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Chapter 1

GENERAL PROVISIONS
Art. 1156
Definition of Obligation
-a juridical necessity to give, to do or not to do.
-a juridical relation whereby a person (called the creditor) may demand from another
(called the debtor) the observance of a determinate conduct (the giving, doing, or not
doing), and in case of breach, may demand satisfaction from the assets of the latter.
( Arias Ramos, p. 74)

Judicial necessity because non-compliance can result in judicial or legal sanction.


Elements of Obligation:
1) an active subject (obligee or creditor): the possessor of a right; he in whose favor the
obligation is constituted;
2) a passive subject (obligor or debtor): he who has the duty of giving, doing or not
doing;
3) the object or prestation: the subject matter of the obligation; it may consist of giving
a thing, or doing or not doing a certain act;
4) the efficient cause (vinculum or juridical tie): the reason why the obligation exists and
5) Causa (causa debendi/causa obligationes) - why obligation exists
Requisites of Object:
a. licit - if illicit, it is void
b. possible - if impossible, it is void
c. determinate or determinable - or else, void
d. pecuniary value

Kinds of Obligations
1) From the viewpoint of sanction
a) civil obligation (perfect obligation) : defined in Art. 1156, Civil Code, and
sanctioned by judicial process
b) natural obligation: the duty not to recover what has voluntarily been paid
although payment was no longer required
: it is sanctioned by law, but only because conscience had originally motivated the
payment
Example: Knowing that it already prescribed, a debtor still paid his debt to the
creditor.
c) moral obligation: sanctioned by conscience or morality, or the laws of the church.
Example: the duty of a catholic to hear mass on Sundays
2) From the viewpoint of subject matter
a) real obligation: the obligation to give
b) personal obligation: to obligation to do or not to do
3) From the affirmativeness and negativeness of the obligation
a) positive or affirmative obligation: the obligation to give or to do
b) negative obligation: the obligation not to give or not to do
4) From the persons obliged
a) unilateral: when only one of the parties is bound
b) bilateral: where both parties are or may be bound
i)
reciprocal: the performance of one is dependent upon the performance of
the other
ii)
non-reciprocal: the performance of one is not dependent on the
performance by the other
Article 1157, Articles 1158-62
Art. 1157
Sources of Obligation (LCQAQ)
1) Law, (OBLIGATION EX LEGE ) - Must be expressly or impliedly set forth and
cannot be presumed
2) Contracts, (OBLIGATION EX CONTRACTU ) - Must be complied with in good faith
because it is the law between parties; neither party may unilaterally evade his
obligation in the contract, unless:
a) contract authorizes it
b) other party assents
Parties may freely enter into any stipulations, provided they are not contrary to law,
morals, good customs, public order or public policy

3) Quasi-contracts (OBLIGATION EX QUASI-CONTRACTU ) - That juridical relation


resulting from a lawful, voluntary and unilateral act, and which has for its purpose,
the payment of indemnity to the end that no one shall be unjustly enriched or
benefited at the expense of another
4) Acts or omissions punishable by law/Delicts (OBLIGATION EX MALEFICIO OR EX
DELICTO ) and
5) Quasi delicts/Torts ( OBLIGATION EX QUASI-DELICTO or EX QUASI MALEFICIO )
- It is a fault or act of negligence ( or omission of care ) which causes damage to
another, there being no pre-existing contractual relations between the parties
Art. 1158: law
Obligations derived from law are
1) not presumed but must be expressly determined in this Code or other special
laws;
2) regulated by the precepts of law which establishes them; and as to what not has
been foreseen, by the provisions of this book.
Art. 1159: contracts
Obligations arising from contracts:
1) have the force of law between the parties; and
meaning that neither party may unilaterally and upon his own exclusive volition, escape
his obligations under the contract, unless the other party assented thereto, or unless for
causes sufficient in law and pronounced adequate by a competent tribunal. (p. 81)
2) should be complied with in good faith.
Compliance in good faith means that we must interpret not by the letter that killeth
but by the spirit that giveth life. (p. 81)
Principle of Privity of Contracts: The terms of the contract cannot be extended to third
parties or those
not included in the contract.
Article 1160: quasi-contracts
Obligations derived from quasi-contract shall be subject to the provisions of Chapter 1,
Title XVII, of this Book.
Definition of Quasi-contract: that juridical relation resulting from a lawful, voluntary, and
unilateral act, and which has for its purpose the payment of indemnity to the end that no
one shall be unjustly enriched or benefited at the expense of another. (Art. 2142, Civil
Code)
Kinds of Quasi-contract
1) Negotiorium gestio (unauthorized management): takes place when a person
voluntarily takes charge of anothers abandoned business or property without the
owners authority;
Reimbursement should be made to the gestor for necessary and useful expenses.
2) Solutio Indebiti (undue payment) : takes place when something is received when
there is no right to demand it, and it was unduly delivered by mistake.
The recipient has the duty to return what was received.

