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    Nature Effects of Obligation

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    NATURE AND EFFECT OF OBLIGATIONS Determinate thing and generic thing 1. Concept A thing is determinate when it is particularly designated or physically segregated from ali others of the same class. (Art. 1460). Examples: 2015 Toyota Altis with engine no. 123456, body no. 546611, and plate no. FRS 840; my only wristwatch; the house located at 234 Moret Street, Sampaloc, Manila; my horse named “Black Stallion.” A thing is indeterminate or generic when it is not particularly designated or physically segregated from all others of the same class, i.e., one of a class. Examples: A horse, a car, P10,000.00. importance of knowing whether a thing is determinate oT generic 7 Fortuiter® @ Mule: the loss of a determinate thing through @ ‘ortuitous event extinguishes the obligation. (Art. 1262) Obligations of one obliged to give a determinate thing 1 To take good care of the thing wi ig ig with the diligence of a good father of a family unless the law or agreement of the Parties requires another standard of care. (Art. 1163) Diligence of a good father of a family means the ordinary care that an average person exercises in taking care of his property. 2. To deliver the thing. (Art. 1163) , This involves placing the thing in the possession or control of the creditor either actually or constructively. 3. To deliver the fruits of the thing. (Art. 1164) a Kinds of fruits 1). Natural fruits - They are ‘the spontaneous products of the soil and the young and other products of animals. (Art. 442) ‘Thus, the trees that grow naturally on the soil without the intervention of man and the colt delivered by a mare are natural fruits. For the young and other products of animals,. they are natural fruits even with the intervention of human labor. 2) Industrial fruits - They refer to those produced by land of any kind through cultivation or labor. (Art, 442) Examples are rice, corn and other crops produced through the intervention of human labor. 3) Civil fruits - They refer to fruits which are the result of a juridical relation such as the rent of a building, price of lease of land and other property and the amount of perpetual or life annuities. (Art. 442) b. When creditor has a right to the fruits of @ determinate thing ‘The creditor has the right to the fruits of a thing from the time the obligation to: deliver it arises, However, he shiall acquire no real right over OBLIGATIONS 10 been delivered to him, te until the thing bas (art, 1164) When obligation to de If the obligation is a pure obligation or one 1) hose performance is not subject to 9 Suspensive period or suspensive condition, the obligation to deliver arises from perfection. 2) If the obligation is subject to. a suspensive + period of suspensive condition, the obligation to deliver arises upon the arrival of the term or upon the fulfillment of the condition. Thus, if D is obliged to give C a specific car on Christmas day next year, the obligation to deliver arises only on the arrival of such date. Or if the obligation of D is to give C such car if C passes the CPA Examination, then the obligation to deliver : erises only upon the fulfillment of such condition. Rights of the creditor 1) Peraonal right - This is a right that may be enforced by one person on ancther, such as the right of the creditor to demand the delivery of the thing and its fruits from the debtor. This is also called jus in personam or jus ad rem. 2) Real right ~ This refers to the nght or power over a specific thing, such aa possession oF ownership, which is a right enforceable against the whole world. This is the right acquired by the creditor over the thing and its fruite when they have been delivered to him. This is also called jus in re. liver the thing arises. 4. To deliver its accessions and accessories even if they have e not been mentioned. (Art. 1166) Remedi L i Accessions - They include everything that is produced by a thing ot js incorporated or attached thereto, either naturally or artificially, (Art. 440) Such as alluvium, the soil gradually deposited by the current of a river on a river bank, or whatever is built, planted or sown on a parcel of land. Accessories - Those joined to or included with the Principal thing for the latter's better use, perfection or enjoyment (such as the keys to a car or a house, or the bracelet of a wristwatch). lies of the creditor If the debtor fails to perform his obligation to deliver a determinate thing 7 a. To compel the debtor to make the delivery. (Art. 1165) b, ‘To demand damages from the debtor. (Art. 1170) Example: D is obliged to give C a specific car. On due date, C demands delivery but D does not deliver. In this case, C can compel D to deliver the car because there is no other person in possession or control of it. C can also demand payment of damages from him. If the debtor fails to perform his obligation to deliver a generic thing a. To ask that the obligation be complied with at the expense of the debtor. (Art. 1165) b. To demand damages from the debtor. (Art. 1170) Example: D is obliged to deliver 10 sacks of rice to C. If D does not perform his obligation