Section 4 – Joint and Solidary Obligation

Joint Obligation

It is an ibligation where there is a conncurrence of two or more debtors or

two or more creditors or of several debtors and creditors. By virtue of which
each of debtors is liable for a proportionate part of the credit.

Example of different instances

A,B and C borrowed $9,000 to D. The presumption is that A,B and C are
jointly liable. Dcan demand only $3,000 from each or a total of $9,000.

A borrowed from B,C and D $9,000 There is one debtor and three creditors.
Each creditors can demand only $3,000 from A

A and B are liable to C and D for $9,000. There are two debtors and two
creditors each can demand $4,500 from each debtor.

Solidary Obligation

There are solidarity liability when

The obligation expressly so state or

The law requires solidarity or

The nature of the obligation requires solidarity

Kinds of solidary Obligation

Passive – solidarity on part of debtors, where anyone of the can made liable
for fulfillment of the entire obligation

Example- A and B are solidary debtor of C in the amount of $10,000

Active- solidarity on part if the creditors, wehre anyone of the can demand
the fulfillment of the entire obligation.

Example- A is liable to B and C for the amount of $10,000. B and C are

solidary creditors.

Mixed Solidarity- solidarity on the part of the debtors and creditors where
each on of the debtors is liable to render and each one of the creditors has a
right to demand, entire compliance with the obligation

Example- A and B are solidarity debtors to C and D, Solidary creditors is in

the amount of 10,000.
 ART. 1207. The concrurrence of two or more creditors or of two more
debtors in one and the same obligation does not imply that each one of the
former has the 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 requires solidarity. (1137a)

Example

Mr. Pedro and Mr. Juan borrowed $1,000.00 from Ms. Eva themselves
solidarily to pay the amount to Ms .Eva

In this case Mr. Pedro and Mr. Juan are only liable
for $500.00 each.

However, Ms. Eva may demand that Mr. Pedro or Mr. Juan pay full
amount of $1000.00

If for example, Mr. Pedro pays the whole $1000.00 upon Ms. Eva
demand, Mr. Juan has the obligation to pay reimburse Mr. Pedro
$500.00, his share in the obligation.

ART.1208 if from the law, or the nature or the wording of the

obligation 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 the creditors or debtors, the credits or debts being considered
distinct from one another, subject to rules of the government the
multiplicity of suits. (1138a)

Example

Mr. Abra and Mr. Tan borrowed $500.00 from Mrs. Uy

Without any stipulation asto their shares, the law presumes that they are
only jointly liable.

Thus, there are two debts and one credit. Mrs. Uy Can demand only $250.00
Each from Mr. Abra and Mr. Tan.

ART 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 other
shall not be liable his share. (1139)
EXAMPLE: A, B, and C are jointly to give D a car valued at P240,000.00. On
the date of the delivery, A and B are willing to deliver but C is not.

In this case, D has no cause of action against C for the delivery of the car
because, as a joint debtor, C is liable only for a proportionate part of the
obligation which is P80,000.00. Since the object (car) is indivisible, the debt
can only be enforced by, proceeding against all the debtors for compliance is
not possible unless they act together.

QUESTION

What will be the action of a debtor if one of the two creditor refused the
delivery of object?

Answer:

He may legally refuse its delivery and deposit it to the court by way of
consignation.

ART 1210

The indivisibility of an obligation does not necessarily give rise to solidarity.

Nor does solidarity of itself imply indivisibility.

EXAMPLES:(1) A and B are jointly liable to deliver to C a particular car.

Here,the prestation is indivisible but the liability of A and B is joint. We
havewhat is called a joint indivisible obligation. (Arts. 1209, 1224.)(2) If A
and B obliged themselves solidarily to give the car to C, wehave a solidary
indivisible obligation — the obligation is indivisible and theliability of A and B
is solidary.To put it in another way, we have a solidary obligation the
subjectmatter of which is indivisible. In case of breach, even the
innocentdebtors are liable for the entire indemnity without prejudice to their
rightof action against the guilty one. (Art. 1221, par. 2.)(3) A solidary
obligation does not necessarily mean that theobligation is also indivisible.
Thus, where A and B promised in solidum topay C P10,000.00, we have an
example of a solidary divisible obligation.(4) Now, if A and B are jointly liable
to pay C P10,000.00, what wehave is a joint divisible obligation. Money is
divisible.

