Obligation with a period – is a kind of obligation wherein its performance is subject to a term or period,

and can only be demandable when that period expires. Such period is 'a day certain' which must
necessarily come, although it may not be known when.

Term – a fixed or limited period for which something,

Period – a length or portion of time.

Differentiate term and condition

 condition is a clause the buyer needs to waive or fulfill by an agreed time in order for the sale to
be finalized, while a term is used to clarify what the buyer expects to be done or included with
the property.

Kinds of Obligations as to Liability

 Joint and Solidary Obligation – generally occur when two or more creditors or two or more
debtors in one and the same obligation.
 JointIndivisible– the prestation is divisible.
 Joint Indivisible – there are several debtors or creditors but the prestation is indivisible.
 Alternative Obligation – debtor is alternatively bound with various prestations that are due but
the performance of one of them is sufficient to extinguish the obligation.
 Facultative Obligation – debtor is bound to perform one prestation is due to deliver one thing
with a reserved right to choose another prestation or thing as substitute for the principal.

Obligations with Penal Clause –

Penalty Clause – a clause (as in a contract) that calls for a penalty to be paid or suffered by a party under
specified terms (as in the event of a breach) and that is usually unenforceable NOTE: A penalty clause
differs from a liquidated damages clause by not being tied to an estimate of possible actual damages.

Different kinds of Penalties

 penalty clause states that one contracting party is required to give something, usually money, to
the other party if he or she breaches the contract.

Modes of extinguishment/ Definition of terms

a. Payment is the trade of value from one party (such as a person or company) to another for goods,
or services, or to fulfill a legal obligation. Legal tender is a medium of payment recognized by a
legal system to be valid for meeting a financial obligation. Payment means not only the delivery
of money but also the performance, in any other manner, of an obligation.
b. Loss of the thing due an bligationn which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor, and before he has
incurred in delay. When by law or stipulation, the obligor is liable even for fortuitous events, the
loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The
same rule applies when the nature of the obligation requires the assumption of risk.
c. Condonation or remission of the debt is essentially gratuitous, and requires the acceptance by
the obligor. It may be made expressly or impliedly.
 d. Confusion or merger of rights of the creditor and debtor the obligation is extinguished from the
time the characters of creditor and debtor are merged in the same person.
e. Compensation shall take place when two persons, in their own right, are creditors and debtors of
each other.
f. Novation Obligations may classified by:
Changing their object or principal conditions;
 Substituting the person of the debtor;
 Subrogating a third person in the rights of the creditor.

Kinds of Novation

I. As to their essence
A. Objective or Real novation – effected by changing the object or principal conditions of the
obligation.
B. Subjective or personal novation – effected by:
1. Substituting the person of the debtor (passive novation) or
2. Subrogating a third person to the rights of the creditor. (active novation)
C. Mixed novation – arises when there is a combination of the objective and subjective novations.

II. As to the form of their constitution:

A. Express- when the parties declared in unequivocal terms that the old obligation is extinguished
by the new obligation.
B. Implied – when there are no express declaration that the old obligation is extinguished by the
new one.
III. As to the extent of their effects:
A. Total or Extinctive – when the original obligation is completely extinguished. There is no novation
when the new contract is not between the same parties as in the old contract.

Four (4) requisites of Extinctive Novation

1. The existence of a previous valid obligation;

2. The agreement of all the parties to the new contract;
3. The extinguishment of the old obligation or contract; and,
4. The validity of new one.
B. Partial or Modificatory – when the original obligation is not totally extinguished but merely
modified.
IV. As to their origin:
A. Legal Novation – takes place by operation of law.
B. ConventionalConventional Novation – takes place by agreement of the parties.
V. As to presence or absence of condition:
A. Pure – when the creation of new obligation is not subject to any condition.
B. Conditional – when the creation of new obligation is subject to a condition.