DIFFERENT TYPES
OF OBLIGATIONS
Obligations with a Period; Alternative Obligations; Joint and Solidary Obligations; Divisible and Indivisible
Obligations; Obligations with a Penal Clause.
Sec. 2 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)
Concept of Term or Period
◦ Term or Period – is an interval of time, which, exerting an
influence on an obligation as a consequence of a juridical act,
either suspends its demandability or produces its
extinguishment.
◦ Obligations with a Period. - those whose demandability or
extinguishment is subject to the expiration of a term or
period.
Condition vs. Term/ Period
A CONDITION TERM
REQUISITES A fact or event which is future and An interval of time which is future
uncertain. and certain.
AS TO FULFILLMENT Future and uncertain fact or event An interval of time which MUST
which may or may not happen. NECESSARILY come, although it
may not be known when.
AS TO INFLUENCE ON Exerts an influence upon the very Merely exerts an influence upon the
OBLIGATION existence of the. Obligation itself. time of the demandability or
extinguishment of an obligation.
AS RETROACTIVITY OF A condition has retroactive effects. No retroactive effect unless there is
EFFECTS an agreement to the contrary.
AS TO EFFECT OF WILL OF When a condition is left exclusively When a term or period is left
DEBTOR to the will of the debtor, the very exclusively to the will of the debtor,
existence of the obligation is the existence of the obligation is not
affected. affected
Classification of Term or Period.
◦ 1. Suspensive or Resolutory –
◦ It is suspensive when the obligation becomes demandable only upon the arrival of a day certain;
◦ it is resolutory when the obligation is demandable at once, although it is terminated upon the arrival of a
day certain.
◦ 2. Legal, conventional, or judicial –
◦ It is legal when it is granted by law;
◦ conventional, when it is stipulated by the parties; and
◦ judicial, when it is fixed by the courts.
◦ 3. Definite or indefinite –
◦ A period is definite when the date or time is known beforehand, and
◦ indefinite when it can only be determined by an event which must necessarily come to pass,
although it may not be known when.
Effects of Term or Period
◦ What is suspended by the term is not the acquisition of
the right or the effectivity of the obligation but merely its
demandability. In other words, the obligation itself
becomes effective upon its constitution or establishment,
but once the term or period expires it becomes
demandable.
◦ However, if the term or period is resolutory, the fulfillment
or performance of the obligation is demandable at once,
but it is extinguished or terminated upon the arrival of the
day certain or the expiration of the term.
Effect of fortuitous event
◦ In obligations with a term or period, any stipulation in the contract
to the effect that in case of a fortuitous event the contract shall be
deemed suspended during the term or period does not mean that
the happening of the fortuitous event shall stop the running of the
term or period agreed upon. Its only effect is to relieve the
contracting parties from the fulfillment of their respective
obligations during the term or period.
- Victorias Planters vs. Victorias Milling Co., 97 Phil. 318
Sec. 2 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)
◦ 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)
Effect of Advanced Payment or
Delivery
◦ If the obligor, being unaware of the period or believing that the
obligation has become due and demandable, paid or delivered
anything before the arrival or expiration of the period, he may
recover what he has paid or delivered with fruits and interests.
◦ Consequently, if the payment or delivery was made voluntarily or
with knowledge of the period or the fact that the obligation has not
yet become due and demandable, there can be no right of recovery
whatsoever.
Sec. 2 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)
Benefit of Term or Period
◦ As a general rule, the creditor cannot demand the performance of the
obligation before the expiration of the designated period; neither can the
debtor perform the obligation before the expiration of such period.
◦ Reasons why the creditor cannot be compelled to accept payment
◦ First: payment of interest
◦ Second: the creditor may want to keep his money invested safely instead of having it in his
hands.
◦ Third: Under the usury law, there is a special prohibition of payment of interest in advance
for more than one year.
Exception to 1196
◦ If it can be proved that the period or term has been established in favor of the
creditor or of the debtor, the general rule or presumption will not apply.
◦ Hence, if it should appear that such period was established for the benefit of
the creditor, he may demand the fulfillment or performance of the obligation
at any time, but the obligor or debtor, on the other hand, cannot compel him to
accept payment before the expiration of the period.
◦ If it should appear that the period was established for the debtor, he may
oppose any premature demand on the part of the creditor for performance, or
he may renounce the benefit of the period by performing his obligation in
advance.
Sec. 2 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)
Judicial Term or Period
◦ A term or period is judicial when the duration thereof is fixed by a
competent thereof is fixed by a competent court in accordance with
the causes expressly recognized by law.
◦ Once fixed by a competent court, the period can no longer be
judicially changed.
