1179-1215.pdf Obligations With Conditions PDF

CHAPTER 3 – DIFFERENT KINDS OF OBLIGATIONS 2) Other Cases: Classification of Obligations: o “Little by little” Primary Classification o “As soon as possible” 1. Pur...

CHAPTER 3 – DIFFERENT KINDS OF OBLIGATIONS 2) Other Cases: Classification of Obligations: o “Little by little” Primary Classification o “As soon as possible” 1. Pure and conditional obligations o “From time to time” 2. Obligations with a period o “At any time I have the money” 3. Alternative and facultative obligations o “In partial payment” 4. Joint and solidary obligations o “When I am in a position to pay” 5. Divisible and indivisible obligations 6. Obligations with a penal clause Art 1181 Secondary Classification In conditional obligation, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend 1. Unilateral and bilateral obligations upon the happening of the event which constitutes the condition. 2. Real and personal obligations 3. Determinate and generic obligations ❖ Acquisition of rights 4. Civil and natural obligations o Depends upon the happening which constitutes the 5. Legal, conventional, and penal obligations condition o Its efficacy or obligatory force is subordinate to the SECTION 1: PURE AND CONDITIONAL CONDITIONS happening of a future and uncertain event o Suspensive Condition Art 1179 ▪ Example: Promise to give a car after graduating from Every obligation whose performance does not depend upon a law school as cum laude future or uncertain event, or upon a past event unknown to the ❖ Loss of rights already acquired parties, is demandable at once. o Conditions fulfilled produces the extinguishment or loss of Every obligation which contain a resolutory condition shall also rights already acquired be demandable, without prejudice to the effects of the o Resolutory Condition happening of the event. ▪ Example: Donation by reason of marriage Obligation under technicalities (Prestation) − Celebration of marriage is a resolutory condition ❖ Pure, Conditional and Period − Did not push through – donation may be revoked Pure Obligation ✓ Immediately demandable by the creditors and the debtor Art 1182 cannot be excused from not complying with his prestation When the fulfillment of the condition depends upon the sole will of ✓ Does not contain any condition or term upon which the the debtor, the conditional obligation shall be void. If it depends fulfillment is made to depend upon chance or upon the will of a third person, the obligation shall General Rule: No condition and no period take effect in conformity with the provisions of this code. Conditional Obligation ❖ Classification of Conditions: ✓ Depends upon a future / uncertain event, or upon a past A. As to effect: event unknown to the contracting parties. 1) Suspensive – happening gives rise to the obligation ✓ Subject in one way or another to the fulfillment of a 2) Resolutory – happening extinguishes the obligation condition B. As to form: Characteristics of a Condition: 1) Express – clearly stated 1. Future and uncertain 2) Implied – acts and merely inferred 2. Past but unknown C. As to possibility 1) Possible – capable of fulfillment Two principal kinds of condition 2) Impossible – not capable of fulfillment ❖ Suspensive Condition D. As to cause or origin ✓ Acquisition by rights by the creditor depends upon 1) Potestative – depends upon the will of one of the the happening of the event which constitutes the parties condition, if such condition does not take place, it 2) Casual – depends upon chance of upon the will of a would be of the conditional obligation had never third person existed. 3) Mixed – depends partly upon chance or partly upon the ✓ Fulfillment will give rise to an obligation will of a third person ✓ GR: No fulfillment, no obligation E. As to mode: ❖ Resolutory Condition 1) Positive – consists in the performance of an act ✓ The rights and obligations already existing are under 2) Negative – consists in the omission of an act threat of extinction upon the happening or F. As to numbers fulfillment of such condition. 1) Conjunctive – several conditions and all must be fulfilled ✓ Fulfillment will extinguish an obligation 2) Disjunctive – several conditions and only one or some of ✓ GR: Fulfillment of condition, extinguish obligatio them must be fulfilled G. As to divisibility Art 1180 1) Divisible – susceptible of partial performance When the debtor binds himself to pay when his means permit him 2) Indivisible – not susceptible of partial performance to do so, the obligation shall be deemed to be one with a period, subject to the provisions of article 1197 ❖ Potestative Condition - Depends upon the sole will of the contracting parties When duration of period depends upon the will of debtor o SUSPENSIVE CONDITION depends upon will of debtor 1) Debtor promises to pay when his means permit him to do so ✓ Conditional obligation is VOID – because its validity o What is left on debtor’s will is the duration of period and and compliance is left to the debtor not whether he should pay or not. ✓ Only the condition is VOID – if the obligation is pre – o If debtor and creditor cannot agree as to specific time for existing payment, the court shall fix the same on the application of o SUSPENSIVE CONDITION depends upon will of creditor either party. ✓ Obligation is VALID o RESOLUTORY CONDITION depends upon will of debtor  ✓ Obligation is VALID Negative Condition ✓ Position of the debtor when it comes to resolutory is − Event will not happen at a determinate time the same as the creditor when it comes to − Obligation shall become effective and binding: suspensive condition 1) Time indicated has elapsed w/o the event taking place ✓ Example: Pacto de retro 2) Become evident that event cannot occur although ❖ Casual Condition time has not yet elapsed Depends upon chance or will of a third person 3) No time fixed – considered to arrive at the intention ✓ Suspensive Condition – VALID of the parties ❖ Mixed Condition EXAMPLE: Suspensive condition – depends partly upon chances or − X obliges to give B 10k if B is not yet married to C on partly upon the will of third person = VALID December 30 Obligation still