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— A thing is improved
when its value is increased or enhanced by nature or by time or at the
RULES IN CASE OF LOSS, ETC. OF THING DURING PENDENCY expense of the debtor or creditor. (see Art. 1187.)
OF SUSPENSIVE CONDITION.
EXAMPLE: Suppose the market value of the car increased, who gets
(1) Loss of thing without debtor’s fault. — the benefit?
EXAMPLE: D obliged himself to give C his car worth P100,000.00 if C The improvement shall inure to the benefit of C. In as much as C
sells D’s property. The car was lost without the fault of D. would suffer in case of deterioration of the car through a fortuitous
event, it is but fair that he should be compensated in case of
The obligation is extinguished and D is not liable to C even if C sells
improvement of the car instead.
the property. A person, as a general rule, is not liable for a fortuitous
event. (Art. 1174.) (6) Improvement of thing at expense of debtor. —
(2) Loss of thing through debtor’s fault. — EXAMPLE: During the pendency of the condition, D had the car
painted and its seat cover changed at his expense. In this case, D will
EXAMPLE: In the same example, if the loss occurred because of the
have the right granted to a usufructuary with respect to improvements
negligence of D, C will be entitled to demand damages (Art. 1170.),
made on the thing held in usufruct.
i.e., P100,000.00 plus incidental damages, if any.
Usufruct- right to enjoy the use of fruits of a thing belonging to
(3) Deterioration of thing without debtor’s fault. — A thing deteriorates
another.
when its value is reduced or impaired with or without the fault of the
debtor. ART. 1189 WILL APPLY IF THEY HAVE LOSS DETERIORATION
EXAMPLE: If the car figured in an accident, as a result of which its ARTICLE.1190
windshield was broken and some of its paints were scratched away
without the fault of D, thereby reducing its value to P80, 000.00, C will EFFECTS OF FULFI LLMENT OF RESOLUTORY CONDITION.
have to suffer the deterioration of impairment in the amount of
P20,000.00. (Art. 1174.) Art. 1189 137 (1) In obligations to give. — When the resolutory condition in an
obligation to give is fulfilled, the obligation is extinguished (Art. 1181.)
(4) Deterioration of thing through debtor’s fault. — and the parties are obliged to return to each other what they have
received under the obligation. (par. 2.)
EXAMPLE: In this case, C may choose between:
(a) There is a return to the status quo- retroactive effect
(a) Rescission (or cancellation) of the obligation with damages; in the
case D is liable to pay P100,000.00, value of the car before its (b) The obligation of mutual restitution is absolute. It applies not only
deterioration plus incidental damages, if any; or to the things received but also to the fruits and interests.
(b) Fulfillment of the obligation also with damages (see Art. 1191.); in (c) In case the thing to be returned “is legally in the possession of a
this case, D is bound to C to give the car and pay P20, 000.00 plus third person who did not act in bad faith” (see Art. 1384, par.
incidental damages, if any.
2.), the remedy of the party entitled to restitution is against the Stated in another way, the happening of a resolutory condition has the
other. same effect on the creditor as the suspensive condition has, on the
debtor — an obligation arises. The fulfillment of the resolutory
(d) In obligations to give subject to a suspensive condition, the condition converts the creditor into debtor, and the debtor into
retroactivity admits of exceptions according to whether the obligation creditor.
is bilateral or unilateral. (see Art. 1187.)
Hence, the applicability of the provisions of Article 1189 in case of
Here, there are no exceptions, whether the obligation is bilateral or loss, deterioration, or improvement of the thing; and pending the
unilateral. The reason for the difference is quite plain. The happening fulfillment of the condition, the parties are entitled to the rights granted
of the suspensive condition gives birth to the obligation. On the other by Article 1188.
hand, the fulfillment of the resolutory condition produces the
extinguishment of the obligation as though it had never existed. (see 8 ARTICLE 1192- POWER TO RESCIND OBLIGATIONS
Manresa 149-150.) The only possible exception is when the intention
of the parties is otherwise. Kinds of obligation according to the person obliged.
