Oblicon 3 - Lecture notes 3 PDF

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Pure and Conditional ObligationsModule 3Objective: By the end of this module, the student must be able to at least understand, familiarize and submit a written on line report on the items listed below. A time limited on-line quiz exam may be given at the end of the session concerning other matters c...

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Art. 1191

DIFFERENT KINDS OF OBLIGATIONS Pure and Conditional Obligations

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Module 3 Objective: By the end of this module, the student must be able to at least understand, familiarize and submit a written on line report on the items listed below. A time limited on-line quiz exam may be given at the end of the session concerning other matters contained in the discussion below. The answer to the quiz will be submitted together with the on line report.

a.) Pure obligations b.) Conditional obligations c.) Suspensive v. resolutory conditions d.) Potestative, casual and mixed conditions e.) Impossible conditions f.) Effects of conditions g.) Constructive fulfilment of suspensive condition h.) Retroactive effects of fulfillment of suspensive condition i.) Rights of creditor pending fulfillment of suspensive condition j.) Loss, improvement, deterioration of thing to be delivered pending the fulfillment of suspensive condition/resolutory condition k.) Unilateral/reciprocal obligations l.) Effect of mutual breach

DIFFERENT KINDS OF OBLIGATIONS Classifiations of obligations. (1) Primary classification of obligations under the Civil Code: (a) Pure and conditional obligations (Arts. 1179-1192.); (b) Obligations with a period (Arts. 1193-1198.); (c) Alternative (Arts. 1199-1205.) and facultative obligations (Art. 1206.); (d) Joint and solidary obligations (Arts. 1207-1222.); (e) Divisible and indivisible obligations (Arts. 1223-1225.); and (f) Obligations with a penal clause. (Arts. 1226-1230.) (2) Secondary classification of obligations under the Civil Code: (a) Unilateral and bilateral obligations (Arts. 1169-1191.); (b) Real and personal obligations (Arts. 1163-1168.); (c) Determinate and generic obligations (Art. 1165.); (d) Civil and natural obligations (Art. 1423.); and (e) Legal, conventional, and penal obligations. (Arts. 1157, 1159, 1161.) (3) Classification of obligations according to Sanchez Roman: (a) By their juridical quality and efficaciousness: 1) Natural. — according to natural law; 2) Civil. — according to civil law; and 3) Mixed. — according to both natural and civil law.

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95 (b) By the parties or subject: 1) unilateral or bilateral; 2) individual or collective (see Arts. 1207, 1208.); and

3) joint or solidary.

(c) By the object of the obligation or prestation: 1) specific or generic; 2) positive or negative (see Art. 1168.); 3) real or personal; 4) possible or impossible (see Arts. 1183, 1306.); 5) divisible or indivisible; 6) principal or accessory (see Art. 1226.); and 7) simple or compound (see Art. 1199.); if compound, it may be: a) conjunctive. — demandable at the same time; or b) distributive. — either alternative or facultative. (d) By their juridical perfection and extinguishment: 1) Pure or conditional; and 2) With a period. (Vol. 8, pp. 20-24.) — oOo — SECTION 1. — Pure and Conditional Obligations ART. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event. (1113) Meaning of pure obligation. A pure obligation is one which is not subject to any condition and no specific date is mentioned for its fulfillment and is, therefore, immediately demandable. EXAMPLES: (1) D obliges to pay C P10,000.00. The obligation is immediately demandable if there is no

condition and no date is mentioned for its fulfillment. Of course, if the loan has just been contracted by D, a period must have been intended by the parties for performance (see Floriano vs. Delgado, 11 Phil. 154 [1908].) but the duration thereof will depend upon the nature of the obligation and the circumstances. (Art. 1197.) A distinction must be made between the immediate demandability of a pure obligation and its fulfillment by the obligor who may be granted by the court a reasonable period for performance. The period remains pure even where such period is fixed by the court. (2) D promises to pay C P26,900.00 upon receipt by D of his share from the estate of X or “upon demand of C.” The obligation of D is immediately due and demandable, for C may rely on the wording “upon demand.” (Pay vs. Vda. de Palanca, 57 SCRA 18 [1974].)

