MODULE 3

Kinds of Obligations
 Classifications of Obligations

A. Primary Classifications under the New Civil Code

Pure and Conditional (Arts. 1179-1192)
Obligations with a period (Arts. 1180, 1193-1198, NCC)
Alternative vs. Facultative Obligations (Arts. 1199-1206, NCC)
Joint and Solidary Obligations (Art. 1207-1222, NCC)
Divisible vs. Indivisible Obligations (Arts. 1223-1225, NCC)
Obligations with a Penal Clause (Arts. 1126-1304, NCC)
B. Secondary Classifications under the Civil Code
Unilateral vs. Bilateral (Arts. 1168-1169, NCC)
Real vs. Personal (Arts. 1163-1168, NCC)
Determinate vs. Generic (Art. 1165, NCC)
Civil vs. Natural (Art. 1423, NCC)
Legal, Conventional and Penal (Arts. 1157, 1159, 1161, NCC)
 Pure and Conditional Obligations

Pure Obligation
A pure obligation is a debt which is not subject to any conditions and no specific date is mentioned for its
fulfillment. A pure obligation is immediately demandable.
Example:
D obliges himself to pay C P 1,000,000. The obligation is immediately demandable because there is no
condition & no date is mentioned for its fulfillment.

Conditional Obligation
A conditional obligation is one whose demandability or extinguishment depends upon the happening of a
condition.
The execution of which is suspended by a condition which has not been accomplished and subject to which
it has been contracted.
Example:
"I will support your studies in college if Mr. A dies."

The obligation becomes demandable only after Mr. A dies. When the condition happens, it gives rise to an
obligation. This condition is referred to as suspensive condition.
Example:
"I will support your studies in college until Mr. A dies." Here, the obligation is demandable at once. When the
condition happens, it extinguishes the obligation. This condition is referred to as resolutory condition.
Condition
Condition is a future event, which may or may not happen. It is a future and uncertain event,
fact, or circumstance whose existence or occurrence is necessary for the existence or
determining the extent of an obligation or liability.

Classification of condition:
1. Suspensive and Resolutory
A. Suspensive condition - a future event, the happening of which will give rise to the obligation.
This is also known as condition antecedent or precedent. (example: I oblige myself to deliver a
red car to A if she passes the CPA board exam)
B. Resolutory condition - a future event, the happening of which extinguishes the obligation. It
is demandable at once but upon happening of the condition, it shall be extinguished. This is
also referred to as condition subsequent. (example: I oblige myself to give P2,000 monthly to B
until he passes the CPA board exams)
2. Potestative , Casual and Mixed
a. Potestative - depends upon the will of one of the contracting parties.
a.1. Potestative on the part of the debtor -
 If suspensive - the obligation is VOID.
Even if the condition is fulfilled, it will not cure the defect.
 If resolutory - the obligation is valid.
a.2. Potestative on the part of the creditor - the obligation is valid whether the condition is
suspensive or resolutory.
B. Casual depends upon chance or upon the will of a third person.
(example: X will deliver a Honda car to B, if Ms. Philippines will be crowned as Ms. Universe
2020)
C. Mixed depends upon the will of one of the contracting parties and partly upon the chance of the
will of a third person.
(example: X will give P100,000 to A, if A marries B this year)
3. Possible and Impossible
A. Possible - capable of fulfillment by its nature and by law.
B. Impossible - not capable of fulfillment because of its nature or due to operation of law. In
this case, the obligation and the conditions are VOID.
(example: "I will give you my condo unit if you can bring to me the Eiffel Tower" "I will pay
you P100,000 if you will deliver to X 10 grams of shabu")

Note: if the condition is not to do an impossible thing, it shall be deemed as not having been
agreed upon (Art. 1183 NCC). Hence, the obligation is valid and demandable. (example: "I will
give you P500 if you will not bring me an internal organ of a dinosaur," "I will pay you P10,000
if you will not deliver me 10 grams of shabu")

4. Positive and Negative

A. Positive - the condition that some future event will happen. The obligation is extinguished if
after the lapse of the future event, the condition did not happen, or it has indubitable that the
event will not happen.
(examples: "F obliges to give C P100,000 if C will marry M this year. The obligation to give is
extinguish if (a) C does not marry M this year, or (b) if M dies, or marries anther than C, thus C
cannot anymore marry her. The obligation is extinguished on such date since the condition to marry
will not take place anymore.

