Obligations Chapter 3 PDF

CHAPTER III DIFFERENT KINDS OF OBLIGATIONS CATEGORIES: a. Demandability - pure, conditional or with a term b. Plurality of object - simple, alternative or facultative c. Plurality of subject - simple, joint or solidary d. Performa...

CHAPTER III DIFFERENT KINDS OF OBLIGATIONS CATEGORIES: a. Demandability - pure, conditional or with a term b. Plurality of object - simple, alternative or facultative c. Plurality of subject - simple, joint or solidary d. Performance - divisible or indivisible e. Sanctions for breach - with or without a penal clause Primary Classification 1. Pure obligation 2. Conditional Obligation 3. Obligation with a period 1. Alternative Obligation 2. Facultative Obligation 3. Joint Obligation 4. Solidary Obligation 5. Divisible obligation 6. Indivisible Obligation 7. Obligation with a Penal Clause PURE AND CONDITIONAL OBLIGATIONS: 1. Pure obligation– demandable at once, with no term and no condition Eg. I will give you ten pesos. 2. Conditional Obligation- one whose demandability or extinguishment depends upon the happening of a condition. A condition is a future and an uncertain event or a past event unknown to the parties eg. I will give you one million pesos if you pass the Bar. Definition of Condition: It is an uncertain event which wields influence on a legal relationship (Manresa) Kinds of Condition 1. Suspensive and Resolutory 2. Potestative, Casual and Mixed 3. Possible and Impossible 4. Positive and Negative 1 APS  5. Divisible and Indivisible i. Suspensive – happening of condition gives rise to obligation; also called as condition antecedent or condition precedent. Effects: 1. effectivity is retroactive 2. no retroactivity with reference to fruits or interest & prescription 3. creditor may preserve rights 4. debtor – recovery of payment by mistake or even w/o mistake ii. Resolutory – happening of condition extinguishes the obligation, referred to as condition subsequent Effects: 1. no retroactive effect 2. obligation extinguished 3. restore to each other what was received plus interest/fruits iii. Potestative – dependent on sole will of a party; if on part of debtor & suspensive – the obligation is void. Art. 1182 Even if the condition is fulfilled, obligation is not demandable.; eg. Debtor will give creditor P10000 if debtor goes to US If potestative on the part of the creditor, obligations is valid whether condition is suspensive or resolutory- eg. Debtor is to give Creditor P10000 if creditor goes to US iv. Casual – dependent upon chance or hazard, or upon the will of a third person eg. Ill give you P1000 if I will win first prize in the lotto which I bet today v. Mixed – dependent partly upon chance and upon the will of one of the parties, or upon the will of a third person. Eg. I will give you P1million if you marry A. vi. With term - Positive – extinguished if time expires or indubitable of condition to happen Negative – effective from moment of time elapsed or evident it can't happen vii. Possible and Impossible Possible- capable of being fulfilled in its nature and by law. Impossible- incapable of being fulfilled by its nature and due to operation of law. 2 APS  (1) To do - both the condition and the obligation are void (2) Not to do –disregard the condition, the obligation is still valid; Condition not to do an impossible thing, deemed to have been not agreed upon. Art. 1183 Impossible condition – physically not feasible Illegal condition – prohibited by law, good custom, public policy and morals viii. Positive and Negative Positive – the condition that some event happen at a determinate time. Obligation is extinguished as soon as the time expires or it has become indubitable that the event will not take place or it has become indubitable that the event will not take place. Eg. Debtor to give creditor P1000 if Creditor will marry A on or before December 30, 2011. obligation is extinguished if creditor will not marry A on Dec 30, 2011. Negative – Condition that some event will not happen at a determinate time. Oblgiation be comes effective as soos as the time indicated has elapsed or it become evident tha event will not occur. Eg. Ill give you 10000 if you have not yet married A as of Dec 30 2011. ix Divisible and Indivisible Divisible –capable of partial performance, eg. A will give B 1000 if B will finish his law course and P10,000 if B pass the bar. Indivisible – incapable of partial performance, eg. A will give P1million to B if B finish his law course and also top the bar. Rules on loss, impairment, improvement of the subject matter pending the happening of suspensive condition/ term (Art. 1189) Liability in Liability in case of Improvement case of Loss/ Impairment w/ debtor’s fault Indemnity & specific performance, rescission & damages or at expense of damages If it improved at the expense of the debtor, obligor/ he shall have no other right than that granted usufructuary to the usufructuary. (art 1189) w/o debtor’s fault Creditor to bear damages or not at expense of Extinguished Creditor gets it