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OBLIGATIONS AND CONTRACT 1.

If the suspensive condition is fulfilled, the


obligation arises, while if it is resolutory
Article 1179 condition that is fulfilled, the obligation is
Every obligation whose performance does not extinguished
depend upon a future or uncertain event, or upon a 2. If the first does not take place, the tie of law
past event unknown to the parties, is demandable (juridical legal tie) does not appear, while if the
at once. other, the tie of law is consolidated.
3. Until the first takes place, the existence of the
Every obligation which contains a resolutory obligation is a mere hope, while in the second,
its effects flow, but over it, hoovers the
condition shall also be demandable, without
possibility of termination.
prejudice to the effects of the happening of the
event.
When condition imposed on perfection of contract
- A distinction must be made between a condition
imposed on the perfection of a contract and that
Pure Obligation
imposed merely on the performance of an
- Not subject to any condition and no specific date is
obligation
mentioned for its fulfilment, and is therefore,
- Failure to comply with the first results in the
immediately demandable.
failure of the contract, while failure to comply in
the second only gives the other party the option
*Period still remains pure even where such period is fixed
either to refuse to proceed with the contract or
by the Court.
to waive the performance of condition

Conditional Obligation
When obligation demandable at once:
- One whose consequences are subject in one way
a. When it is pure
or another to the fulfillment of a condition
b. When it is subject to resolutory condition
c. When it subject to resolutory period

Condition
- Future and uncertain event, upon the Past event unknown to the parties
happening of which the effectivity or - What is contemplated is the knowledge to be
extinguishment of an obligation subject to it acquired in the future of the past event which at
depends. the moment is unknown to the parties
interested (Manresa)
Characteristics of Condition:
1. Future and uncertain
2. Past but unknown Article 1180
When the debtor binds himself to pay when his
Two principle Kinds of Condition: means permit him to do so, the obligation shall be
a. Suspensive Condition the fulfillment of which deemed to be one with a period, subject to the
will give rise to an obligation. provisions of Article 1197
- Condition precedent/ Condition antecedent
- Demandability of obligation is suspended until - What is left to the will of the debtor is the
the happening of a future and uncertain duration of the period only
event.
- There can be no rescission of an obligation Period
that is still non-existent, the suspensive - Future and certain event
condition not having been fulfilled.
b. Resolutory Condition Other Cases:
- Condition subsequent 1. Little by little
- The fulfillment of which will extinguish the 2. As soon as possible
obligation 3. From time to time
4. As soon as I have the money
Distinctions Between Suspensive and Resolutory 5. At any time I have the money
6. In partial payments or upon the will of the third person, the obligation
7. When I am in p1qosition to pay shall take effect in conformity with the provisions
of this Code.

Article 1181 Classifications of Conditions:


In conditional obligations, the acquisition of rights, 1. As to effect
as well as the extinguishment or loss of those a. Suspensive the happening of which gives
already acquired, shall depend upon the happening rise to the obligation
of the event which constitutes the condition. b. Resolutory the happening of which
extinguishes the obligation
Suspensive Condition 2. As to form
- Subordinated to the happening of a future and a. Express condition is clearly stated
uncertain event b. Implied Condition is merely inferred
- Before the suspensive condition, what is 3. As to possibility
acquired is a mere hope or expectancy of a. Possible the condition is capable of
acquiring a right fulfillment, legally and physically; and
b. Impossible the condition is not capable of
Example: fulfillment, legally or physically
- Surrender of a sweepstakes ticket is a condition 4. As to cause or origin
precedent to the payment of prize a. Potestative the condition depends upon
the will of one of the contracting parties
b. Casual the condition depends upon
Loss of rights already acquired chance or upon the will of the third persons
- In obligations subject to a resolutory condition, c. Mixed the condition depends partly upon
the happening of the event which constitutes the chance or partly upon the will of a third
condition produces the extinguishment or loss of person
the rights already acquired. 5. As to mode
a. Positive the condition consists in the
performance of an act
b. Negative the condition consists in the
Example: omission of an act
1. S sold to B a parcel of land subject to Ss right of 6. As to number
repurchase. The ownership already acquired by a. Conjunctive there are several conditions
B under the contract shall be extinguished or and all must be fulfilled
lost should S exercise his right of repurchase. b. Disjunctive there are serval conditions
2. Donation of a land with a condition that the and only one or some of them must be
done will use said property in putting up a fulfilled
foundation. If the condition is not complied with, 7. As to divisibility
he the donor may revoke said donation. a. Divisible the condition is susceptible of
partial performance
3. Lease of land will be terminated if any of the
b. Indivisible the condition is not susceptible
children decides to build house on property
of partial performance

Where a contract is subject to a resolutory condition,


non-compliance with or non-fulfillment of the condition
resolves the contract by force of law without the
Potestative Condition
need of judicial intervention.
- A condition suspensive in nature and which
depends upon the sole will of one of the
contracting parties
Article 1182
When the fulfillment of the condition depends upon Where Suspensive Condition Depends upon the Will
the sole will of the debtor, the conditional of Debtor
obligation shall be void. If it depends upon chance 1. Conditional obligation void
- Cannot be legally demanded 1. Where S binds himself to sell his land if he wins
- In order not to be liable, the debtor will not a case which is pending before the Supreme
just fulfill the condition Court
Examples: 2. Where B will pay the balance of the purchase
1. I will pay you if I want price if the creditor has successfully negotiated
2. I will pay you after I receive a loan from the and secured a road right of way
bank
3. I will pay you after I recover what D owes me.
4. I will pay you after I have harvested the fish
5. I will pay you upon the sale of the house in MIXED CONDITION
which I live - Obligation is valid if the suspensive condition
6. For as long as the lessee needed the premises depend partly upon chance and partly upon the
and can meet and pay the 20% increase in every will of a third person
three years.
Example:
2. Only the Condition Void Where X, building contractor, obliges himself in favor of Y,
- If the obligation is a pre-existing one, and, owner, to repair at Xs expense, any damage to the
therefore, does not depend for its existence building taking place after the earthquake if found by a
upon the fulfillment by the debtor of the panel of arbitrators that construction defects contributed
potestative condition, only the condition is in any way to the damage.
void leaving unaffected the obligation itself
- The condition is imposed not on the birth
of the obligation but on its fulfillment. ARTICLE 1183
Example: Impossible obligations, those contrary to good
D borrowed P100,000 from C payable within 2 customs or public policy and those prohibited by
months. Subsequently, D promised to pay C after D law shall annul the obligation which depends them.
sells his car to which C agreed. In this case, only the If the obligation is divisible, that part thereof
condition is void but not the pre-existing obligation of which is not affected by the impossible or unlawful
D to pay C. condition shall be valid.