depends upon that part of the condition 1) X is not liable if B marries C on or prior December whose fulfillment depends upon the will of the debtor 30 = VOID 2) X is liable if B marries C after December 30 3) X is liable if C dies on or prior December 30 since Art 1183 the obligation becomes effective and is evident to Impossible conditions, those contrary to good customs or public be effective automatically. policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof Art 1186 which is not affected by the impossible or unlawful condition shall The condition shall be deemed fulfilled when the obligor voluntarily be valid. prevents its fulfillment The condition not to do an impossible thing shall be Constructive Fulfillment of Suspensive Condition considered as not having been agreed upon. 3 Requisites – the actual prevention of debtor and not another ✓ Refers to suspensive condition – since it applies only to cause where impossibility already existed at the time the 1. Condition is SUSPENSIVE obligation was constituted 2. Obligor actually PREVENTS THE FULFILLLMENT of the Two kinds of Impossible Conditions condition 1) Physically impossible conditions – Nature of things: 3. He acts VOLUNTARILY *as long as the acts of the obligor is cannot exist / cannot be done not malice or fraud. 2) Legally impossible conditions – contrary to law, morals, EXAMPLE: good customs, public order or public policy. X agreed to give Y commission if he sells X’s land based on its Effect of Impossible Condition terms as Y found a buyer, X sold the land to a buyer on a a) Conditional obligation is VOID – impossible conditions much lower price without the aid of Y. - Condition of annul the obligation which depends upon them and the commission payment was prevented by X reason behind why it is void is that the obligor knows his Constructive Fulfillment of Resolutory Condition – Debtor is obligation cannot be fulfilled bound to return what he has received upon the fulfillment of b) Conditional obligation is VALID – if the condition is an act the condition of not to do, it is disregarded, and the obligation is rendered pure and valid. Art 1187 c) Only the affected obligation = VOID | Not affected by The effects of a conditional obligation to give, once the condition impossible condition = VALID has been fulfilled, shall retroact to the day of the constitution of the d) Only the condition is VOID – if the obligation is pre- obligation. Nevertheless, when the obligation imposes reciprocal existing and do not depend on impossible condition. prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall Art 1184 appropriate the fruits and interests received, unless from the The condition that some event happen at a determinate time shall nature and circumstances of the obligation it should be inferred extinguish the obligation as soon as the time expires or if it has that the intention of the person constituting the same was become indubitable that the event will not take place. different. Positive Condition In obligations to do and not to do, the courts shall determine, in − The happening of an event at a determinate time – each case, the retroactive effect of the condition that has been − Obligation is extinguished: complied with. 1) As time expires without the event taking place 2) If it becomes indubitable although time has not yet Retroactive effect of fulfillment of suspensive condition expired i. To Give − Demandable only upon the fulfillment of the condition EXAMPLE: Condition is fulfilled – effect shall retroact to the − X obliges to give B 10k if B marry C before he reaches 23 day when obligation was constituted yrs. Old ii. To do / Not to do i. X is liable if B marries before 23 − No fixed rule provided ii. Not liable if B marries C on or after 23 Retroactivity is still applicable iii. Not liable if B dies or if no marriage took place Courts are empowered by the use of sound discretion and bearing in mind the intent of the Art 1185 parties and to determine the retroactive effect of The condition that some event will not happen at a determinate the suspensive condition that has been complied time shall render the obligation effective from the moment the with time indicated has elapsed, or if it has become evident that the event cannot occur. Retroactive effect as to fruits and interest I. Reciprocal Obligation If no time has been fixed, the condition shall be deemed fulfilled at o No retroactivity – because it is mutually such time as may have probably been contemplated, bearing in compensated mind the nature of the obligation.  o Once the condition is not yet fulfilled – no right on 3) Deterioration w/o debtor’s fault – value is reduced or fruits and interests impaired II. Unilateral Obligation ▪ Creditor will suffer deterioration or impairment o No retroactive effect because they are gratuitous 4) Deterioration through debtor’s fault o Example: Donation – debtor must deliver the thing ▪ Rescission with damages – Value of the thing + and has the right to keep the fruits and interest as Incidental fee long as the period of which is during the pendency ▪ Fulfillment with damages – thing / obligation + and unless a contrary intention by the debtor may impairment amount + incidental damages be inferred. 5) Improvement by nature or time ▪ Benefits the creditor in as much as the creditor Art 1188 would suffer deterioration through fortuitous event. The creditor may, before the fulfillment of the condition, bring the ▪ Compensated in case of impairment appropriate actions for the preservation of his right. 