(e) If the condition is not fulfilled, the rights acquired by a party (1) Unilateral. — When only one party is obliged to comply with a
become vested. Art. 1190 139 prestation.
EXAMPLE: D obliges himself to allow C to use the former’s car until D EXAMPLES: Donation; In a contract of loan, the lender has the
returns from the province. Upon the return of D from the province, C obligation to give. After the lender has complied with his obligation,
must give back the car. The effect of the happening of the condition is the debtor has the obligation to pay.
to annul the obligation as if it had never been constituted at all. In this (2) Bilateral. — when both parties are mutually bound to each other.
case, the parties intend the return of the car. In other words, both parties are debtors and creditors of each other.
(2) In obligations to do or not to do. — In some obligations, the courts Bilateral obligations may be reciprocal or non-reciprocal.
shall determine the retroactive effect of the fulfillment of the resolutory (a) Reciprocal obligations are those which arise from the same
condition (par. 2.) as in the case where the condition is suspensive. cause and in which each party is a debtor and creditor of the other.
(Art. 1187, par. 2.)
The general rule is that they are to be performed simultaneously or at
The courts in the exercise of discretion may even disallow retroactivity the same time such that each party may treat the fulfillment of what is
taking into account the circumstances of each case. incumbent upon the other as a suspensive condition to his obligation.
Applicability of Article 1189 to party with obligation to return. EXAMPLE: In a contract of sale in the absence of any stipulation, the
In the example above, D is the debtor and C, the creditor, pending delivery of the thing sold by the seller is conditioned upon the
fulfillment of the resolutory condition — the return of D from the simultaneous payment of the purchase price by the buyer, and vice
province. Upon the happening of the condition. D becomes the versa. (see Art. 1169, last par.)
creditor with a right to demand the return of the car and C, the debtor,
with the obligation to return the car.
The seller is the creditor as to the price and debtor as to the thing, EXAMPLE: In a contract of sale of a car between S and B, it was
while the buyer is the creditor as to the thing and debtor as to the agreed that S, the owner, would deliver the car and the necessary
price. document duly signed by him to B at the house of C on December 1,
and B would deliver the payment at the same place and on the same
(b) Non-reciprocal obligations are those which do not impose date.
simultaneous and correlative performance on both parties.
EXAMPLES:
If S does not comply with his obligation.
(1) D borrowed from C P50,000.00. C, on the other hand, borrowed
D’s car. The performance by D of his obligation to C is not conditioned (a) B may, in an action for specifi c performance, demand the delivery
upon the performance by C of his obligation and vice versa. Although of the car with damages; or
D and C are debtors and creditors of each other, their obligations are
not reciprocal. (b) B may demand from the court the rescission of the contract also
with damages.
The obligation of D arises from the contract of loan, while that of C,
from the contract of commodatum. The obligations are not dependent If after delivery of the car by S, it is B who fails to make good the
upon each other and are not simultaneous. price, such failure, in the absence of stipulation that “ownership of the
thing shall not pass to the purchaser until he has fully paid the price’’
Remedies in reciprocal obligations. does not cause the ownership to revest to S, unless the bilateral
contract of sale is first rescinded pursuant to Article 1191.
Article 1191 is the general provision on rescission of reciprocal
obligations. Nonpayment only creates likewise a right to demand the fulfillment of
the obligation or, in case of a substantial breach, to rescind the
- the right of the “injured party’’ to choose between rescission or contract under Article 1191.
fulfillment of the obligation, with the right to claim damages in either
case.. ARTICLE 1191 APPLIES ONLY IF THE RECIPROCITY ARISES
FROM THE SAME CAUSE.
The remedy granted is predicated on a breach of obligation by the
other party that violates the reciprocity between them. ARTICLE 1192: WHEN BOTH PARTIES ARE GUILTY OF BREACH
Choice of remedy by injured party. The above article contemplates two situations.
In case one of the obligors does not comply with what is incumbent (1) First infractor known. — One party violated his obligation;
upon him, the injured or aggrieved party may choose between two subsequently, the other also violated his part of the obligation. In this
remedies: case, the liability of the first infractor should be equitably reduced.