The condition not to do an impossible thing shall be


Where the Suspensive Condition Depends upon the considered as not having been agreed upon.
will of the Creditor
- Obligation is valid - Refers to suspensive condition
- Example: - It applies only to cases where the impossibility
I will pay you my indebtedness upon your already existed at the time the obligation was
demand. constituted

Where Resolutory Condition Depends upon the Will Two kinds of Impossible Conditions:
of the Debtor 1. Physically Impossible Condition when they, in
- The obligation is valid although it is dependent nature of things, cannot exist or cannot be done;
upon the sole will of the debtor 2. Legally Impossible Condition when they are
- The fulfillment of the condition merely causes contrary to law, morals, good customs, public
the extinguishment or loss of rights already order or public policy
acquired.
Effects of impossible conditions:
1. Conditional Obligation Void
CASUAL CONDITION - Both the obligation and condition void
- Depends upon chance or upon the will of a third - The reason behind the law is that the
person: obligation is valid obligor knows his obligations cannot be
fulfilled.
Example: - In conditional testamentary dispositions
and in simple and remuneratory
conditions, the rule is different.
2. Conditional Obligation Valid If no time has been fixed, the condition shall be
- If the condition is negative (not to do an deemed fulfilled at such time as may have been
impossible ting); obligation is rendered probably been contemplated, bearing in mind the
pure and valid nature of the obligation.
3. Only the affected Obligation Void
- If the obligation is divisible, the part
thereof not affected by the impossible or Obligation shall become effective and binding:
unlawful condition shall be valid 1. From the moment the time indicated has
4. Only the Condition Void elapsed without the event taking place
- I the obligation is a pre-existing obligation, 2. From the moment it has become evident that
and, therefore, does not depend upon the the event cannot occur, although the time
fulfillment of the condition which is indicated has not yet elapsed.
impossible for its existence, only the
condition is void.
ARTICLE 1186 Constructive Fulfillment
Article 873
The condition is deemed fulfilled when the obligor
Impossible conditions and those contrary to law or
voluntarily prevents its fulfillment.
good customs shall be considered as not imposed
and shall in no manner prejudice the heir, even if
Requisites:
the testator should otherwise provide.
1. Condition is suspensive
2. Obligor actually prevents the fulfillment of the
condition; and
Article 727 3. He acts voluntarily or intentionally
Illegal or impossible conditions in simple and
remuneratory donations shall be considered as not Mere intention of the debtor (without actually preventing
imposed. the fulfillment) is insufficient

- Obligor should not be allowed to profit by his


ARTICLE 1184 own fault or bad faith
The condition that some event happen at a
determinate time shall extinguish the obligation as Example:
soon as the time expires or it has become X agreed to give Y a commission if the Y could sell the
formers condominium at a certain price. Y found a buyer
indubitable that the event will not take place.
who definitely decided to buy the property upon the terms
prescribed by X. To evade the payment of commission, X
Positive Condition
sold the property to the buyer at a lower price without the
- The happening of an event at a determinate
aid of Y.
time
Constructive Fulfillment of Resolutory Condition
- Article 1186 also applies to an obligation subject
Obligation is extinguished:
to a resolutory condition with respect to the
a. As soon as the time expires without the event
debtor who is bound to return what he has
taking place
received upon fulfillment of the condition
b. As soon as it has become indubitable that the
event will not take place although the time
specified has not yet expired. Example:
X obliges himself to allow Y to occupy the formers house
in Manila as long as X is assigned by their company in the
ARTICLE 1185 province. When Y learned that X would be transferred of
Manila, he was able to induce the president of the
The condition that some event will not happen at a
company to assign another person in place of X.
determinate time shall render the obligation
effective from the moment the time indicated has
The obligation of X is extinguished because the fulfillment
elapsed, or if it has become evident that the event
of resolutory condition was voluntarily prevented by Y.
cannot occur.
Hence, Y must vacate the house.
ARTICLE 1187 ARTICLE 1188
The effects of a conditional obligation to give, once The creditor may, before the fulfillment of the
the condition has been fulfilled, shall retroact to the condition, bring the appropriate actions for the
day of the constitution of the obligation. preservation of his right.
Nevertheless, when the obligation imposes
reciprocal prestations upon the parties, the fruits The debtor may recover what during the same time
and interests during the pendency of the condition he has paid by mistake in case of a suspensive
shall be deemed to have been mutually condition.
compensated. If the obligation is unilateral, the
debtor shall appropriate the fruits and interests
received, unless from the nature and circumstances Rights of the debtor
of the obligation it should be inferred that the Entitled to recover that he has paid by mistake
intention of the person constituting the same was prior to the happening of the suspensive
different. condition: can give rise to solution indebiti

Condition is not fulfilled


In obligations to do and not to do, the courts shall
- The debtor may recover any payment made even
determine, in each case, the retroactive effect of the
if the debtor has paid not by mistake
condition that has been complied with.
Condition is fulfilled
- The debtor may recover if the payment was
made by mistake
Retroactive effects of fulfillment of suspensive
- Otherwise, the debtor is deemed to have
condition:
impliedly waived
1. In obligation to give
- Shall retroacts to the day the obligation was
constituted
ARTICLE 1189 MEMORIZE!!!!
- Reason: condition is only an accidental element
When the conditions have been imposed with the
of the contract.
intention of suspending the efficacy of an obligation
- The rule on retroactivity has no application to
to give, the following rules shall be observed in case
real contracts as they are perfected only by
of the improvement, loss, deterioration of the thing
deliver of the obligation of the contract.
during the pendency of the condition:

2. In obligation to do or not to do 1. If the thing is lost without the fault of the


- No fixed rule is provided debtor, the obligation shall be
- Courts are empowered to determine the extinguished.
retroactive effect of the suspensive condition 2. If the thing is lost through the fault of the
that has been complied with. debtor, he shall be obliged to pay damages;
it is understood that the thing is lost when
Retroactive effects as to fruits and interests in it perishes, or goes out of commerce, or
obligations to give disappears in such a way that its existence
1. In reciprocal obligations is unknown or it cannot be recovered;
- No retroactivity as they are deemed to have been 3. When the thing deteriorates without the
mutually compensated fault of the debtor, the impairment is to be
2. In unilateral obligations borne by the creditor.
- Usually no retroactive effect because they are 4. If it deteriorates through the fault of the
gratuitous debtor, the creditor may choose between
- Debtor receives nothing from the creditor
the rescission of the obligation and its
- Thus, fruits and interests should belong to the
fulfillment, with indemnity for damages in
debtor unless from the nature and other
either case;
circumstances it should be inferred that the
5. If the thing is improved by its nature, or by
intention of the person constituting the same
time, the improvement shall inure to the
was different
benefit of the creditor;
6. If it is improved at the expense of the In the case of loss, deterioration or improvement of
debtor, he shall have no other right than the thing, the provisions which, with respect to the
that granted to the usufructuary. debtor, are laid down in the preceding article shall
be applied to the party who is bound to return.

This article applies only if: As for obligations to do or not to do, the provisions
a. The obligation is a real obligation of the second paragraph of Article 1187 shall be
b. The object is a specific or determinate thing observed as regards the effect of the
c. The obligation is subject to a suspensive extinguishment of the obligation.
condition
d. The condition is fulfilled; and
e. There is loss, deterioration, or improvement of In obligations to give:
the thing during the pendency of the happening 1. There is a return to the status quo. In other
on one condition. words, the effect of the fulfillment of the
condition is retroactive.
Kinds of loss: 2. The obligation of mutual restitution is absolute.
1. Physical loss when a thing perishes as when a It applies not only to the things received but also
house is burned the fruits and interests.
2. Legal loss when a thing goes out of commerce 3. In case the thing to be returned is legally in the
or when a thing heretofore becomes illegal possession of a third person who did not act in
3. Civil loss when a thing disappears in such a bad faith, the remedy of the part entitled to
way that its existence is unknown, or even if restitution is against the other.
known it cannot be recovered, whether as a 4. In obligations to give subject to a suspensive
matter of fact or of law. condition, the retroactivity admits of exceptions
according to whether the obligation is bilateral
Art. 562 or unilateral. Here, there are no exceptions,
Usufruct gives a right to enjoy the property of another whether the obligation is bilateral or unilateral.
with the obligation of preserving its form and substance, 5. If the condition is not fulfilled, the rights
unless the title constituting it or the law otherwise acquired by a party become vested.
provides.
In obligations to do or not to do
Art. 579 - The courts shall determine the retroactive effect
The usufructuary may make on the property held in of the fulfillment of the resolutory condition.
usufruct such useful improvements or expenses for mere
pleasure as he may deem proper, provided he does not
alter its form or substance; but he shall no right to be
indemnified therefor. He may, however, remove such
ARTICLE 1191
improvements, should it be possible to do so without
The power to rescind obligations is implied in
damage to the property.
reciprocal ones, in case one of the obligors should

Art. 580 not comply with what is incumbent upon him.


The usufructuary may set off the improvements he may
have made on the property against any damage to the The injured party may choose between the
same. fulfillment and the rescission of the obligation with
the payment of damages in either case. He may also
seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
ARTICLE 1190
When the conditions have for their purpose the The court shall decree the rescission claimed,
extinguishment of an obligation to give, the parties, unless there be just cause authorizing the fixing of
upon the fulfillment of said conditions, shall return a period.
to each other what they have received.
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 -Manresa says that the stipulated resolution of
and the Mortgage Law. the contract in case one of the parties does not
comply with his undertaking is produced by
force of law, but the option of the injured party
disappears
- Jurisprudence supports the view that when the
*Resolution principal action by a party to a reciprocal parties to a contract expressly reserve an option
obligation, based on non-performance by the other party to terminate or rescind a contract upon the
even in a unilateral obligation violation of a resolutory condition, notice of
resolution must be given to the other party
*Rescission a subsidiary action which may be demanded when such right is exercised.
by a party or even a third person prejudiced by a contract 2. With option to demand fulfillment
for any of the causes or grounds specified by law. - Example: contract of sale
- For sale of immovable property: Art. 1191
Differences: should be read in conjunction with Art. 1592
1. In 1191, the Court may grant a period or term which applies to instance where no stipulation
for the performance of the obligation, while in for automatic rescission is made because it says
1381, the Court has no power to grant an even though.
extension for performance
2. 1381 is not based on a breach of obligation Damages recoverable
3. Prescriptive period: - It follows that damages which would only be
1381 4 years consistent with the conception of specific
1191 10 years from the time the right of action performance cannot be awarded in an action
accrues where rescission is sought, vice versa

