Obligations and Contracts

1. Obligations: An Overview
a. Obligation is a juridical necessity to give, to do, or not to do, and since it is a
juridical in nature, it is enforceable in court in case of non-compliance by the debtor.

b. Obligations come from the following:

b1. Law
b2. Contracts – obligations arise from here when parties agree to do, or not to do
b3. Quasi – contracts – eg. Negotorium gestio, solutio indebiti
b4. Delicts – every person who is criminally liable is also civilly liable
b5. Quasi – delicts – omissions done through negligence give rise to obligations

c. Three Prestations (to give, to do, or not to do)

c1. Personal Obligations – to do or not to do
– the performance of an act or refraining from performance
of an act
*Positive Obligations – to do
*Negative Obligations – not to do

c2. Real Obligations – to give, involves the delivery of the thing and may come in the
form of determinate (generic/particular) or indeterminate (generic).
*Note: This distinction is important to determine whether the debtor is liable in
case of the thing is lost or damage, eg. in a fortuitous event.
*Nobody is liable for loss or damage caused by fortuitous event except if liability
is set expressly by the law, contractual stipulations or when the nature of the
obligation requires that the assuming of some risk.

To avoid liabilities in case of such event, the following may concur:

- The event must first be independent of human will
- The event could not be foreseen, or even if foreseen, it is inevitable
- It must render it impossible for the debtor to comply with his obligation
- The debtor must have no participation, no negligence, or must not aggravate the
injury to the creditor.
*Note: If a determinate thing is lost without the fault of the debtor and before he
is in delay, then he will not be liable. But if a generic thing or indeterminate
thing is lost, he is still liable.

d. Article 1163 provides that prior to the delivery of the thing, the debtor has the
duty to preserve and take care of that thing and the standard of care is the
proper diligence of a good father of a good family. However, another standard of
care may be required by the laws or stipulations of the contract.

e. Article 1166 requires the debtor to deliver everything that comes with it
including the accessories and accessions. Before the delivery of the thing, the
creditor has a personal right over it, which is to demand the debtor to make the
delivery.
e1. Personal right – it only exists and enforceable against the debtor only
e2. Real right – enforceable against the whole world
*Note: Under Article 1164, when the thing is not yet been delivered, the creditor
doesn’t have a real right over it.

f. Whether the obligation is personal or real, the debtor has to comply fully. When
the debtor’s performance is late, irregular, incomplete or no performance at all,
then the obligation has been breached.
There are rules when it comes to breaches and depends on the type of obligation, to
wit:
f1. Obligations to do, as to the degree of quality
 o Low quality – the creditor can ask that what was done poorly be undone

f2. Obligation not to do (forbidden to do)

o The creditor can ask that the act be undone at the expense of the debtor
f3. If it involves irreversible acts
o The only remedy is to claim for damages
f4. If the performance was in contravention of the tenor of the obligation or no
performance at all
o Demand the debtor to perform however, if the debtor refuses to comply,
you cannot force him to perform the obligation as it would be
unconstitutional
*Note: In this case, the creditor can ask someone to perform the obligation at
the expense of the debtor, in addition to damages.
*If the obligation can only be performed by the debtor due to personal
qualification and the likes, then no one else can do it because there can be no
substitute. Thus, the only remedy is a claim for damages.

g. Reciprocal obligations are those which arise from the same cause and which
each is a debtor and creditor of the other, so that performance by one is the
equivalent and condition for the performance of the other. When the other party
performs, the other party must perform theirs. In case of breach, there are two
remedies the injured party can choose from.
o Specific performance – demand that the party at fault perform their
obligation
o Remedy of recession – ask the other party that the contract be cancelled

