1. Lesson 3: Different Kinds of Obligations (Part 1)

2. Flow of Discussion: 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 Secondary Classification of Obligations Unilateral and Bilateral Obligations Real and Personal Obligations Determinate and Generic Obligations Civil and Natural Obligations Legal, Conventional, and Penal Obligations

3. Pure and Conditional Obligations Article 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event. (1113) Pure Obligation – one which does not contain any condition or term upon which its fulfillment is made to depend. Conditional Obligation – kind of obligation which is subject to condition. Condition – future and uncertain event upon which the existence or extinguishments of an obligation is made to depend. Two (2) Principal Kinds of Condition: Suspensive (condition precedent/antecedent) – its fulfillment gives rise to the obligation, if not fulfilled, no obligation will arise. Resolutory (condition subsequent) – extinguishes the obligation which is already existing.

4. Pure and Conditional Obligations Article 1179. (continuation) INSTANCES WHEN AN OBLIGATION IS DEMANDABLE AT ONCE: a. when it is pure; b. when it has resolutory condition. Past Event Unknown to the Parties to the Contract If it has happened – the obligation immediately exists purely and simply. If it has not happened – there is no obligation at all.

5. Pure and Conditional Obligations Article 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of article 1197. (n) PERIOD (or TERM) is a future and certain event upon the arrival of which the obligation subject to it either arises or is extinguished. “debtor promises to pay when his means permit him to do so” (e.g. as soon as possible, from time to time, little by little) - what depends upon the debtor’s will is not whether he should pay or not for indeed he binds himself to pay. - what is left only to his will is the duration of the period

6. Pure and Conditional Obligations Article 1181. In conditional obligations, the 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. (1114) Effects of happening of condition 1. Acquisition of rights (for suspensive condition) – Depends upon the happening of the event which constitutes the condition. 2. Loss of rights already acquired (for resolutory condition) – the happening of the event which constitutes the condition produces the extinguishment or loss of rights already acquired.

7. Pure and Conditional Obligations Article 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code. (1115) Classifications of conditions (1)As to effect. (a) Suspensive. — the happening of which gives rise to the obligation; and (b) Resolutory. — the happening of which extinguishes the obligation. (2) As to form. (a) Express. — the condition is clearly stated; and (b) Implied. — the condition is merely inferred. (3) As to possibility. (a) Possible. — the condition is capable of fulfillment, legally and physically ;and (b) Impossible. — the condition is not capable of fulfillment, legally or physically

8. Pure and Conditional Obligations Article 1182. (Continuation) 4) As to cause or origin. (a) Potestative. — the condition depends upon the will of one of the contracting parties; (b) Casual. — the condition depends upon chance or upon the will of a third person; and (c) Mixed. — the condition depends partly upon chance and partly upon the will of a third person (5) As to mode. (a) Positive. — the condition consists in the performance of an act; and (b) Negative. — the condition consists in the omission of an act. (6) As to number. (a) Conjunctive. — there are several conditions and all must be fulfilled; and (b) Disjunctive. — there are several conditions and only one or some oft hem must be fulfilled. (7) As to divisibility. (a) Divisible. — the condition is susceptible of partial performance; and (b) Indivisible. — the condition is not susceptible of partial performance

9. Pure and Conditional Obligations Article 1182. (Continuation) POTESTATIVE CONDITION – is a suspensive condition which depends upon the sole will of one of the contracting parties. If the condition is resolutory in nature, the obligation is valid although its fulfillment depends upon the sole will of the debtor. CASUAL CONDITION - is a suspensive condition which depends upon chance or upon the will of a third person. (creates a valid obligation) MIXED CONDITION - depends partly upon chance and partly upon the will of a third person

10. 1)Physically impossible conditions. - when they, in the nature of things, cannot exist or cannot be done; and 2)Legally impossible conditions. - when they are contrary to law, morals, good customs, public order, or public policy E ffect of impossible conditions (1) Conditional obligation void. – Impossible conditions annul the obligation which depends upon them. Both the obligation and the condition are void (2) Conditional obligation valid. - If the condition is negative, that is, not to do an impossible thing, it is disregarded and the obligation is rendered pure and valid. (3) Only the affected obligation void. - If the obligation is divisible, the part thereof not affected by the impossible condition shall be valid. (4) Only the condition void. — If the obligation is a pre-existing obligation, and, therefore, does not depend upon the fulfillment of the condition which is impossible, for its existence, only the condition is void. Pure and Conditional Obligations Article 1183. Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. The condition not to do an impossible thing shall be considered as not having been agreed upon. (1116a)