6) Improvement at the expense of debtor The debtor may recover what during the same time he has paid by ▪ Has the right granted to usufructuary with respect mistake in case of a suspensive condition. to improvements. ▪ Usufruct – right to enjoy the use and fruits of the Rights pending fulfillment of suspensive condition thing. i. Right of Creditor ▪ May take or bring appropriate action for the Art 1190 preservation his right When the conditions have for their purpose the extinguishment of ▪ Paragraph 1: analogy to obligations subject to an obligation to give, the parties, upon the fulfillment of said resolutory condition where both parties must return conditions, shall return to each other what they received. what both have received. ii. Right of Debtor In case of loss, deterioration or improvement of the thing, the ▪ Solutio Indebiti – to recover what he has paid by provisions which, with respect to the debtor, are laid down in the mistake preceding article shall be applied to the party who is bound to ▪ Based on the Principle: “no one shall enrich himself at return. the expense of others” As for obligation to do and not to do, the provisions of the second ▪ Note: payment before fulfillment of condition must be paragraph of article 1187 shall be observed as regards the effect of “by mistake”, the debtor is deemed to have impliedly the extinguishment of the obligation. (1123) waived the condition = no recovery Effects of fulfillment of Resolutory Condition Obligations to give Art 1189 o When the condition is fulfilled = obligation is extinguished, When the conditions have been imposed with the intention of and there will be an obligation to return to each other suspending the efficacy of an obligation to give, the following rules what they have received and return to status quo shall be observed in case of the improvement, loss, or o Thing to be returned is legally in possession of third party deterioration of the thing during the pendency of the condition who acted in good faith = restitution is against the other (1) If the thing is lost without the fault of the debtor, the obligation o Mutual restitution is absolute = applies not only to the shall be extinguished; thing/s received but also to the fruits and interests (2) If the thing is lost through the fault of the debtor, he shall be o Retroactivity admits exceptions according as the obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such obligation is bilateral or unilateral = mutually a way that its existence is unknown or it cannot be recovered; compensated (3) When the thing deteriorates without the fault of the debtor, the o The only possible exception for suspensive and resolutory impairment is to be borne by the creditor; condition is when the intention of the parties is otherwise. (4) If the deteriorates through the fault of the debtor, the creditor Obligation to do / not to do may choose between the rescission of the obligation and its o The court shall determine the retroactive effect of the fulfillment; with indemnity for damages in either case; fulfillment. (5) If the thing is improved by its nature, or by time, the o In the exercise of discretion, the court may disallow improvement shall inure to the benefit of the creditor; retroactivity by taking in account the circumstances of (6) If it is improved at the expense of the debtor, he shall have no each case. other right than that granted to the usufructuary. Resolutory Condition – applicable on this article with the Improvement, Loss or Deterioration of the Thing obligation to return ❖ Requisites: o Happening has the same effect as when the condition is 1) Real obligation – obligation to give suspensive. 2) Specific or determinate thing o Involves reciprocal obligation 3) Subject to Suspensive condition o Debtor becomes creditor and creditor become debtor 4) Condition is fulfilled when having the obligation to return 5) Loss, deterioration, or improvement of thing during o Pending the fulfillment of the condition, parties are pendency of condition entitled to the rights granted by article 1188 ❖ Kinds of Loss 1) Physical loss – thing perishes Art 1191 : Reciprocal Obligation & Juridical Rescission 2) Legal loss – goes out of commerce / legal becomes illegal The power to rescind obligations is implied in reciprocal ones, in 3) Civil loss – disappears in a way that its existence is case one of the obligors should not comply with what is incumbent unknown upon him. ❖ Rules in case of loss, deterioration, or improvement of thing The injured party may choose between the fulfillment and the during pendency of suspensive condition: rescission of the obligation, with the payment of damages in either 1) Loss w/o debtor’s fault (fortuitous event) case. He may also seek rescission, even after he has chosen ▪ GR: obligation is extinguished, and debtor is not fulfillment, if the latter should become impossible. liable 2) Loss through debtor’s fault The court shall decree the rescission claimed, unless there be just ▪ Debtor is entitled to pay damages cause authorizing the fixing of a period  This is understood to be without prejudice to the rights of third There must be at least a written notice sent to the persons who have acquired the thing, in accordance with articles other party to have extra – judicial rescission which 1385 and 1388 and the Mortgage Law. (1124) contains a legal effect where such party does not ✓ Art 1191 governs where there is non – compliance by one of oppose it. the parties in case of reciprocal obligation b) Contract still executory – Art 1169, last paragraph – delay ❖ Kinds of Obligation according to person obliged: It is not necessary that there be a stipulation where Unilateral – only one party is obliged to comply with the automatic rescission is allowed prestation Extrajudicial rescission = final decision of the court can Bilateral – mutually bound to each other and may be finally settle whether the rescission was proper or not reciprocal or non – reciprocal o Reciprocal Obligation – arise from same cause and in Art 1192 which each party is debtor and creditor of each other. In case both parties have committed a breach of the obligation, the Fulfillment = as of suspensive condition liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated Non – Fulfillment = tacit or implied resolutory the contract, the same shall be deemed extinguished, and each condition / giving a right to demand rescission shall bear his own damages. Example: Contract of Sale o Non – Reciprocal Obligation – do not impose / do not Where both parties are guilty of breach depend simultaneous and correlative performance on ❖ First infractor known both parties Liability of the 1st should be equitably reduced Obligations are not related to the other party’s ❖ First infractor