ART 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. (1140)
EXAMPLE: Nitz, Daisy and June obtained a Php 900,000.00 loan to Digna
which they executed a promissory note solidarily binding themselves to pay
Digna under the following terms:

Nitz will pay Php 300,000.00 with 12% interest on January 13, 2016;

Daisy will pay Php 300,000.00 with 12% interest on February 13, 2016;

June will pay Php 300,000.00 with 12% interest on March 13, 2016.

When January 13, 2016 comes, Digna can collect Php 300,000.00 with 12%
interest from either Nitz, Daisy or June but she cannot collect the whole
amount because it is not yet due. The creditor must wait until the maturity
of the other amounts. She can still collect the amount in either of them when
the next maturity comes because the tie of the solidarity among the debtors
is preserved and not affected by the differences of the secondary terms and
stipulations assumed.

ART. 1212. Each one of the solidary creditors may do whoever may
be useful to the others, but not anything which may be prejudicial to
the latter. (1141a)

Act of solidary creditor useful/prejudicial to others

A solidary creditor may do any act beneficial or useful to others but he

cannot perform any act prejudicial to them. If he performs such act and as a
result the obligation is extinguished, he shall be responsible to the others for
damages. As far as the debtor or debtors are concerned, the act shall be
valid and binding.

Example:

A owes B and C, solidary creditors, the sum of 10,000. B may make a

demand for the payment of the obligation for this will benefit C. Under the
law, the prescription of action is interrupted when they are filled before the
court (Art 1155) So also, if B collects from A, C will be benefited.

ART. 1213. A solidary creditor cannot assign his rights without the
consent of the others. (n)
Assignment by solidary creditor of his rights

In the absence of consent given by the others, a solidary creditor cannot

assign his rights to a third person. The reason behind this prohibition is that
each creditor represents the others and the assignee may not have the
confidence of the original solidary creditors considering that the assignee
after receiving payment may not give the shares of the others.

ART. 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. (1142)

Payment to any of the solidary creditors

The rule is the debtor may pay any one of the solidary creditors.

Example.

A is liable to pay B and C, solidary creditors, 10,000. In this case, A may pay
either B or C but if a demand, judicial or extrajudicial, is made by B,
payment should be made to B. If A, nevertheless, paid C 10,000, B is still
entitled to his share from A in case C does not turn over to B the latter's
share. If B and C demanded payment at the same time, A may pay either of
them. If there are two (2) or more debtors, only the debtor, upon whom
demand had been made, is bound to make payment to the creditor who
made the demand.

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 – obligations are modified by:

Changing their object or principal conditions;

Substituting the person of the debtor; and

Subrogating (placing) a third person in the rights of the creditor. [Art. 1291]
COMPENSATION – takes place when two persons, in their own right, become
creditors and debtors of each other

the amount of one is covered by the amount of the other

Erap borrowed P100 from Fernando.

Fernando borrowed P75 from Erap.

Erap’s obligation to Fernando is now P25 only, because the original

obligation was offset by Fernando’s supposed-to-be obligation to Erap.

CONFUSION – takes place when the characters of creditor and debtor are
merged in the same person.

Tito pays his debt to Vic with a check payable to “cash”.

Vic paid his debt to Joey with the same check.

Joey paid his debt to Tito, with the same check Tito issued to Vic.

Tito becomes paid by his own check. He becomes the debtor and the creditor
of himself at the same time.

REMISSION – the gratuitous abandonment by the creditor of his right;

acceptance of the obligor is necessary.

These 4 modes of extinguishing obligations are acts prejudicial to the other

solidary co-creditors because these have the effect of extinguishing the debt
or obligation which is due to all of them.

The only recourse of the co-creditors is to let the one who executed any of
those acts be liable for the shares corresponding to all his co-creditors (in
their internal agreement).

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.
When there is passive solidarity, the creditor can proceed against:

Any of the solidary debtors;

Some of the solidary debtors;

All of the solidary debtors, simultaneously.

Extrajudicial demands - first demand shall not prevent subsequent demands

on the other co-debtors, if co-debtor first to have been required to fulfill
obligation did not act on it.

ART. 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.

Example: A,B, and C are jointly an severally liable to D and E in yhe amount
of P3,000.00 due on January 5. If both A and B offer to pay D, on January 5,
the latter may choose which offer to accept. If A pays the entire amount of
P3,000.00 on January 5, the obligation is extinguished.

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.

ART. 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.

Example.

