontheotherhand,Y
because one of the obligors failed to comply with that which was
contends that X failed to deliver to it the manuscript on the date
incumbentuponhim.Theinjuredpartycouldchoosebetweenrequiring
stipulatedandforthatreasonitwasnolongerunderobligationtopay
specificperformanceoftheobligationoritsresolutionwithindemnity
theunpaidbalanceoftheinstallments.
for losses and payment of interest. Inthe case at bar, the aforesaid
ItappearedthatonDecember16,1948,Xwroteanddeliveredaletter stipulationinthecontractmaybeconsideredasliquidateddamagesto
advisingYthatthemanuscriptsubjectofthecontractwasthenatits bepaidincaseofbreachofthecontract.Y,beingtheonethatbreached
disposal,readytogototheprintershouldYdesiretopublishit. thecontractcannotclaimanydamageagainstX.(Albertvs.University
PublishingCo.,Inc.,103Phil.351[1958].)
Issue:HadXperformedhispartofthecontract?
It is petitionerinsureds submission that the fraudulent act of the
5.Insurancecompanyofferedtoreinstateinsurancepolicyithad managerofrespondentinsurancecompanysbranchofficeinBaguio,
inmisappropriatinghispremiumpaymentsistheproximatecauseof
previously cancelled upon a finding that the cancellation was
thecancellationoftheinsurancepolicy.Atheorizedthatactofsigning
erroneous.
andevensendingthenoticeofcancellationhimself,notwithstanding
Facts: Seven months after the issuance of petitioner As personal
his personal knowledge of petitionerinsureds full payment of
accidentinsurancepolicy,respondentinsurancecompanyunilaterally
premiums, further reinforces the allegation of bad faith. Such
cancelledthesamesincecompanyrecordsrevealedthatAfailedtopay
fraudulentactcommittedbyM,arguedAisattributabletorespondent
hispremiums.Respondentlaterofferedtoreinstatesamepolicyithad
insurancecompany,anartificialcorporatebeingwhichcanactonly
148 throughitsofficersoremployees.
OBLIGATIONSArt.1191 Msactuation,concludespetitionerinsured,is,therefore,notseparate
anddistinctfromthatofrespondentinsurancecompany,contrarytothe
previouslycancelledandevenproposedtoextenditslifetimeupona
view held by the Court of Appeals. It must, therefore, bear the
findingthatthecancellationwaserroneousandthatthepremiumswere
consequencesoftheerroneouscancellationofsubjectinsurancepolicy
paid infull byA but were not remittedbyM,respondents branch
causedbythenonremittancebyitsownemployeeofthepremiums
managerwhomisappropriatedthesame.
paid. Subsequent reinstatement, according to A, could not possibly
AnactionfordamagesduetobreachofcontractwasinstitutedbyA absolverespondentinsurancecompanyfromliability,therebeingan
againstrespondent. obvious breach of contract. After all, reasoned out A, damage had
already been inflicted on him and no amount of rectification could Held:(1)Msfraudulentactimputabletorespondent.Weuphold
remedythesame. pe titionerinsureds submission. Malapits fraudulent act of
misappropriat
Respondentinsurancecompany,ontheotherhand,arguesthatwhere
reinstatement, the equitable relief sought by A was granted at an Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 149 Pure and
opportune moment, i.e., prior to the filing of the complaint, is left ConditionalObligations
withoutacauseofactiononwhichtopredicatehisclaimfordamages.
ingthepremiumspaidbypetitionerinsuredisbeyonddoubtdirectly
Reinstatement, it further explained, effectively restored petitioner
imputabletorespondentinsurancecompany.Acorporation,suchasre
insuredtoallhisrightsunderthepolicy.Hence, whatever causeof
spondent insurance company, acts solely thru its employees. The
action there might have been against it, no longer exists and the
latters acts are considered as its own for which it can be held to
consequent award of damages ordered by the lower court is
account. The facts are clear as to the relationship between private
unsustainable.
respondentinsurancecompanyandMalapit.
Issue: Therearetwoissuesforresolutioninthecase.First,didthe
Asadmittedbyprivaterespondentinsurancecompanyinitsanswer,
erroneousactofcancellingsubjectinsurancepolicyentitledA,insured,
MalapitwasthemanagerofitsBaguiobranch.Itisbeyonddoubtthat
to payment of damages? And second, did the subsequent act of
herepresenteditsinterestsandactedinitsbehalf.Hisactofreceiving
reinstating the wrongfully cancelled insurance policy by respondent
thepremiums collectediswellwithinthe provinceofhisauthority.
insurancecompany,inanefforttorectifysucherrorobliteratewhatever
Thus, his receipt of said premiums is receipt by private respondent
liabilityfordamagesitmayhavetobear,thusabsolvingittherefrom.
insurancecompanywho,byprovisionoflaw,particularlyunderArticle
191011oftheCivilCode,isboundbytheactsofitsagent.
(2) Fact that respondent itself was defrauded not a defense. representationismadeinthecourseofitsbusinessbyanyagentacting
Malapitsfailuretoremitthepremiumshereceivedcannotconstitute withinthegeneralscopeofhisauthorityeventhough,intheparticular
adefenseforprivaterespondentinsurancecompany;noexoneration case, the agent is secretly abusing his authority and attempting to
fromliabilitycouldresulttherefrom.Thefactthatprivaterespondent perpetrateafrauduponhisprincipalorsomeotherperson,forhisown
insurancecompanywasitselfdefraudedduetotheanomaliesthattook ultimatebenefit.
place in its Baguio branch office, such as the nonaccrual of said

11Art.1910.Theprincipalmustcomplywithalltheobligationswhich
premiumstoitsaccount,doesnotfreethesamefromitsobligationto
theagentmayhavecontractedwithinthescopeofhisauthority.
petitionerAreola.AsheldinPrudentialBankvs.CourtofAppeals,223
SCRA350[1993],citingtherulinginMcIntoshDakotaTrustCo.(52 Asforanyobligationwhereintheagenthasexceededhispower,the
ND752;204NW818,40ALR1021.): principalisnotboundexceptwhenheratifiesitexpresslyortacitly.
(1727)
Abankisliableforwrongfulactsofitsofficersdoneintheinterestsof
the bank or in the course of dealings of the officers in their
representative capacity but not for acts outside the scope of their
authority. A bank holding out its officers and agent as worthy of
(3) Insurance contract creates reciprocal obligations.
confidencewillnotbepermittedtoprofitbythefraudstheymaythus
Consequently, respondent insurance company is liable by way of
beenabledtoperpetrateintheapparentscopeoftheiremployment;nor
damages for the fraudulent acts committed by Malapit that gave
will it be permitted to shirk its responsibility for such frauds, even
occasiontotheerroneouscancellationofsubjectinsurancepolicy.Its
thoughnobenefitmayaccruetothebanktherefrom.Accordingly,a
banking corporation is liable to innocent third persons where the

earlier act of reinstating the insurance policy can not obliterate the company,failstocomplywithwhatisincumbentuponhim.However,
injuryinflictedonpetitionerinsured. saidarticleentitlestheinjuredpartytopaymentofdamages,regardless
of whether he demands fulfillment or rescission of the obligation.

Respondentcompanyshouldberemindedthatacontractofinsurance
Untenablethenisrespondentinsurancecompanysargument,namely,
createsreciprocalobligationsforbothinsurerandinsured.Reciprocal
that reinstatement being equivalent to fulfillment of its obligation,
obligationsarethosewhicharisefromthesamecauseandinwhich
divestspetitionerinsuredofarightfulclaimforpaymentofdamages.
eachpartyisbothadebtorandacreditoroftheother,suchthatthe
Such a claim finds no support in our laws on obligations and
obligationofoneisdependentupontheobligationoftheother.
contracts.
(4)Respondentliablefordamages.Underthecircumstancesofthe
(5)Thenatureofdamagestobeawarded.Thenatureofdamages
instantcase,therelationshipascreditoranddebtorbetweentheparties
tobeawarded,however,wouldbeintheformofnominaldamages
arosefromacommoncause,i.e.,byreasonoftheiragreementtoenter
contrarytothatgrantedbythecourtbelow.Althoughtheerroneous
intoacontractofinsuranceunderwhoseterms,respondentinsurance
cancellationoftheinsurancepolicyconstitutedabreachofcontract,
company promised to extend protection to petitionerinsured against
privaterespondentinsurancecompany,withinareasonabletimetook
theriskinsuredforaconsiderationintheformofpremiumstobepaid
stepstorectifythewrongcommittedbyreinstatingtheinsurancepolicy
bythelatter.
ofpetitioner.Moreover,noactualorsubstantialdamageorinjurywas
Underthelawgoverningreciprocalobligations,particularlythesecond
inflicted on petitioner Areola at the time the insurance policy was
paragraphofArticle1191,theinjuredparty,petitionerinsuredinthis
cancelled.
case, is given a choice between fulfillment or rescission of the
obligationincaseoneoftheobligors,suchasrespondentinsurance
Nominal damages are recoverable where a legal right is technically Rules and Regulations promulgated pursuant to Presidential Decree
violatedandmustbevindicatedagainstaninvasionthathasproduced No.189creatingtheformerDepartmentofTourism.Thepurposeof
noactualpresentlossofanykind,orwheretherehasbeenabreachof therequirementistoensurethatonlythosepersonsandentitieswho
arefitandresponsibleshouldengageintouroperationbusiness.
ConditionalObligations Issue: Isthesalevoid abinitio ormerelyrescissibleforlackofthe
requiredapproval?
contractandnosubstantialinjuryoractualdamageswhatsoeverhave
beenorcanbeshown. Held: PursuanttoArticle1409(7),thesaleisinexistentandnulland
voidfromthebeginning.Foritiswellsettledthatanycontractentered
Therespondentisorderedtopaynominaldamagesintheamountof
intomustbeinaccordancewithandnotrepugnanttoanapplicable
P30,000.00pluslegalrateofinterestcomputedfromthedateoffiling
statutewhosetermsaredeemedembodiedthereinandwithoutneedof
ofcomplaintuntilfinalpaymentthereof.(Areolavs.CourtofAppeals,
the parties expressly making reference to it. (E.Y. Yuchengco vs.
236SCRA645[1994].)
Velayo,115SCRA307[1982].)

Aquino,J.,concurringintheresult:
6. Sharesofstockofacorporationengagedintourismsoldwithout
prior ThesaleisarescissiblecontractunderArticles1191,1547(2) 12 and
approvalofMinistryofTourismasrequiredbylaw. 1599(4)13 of the Civil Code because S failed to comply with his
representationandwarrantyinthecontractofsale.Itwasincumbent
Facts:SsoldtoBsharesofstockofacorporationengagedintourism,
withoutpriorapprovaloftheMinistryofTourismasrequiredbyits
uponStodelivertoBtheapprovaloftheMinistryofTourismofthe xxx xxx
saleandoftheconcomitanttransferofthetouroperatorslicensetoB. (4)Rescindthecontractofsaleandrefusetoreceivethegoodsorifthe
goodshave
12Art.1547.Inacontractofsale,unlessacontraryintentionappears,
thereis:xxxxxx 152OBLIGATIONSArt.1191
(2)Animpliedwarrantythatthethingshallbefreefromanyhidden Courtmaygrantguiltypartytermforperformance.
faultsordefects,oranychargeorencumbrancenotdeclaredorknown
Thecourtshalldecreetherescissionclaimedunlessthereshouldbejust
tothebuyer.
causeforgrantingthepartyindefaultatermfortheperformanceofhis
xxx xxx obligation.(par.3.)Obviously,thisexceptionappliesonlywherethe
guiltypartyiswillingtocomplywithhisobligationbutneedstimeto
13Art.1599.Wherethereisabreachofwarrantybytheseller,the
dosoandnotwhereherefusestoperform.
buyermay,athiselec
ILLUSTRATIVECASE:
tion:
Afterpaying4monthlyinstallments,buyerrefusedanymoretopaythe
alreadybeenreceived,returnthemoroffertoreturnthemtotheseller
succeeding116monthlyinstallments.
andrecoverthepriceoranypartthereofwhichhasbeenpaid.xxx
Facts: Under the contract to sell, B obliged himself to pay S the
purchasepriceofthesubjectlotsonanequalmonthlyinstallmentbasis
for a period of 10 years or 120 equal monthly installments. After
paying4monthlyinstallments,Brefusedtopayfurtherinstallments,
insistingthathehadtheoptiontopaythepurchasepriceanytimein10 the mercy of the vendee who can easily construct substantial
yearsinspiteoftheclearnessandcertaintyofhisagreementwithS. improvements on the land beyond the capacity of the vendor to
reimburse incase he elects torescindthe contract byreasonofthe

Asamatterofjusticeandequity,theCourtofAppealsgrantedBa
vendees default or deliberate refusal topayor continue paying the
periodwithinwhichtocomplywithhisobligation,consideringthat
purchasepriceoftheland.Underthisdesign,stratagemorscheme,the
theremovalofhishouse[worthP45,000erectedontheland]would
vendeecancleverlyandeasilyimproveoutthevendorofhisland.
amounttoavirtualforfeitureofthevalueofthehouse.
Morethanthat,Bhas
Issue:IsthebenefitstatedinArticle1191(3rdpar.)applicabletoB?
Held:No.(1)Bsbreachsubstantialandinbadfaith.TograntBan
additionalperiodwouldbetantamounttoexcusinghisbadfaithand
beenenjoyingthepossessionofthelandwithoutpayingtheother116
sanctioningthedeliberateinfringementofacontractualobligationthat
monthlyinstallmentsforaperiodof26years. (Roquevs.Lapuz,96
isrepugnantandcontrarytothestability,securityandobligatoryforce
SCRA741[1980].)
ofcontracts.Moreover,Bsfailuretopaythesucceedinginstallments
(about92%oftheagreedprice)isasubstantialandmaterialbreachon Remediesarealternative.
hispart,notmerelycasual,whichtakesthecaseoutoftheapplication
Theremediesoftheinjuredoraggrievedpartyarealternativeandnot
ofthebenefitsofArticle1191.(3rdpar.)
cumulative,thatis,heisprivilegedtochooseonlyoneoftheremedies,
(2) Absence of just cause for grant of additional period. The andnotboth,subjectonlytotheexceptioninparagraph2,towit:he
erectionbyBofhishouseonthepropertydoesnotwarrantthefixing mayalsoseekrescissionevenafterhe has chosenfulfillment if the
ofanadditionalperiod,fortograntthesamewouldplacethevendorat lattershouldbecomeimpossible.Butafterchoosingrescissionofthe
obligation,hecannotthereafterdemanditscompliance,norseekpartial Rbroughtactionfortherecoveryofthevalueoftheportionofthe
fulfillmentundertheguiseofrecoveringdamages.(Siyvs.Courtof fisherygrantedanddamagescoveringthecostofdiggingupthehigher
Appeals,138SCRA536[1985].) portionofthefisherywhichEfailedtoperform.
While the right of choice remains with the plaintiff, an alternative Issue:IsRentitledtothedamagesclaimed?
prayerinthecomplaintforfulfillmentorrescissionispermissiblein
Held: No. The resolution of a contract and its performance are
thediscretionofthecourtforinsuchcaseitcannotbesaidthatthe
incompatiblewitheachother.Havingelectedtherighttorescind,R
plaintiffisavailingofbothremedies.
cannotatthesametimedemandthefulfillmentoftheobligation.Ifhe
ILLUSTRATIVECASES: couldrecoverthecostofthedigging,thatwouldamountindirectlyto
thecompliancebyEwiththeobligation.Inthatmanner,Rwouldatthe
1. Actionbydonorforrecoveryofvalueofpropertydonatedandfor
same time beavailinghimself of the tworemedies of resolvingthe
damagescoveringthecostoffulfillingtheconditionofthegrantwhich
obligationandexactingitsfulfillment. (Osoriovs.BennetandProv.
doneefailedtoperform.
BoardofCavite,41Phil.301[1920].)
Facts: R, donor, gratuitously granted to E (Province of Cavite) a
portionofafisheryownedbyRfortheconstructionofaroadsubjectto
theconditionthatEwouldfillupthespacewheretobuildtheroadwith
mudtakenfromthehigherportionsofthefisherysoitwouldhavethe 2.Actionbymortgageeforrescissionofmortgagecontractandfor
samelevel.Efailedtofulfilltheconditionofthegrant.
paymentofinterestandattorneysfeesfornoncompliancebydebtors.
Facts:Fornoncomplianceonthepartofthedebtorswiththetermsof andsecuredhisdismissalforthepurposeofrecoveringtheproperty
amortgagecontract,thecourtdeclareditresolvedandorderedthemto fromhimandsubsequentlydemandedtherescissionofthesale.
paythestipulated12%interestand10%attorneysfees.
Facts:Sbroughtactionforrecoveryofasumofmoneyonacontract,
Issue:Underthelaw,istheallowanceofthefullstipulatedinterestand wherebySsoldandBbought,hisinterestinapartnershipownedand
attorneysfeesproper? operatedbythem.TherecordsdisclosedthatS,afterthesalehadbeen
consummated,improperlyinstitutedanactionforthedissolutionofthe
Held:No.Whenarescissionisgranted,ithastheeffectofabrogating
partnership and the distribution of its assets, and procured the
thecontractinallitsparts.Thepartyseekingresolutioncannothave
appointment of a receiver for the partnership property; and that B
performanceastopartandresolutionastotheremainder.Itresultsthat
vigorously opposedthe appointment of the receiver andsecured his
whenthecontractinquestionwasresolved,themortgageecouldno
dischargeandthedismissalofthecomplaintprayingforthedissolution
longerrelyuponthestipulationswithrespecttothepaymentofinterest
ofthepartnership,byassertinghisrightstothewholepropertyunder
andattorneysfeesandthesoledutyincumbentuponthedebtorsisto
theverycontracttheenforcementofwhichhelateronresisted.
restorewhattheyhavereceivedfromthecreditor,withlegalinterest
fromthedatewhenthebenefitsaccruingtothemwereconferred.(Po Issue:IsBentitledtorescindthecontractofsale?
Paucovs.SiguenzaandAguilar,49Phil.404[1926].)
Held: No. B, after the receiver was appointed, insisted upon the
enforcementofthecontract,securedthedismissalofthereceiverand
3. Buyeropposedappointmentofreceiverinpossessionofproperty thereturnof the propertytohis possessionandcontrol. Clearly,he
sold couldnotlateronrightlyclaimthatthecommissionofthepropertyto
thehandsofareceiverentitledhimtorescindtheverycontractwhich
heelectedtoenforceforthepurposeoftakingthepropertyoutofthe Held:Yes.Thecauseoftheactiontoclaimrescissionariseswhenthe
handsofthereceiver.(YapUnkivs.ChuaJamco,14Phil.602[1909].) fulfillmentoftheobligationofBbecameimpossiblewhenthecourt,in
thecivilcasefiledbyS,declaredthesaletoBacompletenullityand
orderedthecancellationofthetitleissuedtohim.Theactionmustbe
commencedwithinfour(4)yearsfromthedatethejudgmentinsaid
casebecamefinalandexecutory.(AysonSimonvs.Adamos,131SCRA
4. Sellercouldnotdelivertitletopurchaserbecauseprevioussaleof 439[1984].)
samepropertytoformerwasjudiciallydeclarednullandvoid.
Where contract resolved by nonfulfillment or violation of
Facts:BpurchasedfromStwolots.OncomplaintofC,courtannulled resolutorycondition.
thesaleandorderedtheissuanceofanewtitleinfavorofC.Inthe
Where a contract is subject to a resolutory condition, the non
meantime,BsoldthelotstoDwhofiledasuitforspecificperformance
compliancewiththeconditionresolvesthecontractbyforceoflaw
duetothefailureofBtodeliverthetitleandpossessiontoD.The
withoutneedofajudicialdeclaration. (supra.) Civilists,however,do
judgmentinfavorofD,however,couldnotbeexecutedbecauseofthe
notagreeonwhethertheinjuredpartyretainstheoptionofdemanding
judgmentinanothercivilcasedeclaringthesalefromStoBnulland
fulfillmentorrescissionoftheobligationasprovidedinArticle1191.
void.
(1) Withoutoptiontodemandfulfillment. CollinCapitantbelieves
Issue: May D still bring an action for rescission of the sale with
that the creditor retains his right of option. (3 Curso Elemental de
damages?
DerechoCivil750.)Manresasaysthatthestipulatedresolutionofthe
contractincaseoneofthepartiesdoesnotcomplywithhisundertaking
is produced by force of law, but the option of the injured party immovableproperty,Article1191mustbereadtogetherwithArticle
disappears. (8 Manresa 416.) If the creditor could still demand 1592 which applies to instances where no stipulation for automatic
fulfillment,inspiteoftheresolutionipsojureofthecontract,thenthe rescissionismadebecauseitsayseventhough.(Jacintovs.Kaparas,
resolutionwouldnotbemandatoryonthecreditorandtheresolution 209 SCRA 246 [1992], citing Paras, E.L., Civil Code of the Phil.
wouldproduceitseffectwhenthecreditornotifiedthedebtorofhis Annotated,Vol.V,1986Ed.,p.198.)
decision.(Baezvs.CourtofAppeals,59SCRA15[1974],citingIV
Jurisprudence supports the view that when parties to a contract
Tolentino,CivilCodeofthePhilippines,175.)Thecreditor,however,
expresslyreserveanoptiontoterminateorrescindacontractuponthe
maywaiveanyrightthatmighthaveaccruedtohimbyvirtueofthe
violationofaresolutorycondition,noticeofresolutionmustbegiven
resolutionofthecontract.
totheotherpartywhensuchrightisexercised.Resorttocourtsmaybe
156OBLIGATIONSArt.1191 necessarywhentherightinvolvestheretakingofpropertywhichisnot
voluntarily surrendered by the other party. Permitting the use of

(2)Withoptiontodemandfulfillment.Sinceinacontractofsale,the
unqualified force to reposses the property and without condition of
nonpayment of the price (or nondelivery of the thing sold) is a
noticewouldallowthelessor/ownertotakethelawintohisownheads.
resolutorycondition,theremedyofthesellerunderArticle1191isto
(CamposAssetsCorporationvs.ClubX.O.Company,328SCRA520
exactfulfillmentortorescindthecontract.Thenonpaymentofthe
[2000].)
purchasepriceconstitutesaverygoodreasontorescindasale,forit
violates the very essenceof a contract of sale. By such failure, the ILLUSTRATIVECASE:
obligation of the seller to convey title does not arise. (Padilla vs.
Seller did not cancel contract notwithstanding failure of buyer to
Paredes,328SCRA434[2000];CentralBankofthePhilippinesvs.
complywithresolutorycondition.
Bichara,328SCRA807[2000].)Inrespect,however,tothesaleof
Facts: PHHC(PeoplesHomesiteandHousingCorp.,agovernment constructahouseinthelotwithintheperiodofone(1)yearfromthe
instrumentality)awardedtoBalotownedbytheformerpursuanttoa signingofthecontractand,therefore,Bacquirednorightsthatcould
conditional contract to sell subject to the standard resolutory betransmittedtoC.TherecorddoesnotshowthatPHHCevernotified
conditions imposed upon grants of similar nature, including the Binwritingofthecancellationofthecontracttosell.
granteesundertakingtoejecttrespassers,intrudersorsquattersonthe
Issue:InviewofBsfailuretocomplywiththeresolutoryconditionof
landandtoconstructaresidentialhouseonthelotandshallcomplete
buildingahouse,didheacquireanyrightthatcouldbetransmittedto
the same within a period of one (1) year from the signing of this
C?
contract . . . the noncompliance with which results in the contract
Held: Yes. The contract to sell was, by virtue of the stipulated
beingdeemedannulledandcancelledandthatthesaidcancellation
resolutory condition, resolved by operation of law. However, the
shallbecomeeffectivefromthedatewrittennoticethereofissentby
resolution of the contract never became effective as PHHC never
thePHHCtotheapplicant.
notifiedBofthecancellationofthecontract.Butevenifitbeassumed
gratia argumenti that B acquired no vested right to the lot, PHHC
waived the effects of the resolutory conditionwhen it approvedthe
PHHCapprovedthetransferofrightsofBtoCwhocontinuedpaying transfertoC.(Baezvs.CourtofAppeals,595SCRA15[1974].)
theinstallmentsonthepurchasepriceoftheland.
Damagesrecoverable.
DsoughttonullifytheawardofthelotinquestiontoCclaimingthat,
Since the injured party is not entitled to pursue both of the two
beingtheoccupantoftheland,hehadapreferentialrighttopurchase
inconsistentremedies,inestimatingthedamagestobeawardedincase
thesameandthattheawardtoBwasnullandvoidbecauseBfailedto
of rescission, onlythose kinds of damages canbe awarded that are
compatibleorconsistentwiththeideaofrescission,keepinginmind obligationtopaytheprice,hastheeffectterminatingthesellersright
that had the parties opted for specific performance, other kinds of tothethingsold.(seeRiosandReyesvs.Jacinto,49Phil.7[1926];see
damageswouldhavebeencalledforwhichareabsolutelydistinctfrom Asuncionvs.Evangelista,316SCRA848[1999].)
thosekindsofdamagesaccruingincaseofrescission.Ofcourse,in
(2) In case of rescission for nondelivery of the thing sold, the
estimatingthedamagestobeawardedincaseofspecificperformance,
purchaserisentitledtointerestontheamounthehaspaid.
onlythoseelementsofdamagescanbeadmittedwhicharecompatible
(3)Wheretheconditionalobligationisdeemednottohaveexistedby
withtheconceptionofspecificperformance.
reasonofthenonfulfillmentofthesuspensivecondition,theawardof
(1)Itfollowsthatdamageswhichwouldonlybeconsistentwiththe
damagesunderArticle1191isunwarranted.(Mortelvs.KASSCO,348
conception of specific performance cannot be awarded in an action
SCRA391[2000].)
whererescissionissought,andviceversa.Thus,inthecommoncaseof
Limitationsonrighttodemandrescission.
theresolutionofacontractofsaleforfailureofthepurchasertopaythe
stipulatedprice,thesellerisentitledtoberestoredtothepossessionof
Therighttorescindbytheinjuredparty(theonewhohasperformed
thethingsoldwithitsfruits,ifithasalreadybeendelivered.Ifheelects
whatisincumbentuponhim)isnotabsolute.Itisalwaysprovisional,
specificperformance,heisentitledtothepricewithinterestifithas
i.e.,contestableandsubjecttoscrutinyandreviewbythecourts.(Delta
158OBLIGATIONSArt.1191 MotorCorp.vs.Genuino,170SCRA29[1989];PhilippineNational
ConstructionCorporationvs.MarsConstructionEnterprises,Inc.,325
notyetbeenpaid.Butthesellercannothaveboththethingsoldandthe
SCRA624[2000].)
price,fortheresolutionofthecontracthastheeffectofdestroyingthe
obligation to pay the price, and the performance of the purchasers

(1) Resort to the courts. The rescission contemplated by Article judicialrescission,thesameproduceslegaleffects.(Agustinvs.Court
1191isajudicialrescission.(par.3.)Theinjuredpartyhastoresortto ofAppeals,186SCRA375[1990].)
thecourtstoasserthisrightsjudicially(e.g., torecoverwhathehas
(c)Proofofviolationbyapartyofthecontractisaconditionprecedent
deliveredunderthecontract)forthesamearticleprovidesthat...the
to resolution or rescission. It is only when the violation has been
court shalldecreetherescissiondemanded,unlesstherebejustcause
established that the contract can be declared resolved or rescinded.
authorizingthefixingofaperiod.Nopersoncantakejusticeinhis
(Zuluetavs.Mariano,111SCRA206[1982].)
ownhandsanddecidebyhimselfwhatarehisrightsinthematter.(De
(d) It has been held that a directive to take legal steps for the
laRamavs.Villarosa,[C.A.]No.23537R,Jan.14,1960.)
rescissionofacontractdoesnotnecessarilyhavetobetakenasan
(a)EvenacounterclaimoracrossclaimfoundintheAnswercould
instruction to bring legal action. (Bunye vs. Sandiganbayan, 306
constituteajudicialdemandforrescissionthatsatisfiestherequirement
SCRA663[1997].)Thelawdoesnotrequiretheinjuredpartytofirst
ofthelaw.(Iringanvs.CourtofAppeals,366SCRA41[2001];Bens
filesuitandwaitforajudgmentbeforetakingextrajudicialstepsto
vs.Lavilao,366SCRA549[2006].)
protecthisinterest;otherwise,hewillhavetopassivelysitandwatch
(b)Theotherpartymustbegivenanopportunitytobeheard.(Republic his damages accumulate during the pendency of the suit until final
of the Phil. vs. Hospital San Juan de Dios and Burt, 84 Phil. 820 judgmentofrescissionisrenderedwhenthelawitselfrequiresthathe
[1949].)Butifsuchotherpartydoesnotopposetheextra should exercise due diligence to minimize his own damages.
(University of the Philippines vs. De Los Angeles, 35 SCRA 102

[1970];Casio,Jr.vs.CourtofAppeals,470SCRA57[2005].)
(2)Powerofcourttofixperiod.Thecourthasdiscretionarypower reconveyance. Additionally, in an action for rescission (also often
toallowaperiodwithinwhichapersonindefaultmaybepermittedto termedasresolution)unlikeinanactionforreconveyancepredicated
performhisobligationifthereisajustcauseforgivingtimetothe onanextrajudicialrescission(bynotarialact;seeNote14),thecourt
instead of decreeing rescission, may authorize for a just cause the

debtor14(par.3;KapisananBanahawvs.Dejarme,55Phil.338[1930];
fixing of a period. (Olympia Housing, Inc. vs. Panasiatic Travel
Gaboyavs.Cui,38SCRA85[1971].),aswherethedefaultincurred
Corporation,395SCRA298[2003].)
was not willful or could be excused in view of the surrounding
circumstances(AmericanFarEasternSchoolofAviationvs.AyalaY
Cia, [C.A.] No. 1642R [1948].), or the breach is not substantial.