on due date upon C’s demand, C can obtain 10 sacks of rice from other sources at the expense of D. C can do so because the thing is generic and thus can be replaced with the same kind. C can also ask for damages from D_ If the debtor fails to perform his obligation in obligations todo 4, 12 jis to perform the obligation or er, a, ee may have the obligation executed if the det performs i 1 oretitepense of the debtor. (Art. 1167) 9) He may also demand damages from the debtor. (Art. 1170) Bxample: D is obliged to construct a hollow block fence for C. By agreement, the fence will be 2 imeters high and 10 meters long, fine-finished and painted. If D does not perform his obligation upon s demand, C can ask another person to, or he himself may, construet the fence at the expense of D. Ccan also ask for damages from D. C cannot compel D to perform the obligation because compulsion will. violate D’s right against involuntary servitude. If D constructs the fence but did not follow the measurements agreed upon {i.e., there was contravention of the tenor of the obligation), C will have the'same rights. y If the debtor performs the obligation but does it poorly 1) Creditor may have the same be undone at debtor’s expense. (Art. 1167) 2) Creditor may also demand damages from the debtor. (Art. 1170) Example: If in the same illustration above, D constructs the fence following the measurements but it was not properly aligned, the finishing was rough, and materials used were substandard, C can have the fence be demolished by another Person or even by himself at D's expense. C_can also demand damages from D. if Ifthe debtor does what has been forbideen him OBLIGATIONS 13 a. The creditor may demand that what Has been done be undone. b. He may also demand damages from the debtor. (art. 1168) Example: B ‘bought a farm lot from S. However, the only access from the road to B’s lot is the lot of D. So B ‘entered into'a contract with D fora right of way over a period of:10 years and paid a sum therefor. It was agreed that for the duration of the contract _D would not construct any fence between B’s lot and his. Sometime thereafter, however, D constructed a fence in violation of the agreement. B may demand that D remove the fence at D's expense and pay damages. Grounds for lability to pay damages 1 Fraud 2. Negligence 3. Delay 4. Contravention of the tenor of the obligation. (Art. 1170.) Damages 1. Concept,-distinguished from injury Damages refer to the harm done and the sum of money that may be recovered in reparation for the harm done. (Cinco vs. Canonoy, 50 SCRA 377) Injury refers to the wrongful, unlawful or tortuous act which causes loss or harm to another. It is the legal wrong to be redressed. (See Zulueta vs. Pan American World Airways, Inc., L-28589, January 8, 1973.) 2. Kinds of damages a Actual or compensatory damages - These refer to the pecuniary loss, (such as loss in business or profession) that may be recovered. It includes the value of the loss suffered and profits not realized. (Art. 2199) 4 ae | damages - They include physical sutte ecarat angui fright, “serious ‘anaiete beamirched reputation, wounded feelings, ‘mor shock, social humiliation, and similar injury. (art 2217) Nominal damages - They refer to damages vindicate a right. (Art. 2221) : ‘Temperate or moderate damages - They are more than nominal ‘but less than compensatory damages, but may be recovered if the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. (Art. 2224) Liquidated damages '- Those agreed upon by the parties to a contract, to be.paid in case of breach. (Art. 2226) Exemplary or corrective damages - These are imposed by way of example or correction for public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art. 2229) Proof of pecuniary loss a. b. Actual damages — Proof is required unless provided by law or stipulation. (Art. 2199) Other damages - Proof is not required in order that moral, nominal, temperate or. liquidated or exemplary damages may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case, (Art, 2216) Concept Fraud is the deliberate or intentional evasion bY the debtor of the normal compliance of his obligation. Under Art. 1170, this actually refers to the fraud committed by the debtor at the time of the perfrmance his obligation. Kinds of fraud in general OBLIGATIONS 15 ® According to meaning ) 2) Fraud in obtaining consent a) >) Causal fraud or dolo causante - This refers to frauid without which consent would not have been given. It renders the contract voidable. Example: B bought a ring from $ who told him: that the ring was ‘embellished with diamond. However, S knew all along that the embellishment was not diamond but ordinary glass. B here gave his consent because of . the fraud employed by S; hence, the contract is voidable. Incidental fraud or dolo incidente - This refers to fraud without which consent would have still been given but the person giving it would have agreed on different terms. The contract is valid but the party employing it shall be liable for damages. Example: C hired D to teach in the school of C. D placed in his application that he had earned units in MBA. However, D had actually dropped the subjects for the said units. If C would have hired D