B. Negative - the condition that some event will not happen at a determinate time. The obligation
becomes effective as soon as the time indicated has elapsed or it has become evident that the event
will not occur.
(example: F oblige to give C P100,000 if C will not marry M this year. The obligation becomes
effective if (a) C does not marry M this year, (b) C marries another this year, or (c) M dies, or
marries another than C. The obligation becomes effective on that date since the condition to
marry will not be fulfilled anymore.

5. Divisible and Indivisible

A. Divisible - when capable of partial performance.
 The law provides (Art. 1183 NCC) that, if the obligation is divisible, the part thereof which is not
affected by the impossible or unlawful condition shall be valid. Thus, if B obliges himself to give
C a car if C graduated cum laude or higher in college, and P50,000 if C can forge his school
records and make it appear that it is the school records of B. The obligation to deliver the car
arises when C graduated cum laude or higher in college. The condition to forge school records is
unlawful. Hence, even C complied such condition, he cannot demand the payment of P50,000.
B. Indivisible - not capable of partial performance by its nature or by law or by agreement of the
parties.
(example: B promises to give C a car if C graduated cum laude or higher, and passes the CPA
board exams. C must comply both conditions - graduating cum laude or higher AND passing the
CPA board exam, before he can ask for the delivery of the car.
Effects of fulfillment of suspensive condition (Art. 1187)
General Rule: The effect of the fulfillment of the suspensive condition retroacts to the day of the
constitution of the obligation. Thus, if on Jan. 1, 2019, A promises to give a car to B if B passes the
CPA exams. B passes the CPA exam on May 2019. Upon fulfillment of the condition, B is considered
the owner of the car since Jan 1, 2019.
Exceptions: there shall be no retroactive effect with respect to the fruits and interests as follows:
1. In reciprocal obligations , the fruits and interests shall be deemed to have mutually compensated,
i.e., each party shall keep the fruits and interests received by him prior to the fulfillment of the
condition.
Example:
On June 1, 2017, A agreed to sell his land to B, and B likewise agreed to pay the price of P500,000 to A,
on the condition that B would marry X. It was only on June 1, 2019, or two years later, that B marries
X. From June 1, 2017 to May 31, 2019, A is entitled to keep the fruits and/or produce of the land,
while B is likewise entitled to keep the interests on the price.
2. In unilateral obligation, the debtor keeps the fruits and interests received before the fulfillment of
the condition. Thus, if on June 1, 2017. A promise to give B a parcel of land if B would marry X. it was
only on July 1, 2019 that the condition was fulfilled. During the pendency of the condition. A can keep
the fruits and produce of the said land.

Rights of the parties before the fulfillment of the condition (Art. 1188)
1. Creditor - he may bring the appropriate actions for the preservation of his right. A creditor may
register his claim with the Registry of Deeds (in case of land), if appropriate, or notify third persons of
his claim.
2. Debtor - he may recover what during the same time he has paid by mistake in case of a suspensive
condition.
Rules in case of loss, deterioration or improvement of DETERMINATE thing before the fulfillment
of the suspensive condition (Art. 1189)

1. Loss of the thing

a. Without debtor's fault - the obligation is extinguished b. With debtor's fault-debtor is 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;
Examples:
(a) thing perishes - A promises to give C a particular house if C marries this year. During the
pendency of the condition, a fire broke out in the neighborhood, and houses were burned and
turned to ashes, including the subject house.
(b) goes out of commerce - A promised to deliver to B a pair of Philippine eagle if B passes the
veterinary exams. During the pendency of the condition, a law was passed prohibiting the sale,
private breeding, and domestication of Philippine eagle.
(c) disappears or cannot be recovered - A promised to give B a certain diamond ring soon as A
disembarks to a Philippine port. During A's travel, the said diamond ring was dropped and sank in
the Pacific Ocean, that it's recovery would be impossible.
Note: to exempt from liability, the debtor/obligor MUST NOT be at fault. Thus, in the first
example, if A places inflammable materials in his house which causes the fire, then A must pay
C damages if C marries this year.

