OBLIGATIONS AND CONTRACTS
REVIEWER
TITLE V PRESCRIPTION
Prescription a mode of acquisition of a right
by the lapse of time; a mode of acquiring
ownership.
- limitation; the time within which an
action must be brought after the right
of action has accrued.
PRESCRIPTION
Acquisitive
Prescription or
adversepossession
Extinctive
Prescription or
limitation of actions
Chapter 1 General Provisions
ARTICLE 1106. By prescription, one
acquires ownership and other real rights
through the lapse of time in the manner and
under the conditions laid down by law.
In the same way, rights and actions
are lost by prescription.
Acquisitivebased on the assertion by a usurper
of an adverse right for such a long time,
uncontested by the true owner of the right as to
give rise to the presumption that the latter has
given up such right in favor of the former.
Extinctivebased on the probability that the
alleged right which accrued in the distant past
never existed or has already been extinguished;
or if it exists, the inconvenience caused by the
lapse of time should be borne by the party
negligent in the assertion of his right.
The purpose is to protect the diligent and
vigilant, not the person who sleeps on his rights,
forgetting them and taking no trouble of
exercising them one way or another to show that
he truly has such rights.
Retroactivity of Prescriptiononce the period
is completed the new owner is considered as
having acquired the thing or right from the
moment the period began to run.
Prescription as a matter of defenseit must
be pleaded; it must be proved or established with
the same degree of certainty as any essential
allegation in the civil action.
Characteristics of Prescription:
(1) In the concept of an owner if the
possessor disregards the owner and
exercise right contrary to that of the
latter. (Note: When there is merely license
or tolerance, there is no concept of
owner.)
(2) Public when the acts of enjoyment are
executed in such a manner as to be
manifest or visible to all, especially to the
person against whom the possession may
be considered public; it must be known to
the owner of the thing.
(3) Peaceful when it is acquired and
maintained without any violence, physical
or moral. (Note: use of force sanctioned
under Article 429 that which is
reasonably necessary to repel or prevent
an actual or threatened unlawful physical
invasion of the property)
(4) Uninterrupted when the possessor has
never ceased to manifest with external
acts his intention to exercise a right over
the thing, which presupposes that he has
never in fact ceased to exercise the right.
(Note: not understood in an absolute
sense; it may be exercised in intervals)
(5) Adverse the claimant must clearly,
definitely, and unequivocally notify the
owner of his (the claimants) intention to
avert an exclusive ownership in himself.
Interruption Discontinuity
Interruption is a positive act of a third person.
(Ex. act of deprivation of enjoyment of the things
by a third person, or any other acts which
interrupts prescription)
Discontinuity is a negative act or abstention on
the part of the possessor himself.
Concept of Owner
License is a positive act of the owner in favor of
the holder of the thing.
Tolerance is the passive acquiescence of the
owner to acts being performed by another which
appears to be contrary to the rights of the
former.
In both cases, the possessor acts in
recognition of the rights of the owner.
But, if the possessor disregards the owner
and exercise rights contrary to that of the latter,
the possession is now converted into
concept of owner and can be a basis of
prescription.
Thus, tenants cannot acquire tenanted
lands by prescription and antichretic creditor
cannot acquire the land of his debtor by
prescription.
ARTICLE 1107. Persons who are capable of
acquiring property or rights by the other
1
legal modes may acquire the same by means
of prescription.
Minors and other incapacitated
persons may acquire property or rights by
prescription, either personally or through
their parents, guardians or legal
representatives.
Who may acquire property or rights by
prescription?
(1) Those who can make use of the other
modes of acquiring ownership (such as
donation, succession, sale). (General
Rule)
(2) Even minors and other incapacitated
persons (like the insane). (Exception)
Capacity refers to juridical capacity.
Juridical Capacity and Capacity to Act
Article 37 of the Civil Code provides:
Juridical capacity, which is the fitness to
be the subject of legal relations, is inherent in
every natural person and is lost only through
death. Capacity to act, which is the power to do
acts with legal effect, is acquired and may be
lost.
Minor the general rule is that he cannot enter
into a contract of sale personally; it has to be
with a legal representative, parents or the legal
guardian.
However, in prescription, he may do so
personally or through parents, guardians or legal
representatives.
Note: In the case of minors and other
incapacitated persons, acquiring personally
requires the element of discernment. This is
based on animusrem sibi habiendi or intent
to appropriate the thing as ones own.
Without discernment, there is a need for
them to be represented by a legal guardian,
parents or legal representatives.
ARTICLE 1108. Prescription, both
acquisitive and extinctive, runs against:
(1) Minors and other incapacitated
persons who have parents, guardians
or other legal representatives;
(2) Absentees who have administrators,
either appointed by them before their
disappearance, or appointed by the
courts;
(3) Persons living abroad, who have
managers or administrators;
(4) Juridical persons, except the State
and its subdivisions.
Persons who are disqualified from
administering their property have a right to
claim damages from their legal
representatives whose negligence has been
the cause of prescription.
Article 1108 refers to the running of
prescription against those persons enumerated
therein. Thus, they may lose property or rights
by prescription.
What if the minor or other incapacitated persons
do not have parents, guardians or other legal
representatives?
The Code of Civil Procedure has already been
repealed by the New Civil Code but Sections 42,
45 and 46 have not been expressly repealed by
the NCC. Thus, they are still applicable.
Act No. 190 (Sections 42 and 45) of the
Code of Civil Procedure:
Act No. 190have the effect of giving the
incapacitated person the designated period after
the removal of the disability within which to
bring suit, if the period of prescription has
already expired.
Note: This saving period is only
applicable after the original period of
prescription has expired; this extends to all
parties who have a joint and inseparable interest
with the party under disability (ex. co-heirs, co-
owners).
Note: Act No. 190 do not apply when the
minors or incapacitated persons have parents,
guardians or other legal representatives.
Section 42. If the person entitled to bring the
action mentioned in the preceding sections of
this chapter (title to land by prescription) is, at
the time the cause of action accrues, within the
age of minority, of unsound mind, or in prison,
such person may, after the expiration of ten
years (the period of prescription provided for
title to lands) from the time the cause of action
accrues, bring such action within three years
after such disability is removed.
Section 45. If a person entitled to bring any
action mentioned in either of the last two
preceding sections (extinctive prescription in all
other civil actions aside from suits on title to
land) is, at the time the cause of action accrues,
within the age of minority, or unsound mind, or
in prison, such person may bring such action
within two years after the disability is removed.
2
GR: Even if the minor or other incapacitated
persons have no parents, guardians or other
legal representatives, prescription could still run
against them but they have a certain number of
years within which to bring an action after their
disability had been removed.
Juridical persons, except the State and its
subdivisions
GR: Properties of the state which are not
patrimonial in character cannot be acquired by
prescription.
ARTICLE 1109. Prescription does not run
between husband and wife, even though
there be a separation of property agreed
upon in the marriage settlements or by
judicial decree.
Neither does prescription run
between parents and children, during the
minority or insanity of the latter, and
between guardian and ward during the
continuance of the guardianship.
Reason: Influence or affection may prevent one
from bringing an action against the other. This is
applicable evenwhen there is a separation of
property(paraphernal or capital).
Instances where prescription would apply
between husband and wife:
(1) In cases of action for legal seprataion
(Article 57, FC) 5 years from the time of
the occurrence of the cause.
(2) Objections to decisions made by the
husband in the administration and
enjoyment of the common property
(Articles 96 and 124, FC); Article 96
absolute community property, 5 years;
Article 124 conjugal partnership
property, 5 years. Note: administration
and enjoyment do not include disposition
or encumbrance.
ARTICLE 1110.Prescription, acquisitive and
extinctive, runs in favor of, or against a
married woman.
By marrying, you do not lose your
capacity or your personality.
What about married men? There is no need to
emphasize because there was never any doubt as
to the mens rights, whether married or not.
ARTICLE 1111. Prescription obtained by a
co-proprietor or a co-owner shall benefit the
others.
Is it necessary for the other co-owners to
ratify in order that prescription obtained by
one co-owner may benefit them?
Under Article 1111, it seems that such
ratification is not necessary. However, this
should only apply when the prescription has a
relation to the property owned in common.
The mere existence of the relationship of
co-owners will not in itself suffice to give the
benefit of prescription by one in favor of all the
others.
Ex. A, B, and C are co-owner of a parcel of land
in Manila; then A takes possession of a piece of
land in Zamboanga, not only for himself by also
on behalf of B and C. The prescription cannot
benefit B and C, unless they ratify the possession
acquired by A for them, under the provisions of
Article 532 of the Code. This is because the
possession of land in Zamboanga is so unrelated
to the possession of the land owned in common
in Manila that A cannot be considered as a
representative of the co-ownership.
Article 532. Possession may be acquired
by the same person who is to enjoy it, by his
legal representative, by his agent, or by any
person without any power whatever; but in the
last case, the possession shall not be considered
as acquired until the person in whose name the
act of possession was executed has ratified the
same, without prejudice to the juridical
consequence of negotiorum gestio in a proper
case.
ARTICLE 1112. Persons with capacity to
alienate property may renounce prescription
already obtained, but not the right to
prescribe in the future.
Prescription is deemed to have been
tacitly renounced when the renunciation
results from acts which imply the
abandonment of the right acquired.
Unilateral RenunciationThe renunciation of
prescription already acquired is a unilateral act,
and does not require the acceptance of the
person to be benefited by it. No formality is
required for it; it may even be tacit.
Tacit RenunciationWhere a party
acknowledges the correctness of a debt and
promises to pay it after the same has prescribed
and with full knowledge of the prescription, he
thereby waives the benefit of prescription.
Ex. If after prescription has run, the
maker of a note, in a letter to the holder thereof,
acknowledges the existence of the debt, but says
that an extension of time had been given to him,
the case is taken out of prescription.
3
Note: A simple acknowledgement, which
contains no new and positive promise to pay the
debt which has prescribed, such as a promise to
pay only one-half, or even a part payment, does
not amount to a renunciation of the prescription.
Renunciation in advance is VOID.
Thus, no renunciation can be made, at the
time of entering into a contract, of the right of
pleading a prescription which may thereafter be
acquired. And an agreement that the obligations
arising from the contract shall not be subject to
prescription, is not binding.
Renunciation by Representatives, not
allowed.
Only persons with capacity to alienate
property can renounce prescription already
obtained. Hence, an administrator or executor is
without power to renounce or waive prescription
after it has been acquired in favor of the estate
he represents.
Neither can a guardian revive against his
ward a debt of his ward which has prescribed;
hence, if a guardian pays a debt which has
prescribed before his administration began, he
will be liable for the amount.
ARTICLE 1113. All things which are within
the commerce of men are susceptible of
prescription, unless otherwise provided.
Property of the State or any of its
subdivisions not patrimonial in character
shall not be the object of prescription.
Object of Prescription
Under Article 530 of the Code, only things
susceptible of being appropriated may be the
object of possession. Since possession is an
essential element of prescription, it follows that
things which are not susceptible of appropriation
cannot be acquired by prescription. Thus
common things, property of public dominion, and
intransmissible rights (such as the right to
surname), cannot be acquired by prescription.
Exceptions The following, although within the
commerce of man cannot be acquired by
prescription:
(1) Movables possessed through a crime; and
(2) Land registered under the Torrens
system.
Patrimonial Property of State- Under Article
1113, property of the State or any of its
subdivisions not patrimonial in character shall
not be the object of prescription.
By implication, patrimonial property
may be the object of prescription. However,
under Article 1108, it is provided that
prescription runs against juridical persons,
except the State and its subdivisions.
How should the inconsistency above be
resolved? Can patrimonial property be acquired
by prescription as against the State or its
subdivisions?
Following the rules of construction,
patrimonial property can be acquired by
prescription against the State or any of its
subdivisions.
In sum, the general rule is that all things which
are within the commerce of men are susceptible
of prescription. If it is the property of the state,
such cannot be the subject of prescription if it is
not patrimonial in character. Thus, patrimonial
properties can be the subject of prescription. (?)
Commerce of men refers to those properties
which can be appropriated, subject of
appropriation. They are not res nullius or res
communes.
Res nullius refers to those properties which
are not owned by anyone.
Res communesrefers to those properties
which are owned by everyone. Ex. city hall,
public road.
The above general rule is subject to
the two exceptions (i.e. two instances when
even if a property is within the commerce of
man, it cannot be acquired by prescription
movables possessed through crimes and those
lands registered under the Torrens system).
ARTICLE 1114. Creditors and all other
persons interested in making the
prescription effective may avail themselves
thereof notwithstanding the express or tacit
renunciation by the debtor or proprietor.
Creditors may plead prescriptionThe law
accords to all creditors and persons who have an
interest in the extinguishment of an obligation,
the right to plead prescription for themselves,
even if the person bound by the obligation should
renounce such prescription.
Thus, a current creditor of a corporation
may interpose the plea of prescription to prevent
the corporation from paying prescribed debts
ahead of the current creditor.
Note: Prescription pleaded by one creditor does
not inure to the benefit of another creditor.
4
ARTICLE 1115. The provisions of the
present Title are understood to be without
prejudice to what in this Code or in special
laws is established with respect to specific
cases of prescription.
There are other laws enumerating the
prescriptive periods and the rule on prescription.
Articles 1106-1155 are not exclusive.
ARTICLE 1116. Prescription already running
before the effectivity of this Code shall be
governed by laws previously in force; but if
since the time this Code took effect the
entire period herein required for
prescription should elapse, the present Code
shall be applicable, even though the former
laws a longer period might be required.
New Civil Code took effect on August 30, 1950.
What happens if the possession started before
the New Civil Code and ended under the New
Civil Code?
General Rule: It is the Old Civil Code that will
govern.
Exception:If the NCC provides for a shorter
period. However, the counting of the period
should be reckoned from August 30, 1950, the
date of effectivity of the NCC.
Exception to the Exception:If counting
starting from the date of effectivity would yield a
longer period. Thus, the OCC shall apply.
Chapter 2 Prescription of Ownership and
Other Real Rights
ARTICLE 1117. Acquisitive prescription of
dominion and other real rights may be
ordinary or extraordinary.
Ordinary acquisitive prescription
requires possession of things in good faith
and with just title for the time fixed by law.
Requisites of Acquisitive Prescription:
(1) Capacity to acquire by prescription (See
Article 1107);
(2) A thing capable of acquisition by
prescription (If it is within the commerce
of man);
(3) Possession of the thing under certain
conditions (See Article 1118 concept of
an owner, public, peaceful,
uninterrupted); and
(4) Lapse of time provided by law (Ordinary
10 years; Extraordinary 30 years).
Note: The first two requisites are the same for
ordinary or extraordinary prescription; the last
two requisites vary for each kind.
Ordinary Acquisitive Prescriptionrequires
possession of things in good faith and with just
title for the time fixed by law. (Good faith + Just
title; usually 10 years)
Thus, where a husband merely lent his
name to be used in the execution of simulated
deeds of sale, the acquisition in his name being
really for his wifes separate estate, there is
neither just title nor good faith upon which he
and his heirs can base ownership through
ordinary prescription.
Extraordinary Prescription This refers to the
possession of things in bad faith and without just
title (usually 30 years).
What if the possession begins in good faith,
but later on is converted into bad faith? How
long should the prescription be, ordinary or
extraordinary?
There are three (3) possible solutions:
(1) The supervening bad faith erases the
former possession in good faith, and
extraordinary prescription will run from
the date of possession in bad faith.
(2) The prescription will be extraordinary, but
the period will be counted from the time
the possession began.
(3) The prescription will be extraordinary
but the possession in good faith shall
be computed in the proportion that
the period of extraordinary
prescription bears to that of ordinary
prescription.
The last solution appears to be the most
acceptable, because it reflects the difference
between the two kinds of prescription and gives
the proper value to possession in good faith. The
first is inadmissible, because it places a
possessor who began in good faith in a worse
position than one who began in bad faith. The
second is likewise unacceptable because
5
possession in good faith and possession in bad
faith are given identical effects.
ARTICLE 1118. Possession has to be in the
concept of an owner, public, peaceful and
uninterrupted.
ARTICLE 1119. Acts of possessory character
executed in virtue of license or by mere
tolerance of the owner shall not be available
for the purposes of possession.
Concept of Owner For a claim of acquisitive
prescription to prosper, possession of property
must be in the concept of owner for a certain
period of time.
Thus, possession by virtue of license or by
mere tolerance does not constitute possession.
License vs. Tolerance
Licenseis a positive act of the owner in favor of
the holder of the thing.
Toleranceis the passive acquiescence of the
owner to acts being performed by another which
appear to be contrary to the rights of the former.
In both cases of license and tolerance, the
possessor acts in recognition of the rights of the
owner.
The moment the possessor disregards the
owner and exercises rights in opposition to that
of the latter, the possession is converted into one
in concept of owner and can now be the basis
of prescription.
(See Page 1 for the definition of Public, Peaceful,
and Uninterrupted)
ARTICLE 1120. Possession is interrupted for
the purposes of prescription, naturally or
civilly.
Effect of InterruptionWhen prescription is
interrupted, all the benefits acquired so far from
the possession cease; when prescription runs
again, it will be entirely a new one.
Interruption vs. Suspension of Prescription
Suspension the past period is included in the
computation, being added to the period after
prescription is resumed.
Examples: when a child becomes insane,
or a ward is placed under guardianship, in the
cases contemplated in Article 1109.
ARTICLE 1121. Possession is naturally
interrupted when through any cause it
should cease for more than one year.
The old possession is not revived if a
new possession should be exercised by the
same adverse claimant.
ARTICLE 1122. If the natural interruption is
for only one year or less, the time elapsed
shall be counted in favor of the prescription.
ARTICLE 1123. Civil interruption is
produced by judicial summons to the
possessor.
Judicial summon one that comes from the
court.
ARTICLE 1124. Judicial summons shall be
deemed not to have been issued and shall
not give rise to interruption:
(1) If it should be void for lack of legal
solemnities;
(2) If the plaintiff should desist from the
complaint or should allow the
proceedings to lapse;
(3) If the possessor should be absolved
from the complaint.
In all these cases, the period of the
interruption shall be counted for the
prescription.
In Lacuesta vs. Guerrero, the Supreme Court
ruled that a suit brought and abandoned or
decided against the plaintiff is considered as
never having been commenced. Thus,
prescription was not suspended. (?)
Effects of Recovery of PossessionUnder
Articles 1121 and 1122, in case of natural
interruption, the old possession loses all its
juridical effects, and even if the possession is
reacquired, the old possession canot be tacked to
the new possession for purposes of prescription.
But in case of civil interruption, if the
possession is recovered, it can be connected to
the time that has elapsed as if it were in fact
continuous; the period of interruption is to be
counted for the prescription. (There really was
no interruption in cases under Article 1124)
ARTICLE 1125. Any express or tacit
recognition which the possessor may make
of the owners right also interrupts
possession.
Recognition by possessorIn order to interrupt
prescription, the recognition of the owners right
must be made by the possessor.
The declaration of a third person that the
property does not belong to the possessor, when
such declaration has not been authorized or
6
ratified by the possessor, does not interrupt the
possession for prescription.
ARTICLE 1126. Against a title recorded in
the Registry of Property, ordinary
prescription of ownership or real rights
shall not take place to the prejudice of a
third person, except in virtue of another
title also recorded; and the time shall begin
to run from the recording of the latter.
As to lands registered under the Land
Registration Act, the provisions of that
special law shall govern.
Prescription can only be available if there
is another title also recorded in the registry of
property. The time of recording is deemed to be
the time when constructive notice takes place.
Paragraph 2 Those lands covered by Torrens
titles.
ARTICLE 1127. The good faith of the
possessor consists in the reasonable belief
that the person from whom he received the
thing was the owner thereof, and could
transmit his ownership.
Good faith It is the reasonable belief that the
person from whom we received the thing was the
owner thereof and could transmit his ownership.
ARTICLE 1128. The conditions of good faith
required for possession in Articles 526, 527,
528, and 529 of this Code are likewise
necessary for the determination of good
faith in the prescription of ownership and
other real rights.
Good faith is presumed unless the contrary is
proved.
ARTICLE 1129. For the purposes of
prescription, there is just title when the
adverse claimant came into possession of
the property through one of the modes
recognized by laws for the acquisition of
ownership or other real rights, but the
grantor was not the owner or could not
transmit any right.
The title of the possessor must be just,
true, valid, and proved.
Just Title is an act which has for its purpose
the transmission of ownership, and which would
have actually transferred ownership if the
grantor had been the owner. This vice or defect
is the one cured by prescription.
Ex: sale with delivery, exchange, donation,
succession, and dation in payment.
The following do not constitute title: lease of
things, loan, deposit, and all contracts which do
not transmit property rights; and partition,
compromise, and court decisions, which are all
declaratory of property rights, but do not
transmit them.
In Article 1129, the only defect is that
the transferor is not the owner of the
property. There is no other defect.(Just title)
ARTICLE 1130. The title for prescription
must be true and valid.
True Title To be true, the title must exist
actually, and not merely in the mind of the
possessor. A legally non-existent title is without
value.
The following do not constitute true title: A will
that has been revoked by an unknown
subsequent will which is later discovered;
simulated title (Note that relative simulation is
not included), false title (one which does not
exist but is believed by the possessor to exist).
False title; if the mistake of fact refers to an act
of a third person, the title is sufficient for
prescription. But if it refers to the act of the
possessor himself, it is insufficient.
Thus, if one buys from an insane party,
believing that an insane person can validly
alienate property, the title is not sufficient; but if
he did not know that the vendor was insane, then
the title is sufficient.
Revocable title one in which the transferor
has made a reservation by virtue of which the
right of the possessor may disappear, cannot
serve as a basis for prescription; but once the
reservation becomes ineffective, the period that
has run can be counted for the prescription. Ex.
a sale with right to repurchase.
Valid title The validity of the title means that it
should be sufficient to transmit the right of the
grantor had been the owner. A void title is
insufficient; but a voidable title, so long as it has
not been annulled, can be the basis of ordinary
prescription.
When the title is subject to a suspensive
condition, the period of prescription begins to
run from the fulfillment of the condition; if the
condition is resolutory the period begins at once,
without prejudice to the effect of the resolution
by the condition which may later happen.
ARTICLE 1131. For the purposes of
prescription, just title must be proved; it is
never presumed.
7
 Title Must be Proved This is an
exception to the general rule embodied in Article
541, which presumes a just title for every
possessor in the concept of owner.
Article 1131 refers to the creation or
acquisition of the right of ownership and
therefore demands greater guaranty of the
existence of a title. On the other hand, Article
541 refers only to an existing fact, that of
possession. (Manresa, Sanchez Roman, and
Valverde)
ARTICLE 1132. The ownership of movables
prescribes through uninterrupted
possession for four years in good faith.
The ownership of personal property
also prescribes through uninterrupted
possession for eight years, without need of
any other condition.
With regard to the right of the owner
to recover personal property lost or of which
he has been illegally deprived, as well as
with respect to movables acquired in a
public sale, fair, or market, or from a
merchants store the provisions of Articles
559 and 1505 of this Code shall be observed.
Movables: 4 years if in good faith; 8 years if in
bad faith.
Immovables: 10 years if in good faith; 30 years if
in bad faith.
ARTICLE 1133. Movables possessed through
a crime can never be acquired through
prescription by the offender.
This only pertains to the offender. If such
offender sold it to a third person under the
conditions mentioned in the preceding article
(i.e. public sale, etc.), the latter can acquire the
property by prescription.
ARTICLE 1134. Ownership and other real
rights over immovable property are acquired
by ordinary prescription through possession
of ten years.
Ordinary Prescription for Immovables
10 years and must be in the concept of an owner,
public, peaceful, and uninterrupted.
ARTICLE 1135. In case the adverse claimant
possesses by mistake an area greater, or
less, than that expressed in his title,
prescription shall be based on the
possession.
Constructive PossessionThe possession upon
which prescription is based, is not limited to the
area actually occupied, but covers the area over
which the possession is asserted.
Therefore, the area referred to by the
present article as possessed by mistake, must be
deemed to include not only that actually and
physically occupied but also everything under
constructive possession.
Ex. Actual possession of a part or a tract of land,
with title or claim to the whole, with intention to
claim everything within the title or the area over
which the right is asserted, is possession of the
whole as will serve as a basis for prescription of
the entire tract.
Note: The doctrine of constructive possession
does not apply where the possession is without
title. The basis is the possession and not the title
although the latter is a requisite.
ARTICLE 1136. Possession in wartime, when
the civil courts are not open, shall not be
counted in favor of the adverse claimant.
In this case, prescription is suspended.
ARTICLE 1137. Ownership and other real
rights over immovable also prescribe
through uninterrupted adverse possession
thereof for thirty years, without need of title
or of good faith.
When Title is VoidEven when the title of the
possessor is void such as an oral donation of real
property, he may acquire ownership by
prescription under the provisions of this article.
Note: This will not apply to a property under the
Torrens system.
ARTICLE 1138. In the computation of time
necessary for prescription, the following
rules shall be observed:
(1) The present possessor may complete
the period necessary for prescription
by tacking his possession to that of
his grantor or predecessor in interest;
(2) It is presumed that the present
possessor who was also the possessor
at a previous time, has continued to
be in possession during the
intervening time, unless there is
proof to the contrary;
(3) The first day shall be excluded and
the last day included.
Tacking of PossessionThe present possessor
must have obtained his possession from the
previous possessor. There must be privity
between them. Tacking is possible only when
there is a succession of rights between the
predecessor and the successor. A mere usurper
8
cannot invoke the possession of any previous
possessor.