obligor 3 APS REQUISITES FOR THE AFOREMENTIONED RULE: 1. There is a suspensive condition 2. There is an obligation to deliver a determinate thing 3. There is loss, deterioration or improvement before the happening of the condition OBLIGATION WITH A PERIOD – future & certain, past & uncertain, payable when able When stipulation says “payable when able “ – it is with a period, Remedy: a) agreement among parties b) court shall fix period of payment when parties unable to agree Kinds: a. Resolutory ( in diem ) – takes effect at once but terminate upon arrival of the day certain; Day certain – that which must necessarily come, although it may not be known when b. Suspensive ( ex die ) – takes effect on the day stipulated WHEN COURTS MAY FIX PERIOD: a) art 1197 b) art 1197, 2nd paragraph c) art 1191, 3rd paragraph d) art 1687, 2nd, 3rd, 4th sentence e) art 1180 WHEN DEBTOR LOSES RIGHT TO PERIOD: a. insolvency of debtor, unless security provided b. did not deliver security c. impaired security- thru fault or fortuitous event 4 APS  d. violate undertaking in consideration of extension of period e. attempts to abscond (4). Facultative – only one prestation has been agreed upon but another may be given in substitution Effect of loss or deterioration thru negligence, delay or fraud of obligor: a) of thing intended as substitute - no liability b) of the substitute after substitution is made – with liability (5). Alternative – bound by different prestations but only one is due Right of choice: General rule: right of choice belongs to debtor a. the choice is with debtor (1) If only 1 is left either because of fortuitous events or due to debtor's acts, perform what is left. The effect is that the debtor loses the right of choice (2) if the choice is limited because of the creditor's acts, the debtor has the right of resolution and damages (3) if all are lost due to debtor, the creditor is entitled to damages (4) if some are lost, the debtor can choose from the remaining b. the choice is with creditor (1) if one or some are lost due to fortuitous event, the creditor chooses the remainder (2) if one or some is lost because of the fault of debtor, the creditor may choose either the remainder or the value of any which disappeared, and damages in either case (3) if all is lost due to the debtor's fault, the creditor may choose the value of any if some is lost due to debtor's fault, the creditor chooses the remainder (4) if all is lost due to fortuitous event, obligation is extinguished (5) if all is lost due to creditor's fault, the obligation is extinguished 5 APS  Requisites for making the choice: a) Made properly so that creditor or his agent will actually know b) Made with full knowledge that a selection is indeed being made c) Made voluntarily and freely d) Made in due time – before or upon maturity e) Made to all proper persons f) Made w/o conditions unless agreed by the creditor g) May be waived, expressly or impliedly DISTINCTIONS BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS ALTERNATIVE FACULTATIVE a) Various things are due but the a) Only one thing is due but a substitute may be giving principally of one is given to render payment/fulfillment easy sufficient b) If one of prestations is illegal, b) If principal obligations is void and there is no others may be valid but obligation necessity of giving the substitute; nullity of P remains carries with it nullity of S c) If it is impossible to give all except c) If it is impossible to give the principal, the one, the last one must still be given substitute does not have to be given; if it is impossible to give the substitute, the principal must still be given d) Right to choose may be given either d) The right of choice is given only to the debtor to debtor or creditor (6). Joint – presumption when 2 or more creditors or 2 or more debtors concur in one and the same obligation Effects: a. Demand on one produces delay only with respect to the debt 6 APS  b. Interruption in payment by one does not benefit or prejudice the other c. Vices of one debtor to creditor has no effect on the others d. Insolvency of one debtor does not affect other debtors (7). Solidary – must be expressed in stipulation or provided by law or by nature of obligation a. Active – on the part of creditor or obligee Effects: 1. Death of 1 solidary creditor transmits share to heirs (but collectively) 2. Each creditor represents the other in the act of recovery of payment 3. Credit is divided equally between creditors as among themselves 4. Debtor may pay any of the solidary creditors b. Passive – on the part of debtors or obligors Effects: 1. Each debtor may be requested to pay whole obligation with right to recover from co-debtors 2. Interruption of prescription to one creditor affects all 3. Interest from delay on 1 debtor is borne by all c. Mixed – on the part of the obligors and obligees, or the part of the debtors and the creditors d. Conventional – agreed upon by the parties e. Legal – imposed by law Instances where law imposes solidary obligation: 