Kinds of obligations

Pure and Conditional Obligations

A pure obligation is one which is not subject to any condition and no specific date is mentioned for its fulfillment and
is, therefore, immediately demandable.

A conditional obligation is one whose consequences are subject in one way or another to the fulfillment of a condition.
A condition is either a future and uncertain event, or a past but unknown event, meaning unknown to the parties at
the time that the agreement was made. A condition must not be impossible (impossible also refers to illegal things).

Types of conditions
1. Suspensive condition – a condition that gives rise to the obligation.
2. Resolutory condition – a condition which extinguishes the obligation.

Suspensive Condition Resolutory Condition

Gives rise to the obligation Obligation is extinguished
No juridical tie until happening of condition Juridical tie is consolidated
Until happening of condition the obligation is a Does not affect the fulfilment of obligation but
mere hope or expectancy will terminate it once condition happens

An obligation is deemed to be one with a period if it is dependent when the means of the debtor allows him to do so.

Classification of conditions

1. As to effect
a. Suspensive – gives rise to the obligation.
b. Resolutory – extinguishes the obligation.
2. As to form
a. Express – clearly stated and stipulated.
b. Implied – can be inferred.
3. As to possibility
a. Possible – can be performed.
b. Impossible – cannot be performed physically or legally.
4. As to causes or origin
a. Potestative – the condition depends solely on one of the parties.
b. Casual – the condition depends upon chance or the will of third persons.
c. Mixed – condition is based partly on chance and the will of a third person.
5. As to mode
a. Positive – condition is the performance of an act.
b. Negative – condition is the non-performance of an act or omission.
6. As to number
a. Conjuctive – several conditions that must all be fulfilled.
b. Disjunctive – several conditions where only one or some must be fulfilled.
7. As to divisibility
a. Divisible – susceptible to partial performance.
b. Indivisible – not susceptible to partial performance.

A potestative condition based solely on the will of the debtor is void, but a postetative condition based solely on the
will of the creditor is valid.

However, if the condition is potestative (facultative) and resolutory, it is a valid condition even if purely on the will of
the debtor.

A potestative condition based solely on the will of the debtor does not affect a pre-existing obligation.

Casual condition – one where the fulfilment is dependent on chance and /or the will of a third person, such a
condition is valid.
Mixed condition – a condition where the same partly depends upon the will of the parties and partly upon chance or
the will of third persons.

ART. 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.

A positive impossible condition will make the condition void. If the positive impossible condition only affects a part
of a divisible obligation then only that part is void.

A negative impossible condition is disregarded, thus the whole obligation is valid.

A positive suspensive condition will extinguish the obligation if:

1. As soon as the time expires without the events taking place; or
2. When it becomes apparent that the event will no longer happen even if it had not expired yet.

A negative condition shall have the effect of giving rise to the obligation if:
1. The time indicated has elapsed without the condition happening;
2. When it becomes apparent that the event will not occur or happen, even if the time indicated has not yet
elapsed;

Constructive Fulfillment of condition – a condition is deemed fulfilled when the obligor voluntarily prevents its
fulfillment. Applies to both suspensive and resolutory conditions.

Requisites of constructive fulfilment of suspensive condition:

1. The condition is suspensive;
2. The obligor actually prevents the fulfilment of the condition; and 3. He acts voluntarily.

The fulfillment of a condition retroacts or goes back to the moment that the obligation was created.

The debtor must appropriate or deliver the fruits derived from the time that the obligation was created and up to the
time that the condition is fulfilled, unless there is an agreement stating otherwise.

If the obligation is a reciprocal obligation, the fruits derived from the time the obligation was created up to the time
that the condition is fulfilled is deemed to be mutually compensated or off-set from each other.

When the obligation is to do or not to do the courts shall determine as to how the obligation should retroact.

If the condition is resolutory, upon its fulfillment the parties are required to return to each other that which they have
received prior.