Different Character of PossessionWhen the

possession of the predecessor is in good faith,
and that of the successor is in bad faith, or vice
versa, how will the period be computed? Will
there be tacking of possession? Will the
prescription be ordinary or extraordinary?

(1) The present possessor may complete

the period necessary for prescription
by tacking his possession to that of
his grantor or predecessor in interest;

Ex. If your predecessor had been in

possession for 10 years but in bad faith, and then
he died and you inherited the property how many
more years do you need?

Only 20 years. You can tack the possession of

your predecessor. This presupposes that there
has been no interruption.

(2) It is presumed that the present

possessor who was also the possessor
at a previous time, has continued to
be in possession during the
Chapter 3 Prescription of Actions
intervening time, unless there is
proof to the contrary; Prescription of Actions

This is a mere disputable presumption (i.e.
that there is no interruption).
(3) The first day shall be excluded and
the last day included.
Ex. You are a possessor in good faith for 4 years
and then subsequently you learned that your
predecessor was not the owner but you still
continued possessing the property. How many
more years do you need to be able to acquire the
property?
According to Tolentino, multiply the four
years by two and the result should be deducted
from the required number of years when
possession is in bad faith. Thus, 4x2=8 and 30-
8=22.
In its ordinary and legal sense, the term
prescription of actions or limitation of
actions refers to the time within which an action
may be brought, or some act done, to preserve a
right.
Prescription is a legal, and not a natural
cause of the extinguishment of obligations.
Statute of Limitationsare acts limiting the
time within which actions shall be brought.
Statute of limitation do not confer any right of
action, but are enacted to restrict the period
within which the right, otherwise unlimited,
might be asserted. They are not matters of
substantive right, but are available only as
defenses.
Note: The prescription of actions in the Civil
Code contemplates civil actions and not criminal
actions.

Prescription vs. Laches

Prescription Laches
Concerned with the Concerned with the
fact of delay. effect of delay.
Prescription is a matter Laches is principally a
of time. question of inequity of
permitting a claim to
be enforced, this
inequity being founded
on some change of

9
 condition of the
property or the relation
of the parties.
Prescription is Laches is not; it applies
statutory; it applies to to equity.
law.
Prescription is based Laches is not.
on fixed time.
ARTICLE 1139. Actions prescribe by the
mere lapse of time fixed by law.
Leap Year in PeriodFor the purpose of
computing the prescriptive period where there is
a leap year involved, February 28 and 29 should
be counted as separate days, not as one day.
Effect of Lapse of TimeThe lapse of the period
of prescription provided by law has the effect of
extinguishing the action.
The mere delay in the enforcement of a
claim does not reslt in any reduction or loss of
right, unless the full period required by law for
prescription has expired.
Prescription to be Pleaded The bar of the
statute of limitations cannot be asserted as a
defense unless it is specially pleaded in the
answer and proven with the same degree of
certainty by which any essential allegation in the
pleadings is established.
The right to prescription may be waived
or renounced. It is deemed waived if not timely
raised or pleaded before or during the hearing of
the case. It has been held, however, that even if
not pleaded, if it is apparent on the face of the
complaint, it may be favorably considered, even
after evidence is adduced.
ARTICLE 1140. Actions to recover movables
shall prescribe eight years from the time the
possession thereof is lost, unless the
possessor has acquired the ownership by
prescription for a less period, according to
Articles 1132, and without prejudice to the
provisions of Articles 559, 1505, and 1133.
Actions to recover movables shall prescribe in
eight (8) years.
Article 559. The possession of movable
property acquired in good faith is equivalent to a
title. Nevertheless, one who has lost any movable
or has been unlawfully deprived thereof, may
recover it from the person in possession of the
same.
If the possessor of a movable lost or of
which the owner has been unlawfully deprived,
has acquired it in good faith at a public sale, the
owner cannot obtain its return without
reimbursing the price paid therefor.
Article 1133. Movables possessed through a
crime can never be acquired through
prescription by the offender.
Article 1132. The ownership of movables
prescribes through uninterrupted possession for
four years in good faith.
The ownership of personal property also
prescribes through uninterrupted possession for
eight years, without need of any other condition.
With regard to the right of the owner to
recover personal property lost or of which he has
been illegally deprived, as well as with respect to
movables acquired in a public sale, fair, or
market, or from a merchants store the
provisions of Articles 559 and 1505 of this Code
shall be observed.
Article 1133. Movables possessed through a
crime can never be acquired through
prescription by the offender.
Article 1505. Subject to the provisions
of this Title, where goods are sold by a person
who is not the owner thereof, and who does not
sell them under authority or with the consent of
the owner, the buyer requires no better title to
the goods than the seller had, unless the owner
of the goods is by his conduct precluded from
denying the sellers authority to sell.
Nothing in this Title, however, shall
affect:
(1) The provisions of any factors acts,
recording laws, or any other provision of
law enabling the apparent owner of goods
to dispose of them as if he were the true
owner thereof;
(2) The validity of any contract of sale under
statutory power of sale or under the order
of a court of competent jurisdiction;
(3) Purchases made in a merchants store, or
in fairs, or markets, in accordance with
the Code of Commerce and special laws.
ARTICLE 1141. Real actions over immovable
prescribe after thirty years.
This provision is without prejudice to
what is established for the acquisition of
ownership and other real rights by
prescription.
Actions over immovables prescribe after 30
years.
ARTICLE 1142. A mortgage action
prescribes after ten years.
Ex. Foreclosure of mortgage prescribes in ten
years.
Effect of InterestIf the action to recover the
mortgage debt itself has prescribed, the action to
recover the interest must also be prescribed.
10
ARTICLE 1143. The following rights, among
others specified elsewhere in this Code, are
not extinguished by prescription:
(1) To demand a right of way, regulated
in Article 649;
(2) To bring an action to abate a public or
private nuisance.
The two instances enumerate above cannot
be barred by prescription.
Between Co-owners and Co-heirsUnder
Article 494 of the Civil Code, no prescription
shall run in favor of a co-owner or co-heir against
his co-owners or co-heirs so long as he expressly
or impliedly recognizes the co-ownership. The
possession of each of the co-owners or co-heirs is
in the nature of a subsisting trust and considered
to be in the name of the others.
This cannot be invoked when one of the
co-owners or co-heirs has possessed the property
as exclusive owner for a period sufficient to
acquire the property by prescription.
Other Imprescriptible Actions:
(a) An action by the government or a
government entity;
(b) An action for mandamus;
(c) An action to enforce an express trust, as
long as the trustee does not repudiate the
trust;
(d) An action to quiet title to property in
ones possession;
(e) An action or defense to declare a contract
or judgment void ab initio; and
(f) An action of the registered owner to
recover his land.
ARTICLE 1144. The following actions must
be brought within ten years from the time
the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
Upon a Written Contract The prescriptive
period will run from the time there is a validation
of the said contract and not from the date of its
execution.
Upon an Obligation Created by LawEx.
obligation to give support, etc.
Upon a JudgmentNote that when the courts
execute a judgment, it is not automatically
executed. (motion for execution, etc.)
Implied TrustsWhen property is registered in
anothers name, an implied or constructive trust
is created by law in favor of the true owner. The
action for reconveyance of the title to the
rightful owner prescribes in ten years from the
issuance of the title. But if fraud has been
committed, and this is the basis of action, not
implied trust, the action will be barred after four
years.
ARTICLE 1145. The following actions must
be commenced within six years:
(1) Upon an oral contract;
(2) Upon a quasi-contract.
Upon an Oral Contract 6 years. (Note that
Written Contract prescribes in 10 years)
Upon a Quasi-contract Can either be
negotiorum gestio or solution indebiti.
ARTICLE 1146. The following actions must
be instituted within four years:
(1) Upon an injury to the rights of the
plaintiff;
(2) Upon a quasi-delict.
Injury to RightsEx. When an employee is
separated from his employment for unjustifiable
causes, such unjustified separation is an injury to
the rights of the employee. Thus, the action may
be brought within four (4) years under Article
1146. (Note: The 1-year period fixed by the Rules
of Court within which a petition for quo
warranto should be filed, counted from the date
of ouster, does not apply)
Action on Fraud An action based on fraud
prescribes in four years from discovery of the
fraud.
Upon a Quasi-delictA quasi-delict is an act or
omission causing damage or injury to another
where there is negligence or fault. (4 years
prescriptive period)
ARTICLE 1147. The following actions must
be filed within one year:
(1) For forcible entry and detainer;
(2) For defamation.
Forcible Entry is when, within a period of one
year, a person has been deprived of his
possession of his property through force,
violence, threat, strategies, and stealth.
Unlawful Detainer - An action for unlawful
detainer exists when a person unlawfully
withholds possession of any land or building
against or from a lessor, vendor, vendee or other
persons, after the expiration or termination of
the right to hold possession, by virtue of any
contract, expresses or implied.
Defamation - can give rise to civil or criminal
action. (slander, libel)
11
ARTICLE 1148. The limitations of action
mentioned in Articles 1140 to 1142, and
1144 to 1147 are without prejudice to those
specifies in other parts of this Code, in the
Code of Commerce, and in special laws.
Default period is five years. When will the right
of action accrue? See discussion under Article
1150.L
ARTICLE 1149. All other actions whose
periods are not fixed in this Code or in other
laws must be brought within five years from
the time the right of action accrues.
Right to Collect TaxesLimitations upon the
right of the government to assess and collect
taxes will not be presumed in the absence of
clear legislation to the contrary, and where the
government has not by express statutory
provision provided a limitation upon its right to
assess unpaid taxes, such right is
imprescriptible.
ARTICLE 1150. The time for prescription for
all kinds of actions, when there is no special
provision which ordains otherwise, shall be
counted from the day they may be brought.
Time From Which Period Computed In cases
where there is no special provision for such
computation, recourse must be had to the rule
that the period must be counted from the day on
which the corresponding action could have been
instituted.
It is the legal possibility of bringing the
action which determines the starting point for
the computation of the period. The period
should not be made to retroact to the date of
execution of the contract.
Accrual of Cause of ActionA cause of action
arises when that which should have been done is
not done, or that which should not have been
done is done. (Elements: legal right of the
plaintiff, legal duty of the defendant, violation or
breach of that right or duty with consequential
injury or damage to the plaintiff)
The moment the breach of right or duty
occurs, then the right of action accrues, and the
action can be legally instituted; from that
moment, therefore, the period of prescription
begins to run.
ARTICLE 1151. The time for the
prescription of actions which have for their
object the enforcement of obligations to pay
principal with interest or annuity runs from
the last payment of the annuity or of the
interest.
Obligations with InterestArticle 1151 is only
applicable to cases where the principal debt is
already due. Where there is a period for the
principal obligation which is not yet due,
payment of interest at stipulated intervals does
not cause the running of the period of
prescription, which will commence only after the
maturity of the debt. But where the existence of
a past due mortgage was recognized by
payments of interest, prescription run only from
the past payment of interest.
The reason for this Article is that after the
last payment, no subsequent payments had been
made. This is where the injury to ones right
begins.
ARTICLE 1152. The period for prescription
of actions to demand the fulfillment of
obligations declared by a judgment
commences from the time the judgment
became final.
Article 1152 refers to an action to
demand the fulfillment of an obligation declared
by a judgment. Thus, the right arises from the
declaration contained in such judgment.
When Judgment Becomes Final:
Trial Court judgment becomes final upon the
expiration of the period for appeal; thereafter,
prescription begins to run.
Supreme Court or the Court of Appealsthe
true judgment is that entered by the clerk of that
Court pursuant to the dispositive part of its
decision, and the period of prescription is,
therefore, computed from the date such
judgment is entered. (Under Article 1144, the
period is ten years)
Ex. In recovery of possession of land from a
person, you cannot just go to the premises of
such land and show the possessor the copy of the
decision granting you the ownership of such
land. You have to move for the execution of that
decision. It is the sheriff of the Court who will go
to the premises and demand that the possessor
vacate the land.
ARTICLE 1153. The period for prescription
of actions to demand accounting runs from
the day the persons who should render the
same cease in their functions.
The period for the action arising from
the result of the accounting runs from the
date when said result was recognized by
agreement of the interested parties.
Action to Compel AccountingThe period of
prescription of an action to compel an
accounting by a joint account partner begins to
12
run from the date of the retirement of the
members from whom accounting is demanded. It
begins to run from the dissolution of a
partnership when the final accounting is done.
ARTICLE 1154. The period during which the
obligee was prevented by a fortuitous event
from enforcing his right is not reckoned
against him.
Suspension During War The statute of
limitations is suspended by war, rebellion or
insurrection only when the regular course of
justice is interrupted to such an extent that
courts cannot be kept open and are not within
the reach of the people.
Effect of Destruction of Judicial RecordsAll
terms or periods fixed by law or regulations shall
cease to run from the date of destruction of the
records of the case, and shall only begin to run
again on the date when the parties or counsel
shall have received notice to the effect that the
records have been reconstituted.
ARTICLE 1155. The prescription of actions
is interrupted when they are filed before the
court, when there is a written extrajudicial
demand by the creditors, and when there is
any written acknowledgment of the debt by
the debtor.
Filing Action in Court The filing of an action
interrupts extinctive prescription as to the
parties defendants therein. Such interruption
lasts during the pendency of the action.
The action is deemed filed and legally
commenced from the time the complaint is
docketed in the Court, without taking into
account the issuance and service of summons,
which is not necessary for the interruption of
prescription. It is necessary that the action be
filed before the expiration or lapse of the period
of prescription fixed by law.
Note: Although an action is started
within the prescriptive period, if the plaintiff
desists in its prosecution or judgment is
unconditionally stayed for one reason or another,
the running of the period of limitations is not
suspended. The parties are left in exactly the
same position as if no action had been
commenced at all.
Written Extrajudicial Demand (by the
creditors)Prescription of action will be
interrupted when there is a written extrajudicial
demand by the creditor. (Ex. sending a demand
letter to the debtor for the payment of debt)
The burden of proof to show such demand
is upon the creditor. The law requires that such
demand be in writing. Hence, a verbal demand
upon the debtor is not sufficient to interrupt or
renew the prescriptive period.
Written Acknowledgment of the Debt (by the
debtor) Even if there was no demand made by
the creditor, the prescriptive period is
interrupted once there is a written
acknowledgment of the debt made by the debtor.
Under Article 1125, express or tacit
recognition is sufficient. However, under Article
1155, such acknowledgment must be in
writing.Does this mean that the
acknowledgment under this Article must
always be express?
No. The acknowledgment must always be
in writing but the recognition of the debt may be
either expressly stated therein or may be implied
therefrom.
The acknowledgment of the debt may
be made by a legal representative (guardian,
executor or administrator).
Note: A mere offer to compromise a suit upon a
supposed to debt is not an admission that
anything is due, and cannot be considered as an
acknowledgment that would interrupt the
running of the period of prescription.
Also, when a debtor acknowledges receipt
the statement of an account but denies declines
to recognize the correctness of the account,
there is no such acknowledgment as will
interrupt the running of prescription.
Note: A mere acknowledgment of the
obligation after it has already prescribed is not
sufficient to renew the period of prescription. If
the period has prescribed, there must be a
renunciation of the prescription already
acquired, in order that the action may be
revived.
A mere acknowledgment of the debt does
not constitute renunciation of the prescription
already acquired; there must be a new and
positive promise to pay in order to nullify the
prescription that has already accrued.
Effect of Part PaymentsPart payment cannot
interrupt the period of prescription. Under the
Old Civil Code, a partial payment before the
period has elapsed is undoubtedly an implied
acknowledgment of the debt. But the present
Civil Code requires that the acknowledgment, in
order to interrupt prescription, must be written,
unlike the Old Civil Code which did not require a
writing; hence, the legal impossibility of
considering payment as an acknowledgment
sufficient to interrupt prescription.
13
14
BOOK IV OBLIGATIONS AND CONTRACTS

TITLE I OBLIGATIONS

Chapter 1 General Provisions

ARTICLE 1156. An obligation is a juridical

necessity to give, to do or not to do.

Obligation

An obligation is a juridical relation

whereby a person (called the creditor) may
demand from another (called the debtor) the
observance of a determinate conduct, and, in
case of breach, may obtain satisfaction from the
assets of the latter. (Arias Ramos)

Correlative of RightWhere there is a right or

power to demand, there is a correlative
obligation or an imposition upon a person of a
definite conduct.

The right to demand the object of the

obligation is a credit, and the duty to give, to do
or not to do, it is a debt. The concepts of credit
and debt are thus two distinct aspects of the
unitary concept of obligation.

