Supplemental Notes

Law on Obligations and Contracts

Kinds of Obligations

1. Pure obligation – no condition or period

2. Conditional obligation - an obligation subject to a condition.

3. Obligation with a period – an obligation subject to a period.

4. Condition vs. period

a. A condition is an uncertain event while a period is an event that must

necessarily come.

b. Condition gives rise to an obligation or extinguishes an existing, a period has

no effect upon the existence of obligation, but only its demandability or
performance and thus, a period does not carry with it any retroactive effect.

c. Condition may refer to a past event and unknown to parties while a period
always refers to the future.

5. Obligations that are demandable at once

a. Pure obligation
b. Obligation with a resolution condition
c. Obligation in diem or obligation with a resolutory period

6. Kinds of condition:

a. Suspensive - upon the fulfilment/happening of the condition it will give rise to

an obligation.
b. Resolutory - upon the fulfillment/happening of the condition, it will extinguish
the obligation.
c. Potestative – the fulfilment or happening of the condition depends upon the
will of one of the contracting parties.
(1) If potestative upon the debtor and suspensive at the same time – conditional
obligation is void.
d. Casual – depends upon chance or will of a third person
e. Mixed – depends partly upon chance and partly upon the will of a third person.
f. impossible – physically or legally impossible
g. positive – performance of an act
h. negative – omission of an act

7. Upon the fulfilment of the suspensive condition in obligation to give, it shall

retroact on the day of the constitution of the obligation.

If the conditional obligation imposes reciprocal prestations, the fruits and

interests during the pendency of the condition shall be deemed to have been
mutually compensated.

If unilateral obligation, the fruits shall inure to the benefit of the debtor unless
there is a stipulation to the contrary.

8. 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:
Atty Kid Page 1 of 4
 a. If the thing is lost without the fault of the debtor, the obligation shall be
extinguished;

b. 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;

c. When the thing deteriorates without the fault of the debtor, the impairment is
to be borne by the creditor;

d. 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;

e. If the thing is improved by its nature, or by time, the improvement shall inure
to the benefit of the creditor;

f. If it is improved at the expense of the debtor, he shall have no other right than
that granted to the usufructuary.

9. Effects of fulfillment of resolutory condition to the obligation of the parties

a. There will be mutual restitution.

b. The fruits shall be returned by the person who will make the restitution with
deduction for the expenses for the production, gathering and preservation of
the fruits.

10. Remedy of the injured party in reciprocal obligations

a. The injured party can ask for fulfilment of the obligation plus damages or
rescission of the obligation plus damages.
b. The remedies are considered alternative in nature.

(1) As a general rule, the injured party may ask for the fulfillment of obligation
plus damages but could no longer ask for rescission of obligation.

Unless exact fulfillment becomes impossible, the injured party may ask for
the rescission of the obligation plus damages.

(2) If the injured party asks for the rescission of the obligation, he is already
prohibited from asking exact fulfillment of the obligation.
(a) Rescission is implied
(b) Rescission is judicial

11. Kinds of period

a. Suspensive period or ex die – upon the arrival of the period the obligation
becomes demandable.
b. Resolutory period or in diem - upon the arrival of the period the obligation is
extinguished.
c. Conventional
d. Legal
e. Judicial

12. It is presumed that period is for the benefit of both creditor and debtor in the
absence of contrary agreement.

Atty Kid Page 2 of 4

 13. The debtor shall lose every right to make use of the period:

a. When after the obligation has been contracted, he becomes insolvent, unless
he gives a guaranty or security for the debt;

b. When he does not furnish to the creditor the guaranties or securities which
he has promised;

c. 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;

d. When the debtor violates any undertaking, in consideration of which the

creditor agreed to the period;

e. When the debtor attempts to abscond.

14. Alternative obligation vs. facultative obligation

a. In alternative obligation, there are several prestations but the fulfillment of one
is sufficient and such is determined by the choice of the debtor unless the right
of choice is given to the creditor, while in facultative obligation, only one thing
is due, but the debtor may render another in substitution.

b. In alternative obligation, the right of choice may be granted to the creditor if

expressly made, while in facultative obligation, the right of choice can never be
granted to creditor.

15. Joint Obligation vs. Solidary Obligation

a. Joint obligation - each debtor is liable only for a proportionate part of the debt
and each creditor is entitled only to a proportionate share of the credit.

b. Solidary obligation - each debtor is liable for the entire obligation and each
creditor is entitled to demand the whole obligation.

Obligation is solidary:
(1) When the obligation expressly so states that the obligation is solidary.
(2) When the law requires the obligation to be solidary.
(3) When the nature of the obligation requires it to be solidary.

16. In joint obligation and solidary obligation, the credit or debt shall be presumed to
be divided into as many shares as there are creditors or debtors, the credits or
debts being considered distinct from one another unless the law or the wordings
of the obligation provides otherwise.

17. The indivisibility of an obligation does not imply solidarity.

The solidarity of an obligation does not imply indivisibility.

18. Divisible obligation vs indivisible obligation

a. Divisible Obligation - susceptible of partial performance; that is, the debtor can
legally perform the obligation by parts and the creditor cannot demand a single
performance of the entire obligation.

Atty Kid Page 3 of 4

 b. Indivisible Obligation - not susceptible of partial performance or the law
provides that the performance of the obligation is indivisible or the contract
provides that the performance of the obligation is indivisible.

19. A joint indivisible obligation gives rise to indemnity for damages from the time
anyone of the debtors does not comply with his undertaking. The debtors who
may have been ready to fulfill their promises shall not contribute to the indemnity
beyond the corresponding portion of the price of the thing or of the value of the
service in which the obligation consists.

20. Obligationsto give definite things and those which are not susceptible of partial
performance shall be deemed to be indivisible.

When the obligation has for its object the execution of a certain number of days
of work, the accomplishment of work by metrical units, or analogous things which
by their nature are susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an

obligation is indivisible if so provided by law or intended by the parties.

21. Obligation with a penal clause - has an accessory undertaking to assume greater
liability in case of breach.

22. In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no
stipulation to the contrary. Nevertheless, damages shall be paid if the obligor
refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

23. The nullity of the penal clause does not carry with it that of the principal
obligation.

The nullity of the principal obligation carries with it that of the penal clause.

Atty Kid Page 4 of 4