1. obligations arising from tort 2. obligations arising from quasi-contracts 3. legal provisions regarding obligation of devisees and legatees 7 APS  4. liability of principals, accomplices, and accessories of a felony 5. bailees in commodatum Effects: a. payment made before debt is due, no interest can be charged, otherwise – interest can be charged b. insolvency of one – others are liable for share pro-rata c. if different terms & conditions – collect only what is due, later on collect from any d. no reimbursement if payment is made after prescription or became illegal d. remission made after payment is made – co-debtor still entitled to reimbursement e. effect of insolvency or death of co-debtor – still liable for whole amount f. fault of any debtor – every one is responsible – price, damage & interest g. complete/ personal defense – total or partial ( up to amount of share only ) if not personal to him Effect of loss or impossibility of the prestation: a. if without fault – no liability b. if with fault – there is liability (also for damage and interest) c. loss due to fortuitous event after default – there is liability (because of default) (8). Divisible – obligation that is capable of partial performance a. execution of certain no of days work b. expressed by metrical units c. nature of obligation – susceptible of partial fulfillment (9). Indivisible – one not capable of partial performance a. to give definite things 8 APS  b. not susceptible of partial performance c. provided by law d. intention of parties (10). With penal clause - an accessory undertaking to assume greater liability in case of breach; CHARACTERISTICS OF PENAL CLAUSES 1. Subsidiary - As a general rule, only penalty can be demanded, principal cannot be demanded, except: Penalty is joint or cumulative 2. Exclusive - takes place of damage, damage can only be demanded in the ff. cases: a. Stipulation – granting right b. refusal to pay penalty c. with dolo ( not of creditor ) Causes for reduction of penalty: a. partial/irregular performance b. penalty provided is iniquitous/unconscionable Art 1184 The condition that some event will happen at a determinate time shall extinguish the obligation as soon as the time expires or if it has become indubitable that the event will not take place. If the period is not fixed in the contract, the court, considering the parties’ intentions, should determine what period was really intended. Art 1185 The condition that some event will not happen at a determinate time shall ender the obligation effective from the moment the time indicated has elapsed, or if it has become evident that the event cannot occur. 9 APS  If no time has been fixed, the condition shall be deemed fulfilled at such time as may have been contemplated, bearing in mind the nature of the obligation. This article refers to negative conditions. Art 1186 The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment (Doctrine of Constructive Fulfillment) This Article deals with Constructive or Presumes Fulfillment. Reason for the article: One must not profit by his own fault. Requisites: a. Voluntarily made-intent to prevent must be present b. Actually prevents-intention without prevention or prevention without intention is not sufficient Art 1187 The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. Art 1188 The creditor may, before the fulfillment of the condition, bring the appropriate actions fro the preservation of his rights. The debtor may recover what during the same time he has paid by mistake in case of suspensive condition. 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: a. If the thing is lost without the fault of the debtor, the obligation shall be extinguished 10 APS  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 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 from 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 usufractuary. Effects of Partial Loss-It may be partial loss: a. That would amount to a loss important enough to be considered a complete loss (this will be determined by the courts) b. That would merely be considered a deterioration of the thing, in which case the rules on deterioration should apply Art 1190 When the condition have for their purpose the extinguishments of an obligation to give, the parties, upon fulfillment of said conditions, shall return to each other what they have received. Effects When Resolutory Condition is Fulfilled: a. The obligation is extinguished b. Because the obligation has been extinguished and considered to have had no effect, the parties should restore to each other want they have received c. Aside from the actual things received, the fruits of the interests thereon should also be returned after deducting of course the expenses made for their production, gathering and preservation d. The rule on Art 1189 will apply to whoever has the duty to return in case of the loss, deterioration or improvement of the thing e. The courts are given power to determine the retroactivity of the fulfillment of resolutory conditions. Art 