Reviewer in Law 1 (from De Leon's book) Chapter 3

Chapter 3 – Different Kinds of Obligations

Identification Reviewer

Section 1 – Pure and Conditional Obligation

1)      Article 1179. Every obligation which is not subject to a future or uncertain, and with a past event which is unknown to the parties, is demandable at once. Also, an obligation subject to a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the events.

2)      Pure obligation – is an obligation which is not subject to a condition and there is no date specified with its fulfillment and is therefore, demandable.

3)      Conditional obligation – is an obligation which its consequences are subject in one way or another to the fulfillment of a condition.

4)      Condition – is a future AND uncertain event in which the effectivity or extinguishment of an obligation is subject to its fulfillment. It may refer to a past event which is unknown to the parties. It is important that the event is uncertain, otherwise it is considered as obligation with a period. However, the condition must be possible.

5)      Suspensive condition – a condition in which its fulfillment will give rise to an obligation. The demandability of the obligation is subject to its fulfillment.

6)      Resolutory condition – a condition in which the fulfillment of it will extinguish an existing obligation.

7)      Past event unknown to the parties – this term only refers to the knowledge of a future event with regards to a past event which makes it uncertain.

8)      Period – is a future and certain event in which the effectivity or extinguishment of an obligation is subject to its fulfillment. It is as if the debtor will fulfill the obligation when his means permit him to do so. Also, it is a certain event although it may not be known when.

9)      Suspensive – the happening of which gives rise to an obligation.

10)   Resolutory – the happening of which extinguishes an obligation.

11)   Express – the condition is clearly stated.

12)   Implied – the condition is merely inferred.

13)   Possible – the condition is capable of fulfillment, legally and physically.

14)   Impossible – the condition is not capable of fulfillment, legally and physically.

15)   Potestative – the condition is dependent upon the will of one of the contracting parties.

16)   Casual – the condition is dependent upon chance or upon the will of a third person.

17)   Mixed – the condition is dependent partly upon chance and partly upon the will of a third person.

18)   Positive – the condition consists in the performance of an act.

19)   Negative – the condition consists in the omission of an act.

20)   Conjunctive – there are several conditions and all must be fulfilled.

21)   Disjunctive – there are several conditions and one or two of them must be fulfilled.

22)   Divisible – the condition is susceptible to partial performance.

23)   Indivisible – the condition must be performed as a whole.

24)   Physically impossible conditions – when they, in nature of things, cannot be done or cannot exist. (Ex. Not rain in the Philippines for one year)

25)   Legally impossible conditions – when it is contrary to law, morals, good customs, public order and public policy. (Ex. Killing, common-law-wife, slap, publicly advocate the overthrow of the government and not appear as witness against the criminal)

26)   Physical loss – when the thing perishes as when the house is burned and reduced to ashes.

27)   Legal loss – when the thing goes out of commerce or when it is legal before and it becomes illegal.

28)   Civil loss – when the thing disappears as if its existence is unknown or if known, it cannot be recovered, as a matter of fact or of law.

29)   Usufruct – the right to enjoy the fruits of the thing belonging to another.

30)   Applicability of Article 1189 in obligation to return – in a resolutory condition, the fulfillment of the condition converts the debtor into a creditor and creditor into a debtor. Hence, the rules on loss, deterioration or improvement of the thing apply in the obligation to return.

31)   Unilateral obligation – obligation in which only one party is bound to comply with a prestation.

32)   Bilateral obligation – obligation in which both parties are bound to give one another a prestation. This is a case in which both parties are creditors and debtors of one another.

33)   Reciprocal obligation – obligation which arises from the same cause and the performance of one party is dependent upon the performance of another.

34)   Non-reciprocal obligations – are those which do not impose simultaneous and correlative performance on both parties. The performance of one party is not dependent upon the performance of another.

35)   The courts may grant guilty party term for performance – if there is a just cause to give the party in default time to perform his obligation, the court may still approve it. This is applicable if the debtor is willing to perform.

36)   Remedy is alternative – it is not cumulative, meaning once the injured party decided to have the obligation performed, he can still ask for rescission if the obligation is impossible to perform, otherwise he could not choose both performance and rescission. If the injured party chose rescission, he could not ask for the performance of the obligation anymore.

37)   When expressly stipulated in contract, it is possible for both parties to enter in a contract whereby they agree that in case of breach or violation of the terms, the injured party may choose rescission even without the intervention of the court.

38)   Where contract still executory – in an obligation where both parties have not yet performed their obligations, however one party is already willing and ready to perform and the other is not, he may choose rescission even without the intervention of the court.

Section 2 – Obligations with a period

39)   Obligation with a period – is one whose consequences are subjected in one way or another to the expiration of a period or term.

40)   Suspensive period – an obligation arises upon the happening of a certain event or period.

41)   Resolutory period – an obligation is extinguished upon the happening of a certain event.

42)   Legal period – a period which is set or provided by law.

