SECTION 1.
— Pure and Conditional suspended until the happening of a future
Obligations
Meaning of pure obligation.
A pure obligation is one which is not subject to any
condition and no specific date is mentioned for its
fulfillment and is, therefore, immediately
demandable. (without condition)
Meaning of conditional obligation.
A conditional obligation is one whose
consequences are subject in one way or another to
the fulfillment of a condition. (with condition)
Meaning of condition.
Condition is a future and uncertain event, upon the
happening of which, the effectivity or
extinguishment of an obligation (or rights) subject
to it depends.
Characteristics of a condition
(1) Future and uncertain. — In order to constitute
an event a condition, it is not enough that it be
future; it must also be uncertain.
(2) Past but unknown. — A condition may refer to a
past event unknown to the parties. (infra.) If it refers
to a future event, both its very occurrence and the
time of such occurrence must be uncertain;
otherwise, it is not a condition.
A condition must not be impossible.
Explanation:
Future and uncertain: A condition is something
that hasn't happened yet, and there's some doubt or
uncertainty about whether it will happen. For
example, if I say, "I will give you a cookie if it rains
tomorrow," the condition is the rain, which is
something that hasn't happened yet and might not
happen.
Past but unknown: Sometimes a condition can
refer to something that has already happened, but
the parties involved don't know about it. For
instance, if I promise to pay you if a certain
document is found, and neither of us knows if the
document exists or not, that's a condition based on a
past event that's unknown to us.
Not impossible: A condition must be something
that could potentially happen. It can't be something
that's completely impossible. For example, if I say,
"I'll give you a unicorn if you finish your
homework," that's not a valid condition because
unicorns don't exist.
Two principal kinds of condition.
(1) Suspensive condition (condition precedent
or condition antecedent) or one the
fulfillment of which will give rise to an
obligation (or right). In other words, the
demand ability of the obligation is
and uncertain event which constitutes the
condition. (Obligation and rights begin
when the condition is fulfill).
(2) Resolutory condition (condition
subsequent) or one the fulfillment of which
will extinguish an obligation (or right)
already existing. (Obligation and rights end
when the condition is fulfill).
SECTION 2. — Obligations with a Period.
Meaning of obligation with a period.
An obligation with a period is one whose
consequences are subjected in one way or another to
the expiration of said period or term. (means of
date).
Meaning of period or term.
A period is a future and certain event upon the
arrival of which the obligation (or right) subject to it
either arises or is terminated. It is a day certain
which must necessarily come (like the year 2005;
next Christmas), although it may not be known
when, like the death of a person.
Kinds of period or term.
(1) According to effect:
(a) Suspensive period (ex die). — The
obligation begins only from a day certain
upon the arrival of the period.
This means that the obligation (like a promise or
agreement) only starts or becomes effective on a specific
day. So, nothing happens until that day arrives. It's like
waiting for a deadline to begin working on something.
(b) Resolutory period (in diem). — The
obligation is valid up to a day certain and
terminates upon the arrival of the period.
With this type, the obligation is already in effect, but it
only lasts until a certain day. Once that day comes, the
obligation ends or is resolved. It's like having a contract
that's valid until a specific date, and after that date, it's
no longer valid.
(2) According to source:
(a) Legal period. — When it is provided for
by law;
(b) Conventional or voluntary period. —
When it is agreed to by the parties (Art.
1196.); and
(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; and
(b) Indefinite period. — When it is not fixed
or it is not known when it will come. Where
the period is not fixed but a period is
 intended, the courts are usually empowered
by law to fix the same.
SECTION 3. — Obligations with a Penal Clause
Meaning of obligation with a penal clause.
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.
This means you have a promise or duty to do something,
but there's an extra rule attached. If you don't fulfill your
promise properly, you agree to pay a penalty or fine.
Meaning of penal clause.
A penal clause is an accessory undertaking
attached to an obligation to assume greater liability
on the part of the obligor in case of breach of the
obligation, i.e., the obligation is not fulfilled, or is
partly or irregularly complied with.
It's like a rule within a promise or agreement. If you
don't keep your promise or if you mess up in some way,
you agree to pay an extra penalty or fine on top of fixing
the mistake. It's a way to encourage people to stick to
their promises.
Meaning of principal and accessory obligations.
(1) Principal obligation is one which can stand by
itself and does not depend for its validity and
existence upon another obligation.
This is the main promise or duty that can exist on its
own without needing anything else to support it. It's like
the main thing you agree to do.
(2) Accessory obligation is one which is attached
to a principal obligation and, therefore, cannot
stand alone.
This is like an extra promise or duty that's connected to
the main one. It can't exist by itself; it needs the main
obligation to make sense. It's like a side rule or duty
that goes along with the main promise.
SECTION 4. — Alternative and Facultative
Obligations
Meaning of alternative obligation.
An alternative obligation is one wherein various
prestations are due but the performance of one of
them is sufficiently determined by the choice which,
as a general rule, belongs to the debtor.
An alternative obligation means you owe different
things, but you only have to do one of them. You get to
choose which one to do. So, you have options, but you
only have to pick and do one thing.
Kinds of obligation according to object.
(1) Simple obligation. — one where there is only
one prestation, e.g., S obliged himself to deliver
to B a piano; S promised to repair the car of B.
This is when you have to do only one thing. For
example, if you promise to deliver a piano to someone or
fix their car, that's a simple obligation because there's
only one action involved.
(2) Compound obligation. — one where there are
two or more prestations. It may be.
This is when you have to do two or more things.
(a) Conjunctive obligation. — one where
there are several prestations and all of
them are due; or
You have to do all the things listed. For instance, if you
promise to deliver a piano and also tune it, you have to
do both.
(b) Distributive obligation. — one where
one of two or more of the prestations is
due. It may be alternative or facultative.
You have a choice between two or more things to do. It
could be either alternative, where you choose one
option, or facultative, where you can choose any or all
of the options. For example, if you promise to either
deliver a piano or a guitar, that's alternative. If you
promise to deliver either a piano or a guitar or both,
that's facultative.
Meaning of Facultative Obligation
A facultative obligation refers to only one
prestation agreed upon, but the obligor may render
another in substitution.
You have the option to choose any or all of the things to
do. So, if you promise to deliver either a piano or a
guitar or both, that's facultative.
SECTION 5. — Divisible and Indivisible
Obligations
Meaning of divisible and indivisible obligations.
(1) A divisible obligation is one the object of
which, in its delivery or performance, is
capable of partial fulfillment.
This is when you owe something that can be divided or
done partially. You can fulfill it bit by bit.
(2) An indivisible obligation is one the object of
which, in its delivery or performance, is not
capable of partial fulfillment.
This is when you owe something that can't be divided. It
has to be done or delivered as a whole; you can't do it