Before the fulfilment of a condition the creditor has the following rights:

For Suspensive Conditions

1. File an action for the preservation of the thing;
2. The debtor cannot be required or forced to pay, he may recover what is paid by mistake;

For Resolutory Conditions - Compel compliance with the obligation because the obligations is already
demandable to the happening of the condition.

In case of failure to fufill a condition, the creditor has the following rights:
2. If the condition is suspensive
a. The creditor may:
i. Refuse to proceed with the agreement; or ii.
Waive the fulfillment of the condition
Loss - when the thing perishes, or goes out of commerce, or disappears in such a way that its existence is unknown
or cannot be recovered.

Deterioration – when the thing’s value is reduced or it is partially impaired.

Improvement – something is added to the thing that increases its value or when the utility of the thing is increased.

Loss, deterioration, or improvement of a thing can be through the debtor’s fault or negligence in whole or in part or
through no fault of the debtor at all.

The following rules apply only to specific things.

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;

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.

Usufruct - gives a right to enjoy the property of another with the obligation of preserving its form and substance,
unless the title constituting it or the law otherwise provides. In situation no. 6, the debtor shall have the right of a
usufructuary (the person whom the usufruct is made). Thus, the debtor is entitled to reimbursement for any necessary
expense. A usufructuary is entitled to be reimbursed for necessary repairs and expenses, but not useful expenses.

Obligations with a Period

An obligation is with a period if an interval of time is provided for, which either suspends the demandability of an
obligation or will terminate an existing obligation. So it is also a suspensive period or resolutory period.

Period
Involves a future and certain time or event.
Suspensive period only affects the demandability
of the obligation.
Generally no retroactive effect.
The obligation is still existing if the period
depends upon the will of the obligor.
Condition
Involves a future and uncertain event.
Suspensive condition affects the birth of the
obligation and not merely its demandability.
With retroactive effect.
The obligation is void if the condition depends
upon the will of the obligor.

Kinds of period
1. Suspensive – suspends the demandability of the obligation up to the period agreed upon.
2. Resolutory – obligation is immediately effective and demandable but will be extinguished when the period
arrives.
3. Legal – fixed by law itself.
4. Conventional – agreed upon by the parties.
5. Judicial – fixed by the court.
6. Definite – exact date is specified.
7. Indefinite – the date is not fixed.

Liability on loss, deterioration or improvement in obligations with a suspensive period.

 1. Loss before arrival of period
a. If without the debtor’s fault the obligation is extinguished.
b. If the debtor is at fault he is liable for damages.
3. Deterioration before arrival of period.
a. If without the fault of the debtor the creditor shall bear the deterioration.
b. If with the fault of the debtor the creditor can choose between rescission plus damages or specific
performance plus damages.
4. Improvement before the arrival of the period.
a. If through the natural course of nature and time the creditor will get the improvement.
b. If due to the debtor’s expense the debtor is entitled to reimbursement for the necessary expenses only.

If the period is fixed by both parties it is presumed that it is for the benefit of both parties. Thus, the creditor cannot
demand payment prior to the lapse of the period and the debtor cannot pay before the period without the consent of
the creditor.

If the period is for the benefit of the creditor he can wait for the period to lapse before he can demand performance
or even before the period lapses, but the debtor cannot insist to fulfill his obligation before the lapse of the period.

If the period is for the benefit of the debtor, he can insist on complying before or until the period lapses.

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.

Article 1195 only applies to:

1. The obligation is an obligation to give;
2. The period is for the benefit of the debtor;
3. The obligor delivered before the period; and
4. The obligor is not aware of the period or he believes that the obligation has become due and demandable.

Article 1195 does not apply when:

1. Obligations to do and not to do;
2. Both parties in a reciprocal obligation perform the respective obligations before the lapse of the period;
3. When the period is for the benefit of the creditor alone.
4. When there is payment by the debtor before the period is intentionally made.

When there is bad faith on the creditor who accepted the thing prior to the period, he is liable for fruits and interest
to the debtor.

The courts will fix the period if:

1. The obligation does not fix a period; and
2. The period is intended as can be inferred from the nature of the obligation.

