OBLIGATION
Chapter 3 KINDS OF OBLIGATION (1179-1230)
Primary classification
Pure; Conditional; With a period
Alternative; Facultative
Joint; Solidary
Divisible; Indivisible
With a Penal clause
Pure
● Without condition or period (1179)
● Immediately demandable
Secondary Classification
Unilateral; bilateral
Real, personal
Determinate, generic
Legal, conventional, penal
Positive, negative
Conditional (types) Conditional
● Suspensive - give rise to obligation ● Future/uncertain event unknown to parties(1179)
● Resolutory - extinguish the obligation ● Resolutory condition - immediately demandable
● Express - clearly stated ● Acquisition or extinguishment of obligation depend
● Implied - merely inferred upon the happening of condition (1181)
● Possible ● Positive condition + determinate time - extinguish
● Impossible - physically/legally impossible (1183) when:
● Potestative - depends upon the will of one ○ Time expires (1184)
contracting parties (1182) ○ It becomes indubitable that the event will not take
● Casual - depends upon chance or will of 3P place
● Mixed - partly upon chance, partly upon will of 3P ● Negative condition + determinate time - effective
● Positive - performance when:
● Negative - omission ○ Time has elapsed (1185)
● Conjunctive - several conditions, all must be complied ○ Evident that event cannot occur
● Disjunctive - several conditions, one/some must must ● Constructive fulfillment - the condition shall be
be complied deemed fulfilled when obligor voluntary prevents
● Divisible fulfillment. (1186)
● Indivisible ● Retroactivity of conditional obligation (1187)
○ Reciprocal - fruit and interest deemed mutually
compensated
○ Unilateral - debtor appropriate the fruits an interest,
except nature and circumstance of obligation, the
intention of the person was different
○ Obligation to do/not to do - court shall determine
the retroactivity
● Resolutory condition (1190) - mutual restitution
With a period
● Debtor binds himself to pay when his means permit
him to do so. (1180)
● Suspensive period (Ex die) - arrival - gives rise to
obligation. (1193)
● Payment before arrival of the period (by mistake)
debtor may recover with the fruits and interests
(1195)
● Resolutory period (In diem) - arrival - extinguishes
the obligation - obligation become immediately
demandable
GR: Court is not authorized to fix the period
EGR: Court is authorized to fix the period when
● No period is fixed but period was intended (1197)
● Period depend upon the sole will of debtor (1182)
GR: It is presumed that the period designated was for
the benefit of both parties, except when provided
otherwise (1196)
EGR: Debtor shall lose every right to make use of the
period (1198), hence, immediately demandable:
● When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the debt;
● When he does not furnish to the creditor the
guaranties or securities which he has promised;
● When by his own acts he has impaired said
guaranties or securities after their establishment,
and when through a fortuitous event they disappear,
unless he immediately gives new ones equally
satisfactory;
● When the debtor violates any undertaking, in
consideration of which the creditor agreed to the
period;
● When the debtor attempts to abscond.
Alternative Obligation Facultative Obligation
● Several prestations are due but performance of one ● Only one is due but debtor may substitute. (1206)
is sufficient. ● Right of choice is given only to the debtor
● Debtor shall completely perform one of them (1199)
● Right of choice belongs to the debtor, unless ● Before substitution
expressly granted to the creditor. (1200) ○ Loss of object without fault - not liable
● Limitations to the right of choice: ○ Loss of object with fault of debtor- liable
○ Impossible, unlawful, not object of obligation (1200) ○ Loss/deterioration of substitute with/without fault
○ Only one is practicable - alternative obligation of debtor - not liable
converts to a simple obligation (1202)
● Choice produces no effect until communicated. ● After substitution
(1201) ○ Loss of object with/without fault - not liable
● Communication of choice convert alternative ○ Loss of substitute with fault - liable
obligation to simple obligation (1205) ○ Loss of substitute without fault - not liable
● Creditor’s fault, debtor cannot make a choice -
debtor may rescind the contract with damages (1203)
● Debtor’s fault, all alternative objects have been lost
or has become impossible - right of creditor for
indemnity for damages (1204) - value of last object
● Responsibility of debtor when creditor has the right
of choice:
○ If one is lost through a fortuitous event, he shall
perform the obligation by delivering that which the
creditor should choose from among the remainder
○ If loss of one occurs through the fault of the
debtor, the creditor may claim any of those
subsisting, or the price of that which has
disappeared, with a right to damages;
○ If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon
the price of any one of them, also with indemnity
for damages.
○ The same rules shall be applied to obligations to do
or not to do
Joint and Solidary obligations Divisible and indivisible Obligations with a penal clause