Reciprocal Obligations Limitation on right to demand rescission


- Are those which arise from the same cause, and - Right to rescind: not absolute; always
in which each party is a debtor and creditor of provisional
the other, such that the performance by one
party of his obligation is designed to be the 1. Resort to the courts
equivalent and the condition for the - What is contemplated in Art. 1191 is a judicial
performance by the other of his own obligation. rescission
2. Power of the court to fix period
Alternative Remedies of the Injured Party: - Action of reconveyance
1. An action for rescission - In the absence of any just cause for the court to
2. An action for specific performance determine the period of compliance, the court
*with the right to claim for damages for both situations shall decree the rescission.
3. Compliance by aggrieved party with his obligation
4. Right of third persons
- Rescission created the obligation of mutual
Judicial discretion to decree rescission or fix restitution.
period - However, if the thing, is in the hands of a third
The court shall decree rescission claimed unless there person who acted in good faith, rescission is not
should be just cause for granting the party in default a available as remedy; the injured party may
term for the performance of his obligation (Par. 3) recover damages from the person responsible for
the transfer.
- This exception applies only when the guilty 5. Slight or substantial violation
party is willing to comply with his obligation but - Rescission will not be granted for slight or
needs time to do so and not where he refuses to casual breaches
perform. - Violation should be substantial and
fundamental as to defeat the object of the
Where contract resolved by non-fulfilment or parties in making the agreement
- Depends upon the attendant circumstances and
violation of resolutory condition
not merely on the percentage of the amount paid
1. Without option to demand fulfillment
6. Waiver of right
-
Either expressly or impliedly - Art. 1592. In the sale of immovable property,
7. Contract to sell/ of sale even though it may have been stipulated
- The breach contemplated: obligors failure to that upon failure to pay the price at the time
comply with an obligation already extant, not a agreed upon the rescission of the contract
failure of a condition to render binding that shall take place, the vendee may pay, even
obligation after the expiration of the period, as long as
a. Contract to sell payment of purchase no demand for rescission of the
price is a positive suspensive condition, the contract has been made upon him
failure of which is not a breach, casual or either judicially or by a notarial act.
serious, but a situation that prevents the After the demand, the court may not grant
obligation of the vendor to convey title from him a new term.
acquiring an obligatory force - Non-payment of purchase price as a resolutory
b. Contract of sale non-payment is a condition
resolutory condition which extinguishes the
- Art. 1592 does not apply to sales on
transaction
installments of real property in which the
8. Sales of real property and of personal property in
parties have laid down the procedure to be
installments
followed in the event the vendee failed to
9. Judicial Compromise
fulfill his obligation.
- Applies only to general obligations and not to
- RA 6552: If the contract is canceled, the seller
obligations arising from judicial compromise
shall refund to the buyer the cash surrender
value of the payments on the property
Rescission of Contract without Previous Judicial
equivalent to fifty per cent of the total
Decree
payments made, and, after five years of
1. Where automatic rescission expressly stipulated installments, an additional five per cent
2. Where contract still executory every year but not to exceed ninety per cent
- The willing party may, by his own declaration, of the total payments made
rescind the contract without a previous - In case where less than two years of
judicial decree of rescission installments were paid, the seller shall give
the buyer a grace period of not less than
Procedure where extrajudicial rescission contested sixty days from the date the installment
1. With stipulation for automatic revocation became due. If the buyer fails to pay the
- Judicial intervention necessary in order to installments due at the expiration of the
determine whether or not rescission was grace period, the seller may cancel the
proper contract after thirty days from receipt
2. Without stipulation for automatic revocation by the buyer of the notice of
cancellation or the demand for
Effect of rescission: rescission of the contract by a notarial
1. Contract abrogated from its inception act.
2. Mutual restitution of benefits received by each
party required
3. Effects to third party 2. Personal Property
Rescission created the obligation of mutual
- Art. 1593. With respect to movable property,
restitution.
the rescission of the sale shall of right take
However, if the thing, is in the hands of a third
place in the interest of the vendor, if the
person who acted in good faith, rescission is
vendee, upon the expiration of the period
not available as remedy; the injured party
fixed for the delivery of the thing, should not
may recover damages from the person
have appeared to receive it, or having
responsible for the transfer.
appeared, he should not have tendered the
price at the same time, unless a longer
Rescission in specific types of contracts
period has been stipulated for its payment.
- Art. 1484. In a contract of sale of personal
a. Contracts of Sale property the price of which is payable in
installments, the vendor may exercise any of
1. Real Property the following remedies:
a. Exact fulfillment of the obligation, buyer damages for any loss occasioned by the
should the vendee fail to pay; breach of the contract.
b. Cancel the sale, should the vendees
failure to pay cover two or more The transfer of title shall not be held to have
installments. In this case, he shall have been rescinded by an unpaid seller until he
no further action against the purchaser has manifested by notice to the buyer or by
to recover any unpaid balance of the some other overt act an intention to rescind.
price. Any agreement to the contrary It is not necessary that such overt act should
shall be void. be communicated to the buyer, but the
c. Foreclose the chattel mortgage on the giving or failure to give notice to the buyer of
thing sold, if one has been constituted, the intention to rescind shall be relevant in
should the vendees failure to pay cover any issue involving the question whether the
two or more installments. In this case, buyer had been in default for an
he shall have no further action against unreasonable time before the right of
the purchaser to recover any unpaid rescission was asserted.
balance of the price. Any agreement to
the contrary shall be void. b. Contract of lease
- Art. 1485. The preceding article shall be - ART. 1659. If the lessor or the lessee should not
applied to contracts purporting to be leases comply with the obligations set forth in articles
of personal property with option to buy, 1654 and 1657, the aggrieved party may ask for
when the lessor has deprived the lessee of the rescission of the contract and
the possession or enjoyment of the thing. indemnification for damages, or only the latter,
- Art. 1486. In the cases referred to in two allowing the contract to remain in force.
preceding articles, a stipulation that the
installments or rents paid shall not be c. Contract of Partnership
returned to the vendee or lessee shall be - Article 1191 refers to the resolution of
valid insofar as the same may not be obligations in general, whereas Articles 1783
unconscionable under the circumstances. and 1788 especially refer to the contract of
- Art. 1526. Subject to the provisions of this partnership in particular. And it is a well-known
Title, notwithstanding that the ownership in principle that special provisions prevail over
the goods may have passed to the buyer, the general provision
unpaid seller of goods, as such, has: - Article 1191 is not applicable to contract of
1. A lien on the goods or right to retain partnership
them for the price while he is in
possession of them;
2. In case of the insolvency of the buyer, a ARTICLE 1192
right of stopping the goods in transitu In case both of the parties have committed a breach
after he has parted with the possession of the obligation, the liability of the first infractor
of them;
shall be equitably tempered by the courts. If it
3. A right of resale as limited by this Title;
cannot be determined which of the parties first
4. A right to rescind the sale as likewise
violated the contract, the same shall be deemed
limited by this Title.
extinguished, and each shall bear his own damages.
- Art. 1534. An unpaid seller having the right of
lien or having stopped the goods in transitu,
OBLIGATIONS WITH A PERIOD
may rescind the transfer of title and
resume the ownership in the goods,
ARTICLE 1193
where he expressly reserved the right
Obligations for whose fulfillment a day certain has
to do so in case the buyer should make
been fixed, shall be demandable only when that
default, or where the buyer has been in
day comes.
default in the payment of the price for
Obligations with a resolutory period take effect at
an unreasonable time. The seller shall not
once, but terminate upon arrival of the day
thereafter be liable to the buyer upon the
certain.
contract of sale, but may recover from the
A day certain is understood to be that which must
necessarily come, although it may not be known If there is
when. retroactivity, and
If the uncertainty consists in whether the day will the Court will
come or not, the obligation is conditional and it supplant such,
shall be regulated by the rules of the preceding they will be
Section. running afoul the
will or
agreement of the
Obligation with a period parties.
- One whose consequences are subjected in one
way or another to the expiration of said period or
term.
Kinds of period or term:
Period a future and certain event upon the arrival of 1. According to effect:
which the obligation subject to it either arises or is a. Suspensive period (ex die)
terminated. - Obligation begins only from a day certain
upon the arrival of the period
Period and condition distinguished - Ex: I will pay 30 days from today.
b. Resolutory period (in diem)
Period Condition - Obligation is valid up to a day certain and
As to Certain event Uncertain event terminates upon the arrival of the period
fulfillment which must happen - Ex: I will give you support until you die.
sooner or later at a
date, or time which 2. According to source:
cannot be a. Legal period
determined - When it is provided for by law
As to time Future only May also refer to - Art. 1682. The lease of a piece of rural land,
a past event when its duration has not been fixed, is
unknown to the understood to have been for all the time
parties necessary for the gathering of the fruits
As to Merely fixes the Causes an which the whole estate leased may yield in
influence on time for obligation to one year, or which it may yield once,
the efficaciousness of arise or to cease. although two or more years have to elapse
obligation the obligation. for the purpose.
- Art. 1687. If the period for the lease has not
If suspensive, it been fixed, it is understood to be from year to
cannot prevent the year, if the rent agreed upon is annual; from
birth of obligation month to month, if it is monthly; from week
in due time; if to week, if the rent is weekly; and from day
resolutory, it does to day, if the rent is to be paid daily.
not annul, even in However, even though a monthly rent is
fiction, the fact of paid, and no period for the lease has been
its existence set, the courts may fix a longer term for the
As to effect, Empowers the Invalidates the lease after the lessee has occupied the
when left to court to fix the obligation premises for over one year. If the place for
debtors will period over one month.
As to Arrival of a period Has retroactive b. Conventional or voluntary
retroactivit does not have any effect - When it is agreed by the parties
y of effects retroactive effect c. Judicial
- When it is fixed by the Court
No provision in The law - Art. 1197. If the obligation does not fix a
the law explicitly states period, but from its nature and the
circumstances it can be inferred that a
period was intendedrent is weekly, the appear that the period has been established in
courts may likewise determine a longer favor of one or of the other.
period after the lessee has been in - Presumption is rebuttable
possession for over six months. In case of
daily rent, the courts may also fix a longer
period after the lessee has stayed in the Exceptions to the general rule:
- , the courts may fix the duration thereof. The tenor of the obligation or the circumstances may,
however, show that it was the intention of the parties to
The courts shall also fix the duration of the constitute the period for the benefit of either the debtor or
period when it depends upon the will of the creditor. The benefit of the period may be the subject
the debtor. of express stipulation of the parties.

