Different Kinds of Obligations

Arts. 1179 - 1230

Pure and Conditional

Obligations with a Period

Alternative


Joint and Solidary Obligations

What’s left are Divisible and Indivisible Obligations


A divisible obligation is one the object of which, in its
delivery or performance, is capable of partial
fulfillment.


An indivisible obligation is one the object of which in
its delivery or performance, is not capable of partial
fulfillment
Divisible and Indivisible Obligations


Test for distinction

In determining whether an obligation is divisible or
not, the controlling circumstance is not the possibility
of impossibility of partial prestation but the purpose
of the obligation or the intention of the parties.

Hence, even though the object or service may be
physically divisible, an obligation is indivisible if so
provided by law or intended by the parties.
Divisible and Indivisible Obligations


Test for distinction

However, if the object is not physically divisible or the
service is not susceptible of partial performance, the
obligation is always indivisible, the intention of the
parties to the contrary nothwithstanding. This rule is
absolute.
Divisible and Indivisible Obligations


“Intention of the Parties”

Dragona agreed to pay Curacha P10,000 in four equal
installments. The obligation of Dragona is divisible
because it is capable of partial performance. But if the
agreement is that Dragona will pay Curacha on a certain
date the full amount of P10,000, the obligation is
indivisible although money is physically divisible because
the intention of the parties is that the obligation must be
fulfilled at one time and as a whole (not partially).
Divisible and Indivisible Obligations


The divisibility of an obligation should not, therefore, be
confused with the divisibility of the thing which is the
object thereof.
Divisible and Indivisible Obligations

“Purpose of the Obligation”

Sharon obliged herself to deliver to Ferdinand a specific car on May
12. This obligation is indivisible because it is not capable of partial
performance. The car must be delivered at one time and as a whole.
Divisible and Indivisible Obligations

“Purpose of the Obligation”

Suppose the agreement is that Sharon will deliver one-half of
the car on May 12 and the other half on July 21. The obligation
is still indivisible and Sharon must deliver the whole car on
May 12 or July 21. A definite thing like a car, cannot be severed
into parts without altering its essence or destroying its value.
It is an essential condition of the fitness of a thing to be
divisible that it is possible, by uniting the diverse portions
thereof, to reconstruct it as it existed before its division.
 Divisible and Indivisible Obligations

Effect of non-compliance by a debtor in a joint indivisible
obligation

If any one of the debtor does not comply with his undertaking
in a joint indivisible obligation, the obligation is converted into
one for damages (i.e. to pay money). The creditor cannot ask
for specific performance or rescission because there is no
cause of action against the other debtors who are willing to
fulfill their promises.
Obligation with Penal Clause
 Obligations with a Penal Clause

Quick definition:

Principal obligation is one which can stand by itself and does not
depend for its validity and existence upon another obligation.

Accessory obligation is one which is attached to a principal
obligation and, therefore, cannot stand alone.

An obligation with a penal clause is one which contains an
accessory undertaking to pay a previously stipulated indemnity in
case of breach of the principal prestation, intended primarily to
induce its fulfillment

A penal clause is an accessory undertaking attached to an
obligation to assume greater liability in case of breach i.e. the
obligation is not fulfilled, or is partly or irregularly complied with.
 Obligations with a Penal Clause


Penalty substitutes for damages and interests

As a rule, it is the Courts which decide the amount of damages
that a party may recover due to breach of a promise or non-
fulfilment of obligation. Exception to the rule is when the
parties expressly stipulates in their agreement through a
penal clause the amount of liquidated damages that a party
may incur in case of non-performance.
 Obligations with a Penal Clause

Penalty substitutes for damages and interests

As a general rule, in an obligation with a penal clause, the penalty
takes the place of the indemnity for damages and the payment of
interests in case of non-compliance.

Proof of actual damages suffered by the creditor is not necessary in
order that the penalty may be enforced. The fact of non-
performance of the other suffice to trigger the injured party’s right
to demand for the indemnity stipulated in the penal clause.

In other words, the penal clause quantifies the amount of damages
i.e. in P100,000 that a party may incur in case of breach of its
promise or non-fulfilment of its obligation.
Obligations with a Penal Clause

Xander Port promised to construct a house for Yeye.
The contract carried a penal clause that in case of
non-compliance, Xander Port would have to pay a
penalty of P100,000.
 Obligations with a Penal Clause


Xander Port did not construct the house and, as a
consequence, Yeye suffered damage in the amount of
P40,000. In this case, the penalty of P100,000 shall be paid,
even if Xander Port proves that the damage suffered by Yeye is
only P40,000.
 Obligations with a Penal Clause


The penalty substitutes the indemnity for the damage of
P40,000, unless there is a stipulation to the contrary, in which
case Y may also recover the damages proved by him. If Xander
Port refuses to pay the penalty, Yeye may recover legal
interest thereon, the interest representing new damages
brought about by the non-payment of the penalty.
 Obligations with a Penal Clause


If Xander Port is guilty of fraud (not mere fault) in the
fulfillment of his obligation, he is also liable for the damages
caused thereby in conformity with Article 1171. Proof of the
fraud and the existence and amount of damages is incumbent
upon Yeye. But Yeye need not prove fraud to recover the
penalty.
 YOUR TURN!

Give an example of a divisible obligation.

Encircle the debtor, underline the object and box the
creditor.

In your example, what makes the obligation divisible?


Give an example of an indivisible obligation.

Encircle the debtor, underline the object and box the
creditor.

In your example, what makes the obligation indivisible?
 YOUR TURN!

Give an example of a divisible obligation.

Encircle the debtor, underline the object and box the
creditor.

In your example, what makes the obligation divisible?


Give an example of an indivisible obligation.

Encircle the debtor, underline the object and box the
creditor.

In your example, what makes the obligation indivisible?
 YOUR TURN!


Give an example of an obligation with a penal clause.

What is/are the advantage/s of including penal clause/s in
a contract?


-End of Module-
 Reference

The Law on Obligations and Contracts by Hector de Leon, 2014