even if D did not complete the said units but that he would have given a lower salary to D, the fraud committed by D was only incidental but it would entitle C to recover damages. Fraud in the performance of the obligation ‘This is the deliberate act of evading fulfillment of an obligation in a normal manner. This presupposes an existing 16 b. y 2) Negligence 1. Concept OBLIGATIONS, hence, the fraud has no effect validity. of the contract since it was Ghiployed after perfection. However, the powder soap from S who agreed to deliver Tee came after 2 days. On due date, S Gelivéred 10 bags of powder soap which he fixed with chalk. This is-fraud in the performance of an obligation which entitles B to recover damages. The fraud, however, does not have any effect on the validity of the contract. According to time of commission Future fraud A waiver of an action for future fraud cannot be made. If there is an agreement for its waiver, the same is void. (Art. 1171) Thus, the debtor will still be liable for damages if he commits fraud in the performance of his obligation despite any waiver made by his creditor. Past fraud ‘A waiver of an action for past fraud may be made, since the commission of fraud can no longer be encouraged. Such waiver is an act of liberality on the part of the creditor. It is the omission of that 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, (Art. 1173). It is the failure to observe, for the protection of the interest of another person, that degree care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury OBLIGATIONS 7 National Power Corporation vs, Heirs of Noble Casionan Joboy pulang va. Bedania, G.R. No, 162987, May 21, 2009) It ie the omission ‘to do something’ which a Teqponable man, guided by those considerations. which fo nt ‘gulate the conduct of human affairs, would , ie doing of something which a prudent and Teasonable man, would not do. (Perena vs. Zarate, G.R. No. 157917, August 29, 2012) ; aa 2. Test of negligence ‘ The test of negligence is whether the defendant in joing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. (Guillang vs. Bedania; supra) 3. Diligence to be observed If the law or contract does not state the diligence which is to be observed in the performance of the obligation, the debtor must observe the diligence of a good father of a family, as required by the, nature of the obligation, and which corresponds with the circumstances of the person, of the time or of the place. Examples: ‘a. If the obligation is to deliver a specific window glass, the debtor must ensure that the glass, considering its fragility, is well-protected, say with cushions, when he transports it as required by the nature of the obligation. Otherwise, he will be negligent. b. A baby-sitter, 21 years old, strong and healthy, will be negligent if she sleeps while on duty considering that the circumstances of her person were considered when she was hired for the job. c. If the driver of a car drives at night without any headlight, he will be considered negligent considering that the circumstances of nighttime require such light. 4. If the same car driver drives at 50 kilometers per hour along a busy street where many people are crossing, he will be negligent because the 18 4. Kinds le circumstances of the place require that he shoug | drive slowly (contractual negligence) ~ This ig gence in the performance of @ contract (such neetigeseligence committed by the driver of a bus when a passenger is hurt during a trip because there is here a breach of contract of carriage). Here, the master-servant rule applies, ie, the negligence of the servant is the negligence of the master. Accordingly, the defense of a good father of a family in the selection and supervision of employees is not.a defense on the part of the employer although it may mitigate the liability. Thus, in the example, the negligence of the bus driver is also the negligence of the bus owner. Quipa contractual Mlustrative Case: Saludaga vs. Far Eastern University G.R. No. 179337, April 30, 2008 Facts: S, a student of U University, was shot and wounded by G, a security guard of the school, while inside the campus. S sued U University for damages on the ground that it breached its obligation under the enrollment contract to provide students with a safe and secure environment and an atmosphere conducive to learning. In defense, U_ University pleaded fortuitous event on the ground that it could not have reasonably foreseen nor avoided the accident since G was not its employee, and that it complied with its obligation to ensure a safe environment for its students by having exercised due diligence in selecting the security services of the-SA Security Agency. Held: Respondent school is liable for damages for breach of contract due to negligence in providing @ safe learning environment. It ie settled that in culpa contractual, the mere proof! the existence of the contract.and the failure of it® OBLIGATIONS. 