Oblicon chapter 3 - DIFFERENT KINDS OF OBLIGATIONS PDF

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CHAPTER 3DIFFERENT KINDS OFOBLIGATIONS1. PURE OBLIGATIONS obligations whose performance does not depend upon a future and uncertain event or upon a past event unknown to the parties and is demandable at once. 2. CONDITIONAL OBLIGATIONS - an obligation the happening or extinguishment of which depends...

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CHAPTER 3 DIFFERENT KINDS OF OBLIGATIONS 1. PURE OBLIGATIONS - obligations whose performance does not depend upon a future and uncertain event or upon a past event unknown to the parties and is demandable at once. 2. CONDITIONAL OBLIGATIONS - an obligation the happening or extinguishment of which depends upon the happening of a future and uncertain event. Characteristics of Condition: 1.It is a future and certain event upon which an obligation or provision is made to depend; 2.Even though the event is uncertain, it should be possible; 3.The condition must be imposed by the will of the party and not a necessary legal requisite; 4.Past event but unknown to parties ( the knowledge to be acquired in the future of a past event which at the moment is unknown to parties interested - it is only in that sense that the event is deemed uncertain) Effects of Failure to Comply with Condition: 1. If condition is imposed on the perfection of a contract - results in the failure of the contract; or 2. If condition is imposed on the performance of the obligation gives the other party an option either to refuse to proceed with the compliance of the obligation or to waive the condition. Classifications of Conditions:

1. As to the Effect of Obligation a. Suspensive Condition - when the fulfillment of the condition results in the acquisition of rights arising out of the obligation. b. Resolutory Condition - when the fulfillment of the condition results in the extinguishment of rights arising out of the obligation. 2. As to the Origin of Condition a. Potestative Condition - one which depends upon the will of one of the contracting parties; i. Simple Potestative presupposes not only a manifestation of will but also the realization of an external act of a 3rd party. ii. Purely Potestative - if it depends solely and exclusively upon the will of the debtor, it is void for the debtor cannot fulfill an obligation arising from his own choice. But it is valid if it depends on the will of the creditor. b. Casual Condition - depends exclusively upon chance, will of a third person, or partially by chance and partially by will of a third person, or other factors and not upon the will of the contracting parties. c. Mixed Condition - depends upon the will of one of the

contracting parties and other circumstances including the will of third persons or chance. 3. As to Possibility a. Possible Condition - when the condition is capable of realization according to nature, law, public policy or good customs.

a. Divisible Condition - when the condition is susceptible of partial realization. b. Indivisible Condition - when the condition is not susceptible of partial condition.

b. Impossible Condition when the condition is not capable of realization according to nature, law, public policy, morals or good customs.

Principle of Indivisibility of Conditions The indivisibility of the condition passes to the heirs of the debtor: hence, some heirs cannot demand partial performance of the obligation by offering to fulfill part of the condition corresponding to them.

General Rule (GR): If the obligation is divisible, the impossible conditions shall annul the obligation which depends upon them.

Exceptions: The condition may be divisible: a. By nature of the condition b. By stipulation c. By law.

Exceptions (XPNs): a. Pre-existing obligation b. Divisible Obligation c. Negative Impossible Things d. Testamentary deposition 4. As to Mode a. Positive Condition - condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or become indubitable that the event will not take place. b. Negative Condition - condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time has elapsed of it has become evident that the event cannot occur. 5. As to Divisibility

6. As to Plurality of Conditions a. Conjunctive Condition - there are several conditions, which must all be realized; b. Alternative Condition - there are several conditions, but only one must be realized. 7. As to Form a. Express Condition - condition is stated expressly b. Implied Condition - condition is tacit Effects of Suspensive Condition - before the fulfillment, obligee acquires a mere hope or expectancy, protected by law. a. Before fulfillment - demandability and the acquisition of the rights arising from the obligation is suspended. Obligation of obligor to comply with the prestation is held in