h. Default or Legal Delay – this constitutes breach of obligation and carries with it
certain consequences. This is incurred once the creditor makes a demand on the
debtor.
The following instances will make the debtor in default even if the creditor did not
demand, to wit:
o If it is expressly stated in the obligation or required by the law
o If the nature and circumstances of the obligation show the time of
performance was the reason or motive for creating the obligation
o If demand would be useless
*Note: Default is important because from the moment that we count the
effects of delay, which will depend on who is in fault. If it is the debtor, not
only will he be guilty of breach but he shall be liable to damages and
interest, and if the obligation is determinate, he will also be liable for loss or
damage caused by fortuitous events. If it is the creditor who is delayed, he
will be liable for breach and any damages that may be suffered by the debtor.
If the delay is on the part of both parties, then the delay of each is cancelled.
i. Main Obligations
o Pure obligations – immediately demandable
o Conditional obligations – the creditor must wait for a future and uncertain
event to happen before the obligation can either be performed (suspensive
conditions) or for the obligations to be extinguished (resolutory
conditions)
o Obligations with a period – the creditor must wait until a certain period,
such as due date, before he can demand performance
o Alternative obligation – several things are due until the party who has the
right of choice chooses which one will be delivered
o Facultative obligation – only one thing is due but the debtor can give
something else in substitution
o Joint obligation – each debtor is only liable for their proportionate share
and each creditor can only demand the share that is due to them (eg.
KKB)
 o Solidary obligation – each debtor is bound to perform the obligation in
full upon demand by the creditor who can also ask that the performance
of the obligation be done in dull
o Divisible – the object or prestation can be performed in parts
o Indivisible – if the prestation cannot be performed in parts

o Penal Clause obligation – it sets a penalty as an accessory obligation in

case the debtor fails to perform the principal obligation

j. Extinguishment of Obligations
o By payment or performance
o By loss of the thing without the fault of the debtor and before he is in
delay (applies to determinate things only)
o By condonation or remission – must comply in the forms of donation
o By merger or confusion – the debtor becomes his own creditor or if he
acquires the rights of his creditor
o By compensation – takes place if both parties are principally creditor and
debtor of each other of the same kind, quality, and quantity
o By novation – takes place by either changing the subject of the object of
the principal conditions of the obligations through substitution of debtor
with or without his knowledge and consent or by subrogating a third
person in the rights of the creditor.
*Novation is never presumed
o By death of a party obligated to render personal service
o By mutual desistance or withdrawal
o By arrival of resolutory period or fulfillment of a resolutory condition
o By compromise
o By impossibility of fulfillment (eg. fortuitous event)
o By prescription
o By recession and nullity of contract
o Others.
2. Obligations 1: General Principles of Obligations

a. Obligations are juridical necessity to give, to do, or not to do.

b. General Obligations:
o Civil obligations – give rise to a right to its enforcement
o Natural obligations – arise from equity and natural law, hence they cannot
be enforced

c. Essential Requisites of Obligation

o Active subject – entitled to demand performance of the obligation
o Passive subject – bound to the fulfillment of the obligation
o Prestation – subject matter of the obligation
o Juridical tie – the efficient cause which binds the parties together and
which arises from the sources of obligation
o Form
o
d. Difference between obligation and right
- An obligation is an act which may be enforced under the law while a right is the
power to demand performance of a prestation

e. Obligations may be real or personal

o Real – the subject matter is a thing that is to be delivered
o Personal – the subject matter is an act, either positive (to do) or negative
(not to do)

f. Sources of obligation
o Law – not presumed, the law has to expressly declares the obligation
o Contracts – obligatory upon the parties and should be complied in good
faith. However, it presupposes that the contract is valid and enforceable
o Quasi – contracts – juridical relations resulting from lawful, voluntary,
and unilateral acts by virtue of which the parties become bound to each
other that no one will be unjustly enriched at the expense of another (eg.
negotiorum gestio and solutio indebiti)
o Delicts – are criminal offenses which obligations arise to civil liabilities
in the forms of restitution, reparation, and indemnification
o Quasi – delicts – acts or omissions done through negligence which cause
damages to other party
3. Obligations 2: (Nature and Effect of Obligations 1) Debtor’s Obligations and
Creditor’s Rights

a. Personal and Real Obligations

o Personal – requires the performance of an act (to do or not to do)
o Real – involves the delivery of the thing (to give)