19 compliance justify, prima facie, a corresponding Fight of relief. The schoot failed to prove that it undertook steps to ascertain that the security guards assigned to it actually possessed the required qualifications. A learning institution should not be allowed to completely relinquish Security matters in its premises to the security agency it hired. To do so would result in contracting away its inherent obligation to ensure a safe learning environment for its students. The defense of. fortuitous event or force majeure must also fail. An act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of the loss sustained. b. Culpa aquitiana (civil negligence or tort or quasi- delict or culpa extra-contractua) - These are acts or omissions that cause damage to another, there being no contractual relation between the parties. (art. 2176) ‘The master-servant rule does riot apply. Hence, the defense of a good father of a family in the selection and supervision of employees is a defense on the part of the employer to. escape liability. Thus, if a pedestrian is hit by a bus through the reckless driving of the driver, the latter’s negligence is not the negligence of the owner. © Culpa criminal (criminal negligence) - This is negligence that results in the commission of a crime. Defense of a good father of a family is not proper because the employee's guilt is tomatically the employer's civil guilt if the former insolvent. ‘The passenger of the bus may bring a court action not only for culpa contractual against the bus owner, but also one for culpa criminal against the bus driver for reckless imprudence resulting in physical injuries. In the same way, the pedestrian 20 ke as ot only a suit for culpa aquilia eau bring griver and the owner, but also one for culpa criminal against the bus driver for recldles, impradence resulting in physical injuries. Concept Delay or default or mora is the non-fulfillment of an obligation with respect to time. Kinds a. Mora solvendi- Delay on the part of the debtor. 1) Bx re~ Delay in real obligations (obligations to give). 2) Ex persona - Delay in personal obligations (obligations to do). “b. Mora accipiendi - Delay on the part of the creditor. ‘This exists when the creditor refuses to | accept the thing due without justifiable reason. ©. Compensatio morae - Delay in reciprocal obligat- ions, i.e., both parties are in default. Here, it is as if there is no delay. When debtor incurs in delay in obligations to give or to do, requisites General rule: The debtor incurs in delay from the time the creditor demands fulfillment of the obligation (cither judicially or extra-judicially) but the debtor fails to comply with such demand (no demand, no delay, as & rule). The following are the requisites of delay: a. That the obligation be demandable and already liquidated, b. The debtor does not perform the obligation. ¢. The creditor demands the performance either Judicially or extra-judicially. (See Gilat Satellite Networks, Ltd. vs. UCPB General Insurance, Inc GR. No. 189563, April 7, 2014 for similar requisites.) OBLIGATIONS 21 a. ‘The debtor fails to comply with such demand, Example: D owes C P5,000.00. The obligation is due on M: 15. If D does not pay on May 15, he is not yet in delay. a demand on him to pay on that date or Within a reasonable time thereafter and D does not comply, then D will be in delay. Exceptions, i.c., delay will exist even without demand in the following cases (Art. 1169): a. _ When the law so provides, Thus, where the law provides for the Payment of penalty if the obligation is not performed on due date (such as in the case of taxes}, then demand shalll not be necessary. b. _ When the obligation expressly so declares. Hence, no demand is necessary such as when a lease contract provides that “(T)he rental shall be paid by the lessee within the first five days of the month in advance without need of demand.” c. When time is of the essence of the contract. Thus, where a rent-a-car company is obliged to provide for the bridal car during a wedding at a particular date, time and place, the said company is liable if it fails to perform the said obligation notwithstanding the absence of demand since time was a controlling motive for the establishment of the contract. d. When demand would be useless. Thus, the debtor will be in delay even without demand from the creditor if the thing he is obliged to deliver has been destroyed through his fault or he has delivered it to another person, €. In reciprocal obligations, where the obligations arise out of the same cause and must be fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by the other begins notwithstanding the absence of demand. 22 LIOATION &. In (a) and (b) above, it is not sufficient that the jay or obligation fixes a date for performance; it mus, further state expressly that after the period lnpaey, default will commence. (Rivera v8. Spa, Chua, GR No. 184458 and 184472, January 14, 2015) b. There is no delay in an obligation not to do as one cannot be in delay for not doing something, 4. Biffects of delay @. On the part of the debtor 1) The debtor shall be liable for the payment of damages, (Art. 1170) 2) If the obligation consists in the delivery of a determinate thing, he shall Le responsible for any fortuitous event until he hae effected the delivery. (Art. 1165) b. On the part of the creditor 1) Hecshall bear the risk of loss and shoulder the expenses for the preservation of the thing. 