cannot be determined obligation Deemed extinguished and each shall bear own damages Example: contract of loan or contract of commodatum SECTION 2: OBLIGATIONS WITH A PERIOD Art 1193 ❖ Remedies in reciprocal obligation Obligations for whose fulfillment a day certain has been fixed, shall Choice of remedies be demandable only when that day comes. o Specific performance or fulfillment with damages o Action for rescission with damages Obligations with a resolutory period take effect at once, but Remedy of rescission for non – compliance = Breach terminate upon arrival of the day certain. o Principal action must be distinguished from subsidiary A day certain is understood to be that which must necessarily come, action by reason of lesion or damage under article although it may not be known when. 1381 and from cancellation of a contract based If the uncertainty consists in whether the day will come or not, the o When party demands rescission = treats the non – obligation is conditional, and it shall be regulated by the rule of the fulfillment by the other party’s obligation as preceding section. resolutory condition. ✓ Obligations with a period = effects are subjected upon the expiration or arrival of the said term. ❖ Court may grant guilty party term for performance ✓ Period = future and certain events where it is a day certain The court shall order the rescission claimed unless there (whether we like it or not) which must necessarily come. should be “just cause” for granting the party in default.  Exception: guilty party is willing to comply with his Difference b/w Period and Condition obligation. Period Condition Certain event which must As to ❖ Remedies are alternatives happen, and date known Uncertain event Fulfillment Only one remedy can be chosen and not both beforehand If fulfillment is chosen, he may also seek rescission if the Refer to future and latter should become impossible As to Time Refer only to future past event unknown But if rescission is chosen, he cannot demand fulfillment to the parties Merely fixes the time ❖ Limitations on right to demand rescission * Suspensive – birth As to Resort to the courts – judicial rescission Influence on of obligation Causes obligation to o “no person can take justice or the law in his own * Resolutory – does arise or to cease the obligation hands and decide by himself what are his rights in the not invalidate the fact matter. that obligation existed Power of court to fix period Depends upon the As to effect, Depends upon the will of o If there is a just cause reason and as where the default sole will of the debtor when left to debtor = court fixes incurred was not willful or could be excused in view of = invalidates the debtor’s will duration circumstances obligation Right of third person – if subject matter is in its hands and Retroactivity Arrival of period = no Has retroactive effect acted in good faith of effects retroactive effect o Rescission is not allowed “period is like a condition where it must be possible but if it is Substantial violation impossible, the obligation is void” o GR: rescission will not be granted for slight breach Kinds of Period or Term o “violation shall be substantial” 1. According to effect: Waiver of right a) Suspensive Period (x Die) o “right to rescind may be waived, expressly or − Obligations begin from the day certain. impliedly” − Example: I will support from the time your father dies b) Resolutory Perion (In Diem) ❖ Rescission w/o judicial decree − Obligations is valid until the day certain. a) Automatic rescission is expressly stipulated − Example: I will support until you graduated. Violation of contract / breach = cancellation 2. According to source Right to rescind is not “implied” but expressly a) Legal Period – provided by laws recognized  b) Conventional or Voluntary period – agreed by parties c) Judicial period – fixed by court Art 1197 3. According to definiteness If the obligation does not fix a period, but from its nature and the a) Definite period – fixed or known circumstances it can be inferred that a period was intended, the b) Indefinite period – not fixed or known / period is courts may fix the duration thereof. intended, and courts usually empowered to fix the same. The courts shall also fix the duration of the period when it depends upon the will of the debtor. Art 1194 In case of loss, deterioration, or improvement if the thing before In every case, the courts shall determine such period as may under the arrival of the day certain, the rules in article 1189 shall be the circumstances have bbeen probable contemplated by the observed. parties. Once fixed by the courts, the period cannot be changed by them (1128a)  Refers to judicial period  Contractual period – Art 1195 period agreed by the parties Anything paid or delivered before the arrival of the period, the ❖ Court generally without power to fix period obligor being unaware of the period or believing that the obligation o Court is not authorized to fix the period if there is no fixed has become due and demandable, may be recovered, with the term on the obligation. fruits, and interests. ❖ Exceptions: Payment before arrival of period No period fixed but period was intended ✓ Applies only to obligation to give. − No fixed period but can be recognized through its ✓ Related to Solutio Indebiti – art 1188 nature and circumstances. Creditor cannot unjustly enrich himself by retaining the Duration depends upon the will of the debtor = related to thing received before arrival of period. art 1180 Payment cannot be recovered if the debtor has the − Court must fix the duration to prevent unfulfilled knowledge of the period. obligation ✓ Obligor may no longer recover the thing or payment once the − Court shall determine the period as may under the period has arrived, but he can recover fruits and interests, those circumstances of the agreement. before the date of maturity ❖ Legal effect where suspensive period / condition depends ✓ No recovery in personal obligation (to do or not to do) – upon will of debtor because the debtor cannot really recover or undo the things 1) Existence of the obligation is not affected even if the