11. Positive (suspensive) condition - the happening of an event at a determinate time. The obligation is extinguished: (1)as soon as the time expires without the event taking place; or (2)as soon as it has become indubitable that the event will not take place although the time specified has not yet expired Pure and Conditional Obligations Article 1184. The condition that some event 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 not take place. (1117)

12. Negative condition- an event will not happen at a determinate time. The obligation shall become effective and binding (1)from the moment the time indicated has elapsed without the event taking place; or (2)from the moment it has become evident that the event cannot occur, although the time indicated has not yet elapsed. If no time is fixed, the circumstances shall be considered to determine the intention of the parties. This rule may also be applied to a positive condition Pure and Conditional Obligations Article 1185. The condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time indicated has elapsed, or if it has become evident that the event cannot occur. If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, bearing in mind the nature of the obligation. (1118)

13. Constructive fulfillment of suspensive condition Three (3) requisites: (1)The condition is suspensive; (2)The obligor actually prevents the fulfillment of the condition; and (3)He acts voluntarily The law does not require that the obligor acts with malice or fraud as long as his purpose is to prevent the fulfillment of the condition. Pure and Conditional Obligations Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. (1119)

14. Retroactive effects of fulfillment of suspensive condition (1)In obligations to give. — An obligation to give subject to a suspensive condition becomes demandable only upon the fulfillment of the condition. (2)In obligations to do or not to do. — With respect to the retroactive effect of the fulfillment of a suspensive condition in obligations to do or not to do, no fixed rule is provided. Retroactive effects as to fruits and interests in obligations to give (1) In reciprocal obligations. — There is no retroactivity because the fruits and interests received during the pendency of the condition are deemed to have been mutually compensated. (2) In unilateral obligations. — There is usually no retroactive effect because they are gratuitous. The debtor receives nothing from the creditor. Pure and Conditional Obligations Article 1187. The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. (1120)

15. Retroactive effects of fulfillment of suspensive condition (1)In obligations to give. — An obligation to give subject to a suspensive condition becomes demandable only upon the fulfillment of the condition. (2)In obligations to do or not to do. — With respect to the retroactive effect of the fulfillment of a suspensive condition in obligations to do or not to do, no fixed rule is provided. Retroactive effects as to fruits and interests in obligations to give (1)In reciprocal obligations. — There is no retroactivity because the fruits and interests received during the pendency of the condition are deemed to have been mutually compensated. (2) In unilateral obligations. — There is usually no retroactive effect because they are gratuitous. The debtor receives nothing from the creditor. Pure and Conditional Obligations Article 1187. (continuation)

16. Rights pending fulfillment of suspensive Condition (1)Rights of creditor. — He may take or bring appropriate actions for the preservation of his right, as the debtor may render nugatory the obligation upon the happening of the condition. (2)Rights of debtor. — He is entitled to recover what he has paid by mistake prior to the happening of the suspensive condition. Pure and Conditional Obligations Article 1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. (1121a)

17. Pure and Conditional Obligations Article 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered; (3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor; (4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case; (5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor; (6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary. (1122)

18. Pure and Conditional Obligations Article 1189. (continuation) Requisites for application of Article 1189 (1)The obligation is a real obligation; (2)The object is a specific or determinate thing; (3)The obligation is subject to a suspensive condition; (4) The condition is fulfilled; and (5)There is loss, deterioration, or improvement of the thing during the pendency of the happening on one condition. Kinds of loss (1)Physical loss. — when a thing perishes as when a house is burned and reduced to ashes;or (2)Legal loss. — when a thing goes out of commerce or when a thing heretofore legal becomes illegal (3) Civil loss. — when a thing disappears in such a way that its existence is unknown or even if known, it cannot be recovered whether as a matter of fact or of law

19. Pure and Conditional Obligations Article 1189. (continuation) Rules in case of loss, etc. of thing during pendency of suspensive condition (1)Loss of thing without debtor’s fault. (2) Loss of thing through debtor’s fault. (3)Deterioration of thing without debtor’s fault. — A thing deteriorates when its value is reduced or impaired with or without the fault of the debtor. (4)Deterioration of thing through debtor’s fault (5) Improvement of thing by nature or by time. (6) Improvement of thing at expense of debtor

20. Effects of fulfillment of resolutory condition 1)In obligations to give. — When the resolutory condition in an obligation to give is fulfilled, the obligation is and the parties are obliged to return to each other what they have received under the obligation. 2)In obligations to do or not to do. — In some obligations, the courts shall determine the retroactive effect of the fulfillment of the resolutory condition (par. 2.) as in the case where the condition is suspensive. Pure and Conditional Obligations Article 1190. When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received. In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return. As for the obligations to do and not to do, the provisions of the second paragraph of article 1187 shall be observed as regards the effect of the extinguishment of the obligation. (1123)