2) The debtor may resort to the consignation of the thing due. (Art, 1258) Fortuitous events 1. Concept Fortuitous events are those events that could not be foreseen, or which, though foreseen, are inevitable (Art, 1174). It is not enough that the event should not been foreseen or anticipated, but it must be one impossible to foresee or avoid, (Sicam vs. Jorge, G.R. 159617, August 8, 2007) s Examples: Natural calamities or acts of God svt as earthquake, typhoon and lightning; and acts of (‘force majeure”) such as war and armed robbery. 2. Elements OBLIGATIONS 23 The cause must be independent of the debtor’s will, b. There must be impossibility of foreseeing the event or of avoiding it even if it can be foreseen. c The occurrence of the event must be. of such, character as to render it impossible for the debtor to perform his obligation in a normal manner. (See Sicam vs. Jorge, stipra, for similar elements or characteristics.) 3. Liability for fortuitous events General rule: No person ‘shall be liable for fortuitous events, i.e., his obligation will be extinguished. Exceptions to the rule (Art. 1174): a. When the law expressly provides for liability. even in case of fortuitous events (such as that provided in Art. 1165 where the obligor is liable for fortuitous events if he delays or has promised to | deliver the same thing to two or more persons who { do not have the same interest). b. When the parties have declared liability even in case of fortuitous event. c. When the nature of the obligation requires the assumption of risk (such as the obligation of an insurer who must pay the policy holder even if the Joss is caused by a fortuitous event if the cause thereof is the risk insured against). 4. Burden of proving loss due to fortuitous event The burden of proving that the loss was due to fortuitous event rests on him who invokes it. And, in order for fortuitous event to exempt one from lability, it is necessary that he must have committed no negligence or misconduct that may have occasioned the loss. (Sicam vs. Jorge, supra) 5. Case Roberto C. Sicam, et al., vs. Spouses Jorge G.R. No. 159617, August 8, 2007 24 ORG Facts: LJ pawned several pieces.of jewelry win ‘Agencia de R. C. Sicam to secure a loan. Armed robbery entered the pawnshop and took away the jewelry of Li ang other clients of the pawnshop from the vault which way | left open since it was a Saturday. There was no showing | that a security guard was stationed at the pawnshop When LJ demanded the return of the jewelry she haq pawned, the pawnshop failed to do so because it was logt | in the robbery, and raised, among other defenses, non. liability due to fortuitous event... Is the defense tenable? Held: No. In order for a fortuitous event: to exempt one from liability, it is neeessary that he has committed no negligence or misconduct that may have occasioned the loss. When the event is found to be partly the result of a person’s participation - whether by active intervention, neglect or failure to act - the whole occurrence is humanized and removed from the Tules applicable to acts of God. The pawnshop failed to show that it was free from any negligence by which the loss of the pawned jewelry may have been occasioned. Its failuré to provide a station a security guard at the pawnshop and its leaving the vault open constitute acts of negligence which made the loss no longer independent of its will. Presumptions on receipt of. principal or of later installment {these are disputable presumptions and evidence may be introduced to the contrary by the creditor) (Art. 1176) 1, The receipt of the principal without reservation as to interest, shall give rise to the presumption that the 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 above presumptions are disputable; hence, they may | be rebutted by the creditor with contrary evidence. Thus, the creditor may show proof that interest or a prior installment has not been paid. If the presumption is conclusive, then no evidence to the contrary may be admitted. OBLIGATIONS 25 Remedies of credit Auuinat debtor (ane eye emforee payment of hls claims 1 Pursue the ty Property in the fn except those epeerert, in the possession of the debtor, This is usually by attachment it ui where the creditor fice a court action to exact fulfillment with a prayer that the court set aside a property belonging to the debtor. If the court decides in favor of the creditor and the debtor aces ot pay, the Property attached will be ordered sold : : snd tip eof applied to the payment of the Exercise all the rights and bring all the actions of the debtor except those personal to him (accion subrogatoria). Example: A owes D. D owes.C. If C files a court action against D to collect, he may ask the court to order A not to pay D’so that in the event that the court rules in favor of .C, A will be required to.pay C. In effect, C is exercising the right to collect from A which is a right that belongs to D. Impugn the acts which the debtor may have done to defraud his creditors (accion pauliana). ‘This remedy must be of last resort. The creditor must have taken successively the foregoing measures (Nos. 1 and 2) before he can bring this action. (Metrobank vs. International Exchange Bank, G.R. No. 176008, August 10, 2011) Example: D owes C P50,000.00. To