Topic 3 Kinds of Obligations

Kinds of Obligations
1. Pure Obligation
2. Conditional obligation
3. Obligation with a Period
4. Alternative Obligation
5. Facultative Obligation
6. Joint Obligation
7. Solidary Obligation
8. Divisible Obligation
9. Indivisible Obligation
10. Obligation with a Penal Clause

Pure obligation
 One without a condition or a term thus demandable at once
 Examples:
1. I promise to pay you P5,000.00 – since no date is indicated when
obligation is to be settled or paid …. Obligation is demandable at once
 When it is likewise subject to resolutory condition
Example: I will you my car but you should not get married this year.

Conditional obligation
 Fulfillment of the obligation, acquisition of rights as well as the
extinguishment or loss of those already acquired shall depend upon the
happening of the event which constitutes the condition
 Condition – uncertain event or a past event unknown to the parties which
would have an effect on a legal relationship
 Kinds of conditions:
1. Suspensive condition
2. Resolutory condition
3. Potestative condition – one that depends upon will of debtor ( I will pay
you once I received my allowance)
4. Casual condition – depends upon chance or will of 3 rd person (I will pay
you if I hit the jackpot prize in Lotto)
5. Mixed condition – depends partly on will of debtor and partly on
chance (I will pay if I pass the CPA board Exam)
6. Positive condition
7. Negative condition

 In conditional obligations the acquisition of rights as well the

extinguishment or loss of those already acquired shall depend on the
happening of the event which constitutes the condition. (Art. 1181)
 1. Suspensive condition – happening of the event – condition precedent
for the obligation to arise – thus if the event does not take place, the
parties would stand as if the condition have never existed
Example:
1.1 A in his will gave his tagaytay property to B provided that B
would be able to finish his studies (college). Once B graduates
from college the obligation will automatically arise.
 Once the condition has been fulfilled B’s right to the property
technically becomes effective upon the perfection of the contract –
point when A promise to give B the tagaytay property.

2. Resolutory condition – rights already acquired are lost or extinguished

once the condition is fulfilled
2.1 A told B will you my car now but you should be able to graduate
from college in a year’s time. The obligation of A will outright
arise today but if B fails to graduate in a year’s time he must
return the car to A as the latter’s obligation is deemed
extinguish.
 Once the condition is fulfilled the obligation shall be extinguish
and the parties should restore to each other what they may have
received

 When the fulfillment of the obligation depends upon the will of the debtor
(potestative condition) – the conditional obligation shall be deemed VOID
as the creditor would be at the mercy of the debtor. (A promise to pay B
his debt next year if he would still be alive)

 Positive condition – the condition that some event will happen at a

determinate time shall extinguish the obligation as soon as the time
expires or if it has become indubitable that the event will happen.
Example:
1. A promise to give B a car if he marries X before the year ends. If X dies
before the end of the year or if B is not yet married X by the end of the
year the obligation of A is extinguish.
2. A agreed to buy B’s property in Tagaytay City if B can present to him
the TCT covering said property by end of September. B failed to
present by end of September the TCT to A, thus A is released from his
obligation to B.
3. A obliged himself to give B P100,000 if the latter becomes a lawyer by
2020. If 2020 lapsed without B becoming a lawyer, A’s obligation will
not arise.

 Negative condition – the condition that some event will not happen at a
determinate time shall render the obligation effective from the moment
 the time indicated had lapsed or it becomes certain that the event will not
happen.
Example:
1. A promise to give B a car if he will not marry X this year. If by January
1, 2021 B is still single A’s obligation will arise or if X dies before the
year end A’s obligation will outright arise upon death of X.

 What may happen to the object of the obligation during pendency of the
condition?
1. May get lost
2. May deteriorate (value will be reduced)
3. May improved

 Lost or deterioration may be due to:

1. Fault of debtor
2. Without fault of debtor
3. Partly with and partly without fault of debtor

 Thing/object improve due to:

1. By nature
2. Through effort or expense of debtor
3. Partly through effort of debtors and partly due to nature

 Loss – thing is considered loss:

1. When it perishes
2. Goes out of commerce
3. Disappears in such a way that its existence is unknown
4. Disappears in such a way that it can’t be recovered
Example:
1. A promise to give B today a car (Hyundai ABCD 1234) if he would
be able to pass the November 2021 Bar Exams. B was one of those
who passed the 2021 Bar Exams however 3 months after A made
the promise the car was burned together with A’s house. Thus even
if B passed the Bar Exam the obligation is deemed extinguish as
the object of the contract got lost without fault on his part.
2. If what A promise to B is a sum money, even if A’s house got
burned his obligation to B will not be extinguish cause money is
considered as a generic thing.

Obligation with a period

 Certain length of time which determines the effectivity or extinguishment
of an obligation.