The court can fix the period if the period depends solely on the will of the debtor.
The creditor can demand payment from the debtor before the period (the debtor loses the benefit of the period) in
the following instances:
1. When the debtor becomes insolvent after the obligation has been contracted, unless he can give guaranty or
security;
2. When he does not furnish to the creditor the guaranty or security as promised;
3. When the guaranty or security is impaired after the obligation has been contracted due to the fault of the
debtor, even if the loss is through a fortuitous event, unless he immediately a replacement of equal value;
4. When the debtor violates any undertaking, in consideration of which the debtor agreed to the period;
5. When the debtor attempts to abscond or flee from the obligation; and
6. When there is an acceleration clause.

Alternative Obligations

Kinds of obligation according to object.

1. Simple obligation. — one where there is only one prestation

 2. Compound obligation. — one where there are two or more prestations. o Conjunctive obligation. —
one where there are several prestations and all of them are due; or o Distributive obligation. — one
where one of two or more of the prestations is due.
 Alternative - one where there are two or more prestations but the debtor is only obligated to
completely perform only one.
 Facultative – one where there is only one prestation but can be substituted by another.

Alternative Facultative
There are two or more prestations due Only one prestation is due
Debtor can choose from any Debtor only has once choice, but with a right to
substitute
The option to substitute can be with the debtor The option to substitute is always with the
or creditor debtor.

The choice on what prestation is to be performed generally belongs to the debtor. The choice must not be those that
are unlawful, impossible, or things that could not have been the object of the obligation.

The debtor does not have the right to choose when:

1. There is an agreement that the choice belongs to the creditor; 2.
There is an agreement that a third person will make the choice; or 3.
When among the alternative obligations, only one is practicable.

The choice is effective when it is communicated or made known to the creditor, either through:
1. Express communication;
2. Implied communication; or
3. Constructive communication.
Constructive communication is applicable when the choice belongs to the creditor and the debtor offers
to perform one of the prestations chosen by the latter and the former accepts or agrees to the same.

Once the choice has been communicated or made known to the creditor, the obligation now becomes a simple
obligation.

If the debtor cannot or does not make a choice:

1. If due to the creditors fault, the debtor may rescind from the obligation plus damages;
2. If through his own fault or refusal, he will be forced to make a choice through a civil action.

Effects of loss or deterioration or impossibility of the objects/prestations if the choice is with the debtor:
1. When only one option remains the debtor can still comply by performing the only available option;
2. When two or more options remain the debtor shall choose any of the remaining options;
3. If all alternative options are lost he is liable if the loss of all is due to his fault;
4. When the loss happens after the choice has been made the remedies in simple obligations apply.

Effects of loss or deterioration or impossibility of the objects/prestations if the choice is with the creditor:
1. If the loss of the other options are due to a fortuitous event, the debtor shall perform the choice of the creditor
from the remaining options, or the only option if only one remains;
2. If the loss is through the fault of the debtor, the creditor may choose any of the remaining options or the price
of the option/s lost due to the fault of the debtor, with a right to damages;
3. If all are lost due to the fault of the debtor, the creditor may choose among any of the price of those lost, with
a right to damages.

Whenever there is loss of any of the options due to the fault of the debtor, the creditor has a right to be indemnified
by the payment of damages.

Joint and Solidary Obligations

Solidary Obligation – one in which each if the debtors is liable for the entire obligation and each of the creditors is
entitled to demand the satisfaction of the whole obligation from any or all of the debtors.
 • Plurality of subjects – two or more debtors or two or more creditors
• Unity of prestation – all debtors or creditors have one whole interest in the prestation.

Joint Obligation – one in which each debtor is liable only for proportionate part of the debt and the creditor is entitled
to demand only a proportionate part of the credit from each debtor. Plurality of subjects - two or more debtors or
two or more creditors.
• Each debtor or creditor has determinate specific shares in the prestation.