(Massive Construction, Inc. vs. Intermediate Appellate Court, 23
(3)Compliancebyaggrievedpartywithhisobligation.Apartytoa
SCRA 1 [1993].) In the absence of any just cause for the court to
contract cannot demand performance of the other partys obligation
determine the period of compliance, the court shall decree the
unlessheisinapositiontocomplywithhisownobligations.Similarly,
rescission. (Central Philippine University vs. Court of Appeals, 246
therighttorescindacontractcanbedemandedonlyifapartytheretois
SCRA511[1995].)
ready,willing,andabletocomplywithhisownobligationsthereunder.
14Anactionforreconveyanceisconceptuallydifferentfromanaction
(BinalbaganTech.,Inc.vs.CourtofAppeals,219SCRA777[1993].)
forrescissionandtheeffectsthatflowfromanaffirmativejudgmentin
(4) Right of third persons. Rescission creates the obligation of
either case would be materially dissimilar in various respects. The
mutual restitution. However, if the thing, subject matter of the
judicialresolutionofacontractgivesrisetomutualrestitutionwhichis
obligation,isinthehandsofathirdpersonwhoactedingoodfaith,
not necessarily the situation that can arise in an action for
rescissionisnotavailableasaremedy.(par.4;seeArts.1385,1388.)
Insuchcase,theinjuredpartymayrecoverdamagesfromtheperson 15Incontractstosell,whereownershipisretainedbythesellerandis
responsibleforthetransfer. nottopassuntilthefullpaymentoftheprice(seeArts.1458[par.2],
(5) Slightorsubstantialviolation. Thegeneralruleisthatrescis 1478.),suchpaymentisapositivesuspensivecondition,thefailureof
sionwillnotbegrantedforslightorcasualbreachesofcontract.The whichisnotabreach,casualorserious,butsimplyaneventthatpre
violationshouldbesubstantialandfundamentalastodefeattheobject vents the obligation of the vendor to convey title from acquiring
binding force. (Manuel vs. Rodriguez, 109 Phil. 1[1960].) In other

ofthepartiesinmakingtheagreement. 15(Angvs.CourtofAppeals,
words,itisirrelevantwhethertheinfringementofthecontractwas
70SCRA286[1989];DevelopmentBankofthePhilippinesvs.Court
casualorserious.(LuzonBrokerageCo.,Inc.vs.MaritimeBldg.Co.,
ofAppeals,344SCRA492[2000];Franciscovs.CourtofAppeals,
Inc.,86SCRA305[1978].)Therecanbenorescissionofanobligation
401SCRA594[2003];MultinationalVillageHomeownersAssn.Inc.
that is still nonexistent, where the fulfillment of the suspensive
vs.AraSecurity&SurveillanceAgency,Inc.,441SCRA126[2004].)
conditionhasnotoccurredasyet.(Chengvs.Genato,300SCRA722
Thequestionofwhetherabreachissubstantialdependsupontheatten
[1998].) The breach contemplated in Article 1191 is that of an
dantcircumstancesandnotmerelyonthepercentageoftheamountnot
obligationalreadyexisting,notthefailureofaconditionthatprevents
paid.(DeltaMotorCorp.vs.Genuino,supra;UniversalFoodCorp.vs.
thatobligationtobecomebinding.Cancellation,notrescission,ofthe
CourtofAppeals,33SCRA1[1970];Corpusvs.Alikpala,22SCRA
contract to sell is thus the correct remedy. (Sta. Lucia Realty &
104 [1968]; De Dios vs. Court of Appeals, 212SCRA 519[1992];
Development,Inc.vs.Uyecio,562SCRA226[2008].)
CentralBankofthePhilippinesvs.Bichara,328SCRA807[2000];
Cannulvs.Galang,459SCRA80[2005].)
Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 161 Pure and tenderedpaymentofthebalanceofP5,500.00withinthegraceperiod,
ConditionalObligations the buyer was given an additional period within which to complete
payment of the purchase price as a matter of equity and justice.

(a)Inacase,itwasheldthatdelayinpaymentforasmallquantityof
(Tagubavs.Vda.deDeLeon,132SCRA722[1984].)
molassesforsometwentydayswasnotsuchaviolationofanessential
condition of the contract as would warrant rescission for non (d)WherethevendeehasonlyabalanceofP4,000netofthetotal
performance(SongFovs.HawaiianPhil.Co.,47Phil.821[1925];see purchasepriceofP28,000andwasdelayedinpaymentonlyforone
KapisananBanahawvs.DejarmeandAlvero,supra;Phil.Amusement month, equity and justice mandate that he be given an ad ditional
Enterprises,Inc.vs.Natividad,21SCRA284[1967].);noraredelays period within which to complete payment of the purchase price.
on four (4) occasions in the payment of rentals for a few days (Dignosvs.CourtofAppeals,158SCRA375[1988].)Article1234
substantial breaches in a contract of lease because the law is not mayapplyagainsttheunilateralactofapartytorescindacontract.
concernedwithtrifles.(FilOilRefineryCorporationvs.Mendoza,150 (Angelesvs.Calasanz,135SCRA323[1985].)
SCRA632[1987].)
(e) Where the vendee had already paid P26,601.21 (inclusive of
(b) Wheretimeisnotoftheessenceoftheagreement,aslight delay on the interestsandpenalties)outofthetotalpurchasepriceofP21,328.00
partofonepartyintheperformanceofhisobligationisnotasufficient andtheremainingbalancewasonlyP9,341.24whichthevendorwas
groundfortherescissionoftheagreement.(Blandovs.Embestto,105 willing to pay, the breach held was held slight. To sanction the
Phil.1164[1959].) rescissionmadebythevendorwouldworkinjusticetothevendeeand
unjustlyenrichthevendoratvendeesexpense.(SiskaDevelopment
(c)Inacase,wherethebuyerhadalreadyactuallypaidthesumof
Corp.vs.OfficeofthePresidentofthePhils.,231SCRA674[1994].)
P12,500.00 of the total stipulated purchase of P18,000.00 and had
(f)Wheretheejectmentoftheoccupantsofthelandsoldismadea property.TherequestwasdeniedbythelessoronFebruary14,1986.
conditionforthecompliancebythebuyerwithhis ByaletterdatedFebruary18,1986,thelesseenotifiedthelessorofhis
desiretoexercisetheoptionformally.
162
Itwas heldthat the delayof 18dayswas neither substantialnor

OBLIGATIONSArt.1191
fundamental and did not amount to breach that would defeat the
obligationtopaythebalanceofthepurchaseprice,thenonfulfillment
intention of the parties when they executed the lease contract with
bytheselleroftheconditiongivesthebuyertherighttoeitherrefuseto
optiontopurchase. (Carcillervs. Court ofAppeals,302SCRA718
proceedwiththeagreementortowaivethatconditioninconsonance
[1999].)
withArticle1545oftheCivilCode.Absentastipulationtherefor,it
(h)Therighttorescindisnotabsoluteandwillnotbegrantedwhere
cannotbesaidthatthepartiesintendedtomakeitsnonfulfillmenta
therehasbeensubstantialcompliancebypartialpayments.(Tayagvs.
ground for rescission. Such failure to deliver actual and physical
CourtofAppeals,219SCRA480[1993].)Whereapartyhasalready
possessioncannotbeconsideredasubstantialandfundamentalbreach
beencompensatedfortheotherpartysdefaults,suchdefaultscannot
oftheobligationtosell. (PowerCommercial& Industrial Corp. vs.
be considered as substantial breach that justifies the rescission of a
contract.Whereapartyexercisesitsoptionsincaseofdelayordefault
(g)Inacase,thelesseesentaletteronJanuary15,1986tothelessor
onthepartoftheotherparty,theformerwaivesitsrighttorescindand
manifesting his intent to exercise the option to purchase the leased
is thus estopped from rescinding the contract. (Philippine National
propertysubjectoftheoptionwithintheleaseperiodendingJanuary
Construction Corporation vs. Mars Construction Enterprises, Inc.,
30,1986butrequestingforasixmonthextensionoftheleasecontract
supra.)
for the alleged purpose of raising funds intended to purchase the
(i)Wherethevendeeexpressedhiswillingnesstopaythebalance(P1.8 (6)Waiverofright.Therighttorescindmaybewaived,expressly
million)ofthepurchasepriceonemonthafteritbecamedue,butthe or impliedly. Thus, the acceptance by the seller of the land soldas
offertopaywasconditionedontheperformance securityforthebalanceofthepriceisanimpliedwaiveroftherightto
rescindincaseofnonpaymentbythebuyer.Hisremedyistorecover
the balance. (Roman vs. Blas, [C.A.] 51 O.G. 1920, April, 1955.)
Wherethesellerinsteadofavailingoftherighttorescind,hasaccepted
bythevendorofadditionalburdensthathadnotbeenagreeduponin
delayed payments of installments posterior to the grace periods
theoriginalcontract,itcannotbesaidthatthebreachcommittedbythe
providedinthecontract,heisdeemedtohavewaivedandisestopped
vendeewasmerelyslightorcasualaswouldprecludetheexerciseof
from exercising the right to rescind normally conferred by Article
the right to rescind. In effect, the qualified offer to pay was a
1191. (Tayag vs. Court of Appeals, supra; Rapanut vs. Court of
repudiation of an existing obligation, which was legally due and
Appeals, 246 SCRA 323 [1995]; Heirs of P. Escanlar vs. Court of
demandableunderthecontractofsale.(Velardevs.CourtofAppeals,
Appeals,supra.)
361SCRA56[2001].)
Iftherighttorescindmaybewaived,therighttoimpugnrescission
(j)Thefailureofthevendeetopaythebalanceofthepurchaseprice
maybelostonthegroundofestoppel.Inacase,insteadofgoingto
within10yearsfromtheexecutionofthedeedofsaledoesnotamount
court to impugn the automatic andextrajudicial cancellationof the
to a substantial breach where it is stipulated in the contract that
contract to sell by the seller, the buyer sought to enter into a new
paymentcanbemadeevenafter10yearsprovidedthevendeepaid
contract tosell, therebyconfirming the validityof the extrajudicial
12%interest.(Vda.DeMisticavs.Nagiuat,418SCRA73[2003].)
rescission. An unopposed rescission of a contract has legal effects.
(PeoplesIndustrial&CommercialCorp.vs.CourtofAppeals,281 In a contract of sale, the nonpayment of the price is a resolutory
SCRA206[1997].) conditionwhichextinguishesthetransactionthatforatimeexistedand
discharges the obligations created thereunder. The remedy of the

(7)Contracttosell.Inacontracttosell,thepaymentofthepurchase
unpaidselleristoseekeitherspecificperformanceorrescission.(Heirs
priceisapositivesuspensivecondition(seeArt.1181.),thefailureof
ofP.Escanlarvs.CourtofAppeals,281SCRA177[1997].)
whichisnotabreach,casualorserious,butasituationthatpreventsthe
obligationofthevendortoconveytitlefromacquiring (8)Salesofrealpropertyandofpersonalpropertyininstallments.
164OBLIGATIONSArt.1191 Insalesofrealproperty,Article1592,16asimpliedlyamendedbyR.A.
No.6552,governstheexerciseoftherightofrescission.Article1191
anobligatoryforce.ThebreachcontemplatedinArticle1191isthe
issubordinatedtotheprovisionofArticle1592whichspeaksofnon
obligors failure to comply with an obligation already extant, not a
paymentofthepurchasepriceasaresolutorycondition,whenapplied
failureofaconditiontorenderbindingthatobligation.(OdysseyPark,
Inc.vs.CourtofAppeals,280SCRA253[1997];Chengvs.Genato, 16Art.1592.Inthesaleofimmovableproperty,eventhoughitmay
300SCRA722[1998].)Inacontracttosell,title remains withthe have been stipulated that upon failure to pay the price at the time
vendoranddoesnotpassontothevendeeuntilthefullpaymentofthe agreedupontherescissionofthecontractshallofrighttakeplace,the
purchaseprice. vendeemaypay,evenaftertheexpirationoftheperiod,aslongasno
demandforrescissionofthecontracthasbeenmadeuponhimeither
judiciallyorbyanotarialact.Afterthedemand,thecourtmaynot
granthimanewterm.
Art.1593.Withrespecttomovableproperty,therescissionofthesale deemed ipsofactorescinded.(Torralbavs.DelosAngeles,96SCRA
shallofrighttakeplaceintheinterestofthevendor,ifthevendee, 69 [1980].) R.A. No. 6552 (Realty Installment Buyers Protection
upontheexpirationoftheperiodfixedforthedeliveryofthething, Act.),aspeciallawthatgovernstransactionsthatinvolve,subjectto
shouldnothaveappearedtoreceiveit,orhavingappeared,heshould certain exceptions, the sale on in stallment basis of real property,
nothavetenderedthepriceatthesametime,unlessalongerperiodhas modifiesthetermsandapplicationofArticle1592.Itrequiresthatthe
beenstipulatedforitspayment.(1505) noticeofcancellationordemandforrescissionmustbebynotarialact.
In addition, the seller is required to refund to the buyer the cash

Note:Insalesofrealproperty,Article1592iscontrollingsinceitdeals
surrendervalueofthepaymentsontheproperty.
specificallywithsaleofimmovableproperty.(LuzonBrokerageCo.,
Inc. vs. Maritime Co., Inc., 86 SCRA 305 [1978].) The article,
however,doesnotapplytosalesoninstallmentsofrealpropertyin
whichthepartieshavelaiddowntheproceduretobefollowedinthe
eventthevendeefailedtofulfillhisobligation.(Albeavs.Inquimboy,
to sales of immovable property. (Santos vs. Court of Appeals, 337
80Phil.477[1948].)Thus,wherethecontracttosellaparcelofland
SCRA67[2000].)
expresslyprovidesthatitshallbedeemedannulledandcancelledand
thesellershallbeatlibertytotakepossessionofsaidpropertyand Withrespecttothesalesofpersonalpropertyoninstallments,Articles
disposeofthesametoanyotherpersonupondefaultofthebuyerto
1484,1485,and1486areapplicable.17
paytheinstallmentsdue,thereisnocontracttorescindincourtfrom
the moment the buyer defaults in the timely payment of the (9) Judicial compromise. Article 1191 applies only to reciprocal
installments, the contract between the parties in such case being obligations in general and not to obligations arising from a judicial
compromise.Judgmentuponagreementofthepartiesismorethana 17Art. 1484. Ina contract of sale of personal property the price of
merecontractbindinguponthem.Havingthesanctionofthecourtand whichispayableininstallments,thevendormayexerciseanyofthe
enteredasitsdeterminationofacontroversyithastheforceandeffect followingremedies:
ofanyotherjudgment.Moreover,theruleisthatajudgmentrendered
(1)Exactfulfillmentoftheobligation,shouldthevendeefailtopay;
inaccordancewithacompromiseagreementisimmediatelyexecutory
as there is no appeal from such judgment. (Prudence Realty and . (2) Cancel the sale, should the vendees
DevelopmentCorp.vs.CourtofAppeals,231SCRA379[1994].) failure to pay cover two or more installments;
(10)Arbitrationclauseinacontract.Theactoftreatingacontract
asrescindedonaccountofinfractionsbytheothercontractingpartyis . (3) Foreclose the chattel mortgage on the
validalbeitprovisionalasitcanbejudiciallyassailed.Therightcannot thing sold, if one has been constituted, should
be exercised where there is a valid stipulation on arbitration. Thus,
neither of the parties can unilaterally treat the contract as rescinded thevendeesfailuretopaycovertwoormoreinstallments.Inthiscase,
where an arbitration clause in a contract is availing since whatever heshallhavenofurtheractionagainstthepurchasertorecoverany
infractions or breaches by a party or differences arising from the unpaidbalanceoftheprice.Anyagreementtothecontraryshallbe
contract must be brought first and resolved by arbitration, and not void.(1454Aa)
through an extrajudicial rescission or judicial action. (Korea
Art.1485.Theprecedingarticleshallbeappliedtocontractspurporting
Technologies,Co.,Ltd.vs.Lerma,542SCRA1[2008].)
tobeleasesofpersonalpropertywithoptiontobuy,whenthelessor
hasdeprivedthelesseeofthepossessionorenjoymentofthething. contractofsale,theunilateralrescissionisusuallyintheformofastip
(1454Aa) ulationgrantingthesellertherighttoforfeitinstallmentsordeposits
madebythebuyerincaseofthelattersfailuretomakefullpayment
Art. 1486. In the cases referred to in two preceding articles, a
onthestipulateddate.(AssociatedBankvs.Pronstroller,558SCRA
stipulationthattheinstallmentsorrentspaidshallnotbereturnedto
113[2008].)
thevendeeor lesseeshall bevalid insofar as the same may not be
unconscionableunderthecircumstances.(n) There is nothing in Article 1191 which prohibits the parties from
enteringintosuchstipulationwhichisinthenatureofafacultative
resolutorycondition.(Pangilinanvs.CourtofAppeals,279SCRA560
[1997];Enrilevs.CourtofAppeals,29SCRA504[1969];Lopezvs.
Rescissionofcontractwithoutpreviousjudicialdecree. Commissioner of Customs, 37SCRA 327[1971]; LuzonBrokerage
Co., Inc. vs. Maritime Bldg. Co., Inc., 43 SCRA 93 [1972].)

(1) Where automatic rescission expressly stipulated. The parties,
Obligationsarisingfromcontractshavetheforceoflawbetweenthe
mayvalidlyenterintoanagreementthatviolationofthetermsofthe
constructingpartiesandshouldbecompliedwithingoodfaith.(Art.
contractwouldcausecancellationthereofevenwithoutjudicialinter
1159.)
ventionorpermissionortermination.Thisstipulationisinthenatureof
aresolutorycondition.(UniversityofthePhils.vs.DelosAngeles,35 (a) Where the contractitself contains suchastipulationtheright to
SCRA102[1970];Consingvs.Jamandre,64SCRA1[1975];Froilan rescindisnotimpliedbutexpresslyrecognized.Hence,Article1191
vs.PanOrientalShippingCo.,12SCRA276[1964];HeirsoftheLate isnotapplicable.Judicialactionforrescissionisnotnecessarywhere
JusticeJ.B.L.Reyesvs.CourtofAppeals,338SCRA282[2000].)Ina thecontractprovidesonautomaticrescissionincaseofbreach.Butthe
actofapartyintreatingacontractascancelledshouldbemadeknown
totheother.Forsuchactisalwaysprovisional.Itissubjecttoreview other words, the resolution of reciprocal contracts may be made
by the courts in case the alleged defaulter brings the matter to the extrajudiciallyunlessimpugnedincourt.(Palay,Inc.vs.Clave,124
propercourts.(Gomezvs.CourtofAppeals,340SCRA720[2000]; SCRA641[1983].)Where,however,theotherpartydoesnotdenythat
Sisonvs.CourtofAppeals,164SCRA339[1988];Chengvs.Genato, there was such a breach but he merely argues that the stipulation
300 SCRA 722 [1998]; Liu vs. Loy, Jr., 405 SCRA 316 [2003]; allowingarescissionandarecoveryofpossessionisvoid,theinjured
Dijamco vs. Court of Appeals, 440 SCRA 190 [2004]; Lorenzo partymayvalidlyenforcesuchstipulation.(SubicBayMetropolitan
Shipping Corp. vs. BJ Marthel International, Inc., 443 SCRA 163 Authorityvs.UniversalInternationalGroupofTaiwan,340SCRA359
[2004].) [2000].)
Art. 1191 DIFFERENT KINDS OF OBLIGATIONS 167 Pure and Inanycase,thecreditormaystillchoosespecificperformanceinstead
ConditionalObligations ofrescissionunlessthecontraryisstipulated.
(b)Resorttojudicialactionbytheinjuredpartyisstillnecessaryto (c)Therightofautomaticrescissionstipulatedinacontractissubject
recoverwhateverhemayhavedeliveredtotheotherpartyunderthe towaiver.Thus,inacase,therightwasheldwaivedbyreasonofthe
contract if the latter opposes the rescission. A contract between the manyextensionsgrantedthevendeebythevendorwhonevercalled
partiesprovidingforextrajudicialrescissionandrecoveryofpossession attentiontotheprovisiononautomaticextension.(PilipinasBankvs.
ofpropertyincaseofbreachhaslegaleffectonlywheretheotherparty IntermediateAppellateCourt,151SCRA546[1987].)
does not oppose the rescission. Where it is validly objected to, a

(2) Wherecontractstillexecutory. Intheabsenceofstipulationto
judicial determination of the issue is still necessary. (Zulueta vs.
thecontrary,therighttorescindacontractmustbeinvokedjudicially;
Mariano,111SCRA206[1982];SubicBayMetropolitanAuthorityvs.
itcannotbeexercisedsolelyonapartysownjudgmentthattheother
UniversalInternationalGroupofTaiwan,340SCRA359[2000].)In
hascommittedabreachoftheobligation.(Tanvs.CourtofAppeals, (1)Withstipulationforautomaticrevocation.Incontractsproviding
175SCRA656[1989].)However,althoughthereisnoperformanceyet for automatic revocation, judicial intervention is necessary not for
bybothparties,butoneisreadyandwillingtocomplywithwhatis purposes of obtaining a judicial declaration rescinding a contract
incumbentuponhim,andtheotherisnot(seeArt.1169,lastpar.),the already deemed rescinded by virtue of an agreement providing for
willingpartymay,byhisowndeclaration,rescindthecontractwithout rescissionevenwithoutjudicialintervention,butinordertodetermine
apreviousjudicialdecreeofrescission.Insuchcase,itisnotnecessary whether or not rescission was proper. Where such propriety is
thattherebeastipulationprovidingforautomaticrescission. sustained,thedecisionofthecourtwillbemerelydeclaratoryofthe
revocation,butitisnotinitselftherevocatoryact.(RomanCatholic
ArchbishopofManilavs.CourtofAppeals,198SCRA300[1991];
Procedurewhereextrajudicialrescissioncontested.
Pangilinanvs.CourtofAppeals,279SCRA590[1997].)
Inanycase,wheretheotherpartydeniesthatrescissionisjustified,he
is free to resort to judicial action to question the rescission. Then,
shouldthecourt,afterduehearing,decidethattheresolutionofthe
contractwasnotwarranted,theresponsiblepartywillbesentencedto
damages;inthecontrarycase,theresolutionwillbeaffirmed,andthe
consequentindemnityawardedtothepartyprejudiced.Butwherethe
otherpartydoesnotcontesttheextrajudicialdeclarationofrescission,
the same shall produce legal effect although subject to judicial
invalidation unless attack thereon should become barred by

acquiescence,estoppel,orprescription.(UniversityofthePhils.vs.De admissionoftheveracityandvalidityoftherescindingpartysclaim.
losAngeles,supra;LuzonBrokerageCo.,Inc.vs.MaritimeBldg.Co., (AdelfaProperties,Inc.vs.CourtofAppeals,240SCRA565[1995];
43SCRA93[1972];Angelesvs.Calasanz,135SCRA323[1985]; Goldenrod,Inc.vs.CourtofAppeals,299SCRA141[1998].)
Limvs.CourtofAppeals,182SCRA564[1990].)
Action for rescission not required upon breach of compromise
(2) Without stipulation for automatic revocation. Even without agreement.
express stipulation providing for automatic rescission, a contracting

Acompromiseisanagreementbetweentwoormorepersonswho,for
partyhasthepower torescindreciprocalcontractsextrajudiciallybut,
preventing or putting an end to a lawsuit, adjust their respective
asalreadyobserved,incaseofabuseorerrorbytherescinder,theother
positionsbymutualconsentinthewaytheyfeeltheycanlivewith.
partyisnotbarredfromquestioningincourtsuchabuseorerror.In
Reciprocalconcessionsaretheveryheartandlifeofeverycompromise
otherwords,thepartywhodeemsthecontractviolatedmayconsiderit
agreementwhereeachpartyapproximatesandconcedesinthehopeof
resolved or rescinded, and act accordingly, without previous court
gaining balance by the danger of losing. (Genova De Castro, 407
action, but heproceeds at his ownrisk. For where the extrajudicial
SCRA 165 [2003].) The purpose of the compromise is precisely to
resolutioniscontested,onlythefinalawardofacourtofcompetent
replaceandterminatecontrovertedclaims.(SantosVenturaHocorma
jurisdiction can conclusively settle whether the resolution or action
Foundation,Inc.vs.Santos,441SCRA472[2004].)
takenwasproperornot.(Ibid;PlatinumPlansPhils.,Inc.vs.Cucueco,
418SCRA156[2006].)Iftheotherpartydoesnotopposetheextra Thepartyaggrievedbythebreachofacompromiseagreement(seeArt.
judicialrescission,thenitshallhavelegaleffect;itssilencesuggestsan 2028.)may,enforceor,ifhechooses,bringthesuitcontemplatedor
involved in his original demand, as if there had never been any

compromise agreement, without bringing an action for rescission
thereof.Heneednotseekajudicialdeclaration,forhemayregard 170OBLIGATIONSArt.1192
thecompromiseagreementalreadyrescinded.Thisisclearfromthe
unilaterallybyoneofthemdeclaringarescissionofcontractwithout
languageofArticle2041whichprovides:Ifoneofthepartiesfailsor
theconsentoftheother,ifalegallysufficientgroundexistsorifa
refusestoabidebythecompromise,theotherpartymayeitherenforce
decreeofrescissionisappliedforbeforethecourts.
thecompromiseorregarditasrescindedandinsistuponhisoriginal
Ontheotherhand,terminationreferstoanendintimeorexistence;a
demand.
close,cessationorconclusion.Whenanagreementisrescinded,itis
Article 2041 confers upon the party concerned not a cause for
deemedinexistent,andthepartiesarereturnedtotheirstatusquoante.
rescission (see Art. 2039.), or right to demand rescission of a
Hencethereismutualrestitutionofbenefitsreceived.However,when
compromise,buttheauthoritynotonlytoregarditasrescinded,
itisterminated,itisdeemedvalidatitsinception.Priortotermination
butalso,toinsistupontheoriginaldemand.(Leonorvs.Sycip,1
the contract binds the parties who are thus obliged to observe its
SCRA1215[1961].)
provisions.Theconsequencesofterminationmaybeanticipatedand
Rescissiondistinguishedfromtermination. providedbythecontract.Aslongasthetermsofthecontractarenot
contrarytolaw,morals,goodcustoms,publicorderorpublicpolicy
Inlegalcontemplation,therescissionofacontractisnotequivalentto
theyshallberespectedbythecourts.(PryceCorporationvs.PAGCOR,
itstermination.
458SCRA164[2005].)
Rescissionhaslikewisebeendefinedastheunmakingofacontract,or
ART.1192.Incasebothpartieshavecommittedabreachofthe
its undoing from the beginning, and not merely its termination.
obligation, the liability of the first infractor shall be equita bly
Rescissionmaybeeffectedbybothpartiesbymutualagreement;or
temperedbythecourts.Ifitcannotbedeterminedwhichofthe
parties first violated the contract, the same shall be deemed tempered by the courts, since the second infractor also derived or
extinguished,andeachshallbearhisowndamages.(n) thoughthewouldderivesomeadvantagebyherownactorneglect.x
xxArticle1192doesnotreallyexculpatethesecondinfractorfrom
Wherebothpartiesguiltyofbreach.
liability,asthesecondinfractorisactuallypunishedforhisbreachby
Theabovearticlecontemplatestwosituations. mitigatingthedamagestobeawardedtohimfromthepreviousbreach
oftheotherparty.(Ongvs.Bogalbal,501SCRA490[2006].)
(1) First infractor known. One party violated his obligation;
subsequently,theotheralsoviolatedhispartoftheobligation.Inthis
case,theliabilityofthefirstinfractorshouldbeequitablyreduced. 18 Art. 1192 DIFFERENT KINDS OF OBLIGATIONS 171 Pure and
Thus, where a bank failed to release the entire approved loan ConditionalObligations
(P80,000),buttheborroweralsofailedtopaythepartialloanrelease
liabilityfordamagesshallbeoffsetequitably,exclusiveoftheinterest
(P17,000)hereceivedafteritfelldue,bothareindefaultandtheir
dueontheoverdueloanportion(P17,000)sincetheborrowerderived
respective
benefitforitsuse.(seeCentralBankofthePhils.vs.CourtofAppeals,
18Underthisprovision,thesecondinfractorisnotliablefordamages 139SCRA46[1985].)
atall.Thedamagesforthesecondbreachwhichwouldhavebeen (2) First infractor cannot be determined. One party violated his
payable by the second infractor to the first infractor, being obligationfollowedbytheother,butitcannotbedeterminedwhichof
comprensatedinsteadbythemitigationofthefirstinfractorsliability them was the first infractor. The rule is that the contract shall be
fordamagesarisingfromhisearlierbreach.Thefirstinfractor,onthe deemedextinguishedandeachshallbearhisowndamages.Thismeans
other hand, is liable for damages, but the same shall be equitably thatthecontractshallnotbeenforced.Ineffect,thecourtshallnot
provideremedytoeitheroftheparties,whomustsufferthedamages 19Article 1192, in making the first infractor liable for mitigated
allegedlysustainedbythem. damages and in exempt ing the second infractor from liability for
Theaboverulesaredeemedjust.Thefirstoneisfairtobothparties damages,presupposesthatthecontractingpartiesareonequalfooting
becausethesecondinfractoralsoderived,orthoughthewouldderive, withrespecttotheirreciprocalprincipalobligations.Actualdamages
someadvantagebyhisownactorneglect.Thesecondruleislikewise representingdeficienciesintheperformanceoftheprincipalobligation
justbecauseitispresumedthatbothataboutthesametimetriedto shouldbetakenoutoftheequation.
reapsomebenefit.(ReportoftheCodeCommission,p.130.) Forexample,Ssells10boxesofmangoestoBforP1,000each(ora
Ithasbeenheldthatwhenbothpartiestoatransactionaremutually totalofP10,000).BmadeapartialpaymentofP5,000,defaultinginthe
negligent in the performance of their obligations, the fault of one paymentoftheotherP5,000,butShad previously deliveredonly7
cancelsthenegligenceoftheotherandtheirrightsandobligations boxesanddefaultedinthedeliveryoftheother3boxes.Iftheparties
may be determined equitably under the law proscribing unjust didnoteventuallyperformtheirrespectiveobligations(suchthatthere
enrichment.(RodzssenSupplyCo.,Inc.vs.FarEastBank&TrustCo., isbreachandnotmeredelay),thecourtsshouldfirstputthepartiesin
357 SCRA 618 [2001]; see Art. 1160.) Under Article 1192, the equal footing with respect to their reciprocal principal obligations.
liabilityofthefirstinfractorshallbeequitablytemperedbythecourts Hence, B, the second infractor, would indeed be exempt from the
but it is for the courts, in the exercise of their sound discretion, to paymentofdamages,butthisexemptionshouldonlybeappliedafter
she pays P2,000 in actual damages representing the excess of Ss

decidewhatisequitableunderthecircumstances. 19Inotherwords,the
partialperformanceofherreciprocalprincipalobligation.(Ibid.)
mitigation