(1) Action for specific performance (fulfillment) of the obligation with (2) First infractor cannot be determined. — One party violated his
damages; or obligation followed by the other, but it cannot be determined which of
them was the first infractor. The rule is that the contract shall be
(2) Action for rescission of the obligation also with damages
deemed extinguished and each shall bear his own damages. This (b) Conventional or voluntary period. — When it is agreed to by the
means that the contract shall not be enforced. In effect, the court shall parties (Art. 1196.); and
not provide remedy to either of the parties, who must suffer the
damages allegedly sustained by them. (c) Judicial period. — When it is fixed by the court. (Art. 1197.)
ARTICLE 1193 OBLIGATION WITH A PERIOD is one whose (a) Definite period. — When it is fixed or it is known when it will
consequences are subjected come (Art. 1193, par. 3.); and
PERIOD is a future and certain event upon the arrival of which the (b) Indefinite period. — When it is not fixed or it is not known when it
obligation (or right) subject to it either arises or is terminated. will come. Where the period is not fixed but a period is intended, the
courts are usually empowered by law to fix the same. (see Art. 1197.)
KINDS OF PERIOD OR TERM.
(b) Resolutory period (in diem). — The obligation is valid up to a day ARTICLE 1195 APPLIES ONLY TO OBLIGATION TO GIVE
certain and terminates upon the arrival of the period. (par. 2.) similar to Article 1188, paragraph 2, which allows the recovery of what
EXAMPLES: Ex die: has been paid by mistake before the fulfillment of a suspensive
condition.
(1) “I will pay you 30 days from today.” (or on Jan. 1 next year, or at
the end of this month.) Here, what is suspended is not the obligation Debtor presumed aware of period.
itself (or right acquired) but merely its demandability. The presumption, however, is that the debtor knew that the debt was
(3) “I will pay you when my means permit me to do so.” This is not yet due. He has the burden of proving that he was unaware of the
considered by law as an obligation with a period. (Art. 1180.) period. Where the duration of the period depends upon the will of the
debtor (see Art. 1197, par. 3.), payment by him amounts, in effect, to
In diem: his determination of the arrival of the period.
(1) “I will give you P1,000.00 a month until the end of the year.” The obligor may no longer recover the thing or money once the period
has arrived but he can recover the fruits or interests thereof from the
(2) “I will support you until you die.” date of premature performance to the date of maturity of the
obligation.
2. ACCORDING TO SOURCE:
ARTICLE 1196- PERIOD WHOSE BENEFIT Judicial period VS. Contractual period
GENERAL RULE: For benefit of both parties, debtor and creditor GENERAL RULE:
EXAMPLE: On January 1, D borrowed from C P10,000.00 payable on 1. If the obligation does not state a period and no period is intended,
December 31 at 18% interest. D cannot pay before December 31 the court is not authorized to fix a period or court is without power to
without the consent of C. Neither can C compel D to pay before the fix period.
expiration of the term. It is presumed that the period designated, 2. The courts have no right to make contracts for the parties.
which is December 31, has been established for the benefit of both. D
is benefited because he can use the money for one year. C is also ART, 1197 PAR. 3 PERIOD FIXED CANNOT BE CHANGED BY THE
benefited because of the interest the money would earn for one year. COURT
3. Once choice is made, it cannot be renounced and parties are When choice belongs to debtor
bound thereto. If the consent of creditor changed it can be done.