defraud C, D sells his lot, his only property, to B who knows of the fraudulent intention of D. C may’ask the court to order the rescission of the sale made by D. Once the sale is rescinded and the lot is returried to D, C_ may ask the court to order its attachment and ite ain puplic auction, and the proceeds of the sale app! paymien of his claim, [Note: This remedy is not available if the third person (B, in this illustration), was not aware of the debtor's fraudulent intention, i.e,, he was in goof faith.) op 2 LIGATIONS, Rale on transmissibility of rights and exceptions thereto (Ary, 1178) ; i i liga General rule: All rights acquired in virtue of an obligation are transmissible. (Thus, a creditor may assign his credit to third person or such right is transmitted to the heirs upon hig death.) Exceptions: If the law prohibits the transmission of the right. ‘Thus, the rights of a general partner in a partnership are not transmitted to his heirs upon his death as provided by law. 2. If the parties agreed against transmission. Thus, the right is not transmitted to an assignee or to the heirs if there was a stipulation to: that effect between the parties. 3. If the right is by nature not transmissible. Example: _S was granted a scholarship grant by a school after a series of examination and interviews. S, however, dies with two years still remaining before he finishes his studies. The right of S to enjoy the scholarship grant is not transmitted to his heirs because it is strictly personal. DIFFERENT KINDS OF OBLIGATIONS Primary classification under the Civil Code L 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 ee 27 9, _Indivisible obligation 10, Obligation with a penal clause Pure and Conditional Obligations Pure obligation, concept A pure obligation is one without a term or condition and is demandable at once. Example: I promise to give you P5,000.00. This is immediately demandable since there is no terin that must expire or a condition that must happen for the obligation to be demandable. Conditional obligation, concept A conditional obligation is one whose demandability or extinguishment depends upon the happening of a condition. ' Examples: (1) “I will give you my car if you pass ‘the CPA Examination." The condition here is suspensive. You may not demand, the delivery of my car until you pass the CPA Examination. (2) “I will let you use my car until.you pass the CPA Examination.” The condition here is resolutory. You may demand the delivery of my car now but you must return it to me when you pass the CPA Examination. Condition 1 Concept It is an uncertain event which wields an influence on a.legal relationship. (Manresa) 2. Classification 4. Suspensive and resolutory 3) Suspensive - This is @ condition the happening of which will give rise to the obligation. This is also cailed condition antecedent or condition precedent. Here, the demandability of the obligation is 28 2), OBLIGATIONS, suspended until the happening of the condition. When an obligation is subject to a suspensive condition, its birth takes place or its effectivity commences only if and when the event that constitutes the condition happens or is fulfilled. (Gidwanj vs. People, G.R. No. 195064, January 15, 2014) Resolutory - This is a condition the happening of which extinguishes the obligation. This is also called condition subsequent. The obligation is demandable at once but it shall be extinguished upon’ the happening of the condition. Potestative, casual and mixed y Potestative - A condition that depends upon the will of one of the contracting parties. a) _Potestative on the part of the debtor (1) If suspensive ~ The’ obligat- ion is void. (Art. 1182) Even if the condition is fulfilled, the obligation is _not demandable. (Example: D is to give C P50,000.00 if D goes to Baguio.) 2) If resolutory - The obligation is valid. (Example: D is t0 allow the use of his car by C until D returns from Baguio.) b) —Potestative on the part of th creditor - The obligation is ve! whether the condition is suspensiv¢ or resolutory. (Examples: (1) D 18 to give C PS0,000.00 if C goes (© Baguio. (2) D is to allow the use his car by C until C returns from Baguio.| a 3) 29 Casual ~ A condition that depends upon chance or upon the will of a thitd person [(Sxamples: (1) D is to give C P50,000.00 if D wins first prize in the lotto on the bet he placed this morning. (2) D is to give C P50,000.00 if X goes to Baguio.| Mixed — A condition that depends parily upon the will of one of the parties and Partly upon chance or upon the will of » third person. (Example: D is to gve C PS0,000.00 if C will marry X.) Possible and impossible y 2) Possible ~ One that is capable of fulfillment in its nature and by law. Impossible - One that is not capable of fulfillment in its nature, such as “if you can swim across the Pacific Ocean,” or due to operation of law, such as “if you kill X”. In this case, the obligation and the condition are void. (Art. 1183). Note: If the condition is not to do an ‘impossible thing, it shall be deemed as not having been agreed upon, (Art 1183) Thus, the obligation is immediately demendable. (Example: D is to ge C PS50,000.00 if C does not swim across the Pacific Ocean.) Positive and negative