b. Personal and Real Rights

o Personal – enforceable against a definite passive subject (upon delivery)
o Real – enforceable even without indefinite passive subject (against the
whole world, after delivery)

c. Determinate and Indeterminate Thing

o Determinate – particular or specific, particularly designated from others
of the same class
o Indeterminate – generic, refers to the class to which something belongs

d. Obligations of the Debtor

o Specific Performance – in case of delivery of a determinate thing, the first
obligation of the debtor is to deliver the thing itself
o The preservation or taking care of the thing with the required degree of
diligence – if the party stipulated a certain degree of diligence, then that
must be observed. If the law requires a certain degree of diligence that
will be followed. In the absence of stipulation or law, then the ordinary
diligence will govern.
o To deliver all accessions and accessories
o In case of a determinate thing, the liability for damages in case he
breaches the obligation due to delay, fraud, negligence, or contravention
of the tenor of the obligation

e. The obligation of a debtor to deliver a generic thing

- To deliver a thing of the quality intended by the parties. The creditor cannot
demand a superior thing and the debtor cannot deliver an inferior thing
- To be liable for damages in case of breach, delay, fraud, negligence or
contravention of the tenor of the obligation

f. Rights or remedies of a creditor in real obligation (to give)

o In case the thing is determinate, the creditor has the right to compel the
debtor to make the delivery (specific performance)
*Note: Additional payment of damages in case of breach
o To hold the debtor liable in case the thing is lost or damage due fortuitous
event, in case there is delay or if the debtor has promised to deliver the
thing to two or more persons who do not have the same interests
*Note: whether determinate or indeterminate thing, the creditor acquires a personal
right to the fruits of the things, from the time the delivery of the thing arises. The creditor
will only acquire a real right only after the thing has been delivered to him.
g. Time of delivery – the reckoning point where the personal right to the fruit arises
- Set either by law
- If the law gives a certain date for delivery by perfection (if the parties had not
agreed otherwise)
- If the obligation is subject to condition (upon the happening of the conditions set)
 - If the obligation is set to a period (upon the expiration or arrival of the period)

h. Rights of the creditor in personal obligations (to do, or not to do)

- Positive obligation (to do)
o If the debtor fails to perform his obligation or does it in contravention of
the tenor of the obligation, the creditor may demand the performance at
the expense of the debtor
*Note: The creditor cannot compel the debtor to perform the obligation
as it would be a violation against the constitutional right of the latter.

Remedies:
 Action for damages

o If the obligation has been poorly done, it may be ordered to be undone at

the expense of the debtor

- Negative obligation (not to do)

o The debtor performs a forbidden act, then the act will be undone, and the
creditor has a right to claim for damages
4. Obligations 2.2: (Nature and Effect of Obligations) Breach and Grounds for
Damages
a. Breach – the failure without legal reason to comply with the performance of the
obligation

b. General remedy for breach – claim for damages

c. Purpose on damages
o To place the innocent party in the same position he would have been had
the obligation been performed according to its terms
o To restore him to his position had the obligation been performed
according to its terms

d. Damages are available in case of breach when it is attended by default, fraud,

negligence, or contravention of the tenor of the obligation
o Default (delay/legal delay) – constitutes breach of the obligation. For
default to happen, there must be:
 an obligation which is demandable,
 there is a failure to perform at a prescribed time
 there is a demand by the creditor for performance and after which,
there is a failure to perform the obligation
*Note: As a general rule, demand is essential to constitute the debtor in
default. Without such, there can be no default.
e. Unilateral obligations – only one party has the duty to perform. If there is no
demand, there is no default except if the parties have stipulated, the law so provides,
the time is of the essence of the obligation or if demand would be useless

f. Reciprocal obligations – requires simultaneous performance by the parties. There is

default when one party is ready to comply with this part and the other is not, then
delay begins.