Sec. 2 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)
Section 3. – 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)
◦ 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)
◦ Ferdinando Magellan, Jr., a frequent traveler and connoisseur of the finer things in
life, had plans to travel to Japan but had no money to buy tickets for him and his
family. Not willing to save money, Ferdinando instead opted to borrow P300,000.00
from his friend Ms. Filipinas. Knowing that Mr. Ferdinando might not be able to pay
his debt immediately (or at all), Ms. Filipinas gave the option of fulfilling alternative
obligations to pay back his loan. Mr. Ferdinando had the following options to pay back
his loan: (1) Fully pay back P300,000.00 in cash, (2) bring back soil from Mars, (3) kill
the rival of Ms. Filipinas, Mr. IndoMie, or (4) deliver a 2 kilos worth of
methamphetamine ( shabu) 30 days after his arrival in the Philippines.
◦ 1. What is an alternative obligation
◦ 2. What is a facultative obligation
◦ 3. Since there is no stipulation in their contract as to who has the right of choice in deciding
which obligation to fulfill, who among the parties, Ferdinando Magellan, Jr. or Ms. Filipinas,
has the right of choice in selecting which alternative obligation to fulfill? Why
◦ 4. Which of the four alternative obligations can Ferdinando Magellan, Jr. select? Why?
◦ No special form is required for the communication or notification of the
choice. Any form may be employed provided that the other party is properly
notified of the selection.
◦ It is much better to make the notification either in a notarized document or in
any other authentic writing.
◦ Consent or concurrence of the creditor to the choice or selection made by the
debtor is not necessary before the choice or selection can produce effect.
◦ Once the choice is made by the person, the obligation ceases to be alternative
from the moment the selection has been communicated to the other party.
◦ An election once made is binding on the person who makes it, and he will no
be permitted to renounce his choice and take an alternative which was first
opened to him.
◦ ARTICLE 1201. The choice shall produce no effect except
from the time it has been communicated. (1133)
◦ ARTICLE 1202. The debtor shall lose the right of choice
when among the prestations whereby he is alternatively
bound, only one is practicable. (1134)
◦ 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)
Article 1202
◦ Art. 1202 should be distinguished from the second paragraph of Art. 1200.
◦ Under 1200, there is only one prestation which can be performed; under Art.
1202, there are still two or more which can be performed.
◦ Under 1200, the obligation is converted into a simple one because the debtor
loses the right of election; under 1202, the obligation is still alternative
because the debtor can still exercise his right of election.
Article 1203
◦ The debtor’s right of choice is rendered ineffective through
the creditor’s fault, his only possible recourse will be to
bring an action to rescind the contract with damages.
◦ 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)
◦ 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)
Article 1204 & Article 1205
◦ Art. 1204 is applicable only to a case where the right of choice belongs to the debtor;
(general rule)
◦ Art. 1205 is applicable only to a case where the right belongs to the creditor. (exception)
If right of choice belongs to the debtor
◦ If the loss or impossibility is due to a fortuitous event, then the provisions of Arts. 1174, 1262,
and 1266 of the Civil Code are applicable. Debtor is not liable for damages.
◦ If not all the choices are lost, then the debtor may still fulfill his obligation with the remaining
choices.
◦ If all choices are lost to the debtor without his fault, then the obligation shall be extinguished
completely.
◦ 1204 only applies when the loss is attributable to the fault of the debtor.
◦ IF there are still options/choices remaining to the debtor, the creditor cannot ask for damages
because the debtor can still comply with his obligation.
If right of choice belongs to the creditor
◦ If all choices are lost due to a fortuitous event then Arts. 1174,1262,
and 1266 apply.
◦ If only one or some of the choices are lost, but not all of them; the
creditor may still choose from the remaining choices.
◦ If the loss is due to the fault of the debtor then paragraphs 3 and 4
of Art. 1205 shall apply.
◦ 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)
Facultative Obligations
◦ An obligation wherein only object or prestation has been agreed upon by the parties to the obligation, but
which may be complied with by the delivery of another object or the performance of another prestation
in substitution.
As to Facultative Alternative
Objects due Only one object is due Several objects are due
Compliance Compliance by the delivery of another Delivery of one of the objects or by the
object or by the performance of another performance of one of the prestation
prestation in substitution of that which which are alternatively due.
is due
Choice Only with the debtor Creditor or Debtor
Effect of fortuitous loss Loss of thing due = extinguished Must lose all options before
extinguishment
Effect of culpable loss Culpable loss of the substitute item does Culpable loss of any of the objects may
not affect the debtor’s liability if before result into liability for the debtor.
substitution
Substitution.
◦ Who may make the substitution? Exclusively, the debtor.
◦ Substitution must be communicated to the creditor for it to
take effect.
◦ Once notice of substitution has been made, the obligation
immediately becomes a simple obligation.