2. Deterioration of the thing

A. Without the fault of the debtor - the impairment is to be borne by the creditor;
B. With debtor's fault - the creditor may choose between the (a) rescission of the obligation and (b) its
fulfillment, with indemnity for damages in either case; Deterioration is the decline in the quality of
equipment or structures over a period of time due to the chemical or physical action of the environment. It
includes the physical wear and tear of the thing, and damages that do not result to a total loss of the thing.
Thus, it has been held that the debtor is not liable for the physical wear and tear of the car pending the
fulfillment of the suspensive condition. However, if a car is damaged because of accident due to debtor's
fault or negligence, the creditor may choose between (a) rescission of the contract and ask for damages, or
(b) demand delivery of the car in its deteriorated state plus damages.
3. Improvement of the thing
A. By nature or time - the improvement shall inure to the benefit of the creditor.
(example: A promised to give C a parcel of land if C passes the CPA board exams. It was only after 5 years
that C finally passes the CPA exams. In the meantime, the land was now covered with timber and other
vegetation that grows to the said land without any cultivation made by parties. After the fulfillment of the
suspensive condition.
 A must deliver to C the land together with the timber and vegetations.
B. At the expense of the debtor - he shall have no other right than that granted to the
usufructuary. Art. 562. Of the New Civil Code defines usufructuary. Usufruct gives a right to
enjoy the property of another with the obligation of preserving its form and substance,
unless the title constituting it or the law otherwise provides.
The debtor may remove the improvement if no damage will be caused to the principal
thing. If the improvement cannot be removed without damage from the principal thing, he
shall deliver the thing together with its improvement to the creditor without any right on
the part of the debtor to indemnity. He may, however, set-off the improvement against any
damage to the thing.

Rules in case of fulfillment of resolutory condition (Art. 1190)

1. Upon fulfillment of a resolutory condition, the obligation is extinguished
2. The parties shall return to each other what they have received
3. In case of loss, deterioration or improvement of the thing, the provision of the above rule
(Art.1189), which pertain to the debtor shall be applied to the party who is bound to return.
 Obligation with a period

Obligation with a period, It is an obligation whose demandability or extinguishment is

dependent on the occurrence or happening of a future event which must necessarily
come.
Examples of obligation with a period:
(a)"X promises to deliver a 6-wheel truck to A on December 10, 2019. The obligation
becomes demandable on December 10, 2019 by reason arrival of the period.
(b) "X obliged himself to give A the sum of P100,000 two years from today." The obligation
becomes demandable only two years from today by reason of expiration of the period.
(c) "X delivered a 6-wheel truck to B for the latter's personal use until December 31,
2019." The obligation is demandable at once but will be extinguished on December 14,
2019, upon the arrival of the period.
(d) "X obliged himself to give A P100,000 semi-annually until two years from today." The
obligation is demandable at once but will be extinguished two years from today, after the
lapse of the period.
Happening or arrival of the period gives rise to an obligation such as in the above examples (a) and
(b). The period with a suspensive effect is known as ex die. Here, the obligation becomes
demandable upon the lapse of the period. (Art. 1193)

Concept of Period and Day Certain

Period is a space of time which determines the effectivity or extinguishment of an obligation. If "X
promises to pay Y the amount of P10,000 60 days from today," or "X promises to give P500 to A until
60 days from today," the lapse of 60-day period will determine whether the obligation will arise or
will be extinguished.
A day certain is a future event, which must necessarily come although it may not be known when.
(Art. 1193) An example of this is the death of a person, which will sure to come although the exact
date cannot be known.
Period distinguished from condition

Period Condition

Future event that must necessarily come, Future event which may or may
As to fulfillment at a date known beforehand, or at a time not happen.
that cannot be determined.
 As to time Always refer to the future. May refer to the future or to a past
event unknown to the parties.
As to influence on Merely fixes the time for the Cause an obligation to arise or
the obligation efficaciousness of an obligation. extinguish

