Dimaala, John Axel C.

There are remedies when the debtor fails to comply his obligations such as:
 To demand right for damages (monetary)
 Pursue the property of the debtor.
 Exercise all the rights and bring all the actions of the debtor except those inherent
in his person (Action subrogatoria); subrogatory right (change in creditor)
 Impugn the acts which the debtor may have done to defraud them (Action
pauliana).

The rights acquired by virtue of an obligation is transmissible except in the following cases:

 When prohibited by law; and

 When prohibited by the parties.

There are 10 classifications of obligations

1. Pure obligation – It is not subject to any condition, term or period for its fulfillment, and
therefore, it is immediately demandable.
2. Conditional obligation – one whose effectivity or extinguishment depends upon the
fulfillment of a condition.
3. Obligation with a period – one whose effectivity or extinguishment depends upon the
expiration of a period or term.
4. Alternative obligation – one where a person is alternatively bound by different presentations
but the performance of one is sufficient.
5. Facultative obligation – one where only one presentation has been agreed upon, but the
obligor may render another in substitution.
6. Joint obligation – one where the whole obligation is to be paid proportionately by the
different debtors and/or to be demanded proportionately by the different creditors.
7. Solidary obligations – one where each one of the debtors is required to
render, and/or each one of the creditors can demand from any of the debtors’ entire
compliance with the presentation.
8. Divisible obligation – one where the subject matter is capable or partial fulfillment.
 9. Indivisible obligation – one where the subject matter is not capable or partial
fulfillment.
10.Obligations with a penal clause – one which contains an accessory
undertaking to assume greater liability in case of breach.

Condition - It is a future and uncertain event, upon the happening of which, the effectivity or
extinguishment of an obligation subject to it depends. There are 2 types of conditions such as
Suspensive condition – one which suspends the demandability of the obligation until the
happening of the uncertain event which constitute the condition. Resolutory condition – one the
fulfillment of which has the effect of extinguishing an obligation. The distinction between
resolutory and suspensive conditions are: Suspensive condition suspends the effects of an
obligation, while resolutory condition resolves the obligation upon the happening of the condition;
Second, fulfillment of the suspensive condition gives rise to an obligation, while fulfillment of the
resolutory condition extinguishes an obligation; Lastly, pending the happening of the suspensive
condition, the existence of the condition is a mere hope, while in the second, its effects flow, but
there is the possibility of termination.
There are also cases when the obligation is demandable at once most likely when it is When it is
pure; When it is subject to a resolutory condition and when it is subject to a resolutory period. The
effects of resolutory conditions upon fulfillment are: In an obligation to give, the fulfillment of the
resolutory condition extinguishes the obligation, and the parties shall return to each other what they
have received. The effects of the fulfillment of the condition are retroactive. In an obligation to do
or not to do, it is the duty of the courts to determine the retroactive effect of the fulfillment of the
resolutory condition.

There are also another 2 types of condition like potestative condition, it is a condition suspensive in
nature and which depends upon the sole will of the debtor. Second, causal condition it is a
condition suspensive in nature and which depends upon chance or upon the will of a third person.
There is also two types of impossible condition such as physically impossible conditions – those
which in the nature of things are not susceptible of coming into existence or being
done. Legally impossible conditions – those contrary to law, morals, good customs, public order, or
public policy.
Kinds of loss
 Physical loss – when a thing perishes.
 Legal loss – when a thing goes out of commerce.
 Civil loss – when a thing disappears in such a way that its existence is
unknown, or even if known, it cannot be recovered.

Reciprocal obligations are those which arise from the same cause and the performance of one is
designed to be the equivalent and the condition for the performance of the other. There are
remedies in reciprocal obligations. First is to demand fulfillment of the obligation with damages; or
to demand rescission of the obligation with damages.
The remedies of the injured party are alternative, subject to the exception that if he has chosen
fulfillment and it becomes impossible, then he can still seek rescission.