partway.
Kinds of division.
(1) Qualitative division or one based on quality,
not on number or quantity of the things that are
the object of the obligation.
This is when things are divided based on their quality
or characteristics, not by the number or amount. For
example, dividing items based on their type or features.
 (2) Quantitative division or one based on quantity
rather than on quality.
This is when things are divided based on their quantity
or amount, rather than their quality. For instance,
splitting items based on how many there are.
(3) Ideal or intellectual division or one which
exists only in the minds of the parties.
This type of division only exists in the minds of the
people involved. It's not about physically dividing things
but about conceptual or theoretical divisions.
Kinds of indivisibility.
(1) Legal indivisibility. — where a specific
provision of law declares as indivisible,
obligations which, by their nature, are
divisible;
This happens when the law says that something must be
treated as a single unit, even if it could technically be
divided. For example, even though something could be
divided, the law might insist that it's treated as a whole.
(2) Conventional indivisibility. — where the will
of the parties makes as indivisible, obligations
which, by their nature, are divisible (Ibid.);
and
This occurs when the people involved agree that
something should not be divided, even if it could be. It's
based on their decision rather than on the law.
(3) Natural indivisibility. — where the nature of
the object or prestation does not admit of
division, e.g., to give a particular car, to sing a
song, etc.
This is when the thing itself can't be divided because of
its nature. For instance, you can't split a specific car or
sing only a part of a song. It's inherently impossible to
divide these things.
SECTION 4. — Joint and Solidary
Obligations
Kinds of obligation according to the number of
parties.
(1) Individual obligation. — one where there is
only one obligor and one obligee; and
This is when there's only one person who owes
something (the obligor) and one person who is owed
something (the obligee).
(2) Collective obligation. — one where there are
two or more debtors and/or two or more
creditors. It may be joint or solidary.
This is when there are multiple people involved. It can
be:
Joint: Where each debtor is responsible for only their
share of the debt, and each creditor can only claim their
share of what's owed.
Solidary: Where each debtor is responsible for the
entire debt, and each creditor can demand the full
payment from any or all debtors.
In a collective obligation, there are two relations
involved: that between the creditor and the debtors
(or the creditors and the debtor, or the creditors and
the debtors) and that among the creditors and/or
debtors themselves.
In a collective obligation, there are two kinds of
relationships:
Between the creditor(s) and the debtor(s).
Among the creditors and/or debtors themselves.
Meaning of joint and solidary obligations.
(1) A Joint obligation is 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.
Everyone shares the responsibility. Each debtor owes a
part, and each creditor can only collect their part.
(2) A Solidary obligation is one where each one of
the debtors is bound to render, and/or each one
of the creditors has a right to demand entire
compliance with the prestation.
Everyone is fully responsible. Any debtor can be asked
to pay the whole debt, and any creditor can demand the
full payment from any debtor.
Kinds of solidarity.
(1) According to the parties bound:
(a) Passive solidarity or solidarity on the part of the
debtors, where anyone of them can be made liable
for the fulfillment of the entire obligation. Its
characteristics are plurality of debtors and unity of
prestation. It is in the nature of a mutual guaranty.
(b) Active solidarity or solidarity on the part of the
creditors, where anyone of them can demand the
fulfillment of the entire obligation. Its essential
feature is that of mutual representation among the
solidary creditors with powers to exercise the rights
of others in the same manner as their rights.
(c) Mixed solidarity or solidarity on the part of the
debtors and creditors, where each one of the debtors
is liable to render, and each one of the creditors has
a right to demand, entire compliance with the
obligation.
(2) According to source:
(a) Conventional solidarity or where solidarity is
agreed upon by the parties. If nothing is mentioned
in the contract relating to solidarity, the obligation is
only joint.
(b) Legal solidarity or where solidarity is imposed
by the law.
EXTINGUISHMENT OF OBLIGATIONS
ART. 1231. Obligations are extinguished:
(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of
creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations,
such as annulment, rescission, fulfillment of a
resolutory condition, and prescription, are
governed elsewhere in this Code. (1156a)
Causes of extinguishment of obligations.
In addition to those enumerated in Article 1231,
other causes are:
(1) Death of a party in case the obligation is a
personal one
(2) Mutual desistance or withdrawal
(3) Arrival of resolutory period
(4) Compromise
(5) Impossibility of fulfillment
(6) Happening of a fortuitous event.
Modes of extinguishment of obligations
classified.
Castan classifies the modes of extinguishing
obligations in the following manner:
(1) Voluntary:
(a) Performance:
1) Payment; and
2) Consignation.
(b) Substitution:
1) Dacion en pago (conveyance for
payment); and
2) Novation.
(c) By release agreement:
1) Agreement subsequent to the
constitution of the obligation:
a) Mutual waiver;
b) Unilateral waiver; and
c) Remission.
2) Agreement simultaneous to the
constitution of the obligation:
a) Resolutory condition; and
b) Extinctive period.
(2) Involuntary:
(a) By reason of the subject:
1) Confusion; and
2) Death of the contracting parties in
the cases where the obligations are
personal.
(b) By reason of the object:
1) Loss of the thing due or
impossibility of performance; and
(c) By failure to exercise (right of action):
1) Extinctive prescription.
SECTION 1. — Payment or Performance
ART. 1232. Payment means not only the delivery
of money but also the performance, in any other
manner, of an obligation. (n)
Meaning of payment.
In ordinary parlance, payment refers only to
the delivery of money. As a mode of extinguishing
an obligation, it has a much wider meaning.
Payment may consist of not only in the delivery of
money but also the giving of a thing (other than
money), the doing of an act, or not doing of an act.
When a debtor pays damages or penalty in lieu of
the
fulfillment of an obligation (see Art. 1226.), there is
also payment in the sense used in Article 1232.
In law, payment and performance are
synonymous.
Payment means more than just giving money to settle a
debt. It can also involve giving something else, doing
something, or not doing something. For instance, if you
owe someone money but instead do them a favor, that
counts as payment too. In law, payment and fulfilling an
obligation mean the same thing. So, when you pay
someone back or keep your promise, it's like saying
you've done what you were supposed to.
SUBSECTION 1. — Application of Payments
Meaning of application of payments.
Application of payments 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.
"Application of payments" means figuring out which
debt gets paid when you owe money for different things
to the same person or company. It's like saying which
specific thing you're paying for when you give them
money.
Requisites of application of payments.
The requisites are:
(1) There must be one debtor and one
creditor;
(2) There must be two or more debts;
(3) The debts must be of the same kind;
(4) The debts to which payment made by
the debtor has been applied must be due; and
(5) The payment made must not be suffi
cient to cover all the debts.
SUBSECTION 2. — Payment by Cession
Meaning of payment by cession.
Payment by cession is another special form
of payment. It is the assignment or abandonment of
all the properties of the debtor for the benefi t of his
creditors in order that the latter may sell the same
and apply the proceeds thereof to the satisfaction of
their credits.