43)   Conventional or voluntary period – a period which is agreed by the parties.

44)   Judicial period – a period fixed by the court.

45)   Definite period – a period/time known to the parties.

46)   Indefinite period – a period which is not known to the parties. In this case, the court may be called upon to set the time of fulfillment of the obligation.

47)   Recovery of the thing (payment before arrival of the period) – the debtor may still recover the thing if it is delivered by mistake prior to the fulfillment of a period. He carries the burden of proving that he is unaware that the period has not yet arrived. However, if the period has already arrived, the debtor cannot recover the payment but he can still recover the interest from the premature payment up to the date of the maturity of obligation.

48)   No recovery in case of personal obligation – you cannot recover the service you have rendered, the same goes with a negative obligation, you cannot recover what you have not done.

49)   Period for the benefit of both parties – it is presumed that the period agreed by both parties benefits both of them or one of them. Therefore, the debtor cannot be compelled to pay and creditor cannot demand prior to the fulfillment of period unless otherwise stipulated. However, it is rebuttable.

50)   Computation of term or period – when the laws speak of years, months, days and nights, it should be understood as 365 days in a year, 12 months and 30 days in a month, 24 hours in a day and night is from sunset to sunrise. Also, in computing for a period, the last day should be included while the first day excluded. Also, holidays should be excluded. If months are designated by their name, the number of days they respectively have should be computed.

Section 3 – Alternative Obligations

51)   Simple Obligation – an obligation in which there is only one prestation required.

52)   Compound Obligation – an obligation in which there are two or more prestation required.

53)   Conjunctive Obligation – an obligation in which there are several prestation and all must be fulfilled or given.

54)   Distributive Obligation – there are several prestation but only one of them must be fulfilled.

55)   Alternative Obligation – One of the two or more prestation must be fulfilled. The right of choosing the prestation to be given, as a general rule, belongs to the debtor.

56)   Facultative obligation – is one where only one prestation has been agreed upon but the obligor may render another in substitution.

57)   The right of choice, as a rule, belongs to the debtor – unless expressly stated, the creditor can also choose the prestation to be given or a third person can choose by common agreement.

58)   Rescission – creates an obligation to return what has been given as an object of the obligation together with its fruits, and price with its interest.

59)   Basis of indemnity – the value or price of the last prestation that has disappeared or destroyed through the fault of debtor would be the basis of indemnity. In case of disagreement, the creditor has to prove the value or which of the things last disappeared.

60)   When the right of choice belongs to the creditor – In alternative obligation, the right of choice naturally belongs to the debtor. However, the debtor may expressly give the right of choice to the creditor. In such, the rules regarding in the right of choice of debtor are also applicable if it is upon the creditor. Before the selection of the creditor, the debtor could not incur in delay.

CHAPTER 3 – SECTION 4: JOINT AND SOLIDARY OBLIGATIONS

(Identification)

1)      Individual obligation – an obligation where there is only one obligor and obligee.

2)      Collective obligation – an obligation where there are two or more debtors and/or two or more creditors.

3)      Joint obligation – one where the obligation is to be paid or fulfilled proportionately by the different debtors and/or is to be demanded proportionately by the different creditors.

4)      Solidary obligation – one where each one of the debtors is bound to render, and/or each one of the creditors has a right to demand to any of the debtors, the entire compliance with the prestation.

5)      Multiplicity of suits – the presumption in Article 1208 is subject to the rules of Court governing this. Otherwise, situations may arise where there are as many suits as there are debtors and creditors.

6)      Passive Solidarity – solidarity on the part of the debtors, where anyone of them can be compelled to pay the entire obligation.

7)      Active Solidarity – solidarity on the part of the creditors, where anyone of them can demand payment of the entire obligation from anyone of the debtors.

8)      Mixed Solidarity – solidarity on the part of the debtors and creditors, where each one of the debtors is liable to render, and each one of the creditors has a right to demand, compliance of the entire obligation.

9)      Conventional Solidarity – when solidarity is expressly stipulated in the contract or agreed upon by the parties.

10)   Legal Solidarity – when solidarity is imposed by law

11)   Real Solidarity – when solidarity is imposed by the nature of obligation

12)   Solidarity not presumed – if there are two or more persons in the same obligation, it is presumed to be joint because solidarity is very burdensome for the part of the debtors and the law tends to favor the debtors in presuming that they are bound jointly and not solidarily.

13)   Joint Indivisible obligation – an obligation where it is joint as to liabilities of debtors and rights of the creditors but indivisible as to compliance.

14)    Joint Indivisible Obligation – Debtors are liable jointly to deliver a car (particular thing which is indivisible).

15)   Joint Divisible Obligation – debtors are liable jointly to pay money (money is divisible).

16)   Solidary Indivisible Obligation – debtors are liable solidarily to deliver a car (particular thing which is indivisible).

17)   Solidary Divisible Obligation – debtors are liable solidarily to pay sum of money (money is divisible).

18)   Uniform Solidary obligation – when the parties are bound by the same stipulations.