Elements of Obligation:

(1) An active subject, who has the power to

demand the prestation, known as the
oblige or creditor;
(2) A passive subject, who is bound to
perform the prestation, known as the
obligor or debtor;
(3) An object or the prestation; and

15
 (4) The efficient cause or the juridical tie (2) It must be determinate, or, at least,
between the two subjects by reason of determinable according to pre-established
which the debtor is bound in favor of the elements or criteria; and
creditor to perform the prestation. (3) It must have a possible equivalent in
money.
Note: Some writers add a fifth one: the form in
which the obligation is manifested. However, Note: The prestation need not be of an economic
there is no particular form required to make character to have pecuniary value, because all
obligations binding, except in certain rare cases. interests, even moral ones, in view of the
Thus, it cannot be considered essential. protection given to them by law, have some
pecuniary value. (Ex. personal obligation of the
Personal Elements husband and wife to observe mutual fidelity
which, if violated, may result to legal separation
The personal elements of an obligation which has pecuniary consequences.
are the active and the passive subjects. The
active subject, or the creditor, has the right to Efficient Cause The efficient cause, or the
demand; the passive subject, or the debtor, has juridical or legal tie, is the vinculum, which may
the juridical necessity of adjusting his conduct to either be a relation established (1) b law (such as
the demand of the creditor pursuant to the the relation of husband and wife giving rise to
obligatory tie. the obligation to support); or (2) by bilateral acts
(such as contracts giving rise to the obligations
The subjects may be individual persons stipulated therein); or (3) by unilateral acts (such
or juridical persons. They need not be as crimes and quasi-delicts).
determined in the act constituting the obligation,
but they must be determinable in some manner. Distinguished from Natural Obligations
When either subject cannot be determined, the
obligatory tie can have no effect. The definition of obligation under Article
1156 is what is known as civil obligations, or
Object of Prestation The object of an those which give a right of action to compel their
obligation is not a thing but a particular conduct performance. They do not include natural
of the debtor. Thus, the object is always a obligations, which are those which cannot be
prestation. This may consist in give or doing or enforced by court action but which are binding
not doing something. on the party who makes them, in conscience and
according to equity and natural justice. Article
To give is one in which the prestation 1423 to 1430 deal with natural obligations.
consists in the delivery of a movable or an
immovable thing, in order to create a real right, Civil Obligations Natural Obligations
or for the use of the recipient, or for its simple Civil obligations derive Natural obligations
possession, or in order to return it to its owner. their binding force derive their binding
from positive law. effect from equity and
Ex. Obligations to deliver the thing in the natural justice.
contracts of sale, deposit, lease, antichresis, Civil obligations can be The fulfillment of
pledge, and donation. enforced by court natural obligations
action or the coercive cannot be compelled
To doincludes all kinds of work or services.
power of public by court action but
Ex. It may involve some work on the part authority. depends exclusively
of the debtor, whether it be physical or mental, upon the good
such as in contracts of employment or conscience of the
professional services; in other cases, it is merely debtor.
the necessity of concluding a juridical operation,
such as, when a person promises to give a bond. ARTICLE 1157. Obligations arise from:
Not to doconsists in abstaining from some
(1) Law;
act. This includes not to give, both being (2) Contracts;
negative obligations. (3) Quasi-contracts;
(4) Acts or omissions punished by law;
Ex. The duty of a person not to create a and
nuisance on his property. (5) Quasi-delicts.

Requisites of Prestation: Criticisms regarding the above

enumeration:
(1) It must be possible, physically and
juridically;

16
Planiol All obligations arise either from
contract or from law. In contracts, the will of the
parties is the force that creates the obligation;
the law merely sanctions its effectiveness and
limits its scope.
In the absence of a contract, obligations
can have no other source than the law; if the
debtor becomes bound, it is not because he likes
it, but because the law makes him liable in order
to prevent unjust enrichment or future damage
(as in quasi-contracts) or to repair an injury
already caused (as in crimes and quasi-delicts).
Ruggiero All obligations originate from one of
only two sources: (1) the will of the parties, and
(2) acts of a different nature producing a
juridical tie.
However, these theories are not
acceptable because there is a fundamental
difference between obligations arising purely
from law, and those which arise from other acts
not constituting contract. In the obligations
arising purely from law, it is the law which
creates the obligation in view of the organization
of juridical institutions and the social interest;
while in those arising from acts other than
contract, there is always some individual act
which gives rise to the obligation, and the law
intervenes only to provide a sanction or prevent
an injustice.
A more scientific classification of the
sources of obligations, therefore, advocated by
many writers, including Sanchez Roman and De
Buen, is that which considers two main sources:
law and acts, although not exclusive of each
other. And the acts which give rise to obligations
can in turn be classified into four groups:
(1) Licit acts created by the concurring will
of various persons, such as in contracts.
(2) Licit acts either voluntary (but without
concurrence of wills) or involuntary, such
as quasi-contracts.
(3) Illicit acts of a civil character which are
not punishable, and which may be
voluntary or involuntary, such as
negligence, fraud, delay, fault and abuse
of rights.
(4) Illicit acts, which are voluntary and
punishable, such as crimes.
Note: Unjust enrichment can be placed under
quasi-contract and abuse of rights under
quasi-delict.
Unilateral PromiseUnilateral engagements
may give rise to obligations without need of
acceptance. The one promising the reward or
prize acquired an obligation to pay, but because
the offer is made to the public in general, no
specific acceptance is possible.
Can the unilateral promise be
accepted as a source of obligation in our
law?
According to Camus, since our Code
contains no provision from which we can
attribute any obligatory force to a unilateral
promise before acceptance, the general rule is
that the pollicitatio of the Roman law is to be
followed; that is, an offer without acceptance is
not binding.But by way of an exception, there
may be cases in which courts may recognize an
obligatory character in some unilateral
manifestations of the will.
As observed by the Spanish writers, it
cannot be said with certainty that the
enumeration in this article is exclusive, because
there is nothing which expressly precludes other
sources of obligations, such as the unilateral
promise to the public of an award for a certain
act or accomplishment.
ARTICLE 1158. Obligations derived from law
are not presumed. Only those expressly
determined in this Code or in special laws
are demandable, and shall be regulated by
the precepts of the law which establishes
them; and as to what has not been foreseen,
by the provisions of this Book.
Agreement UnnecessaryThe law cannot exist
as a source of obligations, unless the acts to
which its principles may be applied exist. But
once those acts or facts exist, the obligations
arising therefrom by virtue of express provisions
of the law are entirely independent of the
agreement of the parties. Such obligations and
their correlative rights are governed by the law
by which they are created.
Obligation Not PresumedObligations derived
from law are not to be presumed. Only those
expressly provided for in this Code or in special
laws are enforceable.
ARTICLE 1159. Obligations arising from
contracts have the force of law between the
contracting parties and should be complied
with in good faith.
Principle of Autonomy of Will This
presupposes that the contract is valid and
enforceable. The terms of the contract should,
therefore, not be contrary to law, morals, good
customs, public policy, or public order. If the
contract does not violate any of these limitations,
it should be given effect, notwithstanding the
absence of any legal provision at the time it was
entered into which governs it.
17
Note: The falsification of a contract by the
unauthorized insertion of additional stipulations
does not void the whole contract, which must
still be enforced, disregarding only the additional
stipulations.
Exception to Article 1159: Attorneys
Contracts
An attorney is not entitled, in the absence
of express contract, to recover more than a
reasonable compensation for his services; and
even where there is an express contract, the
court can ignore it and limit the recovery to
reasonable compensation if the amount of the
stipulated fee is found by the court to be
unreasonable. Thus, in order to enable the court
to ignore an express contract for attorneys fees,
it is not necessary to show, as in other contracts,
that it is contrary to morality or public policy. It
is enough that it is unreasonable or
unconscionable.
Pre-Contractual Obligations: Can damages
suffered by a party during the period of
negotiations be recovered, if the contract is
not finally perfected? (i.e. expenses for trips,
inspections, testing, plans, technical opinions,
etc., and such expenses that would be a total loss
if the offeror suddenly withdraws his offer)
Yes, provided that the offer must be clear
and definite, thus leading the offeree in good
faith to incur expenses in the expectation of
entering into the contract; and the withdrawal of
the offer must be without any legitimate cause.
If the offeror, in so acting, is guilty of fault
or negligence, his liability would be based on
Article 2176 (on quasi-delicts). But if there is no
fault or negligence, and the withdrawal was in
abuse of right, then the basis of his liability
would be Article 19 of the Civil Code.
ARTICLE 1160. Obligations derived from
quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of this
Book.
Quasi-Contract A quasi-contract is a juridical
relation which arises from certain lawful,
voluntary, and unilateral acts, to the end that no
one may be unjustly enriched or benefitted at the
expense of another.
ARTICLE 1161. Civil obligations arising
from criminal offenses shall be governed by
the penal law, subject to the provisions of
Article 2177, and of the pertinent provisions
of Chapter 2, Preliminary Title, on Human
Relations, and of Title XVIII of this Book,
regulating damages.
Civil Liability from CrimesEvery person
criminally liable for a felony is also civilly liable.
(Article 100, RPC)
The plain inference form this provision is
that the civil liability springs out of and is
dependent upon facts which, if true, would
constitute a crime.
Such civil liability is a necessary
consequence of criminal proceeding except
where the injured party reserves his right to
avail himself of it in a distinct civil action, and
except in cases where an independent civil
action is allowed by law.
The basis of civil liability arising from a
criminal act is the criminal act itself. However,
not all criminal acts causes material injury (e.g.
contempt), there being neither damages to be
compensated for, nor anything to be returned or
prejudice to be indemnified. Thus, there is no
civil liability to be enforced. But whenever the
criminal liability of a person is established, and
as a result of the offense committed there is
some harm to be indemnified or compensated,
the court must determine the civil liability
incurred by him (e.g. a person has been deprived
of the possession of his property). In this case,
the malefactor is responsible to the owner either
for the return of the property or for the payment
of its value if it cannot be returned.
Non-Liability for Crime Under Article 12 of
the Revised Penal Code (as amended by R.A.
9344), the following persons are exempt from
criminal liability, even if they have committed
acts which constitute a crime:
(1) An imbecile or an insane person, unless
the latter has acted during a lucid
interval;
(2) A person under fifteen years of age;
(3) A person over fifteen years of age and
under eighteen, unless he has acted with
discernment;
(4) Any person who acts under the
compulsion of an irresistible force; and
(5) Any person who acts under the impulse of
an uncontrollable fear of an equal or
greater injury.
Although these persons are exempt from
criminal liability, however, they are not exempt
from civil liability for their acts. Thus, Article 101
of the RPC provides for their civil liability.
The civil liability for acts committed by an
imbecile or insane person, and by a person under
nine years of age, or by one over nine but under
fifteen years of age who has acted without
discernment, shall devolve upon those having
such person under their legal authority or
control, unless it appears that there was no fault
18
or negligence on their part. Should there be no
such person having such insane, imbecile or
minor under his authority, legal guardianship, or
control, or if such person be insolvent, said
insane, imbecile, or minor shall respond with
their own property, excepting property exempt
from execution.
The persons using violence or causing
fear to make another perform a criminal act,
shall be primarily liable, and secondarily, or if
there be no such persons, those doing the act
under force or through fear shall be liable with
their property not exempt from execution.
Subsidiary Liability for CrimeIn default of
the persons criminally liable, innkeepers, tavern-
keepers, and any other persons or corporations
shall be civilly liable for crimes committed in
their establishment, in all cases where a
violation of municipal ordinances or some
general or special police regulation shall have
been committed by them or their employees.
Innkeepers are also subsidiarily liable for
the restitution of goods taken by robbery or theft
within their houses from guests lodging therein,
or for the payment of the value thereof, provided
that such guests shall have been notified in
advance the innkeeper himself, or the person
representing him, of the deposit of such goods
within the inn; and shall furthermore have
followed the directions which such innkeeper or
his representative may have given them with
respect to the care of and vigilance over such
goods. No liability shall attach in case of robbery
with violence against or intimidation of persons
unless committed by the innkeepers employees.
The subsidiary liability established above
also applies to employers, teachers, persons, and
corporations engaged in any kind of industry for
felonies committed by their servants, pupils,
workmen, apprentices, or employees in the
discharge of their duties.
To hold employers subsidiarily liable for
the crime of an employee, however, it must be
committed in the performance of the functions or
duties of the employee.
Extent of Civil LiabilityThe extent of the civil
liability arising from crimes is governed by the
Revised Penal Code and the Civil Code.
RPC Articles 104, 105, 106, 107, 108, 109, 110,
and 111.
CC Articles 2202, 2204, 2206, 2211, 2219,
2220, and 2230.
Extinguishment of LiabilityThe civil liability
for crimes is extinguished by the same causes
provided by the Civil Code for the
extinguishment of other obligations. Such
liability continues, notwithstanding the fact that
the offender has served his sentence consisting
of imprisonment or deprivation of other rights,
or has not been required to serve the same by
reason of amnesty, pardon, commutation of
sentence, or any other reason. This is also true in
cases of subsidiary imprisonment.
Enforcement of Liability When a criminal
action is instituted, the civil action for recovery
of civil liability arising from the offense charged
is impliedly instituted with the criminal action,
unless the offended party expressly reserves
his right to institute it separately or the law
provides for an independent civil action. As a
general rule, therefore, after a criminal action
has been commenced, no civil action arising
from the same offense can be prosecuted.
No Criminal ProceedingA civil action may be
validly instituted, without the necessity of first
instituting the criminal action, not only for the
restitution of what has been taken or otherwise
illegally appropriated, but also for the reparation
of any damage caused, and the indemnity for
consequential damages.
Article 100 of the RPC does not give the
inference that in no case may one be declared
civilly liable without first being declared liable
criminally in a criminal prosecution.
Independent Civil ActionUnder the present
CC, there are cases in which the civil action
arising from a criminal act is entirely
independent of the criminal action; hence, the
civil action can be filed separately even without
any reservation in the criminal action. These
cases are exceptions to the general rule
contained in the Rules of Court that the filing of
the criminal action suspends the civil action.
(1) Obligations not arising from the act or
omission claimed to be criminal (Article
31, CC)
(2) Violations of constitutional rights and
liberties of individuals (Article 32, CC)
(3) Defamation, fraud, or physical injuries,
and (Article 33, CC)
(4) Refusal or failure of members of a local
police force to render protection to life or
property. (Article 34, CC)
Note: The amount of proof or evidence required
in order to recover on civil liability arising from a
crime, depends upon the nature of the
proceeding in which the claim is made (whether
it is in a criminal or civil case).
Effect of Acquittal in a Criminal CaseAn
acquittal in a criminal case does not necessarily
bar actions to claim civil liability. It is only when
the civil action is based on the very same facts
19
on which the criminal action which ended in
acquittal was based, that the acquittal will bar
the civil action.
Instances where the acquittal of the accused in a
criminal case does not prejudice civil action:
(1) Those involving independent civil action
(Articles 31, 32, 33 and 34)
(2) When the accused in a criminal
prosecution is acquitted on the ground
that his guilt has not been proved beyond
reasonable doubt (Article 29)
(3) Those involving civil liabilities not arising
from the criminal act.
ARTICLE 1162. Obligations derived from
quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this
Book, and by special laws.
Quasi-DelictWhoever by act or omission
causes damage to another, there being fault or
negligence, is obliged to pay for the damage
alone. Such fault or negligence, if there is no
pre-existing contractual relation between the
parties, is called a quasi-delict. (Article 2176)
The test in determining whether a person
is negligent in doing an act whereby injury or
damage results to the person or property of
another is this:
Would a prudent man, in the position of
the person to whom negligence is attributed,
foresee harm the person injured as a reasonable
consequence of the course about to be pursued?
Reasonable foresight of harm, followed by the
ignoring of the admonition born of this prevision,
is the constitutive fact of negligence.
Two (2) Kinds of Negligence:
(1) Culpa-aquiliana also known as culpa
extra-contractual, or negligence as a
source of obligation. (Quasi-delict);
governed by Articles 2176 to 2194 of the
CC.
(2) Culpa-contractual or negligence in the
performance of a contract; governed by
Articles 1179et sequel and other special
provisions relative to contracts in the
Code.
Quasi-delict as distinguished from Crime

An injured party or his heirs has the Quasi-delict Crime

choice between an action to enforce civil liability As to the The right The right
arising from crime under Article 100 of the RPC nature of the violated is a violated is a
and an action for quasi-delict under Articles right violated private right. public right. A
2176-2194 of the Civil Code. Quasi-delict is A wrong wrong against
different from delict. There is no need to make a against the the state.
reservation to file a civil action in the criminal individual.
case, as the civil action is based on culpa- As to the Criminal Criminal
aquiliana. condition of intent is not intent is
the mind necessary. necessary for
Fault or Negligence the existence
of criminal
Negligence is the failure to observe for the
liability.
protection of the interests of another person, As to legal There is a An act can be
that degree of care, precaution and vigilance basis of quasi-delict in punished as a
which the circumstances justly demand, whereby liability any act or crime only
such other person suffers injury. (Judge Clooney) omission when there is
wherein fault a penal law
Its application depends upon the situation
or negligence clearly
of the parties and the reasonable degree of care
intervenes. penalizing it.
and vigilance which the surrounding
As to liability Every quasi- There are
circumstances reasonably impose.
for damages delict gives crimes from
Note: Mere intoxication is not negligence. rise to liability which no civil
for damages to liability arises
Elements of negligence: the injured (i.e. contempt,
party. gambling,
(a) A duty on the party of the defendant to violations of
protect the plaintiff from the injury of ordinances
which the latter complains and traffic
(b) A failure to perform that duty, and
regulations
(c) An injury to the plaintiff through such
where nobody
failure.
is injured)
Test of Negligence As to the form The form of The form of
of redress redress is redress is fine
reparation of or

20
 the injury imprisonment, To give may refer either to (1) a specific or
suffered by the or both, the determinate object or thing, or (2) to an
injured party. fine accruing indeterminate or generic thing.
(compensation to the public
or treasury. Delivery of Generic Objects
indemnificatio (punishment)
Generic Thing - is one that is indicated only by
n)
its kinds, without being designated and
As to the Preponderanc Proof of guilt
distinguished from others of the same kind. (ex.
amount of e of the must be
to deliver a horse or a house)
evidence evidence beyond
reasonable In the obligation to deliver a generic
doubt thing, the object due is determinable; the
As to Liability from Criminal
moment it is delivered, it becomes determinate.
compromise quasi-delict liability can
can be never be Limited Generic Obligationwhen the generic
compromised compromised. objects are confined to a particular class. (ex. the
as any other obligation to deliver one of my horses)
civil liability.
Delivery of Determinate Thing

REQUISITES OF LIABILITY BASED ON Determinate or Specific Thingis one that is

QUASI-DELICT:
(1) That there exist a wrongful act or
omission imputable to the defendant by
reason of his fault or negligence,
(2) That there exists a damage or injury,
which must be proved by the person
claiming recovery, and
(3) That there must be a direct causal
connection or a relation of cause and
effect between the fault or negligence and
the damage or injury, or that the fault or
negligence be the cause of the damage or
injury.
Note: In determining liability for a quasi-delict,
the law regards the proximate and not the
remote cause.
individualized and can be identified or
distinguished from others of its kind. (ex.
Obligation to deliver my white horse or the
house at No. 10 Legarda Street)
Three (3) Incidental Obligations (in an obligation
to deliver a determinate thing):
(1) The obligation to preserve the thing with
due care, provided for in Article 1163,
(2) The obligation to deliver the fruits,
provided for in Article 1164, and
(3) The obligation to deliver the accessions
and accessories, provided for in Article
1166.
ARTICLE 1163. Every person obliged to give
something is also obliged to take care of it
with the proper diligence of a good father of
a family, unless the law or the stipulation of
the parties requires another standard of
care.

The obligation to deliver a thing would be

illusory if the debtor were not also obliged to
preserve it.

Diligence requiredDiligence of a good father

of a family (See Article 1173 for definition)

Effect of BreachFailure to exercise the

diligence of a good father of a family gives rise to
sanctions or liability for damages on the part of
the debtor.

However, if the failure of the debtor to

preserve the thing is due to nor fault or
negligence of his, but to fortuitous events or
force majeure, he is exempted from
Chapter 2 Nature and Effect of Obligations responsibility.