x Positive - This is a condition that some event happen at a determinate time. Here the obligation is exunguished as sor the time expires or it has become indubitable that the event will not tase place. (Art. 1184) Example: 1) 18 to give CP: if C will marry X an or before June be extmguished 2016. The obligavion will be extiugusie’ en duly i, 2016 if C has not vet ™ »,000.00 30 4) 30, 2016. If X dies on June 1 =e ‘fore © has married her, then the Shiigation is extinguished on such date coligtiee there is no more doubt thet the fnarriage will not take place. Negative - This is a condition that some event will not happen at a determinate time, Here, the obligation becomes effective as soon as the time indicated has elapsed or it has become evident that the event will not occur. (Art. 1185) Example: D is to give P50,000.00 if C will. not marry X on or before June 30, 2016. The obligation becomes effective on July 1, 2016 if C has not yet married X as of June 30, 2016. If X dies on June 1, 2016 before C has married her, then the obligation becomes éffective on such date because there is no more doubt that the marriage will not take place." Divisible and indivisible y Divisible ~ One that is capable of partial performance. Under Art. 1183, if the obligation is divisible, that part thereof which is not effected by the impossible or unlawful condition shall be valid, Examples: (a) D is to give C a can if C finishes his law course, ant P1,000,000.00 if C tops the Rar Examination. If D finishes his law course. he may demand the delivery of the ca! However, he may not demand the paynitt °f P},000,000,00 if he does not top the Ba! (b) Dis to give C'a car if C finishes bis la¥ course and P1,000,000.00 if C can get & copy of the test questions in the Bar Exemination in advance. Even if bet conditions are fulfilled, C can only ask OBLIGATIONS Ai the delivery of a car from D because the second condition is unlawful 2) Indivisible - One that is not capable of Partial performance by its nature of by law or agreement of the parties Example: D is to give C a car if C finishes his law course and tops the Bar. C must comply with both conditions before he can ask for the delivery of a car from D. Effect of fulfillment of suspensive condition (Art. 1187) General rule: The effect of the fulfillment of the suspensive condition retroacts to the day. of the constitution of the obligation. Exceptions: There shall be. no retroactive’ effect with respect to the fruits and interests as follows: 1, In reciprocal obligations, the fruits and interests shall be "deemed to have been mutually compensated, i.e., each party shall keep the fruits and interest received by him prior to the fulfillment of the condition. Example: On May 1, 2011, S agreed to sell his land to B and B agreed to pay the price of P50,000.00 if 2 finishes his Accounting degree on March 15, 2015. finished his Accounting degree as stipulated, It was as if S was entitled to the price and B to the land beginning on May 1, 2011. However, S shall keep the fruits on the land and B the interest on the price during the pendency of the condition. % Jn unilateral obligations, the debtor keeps the fruits ané interests received before the fulfillment of the condition Example: On May 1, 2012, S promised to give B hie land if B passed the Bar Examination in Februe y 2018. B passed the Bar Examination as stipulated. It was as if B was entitled to the land beginuing on May 4, 2012. However, $ will keep the fruits on the land during the pendency of the condition. St eee ee of the paseiss before eh? fulfillment of the condition Rights (Ar. 1188) nay bring the appropriate actions for the 1 Crediton | Meenas right, such a8 registering his clin “er of Deeds, if appropriate, to notify al with the Regist king the debtor to provide a security i hird person’ e the Yebtor is about to become insolvent.. 9, Debtor ~ He may recover what he has paid by mistake. Effect when the debtor voluntarily prevents fulfillment of the condition ‘The condition is deemed fulfilled if the debtor voluntarily prevents its fulfillment (Art. 1186), hence, the obligation becomes Enmediately demandable. Hére, there must be an intent on part of the debtor to prevent compliance with the condition and actually prevents its fulfillment. Example: D promised to give P10,000.00 to C, a marathon athlete, if C Gnishes the race during the athletic meet. However, on the eve of the scheduled race, D put a substance on the drink of C who experienced weakening after-taking the drink, and hence, wes not able to join the race. Here, D must give P10,000.00 to C since the condition is deemed fulfilled. Rules in case of loss, deterioration or improvement of determinate thing before the fulfillment of the suepensive condition (Art. 1189) 1. Loss of the thing a. Without debtor's fault - Obligation is extinguished b With debtor's fault ~ Debtor is obliged to Pav damages. Concept of loss A thing is considered lost when it perishes, or goes °Ut of commerce or disappears in such a way that existence is unknown or it cannot be recovered ri Example: D is obliged to give C a apecitic howte § passes the CPA Examination. If the house 1s © leatre OBLIGATIONS 33 in a fire without the fault of D before Cpasses the CPA Examination, D's obligation is extinguished even if C, thereafter, passes the CPA Examination. But if the house is destroyed through the fault of D such as when he placed inside the house highly flammable chemicals which caused the fire, then D shall be obliged to pay damages should C pass the CPA Examination. 