Condition Period
Uncertain event An event which must happen sooner
 or later
May refer to a past event Always future
Causes an obligation either to arise Fixes the time or efficaciousness of
or to cease the obligation

 Kinds of period:
1. Definite – exact date or time is given (Christmas day; 3:00 p.m.
September 30, 2020; midterm exams for 1st semester; 18th birthday)
2. Indefinite – something that will surely happen but as to when no
definite date or time (death of a person; holy week)
3. Legal – one fixed by law (payment of taxes; business permits)
4. Conventional or voluntary – agreed upon by the parties
5. Judicial – fixed by the court

 Whenever a period has been designated it is presumed to be for the

benefit of both parties unless it can be shown that it was established in
favor of one of the parties only.
Example:
1. Debt or to pay creditor in 1 year. Debtor can pay creditor anytime he
wishes and creditor can’t demand payment ….. as to when payment is
to be made discretionary on part of debtor but payment should be
made within period of 1 year.

 Instances when court may fix period:

1. Duration depends upon will of debtor (when my means permits me to
do so; little by little; as soon as possible; as soon as I have the money)
2. When although the obligation did not fix a period, it can be inferred
that a period was intended
2.1 a contract to build a house with no agreement between parties
as to timeline

 Instances when court may not fix term

1. No term specified as no term intended by parties – obligation is pure
and demandable at once
2. When obligation is payable on demand
3. When the law provides for the period ( employment contract labor code
provides when employer is bound to pay employees their salary)

 Instances when debtor loose right to make use of period

1. When after the obligation has been contracted he becomes insolvent
unless he provides a guaranty or security
2. When he does not furnish creditor the guaranty or security that he
promise
3. When by his own act impaired the security or guaranty he promise
unless he gives a substitute thereof
 4. When debtor violates any undertaking in consideration of which
creditor agreed to the period
5. Debtor attempts to abscond

 How terms are computed:

 Year – 365 days each
 Month – 30 days
 Day - 24 hours
 Night – sunset to sunrise
 If months are designated by their names – they shall be computed by
the number of days which they respectively have
 In computing a period – exclude 1st day and include last day

Alternative and facultative obligation

Alternative Facultative
Various things are due – giving of one Only one thing is principally due but
is sufficient debtor may be allowed to give another
as substitute
If one of the prestations is illegal, and If the principal thing is void (illegal)
others are valid …obligation will obligation is deemed extinguish
subsists ….substitution not allowed …
substitute considered only as
accessory
If it is impossible to give all except If it impossible to give the principal
one .. that last one must still be thing, no need to give the substitute
given
Right of choice may be given to either Right of choice rest with the debtor
party only

 Alternative obligation
 A owes B the amount of P50,000 due on December 15, 2020. The
contract between the parties provides that on December 15, 2020 B
can either give to A cash of P50,000; or a watch; or 10 bottles of
Johnny Walker Blue label or weekend package for his family at Marco
Polo Hotel Ortigas.
 Thus comes December 15, 2020 B can deliver any of those objects per
the contract and such would considered as payment of the amount
that he owes A.
 However B can’t compel A to receive P25,000 and 5 bottles of the wine
cause B has to deliver one prestation only in whole

 Right to choose what to give rest with the debtor UNLESS the right has
been expressly granted to creditor
  Choice shall produce no effect until such time has been made known
to the other party
 Once choice has been made and communicated to the other party the
obligation ceases to be an alternative obligation but would now become
a pure obligation, thus in case of loss, destruction or deterioration of
the object prior to delivery the rules pure obligation will govern
 If debtor can’t exercise his right to choose on account of creditor’s
conduct, former may rescind the obligation with damages
 If the debtor through his own fault can’t comply with his obligation
(object got lost, destroyed or value deteriorates), creditor have a right
to indemnity for damages ….indemnity will be based on the value of
the last thing that debtor could have delivered to creditor

 Facultative obligation
 A promised to give B a diamond necklace on December 15, 2020. The
contract between the parties states that in lieu of the necklace, A can
give to B his car (Toyota Altis ABCD 1224).
 Comes due date A can either give the necklace or deliver his car to B.

Joint and Solidary obligations

 The concurrence of two or more debtors or two or more creditors in an
obligation
 Gen. rule – obligation is considered JOINT
 Exception:
1. When there is a stipulation in the contract that obligation is
solidary
2. When the nature of obligation requires liability to be solidary
3. When the law declares obligation to be solidary
 Solidary obligation is not presumed….. preference is to treat obligation
as joint cause it is easy to determine extent of liability and rights of the
parties (Art. 1208) thus debt is to divided into as many shares as
there are creditors and debtors; credit or debts will be distinct
from one another

