Assignment No. 3 PDF

Assignment No. 3 1. Define the following: a. 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. b. Conditional obligation - A conditional obligation is one whose consequenc...

Assignment No. 3 1. Define the following: a. 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. b. Conditional obligation - A conditional obligation is one whose consequences are subject in one way or another to the fulfillment of a condition. c. Obligation with a period - An obligation with a period is one whose consequences are subjected in one way or another to the expiration of said period or term. d. Alternative obligation - An alternative obligation is one wherein various prestations are due but the performance of one of them is sufficiently determined by the choice which, as a general rule, belongs to the debtor. e. Facultative obligation - A facultative obligation is one where only one prestation has been agreed upon but the obligor may render another in substitution. f. Joint obligation - A joint obligation is one where the whole obligation is to be paid or fulfilled proportionately by the different debtors and/or is to be demanded proportionately by the different creditors. g. Solidary obligation - A solidary obligation is one where each one of the debtors is bound to render, and/or each one of the creditors has a right to demand entire compliance with the prestation. h. Divisible obligation - A divisible obligation is one the object of which, in its delivery or performance, is capable of partial fulfillment. i. Indivisible obligation - An indivisible obligation is one the object of which, in its delivery or performance, is not capable of partial fulfillment. j. Obligation with a penal clause - An obligation with a penal clause is one which contains an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal prestation intended primarily to induce its fulfillment. k. Unilateral obligation - when only one party is obliged to comply with a prestation. l. Bilateral obligation - when both parties are mutually bound to each other. In other words, both parties are debtors and creditors of each other. Bilateral obligations may be reciprocal or non-reciprocal. m. Real obligation - (obligation to give) or that in which the subject matter is a thing which the obligor must deliver to the obligee. n. Personal obligation - (obligation to do or not to do) or that in which the subject matter is an act to be done or not to be done. o. Determinate obligation - A thing is said to be specific or determinate when it is particularly designated or physically segregated from all others of the same class. p. Generic obligation - A thing is generic or indeterminate when it refers only to a class or genus to which it pertains and cannot be pointed out with particularity. q. Civil obligation - Civil obligations give a right of action in courts of justice to compel their fulfillment or performance. r. Natural obligation - Natural obligations do not grant such right of action to enforce their performance. s. Legal obligation - Obligations arising from law. They are not presumed because they are considered a burden upon the obligor. They are the exception, not the rule. To be demandable, they must be clearly set forth in the law, i.e., the Civil Code or special laws. or These are obligations imposed by law. They arise because the law directly requires a person to do or not do something. t. Conventional obligation - These are obligations that arise from contracts or agreements made between parties. The parties freely agree on what they are obligated to do, as long as it is not contrary to law, morals, or public policy. u. Penal obligation - These are obligations where a penalty is imposed for non-compliance with a principal obligation. The penalty serves as a form of punishment or compensation in case of a breach of the main obligation. 2. What is a condition? What are its characteristics?  - 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. - (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 first 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. 3. What are the kinds of conditions? Explain each. - (1) Suspensive condition (condition precedent or condition antecedent) or one the fulfillment 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. (2) Resolutory condition (condition subsequent) or one the fulfillment of which will extinguish an obligation (or right) already existing. 4. What are the differences between a suspensive condition and a resolutory condition? What are the effects of the happening of a suspensive condition? What about the happening of a resolutory condition? - 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. - (1) Acquisition of rights. — In obligations subject to a suspensive condition, the acquisition of rights by the creditor depends upon the happening of the event which constitutes the condition. (2) Loss of rights already acquired. — In obligations subject to a resolutory condition, the happening of the event which constitutes the condition produces the extinguishment or loss of rights already acquired. 5. Give the effects of the following: a. Suspensive condition depends on the will of the debtor - (1) Conditional obligation void. — Where the potestative condition depends solely upon the will of the debtor, the conditional obligation shall be void because its validity and compliance is left to the will of the debtor and it cannot, therefore, be legally demanded. In order not to be liable, the debtor will not just fulfill the condition. There is no burden on the debtor and consequently, no juridical tie is created. (2) Only the condition void. — If the obligation is a pre-existing one, and, therefore, does not depend for its existence upon the fulfillment by the debtor of the potestative condition, only the condition is void leaving unaffected the obligation itself. Here, the condition is imposed not on the birth of the obligation but on its fulfillment. b. Suspensive condition depends on the will of the creditor - If the condition depends exclusively upon the will of the creditor, the obligation is valid. c. Resolutory condition depends on the will of the debtor - If the condition is resolutory in nature, like the right to repurchase in a sale with pacto de retro, the obligation is valid although its fulfillment depends upon the sole will of the debtor. The fulfillment of the condition merely causes the extinguishment or loss of rights already acquired. The debtor is naturally interested in its fulfillment. The position of the debtor when the condition is resolutory is exactly the same as that of the creditor when the condition is suspensive. A condition which is both potestative (or facultative) and resolutory may be valid, even