In the absence of any agreement or provision of law, the law presumes that the obligation is Joint.
Kinds of Solidary Obligations As to source:
1. Conventional - There is an agreement that the obligation is solidary;
2. Natural – when the nature of the obligation contemplates solidary obligation; and
3. Legal – when the law provides for the solidary liability.

As to the parties:
1. Passive – solidary debtors
2. Active – solidary creditors
3. Mixed – solidarity between creditors and debtors As to applicability of stipulations:
1. Uniform – all stipulations apply to all, each solidary debtor/creditor are bound by the stipulations in the same
manner
2. Non-uniform – the stipulations may vary depending on the debtor/creditor involved.

Effects of a joint obligation:

1. The shares of the debtors/creditors are equal unless the nature of the obligation and the stipulations provide
otherwise;
2. Default or delay of one debtor does not affect the other;
3. Other debtors may not be compelled to perform all the obligations.

Solidary
Two or more debtors/creditors
Prestation remains the same in case of
nonperformance
Each debtor is liable for breach of the other
debtors
Collective performance is required
Indivisible
There can only be one debtor/creditor
The obligation is converted into one for damages
in case of non-performance
One debtor is not liable for the breach of the
others.
Performance may be done by one

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.

This article speaks of a joint indivisible obligation. The obligation is joint because the parties are merely
proportionately liable. It is indivisible because the object or subject matter is not physically divisible into different
parts.
• The creditor must demand performance only against all joint debtors. Demand is not effective for all joint
debtors.
• Insolvency of one debtor will not affect the others.
• Non-compliance by one debtor will convert the obligation into one for damages or monetary obligation.

Active Solidarity – solidarity lies with the creditors

Rules between creditors and debtors on Active Solidarity

1. One solidary creditor may ask for full payment or full compliance with the obligation.
2. The moment demand is made by one solidary creditor, payment must be paid to him.
3. Any one of the solidary creditors may extinguish the obligation.

Rules among the creditors.

 1. If the solidary creditor was able to recover from the debtor, he must thereafter give the share of the other
creditors.
2. Solidary creditors may do whatever that may be useful to other creditors.
3. Solidary creditors may not do anything that is prejudicial to the other creditors.
4. A solidary creditor must get the consent of the other creditors before assigning or transferring his right or
share in the credit.
5. Novation, compensation, confusion or merger may result in prejudice or benefit to the solidary creditors.
a. If beneficial to the creditor, the creditor must share with all other creditors
b. If prejudicial, the creditor is liable to all other creditors.
6. Compensation takes place when two persons are creditors and debtors of each other and the respective
obligations are extinguished up to the extent that they coincide.

Passive Solidarity – solidarity among debtors.

Rule between the creditor and the solidary debtors:
1. One solidary debtor may be obligated to perform the entire obligation.
2. Even if demand was already made on one solidary debtor, demand can be made to the others if there is no
full compliance.
3. One solidary creditor may raise defenses against the creditor.
a. Defenses derived from the nature of the obligation.
b. Defenses that are personal to one debtor. It can be raised by other debtors but will only benefit the
part of the debt to whom the defense belongs.
c. Defenses that pertain to only the share of one debtor.
d. Defenses that pertain to other debtors.
5. Payment by one solidary debtor extinguishes the entire obligation.
6. When the object or prestation of the obligation becomes impossible or when it disappears due to the fault of
one or all the solidary debtors, each of the debtors shall be liable. If through no fault the obligation is
extinguished.
7. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.

Rules among the debtors.

1. If one of the solidary debtors paid the creditor, he can claim reimbursement from the other debtors.
2. A solidary debtor who has the right of reimbursement is also entitled to interest if he paid on due date.
3. If one of the solidary debtors is insolvent the share of the insolvent debtor shall be borne by the other debtors.
4. A solidary debtor is not entitled to reimbursement if he paid the obligation after the obligation has prescribed
or after it has become illegal.
5. A solidary debtor who paid the entire debt may claim reimbursement even against a debtor whose share was
remitted by the creditor.
6. A solidary debtor who was able to obtain a release or remission of the entire obligation is not entitled to
reimbursement.