However, if different dates for performance are imposed upon each party, default will
only happen after the dates have expired.

g. Kinds of default
o Mora Solvendi – delay on the part of the debtor
 Effects if the debtor is in delay:
 Guilty of breaching the obligation
 Liable for interest and damages (from the date of default,
after the demand)
 In case the thing is lost or destroyed due to fortuitous
event, he is liable (applies only to determinate or specific
thing)
o Mora Accipiendi – delay on the part of creditor
 Remedy of the debtor”
 Consign the thing in court
o Compensatio Morae – delay on the part of both parties
 Effects:
 Cancels each other out
  No actionable default
 The liability of the first who caused the delay shall be
equally tempered or may reduced by the court
 When the fault cannot be determined, the contract shall be
extinguished and each party shall bear their own damages

h. Demand is not necessary to put the debtor in default

- When the party so stipulate
- When the law itself requires a time for performance (eg. payment of taxes)
- When time is of the essence (eg. bday cake for a bday celebration)
- When demand would be useless (eg. when the debtor refuses to comply, or the
thing is lost)

- When obligations are reciprocal

i. Effects of delay may cease – upon the renounces of the creditor of his right or if the
obligation has been prescribed

j. Fraud – liability for fraud is demandable for all kinds of obligations

o Dolo Causante – fraud for inducement to enter into contract, present at the
perfection of the contract, it is the reason why the party enters into the
obligation (remedy is annulment)
o Dolo Incidente – conscious and willful evasion of the normal fulfillment
of an obligation. The fraud happens in the performance, thus the
obligation is necessarily valid.
 Remedy for breach due to fraud (dolo incidente) is an action for
damages
*Note: An action for future fraud cannot be waived and if it’s waived, that
contract is void. Waiver of an action for future fraud is void because it is contrary
to public policy as it encourages the perpetration of fraud.
*Waiver for past fraud is valid because it is simply an act of generosity

k. Negligence – demandable in all obligations

- The omission or failure not to observe the diligence required by the nature of the
obligation. It corresponds to the circumstances of the person’s time, and place
o Remedy is action for damages – it is upon the discretion of the court to fix
or regulate the amount of damages to be awarded to the injured party

o Three kinds of Negligence

 Culpa Contractual – in the performance of an obligation arising
from contracts, negligence attends the same performance thus
damages may be claimed by the injured party
 Culpa Aquiliana – directly the source of obligation, actions done
through negligence
 Cupla Criminal – directly the source of obligation, negligence
which results to criminal offense

l. Conrtavention of the tenor of the obligation – refers to any illicit act towards
defective performance in the fulfillment of an obligation
5. Obligations 4: (Nature and Effect of Obligations) Fortuitous Events, Usury, and
Transmissibility
a. Fortuitous events – events which could not be foreseen, or though foreseen, it is
inevitable
o Fortuitous event per se – acts of man which are independent of the will of
the debtor but not necessarily independent of the will of the other human
beings
o Force majeure (acts of god) – events which are totally independent of the
will of all humans
b. General rule for fortuitous event
- Any party shall not be liable in case there is loss or damage brought by fortuitous
event
o Requisites:
 The event must be independent of the will of the debtor
 The event could not have been foreseen, or though foreseen, it is
inevitable
 The event must be of such character as to render it impossible for
the debtor to comply with the obligation in a normal manner
 The debtor must be free from any participation or aggravation of
the injury caused to the creditor
 The fortuitous event must be the proximate and sole cause of the
injury suffered

- Exceptions: (All are liable in these cases)

o If there is delay, fraud, negligence, or contravention of the tenor of the
obligation, then the debtor is liable even if the thing is lost or damaged
due to fortuitous event
o If the debtor has promised to deliver the thing to two or more persons
who don’t have the same interest
o If the obligation arises from criminal offense
o In case the thing is generic
o If the stipulations declared
o Doctrine of assumption of risk – eg. a debtor enters an obligation with full
knowledge of the risk

c. Usury – contracting for or receiving an amount in excess of that allowed by law for
the loan or use of money, goods, shuttles or credits
*Note: Usury law is suspended and though lenders may impose rates of interest
higher that that of the legal rate of 6% per annum, they should not impose rates that
are unconscionable or iniquitous otherwise they may be equitably reduced by the
court