though the condition is left to the will of the obligor. d. Casual condition - (1) If the suspensive condition depends upon chance or upon the will of a third person, the obligation subject to it is valid. (2) When the fulfillment of the condition does not depend on the will of the obligor, but that on a third person who can in no way be compelled to carry it out, and it is found by the court that the obligor has done all in his power to comply with his obligation, his part of the contract is deemed complied with and he has a right to demand performance of the contract by the other party. e. Mixed condition - The obligation is valid if the suspensive condition depends partly upon chance and partly upon the will of a third person. f. Suspensive condition depends partly upon the will of the debtor - According to Manresa, the use of the word “exclusive” (now “sole”) makes it clear that conditional obligations whose fulfillment depends partly upon the will of the debtor and partly upon the will of a third person, or upon chance are perfectly valid. It is believed, however, that if the compliance with the obligation still depends upon that part of the condition whose fulfillment depends upon the will of the debtor, the obligation is void as it is within his power to comply or not to comply with the same. The situation is the same as if the condition depends entirely upon the will of the debtor. 6. What are the kinds of impossible conditions? What are its effects? - (1) Physically impossible conditions. — when they, in the nature of things, cannot exist or cannot be done; and (2) Legally impossible conditions. — when they are contrary to law, morals, good customs, public order, or public policy - (1) Conditional obligation void. — Impossible conditions annul the obligation which depends upon them. Both the obligation and the condition are void. The reason behind the law is that the obligor knows his obligation cannot be fulfilled. He has no intention to comply with his obligation.  In conditional testamentary dispositions and in simple and remuneratory donations, the rule is different. (2) Conditional obligation valid. — If the condition is negative, that is, not to do an impossible thing, it is disregarded and the obligation is rendered pure and valid. Actually, the condition is always fulfilled when it is not to do an impossible thing so that it is the same as if there were no condition. The negative condition may be not to give an impossible thing. (3) Only the affected obligation void. — If the obligation is divisible, the part thereof not affected by the impossible condition shall be valid. (4) Only the condition void. — If the obligation is a pre-existing obligation, and, therefore, does not depend upon the fulfillment of the condition which is impossible, for its existence, only the condition is void. 7. What are the effects of constructive fulfillment of suspensive and resolutory conditions? - There are three (3) requisites for the application of this article: (1) The condition is suspensive; (2) The obligor actually prevents the fulfillment of the condition; and (3) He acts voluntarily. The law does not require that the obligor acts with malice or fraud as long as his purpose is to prevent the fulfillment of the condition. He should not be allowed to profit from his own fault or bad faith to the prejudice of the obligee. In a reciprocal obligation like a contract of sale, both parties are mutually obligors and also obligees. - Article 1186 applies also to an obligation subject to a resolutory condition with respect to the debtor who is bound to return what he has received upon the fulfillment of the condition. 8. Explain the retroactive effects of fulfillment of suspensive condition. - (1) In obligations to give. — An obligation to give subject to a suspensive condition becomes demandable only upon the fulfillment of the condition.  However, once the condition is fulfilled, its effects shall retroact to the day when the obligation was constituted. (2) In obligations to do or not to do. — With respect to the retroactive effect of the fulfillment of a suspensive condition in obligations to do or not to do, no fixed rule is provided. This does not mean, however, that in these obligations the principle of retroactivity is not applicable. The courts are empowered by the use of sound discretion and bearing in mind the intent of the parties, to determine, in each case, the retroactive effect of the suspensive condition that has been complied with. It includes the power to decide that the fulfillment of the condition shall have no retroactive effect or from what date such retroactive effect shall be reckoned. 9. What is loss? What are the kinds of loss? - Loss in civil law may be: (1) Physical loss. — when a thing perishes as when a house is burned and reduced to ashes; or (2) Legal loss. — when a thing goes out of commerce (e.g., when it is expropriated) or when a thing heretofore legal becomes illegal (e.g., during the Japanese occupation, American dollars had become impossible since their use was forbidden by the belligerent occupant); or (3) Civil loss. — when a thing disappears in such a way that its existence is unknown (e.g., a particular dog has been missing for sometime); or even if known, it cannot be recovered, whether as a matter of fact (e.g., a particular ring is dropped from a ship at sea) or of law (e.g., a property is lost through prescription). 10. Explain the rules in case of loss, deterioration, or improvement of the thing due during the pendency of the suspensive condition. - (1) Loss of thing without debtor’s fault. — EXAMPLE: D obliged himself to give C his car worth P100,000.00 if C sells D’s property. The car was lost without the fault of D. The obligation is extinguished and D is not liable to C even if C sells the property. A person, as a general rule, is not liable for a fortuitous event. (2) Loss of thing through debtor’s fault. —  EXAMPLE: In the same example, if the loss occurred because of the negligence of D, C will be entitled to demand damages, i.e., P100,000.00 plus incidental damages, if any. (3) Deterioration of thing without debtor’s fault. — A thing deteriorates when its value is reduced or impaired with or without the fault of the debtor. EXAMPLE: If the car figured in an accident, as a result of which its 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 have to suffer the deterioration of impairment in the amount of P20,000.00. (4) Deterioration of thing through debtor’s fault. — EXAMPLE: In this case, C may choose between: (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 deterioration plus incidental damages, if any; or (b) Fulfillment of the obligation also with damages; in this case, D is bound to C to give the car and pay P20,000.00 plus incidental damages, if any. (5) Improvement of thing by nature or by time. — A thing is improved when its value is increased or enhanced by nature or by time or at the expense of the debtor or creditor. EXAMPLE: Suppose the market value of the car increased, who gets the benefit? The improvement shall inure to the benefit of C. Inasmuch as C 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 improvement of the car instead. (6) Improvement of thing at expense of debtor. — 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 have the right granted to a usufructuary with respect to improvements made on the thing held in usufruct. 