21. Kinds of obligation according to the person obliged (1)Unilateral. — when only one party is obliged to comply with a prestation. (2)Bilateral. — when both parties are mutually bound to each other. In other words, both parties are debtors and creditors of each other Bilateral obligations may be reciprocal or non-reciprocal (a)Reciprocal obligations- those which arise from the same cause and in which each party is a debtor and creditor of the other (b) Non-reciprocal obligations- those which do not impose simultaneous and correlative performance on both parties. Pure and Conditional Obligations Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. (1124)

22. Where both parties guilty of breach (1)First infractor known. — One party violated his obligation; subsequently, the other also violated his part of the obligation. In this case, the liability of the first infractor should be equitably reduced (2) First infractor cannot be determined. —One party violated his obligation followed by the other, but it cannot be determined which of them was the first infractor. The rule is that the contract shall be deemed extinguished and each shall bear his own damages Pure and Conditional Obligations Article 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. (n)

23. Meaning of Period According to Source: a. Legal (fixed by law) b. Voluntarily (fixed by parties) c. Judicial (fixed by the court According to Effect: a.Suspensive Period (Ex-die) -Suspends the demandability of an obligation upon the arrival of the period. Example: I will give you a car on December 25 b. Resolutory Period (In diem) - The performance must be terminated or extinguished upon the arrival of that period. Example: I will give you P 1,000 a month until December 31, 2020 Obligations with a Period Article 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain. A day certain is understood to be that which must necessarily come, although it may not be known when. If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules of the preceding Section. (1125a)

24. According to Definiteness: a. Definite -It refers to a fixed known date or time Example: I will give you a car on December 25, 2020 b. Indefinite -It will necessarily happen, but the date of its happening is not known. Example: I will give you a car when Juan dies Obligations with a Period Article 1193. continuation

25. Effects of Loss, Deterioration, or Improvement Before Arrival of Period Refer to Article 1189 Obligations with a Period Article 1194. In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in article 1189 shall be observed. (n)

26. Payment or Delivery Before the Arrival of the Period Article 1195 applies only to obligation to give. It is similar to Article 1188, paragraph 3, which allows the recovery of what has been paid by mistake before the fulfillment of a suspensive condition. Obligations with a Period Article 1195. Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered, with the fruits and interests. (1126a)

27. Benefit of a Period in an Obligation  The presumption is for the benefit of both the debtor and the creditor.  The effect of this presumption is the creditor cannot demand payment before the agreed period, while the debtor also cannot demand to accept the payment before the agreed period If the Period is for the Benefit of the CREDITOR Only  Creditor can demand performance at any time.  Debtor cannot insist on prepayment. If the Period is for the Benefit of the DEBTOR Only  Debtor can oppose a premature demand for payment.  May validly pay at any time before the period expires. Obligations with a Period Article 1196. Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other. (1127)

28. When Court Can Fix the Period? Article 1197 provides for two grounds: 1. Though the obligation does not fix a period, it can be inferred that a period was intended. 2. When the duration depends upon the will of the debtor. When Court Cannot Fix the Period? 1. When no term was intended. 2. Payable by demand. 3. When the period is specified by the law Obligations with a Period Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof. The courts shall also fix the duration of the period when it depends upon the will of the debtor. In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

29. The period is disregarded, and the obligation becomes demandable at once or immediately demandable. This was based on the fact that the debtor may not be able to comply with his obligation. 1.When the debtor becomes insolvent unless he gives a guaranty or security for the debt. 2.When the debtor does not furnish to the creditor the guaranties or securities which he has promised 3.When his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappeared unless he immediately gives new ones equally satisfactory. 4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the period 5. When the debtor attempts to abscond Obligations with a Period Article 1198. The debtor shall lose every right to make use of the period: (1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt; (2) When he does not furnish to the creditor the guaranties or securities which he has promised; (3) 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; (4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period; (5) When the debtor attempts to abscond. (1129a)

30. Kinds of Obligation According to Object: 1.Simple Obligation – only one prestation.Example: A promised to repair the car of B. 2. Compound Obligation – two or more prestations.  Conjunctive Obligation - All of the prestations are due.  Distributive Obligation - Although two or more prestations but only one is due, it could be either Alternative or Facultative. Meaning of Alternative Obligation Alternative obligations are juridical relations that comprehend several objects or prestations which are due but the payment or performance of one of them would be sufficient. Alternative Obligations Article 1199. A person alternatively bound by different prestations shall completely perform one of them. The creditor cannot be compelled to receive part of one and part of the other undertaking. (1131)