Surety – the surety binds himself solidarily to the creditor to fulfil the obligation of the principal debtor.

Guaranty – a person, called the guarantor, binds himself to the creditor to fulfil the obligation of the principal debtor
in case the latter should fail to do so.

Surety Guaranty
Insures the debt Insures the debtor’s solvency
Surety is primarily and solidarily liable Guarantor is subsidiarily liable
No benefit of excussion Benefit of excussion is granted

Excussion – the guarantor can point to the properties of the principal debtor before he can be made liable.

Divisible and Indivisible Obligations

Divisible Obligation – one where it is susceptible or capable of being executed or performed in parts.

Indivisible Obligation – one where it is not susceptible or capable of being executed and performed in parts by reason
of their nature or as provided by law or agreement of the parties.
Kinds of Indivisible Obligations
1. Natural indivisibility – the nature of the obligation is that it cannot be performed in parts.
2. Legal indivisibility – the law declares that the obligation is indivisible. The thing itself need not be indivisible.
3. Conventional indivisibility – the parties agreed that the obligation is indivisible. The thing itself need not be
indivisible.

Kinds of Division
1. Quantitative – the thing can be materially divided into parts and such parts are homogenous to each other,
such as when the parts are separated from each other as in the case of movables, or when the limits of the
parts fixed by metes and bounds as in the case of immovables.
2. Qualitative – when the thing can be materially divided, but the parts are not homogenous to each other.
3. Ideal or Intellectual – the thing can only be separated into ideal or undivided parts, not material parts. There
is no actual physical division.

Rules to determine if an obligation is divisible or indivisible

1. An obligation to deliver a specific thing is always indivisible.
2. An obligation is divisible if it will be executed or performed within a certain number of days work.
3. An obligation is divisible if the work is to be accomplished by metrical units.
4. If it is susceptible of partial performance it is divisible.
5. Even if the obligation is divisible, it may still be indivisible if the parties agree to it.
6. If the obligation is indivisible by nature, it cannot be made divisible by agreement of the parties.

Obligations with a Penal Clause

A penal clause is in the nature of an accessory obligation which makes one party liable or makes him perform another
prestation if the principal obligation is not fulfilled.

An accessory obligation is one that is attached to the principal obligation in order to complete the same or takes place
in case of breach.

The purposes of a penal clause:

1. Inducement – to insure the performance of the obligation
2. Punitive – as punishment for non-performance
3. Deterrence and retribution
4. To fix in advance the damage that may be awarded without any proof to the same.

The penalty takes the place of indemnity for damages and the payment of interests in case of non-compliance with
the obligation unless there is an agreement to the contrary.

Kinds of penalty 1.
as to origin
a. legal – expressly stated by the law
b. conventional – agreed upon by the parties
3. as to purpose
a. compensatory – it is set for the purpose of indemnifying the damages suffered by one party b. punitive
– as punishment in case of breach
4. as to effect
a. subsidiary – if only the penalty will be enforced in case of breach
b. joint/complementary – both the principal and obligation should be performed in case of breach

A penalty is not an alternative. The enforcement of the penalty is made only if there was non-compliance with the
principal obligation. Thus, the debtor cannot choose to perform just the penalty.

Generally it is not complementary. The creditor can either demand fulfilment of the obligation or enforce the penalty.
The creditor cannot demand both unless:
1. there is an agreement that he can enforce the penalty and at the same time demand performance if the
obligation; or
2. the performance of the obligation becomes impossible.
Proof of actual damages is not necessary. The purpose of the clause itself is to deter any violation of the obligation,
thus the amount or value of the actual damage need not be proven as long as the value of the penalty is given.

Since a Penalty or a penal clause is an accessory obligation, if the principal obligation is void then the penalty is also
void. However, if the only the penalty is void and not the principal obligation, then the principal obligation shall
remain to be valid.

The penalty may be reduced by the court in the following cases:

1. when there is partial compliance
2. when there was but it was irregularly done
3. when the penalty is iniquitous or unconscionable.