Pure Obligations

Not depend on condition or period

Immediately demandable

Conditional

Future and uncertain event

Suspensive

Condition precedent
Future and uncertain event
Upon fulfillment obligation becomes effective
Mere hope
Not fulfilled - juridical relation

Resolutory

Condition subsequent
Demandable immediately after establishment
Subject to danger of extinction
Not fulfilled juridical relation consolidated

Potestative

Depends exclusively upon will of either parties

Will of debtor void
Will of creditor valid
Potestative + resulotory = always valid
Pre-existing indebtedness obligation is not void

Casual

Depends exclusively upon chance/ will of 3 rd person

Mixed

Potestative + casual
Ex: premises shall be vacated by occupant and vendee shall see to it that it is vacated

Possible & Impossible

P capable of realization
I not capable of realization according to nature or law, good customs, public policy
I void; pre-existing obligation valid obligation, void condition

Positive & negative

P performance of act or fulfillment of event

N non-performance or nonfulfillment

Constructive Fulfillment of Suspensive

Obligor voluntarily prevents fulfillment condition deemed fulfilled

Conditional obligation to give once fulfilled

Retroact to day of constitution

Reciprocal prestations fruits and interests mutually compensated
Unilateral debtor shall appropriate fruits and interest received (ex: keep the fruits)

Effect of Suspensive before fulfillment

Expectancy/ hope is protected by law

Writ of injunction

Effect of Suspensive after fulfillment

Effective and demandable

Loss, deterioration, improvement

Loss
o Without fault obligation extinguished
o With fault damages
Deteriorates
o Without fault impairment bourne by creditor
o With fault rescission/ fulfillment + damages
Improvement
o By nature/ time inure benefit of creditor
o Expense of debtor reimbursement for necessary expenses

Right to rescind or resolve belongs to injured party

Must be invoked judicially
Not applicable: if partner fails to pay (1786-1788); sale of real property
Nature of breach must be substantial (ex: molasses)
Remedies rescission, fulfillment + damages
Resolutory provision in contract judicial permission to rescind not necessary
Breach by both parties each shall bear own damages

OBLIGATIONS WITH A PEROD

Period

interval of time which is future or certain

must necessarily come
exerts influence in demandability or extinguishment (condition: existence of obligation)
Will of debtor existence of obligation not affected

Suspensive or Resulotory

S Demandable upon arrival of day

R terminated upon arrival of day

Legal, conventional, judicial

L granted by law (art 1606, 1623)

C stipulated by parties
J fixed by courts

Definite or indefinite

D date & time known before hand

I can only be determined by event (ex: death of someone)

Fortuitous event

Relieve contracting parties from fulfillment of obligations during term or period

Advanced payment/ delivery

May recover what was paid/ delivered

Obligation to give

Benefit of term or period

Presumed to benefit both

Creditor cannot demand performance; debtor cannot perform before expiration
WHY? Payment of interest, safekeeping of money, Usury Law (prohibition to pay
interest in advance for more than 1 year)
Benefit of creditor may demand fulfillment anytime
Benefit of debtor accelerate payment

Judicial term or period

Duration fixed by courts

May fix
o Obligation does not fix period but it was intended
o Period depends on will of debtor
o Debtor pay when his means permit
Cannot be applied to pure obligations (no intention)
1st action court to fix duration of period

Debtor shall lose right to period

He becomes insolvent (unless he has a guarantee)

Does not furnish guarantee promised
Impaired guarantee by his own acts or fortuitous event
Violates any undertaking
Attempts to abscond

Alternative and Facultative

Conjunctive all objects are demandable at same time

Distributive only one is demandable
Alternative several objects due complied by delivery of 1
Facultative one object due complied by delivery of substitute

Right of Choice Alternative

Debtors choice (ex: payment of money or in kind)

Exception- Right of choice expressly granted to creditor or 3rd person
Cannot choose impossible, unlawful, not object of obligation
Choice should be properly notified; consent not necessary
Debtor loses choice if only one prestation is practicable (simple)
If choice is ineffective because of creditor rescind contract + damages

Responsibility of debtor (right of choice creditor)

One of things lost through fortuitous deliver which creditor chooses among remainder
Loss of one thing with debtors fault claim subsisting, or price of lost item + damages
All things lost through debtor price of any item + damages

Facultative vs Alternative

Objects due
o F one
o A several
Compliance
o F delivery of substitute item/ performance
o A delivery of one of the objects
Choice
o F debtor
o A debtor, creditor, 3rd
Fortuitous loss
o F obligation extinguished
o A to extinguish, all must be lost
Culpable loss
o F no liability on debtor
o A liability

Joint and Solidary Obligations

Joint

Each creditor has right to demand

Each debtor bound to render proportionate part

Solidary

Each creditor has right to demand

Each debtor bound to render entire prestation

Presumed joint except

Expressly states solidarity

Law requires solidarity
Nature of obligation requires solidarity
Ex: jointly and severally, individually and collectively
Guilty of tort or criminal offense = solidarily liable

Joint divisible obligation

Creditor can demand his share only & debtor pays his share only

Joint indivisible obligation

Creditors cant represent others

No debtor can pay liability of others
2 or more debtors (X vs ABC for horse)
2 or more creditors (collective act necessary)
Debtor fails to comply breach damages
Insolvency A share + damages; BC share
Act of one alone ineffective