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Meaning of conditional obligation. A conditional obligation is one whose consequences are subject in one way or another to the fulfillment of a condition. Meaning of condition. Condition is a future and uncertain event, upon the happening of which, the effectivity or extinguishment of an obligation (or rights) subject to it depends. Characteristics of a condition. (1) Future and uncertain. — In order to constitute an event a condition, it is not enough that it be future; it must also be uncertain. The fi rst paragraph of Article 1179 obviously uses the disjunctive or between “future” and “uncertain” to distinguish pure obligation from both the conditional obligation and one with a period. Be that as it may, the word “or” should be “and.” (2) Past but unknown. — A condition may refer to a past event unknown to the parties. (infra.) If it refers to a future event, both its very occurrence and the time of such occurrence must be uncertain; otherwise, it is not a condition. A condition must not be impossible. (see Art. 1183.) Two principal kinds of condition. They are: (1) Suspensive condition (condition precedent or condition antecedent) or one the fulfi llment of which will give rise to an obligation (or right). In other words, the demandability of the obligation is suspended until the happening of a future and uncertain event which constitutes the condition. (a) Actually, the birth, perfection or effectivity of the contract subject to a condition can take place only if and when the condition happens or is fulfi lled. If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. (Gaite vs. Fonacier, 2 SCRA 830 [1961]; Joven vs. Court of Appeals, 183 SCRA 171 [1990]; Cheng vs. Genato, 300 SCRA 722 [1998]; Gonzales vs. Heirs of Thomas and Paula Cruz, 314 SCRA 585 [1999]; Insular Life Assurance Co., Ltd. vs. Toyota Bel-Air, Inc., 550 SCRA 70 [2008].) (b) It must appear that the performance of an act or the happening of an event was intended by the parties as a suspensive condition, otherwise, its non-fulfi llment will not prevent the perfection of a contract. (see Arts. 1305, 1315, 1319.) Thus, where there is no provision in a contract of sale declaring it without effect until after the opening of a letter of credit by the buyer as required by the seller, the omission to so open does not prevent the perfection of the contract, such opening being only a mode of payment and is not among the essential requirement of a contract of sale enumerated in Articles 1305 and 1475.1 (Johannes Schuback & Sons vs. Court of Appeals, 2 227 SCRA 717 [1993].) (c) There can be no rescission (see Art. 1191.) of an obligation that is still non-existent, the suspensive condition not having been fulfilled. (Luzon Brokerage Co., Inc. vs. Maritime Building Co., Inc., 46 SCRA 381 [1972]; Rillo vs. Court of Appeals, 274 SCRA 461 [1997]; Gonzales vs. Heirs of Thomas and Paul Cruz, supra; Padilla vs. Paredes, 328 SCRA 434 [2000].) ILLUSTRATIVE CASES: 1 Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. (1450a) 2 See this case under Article 1319.

