Oblicon Reviewer PDF

Assignment No. 1 1. What is an obligation? ❖ An obligation is a juridical necessity to give, to do, or not to do. It is a legal tie by which one party is bound to render something to another, and the other party can demand its fulfillment. 2. How is an obligation considered a juridical n...

Assignment No. 1 1. What is an obligation? ❖ An obligation is a juridical necessity to give, to do, or not to do. It is a legal tie by which one party is bound to render something to another, and the other party can demand its fulfillment. 2. How is an obligation considered a juridical necessity? ❖ Obligation is a juridical necessity because, in case of non-compliance, courts of justice can enforce its fulfillment or impose consequences such as damages. 3. What is a civil obligation? ❖ Civil obligations are enforceable through courts of justice and are based on positive law. 4. What is a natural obligation? ❖ Natural obligations are not enforceable by courts but are based on equity and natural law. If fulfilled voluntarily, the debtor cannot recover what has been delivered. 5. What are the four (4) essential requisites of an obligation? ❖ Passive subject (debtor/obligor). ❖ Active subject (creditor/obligee). ❖ Object or prestation (the subject matter). ❖ Juridical or legal tie (source of the obligation). 6. Who are the parties in an obligation? Give examples. ❖ The parties are the debtor/obligor (who has the duty) and the creditor/obligee (who has the right). Example: In a loan agreement, the borrower is the debtor, and the lender is the creditor. 7. What are the kinds of obligations?  ❖ Real obligation (obligation to give) or that in which the subject matter is a thing which the obligor must deliver to the obligee ❖ 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. There are two kinds of personal obligation: (a) Positive personal obligation or obligation to do or to render service (b) Negative personal obligation or obligation not to do (which naturally includes obligations “not to give”). 8. Enumerate the five (5) sources of obligations. Explain each and give examples. ❖ Law: Obligations imposed by statutes (e.g., paying taxes). ❖ Contracts: Arising from agreements between parties (e.g., a lease contract). ❖ Quasi-contracts: Arising from lawful, voluntary, and unilateral acts (e.g., reimbursement for money paid by mistake). ❖ Delicts (Crimes): Obligations resulting from criminal acts (e.g., restitution for stolen property). ❖ Quasi-delicts: Arising from damages caused by fault or negligence (e.g., car accident damages). OR Sources classified. The law enumerates five (5) sources of obligations. They may be classified as follows: ❖ (1) Those emanating from law; and ❖ (2) Those emanating from private acts which may be further subdivided into: (a) those arising from licit acts, in the case of contracts and quasi-contracts; and  (b) those arising from illicit acts, which may be either punishable by law in the case of delicts, or not punishable in the case of quasi-delicts. 9. What is a contract? Give examples. ❖ A contract is a meeting of minds between two parties to give something or render a service. Example: Sale agreements or employment contracts. 10. What is a quasi-contract? ❖ A quasi-contract is a juridical relation arising from lawful, voluntary, and unilateral acts to prevent unjust enrichment. 11. Explain negotiorum gestio and solutio indebiti. ❖ Negotiorum Gestio: Managing the property or affairs of another without their knowledge or consent, obligating reimbursement of expenses. ❖ Solutio Indebiti: Arising when something is unduly delivered through mistake and must be returned. 12. Distinguish a crime from a quasi-delict. ❖ Crime: Involves criminal or malicious intent and affects public interest. ❖ Quasi-delict: Involves only negligence and concerns private interest. 13. Enumerate the requisites of a quasi-delict. ❖ There must be an act or omission by the defendant; ❖ There must be fault or negligence of the defendant; ❖ There must be damage caused to the plaintiff; ❖ There must be a direct relation or connection of cause and effect between the act or omission and the damage; and ❖ There is no pre-existing contractual relation between the parties. Assignment No. 2 1. Distinguish a specific/determinate thing from a generic/indeterminate thing. ❖ A specific or determinate thing is particularly designated or physically segregated from others of the same class. ❖ A generic or indeterminate thing refers to a class or genus and is not identified individually. 2. Can a generic/indeterminate thing perish or be destroyed? ❖ No, a generic thing does not perish (genus nunquam perit). The debtor remains liable to deliver a thing of the same kind. 3. What are the duties of a debtor in an obligation to deliver a specific thing? ❖ To preserve or take care of the thing due; ❖ To deliver the fruits of the thing; ❖ To deliver its accessions and accessories; ❖ To deliver the thing itself; ❖ To answer for damages in case of non-fulfillment or breach. 4. What are accessories and accessions? ❖ Accessions: Fruits, additions, or improvements on a principal thing, like rents or dividends. ❖ Accessories: Things included with the principal for its embellishment or better use, like a key for a house. 