Section 5

Divisible And
Indivisible
Obligation
 Article1223

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.
 Meaning Of Divisible and
Indivisible Obligations

ligation
e object of which, in its delivery or
is capable of partial fulfillment.

Obligation
object of which, in its delivery or
 Kinds Of Division
1. Qualitative Division
- or one based on quantity, not on number or quantity of the
things which are the object of the obligation.

2. Quantitative Division
- or one based on quantity rather than on quality.

3. Ideal or Intellectual Division

- or one which exists only in the minds of the parties.
 Kinds Of Indivisibility
1. Legal Indivisibility
- where a specific provision of law declares as indivisible,
obligations which, by their nature, are divisible.
2. Conventional Indivisibility
- where all are will of the parties makes as indivisible,
obligations which, by nature, are divisible.
3. Natural Indivisibility
- where the nature of the object or prestation does not
admit of division, to give a particular car, to sing a song, etc.
 Article 1224
A joint indivisible obligation gives rise to
indemnity for damages from the time anymore
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 consist.
 Article 1225
For the purposes of the preceding articles, obligations
to give definite things and those which are not
susceptible of partial performance shall deemed to be
indivisible.
When the obligation has for its object for 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 and partial performance, it
shall be divisible.
 Article 1225 Cont.
However, even though the object or service may be
physically divisible, an object 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 characteristic of the prestation in
each particular case.
 Obligations Deemed Indivisible

1. Obligation to give determinate things.

2. Obligations which are not susceptible of partial
performance.
3. Obligations provided by the law to be indivisible even
if the thing or service is physically divisible.
4. Obligations intended by the parties to be indivisible
even if the thing or service is physically divisible.
 Obligations Deemed Divisible
1. Obligations which have for their object the execution
of certain numbers of days of work.
2. Obligations which have for their object the
accomplishment of work by metrical units.
3. Obligations by which by their nature are susceptible
of partial performance.
 Divisibility or Indivisibility in
Obligations Not To Do
In negative obligations not to do, the character of the prestation in
each particular case shall determine their divisibility or indivisibility.
1. Indivisible Obligation
-A obliged himself to B not to sell cigarettes in his store for one
year, here, the obligation should be fulfilled continuously during a
certain period.
2. Divisible Obligation
- If the obligation of A is not to sell cigarettes in his store only during
Sundays and Holidays, the obligation is divisible because the forbearance
is not continuous.
 Section 6
Obligations
With A Penal
Clause
 Article 1226
-In obligations with penal clause, the penalty
shall substitutes the indemnity for damages and
the payment of interests incase of non-
compliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid
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 the accordance with the
provision of this code. Art 1152
 Meaning Of Principal And
Accessory Obligations
1. Principal Obligation
- Is one which can stand by itself and does
not depend for its validity and existence upon
another obligation.
2. Accessory Obligation
- Is one which is attached to the principal
obligation and, therefore, cannot stand alone.
 Meaning Of Obligations With
Penal Clause
An Obligation with a penal clause
- is one which contains an accessory undertaking to pay a
previously stipulated indemnity in case of breach of the
principal prestation, intended primarily to induce its
fulfillment.
Penal Clause
- is an accessory undertaking attached to an obligation to
assume greater liability in case of breach, ei. The obligation
is not fulfilled, or is partly or irregularly complied with.
 Purpose of Penal Clause
1. To ensure their performance by creating an effective
deterrent against breach, making the consequences
of such breach as onerous as it may be possible.

2. To substitute a penalty for the indemnity for

damages and the payment of interests in case of non
compliance or to punish the debtor for the non
fulfillment or violation of his obligation.
 Penal Clause and Condition
Distinguished
1. The first constitutes an obligation although
accessory, while the latter does not.

2. Therefore, the former may become

demandable in default of the unperformed
obligation and sometimes jointly with it,
while the latter is never demandable.
 Kinds of Penal Clause
1. As to its origin:
a. Legal Penal Clause
b. Conventional Penal Clause
2. As to its purpose:
a. Compensatory Penal Clause
b. Punitive Penal Clause
3. As to its demandability or effects:
a. Subsidiary or Alternative penal Clause
b. Joint or Cumulative Penal Clause
When Creditor Recover Damages