Three (3) Kind of Prestations in Obligatons ARTICLE 1164. The creditor has a right to
To give, To do, and Not to do. the fruits of the thing from the time the

21
obligation to deliver it arises. However, he
shall acquire no real right over it until the
same has been delivered to him.
The creditor or oblige, in an obligation to
deliver a determinate thing, is entitled to the
fruits from the time the obligation to deliver
arises. (The obligation to deliver arises differ
depending on the type of obligation)
(1) Law, Quasi-Delicts, Quasi-Contracts,
Crimes the specific provisions of law
applicable to the obligation
determinewhen the delivery should be
made.
(2) Obligations with a Suspensive
Conditionthe obligation to deliver arises
from the moment the condition happens.
(3) Obligation with a Suspensive Term or
Periodthe obligation to deliver arises
upon the expiration of the term or period.
(4) Obligation with neither Term nor
Condition the obligation to deliver
arises from the perfection of the contract
or the constitution or creation of the
obligation.
Real RightsA real right is the power
belonging to a person over a specific thing,
without a passive subject individually
determined, against whom such right may be
personally exercised.
It gives to a person a direct and
immediate juridical power over a thing, which is
susceptible of being exercised, not only against a
determinate person, but against the whole world.
Ex. Rights of ownership and possession
Personal Rights A personal right is the
power belonging to one person to demand of
another, as a definite passive subject, the
fulfillment of a prestation to give, to do, or not to
do.
Tradition or Deliverynon nudis pactis, sed
traditione dominia rerum transferentur (the
ownership of things is transferred not by mere
agreements but by delivery)
From the time the obligation to deliver a
determinate thing arises, the creditor has only a
personal right to the thing itself and to the fruits
thereof. Thus, he can only demand that the
debtor deliver such thing and its fruits.
(ownership has not yet been transferred)
Why is there a need for Tradition or
Delivery?
The delivery or tradition of a thing
constitutes a necessary and indispensable
requisite for the purpose of acquiring the
ownership of the same.
Ex. When there has been no delivery yet,
the proper action for a vendee to take against
the vendor of a thing is not one for revindicacion
(which is an action based on ownership), but one
for specific performance of the sale or for the
delivery of the thing.
ARTICLE 1165. When what is to be delivered
is a determinate thing, the creditor, in
addition to the right granted him by Article
1170, may compel the debtor to make the
delivery.
If the thing is indeterminate or
generic, he may ask that the obligation be
complied with at the expense of the debtor.
If the obligor delays, or has promised
to deliver the same thing to two or more
persons who do not have the same interest,
he shall be responsible for fortuitous event
until he has effected the delivery.
Remedies of Creditor (when the debtor fails to
comply with his obligation):
(1) An action for specific performance, to
obtain compliance of the prestation;
(2) An action, in some cases, to rescind or
resolve the obligation, and
(3) An action for damages, exclusively or in
addition to either of the first actions.
Specific PerformanceWhether the object of
the obligation is determinate or generic, the
creditor has the right to ask that the same be
performed.
In the delivery of generic objects, the
delivery of any thing belonging to the species
stipulated will be sufficient. The debtor cannot
avoid the obligation by paying damages if the
creditor insists on the performance.
In both cases, the creditor is entitled to
recover damages suffered, even if this is not
expressly mentioned by Article 1165 with
respect to generic objects.
Imprisonment for DebtUnder the
Constitution, no person shall be imprisoned for
debt. Thus, a debtor in a purely civil case cannot
be punished with imprisonment for non-
compliance with his obligation. However, this is
not without prejudice to subsidiary
imprisonment for non-payment of the civil
liability imposed in a criminal case, or to
imprisonment as a punishment for contempt.
ARTICLE 1166. The obligation to give a
determinate thing includes that of
22
delivering all its accessions and accessories,
even though they may not have been
mentioned.
Accessoriesthose things which, destined for
the embellishment, use, or preservationof
another thing of more importance, have for their
object the completion of the latter for which they
are indispensable or convenient.
Ex. machinery in a factor; the tools and spare
parts, with respect to a machine; the keys, with
respect to a house, etc.
Accessionsinclude everything which is
produced by a thing, or which is incorporated or
attached thereto, either naturally or artificially.
Note: The term accession as used under Article
1166 does not include fruits as mentioned under
Article 1164.
Thus, Article 1166 refers to the accession
continua, including the accession natural (such
as alluvion) and accession industrial (building,
planting, and sowing).
What to DeliverEverything that is attached,
naturally or artificially, to the principal thing, as
well as that which serves to complete it, even if
not attached to it, must be delivered together
with it.
However, the parties may still agree to
exclude any accession or accessory of the thing
to be delivered.
ARTICLE 1167. If a person obliged to do
something fails to do it, the same shall be
executed at his cost.
This same rule shall be observed if he
does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed
that what has been poorly done be undone.
Performance at Debtors CostWhen the
debtor does not comply with an obligation to do,
the creditor is entitled to have the thing done in
a proper manner, by himself or by a third person,
at the expense of the debtor.
The court has not discretion to merely
award damages to the creditor when the act can
be done in spite of the refusal or failure of the
debtor to do so.
Personal CompulsionThe law does not
authorize the imposition of personal force or
coercion upon the debtor to comply with his
obligation. There is no imprisonment for debt.
The ultimate sanction of civil obligations is
indemnification of damages.
Indemnification for Damages Where only
the debtor can do the thing, the only remedy is
to recover damages in case of non-performance
by him.
Note:Article 1167 presupposes that the act can
be done by persons other than the debtor.
Otherwise, the creditor can only resort to
indemnification for damages.
ARTICLE 1168. When the obligation
consists in not doing, and the obligor does
what has been forbidden him, it shall also
be undone at his expense.
Aside from undoing what is done in
violation of the prohibition, the debtor can also
be held liable for damages.
If the act cannot be undone or its effects
will not cease even if the thing prohibited be
undone, the only feasible remedy is
indemnification for the damages caused.
ARTICLE 1169. Those obliged to deliver or
to do something incur in delay from the
time the obligee judicially or extrajudicially
demands from them the fulfillment of their
obligation.
However, the demand by the creditor
shall not be necessary in order that delay
may exist:
(1) When the obligation or the law
expressly so declares; or
(2) When from the nature and the
circumstances of the obligation it
appears that the designation of the
time when the thing is to be delivered
or the service is to be rendered was a
controlling motive for the
establishment of the contract; or
(3) When demand would be useless, as
when the obligor has rendered it
beyond his power to perform.
In reciprocal obligations, neither party
incurs in delay if the other does not comply
or is not ready to comply in a proper manner
with what is incumbent upon him. From the
moment one of the parties fulfills his
obligation, delay by the other begins.
Delay synonymous to default or mora, which
means delay in the fulfillment of obligations; it is
non-fulfillment with respect to time.
There can be delay only in positive
obligations (to do and to give); but there can be
no delay in negative obligations (not to do and
not to give).
Three (3) Classes of Mora:
23
 (1) Mora solvendi default on the part of the
debtor which may either be ex re
(referring to obligations to give) or ex
persona (referring to obligations to do);
(2) Mora accipiendidefault on the part of the
creditor; and
(3) Compensatio Moraedefault of both
parties in reciprocal obligations.
MORA SOLVENDIis the delay, contrary to law,
in the fulfillment of the prestation by reason of a
cause imputable to the former. It presupposes a
prestation that is due and enforceable. There is
no mora in natural obligations.
In order that the debtor may be in default, it is
necessary that the following requisites be
present:
(1) That the obligation be demandable and
already liquidated;
(2) That the debtor delays performance; and
(3) That the creditor requires the
performance judicially or extrajudicially.
(Note: a mere reminder cannot be
considered a demand for performance)
Need for Demand Default generally begins
from the moment the creditor demands the
performance of the obligation. The demand may
be in any form, provided that it can be proved.
Demand is generally necessary even if a
period has been fixed in the obligation. Without
expressly stating that the debtor shall be in
default upon the maturity of the obligation, there
is no justification to hold the debtor in default.
Nature of DemandThe demand must refer to
the prestation that is due and not to another.
Four (4) cases where demand is not
necessary to constitute the debtor in
default:
(1) Where there is an express stipulation to
that effect;
(2) Where the law so provides;
(3) When the period is the controlling motive
or the principal inducement for the
creation of the obligation; and
(4) Where demand would be useless.
The other case where demand is not necessary to
constitute the debtor in default is when from the
nature and circumstances of the obligation, it
appears that the period was the determining
motive for the creation of the obligation.
Ex. the delivery of things or the rendition
of services to be employed in agricultural work,
the time of said work having been designated as
the date of the fulfillment of the obligation; or
the delivery of fruits or other objects which
might be used by the creditor in industrial
operations having a determinate period for their
completion; or where a building was to be
completed on a certain date because it was to be
opened as a school on a fixed date.
The law does not require expressly that
the debtor should know that the fixing of the
date for performance was a controlling motive on
the part of the creditor; but this knowledge is
essential in order that it can be said that the
debtor has tacitly consented to incur in delay
without the necessity of a demand.
Demand Useless Where the performance has
become impossible, demand will be useless and
will not be necessary to constitute the debtor in
delay, such as:
(1) When the impossibility is caused by some
act or fault of the debtor, such as when he
is absent or is in hiding, or has already
disposed of the thing which is to be
delivered, and
(2) When the impossibility is caused by
fortuitous event, but the debtor has bound
himself to be liable in cases of such
events.
Effects of Mora Solvendi:
(1) When it has for its object a determinate
thing, the delay places the risks of the
thing on the debtor; and
(2) He becomes liable for damages for the
delay.
MORA ACCIPIENDIis the delay in the
performance based on the omission by the
creditor of the necessary cooperation, especially
acceptance on his part. It is necessary, however,
that it be lawful for the debtor to perform, and
that he can perform.
The creditor incurs in delay when the
debtor tenders payment or performance, but the
creditor refuses to accept it without just cause.
Requisites:
(1) An offer of performance by the debtor
who has the required capacity;
(2) The offer must be to comply with the
prestation as it should be performed; and
(3) The creditor refuses the performance
without just cause.
Effects of Mora Accipiendi:
(1) The responsibility of the debtor for the
thing is reduced and limited to fraud and
gross negligence;
(2) The debtor is exempted from the risks of
loss of the thing, which automatically pass
to the creditor;
24
 (3) All expenses incurred by the debtor for
the preservation of the thing after the
mora shall be chargeable to the creditor;
(4) If the obligation bears interest, the debtor
does not have to pay the same from the
moment of the mora;
(5) The creditor becomes liable for damages;
and
(6) The debtor may relieve himself of the
obligation by the consignation of the
thing.
COMPENSATIO MORAEThe parties in a
bilateral contract can regulate the order in
which they shall comply with their reciprocal
prestations. But if the parties have not
determined the order of fulfillment of their
obligations, this fulfillment must be reciprocal
and simultaneous.
In reciprocal obligations, neither party
incurs in default if the other does not comply or
is not ready to comply in a proper manner with
what is incumbent upon him.(General Rule)
There may be cases of reciprocal
obligations in which different dates for
performance are fixed for the obligations. In
such cases, the default for each obligation must
be determined by the rules given in the first
parts of the present article.
Cessation of the Effect of MoraThe benefits
arising from default or delay may cease upon:
(1) Renunciation by the creditor may be
express or implied. There is implied
renunciation, when after delay has been
incurred, the creditor grants an extension
of time to the debtor or agrees to a
novation of the obligation.
(2) Prescription
ARTICLE 1170. Those who in the
performance of their obligations are guilty
of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof,
are liable for damages.
Non-Performance by FraudIn general, fraud
may be defined as the voluntary execution of a
wrongful act, or a willful omission, knowing and
intending the effects which naturally and
necessarily arise from such act or omission.
The fraud referred to in this article is the
deliberate and intentional evasion of the
normalfulfillment of obligations. It is
distinguished from negligence by the presence
ofdeliberate intent, which is lacking in the latter.
It is fraud in the performance of an obligation
already existing, as distinguished from the fraud
referred to in Article 1338 which is a cause of
nullity of contracts and which exists before and
at the moment of creating the obligation.
Thus, fraud, as a ground for damages
under the present article, implies some kind of
malice or dishonesty and it cannot cover cases of
mistake and errors of judgment made in good
faith. (it is synonymous to bad faith, which
imports a dishonest purpose or some moral
obliquity and conscious doing of wrong)
TEST: The element of intent, and not the degree
of actual harm done.
Fault or NegligenceThe concept of fault or
negligence in the fulfillment of obligations is
defined in Article 1173. This fault or negligence
is known as culpa contractual, to distinguish it
from the fault or negligence referred to in Article
2176, which is known as culpa aquiliana or
extra-contractual.
Culpa contractual is the fault or
negligence of the debtor as an incident in the
fulfillment of an existing obligation.
Culpa aquilianais the fault or
negligence which constitutes an independent
source of obligation between parties not
previously bound.
Note: Whether contractual or non-contractual,
the negligence of the defendant should be the
proximate cause of the damage to the plaintiff is
liability is to attach.
By Delay and Other Violation Not only
debtors guilty of fraud, negligence or default in
the performance of obligations, however, are
liable for damages. In general, every debtor who
fails in the performance of his obligation is
bound to indemnify for the losses and damages
caused thereby.
The phrase in any manner contravene
the tenor of the obligation includes any illicit
act which impairs the strict and faithful
fulfillment of the obligation, or every kind of
defective performance.
It is not enough, however, that there be
non-performance or delay to hold the debtor
liable for damages; such non-performance or
delay must be imputable to him. Such delay or
contravention must either be malicious or
negligent to be actionable.
Excuse for Non-PerformanceWhen the failure
of the debtor to perform is due to fortuitous
events or force majeure, he cannot be held liable
for damages, unless there is an express
agreement to the contrary, or the law otherwise
provides in particular cases.
25
Recoverable Damages The words damage and
damages are used by the Civil Code without any
qualification or limitation and should
comprehend all that are embraced within their
meaning. They include: physical or material,
moral or psychological, mental or spiritual,
financial, economic, social, political and
religious.
Payment of MoneyDamages may be recovered
under this article when the obligation is to do
something other than the payment of money; but
when the obligation consists only in the payment
of money, the rule of damages is that laid down
by Article 2209 of the Civil Code, which provides
as follows:
If the obligation consists in the payment
of a sum of money, and the debtor incurs in
delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment
of the interest agreed upon, and in the absence
of stipulation, the legal interest, which is six
percent per annum.
ARTICLE 1171. Responsibility arising from
fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.
The renunciation which is prohibited by
this article is that which is made in advance of
the fraud.
The law does not prohibit the
renunciation of the action for damages on the
ground of fraud already committed.
ARTICLE 1172. Responsibility arising from
negligence in the performance of every kind
of obligation is also demandable, but such
liability may be regulated by the courts,
according to the circumstances.
Two Kinds of Culpa: (1) Culpa contractual; and
(2) culpa aquiliana.
Distinction between culpa contractual and
culpa aquiliana:
Defense of Employer. Where the
liability arises from culpa aquiliana, not involving
a breach of existing obligation, an employer or
master, may exculpate or exempt himself from
liability, under the last paragraph of Article 2180
of the Civil Code, by proving that he had
exercised due diligence to prevent the damage;
whereas his defense is not available if the
liability of the master arises from a breach of
contractual duty or from culpa contractual.
Mitigation of Damages.Another
difference between liability arising from culpa
aquiliana and that arising from culpa
contractual, is that in dealing with the latter
form of negligence, the court is given a
discretion to mitigate liability according to the
circumstances of the case, under Article 1172 of
the Civil Code. No such general discretion is
given by the Code in dealing with liability arising
under Article 2176.
Question: When the employer is sued jointly
with the negligent employee, in cases of culpa
contractual, may the employee be held solidarily
with the employer?
Question: May a party to a contract validly
renounce in advance the right to enforce liability
arising from the fault or negligence of the other?
Stipulations exempting from liability for
gross negligence are void, because such
negligence amounts to a fraud.
What about simple negligence? The
validity of stipulations exempting from liability
for simple negligence can be accepted as a
general principle taking into account the
discretionary power of the courts to regulate
such liability. But stipulations exempting from
liability for negligence (in general) should not be
upheld in cases where there are strong reasons
against it. (Ex. in contracts of adhesion such as
contracts with transportation companies or
contracts of employment)
*Contract of Adhesion a contract where the
parties are manifestly in such an inequality of
positions that one could not freelybargain with
the other in the determination of the terms of the
contract.
ARTICLE 1173. The fault or negligence of
the obligor consists in the omission of that
diligence which is required by the nature of
the obligation and corresponds with the
circumstances of the persons, of the time
and of the place. When negligence shows
bad faith, the provisions of Articles 1171
and 2201, paragraph 2, shall apply.
If the law or contract does not state
the diligence which is to be observed in the
performance, that which is expected of a
good father of a family shall be required.
A good father of a family, or bonos
paterfamilias, means a person of ordinary or
average diligence. Anyone who used diligence
below this standard is guilty of negligence.
Note: There is no fixed standard of diligence
applicable to each and every obligation. Each
case must be determined upon its particular
facts and circumstances, and the degree of
diligence required for the performance of an
26
obligation must depend upon the circumstances
of the particular obligation.
ARTICLE 1174. Except in cases expressly
specified by the law, or when it is otherwise
declared by stipulation, or when the nature
of the obligation requires the assumption of
risk, no person shall be responsible for
those events which, could not be foreseen,
or which, though foreseen, were inevitable.
Fortuitous Even or Force MajeureThose
events which could not be foreseen, or which,
though foreseen, were inevitable.
There is no essential difference between
fortuitous event and force majeure; they both
refer to causes independent of the will of the
obligor.
Fortuitous events may be produced by two
general causes:
(1) By nature (such as earthquakes, storms,
floods, epidemics, fires, etc.)
(2) By the act of man (such as an armed
invasion, attack by bandits, governmental
prohibitions, robbery, etc.)
In order that acts of man may constitute
fortuitous event, it is necessary that they have
the force of an imposition which the debtor could
not have resisted.
Fortuitous event includes unavoidable
accidents, even if there has been an intervention
of human element, provided fault or negligence
cannot be imputed to the debtor.
Characteristics of a Fortuitous Event:
(1) The cause of the unforeseen and
unexpected occurrence, or the failure of
the debtor to comply with his obligations,
must be independent of the human will.
(2) It must be impossible to foresee the event
which constitutes the caso fortuito, or if it
can be foreseen, it must be impossible to
avoid.
(3) The occurrence must be such as to render
it impossible for the debtor to fulfill his
obligation in a normal manner.
(4) The obligor must be free from any
participation in the aggravation of the
injury resulting to the creditor.
Note: One who creates a dangerous condition
cannot escape liability although an act of God
may have intervened.
For the defense of force majeure to
prosper, the accident must be due to natural
causes, and absolutely without human
intervention.
Effect in GeneralWhen a debtor is unable to
fulfill his obligation because of fortuitous event
or force majeure, the general rule is that he
cannot be held liable for damages for non-
performance.
Effect of NegligenceIn order that fortuitous
event or force majeure may exempt a person
from liability, it is necessary that he be free from
negligence.
When the negligence of a person concurs
with an act of God in producing a loss, such
person is not exempt from liability by showing
that the immediate cause of the damage was the
act of God. To be exempt from liability for loss
because of an act of God, he must be free from
any previous negligence or misconduct by which
that loss or damage may have been occasioned.
Express Stipulation The parties may
expressly stipulate in their contract that the
debtor shall be liable to the creditor, even if
performance is rendered impossible by fortuitous
event of force majeure.
Assumption of RisksOne of theexceptions to
the general rule on fortuitous event is when the
nature of the obligation requires the assumption
of risk.
The principle of assumption of risk (or
doctrine of created risk) is based on social
justice.Accidents have frequently occurred in the
operation of the industrial properties used in the
further production of wealth for their owners,
and it is but just that those owners who benefit
from the operation of such properties should also
bear the risks arising therefrom.
If a person, for his convenience or profit,
creates risks for the public which formerly did
not exist, although morally his fault or
negligence may not be the cause of the damages
resulting therefrom, nevertheless he should be
liable for such damages: qui sentit
commodum sentire debet et incommodum.The
principle of created risk or assumption of
risk is an exception to the old and
traditional rule that there is no
responsibility without fault or negligence.
(Ex. derailment of a train those who are injured
must be indemnified by the transportation
company)
The liability, however, should be limited to
risks and events that are typical of the business
concerned; it cannot extend to dangers which
are not typical of the business, such as lightning
or earthquake causing injury to a train and its
passengers.
27
The doctrine of created risk is expressly provided
in the Mexican Code (Article 1913) as follows:
When a person makes use of machinery,
instruments, apparatus or substances which are
dangerous in themselves, by reason of their
speed, of their explosive or inflammable nature,
of the electric power they carry, or of other
analogous causes, he is bound to indemnify for
the injuries they may cause, even if he does not
act unlawfully, unless the injury is caused by the
inexcusable fault or neglect of the victim.
Thus, the debtor is released from liability
not only when the non-performance of the
obligation is due to fortuitous event or force
majeure, but also when it is due to the act of the
creditor himself. (Ex. the damages suffered by
the goods transported on a vessel due to
defective packing)
ARTICLE 1175. Usurious transactions shall
be governed by special laws.
Usury may be defined as contracting for
or receiving something in excess of the amount
allowed by law for the load noir forbearance of
money, goods or chattels. It is the taking of more
interest for the use of money, goods, or chattels
or credits than the law allows.
Interest is the income produced by money in
relation to its amount and to the time that it
cannot be utilized by its owner. (May either be
moratory or compensatory)
ARTICLE 1176. The receipt of the principal
by the creditor, without reservation with
respect to the interest, shall give rise to the
presumption that said interest has been
paid.
The receipt of a later installment of a
debt without reservation as to prior
installments, shall likewise raise the
presumption that such installments have
been paid.
Receipt of PrincipalUnder Article 1253 of the
CC, if a debt produces interest, payment of the
principal shall not be deemed to have been made
until the interests have been covered.
Note: The present article is not applicable to
payment of taxed because the tax for one year is
independent of the taxes for other years. They do
not constitute installments of the same
obligation.
ARTICLE 1177. The creditors, after having
pursued the property in possession of the
debtor to satisfy their claims, may exercise
all the rights and bring all the actions of the
latter for the same purpose, save those
which are inherent in his person; they may
also impugn the acts which the debtor may
have done to defraud them.
In order to satisfy their claims against the
debtor, creditors have the following
successive rights:
(1) To levy by attachment and execution upon
all the property of the debtor, except such
as are exempt by law from execution;
(2) To exercise all the rights and actions of
the debtor, except such as are inherently
personal to him; and
(3) To ask for the rescission of the contracts
made by the debtor in fraud of their
rights.
Taking into consideration the purpose of the law
in allowing the creditor to exercise the rights
and actions of the debtor, the following
requisites can be said to be essential:
(1) The creditor has an interest in the right
or action not only because of his credit
but because of the insolvency of the
debtor.
(2) Malicious or negligence inaction of the
debtor in the exercise of his right or
action of such seriousness as to endanger
the claim of the creditor.
(3) The credit of the debtor against a third
person is certain, demandable and
liquidated.
(4) The debtors right against the third
person must be patrimonial, or
susceptible of being transformed to
patrimonial value for the benefit of the
creditor. It is not essential that the
creditors claim be prior to the acquisition
of the right by the debtor.
Accion Subrogatoria (Subrogatory Action)
The action which the creditor may exercise in
the place of his negligent debtor in order to
preserve or recover for the patrimony of the
debtor the product of such action, and then
obtain therefrom the satisfaction of his own
credit.
A previous approval of the court is not
necessary in order to exercise the accion
subrogatoria.
Personal Rights of DebtorThe following are
rights of the debtor which cannot be exercised
by the creditor:
(1) The right to existence, thereby exempting
from the reach of creditors whatever he
may be receiving as support;
(2) Rights or relations of a public character;
(3) Rights of an honorary character;
28
 (4) Rights consisting of powers which have
not been used, including: (a) the power to
administer, such as when the debtor fails
to have some property leased the creditor
cannot give it in lease for him, (b) the
power to carry out an agency or deposit,
which are purely personal acts, and (c)
the power to accept an offer for a
contract;
(5) Non-patrimonial rights (such as the action
to establish the debtors status as a
legitimate or an illegitimate child, the
action for legal separation or annulment
of marriage, and other rights arising from
family relations);
(6) Patrimonial rights not subject to
execution(such as the right to a
government gratuity or pension);
(7) Patrimonial rights inherent in the person
of the debtor (such as the right to revoke
a donation by reason of ingratitude, and
the right to demand the exclusion of an
unworthy heir).
Rescission of Fraudulent Act As a last
recourse, creditors have the right to set aside or
revoke the acts which the debtor may have done
to defraud them; creditors may rescind
fraudulent reductions of the properties of the
debtor which constitute the guaranty for his
debts.The action to revoke or rescind such
acts is known as the accion pauliana.
(Regulated by Articles 1380 to 1389)Note: This is
only a last resort.
Scope of Accion PaulianaAll acts of the
debtor which reduce his patrimony in fraud of
his creditors, whether by gratuitous or onerous
title, can be revoked by accion pauliana.
They include alienations of property,
payment of debts which are not due,
renunciations of rights such as the right of
usufruct or an inheritance, assignments of credit,
and remission of debts. The debtors
renunciation of a prescription which has already
been acquired, is also uniformly considered as
within the scope of this action.
The creditors are protected, not only from
voluntary acts of the debtor, but also from
judicial acts, such as, when the debtor, in
connivance with another, permits the latter to
bring an action against him and obtain a
judgment by default or confession and such
judgment is enforced against the debtors
property.
But payments of pre-existing obligations
already due, whether natural or civil, cannot be
impugned by an accion pauliana.
New Debts New debts contracted by the
insolvent debtor are not included although they
may make the position of existing creditors
worse, because only acts which impair the assets
of the debtor are covered by the provision and
those which merely increase his liabilities are
not. (Gasparis view)
ARTICLE 1178. Subject to the laws, all
rights acquired in virtue of an obligation are
transmissible, if there has been no
stipulation to the contrary.
Where there is no stipulation with regard
to the assignment of an obligation, all rights
acquired by virtue of an obligation are
transmissible in accordance with law.
An instrument evidencing a credit may be
transferred or assigned by the creditor to
another, and the transferee would be considered
in lawful possession of the same as well as of the
credit, unless the contrary is shown.
Chapter 3 Different Kinds of obligations
Classification of Obligations:
(1) Pure
(2) Conditional
(3) With a term
(4) Alternative
(5) Joint or mancomunada
(6) Solidary or several or in solidum
(7) Divisible
(8) Indivisible
(9) With a penal clause
Others:
(a) Unilateral and bilateral (Article 1169,
1191)
(b) Determinate and generic (Article 1165)
(c) Legal, conventional, and penal (Articles
1156 and 1162)
Sanchez Roman classifies obligation as
follows:
(1) By their juridical quality and
efficaciousness: (a) natural, (b) civil, and
(c) mixed.
(2) By their subject: (a) unilateral and
bilateral, (b) simple or individual, and
multiple or collective. Multiple or
collective may either be joint or solidary.
(3) By their object: (a) simple and compound
or multiple (may either be conjunctive or
distributive), (b) positive and negative, (c)
real and personal, (d) possible and
impossible, (e) divisible and indivisible, (f)
principal and accessory. Distributive may
29
 either be specific or generic, alternative Conditional Obligationsis one which is
or facultative. Accessory obligations may subject to a condition.
be fide jusorias, hipotecarias,
pignoraticias, ejecutivas, and with a penal Condition has been defined as a future
clause. and uncertain event upon which the acquisition
(4) By their juridical perfection and or resolution of rights is made to depend by
extinguishment: (a) pure, (b) conditional, those who execute the juridical act. (Condition =
and (c) with a term. The condition and the futureand uncertain event)
period may either be suspensive or
resolutory. The condition must be imposed by the will
of a party and must not be a necessary legal
requisite of the act. Ex. The promise to give a
donation propter nuptias if the done gets
married cannot be considered conditional.