19)   Non-uniform or varied Solidary obligation – when the parties are not bound by the same stipulations.

20)   Solidarity not affected by diverse stipulations – the rule is that the creditor may bring his action in toto against any of the solidary debtors less the shares of the other debtors with unexpired terms or unfulfilled conditions or less the shares already been paid by other debtors.

21)   Act of solidary creditor prejudicial to others – a solidary creditor may do any act beneficial or useful to the others but he cannot perform any act prejudicial to them. If he performs such act and as a result the obligation is extinguished, he shall be responsible to the others for damages.

22)   Remission or condonation – gratuitous abandonment of debt.

23)    Assignment by solidary creditor of his rights – in the absence of consent given by the others, a solidary creditor cannot assign his rights to a third person. The assignee may not give the shares of the others. However, if the assignment is made to a co-creditor, the consent of the other creditors is not necessary.

24)   Payment to any of the solidary creditors – in case of active or mixed solidarity, the debtor(s) can pay either of the creditors but if a judicial or extra-judicial demand was made by one of the creditors, the debtor who was asked to pay is bound to make the payment to that creditor. If the debtor made the payment to other creditor who did not make the demand and if that creditor did not give the other his share of the payment, the other creditor can still collect from the debtor his share of the payment.

25)   Effect of novation, etc. where obligation is joint – In a joint obligation, causes of modification or extinction does not terminate the obligation except with respect to the creditor or debtor affected.

26)   Creditor may proceed against any solidary debtor – if a demand is made by the creditor to one of the debtors and that debtor did not make the payment in full, the creditor can still demand from other solidary debtors for the remaining obligation. However, if demand is made to A, he cannot ask for the creditor to make a demand to other debtors as the creditor has the right to proceed against any one of them.

27)   Prescription – one acquires ownership and other rights through the lapse of time in the manner and under the conditions laid down by law.

28)   Effect of remission of share after payment – if payment is made before remission, the remission will have no effect because there is no more obligation to remit. However, if remission is made and payment is made subsequently, solutio indebiti arises. The solidary debtor who made the payment is entitled to receive back his proportionate share.

29)   No right to reimbursement in case of remission – the solidary debtor who received remission is not entitled to ask for reimbursement from his co-debtors because remission is gratuitous and he did not actually make payments to the creditor.

SECTION 5 – DIVISIBLE AND INDIVISIBLE OBLIGATIONS

1)      Divisible Obligation – is one where the object of which, in its delivery or performance, is capable of partial fulfillment.

2)      Indivisible Obligation – is one where the object of which, in its delivery or performance, is not capable of partial fulfillment.

3)      Absolute Rule in Divisibility – divisibility of obligation is not subject to possibility or impossibility of partial prestation, you can determine it according to the purpose or intention of the parties. However, an indivisible prestation will remain indivisible even if the intention of the parties is otherwise.

4)      An obligation is presumed to be indivisible when there are only one debtor and creditor.

5)      Applicability of Article 1223 – although it may appears that the article refers to a real obligation, divisibility of obligation refers to the object or prestation of an obligation in its broad sense, whether it may be a service or a thing.

6)      Qualitative Division – division of object of obligation based on quality rather than on numbers or quantity.

7)      Quantitative Division – division of object of obligation based on numbers or quantity rather than on quality.

8)      Ideal or Intellectual Division – is one which exists only in the mind of the parties.

9)      Legal indivisibility – an indivisible obligation set by law even if the object is by nature divisible.

10)   Conventional Indivisibility – an indivisible obligation set or contracted by the parties, even though the object is by nature divisible.

11)   Natural Indivisibility – an object which is by nature indivisible, regardless of the intention of the parties. (Example: car)

12)   Where there is only one debtor and creditor – the debtor has to perform the obligation in totality, whether the prestation is divisible or not. The creditor cannot be compelled to receive partial performance and a partial performance would not extinguish the obligation unless it is fully performed.

13)   Effect of non-compliance by a debtor in a joint indivisible obligation – the obligation will be turned into one for damages (i.e., to pay money). The creditor cannot demand specific performance or rescission because there is no cause of action against the other debtors who are willing to fulfill their promises.

14)   General Rule – generally, obligations to do and not to do are indivisible. However, obligations to do stated in article 1225 are divisible.

SECTION 6 – OBLIGATION WITH A PENAL CLAUSE

1)      Principal obligation – is one which can stand by itself and its validity and existence do not depend on another obligation.

2)      Accessory obligation – is one which cannot stand by itself and depends upon a principal obligation.

3)      Obligation with a penal clause – is one which there is an accessory undertaking attached to it in order to pay previously stipulated indemnity in case of breach.

4)      Penal clause – is an accessory undertaking attached to an obligation to assume greater liability in case of breach.

5)      Legal Penal clause – when it is provided for by law.

6)      Conventional penal clause – when it is provided by the contracting parties.

7)      Compensatory penal clause – when the purpose of the penalty is for payment of damages.