suspense until the fulfillment of condition. ** Anything paid by mistake during such time may be recovered. b. After Fulfillment - the obligation arises or becomes effective; obligor can be compelled to comply with what is incumbent upon him. Effects of Resolutory Condition a. Before fulfillment - right recognized in Art. 1188, par. 1 of the CC in case of a suspensive condition should likewise be available in obligations with a resolutory condition. b. After fulfillment - whatever may have been paid or delivered by one or both of the parties upon the constitution of the obligation shall have to be returned upon the fulfillment of the condition. There is a return to the status quo. Effects of Potestative Condition a. When it depends exclusively upon the will of creditor, the condition and obligation is valid. b. When it depends exclusively upon the will of the debtor in case of a suspensive condition, the condition and obligation are void. c. When it depends exclusively upon the will of the debtor in case of resolutory condition, the condition and obligation is valid. Note: If the obligation is a pre-existing one, and does not depend for its existence upon the fulfillment by the debtor of the potestative condition unaffected the obligation itself. Here, the condition is imposed not on the birth of the obligation but on its fulfillment (valid obligation).

Effect of Casual Condition: The obligation and condition shall take effect. Effect of Mixed Condition: The obligation and condition shall take effect. Effects of Impossible Conditions: 1. Conditional obligation is void - both obligation and condition are void. 2. Conditional obligation is valid - if condition is negative, it is disregarded and obligation is rendered pure and valid. 3. Only the affected obligation is void - if the obligation is divisible, the part not affected by the impossible condition shall be valid. 4. Only the condition is void - if obligation is pre-existing, not depending on fulfillment of the condition which is impossible for its existence, only the condition id void. 5. Condition considered not imposed if impossible/unlawful condition is attached to a simple or remunetory donation as well as to a testamentary disposition, condition is considered not imposed while the obligation is valid. NOTE: The impossibility of the condition must exist at the time of the creation of the obligation; a supervening impossibility does not affect the existence of the obligation. Effects of Positive and Negative Condition: In positive condition, obligation is extinguished as soon as th e time expires or if it becomes indubitable that the event will not take place. In negative condition, the obligation is effective from the moment the time indicated has lapsed, or if it has become evident that the event cannot occur,

although the time indicated has not yet lapsed. The intention of the parties, taking into consideration the nature of the obligation, shall govern if no time has been fixed for the fulfillment of the condition. Doctrine of Constructive Fulfillment of Suspensive Condition Condition is deemed fulfilled when the obligor actually prevented the obligee from complying with the condition. Prevention must be voluntary or willful in character. ** Doctrine applies only to suspensive condition. It can have no application to an external contingency which is lawfully within the control of the obligor.

object of the obligation. The principle only applies to consensual contracts. 2. Contracts in which the condition arising therefrom can only be realized within successive periods or intervals. (e.g. lease, hire of service, life annuity) Retroactive Effects as to the Fruits and Interests in Obligations to give: 1. In Reciprocal Obligations: no retroactivity - mutually compensated (fruits may be natural, industrial or civil) 2. In Unilateral Obligations: no retroactivity; debtor appropriates the fruits and interests received because it is usually gratuitous unless intention was otherwise, as inferred from nature and circumstances.

** The mere intention of the debtor to prevent its happening or the mere placing of ineffective obstacles to its compliance, without actually preventing fulfillment is insufficient.

In obligations to do and not to do (personal obligations): NO fixed rule. Courts are empowered to determine the retroactive effect of the suspensive condition. This rule also applies to an obligation with a resolutory condition.

Requisites of Constructive Fulfillment: 1. Condition is suspensive. 2. Debtor actually prevents the fulfillment of the condition; and 3. He acts voluntarily.

Rights of the Creditor Before the Fulfillment of the Condition: The creditor may, before the fulfillment of the obligation, bring the appropriate action for the reservation of his rights.

Principle of Retroactivity in Suspensive Condition The principle of retroactivity, under the CC, Art. 1187, is limited to the effects of the obligation. The cause of action for the enforcement of the obligation must still be computed from the moment of the happening of the suspensive condition.