1. Due to fortuitous event
ARTICLE 1202:
A. All are lost- debtor is released from the obligation. (extinguished
Effect when only one prestation is practicable. If more than one is OB)
practicable, it is Article 1200 that will apply. The obligation is still
alternative because the debtor still retains the right of choice. Under B. Some but not all are lost- deliver that which he shall choose from
Article 1202, if only one is practicable (e.g., the others have become among the remainder.(pag may natira pipili)
impossible), the obligation is converted into a simple one. C. Only one remains- deliver that which remain (pag isa na lang
idedeliver)
When choice is rendered impossible through the creditors fault, the A. All are lost- creditor shall have a right to indemnity for damages
debtor may bring an action to rescind the contract with damages. The based on value of the last thing.
debtor, however, is not bound to rescind. B. Some but not all are lost
EXAMPLE: D borrowed from C P20,000.00. It was agreed that (Debtor to debtor)
instead of P20,000.00, D could deliver item one, or item two, or item
three. (Right to choice belongs to debtor you must determine the value
the last thing that disappeared)
If through the fault of C, item one is destroyed, D can rescind the
contract if he wants. In case of rescission, the amount of P20,000.00 3. When choice belongs to Creditor
must be returned by D with interest. C, in turn, must pay D the value
of item one plus damages. Before the creditor makes the selection, the debtor cannot incur in
delay.
D, instead of rescinding the contract, may choose item two or three
with a right to recover the value of item one with damages. If D A. Due to fortuitous event- same effects or events
chooses item one, his obligation is extinguished. C is not liable for
2. Debtors fault
damages.
(creditor to debtor) pipili si creditor plus damages
REMEDIES- May rescind if he wants; May choose another choice or
item. A, All are lost- creditors may claim the price or value of any of them
without indemnity for damages
ARTICLE 1204 AND 1205: EFFECTS OF LOSS OF OBLIGATION
B. Some but not all are lost (1) “I will give you my piano but I may give my television set as a
substitute.” In this obligation, only the piano is due.
(The same rule shall applied to Obligation to do or not do)
Hence, its loss through my fault will make me liable.
(2) When a thing is lost through debtor’s fault. 1. Loss of the thing intended as substitute
EXAMPLE: If the loss of item one occurs through the fault of S, B may A. Before Substitute is made (If the principal thing is lost through a
claim item two or item three or item four with a right to damages or the fortuitous event, the obligation is extinguished; otherwise, the debtor
price of item one also with a right to damages. is liable for damages)
(3) When all the things are lost through debtor’s fault. 1.If due to bad faith and fraud of obligor. Obligor is liable.
EXAMPLE: If all the items are lost through the fault of S, then B can 2.If due to the negligence of the Obligation. Obligor is not
demand the payment of the price of any one of them with a right to liable.
indemnity for damages.
EXAMPLE:
(4) When all the things are lost through a fortuitous event.
S will give B item one or if S wants, item two.
EXAMPLE: The obligation of S shall be extinguished if all the items
which are alternatively the object of the obligation are lost through a (a) If item one is lost through a fortuitous event, the obligation of S is
fortuitous event. extinguished.
ARTICLE 1206- FACULTATIVE OBLIGATION (SUBSTITUTE) (b) If item one is lost through the fault of S, S is liable for damages.
ART. 1206 (PAR. 2)- EFFECT OF LOSS OF SUBSTITUTE IS (c) If item two is lost with or without the fault of S, S is still liable to
FACULTATIVE OBLIGATION deliver item one (he is not liable for damage for the loss of item two as
it is not due.
Facultative obligation is one where only one prestation has been
agreed upon but the obligor may render another in substitution. B. After substitution is made (If the principal thing is lost, the debtor
is not liable whatever may be the cause of the loss, because it is no
EXAMPLES:
longer due. If the substitute is lost, the liability of the debtor depends - the right to make the substitution is given only to the debtor
upon whether or not the loss is due through his fault.)
- the loss of the thing due extinguishes the obligation
1. The loss or deterioration of the substitute on account of the
obligors. - the loss of the thing due through his fault makes him liable
(Entitled ang creditor sa damages) - the nullity of the prestation agreed upon invalidates the
obligation
EXAMPLE: Based on the preceding example:
- Choice pertains only to the debtor
(a) If item one is lost with or without the fault of S, S is not liable for its
loss since his obligation is to deliver item two. - Substitution
(b) If item two is lost through a fortuitous event, the obligation of S is - Debtor right to choose
extinguished. Note: CHOICE ONCE PROPERLY MADE AND COMMUNICATED
(c) If item two is lost through the fault of S, S is liable for damages. IS IRREVOCABLE AND CANNOT, THEREFORE, BE CHANGED
BY EITHER PARTY WITHOUT THE CONSENT OF THE OTHER.