8)      Punitive penal clause – when the purpose of the penalty is to punish the violator.

9)      Subsidiary or alternative penal clause – when only the penalty can be enforced.

10)   Joint or cumulative penal clause – when the principal obligation and penalty can be enforced.

11)   Penalty substitutes for damages and interests – as a general rule, the penal clause substitutes for damages and payment of interests in case of non-compliance. The creditor does not need to go to court to prove the actual damages if there is penal clause.

12)   When penalty may be enforced – penalty can only be demandable if there is a breach committed by the obligor and if it is not contrary to law, morals, customs, public policy and public order. The penalty may also be reduced if it is iniquitous or unconscionable and if there is already partial fulfillment.

13)   Penalty not substitute for performance – the debtor cannot just pay the penalty in substitution for non-compliance of the obligation. By the general purpose of penal clause, it is to ensure the compliance of the obligation, thus penalty is not a substitute. However, the debtor can do so if it is clearly stipulated that the creditor allowed him, thus the obligation is not with a penal clause anymore but an alternative.

14)   When penal clause joint – with respect to the creditor, he has the right to demand both the principal obligation and penalty jointly if this right is clearly granted to him. However, it is not required for it to be expressed clearly if it can be understood impliedly through the nature of obligation. Example, if the principal obligation is to pay a sum of money, in case of non-compliance it is implied that the creditor can demand both principal and the penalty.

15)   Penalty demandable even without proof of actual damages – the creditor need not to present proof of actual damages in obligation with a penal clause, the only thing needs to be proven is the breach of contract or non-compliance. The creditor may enforce penalty whether he suffered or not. However, the penalty cannot exceed the amount stipulated even if actual damages are more than the penalty stipulated.

16)   Damages recoverable in addition to penalty must be proved – in case when the creditor can still demand damages in addition to the penalty, the creditor must prove those damages which he actually suffered.

17)   The nullity of penal clause does not carry with it that of the principal obligation – if the penal clause is void, the principal obligation can still be enforced. In case of non-compliance or breach, the creditor may demand payment for damages and not the void penalty.

18)   The nullity of principal obligation carries with it that of the penal clause – the penal clause is dependent to the principal obligation; therefore if the principal is void, penal clause will also be void. However, if the nullity is due to the fault of debtor who acted in bad faith, the creditor who suffered damages can demand for the payment of penalty (which is not void).

Chapter 3 – Different Kinds of Obligations (Section 1, 2, 3)

Enumeration Reviewer

1)      Classifications of Obligation

·         Primary Classification of obligations

·         Secondary Classification of obligations

2)      Primary Classification of obligations

·         Pure and conditional obligations

·         Obligations with a period

·         Alternative and facultative obligations

·         Joint and solidary obligations

·         Divisible and indivisible obligations

·         Obligations with a penal clause

Section 1 – Pure and Conditional Obligations

3)      Secondary Classification of obligation

·         Unilateral and bilateral obligations

·         Real and personal obligations

·         Determinate and generic obligations

·         Civil and natural obligations

·         Legal, conventional and penal obligations

4)      Principal Kinds of Conditional Obligation

·         Suspensive condition (condition precedent or antecedent)

·         Resolutory condition (condition subsequent)

5)      When obligation is demandable at once

·         When it is pure

·         When it is subject to a resolutory condition

·         When it is subject to a resolutory period

6)      When the debtor obliges himself to pay (other cases of period)

·         Little by little

·         As soon as possible

·         From time to time

·         At any time I have the money

·         In partial payments

·         When I am in a position to pay

7)      Effects of Happening of a Condition

·         In a suspensive condition, the creditor will only have real right over the thing/performance when the condition is fulfilled. If the condition did not happen, it will be treated as if the obligation never existed.

·         In a resolutory condition, the extinguishment of obligation is subject to its fulfillment. When the condition is fulfilled, the creditor will lose the rights he already acquired.

8)      Void Conditional Obligation

·         When the fulfillment of suspensive condition is dependent upon the sole will of the debtor.

·         When the condition is impossible.

9)      Void Condition

·         If an obligation is a pre-existing one and therefore not dependent upon the fulfillment of a subsequent condition, only the condition is void.

·         If an obligation is a pre-existing one and an impossible condition subsequently arises, only the condition is void.

10)   Valid Conditional Obligation

·         When the fulfillment of condition is dependent upon chance or upon the will of a third person.

·         When the suspensive condition is dependent upon the will of creditor.

·         When the resolutory condition is subject to the will of debtor.

·         When the suspensive condition is subject partly upon chance and partly upon will of a third person.

·         When the suspensive condition is dependent partly upon will of a third person and partly upon will of debtor.

·         When the obligation is divisible, that part thereof which is not affected by unlawful or impossible condition shall be valid.

