OBLIGATIONS AND CONTRACTS SUMMARY
As to retroactivity of effects – the arrival of
Chapter 3
Different Kinds of Obligations
SECTION 2. – Obligations with a Period
Article 1193. Obligation for whose
fulfilment 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.
Obligation with a period – one whose effects or
consequences are subjected in one way or
another to the expiration or arrival of the said
period or term.
Period – is a future and certain event upon the
arrival of which the obligation subject to it either
arises or is extinguished.
-A day certain is which must necessarily come,
although it may not be known when.
Period and Condition Distinguished
1. As to fulfillment - A period is a certain event
which must happen sooner or later while a
condition is an uncertain event.
2. As to time – a period refers only to the future
while a condition may refer to a past
unknown event.
3. As to influence on the obligation – the period
fixes the time of efficaciousness of the
obligation while a condition causes an
obligation either to arise or to terminate.
4. As to effect, when left to debtor’s will – period
which depends upon the will of debtor
empowers the court to fix the duration while
condition which depends upon the will of the
debtor invalidates the obligation.
5.
period does not have any retroactive effect,
while condition has retroactive effect.
Kinds of period or term
1. According to Effect
a. Suspensive (ex die) – the obligations
begins only from a day certain upon
arrival of the period.
b. Resolutory (in diem) – the obligation is
valid to a day certain and terminates upon
the arrival of the period.
2. According to source
a. Legal period – When. – when it is
provided for by laws.
b. Conventional/voluntary period – when it
is agreed by the parties
c. Judicial period – when it is fixed by the
court.
3. According to definiteness
a. Definite period – when it is fixed or it is
known when it will come.
b. Indefinite – when it is not fixed or it is not
known when it will come. When it is not
fixed but a period is intended, the courts
are empowered to fix the same.
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.
ART. 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
THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3
 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
(right to enjoy use and fruits)
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 interest.
Payment before Arrival of Period
This article which is similar to Article 1188,
applies only in an obligation to give, it allows the
recovery of what has been paid by mistake before
the fulfillment of a suspensive condition.
Debtor presumed aware of period.
The presumption is that the debtor knew that the
debt was not yet due. He has the burden of
proving that he was unaware of the period.
Where the duration of the period depends upon
the will of the debtor payment by him amounts,
in effect, to his determination of the arrival of the
period.
The obligor may no longer recover the thing or
money once the period has arrived but he can
recover the fruits or interests thereof from the
date of premature performance to the date of
maturity of the obligation.
No recovery in personal obligations.
1195 has no application to obligations to do or
not to do because as to the former, it is physically
impossible to recover the service rendered, and
as to latter, as the obligor performs by not doing,
he cannot, of course, recover what he has not
done.
ARTICLE 1196. Whenever in an obligation
a period is designated, it is presumes 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 favour of one or of the other.
Presumption as to benefit of period.
The general rule in an obligation subject to a
period fixed by the parties, the period is
presumed to be for the benefit of both creditor
and debtor.
Which means that before the expiration of the
period, the debtor may not fulfill the obligation
and neither the creditor demand its fulfillment.
Exceptions to the general rule.
If the tenor of the obligation or other
circumstances may indicate that a period is have
been established for the benefit of either the
creditor or debtor:
1. Term is for the benefit of the debtor alone.
– debtor cannot be compelled to pay
prematurely.
2. Term is for the benefit of the creditor. –
creditor may demand fulfilment even
before the arrival of the term but the
debtor cannot require him to accept
payment before the expiration of the
stipulated period.
ARTICLE 1197. If the obligation does
not fix a period, but 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.
Court Generally is Without Power to Fix a
Period
If an obligation does not state a judicial period
and no period is intended, the court is not
authorized to fix a period. The courts have no
right to make contracts for the parties.
Exceptions to the general rule.
1. No period is fixed but a period was intended.
- the obligation does not fix a period but it can
be inferred from its nature and circumstances
that a period is intended.
2. Duration of the period depends upon the will
of the debtor. –
THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3
 ART. 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.
the period, unless she gives another one
equally satisfactory.
4. When debtor violates an undertaking –
Example: Art secured a loan from Arnold on
condition that Art will paint the house of
Arnold. If after the proceeds of the loan was
given to Art, he did not paint the house of
Arnold, Art loses his right to make use of the
period.
5. When the debtor attempts to abscond.
Abscond means to depart or escape from
creditor’s knowledge to avoid payment of his
debt. Mere attempt on the part of debtor will
entitle the creditor to demand payment of the
obligation without waiting for the period to
expire.