172OBLIGATIONSArt.1192 Issue: Didthelowercourtcommitanerrorinnotdeclaringexpressly
thatthepartiesareabsolvedfromfurtherliability?
ofthedamagestobeawardedtothesecondinfractorissubjecttothe
discretionofthecourt,dependingofwhatisequitableunderthecir Held:Noerroriscommitted(undertheprovisionsofArt.1191.)since
cumstances. by the very terms of the judgment the parties must necessarily be
absolvedfromanyfurtheractionorliabilityuponthecontract.Ydid
ILLUSTRATIVE CASES:
notperformtheundertakingwhichhewasboundbythetermsofhis
1. Right of a party guilty of breach of his obligation to specific
agreementtoperform.Consequently,heisnotentitledtoinsistupon
performance
theperformanceofthecontractbyXortorecoverdamagesbyreason
ortorecoveryofdamagesbyreasonofsuchbreach.
ofhisownbreach.
Facts: XagreedtoconstructahouseforY,whowastofurnishthe
The lower court found that inasmuch as Y had actually furnished
materials. Before the house was completed, it was destroyed by a
materialtoXinthesumofP132.00,whichXhadused,thatYwas
storm,afortuitousevent.Ybroughtactionfortherecoveryofasumof
entitledtoajudgmentagainstXforthatamount;andXhadexpended
moneyallegedlydueonthebuildingcontract.Xcounterclaimedfor
inlaborandmaterialthesumofP500.00foradditionalworkandlabor
laborandmaterialsfurnishedbyhim.Theevidencedisclosedthateach
performed upon the additions made to the original building, at the
ofthepartieshadmoreorlessfailedtocomplywithhisrespective
requestofY,thatXwasentitledtoajudgmentagainstYforthatsum;
obligation.
and,therefore,thatXshouldrecoverfromYthesumofP368.00,being
ThelowercourtbalancedthefailureofXandYagainsteachother,and thedifferencebetweenP500.00andP132.00.
allowedjudgmentforXforthebalance.Yappealed.
Thisjudgmentofthelowercourtabsolvedeachpartyfromanyfurther foundation materials, food, and effective water system. During the
liabilityuponthesaidcontract.(Bosquevs.YuChipco,14Phil.95 installationofsaidmachineryandequipment,Swasforcedtoprovide
[1909];seeAlbertvs.UniversityPublishingCo.,103Phil.351[1958] thenecessarymaterialsandlaborandadvancewhateverexpenseshad
citedunderArt.1191.) beenmadeforthatpurposewithpreviousknowledgeandconsentgiven
byBbecausethelatterwasshortoffundsduringthattime.IttookS
one(1)yearandthree(3)monthstocompletetheinstallation.
Brefusedtopaythebalancedueandallexpenses(P19,628.93)because
of the failure of S to complete the installationwithin the stipulated
2.Liabilityofapartywhoisguiltyofbreachtopayinterest.
periodandplacethemachineryandequipmentinsatisfactoryrunning
Facts:S(corporation)andBenteredintoacontractwherebySagreed conditionsasguaranteedbySinthecontract.
tosellandinstall,fortheconsiderationofP52,000.00,aprocessing
SbroughtanactionagainstBforrescissionofthecontractaftermutual
machineryandequipmentatBsplaceinLanaowithinaperiodof70
restitutionbythepartieswithprovisionfordamagesinitsfavor.B,in
working days from the date of the signing of the contract. In
hisanswer,likewisesoughttherescissionofthecontractaftermutual
compliancewiththecontract,BmadeapartialpaymentofP15,750.00
restitutionbytheparties,butwithprovisionforthepaymentbySof
leavingabalanceofP36,750.00whichshallbepayablein12monthly
freightchargesthatmaybeincurredduetosuchrestitutionandwiththe
installments.
awardofdamagesinhisfavor.
Underparagraph6ofthecontract,Bundertooktosupplythebuilding
Itwasestablishedthatbothpartiesviolatedthetermsandconditionsof
wherein shall be housed the machinery and equipment, laborers,
the contract: B, by failing to comply with his obligations under
paragraph 6 of the contract, and S, by installing machinery and (Grace Park Engineering Co., Inc. vs. Domingo, 107 SCRA 266
equipmentthatwerebasicallydefectiveandinadequate.Itcouldnotbe [1981].)
determined,however,astowhowasthefirstinfractorinpointoftime.
oOo
Thetrialcourtgrantedrescissionbutheldthatthepartiesshouldbear
his/itsowndamages.ApplyingArticle1192,itorderedBtoreturntoS
SECTION2.ObligationswithaPeriod ART.1193.Obligations
the machinery and equipment and bear the transportation expense
thereoftotheportofCotabato,Stobearthefreightchargesthereoffor forwhosefulfillmentadaycertain
itsshipmenttoManila,andtopaySP19,628.93withinterestthereonat
hasbeenfixed,shallbedemandableonlywhenthatdaycomes.
therateof6%fromthedateofthefilingofthecomplaint,andSto
Obligations with a resolutory period take effect at once, but
returnthepartialpaymentofP15,750.00.Itmadenopronouncementas
todamagesandcosts. terminateuponarrivalofthedaycertain.
174 Adaycertainisunderstoodtobethatwhichmustnecessarily
come,althoughitmaynotbeknownwhen.
OBLIGATIONSArt.1192
Iftheuncertaintyconsistsinwhetherthedaywillcomeornot,the
Issue:Isthelowercourtsdecisioncorrect?
obligationisconditional,anditshallberegulatedbytherulesof
Held: Yes, with theonly modificationthat Bwas not liable topay
theprecedingSection.(1125a)
interestonthesumofP19,628.93,fortoholdotherwisewouldbein
conflictwiththerulethateachpartymustbearhis/itsowndamages. Meaningofobligationwithaperiod.
Anobligationwithaperiodisonewhoseconsequencesaresubjected 175
in one way or another to the expiration of said period or term. (8

Manresa158;seeLiragTextiles,Inc.vs.CourtofAppeals,63SCRA
(2) Astotime.Aperiodrefersonlytothefuture,whileacondi tion may
374[1975].)
referalsotoapasteventunknowntotheparties;
Meaningofperiodorterm.
(3)Astoinfluenceontheobligation.Aperiodmerelyfixesthetime
A period isafuture and certaineventuponthearrivalofwhichthe
for the efficaciousness of the obligation. If suspensive, it cannot
obligation(orright)subjecttoiteitherarisesoristerminated.Itisa
preventthebirthoftheobligationinduetime;ifresolutory,itdoesnot
day certain which must necessarily come (like the year 2005; next
annul,eveninfiction,thefactofitsexistence.Ontheotherhand,a
Christmas),althoughitmaynotbeknownwhen,likethedeathofa
condition causes an obligation to arise or to cease. Because of this
person.(Art.1193,par.3.)
difference, a period does not carry with it, except when there is a
Periodandconditiondistinguished. stipulation expressly made by the parties, the same retroactive
consequencesthatfollowacondition(see8Manresa159160.);
Thedifferencesareasfollows:
(4)Astoeffect,whenlefttodebtorswill.Aperiodwhichdepends
(1)Astofulfillment.Aperiodisacertaineventwhichmusthappen
upon the will of the debtor empowers the court to fix the duration
soonerorlateratadateknownbeforehand,oratatimewhichcannot
thereof(Art.1197,par.2.),whileaconditionwhichdependsuponthe
bedetermined,whileaconditionisanuncertainevent;
solewillofthedebtorinvalidatestheobligation(Art.1182.);and
175
(5)Astoretroactivityofeffects.Unlessthereisanagreementtothe Issue:IstheobligationofSconditionaloronewithaperiod?
contrary,thearrivalofaperioddoesnothaveanyretroactiveeffect,
Held: (1) No definite date was fixed for delivery. Under these
whilethehappeningofaconditionhasretroactiveeffect.
stipulations,itcannotbesaidthatanydefinitedatewasfixedforthe
Likea condition (seeArt. 1183.), a periodmust be possible. If the deliveryofthemachinery.
periodis impossible(e.g.,February30,becauseitwillnevercome;
At the time of the execution of the contracts, the parties were not
within24hourstodeliverashipinforeigncountrybecauseitistoo
unmindfulofthecontingencyoftheU.S.notallowingtheexportof
short),theobligationisvoid.
Art.1193DIFFERENTKINDSOFOBLIGATIONS177Obligations
ILLUSTRATIVECASES:
withaPeriod
1. Atermwasfixedfordeliveryofgoodsbutbothpartiesrecognized
thegoodsinviewoftheworldwar,orofthefactthatotherunforeseen
thatsuchdeliverywassouncertaininviewofpossiblecontingencies
circumstances therein stated might prevent it. As the export of the
knowntothem.
machineryinquestionwascontingentuponSobtainingpermissionof
Facts: S and B entered into various contracts whereby the former the U.S. government, the delivery was subject to a condition the
obligatedhimselftosell,andthelatter,topurchase,steeltanks,electric fulfillmentofwhichdependednotonlyontheeffortofSbutuponthe
motors,etc.,thesametobeshippedfromtheU.S.withinfixedperiods willofthirdpersonswhocouldinnowaybecompelledtofulfillthe
oftime.Brefusedtoreceivethemandpaythepricesstipulatedasthey condition.
arrivedbeyondthetimefixed.Inallthecontractsthereisafinalclause
(2)Deliverymustbemadewithinareasonabletime.Withtheabove
thatSwasnotresponsiblefordelayscausedbyfires,riots,strikes,or
inmind,thetermwhichthepartiesattemptedtofixwassouncertain
othercausesentirelybeyondthecontrolofS.
thattheobligationmustberegardedasconditional.Incaseslikethis, himselfembarkedupontheexploitationoftheclaim.Subsequently,X
theobligorwillbedeemedtohavesufficientlyperformedhispartof revokedtheauthoritygrantedbyhimtoYwhoassentedtheretosubject
theobligation,ifhehas doneallthat wasinhispower evenif the tocertainconditions.Asaresult,adocumentwasexecutedwhereinY
conditionhasnotbeenfulfilledinreality.Whenthetimeofdeliveryis transferredtoXallofYsrightsandinterestsoverthe24tonsofiron
notfixedorisstatedingeneralandindefiniteterms,timeisnotofthe ore,moreorlessthatYhadalreadyextractedfromthemineralclaims
essenceofthecontract.Insuchcases,thedeliverymustbemadewithin inconsiderationofthesumofP75,000.00,P10,000.00ofwhichwas
areasonabletime. paiduponthesigningoftheagreement,andthebalanceofP65,000.00
willbepaidfromandoutofthefirstletterofcreditcoveringthefirst
Takingintoaccount theabovecircumstances, the goodsinquestion
shipmentofironoresandofthefirstamountderivedfromthelocal
were brought to Manila by S within a reasonable time and
saleofironorefromsaidclaims.
consequently, B must pay their price. (Smith Bell & Co. vs. Sotelo
Matti,44Phil.875[1923].) Tosecurethepaymentofthebalance,XexecutedinfavorofYasurety
bond.Nosaleofapproximately24,000tonsofironorehadbeenmade

norhadthebalanceofP65,000.00beenpaidtoY.
2. Existenceofobligationtopayisrecognizedandmerelytheexact
date Issue:Istheshipmentorlocalsaleoftheironoreaconditionprecedent
(or suspensive condition) to the payment of the balance, or only a

forpaymentisundetermined.
suspensiveperiodorterm?
Facts:X,ownerofaminingclaim,appointedYasattorneyinfactto
178
enter into a contract with any individual or juridical person for the
exploration and development of said claim on a royalty basis. Y OBLIGATIONSArt.1193

Held:TheobligationofXisonewithaterm.Thewordsofthecontract butincaseofnonfulfillmentofanyofthestipulationsandconditions
expressnocontingencyinthebuyersobligationtopay.Thereisno ofthemortgage,suchasthefailuretopaytheannualinstallments,E
uncertaintythatthepaymentwillhavetobemadesoonerorlater;what coulddeclarethesaidstipulationsandconditionsviolatedandproceed
isundeterminedismerelytheexactdateatwhichitwillbemade.By totheforeclosureofthemortgageinaccordancewithlaw.
theverytermsofthecontract,therefore,theexistenceoftheobligation
Issue:Whatistheeffectofthenonfulfillmentoftheconditionsofthe
topayisrecognized;onlyitsmaturityordemandabilityisdeferred.
contract?
Furthermore,tosubordinateXsobligationtothesaleorshipmentof
Held: It renders the period ineffective, and makes the obligation
theoreasaconditionprecedent,wouldbetantamounttoleavingthe
demandable at the will of E, the creditor. (Phil. National Bank vs.
paymentathisdiscretion(Art.1182.),forthesaleorshipmentcould
LopezVito,52Phil.41[1928];seeArt.1198.)
notbemadeunlesshetookstepstoselltheore.(Gaitevs.Fonacier,12

SCRA831[1961].)
4. Effect of happening of fortuitous event on the running of period
agreed
3.Rightofdebtortomakeuseofperiodmadesubjecttofulfillmentof
uponforfulfillmentofobligation.
certainconditions.
Facts:XandYenteredintoamillingcontractwherebyXagreedthat
Facts: AccordingtothecontractenteredintobetweenR(mortgagor) thesugarcanewhichYwillproducewillbemilledbyXforaperiodof
andE(mortgagee),theobligationofRwastopaythedebtinyearly thirtyyears. It was stipulated that incase of a fortuitous event, the
installmentsonafixeddayofeachyear,untilithasbeenfullysatisfied contractshallbedeemedsuspendedduringsaidterm.
YfailedtodeliversugarcanetoXforsixyears,fouryearsduringthe Held: No. The stipulation does not mean that the happening of a
warandtwoyearswhenhismillwasbeingrebuilt. fortuitouseventstopstherunningoftheperiodagreedupon.Itonly
relievesthepartiesfromthefulfillmentoftheirrespectiveobligations
Issue: MayYbecompelledtodeliversugarcanetoXforsixmore
during that time. X, not being entitled to demand from Y the
1AlsocitedunderArticles1198and1378.
performanceofthelatterspartofthecontractwhichwasimpossibleat
thetimeitbecamedue,cannot later ondemandits fulfillment.The
prayerofX,ifgranted,wouldineffectbeanextensionofthetermof
the contract entered into by them. (Victorias Planters vs. Victorias
withaPeriod
MillingCo.,97Phil.318[1955].)
yearsaftertheexpirationofthirtyyearstomakeupforwhatYfailedto
Kindsofperiodorterm.
deliver?
They are:
(1)Accordingtoeffect:
(a) Suspensiveperiod(exdie). Theobligationbeginsonlyfroma
daycertainuponthearrivaloftheperiod(Art.1193,par.1.);and
(b)Resolutoryperiod(indiem).Theobligationisvaliduptoaday
certainandterminatesuponthearrivaloftheperiod.(par.2.)
EXAMPLES:
Exdie: (a)Legalperiod.Whenitisprovidedforbylaw;
(1)Iwillpayyou30daysfromtoday.(oronJan.1nextyear,orat 180OBLIGATIONSArts.11941195
theendofthismonth.)Here,whatissuspendedisnottheobligation
(b) Conventionalorvoluntaryperiod. Whenitisagreedtobythe
itself(orrightacquired)butmerelyitsdemandability.
parties(Art.1196.);and
(2) I will support you from the time your father dies. Here, the
(c) Judicialperiod. Whenitisfixedbythecourt.(Art.1197.)(3)
uncertaintyconsistsnotinwhethertheday(death)willcomeornot,
Accordingtodefiniteness:
butonlyintheexactdateortimeofitstakingplace.(pars.3and4,Art.
(a)Definiteperiod.Whenitisfixedoritisknownwhenitwillcome
1193.)
(Art.1193,par.3.);and
(3) I will pay you when my means permit me to do so. This is
(b)Indefiniteperiod.Whenitisnotfixedoritisnotknownwhenit
consideredbylawasanobligationwithaperiod.(Art.1180.)
willcome.Wheretheperiodisnotfixedbutaperiodisintended,the
Indiem:
courtsareusuallyempoweredbylawtofixthesame.(seeArt.1197.)
. (1) IwillgiveyouP1,000.00amonthuntil
ART.1194.Incaseofloss,deteriorationorimprovementofthe
the end of the year.
thingbeforethearrivalofthedaycertain,therulesinArticle1189
shallbeobserved.(n)
. (2) I will support you until you die.
Effect of loss, deterioration, or improvement before arrival of
period.
(2)Accordingtosource:
SeecommentsunderArticle1189. Thepresumption,however,isthatthedebtorknewthatthedebtwas
notyetdue.Hehastheburdenofprovingthathewasunawareofthe
ART.1195.Anythingpaidordeliveredbeforethearrivalofthe
period.Wherethedurationoftheperioddependsuponthewillof
period,theobligorbeingunawareoftheperiodorbelievingthat
theobligationhasbecomedueanddemandable,mayberecovered, Art.1196DIFFERENTKINDSOFOBLIGATIONS181Obligations
withaPeriod
withthefruitsandinterests.(1126a)
thedebtor(seeArt.1197,par.3.),paymentbyhimamounts,ineffect,
Paymentbeforearrivalofperiod.
tohisdeterminationofthearrivaloftheperiod.
Article1195appliesonlytoobligationstogive.ItissimilartoArticle
Theobligormaynolongerrecoverthethingormoneyoncetheperiod
1188,paragraph2,whichallowstherecoveryofwhathasbeenpaidby
hasarrivedbuthecanrecoverthefruitsorintereststhereoffromthe
mistakebeforethefulfillmentofasuspensivecondition.Thecreditor
dateofprematureperformancetothedateofmaturityoftheobligation.
cannotunjustlyenrichhimselfbyretainingthethingormoneyreceived
beforethearrivaloftheperiod. EXAMPLE:
Undertheformerprovision,thedebtorcouldrecoveronlythefruitsor DowesCP2,000.00whichwassupposedtobepaidonDecember31
interestsbutnotthethingorsumgivenorpaidinadvance.Thisrule thisyear.Bymistake,DpaidhisobligationonDecember31lastyear.
was deemed unjust and contrary to the manifest intention of the

Assuming that today is June 30, D can recover the P2,000.00 plus
parties.(seeReportoftheCodeCommission,pp.130131.)
P120.00,whichistheinterestforonehalfyearatthelegalrateof12% 2
Debtorpresumedawareofperiod.
oratotalofP2,120.00.ButDcannotrecover,excepttheinterest,ifthe
debthadalreadymatured.
NeithercantherebearighttorecoveryifDhadknowledgeofthe andthedebtor.Thismeansthatbeforetheexpirationoftheperiod,the
period.Thetheoryundersolutioindebitiobviouslywillnotapply.(Art. debtor may not fulfill the obligation and neither may the creditor
2154.)Disdeemedtohaveimpliedlyrenouncedtheperiod. demanditsfulfillmentwithouttheconsentoftheotherespeciallyifthe
latterwouldbeprejudicedorinconveniencedthereby.
Norecoveryinpersonalobligations.
Article 1195 has no application to obligations to do or not to do
because as to the former, it is physically impossible to recover the 2SeeC.B.CircularNo.416,citedunderArticle1175.
servicerendered,andastothelatter,astheobligorperformsbynot
doing, he cannot, of course, recover what he has not done. (see 8
Manresa166.) Inareciprocalcontractlikealease,theperiodmustbedeemedtohave
been agreed upon for the benefit of both parties, absent language
ART.1196.Wheneverinanobligationaperiodisdesignated,itis
showingthatthetermwasdeliberatelysetforthebenefitofthelessee
presumed to have been established for the benefit of both the
orthelessoralone.(Fernandezvs.CourtofAppeals,160SCRA577
creditorandthedebtor,unlessfromthetenorofthesameorother
[1988];Bucevs.CourtofAppeals,332SCRA151[2000].)
circumstancesitshouldappearthattheperiodhasbeenestablished
Thepresumption,ofcourse,isrebuttable.(Osoriovs.Salutillo,87Phil.
infavorofoneoroftheother.(1127)
356[1950].)
Presumptionastobenefitofperiod.
EXAMPLE:
Inanobligationsubjecttoaperiodfixedbytheparties,theperiodis
presumedtohavebeenestablishedforthebenefitofboththecreditor
OnJanuary1,DborrowedfromCP10,000.00payableonDecember31 obligation of D is to deliver say, 100 cavans of rice, C cannot be
at18%interest. compelledtoacceptperformancebeforetheexpirationoftheperiod
especiallyifhewouldbeprejudicedorinconveniencedthereby.
DcannotpaybeforeDecember31withouttheconsentofC.Neither
canCcompelDtopaybeforetheexpirationoftheterm.Itispresumed ILLUSTRATIVE CASES:
thattheperioddesignated,whichisDecember31,hasbeenestablished 1.Prescriptiveperiodwheretermisforthebenefitofbothcreditorand
forthebenefitofboth.Disbenefitedbecausehecanusethemoneyfor
debtor.
oneyear.Cisalsobenefitedbecauseoftheinterestthemoneywould
Facts: DsecuredaloanfromCwithinterest,thetermofwhichwas
earnforoneyear.
one(1)year.Assecurity,DpledgedhisjewelryinwritingtoC.Within
Inacontractofloanwithinterest,thetermisgenerallyforthebenefit
11yearsfromtheexecutionofthepledge,DbroughtactionagainstC
ofboththelenderandtheborrower.(seeBachrachGarage&Taxicab
torecoverthejewelry,tenderingthecorrespondingprincipalandthe
Co.vs.Golingco,39Phil.912[1919].)Thisisalsothecaseevenwhere
correspondinginterests.
there is no interest stipulated but the creditor receives, in place of
Ccontendedthattheactionhasprescribedsinceitwasbroughtafter10
interest,otherbenefitsbyreasonoftheperiod.(Osoriovs.Salutillo,
yearsfromdateoftheexecutionofthepledgeinasmuchasDcould
supra.)
Obviouslyintheaboveexample,DcanpayCbeforeDecember31
withaPeriod
provided the payment includes the interest for one (1) year. (see,
however, De Leon vs. Santiago Syjuco, Inc., 90 Phil. 311 [1951]; havepaidtheloanandrecoveredthejewelrywithintheoneyearterm.
Nicolas vs. Matias, 89 Phil. 126 [1951].) Where, however, the IfthecontentionofCbesustained,thenDsactionwasalreadybarred
althoughitwasbroughtwithinten(10)yearsfromtheexpirationofthe PrivaterespondentT,lessor,demandedgradualincreasesintherental
oneyearterm. whichBpaid.In1993,Brefusedtopayanymoreincreaseinrental.
Issue:IsthetheoryofCtenable? AccordingtoT,thephraseintheleasecontractauthorizingrenewalfor
another 10 years does not mean automatic renewal, rather, it