11)   Classifications of Conditions

As to Effect

·         Suspensive

·         Resolutory

As to Form

·         Express

·         Implied

As to Possibility

·         Possible

·         Impossible

As to Cause/Origin

·         Potestative

·         Casual

·         Mixed

As to Mode

·         Positive

·         Negative

As to Number

·         Conjunctive

·         Disjunctive

As to Divisibility

·         Divisible

·         Indivisible

12)   Kinds of Impossible Conditions

·         Physically Impossible Condition

·         Legally Impossible Condition

13)   Effects of Impossible Condition

·         An impossible condition annuls the obligation which depends on it.

·         If the impossible condition refers to a negative condition, which is not to do an impossible thing, the obligation is considered valid and pure.

·         If the obligation is divisible, the part that is not subject to an impossible condition would still be valid.

·         If there is already a pre-existing obligation before an impossible condition arises, only the condition is void.

14)   The obligation is extinguished in a positive suspensive condition

·         As soon as the time to fulfill the condition expires

·         If the condition becomes too obvious to be doubted that it will not be fulfilled, the obligation is extinguished even if the time is not yet expired.

15)   The obligation shall become effective in a negative obligation when

·         The time indicated has elapsed without the event taking place

·         The condition becomes impossible even if the time has not yet elapsed.

16)   Constructive fulfillment of a suspensive and resolutory condition

·         The obligor actually prevents the fulfillment of the condition

·         He acts voluntarily

17)   Retroactive effect of fulfillment of a suspensive condition

·         In obligations to give, the condition has retroactive effect, even if the effectivity only arises when the condition is fulfilled. It is because even without the condition, the obligation can still exist. If there has been no condition, they would have been entered into a pure obligation. Hence, the creditor has a nominal right to the thing even before the condition is fulfilled.

·         In obligations to do or not to do, there is no fixed provision as to its retroactivity. The court will decide, considering the intent of the parties and the nature of obligation, whether to apply retroactivity or not.

18)   Retroactive effect as to fruits and interests in obligations to give

·         In reciprocal obligation, there is no retroactive effect because the fruits and interest are deemed to have been mutually compensated.

·         In unilateral obligation, there is no retroactive effect because it is gratuitous. The debtor does not receive anything from the creditor. Thus, the fruits and interest belong to the debtor unless otherwise stipulated.

19)   Rights pending fulfillment of a suspensive condition

·         The creditor has a right to take appropriate actions to preserve his rights, as the debtor may render nugatory the obligation upon the happening of the condition.

·         The debtor has a right to recover what he has paid before the condition is fulfilled. This is a case of solutio indebiti. However, he cannot recover the payment made prior to the condition if the condition is fulfilled.

20)   Requisites in the application of article 1189

·         The obligation is a real obligation

·         The object is a specific or determinate thing

·         The obligation is subject to a suspensive condition

·         The condition is fulfilled

·         There is loss, deterioration or improvement to the thing during pendency of the condition

21)   Kinds of Loss

·         Physical Loss

·         Legal Loss

·         Civil Loss

22)   Rules in case of loss, deterioration or improvement of the thing during pendency of a condition

·         If loss of the thing without debtor’s fault, the obligation will be extinguished and the debtor is not liable for damages. A person, in nature, is not liable for damages in case of fortuitous event.

·         If loss of the thing through debtor’s fault, the debtor is liable for damages and incidental damages if any.

·         If deterioration without debtor’s fault, the creditor will bear the consequences of deterioration.

·         If deterioration through debtor’s fault, the creditor may choose whether to cancel the obligation with damages or demand for the fulfillment of obligation with the right to damages.

·         If improvement due to nature or by time, the creditor will benefit from the improvement of the thing.

·         If improvement at debtor’s expense, the debtor has the right to the improvement subject to the right granted in usufructuary.

23)   Rights granted to Usufructuary

·         In usufruct, the debtor can put improvements to the thing for mere pleasure, as long as it will not change its form and substance.

·         The debtor may remove the improvements provided that it will not cause damages to the thing.

·         The improvements made to the thing will offset the damages made to the thing.

24)   Effects of fulfillment of a resolutory condition

·         In obligations to give, when the condition is fulfilled, the obligation is extinguished and therefore both parties should return to each other the things they received. In case one of the things is already in the possession of a third who did not act in bad faith, the remedy of the party is restitution against the other. The restitution is also applicable to the fruits and interest. It means there is a retroactive effect in this case. The only exception is when the parties’ intention is otherwise.

·         In obligation to do or not to do, there is no specific provision to its retroactivity. The court will decide whether retroactivity applies to the obligation or not, similar to the case of a suspensive condition.

25)   Kinds of obligation according to person obliged

·         Unilateral obligation

·         Bilateral obligation

26)   Kinds of Bilateral obligation

·         Reciprocal obligation

·         Non-reciprocal obligation

27)   Remedies in reciprocal obligation

·         Demand fulfillment of the obligation with damages

·         Demand rescission with damages

28)   Limitations on the right to rescind

·         The court has a discretionary power to give time for the person in default in order to perform his obligation if there is a just cause for doing so.