 Joint obligation – each of the debtor is liable only for a part of the entire
obligation, while each of the creditor may demand only fulfillment of part of
the entire obligation
 Example:
1. A, B & C jointly owes D P3,000.00 A, B & C – liable proportionately
to D in the amount of P1,000.00 each; D can only demand P1,000
from each of the debtor
2. A & B are joint debtors of C, D and E in the amount of P3,000.00 A
& B are liable to the extent of P1,500 each; C, D & E on the other
hand can demand only P1,000 each; thus C can only demand P500
from A and P500 from B. Same would be for D & E.
  In case any of the debtor becomes insolvent…..the other debtors who
are financially stable not obligated to cover the insolvent debtor’s share
 In case demand is made to a particular debtor, such would not be
binding to the other debtors as all the obligations are considered
distinct and separate from each other
 Joint Indivisible obligation
 A & B jointly agree to buy and give C a particular car that is worth
P300,000.00. When the obligation becomes due A can’t give his share
as he was financially drain.
 Since the object is indivisible car which means it can’t be partitioned
and has to be delivered as a whole, the obligation of A & B will be
converted to an obligation to give indemnity for damages.
 Thus A & B will just be made liable for the monetary value of the car
in the amount of P150,000 each.

 Solidary obligation – any of the debtor may be held liable for the entire
obligation while any of the creditors may demand fulfillment of the entire
obligation
 Example
1. A & B solidarily owes C P2,000.00 C can demand payment of
entire obligation from either A or B. If payment was made by A, A
can demand reimbursement from B of his share in the obligation
in the amount of P1,000
2. A & B solidarily owes C, D & E the amount of P3,000.00. C, D or E
may demand from either A or B payment of the entire obligation. If
C demand payment, he has to give share of D & E in the amount of
P1,000 each. If the demand was made to A, A after paying may
seek reimbursement from B of his share in the obligation in the
amount of P1,500.00
 Any of debtors may pay any of the creditors, but when demand
(judicial or extrajudicial) is made by a creditor, payment should be
made to such demanding creditor ….if payment is made to another
creditor not the one who demands payment, obligation is not yet
deemed extinguish
 If payment is being made by 2 debtors, the creditors may choose
which offer to accept
 If payment has been made by any of the debtors, such debtor may
seek reimbursement from his co-debtors their corresponding share in
the obligation …..and in case one of the debtor is insolvent the other
solvent debtors would have share proportionately amount due from
insolvent debtor
 The transaction may likewise give rise to a situation that the nature of
liability of the debtors – JOINT, while the relationship of the creditors –
SOLIDARY, or vice versa.
Example:
 1. A & B jointly owes C, D & E the amount of P3,000.00. The relationship
of C, D & E as creditors is solidary. Thus even if C, D & E are solidary
creditors of A & B, each of them can collect only a portion of the entire
obligation in the amount of P500.00
2. A & B are solidary debtors of C, D & E in the amount of P3,000.00
Relationship of C, D & E as creditors is joint. Thus even if the
relationship of A & B solidary, C, D or E can’t collect entire obligation
from either A or B since their relationship is joint by nature. Thus C, D
or E can only collect a part of the entire obligation from A or B in the
amount of P500.00.

Divisible and Indivisible obligations

 Point of reference is the subject matter – object of the contract
 Divisible – one that is capable of partial performance (deliver 50 kilos of
sugar; obligation is payable in installment basis; laborer is hired to work
for 10 days)
 Indivisible – one that is not capable of partial performance (to deliver a car;
performance by an orchestra)

Solidarity Indivisibility
Refers to the relationship of the Refers to nature of the obligation
parties
There should be at least 2 debtors or May exist even if there is only one
creditors debtor and one creditor
Fault of one is the fault of the others Fault of one not the fault of others

Obligation with a Penal Clause

 Penal clause – accessory undertaking to assume greater liability in case of
breach of contract …..it is attached to an obligation to insure its
performance
 Kinds:
1. Legal – one that is imposed by law
2. Conventional – one that is agreed upon by the parties

 A promised to construct of B within a period of 4 months. The contract

further provides that in case the house is not yet finished at the end of the
4th month, A will have to cover the monthly rental expense of the place
being rented by B till B would be able to move to his house. The stipulation
on rental expense that A would have pay in case house is not yet finished is
the penal clause.
 In case obligation is not deemed fulfilled on its due date the creditor can’t
demand indemnity for damages caused the penal clause that debtor would
have to satisfy will take the place for indemnity for damages. Damages may
only be recovered when:
 1. There has been a stipulation/agreement between the parties
2. If debtor refuses to pay or satisfy the penalty, in which case creditor is
entitled to legal interest
3. Debtor is guilty of fraud in the fulfillment of the obligation
 In case there is breach of contract payment by the debtor of the penalty will
not outright extinguish his liability unless there was an agreement by the
parties
 When may court reduce the penalty:
1. When there has been partial or irregular performance by the debtor
2. When the penalty agreed upon is unconscionable even if there has been
no performance yet