In every case, the courts shall determine 1. Term is for the benefit of the debtor alone
such period as may under the - He cannot be compelled to pay prematurely, but
circumstances have been probably he can, if he desires to do so.
contemplated by the parties. Once fixed by
- Examples:
the courts, the period cannot be changed
a. D borrowed from C P100 to be paid within
by them
one month without interest.
b. D promised to pay his debt on or before
Dec. 31, 2014.
3. According to definiteness
a. Definite period
2. Term is for the benefit of the creditor
- When it is fixed or it known when it will
- He may demand fulfillment even before the
come
b. Indefinite period arrival of the term but the debtor cannot require
him to accept payment before the expiration of
- When it is not fixed or it is not known when
it will come. Where the period is not fixed the stipulation period.
but a period is intended, the courts are - Example: D borrowed from C P 10,000 payable
usually empowered by law to fix the same. on Dec. 31 with the stipulation that D cannot
make payment before the lapse of the period but
C may demand fulfillment even before said date.
ARTICLE 1194
In case of loss, deterioration or improvement of the Acceleration by debtor of time payment
thing before the arrival of the day certain, the rules - Unless the creditor consents, the debtor has no
in Article 1189 shall be observed. right to accelerate the time of payment even if
the premature tender included an offer to pay
principal and interest in full