JOINT OBLIGATION - two or more debit/credit as there DIVISIBLE - capable of partial fulfillment Penalty shall substitute the indemnity for damages and
are debtor/creditor (mancomunada, INDIVISIBLE - not capable of partial fulfillment payment of interest in case of non-compliance (absence
mancomunadamente, pro rata, proportionately, We of agreement) (1226)
promise to pay signed by two or more persons. Kinds of division:
● Qualitative division Kinds of penal clause:
SOLIDARY OBLIGATION - each debtor/creditor is bound ● Quantitative division ● Legal penal clause
to pay/right to demand payment the entire compliance ● Ideal or intellectual indivisibility - exists only in the ● Conventional penal clause
of the obligation (jointly and/or severally, solidaria, in minds of the parties ● Compensatory penal clause - substitutes damages
solidum, juntos o separadamente, individually and/or ● Punitive penal clause - punishment for breach
collectively, I promise to pay signed by 2/more persons. Kinds of indivisibility: ● Subsidiary/alternative - only penal clause can be
● Legal indivisibility enforced
GR: Joint obligation ● Conventional indivisibility ● Joint/cumulative - both principal and penal clause can
EGR: Law, stipulation, nature of obligation requires (real ● Absolute/natural indivisibility be enforced
solidarity) (1207,1208)
Divisibility or indivisibility is determined by the purpose Rules:
Read 1209-1222 or intention of the parties. Divisible or indivisible refers ● Penalty may be enforced only when demandable
to the object, not the legal tie. ● Proof of actual damages damages not necessary (1228)
Kinds of solidarity: ● Damages shall still be paid when:
● Passive solidarity - debtor When joint indivisible obligation give rise to indemnity ○ There is stipulation
● Active solidarity - creditor for damages - one debtor does not comply with his ○ Obligor refuses to pay penalty
● Mixed solidarity - both undertaking. (1224) ○ Guilty of fraud in fulfillment of obligation
● Conventional - by agreement ● Effect - Obligation is converted into one for
● Legal - by law damages. Specific performance or rescission is not a ● Debtor cannot exempt himself from performance to
● Real solidarity - nature of obligation remedy. pay only penalty (except when expressly granted).
● Uniform (legal tie) - bound by same stipulation Neither can the creditor demand the fulfillment of
● Non-uniform or varied Divisible obligations (1225) obligation and penalty at the same time (unless clearly
● Execution of of a certain number of days/ work granted). (1227)
● Accomplishment of work by metrical units or ● Reduction of penalty (1229)
analogous things ○ Principal obligation has been partly/irregularly
● Nature is susceptible of partial performance complied with
Indivisible obligations (1226) ○ Penalty is iniquitous/unconscionable
● Obligation to give a definite thing is not susceptible ● Nullity of penal clause does not carry with it the nullity
for partial performance of principal obligation. (1230)
Obligation to do or not to do
● Determined by character of prestation in each case
Chapter 4 EXTINGUISHMENT OF OBLIGATION

Obligations are extinguished by (1231) Other causes of extinguishment

Payment of performance Annulment

Loss of the thing due Rescission
Condonation or remission of debt Fulfillment of resolutory condition
Confusion or merger of rights Prescription
Compensation Others
Novation

Payment or performance (1232-1261) Loss of the thing due (1262-1269) Condonation/ Remission of debt (1270-1274)