1191 The power to rescind obligations is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him. 11 APS  The injured party may choose between the fulfillment if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. To rescind=to cancel/revoke Rescission may be judicial or extra-judicial (but best to be judicial) Effect of Rescission-mutual restitution This article speaks of reciprocal obligations Characteristics of the Right to Rescind of Resolve a. It only exists in reciprocal obligations b. It can be demandable only if the plaintiff is ready, will and able to comply with his own obligation, and the other is not The Right to Rescind is not Absolute a. trivial causes for slight breaches will not case rescission b. If there be a just cause for fixing the period within which the debtor can comply, the court will not decree rescission c. If e property is now in the hands of an innocent 3rd party who has lawful possession of the same Judicial approval for rescission is needed when there has already been delivery of the object (unless there is a voluntary returning) Judicial approval is not needed when there has been no delivery yet Choice by the Injured Party a. Fulfillment or specific performance with damages or b. Rescission plus damages Art 1192 In case both parties have committed a breach of the obligation. The liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. Breach of the second infractor provides mitigating effect to the liability of the first infractor because of this, the courts shall temper/regulate/lessen the liability of the first infractor. 12 APS  Section 2 – Obligations with a Period Art 1193 Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. Obligations with resolutory period take the effect at once, but terminate upon arrival of the day certain. A day certain is understood to be that which must necessarily some, 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. Period ids a certain length of time which determines the effectively or the extinguishment of the obligation (it must surely come) Different Kinds of Periods or Terms a. Definite-exact date or time is known or given b. Indefinite-something will surely happen but the date is unknown c. Legal-period granted under the provision of the law d. Conventional or Voluntary-period agreed upon or stipulated by the parties e. Judicial-period is fixed by the courts for the performance of an obligation or for its termination f. Ex Die- a period with suspensive effect- the obligation begins upon the arrival of the period g. In Diem-a period with a resolutory effect- the obligation terminates upon the arrival of the period Requisites for a Valid Period or Term a. It must refer to the future b. It must be certain, but can be extended c. It must be physically or legally impossible, otherwise the obligation is void. Art 1194 In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in Art 1189 shall be observed. 13 APS Art 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 fruits and interests. Art 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. General Rule: Term is for the benefit of the debtor or creditor. Meaning, the debtor cannot prematurely pay and the creditor cannot demand prematurely. This Article applies only to a contract with a period they fixed themselves. Art 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. Art 1198 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 guarantees or securities which he has promised c. When by his own acts he has impaired said guaranties and 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 APS  The debtor shall lose every right to make use of the period-it means that the term is extinguished and the creditor can demand fulfillment at once. Art 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. Art 1200 The right of choice belongs to the debtor, unless if as been expressly granted to the creditor. The debtor shall have no right to choose from those prestations which are impossible, unlawful, or which could not have been the object of the obligation. General Rule-In the absence of any stipulations, the right if choice belongs to the debtor. Limitation on the Debtor’s Choice- the debtor shall have no right to choose prestations which are: a. Impossible b. Unlawful c. Which could not have been the object of the obligation Art 1201 The choice shall produce no effect except from the time it has been communicated. The choice may be communicated orally or in writing, expressly or impliedly. Once notice has been made that a choice has been done, the obligation becomes a simple obligation to do or to deliver the object selected. An election once made is binding on the person who makes it, and he will not therefore be permitted to renounce his choice and take an alternative which was first open to him. 15 APS Requisites for Making the Choice: a. Made properly so that the creditor or his agent will actually know b. Made with full knowledge that a selection is indeed being made c. Made voluntarily and freely d. Made in due time-that is before or