1. When stipulated b the parties.

2. When the obligor refuses to pay the penalty in which
case the creditor may recover legal interest thereon,
and
3. When the obligor is guilty of fraud in the fulfillment
of the obligation, in which case the creditor may
recover damages caused by such fraud.
 Article 1227
The debtor cannot exempt himself from the
performance of the obligation by paying the penalty,
save in the case where this 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 required the fulfillment of the obligation, the
performance thereof should become impossible without
his fault, the penalty may be enforce.
 Penal Clause Presumed
Subsidairy
1.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
“the right has been clearly granted” the creditor. Under article 1227,
therefore, the general rule is that penal clause is subsidiary and not joint.
2. When there is no performance-
-Incase of non-compliance, the creditor may ask for the penalty of
require specific performance. The remedies are alternative and not
cumulative nor successive, subject to the exception that the penalty may
be enforced after the creditor has decided to require fulfillment, the same
should become impossible without his fault. If there was fraud on the part
of debtor, the creditor may recover the penalty as well as damages for
non-fulfillment.
 Article 1228
Proof of actual damages
suffered by the creditor is
not necessary in order that
the penalty may be
demanded.
Penalty Demandable Without The
Proof Of Actual Damages.
- In an obligation with a penal clause all that the creditor has to
prove, to enforce the penalty, is 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.
- One of the reason of fixing the penalty is to avoid such necessity
and other difficulties involved into litigation.
- -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 damages exceed
the penalty.
Damages Recoverable In Addition
To Penalty Must Be Proved.
• In article 1228, applies only where the penalty is fixed
by the parties to substitute the indemnity for
damages.
• In any of the three exception when damages may be
recovered in addition to the penalty (Art. 1227.), the
creditor must prove the amount of such damages
which he actually suffered resulting from the breach
of the principal obligation.
 ARTICLE 1229
THE JUDGE SHALL EQUITABLY 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 COURTS IF IT IS
INQUITOUS OR UNCONSCIONABLE.(1154a)
 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- refers to the extent of fulfillment, the
latter, to the manner. As a general rule, an obligation is not deemed performed unless the
thing or service in which it consists has been completely delivered or rendered, as the case
may be(see Arts. 1233,1234,1235,1248); or

• 2.) When the penalty agreed upon is iniquitous or unconscionable- here, the penalty may be
reduced even if there is no performance at all. Even if iniquitous or unconscionable,
liquidated damages, whether, intended as an indemnity or as a penalty, are not void, but subject
merely to equitable reduction.(see Art.2227;Yulo vs. Chan Pe, 101 Phil.134.)
 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.(1155)
• EFFECT OF NULLITY OF THE PENAL CLAUSE- if the penal clause
is void, the principal obligation remains valid and demandable.
The penal clause is just damages in case of non-performance of
the obligation as if no penalty has been stipulated.(see Art.1170.)

• 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 subordinated.
 Chapter 4

EXTINGUISHMENT OF
OBLIGATION
 ART.1231. OBLIGATIONS ARE
EXTINGUISHED:
• BY PAYMENT OR PERFORMANCE;
• BY THE LOSS OF THE THING DUE;
• BY THE CONDONATION OR REMISSION OF THE DEBT;
• BY THE CONFUSION OR MERGER OF THE RIGHTS OF CREDITOR AND
DEBTOR;
• BY COMPENSATION;
• BY NOVATION.
OTHER CAUSES OF EXTINGUISHMENT OF OBLIGATIONS, SUCH AS
ANNULMENT, RESCISSION, FULFILLMENT OF A RESOLUTORY CONDITION, AND
PRESCRIPTION, ARE GOVERNED ELSEWHERE IN THE CODE.(1156A)
 ART.1232. PAYMENT MEANS NOT ONLY THE DELIVERY
OF MONEY BUT ALSO THE PERFORMANCE, IN ANY
OTHER MANNER, OF AN OBLIGATION.

(1) In ordinary parlance, payment refers only to the delivery of money.

(2) As a legal mode of extinguishing an obligation, it has a much wider meaning.
Payment may consist of not only in the delivery of money but also the giving of
a thing(other than money), the doing of an act, or not doing of an act.

when a debtor pays damages or penalty in lieu of the fulfillment of an

obligation(see 1226), there is also payment in the used in Article 1232.

IN LAW, PAYMENT AND PERFORMANCE ARE SYNONYMOUS.

 ART.1233. A DEBT SHALL NOT BE UNDERSTOOD TO
HAVE BEEN PAID UNLESS THE THING OR SERVICE IN
WHICH THE OBLIGATION CONSISTS HAS BEEN
COMPLETELY DELIVERED OR RENDERED, AS THE CASE
MAY BE.(1157)
When debt is considered paid.

a debtor may refer to an obligation to deliver money, to deliver a thing(other than money),
to do an act, or not to do an act.