A and B are solidarily indebted to C in the amount of P1,000.00. The debt

prescribed. If A, nevertheless, paid the debt, he cannot collect from B the
share corresponding to the latter. Neither can A recover from C. "When a
right to sue upon a civil obligation has lasped by extinctive prescription, the
obligor cannot recover what he has delivered or the value of the services he
has rendered."

ART.1219. The remission made by the creditor of the share which affects
one of the solidary debtors does not release the latter from the
responsibility towards the co-debtors, in the case the debt had been totally
paid by anyone of them before the remission was affected.

Example.

A and B are liable in solidum to C in the amount of P1,000.00. C remitted A's

share. Subsequent payment by B of P1,000.00 ti C will not entitle him to
reimbursement from A since the remission extinguished the obligation with
respect to A's share. However, B can demand the return of P5

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.

The article applies only when the remission covers the whole or entire
obligation and the remission is obtained by one of the solidary debtors
without spending anything for its grant.

In case the remission is only partial, the solidary debtor who paid the
unremitted part o the obligation is entitled to reimbursement with respect
only to the amount he actually paid.

Illustration/example

“Kardo”, “Pedro”, and “Toro” are solidarily liable to “Dodong” in the sum of
P200,000.00. When Kardo offered to pay the entire obligation, Dodong by an
impluse of sudden kindness, remitted the entire obligation resulting in the
extinguishment thereof. Kardo is not entitled to reimbursement from Pedro
and Toro because Kardo did not spend anything for the remission granted by
Dodonf, the remission being gratuitous one.

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. (1147a)

Limited to a Loss of Thing – If the loss or impossibility is due to fortuitous

event, without fault or delay on the part of any debtor, then the obligation is
extinguished; no debtor can be held liable for damages.

Illustration:

A & B are bound solidary to deliver to the creditor a deteminate object,

jewelries worth of 10 million pesos that was kept in the vault of B, because
of the negligence of B the jewelries were stolen. The creditor can demand
the payment of the full amount of the jewelries from A. If A pays the creditor
the full amount plus damages, A can recover the full amount he paid to the
creditor from B. But if the action was brought by the creditor against B, then
B cannot recover any part of the price & damages from A. B bears the entire
burden of indemnity.

Non- Performance Without a Loss- If the thing is not lost, but there is a
delay. The creditor may also recover indemnity for damages from any
solidary debtors. However the guilty debtor cannot be made to shoulder, as
part of the indemnity, the shares of the co-debtors in the original obligation.

Illustration:

A & B are bound solidary to deliver to the creditor jewelries worth of 10

million pesos (generic object). At maturity, the creditor demands the
performance of B, but he fails to perform and there was a delay. The creditor
sues A and made to pay the price of the jewelries plus damages and
interest. A can recover only the share of B in the obligation and B will pay
exclusively all the damages and intetrest because he is the one who is liable
for the cause of delay.

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. (1148a)

Illustration:

Rosario Breganza together with her two sons loaned from De Villa Abrille on
the amount of P70,000.00 in Japanese war notes and in consideration
thereof, promised in writing to pay him P10.oo + 2% per annum. After two
years they have not paid Abrille, so they were sued.

ISSUE Whether or not the boys who were 16 and 18 respectively bound to
sign a contract?

HELD:

The boys who were 16 and 18 respectively are bound to sign a contract, but
the Supreme Court still found they were liable to pay the amount loaned
since they did not disclose their real age during signing of the contract
neither did the mother Breganza.

SECTION 5. – DIVISIBLE AND INDIVISIBLE OBLIGATIONS

Art. 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 – is one the object of which, in its deliver or performance, is

capable of partial fulfilment.
Indivisibility – is one the object of which, in its delivery or performance, is
not capable on partial fulfilment.

Kinds of Divisibility

1.Qualitative Division – divisibility depends on the quality not on number or

quality of the things which object of obligation.

2.Quantitative Division – divisibility depends on the quantity or numbers of

the things

3.Ideal Division – one which exists only in minds pf the parties.

Kinds of Indivisibility

1.Legal Indivisibility – specific provision of law declares as indivisible.

2.Conventional Indivisibility – indivisibility agreed upon by both parties

3.Natural Indivisibility– indivisibility by reason of the nature of the object or

subject matter of the obligation

Article 1224

A joint indivisible obligation gives the 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.

JOINT OBLIGATION – the entire obligation is be paid by debtors

proportionately.