31. Right of Choice, As a Rule, Given to Debtor General Rule: The debtor will decide but the creditor is also allowed to decide if that is the stipulation. Right of Choice of Debtor Not Absolute The law provides limitations as to the debtor’s right of choice. The debtor cannot choose prestations which are: 1. Impossible 2. Unlawful 3. Could have not have been the object of the obligation Alternative Obligations Article 1200. The right of choice belongs to the debtor, unless it has been expressly granted to the creditor. The debtor shall have no right to choose those prestations which are impossible, unlawful or which could not have been the object of the obligation. (1132)

32. What could be the effect? Converts Alternative Obligation to Simple Obligation. Example: A delivers the car to B.  No particular form is required.  Choice properly made and communicated is irrevocable. Alternative Obligations Article 1201. The choice shall produce no effect except from the time it has been communicated. (1133)

33. When does the debtor lose the right of choice? What is the effect when only one prestation is present? The obligation is converted to a simple obligation. Article 1202 provides that the debtor lost his right of choice. Alternative Obligations Article 1202. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable. (1134)

34. If the debtor cannot exercise his right of choice, because of creditor, the debtor can rescind the contract with damages. Example: A promised to teach B Law on Obligations and Contracts for the year 2021 or to buy her a car or a house. In 2021, B went abroad, and A cannot contact him anymore. A lost the right to choose option 1 which is to teach B Law on Obligations and Contracts because of B’s action. Then A has the right to rescind the contract plus claim damages, but the law implies that the debtor may allow it to remain enforced as long as the possible choice or choices are involved. But if A still chooses to enforce the obligation, B is not liable for damages. Alternative Obligations Article 1203. If through the creditor's acts the debtor cannot make a choice according to the terms of the obligation, the latter may rescind the contract with damages. (n)

35. The Effect in One or More or All of the Things the Debtor Promised to Deliver Got Lost For this provision to be applicable: a. The right to choose belongs to the debtor. b. The loss or impossibility happened before the selection was made. 1.If some of the objects are lost or become impossible through the fault of the debtor – the debtor is not liable since he has the right of choice and the obligation can still be performed. 2.All the objects got lost through the fault of the debtor – the creditor has a right for indemnity for damages since the obligation can no longer be complied with. Basis of Indemnity The indemnity shall be fixed taking as a basis the value of the last thing which disappeared (referring to obligations to give) or that of the service which last became impossible (referring to obligations to do). Alternative Obligations Article 1204. The creditor shall have a right to indemnity for damages when, through the fault of the debtor, all the things which are alternatively the object of the obligation have been lost, or the compliance of the obligation has become impossible. The indemnity shall be fixed taking as a basis the value of the last thing which disappeared, or that of the service which last became impossible. Damages other than the value of the last thing or service may also be awarded. (1135a)

36. Alternative Obligations Article 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. Until then the responsibility of the debtor shall be governed by the following rules: (1) If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering that which the creditor should choose from among the remainder, or that which remains if only one subsists; (2) If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared, with a right to damages; (3) 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 in case one, some or all of the prestations should become impossible. (1136a)

37. Alternative Obligations Article 1205. Continuation When Right of Choice Belongs to the Creditor The right must expressly be given to him, the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. Rules in Case of Loss Before Creditor Has Made Choice: 1.When a thing is lost through a fortuitous event.  The creditor should choose from among the remainder, or that which remains. 2. When a thing is lost through the debtor’s fault.  The creditor has claimed any of those subsisting or the price with damages. 3. When all the things are lost through debtor’s fault.  The creditor has the right to choose upon the price of any one of them, also with indemnity for damages. 4. When all things are lost through a fortuitous event.  Article 1174 applies, the obligation is extinguished.

38. Facultative Obligation Facultative obligations are juridical relations where only one object or presentation has been agreed upon by the parties to the obligation, but the obligor or debtor may deliver or render another in substitution. This provision defines what is a facultative obligation, which is only one prestation has been agreed upon, but the obligor may render another in substitution Effect of Loss 1.Before the substitution is effected, it is not the prestation that is due; only the principal prestation is due and enforceable by the creditor at that time. 2.If the principal thing is lost, the debtor is not liable, whatever may be the cause of the loss, because it is no longer due Alternative Obligations Article 1206. When only one prestation has been agreed upon, but the obligor may render another in substitution, the obligation is called facultative. The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor, does not render him liable. But once the substitution has been made, the obligor is liable for the loss of the substitute on account of his delay, negligence or fraud. (n)

39. End of Presentation