DISTINGUISHED alternative and facultative
- the right of choice may be given to the creditor or third person JOINT (hati-hati o proportionate)
- the loss of one or more of the alternatives through a fortuitous SOLIDARY- solid: pwedeng idemand sa isang tao o kailangang
event does not extinguish the obligation bayaran ang buong amount
- , the loss of one of the alternatives through the fault of the Kinds of obligation according to the number of parties.:
debtor does not render him liable (1) Individual obligation. — one where there is only one obligor and
- the nullity of a prestation does not invalidate the others, one obligee; and
- Choice may pertain to debtor, creditor or third person (2) Collective obligation. — one where there are two or more debtors
and/or two or more creditors. It may be joint or solidary.
- Alternative due
In a collective obligation, there are two relations involved: that
FACULTATIVE between the creditor and the debtors and that among the creditors
and/or debtors themselves.
- Only one is due
Joint obligation is one where the whole obligation is to be paid or (3) the nature of the obligation requires solidarity.
fulfilled proportionately by the different debtors and/or is to be
demanded proportionately by the different creditors. (PAYMENT) (Sa example ni Ma’am)
Solidary obligation is one where each one of the debtors is bound to A,B,C, are liable to D in the amount of 3,000.
render, and/or each one of the creditors has a right to demand entire A,B,C as debtor of D
compliance with the prestation. (DEMAND)
D. creditor entitled to demand payment from A,B,C.
ARTICLE 1207- NATURE OF COLLECTIVE OBLIGATION
C. absent any stipulation as the solidarity of the obligation. A,B,C are
General rule: Obligation is presumed to be joint. liable only 1,000 each.
EXAMPLES: D. is not entitled to collect from each debtor,
(1) A, B, and C borrowed P9,000.00 from D. The presumption is that Kinds of solidarity
A, B, and C are jointly liable.
(1) According to the parties bound:
Here, there are three (3) debts and one (1) credit. D can demand only
P3,000.00 each from A, B, and C or a total of P9,000.00. Since the (a) Passive solidarity (debtor/ obligor)
debts are distinct and separate from each other, the insolvency of one
of the debtors shall not make the others liable. - solidarity on the part of the debtors, where anyone of them can be
made liable for the fulfillment of the entire obligation. It is in the nature
(2) A borrowed from B, C, and D P9,000.00. Unless the contrary of a mutual guaranty.
appears, the obligation is prima facie a joint one. In this case, there is
one (1) debt and three (3) credits. Each creditor can demand only (b) Active solidarity (creditor/ obligee)
P3,000.00 from A. -solidarity on the part of the creditors, where anyone of them can
(3) A and B are liable to C and D for P9,000.00. The same demand the fulfillment of the entire obligation.
presumption applies. There are two (2) debts and two (2) credits. - mutual representation among the solidary creditors with powers to
Each creditor can demand only P4,500.00 from either debtor. Of
exercise the rights of others in the same manner as their rights.
course, the total liability of A or B, and the total collection of C or D,
cannot exceed P4,500.00. EXAMPLES: (1) A is liable for P10,000.00 in favor of B and C who
are solidary creditors. A may pay either B or C.
Exemptions:
So long as the entire debt is not paid, B and C can demand payment
1. The obligation expressly stated that there is solidarity
from A. (Art. 1207.) If B (or C) received payment, he is liable to C (or
(1)the obligation expressly so states; or B) for the latter’s share in the credit according to their agreement. The
liability of A cannot exceed P10,000.00 which is the extent of his
(2) the law requires solidarity; or liability
(c) Mixed solidarity or solidarity on the part of the debtors
and creditors, where each one of the debtors is liable to render, and
each one of the creditors has a right to demand, entire compliance
with the obligation.
ARTICLE 1208