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1. Acknowledgment signed by one of the debtors of a document is conditioned upon the same being signed by all the debtors. Facts: By agreement of C and D, the separate debts of the brothers A, B, and C to D were liquidated and consolidated into only one obligation in a promissory note signed by C who acknowledged his indebtedness. D signed the note on condition that C would obtain the signatures of A and B thereby creating a joint obligation against the three. C never secured their signatures until his death. In an action against A and B by D to recover their respective shares in the indebtedness, A and B contended that since their signatures were not affixed to the document, D was bound to acknowledge it as a credit only against C who signed it. Issue: Is D bound to acknowledge the document as a credit only against C? Held: No. The contract contained reciprocal obligations (see Art. 1169, last par.) which were to be fulfilled by each of the signers, that is, on the part of C to secure signatures of A and B to the instrument, and then on the part of D, to recognize it as a joint obligation of A, B, and C covering their indebtedness to him. Until C obtained the signatures of A and B, D was not in any way bound to acknowledge it as anything more than an executory contract containing a condition precedent which was to be performed by C before D’s obligation was due. Mere continued silence on his part could signify nothing until the signatures of A and B had been secured. (Martinez vs. Cavives, 25 Phil. 581 [1913].) —-— —-— —-— 2. Sale of vessel is conditioned upon proof that seller is, in fact, owner of property. Facts: S, owner, and B, purchaser, agreed upon the sale of a vessel provided that the title papers to the same were in proper form. The title was in the name of another and S promised to perfect his title to the vessel. Before compliance by S with the condition exacted by B, and while the vessel was in S’s possession, it sank due to a severe storm. Issue: Is B under obligation to pay the price of the vessel? Held: No. The sale of the vessel was not perfected, because of the non-compliance by S of a condition precedent to its perfection, to wit: the production of the proper papers showing that he was, in fact, the owner of the vessel in question. Consequently, the loss of the vessel must be borne by S, the owner, and not by B who only intended to purchase it and was unable to do so because of failure of S to comply with the said condition. Article 1262 is not applicable. (Roman vs. Grimalt, 6 Phil. 96 [1906]; see Borromeo vs. Franco, 5 Phil. 49 [1905], infra.) —-— —-— —-— 3. Condition claimed was not contemplated by the parties. Facts: B obliged himself to pay S the balance of the purchase price of a subdivision lot within two years from the completion by S of the roads therein. S brought suit to foreclose the real estate mortgage executed by B to secure the payment of the unpaid price, for failure of B to pay the mortgage indebtedness notwithstanding the completion of the roads, a condition for the payment of the same. B contends that the roads are not yet completed in the technical, legal sense, because the fi nal say or acceptance by the Capital City Planning Commission of Quezon City had not yet been secured. Issue: Is this contention of B tenable? Held: No. This contention is inordinately technical and also devoid of merit. There is nothing at all in the ordinance (No. 2969 of Quezon City) which makes the acceptance by the said agency a

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condition precedent before a street may be considered constructed. Such condition was not within the contemplation of the parties. (Enriquez vs. Ramos, 73 SCRA 116 [1976].) (2) Resolutory condition (condition subsequent) or one the fulfillment of which will extinguish an obligation (or right) already existing. ILLUSTRATIVE CASES: 1. Donation subject to resolutory condition transfers title but revocable for non-compliance with condition. Facts: R donated to T (Province of Tarlac) a parcel of land subject to the condition that it was to be used for the erection of a central school and a public park, the work to commence within the period of six (6) months from the date of the ratification by the parties of the deed of donation. The donation was accepted by T and title to the property was transferred to it. Subsequently, R sold the land to C. C claimed that since the condition imposed was not complied with, there was no donation. Issue: Is the condition suspensive or subsequent? Held: It is a condition subsequent. The characteristic of a condition precedent is that the acquisition of right is not effected while said condition is not complied with or is not deemed complied with. Meanwhile, nothing is acquired and there is only an expectancy of right. Consequently, when a condition is imposed, the compliance of which cannot be effected except when the right is deemed acquired, such condition cannot be deemed a condition precedent. In the present case, the condition could not be complied with except after giving effect to the donation. The donee could not do any work on the donated land if the donation had not really been effected because it would be an invasion of another’s title, for the land would have continued to belong to the donor so long as the condition imposed was not complied with. The non-compliance with the condition is, however, a sufficient cause for revocation. (Parks vs. Prov. of Tarlac, 49 Phil. 142 [1926].) —-— —-— —-— 2. Transfer of ownership of property sold shall become absolute upon payment by vendee of vendor’s debt to third parties; void, if paid by the vendor himself. Facts: S sold to B a parcel of land in consideration of the obligation assumed by B to pay what the vendor (S) owed to several parties mentioned in the deed; if S paid his debts, the sale shall become inoperative and void, but that if B paid the same debts by reason of S’s failure to do so, the sale made shall become absolute and irrevocable automatically, without the need of executing any other deed of conveyance. B paid the debts of S. Upon presentation of the corresponding instruments, the certificate of title issued in the name of S was cancelled and a transfer certificate of title was issued in B’s name. Issue: Is the contract one of equitable mortgage or a sale subject to a resolutory condition? Held: The contract is obviously a perfected contract of sale and subject to a resolutory condition. The property is not given as a mere security for a loan — which is the manifest purpose of a contract of mortgage — but instead it makes a conditional transfer of ownership which becomes automatically absolute and final upon performance of the condition agreed upon, namely, payment by B of what S owed the parties mentioned in the deed of conveyance. (Rodriguez, Sr. vs. Francisco, 2 SCRA 648 [1961].) Note: In a contract to sell on installments, upon the fulfillment of the positive suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to