Art. 1161: Ex Delicto or Ex Maleficio


Rules that govern:
1) pertinent provisions of the Revised Penal Code and other penal laws, subject to the
provisions of Art. 2177, Civil Code;
2) Chapter 2, Preliminary Title, on Human Relations of the Civil Code;
3) Title 18 of Book IV of the Civil Code (on damages).
What civil liability arising from a crime includes:
a. restitution
b. reparation of damage caused
c. indemnity for consequential damages
Effect of acquittal in criminal case:
when acquittal is due to reasonable doubt no civil liability
when acquittal is due to exempting circumstances there is civil liability
when there is preponderance of evidence there is civil liability
Art. 1162: Ex Quasi-Delicts or Ex Quasi-Maleficio
Rules that govern:
1) Chapter 2, Title 17, Book IV, Civil Code

2) Special laws.

Definition of Quasi-delict: a fault or act of negligence (or omission of care), which causes
damages to another, there being no pre-existing contractual relations between the
parties.
Definition of Negligence: the omission of that diligence which is required by the
circumstances of person, place and time (Art. 1173)
Requirements before a Person can be held Liable for a Quasi Delict
1) There must be fault or negligence attributable to the person charged;
2) There must be damage or injury;
3) There must be a direct relation of cause and effect between the fault or negligence
on the one hand and the damage or injury on the other hand (proximate cause).
Proximate cause is that adequate and efficient cause, which in the natural order of
events, necessarily produces the damages or injury complained of. (p. 102)

Chapter 2
NATURE AND EFFECT OF OBLIGATIONS
EFFECTS OF OBLIGATION
1. Obligation to give - obligation to deliver the thing agreed upon
2. Obligation to do/not to do - obligation to do/not to do the service agreed upon
ACCESSORY OBLIGATIONS:
1. Exercise diligence / Preserve the thing (Art. 1163) EDD
Art. 1163: The obligation of every person to take care of a DETERMINATE/SPECIFIC THING
with proper diligence of a GOOD FATHER OF A FAMILY.
standard of care: that of a good father of a family unless the law or stipulation
requires another standard of care
2. Delivery of fruits (Art. 1164)
Art. 1164: Nature of the rights of the creditor
The creditor has the rights to the fruits of the thing from the time the obligation to
deliver it arises. However, he shall acquire no real right over it until the same has been
delivered to him.
When does the right begin to exist : from the time to deliver arises
a) when there is no term/condition from the perfection of the contract
b) when there is a term/condition from the moment the term or condition arises
3. Delivery of accessories & accessions ( obligation to deliver determinate thing, even if the
stipulation does not mention delivery of accessories & accessions)
Accessories - those joined to or included with the principal for the latters better use,
perfection or enjoyment
Accessions additions to or improvements upon a thing
When does right to fruits arise? from the time the obligation to deliver arises
a) Conditional from the moment the condition happens
b) With a term/period upon the expiration of the term/period
c) Simple from the perfection of the contract
IT DEPENDS!
A. If there is no term or condition, then from the perfection of the contract
B. If there is a term or a condition, then from the moment the term arrives or the
condition happens.
PERSONAL RIGHT jus in personam or jus ad rem
Power demandable by one person of another (obligation to give, to do or not to do)
REAL RIGHT jus in rem
A power over a specific thing and it is binding on the whole world.
KINDS OF DELIVERY
A. ACTUAL OR TRADITION physically, the property changes hands
B. CONSTRUCTIVE DELIVERY where the physical transfer is implied
1.
Traditio Simbolica (symbolical tradition) as when the keys to the bodega are
given
2.
Tradition Longa Manu (delivery by mere consent or the pointing out of the
object) like pointing out to the car, which is the object of a sale.

3.

Tradition Brevi Manu (delivery by short hand) a possessor of a thing not as


an owner, becomes the possessor as owner like when a tenant already in possession buys
the house he is renting.
4.
Tradition Constitutum Possessorium opposite of Brevi Manu the delivery
whereby a possessor of a thing as an owner retains possession no longer of a thing as an
owner but in some other capacity.
5.
Tradition by the Execution of Legal Forms and Solemnities like the execution
of a public instrument selling land.