Not only delivery of money but also the performance in GR: If the thing lost is a specific, the obligation is
any other manner of an obligation extinguished when the thing is lost without the fault of
debtor. (1262)
GR: The thing/service must be completely delivered/ EGR: Obligation is not extinguish when lost is due to:
rendered, Partial performance not allowed. (1233) 1. Law:
a. Delay
EGR: b. Promise to deliver the same thing to 2 or more
● Substantial performance in good faith (1234) Req: persons with different interests
○ Attempt in good faith to perform without c. Obligation to deliver specific thing arises from
willful/intentional departure criminal offense (1268) uncless creditor refused
○ Deviation is slight without justification to accept it.
○ Omission/defect is technical/unimportant 2. Stipulation:
○ Not material where intention of parties is not 3. Assumption of risk (nature of obligation)
attained
■ Obligor may recover, less damages If the thing lost is generic, the obligation is not
■ Right to rescind cannot be used extinguished. (1263)
● Creditor accepts performance knowing its In obligations to do, debtor is released from obligation:
incompleteness/irregularity without protest ● Prestation becomes legally/physically
(estoppel) (1235) impossible without fault of debtor (1266)
● When service has become so difficult as to be
Read 1236-1251 manifestly beyond the contemplation of the
parties (1267)
● Essentially gratuitous
● Requires acceptance by obligor
● May made expressly/impliedly
● EXPRESSED CONDONATION - should comply with
forms of donation (1270)
● IMPLIED CONDONATION - (rebuttable presumptions)
○ Delivery of private document evidencing credit
made voluntarily (1271) It should be claimed
inofficious to nullify waiver.
○ When private document is found in debtor’s
possession, it’s presumed it was voluntarily
delivered by credit. (1272)
○ Renunciation of principal debt extinguishes its
accessories. (1273)
○ Remission of the thing pledge - when the thing
pledge is found in the possession of debtor, or 3P
who owns the thing. (1274)

In case of partial loss, the courts shall determine

 whether the object is so important to extinguish the
obligation. (1264)

GR: When a thing is lost in possession of debtor, it is

presumed to be his fault. EGR: Fortuitous events.
(1265)

SPECIAL FORMS OF PAYMENT

Dation in Payment (1245) Application of payment (1252-1254) Payment by cession (1255) Tender of payment & consignation (1256-1261)

Property is alienated in ● Various debts
satisfaction of a debt in ● In favor of one and the same creditor
money. ● Debts must be of same kind
Governed by law on sales. ● Debts are already due, unless:
○ There’s a stipulation to the contrary
○ Application is made by the party for
whose benefit the term has been
constituted
● Payment not sufficient to cover all
debts
Payment applies to interest first before
the principal (1253)
If application cannot be inferred, apply
to debt which is the most onerous
(1254)
If they debts due have the same
nature/burden, apply proportionately
● Various of debts
● Various creditors
● Debtor is partially insolvent
● Assignment of cession must be
accepted by the creditors.
GR: Debtor is only released for the ● Tender of payment by debtor
net proceeds of the thing assigned. ● Refusal of credit without just cause to accept it (1256)
EGR: Stipulation to the contrary.
Tender of payment - extrajudicial; it cannot extinguish
debt alone
Consignation - judicial, it may extinguish debt alone
Requisites:
● Existence of debt, due and demandable
● Previous notice of consignation to persons interested
(guarantor, mortgagee, solidary dr/ cr) (1257)
● Consignation of the thing to a judicial authority (1258)
● Subsequent notice of consignation to interested parties
Effects:
● Debtor is released from obligation
● Consignation expenses is charged against the creditor
(1259)
● Before creditor accepts the consignation or before
judicial declaration, the debtor may withdraw the thing.
(1260)
● The creditor should authorize the debtor to withdraw
the same, but debtor will lose every preference over it
(1261), the obligation will also remain in force.