(1)Integrity of prestation - a debt to deliver a thing( including money) or to render service is not
understood to have been paid unless the thing or service has completely delivered or
rendered, as the case may be.

(2) Identify of the prestation- when a debt is admitted by the debtor or established by the
evidence of the creditor, the burden of proving extinguishment by payment devolves upon the
debtor who claims payment.
 ARTICLE 1234
IF THE OBLIGATION HAS BEEN
SUBSTANTIALLY PERFORMED IN GOOD
FAITH, THE OBLIGOR MAY RECOVER AS
THOUGH THERE HAS BEEN A STRICT
AND COMPLETE FULFILLMENT, LESS
DAMAGES SUFFERED BY THE OBLIGEE.
 RECOVERY ALLOWED IN CASE OD
SUBSTANTIAL PERFOMANCEIN GOOD
FAITH
Requisites for the application of Article 1234.
The requisites are:
(1)There must be substantial performance; and
(2) the obligor must be in good faith.

good faith is always presumed un the absence of

proof to the contrary.
 ARTICLE 1235

When the obligee accepts the

performance, knowing its
incompleteness or irregularity, and
without expressing any protest or
objection, the obligation is deemed
fully complied with.
 Recovery allowed when incomplete
or irregular performance is waived
1. If the payment is incomplete or irregular, the
creditor may properly reject it.
2. In case of acceptance, the law considers that
he waived his right. The whole obligation is
extinguished.
Requisites for the application of
article 1235
1.The oblige knows that the
performance is incomplete or
irregular; and
2.He accepts the performance
without expressing any protest or
objection.
 Article 1236
• The creditor is not bound to accept payment or
performance by a third person who has no interest in the
fulfillment of the obligation, unless there is stipulation to
the contrary.

• Who ever pays for another may demand from the

debtor what he has paid, except that if he paid without the
knowledge of the debtor or against the will of the debtor,
he can recover only insofar as the payment has been
beneficial to a debtor. (1158a)
Persons from whom the creditors
must accept the payment

• The creditor may is bound to accept payment for

performance from the following:
• (1) The debtor;
• (2) Any person who has interest in the obligation (like
a guarantor); or
• (3) A third person who has no interest in the obligation
when there is stipulation that he can make payment.
(part.1)
Creditor may refuse payment by a
third party person.

• “Under the old Civil Code, the creditor cannot refuse payment
by a third person but the commission believes that the creditor
should have a right to insist on the liability of the debtor.
Moreover, the creditor should not be compelled to accept
payment from a third person whom he may dislike or distrust.
The creditor may not, for a personal reasons desire to have any
business dealings with a third persons; or the creditor may not
have confidence in the honesty of the third person who might
deliver a defective thing or pay with a check which may not be
honored.” (Report of the Code Commission, p.8)
Effect of payment by a third party

• The two effects of payment by a third party:

• (1) If made without the knowledge or against the will of the debtor –
Payer can recover from the debtor only insofar the as the payment has been
beneficial the latter. In other words, the recovery is only up to extent or
amount of the debt at the time of payment.

• (2) If made with the knowledge of the debtor - Payer shall have the
rights of reimbursement and subrogation, that is, to recover what he has
paid the amount and to acquire all the rights of the creditor.
 Article 1237

• Whoever pays on behalf of the debtor

without the knowledge or against the will of
the latter cannot compel the creditor to
subrogate him in his rights, such as those
arising from a mortgage, guaranty, or penalty.
(1159a)
 Right of third person to
subrogation
• Whoever pays on behalf of the debtor is entitled to
subrogation if the payment is with the consent of the
latter. If the payment is without the knowledge or
against the will of the debtor, the third person cannot
compel the creditor to subrogate him in the latter’s
accessory rights of mortgage, guaranty, or penalty.
 Subrogation and reimbursement
distinguished
• (1) In subrogation, the persons who pays for the debtor is put into the
shoes of the creditor. The payor acquires not only the right to be
reimbursed for he has paid but also all other rights which the creditor
could have exercised pertaining to the credit either against the debtor
or against third persons, be they guarantors or possessor of mortgages.
(Art. 1303)

• (2) In reimbursement, the third person entitled by reason of payment

has merely the bare right to be refunded to the extent provided in the
second paragraph of Article 1236 without the right to the guarantees
and securities of the original obligation. In subrogation, however, there
is no real extinction of the obligation, but only a change of creditor.
 Article 1238