An event which is not uncertain but must

necessarily happen cannot be a condition; the
obligation will be considered as one with a term.
(Term = future and certain) Ex. death of a
person.

Past Event cannot be considered a condition

because the element of uncertainty is
lacking.Even when unknown to parties, a past
event is not a condition. The uncertainty in such
a case exists only in the minds of the parties, and
not in reality; there is no uncertainty in the event
itself, for it has either already happened or has
not happened.

What can be a condition is the future

knowledge or proof of a past event unknown
to the parties, but not the event itself. Ex. A
promissor may agree to purchase a certain house
if it has a first class white-tiled bathroom. In
this case, it is not the fact stated which serves as
a condition, but the proof of such fact.
Section 1 PURE AND CONDITIONAL
OBLIGATIONS Classification of Conditions:

ARTICLE 1179. Every obligation whose (1) Suspensive or Resolutory (Article 1181)
performance does not depend upon a future a. Suspensive the happening of the
or uncertain event, or upon a past event condition gives rise to an
unknown to the parties, is demandable at obligation;
once. b. Resolutory the happening of the
condition extinguishes rights
Every obligation which contains a already existing.
resolutory condition shall also be (2) Potestative, Casual, or Mixed (Article
demandable, without prejudice to the effects 1182)
of the happening of the event. a. Potestative the condition
depends upon the will of the party
Pure ObligationsWhen the obligation contains to the juridical relation;
no term or condition whatever upon which b. Casual depends upon chance or
depends the fulfillment of the obligation will of a third person (?)
contracted by the debtor, the obligation is a pure c. Mixed depends partly upon the
obligation. It is immediately demandable and will of the party to the juridical
there is nothing to exempt the debtor from relation and partly upon chance or
compliance therewith. the will of a third person.
(3) Divisible or Indivisible
When the period originally given has been a. Divisible whether by its nature,
cancelled by mutual agreement of the parties, or by agreement or under the law, it
the non-fulfillment of a condition resolves the can be performed in parts;
period stipulated, the obligation must be b. Indivisible cannot be performed
considered as pure. in parts.

30
 (4) Conjunctive or Alternative
a. Conjunctive where there are
several conditions, all of them
must be performed;
b. Alternative or Disjunctive only
one of them must be performed.
(5) Positive or Negative (Articles 1184 and
1185)
a. Positive if it is an act;
b. Negative if it is an omission.
(6) Express or Implied
a. Express when the condition is
stated;
b. Implied when it is merely
inferred.
(7) Possible or Impossible (Article 1183)
a. Possible when the condition can
be fulfilled;
b. Impossible when it cannot be
fulfilled; may either be physical or
legal.
Plurality of Conditions If several conditions
are imposed for the same obligation, the
necessity of complying with all or one only
depends upon the intention of the parties.
ARTICLE 1180. When the debtor binds
himself to pay when his means permit him
to do so, the obligation shall be deemed to
be one with a period, subject to the
provisions of Article 1197.
Court to Fix Period In cases falling under the
present article, the creditor should file an action
to fix a period for the payment of the obligation.
An immediate action to enforce the obligation,
without a period having been previously fixed by
the court, would be premature.
ARTICLE 1181. In conditional obligations,
the acquisition of rights, as well as the
extinguishment or loss of those already
acquired, shall depend upon the happening
of the event which constitutes the condition.
Suspensive and Resolutory ConditionsIf the
suspensive condition happens, the obligation
arises; in other words, if the condition does not
happen, the obligation does not come into
existence.
On the other hand, the resolutory
condition extinguishes rights and obligations
already existing; in other words, the obligations
and rights already exist, but under the threat of
extinction upon the happening of the resolutory
condition.
Note: When rights must exist before a condition
can be performed, the condition cannot be called
suspensive. The suspensive condition is also
known as a condition precedent or antecedent,
and the resolutory condition as subsequent.
If Condition Does Not HappenIf the time
comes when it becomes certain that the
condition will not be fulfilled, and the condition
is suspensive, the conditional creditor loses all
hope of becoming a real creditor, and he likewise
loses the power to exercise the actions granted
by Article 1188 for the preservation of his rights;
and if the condition is resolutory, the creditors
rights become absolute.
ARTICLE 1182. When the fulfillment of the
condition depends upon the sole will of the
debtor, the conditional obligation shall be
void. If it depends upon chance or upon the
will of a third person, the obligation shall
take effect in conformity with the provisions
of this Code.
Potestative Conditionis one which depends
upon the will of one of the contracting parties.
Ex. I promise to give you P1000 if you
build a house for me in three months. one
which is in the power of one of the parties to
realize or prevent
Casual Conditionis one which depends
exclusively upon chance or other factors, and not
upon the will of the contracting parties.
Ex. I will give you my land if war breaks
out next month.
I will give you P500 if I win the case
which I have before the Supreme Court.
condition dependent upon the will of a third
person
Mixed Conditionis one which depends upon
the will of one of the contracting parties and
other circumstances, including the will of a third
person.
Ex. I will give you a house, if you marry
Carolina.
Kinds of Potestative Condition:
(1) Simple potestaive condition which
presupposes not only a manifestation of
will but also the realization of an external
act, such as if you sell your house; and
(2) Purely potestative condition which
depends solely and exclusively upon the
will, such as if I like it, or if I deem it
proper.
The simple potestative condition on the part of
the debtor, does not prevent the formation of a
valid obligation. While it is true that to a certain
extent it depends on the voluntary act of the
obligor, yet it is likewise true that it is subject, in
part, to contingencies over which he has no
control. (Ex. I agree to make the first offer to
31
you should I decide to sell my house theneed
for money or the advantage of transferring to a
different location)
The purely potestative condition, on the other
hand, destroys the efficacy of the legal tie. Ex. I
will sell to you my house if I deem it proper it
is obvious that there is no seriousness in this
undertaking.
Effect Potestative ConditionIt is only when
the potestative condition depends exclusively
upon the will of the debtor that the conditional
obligation is void.
When it depends partly on the will of the
debtor and partly upon chance or the will of a
third person (mixed), the conditional obligation
is valid. Also, when the fulfillment of the
condition depends on the exclusive will of the
creditor, it is valid.
In reciprocal obligations, where both
parties are creditors and debtors, the rule
applies to each in his capacity as debtor.
In cases falling under this article, it is
not only the condition that is void; the whole
obligation is void. This provision, however, is
applicable only when the condition is suspensive,
and cannot apply to resolutory conditions the
validity of which is recognized in Article 1179 of
the Code.
In other words, a condition that is both
potestative (or facultative) and resolutory may be
valid, even though the condition is made to
depend upon the will of the obligor. The
obligation in such case arises immediately but
the party who has made the reservation may
resolve it when he wishes to.
Mixed Conditions When the condition
depends, not only upon the will of the debtor, but
also upon chance or the will of others, the
obligation is valid.
ARTICLE 1183. Impossible conditions, those
contrary to good customs or public policy
and those prohibited by law shall annul the
obligation which depends upon them. If the
obligation is divisible, that part thereof
which is not affected by the impossible or
unlawful condition shall be valid.
The condition not to do an impossible
thing shall be considered as not having been
agreed upon.
Impossible ConditionsThe impossibility of a
condition may either be physical or juridical.
The condition is physically impossible
when it is contrary to the law of nature; it is
juridically impossible when contrary to law,
morals, good customs, and public policy.
It is juridically impossible or illicit, not
only when the act is prohibited by law, but also
when it restricts certain essential rights which
are necessary for the free development of human
activity, such as political rights, family tights,
and constitutional rights and liberties. Ex. the
condition not to change domicile, the condition
to change or not to change religion, and the
condition that a person shall not contract
marriage.
Illicit Conditionsit is necessary that it consist
of an act or fact for one of the parties to the
contract. The illicit character is not determined
by the act or fact in itself, but by its effects upon
one of parties. The intention of the party
imposing the condition must be considered.
There are certain illicit acts, for instance,
which even if mentioned as a condition will not
affect the obligation; on the other hand, there
are lawful acts which, by the manner in which
they are attached to the condition, nullify the
obligation.
Thus, it is immoral to open a house of
prostitution; but if a person sells a house under
the resolutory condition that the vendee shall not
open a house of prostitution, there is nothing
immoral in the contract, which is valid.
Scope of the LawImpossible or illicit
conditions annul the obligations dependent upon
them only when the conditions are positive and
suspensive. If the impossible or illicit condition is
negative, it is simply considered as not written,
and the obligation is converted into a pure and
simple one.
It should also be noted that this principle
of nullity of the obligation itself due to the
impossibility or illicit character of the condition,
applies only to contracts. It has no application to
simple and remuneratory donations and to
testamentary dispositions.
Time of ImpossibilityIn order that an
impossible condition may annul the obligation,
the impossibility must exist at the time of the
creation of the obligation; a supervening
impossibility does not affect the existence of the
obligation. On the same principle, if the
condition was impossible when the obligation
was constituted, the obligation remains void
even if such condition subsequently becomes
possible, unless the parties later agree again.
32
Illogical ConditionsSimilar to the effect of an
impossible condition is the logical impossibility
in an obligation, although the condition itself is
not impossible.
Ex. I will deliver to you my house if it is
totally destroyed. The impossibility here is in
the obligation itself, which is affected by an
intrinsic absurdity; hence, the obligation is void.
Divisible ObligationsWhen the obligation is
divisible, that part which is not affected by the
impossible or unlawful condition shall be valid.
Negative Impossible ConditionsAlthough the
second paragraph of this article provides that
the condition not to do an impossible thing shall
be considered as not having been agreed upon,
this should be understood to include all negative
impossible conditions. In this case, the condition
is considered as not imposed, and the obligation
must be regarded as a pure and simple one.
Ex. I will give you P500 if you do not fly
to the moon within a period of five years.
In this case, the obligation is pure and
immediately demandable; there is no need of
waiting for the lapse of five years. The negative
impossible conditions are considered as not
written.
A negative unintelligible condition is the
same as a negative impossible condition; hence,
it is considered as not imposed.
ARTICLE 1184. The condition that some
event happen at a determinate time shall
extinguish the obligation as soon as the
time expires or if it has become indubitable
that the event will not take place.
Ex. An obligation to pay a sum of money is
subject to the condition that a certain person
shall arrive at a designated place in one year.
This obligation will be extinguished if (a) one
year passes and he does not arrive at the place,
or (b) if such person dies before the lapse of one
year and before arriving at such place.
Where No Period StatedWhen no period has
been fixed, the rule in the second paragraph of
Article 1185 is applicable. The intention of the
parties is controlling, and the time shall be that
which the parties may have probably
contemplated, taking into account the nature of
the obligation.
ARTICLE 1185. The condition that some
event will not happen at a determinate time
shall render the obligation effective from
the moment the time indicated has elapsed,
or if it has become evident that the event
cannot occur.
If no time has been fixed, the
condition shall be deemed fulfilled at such
time as may have probably been
contemplated, bearing in mind the nature of
the obligation.
Ex. An obligation to deliver a piece of land to X is
subject to the condition that he shall not marry
within two years. This obligation shall become
effective and the land should be delivered to X if
(a) two years expire without X having married, or
(b) X enters priesthood before the two years
expire.
ARTILCE 1186. The condition shall be
deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Constructive FulfillmentThis article covers
constructive fulfillment of conditions, and refers
to a condition which, although not exclusively
within the will of the debtor, may in some way be
prevented by the debtor from happening. The
mere intention of the debtor to prevent its
happening, or the mere placing of ineffective
obstacles to its compliance, without actually
preventing fulfillment, is not sufficient.
2 Requisites:
(1) Intent of the obligor to prevent fulfillment
of the condition, and
(2) Actual prevention of compliance
Intent to Prevent ComplianceThe intent of
the debtor to prevent the fulfillment of the
condition is essential. Any act imputable to the
debtor, whether done with or without malice will
suffice; in both cases the debtor is responsible
for his act.
ARTICLE 1187. The effects of a conditional
obligation to give, once the condition has
been fulfilled, shall retroact to the day of
the constitution of the obligation.
Nevertheless, when the obligation imposes
reciprocal prestations upon the parties, the
fruits and interests during the pendency of
the condition shall be deemed to have been
mutually compensated. If the obligation is
unilateral, the debtor shall appropriate the
fruits and interests received, unless from
the nature and circumstances of the
obligation it should be inferred that the
intention of the person constituting the
same was different.
In obligations to do and not to do, the
courts shall determine, in each case, the
retroactive effect of the condition that has
been complied with.
Retroactivity of ObligationThis article refers
to the effects of the happening of suspensive
33
conditions. Between the moment of the creation
of the conditional obligation and the fulfillment
of the suspensive condition, the creditor cannot
enforece the obligation; his right during that
period is a mere expectancy. The moment the
suspensive condition happens, the obligation
becomes effective and enforceable. The debtor
may legally be compelled to perform from that
moment. The cause of action for the enforcement
of the obligation accrues, and the period of
prescription of the action has to be computed
from that moment.
The effects of the obligation, however,
retroact to the moment when such obligation
was constituted or created. The juridical reason
for this rule is that the condition is only an
accidental, and not an essential element of the
obligation. The obligation is constituted when
the essential elements which give rise thereto
concur.
By principle of retroactivity, therefore, a
fiction is created whereby the binding tie of the
conditional obligation is produced from the time
of its perfection, and not from, the happening of
the condition.
Contracts of DebtorIf the conditional
obligation has for its object the delivery of a
determinate thing, the debtor cannot, before the
happening of the suspensive condition, make
contracts disposing of or alienating or
encumbering the thing, or otherwise creating a
real right over the thing incompatible with the
right of the creditor. If he does so, then all such
contracts are abrogated and cease to have any
effect upon the happening of the suspensive
condition. Because of the retroactivity of the
obligation, the creditor retains a superior right.
It should be noted that under our law
tradition or delivery transfers ownership or real
rights over the thing. Hence, if a third person
with whom the debtor has made a contract
pendent conditione acted in good faith, and the
thing has been delivered to him, the happening
of the suspensive condition will not serve to
defeat his right of ownership. The creditor
cannot recover the thing by an accion
reivindicatoria, because, there being no delivery
to him, he does not have the ownership over the
thing. The debtor will simply be liable for
damages to the creditor. Of course, if the third
person to whom delivery was made, acted in bad
faith, or with knowledge of the pending
condition, he cannot invoke protection and
cannot be in a better position that the debtor
himself. He may be compelled to deliver the
thing to the creditor.
Contracts of Creditor If the creditor, before
the happening of the condition, has already
disposed of his expected right, such as by
creating a mortgage over the property to be
delivered to him, the happening of the
suspensive condition consolidates or makes
effective the act performed pendent conditione.
Increase in Value The increase in value which
the thing may acquire before the happening of
the suspensive condition, inures to the benefit of
the creditor. This principle is expressed in Article
1189, par. 5 of the Code.
Limitations on RetroactivityThe application
of the principle of retroactivity of conditional
obligations is not absolute. It is subject to certain
limitations dictated by justice and required by
practicability or convenience. Thus, if the thing
is lost by fortuitous event before the happening
of the condition, the debtor suffers the loss
because he is still the owner.
Acts of AdministrationActs of administration,
performed by the debtor before the happening of
the suspensive condition, are not affected by the
retroactivity of the effect of the obligation, and
can be asserted against the creditor after the
happening of the condition. Nevertheless, acts in
abuse of right, committed by the debtor in the
guise of administration, should not be allowed to
defeat the rights of the creditor. The will of the
parties, however, must also be taken into
account.
Fruits and InterestsFor reasons of
practicability or convenience, the law does not
require the delivery or payment of the fruits or
interests accruing before the happening of the
suspensive condition. The right to the fruits of
the thing, therefore, is not within the principle of
retroactivity of conditional obligations.
When the obligation to give is reciprocal,
the fruits and interests pending the happening of
the condition are deemed to mutually
compensate each other.
If the obligation is unilateral, the fruits
received by the debtor before the happening of
the condition, are kept by him and are not
delivered together with the thing upon the
fulfillment of the condition. This is but just,
because the debtor does not receive anything
from the creditor in a unilateral obligation.
These rules with respect to the retention
of the fruits and interests by the parties,
however, must yield to the contrary intent or
agreement of the parties themselves.
Obligations to Do, Not to DoIn obligations to
do and not to do, the courts by the use of sound
discretion, shall determine the retroactive effect
of the fulfillment of the condition. The court may
34
determine to what date retroactivity shall be
allowed, or it may even refuse to permit
retroactivity, depending upon the circumstances
of each case. The intent of the parties should be
taken into account.
ARTICLE 1188. The creditor may, before the
fulfillment of the condition, bring the
appropriate actions for the preservation of
his right.
The debtor may recover what during
the same time he has paid by mistake in
case of a suspensive condition.
Preservation of Creditors RightsInasmuch
as pending the happening of suspensive
condition the creditor has only an expectancy
and cannot compel the debtor to perform, acts or
events may take place which might render his
right illusory when the condition happens.
Hence, the law allows him to take appropriate
steps or bring the proper actions for the
preservation of his right.
The actions for the preservation of the
creditors rights may have for their objects:
(1) To prevent the loss or deterioration of the
things which are the objects of the
obligation by enjoining or restraining acts
of alienation or destruction by the debtor
himself or by third persons;
(2) To prevent concealment of the debtors
properties which constitute the guaranty
in case of non-performance of the
obligation;
(3) To demand security if the debtor becomes
insolvent;
(4) To compel the acknowledgment of the
debtors signature on a private document
or the execution of the proper public
documents for registration so as to affect
third persons;
(5) To register the deeds of sale or mortgage
evidencing the contract;
(6) To set aside fraudulent alienations made
by the debtor; and
(7) To interrupt the period of prescription, by
actions against adverse possessors of the
things which are the objects of the
obligation.
Payment Before Condition The second
paragraph of this article permits the debtor who
paid before the happening of the condition to
recover only when he paid by mistake and
provided to action to recover is brought before
the condition happens. If the payment was of a
determinate thing, and it still exists in the hand
of the creditor, the accion reinvindicatoria will
lie; otherwise, the provisions of solutio indebiti
will apply.
If the payment was made with knowledge
of the condition, there is an implied waiverof
the condition, and whatever has been paid
cannot be recovered. And even if there had been
mistake in making the payment, that is, the
debtor was ignorant of the suspensive condition,
the subsequent fulfillment of the condition will
bar the recovery of what has been prematurely
paid, because the retroactivity of the obligation
consolidates the right of the creditor to what is
paid from the moment the obligation was
constituted.
But if there is no mistake, and later on the
condition is not fulfilled, what will be the
debtors right with respect to what he has
already delivered?
The debtor be allowed to recover what he
has paid in the expectancy that the condition
would happen; otherwise, there would be unjust
enrichment on the part of the creditor. (with all
its accessions and if due to the fault of the
creditor, fruits must also be returned)
ARTICLE 1189. When the conditions have
been imposed with the intention of
suspending the efficacy of an obligation to
give, the following rules shall be observed in
case of the improvement, loss or
deterioration of the thing during the
pendency of the condition:
(1) If the thing is lost without the fault of
the debtor, the obligation shall be
extinguished;
(2) If the thing is lost through the fault
of the debtor, he shall be obliged to
pay damages; it is understood that
the thing is lost when it perishes, or
goes out of commerce, or disappears
in such a way that its existence is
unknown or it cannot be recovered;
(3) When the thing deteriorates without
the fault of the debtor, the
impairment is to be borne by the
creditor;
(4) If it deteriorates through the fault of
the debtor, the creditor may choose
between the rescission of the
obligation and its fulfillment, with
indemnity for damages in either case;
(5) If the thing is improved by its nature,
or by time, the improvement shall
inure to the benefit of the creditor;
(6) If it is improved at the expense of the
debtor, he shall have no other right
than that granted to the usufructuary.
Scope of Article - The provisions of this article
apply only to obligations to deliver a determinate
or specific thing. It can have no application to
generic objects. Furthermore, these provisions
35
apply only in case the suspensive condition is
fulfilled.
Loss of the Thing
A thing is lost:
(1) When it perishes (such as when an animal
dies, or a house is destroyed completely
by fire, or a crop is washed away by flood,
or fruits rot);
(2) When it goes out of the commerce of man
(such as when private land belonging to a
municipality is converted into a public
plaza, or a thing is declared by law as
contraband); or
(3) When it disappears in such manner that
its existence is unknown or it cannot be
recovered (such as when a ship sinks in
the middle of the ocean, or a thing is
stolen by unknown persons or is dropped
somewhere in a forest and cannot be
found).
If the loss is due to the fault of the debtor, he
becomes liable for damages to the creditor upon
the fulfillment of the condition. But if the debtor
is without fault, the obligation is extinguished,
unless there is a stipulation to the contrary.
(pursuant to Article 1262)
Deterioration of ThingDeterioration is any
reduction or impairment in the substance or
value of a thing which does not amount to a loss.
In other words, the thing still exists at the
time the condition is fulfilled, but it is no longer
intact, or is less than what it was when the
obligation was constituted. (Ex. where a house is
partly damaged, or part of a herd should die, or a
portion of a stock of fruits should rot)
If the deterioration is not imputable to the
debtor, he is not liable for any damages for such
deterioration, and the creditor must accept the
thing in its impaired condition. But if the
deterioration is due to the fault of the debtor,
then the creditor may either demand the thing or
ask for rescission, with damages in either case.
Improvement of ThingAnything added to,
incorporated in, or attached to the thing that is
due, is an improvement.
If caused by the nature of the thing or by
time, such as alluvion or deposits of soil on the
edge of land bordering a river, or the natural
growth of trees or plants on a piece of land, the
improvement shall inure to the benefit of the
creditor. (in conformity with the principle of
retroactivity of the effects of conditional
obligations)
If the improvement was at the expense of
the debtor, the law says he shall have the same
rights as a usufructuary. The rights of the
usufructuary with respect to improvements are
governed by Articles 579 and 580 of the Code.
This means that if the improvement, whether
useful or for mere pleasure, can be removed by
the debtor without damage to the thing due, then
he may remove the same; but if the removal
cannot be made without substantial injury to the
thing due, then the improvement must be
delivered together with the thing to the creditor
without the latter paying any indemnity to the
debtor. If the debtor has caused deterioration to
the thing, which he has also improved at his
expense, then the value of the improvements
maybe set off against the damages for
deteriorations.
ARTICLE 1190. When the conditions have
for their purpose the extinguishment of an
obligation to give, the parties, upon the
fulfillment of said conditions, shall return to
each other what they have received.
In case of the loss, deterioration or
improvement of the thing, the provisions
which, with respect to the debtor, are laid
down in the preceding article shall be
applied to the party who is bound to return.
As for obligations to do and not to do,
the provisions of the second paragraph of
Article 1187 shall be observed as regards
the effect of the extinguishment of the
obligation.
Resolutory Condition HappeningThis article
gives the effects of the happening of a resolutory
condition.
In an obligation subject to a resolutory
condition, the rights of the creditor are
immediately vested; but such rights are always
in the danger of being extinguished by the
happening of the resolutory condition.
If the condition does not happen, those
rights are consolidated and they become
absolute in character. But if the condition
happens, such rights are extinguished, and the
obligation is treated as if it did not exist; hence,
each party is bound to return to the other
whatever he has received, so that they may be
returned to their original condition before the
creation of the obligation. Every vestige of the
obligation is wiped out as much as possible
through the process of mutual restitution.
Rights of Third PersonsWhen a thing has
already been delivered, the ownership has
passed to the possessor, without prejudice to the
effect of the happening of the resolutory
36
condition. If it is transferred by the possessor to
a third person, and later on the condition
happens, the party entitled to restitution cannot
sue the third person directly for the recovery of
the thing, by an accion reinvindicatoria because
such party would no longer be the owner thereof.
The happening of the resolutory condition does
not ipso jure revest ownership in him; he merely
becomes entitled to the delivery which would
give him the ownership anew. This is a personal
right which he can enforce only against his
creditor who has become debtor obliged to make
restitution; he has no real right that can be
enforced against third persons in good faith.
Loss, Deterioration, Improvement The
provisions of Article 1189 shall be applicable, the
party who has to make the restitution being
considered as the debtor.
Thus, if the thing is lost before the
happening of the resolutory condition, the loss
must be borne by the owner at the time of loss;
that is, by the party who is bound to return it. If
he has paid a price therefor, he cannot recover
such price. And if the loss occurred by his fault,
he would still be liable for damages.
Fruits and InterestsThe duty of mutual
restitution applies not only to the object and the
price, but also to the fruits and interests.
As a matter of convenience or
practicability, however, in reciprocal restitution,
the fruits and interests may be compensated
against each other.
In determining the fruits to be returned, it
should be remembered that under Article 443 of
the Code, he who receives the fruits has the
obligation to pay the expenses made by a third
person in their production, gathering, and
preservation; therefore, these expenses
incurred by the person obliged to make
restitution should be deducted from the gross
value of the fruits to be returned.
Protection of Rights The party who would be
entitled to restitution from the other in the event
the resolutory condition is fulfilled, stands in the
same position as a creditor in an obligation with
a suspensive condition, in that he has an
expectancy of recovery of the thing. Pending the
fulfillment of the resolutory condition, therefore,
he should be entitled to take the same steps and
bring the same actions allowed to the creditor
under the first paragraph of Article 1188 for the
protection of his rights.
ARTICLE 1191. The power to rescind
obligations is implied in reciprocal ones, in
case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose
between the fulfillment and the rescission of
the obligation, with the payment of damages
in either case. He may also seek rescission,
even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without
prejudice to the rights of third persons who
have acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law.
This article applies only to reciprocal
obligations.
Note: It has no application to every case where
two persons are mutually debtor and creditor of
each other. There must be reciprocity between
them. Both relations must arise from the same
cause, such that one obligation is correlative to
the other.Reciprocity arises from identity of
cause, and necessarily the two obligations
are created at the same time.
Reciprocal Obligationsare those which arise
from the same cause, and in which each party is
a debtor and a creditor of the other, such that
the obligation of one is dependent upon the
obligation of the other. They are to be performed
simultaneously, so that the performance of one is
conditioned upon the simultaneous fulfillment of
the other.
Tacit Resolutory ConditionThis article
recognizes an implied or tacit resolutory
condition in reciprocal obligations. It is a
condition imposed exclusively by law, even if
there is no corresponding agreement between
the parties.
Ex. In reciprocal obligations, when one
party has performed his part of the contract, the
other party incurs in delay; hence, the party who
has performed or is ready and willing to perform
may rescind the obligation if the other does not
perform or is not ready and willing to perform.
The power to rescind is given to the
injured party. Where one party, therefore, fails
to comply with his obligation under a contract,
the other party has the right to either demand
performance or ask for the resolution of the
contract.
Where both parties have committed a
breach of obligation and it cannot be determined
who was the first infractor, the contract shall be
deemed extinguished and each shall bear his/its
own damages.
37
Declaration of Rescission
If the obligation has not yet been
performed, extra-judicial declaration of
resolution or rescission by the party who is
ready and willing to perform would suffice; he
can refuse to perform if the other party is not
ready and willing to perform.
But where the injured party has already
performed such as when property has already
been delivered by him to the other party, he
cannot by his own declaration rescind the
contract and reacquire title to the property, if the
other party opposes the rescission. In such case,
court action must be taken, and the function of
the court is to declare the rescission as properly
made, or to give a period to the debtor in which
to perform.
Rescission, Not an Absolute RightThe court
is given a discretionary power to allow a period
within which a person in default may be
permitted to perform the stipulation upon which
the claim for rescission of the contract is based.
Rescission will not be permitted for a
slight or casual breach of the contract, but only
for such breaches as are so substantial and
fundamental as to defeat the object of the parties
in making the agreement.
Furthermore, the right of an injured party
to rescind is subordinated to the rights of a third
person to whom bad faith is not imputable.
Effect of RescissionThe exercise of the power
to rescind extinguishes the obligatory relation as
if it had never been created, the extinction
having a retroactive effect. The rescission is
equivalent to invalidating and unmaking the
juridical tie, leaving things in their status before
the celebration of the contract.
Where a contract is rescinded, it is the
duty of the court to require both parties to
surrender that which they have respectively
received and to place each other as far as
practicable in his original situation; the
rescission has the effect of abrogating the
contract in all parts.
Alternative Remedies:
The party injured by non-performance by
the other of his obligation, has the right to
choose whether he shall ask for (1) specific
performance of the obligation, or (2) for the
rescission of the contract which has been
breached.
These two remedies are alternative. The
injured party cannot have both.
However, where performance has become
impossible or there are insuperable and legal
obstacles thereto, rescission with damages to the
injured party is proper although the latter had
sought specific performance.The prescriptive
period for the action for rescission in such
case is four years from the final judgment
on the action for specific performance which
has become impossible to execute.
The right to choose between fulfillment
and rescission is not incompatible with an
alternative prayer in the complaint, or with a
subsidiary petition for rescission when
fulfillment is impossible.
WaiverWhile the right to rescind reciprocal
obligations is implied, that is, that such right
need not be expressly provided in the contract,
nevertheless the contracting parties may waive
the same. (Ex. providing for security for the
payment of the balance of the purchase price)
Express Resolutory ConditionThe parties to a
bilateral contract may validly stipulate that if one
of them does not comply with his obligation, the
contract shall be automatically resolved. This
stipulation if often found in insurance contracts.
The validity of this stipulation has never
been doubted; it is in the nature of a facultative
resolutory condition. In this case, the resolution
takes place by force of law, and the court cannot
grant the debtor a period within which to
perform.But the resolution is not mandatory
on the creditor; he may still choose to
require specific performance, unless the
contrary is expressly stipulated.
ARTICLE 1192. In case both parties have
committed a breach of the obligation, the
liability of the first infractor shall be
equitable tempered by the courts. If it
cannot be determined which of the parties
first violated the contract, the same shall be
deemed extinguished, and each shall bear
his own damages.
Offset EquitablyWhere both parties are in
default, their respective liability for damages
shall be offset equitably.
38
 As to A period has A condition
influence on no effect upon gives rise to
the the existence an obligation
obligation of obligations, or
but only their extinguishes
demandability one already
or existing.
performance.
It does not
carry
retroactive
effect.
As to time A period A condition
always refers may refer to a
to the future. past event
unknown to
Section 2 OBLIGATIONS WITH A PERIOD the parties.
As to will of A period left to A condition
ARTICLE 1193. Obligations for whose debtor the debtors which depends
fulfillment a day certain has been fixed, will merely exclusively on
shall be demandable only when that day empowers the the will of the
comes. court to fix debtor annuls
such period. the obligation.
Obligations with a resolutory period
take effect at once, but terminate upon
arrival of the day certain. Requisites of Period:

A day certain is understood to be that (1) Future

which must necessarily come, although it (2) Certain
may not be known when. (3) Possible

If the uncertainty consists in whether Kinds of Terms:

the day will come or not, the obligation is
According to the Roman Law classification:
conditional and it shall be regulated by the
rules of the preceding Section. (1) Suspensive ex die (from a day certain);
one that must lapse before the
Term A term or period is a space of time
performance of the obligation can be
which, exerting an influence on obligations as a
demanded;
consequence of a juridical act, suspends their
(2) Resolutory in diem (to a day certain);
demandability or determines their
the period after which the performance
extinguishment.
must terminate.
Term vs. Condition
Terms (according to source):
Term Condition (1) Legal which is a period fixed by law;
As to A term is an A condition is (2) Voluntary that which is stipulated by the
fulfillment event that an uncertain parties;
must event. Even (3) Judicial that allowed by courts.
necessarily when an even
come, whether must Others:
on a date necessarily
known before happen, the Period may be: (a) Express when specifically
hand or at a obligation will stated; (b) tacit as when a person undertakes to
time which be conditional do some work which can be done only during a
cannot be when the particular season.
predetermined condition is
It may also be (a) an original period; or (b) a
. that such
period of grace which is an extension fixed by
event shall or
the parties themselves or by the court, as in
shall not
Article 1191.
happen within
a certain time. Another classification is that into (a) definite and
(Arts. 1184 & (b) indefinite.
1185)