5. Define "proper diligence of a good father to a family". ❖ It refers to ordinary care exercised by a reasonably prudent person over their property. 6. What are the duties of a debtor in an obligation to deliver a generic thing? ❖ To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances ❖ To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof. 7. Enumerate the kinds of fruits under the law. Explain each. ❖ Natural fruits: Spontaneous products of the soil or animals. ❖ Industrial fruits: Products from cultivation or labor, like crops. ❖ Civil fruits: Income derived from a juridical relation, like rents. 8. When does the obligation to deliver fruits arise? ❖ Generally, the obligation to deliver the thing due and, consequently, the fruits thereof, if any, arises from the time of the perfection of the contract. Perfection in this case refers to the birth of the contract or to the meeting of the minds between the parties. ❖ If the obligation is subject to a suspensive condition or period, it arises upon fulfillment of the condition or arrival of the period. However, the parties may make a stipulation to the contrary as regards the right of the creditor to the fruits of the thing. ❖ In a contract of sale, the obligation arises from the perfection of the contract even if the obligation is subject to a suspensive condition or a suspensive period where the price has been paid. ❖ In obligations to give arising from law, quasi-contracts, delicts, and quasi-delicts, the time of performance is determined by the specific provisions of law applicable. 9. Define personal right and real right. Distinguish personal and real right. ❖ Personal right - is the right or power of a person (creditor) to demand from another (debtor), as a defi nite passive subject, the fulfi llment of the latter’s obligation to give, to do, or not to do.  ❖ Real right: is the right or interest of a person over a specifi c thing (like ownership, possession, mortgage, lease record) without a defi nite passive subject against whom the right may be personally enforced. While in personal right there is a definite active subject and a definite passive subject, in real right, there is only a definite active subject without any definite passive subject. A personal right is, therefore, binding or enforceable only against a particular person while a real right is directed against the whole world 10. What are the remedies of a creditor in a real obligation? ❖ In a specific real obligation (obligation to deliver a determinate thing), the creditor may exercise the following remedies or rights in case the debtor fails to comply with his obligation: (a) demand specific performance or fulfillment (if it is still possible) of the obligation with a right to indemnity for damages; (b) demand rescission or cancellation (in certain cases) of the obligation also with a right to recover damages; or (c) demand the payment of damages only where it is the only feasible remedy. ❖ A generic real obligation (obligation to deliver a generic thing), on the other hand, can be performed by a third person since the object is expressed only according to its family or genus. It is thus not necessary for the creditor to compel the debtor to make the delivery although he may ask for performance of the obligation. In any case, the creditor has a right to recover damages under Article 1170 in case of breach of the obligation. 11. What are the remedies of a credit in a positive personal obligation? ❖ If the debtor fails to comply with his obligation to do, the creditor has the right:  (a) to have the obligation performed by himself, or by another unless personal considerations are involved, at the debtor’s expense; and (b) to recover damages. ❖ In case the obligation is done in contravention of the terms of the same or is poorly done, it may be ordered (by the court) that it be undone if it is still possible to undo what was done. 12. What are the remedies of a credit in a negative personal obligation? ❖ In an obligation not to do, the duty of the obligor is to abstain from an act. Here, there is no specific performance. The very obligation is fulfilled in not doing what is forbidden. Hence, in this kind of obligation the debtor cannot be guilty of delay. As a rule, the remedy of the obligee is the undoing of the forbidden thing plus damages. However, if it is not possible to undo what was done, either physically or legally, or because of the rights acquired by third persons who acted in good faith, or for some other reason, his remedy is an action for damages caused by the debtor’s violation of his obligation. 13. What is the meaning of delay? What are the kinds of delay? ❖ Delay: Failure to perform on time. Ordinary delay is merely the failure to perform an obligation on time. Legal delay or default or mora is the failure to perform an obligation on time which failure, constitutes a breach of the obligation. ❖ Three kinds of delay are: Mora solvendi or the delay on the part of the debtor to fulfill his obligation (to give or to do) by reason of a cause imputable to him;  Mora accipiendi or the delay on the part of the creditor without justifiable reason to accept the performance of the obligation; Compensatio morae or the delay of the obligors in reciprocal obligations (like in sale), i.e., the delay of the obligor cancels the delay of the obligee, and vice versa. 