10 Kinds of Obligation

10 Kinds of Obligation 1. Pure 2. Conditional 3. Alternative 4. Facultative 5. Joint 6. Solidary 7. Divisible 8. Indivisible 9. Obligation w/ a period 10. Obligation w/ a penal clause 1. PURE OBLIGATION - w/o condition, demandable at once (pure has resolutory condition/period) 2. CONDITIONAL OBLIGATION - there is condition in performance; future & uncertain 2Kinds a. Suspensive condition – happening of condition gives RISE to obligation b. Resolutory condition – happening of condition EXTINGUISHES obligation 6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION 1. Impossible conditions, contrary to law, shall ANNUL obligation. 2. The condition not to do an impossible thing is considered not agreed upon. 3. The condition that happens in determinate time, EXTINGUISHES obligation. 4. The condition that happens in INDETERMINATE time, obligation only effective at arrival. 5. The condition is fulfilled if DEBTOR prevents fulfillment. 6. The effect of conditional obligation, once fulfilled: - to give: retroact to the day of constitution of obligation - has reciprocal prestations: fruits & interests be mutually compensated - has unilateral obligation: debtor shall give fruits & interests RULES in case of Loss, Improvement, or Deterioration of thing during the pendency of condition 1. LOST a. w/ debtor’s fault – damages b. w/o debtor’s fault – extinguishes obligation 2. DETERIORATION a. w/ debtor’s fault - (1) cancel obligation & damages; or (2) fulfill obligation w/ damages b. w/o debtor’s fault – creditor suffer impairment 3. IMPROVEMENT a. By nature/time – benefit to creditor b. at expense of debtor – debtor no right than that granted to usufructuary (debtor no right to compensate amount for improvement)

EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION General Rule: The obligation becomes effective retroactively to the day obligation was constituted. Exceptions: 1. In reciprocal obligation, fruits & interests during pendency of condition shall compensate each other. 2. In unilateral obligation, debtor gets fruits & interests unless there is a contrary intent. 3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION 1. Extinguish obligation. 2. Both parties restore what they received plus fruits & interests. 3. The rule on L, D, or I will apply to person who has to return the thing. When one of debtors in reciprocal obligation does not comply w/ his obligation 1. The right of injured party is (1) cancel contract & damages; or (2) fulfill obligation & damages 3 Kinds of Obligation (Accdng to PERSON OBLIGED) 1. UNILATERAL – only 1 party obliged to comply 2. BILATERAL – both parties; performance not same time 3. RECIPROCAL – both parties; performance same time 3. OBLIGATION W/ A PERIOD - demandability/extinguishment subject to the expiration of period PERIOD – interval of time; either suspends demandability or produces extinguishment DAY CERTAIN – must come, not known when 7 CASES CONSIDERED TO BE “OBLIGATION W/ A PERIOD” 1. Little by little 2. In partial payment 3. Payable ASAP 4. When I can afford it 5. When I have the money 6. When I am able to 7. When my means permit me to do so PERIOD certain future only (*influence upon obligation) only upon its demandability

CONDITION uncertain future/past but unknown (*) on the very existence of obligation itself

FOR WHOSE BENEFIT IS THE PERIOD? General Rule: Both the debtor & creditor.

Therefore, NEITHER of them can demand performance of obligation. Exception: If the term of obligation has to favor one of them. 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE “PERIOD” 1. Debtor is insolvent. 2. Debtor attempts to abscond. 3. Impairment of guarantees/securities. 4. Failure to furnish guarantees/securities promised. 5. Violation of undertaking. 4. ALTERNATIVE OBLIGATION - w/ 2 or more prestations, only 1 is due. 5. FACULTATIVE OBLIGATION - w/ ONLY 1 prestation but can be substituted. ALTERNATIVE prestations LOST w/ debtor’s fault Creditor entitled to damages but needs ff requisites: 1. Debtor can choose. 2. All prestations lost/become impossible due to debtor’s fault. ALTERNATIVE OBLIGATION several prestations due, giving one is sufficient right to choose (debtor) unless granted to creditor If 1 of the prestation is illegal, others may be valid, obligation remains loss/impossibility of ALL prestations due, w/o debtor’s fault, extinguishes obligation