39
 Definite refers to a fixed known date or
time
Indefinite refers to an event which will
necessarily happen but the date of its happening
is unknown.
Note: The uncertainty of the date of occurrence
in the indefinite or indeterminate period does not
convert it into a condition, so long as there is no
uncertainty as whether it will happen or not. (ex.
death of a person, movable religious holidays)
Effect of Period Obligations with a term are
demandable only when the day fixed for their
performance arrives.
ARTICLE 1194. In case of loss, deterioration
or improvement of the thing before the
arrival of the day certain, the rules in Article
1189 shall be observed.
ARTICLE 1195. Anything paid or delivered
before the arrival of the period, the obligor
being unaware of the period or believing
that the obligation has become due and
demandable, may be recovered, with the
fruits and interests.
This article only applies to obligations to
give.
Effect of Arrival of TermThis article allows
the recovery of the thing or money itself, plus the
fruits or interest, which must be understood as
those accruing from the moment of payment to
the date of recovery.
Right to Interests and FruitsThe present
article allows the debtor to recover fruits and
interests in all cases where he paid under a
mistake as to the period.
This article should be construed in
relation to the provisions on solution indebiti or
payment of what is not due. Under these
provisions, the creditor who accepts the payment
in bad faith, or with knowledge that the period
has not yet arrived, shall pay legal interest if a
sum of money is involved, or shall be liable for
fruits received or which should have been
received if the thing produces fruits; but if the
creditor acted in good faith or under a mistaken
belief that the payment was already due, he is
liable for fruits only in so far as they benefited
him.
Fruits or interest cannot be recovered in the
following cases (notwithstanding premature
payments):
(1) When the obligation is reciprocal, and
there has been premature performance
on both sides;
(2) When the obligation is a loan on which
the debtor is bound to pay interest; and
(3) When the period is exclusively for the
benefit of the creditor, because the debtor
by paying in advance loses nothing.
Note: If the payment before the period was made
voluntarily, with knowledge of the period, the
payment cannot be recovered.
ARTICLE 1196. Whenever in an obligation a
period is designated, it is presumed to have
been established for the benefit of both the
creditor and the debtor, unless from the
tenor of the same or other circumstances it
should appear that the period has been
established in favor of one of the other.
Benefit of Term:
If the term is for the benefit of both parties, as is
the presumption of this article in case of doubt,
the creditor cannot demand payment and the
debtor cannot make an effective tender and
consignation of payment, before the period
stipulated.
If it is for the benefit of the creditor only, he may
demand performance at any time, but the debtor
cannot compel him to accept payment before the
period expires.
If the period is for the benefit of the debtor only,
he may oppose a premature demand for
payment, but may validly pay at any time before
the period expires.
Ex. In a contract of loan
If the loan is gratuitous or without
interest, the term is ordinarily for the exclusive
benefit of the debtor, who may therefore pay in
advance of the period.
If interest is stipulated, the period is
generally for the benefit of both parties, and the
debtor cannot pay in advance against the will of
the debtor, unless he pays, the full interest for
the period agreed upon.These may be explained
by other circumstances such as the creditor, by
fixing a period may protect himself from sudden
decline in the purchasing power of the currency
loaned. Another is that the creditor may want to
keep his money invested safely instead of having
it in his hands.
Furthermore, even when there is no
interest stipulated, the period may still be for the
benefit of both parties, and the debtor cannot
pay in advance without the consent of the
creditor, if the creditor receives other benefits by
reason of the term. (Ex. During the term or
existence of the mortgage, the creditor shall
have possession of the two parcels of land
40
mortgaged, and will harvest the nuts and make
the copra therefrom, for which he will be given
70% of the net proceeds of the sale of the copra)
Note: If partial payment was made by the debtor
to the creditor, which the latter accepts, before
the expiration of the term, there is deemed to be
a waiver of the said term by the creditor.
Others: A stipulation that the payment is to be
made within the stipulated period is for the
benefit of the debtor. Hence, although the
creditor cannot enforce or demand payment
before the period fixed, the debtor may waive the
period and pay in advance.
ARTICLE 1197. If the obligation does not fix
a period, but from its nature and the
circumstances it can be inferred that a
period was intended, the courts may fix the
duration thereof.
The courts shall also fix the duration
of the period when it depends upon the will
of the debtor.
In every case, the courts shall
determine such period as may under the
circumstances have been probably
contemplated by the parties. Once fixed by
the courts, the period cannot be changed by
them.
The court may fix a period in the following
cases:
(1) When the term of a lease has been left to
the will of the lessee;
(2) When the terms of a donation imposing
certain conditions do not fix the time for
the performance of the conditions;
(3) Where a building contract did not fix a
definite period within which the engineer
was to complete the construction of the
house covered by the contract;
(4) Where, in connection with a contract of
sale, the vendor as given the right to
redeem but no term was specified for the
redemption;
(5) Where the debtor promises to pay his
indebtedness consisting of the sum of
money, little by little, or in partial
payments, or as soon as possible, or right to make use of the period:
when I please, or as soon as he has
money, or when his means permit him to
do so.
(6) When a decision is rendered conformably
with a compromise agreement but no
time is specified within which the parties
should comply with their commitments,
either party may move the court to have a
period fixed for the compliance of their
respective commitments.
Note: The mere failure of the parties to fix a
period will not always justify the court in
fixing one thus:
(a) It is not incumbent upon courts to fix the
period during which contracts of
employment or services shall last. Their
duration is to be implicitly fixed, in
default of express stipulation, by the
period for the payment of the salary of the
employee.
(b) Where a person obligated himself to pay
another the proceeds of the latters
tobacco as soon as they are disposed of, a
period exists for the payment of the
obligation and Article 1197 should not be
applied.
(c) When the obligation is pure, simple, and
unconditional, the debtor cannot ask that
a period be fixed, when he cannot show
that it was the intention of the creditor to
grant him an extension of time within
which to pay.
Action to Fix Term The only action that can
be maintained on obligations falling under this
article, is an action to ask the court to fix a term
within which the obligor must comply with his
obligation.
The fulfillment of the obligation itself
cannot be demanded until after the court has
fixed the period for compliance therewith, and
such period has arrived. This would imply two
causes of action which must not be made in the
same complaint: the first for the purpose of
fixing a period, and the second for the purpose of
specific performance. These two actions must be
made separately. (General Rule)
The Supreme Court, however, has held
that, while in previous cases it had been held
that the duration of the term should be fixed in a
separate action for that express purpose, such
technicality need not be adhered to when such
separate action would be a mere formality and
would serve no purpose than to delay.
(Exception) See Central Philippines University
vs. CA)
ARTICLE 1198. The debtor shall lose every
(1) When after the obligation has been
contracted, he becomes insolvent,
unless he gives a guaranty or security
for the debt;
(2) When he does not furnish to the
creditor the guaranties or securities
which he has promised;
(3) When by his own acts he has impaired
said guaranties or securities after
their establishment, and when
41
 through a fortuitous event they
disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any
undertaking, in consideration of
which the creditor agreed to the
period;
(5) When the debtor attempts to abscond.
Loss of TermIn the cases provided in this
article, the obligation becomes immediately
due and demandable even if the period has not
yet expired. The obligation is thus converted into
a pure obligation.
Thus, the debtor was held to have lost the
benefit of the term when, instead of mortgaging
three lots to the creditor, he mortgaged one of
the lots to a stranger, thereby diminishing the
security which he promised to his creditor, and
where a launch, which was the security for the
payment of its unpaid purchase price, was
destroyed by a storm.
Insolvency of DebtorThe insolvency of the
debtor that would deprived him of the benefit of
the term need not be judicially declare in an
insolvency proceeding. It is enough that he is in
such a state of financial difficulty that he is
unable to pay his debts.
Loss of Securities Given:
When caused by the acts of the debtor
the disappearance or impairment of the
securities given need not be total.
When caused by a fortuitous event there
must be a total disappearance in order to deprive
the debtor of the benefit of the term.
Note: The term disappear is not used here in
its grammatical or ordinary meaning, but in the
sense of loss as defined by the law.
Section 3 ALTERNATIVE OBLIGATIONS
ARTICLE 1199. A person alternatively bound
by different prestations shall completely
perform one of them.
The creditor cannot be compelled to
receive part of one and part of the other
undertaking.
Obligations with Several Objects (Plurality of
Objects):
(1) Conjunctive
(2) Alternative
(3) Facultative
Conjunctive Obligation is one where the
debtor has to perform several prestations; it is
extinguished only by the performance of all of
them.
Alternative Obligation several objects being
due, the fulfillment of one is sufficient,
determined by the choice of the debtor who
generally has the right of election.
As a result, the loss of one of the things
due affects the obligation in alternative
obligations.
The election (right of choice) may be
granted to the creditor.
The loss of one of the things does not
extinguish the obligation.
Facultative Obligationonly one thing is due,
but the debtor has reserved the right to
substitute it with another.
The loss the that which may be given as a
substitute does not affect the obligation.
The right of choice can never be granted
to the creditor.
The loss that which is due as the object of
the obligation will extinguish the obligation.
ARTICLE 1200. The right of choice belongs
to the debtor, unless it has been expressly
granted to the creditor.
The debtor shall have no right to
choose those prestations which are
impossible, unlawful or which could not
have been the object of the obligation.
Election by the DebtorIn alternative
obligations, the debtor has the right to choose
the method of meeting the obligation, unless the
creditor has expressly reserved that right to
himself.
Election by Others The right to choose may
be granted to the creditor.The grant must be
expressed; it cannot be implied.
The choice may also be expressly
entrusted by the parties to a third person.
Note: The right to choose is indivisible. The
debtor cannot choose part of one prestation and
part of another.
The debtor cannot choose unlawful or
impossible undertakings. Neither can the debtor
select prestations which could not have been the
object of the obligation.
42
ARTICLE 1201. The choice shall produce no
effect except from the time it has been
communicated.
Notice of SelectionThe notice of selection or
choice may be in any form provided it is
sufficient to make the other party known that the
election has been made. Thus, it can be made:
(1) orally, (2) in writing, (3)tacitly, or (4) by any
other unequivocal means.
A tacit declaration of the selection may be
seen in the performance by the debtor who has
the right to choose; or in the acceptance of a
prestation by the creditor when he has the right
of selection. There is also tacit selection by the
creditor when he sues for the performance of
one of the prestation.
The notice of selection may be given by or
to a duly authorized representative.
Note: The law does not require the other party
to consent to the choice made by the party
entitled to choose. (Unilateral declaration of
will)
However, when the debtor has chosen a
prestation which could not have been the object
of the obligation, the creditors consent would
bring about a novation of the obligaton.
When there is Plurality of Subjects
When there are various debtors or
creditors and the obligation is joint, the consent
of all is necessary to make the selection effective
because none of them can extinguish the entire
obligation.
If the obligation is solidary, and there is
no stipulation to the contrary, the choice by one
will be binding personally upon him, but not as
to the others.
When there is a Condition or Term
The selection made by one party cannot
be subjected by him to a condition or a term
unless the other party consents thereto.
Effect of ChoiceThe effect of the notice of
choice is to limit the obligation to the object or
prestation selected, with all the consequences
which the law provides. The obligation is
converted into a simple obligation to
perform the prestation chosen. Once the
selection has been communicated, it becomes
irrevocable.
ARTICLE 1202. The debtor shall lose the
right of choice when among the prestations
whereby he is alternatively bound, only one
is practicable.
The obligation ceases to be alternative,
and is converted into a simple obligation to
perform the only feasible or practicable
prestation.
Note: The impossibility of the other prestations
must not be due to the creditors acts, for in such
case Article 1203 shall apply.
Article 1202 is applicable only when the debtor
has the right to choose. In cases where the
creditor is granted the right to choose, Article
1205 will apply when only one prestation
remains practicable, either due to fortuitous
event or due to the fault of the debtor.
ARTICLE 1203. If through the creditors act
the debtor cannot make a choice according
to the terms of the obligation, the latter may
rescind the contract with damages.
The debtor may also elect to perform that
which remains (if there be only one prestation
possible) or to elect from those still remaining (if
several are still possible), because the rescission
does not take place automatically but at his
option.
ARTICLE 1204. The creditor shall have a
right to indemnity for damages when,
through the fault of the debtor, all the
things which are alternatively the object of
the obligation have been lost, or the
compliance of the obligation has become
impossible.
The indemnity shall be fixed taking as
a basis the value of the last thing which
disappeared, or that of the service which
last become impossible.
Damages other than the value of the
last thing or service may also be awarded.
This article applies to cases in which the
debtor has the right to choose.
Loss by Fault of the DebtorIf only some of the
prestations are rendered impossible, the fault of
the debtor does not make him liable for
damages, because he can still comply with the
obligation by performing any of the prestations
remaining (if there are still several) or the one
which remains (if only one is possible).
He will become liable for damages
under the terms of this article only when all
the prestations become impossible through
his fault.
Effect of Fortuitous EventIf all the
prestations become impossible due to fortuitous
event, the obligation is extinguished; the debtor
is not liable for damages.
43
 If one or more of the prestations due Effect of Creditors DelayWhen the creditor
become impossible by fortuitous event, leaving fails to make a selection in cases where he has
only one prestation, and then this last one the right to choose, the debtor will not incur in
becomes impossible by fault of the debtor, the delay in the performance of the obligation, even
provisions of the present article will apply; the if there is a definite period fixed for
debtor will be liable for damages, with the performance.
value of the last prestation as the basis.
If the creditor does not make his selection
What if some of the prestations become before the period fixed, the debtors duty to
impossible by fault of the debtor, and then perform does not arise because the particular
the remaining prestation became impossible prestation to be performed has not been
by fortuitous event, what shall be the determined. The creditor in such case must be
solution? considered by his own inaction to have waived
the period.
The debtor is liable under the present
article, but the basis of damages will be the ARTICLE 1206. When only one prestation
value of the last prestation which became has been agreed upon, but the obligor may
impossible through his fault. render another in substitution, the
obligation is called facultative.
ARTICLE 1205. When the choice has been
expressly given to the creditor, the The loss or deterioration of the thing
obligation shall cease to tbe alternative intended as a substitute, through
from the day when the selection has been negligence of the obligor, does not render
communicated to the debtor. him liable. But once the substitution has
been made, the obligor is liable for the loss
Until then the responsibility of the of the substitute on account of his delay,
debtor shall be governed by the following negligence or fraud.
rules:
Alternative vs. Facultative
(1) If one of the things is lost through a
fortuitous event, he shall perform the Alternative Facultative
obligation by delivering that which As to There are Only the
the creditor should choose from contents of various principal
among the remainder, or that which the prestations all prestation
remains if only one subsists; obligation of which constitutes the
(2) If the loss of one of the things occurs constitute obligation, the
through the fault of the debtor, the parts of the accessory
creditor may claim any of those obligation. being only a
subsisting, or the price of that which, means to
through the fault of the former, has facilitate
disappeared, with a right to damages; payment.
(3) If all the things are lost through the As to nullity The nullity of The nullity of
fault of the debtor, the choice by the one prestation the principal
creditor shall fall upon the price of does not prestation,
any one of them, also with indemnity invalidate the such as when
for damages. obligation, the object is
which is still in unlawful or
The same rules shall be applied to force with outside the
obligations to do or not to do in case one, respect to commerce of
some or all of the prestations should those which man,
become impossible. have no vice invalidates the
obligation (the
Selection by CreditorWhen the creditor has creditor
the right to choose, his selection takes effect cannot
from the moment it is communicated to the demand the
debtor. substitute
even when this
The selection by the creditor may be
is valid)
made expresslyor tacitly.There is tacit selection
As to choice The right to Only the
when the creditor accepts a prestation offered by
choose may be debtor can
the debtor, or brings an action for the
given to the choose the
enforcement of one of the prestations.
creditor substitute
prestation
44
As to effect Only the The
of loss impossibility impossibility
of all the of the
prestations principal
due without prestation is
fault of the sufficient to
debtor extinguish the
extinguishes obligation,
the obligation even if the
substitute is
possible

Loss of Substitute Before the substitution is

effected, the substitute is not the prestation that
is due; only the principal prestation is due and
enforceable by the creditor at that time.

Therefore, if the substitute prestation

becomes impossible due to the fault or
negligence of the debtor, the obligation is not
affected, and he cannot be held liable for
damages.

Note: The law does not expressly provide when

the substitution of the prestation becomes
effective and binding upon the debtor. However,
by analogy, it becomes effective from the time
the debtor communicates to the creditor that he
elects to perform the substitute prestation.