Held:No.ThisisacaseofaloanwhereinthetermbenefitsDbythe
contemplates a mutual agreement between the parties. On the other
useofthemoneyaswellasCbytheinterest.Therefore,theactionfor
hand,Bmaintainsthestipulationinthecontractallowingthelesseeto
therecoveryofthejewelrypledgedaroseonlyafterthelapseoftheone
construct buildings and improvements, her filing of the complaint
(1) year period for purposes of the computation of the period of
before the expiration of the initial 15years term, for specific
prescriptionofsaidaction.ItfollowsthatCisinerror.(Sarmientoand
performance with consignation with prayer to accept the rentals in
Villasenorvs.Javellana,43Phil.880[1920].)
accordancewiththeleasecontract,andTsacceptanceoftheincreased

rental are contemporaneous and subsequent acts that signify the
2.Underthecontractofleaseforaperiodof15years,theleaseshall
intentionofthepartiestorenewthecontract.
be
Issue: The basic issue is the correct interpretation of the contract
subjecttorenewalforanotherten(10)years.
provisioninquestion.
Facts:PetitionerBleasedaparcelofland,foraperiodof15yearsto
Held: (1) Provisiononrenewalunclear. Thephrasesubjectto
commenceonJune1,1979andtoendonJune1,1994subjectto
renewalforanotherten(10)yearsisunclearonwhethertheparties
renewal for another ten (10) years, under the same terms and
contemplatedanautomaticrenewalorextensionoftheterm,orjustan
conditions.Bthenconstructedandpaidtherequiredmonthlyrental.
optiontorenewthecontract;andifwhatexistsisthelatter,whomay wasgivenforthebenefitofhereinpetitioner.Thus,pursuanttothe
exercisethesameorforwhosebenefititwasstipulated. FernandezrulingandArticle1196oftheCivilCode,theperiodofthe
leasecontractisdeemedtohavebeensetforthebenefitofbothparties.
Inthis jurisdiction,afinedelineationexistsbetweenrenewal ofthe
Renewalofthecontractmaybehadonlyupontheirmutualagreement
contract and extension of its period. Generally, the renewal of a
oratthewillofbothofthem.Sincetheprivaterespondentswerenot
contract connotes the death of the old contract and the birth or
amenabletoa renewal, theycannot be compelledtoexecuteanew
emergenceofanew
contractwhenthe oldcontract terminatedon1June 1994. It isthe
184
ownerlessors prerogative to terminate the lease at its expiration.
OBLIGATIONSArt.1196 (Bucevs.CourtofAppeals,332SCRA151[2000].)
one.Aclauseinaleaseprovidingforanextensionoperatesofitsown Note: In this case, the parties limited the issue to the correct
forcetocreateanadditionalterm,butaclauseprovidingforarenewal interpretation of the contract. The issue of possession of the leased
merelycreatesanobligationtoexecuteanewleasecontractforthe premises was not among the issues agreed upon by the parties or
additionalterm.Asrenewalofthecontractcontemplatesthecessation threshedoutbeforethetrialcourt;neitherwasitraisedbyTonappeal.
oftheoldcontract,thenitisnecessarythatanewonebeexecuted Ts right to file anaction for the recovery of possession of subject
betweentheparties. propertywasrecognized.
(2) Leaseperiod deemedtohave beenfixedfor the benefit of both Exceptionstothegeneralrule.
parties. Inthecaseatbar,itwasnotspecificallyindicatedwho
Thetenoroftheobligationorthecircumstancesmay,however,show
mayexercisetheoptiontorenew,neitherwasitstatedthattheoption
thatitwastheintentionofthepartiestoconstitutetheperiodforthe
benefitofeitherthedebtororthecreditor.Thebenefitoftheperiod (2)DpromisedtopayhisdebtonorbeforeDecember31,2004.
maybethesubjectofexpressstipulationoftheparties. Here,thepaymentistobemadewithinastipulatedperiod.Dcanpay
beforesaiddate.(seePastorvs.Gaspar,2Phil.592[1903].)
(1)Termisforthebenefitofthedebtoralone.Hecannotbecom
pelledtopayprematurely,buthecan,ifhedesires,doso. (3)Dpromisedtopayhisdebtforatermoffiveyearscountedfrom
thisdate.Ithasbeenheldthatthedebtispayablewithinfiveyears.
EXAMPLES:
(Siavs.CourtofAppealsandValencia,92Phil.355[1952].)
(1)DborrowedfromCP10,000.00tobepaidwithinoneyearwithout
(2) Term is for the benefit of the creditor. He may demand
interest.
fulfillmentevenbeforethearrivalofthetermbutthedebtorcannot
Inthiscase,theperiodofoneyearshouldbedeemedintendedforthe
requirehimtoacceptpaymentbeforetheexpirationofthestipulated
benefitofDonly.Therefore,hecanpayanytimebuthecannotbe
period.
compelledtopaybeforeoneyear.Althoughtheloanisgratuitous,the
EXAMPLE:
termsandconditionsofthecontractorothercircumstancesmay,
D borrowed from C P10,000.00 payable on December 31 with the

stipulationthatDcannotmakepaymentbeforethelapseoftheperiod
withaPeriod
butCmaydemandfulfillmentevenbeforesaiddate.
however,indicatethattheperiodhasbeenestablishedforthebenefitof
Here,CcandemandpaymentatanytimebutDcannotshortentheone
bothparties.
year period without the consent of C. Ordinarily, there must be a
stipulationgrantingthebenefitofthetermtoonlythecreditor.
Accelerationbydebtoroftimeofpayment. thatrepaymentcouldnotbemadewithinfive(5)yearsbecausethey
wantedtoderivesomeadvantagefromthechangeofcurrencywhich
Thepaymentofinterestmaynotbetheonlyreasonwhyacreditormay
they foresaw or waited. The creditors wisely provided against
notbeboundtoreceivepaymentbeforematurity.Theremaybeother
repaymentinJapaneseNotesthatwerethenoflittlevaluemakingthe
reasons,towit:thatthecreditormaywanttokeephismoneyinvested
calculationthatafterfive(5)years,theJapanesewouldnotbehereand
safelyinsteadofhavingitinhishands,andthatthecreditorby
thesaidnoteswouldhaveceasedtobelawfulcurrency.(Nicolasvs.
fixing a period, protects himself against sudden decline in the
Matias,89Phil.126[1951].)
purchasing power of the currency loaned especially at a time when
therearemanyfactorsthatmayinfluencethefluctuationofthecur Effectofacceptancebycreditorofpartialpayment.
rency.
Theacceptanceofapartialpaymentbyacreditoramountstoawaiver
All available authorities on the matter are agreed that unless the oftheperiodagreeduponduringwhichpaymentshouldnotbemade.If
creditor consents, the debtor has no right to accelerate the time of noexplanationisgivenwhythecreditorreceivedsuchpartialpayment
paymenteveniftheprematuretenderincludedanoffertopayprincipal before the maturity of the obligation, it may be presumed that his
andinterestinfull.(DeLeonvs.SantiagoSyjuco,Inc., 90Phil.311 relinquishment was intentional, and his choice to dispense with the
[1951].) term,voluntary.Itisnotamereforbearance.(Lopezvs.Ochoa,103
Phil.950[1958].)
Thus,inacase,afterholdingthatthecreditorcouldnotbeobligedto
acceptpaymentsbeforetheexpirationoftheperiod(5years)agreed Computationoftermorperiod.
upon,theSupremeCourtsaid:Thecreditorsevidentlystipulated
(1)TheCivilCodeprovides:
When the law speaks of years, months, days or nights, it shall be LegalPeriodsYearshallbeunderstoodtobetwelvecalendar
understoodthatyearsareofthreehundredsixtyfive(365)dayseach; months;monthofthirtydays,unlessitreferstoaspecificcalendar
monthsofthirty(30)days;daysoftwentyfour(24)hours;andnights monthinwhichcaseitshallbecomputedaccordingtothenumberof
fromsunsettosunrise. daysthespecificmonthcontains;day,toadayoftwentyfourhours;
and night from sunset to sunrise. (Chap. VIII, Book I, Sec. 31

Ifmonthsaredesignatedbytheirname,theyshallbecomputedbythe
thereof.)
numberofdayswhichtheyrespectivelyhave.
(3)A calendarmonth isamonthdesignatedinthecalendarwithout

Incomputingaperiod,thefirstdayshallbeexcluded,andthelastday
regardtothenumberofdaysitmaycontain.Itistheperiodoftime
included.(Art.13thereof.)
runningfromthebeginningofacertainnumbereddayupto,butnot
IfthelastdayisaSundayoralegalholiday,thetimeshallnotrununtil
including,thecorrespondingnumbereddayofthenextmonth,andif
theendofthenextdaywhichisneitherSundaynoraholiday.
thereisnotasufficientnumberofdaysinthenextmonth,thenupto
Ayearisequivalentto365daysregardlessofwhetheritisayearora andincludingthelastdayofthatmonth.
leapyear.(NationalMarketingCorporationvs.Tecson,29SCRA70
To illustrate: One calendar month from December 31, 2007will be
[1969].)
fromJanuary1,2008toJanuary31,2008;onecalendarmonthfrom
(2)TheAdministrativeCodeof1987(Exec.OrderNo.292.),however, January31,2008willbefromFebruary1,2008untilFebruary29,
provides: 2008.
Art.1197DIFFERENTKINDSOFOBLIGATIONS187Obligations Under the Administrative Code, a year is composed of 12 calendar
withaPeriod months,thenumberofdaysbeingirrelevant,whereasundertheCivil
Codeayearisequivalentto365days,whetheritbearegularyearora Theperiodmentionedintheaboveprovisionreferstoajudicialperiod
leap year. There exists a manifest incompatibility in the manner of asdistinguishedfromtheperiodfixedbythepartiesintheircontract
computinglegalperiods.TheAdministrativeCodeof1987beingthe whichisknownascontractualperiod.
morerecentlawgovernsthecomputationoflegalperiods.(Comm.of
InternationalRevenuevs.PrimetownPropertyGroup,Inc.,531SCRA
Iftheobligationdoesnotstateaperiodandnoperiodisintended,the
436[2007].)
courtisnotauthorizedtofixaperiod.Thecourtshavenorighttomake
ART. 1197. If the obligationdoes not fixaperiod, but from its
contractsfortheparties.(Tolentinovs.Gonzales,50Phil.577[1927].)
natureandthecircumstancesitcanbeinferredthataperiodwas
ILLUSTRATIVE CASES:
intended,thecourtsmayfixthedurationthereof.
1.Authorityofcourttograntextensionwhereobligationcontainsno
Thecourtsshallalsofixthedurationoftheperiodwhenitdepends
term.
uponthewillofthedebtor.
Facts: D,etc.,executedapromissorynotewhichreads:Wepromise
Ineverycase,thecourtsshalldeterminesuchperiodasmayunder
topayCthesumofP1,352.00forbalancestandingagainstusonthis
the circumstances have been probably contemplat ed by the
date.UntilsaidamountispaidtoC,weengagetopayinterestthereon
parties.Oncefixedbythecourts,theperiodcannotbechangedby attherateof10%perannum,asagreed,Jan.20,1907.(Sgd.)D,etc.
them.(1128a) Cbroughtactionforrecoveryoftheamount.
Courtgenerallywithoutpowertofixaperiod.
Issue: There being no period fixed for the payment thereof, is the 2. Power of court to determine, where the period contemplated is
obligationimmediatelydemandableorshouldtheperiodfirstbefixed withinareasonabletime,ifsuchperiodhadalreadyelapsedornot;
bythecourt? applicabilityofArticle1197.
Held: Itcannotbeinferredfromthelanguageofthedocumentthatit Facts: S (seller) obligated itself to construct streets around the
wastheintentionofCtograntD,etc.,anyextensionoftimeinthe perimeterofthelandsold(siteoftheSto.DomingoChurchinQuezon
payment,thedurationofwhichshouldbefixedbyjudicialauthority. City).Thepartieswereawarethattheland,onwhichthestreetswould
Inasmuch as the complaint was filed in court 27 days after the beconstructed,wereoccupiedbysquatters.Nodefinitedatewasfixed
obligationwasexecuted,afterpaymenthadbeendemandedfromD, withinwhichthestreetswouldbeconstructed.
etc., the latter have no right at all to claim an extension for the
Anactionforspecificperformancewithdamageswasbroughtagainst
fulfillmentoftheobligation,theexistenceandlegalityofwhichthey
S.
haveexpresslyrecognized.
Thedocumentcontainsnotermorconditionuponwhichdependsthe
withaPeriod
fulfillmentoftheobligationcontractedbyD,etc.(seeArt.1179,par.
Issues:(1)HasthecourtthepowerunderArticle1197tofixtheperiod
1.)Therefore,thereexistsnomotiveorreasonthatwouldexemptthem
fortheperformanceofSsobligation?
from compliance therewith. (Floriano vs. Delgado, 11 Phil. 154
[1908];seeDelgadoandFigueroavs.Amenabar,16Phil.403[1910].) (2)Ifso,whenshouldtheobligationbeperformed?
Held:(1)IftheissueraisediswhetherSwasgivenareasonabletime
within which to construct the streets, the court should determine

whetherthepartieshadagreedthatSshouldhaveareasonabletimefor UnderArticle1197(pars1and2),therearetwocaseswhenthecourtis
performance.Ifthecontractsoprovided,thentherewasaperiodfixed, authorizedtofixthedurationoftheperiod.
areasonabletime,andallthatthecourtshoulddo,istodetermineif
Article1197ispartandparcelofallobligationscontemplatedtherein.
thatreasonabletimehadalreadyelapsed.Ifithadpassed,thenthecourt
Hence,wheneverthecourtfixesthetermofanobligation,itdoesnot
shoulddeclarethatShadbreachedthecontractandfixtheresulting
therebyamendormodifythesame.Itmerelyenforcesorcarriesoutthe
damages; otherwise, it is bound to dismiss the action for being
intentionoftheparties.(Deudorvs.J.M.TuazonandCo.,Inc.,2SCRA
premature.
129[1961].)Itcannotarbitrarilyfixaperiodoutofthinairforthelaw
Article1197ispredicatedontheabsenceofanyperiodfixedbythe expresslyprescribesthatthecourtsshalldeterminesuchperiodasmay
parties(orthefactthatperiodfixedismadetodependonthewillofthe under the circumstances have been probably contemplated by the
debtor)butitcanbeinferredthataperiodwasintended. parties.(Art.1197,par.3.)
(2) As the parties were fully aware that the land was occupied by Noperiodisfixedbutaperiodwasintended.
squattersandmusthaveknownthattheycouldnottakethelawinto
Iftheobligationdoesnotfixaperiodbutitcanbeinferredfromits
their own hands, but must resort to legal processes in evicting the
natureandthecircumstancesthataperiodwasintendedbytheparties,
squatters,thepartiesmusthaveintendedtodefertheperformanceof
the court may fix the period. If the period fixed is extended by
theobligationofSuntilthesquattersweredulyevicted.(G.Araneta,
agreement,tobevalidthesamemustbeforadefinitetime,although
Inc.vs.Phil.SugarEstatesDev.Co.,Inc.,Ltd.,20SCRA330[1967].)
Exceptionstothegeneralrule.
ifnoprecisedateisfixed,itissufficientthatthetimecanreadilybe intentionwasnotindicatedinthepromissorynote.(seeArt.1180.)On
determined.Incasetheperiodofextensionisnotprecise,Article1197 thecontrary,thefactthatanaccelerationclauseandalatepayment
applies.(PacificBankingCorp.vs.CourtofAppeals,173SCRA102 penaltywereprovidedinthepromissorynote,showedtheintentionof
[1989].) the parties that the installments should be paid at a definite date.
(RadiowealthFinanceCo.vs.DelRosario,335SCRA288[2000].)
EXAMPLES:
(1)XagreedtoconstructthehouseofY.Thepartiesfailedtofixthe Inanothercase,afterfindingthatArticle1687 3oftheCivilCodewas
periodwithinwhichtheconstructionistobemade.Here,thecourtcan applicableandcorrelatingitwiththefirstparagraphofArticle1197,
fixthetermforitisevidentthatthepartiesintendedthatXshould theSupremeCourtsaidthatunderbothArticlesthecourtisaccorded
constructthehousewithinacertainperiod.(seeConcepcionvs.People, thepowertofixalongertermforthelease,whichpowerispotestative
74Phil.63[1942].) ordiscretionaryinnature,addressedtothecourtssoundjudgmentand
is controlled by equitable considerations. It may not, therefore, be

(2) B bought lumber from the store of S on credit. The period for
contendedthatacourtintheexerciseofitsdiscretionarypowerunder
paymentintheinvoiceisleftblank.Fromthenatureoftheobligation,
saidarticlesismakinganewcontractbetweentheparties,
itcanbeinferredthataperiodisintended.(seeCosmicLumberCo.,
Inc.vs.Manaois,106Phil.1015[1960];seeQuivs.CourtofAppeals, 3Art. 1687. If the period for the lease has not been fixed, it is
66SCRA523[1975].) understoodtobefromyeartoyear,iftherentagreeduponisannual;
frommonthtomonth,ifitismonthly;fromweektoweek,iftherentis
Inacase,thespaceforthedateonwhichtheinstallmentshouldhave
weekly;andfromdaytoday,iftherentistobepaiddaily.However,
commencedwasleftblank;held:thisdidnotnecessarilymeanthatthe
eventhoughamonthlyrentispaid,andnoperiodforthelesseehas
debtors were allowed to pay as and when they could, where such
beenset,thecourtsmayfixalongertermfortheleaseafterthelessee Facts:DboundhimselftopayhisdebttoCinpartialpaymentsasset
hasoccupiedthepremisesforoveroneyear.Iftherentisweekly,the forth in the promissory note. No fixed day was specified for its
courtsmaylikewisedeterminealongerperiodafterthelesseehasbeen fulfillmentsothatperiodforpaymentisundetermined.
inpossessionforoversixmonths.Incaseofdailyrent,thecourtsmay
Issue:Maythecourtfixthetermforpayment?
alsofixalongerperiodafterthelesseehasstayedintheplaceforover
Held: The obligation being manifestly defective with regard to the
onemonth.(1581a)
durationoftheperiodgrantedtothedebtor,D,thatdefectmustbe
curedbythecourtswhichshalldeterminethesaiddurationunderthe
Art.1197DIFFERENTKINDSOFOBLIGATIONS191Obligations powerexpresslygrantedthemforsuchpurposebyArticle1197.(Levy
withaPeriod Hermanosvs.Paterno,18Phil.353[1911].)
sincetheverypurposeofthelawisnotthefixingofalongertermfor
thelease,buttomaketheindefiniteperiodofleasedefinitebyfixing 2. Donationissubjecttoaconditionforthefulfillmentofwhichno
onceandforalltheremainingdurationofthelease.(F.S.Divinagracia period
AgroCommercial,Inc.vs.CourtofAppeals,104SCRA180[1981].)
isfixed.
ILLUSTRATIVECASES:
Facts:RdonatedtotheCityofManilaaparceloflandsubjecttothe
1.Debtpayableininstallmentswithoutfixingtheperiodforpayment. condition (among others) that the city should acquire such of the
adjoininglandasmaybenecessarytoformwithmineapublicsquare
withgardensandwalls.Thedeeddidnotfixanyperiodwithinwhich
theconditionshouldbefulfilled.Asmanyyearshaveelapsedwithout
thecityhavingcompliedwiththecondition,Rbroughtactiontoannul
thedonationandtorecovertheproperty.

Issue:IstheactionofRproper?
3.Thechildrenwereinvitedbytheparents,tooccupythelatterstwo
Held:No.Thecontracthavingfixednoperiodinwhichthecondition
lotsbutunfortunately,becauseofanunresolvedconflictandoutof
shouldbefulfilled,theprovisionsofArticle1197areapplicableandit
pique,theparentsaskedthemtovacatethepremises.
is the duty of the court to fix a suitable time for its fulfillment. 4
Facts:Respondents(parents)invitedtheirsonandhiswife(petitioners)
(Barrettovs.CityofManila,11Phil.624[1908].)
toconstructtheirresidenceonthesubjectlotsandasthesitusoftheir
4Intheabsenceofanyjustcauseforthecourttodeterminetheperiod constructionbusiness,inorderthattheycouldalllivenearoneother
andhelpinresolvingsomefamilyproblems.Respondentsfiledwith
ofcompliance,thecourtmaydecreetherescissionclaimed.(seeArt.
themunicipaltrialcourtanejectmentsuitagainstpetitioners.
1191,par.3.)InCentralPhil.University(CPU)vs.CourtofAppeals
(246SCRA511[1995].),CPU(donee)failedformorethan50yearsto Petitioners dispute the lower courts finding that they occupied the
com ply with the condition of the donation to establish a medical property on the basis of mere tolerance. They argue that their
collegeonthelanddonated. Held: Thereisnomoreneedtofixthe occupation was not under such condition, since respondents had
durationofatermoftheobligationwhensuchprocedurewouldbea invited,offeredandpersuadedthemtousesaidlots.
meretechnicalityandformalityandwouldservenopurposethanto
Issues:IsthefirstparagraphofArticle1197applicable?
delayorleadtounnecessaryandexpensivemultiplicityofsuits.
Held:No.(1)Possessionwasnotbymeretolerance.Thepossession usethelotsceasedupontheirreceiptofthenoticetovacate.(Macasaet
ofthesubjectlotsbypetitionerswasnotbymeretolerance.Itwasupon vs.Macasaet,439SCRA625[2004].)
the invitation of and with complete approval of respondents who

Durationofperioddependsuponthewillofthedebtor.
desiredthattheirchildrenwouldoccupythepremises.Itarosefrom
familial love and a desire for family solidarity, which was a basic Forexamples,seecommentsunderArticle1180.
Filipinotrait.
In the two cases provided in Article 1197, the court must fix the
(2)Noperiodwasintendedbytheparties.Petitionershadarightto durationoftheperiodtoforestallthepossibilitythattheobligationmay
occupy the lots. The issue is the duration of the possession. In the neverbefulfilledortocureadefectinacontractwherebyitis
absenceofstipulation,Article1197allowsthecourtstofixtheduration Art.1197DIFFERENTKINDSOFOBLIGATIONS193Obligations
ortheperiod.Article1197,however,appliestoasituationinwhichthe withaPeriod
partiesintendedaperiod.Fromthefactsofthecase,noperiodwas
madetodependsolelyuponthewillofoneoftheparties.Infixingthe
intendedbytheparties.Theirmerefailuretofixthedurationoftheir
term, the court is merely enforcing the implied stipulation of the
agreementdoesnotnecessarilyjustifyorauthorizethecourtstodoso.
parties.(Deudorvs.J.M.TuazonandCo.,supra.)Acontractwhereby
(3)Possessionwassubjecttoresolutorycondition.Effectively,there
theproceedsofthesaleofgoodsshouldbeturnedovertotheprincipal
wasaresolutoryconditionintheiragreement.Whenpersistentconflict
by the agent as soon [they were] sold makes the obligation
andanimosityovertooktheloveandsolidaritybetweentheparentsand
immediatelydemandableassoonasthegoodsaredisposedof;hence,
thechildren,thepurposeoftheagreementceased.Thus,petitionersno
Article 1197 is not applicable. (Lim vs. People, 133 SCRA 333
longerhadanycauseforcontinuedpossessionofthelots.Theirrightto
[1984].)
ILLUSTRATIVECASES: period of five (5) years under the terms and conditions as will be
mutuallyagreeduponbythepartiesatthetimeofrenewal.
1.Termsofleaseisforsolongaslesseepaysstipulatedrent.
Notwithstandingthefailureofthepartiestoreachagreementonthe
Facts:Inthecontractoflease,itisprovidedthatRwouldleasetoEa
termsandconditionsoftherenewalofthecontract,thelowercourt
certainbuildingforthesumofP250beginningonthe1stofMarchin
ordered the renewal on the ground that the lease has never expired
theyearwhentheagreementwasmadeandtocontinuesolongasthe
becausethecontractexpresslymandateditsrenewal.
tenantpaidthestipulatedrentofP250.
Issue:IsthesecondparagraphofArticle1197applicable?
Raskedthecourttofixadefinitetermduringwhichtheleaseshould
continue. Held:No.Underthequotedclause,thedurationoftherenewalperiod
wasnotlefttothewillofthelesseealone,butrathertothewillofboth
Issue: May the court fix the term of the lease?
thelessorandthelessee.Mostimportantly,Article1197appliesonly
Held:Thecourthasauthoritytofixthetermofthelease.(YuChin
whereacontractofleaseclearlyexists.Theclausecanonlymeanthat
Piaovs.LimTuaco,33Phil.92[1915].)
RandEmayagreetorenewthecontractuponreachingagreementon
thetermsandconditionstobeembodiedinsuchrenewalcontract.
2.Termofleasecontractincaseofrenewaldependsuponwillofboth
Thisfailuretoreachsuchagreementpreventedthecontractfrombeing
lessorandlessee. renewedatall.Hence,therewasinfactnocontractatalltheperiod
Facts:AfiveyearcontractofleasewasenteredintobetweenR(lessor) 194OBLIGATIONSArt.1197
andE(lessee).Underthecontract,thesamemayberenewedaftera
ofwhichcouldhavebeenfixed.(Millarevs.Hernando,151SCRA484 hasarrived.Thedurationoftheperiodshouldbefixedinanaction
[1987].) broughtforthatexpresspurposeseparatefromtheactiontoenforce
paymentbutsuchtechnicalityneednotbeadheredtowhenapriorand
Legaleffectwheresuspensiveperiod/conditiondependsuponwill
separateactionwouldbeamereformalityandwouldservenoother
ofdebtor.
purpose than to delay. (Concepcion vs. People, 74 Phil. 63 [1942];
(1)Theexistenceoftheobligationisnotaffectedalthoughtheperiod Gonzales vs. De Jose, 66 Phil. 369 [1938]; see Tiglao vs. Manila
dependsuponthesolewillofthedebtor.Itisonlytheperformance RailroadCo.,98Phil.181[1956];Calerovs.Carrion,107Phil.549
withrespecttotimethatislefttothewillofthedebtor. [1960];Borromeovs.CourtofAppeals,47SCRA65[1972];Pagesvs.
BasilanLumberCo.,104Phil.882[1958].)
(2)Iftheobligationissubjecttoaconditionwhichdependsuponthe
will of the debtor, the conditional obligation is void (Art. 1182.) (1)Forinstance,whereacontractofleasefixesnotermbutfromits
becauseinsuchcase,itisactuallythefulfillmentoftheobligationthat natureandthecircumstancesitmaybeinferredthatthetermhasbeen
dependsuponthewillofthedebtor.(seeArt.1308.) lefttothelesseetodetermine,orwhenthepowertofixthetermrests
solelywiththelessee,thelessorshouldfirstbringanactionforthe
Separateactiontofixdurationofperiod.
purposeofhavingthecourtfixitsdurationandbeforethisisdone,an
OnobligationscomingwithinthepurviewofArticle1197,theonly
actionforevictionundersuchacontractispremature.(Eleizequivs.
actionthatcanbemaintainedistoaskthecourtfirsttodeterminethe
LaronTennisClub,2Phil.309[1903];YuChinPiaovs.LimTuaco,
termwithinwhichtheobligormustcomplywithhisobligationforthe
33Phil.92[1915];seeSeonevs.Franco,24Phil.309[1913];Patente
reasonthatfulfillmentoftheobligationitselfcannotbedemandeduntil
vs.Omega,93Phil.218[1953].)
afterthecourthasfixedtheperiodforitscomplianceandsuchperiod
Art.1197DIFFERENTKINDSOFOBLIGATIONS195Obligations constructed by E was destroyed by fire. E could not rebuild the
withaPeriod buildingbecausetheinsuranceproceedswerenotyetpaid.Rfileda
suitforejectment.
(2)Wherethecontractfortherepairofatypewriterdidnotcontaina
periodforcompliancebutthepartiesintendedthatthedefendantwasto Issue:IstheactionofRproper?
finishitatsomefuturetime,hecannotinvokeArticle1197afterhe
Held:No.Hisremedyistoinstituteanactionsothatthecourtcanfix
virtually admitted nonperformance by returning the typewriter
theperiodforthereconstructionoftheburnedbuilding.Onlyaftera
unrepaired. The time for compliance having evidently expired, and
competent court shall have fixed such period in a proper action
therebeingabreachofcontract,itwasheldacademicfortheplaintiff
pursuant tothe provisionsof Article 1197canthere beabreachor
tohavejustpetitionedthecourttofixaperiodforperformancebefore
violationoftheleasecontractenteredintoRscomplaintforejectment
filing his complaint. The fixing of a period would thus be a mere
isdismissed.(Quivs.CourtofAppeals,66SCRA523[1975].)
formalityandwouldservenootherpurposethantodelay.(Chavesvs.
Ultimatefactstobeallegedincomplaint.
Gonzales,32SCRA547[1970].)
ILLUSTRATIVECASE: The ultimate facts to be alleged in a complaint to properly and
adequatelypleadtherightofactiongrantedbyArticle1197are:
Nobreachorviolationiscommittedbeforeperiodforfulfillmentof
obligationisfixedbythecourt. (1)Factsshowingthatacontractwasenteredinto,imposingononeof
thepartiesanobligationorobligationsinfavorofanother;and
Facts: Under the lease contract executed between R (lessor) and E
(lessee), upon the expiration of the lease for 20 years, the factory
building to be constructed by E shall belong to R. The building

(2) Facts showing or from which an inference may reasonably be (2)Fromtheverymomentthepartiesgivetheiracceptanceandconsent
drawn, that a period for performance was intended by the parties. totheperiodfixedbythecourt,saidperiodacquiresthenatureofa
(Schenkervs.Gemperle,5SCRA1042[1962].) covenant, because the effect of suchacceptance andconsent bythe
partiesisexactlythesameasiftheyhadexpresslyagreeduponit,and
Ifthecomplaintdoesnotaskthataperiodfortheperformanceofan
havingbeenagreeduponbythem,itbecomesalawgoverningtheir
obligationbefixed,thecourtcannotfixaperiodunlessthe
contract.Theperiodfixedinafinaljudgmentis resjudicata andas
suchformsanintegralpartoftheimperfectcontractwhichgaveriseto
complaintisfirstamended.(G.Araneta,Inc.vs.Phil.SugarEstates itsdesignationbythecourt,andthence,forwardpartofaperfectand
Dev.Co.,Ltd.,20SCRA330[1967].)Thecourt,however,mayfixthe bindingcontract.Consequently,thecourtcannotchangeit.(Barretto
durationoftheperiodalthoughthecomplaintdoesnotexpresslyask vs.CityofManila, 11Phil. 624[1908].)However,theparties may
forsuchreliefwheretheultimatefactsabovearesufficientlyalleged modifythetermbyanewagreement.
therein.
ART.1198.Thedebtorshallloseeveryrighttomakeuseofthe
Periodfixedcannotbechangedbythecourts. period:
(1)Ifthereisaperiodagreeduponbythepartiesandithasalready (1)Whenaftertheobligationhasbeencontracted,hebecomes
lapsedorexpired,thecourtcannotfixanotherperiod.(Gonzalesvs. insolvent,unlesshegivesaguarantyorsecurityforthedebt;
Jose,66Phil.369;Millarvs.Nadres,74Phil.307[1903];Millarevs.
(2) When he does not furnish to the creditor the guaranties or
Hernando,151SCRA484[1987].)
securitieswhichhehaspromised;
(3) When by his own acts he has impaired said guaranties or Theexceptionsarebasedonthefactthatthedebtormightnotbeable
securities after their establishment, and when through a for tocomplywithhisobligation.
tuitouseventtheydisappear,unlessheimmediatelygivesnewones (1)Whendebtorbecomesinsolvent.EXAMPLE:
equallysatisfactory;
DowesCP10,000.00dueandpayableonDecember20.IfDbecomes
(4) Whenthedebtorviolatesanyundertaking,inconsider ation of insolvent,sayonSeptember10,C,candemandimmediatepayment
whichthecreditoragreedtotheperiod; from D even before maturity unless D gives sufficient guaranty or
security.
(5)Whenthedebtorattemptstoabscond.(1129a)
The insolvency in this case need not be judicially declared. It is

sufficientthattheassetsofDarelessthanhisliabilitiesorDisunable
withaPeriod
topayhisdebtsastheymature.
Whenobligationcanbedemandedbeforelapseofperiod.
NotethattheinsolvencyofDmustoccuraftertheobligationhasbeen
Thegeneralruleisthattheobligationisnotdemandablebeforethe contracted.
lapseoftheperiod.However,inanyofthefive(5)casesmentionedin
Inacase,thestatementoftheChairmanoftheBoardofDirectorsof
Article 1198, the debtor shall lose every right to make use of the
themortgagorcorporationthatitwaswithoutfunds,neitherdoesit
period,thatis,theperiodisdisregardedandtheobligationbecomes
expecttohaveanyfundsintheforeseeablefuturewasheldaproofof
pureand,therefore,immediatelydemandable.
itsinsolvency.(PeoplesBank&TrustCo.vs.DahicanLumberCo.,20
SCRA84[1967].)
(2)Whendebtordoesnotfurnishguarantiesorsecuritiespromised. event,itisrequiredthatthesecuritymustdisappear.Butifthesecurity
EXAMPLE: givendeterioratesinsuchamannerastobecomeillusory,itmustbe
deemedtohavedisappearedorlostascontemplatedinparagraph3.
Supposeinthesameexample,Dpromisedtomortgagehishouseto
securethedebt.Ifhefailstofurnishsaidsecurityaspromised,heshall Ifthedebtissecuredbyabond,thefailureofDtorenewthebondor
losehisrighttotheperiod.(seeDaguhoyEnterprises,Inc.vs.Ponce, replaceitwithanequivalentguaranteeuponitsexpirationwilllikewise
96Phil. 15[1954]; Laplanavs. Garchitorena Chereau, 48 Phil. 163 giveCtherighttodemandimmediatepayment.(seeGaitevs.Fonacier,
[1925].) 2SCRA831[1961].)
(3) Whenguarantiesorsecuritiesgivenhavebeenimpairedorhave ILLUSTRATIVECASE:
disappeared.
Right of seller to recover whole purchase price of vessel sold on
EXAMPLE: installmentbasis,whichdisappeared,whilebeingdelivered,duetoa
IfthedebtissecuredbyamortgageonthehouseofD,butthehouse fortuitousevent.
198 Facts: S sold to B a launch for P16,000.00 payable in quarterly
installmentsofP1,000.00eachwithinterestat10% perannum. The