"Payment by cession" is when a debtor gives up

everything they own to their creditors so the creditors
can sell it and get their money back. It's like saying, "I
can't pay you with money, but I'll give you everything I
own instead, so you can sell it and get your money
back."

Requisites of payment by cession.

They are:
(1) There must be two or more creditors;
(2) The debtor must be (partially) insolvent;
(3) The assignment must involve all the
properties of the debtor; and
(4) The cession must be accepted by the
creditors.

SUBSECTION 3. — Tender of Payment and

Consignation

Meaning of tender of payment and consignation.

(1) Tender of payment is the act, on the part

of the debtor, of offering to the creditor the thing or
amount due. The debtor must show that he has in
his possession the thing or money to be delivered at
the time of the offer. It is an act preparatory to
consignation, which is the principal, and from
which are derived the immediate consequences
which the
debtor desires or seeks to obtain.
When you offer what you owe to someone. You have to
show you actually have the money or thing you're
offering.

(3) Consignation is the act of depositing the thing

or amount due with the proper court when the
creditor does not desire, or refuses to accept
payment, or cannot receive it, after complying
with the formalities required by law. It is
always judicial and it generally requires a prior
tender of payment which is by its very nature
extrajudicial.
If the person you owe doesn't want to take the payment,
or can't, you can deposit what you owe with a court
instead. This is usually after you've tried to pay them
outside of court.