45

Section 1 Joint and Solidary Obligations
ARTICLE 1207. The concurrence of two or
more creditors or of two or more debtors in
one and the same obligation does not imply
that each one of the former has a right to
demand, or that each one of the latter is
bound to render, entire compliance with the
prestation. There is a solidary liability only
when the obligation expressly so states, or
when the alw or the nature of the obligation
requires solidarity.
ARTICLE 1208. If from the law, or the
nature or the wording of the obligations to
which the preceding article refers the
contrary does not appear, the credit or debt
shall be presumed to be divided into as
many equal shares as there are creditors or
debtors, the credits or debts being
considered distinct from one another,
subject to the Rules of Court governing the
multiplicity of suits.
Joint Obligationis one in which each of the
debtors is liable only for a proportionate part of
the debt, and each creditor is entitled only to a
proportionate part of the credit.
Each creditor can recover only his share
of the obligation, and each debtor can be made
to pay only his part.
- Mancomunada; mancomunada simple;
pro rata; We promise to pay
Solidary Obligationis one in which each
debtor is liable for the entire obligation, and
each creditor is entitled to demand the whole
obligation.
Each creditor may enforce the entire
obligation, and each debtor may be obliged to
pay it in full.
- Mancomunada solidaria; joint and
several; in solidum; juntos
separademente in a promissory note;
I promise to pay; individually and
collectively; individually liable;
individidually and jointly
Joint Character PresumedWhen two persons
are liable under a contract or under a judgment,
and no words appear in the contract or the
judgment to make each liable for the entire
obligation, the presumption is that their
obligation is joint or mancomunada, and each
debtor is liable only for a proportionate part of
the obligation.
Ex. a final judgment against several
defendants does not specify that they shall pay
the amount thereof solidarily the liability shall
be presumed to be joint.
Effect of Joint Liability:
(1) The demand by one creditor upon one
debtor, produces the effects of default
only with respect to the creditor who
demanded and the debtor on whom the
demand was made, but not with respect
to the others.
(2) The interruption of prescription by the
judicial demand of one creditor upon a
debtor, does not benefit the other
creditors nor interrupt the prescription as
to other debtors. On the same principle, a
partial payment or acknowledgment made
by one of several joint debtors does not
stop the running of the statute of
limitations as to the others.
(3) The vices of each obligation arising from
the personal defect of a particular debtor
or creditor does not affect the obligation
or rights of the others.
(4) The insolvency of a debtor does not
increase the responsibility of his co-
debtors, nor does it authorize a creditor
to demand anything from his co-creditors.
(5) In the joint divisible obligation, the
defense of res judicata is not extended
from one debtor to another.
When Solidarity Exists:
(1) When there is an express stipulation in
the contract that the obligation is
solidary, or words having the same effect
are used.
(2) When a charge or condition is imposed
upon heirs or legatees, and the testament
expressly makes the charge or condition
in solidum.
(3) When the law expressly provides for
solidarity of the obligation of several
obligors, as in the case of the liability of
co-participants in a crime, the liability of
the captain and owner of a vessel
engaged in maritime commerce for
damages to the goods or cargo on board,
the liability of connecting carriers in
commercial overland transportation, and
the liability of joint tortfeasors, which
include all persons who command,
instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the
commission of a tort, or who approve of it,
after it is done, if done for their benefit.
46
 (4) When a solidary responsibility is imposed
by a final judgment upon several
defendants.
(5) When the nature of the obligation
requires solidarity. (e.g. Liability under
the provisions of Articles 19 to 22 of the
Civil Code; Note: A moral wrong cannot
be divided into parts making the liability
solidary [crimes, quasi-delicts, receipt of
what is given by mistake])
An obligation is presumed to be joint unless
solidarity has been expressly agreed upon. It is
not necessary, however, that the agreement
should use precisely the word solidary for an
obligation to be so; it is sufficient that the
obligation states, for example, that each one
of the debtors can be compelled to pay the
totality of the debt, or that each of them is
obligated for the entire value of the
obligation.
Note:The intention of the parties should prevail,
in determining whether the rules on solidarity or
those on alternative obligations should be
applied.
In case of doubt, solidarity should be
favored, as it is more conducive to the fulfillment
of the obligation, which is after all the ultimate
purpose of the parties.
Relations of Co-PartiesThe co-creditors or co-
debtors may regulate their rights or liabilities in
their internal relations with each other. Thus,
they may exclude a division and provide for sole
responsibility, or they may provide for total
reimbursement, or for a division into unequal
parts.
Dual Character of ObligationThe obligation
may be joint on the side of the creditors, and
solidary on the side of the debtors, or vice versa.
In such cases, the rules applicable to each
subject of the obligation should be applied, the
character of the creditors or the debtors
determining their respective rights and
liabilities.
ARTICLE 1209. If the division is impossible,
the right of the creditors may be prejudiced
only by their collective acts, and the debt
can be enforced only by proceeding against
all the debtors. If one of the latter should be
insolvent, the others shall not be liable for
his share.
Article 1209 is applicable when the
obligation is joint but the subject matter is
indivisible (cannot be divided or delivered in
parts) such as delivery of a car or a house. In this
case, the proper remedy is for the creditor to
demand from all the debtors involved.
Joint Indivisible Obligation When there are
several debtors or creditors, but the prestation is
indivisible and the obligation is joint.
The fulfillment of this obligation requires
the concurrence of all the debtors, although
each for his part. On the side of the creditors,
collective action is expressly required for acts
which may be prejudicial.
Plurality of CreditorsIf there are several
creditors and only one debtor, the obligation can
be performed only by delivering the object to all
the creditors jointly.
A debtor who delivers the thing to one
creditor only, becomes liable for damages
because of non-performance to the other
creditors, unless they have authorized the
former to receive payment for all of them. In
this case, the debtor is liable for damages. With
respect to the damages, the prestation becomes
divisible, and each creditor can recover
separately his proportionate share.
Is an obligation not to do divisible or
indivisible?
Plurality of DebtorsWhere the plurality of
subjects is among the debtors, the indivisible
obligation can be performed by them only by
acting together.
If any of the debtors is not willing to
perform, the prestation is converted into an
indemnification for damages. Once converted,
the creditor can sue the debtors separately for
their respective shares in the indemnity.
ARTICLE 1210. The indivisibility of an
obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply
indivisibility.
Solidarity Indivisibility
Difference between indivisibility and
solidarity:
Solidary obligations each creditor may
demand the full prestation and each debtor has
likewise the duty to comply with the entire
prestation. (Tie between parties)
Indivisible joint obligations each creditor
cannot demand more than his share and each
debtor is not liable for more than his share.
(Subject matter)
Indivisibility refers to the prestation
which is not capable of partial performance,
while solidarity refers to the legal tie or
vinculum defining the extent of liability.
47
ARTICLE 1211. Solidarity may exist
although the creditors and the debtors may
not be bound in the same manner and by the
same periods and conditions.
Kinds of Solidarity:
(1) Activeone that exists among the
creditors;
(2) Passiveone that exists among the
debtors;
(3) Mixedthat on the part of both creditors
and debtors.
Active SolidarityThe essence of active
solidarity consists in the authority of each
creditor to claim and enforce the rights of all,
with the resulting obligation of paying everyone
what belongs to him. There is no merger, much
less a renunciation of rights, but only mutual
representation.It is thus essentially a mutual
agency.
Juridical effects of Active Solidarity:
(1) Since it is a reciprocal agency, the death
of a solidary creditor does not transmit
the solidarity to each of his heirs but to all
of them taken together.
(2) Each creditor represents the others in the
act of receiving payment, and in all other
acts which tend to secure the credit or
make it more advantageous. (Ex. Partial
payment must be divided among the
other creditors; One can interrupt the
period of prescription or render the
debtor in default, for the benefit of all
other creditors)
(3) One creditor, however, does not represent
the others in such acts as novation,
compensation and remission. (Thus, even
if the debtor is released, the other
creditors can still enforce their rights
against the creditor who made the
novation, compensation or remission)
(4) The credit and its benefits are divided
equally among the creditors, unless there
is an agreement among them to divide
differently. (Ex. accounting and
distribution of amount should follow the
collection of credit)
(5) The debtor may pay to any solidary
creditor, but if a judicial demand is made
on him, he must pay only to the plaintiff.
(6) Each creditor may renounce his right
even against the will of the debtor, and
the latter need not thereafter pay the
obligation to the former.
Passive SolidarityThe essence is that each
debtor can be made to answer for the others,
with the right on the part of the debtor-payor to
recover from the others their respective
shares.This kind of solidarity is similar to a
mutual guaranty.
Juridical effects of Passive Solidarity:
(1) Each debtor can be required to pay the
entire obligation; but after payment, he
can recover from the co-debtors their
respective shares.
(2) The debtor who is required to pay may set
up by way of compensation his own claim
against the creditor, in this case, the
effect is the same as that of payment.
(3) The total remission of the debt in favor of
a debtor releases all the debtors; but
when this remission affects only the share
of one debtor, the other debtors are still
liable for the balance of the obligation.
(4) All the debtors are liable for the loss of
the thing due, even if such loss is caused
by the fault of only one of them, or by
fortuitous event after one of the debtors
has incurred in delay.
(5) The interruption of prescription as to one
debtor affects all the others; but the
renunciation by one debtor of prescription
already had does not prejudice the others,
because the extinguishment of the
obligation by prescription extinguishes
also the mutual representation among the
solidary debtors.
(6) The interests due by reason of the delay
of one fo the debtors are borne by all of
them.
Terms and ConditionsThe legal bonds in
solidarity may be:
(1) Uniform when the debtors are bound by
the same conditions and clauses; or
(2) Varied where the obligors, although
liable for the same prestation, are
nevertheless not subject to the same
terms and conditions.
Thus, it has been held that sureties, who are
liable solidarily, may bind themselves to
conditions distinct from those under which their
principal is liable. The only limitation upon this is
that the obligation of the surety cannot be
greater than that of the principal.
ARTICLE 1212. Each one of the solidary
creditors may do whatever may be useful to
the others, but not anything which may be
prejudicial to the latter.
Acts BeneficialEach solidary creditor may
interrupt prescription, constitute the debtor in
default, or bring suit so that the obligation may
produce interest.
48
Acts PrejudicialA solidary creditor cannot do
anything prejudicial to the co-creditors.
However, this is contrary to Article 1215.
The present article must be harmonized
with Article 1215. Thus, it should be understood
to mean that the act of extinguishment, which is
prejudicial to the co-creditors, will be valid so as
to extinguish the claim against the debtors, but
not with respect to the co-creditors whose rights
subsists and can be enforced against the creditor
who performed the act alone.
ARTICLE 1213. A solidary creditor cannot
assign his rights without the consent of the
others.
The solidary creditor is an agent of the
others; hence, he cannot assign that agency to a
third person without the consent of the other
creditors.
Mutual agency, which is the essence of
active solidarity, implies mutual confidence of
each creditor, hence, it is only just to require
consent of the others when one transfers his
rights to another.
Unauthorized TransferThe law is silent as to
its effects. However, the law seems to imply that
since such assignment cannot be made, it
produces no effect whatsoever.
The assignment, however, would produce
its effects if made to a co-creditor. The consent of
the other creditors would not be necessary,
because the assignee is one as to whom the
confidence of the others already exist.
ARTICLE 1214. The debtor may pay any one
of the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by
one of them, payment should be made to
him.
Judicial DemandThe solidary creditors are
tacitly mutual representatives of each other for
demanding payment.
However, when one creditor makes a
judicial demand for payment, the tacit
representation by the other creditors is
considered revoked. During the pendency of the
action, the creditors who did not sue lose their
representation of the others.
On the other hand, the debtor can pay
only to the plaintiff, in whom the representation
of the other creditors is thus concentrated, and
he can no longer be sued by the others. Hence, a
payment to any of the creditors who did not sue
would be a payment to a third person, in so far
as the shares of the others in the credit are
concerned.
The action, however, does not definitely
eliminate the other creditors, but only during the
time that the effects of the action exist.
Extra-Judicial DemandThe present article has
given to extra-judicial demand the same effect as
judicial demand in terminating the mutual
representation among the solidary creditors and
concentrating the agency in the creditor who
made the demand.
Demand by Several CreditorsIf all or several
solidary creditors demand payment separately,
the debtor should pay to the one who first
notified him.
If they demand at the same time or
collectively, as when they join together in a
single action or written demand upon the debtor,
the latter preserves his right to choose and may
pay anyone of those demanding payment.
Mixed SolidarityWhen one creditor makes a
demand upon one of the debtors, the latter
cannot pay to any other creditor but the one who
made the demand.
This prohibition, however, does not apply
to the other debtors upon whom no demand has
been made, and so they may pay to any creditor
who may not be the one who made the demand.
ARTICLE 1215.Novation, compensation,
confusion or remission of the debt, made by
any of the solidary creditors or with any of
the solidary debtors, shall extinguish the
obligation, without prejudice to the
provisions of Article 1219.
The creditor who may have executed
any of these acts, as well as he who collects
the debt, shall be liable to the others for the
share in the obligation corresponding to
them.
Novation Each solidary debtor may release all
the others by binding himself alone, in their
place, in favor of the creditor. The debtor who
effects the novation cannot, by himself, bind the
others to a new debt without their consent.
Hence, if the creditor does not require the
consent of the others, they will be released, and
only the debtor who secured the novation will be
bound under the new contract.
Merger and Compensation
(1) When it is partial and there is doubt as to
what part of the debt it should be applied
the rules on application of payments
should govern.
(2) When it is total the obligation is
extinguished, the relation between
creditors as a group and debtors as
49
 another group ceases, and there is left
only the resulting liability for
reimbursement within each group.
RemissionWhen one creditor makes a
remission, it extinguishes the obligation in the
amount and to the extent in which it is made; but
the creditor who made the remission becomes
liable to his co-creditors for their shares.
When several, but not all, of the creditors
make the remission, there can be no action as
between those who made it; but all of them will
be liable for the shares of the creditors who did
not remit, and if one is insolvent, his share shall
be made up by the others who concurred in the
remission.
(1) If the remission in favor of a debtor is
partial (not covering his full share) his
character as solidary debtor continues
with respect to the creditors and his co-
debtors.
(2) When the remission is for his full share in
the obligation he ceases to have any
relation with the creditors, from whom he
is thereby released, unless the
continuation of his solidary relation has
been expressly reserves, in which case he
will be a surety for the other debtors.
Note: The debtor in whose favor the remission
has been made, even if it be of the whole
obligation, cannot recover anything from his co-
debtors, because the remission is a gratuitous
act. (Article 1220, CC)
Effects of Acts:
The effects of novation, compensation,
confusion or remission of the debt, made by one
of the solidary creditors or with any of the
solidary debtors, should be considered from two
aspects:
(1) The relation between the creditors on one
hand and the debtors on the other, and
(2) The relations among co-debtors
themselves.
As between creditors and debtors any of
these acts will extinguish the obligation, so that
no creditor may thereafter sue any debtor,
except in case of novation, where there may be
no change or only a partial change of parties; but
in this last case, it is no longer the original
obligation, but the new one, which would be
sued upon.
As among co-creditorsthe act of any of them
in extinguishing the obligation with respect to
the debtor or debtors, does not prejudice the
rights of the other creditors to recover their
respective shares in the obligation from the
creditor who effected the novation,
compensation, confusion or remission.
As among the co-debtorsthe co-debtor as to
whom the obligation was extinguished cannot
recover from his other co-debtors more than
their respective shares in whatever he may have
given up or lost as the consideration for the
extinguishment of the obligation.
If there has been total compensation,
since he had given his own credit to extinguish
the obligation, he can recover from the others
their respective shares in the obligation.
In case of merger, if one co-debtor
acquires the whole credit, then he can still
demand from the other debtors their respective
shares therein.
In case of remission, since the co-debtor
in whose favor the remission was made, gives or
loses nothing, he cannot recover anything from
the other debtors. (Article 1220)
ARTICLE 1216. The creditor may proceed
against any one of the solidary debtors or
some or all of them simultaneously. The
demand made against one of them shall not
be an obstacle to those which may
subsequently be directed against the others,
so long as the debt has not been fully
collected.
This article applies only to solidary
obligations, and not to joint ones.
Passive Solidarity and SuretyshipPassive
solidarity and solidary guaranty or suretyship are
not identical.
Similarities:
(1) A solidary debtor, like a surety, stands for
some other person, and
(2) Both debtor and surety, after payment,
may require that they be reimbursed.
Distinctions:
(1) A solidary debtor, unlike the surety, is
liable, not only for his co-debtors
obligation, but also for his own; hence, he
is both a principal debtor and a
surety.
(2) A solidary debtors responsibility for his
co-debtor is primary, not subsidiary.
(3) An extension of time given by the creditor
to a debtor would not release a solidary
co-debtor but would release a solidary
guarantor or surety.
Actions Based on SolidarityEach solidary
creditor, under Article 1212, may bring an action
enforce the obligation and payment can be made
50
only to the plaintiff in such case by virtue of the
provisions of Article 1214.
Under the present article, the solidary
debtors may be sued simultaneously in one suit
or successively in different actions. The
provisions of this article, however, are not of
public interests. The parties, therefore, may
validly stipulate that the solidary debtors can
only be sued simultaneously, or they may provide
for the order in which the debtors may be sued
individually.
Judgment as Regards CreditorsIf the
judgment is favorable to the creditor, there
seems to be no doubt that, under Article 1212,
this inures to the benefit of the co-creditors.
What if the judgment is adverse to the
plaintiff, is it a bar to an action by the other
co-creditors?
The judgment adverse to a solidary
creditor can be set up against the other co-
creditors in subsequent actions, unless it is
founded on a cause personal to the plaintiff in
the first action.
Note that under Article 1214, once an
action is filed by a solidary creditor, he
represents all the others and payment can be
made only to him. If the filing of the action
consolidates in the plaintiff creditor all the rights
of the other co-creditors, the latter must benefit
from the favorable results and suffer from the
adverse consequences of such action.
Judgment as Regards DebtorsIf the judgment
is favorable to the plaintiff, but the defendant
solidary debtor is insolvent, it is obvious from the
provisions of Article 1216 that the other debtors
can still be sued until the debt is fully paid. The
judgment against one debtor, however, cannot be
enforced against the others; a new action must
be filed against the latter. However, a judgment
rendered against several defendants can be
revived against one of them only.
What if the first action results in a
judgment favorable to the solidary debtor
who is sued therein, can this judgment be
set up as res judicata by the other debtors if
they are later sued?
The other debtors can invoke the
favorable judgment, provided that it is not based
on a defense personal to the debtor in whose
favor it was rendered.
ARTICLE 1217. Payment made by one of the
solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay,
the creditor may choose which offer to
accept.
He who made the payment may claim
from his co-debtors only the share which
corresponds to each, with the interest for
the payment already made. If the payment is
made before the debt is due, no interest for
the intervening period may be demanded.
When one of the solidary debtors
cannot, because of his insolvency, reimburse
his share to the debtor paying the
obligation, such share shall be borne by all
his co-debtors, in proportion to the debt of
each.
Payment by a Solidary DebtorPayment by one
of the solidary debtors and his subsequent
release from liability results in release from
liability of the other debtors to the creditor.
The extinction or discharge of the solidary
obligation by the payment made by the co-debtor
gives birth to a right in favor of the paying co-
debtor, and imposed on the other co-debtors the
duty to pay him their shares in the discharged
obligation.
Note:There is no real case of subrogation in this
case because the original obligation is
extinguished and a new one is created. The right
of the paying co-debtor to be reimbursed is not
based on the original obligation but upon the
payment made by him.
Partial Payment If a solidary debtor pays the
obligation in part, he can recover reimbursement
from the co-debtors only in so far as his payment
exceeded his share of the obligation.
ReimbursementWhen a solidary debtor pays
the entire obligation, the resulting obligation of
the co-debtors to reimburse him becomes joint.
If one, by insolvency, cannot pay his share
in the reimbursement, the others (including the
one who paid) shall bear such share
proportionately.
ARTICLE 1218. Payment by a solidary debtor
shall not entitle him to reimbursement from
his co-debtors if such payment is made after
the obligation has prescribed or become
illegal.
Effect of PaymentAfter the obligation has
prescribed or has become illegal, it is no longer
due, and none of the solidary debtors can be
compelled by the creditor to pay.
If one of the debtors actually pays such an
obligation, he does not thereby revive the
obligation as to the co-debtors; hence, they
cannot be made to pay anything to the debtor
who has paid.
51
 The same rule applied when the
obligation has already been extinguished by
other causes, such as previous payment by, or
total remission in favor of another debtor.
ARTICLE 1219. The remission made by the
creditor of the share which affects one of
the solidary debtors does not release the
latter from his responsibility towards the co-
debtors, in case the debt had been totally
paid by anyone of them before the remission
was effected.
ApplicationThis article applies to a case where
a co-debtor has already paid the obligation in full
when the remission of the part affecting another
co-debtor is made.
To exempt the co-debtor whose part is
thus subsequently remitted will give way to
fraud.
Insolvency After Partial RemissionAfter the
creditor has made a remission of the share of
one solidary debtor, the credit will be limited to
the balance. What is the effect of the
insolvency of anyone of the remaining
debtors?
When a creditor remits the share of any
debtor, he can affect only the relation between
the creditor and the debtor, because he is totally
a stranger to the relation among the debtors
themselves.
This relationship among the debtors is
expressly governed by law in the last paragraph
of Article 1217, which imposes on every other co-
debtor the duty of contributing to the share of
the insolvent debtor.
ARTICLE 1220. The remission of the whole
obligation, obtained by one of the solidary
debtors, does not entitle him to
reimbursement from his co-debtors.
ARTICLE 1221. If the thing has been lost or
if the prestation has become impossible
without the fault of the solidary debtors, the
obligation shall be extinguished.
If there was fault on the part of any
one of them, all shall be responsible to the
creditor, for the price and the payment of
damages and interest, without prejudice to
their action against the guilty or negligent
debtor.
If through a fortuitous event, the
thing is lost or the performance has become
impossible after one of the solidary debtors
has incurred in delay through the judicial or
extrajudicial demand upon him by the
creditor, the provisions of the preceding
paragraph shall apply.
The effects provided for in the present
article are limited to the case of non-
performance because of loss of the thing or
impossibility of the prestation that is due.
If the loss or impossibility is due to
fortuitous event, without fault or delay on
the part of any debtor the obligation is
extinguished. No debtor can be held liable for
damages.
If the loss or impossibility is due to the fault
of any solidary debtor, or due to fortuitous
event after a debtor has incurred in delay
the obligation is converted into an obligation to
pay indemnity, consisting of the price, damages
and interest.
Although only one debtor may have been
at fault or guilty of delay, the entire indemnity
may be recovered by the creditor from the other
debtors who were free from fault or delay. But if
any of these debtors should pay to the creditor,
they can recover from the guilty debtor the full
amount of the indemnity they have paid to the
creditor.
Non-Performance Without LossIf the thing is
not lost or the prestation has not become
impossible, but there is delay, fraud, fault or
negligence, or some other breach of the
obligation, the creditor may also recover
indemnity for damages from any of the solidary
debtors.
As among themselves, however, the guilty
debtor cannot be made to shoulder, as part of the
indemnity, the shares of the co-debtors in the
original obligation.
ARTICLE 1222. A solidary debtor may, in
actions filed by the creditor, avail himself of
all defenses which are derived from the
nature of the obligation and of those which
are personal to him, or pertain to his own
share. With respect to those which
personally belong to the others, he may
avail himself thereof only as regards that
part of the debt for which the latter are
responsible.
Defense of Solidary Debtor There are 3 kinds
of defenses available to a solidary debtor when
sued by the creditor:
(1) Defenses derived from the nature of the
obligation
(2) Defenses personal to the debtor-
defendant, and
(3) Defenses personal to the other solidary
debtors.
52
Defenses Inherent in Obligation:
These are defenses connected with the
obligation and are derived from its nature; those
which may contribute to weaken or destroy the
vinculum juris existing between the creditor and
the debtor. They constitute a total defense.
(1) Non-existence of the obligation because
of illicit cause or object, or absolute
stimulation
(2) Nullity due to defect in capacity or
consent of all the debtors, such as
minority, mistake, fraud or violence
(3) Unenforceability because of lack of
proper proof under the Statute of Frauds
(4) Non-performance of suspensive condition
or non-arrival of period affecting the
entire obligation
(5) Extinguishment of the obligation, such as
by payment and remission
(6) All other means of defense which may
invalidate the original contract from
which the right or the action of the
creditor against the debtors arises, such
as res judicata, prescription and other of
the same class
Defenses Personal to Defendantmay either
be total or partial defense.
Defense such as minority, insanity, fraud,
violence or intimidation, which are sufficient
causes to annul consent, will serve as a complete
exemption of the defendant from liability to the
creditor.
Section 5 Divisible and Indivisible
Obligations
ARTICLE 1223. The divisibility or
indivisibility of the things that are the
object of obligations in which there is only
one debtor and only one creditor does not
alter or modify the provisions of Chapter 2
of this Title.
Divisibility of Things:
(1) Indivisible A thing is considered
indivisible when, if divided into parts, its
value is diminished disproportionately.
(2) DivisibleA thing is divisible when each
one of the parts into which it is divided
forms a homogenous and analogous
object to the other parts as well as to the
thing itself.
The division of a thing may be:
(a) Qualitative when the thing is not
entirely homogenous, such as an
inheritance,
(b) Quantitative when the thing divided is
homogenous (the parts themselves may
be separated, as in movables, or the limits
of each part may be fixed, as in the case
of immovables)
(c) Ideal when the parts are not separated
in a material way, but there are assigned
to several persons the undivided portions
pertaining to them, as in co-ownership.
Divisible Obligation is one which is
susceptible of partial performance; that is, the
debtor can legally perform the obligation by
parts and the creditor cannot demand a single
performance of the entire obligation.
Indivisible Obligationwhatever may be the
nature of the thing which is the object thereof,
when it cannot be validly performed in parts.
Note: Divisibility or indivisibility of the
obligation refers to the performance of the
prestation and not to the thing which is the
object thereof. (Divisibility of an obligation
Divisibility of the thing)
ARTICLE 1224. A joint indivisible obligation
gives rise to indemnity for damages from
the time anyone of the debtors does not
comply with his undertaking. The debtors
who may have been ready to fulfill their
promises shall not contribute to the
indemnity beyond the corresponding portion
of the price of the thing or of the value of
the service in which the obligation consists.
Indivisible Joint ObligationTo enforce a joint
indivisible obligation, Article 1209 has
established the necessity of collective fulfillment
and the action must be against all the debtors.
In case of non-performance by any of the
debtors, the obligation is converted into a
liability for losses and damages, which is
divisible. In this case, if one of the debtors is
insolvent or fails to pay his share, the others will
not be liable for his share; the debtors who are
ready to perform their part do not become liable
for more than the portions respectively
corresponding to them in the price of the subject
matter of the obligation; the obligation is thus
transformed, but not increased.
If this transformation causes damages to
them, they may cover such damages from the
debtor who failed to perform. The entire liability
for other damages, of course, such as those
suffered by the creditor, is shouldered by the
defaulting debtor.
Solidarity and Indivisibility - Solidarity and
indivisibility in obligations are not identical;
neither does one imply the other.
53
 Solidarity refers to the vinculumand
therefore principally to the subjects of the
obligation, indivisibility refers to the prestation
or the object of the obligation.Thus, solidarity
requires plurality of subjects; whereas this is
not required for the indivisibility of an obligation.
Furthermore, when the indivisible
obligation is converted into one to pay damages,
the reason for the indivisibility ceases to exist,
and each debtor becomes liable for his part of
the indemnity. Whereas, if the obligation is
solidary, such solidarity remains even when there
has been non-performance and the debtors
become liable for damages.
Finally, indivisibility affects the heirs of
the debtor in that they remain bound to perform
the same prestation; but the death of the debtor
terminates the solidarity, which is not
transmitted to the heirs.
Indivisible Solidary ObligationsIf the
obligation is solidary and indivisible, every
debtor is liable for losses and damages, although
those ready to perform can later recover from
the guilty one.
The creditor may demand the entire
indemnity, including the price of the thing or
prestation and the damages, from any debtor,
even if the latter was ready and willing to
perform. But a debtor who has paid the entire
indemnity may recover from the others their
respective shares in the price, and from the
guilty debtor the entire amount of damages.
ARTICLE 1225. For the purpose of the
preceding articles, obligations to give
definite things and those which are not
susceptible of partial performance shall be
deemed to be indivisible.
When the obligation has for its object
the execution of a certain number of days of
work, the accomplishment of work by
metrical units, or analogous things which by
their nature are susceptible of partial
performance, it shall be divisible.
However, even though the object or
service may be physically divisible, an
obligation is indivisible if so provided by law
or intended by the parties.
In obligations not to do, divisibility or
indivisibility shall be determined by the
character of the prestation in each
particular case.
Determination of DivisibilityThe divisibility
of the object does not necessarily determine the
divisibility of the obligation.
The test of divisibility of an obligation
is whether or not it is susceptible of partial
performance.
This susceptibility of partial performance
should be understood, not in the sense of
whether the delivery of the things or the
execution of the acts in parts is absolutely
impossible or not, but in the sense of whether
such separation into parts is contrary or not to
the end which the obligation seeks to attain.
Thus, while the indivisibility of the object carries
with it the indivisibility of the obligation, the
divisibility of the former does not always mean
that the latter is also divisible.
The following may be considered as factors
whicbh determine whether an obligation is
divisible or indivisible:
(1) The will or intention of the parties, which
may be expressed or presumed;
(2) The objective or purpose of the stipulated
prestation;
(3) The nature of the thing; and
(4) Provisions of law affecting the prestation.
Obligations to give those for the delivery of
certain objects, such as an animal or a chair, are
indivisible.
Obligations to doindivisibility is presumed, and
it is only when they are under the exceptional
cases mentioned in paragraph two of this article
that they are divisible.
In these cases, the obligation will be
divisible only when the work is agreed to be by
units of time or measure; but if the work is for
the execution of a particular object, and the
indication of theunit of time or measure is
merely accidental, the obligation is
indivisible.The purpose of the parties is
controlling; and this applies not only to
obligations to give, but also to those of doing or
not doing.
Partial PerformanceWhere the contract is
indivisible, in that it is not susceptible of partial
performance, even if the compensation is fixed
by unit of measure, the debtor who fails to fully
perform the work agreed upon, but abandons the
same after performing a part, cannot recover on
quantum meruit for the work already finished,
because in indivisible obligations partial
performance is equivalent to non-performance.
This conclusion is confirmed by Article
1233, which requires complete performance of
an obligation, and Article 1248, which forbids
partial fulfillment.
Two exceptions, however, are provided:
54
 (1) Where the obligation has been
substantially performed in good faith, the
debtor may recover as if there had been
complete performance, minus the
damages suffered by the creditor (Article
1234);
(2) When the creditor accepts performance,
knowing its incompleteness, and without
protest the obligation is deemed fully
performed (Article 1235).
Entire and Severable ContractsDivisible and
indivisible obligations are not necessarily
identical to severable and entire contracts,
respectively.
Whether a contract is entire or severable
depends in general upon the consideration to be
paid, not upon its object. If the consideration is
single, the contract is entire, but if the
consideration is expressly or by implication
apportioned, the contract is severable.
When the consideration is entire and
single, the contract must be held to be entire,
although the subject matter may be distinct and
independent items. A contract may be entire in
its origin and yet looking to the performance of
different things at different times, as a contract
of subscription to a publication to be delivered in
parts each part to be paid upon delivery.
If the part to be performed by one party
consists in several distinct and separate items,
and the price is apportioned to each of them, the
contract will generally be held to be severable.
In such case, each distinct stipulation relating to
a separate subject matter will be treated as a
separate contract. Thus, an agreement where a
party was to convey a piece of land and make a
lease of a hall, and cement its cellars and put in
a floor was separable.
Effect of IllegalityIf the contract is severable,
and one part is illegal, the part which is illegal is
void and cannot be enforced, but that part which
is legal is enforceable.
If the contract is entire, and a part is
illegal, the whole contract is unenforceable. A
party cannot ignore the illegal part and enforce
the legal part.
The same rule applies to the
consideration. If there is a single consideration
but part thereof is illegal, all the promises based
on such illegal consideration are unenforceable.
Effect of NullityIf one of the undertakings is
void because of its subject matter, but it is not
illegal, then the valid covenants may be
enforced, whether the contract is severable or
not.
55