OBLICON17 February 2011

Ryan Jeremiah D. Quan. J.D.

Facultative Obligations

Only one prestation has been agreed upon but anoher may be given in substitution

Effect of Loss or Deterioration thru Negligence, Delay, or Fraud of Obligor:

Of the thing intended as substitute – NO LIABILITY

Of the substitute after the substitution is made – LIABILITY EXISTS

Alternative Obligations

There are different prestations but only one is due

Right of Choice:

GR: right choice belongs to the debtor

Exceptions:Expressly granted to creditor

Expressly granted to a third person

Alternative Obligations

Limitations on the Right of Choice of the Debtor

Debtor shall not have the right to choose the prestations which are:

Impossible

Unlawful

Those which could not have been the object of the obligation

Alternative Obligations

Converted to Simple Obligation

When the person who has the right of choice has communicated his choice

Only one is practicable

Alternative ObligationsEffects of Loss of Objects

A. Right of Choice Belongs to Debtor

Fortuitous event – debtor is not liable

1 or more but not all of the things are lost or one or some but not all of the prestations cannot be performed because of a fortuitous event or due to the debtor’s fault – debtor not liable for damages because he can still comply

All, except 1, are lost – perform /deliver the remaining

All are lost due to debtor’s fault – debtor liable for value of the last thing or service which became impossible

Alternative ObligationsRequisites of Making the Choice

Made properly so that creditor or his agent will actually know

Made with full knowledge that a selection is indeed being made

Made voluntarily and freely

Made in due time – before or upon maturity

Made to all proper persons

Made without conditions unless agreed by the creditor

May be waived, expressly or impliedly

Alternative v. Facultative

Alternative Facultative

Various things are due but the giving principally of one is sufficient

Only 1 thing is due but a substitute may be given to render payment / fulfillment easy

If 1 of the prestations is illegal, others may be valid, the obligation exists

If principal obligations is void and there is no necessity of giving a susbstitute, nullity of the principal carries with it the nullity of the substitue

If it is impossible to give all except one, the last one must be given

If impossible to give the principal, the substitute does not have to be given; if it is impossible to give the substitute, the principal must still be given

Right to choose may be given either to the debtor or creditor

Right of choice is only given to the debtor

Joint & Solidary Obligations

Joint – presumption when 2 or more creditors or 2 or more debtors concur

Exceptions

Expressly stated that there is solidarity

Law requires solidarity

Nature of obligations requires solidarity

By virtue of a court order

Joint & Solidary Obligations

Effects of Joint Liability

Demand on one produces delay only with respect of the debt

Interruption in payment by one does not benefit or prejudice the other

Vices of one debtor to creditor has not effect on the others

Insolvency of one debtor does not affect other debtors

Joint Divisible Obligations

Each creditor can demand for the payment his proportionate share of the credit, while each debtor can be held liable only for the payment of his appropriate share of the debt

A joint creditor cannot act in representation of the other creditors while a joint debtor cannot be compelled to answer for the acts or liability of the other debtors

Joint Indivisible Obligations

If there are 2 or more debtors, the fulfillment or compliance with the obligation requires the concurrence of all debtors, although each for his own share. The obligation can be enforced only be proceeding against all of the debtors.

If there are 2 or more creditors, the concurrence or collective act of all the creditors, although each for his own share, is also necessary for the enforcement of the obligation.

Effect of Breach

If one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfilled or performed.

Consequently, it is converted into one of indemnity for damages. Innocent joint debtor shall not contribute to the indemnity beyond their corresponding share of the obligation.

Solidary Obligation

Must be expressed in stipulation or provided by law or by the nature of the obligation

Solidary Obligation

ACTIVE SOLIDARITY – on the part of the obligee

Effects:

Death of 1 of the solidary creditors transmits share to heirs (but collectively)

Each creditor represents the other in the act of recovery of payment

Credit is divided equally between creditors as among themselves

Debtor may pay any of the solidary creditors

Solidary Obligation

PASSIVE SOLIDARITY – on the part of the obligor

Effects:

Each debtor may be requested to pay the whole obligation with right to recover from co-debtors

Interruption of prescription to one of the creditor affects all

Interest from delay on 1 debtor is borne by all

Solidary Obligation

MIXED SOLIDARITY – on the part of the obligors and obligees

CONVENTIONAL SOLIDARITY – agreed upon by the parties

LEGAL SOLIDARITY – imposed by lawExamples:

Obligations arising from tort

Obligations arising from quasi-contract

Liability of principals, accomplices, and accessories in a felony

Solidary Obligation

Effect of Loss or Impossibility of the Prestation

If without fault – no liability

If with fault – there is liability (also for damage and interest)

Loss due to fortuitous event after default – there is liability

Divisible Obligations

Obligations capable of partial performance

Execution of certain number of days work

Expressed by metrical units

Nature of obligation – susceptible of partial performance

Indivisible Obligations

Not capable of partial performance

To give definite things

Not susceptible of partial performance

• Provided by law

• Intention of parties

Divisible & Indivisible

• Divisibility or indivisibility of the obligation refers to the performance of the prestation and not to the thing which is the object thereof

• Intention of the parties should be taken into account to determine whether the obligation is divisible or not

Indivisibility & SolidarityINDIVISIBILITY SOLIDARITY

Refers to the prestation which constitutes the object of the obligation

Refers to the legal tie and consequently to the subjects or parties of the obligation

Plurality of subjects is not required

Plurality of subjects is indispensible

In case of breach, obligation is converted into 1 of indemnity for damages because of breach. Indivisibility of the obligation is terminated.

When there is liability on the part of the debtors because of the breach, the solidarity among the debtors remain.

Obligations with a Penal Clause

• One to which an accessory undertaking is attached for the purpose of insuring its performance by virtue of which the obligor is bound to pay a stipulated indemnity or perform a stipulated prestation in case of breach

Obligations with a Penal Clause

Purpose of Penalty

• Funcion coercitiva o de garantia – to insure the performance of the obligation

• Funcion liquidatoria – to liquidate the amount of damages to be awarded to the injured party in case of breach of the principal obligation (compensatory)

• Funcion estrictamente penal – in certain exceptional cases, to punish the obligor in case of breach of the principal obligation (punitive)

Obligations with a Penal Clause

Characteristics of Penal Clauses

• Subsidiary– GR: only penalty can be demanded, principal

cannot be demanded– E: penalty is joint or cumulative

• Exclusive – takes place of damage, damage can only be demanded in the ff. cases:– Stipulation – granting right– Refusal to pay penalty– With dolo (not of creditor)

Obligations with a Penal Clause

Penalty as Substitute for Damages

• GR: the penalty fixed by the parties is or substitute for damages in case of breach

• Exceptions:– When there is a stipulation to the contrary– When the debtor is sued for refusal to pay

agreed penalty– When debtor is guilty of fraud

Obligations with a Penal Clause

Double Functions of Penalty

• To provide fro liquidated damages

• To strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach

Maraming salamat!