Art. 1165
DELAY in this article means LEGAL DELAY or DEFAULT
a. ORDINARY DELAY merely the non-performance at the stipulated time
b. LEGAL DELAY or DEFAULT that delay which amounts to a virtual non-fulfillment of
the obligation. AS A RULE, to put a debtor in default, there must be a JUDICIAL or
EXTRAJUDICIAL DEMAND or fulfillment
WHEN THE DEBTOR FAILS TO COMPLY WITH HIS OBLIGATION, THE CREDITOR CAN:
1. Demand specific performance or compliance
- Specific Performance- performance of the prestation itself
- Substitute Performance - someone else performs or something else is performed
at the expense of debtor
- Equivalent Performance demand for damages
a. If the thing is determinate compel obligor to deliver the thing
b. If the thing is generic demand obligor to comply with his obligation you
cannot compel him to deliver a specific thing.
2. Demand rescission or cancellation
3. Demand Damages
Art. 1166
ACCESSORIES those joined to or included in the principal for the latters better use,
perfection or enjoyment. (Example: keys to a house, jack of a car)
ACCESSIONS additions to improvements upon a thing (Examples: whatever is built,
planted or sown on a parcel of land).
If there is a stipulation to said effect, accessions and accessories do not have to be
included.
Art. 1167: The Obligation TO DO
If DEBTOR fails to Do something, CREDITOR can:
Have the obligation performed by himself or another at the debtors expense (only if
another can do the performance)
Obtain Damages only if personal or special, or if others or the creditor cant do it
Specific performance is not a remedy in personal obligations, otherwise, this may
amount to involuntary servitude, which is prohibited under our Constitution
When a Thing May be Ordered Undone:
If poorly made performance by another and damages may be demanded
If the obligation is a negative one provided the undoing is possible
Art. 1168
When the obligation consists in not doing, and the obligor does what has been
forbidden him, it shall also be undone at his expense.
Table of Remedies in case of
FAILURE TO COMPLY WITH PERFORMANCE/REMEDIES:

Remedies
SPECIFIC
PERFORMANCE
EQUIVALENT
PERFORMANCE

Obligation to give
(Real Obligation)
Specific Generic
X

Obligations to do
(Personal Obligation)
To do
Not to do
undo
the
things
X
already done
Can only be demanded
if obligation is not very
X
personal

SUBSTITUTE
PERFORMANCE

RESCISSION/
CANCELLATION
X
X
A. CAUSES ATTRIBUTABLE TO DEBTOR

Undo
the
things
already
done
at
debtor's expense

1. Contravention of tenor
2. Delay/ Mora - Non performance with respect to time
a. Mora solvendi default on the part of the debtor;
2 kinds:
(1) Mora Solvendi Ex re default in real obligations
(2) Mora Solvendi Ex persona default in personal obligations
Elements:
(1) The obligation must be due, enforceable and already liquidated or
determinate in amount
(2) There must be non-performance
(1) There must be a demand, unless demand is not required
Effects:
a. if determinate thing - debtor bears risk of loss (even when there is fortuitous
event)
b. debtor liable for damages/interest
c. resolution (art 1170, in proper cases)
b. Mora accepiendi default on part of creditor; Creditor is guilty of default when
he unjustifiably refuses to accept payment or performance at the time
payment/performance can be done
Effects:
(1)
responsibility of debtor is reduced to fraud and gross negligence
(2)
debtor is exempted from risk of loss of thing / creditor bears risk of loss
(3)
expenses by debtor for preservation of thing after delay is chargeable to
creditor
(4)
if obligation bears interest, debtor does not have to pay from time of delay
(5)
creditor liable for damages
(6)
debtor may relieve himself of obligation by consigning the thing
c. Compensatio morae both parties are in default (in reciprocal obligations); the
effect: is as if there is no default
Art 1169
Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extra-judicially demands from them the fulfillment of their obligation.
However, the demand from the creditor shall not be necessary in order that delay
may exist:
a. When the obligation or the law expressly so declares. ONU
b. When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered to the service is to be
rendered was a controlling motive for the establishment of the contract
c. When demand would be useless, as when the obligor has rendered it beyond his
power to perform
In reciprocal obligations, neither party incurs in delay if the other does not comply or is
not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the other begins.