Three kinds of Negligence

 Contractual negligence (culpa contractual) or negligence in contracts resulting in their
breach. This is not a source of obligation but it makes the debtor liable for damages by
reason of his negligence in the performance of a pre-existing obligation.
 Civil negligence (culpa aquiliana) or negligence which is a source of obligation
between the parties not bound by a pre-existing contract. The other term is tort or
quasi-delict.
 Criminal negligence (culpa criminal) or negligence resulting in the
commission of a crime.

Period – A Day or time that is certain to come. The arrival of the period determines either the
demandability of an obligation or its termination. The difference between period and condition are
as follows:
 The former is a certain event, while the latter, is an uncertain event;
 The former refers only to the future, while a condition may refer to a past event
unknown to the parties;
 The former determines the effectivity of an obligation, while the latter, will determines the
birth or the termination of an obligation;
  The court may fix the duration of a period when it depends upon the will of the debtor, while
a condition which depends upon the sole will of the debtor will invalidate the obligation.
 In the former, there is no retroactive effect, unless there is an agreement to the contrary,
while in the latter, the happening of a condition has retroactive effect.

In the lesson it also states the classification of period depending on their own such ash:
Classify period. According to effect: Suspensive period (ex die) – the obligation becomes effective
upon the arrival of a day certain which has been fixed; and resolutory period (in diem) – the
obligation takes effect at once but terminates upon the arrival of the day certain. According to
source: Legal – when it is provided by law; Voluntary – when it arises from the stipulation of the
parties; Judicial – when it is fixed by the court. According to definiteness: Definite – when the term
is fixed and indefinite – when the term is not fixed.

Kinds of Solidarity according to parties: Passive – solidarity on the part of the debtors. Any one
of the debtors can be made to comply with the entire obligation; Active – solidarity on the part of
the creditors. Any one of the creditors can demand the fulfillment of the entire obligation; Mixed –
solidarity on the part of both debtors and creditors. Each one of the debtors is liable to render, and
each one of the creditors can demand, entire compliance with the obligation.
According to source: Legal – solidarity is provided by law; Conventional – solidarity is stipulated
by the parties; Real – solidarity is imposed by the nature of the obligation. According to tie:
Uniform – when the parties are bound by the same stipulations or clauses; non-uniform – when the
parties are not bound by the same stipulations or clauses.

The requisites of a joint obligation was also tackled in the lesson: (1) Plurality of parties (2)
Specification of the share of each in the obligation. Requisites of solidary obligation: (1) Plurality
of parties (2) Unity of prestation (3) Internal relationship between debtors and creditors.

Kinds of Division
 Qualitative division – one based on quality rather than quantity. Example: X and Y are
heirs of Z. A inherits a house and lot and home appliances, while Y inherits a banana
plantation and a certificate of stock.
  Quantitative division – one based on quantity rather on quality. When the inheritance
consists only of a certain parcel of land, the partition of such land by meters and bounds
partakes of the nature of a quantitative division.
 Ideal or intellectual division – one which takes place only in the minds of the parties, not
physically. Example: co-ownership.

Purpose of Penal Clause

 To insure the performance of an obligation;
 To determine the number of damages to be awarded in case of breach;
 To punish the obligor in case of non-compliance.
There are distinction between penal clause and condition such as: A penal clause is an accessory
obligation, while a condition is not. A penal clause becomes demandable in case of non-
compliance, while condition is never demandable.

Kinds of Penal Clause

 Legal penal clause – when it is provided by law;
 Conventional penal clause – when it is provided by agreement of the parties;
 Compensatory penal clause – when the penalty takes the place of damages;
 Punitive penal clause – when it is imposed as a punishment;
 Subsidiary or alternative penal clause – when only the penalty can be
imposed;
 Joint or cumulative penal clause – when both the principal obligation and the penalty can be
enforced.