Rights of the Debtor Before the Fulfillment of the Condition: 1. The debtor may recover what he paid by mistake before the happening of the suspensive condition; 2. If the payment was for a determinate thing, debtor may file an accion reivindicatoria; 3. If the payment was for an indeterminate thing, there is solutio indebiti; 4. If payment was made with knowledge of the condition, debtor

Rule on retroactivity has no application to: 1. Real contracts because they are perfected only by delivery of the

impliedly waives the condition and cannot recover; 5. If payment was with knowledge but the condition did not happen, the debtor can recover lest the creditor will be unjustly enriched; and 6. If payment is not by mistake, debtor is deemed to have impliedly waived the condition; he cannot recover what he has prematurely paid once the suspensive condition is fulfilled.

LOSS, DETERIORATION OR IMPROVEMENT PENDING THE HAPPENING OF THE CONDITION: LOSS A thing is lost when it: a. Perishes b. Goes out of commerce of men c. Disappears in such a way that its existence is unknown or it cannot be recovered DETERIORATION Any reduction or impairment in the substance or value of a thing which does not amount to loss; the thing is less than when the obligation was constituted. IMPROVEMNET Anything added to, incorporated in, or attached to the thing that is due. 3. REAL OBLIGATIONS In obligations to Give): The thing pending the happening of the condition, in case of improvement, loss, or deterioration, the following rules shall be observed: 1. If loss is without the fault of the debtor, obligation is extinguished. 2. If loss through the fault of the debtor, obliged to pay damages.

3. If thing deteriorates without the fault of the debtor, impairment to be borne by the creditor. 4. If the thing deteriorates through the fault of the debtor, creditor may choose between fulfillment and rescission with damages in either case. 5. If improvement is through nature or time, inures to the benefit of creditor; 6. If the improvement is at the expense of the debtor, rights similar to that granted to the usufructuary. Note: Consequently, the debtor cannot ask reimbursement for the expenses incurred for useful improvements of or improvements for mere pleasure. He can only ask reimbursement for necessary expenses.

The above rules apply to the following: a. Determinate things only because the genus of a thing never perishes (genus nun quam peruit) b. Obligation with a period; or c. Those who have a duty to return in case of loss, deterioration or improvement of the thing in an obligation with a resolutory condition The happening of a resolutory condition does not ipso jure revert ownership in the original debtor; he merely becomes entitled to the delivery which would give him ownership a new. 4. RECIPROCAL OBLIGATIONS Those which are created or established at the same time, out of the same cause, and which result in mutual relationships of creditor and debtor between the parties. G. R. If none of the parties fails to comply with what is incumbent

upon him, there is a right on the part of the other to rescind (or resolve) the obligation (tacit resolutory condition) ** Mere failure on the part of the party to comply with what is incumbent upon him does not ipso jure produce the rescission or resolution of the obligation. It requires restitution or bringing parties back to its original status prior to the contract. Requisites of Rescission: 1. One of the parties failed to comply with that is incumbent upon him; 2. The injured party choose rescission over fulfillment or performance is no longer possible; 3. The breach is substantial so as to defeat the object of the parties in making the agreement. **Right to rescind not absolute. The court is given discretionary power to fix the period within which the obligor in default may be permitted to comply with what is incumbent upon him (CC, Art. 1191, par3). But the discretionary power of the court cannot be applied to reciprocal obligations arising from a contract of lease because they are governed by Art. 1659 of the Civil Code. Waiver of Right - the right to rescind may be waived either expressly or impliedly. Effects of right to rescind 1. If there is a stipulation granting the right of rescission on the part of the aggrieved party and express grant, any court decision adjudging the proprietary of the rescission extra-judicially made is not the revocatory act of rescission but merely declaratory or an affirmation of the revocation.