2. Deterioration of the thing Without debtor's fault - The impairment shall be borne by the creditor, i.e., no liability on the part of the debtor to pay damages. b. With ‘debtor's fault - The creditor may choose between : 1) Rescission, plus damages, and. 2) Pulfillment, plus damages. . Example: D is obliged to give @ specific car to C if C finishes his egonomics degree. The deterioration of the car due to wear and tear before C finishes his, economics degree will be borne by C if C later finishes the said degree. However, if the car is damaged in an accident due to D's fault, C, if he finishes his economics degree, may rescind the contract and ask for damages, or ask D to deliver the car in its deteriorated condition plus damages. Improvement of the thing a. _By nature or by time - The improvement shall inure to the benefit of the creditor. Example: D is obliged to give his violin'to C if C finishes his course in music. If the quality of the tone produced by the violin had improved between the time that D's obligation was constituted and the completion by C of his course in music, then such improvement shall inure to the benefit of C. b. At the expense of the debtor - The debtor will haye the rights granted to a usufructuary, i.e, he can have enjoyment of the use of the improved thing OBLIGATION, its fruits, He may remove the improvement ig ape is caused to the principal thing. If the improvement cannot be removed without causing damage to the principal thing, the thing and the improvement shall be delivered to the creditor without any right on the part of the debtor t indemnity. He may, however, set off the improvements against any damage to the thing (Arts. 579 and 580) Example: _D is obliged to’give his only car to C if C finishes his economics degree. Before C. finished the said degree, D had the car repainted. In this case, D can continue using the car in its improved condition. Upon the completion by C of his economics degrée, D cannot remove the paint ‘because it will cause damage to the car. However, if he had caused a dent on the car due to his fault, he may set off the cost’ of damage brought by such dent against the cost of repainting. Rule in case of fulfillment of resolutory condition (Art. 1190) 1. Upon the fulfillment of the resolutory condition, the obligation is extinguished. 2. ‘The parties shall return to each other what they have received. In case of loss, deterioration or improvement of the thing, the provisions in the above rule (Art. 1189), which pertain to the debtor shall be applied to the party who is bound t0 return, Reciprocal obligation, concept A reciprocal ‘obligation is one that arises from the sa? cause and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon fe obligation of the other. (Goldloop Properties, Inc. vs. Government Service Insurance System, G.R. No. 171076, August 1, 2019) Reciprocal obligations are to be pe: formed simultaneously 2 tet the performance of one is conditioned upon the simuleanc’t fulfillment of the other. (Jalandoni vs. Cabalum Coan! Pe School, 61216-R, July 15, 1980) LIGATION: OB! iS a Example: sold his Toyota car to B for P200,000.00. ' « ‘The delivery of the car by $ is dependent the payment the price by Band vice-versa, ns Pon i Remedios of the injured party in reciprocal obligation L Rescission with damages. 2. Fulfillment of the obligation with damages. The above remedies may be availed of by the injured party in the alternative. He cannot ask for both, (Verceluz vs. Edano, 44 Phil 801) If he has chosen rescission of the obligation, he can no longer ask for fulfillment, However, he may also seek rescission, even after be has. chosen fulfillment, if the latter becomes impossible, ObUgations with a Period Obligation with a period, concept An obligation with a period is one whose demandability or extinguishment is subjected to the expiration of the term which must necessarily come. In other words, there is a day certain when the obligation will arise or cease. Examples: (1) D is obliged to give his car to C on May 1 2016. On May 1, 2016, the obligation becomes demandable reason of the expiration of the term or period. The period here is one with a suspensive effect or ex die. (2) On January 1, 2016, D allowed C (o use his car until May 1, 2016. The obligation demandable on January 1, 2016 but on May 1, 2016, D's obligation to let C use his car is extinguished by reason of the expiration of the term. The period here is one with a resolutory fiect or in diem. C must therefore return the car Concept of period and day certain Penod is a space of time whicl © extinguishment of an obligation. between January 1, 2015 end Jenuary 1, lapse of which will cause an obligation t0 2: Lh determines the effectivity Thus, the space of tine ‘2016 is a period the or cvase. OBLIGATIONS t_necessarily cor ‘A day certain is that which mus! yy

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