upon maturity e. Made to all the proper persons f. Made without conditions unless agreed to by the creditor g. May be waived expressly or impliedly Art 1202 The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable. Art 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. The debtor may: a. Rescind the obligation plus collect damages b. Perform other prestation(s) Observe that the contract is not automatically rescinded. Art 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 vale of the last thing which disappeared, or that of the services which last become impossible. Art 1205 When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day the selection has been communicated to the debtor. Until then the responsibility of the debtor shall be governed by the following rules: 16 APS  a. 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 b. If the lose 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 c. If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any of them, also with indemnity for damages. Art 1206 When only one prestation has been agreed upon the obligor may render another in substitution, the obligation is called facultative. Facultative Obligation- one where only one prestation has been agreed upon but the obligor may render another in substitution. 17 APS  Section 4 – Joint and Solidary Obligation Art 1207 Joint Obligations- each obligor answers only for a part of the whole liability and to each obligee belongs only a part of the correlative (equivalent) rights Solidary / Joint and Several Obligations- the relationship between the active and the passive subjects is so close that each of the former or of the latter may demand the fulfillment of or must comply to the whole obligation. General Rule: When there are two or more debtors or two or more creditors the obligation is joint. Exceptions: a. When there is a stipulation to the contract that the obligation is solidary b. When the object of the obligation requires liability to be solidary c. When the law declares the obligation to be solidary Art 1208 Liability of Partners: a. If it arises out of contracts the liability is joint or pro-rata b. If it arises out of a crime or quasi-delict, the liability is solidary together with the partnership Art 1209 If the division is impossible, the rights of the creditors may be prejudiced only by their collective acts, and the debt can be enforced only by proceeding against all the debtors. Characteristics a. The obligation is joint but since the object is indivisible, the creditor may proceed against all the joint debtors for compliance is possible only if all the joint debtors would act together b. Demand must therefore be made on all the joint debtors if anyone of the debtors does not comply with his monetary obligation for damages c. If any of the debtors shall be insolvent, the others shall not be liable for his share d. If there be joint creditors, delivery must be made to all, and not merely to one, unless that one be specifically authorized by others e. Each joint creditor is allowed to renounce his proportionate credit 18 APS Art 1210 The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility. Indivisibility- refers to the subject matter Solidarity- refers to the tie between the parties Art 1211 Different Ways by Which Two Debtors may be Bound: a. Uniform-when the debtors are bound by the same stipulations and clauses b. Otherwise-where the obligor, though liable for the same prestation are nevertheless not subject to the same secondary stipulations and clauses Art 1213 – A solidary creditor cannot assign his rights without the consent of the others. Art 1214 – The debtor may pay any one of the creditors: but if any demand has been made by any one of them, payment must be made to him. Art 1215 The creditor who may have expected any of these acts, as well as he who has collects the debt, shall be liable to the others for the share in the obligation corresponding to them. Novation- the modification of an Obligation by changing its object or principal conditions, or by substituting the person of the debtor or by subrogating a third person in the rights of the creditor Compensation- that which takes place when 2 persons in their own right are creditors and debtors of each other. Compensation may be Total or Partial depending upon the amount involved Confusion or Merger- That which takes place when the characters of the creditor and debtor are merged in the same person Remission or Waiver- that act of liberality whereby the creditor condones the obligation of the debtor, that where the creditor tells the debtor to forget the whole thing Payment- one of the ways by which the obligation is extinguished and consists in the delivery of the thing or the rendition of the service which is the object of the obligation. 