Extra-judicial demands may be written or oral-but best if written because it can be


presented as evidence.
AS A RULE-to put a debtor in default, DEMAND is needed.
Demand is not Needed to Put Debtor in Default When:
a. When the law so provides
b. When the obligation expressly so provides
c. When the fixing of the time was the controlling motive for the establishment of the
contract
d. When demand would be useless
e. When the obligor has expressly acknowledged that he really is in default

BUT IN THE PHILIPPINE LAW, THIS IS NO LONGER SO because it is expressly provided that
in reciprocal obligations, neither party incurs default if the other does not comply with
what is incumbent upon him. Even if there were (written) demands from both sides,
there is no default when neither has done his obligation.
It is only when one party fulfills his obligation, delay by the other begins (assuming that
there is no date set in the contract for his performance).
3. Fraud / Dolo Voluntary execution of a wrongful act or willful omission, knowing and
intending the effects which naturally and necessarily arise from such act or omission
a. Causante ( causal ) - makes contract voidable
b. incidente ( incidental ) - fraud in performance of obligation; does not affect
validity of obligations
Remedies of Person in fraud under obligations are:
a. insist on specific performance (art 1233)
b. resolve contract (art 1191)
c. claim damages, in either case

4. Negligence /Culpa - absence of due diligence


Elements:
a) Omission of diligence required
b) Diligence required per nature of obligation, circumstances of persons, time and
place
Art 1170
Those who in the performance of their obligation are guilty of fraud, negligence or
delay and those who in any manner contravene the tenor thereof are liable for
damages.

Grounds for Liability in the Performance of Obligations


a. Fraud-use of deceit or other machinations to intentionally evade the fulfillment of the
obligation
-This type of fraud is applicable in obligations only-it is different from CAUSAL OR
INCIDENTAL fraud (fraud that exists between parties when there is no pre-existing
contractual relations or obligations between them).
b. Negligence-fault-0no intent
c. Default
d. Violation of the terms of Obligation (unless excused in proper cases by fortuitous
events)

The Following do not Exempt from the Fulfillment of the Obligation


a. Increase in the cost of the performance
b. Poverty
c. War between the subject of the neutral country and the subject of a country at war,
as long as the substantial compliance can still be done.

Those liable under this Article should pay damages, only if prejudice or damage was
caused.
Kinds of Damages
a. Moral-for moral and physical anguish
b. Exemplary-corrective or to set an example
c. Nominal-to vindicate a right-when no other kind of damages may be recovered
d. Temperate-when the exact amount of damages cannot be determined
e. Actual-actual losses as well as unrealized profits
f. Liquidated predetermined beforehand by agreement.

Art 1171
Responsibility arising from fraud is demandable in all obligations. Any waiver of an
action for future fraud is void.
Art 1172
Responsibility arising from negligence in the performance of every kind of obligation
is also demandable, but such liability may be regulated by the courts, according to the
circumstances.

Art 1173
The fault or negligence of the obligor consists in that omission of the diligence
which is required by the nature of the obligation and corresponds with the circumstances of
the person, of the time and of the place. When negligence shows bad faith, the provisions of
Articles 1171 and 2201 paragraph 2, shall apply.
Kinds
a.
b.
c.

of Diligence Under the Civil Code


That agreed upon by the parties
In the absence of that agreed upon by the parties, that required by law
In the absence of that required by law, that expected of a good father of a family.

FRAUD DISTINGUISHED FROM NEGLIGENCE

FRAUD

NEGLIGENCE

There is deliberate intention to cause


damage.
Liability cannot be mitigated.
Waiver for future fraud is void.

There is no deliberate intention to cause


damage.
Liability may be mitigated.
Waiver for future negligence may be allowed in
certain cases:
a) gross can never be excused in advance;
against public policy
b) simple may be excused in certain cases

Art 1174
Concept: Fortuitous Event - event which could not be foreseen, or which though foreseen,
were inevitable
Refers to as caso fortuito, act of God, force majeure, unavoidable accident
Eg. Natural calamities
Essential Characteristics of a fortuitous Event (Nakpil & Sons vs. CA)
1. The cause of the breach of the obligation must be independent of the will of the
debtor
2. The event must be either unforeseeable or unavoidable
3. The event must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner
4. The debtor must be free from any participation in, or aggravation of injury to the
creditor
Liability for fortuitous events

General Rule for Fortuitous Events- No person shall be liable for fortuitous events;
i.e., his obligation will be extinguished:
Exceptions to the General Rule- when the debtor shall be held liable for a fortuitous
event (Art. 1174)
a) when expressly declared by law ( bad faith, subject matter is generic, debtor
is in delay )
b) when expressly declared by stipulation or contract
c) when the nature of the obligation requires assumption of risk (eg. obligation of
an insurer)