14. What are the requisites for delay? ❖ failure of the debtor to perform his (positive) obligation on the date agreed upon; ❖ demand (not mere reminder or notice) made by the creditor upon the debtor to fulfill, perform, or comply with his obligation which demand, may be either judicial (when a complaint is filed in court) or extra-judicial (when made outside of court, orally or in writing); ❖ failure of the debtor to comply with such demand. 15. What are the effects of delay? ❖ Mora solvendi. — The following are the effects: (a) the debtor is considered in breach of the obligation, (b) they are liable for interest (in monetary obligations) or damages (in other obligations) from the time of demand or filing of a complaint, and (c) they are responsible even for fortuitous events when the obligation involves delivering a specific thing, unless they prove the loss would have occurred regardless of the delay. The court may reduce damages in such cases. ❖ Mora accipiendi. — The effects are as follows: (a) The creditor is guilty of breach of obligation; (b) He is liable for damages suffered, if any, by the debtor; (c) He bears the risk of loss of the thing due;  (d) Where the obligation is to pay money, the debtor is not liable for interest from the time of the creditor’s delay; and (e) The debtor may release himself from the obligation by the consignation of the thing or sum due. ❖ Compensatio morae. — The delay of the obligor cancels out the effects of the delay of the obligee and vice versa. The net result is that there is no actionable default on the part of both parties, such that as if neither one is guilty of delay. 16. When does delay begin? When is demand not necessary for delay to begin? ❖ The general rule is that delay begins only from the moment the creditor demands, judicially or extrajudicially, the fulfillment of the obligation. The demand for performance marks the time when the obligor incurs mora or delay and is deemed to have violated his obligation. Without such demand, the effect of default will not arise unless any of the exceptions mentioned below is clearly proved. 1) When the obligation so provides. 2) When the law so provides. 3) When time is of the essence. 4) When demand would be useless. 5) When there is performance by a party in reciprocal obligations. 17. Define the following: a. Fraud - Fraud (deceit or dolo) is the deliberate or intentional evasion of the normal fulfillment of an obligation. It involves some kind of malice or dishonesty and it cannot cover cases of mistake and errors of judgment made in good faith. It is synonymous to bad faith in that it involves a design to mislead or deceive another. b. Incidental fraud - refers to incidental fraud (dolo incidente) committed in the performance of an obligation already existing because of contract. c. Causal fraud - It is to be differentiated from causal fraud (dolo causante) or fraud employed in the execution of a contract under Article 1338, which vitiates consent and makes the contract voidable and to incidental fraud under Article 1344 also employed for the purpose of securing the consent of the other party to enter into the contract but such fraud was not the principal inducement to the making of the contract. d. Negligence - Negligence (fault or culpa) is any voluntary act or omission, there being no malice, which prevents the normal fulfillment of an obligation. e. Contravention of the terms of the contract - Contravention of the terms of the obligation is the violation of the terms and conditions stipulated in the obligation. The contravention must not be due to a fortuitous event or force majeure. The unilateral act of terminating a contract without legal justification by a party makes him liable for damages suffered by the other pursuant to Article 1170. 18. Distinguish fraud from negligence. 1) In fraud, there is deliberate intention to cause damage or injury, while in negligence, there is no such intention; 2) Waiver of the liability for future fraud is void, while such waiver may, in a certain sense, be allowed in negligence; 3) Fraud must be clearly proved, mere preponderance of evidence not being sufficient, while negligence is presumed from the breach of a contractual obligation; and 4) Lastly, liability for fraud cannot be mitigated by the courts, while liability for negligence may be reduced according to the circumstances. 19. Distinguish waiver for past fraud from waiver for future fraud. ❖ Waiver of action for future fraud void. According to the time of commission, fraud may be past or future. A waiver of an action for future fraud is void (no effect, as if there is no waiver) as being against the law and public policy. A contrary rule would encourage the perpetration of fraud because the obligor knows that even if he should commit fraud he would not be liable for it thus making the obligation illusory. ❖ Waiver of action for past fraud valid. What the law prohibits is waiver anterior to the fraud and to the knowledge thereof by the aggrieved party. A past fraud can be the subject of a valid waiver because the waiver can be considered as an act of generosity and magnanimity on the part of the party who is the victim of the fraud. Here, what is renounced is the effects of the fraud, that is, the right to indemnity of the party entitled thereto. 20. Enumerate the kinds of negligence.  