• Payment made by a third person who

does not intend to be reimbursed by the
debtor is deemed to be a donation,
which requires the debtor’s consent. But
the payment is in any case valid as the
creditor who has accepted it.
 Payment by a third person who
does not intended to be
reimbursed
• Article 1238 “embodies the idea that no one should be
compelled to accept the generosity of another.” If the
paying third person does not intended to be
reimbursed, the payment is deemed a donation which
requires the debtor’s consent to be valid.
• However, if the creditor accepts the payment, it
shall be valid as to him and the payor although the
debtor did not give his consent to the donation.
 Article 1239
• In obligations to give, payment made by
one who does not have the free disposal
of the thing due and capacity to alienate
it shall not be valid, without the
prejudice to the provisions of article
1427 under the Title on “Natural
Obligations.” (1160a)
Meaning of “free disposal of thing
due” and capacity to alienate”

• (1) Free disposal of the thing due means that the thing
to be delivered must not be subject to any claim or
lien or encumbrance. (e.g., mortgage, pledge) of a
third person.

• (2) Capacity to alienate means that the person is

not incapacitated to enter into contracts and for that
matter, to make a disposition of the thing due.
 Free disposal of thing due and
capacity to alienate required
• As a general rule, in obligations to give, payment by
one who does not have the free disposition of the
thing due and capacity to alienate it is not valid.

• The exception is provided in Article 1427. the

creditor cannot be compelled to accept payment
where the person paying has no capacity to make it.
 Article 1240
• Payment shall be made to the
person in whose favor the obligation
has been constituted, or his
successor in interest, or any person
authorized to receive it. (1162a)
Person to whom payment shall be
made

• Payment shall be made to:

• (1) the creditor or oblige (person in whose favor

obligation has been constituted);
• (2) his successor in interest (like an heir or
assignee); or
• (3) any person authorized to receive it.
 Article 1241
• Payment to a person who is incapacitated to administer his property
shall be valid if he has kept the thing delivered, or insofar as the
payment has been beneficial to him.
• Payment made to a third person shall also be valid insofar as it
has redounded to the benefit of the creditor. Such benefit to the
creditor need to be proved in the following cases:
• (1) If after the payment, the third person acquires the creditor’s
rights;
• (2) If the creditor ratifies the payment to the third person;
• (3) If by the creditor’s conduct, the debtor has been led to believe
that the third person had authority to receive the payment. (1163a)
 Effect of payment to an
incapacitated person

• Payment to a person incapacitated to administer or manage his

property is not valid unless such incapacitated person kept the
thing paid or delivered, or was benefited by the payment.

• In the absence of this benefit, the debtor may be made to pay

again by the creditor’s guardian by the incapacitated person
himself when he acquires or recovers his capacity. Proof of such
benefit is incumbent upon the debtor who paid.
When benefit to creditor need not
be proved by debtor
• But the debtor is relieved from proving benefit to the creditor in
case of:
• (1) subrogation of the payer in the creditor’s rights;
• (2) ratification by the creditor; or
• (3) estoppel on the part of the creditor.

• In such cases, the benefit to the creditor is to be presumed.

Though estoppel, an admission or representation is rendered
conclusive upon the person making it and cannot be denied or
disapproved ass against the person relying thereon. (Art. 1431)
 Article 1243
Payment made in good faith to
any person in possession of the
credit shall release the debtor.
(1164)
 Article 1243
• Payment made to the creditor by
the debtor after the latter has been
judicially ordered to retain the debt
shall not be valid. (1165)
 Article 1244
• The debtor of a thing cannot compel
the creditor to receive a different
one, although the latter may be of
the same value as, or more valuable
than that which is due.
 Article 1245
Dation in payment whereby property
is alienated to the creditor in
satisfaction of a debt in money, shall
be governed by the law of sales. (n)
 Article 1246
• When the obligation consists in the delivery of
an indeterminate or generic thing, whose
quality and circumstances have not been
stated, the creditor cannot demand a thing of
inferior quality. The purpose of the obligation
and other circumstances shall not be taken
into consideration. (1167a)
 Article 1247
• Unless it is otherwise stipulated,
the extrajudicial expenses required
by the payment shall be for the
account of the debtor. With regard
to judicial costs, the Rules of Court
shall govern. (1168a)
 Article 1248
• Unless there is an express stipulation to that effect,
the creditor cannot be compelled partially to receive
the prestations in which the obligation consists.
Neither may the debtor be required to make partial
payments.
• However, when the debt is in a part liquidated, the
creditor may demand and the debtor may effect the
payment of the former without waiting for the
liquidation of the latter. (1169a)