OBLIGATIONSArt.1198
launchwasshipwreckedandbecameatotallosswhileenroutetoBs
wasburnedthroughhisfault,theobligationalsobecomesdemandable
place of business. S brought action for the recovery of the whole
unlessDgivesanewsecurityequallysatisfactory.
purchaseprice.
Inthiscase,thehouseneednotbetotallydestroyedasitissufficient
thatthesecuritybeimpairedbytheactofD.Butincaseofafortuitous
Issue:IsSentitledtothewholepurchasepriceoronlyfortheamount xxxxxx
oftheunpaidinstallmentsdueundertheexpresstermsofthecontract
Art.1538.Incaseofloss,deteriorationorimprovementofthething
whenthecomplaintwasfiled?
before its delivery, the rules in Article 1189 shall be observed, the
Held: Yes.Thesecurityforthepaymentofthepurchasepriceofthe vendorbeingconsideredthedebtor.
launchitselfhavingdisappearedasaresultofanunforeseeneventand
Note:UnderArticles1480and1538,ifthe(specific)thingsoldislost
no other security having been substituted therefor, S was clearly
afterperfectionofthecontractofsalebutbeforedelivery,thatis,even
entitled to recover judgment not only for the installments of the
beforetheownershipistransferred,thebuyerbearstheriskoflossas
indebtednessdueunderthetermsofthecontractatthetimewhenhe
anexceptiontotheruleofresperitdomino(thethingperisheswiththe
institutedtheaction,butalsoforallinstallmentswhich,butfortheloss
owner).
ofthevessel,hadnotmaturedatthattime. 5(SongFo&Co.vs.Oria,

33Phil.3[1915].)
5Art. 1480. Any injury to or benefit from the thing sold, after the
withaPeriod
contracthasbeenperfected,fromthemomentoftheperfectionofthe
(4)Whendebtorviolatesanundertaking.EXAMPLE:
contracttothetimeofdelivery,shallbegovernedbyArticles1163to
1165,and1262. Now, suppose that C in the example agreed to the period in
consideration of the promise of D to repair the piano of C free of

Thisruleshallapplytothesaleoffungiblethings,madeindependently
charge.The violationof thisundertakingbyDgivesCtherightto
andforasingleprice,orwithoutconsiderationoftheirweight,number,
demandimmediatepaymentoftheloan.
ormeasure.
(5)Whendebtorattemptstoabscond.EXAMPLE: Theyare:
Beforetheduedateoftheobligation,D(debtor)changedhisaddress (1)Simpleobligation.onewherethereisonlyoneprestation,e.g.,S
withoutinformingC(creditor)andwiththeintentionofescapingfrom obligedhimselftodelivertoBapiano;Spromisedtorepairthecarof
hisobligation.ThisactofDisasignofbadfaithwhichresultsinthe B.
lossofhisrighttothebenefitoftheperiodstipulated.
(2) Compoundobligation. onewheretherearetwoormorepres
Observethatamereattemptorintenttoabscondissufficient.oOo tations.Itmaybe.
(a) Conjunctiveobligation. onewherethereareseveralprestations
andallofthemaredue;or
200OBLIGATIONS (b) Distributiveobligation. onewhereoneoftwoormoreofthe
prestationsisdue.Itmaybealternative(Art.1199.)orfacultative.(Art.
SECTION 3. Alternative Obligations ART. 1199. A person
1206.)
alternativelyboundbydifferentpresta
Meaningofalternativeobligation.
tionsshallcompletelyperformoneofthem.
Analternativeobligationisonewhereinvariousprestationsareduebut
Thecreditorcannotbecompelledtoreceivepartofoneandpartof
theperformanceofoneofthemissufficientlydeterminedbythechoice
theotherundertaking.(1131)
which,asageneralrule,belongstothedebtor.(8Manresa176;Art.
Kindsofobligationaccordingtoobject. 1200.)
EXAMPLE:
DborrowedfromCP10,000.ItwasagreedthatDcouldcomplywith Rightofchoice,asarule,giventodebtor.
his obligation by giving CP10,000, or a color television set, or by

As a general rule, the right to choose the prestation belongs to the
paintingthehouseofC.
debtor.
200
Bywayofexception,itmaybeexercisedbythecreditorbutonlywhen
Art.1200DIFFERENTKINDSOFOBLIGATIONS201Alternative expressly grantedtohim(Art.1205.),orbyathirdpersonwhenthe
Obligations rightisgiventohimbycommonagreement.(Art.1306.)
ThedeliveryoftheP10,000,oracolortelevisionset,orthepaintingof EXAMPLES:
thehouseofC,issufficienttocomplywiththeobligation.Performance
(1)DinsuredhishousewithR,aninsurancecompany.Itisagreedthat,
must be complete. C cannot be compelled to accept, for instance,
ifthehouseisdestroyedordamaged,Rmayeitherpaythedamageor
P5,000andhalfofthetelevision,therebyestablishingacoownership
lossorreinstateorrebuildthehouse.
betweenthem,orP5,000,andthepaintingofapartofhishouse.(Art.
1199,par.2.) Sincenothingissaidinthecontractastowhohastherightofchoice,it
belongstoR,asdebtor.
ART.1200.Therightofchoicebelongstothedebtor,unlessithas
(2)SbindshimselftodeliveritemoneortwotoBonNovember10
beenexpresslygrantedtothecreditor.
andtocommunicatehischoiceonorbeforeNovember5.
Thedebtorshallhavenorighttochoosethoseprestationswhich
IfSdelaysinmakinghisselection,Bcannotexercisetherightbecause
areimpossible,unlawfulorwhichcouldnothavebeentheobjectof
it is not expressly granted to him. But judgment in the alternative
theobligation.(1132)
cannotbedefeatedbySbyrefusingtomakeachoice.Insuchcase,the Issue: Istheagreementtoconveythehouseandlotatanappraised
courtcangivetherightofchoicetoB. valuationintheeventoffailuretopaythedebtinmoneyatitsmaturity
valid?
ILLUSTRATIVECASE:
Held:Yes.Theagreementissimplyanundertakingthatifthedebtis
Obligationistopaymoney,butdebtormayelectinsteadtotransfer
notpaidinmoney,itwillbepaidinanotherway.Theagreementisnot
propertyatavaluationbynotpayingdebtatmaturity.
opentotheobjectionthatthestipulationisa pactocommisorio. (see
Facts:D,etc.executedinfavorofCadocumentwhereintheybound
Art. 2088.) It is not an attempt to permit the creditor to declare a
themselvestopaytheirindebtednesstoC,mortgagedtheirhouseand
forfeitureofthesecurityuponthefailureofthedebtorstopaythedebt
lotassecurity,andagreedtothecessionofsaidhouseandlotto
atmaturity.Itissimplyprovidedthatifthedebtisnotpaidinmoneyit
be paid in another specific way by the transfer of property at a
valuation.ThetitletothepropertyisnottobetransferredtoC ipso
202
factouponthefailureofC,etc.,topaythedebtatitsmaturity.
OBLIGATIONSArt.1200
TheobligationsassumedbyD,etc.,werealternativeandtheyhadthe
C,transferringtoheralltheirrightstotheownershipandpossession righttoelectwhichtheywouldperform. (AgoncilloandMarianovs.
thereof,incaseofinsolvencyontheirpart.D,etc.paidnopartoftheir Javier,38Phil.424[1918].)
indebtedness.
Rightofchoiceofdebtornotabsolute.
Therightofchoiceofthedebtorissubjecttolimitations.Thus
(1) The debtor cannot choose those prestations which are: (a) ART.1201.Thechoiceshallproducenoeffectexceptfromthetime
impossible,(b)unlawful,or(c)whichcouldnothavebeentheobjectof ithasbeencommunicated.(1133)
the obligation. These prestations are void. Their presence do not

Communicationofnoticethatchoicehasbeenmade.
invalidatetheobligationifitincludesotherundertakingsotherwisefree
from such defects. In other words, under Article 1200, the debtors (1)Effectofnotice.Untilthechoiceismadeandcommunicated,the
rightofchoiceisnotextinguishedaltogetherbutlimitedtotheremain obligationremainsalternative.
ingvalidprestations.
(a)Oncethenoticeoftheelectionhasbeengiventothecreditor,the
(2) The debtor has no moreright of choice, when among the pres obligationceasestobealternativeandbecomessimple.
tationswherebyheisalternativelybound,onlyoneispracticable.(Art.
(b)Suchchoiceonceproperlymadeandcommunicatedisirrevocable
1202.)Inthiscase,thereisnotonlyalimitationbutalossoftheright
andcannot,therefore,berenounced.Suchruleisinherentinthenature
ofchoicebelongingtothedebtor.Theobligationbecomessimple.
ofthechoiceitspurposebeingtoclarifyandrenderdefinitetherights
Therightdoesnotpasstothecreditor,normayitbeexercisedbyany oftheoneexercisingthechoice,sothattheotherpartymayactin
one. consequence. (see Benguet Consolidated Mining Co. vs. Pineda, 98
Phil. 711 [1956]; Reyes vs. Martinez, 55 Phil. 492 [1930].) The
(3)Thedebtorcannotchoosepartofoneprestationandpartofanother
concurrence of the creditor to the choice is not required. (see Art.
prestation.(seeArt.1199,par.2.)
1200.)
Art.1201DIFFERENTKINDSOFOBLIGATIONS203Alternative
Obligations
(c)Wherethechoicehasbeenexpresslygiventothecreditor,such companybeboundtoexpendmorethanitwouldhavecosttoreinstate
choiceshalllikewiseproducelegaleffectsuponbeingcommunicatedto suchpropertyasitwasatthetimeoftheoccurrenceofsuchlossor
thedebtor.(Art.1205,par.1.) damage,normorethanthesuminsuredbythecompanyhereon.
(2) Proof and form of notice. The burden of proving that such 204
communicationhasbeenmadeisuponhimwhomadethechoice.The
OBLIGATIONSArts.12021203
lawdoesnotrequireanyparticularformregardingthegivingofnotice.
Issue:WhatistheeffectofthisclauseontheobligationofR?
Itmay,therefore,bemadeorallyorinwriting,expresslyorimpliedly.
Held:ItseffectistomaketheobligationofRanalternativeone,thatis
ILLUSTRATIVECASE:
tosay,thatitmayeitherpaytheinsuredvalueofthehouseorrebuiltit.
Obligationofinsureristopaytheamountofloss,oratitsoption,
Inanalternativeobligation,thedebtor,Rinthiscase,mustnotifythe
replacethepropertydestroyed.
creditor,Eintheinstantcase,togivehimanopportunitytoexpresshis
Facts: The house and merchandise of E insured by R (insurance consent,ortoimpugntheelectionmadebythedebtor,andonlyafter
company)wereburnedwhilethepolicywasinforce. saidnoticeshalltheelectiontakelegaleffectwhenconsentedbythe
creditor, or if impugned by the latter, when declared proper by the

Thepolicycontainedthefollowingclause:TheCompanymayatits
optionreinstateorreplacethepropertydamagedordestroyed,orany competentcourt.1
partthereof,insteadofpayingtheamountofthelossordamagexxx
Intheinstantcase,therecordshowedthatRdidnotgiveaformal
butthecompanyshallnotbeboundtoreinstateexactlyorcompletely,
noticeofitselectiontorebuild,andwhilethewitnessesspokeofthe
but only as circumstances permit x x x, and in no case shall the
proposedreconstructionofthehousedestroyed,yetEdidnotgivehis
consenttothepropositionforthereasonthatthenewhousewouldbe Whendebtormayrescindcontract.
smaller and of materials of lower kind than those employed in the

Rescissioncreatestheobligationtoreturnthethingswhichwerethe
construction of the house destroyed. The election alleged by R to
objectofthecontracttogetherwiththeirfruits,andthepricewithits
rebuildthehouseburnedinsteadofpayingthevalueoftheinsurance
interest.(Art.1385,par.1.)
wasimproper.(OngGuanCanvs.TheCenturyIns.Co.,46Phil.592
[1924].)
1InviewofArticle1200,theconsentofthecreditorisnotrequired.
ART.1202.Thedebtorshalllosetherightofchoicewhenamong
the prestations whereby he is alternatively bound, only one is

practicable.(1134)
Obligations
Effectwhenonlyoneprestationispracticable.
Itisthe verynatureofanalternative obligationthat the debtorcan
Ifmorethanoneispracticable,itisArticle1200thatwillapply.The makehischoicewithouttheconsentofthecreditor.Hence,theright
obligationisstillalternativebecausethedebtorstillretainstherightof giventhedebtortorescindthecontractandrecoverdamagesif,through
choice.UnderArticle1202,ifonlyoneispracticable(e.g., theothers thecreditorsfault,hecannotmakeachoiceaccordingtothetermsof
havebecomeimpossible),theobligationisconvertedintoasimpleone. theobligation.Thedebtor,however,isnotboundtorescind.
ART.1203.Ifthroughthecreditorsactsthedebtorcannotmakea EXAMPLE:
choiceaccordingtothetermsoftheobligation,thelattermay D borrowed from C P20,000.00. It was agreed that instead of
rescindthecontractwithdamages.(n) P20,000.00,Dcoulddeliveritemone,oritemtwo,oritemthree.
If through the fault of C, item one is destroyed, D can rescind the Effectoflossorbecomingimpossibleofobjectsofobligation.
contractifhewants.Incaseofrescission,theamountofP20,000.00
Articles1203and1204applywhentherightofchoicebelongstothe
mustbereturnedbyDwithinterest.C,inturn,mustpayDthevalueof
debtor.UnderArticle1205,thecreditorhastherighttochoose.
itemoneplusdamages.
(1)Someoftheobjects.Ifsomeoftheobjectsoftheobligationhave
D,insteadofrescindingthecontract,maychooseitemtwoorthree
been lost or have become impossible even through the fault of the
with a right to recover the value of item one with damages. If D
debtor,thelatterisnotliablesincehehastherightofchoiceandthe
chooses item one, his obligation is extinguished. Cis not liable for
obligationcanstillbeperformed.Thisisanexceptiontothegeneral
damages.
ruleestablishedinArticle1170regardingliabilityfordamagesarising
ART. 1204. The creditor shall have a right to indemnity for fromnegligence.
damageswhen,throughthefaultofthedebtor,allthethingswhich
arealternativelytheobjectoftheobligationhavebeenlost,orthe
(2)Alloftheobjects.Ifallofthemhavebeenlostorhavebecome
complianceoftheobligationhasbecomeimpossible.
impossiblethroughthedebtorsfault,thecreditorshallhavearightto
Theindemnityshallbefixedtakingasabasisthevalueofthelast indemnityfordamagessincetheobligationcannolongerbecomplied
thingwhichdisappeared,orthatoftheservicewhichlastbecame with. Of course, if the cause of the loss is a fortuitous event, the
impossible. obligationisextinguished.
Damagesotherthanthevalueofthelastthingorservicemayalso The phrase or the compliance of the obligation has become
impossiblereferstoobligationstodo.
beawarded.(1135a)
EXAMPLE: Intheaboveexample,ifitemsoneandtwoarelost,Swillbeboundto
deliveritemthree.
Sagreedtodeliveritemone,oritemtwo,oritemthree.
Ifsubsequently,itemthreeisalsolostthroughthefaultofS,thebasis
IfitemoneislostthroughthefaultofS,hecanstillselecteitheritem
forindemnityisthevalueofitemthreesinceSwouldhavebeenbound
twooritemthree.Thelossofitemoneandtwowithorwithoutthe
todeliverithaditnotalsobeenlost.TheliabilityofSisnotaffected
faultofSwillreducetheobligationtoasimpleone.
althoughthelossofitemsoneandtwowasthroughafortuitousevent.
Ifalltheitemsarelostthroughhisfault,liabilitywillattach;ifthrough
IfitemthreeislostwithoutthefaultofS,hisobligationisextinguished
afortuitousevent,theobligationwillbeextinguished.
andheshallnotbeliablefordamagesalthoughthelossofitemsone
Basisofindemnity.
andtwowasduetohisfault.Thereasonisthatafterthelossofitems
oneandtwo,theobligationisconvertedintoasimpleonetodeliver
Theindemnityshallbefixedtakingasbasisthevalueofthelastthing
itemthree.(Art.1202.)
which disappeared (referring to obligations to give) or that of the
servicewhichlastbecameimpossible(referringtoobligationstodo). Scannotbeheldresponsibleforthelossofitemsoneandtwo
Incaseofdisagreement,itisincumbentuponthecreditortoprovesuch
value,orwhichthinglastdisappearedorwhichservicelastbecame
Obligations
impossible.
throughhisfaultbecausehavingtherightofchoice,hewasnotbound
Otherdamagesmayalsobeawarded.(Art.1204,pars.2and3.)
todelivereither.Theruleisjustsincehecouldhavebeenliablefor
EXAMPLE:
damagesifitemthreeinsteadwaslostthroughhisfaultanditemsone (3)Ifallthethingsarelostthroughthefaultofthedebtor,the
andtwo,throughafortuitousevent. choicebythecreditorshallfalluponthepriceofanyoneofthem,
alsowithindemnityfordamages.
ART. 1205. When the choice has been expressly given to the
creditor,theobligationshallceasetobealternativefromtheday Thesamerulesshallbeappliedtoobligationstodoornottodoin
whentheselectionhasbeencommunicatedtothedebtor. caseone,someoralloftheprestationsshouldbecomeimpossible.
(1136a)
Untilthentheresponsibilityofthedebtorshallbegovernedbythe
followingrules: Whererightofchoicebelongstocreditor.
(1)Ifoneofthethingsislostthroughafortuitousevent,heshall Inalternativeobligations,therightofchoice,asarule,belongstothe
perform the obligation by delivering that which the credi tor debtor.Nevertheless,thedebtormayexpresslygivetherightofchoice
shouldchoosefromamongtheremainder,orthatwhichremains tothecreditor.(Art.1200.)Insuchacase,theprovisionswhichwith
ifonlyonesubsists; respecttothedebtorarelaiddownintheprecedingarticles,shallbe
applicabletothecreditorwhentherightofchoiceisgiventohim.
(2)Ifthelossofoneofthethingsoccursthroughthefaultofthe
Before the creditor makes the selection, the debtor cannot incur in
debtor,thecreditormayclaimanyofthosesubsisting,ortheprice
delay.
ofthatwhich,throughthefaultoftheformer,hasdisappeared,
witharighttodamages; Rulesincaseoflossbeforecreditorhasmadechoice.
(1)Whenathingislostthroughafortuitousevent.
208 (4) When all the things are lost through a fortuitous event.
EXAMPLE:
OBLIGATIONSArt.1206
TheobligationofSshallbeextinguishedifalltheitemswhichare
EXAMPLE:
alternativelytheobjectoftheobligationarelostthroughafortuitous
SobligedhimselftodelivertoBitemone,oritemtwooritemthree,or
event.Inthiscase,Article1174shallapply.
itemfour.Ifitemoneislostthroughafortuitousevent,Bcanchoose
Rulesapplicabletopersonalobligations.
fromamongtheremainderorthatwhichremainsifthreeoftheitems
arelost. Theaboverulesarealsoapplicabletopersonalobligations.(par.2.)
Theresponsibilityofthedebtorfordamagesdependsuponwhetherthe
(2)Whenathingislostthroughdebtorsfault.EXAMPLE:
causewhichhasrenderedtheobligationimpossiblewasduetohisfault
IfthelossofitemoneoccursthroughthefaultofS,Bmayclaimitem
ornot.
twooritemthreeoritemfourwitharighttodamagesorthepriceof
ART.1206.Whenonlyoneprestationhasbeenagreedupon,but
itemonealsowitharighttodamages.
theobligormayrenderanotherinsubstitution,theobligationis
(3)Whenallthethingsarelostthroughdebtorsfault.EXAMPLE:
calledfacultative.
IfalltheitemsarelostthroughthefaultofS,thenBcandemandthe
The lossordeteriorationofthethingintendedasasubstitute,
paymentofthepriceofanyoneofthemwitharighttoindemnityfor
throughthenegligenceoftheobligor,doesnotrenderhimliable.
damages.
Butoncethesubstitutionhasbeenmade,theobligorisliablefor
thelossofthesubstituteonaccountofhisdelay,negligenceor Here,Imaymortgagemylandinsubstitutionoftheobligationtomake
fraud.(n) payment within 30 days. (see Quizana vs. Redugerio, 94 Phil. 922
[1954].)
Obligations Effectofloss.
Meaningoffacultativeobligation. (1) Before substitution. If the principal thing is lost through a
fortuitousevent,theobligationisextinguished;otherwise,thedebtoris
A facultative obligation is one where only one prestation has been
liablefordamages.Thelossofthethingintendedasasubstitutewithor
agreeduponbuttheobligormayrenderanotherinsubstitution.
withoutthefaultofthedebtordoesnotrenderhimliable.
EXAMPLES:
Thereasonisthatthethingintendedasasubstituteisnotdue.The
(1)IwillgiveyoumypianobutImaygivemytelevisionsetasa effectofthelossismerelytoextinguishthefacultativecharacterofthe
substitute. obligation.
Inthisobligation,onlythepianoisdue.Hence,itslossthroughmy EXAMPLE:
faultwillmakemeliable.
SwillgiveBitemoneorifSwants,itemtwo.
(2)Iwillmortgagemylandtosecuremydebtwhichshallbepay
(a)Ifitemoneislostthroughafortuitousevent,theobligationofSis
ablewithin90daysuponmyfailuretopaymydebtwithin30days.
extinguished.(Arts.1174,1262.)
(b)IfitemoneislostthroughthefaultofS,Sisliablefordamages.
(Art.1170.)
(c)IfitemtwoislostwithorwithoutthefaultofS,Sisstillliableto (b)Ifitemtwoislostthroughafortuitousevent,theobligationofSis
deliveritemone(seeArt.1165.);heisnotliablefordamageforthe extinguished.
lossofitemtwoasitisnotdue.
(c)IfitemtwoislostthroughthefaultofS,Sisliablefordamages.
(2)Aftersubstitution.Iftheprincipalthingislost,thedebtorisnot
Alternativeandfacultativeobligationsdistinguished.
liablewhatevermaybethecauseoftheloss,becauseitisnolonger
due.Ifthesubstituteislost,theliabilityofthedebtordependsupon Thedifferencesareasfollows:
whetherornotthelossisduethroughhisfault.
(1)Numberofprestations.Inthefirst,severalprestationsareduebut
210OBLIGATIONSArt.1206 compliance with one is sufficient, while in the second, only one
prestationisduealthoughthedebtorisallowedtosubstituteanother;
Oncethesubstitutionismade,theobligationisconvertedintoasimple
one to deliver or perform the substituted thing or prestation. The (2)Rightofchoice.Inthefirst,therightofchoicemaybegivento
substitutionbecomeseffectivefromthetimeithasbeencommunicated. thecreditororthirdperson,whileinthesecond,therighttomakethe
(Art.1201.) substitutionisgivenonlytothedebtor;
EXAMPLE: (3)Lossthroughfortuitousevent.Inthefirst,thelossofoneormore
ofthealternativesthroughafortuitouseventdoesnotextinguishthe
Basedontheprecedingexample:
obligation,whileinthesecond,thelossofthethingdueextinguishes
(a)IfitemoneislostwithorwithoutthefaultofS,Sisnotliablefor theobligation;
itslosssincehisobligationistodeliveritemtwo.
(4)Lossthroughfaultofdebtor.(a)Inthefirst,thelossofoneofthe
alternativesthroughthefaultofthedebtordoesnotrenderhimliable,
whileinthesecond,thelossofthethingduethroughhisfaultmakes In ordinary alternative obligations, a mere choice categorically and
himliable;and(b)Inthefirst,wherethechoicebelongstothecreditor, unequivocallymadeandthencommunicatedbythepersonentitledto
thelossofonealternativethroughthefaultofthedebtorgivesriseto exercise the option concludes the parties. The creditor may not
liability,whileinthesecond,thelossofthesubstitutebeforethesubsti thereafter exercise any other option, unless the chosen alternative
tutionthroughthefaultofthedebtordoesnotrenderhimliable;and provestobeineffectualorunavailingduetonofaultonhispart.This
rule,inessence,isthedifferencebetweenalternativeobligations,onthe
(5) Nullityofprestation. (a)Inthefirst,thenullityofaprestation
onehand,andalternativeremedies,upontheotherhand,where,inthe
doesnotinvalidatetheothers,whileinthesecond,thenullityofthe
latter case, the choice generally becomes conclusive only upon the
prestationagreeduponinvalidatestheobligation;and(b)inthefirst,
exerciseoftheremedy.
thedebtororcreditorshallchoosefromamongtheremainder,whilein
thesecond,thedebtorisnotboundtochoosethesubstitute. Forinstance,inoneoftheremediesexpressedinArticle1484 2ofthe
Art.1206DIFFERENTKINDSOFOBLIGATIONS211Alternative CivilCode,itisonlywhentherehasbeenaforeclosureofthechattel
Obligations mortgagethatthevendeemortgagorwouldbepermittedtoescapefrom
adeficiencyliability.Thus,ifthecaseisoneforspecificperformance,
The second paragraph of Article 1206 speaks of thing. Never
even when this action is selected after the vendee has refused to
theless,theprovisionappliestobothrealandpersonalobligations.The
surrenderthemortgagedpropertytopermitanextrajudicialforeclosure,
wordisemployedinitsbroadsensetomeanthesameasprestationin
thatpropertymaystillbeleviedonexecutionandanaliaswritmaybe
thefirstparagraph.(seeArt.1223.)
issuediftheproceedsthereofareinsufficienttosatisfythejudgment
Alternativeobligationsandalternativeremediesdistinguished. credit.So,also,ameredemandtosurrendertheobjectwhichisnot
heeded by the mortgagor will not amount to a foreclosure, but the

repossessionthereofbythevendormortgageewouldhavetheeffectof thevendeesfailuretopaycovertwoormoreinstallments.Inthiscase,
foreclosure.(BorbonIIvs. ServicewideSpecialists, Inc., 258SCRA heshallhavenofurtheractionagainstthepurchasertorecoverany
634[1996].) unpaidbalanceoftheprice.Anyagreementtothecontraryshallbe
void.(1454Aa)
oOo

2Art.1484.Inacontractofsaleofpersonalpropertythepriceofwhich
ispayableininstallments,thevendormayexerciseanyofthefollowing
remedies: 212OBLIGATIONS
. (1)Exactfulfillmentoftheobligation,should SECTION4.JointandSolidaryObligations
the vendee fail to pay;