ARTICLE 1195
Anything paid or delivered before the arrival of the
ARTICLE 1197
period, the obligor being unaware of the period or
If the obligation does not fix a period, but from its
believing that the obligation has become due and
nature and the circumstances it can be inferred
demandable, may be recovered, with the fruits and
that a period was intended, the courts may fix the
interests.
duration thereof.
- Applies only to obligations to give
The courts shall also fix the duration of the period
- Presumption: debtor knew that the debt was not
when it depends upon the will of the debtor.
yet due
In every case, the courts shall determine such
period as may under the circumstances have been
probably contemplated by the parties. Once fixed
ARTICLE 1196
by the courts, the period cannot be changed by
Whenever in an obligation a period is designated, it
them.
is presumed to have been established for the benefit
of both the creditor and the debtor, unless from the
tenor of the same or other circumstances it should
If the obligation does not state a period and no period is - In case of a fortuitous event, the security must
intended, the court is not authorized to fix a period. The disappear.
courts have no right to make contracts for the parties. - Equally satisfactory no explanation as to
whom satisfaction should be considered
When court may fix a period: Consent of the creditor is not required
1. Inferred that period was intended (Par 1)
Examples: Par. 4: When debtor violates an undertaking
a. X agreed to construct the house of Y. The - Special undertaking: consideration upon which
parties failed to fix the period within which the creditor has given the term/period.
construction is to be made. Here, the court
can fix the term for it is evident that the Par. 5: When debtor attempts to abscond
parties intended that X should construct - Mere attempt or intent is sufficient
the house within a certain period.
b. B bought cement from the store of A on
credit. The period for payment in the
invoice was left blank. From the nature of ALTERNATIVE OBLIGATIONS
the obligation, it can be inferred that a
period is intended. ARTICLE 1199
2. Duration depends on the will of the debtor A person alternatively bound by different
prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of
ARTICLE 1198; IDIVA
one and part of the other undertaking.
The debtor shall lose every right to make use of the
period:
1. When after the obligation has been
Kinds of obligation according to object:
contracted, he becomes insolvent, unless
1. Simple Obligation
he gives a guaranty or security of the debt;
- There is only one prestation
2. When he does not furnish to the creditor
2. Compound Obligation
the guaranties or securities which he has - One where there are two or more prestations
promised; a. Conjunctive obligation
3. When by his own acts he has impaired said - One where there are several
guaranties or securities after their prestations and all of them are due
establishment, and when through a b. Distributive obligation
fortuitous event they disappear, unless he - One where one of two or more
immediately gives new ones equally prestations is due. It may be
satisfactory; alternative or facultative.
4. When the debtor violates any undertaking,
in consideration of which the creditor Alternative Obligation
agreed to the period; - One wherein various prestations are due but the
5. When the debtor attempts to abscond. performance of one of them is sufficiently
determined by the choice, which, as a general rule,
belongs to the debtor.
Par. 1: When debtor becomes insolvent
- Insolvency need not be judicially declared
- It is sufficient that the assets are less than the
ARTICLE 1200
liabilities
- Insolvency must occur after the obligation has The right of the choice belongs to the debtor, unless
been contracted it has been expressly granted to the creditor.
The debtor shall have no right to choose those
Par. 2: When debtor does not furnish guaranties or prestations which are impossible, unlawful or
securities promised which could not have been the object of the
obligation.
Par. 3: When guaranties or securities given have been
impaired or disappeared
Impossible, Unlawful prestations or those which could not If through the fault of J, item one is destroyed, D can
have been the object of the obligation rescind the contract if he wants. In case of rescission,
- Their presence does not invalidate the obligation the amount of 10,000 must be returned by D with
if it includes other undertakings otherwise free interest. J, in turn, must pay D the value of item one
from such defects. The debtors right pf choice is plus damages.
not extinguished altogether but limited to the
remaining valid prestations. D, instead of rescinding the contract, may choose
- If there is only one remaining; the obligation from item two or three with a right to recover the
becomes simple. value of item one with damages. If D chooses item
one, his obligation is extinguished. C is not liable for
damages.
ARTICLE 1201
The choice shall produce no effect except from the
time it has been communicated. ARTICLE 1204
The creditor shall have a right to the indemnity
Communication of notice: for damages when, through the fault of the
1. Effect of Notice Until the choice is made and debtor, all the things which are alternatively
communicated, the obligation remains alternative. the object of the obligation have been lost, or
a. Once the notice of election has been given to the compliance of the obligation has become
the creditor, the obligation ceases to be impossible.
alternative and becomes simple.
b. Such choice once properly made and The indemnity shall be fixed taking as a basis
communicated is irrevocable and cannot be the value of the last thing which disappeared,
renounced. or that of the service which last became
c. Where the choice has been expressly given to impossible.
the creditor, such choice shall likewise produce
legal effects upon being communicated to the Damages other than the value of the last thing
debtor. or service may also be awarded.

2. Proof and form of notice


- Law does not require any particular form
- May be made orally or in writing, expressly or
ARTICLE 1205
impliedly
When the choice has been expressly given to the
- Burden of proving that such communication has
creditor, the obligation shall cease to be alternative
been made is upon him who made the choice
from the day when the selection has been
communicated to the debtor.
ARTICLE 1202
The debtor shall lose the right of choice when Until then the responsibility of the debtor shall be
among the prestations whereby he is governed by the following rules:
alternatively bound, only one is practicable. 1. If one of the things is lost through a
fortuitous event, he shall perform the
obligation by delivering that which creditor
ARTICLE 1203 should choose from among the remainder, or
If through the creditors acts the debtor cannot that which remains if only one subsists;
make a choice according to the terms of the 2. If the loss of one of the things occurs
obligation, the latter may rescind the contract through the fault of debtor, the creditor may
with damages. claim any of those subsisting, or the price of
that which, through the fault of the former,
Example: has disappeared, with a right to damages;
D borrowed from J 10,000. It was agreed that instead 3. If all the things are lost through the fault of
of 10,000, D could deliver item one, two, or three. the debtor, the choice shall fall upon the
price of any one of them, also with indemnity ARTICLE 1207
for damages. The concurrence of two or more creditors or of two
or more debtors in one and the same obligation
The same rules shall be applied to obligations to do does not imply that each one of the former has a
or not do in case one, some or all of the prestations right to demand, or that each one of the latter is
should become impossible. bound to render, entire compliance with
prestations. There is a solidary liability only when
the obligation expressly so states, or when the law
ARTICLE 1206 or the nature of the obligation requires solidarity.
When only one prestation has been agreed upon,
but the obligor may render another in substitution,
the obligation is called facultative. ARTICLE 1208
If from the law, or the nature, or the wording of the
The loss or deterioration of the thing intended as a obligations to which the preceding article refers
substitute, through the negligence of the obligor the contrary does not appear, the credit or debt
does not render him liable. But once the shall be presumed to be divided into as may equal
substitution has been made, the obligor is liable for share as there are creditors or debtors, the credits
the loss of the substitute on account of his delay, or debts being considered distinct from one
negligence or fraud. another, subject to the rules of Court governing the
multiplicity of suits.

Alternative Facultative
Number of Several Only one is due Joint obligation
prestations prestations are although the - One where the whole obligation is to be paid or
due but debtor is fulfilled proportionately by the different debtors
compliance with allowed to and/or is to be demanded proportionately by the
one is sufficient substitute different creditors.
Right of choice May be given to Given only to
the creditor or the debtor Solidary obligation
third person - One where each one of the debtor is bound to
Loss through Does not Extinguished render, and/or each one of the creditors has a
fortuitous event extinguish the the obligation right to demand entire compliance with
obligation prestation.
Loss through Not liable; Liable
fault of debtor however, if the Joint obligations:
choice is given 1. There are as many debts as there are debtors;
to the creditor, 2. There are as many credits as there are creditors.
debtor will be 3. The debts/credits are considered distinct and
liable separate from each other.
Nullity of Does not Invalidates the 4. Each debtor is liable only for a proportionate
prestation invalidate the obligation part of the debt;
others 5. Each creditor is entitled only to a proportionate
part of the credit.
Debtor or Debtor is not
creditor shall bound to Presumption in Article 1208 is rebuttable.
choose from the choose
remainder substitute Article 1277. Confusion does not extinguish a joint
obligation except as regards the share corresponding to
the creditor or debtor in whom the two characters concur

Novation, compensation, confusion, remission,


JOINT AND SOLIDARY OBLIGATION prescription and any other cause of modification or
extinction does not extinguish or modify the obligation
except with respect to the creditor or debtor affected, If A and B suffered damages by reason of non-fulfillment by C,
they may recover from C.
without extending its operation to any other part of the
debt or the credit. Should any of the debtors become insolvent, the others shall not
be liable for his share. D must wait until the insolvent debtor can
pay.