19 APS Art 1218 – Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors if such payment is made after the obligation has prescribed or become illegal. Art 1220 – The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle him from reimbursement from his co-debtors. Art 1221 If the thing has been lost or the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished. If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor. A solidary obligation implies mutual agency and mutual confidence. Art 1222 A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. With respect to those which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible. Kinds of Defense a. Those derived from the nature of the obligation - Lack of consideration or cause - Absolute simulation-as when the contract is totally fictitious - Illegal consideration - Extinguishment of the obligation-as when the whole debt has been paid, remitted, etc. - Non-fulfillment of the suspensive condition - Statute of frauds - When all the debtors were incapacitated to give consent-such as unemancipated minors, insane, etc. - When there are Vices of Consent/Vitiated Consent on the part of all the debtors b. Those personal to the debtor sued c. Those personal to the other 20 APS  Section 5 – Divisible and Indivisible Obligations Art 1223 The divisibility of the indivisibility of the things that are the object of obligations in which there is only one debtor and only one creditor does not alter or modify the provisions of Chapter 2 of this Title. Divisible Obligations-one capable of partial performance Indivisible Obligations- one not capable of partial performance Classes of Kinds of Indivisibility a. Conventional- by common agreement b. Natural or Absolute- because of the nature of the undertaking c. Legal- if so provided by law Kinds of Division a. Quantitative- depends on quantity b. Qualitative- depends on quality, irrespective of quantity c. Intellectual or Moral- one that exists only in the mind, and nor in physical reality Art 1224 A joint indivisible obligation give 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 nor 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. Effect of Non-Compliance: the obligation is converted to a monetary one for indemnity. Art 1225 For the purpose of the preceding articles, obligations to give definite and those which are not susceptible of partial performance shall be deemed to be indivisible. In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each particular case. Obligations that are Deemed Indivisible: a. Obligations to give definite things b. Those which are not susceptible of partial performance c. Even if the thing is physically divisible, it may be indivisible if so provided by law 21 APS  d. Even if the thing is physically divisible, it may be indivisible if such was the intention of the parties concerned Obligations that are Deemed Divisible a. When the object of the obligation is the execution of a certain number of days of work b. When the object of the obligation is the accomplishment of work by metric units c. When the purpose of the obligation is to pay a certain amount in installment d. When the object of the obligation is the accomplishment of work susceptible of partial performance The character of the prestation or obligation will determine the divisibility or indivisibility of obligation not to do. 22 APS  Section 6 – Obligations with a Penal Clause Art 1226 In obligation with a penal clause, the penalty shall substitute the indemnity fro damages and the payment of interest in case of non-compliance, 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. Principal Purpose of the Penal Clause- to insure the performance of the obligation and also to substitute for damages and the payment of interest in case of non-compliance. Exceptions to the General Rule: a. When there is express stipulation to the effect that damages or interest may still be recovered, despite the presence of the penalty clause b. When the debtor refuses to pay the penalty imposed in the obligation c. When the debtor is guilty of fraud in the fulfillment of the obligation Art 1227 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. 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 to him. However, if after the creditor has decided to require the fulfillment of the obligation, the performance thereof should become impossible without his fault, the penalty may be enforced. IF the debtor can just pay the penalty, the fulfillment of the obligation will be considered an alternative one. Art 1228 – Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. Art 1229 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. When Penalty may be Reduced by Court; a. When the obligation has been partly complied with by the debtor b. When the obligation has been irregularly complied with by the debtor c. When the penalty is iniquitous or unconscionable, even if there has been no performance at all 23 APS It is thus clear that the penal clause cannot be enforced if a. The breach is the fault of the creditor b. A fortuitous event intervened, unless the debtor expressly agreed on his liability in case of fortuitous events c. The debtor is not yet in default Art 1230 – 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. 24 APS