FORTUITOUS EVENTS CANNOT EXEMPT ONE FROM COMPLIANCE IF:


1. The obligor defaults
2. The obligor is guilty of Bad Faith (for having promised to deliver to two or more
persons who do not have the same interest).
EXAMPLE:
Jaypee is obliged to give Jaboom his car on Dec. 7, 1991. If on that said day, Jaypee
does not deliver, he is in ordinary delay. If on Dec. 8, 1991, an earthquake destroys the car,
he is not liable because the obligation is extinguished.
Art 1175
Usurious transactions shall be governed by special laws.

Usury-contracting for or receiving something in excess of the amount allowed by the law
for the loan or use of money, goods, chattels (estate inheritance, personal property) or
credit

Art 1176 Presumptions on receipt of principal or of later installment (these are


disputable presumptions and evidence may be introduced to the contrary by the
creditor.)
1. The receipt of the principal by the creditor without reservation as to interest, shall
give rise to the presumption that said interest has been paid.
2. The receipt of a later installment without reservation as to prior installments, shall
give rise to the presumption that such prior installments have been paid.

The condition not to do an impossible thing shall be considered as not having been
agreed upon:
a. If condition is to do an impossible of illegal thing=condition and obligation are void
b. If the condition is negative/not to do the impossible=just disregard the condition but
the obligation remain
c. If the obligation is negative/not to do= both condition and obligation are valid

Art. 1177 Remedies of creditor to enforce payment of his claims against debtor
1. Exact performance - specific, substitute, equivalent
2. Attach and execute debtor's property which is not exempt (art 2236)
- pursue the property in the possession of the debtor, except those exempt by law.
3. Accion subrogatoria (Art 1171)- exercise all the rights and bring all the actions of the
debtor except those personal to him.
Requisites:
a. Creditor must have right of return against debtor
b. The debt is due and demandable
c. There is a failure of the debtor to collect his own debt from 3 rd persons
either through malice or negligence
d. Debtor's assets are insufficient
e. The right of account is not purely personal
4. Accion directa (arts 1729 & 1652)
5. Accion pauliana the right to impugn the acts which the debtor may have done to
defraud his creditors. (remedy is rescission)
Requisites:
a. There is a credit in favor of plaintiff
b. The debtor has performed an act subsequent to the contract, giving
advantage to other persons
c. The creditor is prejudiced by the debtor's act which are in favor of 3 rd
parties and rescission will benefit the creditor
d. The creditor has no other legal remedy
e. The debtor's acts are fraudulent
Art. 1178
Rule on transmissibility of rights and exceptions thereto.
All rights acquired by virtue of an obligation are generally transmissible
Exceptions:
1. If the law prohibits the transmission of rights;
2. It the parties stipulated;
3. If the right is not transmissible. Eg. personal obligation

CHAPTER III
DIFFERENT KINDS OF OBLIGATIONS
CATEGORIES:
a.
b.
c.
d.

Demandability - pure, conditional or with a term


Plurality of object - simple, alternative or facultative
Plurality of subject - simple, joint or solidary
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
4. Alternative Obligation
5. Facultative Obligation
6. Joint Obligation
7. Solidary Obligation
8. Divisible obligation
9. Indivisible Obligation
10. 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
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
happen
Negative effective from moment of time elapsed or
happen

of

condition

evident

it

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.

to

can't

(1)
(2)

To do - both the condition and the obligation are void


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
case of Loss/
Impairment
w/ debtors fault
or at expense of
obligor/
usufructuary
w/o
debtors
fault or not at
expense of obligor

Indemnity
damages

ed

&

Extinguish

Liability in case of Improvement

specific performance, rescission & damages


If it improved at the expense of the debtor,
he shall have no other right than that granted
to the usufructuary. (art 1189)
Creditor to bear damages
Creditor gets it

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
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
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


giving principally of one is sufficient
b) If one of prestations is illegal, others
may be valid but obligation remains

a) Only one thing is due but a substitute may be


given to render payment/fulfillment easy
b) If principal obligations is void and there is no
necessity of giving the substitute; nullity of P
carries with it nullity of S
c) If it is 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
d) The right of choice is given only to the debtor

c) If it is impossible to give all except


one, the last one must still be given
d) Right to choose may be given either
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
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
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
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.
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

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.
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 3 rd 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.