being done period depends upon the will of the debtor since it is only the performance which matters. Art 1196 2) If subject to a condition, conditional obligation is void if it Whenever in an obligation a period is designated, it is presumed to depends upon the sole will of the debtor (Art 1182) since have been established for the benefit of both the creditor and the the performance of the obligation depends on the debtor debtor, unless from the tenor of the same or other circumstances, it (Art 1308) should appear that the period has been established in favor of one or of the other. ❖ Period fixed cannot be changed by the courts If the period was fixed by the parties and has already G.R: Both parties are benefited by the period unless stipulated lapsed Example: If the parties agreed to the period fixed by the court, said On January 1, A borrowed from B 10k payable on December 31 at period acquires the nature of the obligation since the 15% interest. effect is exactly the same as if they had expressly agreed ✓ A cannot pay before December 31 without B’s consent and upon it. neither B can compel A to pay before expiration of the term. ✓ But A can pay before December 31 where interest of it is Art 1198 included. The debtor shall lose every right to make use of the period: A is to deliver 200 bags of rice (1) When after the obligation has been contracted, he becomes ✓ B cannot compel to accept performance before expiration insolvent, unless he gives a guaranty or security for the debt; especially if it would be prejudiced or inconvenient to him. (2) When he does not furnish to the creditor the guaranties or Exceptions to General Rule: securities which he has promised 1. Term is for the benefit of the debtor alone (3) When by his own acts he has impaired said guaranties or He cannot be compelled to pay in advanced, but he can, securities after their establishment, and when through a if he desires to do so. fortuitous event they disappear, unless he immediately gives 2. Term is for the benefit of the creditor new ones equally satisfactory; May demand fulfillment even before arrival of the (4) When the debtor violates any undertaking, in consideration of period but cannot require accepting payment before which the creditor agreed to the period; expiration. (5) When the debtor attempts to abscond. (1129a) Computation of term or period Legal periods GR: Obligation is not demandable before the lapse of the period 1) Year – twelve calendar months ✓ Lose every right to make use of the period once the period is 2) Month – thirty days, unless refers to specific calendar disregarded since the obligation became pure and demandable month where it shall be computed according to number of days Exceptions: (based on the fact that debtor will not be able to 3) Day – twenty-four hours comply obligations) 4) Night – sunset to sunrise 1) Debtor becomes insolvent Calendar month - calendar without regard to the number of 2) Does not furnish guaranties or securities promised – terms days it may contain became demandable − A period of time running from the beginning of a certain 3) Guaranties or securities have been impaired or have numbered day up to, but not if there is not sufficient disappeared number of days in the next month. 4) Debtor violates an undertaking − Example: one calendar month from January 31, 2020 – it 5) Debtor attempts to abscond – depart secretly or hide. will be from February 1 to February 28  When debtor may rescind contract SECTION 3: ALTERNATIVE OBLIGATIONS ✓ If through debtor’s fault, debtor cannot make a choice according to the terms of obligation Art 1199 ✓ Borrowed must be returned with interest / fruit and A person alternatively bound by different prestations shall creditor must what he is faulted with and with damages. completely perform one ofthem GR: However, debtor is not bound to rescind. The creditor cannot be compelled to receive part of one and ✓ He may continue to do the other prestation, but the part of the other undertaking. creditor is not liable for damages. Kinds of obligation according to object 1. Simple obligation - only 1 prestation Art 1204 2. Compound obligation – two or more prestations The creditor shall have a right to indemnity for damages when, Conjunctive Obligation – several prestation, all are due through the fault of the debtor, all the things which are Distributive Obligation – two or more prestations are alternatively the object of the obligation have been lost, or the due. compliance of the obligation has become impossible. o Facultative Obligation The indemnity shall be fixed taking as a basis the value of the last − One prestation is due but can be substituted with thing which disappeared, or that of the service which last became the other impossible. o Alternative Obligation Damages other than the value of the last thing or service may − Several prestation is due, but only one also be awarded (1135a) performance is sufficient ✓ Right of choice belongs to the debt − Prestation must be complete, not by installment or half of the performanc Effect of loss of the object of obligation: 1) Some of the objects have been lost or became impossible Art 1200 even through the fault of the debtor The right of choice belongs to the debtor, unless it has been o The latter (debtor) is not liable because he can still expressly granted to the creditor choose from the other prestations to comply with his The debtor shall have no right to choose those prestations which obligation. are impossible, unlawful or which could not have been the object o Exception: General Rule of 1170: liability for damages of the obligation arising from negligence GR: right to choose the prestation belongs to the debtor 2) All object has been lost and became impossible Exception: when it is only expressly granted by creditor o Creditor shall have the right to indemnity for damages Right of choice of debtor is not absolute o Exception: cause is through fortuitous event, obligation 1. Debtor cannot choose a prestations that are impossible, is extinguished and if personal obligation (to do) unlawful, and could not have been the object of the obligation became impossible to perform. since it makes the prestation void Basis of indemnity o Debtor’s right to choose is not extinguished altogether but ✓ Value of the last thing disappeared or service which last limited to the remaining valid prestation. became impossible. o Value of the prestation must be equal to what has been ✓ If the last thing was lost through fortuitous event, debtor is agreed upon to. not liable even if other items are lost through his fault and 2. Debtor has no more right of choice if the prestation that he is obligation is extinguished since the obligation is converted alternatively bound to theonly one practicable, this makes the into a simple one. obligation simple. 