d. Remedies of the creditor in protection of his credit

o exhaust all the assets or property of the debtor
o action subrugatorya – refers to the right of the creditor to be subrogated to
all the rights of the debtor to protect his credit. The creditor acts in the
place of the debtor
  requisites:
 there must be debt owing from the debtor to the creditor
 the creditor is prejudiced by the inaction of the debtor to
run after or proceed against a third person who owes the
debtor
 the creditor has exhausted the properties of the debtor

o Action polyana – the right of the creditor to impugn or challenge that

debtor’s acts which may have been done to defraud the creditor done thru
rescissory action
 Requisites:
 There must be a prior credit owing to the creditor from the
debtor
 There is a subsequent transfer from the debtor to a third
party

 The creditor must have no other legal remedy

e. As a general rule, rights are transmissible

- Exceptions: (situations where rights may not be transmitted)
o When transmission is prohibited by law (eg. purely personal in nature
such as contracts of agency or partnership)
o When there is a stipulation by the parties
6. Obligations 5: Recession of Reciprocal Obligations
a. Reciprocal Obligations is created at the same time and for the same cause and
results in the mutual relation or creditor and debtor.

b. Recession only applies in reciprocal obligations. It only applies in cases of breach

c. In case of breach, the remedies of the injured party are:

- Specific performance
- Recession
*Note: the injured party can only choose one remedy (GR)
-exceptions where specific performance and recession can be availed at the same
time: when the party picks specific performance and then the specific performance
becomes impossible, then the injured party may pick recession.

d. The power to rescind is implied in reciprocal obligations

e. Recession from Article 1191 is different form recession under Article 1381
o Article 1381 – a remedy for the reparation of the damage caused by fraud,
applies to both unilateral and reciprocal obligations
o Article 1191 – a remedy in case of breach, applies only to reciprocal
obligations

f. The right to rescind is not absolute

- The court must be called upon to claim recession
- Exceptions: (you don’t need to go to courts)
o If the party expressly gives the right of recession
o If the contract is still purely executory (no performance on either side)

g. Only the injured party may claim recession

- If granted, the injured party can only bring recession if he is ready, willing, and
ready to perform his obligation

h. Recession is not permitted for slight or casual breaches, only for breaches which
are substantial or fundamental as to defeat the purpose of the parties in entering
into the agreement
- In order for the party to properly claim the remedy of recession, the breach must
be substantial. The breach is substantial if it defeats the purpose or intention of
the parties or the object of the parties is defeated.

i. The right to rescind may be waived

j. Effects of recession
 o Extinguishes the obligation with a retroactive effect (as if the parties
never entered into an obligation at all)
o Duty of mutual restitution – each party is bound to return whatever he
may received by virtue of the obligation

k. Instances where recession cannot be claimed

o If the party asking for recession is not ready to comply with what is due
from them
o If the party asking for recession cannot return what he has received by
virtue of the obligation
o Recession cannot be claimed if the thing subject of the obligation is now
in possession of a third party who has acted in good faith
 Remedy to claim the object:
 Go after the party at fault for damages
o No partial recession as a recession must involve the entire obligation

7. Obligations 6: Pure and Conditional Objects

a. Pure obligation is not subject for condition or no specific date for its fulfillment,
demand can be done immediately

b. Conditional obligation – subjects to conditions. If the conditions happen, it either

gives rights or it extinguishes rights already acquired
o Condition – a future and uncertain event the happening of which gives
rise to rights or extinguishes rights which are already acquired (eg. death
of certain cause)
o Period – future and certain event (eg. death)

c. Potestative Conditions – simple and purely potestative

o Simple – the will of one of the parties plus some other external act, valid
o Purely – conditions are dependent upon the sole will of one of the parties
 dependent upon the sole will of one of the debtor
 the obligation and the condition shall be void because the
validity and the compliance of the obligation is left to the
sole will of the debtor. Thus, the obligation cannot be
demanded
 dependent upon the sole will of one of the creditor
 the obligation is valid because the creditor is interested if
the obligation is fulfilled.