ART.1207.Theconcurrenceoftwoormorecreditorsoroftwoor
moredebtorsinoneandthesameobligationdoesnotimplythat
. (2) Cancel the sale, should the vendees
eachoneoftheformerhasarighttodemand,orthateachoneof
failure to pay cover two or more installments;
the latter is bound to render, entire compliance with the
prestations.Thereisasolidaryliabilityonlywhentheobligation
. (3) Foreclose the chattel mortgage on the
expresslysostates,orwhenthelaworthenatureoftheobligation
thing sold, if one has been constituted, should
requiressolidarity.(1137a)
ART.1208.Iffromthelaw,orthenatureorthewordingofthe 212
obligationstowhichtheprecedingarticlerefersthecontrarydoes
Arts.12071208DIFFERENTKINDSOFOBLIGATIONS213Joint
notappear,thecreditordebtshallbepresumedtobedividedinto andSolidaryObligations
asmanyequalsharesastherearecreditorsordebtors,thecredits
Meaningofjointandsolidaryobligations.
ordebtsbeingconsidereddistinctfromoneanother,subjecttothe
(1)Ajointobligationisonewherethewholeobligationistobepaidor
RulesofCourtgoverningthemultiplicityofsuits.(1138a)
fulfilled proportionately by the different debtors and/or is to be
Kindsofobligationaccordingtothenumberofparties.
demandedproportionatelybythedifferentcreditors.(Art.1208.)
Theyare:
(2)Asolidaryobligationisonewhereeachoneofthedebtorsisbound
(1) Individualobligation. onewherethereisonlyoneobligorand torender,and/oreachoneofthecreditorshasarighttodemandentire
oneobligee;and compliancewiththeprestation.(Art.1207.)
(2)Collectiveobligation.onewheretherearetwoormoredebtors Collectiveobligationpresumedtobejoint.
and/ortwoormorecreditors.Itmaybejointorsolidary.
(1)IfAisliabletoBforP9,000.00,therecanbenoproblemregarding
Inacollectiveobligation,therearetworelationsinvolved:thatbetween thedeterminationofthefollowing:
thecreditor andthedebtors (or thecreditors and the debtor, or the

. (a) the person liable to pay;
creditorsandthedebtors)andthatamongthecreditorsand/ordebtors
themselves.
. (b) thepersonentitledtodemandpayment; morecreditors)isnotspecified.WhatistheextentoftheliabilityofA,
B,andC?Insuchcase,thepresumptionisthattheobligationisjoint
(Arts.12071208.),andasaconsequence:
. (c)theextentoftheliabilityofthedebtor;and
. (a) There are as many debts as there are
debtors;
. (d) the extent of the right of the creditor.
. (b) There are as many credits as there are
creditors;
(2)Wherethereisapluralityofparties(twoormoredebtorsand/or
two or more creditors) and the share of each in the obligation is
specified, the correlative rights and obligations of the parties are . (c) The debts and/or credits are considered
known. distinct and
Thus,ifA,B,andCareliabletoDintheamountofP9,000,anditis
statedthatthecorrespondingshareofeachdebtorisP3,000.00(itmay separatefromoneanother;
beinunequalamounts),weknowthatA,B,andCareliableonlyfor
(d)Eachdebtorisliableonlyforaproportionatepartofthedebt;and
P3,000.00eachandthatDisnotentitledtocollectfromeachdebtor
214OBLIGATIONSArts.12071208
morethanhiscorrespondingshareintheobligation.
(e)Eachcreditorisentitledonlytoaproportionatepartofthecredit.
(3)Ontheotherhand,letussupposethatinthesameobligation,the
shareofeachdebtor(ortheshareofeachcreditor,iftherearetwoor
ThepresumptionestablishedinArticle1208isrebuttable. Each creditor can demand only P4,500.00 from either debtor. Of
course,thetotalliabilityofAorB,andthetotalcollectionofCorD,
EXAMPLES:
cannotexceedP4,500.00.
(1)A,B,andCborrowedP9,000.00fromD.Thepresumptionisthat
ILLUSTRATIVECASE:
A,B,andCarejointlyliable.
Finaljudgmentagainstseveraldefendantsdoesnotspecifythattheir
Here,therearethree(3)debtsandone(1)credit.Dcandemandonly
liabilityissolidary.
P3,000.00eachfromA,B,andCoratotalofP9,000.00.
Facts: Underacontract,theobligationofA,BandCwassolidary.
Since the debts are distinct and separate from each other, the
However,thejudgmentrenderedagainstthem,whichhasbecomefinal,
insolvencyofoneofthedebtorsshallnotmaketheothersliable.
wasforthetotalamountsuedwithoutstatingthenatureorextentof
(2) A borrowed from B, C, and D P9,000.00. Unless the contrary
theirliability.
appears,theobligationisprimafacieajointone.
Issue:MayjudgmentbeexecutedonthepropertyofCalonetosatisfy
Inthiscase,thereisone(1)debtandthree(3)credits.Eachcreditorcan
theentireobligation.
demandonlyP3,000.00fromA.
Held: No.Eachofthedefendantsisliableonlyforhisproportionate
(3)AandBareliabletoCandDforP9,000.00.Thesamepresumption
partofthejudgmentwhichsupersededtheactionfortheenforcement
applies.Therearetwo(2)debtsandtwo(2)credits.
ofthecontract.Acourthasnopowertoamendajudgmentthathas
becomefinal.(OrientalCommercialvs.Cebato,60Phil.723[1934].)
Presumptionsubjecttorulesonmultiplicityofsuits.
ThepresumptioninArticle1208ismadesubjecttotheRulesofCourt itself,nottheadmissionoftheparties.(UnFakLeangvs.Negurra,9
governingthemultiplicityofsuits(Art.1208.);otherwise, Phil.381[1907];Tiuvs.CourtofAppeals,228SCRA51[1993].)
Arts.12071208DIFFERENTKINDSOFOBLIGATIONS215Joint Characteristics,essence,andbasisofasolidaryobligation.
andSolidaryObligations
(1)Everysolidaryobligationhasthesecharacteristics:unityofobject
situationsmayarisewherethereareasmanysuitsastherearedebtors andpluralityofties.Theprestationdue,ortowhicharightexists,is
andcreditors.(seeRulesofCourt,Rule3,Sec.6.) oneandthesamething.
Wordsusedtoindicatejointliability. 1InSpanishlaw, the comprehensiveandgeneric termbywhichto
Otherwordsusedforjointobligationsare: mancum,mancomunada; indicatemultiplicityofobligationsarisingfrompluralityofdebtorsor
mancomunadamente; pro rata; proportionately; pro rata, jointly; creditors,ismancomunidad,whichtermincludes(1)mancomunidad
simple or mancomunidad properly such and (2) mancomunidad

conjoint; wepromisetopaysignedbytwoormorepersons. 1 (see
solidaria.Inotherwords,theSpanishsystemrecognizestwospeciesof
Jaucianvs.Querol,38Phil.707[1918];Parolvs.Gemora,7Phil.94
multipleobligation,namely,theapportionablejointobligationandthe
[1906];seeLafargeCementPhils.,Inc.vs.ContinentalCementCorp.,
solidaryjointobligation.Thesolidaryobligationis,therefore,merelya
443SCRA522[2004].)
formofjointobligation.Theideaofthebenefitofdivisionasafeature
Ithasbeenheldthatanadmissionoftwodebtorsintheirbriefthattheir of the simple joint obligation appears to be a peculiar creation of
liability in the contract is a solidary one does not convert the joint Spanishjurisprudence.NosuchideaprevailedintheRomanLaw,and
character of their obligation as appearing in their contract for what itisnotrecognizedeitherintheFrenchorintheItaliansystem.
determinesthenatureoftheobligationisthetenoroftheircontract
Inthecommonlawsystem,everydebtorinajointobligationisliable (2)Theessenceofsolidarityisthateachandeveryoneofthesolidary
in solidum for the whole; and the only legal peculiarity worthy of creditorscandemandandeachofthedebtorsmustsatisfythesame
remark concerning the joint contract at com mon law is that the prestation, with the resulting duty on the part of the creditor who
creditorisrequiredtosueallthedebtorsatonce.Toavoidtheinconve receivedpaymenttopaytoeachofhiscocreditorswhatbelongsto
nienceofthisproceduralrequirementandtopermitthecreditorina him, and the resulting right on the part of the debtor who made
jointcontracttodowhatthecreditorinasolidaryobligationcando paymenttoclaimfromhiscodebtorsthesharewhichcorrespondsto
underArticle1144(nowArt.1216.)oftheCivilCode,itisnotunusual each.(Art.1217.)
forthepartiestoacommonlawcontracttostipulatethatthedebtors
(3) The basis of solidarity in either case has something of a legal
shallbejointlyandseverallyliable.Theforceofthisexpressionisto
fiction, i.e., that it is a mutual agency (see 4 Sanchez Roman 50.)
enable the creditor to sue any one of the debtors or all together at
amongthoseinterestedinthesameobligation.
pleasure.(Jaucianvs.Querol,38Phil.718719[1918].)So,thesense
Thesolidaryobligationisreallyaformofjointobligation.(seeNote1.)
oftheEnglishwordjoint,asusedinthecommonlaw,istobeunder
stoodinthesenseofsolidaryinourjurisdiction,butsubjecttothe Whenobligationsolidary.
proceduralrequirementmentionedintheabsenceofstipulationthatthe
Solidaryliabilityisnotlightlyinferred.UnderArticle1207,thereis
debtorsshallbe,forexample,jointlyandseverallyliable.
solidaryliabilityonlywhen:
. (1) the obligation expressly so states; or

. (2) the law requires solidarity; or and/orseparately;individuallyand/orcollectively;juntososuparada
mente.Ipromisetopaysignedbytwoormorepersons.Ithasbeen
heldthatthewordsindividuallyandjointlycreateasolidaryliabil
. (3) the nature of the obligation requires
solidarity. Arts.12071208DIFFERENTKINDSOFOBLIGATIONS217Joint
Solidaryliabilityalsoexistswhenitisimposedinafinaljudgment
ity.(Ronquillovs.CourtofAppeals,2132SCRA274[1984].)Solidary
againstseveraldefendants.
obligationsmaybeusedinterchangeablywithjointandseveralor
Wordsusedtoindicatesolidaryliability. several.Usageofthetermjointandsolidaryisconfusingandam
biguous.(LafargeCementPhils.,Inc.vs.ContinentalCementCorp.,
Itisnotnecessarythattheagreementshouldemploypreciselytheword
443SCRA522[2004].)
solidary in order that an obligation may be so considered. It is
sufficientthattheobligationdeclares,forinstance,thateachoneofthe Inacase,thepetitionersclaimedthattheysignedthelettersofcredit
debtors can be compelled to pay the entire obligation, or can be andrelateddocumentspertainingtothetransactionswithabank.The
proceededagainstforthefullamountoftheobligation,orthatdemand documents show that the petitioners agreed to jointly and severally
maybemadeagainstanyoneofthem,etc.(see8Manresa191;Juan undertakepaymentoftheobligationandalsoconsentedtoeachandall
Ysmael&Co.vs.Salinas,75Phil.601[1946];seeArt.1216.) of the stipulated condition onthe document; held: An experienced
businessman who signs important legal papers cannot disclaim the

Examplesofotherwordsusedtoindicatesolidarityare:severally,
consequentliabilitiesthereforafterbeingasignatorythereon.(Blade
jointly and/or severally; solidaria; in solidum; solidarily; together
InternationalMarketingCorporationvs.CourtofAppeals,372SCRA Itissubmitted,however,thatinourjurisdiction,acontractwhichuses
333[2001].) thewordindividually,separately,distinctly,orrespectively,
inanobligationwherethereisapluralityofdebtors,mustbetakento
Kindsofsolidarity.
have in contemplation, as it does, a joint obligation apportion able
They are: amongthedebtors.Theideaofthebenefitofdivisionistotallyforeign
(1)Accordingtothepartiesbound: tothe common law system. It is, therefore, easy to see why in the
commonlawtheuseofanyofsaidwordsisneverthelessconstruedas
(a) Passivesolidarity orsolidarityonthepartofthedebtors,where
conveyingthesenseofasolidaryobligationsofarastheextentofthe
anyone of them canbemadeliable for the fulfillment of the entire
debtorsliabilityisconcerned.Indeed,thewordjointinthecommon
obligation. Its characteristics are plurality of debtors and unity of
lawexpressesthemeaningofsolidaryinourjurisdiction.Itisonlyto
prestation.Itisinthenatureofamutualguaranty.
avoidtheinconvenienceoftheproceduralrequirementofsuingallthe
2Inthiscase,theSupremeCourt(citingWordsandPhrases,Perm.Ed.,
debtors at once that the parties to a common law contract use a
Vol.21,p.194andVol.39,p.72.)saidthatthetermindividually
compoundexpressionsuchasindividuallyandjointlyorjointlyand
has the same meaning as collectively, separately, distinctly,
severallyandsimilarexpressionstoenablethecreditortosueany
respectively, or severally. An agreement to be individually li
oneofthedebtorsoralltogetheratpleasure.(seeJaucianvs.Querol,
able undoubtedly creates a several obligation, and a several
supra.)
obligationisonebywhichanindividualbindshimselftoperformthe

wholeobligation.
218
OBLIGATIONSArts.12071208 clearlyappearsthattheintentionofthepartiesisthateitherAorBmay
paywithoutrightofchoiceonthepartofC.
EXAMPLES:
(b) Activesolidarity orsolidarityonthepartofthecreditors,where

(1)AandBaresolidarydebtorsofCintheamountofP10,000.00.
anyoneofthemcandemandthefulfillmentoftheentireobligation.Its
Thereishereonlyone(1)debt,thedebtofAandBintheamountof
essential featureisthat of mutualrepresentationamongthe solidary
P10,000.00; and one (1) credit, the credit of C in the amount of
creditors with powers to exercise the rights of others in the same
P10,000.00againstBandC.(Adistinctionmustbemadebetweenthe
mannerastheirrights.(see8Manresa205206.)
debtitselfandthepersonsagainstwhomthedebtcanbecollected.)
EXAMPLES:
C may demand payment from either A or B, or both of them
(1)AisliableforP10,000.00infavorofBandCwhoaresolidary
simultaneously,thewholeobligation.(Art.1216.)PaymentbyA(orB)
creditors.
extinguishestheobligationbutA(orB)mayclaimfromB(orA)the
share which corresponds to him depending upon the agreement AmaypayeitherBorC.(Art.1214.)Solongastheentiredebtisnot
betweenthem.(Art.1217.) paid,BandCcandemandpaymentfromA.(Art.1207.)IfB(orC)
receivedpayment,heisliabletoC(orB)forthelattersshareinthe
Inanycase,CcannotcollectmorethanP10,000.00whichistheextent
creditaccordingtotheiragreement.
ofhiscredit.
TheliabilityofAcannotexceedP10,000.00whichistheextentofhis
(2)Undertheircontract,eitherAorBwillpayCP10,000.00.Here,the
liability.
debtorsarenameddisjunctivelyorinthealternative.Theirliabilityis
solidary and C can demand payment from either of them unless it (2)TheobligationofAistopayP10,000.00toeitherBorC.
In this case, either B or C may demand payment from A unless it A(orB)canpayeitherCorD.C(orD)candemandfromeitherAor
clearlyappearsthattheintentionofthepartiesistogivetoAtheright B.ThepaymentbyA(orB)ofP10,000.00toC(orD)shallextinguish
tochoosewhomtopay. theobligation.A(orB)canaskreimbursementfromB(orA)inthe
amountofP5,000.00orsuchamountagreeduponbetweenthem.C(or
D),inturn,isliabletogivetoD(orC),thelattersshareofP5,000.00
ortheamountstipulated.
(c) Mixed solidarity or solidarity on the part of the debtors and
RememberthattheagreementbetweenAandB,astotheextentofthe
creditors,whereeachoneofthedebtorsisliabletorender,andeach
shareofeachinthedebt,orCandD,astotheextentoftheshareof
oneofthecreditorshasarighttodemand,entirecompliancewiththe
eachinthecredit,hasnothingtodowiththeagreementbetweenAand
obligation.
B,ontheonehand,andCandD,ontheother.
EXAMPLE:
(2)Accordingtosource:
A and B are solidarily liable to C and D, solidary creditors, in the
(a) Conventionalsolidarity orwheresolidarityisagreeduponbythe
amountofP10,000.00.
parties.(Art.1306.)Ifnothingismentionedinthecontractrelatingto
solidarity,theobligationisonlyjoint.
(b) Legal solidarity or where solidarity is imposed by the law.
EXAMPLES:
(1)Iftwoormoreheirstakepossessionoftheestate,theyshallbe (6) The responsibility of two or more officious managers shall be
solidarily liable for the loss or destruction of a thing devised or solidary, unless the management was assumed to save the thing or
bequeathed,eventhoughonlyoneofthemshouldhavebeennegligent. businessfromimminentdanger.(Art.2146,2ndpar.)
(Art.927.)
(7)Theresponsibilityoftwoormorepayees,whentherehasbeena
(2)Evenwhentheagenthasexceededhisauthority,theprincipalis paymentofwhatisnotdue,issolidary.(Art.2157.)
solidarilyliablewiththeagentiftheformerallowedthelattertoactas
(8) The responsibility of two or more persons who are liable for a
thoughhehadfullpowers.(Art.911.)
quasidelictissolidary.(Art.2194.)
(3)Allpartnersaresolidarilyliablewiththepartnershipforanycrime
(9) The liability of spouses whose property relations during the
orquasidelictcommittedbyanypartneractingintheordinarycourse
marriage are governed by the regime of separation of property are
ofbusinessofthepartnershiporwiththeauthorityofhiscopartners.
solidary.(Arts.143,146,FamilyCode.)
(Arts.18221824.)
(10) If the engineer or architect supervises the construction of a
(4) If two or more persons have appointed an agent for a common
building,heshallbesolidarilyliablewiththecontractorfordamages
transactionorundertaking,theyshallbesolidarilyliabletotheagent
foranydefectintheconstruction.(Art.1723;seeNakpil&Sonsvs.
foralltheconsequencesoftheagency.(Art.1915.)
(11) In a felony, the principal, accomplices, and accessories, each
(5)Whentherearetwoormorebaileestowhomathingisloanedin within their respective class, shall be liable severally (in solidum)
thesamecontract,theyareliablesolidarily.(Art.1945.)
amongthemselvesfortheirquotas,andsubsidiarilyforthoseofother thatthecasescontemplatedarethoseinwhichtheintentorpurposeof
personsliable.(Art.110,RevisedPenalCode.) thelawistohavetheobligationsatisfiedinfullbutthelawitselfdoes
notexpresslyrequiresolidarity.
(12)Theprovisionsofexistinglawstothecontrarynotwithstanding,
every employer or indirect employer (i.e., any person, partnership, Arts.12071208DIFFERENTKINDSOFOBLIGATIONS221Joint
associationorcorporationwhich,notbeinganemployer,contractswith andSolidaryObligations
anindependentcontractorfortheperformanceoranywork,task,jobor
Thus, the nature of the obligation of employers under the former
project)shallbeheldresponsiblewithhiscontractororsubcontractor
WorkmensCompensationLaw3(Sec.2,Rep.ActNo.4119;seeArts.
foranyviolationofanyprovisionoftheLaborCode.(seeArts.106,
1711, 1712.), to pay indemnity or compensation or death or injury
107,109,LaborCode;RosewoodProcessing,Inc.vs.NationalLabor
causedtotheiremployeeswhileintheperformanceoftheirassigned
RelationsCommission,290SCRA408[1998].)Thesolidaryliability
duty,washeldsolidaryalthoughthelawissilentonthispointbecause
oftheonewhopaiddoesnotprecludetheapplicationoftheCivilCode
thelawwasenactedtogivefullprotectiontoemployees,andifthe
provision(i.e.,Art.1217.)onhisrightofreimbursementfromhisco
responsibility were only joint, the purpose of the law might not be
debtor.(MarivelesShipyardCorp.vs.CourtofAppeals,415SCRA
attainedshouldoneoftheemployershappentobeinsolvent.(Liwanag
573[2003].)
vs.WorkmensCompensationCommission,105Phil.741[1959].)
(c)Realsolidarityorwheresolidarityisimposedbythenatureofthe
Similarly,wherethevehiclewhichfiguredinanaccidentwasoperated
obligation.
underthesocalledkabitsystem,theawardofexemplarydamages,
The law does not expresslyindicatethe cases where the liabilityis
amongothers,payablejointlyandseverallybytheoperatorandthe
solidarybecauseofthenatureoftheobligation.Theopinionisoffered
grantee of the certificate of public convenience was held justified
becausetheperniciouskabitsystemisaviolationoflaw.(Canares Issue: Aretherulesconcerningjointobligationsandsolidaryobliga
vs.Aras,CAG.R.No.2488R,March4,1961.) tionsapplicable?
ILLUSTRATIVECASE: 3Now embodied in Articles 166208, Title II, Labor Code (Pres.
Requirement for application of rules concerning joint and solidary DecreeNo.442,asamended.),whichprovideataxexemptemployees
obligations. compensationprogramadministeredbytheEmployeesCompensation
Commission.
Facts:ItappearsthatA,lesseeofalot,istheownerofabuildingunder
receivership;thattherentalsonthebuildingcollectedbyB,receiver,
belongtoA;thatBisamerecustodianofthefundsthuscollectedand 222
heldbyhim;thatthejudgmentinfavorofC,lessor,againstB,ordering
OBLIGATIONSArts.12071208
himtopaytherentalsinquestionjointlyandseverallywithA,merely
enforcesanobligationofA,towhomsaidfundsbelong,andthatthe Held:No.Saidrulesrequireapluralityofsubjects(creditors,debtors,
liabilityofBunderthesaidjudgmentisnothingbuttheverysame orboth)andhavenoapplicationwhenthereisonlyonecreditorand
liabilityofA. one debtor, even if payment of the debt is to be made by several
individuals representing one and the same interest or debtor. The

BraisedtheproprietyofhisinclusionasdefendantwithAintheaction
argumentofBispredicateduponthewrongtheorythathe,asreceiver,
byCfortherecoveryofunpaidrentalsonthelot.Hearguedthathe
representsaninterestcompletelydistinctandseparatefromthatofA.
wasnotapartytothecontractoflease,andneitherthesame,northe
(Abellavs.G.K.Co.,BunKimandQ.Carpio,100Phil.1019[1957].)
natureofthecontract,northelaw,madehimsolidarilyliablewithA
fortherentals. Passivesolidarityandsolidaryguarantycompared.
Article2047,paragraph2(TitleXV.Guaranty.)says: (a)Thesolidarydebtor,unlikethesurety,isliable,notonlyforthedebt
of another but also for one properly his own. (8 Manresa 219.) A
If a person binds himself solidarily with the principal debtor, the
(guarantoror)suretydoesnotincurliabilityunlesstheprincipaldebtor
provisions of Section 4, Chapter 3, Title 1 of this Book shall be
isheldliable.Itisinthissensethatasurety,althoughsolidarilyliable
observed.Insuchcase,thecontractiscalledasuretyship.
withtheprincipaldebtor,isdifferentfromthedebtor.Itdoesnotmean
(1)Similarities.Theyare:
thatthesuretycannotbeheldliabletothesameextentastheprincipal
(a)Inpassivesolidarityalthoughsomesortofmutualagencymaybe debtor.Thenatureandextentoftheliabilitiesofasuretyisdetermined
seen as in active solidarity, guaranty is a characteristic which bythecontractofsuretyship(PacificBankingCorp.vs.Intermediate
predominatesoverthatofmereagency.Byvirtueofthis,thesolidary AppellateCourt,203SCRA496[1991].);
debtorlikethesurety,answersforadebtwhichisnotproperlyhisown;
and
(b)Likethesuretyalso,afterpaying,hemaydemandreimbursement
(b) In passive solidarity, the debtor who made payment may claim
fromthedebtorpersonallyboundintheobligationpaid.
reimbursementfromhiscodebtorsforthesharewhichcorrespondsto
(2)Distinctions.Whileaguarantormaybindhimselfsolidarilywith each(Art.1217,par.2.),whileinasuretyship,thesuretywhopaidthe
theprincipaldebtor,theliabilityofaguarantorisdifferentfromthatof obligationisentitledtobeindemnifiedbytheprincipaldebtorwiththe
a solidary debtor. (Inciong, Jr. vs. Court of Appeals, 257 SCRA righttobesubrogatedbyvirtueofsuchpaymenttoalltherightswhich
[1996].)Thedistinctionsareasfollows: thecreditorhadagainstthedebtor(Arts.2066,2067.);and
(c)Inpassivesolidarity,anextensiongrantedbythecreditortooneof (1)Whereapersonauthorizesanothertomortgageandborrowmoney
thesolidarydebtorswithouttheconsentoftheothersolidarydebtors forandinhisname,theliabilityofthetwotothecreditorisonlyjoint,
wouldnotreleasethelatterfromtheirobligations.Theyarestillliable notsolidary,pursuanttoArticles1207and1208.(Phil.NationalBank
for the whole obligation less the share of the debtor granted the vs.Sta.Maria,29SCRA30[1969].)
extension.Uponarrivaloftheextendedperiod,thecreditorcandemand
(2)Whenitisnotprovidedinajudgmentthatthedefendantsareliable
the remaining balance from any of the solidary creditors but in
topayjointlyandseverallyacertainsumofmoney,noneofthemmay
suretyship, an extension granted to the principal debtor without the
becompelledtosatisfyinfullsaidjudgment.Itisofnoconsequence
consent of the surety would have the effect of extinguishing the
thattheobligationassumedbythemundertheirwrittencontractwas
suretyship.(seeArt.2079.)
solidaryincharacter.Thefinaljudgmenthastheeffectofsuperseding
Solidaritynotpresumed. theactionbroughtforenforcementofsaidcontract.(AngLinChivs.
Castelo,63Phil.263[1936];OrientalCommercialCo.,Inc.vs.Abeto
Thepresumption,wheretherearetwoormorepersonsinthesame
andMabanag,60Phil.723[1934];DeLeonvs.Nepomuceno,37Phil.
obligation,isthatitisjoint.Thereasonisthatsolidaryobligationsare
180[1917];Ortizvs.Kayanan,92SCRA146[1979];Industrial
very burdensome for they create unusual rights and liabilities. Soli
darity between debtors increases their responsibility while solidarity 224OBLIGATIONSArt.1209
betweencreditorsincreasestherightofeachcreditor.Thelawtendsto
Management International Development Corp. vs. National Labor
favor the debtors in presuming that they are bound jointly and not
RelationsCommission,331SCRA640[2000].)
solidarily.
(3)OneoftheeffectsoftheruleestablishedbytheCodethatthedebtis
tobepresumedasdividedintoasmanyequalshares...asthereare
debtors(Art. 1208.) is that the interruption of prescription bythe This obligation constitutes the middle ground between a joint
claim of a creditor addressed to a single debtor or by an obligationandasolidaryobligation.
acknowledgmentmadebyoneofthedebtorsinfavorofoneormoreof
EXAMPLES:
thecreditorsisnottobeunderstoodasprejudicialtoorinfavorofthe
(1)A,B,andCarejointlyliabletogiveDacarvaluedatP240,000.00.
otherdebtorsorcreditors.(8Manresa182;AgoncilloandMarinovs.
Onthedateofdelivery,AandBarewillingtodeliverbutCisnot.
Javier,38Phil.424[1918].)
Inthiscase,DhasnocauseofactionagainstCforthedeliveryofthe
ART.1209.Ifthedivisionisimpossible,therightofthecreditors
carbecause,asajointdebtor,Cisliableonlyforaproportionatepart
maybeprejudicedonlybytheircollectiveacts,andthedebtcanbe
of the obligation which is P80,000.00. Since the object (car) is
enforcedonlybyproceedingagainstallthedebtors.Ifoneofthe
indivisible,thedebtcanonlybeenforcedbyproceedingagainstallthe
latter should be insolvent, the others shall not be liable for his
debtorsforcomplianceisnotpossibleunlesstheyacttogether.
share.(1139)
PursuanttoArticle1224(infra.),theliabilityisconvertedintoonefor
Jointindivisibleobligation.
damages.So,A,B,andCwillbeliableforP80,000.00eachoratotal
Thisarticlespeaksofajointindivisibleobligation.Theobligationis of P240,000.00 which is the value of the car without increase of
joint because the parties are merely proportionately liable. It is responsibilityforAandB.C,theunwillingdebtor,shallbeliablefor
indivisible because the object or subject matter is not physically damagestoDforhavingviolatedtheobligation.
divisibleintodifferentparts.(seeArt.1225,par.1.)Inotherwords,itis
Art. 1210 DIFFERENT KINDS OF OBLIGATIONS 225 Joint and
joint as to liabilities of the debtors or rights of the creditors but
SolidaryObligations
indivisibleastocompliance.(seeArt.1224.)
IfAandBsuffereddamagesbyreasonofthenonfulfillmentbyC, IfAbecomesliabletopaydamagesfornonperformance,DandEcan
theymayrecoverthemfromC. recoveronlytheirrespectivesharesintheindemnity.NeitherDnorE
maydoanythingwhichmaybeprejudicialtotheother(Art.1212.)like
Shouldanyoneofthedebtorsbeinsolvent,theothersshallnotbeliable
renouncingorassigningtheentireobligationwithouttheconsentofthe
fortheirshare.(Art.1209.)Dmustwaituntiltheinsolventdebtorcan
other.Thisissobecausetheobligationisjoint,i.e.,thecreditofDis
pay.
separate from that of E, and, therefore, neither D nor E can act in
(2) If there aretwocreditors, sayD andE, andone debtor, A, the
representationoftheother.Theirrightsmaybeprejudicedonlybytheir
obligationcanbeperformedonlybydeliveringthecartothemjointly.
collectiveacts.(Art.1209.)
A(theremaybemorethanonedebtor)caninsistthatbothDandE
ART.1210.Theindivisibilityofanobligationdoesnotnecessarily
togetheracceptthecar;andifeitherofthemrefusestojointheother,A
give rise to solidarity. Nor does solidarity of itself imply
maylegallyrefusetodeliverthecar.Hemaydepositthecarincourtby
wayofconsignation.(seeArt.1256.) indivisibility.(n)
Indivisibilitydistinguishedfromsolidarity.
Thedifferencesare:
(1)Indivisibilityreferstotheprestation,whilesolidarityreferstothe
juridicalorlegaltiethatbindstheparties;
(2) In indivisible obligations, only the debtor guilty of breach of
obligation is liable for damages (Arts. 1209, 1224.), thereby

terminatingtheagency,whileinsolidaryobligations,allofthedebtors (1)AandBarejointlyliabletodelivertoCaparticularcar.Here,the
areliableforthebreachoftheobligationcommittedbyacodebtor prestationisindivisiblebuttheliabilityofAandBisjoint.Wehave
(Art.1221.),forsolidarityamongthemremains; whatiscalledajointindivisibleobligation.(Arts.1209,1224.)
(3)Indivisibilitycanexistalthoughthereisonlyonedebtorandone (2)IfAandBobligedthemselvessolidarilytogivethecartoC,we
creditor,whileinsolidarity,theremustbeatleasttwodebtorsortwo havea solidaryindivisibleobligation theobligationisindivisible
creditors(Arts.1207,1208.);and andtheliabilityofAandBissolidary.
(4) In indivisible obligations, the others are not liable in case of Toputitinanotherway, wehavea solidaryobligationthesubject
insolvencyofonedebtor,whileinsolidaryobligations,theothersare matter of whichis indivisible. In case of breach, eventhe innocent
proportionatelyliable.(Art.1217.) debtorsareliablefortheentireindemnitywithoutprejudicetotheir
rightofactionagainsttheguiltyone.(Art.1221,par.2.)
(3)Asolidaryobligationdoesnotnecessarilymeanthattheobligation
ThefirstsentenceofArticle1210simplymeansthattheliabilityinan
isalsoindivisible.Thus,whereAandBpromisedinsolidumtopayC
indivisible obligation may be either joint or solidary. The second
P10,000.00,wehaveanexampleofasolidarydivisibleobligation.
sentencemeansthatinasolidaryobligation,thesubjectmattermaybe
divisibleorindivisible.(seeArt.1225.) (4)Now,ifAandBarejointlyliabletopayCP10,000.00,whatwe
haveisajointdivisibleobligation.Moneyisdivisible.
EXAMPLES:
ART. 1211. Solidarity may exist although the creditors and the althoughthepartiesmaynotbeboundinthesamemannerandbythe
debtorsmaynotbeboundinthesamemannerandbythesame sameperiodsandconditions.Theruleisthatthecreditormaybringhis
periodsandconditions.(1140) actionintotoagainstanyofthesolidarydebtorslessthesharesofthe
otherdebtorswithunexpiredtermsorunfulfilledconditionswhoare
Kindsofsolidaryobligationaccordingtothelegaltie.
entitledtodefensesunderArticle1222.
Theyare:
Upontheexpirationofthetermorthefulfillmentofthecondition,the
(1)Uniform.whenthepartiesareboundbythesamestipulationsor creditorwillhavetherighttodemandthepaymentoftheremainder.
clauses;or (Inchausti&Co.vs.Yulo,34Phil.978[1916];see8Manresa203;
OperatorsIncorporatedvs.AmericanBiscuitCo.,Inc.,154SCRA738
(2) Nonuniformorvaried. whenthepartiesarenotsubjecttothe
[1987].)
samestipulationsorclauses.(see4SanchezRoman50.)
Thepartiesmaystipulatethatanysolidarydebtoralreadyboundmay
Solidaritynotaffectedbydiversestipulations.
bemadeliablefortheentireobligation.
The essence of solidarity consists in the right of each creditor to

