Before Fulfillment After Fulfillment
The demandability and acquisition or effectivity of the rights arising from the obligation is suspended. Anything paid by mistake during such time may be recovered.
The obligation arises or becomes effective. The obligor can be compelled to comply with what is incumbent upon him.
Doctrine of Constructive Fulfillment of Suspensive Conditions
Art. 1186: The condition shall be deemed fulfilled when the obligor actually prevented the obligee from complying with the condition, and that such prevention must have been voluntary or willful in character.
(1) Applicable to suspensive conditions but not to resolutory conditions.
(2) The article can have no application to an external contingency which is lawfully within the control of the obligor.
(3) The mere intention of the debtor to prevent, without actually preventing fulfillment is not sufficient. Constructive fulfillment will not hold when the debtor acts pursuant to a right. There is constructive fulfillment when:
(a) Intent of the obligor is to prevent fulfillment; and
(b) There is actual prevention of compliance. Principle of Retroactivity in Suspensive Conditions Art.1187, par.1: Once the condition is fulfilled, its effects must logically retroact to the moment when the essential elements, which gave birth to the obligation have taken place. The condition which is imposed is only accidental, not an essential element of the obligation. (This is applied only to consensual contracts. No application to real contracts which can only be perfected by delivery.)
To Give To Do/Not To Do
If reciprocal, the fruits and interests shall be deemed to have been mutually compensated as a matter of justice and convenience [Art. 1187, par. 1].
In obligations to do or not to do, the court shall determine the retroactive effect of the condition that has been complied with
[Art. 1187, par. 2]. If unilateral, the debtor
shall appropriate the fruits and interests received, unless from the nature and circumstance it should be inferred that the intention of the persons constituting the same was different.
The power of the court includes the
determination of whether or not there will be any retroactive effect. This rule shall likewise apply in obligations with a resolutory condition [Art. 1190 par. 3].
Resolutory Condition
Before Fulfillment After Fulfillment
Preservation of creditor’s rights (Art. 1188, par. 1) also applies to obligations with a resolutory
condition.
Whatever may have been paid or delivered by one or both of the parties upon the constitution of the obligation shall have to be returned upon the fulfillment of the condition. There is no return to the status quo. However, when the condition is not fulfilled, rights are consolidated and they become absolute in character.
UP COLLEGE OF LAW OBLIGATIONS BAR OPERATIONS COMMISSION
EFFECT OF LOSS OF SPECIFIC THING, OR DETERIORATION OR IMPROVEMENT OF SPECIFIC THING BEFORE FULFILLMENT OF SUSPENSIVE CONDITION [ART. 1189];
OR IN CASE OF A RESOLUTORY CONDITION IN AN OBLIGATION TO DO OR NOT TO DO [ART.1190, PAR.3]
ARTICLE 1189
Art. 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.
ARTICLE 1190
Art. 1190, par. 3. As for the obligations to do and not to do, the provisions of the second paragraph of Article 1187 shall be observed as regards the effect of the extinguishment of the obligation.
Without Debtor’s
Fault/Act With Debtor’s Fault/Act
Loss
Obligation is
extinguished. Obligation is converted into one of indemnity for damages.
Deterioration Impairment to be borne
by the creditor. Creditor may choose between bringing an action for rescission of
the obligation OR bringing an action for specific performance, with damages in either case.
Improvement mprovement at the debtor’s expense, the debtor shall ONLY have usufructuary rights.
Improvement by the thing’s nature or by time shall inure to the benefit of the creditor.
Loss, defined: “when [the thing] perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered” [Art. 1189, no. 2].
OBLIGATIONS WITH A PERIOD OR TERM
ARTICLE 1193
Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.
A day certain is understood to be that which must necessarily come, although it may not be known when. If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules of the preceding Section. Period or Term: Interval of time, which either suspends demandability or produces extinguishment.
The period must be: future, certain, and possible [Tolentino, 1987].
A fortuitous event does not interrupt the running of the period. It only relieves the contracting parties from the fulfillment of their respective obligations during the period.
Kinds of Period [Art. 1193]:
(1) Ex die - period with a suspensive effect. Obligation becomes demandable after the lapse of the period.
(2) In diem - period with a resolutory effect. Obligation is demandable at once but is extinguished upon the lapse of the period. ARTICLE 1180
Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.
Term/Period and Condition Distinguished
Term/Period Condition
Interval of time which is
future and certain Fact or event which is future and uncertain Must necessarily come,
although it may not be known when
May or may not happen Exerts an influence upon
the time of demandability or extinguishment of an obligation
Exerts an influence upon the very existence of the obligation itself
No retroactive effect unless there is an
agreement to the contrary
Has retroactive effect When it is left exclusively
to the will of the debtor, the existence of the obligation is not affected
When it is left exclusively to the will of the debtor, the very existence of the obligation is affected SUSPENSIVE PERIOD
Benefit of the Period
Presumption: The period in an obligation is presumed to be established for the benefit of both the creditor and debtor, UNLESS from the tenor of the obligation or other circumstances, it shall appear that the period has been established in favor of either the creditor or debtor [Art. 1196].
Period for the Benefit of either Creditor or Debtor
Creditor Debtor
Creditor may demand the
fulfillment or
performance of the obligation at any time but the obligor cannot compel him to accept payment before the expiration of the period.