Imterest and damages be recovered in addition to the penalty. In an obligation with a penal clause,
the general rule is that the penalty substitutes the indemnity for damages and the payment of
interest in case of non-compliance. However, the creditor, in addition to the penalty, may recover
damages and interests in the following cases:

 When the obligor refuses to pay the penalty;

 When it is stipulated by the parties; and
 When the obligor is guilty of fraud in the fulfillment of the obligation.
Insstances where the penalty may be reduced by the courts. (1) When there is partial or irregular
performance; and (2) When the penalty is iniquitous or unconscionable.

The effects of the nullity of the penal clause and of the principal obligation
 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.

Modes of extinguishing obligations.

1. by the payment or performance;
2. by the loss of the thing due;
3. by the confusion or merger of the rights of creditor and debtor;
4. by compensation;
5. by novation.

Other causes of extinguishment of obligation

1. Annulment;
2. Rescission;
3. Fulfillment of resolutory condition;
4. Prescription;
5. Death of a party in case of personal obligation;
6. Mutual desistance or withdrawal;
7. Arrival of a resolutory period;
8. Compromise;
9. Impossibility of fulfillment; and
10. Happening of a fortuitous event.

Payment means not only the delivery of money but also the performance, in any other manner, of
an obligation. Payment and performance are synonymous. Instances when partial performance may
be allowed. First is when there is agreement by the parties; When the debt is in part liquidated and
in part unliquidated and when the different prestations in which the obligation consists are subject
to different terms or conditions.

When is incomplete or irregular performance deemed payment? When the obligee accepts the
performance, knowing its incompleteness or irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied with. A third person can pay for a debtor if
agreed to by the parties.

We discuss the effect of payment made by a third person.

 If payment has been made without the knowledge or against the will of the debtor,
recovery by the payer is allowed insofar as the payment has been beneficial
to the debtor. This means that the payer can recover only the amount of
debt at the time of payment.
 If payment has been made with the knowledge of the debtor, the payer is entitled to
reimbursement and subrogation.

The distinctions between domicile and residence. Domicile is the place of a person’s habitual
residence, the place where he has his true fixed permanent home and to which place he, whenever
he is absent, has the intention of returning.
Residence is only an element of domicile. Residence requires bodily presence as an inhabitant in a
given place, while domicile (or legal residence) requires bodily presence in that place and also an
intention to make it one’s domicile.

The four special forms of payment.

 Dation in payment or dacion en pago;

 Application of payment;
 Payment by cession; and
 Tender of payment and consignation.

Dacion en pago. It is the conveyance of ownership of a thing as an accepted equivalent of

performance. The Difference between dacion en pago from payment by cession are: (1) In dation,
there is but one creditor, while in cession, there are several creditors;(2) Dation does not require
the insolvency of the debtor, while insolvency is required in cession; (3) Dation refers only to
particular property of the debtor, while cession refers to all the property of the debtor; (4) In dation,
the creditor becomes the owner of the thing given by the debtor, while in cession, the creditors
acquire the right to sell the thing and apply the proceeds to their credits pro rata.

Application of payments - It is the designation of the debt to which should be applied the payment
made by a debtor who has various debts of the same kind in favor of one and the same creditor.
There are rules on application of payments such as:
 The debtor must indicate at the time of payment which particular debt is being paid. He
has the first choice;
 If there is no specification by the debtor, the creditor may designate in the receipt as to
which debt payment is being made;
 In the absence of any specification made by the creditor, then the debt which is most
onerous to the debtor among those due shall be deemed to have been satisfied;
 If the debts due are of the same nature and burden, the payment shall be applied pro
rata.

Payment by cession - It is the assignment or abandonment of all the properties of the debtor for the
benefit of his creditors in order that the latter may sell the same and apply the proceeds thereof to
the satisfaction of their credits. The requisites of payment by cession.
 There must be several creditors;
 The debtor must be insolvent; and
 The cession must be accepted by the creditors.