Indivisibility vs Solidarity

Nature
o I prestation
o S parties
Requisites
o I plurality of subjects no required
o S required

Effect of breach
o I damages; terminated
o S solidarity remains

Kinds of Solidarity

Active each creditor ay demand for payment of entire obligation

Passive- Each debtor may pay all
Uniform term and conditions apply to all
Non-uniform vary depending debtor involved

Examples:

ABC solidary: A due date 2010, B 2011, C 2012 = X can collect A 2010, AB 2011, ABC
2012
ABC joint: A 2010, B 2011, C 2012
Joint debtors, solidary creditors: B can collect 6k from X (any of them can collect) only
the amount each debtor is due
Solidary debtors and creditors: B can collect 18k from X

Novation obligation modified by changing object or condition

Novation is prejudicial to creditors liable to others

Beneficial share benefits
Extension of time to one solidary debtor will not release other debtors

Examples:

ABC Solidary debtor B deliver 30 sacks of rice

Demand made to all as long as no full compliance
Defenses of solidary debtor
o Prescription
o Defense of minority (only to his share)
o Separate condition
All debtors liable for loss of object

Solidary debtors

Paid creditor, can claim reimbursement & interest

Insolvent AB shoulder Cs share
Payment after due date no reimbursement
A entitled to reimbursement of B even if Bs share was remitted (full payment)

Divisible vs Indivisible

Non-compliance = damages
Cannot be performed in part

Kinds of indvisible

Natural specific dog

Legal law stipulates
Conventional parties agree

Rules

Obligation to give indivisible

Service divisible
Metrical units divisible (1000kg rice)
Divisible by nature can be indivisible by law or agreement
Indivisible by nature cannot

Obligations with Penal Clause

Liable if principal obligation not fulfilled
Penalty clause takes places of damages/ interests
Purpose

Inducement
Punitive
Deterrence and retribution
Fix in advance the damage

Kinds

Subsidiary or complementary
o S- penalty only is enforced
o C principal obligation + penalty
Conventional or legal
o C agreed upon
o L stated in law

Nature

Penalty is not an alternative

Generally not complementary (unless there is agreement or impossible)
Proof of actual damages not necessary
Nullity accessory follows principal

Reduce penalty

Partial compliance (90 sacks of 100)

Irregular compliance (90 sacks good rice 10 not too good)
Unconscionable

PAYMENT
When

Obligation to give is given

Service was done
Did not do what he was not supposed to do

Characteristics

Integrity
o All things promised must be given/ done
o Exceptions
Substantial compliance (admission, slight, technical)
Estoppel (incomplete performance, creditor accepted, did not protest)
o Who can pay
Debtor or 3rd person (3rd person may not compel)
Incapacitated person not valid
o Rights of 3rd person
Reimbursement
Subrogation (not applicable if no consent)
o Whom payment is made
Creditor, successors-in-interest, authorized to receive
o Capacity of payee incapacitated person benefited valid
o Benefit to 3rd person must be proved except:
3rd person acquires creditors right
Creditor ratifies payment
Creditors conduct, debtor believed 3rd person had authority
o Payment to person in possession of credit
Identity
o Give what should be given, do what should be done
o Exceptions
Facultative obligation
Dation in payment (another prestation, due, agreed)
Indivisibility
o Full compliance
o Exceptions
Liquidated and unliquidated in part (ex: 1000 + damages)
Agreed on partial compliance

Nature cannot be done in one instance

Solidary obligations where debtors are bound by different terms
Joint debtors bound to deliver respective shares

Currency

Legal tender notes & coins BSP

Coins 1, 5, 10 = 1000; 1, 5, 10, 20 cents = 100 pesos
Commercial papers checks (may not accept; does not produce payment) exceptions:
o Encashed
o Impaired due to fault of creditor ONLY IF 3rd person executed instrument
o Mercantile documents is sufficient for purpose of redemption of right

Effect of inflation

Value of currency at establishment of obligation

Exceptions
o Agreement
o Extraordinary inflation/ deflation (declaration)

Application of payments

2 or more debts
Debtor creditor is the same
Obligations same kind
Obligations due and demandable
Payment not sufficient for all

Rules:

Designate debt
Debt indicated on creditors receipt
No designation
o Payment applied to interest before principal
o Onerous debts
o Same terms and conditions proportion to debt

Payment by cession

Abandonment of all properties for benefit of creditor

Requisites
o 2 or more debts
o 2 or more creditors
o One debtor insolvent
o Abandon property in favor of creditor
o Creditor must accept abandonment

Tender of payment and consignation (both present)

Tender of payment offering creditor what is due, demand that creditor should accept
Consignation deposit in court by debtor of object if creditor does not want to receive
Requisites Tender
o Tender made to C
o Payment must be complete, regular, identical
o Include accessory obligations/ interests
o Obligation due
o Tender unconditional
Requisites Consignation
o Debt must be due
o Creditor refused notice given by debtor
o Notice of consignation given to person interested in performance
o Amount due placed at court
o Consignation made person interested must be notified
Justifiable refusal
o Conditional payment
o Partial performance
o Check tendered
o Offered to deliver something else