EXAMPLE:
enforcetherightsofallandtheliabilityofeachdebtortoanswerfor
theliabilitiesofall.Therefore,theremaybeasolidaryobligation A,B,C,andDobligedthemselvessolidarilytopayEP20,000.00,as
follows:
SolidaryObligations
A,topaybyinstallmentattherateofP1,000.00amonth,tostartin arealreadydueanddemandableandunpaidpertainingtothesharesof
July;B,topayinSeptember;C,topayinDecember;andD,ifEpasses A,B,andC.
theBarexaminations.
(e)IftheagreementisthatEmaydemandtheentireobligationfromB
(a)InJuly,EcandemandonlyP1,000.00fromA.Ecanalsomakea inSeptember,fromCinDecember,orfromDifEpassestheBar
demandfromB,C,and/orDtheP1,000.00sharecorrespondingtoA.
228
ButEcannotrecoveryetthesharesofB,C,andDwhicharenotyet
OBLIGATIONSArt.1212
dueanddemandable.
examinations, thenBisliableforP20,000.00inSeptember lessthe

(b) In September, E is entitled to collect from any of the solidary
amount,ifany,alreadypaidbyAandD;CisliableforP20,000.00in
debtors the share corresponding to B which is P5,000.00 and A,
Decemberlesstheamount,ifany,alreadypaidbyA,B,andD.Dis
P1,000.00or P3,000.00, if Ahadnot yet paid any installment. The
liableforP20,000.00ifEpassestheBarexaminationslesstheamount,
sharesofCandDarenotyetrecoverable.
ifany,alreadypaidbyA,B,andC.
(c)InDecember,Ecanrecoverfromanyofthesolidarydebtors,the
Jointobligationononeside,solidaryontheother.
share corresponding to C in the amount of P5,000.00 plus such
amountsfromthesharesofAandBwhichhavenotyetbeenpaid.The
Anobligationmaybejointonthesideofthecreditorsandsolidaryon
shareofDwillmatureonlyafterEpassestheBarexaminations.
thesideofthedebtors,orviceversa.
(d) If E passes the Bar examinations, the obligation of D to pay

Insuch cases, the rules applicable toeachsubject of the obligation
P5,000.00 arises. This amount can be demanded from any of the
should be applied, the character of the creditors or the debtors
solidarydebtors.Again,Eisalsoentitledtorecoverallamountswhich
determining their respective rights and liabilities. Thus, if the
obligationisjointonthesideofthecreditors,andsolidaryontheside Inotherwords,AorBmaybemadeliableforP1,000.00andCandB
of the debtors, each creditor can demand only his share in the areentitledtoreceivenotmorethanP500.00each.
obligation; but each debtor may be compelled to pay the entire

ART.1212.Eachoneofthesolidarycreditorsmaydowhatever
obligationtothecreditors.(8Manresa201202.)
may be useful to the others, but not anything which may be
EXAMPLES: prejudicialtothelatter.(1141a)
(1)AandB,jointdebtors,areliabletoCandD,solidarycreditors,for
P1,000.00.Here,wehavetwo(2)separatedebtsofAandB(P500.00
SolidaryObligations
each),andone(1)credit(P1,000.00)ofCandD.CorDcandemand
Actofsolidarycreditoruseful/prejudicialtoothers.
fromAandBP500.00eachonly,theirrespectiveshareinthedebt;and
AandBmayberequiredtopayP500.00each,eithertoCortoD. Asolidarycreditormaydoanyactbeneficialorusefultotheothersbut
hecannotperformanyactprejudicialtothem.Ifheperformssuchact
Inotherwords,AandBarenotliableformorethanP500.00eachand
andasaresulttheobligationisextinguished,heshallberesponsibleto
CorDisentitledtoreceivenotmorethanP1,000.00.
theothersfordamages.Asfarasthedebtorordebtorsareconcerned,
(2)AssumethatAandBarethesolidarydebtors,andCandD,the
theactshallbevalidandbinding.
jointcreditors.Nowwehaveone(1)debt(P1,000.00)ofAandB,and
Theruleisbasedonthetheoryofmutualagencyamongthesolidary
two (2) separate credits (P500.00 each) of C and D. C and D can
creditors.Ajointcreditorcannotactinrepresentationoftheothers.
demandP500.00each,theirrespectiveshareinthecredit,fromAorB;
andAorBmaybecompelledtopayP1,000.00(theentireobligation), EXAMPLE:
P500.00toCandP500.00toD.
AowesBandC,solidarycreditors,thesumofP2,000.00.Bmaymake Iftheassignmentismadetoacocreditor,theconsent of the other
ademandfor thepayment of theobligationfor this will benefit C. creditorsisnotnecessary.
Underthelaw,theprescriptionofactionisinterruptedwhentheyare
Effectofunauthorizedassignment.
filedbeforethecourt.(Art.1155.)Soalso,ifBcollectsfromA,Cwill
bebenefited. Supposeasolidarycreditordidassignhisrights,willpaymenttothe
assigneeextinguishtheobligation?Article1213seemstoimplythat
IncaseofremissionorcondonationeffectedbyB,theobligationwill
suchassignmentisinvalid.Thisarticlehasbeencriticizedasfollows:
beextinguishedbutsinceCcannotbeprejudicedbytheremission,B
hastoreimburseCforthelattersshare.(Art.1215.) 230
ART.1213.Asolidarycreditorcannotassignhisrightswithout OBLIGATIONSArt.1214
theconsentoftheothers.(n) Thisruleisunjustifiableandplacesanunnecessaryrestrictiononthe
rightsofthesolidarycocreditoruponhisshare.Thereasonbehindit
Assignmentbysolidarycreditorofhisrights.
seemstobethateachcreditorrepresentstheothersand,therefore,must
Intheabsenceofconsentgivenbytheothers,asolidarycreditorcannot
have the confidence of the latter. But in the first place, confidence
assignhisrightstoathirdperson.Thereasonbehindthisprohibitionis
betweencocreditorscannotproperlybesaidtoexistexceptinthecase
thateachcreditorrepresentstheothersandtheassigneemaynothave
ofasolidarycreditbycontract.
theconfidenceoftheoriginalsolidarycreditorsconsideringthatthe
Inthesecondplace,therepresentation(byeachcreditor)ofthesolidary
assigneeafterreceivingpaymentmaynotgivethesharesoftheothers.
creditors is created by law and not by consent or agreement of the
(seeArt.1178.)
parties.Ifdangerisseeninthepossiblemisfeasanceoftheassignee,
the remedy is not the paralyzation of the proprietary rights of the creditor,paymentshouldbemadetohim;otherwise,theobligationwill
solidarycreditor,buttoimposeuponhimasubsidiaryresponsibilityfor not be extinguished except insofar as the creditorpayees share is
theactsoftheassignee,similartothatoftheagentfortheactsofthe concernedincasethelatterdoesnotgivetotheothercreditorstheir
subagentunderArt.1892.4 4Art.1892.Theagentmayappointasubstituteiftheprincipalhasnot
prohibitedhimfromdoingso;butheshallberesponsiblefortheactsof
ThisisManresasviewinhiscommenttoArt.1141oftheCodeof
thesubstitute:
1889.SothatArt.1213couldhavebeenmadetoread:Asolidary
creditorwhoassignshisrightswithouttheconsentofhiscocreditors . (1) When he was not given the power to
shallanswersubsidiarilyforanyprejudicecausedtothelatterbythe appoint one;
assignee in connection with the credit. (Justice J.B.L. Reyes,
ObservationontheNewCivilCode,XVIL.J.48,Jan.31,1951.)
. (2) When he was given such power, but
ART.1214.Thedebtormaypayanyoneofthesolidarycreditors; without designating the person, and the per
butifanydemand,judicialorextrajudicial,hasbeenmadebyone
ofthem,paymentshouldbemadetohim.(1142a) sonappointedwasnotoriouslyincompetentorinsolvent.
Paymenttoanyofthesolidarycreditors. All acts of the substitute appointed against the prohibition of the
principalshallbevoid.(1721)
Theruleisthatthedebtormaypayanyoneofthesolidarycreditors.
Butwhenademand,judicialorextrajudicial,hasbeenmadebyoneof
them, to avoid confusion, as well as prejudice to the more diligent

Art. 1215 DIFFERENT KINDS OF OBLIGATIONS 231 Joint and Novation,compensation,confusion,andremissionaremodesorcauses
SolidaryObligations ofextinguishmentofobligations.(Art.1231.)Itisbutlogicalthatthe
creditorwhoexecutedanyoftheseactsshouldbeliabletotheothers
sharesinthepayment.Thedemandhastheeffectofterminatingthe
fortheircorrespondingsharesconsideringthatsuchactsareprejudicial
mutualagencyamongthesolidarycreditors.
tothem.(Art.1212.)
Article1214isapplicablenotonlyincasesofactivesolidaritybutalso
Thedifferentcausesofextinguishmentofanobligationarediscussed
where the solidarity is mixed although the singular debtor is
underChapter4,Articles12311304.
employed. In case of mixed solidarity, the debtor upon whom no
demandhasbeenmade,maypayanyoneofthesolidarycreditors. Effectofextensionoftimegivenbycreditortoasolidarydebtor.
ART. 1215. Novation, compensation, confusionor remis sionof Anextensionoftimegrantedbythecreditortoasolidarydebtordoes
thedebt,madebyanyofthesolidarycreditorsorwithanyofthe notamounttoanovationthatwilldischargetheothersolidarydebtors.
solidarydebtors,shallextinguishtheobligation,withoutprejudice Thelattershallbeliableforthewholedebtlesstheshareofthedebtor
totheprovisionsofArticle1219. grantedtheextension.(seeArt.1211.)Upontheexpirationoftheterm,
thecreditorcandemandpaymentoftheunpaidsharefromanyofthe
Thecreditorwhomayhaveexecutedanyoftheseacts,aswellashe
solidarydebtors.
whocollectsthedebt,shallbeliabletotheothersforthesharein
Insuretyship,theeffectoftheextensiongiventotheprincipaldebtor
theobligationcorrespondingtothem.(1143)
without the consent of the surety is to extinguish the contract of
Liability of solidary creditor in case of novation, compensation, suretyship.(Art.2079.)
confusion,orremission.
Note:Inasuretyship,aperson(surety)bindshimselfsolidarilywiththe Rightofcreditortoproceedagainstanysolidarydebtor.
principaldebtor.(seeArt.2047,par.2.)Inasolidaryobligation,a
Theaboveprovisionisnotapplicabletoajointobligation.(LinoLuna
232OBLIGATIONSArt.1216 vs.Arcenas,34Phil.80[1915].)Itreiteratestherulethatinasolidary
obligation(passivesolidarity),anyoneorsomeorallofthesolidary
solidarydebtorishimselfaprincipaldebtor.Hence,asolidarydebtor
debtorssimultaneously,maybemadetopaythedebtsolongasithas
cannotbeconsideredaguarantorofhiscodebtor.
notbeenfullycollected.
Effectofnovation,etc.whereobligationjoint.
(1)Sincetheliabilityissolidary,theother,solidarydebtorsarenot
In a joint obligation, novation, compensation, confusion, remission,
indispensablepartiesinasuitfiledbythecreditor.(DeCastrovs.Court
prescription,andanyothercauseofmodificationorextinctiondoesnot
ofAppeals,384SCRA607[2002].)
extinguishormodifytheobligationexceptwithrespecttothecreditor
(2)Thebringingofanactionagainstasolidarydebtortoenforcethe
ordebtoraffected,withoutextendingitsoperationtoanyotherpartof
payment of the obligation is not inconsistent with and does not
thedebtorofthecredit.(1GiorgionObligations83;Agoncilloand
precludethebringingofanothertocompeltheotherstofulfilltheir
Marianovs.Javier,38Phil.424[1918].)
obligations.(seePhil.NationalBankvs.ConfessorandDiaz,[CA]37
ART. 1216. The creditor may proceed against any one of the
O.G.2395.)Asolidarydebtorisalsoasurety.(seeArt.2047.)
solidary debtors or some or all of them simultaneously. The

(3)Incaseofdeathofoneofthesolidarydebtors,thecreditormay
demandmadeagainstoneofthemshallnotbeanobstacletothose
proceed against the estate of the deceased solidary debtor alone or
whichmaysubsequentlybedirectedagainsttheothers,solongas
againstanyorallofthesurvivingsolidarydebtorswhoseliabilityis
thedebthasnotbeenfullycollected.(1144a)
independent of and separate from the deceased debtor, instead of
institutingaproceedingforthesettlementoftheestateofthedeceased After having been informed of the death, the court issued an order
debtorwhereinhisclaimcouldbefiled.(ImperialInsurance,Inc.vs. dismissingthecase,citingSection6,Rule86oftheRulesofCourt
David,133SCRA317[1984].) which provides: Solidary obligation of decedent. Where the
obligationofthedecedentissolidarywithanotherdebtor,theclaim
shallbefiledagainstthedecedentasifheweretheonlydebtor,without
SolidaryObligations
prejudice to the right of the estate to recover contribution from the
(4)Thechoiceislefttothesolidarycreditortodetermineagainstwhom
otherdebtor.Inajointobligationofthedecedent,theclaimshallbe
he will enforce collection. (Phil. National Bank vs. Independent
confinedtotheportionbelongingtohim.
Planters Assoc., Inc., 122 SCRA 113 [1983]; Dimayuga vs. Phil.
Issue:Isthedismissalofthecasecorrect?
CommercialandIndustrialBank,200SCRA143[1991].)
Held:No.Acursoryperusalofthecitedprovisionrevealsthatnothing
TheruleinArticle1216maybemodifiedbyagreementoftheparties.
therein prevents a solidary creditor from proceeding against the
ILLUSTRATIVECASE:
survivingsolidarydebtors.Saidprovisionmerelysetsuptheprocedure
Thecourtdismissedacollectionsuituponthedeath inenforcingcollectionincaseacreditorchoosestopursuehisclaim
againsttheestateofthedeceasedsolidarydebtor.
ofoneofthesolidarydebtors,holdingthattheclaimshouldbepursued
againsttheestateofthedeceased. Torequirethesolidarycreditortoproceedagainsttheestate,makingit
aconditionprecedentforanycollectionactionagainstthesurviving
Facts:BeforethecollectionsuitfiledbyB(bank),creditor,againstthe
debtor to prosper, would deprive him of his substantative rights
jointandsolidarydebtorscouldbedecided,A,oneofthedebtorsdies.
providedbyArticle1216,toproceedagainstanyoneofthesolidary
debtors or some or all of them simultaneously. The choice is Effectsofpaymentbyasolidarydebtor.
undoubtedly left to the solidary creditor. (Phil. National Bank vs.

Article1217referstotheeffectsofpaymentbyoneofthesolidary
Asuncion,80SCRA321[1977].)
debtors.Itisnotapplicablewherenosuchpaymenthasbeenmade.
ART. 1217. Payment made by one of the solidary debtors (Republicvs.Angeles,20SCRA628[1967].)
extinguishestheobligation.Iftwoormoresolidarydebtorsoffer
(1)Betweenthesolidarydebtorsandcreditor(s).Paymentmadeby
topay,thecreditormaychoosewhichoffertoaccept.
oneofthesolidarydebtorsextinguishestheobligation.(Whenspeaking
Hewhomadethepaymentmayclaimfromhiscodebtorsonlythe ofpaymentthatextinguishesanobligation,thelawreferstopaymentin
full.) However, the creditor for his protection is given the right to
sharewhichcorrespondstoeach,withtheinterestfor
choosewhichoffertoacceptiftwoormoresolidarydebtorsofferto
234
pay.(par.1.)
OBLIGATIONSArt.1217
(2) Amongthe solidary debtors. Payment by one of the solidary
thepaymentalreadymade.Ifthepaymentismadebeforethedebt debtors does not create a real case of subrogation. (see Arts. 1302,
isdue,nointerestfortheinterveningperiodmaybedemanded. 1303.) It merely entitles him to claim reimbursement from his co
debtorsonlythesharewhichcorrespondstoeach.(seeArt.1277.),
Whenoneofthesolidarydebtorscannot,becauseofhisinsolvency,
i.e., onlyfortheirproportionateshareswith(legal)interestonlyfrom
reimburse his share to the debtor paying the obliga tion, such
thetimeofpayment.
shareshallbebornebyallhiscodebtors,inproportiontothe
(a)Theotherdebtorsdonotbecomebyvirtueofsuchpaymentsolidary
debtofeach.(1145a)
debtorsofthedebtorpayer.Theirliabilityisnotbasedontheoriginal
obligationwhichhasbeenextinguished,butuponthepaymentmadeby (3) Amongthesolidarycreditors. Thereceivingcreditorisjointly
thecodebtorwhichcreatesajointobligationofreimbursementonthe liabletotheothersfortheircorrespondingshares.(Art.1208.)
partoftheothers.(Art.1208.)However,incaseofinsolvencyofanyof
EXAMPLES:
thesolidarydebtors,theothersassumetheshareoftheinsolventone
(1) A, B, and C are jointly and severally liable to D and E in the
prorata.(pars.2and3.)
amountofP3,000.00dueonJanuary5.
(b) Payment by asolidary debtor does not automatically result in a
IfbothAandBoffertopayD,onJanuary5,thelattermaychoose
correspondingobligationoftheotherdebtorstoreimbursethepaying
whichoffertoaccept.IfApaystheentireamountofP3,000.00on
debtor.Ifasolidarydebtorpaystheobligationinpart,hecanrecover
January5,theobligationisextinguished.
reimbursement from the codebtors only in so far as his payment
exceededhisshareintheobligation. (2)ThepaymentbyAgiveshimtherighttodemandreimbursement
fromBandCP1,000.00eachwithinterestfromthedateofpayment.
(c)Iftheamountisequaltohisproportionateshareintheobligationhe,
ButAisnotentitledtoreimbursementnortointerestforanypayment
ineffect,paysonlywhatisduefromhim;ifthe
madebeforeJanuary5.TheobligationofBandCtoreimbursehim
withinterestwillariseonlyfromJanuary5.
SolidaryObligations
IfCisinsolvent,bothAandBshallbearhisinsolvencyinproportion
amount is less than his share, he cannot demand reimbursement
totheirshares.Hence,AcanstillaskBtopayanadditionalsumof
becausehispaymentislessthanhisactualdebt.(seeRepubllicGlass
P500.00.Ofcourse,AandBcanlateronrecoverfromCshouldthe
Corporationvs.Qua,435SCRA480[2004].)
lattersfinancesimprove.
If,inthesameexample,ApaidonlyP2,400.00andB,P600.00,Acan After liberation, B demanded payment from A and C of their
recoverreimbursementonlytotheextentthathispaymentexceedshis correspondingshares.CpaidbutArefusedtopayhis1/3shareor
share,sothatCisliabletohimforP1,000.00andB,forP400.00.IfC
236
is insolvent, B is liable to pay A P900.00. A is not entitled to
OBLIGATIONSArt.1217
reimbursementifhispaymentisP1,000orless.
P37,530.40 demanded by B on the ground that he should pay only

(3) D, in the above example, has the obligation to give to E his
P625.51 which is the equivalent value as of November 1944 of
correspondingshareinthecredit.
P37,530.40inJapanesemilitarynotespaidbyBtoDbank,underthe
ILLUSTRATIVECASES:
Ballantyneschedule.(seeArt.1249.)
1. A solidary debtor who paid the entire debt contends that the
BcontendedthattheobligationofAtopayBwascreatednotonthe
obligationofthecodebtortopayhimhissharearoseonthedatethe
datehemadepaymenttoEbutonthedateoftheoriginalobligation,
originaldebtwascreatedandnotonthedatehemadethepayment.
i.e., beforethewar,and,therefore,theBallantyneschedulewasnot
Facts:In1938(beforethesecondworldwar),A,B,andCjointlyand applicable.
severally signed a promissory note in the amount of P90,000.00 in

Issue: DidthepaymentmadebyBsubrogatehimintherightsofD
favorofDbank.UpondemandofEbank,asliquidatorofallenemy
bank, transmitting to him the credit with all the rights appertaining
banks, among whichwas D bank, B paidthe promissory note with
thereto?
interestonNovember1944.
Held: No. When B paid the entire loan, the whole obligation was
extinguishedandanewobligationwascreatedinfavorofBagainstA
andConhishavingpaidtheentireloan.TheobligationinfavorofBto
payhimwhathepaidinfavorofAwascreatedinNovember1944and 2.Insureragainstthirdpartyliabilitywasheldbythecourtsolidarily
notbefore.Inotherwords,thepaymentbyBdidnotcreatearealcase
liabletothirdparty,withtheinsuredandtheotherpartiesfoundat
ofsubrogation.BdidnotstepintotheshoesofDbank.Dcouldcollect
fault.
thewholeamountoftheloanfromanyoneofthesolidarycodebtors
Facts:MCo.,insurancecompany,issuedaninsurancepolicyinfavor
andinfactdidfromoneofthem.This,Bcouldnotdo.
of X covering a jeep. The coverage was for own damage not to
According to Article 1217, payment by one of the solidary debtors
exceedP600.00andthirdpartyliabilityintheamountofP20,000.00.
entitleshimtoclaimfromhiscodebtorsonlythesharepertainingto
Duringtheeffectivityofthepolicy,thejeepwhilebeingdrivenbyY,
eachwithinterestontheamountadvanced,andthisiswhatBwas
anemployeeofZ,collidedwithapassengerbuscausinginjuriestoW.
doing,onlythathewantedtocollectthewholeamountpaidbyhimin
genuinePhilippinecurrencyinsteadoftheequivalentthereofunderthe
SolidaryObligations
Ballantyneschedule.
TheCourtofAppealsruledthatMCo.wassolidarilyliablewithXand
Moreover,ongroundsofequity,Bshouldnotbeallowedtocollect
ZanditwasnotentitledtobereimbursedbyZforwhateveramountM
fromAmorethantherealvalueofwhathepaidforhimespecially
Co.wasadjudgedtopayX.
when the difference between the military notes and the genuine
Philippine currency in November 1944 was so great. (Wilson vs. Issue:Istheaboverulingcorrect?
Berkenkotter,92Phil.918[1955]; seePhil.InternationalSuretyCo.,
Held: No. The liability of M Co. to Z is based on the contract of
Inc.vs.Gonzales,3SCRA391[1961].)
insurance5 withX;thatofXandZisbasedontort. 6 IfMCo.were

solidarily liable with X and Z by reason of the indemnity contract (Malayan Insurance Co., Inc. vs. Court of Appeals, 165 SCRA 536
againstthirdpartyliabilityunderwhichaninsurercanbedirectly [1988].)
suedbyathirdpartythiswillresultinviolationoftheprinciples
ART.1218.Paymentbyasolidarydebtorshallnotentitlehimto
underlyingsolidaryobligationandinsurancecontracts.
reimbursementfromhiscodebtorsifsuchpaymentismadeafter
Inthecaseatbar,MCo.,XandZwereheldsolidarilyliabletoWfora theobligationhasprescribedorbecomeillegal.(n)
totalamountofP29,103.00withthequalificationthatMsliabilityis
Effect of payment where obligation has already prescribed or
onlyuptoP20,000.00.Inthecontextofasolidaryobligation,Mmay
becomeillegal.
becompelledbyWtopaytheentireobligation,notwithstandingthe
qualificationmadebythetrialcourt.Butunderthethirdpartyliability Whenasolidarydebtorpaystheobligation,heisentitled,asarule,to
policy,MsliabilityislimitedonlytopayP20,000.00.Moreover,the reimbursementfromhiscodebtors.Article1218mentionstwocases
qualification,whentheobligationtoP29,103.00ismadesolidary,isan when the paying debtor cannot get any reimbursement. When the
evidentbreachoftheconceptofasolidaryobligation. obligationhasprescribed(Art.1231,par.2;seeArt.1424.)or
Subrogationisnormalincidentofaindemnityinsuranceevenwithout 5Acontractofinsuranceisanagreementwherebyoneundertakesfora
anyexpressstipulationtothateffectinthepolicy.Accordingly,onlyX
consideration to indemnify another against loss, damage or liability
and Z are solidarily liable to W. If X is made to pay the entire
arisingfromanunknownorcontingentevent.(Pres.DecreeNo.1460,
obligationofP29,103.00andM,asinsurerofX,iscompelledtopay
Sec.2.)
P20,000.00ofsaidobligation,M,underArticle1217wouldbeentitled
as subrogee of Xas against Ztobe reimbursed 1/2of P29,103.00.

