RECIPROCAL OBLIGATIONS Those which are OBLIGATION WITH A PERIOD

created or established at the same time, out of

the same cause, and which result in mutual Those whose demandability or extinguishment is
relationships of creditor & debtor between the subject to the expiration of a term or period 
parties Requisites:
1. future
TACIT RESOLUTORY CONDITION with what is 2. certain
incumbent upon him, there is a right on the part 3. possible, legally and physically
of the other to rescind the obligation.
CLASSIFICATION OF TERM OR PERIOD
RIGHT TO RESCIND (ART 1191)
General Rule: The right to rescind needs judicial 1. a. suspensive (ex die) – obligation becomes
approval. demandable only upon arrival of a day certain
Exceptions: b. resolutory (in diem) – arrival of day certain
1. If there is an express stipulation of automatic terminates the obligation
rescission
2. When the debtor voluntarily returned the 2. a. legal – granted by law
thing b. conventional – stipulated by parties
c. judicial – fixed by courts
NOTES:
Article 1191 refers to judicial rescission. It does TERM Condition
not apply if there is an express stipulation to interval of time w/c is 1. fact or event w/c is
rescind, in which case such stipulation must future & certain future and uncertain
prevail. There is nothing in the law which 2. interval of time w/c 2. future and
prohibits the parties from entering into an must necessarily uncertain fact or
agreement that violation of the terms of the come, although it event w/c may or
contract would cause its cancellation without may not be known may not happen
court intervention. Said stipulation is in the when
nature of facultative resolutory condition
3.exerts an influence 3. exerts an influence
(Angeles vs. Calasanz, 135 SCRA 323). upon the time of upon the very
demandability or existence of the
Rescission will be ordered only where the breach extinguishment of an obligation itself
is substantial as to defeat the object of the obligation
parties in entering into the agreement.
4. does not have any 4. has retroactive
retroactive effect effect
The injured party may choose between
unless there is an
fulfillment and rescission of the obligations, with
agreement to the
the payment of damages in either case. These
contrary
remedies are alternative, not cumulative.
5. when it is left 5. when it is left
However, should fulfillment become impossible,
exclusively to the will exclusively to the will
the injured party may also seek rescission.
of the debtor, the of the debtor, the
existence of the very existence of the
The right to rescind belongs exclusively to the
obligation is not obligation is affected
injured party.
affected
General Rule: When a period is designated for
the performance or fulfillment of an obligation,
it is presumed to have been established for the
benefit of both creditor and debtor.
Exception: When it appears from the tenor of the
obligation or other circumstances that the
period has been established in favor of one or of
the other.
The Court may fix the period.
Reason for Fixing the Period (ART 1197)  There
can be no possibility of any breach of contract or
failure to perform the obligation unless the
period is fixed by courts.
Art. 1198. The debtor shall lose every right to
make use of the period:
(1) When after the obligation has been
contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
(2) When he does not furnish to the creditor the
guaranties or securities which he has promised;
(3) When by his own acts he has impaired said
guaranties or securities after their
establishment, and when through a fortuitous
event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the
period;
(5) When the debtor attempts to abscond.
• The debtor shall lose every right to make use
of the period:
1. When after the obligation has been
contracted, the debtor becomes insolvent unless
he gives a guaranty or security for the debt
o The insolvency here need not be
judicial. It can be actual insolvency.
2. When he does not furnish to the creditor the
guaranties or securities which he has promised
3. When by his own acts he has impaired the said
guaranties or securities after their
establishment, and when through a fortuitous
event they disappear, unless he immediately
gives new ones equally satisfactory
4. When the debtor violates any undertaking, in
consideration of which the creditor agreed
5. When the debtor attempts to abscond
6. When the creditor is deceived on the
substance or quality of the thing pledged, the
creditor may either claim another thing in its
stead or demand immediate payment of the
principal obligation
• Types of Periods
i. Suspensive (ex die)
• The period is suspensive when the
obligation becomes demandable
only upon the arrival of the period.
ii. Resolutory (in diem)
• The period is resolutory when the
performance must terminate upon
the arrival of the period.
Classification according to source:
i. Legal
• A period is legal when it is granted by law.
ii. Voluntary
• A period is voluntary when it is stipulated by
the parties.
iii. Judicial
• A period is judicial when it is fixed by the
courts.
• If the obligation does not fix a period, but from
its nature and the circumstances it can be
inferred that a period was intended, the courts
may fix the duration thereof
i. Express • A period is express
when the period is specifically
stated.
ii. Tacit • A period is tacit when a
person undertakes to do some
work which can be done only
during a particular season.
iii. Original • Original period agreed
upon
iv. Grace • A grace period is an
extension fixed by the parties or
by the court.
v. Definite • A period is definite
when it refers to a fixed known
date or time.
vi. Indefinite • A period is indefinite
when it refers to an event which
will necessarily happen but the
date of its happening is
unknown (i.e. death)
Art. 1202. The debtor shall lose the right
of choice when among the prestations
whereby he is alternatively bound, only
one is practicable. Art.
1203. If through the creditor's acts the
debtor cannot make a choice according
to the terms of the obligation, the latter
may rescind the contract with damages.