d. Casual condition – dependent either on the chance or the will of the third party
 This is valid

e. Mixed condition – depends on the will of the one of the parties to the obligation, and
partly upon either chance or the will of a third party, valid

f. Suspensive and resolutory conditions

o Suspensive – if rights arise,
 the demand ability of the obligation, the performance of
the prestation, and the rights arising from the obligation
are suspended until the conditions happen
o resolutory – the condition extinguishes the obligation

g. In real obligations (to give), the effects of conditional obligation is retroact or go

back to the point when the parties first agreed to enter in to the contract. This is
because the conditional is only an accidental element
o Exceptions of retroact:
 If the obligation involves a real contract
  This is because real contracts are perfected by delivery
hence, there is nothing to retroact to beyond that point of
delivery. The rights will rise from that moment of delivery
 If the obligation is to be performed successively or in intervals

h. Retroactive Rule on Personal Obligations (to do or not to do)

- Is the courts that will determine if there is retroactive effect

i. Retroactive Rule on Reciprocal Obligations

- If the party is bound to deliver the object, he is no longer has to give the other
party the fruits and other party has no longer has to give interests when he gives
the price

j. Retroactive Rule on Unilateral Obligations (No retroactive effect)

- The debtor may retain the fruits until the point of delivery.
- Exceptions: the parties otherwise stipulated in the contracts

k. The condition says that an event must happen at a determinate time

- The obligation will be extinguished

- No liability if the time expires without the event happening

l. The condition says that an event should not happen at a determinate time
- The obligation will become effective when the time expires or when it is sure that
the event cannot occur

m. Doctrine of Constructive Fulfillment

- The condition will be deemed to have been fulfilled and the obligation becomes
pure if the debt or voluntary prevents its fulfillment
o Requirements:
 The condition must be expensive
 The debtor must actually prevented the happening of the condition
 The debtor’s act must be voluntary

n. Rules on loss improvement or deterioration of the thing

- Requisites:
o It only applies to a real obligation
o Must involve a determinate thing
o Must be an obligation with suspensive condition which has been fulfilled
o The loss or deterioration must happen while the condition is pending or
has not yet happen

- First Rule: if the thing is lost without the fault of the debtor, then the obligation is
extinguished. But if the thing is lost due to the fault of debtor, then he is liable for
damages.
- Second Rule: in case of deterioration without the fault of the debtor, then the
creditor is the one who bears the impairment. in case of deterioration is due to the
debtor’s fault, then the creditor has the option of either choosing recession or
specific performance with damages of either case.

o. Resolutory Conditions
- If they are attached to an obligation, then the rights that have been acquired or
simply extinguished.
- Obligations are immediately demandable

p. Impossible conditions (physical or legal impossibility)

o Physical – cannot be done
o Legal – the prestation is contrary to law, morals, etc
- In case the obligation is subject to an impossible condition, then the obligation
itself is void.
8. Obligations 7: Obligations with a Period
a. Obligations with a Period
- Obligations whose demand ability or depends on the arrival of the period

b. Suspensive and Resolutory Period

o Suspensive – the obligation already exists, the demand ability is
suspended
 Upon arrival of the period, the obligation becomes
demandable
o Resolutory – upon arrival of the period, the obligation is now
extinguished and the duty of mutual restitution comes into play (the
parties must return whatever they may have received by virtue of the
obligation)