2. The decree of rescission shall be without prejudice to the rights of third persons who have acquired the thing in accordance with Art. 1385 and 1388 and Mortgage Law. Art, 1191 of the Civil Code does not apply to the following: 1. Contracts of partnership where a paertner fails to pay the whole amount which he has bound to contribute to the common fund. 2. Sales of real or personal property by installments. The first being governed by Maceda Law while the latter by Recto Law. Recto Law - also known as Installment Sales Law This law covers contracts of sale of personal property by installments (Act No. 4122). It is also applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. (PCI Leasing and Finance Inc vs. Giraffe-X, G.R. No. 142618, July 12, 2007) Alternative Remedies of injured party in case of Sale of Personal Properties in Installment a. Specific Performance with damages. - Creditor may demand for the exact fulfillment of the obligation with damages. G.R. If availed of, the unpaid seller can no longer choose other remedies. XPN: If fulfillment has become impossible. b.

Rescission with damages. - Cancel the obligation if buyer fails to pay 2 or more installments. This remedy is deemed chosen when: i. Notice of rescission is sent

ii. Takes possession of subject matter of sale iii. Files action for rescission c.

Foreclosure. creditor may foreclose the chattel mortgage if buyer fails to pay 2 or more installments.

Maceda Law - also known as the Realty Installment Buyer Act. Provides for certain protection to particular buyers of real estate payable on installments against onerous and oppressive conditions (RA6552). Applicable to contract to sell real properties on installment basis. Transactions/Sale covered by Maceda Law: - Residential Real Estate Transactions/Sale excluded in Maceda Law: a. Industrial Lots b. Commercial buildings ( commercial lots by implication) c. Sale to tenants under agrarian laws. Rights granted to buyers: 1. Buyer paid at least 2 years installment: a. Pay without interest the balance within grace period of 1 month for every year of installment payment. Grace period to be exercised once every five (5) years. b. When no payment - canceled; buyer is entitled to 50% of what he has paid plus 5% for every year but not exceeding 90% of payments made. Note: Cancellation to be effected 30 days form notice and upon payment of cash surrender value.

2. Buyer paid less than 2 years installment a. Grace period is not less than 60 days from due date b. Cancellation if failure to pay within 60 days c. 30 days notice before final cancellation *** There can be partial rescission and partial fulfillment under Art. 1191 of the Civil Code. Effects of rescission: 1. Duty upon the court to require the parties to surrender whatever they may have received from the other (without prejudice to the obligation of the party who was not able to comply with what is incumbent upon him); or 2. Can no longer be demanded when he who demands is no longer in the position to return whatever he may be obliged to restore; neither can it be demanded when the thing which is the object of the contract is already in the possession of a third person who obtained it in good faith. Remedy: Proceed against the party responsible for the transfer or conveyance for damages. Effects of Breach by Both Parties: a. The liability of the first infractor shall be equitably tempered by the courts; b. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. 5.

OBLIGATIONS WITH A PERIOD - Obligations whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. Obligations with a resolutory period takes effect

at once but terminate upon the arrival of the day certain. **A day certain is understood to be that which must necessarily come, although it may not be known when. If the uncertainty consists on whether the day will come or not, the obligation is a conditional one. Term/Period Interval of time, which, exerting am influence on an obligation as a consequence of a juridical act, wither suspends its demandability or produces its extinguishment.

Requisites of Period: 1. Future 2. Certain 3. Possible, legally and physically **What is suspended by the term is not the acquisition of right or the effectivity of the obligation but its demandability. When period of prescription begins: - it commences from the time the term in the obligation arrives, for it is only from that date that it is due and demandable.

agreement to the contrary When it is left exclusively to the will of the debtor, the existence of the obligation is not affected; empowers the court to fix the duration of the obligation Must be possible, otherwise, obligation is void.

When it is left exclusively upon the will of the debtor, the very existence of the obligation is affected

Must be possible, otherwise, obligation is void

Kinds of Period/Term: 1. As to Effect a. Suspensive Period (Ex die) obligation whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. *** If a fortuitous event supervenes, the obligor is merely relieved of the obligation to fulfill the obligation at that time and does not stop the running of the period. *** Fortuitous event does not interrupt the running of the period. b.

Resolutory Condition (In Diem) - Obligations with a resolutory period take effect at once but terminate upon arrival of the day certain.

Distinctions between Term/Period and Condition TERM/PERIOD CONDITION 2. As to Expression Interval of time which Fact or event which isa. Express Period - when is future and certain future and un...