1) Contractual negligence (culpa contractual) or negligence in contracts resulting in their breach Article 1172 refers to “culpa contractual.” This kind of negligence is not a source of obligation. It merely makes the debtor liable for damages in view of his negligence in the fulfillment of a pre-existing obligation resulting in its breach or non-fulfillment. It is a kind of civil negligence if it does not amount to a crime; 2) Civil negligence (culpa aquiliana) or negligence which by itself is the source of an obligation between the parties not formally bound before by any pre-existing contract. It is also called “tort” or “quasidelict.” 3) Criminal negligence (culpa criminal) or negligence resulting in the commission of a crime. The same negligent act causing damages may produce civil liability arising from a crime under Article 100 of the Revised Penal Code (supra.), or create an action for quasi-delict under Article 2176, et seq., of the Civil Code. 21. What is the effect of negligence on the part of the injured party? ❖ To be entitled to damages, the law does not require that the negligence of the defendant should be the sole cause of the damage. There is contributory negligence on the part of the injured party where his conduct has contributed, as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection. The defense of contributory negligence of the injured party does not apply in criminal cases where the offense was committed by the accused through reckless imprudence since one cannot allege the negligence of another (e.g., deceased was driving with an expired license) to evade the effects of his own negligence. 22. What are the factors to consider in determining negligence? (1) Nature of the obligation. — e.g., smoking while carrying materials known to be inflammable constitutes negligence; (2) Circumstances of the person. — e.g., a guard, a man in the prime of life, robust and healthy, sleeping while on duty is guilty of negligence; (3) Circumstances of time. — e.g., driving a car without headlights at night is gross negligence but it does not by itself constitute negligence when driving during the day; and (4) Circumstances of the place. — e.g., driving at 60 kilometers per hour on the highway is permissible but driving at the same rate of speed in Quezon Boulevard, Manila, when traffic is always heavy is gross recklessness. 23. Define diligence. What are the kinds of diligence required? ❖ Diligence is “the attention and care required of a person in a given situation and is the opposite of negligence.’’ Under Article 1173, the following kinds of diligence are required: (1) that agreed upon by the parties, orally or in writing; (2) in the absence of stipulation, that required by law in the particular case (like the extraordinary diligence required of common carriers); and (3) if both the contract and law are silent, then the diligence expected of a good father of a family (par. 2.) or ordinary diligence. Whether or not the negligence of the obligor is excusable will depend on the degree of diligence required of him. Under No (3), for example, the obligor is not liable for damages where his negligence is one which ordinary diligence and prudence could not have guarded against. 24. Define fortuitous event. Define force majeure. ❖ A fortuitous event is an extraordinary event that cannot be foreseen or is inevitable, making it impossible to fulfill an obligation. ❖ Force majeure refers to acts of God or natural accidents (e.g., earthquake, flood) that are beyond human control and thus exempt an obligor from liability. 25. Distinguish fortuitous event from force majeure. (1) Acts of man. — Strictly speaking, fortuitous event is an event independent of the will of the obligor but not of other human wills, e.g., war, fire, robbery, murder, insurrection, etc. (2) Acts of God. — They are those events which are totally independent of the will of every human being, e.g., earthquake, flood, rain, shipwreck, lightning, eruption of volcano, etc. They are also called force majeure. The term generally applies to a natural accident. 26. What are the kinds of fortuitous events? (1) Ordinary fortuitous events or those events which are common and which the contracting parties could reasonably foresee (e.g., rain); and (2) Extraordinary fortuitous events or those events which are uncommon and which the contracting parties could not have reasonably foreseen (e.g., earthquake, fire, war, pestilence, unusual flood). 27. What are the requisites for a fortuitous event? (1) The event must be independent of the human will or at least of the obligor’s will; (2) The event could not be foreseen (unforeseeable), or if it could be foreseen, must have been impossible to avoid (unavoidable); (3) The event must be of such a character as to render it impossible for the obligor to comply with his obligation in a normal manner; and (4) The obligor must be free from any participation in, or the aggravation of the injury to the obligee. 