·         If the object is in the hands of a third person, rescission is not available as a remedy.

·         The general rule is that the rescission shall not be granted for slight breaches of contract; the violation should be substantial enough to defy the object of the agreement.

·         The rescission should be a judicial rescission. The injured party should go to the court in order to have his right for rescission.

·         The right to rescind may be waived, expressly or impliedly. The creditor may only recover the balance for the damages in this case.

29)   Rescission without previous judicial decree

·         When expressly stipulated

·         Where contract still executory

30)   Where both parties are guilty of breach

·         If one party committed a violation which is followed by a violation of the other party as well, the liability of the first infractor shall be equitably reduced.

·         If both parties committed breach but it cannot be determined who among them is the first violator, the contract is extinguished and both shall bear damages.

31)   Period and Condition Distinguished

As to fulfillment

·         A period is a certain event which must come sooner or later while a condition is an uncertain event.

As to time

·         A period only refers to a future event while a condition may refer to a past event unknown to the parties.

As to effect when left to debtor’s will

·         In a period, the court is required to fix the time of fulfillment while in a condition the obligation is void.

As to retroactivity of effect

·         Unless otherwise stated, there is no retroactive effect in a period while in a condition there is retroactivity of effect.

Section 2 – Obligations with a Period

32)   Kinds of Period or Term

As to effect

·         Suspensive period

·         Resolutory period

As to source

·         Legal period

·         Conventional or voluntary period

·         Judicial period

As to definiteness

·         Definite period

·         Indefinite period

33)   Exceptions to the general rule (regarding to the general rule that both parties should benefit from the agreed period)

·         If the term is for the benefit of the debtor alone, he cannot be compelled to pay prematurely unless if he desires to do so.

·         If the term is for the benefit of the creditor, he may demand payment before the period but he cannot be compelled to accept premature payment.

34)   Exceptions to the general rule (regarding to the rule that courts in general have no power to fix a period)

·         When there is no date specified but it can be inferred from the nature of the obligation that there is a period intended.

·         When the period is dependent upon the sole will of the debtor.

35)   When obligation can be demanded before lapse of period (exceptions to the general rule that obligations cannot be demanded before the lapse of period)

·         When the debtor becomes insolvent

·         When the debtor does not furnish guaranties or securities promised

·         When securities or guaranties given has become impaired or has disappeared

·         When debtor violates an undertaking

·         When debtor attempts to abscond

Section 3 – Alternative Obligations

36)   Kinds of Obligation according to object

·         Simple Obligation

·         Compound Obligation

37)   Kinds of Compound Obligation

·         Conjunctive Obligation

·         Distributive Obligation

38)   Kinds of Distributive Obligation

·         Alternative Obligation

·         Facultative Obligation

39)   Right of choice of the debtor is not absolute

·         The debtor could not give a prestation which is impossible, unlawful and those could not have been the object of obligation.

·         If the choices of prestation offer only one practicable prestation to be complied with by the debtor, the obligation becomes simple. It does not however give right of choice to creditor.

·         The debtor cannot choose half of prestation and the half of another prestation.

40)   Effect of notice that choice has been made

·         When the choice has been made by the debtor, it is irrevocable, which means that the debtor could not change his choice of prestation without the consent of the creditor. The obligation ceases to be alternative and becomes simple.

·         When the choice has been made, it creates legal effect. The giving of notice can be made orally or in writing, expressly or impliedly.

41)   When debtor may rescind contract

·         If through the creditor’s fault, one of the prestation is destroyed, the debtor could choose to rescind the contract. If he rescinds the contract, the debtor is obliged to return the amount borrowed to the creditor while the creditor is liable to pay for the prestation destroyed.

·         Also, the debtor could choose the other alternative prestation with the right to recover damages for the prestation destroyed.

·         The debtor could choose the prestation destroyed through the fault of creditor, thus obligation is extinguished.

42)   Effects of loss of objects of obligation

·         If one of the prestation is lost through the fault of debtor, the obligation can still be performed by choosing the other alternatives left.

·         If all the prestation are lost through the fault of debtor, the creditor has a right to receive payment for damages.

·         If all the prestation are lost through fortuitous event, the obligation is extinguished.

43)   Rules in case of loss before creditor has made a choice (also applicable to personal obligations)

·         If a thing is lost through a fortuitous event – the creditor will be limited to choose from the remaining alternative prestation.

·         If a thing is lost through debtor’s fault – the creditor can choose one of the remaining prestation with the right to damages or he could ask for the value of the lost prestation with also the right to damages.

·         If all things are lost through debtor’s fault – the creditor may ask for the payment of the value of one of the prestation with a right to damages.

·         If all things are lost through a fortuitous event – the obligation will be extinguished.

44)   Effect of Loss in Facultative Obligation

·         Before substitution – if the item due is lost through debtor’s fault, he is liable for damages. He’s not liable for damages if it is lost through a fortuitous event. If item two is lost with or without the debtor’s fault, he will not be liable for it because it is not the item due.