6SeeArticle1162. . (3) Upon a judgment. (Art. 1144.)
Thefollowingactionsmustbecommencedwithinsix(6)years:
becomeillegal(Art.1266.),theobligationisextinguished.Hence,there
. (1) Upon an oral contract;
isnomoreobligationtobecompliedwith.
Prescriptiveperiodsofactions.
. (2) Upon a quasicontract. (Art. 1145.)
Byprescription,oneacquiresownershipandotherrightsthroughthe
lapseoftimeinthemannerandundertheconditionslaiddownbylaw.
Thefollowingactionsmustbeinstitutedwithinfour(4)years:
In the same way, rights and actions are lost by prescription. (Art.
. (1) Upon an injury to the rights of the
1106.)
plaintiff;
Thefollowingactionsmustbebroughtwithinten(10)yearsfromthe
timetherightofactionaccrues:
. (2) Upon a quasidelict. (Art. 1146.)
. (1) Upon a written contract;
Thestatuteoflimitations,however,maybesupersededormodifiedby
. (2) Upon an obligation created by law; acontractbetweentheparties.(Macias&Co.vs.ChinaFireInsurance
Co.,46Phil.345[1924].)
ART.1219.Theremissionmadebythecreditorofthesharewhich equality and justice to the paying debtor inasmuch as the payment
affectsoneofthesolidarydebtorsdoesnotreleasethelatterfrom benefitshiscodebtors.
hisresponsibilitytowardsthecodebtors,incasethedebthadbeen EXAMPLES:
totallypaidbyanyoneofthembeforetheremissionwaseffected.
(1)AandBareliableinsolidumtoCintheamountofP1,000.00.C
(1146a)
remittedAsshare.SubsequentpaymentbyBofP1,000.00toCwill
Effectofremissionofshareafterpayment. not entitle him to reimbursement from A since the remission
extinguishedtheobligationwithrespecttoAsshare.However,Bcan
Ifpaymentismadefirst,theremission(seeArt.1270.)orwaiverisof
demandthereturnofP500.00fromCundertheprincipleof solutio
noeffect.Thereisnomoreobligationtoremit.Ifremissionismade
indebiti.
previoustothepaymentandpaymentismade,solutioindebitiarises.It
isincumbentuponthedebtorwhosedebtisremitted,to IfpaymentbyBwasmadebeforetheremission,AisstillliabletoB
because the remission is without effect, the obligation having been

extinguishedalreadybythepayment.
SolidaryObligations
(2)A,B,andCareliableinsolidumtoDintheamountofP3,000.00.
provethepriorityoftheremissiontothepaymenttoreleasehimfrom
DremittedtheshareofA.AfterpayingDP2,000.00,thebalanceofthe
responsibilitytowardshiscodebtors.
credit,BdemandsreimbursementfromCwhobecameinsolventafter
Thepurposeofthearticleistoforestallfraudwherebythedebthaving theremission.
been paid, the creditor, who does not stand to suffer any loss or
damage,remitstheshareofaparticulardebtor.Thearticlealsosecures
IsAobligedtocontributetotheshareofC?Yes.Article1217(par.3.), Incaseofnovation,compensation,orconfusion(seeArt.1215.),the
saysthattheshareoftheinsolventcodebtorshallbebornebyallhis debtor with whom it is effected is entitled to recover from his co
codebtors, in proportion to the debt of each. Furthermore, the debtorstheircorrespondingsharesoftheobligation.
remissioncanonlyrefertotheshareofAintheobligationandcannot,
ART. 1221. If the thing has been lost or if the prestation has
therefore,affecthisresponsibilitytocontributetotheshareofC,the
become impossible without the fault of the solidarydebtors, the
insolventdebtor.Acreditorhasnorighttoalterormodifytherights
obligationshallbeextinguished.
andobligationsofthesolidarydebtorsasamongthemselves.
If there was fault on the part of any one of them, all shall be
ART.1220.Theremissionofthewholeobligation,obtainedbyone
responsible to the creditor, for the price and the payment of
ofthesolidarydebtors,doesnotentitlehimtoreimbursement
damagesandinterest,withoutprejudicetotheiractionagainstthe
fromhiscodebtors.(n)
guiltyornegligentdebtor.
Norighttoreimbursementincaseofremission.
Ifthroughafortuitousevent,thethingislostortheperformance
The reason for the above article is that the debtor who obtains
has become impossible after one of the solidary debtors has
remission pays nothing to the creditor. Remission is essentially
incurredindelaythroughthejudicialorextrajudicialdemand
gratuitous.Itisreallyadonation.(Art.1270.)Observethatthearticle
upon him by the creditor, the provisions of the preceding
appliesonlywhenthewholeobligationisremitted.
paragraphshallapply.(1147a)
Rules in case thing has been lost or prestation has become
impossible.
Ifthethingislostortheprestationbecomesimpossible,theliabilityof AandB,however,canrecoverfromC,theguiltyornegligentdebtor,
thesolidarydebtorsdependsuponwhetherornotthereisfaultordelay. thefullamountofsuchpriceanddamagesifAandBhavealready
contributedtothepriceofthetruck.(par.2;Art.1170.)
(1)Lossiswithoutfaultandbeforedelay.EXAMPLE:
IfDrecoversthepriceanddamagesfromC,thelattercannotclaim
A,B,andCobligedthemselvessolidarilytodelivertoDaparticular
reimbursementfromAandB,becausehealonewasatfault.
truckvaluedatP300,000.00.
(b)SupposenowthatthetruckinquestionbelongedtoCandAandB
Theobligationshallbeextinguishedifthetruckislostordestroyed
wouldcontributeP100,000.00eachastheirshareintheobligation.IfB
throughafortuitouseventwithoutthefaultofA,B,andCandbefore
paidDP300,000.00plusP10,000.00asdamages,Bcanrecoverthe
theyhaveincurredindelay.(Arts.1262,par.1;1174.)
sharesofAandC(P100,000.00each)inthepriceofthetruck.OnlyC
(2)Lossisduetofaultonthepartofasolidarydebtor.EXAMPLES:
shallbearthedamagesofP10,000.00.Inthiscase,thelossofCwould
(a)If,intheprecedingexample,thetruckwaslostthroughthefaultof be P410,000.00: P100,000.00 for his share, P10,000.00 for the
C,AandBshallalsoberesponsibletoDforthepriceofthetruckas damages,andP300,000.00,thevalueofhistruck.
wellasdamagesalthoughAandBwerenotatfaultatall.Asolidary
Inthefirstexample(a)whereAandBhavealreadygiventheirshares
obligationis, in essence, amutual agency. As far as the creditor is
inthepriceofthetruck,assumingthatP310,000.00alsowaspaidbyB
concerned,thefaultordelayofonesolidarydebtor,shallbethefaultor
to D, the loss of C would also be P410,000.00: P310,000.00, the
delayofallthesolidarydebtors.
amount paid which he is under obligation to reimburse, and
Art. 1222 DIFFERENT KINDS OF OBLIGATIONS 241 Joint and P100,000.00,hisshareinthepriceofhistruck.NotethatCmayalsobe
SolidaryObligations madeliabletopayinterestforthepaymentmade.
(3)Lossiswithoutfaultbutafterdelay.EXAMPLE: (1)Defensesderivedfromthenatureoftheobligation.
Ifthetruckwaslostthroughafortuitouseventbutafterademandwas 242
madeuponC,DcanstillrecoverdamagesfromAorBorbothofthem
OBLIGATIONSArt.1222
withoutprejudicetotherightofactionofthelatteragainstCfollowing
EXAMPLE:
thesameruleinNo.2.
AandBaresolidarilyliabletoCintheamountofP10,000.00.The
ThedefaultbyCmakesallofthesolidarydebtorsresponsibleevenfor
entiredebtofAandBwaspaidbyD.InanactionbyCagainstA,the
afortuitousevent.(par.3;Art.1170.)
lattercanraisethedefenseofpaymentbyvirtueofwhichtheobligation
ART.1222.Asolidarydebtormay,inactionsfiledbythecreditor,
wasextinguished.
availhimselfofalldefenseswhicharederivedfromthenatureof
A defense derived from the nature of the obligation is a complete
theobligationandofthosewhicharepersonaltohim,orpertainto
defense because it nullifies the obligation or renders it ineffective.
hisownshare.Withrespecttothosewhichpersonallybelongto
Otherexamplesarefraud,prescription,remission,illegalityorabsence
theothers,hemayavailhimselfthereofonlyasregardsthatpartof
of consideration, res judicata,7 nonperformance of a suspensive
thedebtforwhichthelatterareresponsible.(1148a)
condition,etc.
Defensesavailabletoasolidarydebtor.
(2)Defensespersonalto,orwhichpertaintoshareof,debtorsued.
Inactionsfiledbythecreditor,asolidarydebtormayavailhimselfof Asolidarydebtor,byhisownactorinaction,suchasbyfailingto
thefollowingdefenses: appeal,maylosethebenefitoftheprovisionsofArticle1222.(Quano
ArrastreService,Inc.vs.Aleonar,202SCRA618[1991].)
EXAMPLES: 7Whentheobligationoftheothersolidarydebtorsissodependenton
(a)IftheactionbyCisagainstB,andBwasinsaneatthetimethe thatoftheircosolidarydebtor,thereleaseoftheonewhoappealed,
obligationwascontracted,Bcanputupthedefenseofinsanitywith provided,itbenotgroundspersonaltosuchappealingdebtor,operates
respecttotheentireobligation.ThisdefenseispersonaltoBalone.Itis aswellastotheotherswhodidnotappeal.Thedecisionorjudgmentin
acompletedefense. favorofthedebtorwhoappealedcanbeinvokedasresjudicatabythe
otherdebtorswhodidnotjoinintheappeal.(UniversalMotorsCorp.
Otherexamplesare:incapacity,mistake,violence,minority,etc.
vs.CourtofAppeals,205SCRA448[1992].)
(b)AssumenowthattheportionoftheobligationaffectingBissubject

toasuspensiveconditionwhichhasnotyethappened.
Inthiscase,thenonfulfillmentoftheconditionisapartialdefenseas
SolidaryObligations
itcanbesetupbyBonlywithrespecttohisshare.Ccandemandfrom
Inotherwords,Amayavailhimselfthereofonlyasregardsthatpartof
BtheportionoftheobligationpertainingtoAbecauseBissolidarily
thedebtforwhichBisliable.Hence,havingonlyapartialdefense,A
liable.
isstillliableforP2,000.00,hisshareintheobligation.(seeBraganza
(3)Defensespersonaltoothersolidarydebtors.EXAMPLE:
vs.VillaAbrille,105Phil.456[1959].)
In the two preceding examples, the defense of insanity or non

oOo
fulfillment of the suspensive condition is not available to A as to
releasehimfromhisliabilityforhisshareintheobligation.
244OBLIGATIONS
SECTION5.DivisibleandIndivisibleObligations Indeterminingwhetheranobligationisdivisibleornot,thecontrolling
circumstanceisnotthepossibilityorimpossibilityofpartialprestation
ART.1223.Thedivisibilityorindivisibilityofthethingsthatare
butthepurposeoftheobligationortheintentionoftheparties.Hence,
theobjectofobligationsinwhichthereisonlyonedebtorandonly
even though the object or service may be physically divisible, an
onecreditordoesnotalterormodifytheprovisionsofChapter2of
obligation is indivisible if so provided by law or intended by the
thisTitle.(1149)
parties.(Art.1225,par.3.)
Meaningofdivisibleandindivisibleobligations. However,iftheobjectisnotphysicallydivisibleortheserviceisnot
susceptibleofpartialperformance(Art.1225,par.1.),theobligationis
(1)Adivisibleobligationisonetheobjectofwhich,initsdeliveryor
always indivisible, the intention of the parties to the contrary
performance,iscapableofpartialfulfillment.
notwithstanding.Thisruleisabsolute.
(2)Anindivisibleobligationisonetheobjectofwhich,initsdelivery
Anobligationispresumedindivisiblewherethereisonlyonecreditor
orperformance,isnotcapableofpartialfulfillment.
andonlyonedebtor.(seeArt.1248.)
Testforthedistinction.
ApplicabilityofArticle1223.
WhileArticle1223appearstobelimitedtorealobligationsbecauseit
speaksofthings,thewordisusedinitsbroadsenseasreferringto
244
Art.1223DIFFERENTKINDSOFOBLIGATIONS245Divisibleand (3)SupposetheagreementisthatSwilldeliveronehalfofthecaron
IndivisibleObligations November15andtheotherhalfonNovember30.Ofcourse,itwould
beinconceivablethatBwouldagreetoapartialperformanceofthe
the object or prestation oftheobligation,whichmaybetodelivera
obligation,butletusjustassumehedid.Willtheobligationbedivisible
thingortorendersomeservice.
orindivisible?
EXAMPLES:
TheobligationisstillindivisibleandSmustdeliverthewholecaron
(1)DagreedtopayCP2,000.00infourequalmonthlyinstallments.
November15orNovember30.Adefinitethinglikeacar,cannotbe
The obligation of D is divisible because it is capable of partial
severedintopartswithoutalteringitsessenceordestroyingitsvalue.It
performance.
isanessentialconditionofthefitnessofathingtobedivisiblethatitis
ButiftheagreementisthatDwillpayConacertaindatethefull possible,byunitingthediverseportionsthereof,toreconstructitasif
amountofP2,000.00,theobligationisindivisiblealthoughmoneyis existedbeforeitsdivision.(4SanchezRoman93.)
physically divisible because the intention of the parties is that the

ILLUSTRATIVECASE:
obligationmustbefulfilledatonetimeandasawhole(notpartially).
Contract contemplates stagebystage construction and payment
Thedivisibilityofanobligationshouldnot,therefore,beconfusedwith
approach.
thedivisibilityofthethingwhichistheobjectthereof.
Facts: One of the conditions of the building contract is that C
(2)SobligedhimselftodelivertoBaspecificcaronNovember15.
(contractor) shall start the construction of the building by stages
This obligation is indivisible because it is not capable of partial
advancingthenecessaryamountneededforeachstageofworkandO
performance.Thecarmustbedeliveredatonetimeandasawhole.
(owner),toreimbursetheamountspentontheworkaccomplishedbyC
before proceeding to the next stage, and that C will give a new (1) Qualitative division or one based on quality, not on number or
performancebondinproportiontotheremainingvalueorcostofthe quantityofthethingsthataretheobjectoftheobligation.
unfinishedworkasperapprovedplansandspecifications.
EXAMPLE:
Issue:Doestheamountofthebond(20%)refertothewholeunfinished
A and B are heirs of C. They agreed to divide the inheritance as
work?
follows:toAahouseandlotandhomeappliancesandtoBa
246 ricefield,acarandP100,000.00cash.
OBLIGATIONSArt.1223 (2) Quantitative division or one based on quantity rather than on
quality.
Held:No.Thepartiescontemplateadivisibleobligationnecessitatinga
performance in proportion to the uncompleted work. The quoted EXAMPLE:
wordsmeanabondequalto20%ofthenextstageofworktobedone.
Intheprecedingexample,iftheinheritanceconsistsonlyofaricefield
It would have been different were C is required to give a new
itspartitionbymetesandboundsintotwoequalpartsisaquantitative
performancebondtocovertheremainingvaluecostoftheunfinished
division.Anotherexample,iswhenAandBdivide300cavansofpalay
workoftheconstruction.(PasayCityGovernmentvs.CFIofManila,
harvestedfromthericefieldortheP100,000.00cash.
132SCRA156[1987];seeGonzalesvs.CourtofAppeals,124SCRA
(3)Idealorintellectualdivisionoronewhichexistsonlyintheminds
630[1983].)
oftheparties.
Kindsofdivision.
EXAMPLE:
Theyare:
Supposethecarandthericefieldinthefirstexample,wereinheritedby (3)Naturalindivisibility.wherethenatureoftheobjectorprestation
bothAandB. doesnotadmitofdivision,e.g.,togiveaparticularcar,tosingasong,
etc.(Ibid.,par.1.)
Ascoowners,theironehalfsharesinthecararenotseparableina
materialwaybutonlymentally.Similarly,beforethelandisactually Wherethereisonlyonecreditorandonedebtor.
dividedbetweenAandB,theyaremerelycoowners,andneitherone
TheprovisionsofChapter2,Title1,regardingtheNatureandEffect
of them can saythat heisthe absolute owner of a specific portion
ofObligationsingeneral(Arts.1163to1178.)arealsoapplicableto
thereof.
divisible or indivisible obligations. They contemplate obligations
Art.1224DIFFERENTKINDSOFOBLIGATIONS247Divisibleand involvingonlyonecreditorandonlyonedebtor.
IndivisibleObligations
Sincedivisibilityorindivisibilityreferstotheobjectorprestation(see
Kindsofindivisibility. Art.1210.),itdoesnotalterormodifysaidprovisions.(Art.1223.)
When there is only one creditor and one debtor, the latter has to
Theyare:
performtheobligationinitstotality,whetherornottheprestationis
(1)Legalindivisibility.whereaspecificprovisionoflawdeclaresas
divisible. Unless there is an express stipulation to that effect, says
indivisible,obligationswhich,bytheirnature,aredivisible(Art.1225,
Article 1248 (par. 1.), the creditor cannot be compelled partially to
par.3.);
receive the prestations in which the obligation consists; and in
(2)Conventionalindivisibility.wherethewillofthepartiesmakesas accordancewithArticle1232,anobligationisnotdeemedpaidunless
indivisible,obligationswhich,bytheirnature,aredivisible(Ibid.);and the thing or service in which the obligation consists has been
completelydeliveredorrendered,asthecasemaybe.
ART.1224.Ajointindivisibleobligationgivesrisetoindemnity In a joint indivisible obligation, the effect of noncompliance by a
fordamagesfromthetimeanyoneofthedebtorsdoesnotcomply debtoristomakeallthedebtorsliablefordamagesbuttheinnocent
withhisundertaking.Thedebtorswhomayhavebeenreadyto debtors shall not contribute beyond their respective shares of the
obligation.Theobligationbecomesadivisibleone.
fulfilltheirpromisesshallnotcontributetotheindemnitybeyond
thecorrespondingportionofthepriceofthethingorofthevalue TheaboveprovisionhasalreadybeenexplainedunderArticle1209.
oftheserviceinwhichtheobligationconsists.(1150)
ART.1225.Forthepurposesoftheprecedingarticles,obligations
248OBLIGATIONSArt.1225 to give definite things and those which are not suscep tible of
partialperformanceshallbedeemedtobeindivisible.
Effect of noncompliance by a debtor in a joint indivisible
obligation. Whentheobligationhasforitsobjecttheexecutionofacertain
numberofdaysofwork,theaccomplishmentofworkbymetrical
Ifanyoneofthedebtorsdoesnotcomplywithhisundertakingina
units,oranalogousthingswhichbytheirnaturearesusceptibleof
jointindivisibleobligation,theobligationistransformedintoonefor
damages, i.e., to pay money. The creditor cannot ask for specific partialperformance,itshallbedivisible.
performanceorrescissionbecausethereisnocauseofactionagainst
However, even though the object or service maybe physi cally
theotherdebtorswhoarewillingtofulfilltheirpromises.
divisible, an obligation is indivisible if so provided by law or
Inasolidaryobligation,thebreachbyacodebtormakesalldebtors intendedbytheparties.
liablefordamages.Theobligationremainssolidarywithoutprejudice
totheirrightagainsttheguiltyornegligentdebtor.(Art.1221,par.2.)
In obligations not to do, divisibility or indivisibility shall be (2) Obligations which are not susceptible of partial performance
determinedbythecharacteroftheprestationineachparticular (Ibid.).
case.(1151a) EXAMPLES:
Obligationsdeemedindivisible. Tosingasong;todancethetinikling.
The above article lays down the general rule for determining the Here, the obligation is indivisible by reason of its purpose which
divisibility or indivisibility of an obligation. As has been seen, requirestheperformanceofalltheparts.
however,thepurposeoftheobligationisthecontrollingcircumstance.
Istheobligationstillindivisible,iftherearemorethanoneparticipant?
Thisruleappliesnotonlytoobligationstogivebutalsotothoseof
The obligation becomes divisible as far as the participants are
doingornotdoing.(4SanchezRoman94.)
concernedbecauseitiscapableofpartialperformance.
Divisible and indivisible obligations are not to be confused with

(3) Obligations provided by law to be indivisible even if thing or
divisibleandindivisiblecontracts.(seeArt.1420.)
serviceisphysicallydivisible(par.3.).
Art.1225DIFFERENTKINDSOFOBLIGATIONS249Divisibleand
EXAMPLE:
IndivisibleObligations
Underthelaw,taxesshouldbepaidwithinadefiniteperiod.Although
(1)Obligationstogivedefinitethings(par.1.).EXAMPLES:
money is physically divisible, the amount of tax payable must be
Togiveaparticularelectricfan;todeliveraspecificcar.Here,the deliveredintoto,notpartially.
obligationisindivisiblebecauseofthenatureofthesubjectmatter.
(4)Obligationsintendedbythepartiestobeindivisibleevenifthingor TheobligationofXtopaintthehouseofY,thepaintingtobefinished
serviceisphysicallydivisible(par.3.). in10days.Here,theobligationneednotbefulfilledatonetime.
EXAMPLES: (2)Obligationswhichhavefortheirobjecttheaccomplishmentofwork
bymetricalunits(Ibid.).
TheobligationofDtogiveP1,000.00toConacertaindate.Moneyis
physically divisible but the clear intention here is for D to deliver EXAMPLES:
P1,000.00atonetimeandasawhole.
TheobligationofXtomakeatable,3feetwideand5feetlong;the
Suppose there are two debtors, D and E, is the obligation still obligationofXandYtodeliver20cubicmetersofsand.
indivisible?TheobligationbecomesdivisibleasfarasDandEare
ButtheobligationofXalonetodeliver20cubicmetersofsandis
concernedbecausethedeliveryofP1,000.00canbedoneinparts,e.g.,
indivisible.
P500.00byDandP500.00byE.However,asfarasCisconcerned,the
(3)Obligationswhichbytheirnaturearesusceptibleofpartialperfor
obligationremainsindivisiblebecauseitsperformancecannotbedone
mance(Ibid.).
inparts.
EXAMPLE:
TheobligationofXtoteachObligationsandContractsforoneyear
Obligationsdeemeddivisible.
in a university; the obligation of Y to render 3 song numbers in a
(1) Obligationswhichhavefortheirobjecttheexecutionofacertain
program;theobligationofZtopayadebtofP12,000.00in12monthly
numberofdaysofwork(par.1.).
installments of P1,000.00 (see Soriano vs. Montes, 1 SCRA 366
EXAMPLE:
[1961].)buteachprestationtopayP1,000.00isindivisibleasitistobe Art.1225DIFFERENTKINDSOFOBLIGATIONS251Divisibleand
deliveredatonetimeandinitstotality. IndivisibleObligations
Divisibilityorindivisibilityinobligationsnottodo. (2)Divisibleobligation.IftheobligationofXisnottosellcigarettes
in his stores only during Sundays and holidays, the obligation is

Innegativeobligationsnottodo,thecharacteroftheprestationineach
divisiblebecausetheforbearanceisnotcontinuous.
particularcaseshalldeterminetheirdivisibilityorindivisibility.(Ibid.)
Obligations to do and not to do are generally indivisible.

EXAMPLES:
Obligationstodostatedinparagraph2ofArticle1225aredivisible.
(1) Indivisible obligation. X obliged himself to Y not to sell

oOo
cigarettes in his store for one year. Here, the obligation should be
fulfilledcontinuouslyduringacertainperiod.

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Chapter3 and

DIFFERENTKINDSOFOBLIGATIONS (f)Obligationswithapenalclause.(Arts.12261230.)(2) Secondary

. (a) Pure and conditional obligations (Arts.

. (b) Obligations with a period (Arts. 1193

. (c) Alternative (Arts. 11991205.) and

civillaw. . 4) possible or impossible (see Arts. 1183,

. a) conjunctive. demandable at the same

immediately due and demandable, for C may rely on the wording

fulfillment. Of course, if the loan has just been contracted by D, a

the happening of afuture anduncertainevent whichconstitutes the

1305and1475.1 (JohannesSchuback&Sonsvs.CourtofAppeals, 2 theindebtedness,AandBcontendedthatsincetheirsignatureswere

condition.Article1262isnotapplicable. (Romanvs.Grimalt,6Phil. merit.Thereisnothingatallintheordinance(No.2969ofQuezon

Art. 1179 DIFFERENT KINDS OF OBLIGATIONS 101 Pure and

Cclaimedthatsincetheconditionimposedwas not compliedwith,

condition is not complied with or is not deemed complied with. assumedbyBtopaywhatthevendor(S)owedtoseveralpartiesmen

Meanwhile, nothing is acquired and there is only an expectancy of tionedinthedeed;ifSpaidhisdebts,thesaleshallbecomeinoperative

thetitleofMeralco,andtorepossessthepropertyasprovidedinits perfectionof acontractandthat imposedonthe performanceofan

SCRA173[1982].) failure of a contract, while failure to comply with the second(e.g.,

influence on the existence of the obligation, but in diametrically CourtofAppeals,263SCRA569[1996];seeArt.1545;Babasavs.

it is the resolutory condition that is fulfilled, the obligation is Whenobligationdemandableatonce.

(Ibid., par. 2.); or

. (3) whenitissubjecttoaresolutoryperiod. rightofS.However,Shasnotyetreceivedthenoticethathehadwon

(Art. 1193, par. 2.) thecase.Now,SobligedhimselftosellthelandtoBforadefinite

depend upon the happening of the event which constitutes the

This article reiterates the distinction between a suspensive (or

Issue: IsXliableforthedayshedidnotusethelorchaswhilethey (DandS)undertaketopaytoCsuchsumsasDmayfailtoturninas

Held: No.TheobligationassumedbyXwasaconditionalone.Since InanactionbyCtorecovertheamountofthepromissorynote,Cdid

debtor to deliver to creditor proceeds of sales of merchandise delivertoCthetotalproceedsofthesalesofthemerchandiseforthe

conditionthatDwillpayovertoCattheendofeachmonthallsums (2) Loss of rights already acquired. In obligations subject to a

agreement shall cease to exist. The right of X was expressly Phil.49[1905];seeRomanvs.Grimalt,6Phil.96[1906],supra.)

Issue:IstheagreementonthepartofBtocompletethetitlepapersa Art. 1181 DIFFERENT KINDS OF OBLIGATIONS 109 Pure and

terminatingtherightofpossessionanduse.Theagreementindicates Issue: WhatistheeffectofBsnoncompliancewiththeresolutory

of their respective properties. (Baluran vs. Navarro, 79 SCRA 309

ILLUSTRATIVE CASES: Facts:SsoldtoBaparceloflandsubjecttotheconditionthatBmakes

bidofS. Public Schools through an Affidavit of Acceptance and/or

biggerlandwhichwasusedforthesamepurpose. him toaccomplishor attain;anend,intention, or aim, object, plan,

project. Term is synonymous with the ends sought, an object to be

(2) Purposeofdonationremainsthesame. Withouttheslightest Classificationsofconditions.

depends upon chance or upon the will of a third person, the

and physically; and

(a) Potestative. theconditiondependsuponthewillofoneofthe

obligation provided therein were sufficient to prevent the statute of

1. Validity of stipulation in a contract of employment that grant of

(6)Iwillpayyouthepriceoftheforestconcessionyousoldmeupon Facts: On the basis of the stipulation inserted in the contract of

Inalltheabovecases,boththeconditionsandtheobligationsarevoid. Held: Apromiseofthischaractercreatesalegalobligationbinding

of theemployer. (Liebnowvs. Phil. Vegetable Oil Co., 39Phil. 60 estate.Wemustnotlosesightofthefactthatthesedebtswerethenso

property itself, with all its improvements making it practically

hasobtainedaloan. Facts: PrivaterespondentYFwascontractedbypetitionerSBTCto

for P200,000.00. Despite this recommendation and several demands

from private respondent, SBTCfailedtomake payment. It denied

ineffectaconditiondependentonpetitioner banks solewill, since sametohim.

Issue: Is the condition obnoxious to the first sentence contained in Servicescontinuedasporteragecontractor.KServicesreceivedaletter

andII. porterage service was specified up to a certain period is a clear

Thewilltosellonthepartofthedebtor(intestate)waspresentinfact, Held: No.(1) Conditiondefendantuponothercircumstances. The

additiontotheacceptabilityofthesaletohim(obligor),therewerestill if he likes to pay the sums advanced, or any other condition of

presenceofabuyer,ready,able,andwillingtopurchasetheproperty depend, the condition would be potestative, dependent exclusively

contract was subject to a potestative condition which rendered the respondent)isforcedtostop,abandoned(sic)itsoperationasapublic

of a third person, which do not invalidate the aforementioned

case, the conditional obligation is void. Based on this definition, Wheresuspensiveconditiondependspartlyuponthewillofdebtor.

constituted. If the impossibility arises after the creation of the

unlawfulconditionshallbevalid. (1) Conditional obligation void. Impossible conditions annul the

Art. 1184 DIFFERENT KINDS OF OBLIGATIONS 125 Pure and carisvoidbecauseitisdependentuponanimpossiblecondition.

In conditional testamentary dispositions and in simple and obligation,and,therefore,doesnotdependuponthefulfillmentofthe