28. Explain the rules on liability in case of fortuitous event. ❖ When expressly specified by law. — In exceptions (a), (b), and (c) below, the special strictness of the law is justified. (a) The debtor is guilty of fraud, negligence, or delay, or contravention of the tenor of the obligation. (b) The debtor has promised to deliver the same (specific) thing to two or more persons who do not have the same interest for it would be impossible for the debtor to comply with his obligation to two or more creditors even without any fortuitous event taking place. (c) The debt of a thing certain and determinate proceeds from a criminal offense, unless the thing having been offered by the debtor to the person who should receive it, the latter refused without justification to accept it. (d) The thing to be delivered is generic for the debtor can still comply with his obligation by delivering another thing of the same kind in accordance with the principle that “genus never perishes” (genus nunquam perit). ❖ When declared by stipulation. — The basis for this exception rests upon the freedom of contract. Such a stipulation is usually intended to better protect the interest of the creditor and procure greater diligence on the part of the debtor in the fulfillment of his obligation. But the intention to make the debtor liable even in case of a fortuitous event should be clearly expressed. 29. What is usury? ❖ Usury is contracting for or receiving interest in excess of the amount allowed by law for the loan or use of money, goods, chattels, or credits. 30. What is interest? ❖ Interest refers to the compensation a debtor must pay to a creditor for the use of money or for delaying payment. It can arise when money is borrowed or when a payment is late. There are two types of interest: legal interest, which is set by law when no specific rate is agreed upon, and conventional interest, which is the rate agreed upon by the parties in the contract. Essentially, interest serves as a fee for the use of borrowed money or for overdue payments. 31. Define simple loan or mutuum. ❖ Simple loan or mutuum is a contract whereby one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. It may be gratuitous or with a stipulation to pay interest. 32. What are the requisites for recovery of interest. ❖ The payment of interest must be expressly stipulated ; ❖ The agreement must be in writing; and ❖ The interest must be lawful. 33. Define presumption. What are the kinds of presumptions? ❖ A presumption is an inference of a fact not actually known based on its usual connection with another fact that is known or proven. The kinds of presumptions are: (1) Conclusive presumption. — one which cannot be contradicted like the presumption that everyone is conclusively presumed to know the law; and (2) Disputable (or rebuttable) presumption. — one which can be contradicted or rebutted by presenting proof to the contrary like the presumption established in Article 1176. 34. What are the four (4) remedies available to a creditor to satisfy his/her claims? ❖ exact fulfillment (specific performance) with the right to damages; ❖ pursue the leviable (not exempt from attachment under the law) property of the debtor; ❖ “after having pursued the property in possession of the debtor,’’ exercise all the rights (like the right to redeem) and bring all the actions of the debtor (like the right to collect from the debtor of his debtor) except those inherent in or personal to the person of the latter (such as the right to vote, to hold office, to receive legal support, to revoke a donation on the ground of ingratitude, etc.); and ❖ ask the court to rescind or impugn acts or contracts which the debtor may have done to defraud him when he cannot in any other manner recover his claim. 35. Are rights transmissible? What are the exceptions? Yes, all rights acquired in virtue of an obligation are generally transmissible. The exceptions to this rule are the following: ❖ Prohibited by law. — When prohibited by law, like the rights in partnership, agency, and commodatum which are purely personal in character. (a) By the contract of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. (b) By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. (c) By the contract of commodatum, one of the parties delivers to another something not consumable so that the latter may use the same for a certain time and return it. Commodatum is essentially gratuitous. ❖ Prohibited by stipulation of parties. — When prohibited by stipulation of the parties, like the stipulation that upon the death of the creditor, the obligation shall be extinguished or that the creditor cannot assign his credit to another. The stipulation against transmission must not be contrary to public policy. Such stipulation, being contrary to the general rule, should not  be easily implied, but must be clearly proved, or at the very least, clearly inferable from the provisions of the contract itself. 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.3 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. Assignment No. 4 1. What is an 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. 2. What is a term or a period? A period is a future and certain event upon the arrival of which the obligation (or right) subject to it either arises or is terminated. It is a day certain which must necessarily come (like the year 2005; next Christmas), although it may not be known when, like the death of a person. 