·         After substitution – after substituting the item due to item two, it ceases to be a facultative obligation, it becomes simple obligation. The debtor is not liable for the loss of the first thing since it is not due anymore. He is liable for the loss of the second thing if it is through his fault. If it is through a fortuitous event, the obligation is extinguished.

45)   Alternative and facultative obligations distinguished

·         Alternative – several prestations are due but compliance with one is sufficient. Facultative – only one prestation is due although the debtor is allowed to substitute it.

·         Alternative – the right of choice may be given to the creditor or third person. Facultative – the right to make the substitution is given only to the debtor.

·         Alternative – the loss of one or more of the alternatives through a fortuitous event does not extinguish the obligation. Facultative – the loss of the thing due extinguishes the obligation.

·         Alternative – the loss of one of the alternatives through the fault of the debtor does not render him liable. Facultative – the loss of the thing due through his fault makes him liable.

·         Alternative – where the choice belongs to the creditor, the loss of one alternative through the fault of the debtor gives rise to liability. Facultative – the loss of the substitute before the substitution through the fault of the debtor does not render him liable.

CHAPTER 3 – SECTION 4: JOINT AND SOLIDARY OBLIGATIONS

(Enumeration)

1)      Kinds of Obligations according to number of parties

·         Individual Obligation

·         Collective Obligation

2)      Kinds of Collective Obligation

·         Joint obligation

·         Solidary obligation

3)      Collective obligation presumed to be joint

·         If there are only one debtor and creditor, there is no problem in the determination of: a) the person liable; b) the person who has the right to prestation; c) the extent of the liability; and d) the extent of the right of creditor.

·         If there is plurality of parties and the liability or obligation is specified, the correlative rights and obligations of the parties are known.

·         If there is plurality of parties and the extent of liability is not specified, it is presumed to be joint obligation. The consequences are: a) there are as many debts as there are debtors; b) there are as many credits as there are creditors; c) the debts and/or credits are considered distinct and separate from one another; d) each debtor is liable only for a proportionate part of the debt; and e) each creditor is entitled only to a proportionate part of the credit.

4)      Other terms for Joint Obligation

·         Mancomunada

·         Mancomunadamente

·         Pro rata

·         Proportionately

·         We promise to pay signed by two or more persons

5)      When obligation solidary

·         The obligation expressly so states

·         The law requires solidarity

·         When the nature of obligation requires solidarity

·         When it is imposed in a final judgment against several defendants

6)      Words used to indicate solidary liability

·         Individually and/or severally

·         Solidaria

·         In solidum

·         Together and/or separately

·         Individually and/or collectively

·         Juntos o separadamente

·         I promise to pay signed by two or more persons

7)      Kinds of Solidarity

·         Passive Solidarity

·         Active Solidarity

·         Mixed Solidarity

8)      Kinds of Solidarity according to Source

·         Conventional Solidarity

·         Legal Solidarity

·         Real Solidarity

9)      Examples of Legal Solidarity

·         Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers.

·         The partners are solidarily liable with the partnership for any crime or quasi-delict committed by any partner acting in the ordinary course of business.

·         When there are two or more bailees to whom a thing is loaned in the same contract, they are liable solidarily.

·         The responsibility of two or more persons who are liable for a quasi-delict is solidary.

·         In a felony (crime), the principal, accomplices and accessories, each within their respective class, shall be liable severally among themselves for their quotas, and subsidiarily for those of other persons liable.

10)   Examples of Real Solidarity

·         The nature of the obligation for employers under the former Workmen’s Compensation Law

·         Kabit System

11)   Examples of Indivisible Joint Obligation

·         If there are two or more debtors and only one creditor and they are obliged to deliver a car to the creditor, if one of the debtors is not willing to comply, the creditor may choose to ask restitution from all the debtors and ask for reparation of damage caused from the unwilling party. The insolvency of one of the debtors will not make the other debtors liable.

·         If there are one debtor and two or more creditors, and if the creditors do not accept the thing to be delivered jointly, the debtor may legally refuses to deliver the thing or he may deposit the thing to the court by way of consignation.

12)   Indivisibility and Solidarity distinguished

·         Indivisibility refers to the prestation while solidarity refers to the juridical or legal tie that binds the parties.

·         In indivisible obligation, only the party who committed a breach of contract is liable to pay for damages while in solidary obligation, all debtors are liable for damages due to breach of one of them.

·         Indivisible obligation can exist even when there are only one debtor and one creditor while solidary obligation must have at least two debtors or two creditors.

·         In indivisible obligation, the insolvency of one of the debtors will not make the other debtors liable while in solidary obligation all the debtors will be held liable proportionately by the insolvency of one of them.

13)   Kinds of Solidary Obligation according to legal tie

·         Uniform

·         Non-uniform or varied

14)   Causes of Extinguishment of Obligation

·         Novation

·         Compensation

·         Confusion

·         Remission

·         Prescription

15)   Effects of Payment by a Solidary Debtor

·         Between solidary debtors and creditor(s) – the obligation is extinguished after the payment of a solidary debtor. However, the creditor may choose which offer to accept if both solidary debtors offer payment.