3. Debtor cannot choose part of one prestation and part of Art 1205 another prestation. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative form the dy when the Art 1201 selection has been communicated to the debtor. The choice shall produce no effect except from the time it has Until then the responsibility of the debtor shall be governed by been communicated. the following rules: Communication of Choice (1) If one of the things is lost through a fortuitous event, a) Effect of Notice: until choice is made, obligations remains he shall perform the obligation by delivering that which alternative the creditor should choose from among the remainder, ▪ Once notice of election is given, obligation ceases to or that which remains if only one subsists; be alternative and be simple. (2) If the loss of one of the things occurs through the fault ▪ Once choice is properly made and is irrevocable, it of the debtor, the creditor may claim any of those cannot be changed by either party without consent subsisting, or the price of that which, through the fault / choice has been expressly give, choice shall of the former, has disappeared, with a right to damages. likewise produce legal effect. (3) If all the things are lost through the fault of the debtor, b) Proof and Form: law does not require any particular form. the choice by the creditor shall fall upon the price of any GR: All rights may be waived. one of them, also with indemnity for damages; The same rules shall be applied to obligations to do or not to Art 1202 do in case one, some or all of the prestations should become The debtor shall lose the right of choice when among the impossible. prestations whereby he is alternatively bound, only one is ✓ Alternative Obligation = General rule, right of choice practicable. belongs to the debtor, but the debtor may expressly give ✓ Alternative obligation becomes simple if there is only one the right of choice to the creditor. prestation that is practicable and others are impossible. ✓ Before creditor makes selection, debtor cannot incur in ✓ If more than one prestation is practicable = art 1200 will be delay. applie Rules in case of loss before creditor makes a choice: 1. Lost through Fortuitous event Art 1203 − Creditor should choose among the remainder. If through the creditor’s acts, the debtor cannot make a choice 2. Lost through debtor’s fault according to the terms of the obligation, the latter may rescind the contract with damages.  − May claim among the remainder with damages or may Art 1208 choose the value of the thing lost with damages If from the law, or the nature or the wording of the obligations to 3. All things are lost through debtor’s fault. which the preceding article refers, the contrary does not appear, − Demand any value of the items or prestation with the credit or debt shall be presumed to be divided into as many indemnity for damages. equal share as there are creditors or debtors, the credits or debts 4. All things are lost through fortuitous event being considered distinct from one another, subject to the Rules − Obligations are extinguished of court governing the multiplicity of suits. Can also be applied to personal obligation Kinds of Obligation: − Damages depends upon whether the cause which has 1.Individual Obligation – only 1 obligor and 1 obligee rendered the obligation impossible was due to his fault or not. 2.Collective Obligation – 2 or more debtor and 2 or more creditor, and may be joint or solidary Art 1206 Obligation under plurality of parties When only one prestation has been agreed upon, but the obligor Joint Obligation – paid/fulfilled proportionately by different may render another in substitution, the obligation is called debtors or demanded proportionately by different creditors facultative Solidary Obligation – entire or whole compliance of one is a The loss or deterioration of the thing intended as a substitute, compliance to others. through the negligence of the obligor, does not render him liable. Collective obligation presumed as Joint: But once the substitution has been made, the obligor is liable for ✓ Joint obligation – mancomunada; mancomunadamente; the loss of the substitute on account of his delay, negligence or pro – rata fraud. ✓ Share of each obligation is specified, and the correlative rights are also known. Facultative Obligation Requisites of Joint: ✓ One prestation agreed upon but can be substituted ✓ Only debtor has the right of choice − Many debts as debtors − Many credits as creditors Effect of Loss: − Debtor and creditor are proportionate only for their part. A. Before substitution Multiplicity of Suits o Principal thing is lost due to fortuitous event, − Seek to prevent the filing of two or more suits or complaints obligation is extinguished. Otherwise, debtor is for a single cause of action or the same violation of the legal liable right of the plaintiff. o Loss of the thing intended as substitute, with or Example: A, B and C borrowed 15k from D. The presumption is without his fault, debtor is not liable because that the debtors are jointly liable. Here, there are 3 debts and 1 substitute is still not due. credit. D can demand only 5k each from A, B, and C or total of B. After substitution 15k. Since debts are distinct and separated from each other, o Principal thing is lost, debtor is not liable whatever insolvency of one debtor shall not make the other debtors liable. the cause is. It is because it is no longer due. *or it could be otherwise, with the creditors, where