Words used to indicate joint liability


1. Mancum
In case of breach
2. Mancomunada
Article 1224. A joint indivisible obligation gives rise to
3. Mancomunadamente
indemnity for damages from the time anyone of the
4. Pro rata
debtors does not comply with his undertaking. The
5. Proportionately
6. Jointly debtors who may have been ready to fulfill their promises
7. Conjoint shall not contribute to the indemnity beyond the
8. We promise to pay signed by two persons corresponding portion of the price of the thing or of the
value of the service in which the obligation consists.
Requisites:
In case of Novation, Compensation, Confusion,
1. Plurality of subjects
2. Determination of the shares in the Remission
Demandability of the fulfillment of obligation - Novation: Affects only the share of the joint co-
this is in relation to the debtor with regard to debtor in whom the novation is created
his co-debtors and the creditor with regard to Compensation: Affects only the share of the joint
his co-creditors (presupposes a situation after co-debtor in whom the compensation takes place
payment) Confusion: Art 1277 Confusion does not
extinguish a joint obligation except as regards
the share corresponding to the creditor or debtor
in whom the two characters concur.
ARTICLE 1209. Remission: Benefits only the joint co-debtor in
whom the remission is granted, obligation
If the division is impossible, the right of the
extinguished
creditors may be prejudiced only by their collective
acts, and the debt can be enforced only by
proceeding against all the debtors. If one of the
latter should be insolvent, the others shall not be
liable for his share.
ARTICLE 1210.
The indivisibility of the obligation does not
Joint indivisible obligation
necessarily give rise to solidarity. Nor does
- Parties are merely proportionately liable
solidarity of itself imply indivisibility.
- Object or subject matter is not physically
divisible into different parts
Indivisibility distinguished from solidarity
- Joint as to liabilities of the debtor or rights of
the creditors but indivisible as to compliance.
Indivisible Solidarity

Example: Refers to prestation Refers to the juridical or


A, B, and C are jointly liable to give D a car valued at 240,000. On legal tie that binds the
the date of delivery, A and B are willing to deliver, but C is not. parties
Only the debtor guilty of All of the debtors are
In this case, D has no cause of action against C for the delivery of
breach of obligation is liable for the breach of
the car because, as joint-debtor, C is liable only for a
proportionate part of the obligation which is P80,000. Since the liable for damages, obligation committed by a
object (car) is indivisible, the debt can only be enforced by thereby terminating the co-debtor, for solidarity
proceeding against all debtors for compliance is not possible agency among them remains
unless they act together.
Can exist although there There must be at least
Pursuant to Art.1224, the liability is converted into one for is only one debtor and one two debtors or two
damages. So, A,B and C will be liable for P80,000 each without creditor creditors
increase of responsibility for A and B. C, the unwilling debtor, Others are not liable in Other are proportionately
shall be liable for damages to D or having violated the obligation.
case of insolvency of the liable.
debtor rights of others in the same manner as
their rights.

Characteristics of Solidary Obligations c. Mixed solidarity solidarity on the part of


1. Every solidary obligation has these the debtors and creditors, where each
characteristics: unity of object and plurality of one of the debtors is liable to render, and
ties. The prestation due, or to which a right each one of the creditors has a right to
exists, is one of the same thing. demand, entire compliance with the
2. Essence: each and every one of the solidary obligation
creditors can demand and each of the debtors
must satisfy the same prestation. 2. According to source:
3. Basis of solidarity: has something of a legal a. Conventional Solidarity agreed upon by
fiction i.e., that is a mutual agency among those the parties. If nothing is mentioned in
interested in the obligation. the contract relating to solidarity, the
*The solidary obligation is really a form of joint obligation is joint.
obligation. b. Legal Solidarity imposed by law
Art. 1208.
Art. 1915. If two or more persons have
appointed an agent for a common
When obligation Solidary:
transaction or undertaking, they shall
Under Article 1207, there is solidary liability only:
be solidarily liable to the agent for all
1. The obligation expressly so states;
the consequences of the agency.
2. The law requires solidarity
Art. 1945. When there are two or more
3. The nature of the obligation requires solidarity
bailees to whom a thing is loaned in
Solidary liability also exists when it is imposed in a final
the same contract, they are liable
judgment against several defendants.
solidarily.
Art. 110 (RPC). Several and subsidiary
liability of principals, accomplices and
Words used to indicate solidary liability:
accessories of a felony; Preference in
1. Severally
payment. Notwithstanding the
2. Jointly and or/severally
provisions of the next preceding
3. Solidaria
article, the principals, accomplices,
4. In solidum
and accessories, each within their
5. Solidarily
respective class, shall be liable
6. Together and/or separately
severally (in solidum) among
7. I promise to pay signed by two more persons
themselves for their quotas, and
8. Individually and jointly
subsidiaries for those of the other
persons liable.
Kinds of solidarity:
1. According to the parties bound:
c. Real solidarity imposed by the nature of
a. Passive solidarity solidarity on part of
the obligation; intent of the law is to have
the debtors, where any of them can be
the obligation satisfied in full but the law
made liable for the fulfillment of the
itself does not expressly require solidarity
entire obligation. Its characteristics are
Examples:
plurality of debtors and unity of
1. Nature of the obligation of employers
prestation. Its in the nature of a mutual
under the former Workmens
guaranty.
Compensation Law (now, Labor Code):
to pay indemnity or compensation or
b. Active solidarity solidarity on the part of
death or injury caused to their
the creditors, where anyone of them can
employees while in the performance of
demand fulfillment of the obligation. Its
the assigned duty (Liwanag v.
essential feature is that of mutual
Workmens Compensaton Commission)
representation among the solidary
creditors with powers to exercises the
2. Vehicle: kabit system operator and - Otherwise the obligation will not be
the grantee of the certificate of public extinguished except insofar as the creditor-
convenience held liable payees share is concerned in case the latter does
not give to the other creditors their shares in the
payment.
ARTICLE 1211 - The demand : termination of mutual agency
Solidarity may exist although the creditors and the
debtors may not be bound in the same manner and ARTICLE 1216
by the same periods and conditions. The creditor may proceed against any one of the
solidary debtors or some or all of them
simultaneously. The demand made against one of
Kinds of solidary obligation according to the legal them shall not be an obstacle to those which may
tie: subsequently be directed against the others, so long
1. Uniform where the parties are bound by the as the debt has not been fully collected.
same stipulation or clauses
2. Non-uniform or varied where the parties are - May be modified by agreement of the parties
not subject to the same stipulations or clauses - Choice is left to the solidary creditors