SOLIDARY OBLIGATION- each on of the debtors is obliged to pay the entire

obligation, each one of the creditors has the right to demand from any
debtors the payment of the entire obligation.

Example.

Diane & Pam contracted to deliver television LED monitor in the amount of
P50,000 to Angeline

Diane is ready to pay P25,000 while Pam failed to produce P25,000. Diane is
not liable to pay for Angeline the obligation of Pam.
In Solidary Obligation: (using the same case as above)

Diane is liable to pay the entire P50,000 or reciprocally to Angeline even

Pam failed to give his P25,000, Pam is liable to pay Diane the said amount.

SECTION 6- OBLIGATIONS WITH A PENAL CAUSE

ART. 1226: In obligation with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interest in case of non-
compliance, if there is no stipulation to the contrary. Navertheless, damages
shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in
the fulfillment of the obligation

The penalty may be enforced only when it is demandable in

accordance with the provisions of the code.

PRINCIPAL AND ACCESSORY OBLIGATIONS

PRINCIPAL OBLIGATIONS is one which can stand by itself and does not
depend for its validity and existence upon another obligation.

ACCESSORY OBLIGATION is one which is attached to principal obligation and

therefore, cannot stand alone.

An OBLIGATION WITH A PENAL CAUSE is one which contains an accessory

undertaking to pay previously stipulated indemnity in case of the principal
prestation, intended primarily to induce its fulfillment.

A PENAL CAUSE is an accessory undertaking attached to an obligation to

assume greater liability in case of breach.

PURPOSES OF PENAL CLAUSE

To ensure their performance by craeting effective deterrent against breach,

making the concequences of such breach as onerous as it may be possible.

To substitute a penalty for the indemnity for damages and the payment of
interests in case of non-compliance.

PENAL CLAUSE AND CONDITION DISTINGUISHED

The first constitutes an obligation although accessory, while the latter does
not
Therefore, the former may become demandable in default of the
unperformed obligation and sometimes jointly with it, while the latter is
never demendable.

KINDS OF PENAL CLAUSE

As to its origin:

LEGAL PENAL CLAUSE when it is provided by law

CONVENTIONAL PENAL CLASUE when it is provided for by stipulation of the

party

As to its purpose:

COMPENSATORY PENAL CLAUSE when the penalty takes the place of

damages

PUNITIVE PENAL CLAUSE when the penalty is imposed merely as

punishment for breach

As to its demandable or effect:

SUBSIDARY OR ALTERNATIVE PENAL CLAUSE when only the penalty can be

enforced

JOINT OR CUMULATIVE PENAL CLAUSE when both the principal obligation

and the penal clause can be enforced

PENALTY SUBSTITUTES FOR DAMAGES AND INTERESTS

As a general rule, in an obligation with a penal clause the penalty

takes the place of the indemnity for damages and the payment of interests
in case of non-compliance. Proof of actual damages suffered by the creditor
in not necessary in order that the penalty may be enforced.

WHEN CREDITOR MAY RECOVER DAMAGES

The creditor, in addition to the penalty, may recover damages and

interests:

When so stipulated by the parties;

When the obligor refuses to pay the penalty in which case the creditor may
recover legal interest thereon; or

When obligor is guilty of fraud in the fulfillment of the obligation, in which

case the creditor may recover damages caused by such fraud.

Example:
 X promised to construct a house for Y. The contract carried a penal
clause that in case of non-compliance, X would have to pay a penalty of
P100,000. X did not construct the house and, as a consequence, Y suffered
damages in the amount of P40,000.

In case, penalty of P100,000 shall be paid. Y cannot recover more hen

P100,000, the penalty stipulated, even if X proves that the damages
suffered by Y is only P40,000

The penalty substitutes the indemnity for the damage of P40,000,

unless there is a stipulation to the contrary, in which case Y may also
recover the damages proved by him.

If X refuses to pay penalty, Y may recover legal interest thereon, the

interest representing new damages brought about by the non-payment of
the penalty.

If X is guilty of fraud (not mere fault) in the fulfillment of his

obligation, he is also liable for the damages caused thereby in conformity
with Article 1171. Proof of the fraud and the existence and amount of
damages is incumbent upon Y. But Y need not prove fraud to recover the
penalty.

THE PENALTY MAY BE ENFORCED

The penalty may be enforced only when it is demandable in

accordance with the provision of the Civil Code.