*Note: If the obligation is subject to period and a fortuitous event happens, the general
rule is that the fortuitous event does not interrupt the running of the period. The
fortuitous event will only relieve the parties from performance (they do not have to
perform during the time of the event)
c. General rule in obligations with a period
- The period is made for the benefit of both parties
o In case the period is for the benefit of the debtor, he cannot be compelled
to pay before arrival of the period but he can pay before the period
arrives, if he still wants
o If the period is for the benefit of the creditor, he cannot be compelled to
accept payment but he can demand payment at any time he wants

d. Judicial vs conventional or contractual period

o Judicial – periods set by the courts
o conventional or contractual – set by the parties
9. Obligations 8: Alternative Obligations
a. Alternative Obligations – in this kind of obligations, various prestations are due
but performance of only one is sufficient

b. As a general rule, the right of choice is given to the debtor

- Exceptions: the right of choice may be given to creditor or third party if it is done
expressly
- Limitations of the right of debtor:
o The debtor cannot choose a prestation which is impossible, unlawful, or
could not have been the object of obligation
o Among the prestations, only one prestation becomes practicable because
the others may have lost, then the remaining prestation will be object of
obligation
o The choice of the debtor, what he pays will only produce the effect the
moment he communicates his choice to the creditor

c. The performance in alternative obligations must be complete

d. The right of choice is given to the creditor

o The obligation will become a pure obligation from the moment the
creditor has communicated his choice
 Rules:
 If all the things are lost through the fault of the debtor, the
creditor will be indemnified.
 If the things are lost through fortuitous event, the debtor is
not liable (GR)
 If some of the things are lost due to debtor, the creditor
will be indemnified based on the value of the thing lost or
the creditor can take the remaining ones.
*Note: these rules do not apply to generic things
e. Alternative and Facultative Obligations
o Alternative – there are several prestations due but performance of only
one is sufficient
o Facultative – the passive subject can either perform the prestation which
was agreed upon or give the substitute
10. Obligations 9: Joint and Solidary Obligations
a. Joint and Solidarity obligations
o Joint - each debtor is only liable for their proportionate share and each
creditor can only demand the share that is due to them
o Solidarity - each debtor is bound to perform the obligation in full upon
demand by the creditor who can also ask that the performance of the
obligation be done in dull

b. Active and Passive Solidarity

o Active Solidarity - Creditors have a duty of mutual agency, and the act of
one is considered the act of all
o Passive - Obligation is fulfilled by one debtor extinguishing the
obligation, creating a new obligation for reimbursement among debtors

c. Specifics of Joint Indivisible Obligations

o If prestation is indivisible – the simultaneous performances are required
o If one of the co-debtors fails – the obligation is converted to damages
o If the thing is lost – all solidary debtors are responsible, in additional to
the damages

d. Defenses in Solidarity
o Inherent
o Personal
o Related to own share
o Related to shares of co-debtors
11. Obligations 10: Divisible and Indivisible Obligations
a. Divisible and Indivisible Obligations
o Divisible – the object or prestation can be performed in parts
o Indivisible – if the prestation cannot be performed in parts

b. Rules
- If real obligation (to give):
o Even if the object is divisible, then the obligation is indivisible if,
provided law or intended by the parties.
o If the object or thing is physically indivisible, the obligation is always be
indivisible
- If personal obligation (to do):
o If the object is execution of a certain number days of work, the
accomplish of work is by metrical units, or if the accomplishment of
analogous things which by their nature are susceptible of portion
performance, then those are divisible obligations
- If personal obligation (not to do):
o This depends on the character of the prestation in its particular case
12. Obligations 11: Obligations with a Penal Clause
a. Definition
- it sets a penalty as an accessory obligation in case the debtor fails to perform the
principal obligation

b. Principal and Accessory Obligations

o Principal – can stand by themselves. This is because their validity does
not depend on another obligation
o Accessory - cannot stand by themselves because they are attached to a
principal obligation

c. Purpose of Penal Clause Obligations

o Function coersativa – ensures the performance of the obligation on the
part of the debtor
o Function liquidatoria – serves as the liquidated amount of damages to be
awarded in case of breach of the principal obligation
o To punish the debtor for breach

d. Exceptions:
o If the parties so expressly stipulate or agree
o If the debtor refuses to pay the penalty
o If the debtor is guilty of fraud in performance, the creditor may recover
damages

e. Enforceability of the penal clause

- The penalty is only demandable if there is a breach
- Must be conformed to the laws, public policy, morals, etc