FACULTATIVE OBLIGATION one prestation due, but can be subtituted right to choose DEBTOR ONLY nullity of principal carries w/ it nullity of accessory/ substitute loss/impossibility of presta-tion due, w/o debtor’s fault, extinguishes obligation

(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR IN ALTERNATIVE OBLIGATION 1. If 1 of prestations lost through fortuitous event, shall still be perform by choosing (creditor) from the remainder. 2. If 1 of prestations lost through debtor’s fault, creditor may claim any of remainders w/ damages. 3. If ALL prestations lost through debtor’s fault, creditor choose price w/ damages. RULES on LOSS/DETERIORATION of the thing intended as SUBSTITUTE in FACULTATIVE OBLIGATION

1. If there is a loss/deterioration of thing intended as substitute, debtor is NOT liable if NOT HIS FAULT. But if substitution is already made, debtor is liable for loss of substitute when in DELAY, NEGLIGENCE, or FRAUD. 6. JOINT OBLIGATION - obligation is to be paid proportionately by debtors or to be demanded proportionately by creditors 7. SOLIDARY OBLIGATION - each one of debtors has right to render or each one of creditors has right to demand the entire compliance w/ prestation MAXIMS & SYNONYMS MAXIMS JOINT “To each his Obligation own” SOLIDARY “One for all, all Obligation for one”

SYNONYMS proportionate individually & collectively

(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES 1. Law states 2. Stipulation states 3. Nature of obligation requires 2 PRESUMPTIONS THAT OBLIGATION IS JOINT 1. The debts be divided as many shares as there are debtors/creditors. 2. The debtors/creditors are distinct from one another. 8. DIVISIBLE OBLIGATION - prestation is capable of partial performance 9. INDIVISIBLE OBLIGATION - prestation incapable of partial performance 10. OBLIGATION W/ A PENAL CLAUSE - one w/ accessory undertaking attached to obligation to assume greater liablity in case of breach/non-fulfillment of obligation 3 PURPOSES OF PENAL CLAUSE 1. Ensure performance of obligation 2. Substitute for damages & interest in case of noncompli-ance 3. Penalize debtor in case of breach In case obligation has a PENAL CLAUSE General Rule: Penalty takes the place of damages & interest in case of non-compliance.

Exceptions: 1. Stipulation states. 2. Debtor refuse to pay penalty. 3. Debtor guilty of fraud in performance of obligation. NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE Nullity of principal obligation = nullity of penal clause Nullity of penal clause = NOT nullity of principal obligation 10 MODES OF EXTINGUISHMENT OF OBLIGATIONS 1. Payment or performance 2. Prescription 3. Compensation 4. Confusion/merger 5. Condonation/remission 6. Fulfillment of resolutory condition 7. Annulment 8. Rescission 9. Novation 10. Loss of thing due 1. PAYMENT/PERFORMANCE - Payment means delivery of money & performance of obligation 2 PLACE OF PAYMENT 1. At place agreed upon 2. If w/o agreement a. Object is indeterminate – paid at domicile of DEBTOR b. Object is determinate – place of thing at the time of constitution of obligation 4 SPECIAL MODES OF PAYMENT a. Application of payment b. Cession c. Tender of payment & consignation d. Dacion in payment a. APPLICATION OF PAYMENT - designation of debt to w/c payment must be applied when debtor has several obligations of same kind in favor of same creditor. 3 REQUISITES OF APPLICATION OF PAYMENT 1. Only 1 debtor & 1 creditor 2. 2 or more debts, same kind 3. All debts are due 4. Insufficient payment to exinguish ALL debts