·         Among the solidary debtors – the solidary debtor who made the payment can demand reimbursement from his co-debtors for their proportionate shares with legal interest only from the time of payment.

·         Among the solidary creditors – the solidary creditor who accepted the payment is bound to give others their proportionate shares.

16)    Two cases when the paying debtor cannot get any reimbursement

·         When the obligation has already prescribed.

·         After the obligation has become illegal.

17)   The following actions must be brought within 10 years from the time the right of action accrues

·         Upon a written contract

·         Upon an obligation created by law

·         Upon a judgment

18)   The following actions must be brought within 6 years from the time the right of action accrues

·         Upon an oral contract

·         Upon a quasi-contract

19)   The following actions must be brought within 4 years from the time the right of action accrues

·         Upon an injury to the rights of the plaintiff

·         Upon a quasi-delict

20)   Rules in case thing has been lost or prestation has become impossible

·         Lost through fortuitous events and before delay – the obligation will be extinguished.

·         Lost through one of the solidary debtors’ fault – all other solidary debtors will be held liable for the damages and interest caused by the debtor in fault. However, other debtors may ask for reimbursement from the party in fault and if the creditor was able to collect payment for damages from the party in fault, other solidary debtors cannot be compelled to make reimbursements because he alone was at fault.

·         Lost through fortuitous events but after delay – all solidary debtors will be held liable but they can ask for reimbursement from the solidary debtor in default.

21)    Defenses available to solidary debtors

·         Defenses derived from the nature of obligation – it is a complete defense because it nullifies the obligation or renders it ineffective. Other examples are: fraud, prescription, remission, illegality or absence of consideration, res judicata, non-performance of a suspensive condition.

·         Defenses personal to, or which pertain to share of, debtor sued –examples are insanity, incapacity, violence, mistake, and minority. If subject to a suspensive condition and the condition has not yet been fulfilled, it is a partial defense and the solidary debtor can still be compelled to make payment for the share of other debtors.

·         Defenses personal to solidary debtors – having partial defense, other debtors would still be liable to pay for their shares.

SECTION 4 – DIVISIBLE AND INDIVISIBILE OBLIGATION

1)      Kinds of Division

·         Qualitative Division

·         Quantitative Division

·         Ideal or Intellectual Division

2)      Kinds of Indivisibility

·         Legal indivisibility

·         Conventional indivisibility

·         Natural indivisibility

3)      Obligations deemed indivisible

·         Obligation to give definite things

·         Obligation which is not susceptible to partial performance

·         Obligation which is required by law to be indivisible even the service or thing is physically divisible

·         Obligation intended by the parties to be indivisible even if thing or service is physically divisible

4)      Obligations deemed Divisible

·         Obligations which have for their object the execution of a certain number of days of work

·         Obligations which have for their object the accomplishment of work by metrical units

·         Obligations which by their nature are susceptible of partial performance.

5)      Divisibility and Indivisibility in obligations not to do

·         Indivisible Obligation – if A obliged himself to B not to sell cigarettes in his store for the entire year. The obligation must be fulfilled continuously.

·         Divisible Obligation – if A obliged himself to B not to sell cigarettes during weekends and holidays. The obligation is divisible because it is not to be fulfilled continuously.

SECTION 6 – OBLIGATION WITH A PENAL CLAUSE

1)      Purposes of Penal Clause

·         The general purpose is to ensure the fulfillment of obligation by creating an effective deterrent against breach, making the consequences of such breach as onerous as it may be possible.

·         To substitute a penalty for the indemnity of damages and payment of interests in case of non-compliance or to punish the debtor for non-fulfillment of obligation

2)      Penal clause and condition distinguished

·         The first refers to an obligation although it is an accessory while the second does not

·         Therefore, the first one is demandable in case of default of unperformed obligation and sometimes jointly with it while the other is not

3)      Kinds of Penal Clause

As to its origin

·         Legal Penal clause

·         Conventional penal clause

As to its purpose

·         Compensatory Penal Clause

·         Punitive Penal Clause

As to its effect or demandability

·         Subsidiary or alternative penal clause

·         Joint or cumulative penal clause

4)      When creditor can recover damages

·         When it is clearly stipulated by the parties

·         When the obligor refuses to pay the penalty

·         When the obligor is guilty of fraud

5)      Penal clause presumed to be subsidiary

·         Once the obligation is fulfilled, the creditor cannot demand payment for the penalty anymore unless this right is clearly granted to him.

·         In case of non-compliance, the creditor can demand specific performance or payment of penalty. The remedies are alternative, not cumulative nor successive subject to the exception that when after the creditor asked the specific performance, the same became impossible without his fault. If there was fraud on the part of debtor, the creditor may ask for the penalty plus damages for non-fulfillment.