11. What is rescission? - Rescission is an equitable remedy granted by law to the contracting parties and sometimes even to third persons in order to secure reparation of  damages caused them by a valid contract, by means of the restoration of things to their condition prior to the celebration of said contract. 12. What are the limitations on the right to demand rescission? - The right to rescind by the injured party (the one who has performed what is incumbent upon him) is not absolute. It is always provisional, i.e., contestable and subject to scrutiny and review by the courts. (1) Resort to the courts. — The rescission contemplated by Article 1191 is a judicial rescission.The injured party has to resort to the courts to assert his rights judicially (e.g., to recover what he has delivered under the contract) for the same article provides that.. “the court shall decree the rescission demanded, unless there be just cause authorizing the fixing of a period.” No person can take justice in his own hands and decide by himself what are his rights in the matter. (2) Power of court to fix period. — The court has discretionary power to allow a period within which a person in default may be permitted to perform his obligation if there is a just cause for giving time to the debtor, as where the default incurred was not willful or could be excused in view of the surrounding circumstances, or the breach is not substantial. In the absence of any just cause for the court to determine the period of compliance, the court shall decree the rescission. (3) Right of third persons. — Rescission creates the obligation of mutual restitution. However, if the thing, subject matter of the obligation, is in the hands of a third person who acted in good faith, rescission is not available as a remedy. In such case, the injured party may recover damages from the person responsible for the transfer. (4) Slight or substantial violation. — The general rule is that rescission will not be granted for slight or casual breaches of contract. The violation should be substantial and fundamental as to defeat the object of the parties in making the agreement.The question of whether a breach is substantial depends upon the attendant circumstances and not merely on the percentage of the amount not paid. (6) Waiver of right. — The right to rescind may be waived, expressly or impliedly. Thus, the acceptance by the seller of the land sold as security for the balance of the price is an implied waiver of the right to rescind in case of non-payment by the buyer. His remedy is to recover the balance. Where the seller instead of availing of the right to rescind, has accepted delayed payments of installments posterior to the grace periods provided in the contract, he is deemed to have waived and is estopped from exercising the right to rescind normally conferred by Article 1191. (7) Contract to sell. — In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. The breach contemplated in Article 1191 is the obligor’s failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. In a contract to sell, title remains with the vendor and does not pass on to the vendee until the full payment of the purchase price. (8) Sales of real property and of personal property in installments. — In sales of real property, Article 1592,16 as impliedly amended by R.A. No. 6552, governs the exercise of the right of rescission. Article 1191 is subordinated to the provision of Article 1592 which speaks of nonpayment of the purchase price as a resolutory condition, when applied to sales of immovable property. (9) Judicial compromise. — Article 1191 applies only to reciprocal obligations in general and not to obligations arising from a judicial compromise. Judgment upon agreement of the parties is more than a mere contract binding upon them. Having the sanction of the court and entered as its determination of a controversy it has the force and effect of any other judgment. Moreover, the rule is that a judgment rendered in accordance with a compromise agreement is immediately executory as there is no appeal from such judgment. (10) Arbitration clause in a contract. — The act of treating a contract as rescinded on account of infractions by the other contracting party is valid  albeit provisional as it can be judicially assailed. The right cannot be exercised where there is a valid stipulation on arbitration. Thus, neither of the parties can unilaterally treat the contract as rescinded where an arbitration clause in a contract is availing since whatever infractions or breaches by a party or differences arising from the contract must be brought first and resolved by arbitration, and not through an extrajudicial rescission or judicial action. 13. Give the remedies in reciprocal obligations. - Article 1191 is the general provision on rescission of reciprocal obligations. It speaks of the right of the “injured party’’ to choose between rescission or fulfillment of the obligation, with the right to claim damages in either case. It governs where there is non-compliance by one of the contracting parties in case of reciprocal obligations. The remedy granted is predicated on a breach of obligation by the other party that violates the reciprocity between them. The breach contemplated is the obligor’s failure to comply with an existing obligation, not a failure of a condition to render binding that obligation. 14. Explain the rules when both parties have committed breach of obligation. - The above article contemplates two situations. (1) First infractor known. — One party violated his obligation; subsequently, the other also violated his part of the obligation. In this case, the liability of the first infractor should be equitably reduced. (2) First infractor cannot be determined. — One party violated his 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 deemed extinguished and each shall bear his own damages. This means that the contract shall not be enforced. In effect, the court shall not provide remedy to either of the parties, who must suffer the damages allegedly sustained by them.