GR: Tender payment + consignation

EGR:Consignation alone is allowed when:

● Creditor is absent, unknown, does not appear in place of

payment;
● He is incapacitated to receive payment,

Confusion/ Merger of rights (1275 - 1277) Compensation (1278 -1290)
The character of creditor and debtor is Two persons, in their own right, are creditors and debtors
merged in the same person. (1275) of each other. (1278)
GR: Merger which takes place in the person Kinds of compensation:
of principal debtor/creditor benefits the ● Total, Partial (1281)
guarantors. ● Legal, voluntary, judicial, facultative (set up only by1)
EGR: Confusion which takes place in the
person of any of the latter does not Requisites (Legal Compensation - if all are present):
extinguish the obligation. (only accessory ● Principal debtor/creditor of each other
obligation is extinguished) (1276) ● Both debts consist in the sum of money, consumable
things of the same kind and quality,
GR: Effect of merger - obligation is ● Both debts are due
extinguished. ● Both debts are liquidated and demandable
EGR: Obligation is not extinguished in case of ● Over neither of them there be any retention or
joint obligation except in regards the share controversy, commenced by 3P and communicated in
corresponding to the creditor/debtor in due time by debtor (1279)
whom 2 characters concur. (1277)
For legal compensation (1279):
● Both debts are extinguished even though debtor/
creditor are not aware of the compensation. (1290)
● It takes place even though they are payable at
different places, but there shall be indemnity for
expenses of exchange/transportation to the place of
payment (1286)
Parties may agree for compensation of debts which are
not yet due (1282) - (Voluntary compensation)
If one of the parties to a suit over an obligation has a
claim for damages against the other, the former may set
it off by proving his right to said damages and the amount
thereof (1283)
● He refuses to give a receipt without just cause,
● 2 or more persons claim the right to collect
● When title of obligation has been lost.
Novation (1291 -1304)
Obligations may be modified by:
● Changing the object/principal conditions
● Substituting the person of debtor
● Subrogating a 3P in the rights of creditor (1291)
Kinds of novation:
● Legal; conventional
● Express - declared in unequivocal term (1292)
● Implied - old and new obligations are essentially incompatible with
each other (1292)
● Total/extinctive - old obligation is extinguished
● Partial/modificatory - old obligation is modified
● Real/objective - object/p.condition is changed
● Personal/subjective -
○ SUBSTITUTION (debtor)
■ Expromision - (1293) 3P on his own initiative and without
knowledge or against the will of original debtor assumes latter’s
obligation with consent of creditor. (creditor + 3P’s consent)
■ Delegacion - creditor accepts 3P to take place of the debtor at
the instance of latter. Old debtor is release from obligation. (all
parties must agree)
○ SUBROGATION (creditor) - 3P is subrogated with CR’s rights
● Mixed - combination of real and personal novation
● Conventional subrogation (1300) shall be clearly established, and it
requires consent of DR + CR + 3P.
● Legal subrogation -not presumed except in legal cases
● 1302: There is legal subrogation when:
○ When creditor pays another creditor who is preferred, even
without DR’s knowledge
○ When a 3P not interested in the obligation, pays with
express/implied approval of DR.
○ When a 3p interested in the obligation pays without
prejudice/confusion to DR’s share.
When the debt/s are rescissible/voidable, they may be
compensated against each other before they are judicially
rescinded or avoided. (1284)
Compensation not proper when obligation arises from:
● Depositum, depositary, bailee in commodatum, Claim
for support due to gratuitous title (1287)
● Civil liability arising from penal offense (1288)
For several debts susceptible for compensation, apply
rules on application of payments (1289)
● When the principal obligation is extinguished, accessory obligation
may subsist only insofar as they may benefit 3P who did not consent.
(1296)
● A creditor, to whom partial payment was made, may exercise his right
to the remainder, and he shall be preferred to the person who has
been subrogated in his place. (1304)
● If new obligation is void, original one subsist, unless the parties
intended that the new one is extinguished in any event. (1297)
● Novation is void, if original obligation was void, except when
annulment may be claimed by debtor, or ratification validates acts
which are voidable. (1298)