there are o Substitute is lost, liability depends upon whether or 1 debt and 3 credits. not lost is due to debtor’s fault. Obligation is presumed to be Solidary o Substitution is effective if it has been communicated − One of the debtors can be compelled to pay the active Difference b/w Alternative and Facultative Obligation: obligation or can be proceeded against for the full amount of Alternative Facultative the obligation. Several prestation are One prestation is due − Solidaria; in solidum; juntos o separademente Number of Requisite of Solidary due but one is and can be substituted Prestations 1. Obligation expressly so states sufficient by the debtor Can be given to the Right to substitute is 2. Law requires solidarity Right of 3. Nature of the obligation requires solidarity. creditor and third given only to the debtor choice Kinds of Solidarity (According to parties bound) person Loss of one or more Loss of the thing due, 1) Passive Solidarity Loss through prestation through extinguishes the − Solidarity on the part of the debtor Fortuitous fortuitous event does obligation − One of them can be made liable for the fulfillment = it is Event not extinguish in the nature of mutual guaranty obligation. − 1 debtor may fulfill the whole obligation and collect or a) Loss of one a.) Loss of the thing claim with the other its share. prestation does not due through his − Example: A and B are solidary debtors of C in the render him liable fault does not make amount of 20 000 Loss through b) Choice belongs to the debtor liable. ✓ Only 1 debt and 1 credit the fault of creditor, loss of b.) Loss of the thing ✓ C may demand the whole oblgiation from either A the debtor one prestation before substitution or B or both of them simultaneously. through his fault through debtor’s ✓ C cannot collect more than 20 000 makes the debtor fault does not make ✓ Liability is solidary unless it is clearly stated that lliable him liable the intention of the parties is that they may pay without right of choice of the creditor. SECTION 4: JOINT AND SOLIDARY OBLIGATIONS 2) Active Solidarity − Solidarity on the part of the creditors Art 1207 − One of them can demand the fulfillment of the whole The concurrence of two or more creditors or of two or more obligation debtors in one and the sameobligation does not imply that each − Mutual representation among the solidary creditors one of the former has a right to demand, or that each one of with powers to exercise the the latter is bound to render, entire compliance with the − rights of others in the same manner as their rights. prestation. There is a solidary liability only when the obligation − Example: A is liable for 20 000 in favor of B and C who expressly so states, or when the law or the nature of the are solidary creditors obligation requires solidarity. ✓ A may pay either B or C  ✓ B and C may demand payment from A as long as Solidarity may exist although the creditors and the debtors may debt is not yet paid. not be bound in the same manner and by the same periods and ✓ Unless it clearly appears that the intention of the conditions. parties is to give to A the right to choose whom to Solidarity with different periods, condition, or manner pay Kinds of Solidary Obligation (According to Legal Tie) ✓ If either of the solidary creditors received the 1. Uniform – parties are bound by the same stipulations. payment, either is liable for the share of the other 2. Non-Uniform or Varied – parties are not subject to the same according to the agreement. stipulations. 3) Mixed Solidarity − Solidarity on the part of debtor and creditor RULES: 1. Solidarity is not affected by diverse stipulation. − Payment or collection of one = reimbursement from 2. There may be a solidary obligation although parties may not other parties. be bound in the same manner. According to source: 3. Upon the expiration of term or fulfillment of condition, the 1) Conventional Solidarity creditor will have the right to demand the remainder of the − Solidarity is based upon the agreement of the parties payment (or whole if agreed upon) − No contract to solidarity = only joint Any solidary debtor already bound may be made liable for 2) Legal Solidarity the entire obligation. − Solidarity is imposed by the law Example: 3) Real Solidarity A,B,C and D obliged themselves solidarily to pay E 20,000 as follows: − Solidarity is imposed by the nature of obligation A, to pay by installment at the rate of 1,000 per month starting in − Law does not interfere or does not expressly indicate July; B, to pay in September; C, to pay in December; and D, if E where obligations are solidarity in nature passes to the CPA Examination. Solidarity not Presumed − Presumption: two or more persons in the same obligation is Remember: that it is joint. ✓ Can only demand when already bound. − Reason: solidary obligations are very burdensome for they ✓ Could collect from any of the solidary debtors but only to the create unusual rights and liabilities. Solidarity b/w debtors extent of the amount due, or the remainder of the amount increases their responsibility while solidarity b/w between already due. creditors increases the right of each creditor. ✓ Cannot recover the amount of the others that are not yet due, or demandable. Art 1209 Situations: (to the following example) If the division is impossible, the right of the creditors may be a) In July, E can only demand 1,000 from A and could also prejudiced only by their collective acts, and the debt can be demand from the other creditors but only to the extend of A’s enforced only by proceeding against all the debtors. If one of share which is 1,000. But E cannot recover yet the shares of the latter should be insolvent, the others shall not be liable for others which are not yet due nor demandable. this share. (1139) b) In September, E is entitled to collect from any of the solidary Jointly Indivisible Obligation debtors the share corresponding to B which is 5,000 (1/4 of − Obligation is joint since the parties are merely 20,000) and A, 1,000 or 3,000, if A had not yet paid any proportionately liable. installment. The shares of C and D are not yet recoverable. − It