ARTICLE 1212
ARTICLE 1217
Each one of the solidary creditors may do whatever
Payment made by one of the solidary debtors
may be useful to the others, but not anything which
extinguishes the obligation. If two or more
may be prejudicial to the latter.
solidary debtors offer to pay, the creditor may
choose which offer to accept.
Effects of Prejudicial Acts as to Creditors
- If the creditor does a thing that it is prejudicial
He who made the payment may claim from his co-
to the others, he will be liable for damages.
debtors only the share which corresponds to each,
- As for the debtors, the act shall be valid and
with the interest for the payment already made. If
binding.
the payment is made before the debt is due, no
interest for the intervening period may be
demanded.
ARTICLE 1213
A solidary creditor cannot assign his rights without
When one of the solidary debtors cannot, because of
the consent of the others.
his insolvency, reimburse his share to the debtor
Reason: Each creditor represents the others and the paying the obligation, such share shall be borne
assignee may not have the confidence of the by all his co-debtors, in proportion to the debt of
original solidary creditors considering that the each.
assignee after receiving payment may not give
the shares of the others.
ARTICLE 1218
- A solidary creditor who assigns his rights to another Payment by a solidary debtor shall not entitle him
without the consent of his co-creditors shall answer reimbursement from his co-debtors if such payment
subsidiarily for any prejudice caused to the is made after the obligation has prescribed or
latter by the assignee in connection with the credit. become illegal.

Prescription lapse of time


ARTICLE 1214
The debtor may pay any one of the solidary The following actions must be brought within 10 years
creditors; but if any demand, judicial or from the time the right of action accrues:
extrajudicial, has been made by one of them, 1. Upon a written contract
payment should be made to him. 2. Upon an obligation created by law
3. Upon a judgment
- Purpose: to forestall fraud
Six years:
1. Upon an oral contract Example:
2. Upon a quasi-contract 1. A and B are liable in solidum to C in the amount
of P1,000. C remitted As share. Subsequent
Four years: payment by B of P1,000 to C will not entitle him
1. Upon an injury to the rights of the plaintiff of reimbursement from A. However, B can
2. Upon a quasi-delict demand the return of P500 from C under the
principle of solution indebiti.

Effects of Novation, Compensation, Confusion and


Remission by Creditor Article 1220
The remission of the whole obligation, obtained by
Article 1215 one of the solidary debtors, does not entitle him to
Novation, compensation, confusion or remission of reimbursement from his co-debtors.
debt, made by any of the solidary creditors or Reason: because it is essentially a donation; it is
with any of the solidary debtors, shall extinguish gratuitous
the obligation without prejudice to the provisions
of Article 1219.
The creditor who may have executed of these acts,
as well as he who collects the debt, shall be liable EFFECT OF LOSS OR IMPOSSIBILITY OF

to the others for the share in the obligation PERFORMANCE

corresponding to them.
ARTICLE 1221
If the thing has been lost or their prestation has

Effect of extension of time given by creditor to a become impossible without the fault of the

solidary debtor solidary debtors, the obligation shall be

- Does not amount to novation that will discharge extinguished.


the other solidary debtors
- The other solidary debtors shall be liable for the If there was fault on the part of any of them, all
whole share less the share of the debtor granted shall be responsible to the creditor, for the price
the extension. and the payment of damages and interest, without
- Upon the expiration of the term, the creditor can prejudice to their action against the guilty or
demand payment of the unpaid share from any negligent debtor.
of the solidary debtors.
If through a fortuitous event, the thing is lost or the
performance has become impossible after one of
Article 1219 the solidary debtors has incurred in delay
The remission made by the creditor of the share through the judicial or extrajudicial demand
which affects one of the solidary debtors does not upon him by the creditor, the provisions of the
release the latter from his responsibility towards preceding paragraph shall apply.
the co-debtors, in case the debt had been totally ARTICLE 1222
paid by anyone of them before the remission was A solidary debtor may, in actions filed by the
effected. creditor, avail himself of all the defenses which are
derived from the nature of the obligation and of
- Payment made before the remission waiver is of no those which are personal to him, or pertain to his
effect own share. With respect to those which personally
- If the remission is made previous to the payment belong to the others, he may avail himself thereof
and payment is made, solution indebiti arises. only as regards that part of the debt for which the
- It is incumbent upon the debtor whose debt is latter are responsible.
remitted, to prove the priority of the remission to
the payment to release him from responsibility 1. Defenses derived from the nature of the obligation
towards his co-debtors. Example:
A and B are solidarily liable to C in the amount of
P1,000. The entire debt was paid by D. In an (b) Assume now that the portion of the obligation
action by C against A, the latter can raise the affecting B is subject to a suspensive condition
defense of payment by virtue of which the which has not yet happened.
obligation was extinguished.
A defense derived from the nature of the obligation In this case, the non-fulfillment of the condition
is complete defense because it nullifies the is partial defense as it can be set-up by B only
obligation or renders it ineffective. Other examples with respect to his share. C can demand from B
are fraud, prescription, remission, illegality or the portion of the obligation pertaining to A
absence of consideration, res judicata, non- because B is solidarily liable.
performance of suspensive condition, etc.
3. Defenses personal to other solidary debtors
2. Defenses personal to, or which pertain to share of, Example:
debtor sued In the two preceding examples, the defense of
Examples: insanity or non-fulfillment of the suspensive
(a) If the action by C is against B, and B was condition is not available to A as to release him from
insane at the time of the obligation was his liability for his share in the obligation.
contracted, B can put up the dense of insanity
with respect to the entire obligation. This In other words, A may avail himself thereof only as
defense is personal to B alone. It is a complete regards that part of the debt for which B is liable.
defense. Hence, having only a partial defense. A is still liable
for P2,000 his share in the obligation.
Other examples are incapacity, mistake,
violence, minority, etc.

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