When Debtor Loses the Right to Make Use of

a Period
The general rule is that the obligation is not
demandable before the lapse of the period. The
exceptions are based on the fact that the debtor
might not be able to comply with his obligation:
1. When debtor becomes insolvent:
The insolvency need not be judicially
declared. It is sufficient that the debtor has less
assets than his liabilities or if debtor is unable to
pay his debts as they mature. It is noted that the
insolvency of the debtor must occur after the
obligation has been contracted.
2. When debtor does not furnish guaranties
or securities promised:
Gaya borrowed loan from Tito which loan was
secured by a chattel mortgage of Gaya’s car as a
guaranty. After obtaining the loan, Gaya fails or
does not execute a chattel mortgage, the loan
becomes demandable or the debtor loses her
right to make use of the period.
3. When by his own acts he has impaired
said guaranties or securities:
Example: Gaya borrowed P50, 000 from Tito
which loan was secured by a chattel mortgage
on Gaya’s car. Later, Gaya’s fault, the car
was damaged or she causes the impairment of
the car, Gaya loses her right to make use of

THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3

OBLIGATIONS AND CONTRACTS SUMMARY
Chapter 3
Different Kinds of Obligations
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.
Kinds of Obligation according to object.
(1) Simple obligation. – one where there is only
one prestation.
(2) Compound obligation. – one where there are
two or more prestation.
a. Conjunctive – one where there at
several prestations and all of them are
due.
b. Distributive – one where two or more
of the prestationsis due.
1) Alternative – one where several
prestations are due but the
performance of one is sufficient.
2) Facultative – one where only one
prestation is due but the debtor may
substitute another.
Alternative obligation – one wherein various
prestations are due but the performance of one of
them is sufficient as determined by the choice
which, as a general rule, belongs to the debtor.
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.
Right of choice, as a rule, given to debtor.
As a general rule, the right to choose the
prestation belongs to the debtor.
By the way of exception, it may be exercised by
the creditor but only when expressly granted to
him, or by a third person when the right is given
to him by common agreement.
Right of choice of debtor not absolute.
1. The debtor cannot choose those
prestations which are (a) impossible, (b)
unlawful, or (c) which could not have
been the object of obligation. These
prestations are void.
The debtor’s right of choice is not
extinguished altogether but limited to the
remaining valid prestations.
2. The debtor has no more right of choice
when, among the prestations whereby he
is alternatively bound, only one is
practicable. In this case, these is not only
a limitation but a loss of the right of
choice belonging to the debtor. The
obligation becomes simple.
3. Debtor cannot choose part of one
prestation and part of another prestation.
ARTICLE 1201. The choice shall produce
no effect except from the time it has been
communicated.
Communication of notice that choice has
been made.
(1) Effect of notice. – until the choice is made
and communicated, the obligation remains
alternative.
a. Once the notice of the election has
been given to the creditor, the
obligation ceases to be alternative and
becomes simple.
b. Such choice once properly made and
communicated is irrevocable and
cannot, therefore, be changed by
either party without the consent of the
other. The concurrence of the creditor
to the choice made by the debtor is
not required.
(2) Proof and form of notice – the burden of
proving that such communication has been
made is upon him who made the choice. The
law does not require any particular form
regarding the giving of notice. It may,
therefore, be made orally or in writing,
expressly or impliedly.
ARTICLE 1202. The debtor shall lose
the right of choice when among the
prestations whereby he is alternatively
bound, only one is practicable.
Effect when only one prestation is
practicable.
If only one is practicable, the obligation is
converted into a simple one.
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.
When debtor may rescind contract.
Rescisssion creates the obligation to return the
things which were the object of the contract
THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3
together with their fruits, and the price with its
interest.
The debtor may rescind the contract with
damages if he could not make any choice in
accordance with the terms of the obligation, due
to the creditor’s fault.
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.
Effect of loss of objects of obligation
The creditor has the right to choose.
1. Some of the objects. – the loss of some of the
objects through the fault of the debtor does
not make him liable since he has the right of
choice and the obligation can still be
performed.