3. Distinguish a period from a condition. The differences are as follows: (1) As to fulfillment. — A period is a certain event which must happen sooner or later at a date known beforehand, or at a time which cannot be determined, while a condition is an uncertain event; (2) As to time. — A period refers only to the future, while a condition may refer also to a past event unknown to the parties; (3) As to influence on the obligation. — A period merely fixes the time for the efficaciousness of the obligation. If suspensive, it cannot prevent the birth of the obligation in due time; if resolutory, it does not annul, even in fiction, the fact of its existence. On the other hand, a condition causes an obligation to arise or to cease. Because of this difference, a period does not carry with it, except when there is a stipulation expressly made by the parties, the same retroactive consequences that follow a condition; (4) As to effect, when left to debtor’s will. — A period which depends upon the will of the debtor empowers the court to fix the duration thereof (Art. 1197, par. 2.), while a condition which depends upon the sole will of the debtor invalidates the obligation (Art. 1182.); and (5) As to retroactivity of effects. — Unless there is an agreement to the contrary, the arrival of a period does not have any retroactive effect, while the happening of a condition has retroactive effect. Like a condition (see Art. 1183.), a period must be possible. If the period is impossible (e.g., February 30, because it will never come; within 24 hours to deliver a ship in foreign country because it is too short), the obligation is void. 4. Define the following: a. Suspensive period - The obligation begins only from a day certain upon the arrival of the period. b. Resolutory period - The obligation is valid up to a day certain and terminates upon the arrival of the period. c. Legal period - When it is provided for by law. d. Conventional period - When it is agreed to by the parties. e. Judicial period - When it is fixed by the court. f. Definite period - When it is fixed or it is known when it will come. g. Indefinite period - When it is not fixed or it is not known when it will come. Where the period is not fixed but a period is intended, the courts are usually empowered by law to fix the same. 5. What happens when the debtor pays before the arrival of the period? Article 1195 applies only to obligations to give. It is similar to Article 1188, paragraph 2, which allows the recovery of what has been paid by mistake before the fulfillment of a suspensive condition. The creditor cannot unjustly enrich himself by retaining the thing or money received before the arrival of the period. Under the former provision, the debtor could recover only the fruits or interests but not the thing or sum given or paid in advance. This rule was deemed unjust and “contrary to the manifest intention of the parties.’’ OR ART. 1195. Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered, with the fruits and interests. 6. In whose benefit is a period for? In an obligation subject to a period fixed by the parties, the period is presumed to have been established for the benefit of both the creditor and the debtor. This means that before the expiration of the period, the debtor may not fulfill the obligation and neither may the creditor demand its fulfillment without the consent of the other especially if the latter would be prejudiced or inconvenienced thereby. In a reciprocal contract like a lease, the period must be deemed to have been agreed upon for the benefit of both parties, absent language showing that the term was deliberately set for the benefit of the lessee or the lessor alone.  The presumption, of course, is rebuttable. 7. How is a period computed? (1) The Civil Code provides: “When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty-five (365) days each; months of thirty (30) days; days of twenty-four (24) hours; and nights from sunset to sunrise. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included.” (Art. 13 thereof.) If the last day is a Sunday or a legal holiday, the time shall not run until the end of the next day which is neither Sunday nor a holiday. A year is equivalent to 365 days regardless of whether it is a year or a leap year. (2) The Administrative Code of 1987 (Exec. Order No. 292.), however, provides: “Legal Periods — “Year’’ shall be understood to be twelve calendar months; “month’’ of thirty days, unless it refers to a specific calendar month in which case it shall be computed according to the number of days the specific month contains; “day,’’ to a day of twenty-four hours; and “night’’ from sunset to sunrise.’’ (3) A calendar month is “a month designated in the calendar without regard to the number of days it may contain. “It is the “period of time running from the beginning of a certain numbered day up to, but not including, the corresponding numbered day of the next month, and if there is not a sufficient number of days in the next month, then up to and including the last day of that month.’’ To illustrate: One calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from January 31, 2008 will be from February 1, 2008 until February 29, 2008. Under the Administrative Code, a year is composed of 12 calendar months, the number of days being irrelevant, whereas under the Civil Code a year is equivalent to 365 days, whether it be a regular year or a leap year. There exists a manifest incompatibility in the manner of computing legal periods.  The Administrative Code of 1987 being the more recent law governs the computation of legal periods. 