is indivisible because the subject matter is not physically c) In December, E can collect from any of the solidary debtors divisible into different parts. the share corresponding to C plus the share of A and B that Example: are not yet been paid. The share of D will mature only when E − A, B and C are jointly liable to give D a car worth 150 000. passes the CPA Examination. On the date of delivery, C is not willing to comply d) As soon as D passes the CPA examination, the obligation of D ✓ Joint as to liabilities (damages of 50k each) but to pay E 5,000 arises. This amount can be demanded from any indivisible as to compliance. of the solidary debtors. And, E is also entitled with the other ✓ Unwilling debtor is liable for damages amounts due and demandable, or even the unpaid which ✓ If A and B suffered damages, they may recover it from pertains to the shares of A, B, and C. C e) If the agreement is that E may demand the entire obligation ✓ If one debtor is insolvent, other debtors is not liable from B, C, and D as their obligation arises, then they are for its share, the creditor must wait until the debtor entitled to pay the entire amount less the amount, if any, can pay. already paid. ✓ If there are 2 or more creditors – if one creditor refuses to accept, debtor may legally refuse to deliver Art 1212 the car and deposit the car in court by way of Each one of the solidary creditors may do whatever may be useful consignation to the others, but not anything which may be prejudicial to the latter. Art 1210 Act of the Solidary Creditor useful / prejudicial to others but it The indivisibility of an obligation does not necessarily give rise to cannot be beneficial to them. solidarity. Nor does solidarity of itself imply indivisibility. − If performed and results to an extinguishment of obligation, Indivisibility Solidarity he shall be responsible to the others for damages. − This rule is based on the Theory of Mutual Agency (i.e. right of Refers to prestation Refers to legal tie one to act for and in the name of the others.) Only debtor guilty of breach is All debtors are liable for breach Example: liable for damages committed by one of them A owes B and C, Solidary Creditors, the sum of 10,000. B may make 1 debtor and 1 creditor At least 2 debtor and 2 creditors a demand for the payment of the obligation for this will benefit C. Others are not liable in case of Debtors are liable Under the law, the prescription of action is interrupted when they insolvency of one debtor proportionately are filed before the court. (Art. 1155) So also, if B collects from A, C will be benefitted. Art 1211 In case of remission or condonation effected by B, the obligation 10,000. So, A is still indebted to C and D in the amount of will be extinguished but since C cannot be prejudiced by the 20,000. remission, B has to reimburse C for the latter’s share − Highlighted: Condonation will be based upon the share of the creditor condoned it. Art 1213 In the first example, only 12,000 of the debt remains, the A solidary creditor cannot assign his rights without the consent of obligation of A to pay the 18,000 condoned having been the others. extinguished Assignment by Solidary Creditor of his rights. General Rule: A solidary creditor cannot assign his rights to a third person. Reason: it is because each creditor represents the others, and the assignee may not have the confidence of the original solidary creditor and it also considers the act that the assignee may do after receiving the payment such as it may not give the shares of the others. Art 1214 The debtor may pay any one of the solidary creditors; but if any demand, judicial or extrajudicial, has been made by one of them, payment should be made to him. Payment to any of the solidary creditors Rule: Payment should be made to any of the solidary creditors (general rule) however, payment should be made to the solidary creditor who demanded, judicially or extrajudicially, of the payment; otherwise, the obligation will not be extinguished except insofar as the creditor-payee’s share is concerned in case the latter does not give to the other creditors their share. Art. 1214 is not only applicable to active solidarity. Example: A is liable to pay B and C, solidary creditors, 10,000. In this case, A may pay either B or C but if a demand, judicial or extrajudicial, is made by B, payment should be made to B. If A, nevertheless, paid C 10,000, B is still entitled to his share from A in case C does not turn over to B the latter’s share. If B and C demanded payment at the same time, A may pay either of them. If there are two (2) or more debtors, only the debtor, upon whom the demand had been made, is bound to make payment to the creditor who made the demand. Art 1215 Novation (Art. 1291), compensation (Art.1278), confusion (Art. 1275), or remission (Art. 1270) of the debt, made by any of the solidary creditors or with any of the solidary debtors, shall extinguish the obligation, without prejudice to the provisions of article 1219. The creditor who may have executed any of these acts, as well as he who collects the debt, shall be liable to the others for the share in the obligation corresponding to them. Modes / causes of the extinguishment of obligation. General Rule: the creditor who executed any of these acts should be liable to the others for their corresponding shares considering that such acts are prejudicial to them − Example: A, debtor and B, C, D, solidary creditors in the amount of 30,000. If B validly condones the debt in the amount of 18,000, he shall be liable for 6,000 each to C and D. If B collects 15,000 from A, B must account for the 5,000 share each of C and D. Effect of Novation, etc. where obligation joint. In a Joint Obligation, novation, compensation, confusion, remission, prescription, and any other causes of modification or extinction does not extinguish or modify the obligation except with respect to the creditor or debtor affected, without extending its operation to any other part of the debt or of the credit. − Example: If the obligation of A in the above example is joint, the condonation will affect only the share of B in the amount of