ART. 1227: The debtor cannot exempt himself from the performance of the
obligation by paying the penalty, save in the case where this right has been
expressly reserved for him. Neither can the creditor demand the fulfillment
of the obligation and the satisfaction of the penalty at the same time, unless
this right has been clearly granted him. However, if after the creditor has
decided to require the fulfillment of the obligation, the performance thereof
should become impossible without his fault the penalty may be enforced.

PENALTY NOT SUBSTITUTE FOR PERFORMANCE

Generally, the debtor cannot just pay the penalty instead of

performing the obligation. Precisely, the purpose of the penalty is to secure
compliance with his obligation. If the debtor allowed to pay the penalty, this
would in affect make the obligation an alternative one. (Art. 1199)

The debtor can exempt himself from the non-fulfillment of the

obligation an only when “this right has been expressly reserved for him”

Example:

S is required to deliver to B certain products; otherwise, he shall pay a

penalty in amount of P10,000.
 Under the above article, S cannot just pay the penalty as a substitute
for noncompliance of the principal obligation except when he is expressly
given the right by B to do so.

PENAL CLAUSE PRESUMED SUBSIDIARY

AS A GENERAL RULE, the creditor cannot demand the fulfillment of the

obligation and the satisfaction of the penalty at the same time. The primary
purpose of penalty is to urge the debtor to the performance of the main
obligation.

Where there is performance- once the obligation is fulfilled this purpose is

attained and therefore, there is no need for demanding the penalty. The
exception arises when “this right has been clearly granted” the creditor.
Under Article 1227, therefore, the general rule is that a penal clause is
subsidiary and not joint.

Where there is no performance- in case of non-compliance, the creditor may

ask for penalty or require specific performance.

WHEN PENAL CLAUSE JOINT

The debtor has the right to pay penalty in lieu of performance only
when this right has been expressly reserved for him.

ARTICLE 1228 -proof of actual damages suffered by the creditor is not

necessary in order that the penalty may be demanded. •Penalty demandable
without proof of actual damages. In an obligation with a penalty clause all
that the creditor has to prove, to enforce the penalty, is the violation of the
obligation by the debtor. It is not necessary to adduce evidence to prove
losses and damages suffered by the creditor or the extent of the same.
Indeed, one of the reasons of fixing the penalty is to avoid such necessity
and other difficulties involved in litigations. The creditor may enforce the
penalty whether he suffered damages or not. But he cannot recover more
than the stipulated penalty even if he proves that the amount of his
damages exceeds the penalty. •Damages recoverable in addition to penalty
must be proved.

Article 1228 applies only where the penalty is fixed by the parties to
substitute the indemnity for damages. In any of the three exceptions when
damage may be recovered in addition to the penalty. The creditor must
prove the amount of such damages which he actually suffered resulting from
the breach of the principal abligation.
 ARTICLE 1229 -the judge shall equitable reduce the penalty when the
principal obligation has been partly or irregularly complied with by the
debtor. Even if there has been no performance, the penalty may also be
reduced by the courts if it is inquitous or unconscionable. •When penalty
may be reduced by the courts. The rule in article 1229 is evident justice. The
penalty provided for in the penal clause may be reduced by the courts: 1.
When there is partial or irregular performance.

Example:

X aggreed to construct the house of Y within four months for 1,000,000

according to certain specifications. The contract stipulates that in case of
noncompliance with the obligation, X will pay a penalty of 100,000. Except
for some finishing touches, X practically completed the construction of the
house after four months. 2. When the penalty agreed upon is iniquitous or
unconscionable. Example:Suppose in the same example, the value of the
house is onlu 100,000. It is stipulated that for every day of delay, X must
pay a penalty of 5,000.

ARTICLE 1230 -the nullity of the penal clause does not carry with it that of
the principal obligation. The nullity of the principal obligation carries with it
that of the penal clause. •Effect of nullity of the penal clause If only the
penal clause is void, the principal obligation remains valid and demandable.
The penal clause is just disregarded. The injured party may recover
indemnity for damages in case of non-performance of the obligation as if no
penalty had been stipulated.

Example:

S agreed to sell merchandise to B. It is provided in their agreement that in

case of default, S will deliver a prohibited drug as penalty. •Effect of nullity
of the principal obligation If the principal obligation is void, the penal clause
is likewise void. The reason is that the clause cannot stand alone without the
principal obligation to which it is subordinates. Example: S agreed to deliver
to B two grams of prohibited drugs. The contract carries a penal clause to
the effect that in case of noncompliance with the obligation, S would pay a
penalty of 10,000.