8. Give the instances when the court may fix the period. If the obligation does not fix a period but it can be inferred from its nature and the circumstances that a period was intended by the parties, the court may fix the period. If the period fixed is extended by agreement, to be valid the same must be for a definite time, although if no precise date is fixed, it is sufficient that the time can readily be determined. In case the period of extension is not precise, Article 1197 applies. 9. When may an obligation be demand before the lapse of a period? The general rule is that the obligation is not demandable before the lapse of the period. However, in any of the five (5) cases mentioned in Article 1198, the debtor shall lose every right to make use of the period, that is, the period is disregarded and the obligation becomes pure and, therefore, immediately demandable. The exceptions are based on the fact that the debtor might not be able to comply with his obligation. (1) When debtor becomes insolvent. (2) When debtor does not furnish guaranties or securities promised. (3) When guaranties or securities given have been impaired or have disappeared. (4) When debtor violates an undertaking. (5) When debtor attempts to abscond. TRUE OR FALSE. Write TRUE if the answer is true, and write FALSE if the answer is false. 1. In obligations where there are multiple parties, the obligation is presumed joint. 2. In all alternative obligations, the debtor has to perform all the prestations before the obligation is considered fulfilled. 3. Once the creditor chooses a substitute in a facultative obligation, the substitute can no longer be changed. 4. Payment may be partial. 5. All obligations have a penal clause. 6. There is active solidarity when there are two or more creditors. 7. Performance and payment both produce the effect of payment. 8. A penal clause gives the obligation more coercive force as it acts as both payment and punishment. 9. When the penal clause is void, the obligation is also void. 10. Dation in payment (dacion en pago) is a special form of payment where an obligation to give property is satisfied by payment of money, instead of delivery of the property. 11. Legal tender is money that the creditor must accept as payment for a debt. 12. If a solidary debtor pays for the entire obligation, the other solidary debtors must pay him the entire amount that he paid. 13. The responsibility of two or more persons liable for a quasi-delict is joint. 14. Payment can be made to any of the solidary creditors even if one of them has already made a demand. 15. The creditor may compel one of the debtors to pay the entire amount in a joint obligation. ANSWER KEY: 1. TRUE – Obligations with multiple parties are presumed joint unless expressly solidary. Proof: Articles 1207-1208 explain the presumption of joint obligations unless otherwise stipulated. 2. FALSE – In alternative obligations, the debtor must perform only one prestation unless the law or contract provides otherwise. Proof: Article 1199 defines alternative obligations where performance of one is sufficient. 3. FALSE – In facultative obligations, substitution can be changed unless already performed. Proof: Article 1206 allows for substitution and holds the debtor accountable only after it is effected. 4. TRUE – Payment may be partial under specific conditions such as an express stipulation. Proof: Article 1248 outlines when partial performance is permitted. 5. FALSE – Not all obligations have a penal clause; it must be explicitly stipulated. Proof: Article 1226 states that penal clauses are accessory obligations added by agreement. 6. TRUE – Active solidarity exists when there are multiple creditors, and each may demand full compliance. Proof: Article 1207 defines solidary obligations involving multiple parties. 7. TRUE – Both performance and payment extinguish obligations. Proof: Articles 1247-1248 confirm complete performance or payment as means to extinguish obligations. 8. TRUE – A penal clause serves as coercion and penalty for non-fulfillment. Proof: Article 1226 highlights the coercive and compensatory functions of penal clauses. 9. FALSE – The nullity of a penal clause does not void the principal obligation unless inseparably linked. Proof: Article 1226 distinguishes between the principal obligation and the penal clause. 10. FALSE – Dation in payment involves transferring property to extinguish a debt, not paying money. Proof: No direct provision in this search but basic Civil Law principle confirms this. 11. TRUE – Legal tender must be accepted by the creditor for debt payment. Proof: Standard Civil Law on legal tender; not directly cited in the search results. 12. TRUE – A solidary debtor paying the entire obligation has a right to reimbursement. Proof: Article 1217 allows for reimbursement from co-debtors. 13. FALSE – Liability for quasi-delict is typically solidary, not joint. Proof: Case references often interpret quasi-delict responsibilities as solidary. 14. TRUE – Payment can be made to any solidary creditor, extinguishing the debt. Proof: Article 1214 allows such payment in solidary obligations. 15. FALSE – In joint obligations, each debtor is liable only for their proportionate share, not the entire amount. Proof: Articles 1207-1208 emphasize this limitation.