2. All of the objects. – if all of them have been
lost or have become impossible through his
fault, the creditor shall have the right to
indemnity for damages since the obligation
can no longer be complied with. If the cause
of the loss is fortuitous event, the obligation
is extinguished.
Basis of indemnity.
The indemnity shall be fixed taking as a basis the
value of the last thing which disappeared
(obligation to give) or that if the service which
last became impossible (to do). In case of
disagreement, it is incumbent upon the creditor
to prove such value or which thing last
disappeared or which service last became
impossible.
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 the responsibility of the debtor shall
be governed by the following rules:
1. If one of the things is lost through a
fortuitous even, 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.
When right of choice belongs to creditor.
In alternative obligations, 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.
Rules in case of loss before creditor has made
choice.
(1) When a thing is lost through a fortuitous
event. - If one of the things is lost through a
fortuitous event, the debtor 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) When a thing is lost through debtor’s fault. –
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) When all the things are lost through debtor’s
fault. – 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.
(4) When all the things are lost through a
fortuitous event. – ART.1174 shall apply.
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 due to his
fault or not.
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
THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3
 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.
A facultative obligation is one where only one
prestation has been agreed upon but the obligor
may render another in substitution.
Effect of loss.
(1) Before substitution. – If principal is lost
through a fortuitous event, the obligation is
extinguished. The loss of the thing intended
as a substitute with or without the fault of the
debtor does not render him liable.
(2) After substitution. – 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. If substitute is lost, the liability of the
debtor depends upon whether or not the loss
is due to his fault.
Alternative and facultative obligations
distinguished.
(1) Number of prestations.
1) Several prestations are due but
compliance with one is sufficient.
2) Only one prestation is due although the
debtor is allowed to substitute it.
(2) Right of choice.
1) The right of choice may be given to the
creditor or third person
2) The right to make the substitution is
given only to the debtor
(3) Loss through fortuitous event.
1) Loss of one or more of the alternatives
does not extinguish the obligation
2) The loss of the thing due extinguishes the
obligation
(4) Loss through fault of debtor.
a. 1) loss of one of the alternatives
through the fault of the debtor does not
render him liable.
2) loss of the thing due through his
fault makes him liable.
b. 1) where the choice belongs to the
creditor, the loss of one alternative
through the fault of the debtor gives
rise to liability.
2) the loss of the substitute before the
substitution through the fault of the
debtor does not render him liable.

THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3

OBLIGATIONS AND CONTRACTS SUMMARY

Chapter 3
Different Kinds of Obligations
SECTION 4. – Joint and Solidary
Obligations
ARTICLE 1207. The concurrence of two or
more creditors or of two or more debtors
in one and the same obligation does not
imply that each one of the former has a
right to demand, or that each one of the
latter is bound to render, entire
compliance with the prestation. There is a
solidary liability only when the obligation
expressly so states, or when the law or
the nature of the obligation requires
solidarity.

ARTICLE 1208. If from the law, or the

nature or the wording of the obligations
to which the preceding article refers, the
contrary does not appear, the credit or
debt shall be presumed to be divided into
as many equal shares as there are
creditors or debtors, the credits or debts
being considered distinct from one
another, subject to the Rules of Court
governing the multiplicity of suits.

Kinds of obligations according to the

number of parties.
(1) Individual obligation. – one where there is
only one obligor or one obligee; and
(2) Collective obligation. – one where there is
two or more debtors and/or two or more creditors. It
may be joint or solidary.

Joint Obligation – one where the whole obligation is to

be paid or fulfilled proportionately by the different
debtors and/or is to be demanded proportionately by the
different creditors.

Solidary Obligation – one where each one of the debtors

is bound to render and/or each one of the creditors has
a right to demand from any of the debtors, entire
compliance with the prestation.

THE LAW ON OBLIGATIONS AND CONTRACTS | Chapter 3