Art. 1204. The creditor shall have a right
to indemnity for damages when,
through the fault of the debtor, all the
things which are alternatively the object
of the obligation have been lost, or the
compliance of the obligation has
become impossible. The indemnity shall
be fixed taking as a basis the value of the
last thing which disappeared, or that of
the service which last became
impossible. Damages other than the
value of the last thing or service may also
be awarded.
Art. 1205. When the choice has been
expressly given to the creditor, the
obligation shall cease to be alternative
from the day when the selection has
been communicated to the debtor. Until
then the responsibility of the debtor
shall be governed by the following rules:
(1) If one of the things is lost through a
fortuitous event, he shall perform the
obligation by delivering that which the
creditor should choose from among the
remainder, or that which remains if only
one subsists; (2) If the loss of one of the
things occurs through the fault of the
debtor, the creditor may claim any of
those subsisting, or the price of that
which, through the fault of the former,
has disappeared, with a right to
damages; (3) If all the things are lost
through the fault of the debtor, the
choice by the creditor shall fall upon the
price of any one of them, also with
indemnity for damages. The same rules
shall be applied to obligations to do or
not to do in case one, some or all of the
prestations should become impossible.
Art. 1206. When only one prestation has
been agreed upon, but the obligor may
render another in substitution, the
obligation is called facultative. The loss
or deterioration of the thing intended as
a substitute, through the negligence of
the obligor, does not render him liable.
But once the substitution has been
made, the obligor is liable for the loss of
the substitute on account of his delay,
negligence or fraud.
ALTERNATIVE
• An obligation is alternative when
several objects or prestations are due,
but the payment or performance of 1 of
them would be sufficient.
• A promise to deliver either 500 kgs of
rice or 1000 liters of gas. The obligation
is alternative. The debtor cannot
perform the obligation by giving 250 kgs
of rice and 500 liters of gas unless the
creditor agrees. In which case there is a
novation.
• General Rule: The right of choice the
right to belongs to the debtor.
• Exceptions: 1. When it is expressly
granted to the creditor 2. When it is
agreed upon by the parties that a 3rd
person shall make the choice
• Choice Belongs to the Debtor
1. When through fortuitous event or
through the debtor’s acts, there is only 1
prestation left, the obligation ceases to
be alternative (Article 1202).
2. When the choice of the debtor is
limited through the creditor’s own acts,
then the debtor has the remedy of
resolution (Article 1191) plus damages
(Article 1203)
3. When all things are lost due to the
debtor’s fault, the creditor can sue for
damages (Article 1204) o Measure: value
of the last prestation
4. When some things are lost due to the
debtor’s fault but there are still some
things remaining, then the debtor can
choose from what’s left
5. When all the things are lost due to a
fortuitous event, the obligation is
extinguished
6. When all but 1 of the things are lost
due to a fortuitous event and the last
object is lost through the debtor’s fault,
then the creditor can sue for damages 7.
When all but 1 of the things are lost
through the debtor’s own acts and the
last object is lost through a fortuitous
event, the obligation is extinguished
Choice Belongs to the Creditor (Article
1205)
1. When 1 or some of the objects are lost
through fortuitous events, then the
creditor chooses from the remainder
2. When 1 or some of the objects are lost
due to the debtor’s fault, the creditor
may choose from the remainder or get
the value of any of the objects lost plus
damages in either case 3. When all of the
things are lost due to the debtor’s fault,
the creditor can get the value of any of
the objects lost plus damages
4. When some are lost through the
debtor’s fault, the creditor chooses from
the remainder 5. When all the objects
are lost due to a fortuitous event, then
the obligation is extinguished 6. When
all the objects are lost due to the
creditor’s fault, the obligation is
extinguished
FACULTATIVE
• An obligation is facultative when only
1 object or prestation has been agreed
upon by the parties to the obligation,
but the debtor may deliver or render
another in substitution. o Debtor
reserves the right to substitute it with
another prestation • Facultative
obligations bear a resemblance to
alternative obligations particularly when
the choice in an alternative obligation is
with the debtor.
• In a facultative obligation, the right of
choice is always with the debtor. Only
debtor can make the choice
• In an alternative obligation, if 1 of the
prestations is impossible, then there are
other choices. In a facultative obligation,
if the principal obligation is impossible,
then everything is annulled.
• In theory, it is easy to distinguish a
facultative obligation from an
alternative obligation. In practice, it is
difficult to do so since most of the time,
the words are ambiguous. For example,
I promise to deliver my Honda Accord,
but I reserve my right to substitute this
with my Gold Rolex. In this case, it is not
very clear whether the obligation is
alternative or facultative.
• According to Professor Balane, the rule
is that one must look at the
circumstances of the obligation to
determine the intent of the parties. If it
is impossible to determine which one,
then the doubt should be resolved in the
favor of an alternative obligation since
its effects are less radical.
• Differences between alternative and
facultative
 Alternative Facultative
Content Various Only the
s prestations principal
all of which prestation
constitute constitutes
parts of the the
obligation obligations,
the
accessory
being only a
means to
facilitate
payment
Nullity Nullity of 1 Nullity of
doesn’t the
invalidate principal
the invalidates
obligation the
obligation
Choice Either Only the
debtor or debtor
creditor
Effect of Only The
loss impossibilit impossibilit
y of all y of the
without the principal is
fault of the sufficient,
debtor will even if the
extinguish substitute is
the possible
obligation