Other kinds of period

1. Legal - one that is fixed by law (examples: taxpayers shall file and pay their annual tax due on or
before April 15 of the year following the taxable period; within 30 days from notice of tax
assessment, the taxpayer must file his protest with the BIR, otherwise, the assessment become final
and executory).
2. Voluntary period - one that is fixed by both parties. (example: X obliged himself to finish the
construction of the house of Y within 90 days from today).
3. Judicial period - one that is fixed by the court (example: the court may order the parties to submit
their respective memoranda or position paper within 30 days after the termination of Pre-trial.
 Alternative and Facultative Obligations

Kinds of obligation according to the number of prestation:

1. Simple -where there is only one prestation
2. Compound - when there are several prestation. This may be -
a. Conjunctive -several prestation are due, and ALL must be performed. (example: D obliged
himself to deliver a car, a motorbike and a vacuum cleaner to C.)
b. Distributive or disjunctive - there are several prestation, but only one or some of the prestation
are due.
-maybe alternative or facultative
Alternative obligation
An obligation is alternative when two things are equally due, under an alternative. The obligor is
bound to render only one of two or more items of performance. Under Art. 1199 of the NCC, a
person alternatively bound by different prestation shall completely perform one of them, is
sufficient to extinguish an obligation.
For example, A agrees to give B, upon a sufficient consideration, a horse, a second-hand car or
piano. The delivery of any of the three items will extinguish the obligation.
Who has the right to choose?
Under Art. 1200, the right of choice belongs to the debtor, unless it has been expressly granted to the creditor,
subject to the following limitations: a. The debtor must completely perform the prestation chosen. The creditor
cannot be compelled to receive part of one and part of the other undertaking b. The debtor shall have no right
to choose those prestation which are impossible, unlawful or which could not have been the object of the
obligation. When obligation ceases to be an alternative obligation
1. Art. 1201 -When the debtor has communicated his choice to the creditor
2. Art. 1202 -When among the prestation whereby the debtor is alternatively bound only one prestation is
practicable.
3. Art. 1205 - when the creditor has communicated is choice to the debtor, if the creditor has been expressly
given the right of choice.
Loss of the things and/or impossibility of services in alternative obligation
Under 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.
Example: D obliged himself to deliver to E a specific race horse, a 2018 Toyota Corolla model with Plate No. ABA
106, or a specific diamond ring. The obligation does not specify who will have the right to choose. Hence, the law
states that the right to choose is granted to D, the obligor.
Facultative obligation
An obligation where only one prestation is due, but the debtor may deliver another in substitution.

Rules in case of loss of the principal thing and substitute

1. Before substitution (before the debtor informed the creditor his intention to deliver the substitute)
a. Loss of principal thing
• if through fortuitous event - the obligation is extinguished
• If through the fault of the debtor - the debtor shall pay damages
b. Loss of the substitute - no effect. Whether the loss of the substitute is through fortuitous event or though
the fault of the debtor, the debtor is not liable. He must still deliver the principal thing.
2. After substitution (after the debtor informed the creditor his intention to deliver the substitute)
a. Loss of the principal thing - no effect. After the substitution, the obligation is converted into a simple
obligation. The thing now due is the substitute. Whether the loss of the principal thing is through fortuitous
event or though the fault of the debtor, the debtor is not liable. He must now deliver the substitute.
b. Loss of the substitute
• If through fortuitous event - the obligation is extinguished
• If through the fault of the debtor - the debtor shall pay damages
 Joint and Solidary Obligations

Joint and solidary obligations, defined

Joint and several obligations is a form of liability that is used in civil cases where two or more
people are found liable for damages. In a joint and solidary obligation, there is a concurrence of two
or more debtors and/or two or more creditors in one and the same obligation
Joint obligation arises when each debtor is liable only for proportionate part of debt and each
creditor is entitled only to a proportionate part of the credit. In the absence of contrary stipulations,
obligations of two or more debtors or collectibles of two or more creditors are presumed joint.
Examples:
1. Joint debtor - "A and B borrowed money amounting to P80,000 from C. Here, A is liable only to
pay C for P40,000 and B is likewise liable to C for P40,000, their proportionate share in the liability.
2. Joint creditor - "A borrowed money from X and Y the amount of P50,000." On due date, X can only
collect P25,000 from A, and likewise Y can also collect P25.000 from A, their proportionate shares in
the credit.
3. Joint debtors and joint creditors - "A and B borrowed P300,000 from X, Y, and Z. The
liability/rights of the parties are as follows:
A is liable to X for P50,000 X can collect from A for P50,000
to Y for P50,000 from B for P50,000
To Z for P50,000
B is liable to X for P50,000 Y can collect from A for P50,000
to Y for P50,000 from B for P50,000
to Z for P50,000
Z can collect from A for P50,000
from B for P50,000