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convey title to the prospective buyer by entering into a contract of absolute sale. (see Coronel vs. Court of Appeals, 263 SCRA 15 [1996].) The failure to fulfill the condition is not considered a breach, casual or serious, but simply an event which prevents the obligation of the seller to convey title from acquiring any obligatory force. (Rillo vs. Court of Appeals, 274 SCRA 461 [1997].) —-— —-— —-— 3. Vendor seeks rescission of sale for violation by vendee of restriction imposed in contract of sale between vendor and previous owner (first vendor). Facts: The contract of sale of three (3) lots between S (PHHC) and B provided that only construction exclusively for “residential purposes” shall be built on the property, terms thereof to be binding upon the successors and assignees of the respective parties. Subsequently, B sold two (2) lots to Meralco which established a sub-station within the property. Because of the “severe noise” from the sub-station, B fi led a complaint for the rescission of the sale. Issue: Has B the right of action against Meralco for violation of the restriction imposed in the contract between S and B? Held: No. It is S which has the right of action against any assignee of B. S cannot rescind the contract between B and Meralco because it was not a party to it. S’s redress would be to directly “seek cancellation of the title of Meralco, and to repossess the property” as provided in its contract with B. (Manila Electric Company vs. Court of Appeals, 114 SCRA 173 [1982].) Distinctions between suspensive and resolutory conditions. The difference between the two conditions is very clear; both bear an influence on the existence of the obligation, but in diametrically opposed manner. (1) If the suspensive condition is fulfilled, the obligation arises, while if it is the resolutory condition that is fulfilled, the obligation is extinguished; (2) If the first does not take place, the tie of law (juridical or legal tie) does not appear, while if it is the other, the tie of law is consolidated; and (3) Until the first takes place, the existence of the obligation is a mere hope, while in the second, its effects flow, but over it, hovers the possibility of termination. (see 8 Manresa 130-131.) Note: A distinction must be made between a condition imposed on the perfection of a contract and that imposed on the performance of an obligation. Failure to comply with the first condition results in the failure of a contract, while failure to comply with the second ( e.g., condition that the seller shall eject the squatters on the property sold within a certain period), only gives the other party the option either to refuse to proceed with the sale or to waive the condition. (Lim vs. Court of Appeals, 263 SCRA 569 [1996]; see Art. 1545; Babasa vs. Court of Appeals, 290 SCRA 532 [1998]; Jardine Davies, Inc. vs. Court of Appeals, 333 SCRA 684 [2000].) When obligation demandable at once. An obligation is demandable at once — (1) when it is pure (Art. 1179, par. 1.); (2) when it is subject to a resolutory condition (Ibid., par. 2.); or (3) when it is subject to a resolutory period. (Art. 1193, par. 2.) Art. 1180

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Past event unknown to the parties. A condition really refers only to an uncertain and future event. A past event cannot be said to be a condition since the demand ability of an obligation subject to a condition depends upon whether the event will happen or will not happen. What is really contemplated by the law is the knowledge to be acquired in the future of a past event which at the moment is unknown to the parties interested, for it is only in that sense that the event can be deemed uncertain. This knowledge determines whether the obligation will arise or not. (see 8 Manresa 120-121.) EXAMPLE: S is the owner of a parcel of land which is being claimed by X. Last week, the Supreme Court has rendered a final decision upholding the right of S. However, S has not yet received the notice that he had won the case. Now, S obliged himself to sell the land to B for a definite price, should he win the case against X. Under the facts, S would be bound to sell the land to B upon receipt of the notice that he had won the case against X. ART. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197. (n) Where duration of period depends

upon the will of debtor.

A period is a future and certain event upon the arrival of which the obligation subject to it either arises or is extinguished. (1) The debtor promises to pay when his means permit him to do so. — The obligation shall be deemed to be one with a period. In this case, what depen...