Solidary obligation arises when the parties agreed that each debtor is liable for the whole
obligation, and each creditor is entitled to demand payment of the whole obligation. In short, it's an
obligation under which any of two or more obligors can be held liable for the entire performance
like payment of a debt.
Other terms for solidary obligation are:
1. jointly and severally
2. individually and collectively
3. in solidum
4. mancomunada solidaria
5. juntos o separademente

Kinds of Solidary obligations

1. Passive solidarity (solidarity on the part of the debtors)
2. Active solidarity (solidarity on the part of the creditors)
3. Mixed solidarity (solidarity on both part of the debtors and creditors)
 Divisible and Indivisible Obligations

Divisible and indivisible obligation, defined

An obligation is divisible when the object of the performance is susceptible of division. 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 is divisible.
Examples:
1. Capable to be executed for certain number of hours - obligation to construct the fence in the
house for 2 weeks, obligation to teach 3 hours a day for 1 semester,
2. Capable of measurement of work by metrical units - obligation to deliver 100 sacks of rice,
obligation to deliver 10,000 liters of gasoline
3. Analogous things susceptible of partial performance
An obligation is indivisible when the object of the performance, because of its nature or because of
the intent of the parties, is not susceptible of division.
The following are indivisible obligations:
1.Obligation to give a definite thing - obligation to give a specific race horse.
2. Those not susceptible of partial performance - obligation to sing the national anthem during
Manny Pacquiao fight.
3. Although the object is divisible, the law provides its indivisibility - such as when the court award
moral damages of P100,000 against the accused, partial performance of the obligation is not
allowed.
4. Although the object is indivisible, the parties stipulate its invisibility - such as when the obligation
to deliver 10 sacks of rice and the parties agreed that the obligation is indivisible, hence, the obligor
cannot made partial delivery.
 Obligation with a Penal Clause
Obligation with a Penal Clause, defined
An obligation with a penal clause is one which provide greater liability on the part of the obligor
in case of non-compliance.
A penal clause is an accessory undertaking to assume greater liability in case of breach.
It has a double function:
1. To provide for liquidated damages, and
2. To strengthen the coercive force of the obligation by the threat of greater responsibility in the
event of breach.
A penal clause is intended to prevent the obligor from defaulting in the performance of his
obligation. Thus, if there should be default, the penalty may be enforced.

Kinds of Penal Clause

1. Legal and conventional
a. Legal - imposed by law, such as a penalty of 25% p.a. interest and 25%- 50% surcharge imposed
on the basic assessed tax for everyday of delay in payment.
b. Conventional-imposed by the agreement of parties.
2. Subsidiary and joint
a. Subsidiary - when only the penalty may be enforced
b. Joint - when both the obligation and the penalty may be enforced

Rules in Obligation with a Penal Clause

General rule: the penalty takes the place of the damages and interest in case of non- compliance.
(compensation)
Exception: aside from penalty, damages and interests
following instances:
1.When there is stipulation to that effect
2. When the debtor refuses to pay the penalty
3. When the debtor is guilty of fraud in the performance of his obligation
Other rules applicable to obligations with a penal clause
1. The debtor cannot exempt himself from the performance of the obligation by paying the penalty,
save in the case where this right has been expressly reserved for him (Article 1227)
2. Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the
penalty at the same time, unless this right has been clearly granted him.
3. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be
demanded (Article 1228).
4. The judge shall equitably reduce the penalty when the principal obligation has been partly or
irregularly complied with by the debtor. Even if there has been no performance, the penalty may
also be reduced by the courts if it is iniquitous or unconscionable. (Article 1229)
5. 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 (Article 1230).
THAT’S ALL,
THANKYOU!
 REPORTERS:
BSBAFM 2A
Calopez, Jim Fel Grace S.
Gamboa, Fritz Angelo B.
Serra, Alphy T.
Mananap, Ira Marie S.