Debtor may oppose any premature demand on the part of the obligee for the performance of the obligation, or if he so desires, he may renounce the benefit of the period by performing his obligation in advance. If Period Given for the Benefit of Debtor Alone When Debtor Loses Right to Use Period Art.1198: I GIV A LA—
(1) Debtor becomes Insolvent, unless he gives a guaranty or security for his debt, after obligation is contracted
(2) Debtor fails to furnish the Guaranties or securities promised
(3) Debtor by his own acts Impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory
(4) Debtor Violates any undertaking, in consideration of which the creditor agreed to the period
(5) Debtor attempts to Abscond (6) By Law or stipulation
(7) Parties stipulate an Acceleration Clause
In the cases provided, the obligation becomes immediately due and demandable even if the period has not yet expired. The obligation is thus converted into a pure obligation [Tolentino, 1987].
RESOLUTORY PERIOD
Obligation is demandable at once but is extinguished upon the lapse of the period. DEFINITE OR INDEFINITE PERIOD
(1) INSTANCES WHEN COURTS MAY FIX THE PERIOD (ART. 1197)
Art. 1197: As a general rule, the court is not authorized to fix a period for the parties [De Leon, 2003].
Araneta v. Phil. Sugar Estates, provides— First, the Court shall determine:
(a) If the obligation does not fix a period, but from its nature and circumstances, it can be inferred that a period was intended.
(b) If the period is void, such as when it depends upon the will of the debtor.
(c) If the debtor binds himself when his means permit him to do so.
Second, it must decide what period was “probably contemplated by the parties”.
Art. 1197 does not apply to contract of services and to pure obligations.
The court, however, to prevent unreasonable interpretations of the immediate demandability of pure obligations, may fix a reasonable time in which the debtor may pay [Tolentino, 1987].
(2) CREDITOR MUST ASK COURT TO SET THE PERIOD, BEFORE HE CAN DEMAND PAYMENT.
THE ONLY ACTION THAT CAN BE MAINTAINED BY THE CREDITOR UNDER ART.1197 IS THE ACTION TO ASK THE COURTS TO FIX THE TERM WITHIN WHICH THE DEBTOR MUST COMPLY WITH HIS OBLIGATION. THE FULFILLMENT OF THE OBLIGATION ITSELF CANNOT BE DEMANDED UNTIL AFTER THE COURT HAS FIXED THE PERIOD FOR
UP COLLEGE OF LAW OBLIGATIONS BAR OPERATIONS COMMISSION
COMPLIANCE THEREWITH, AND SUCH PERIOD HAS ARRIVED.
ALTERNATIVE OR FACULTATIVE
DIFFERENCE BETWEEN ALTERNATIVE AND FACULTATIVE OBLIGATIONS
Alternative Obligations Facultative Obligations
Several objects are due. Only one object is due. May be complied with by
delivery of one of the objects or by performance of one of the prestations which are alternatively due.
May be complied with by the delivery of another object or by the performance of another prestation in substitution of that which is due. Choice may pertain to
debtor, creditor, or third person.
Choice pertains only to the debtor.
Loss/impossibility of all object/prestation due to fortuitous event shall extinguish the obligation. The loss/impossibility of one of the things does not extinguish the obligation.
Loss/impossibility of the object/prestation due to fortuitous event is sufficient to extinguish the obligation.
Culpable loss of any of the objects alternatively due before the choice is made may give rise to liability on the part of the debtor.
Culpable loss of the object which the debtor
may deliver in
substitution before the substitution is effected does not give rise to any liability on the part of the debtor.
Alternative Obligations
Several prestations are due but the performance of one is sufficient [De Leon, 2003].
Right of Choice:
Art. 1200: Belongs to the debtor, UNLESS: (1) when it is expressly granted to the creditor (2) when it is expressly granted to a third person Limitations to the right of choice:
(1) impossible prestations (2) unlawful prestations
(3) those which could not have been the object of the obligation
(4) only one prestation is practicable [Art. 1202; De Leon, 2003]
When choice shall produce effect
Art. 1201: Choice shall produce no effect except from the time it has been communicated.
The effect of the notice is to limit the obligation to the object or prestation selected. Notice of selection or choice may be in any form provided it is sufficient to make the other party know that the selection has been made. It can be:
(a) oral (b) in writing (c) tacit
(d) any other equivocal means
Choice of the debtor when communicated to the creditor does not require the latter’s concurrence. When the choice is rendered impossible through the creditor’s fault, the debtor may bring an action to rescind the contract with damages [Art. 1203]. Obligation is converted into a simple obligation when:
(a) The person with the right of choice has communicated his choice [Art. 1201].
(b) Only one prestation is practicable [Art. 1202]. Facultative Obligation
Only one prestation has been agreed upon but the debtor may render another in substitution [De Leon, 2003]. Debtor always has the right of choice.
Effect of Loss of Substitute
Before Substitution is
Made After Substitution is Made
If due to bad faith or fraud of obligor: obligor is liable. If due to the negligence of the obligor: obligor is not liable.
The loss or deterioration of the substitute on account of the obligor’s delay, negligence, or fraud, renders the obligor liable because once the substitution is made, the obligation is converted into a simple one with the substituted thing as the object of the obligation.
EFFECT OF LOSS OF SPECIFIC THINGS OR IMPOSSIBILITY OF PERFORMANCE OF ALTERNATIVE, THROUGH FAULT OF DEBTOR/CREDITOR OR THROUGH FORTUITOUS EVENTS Art. 1204: Debtor’s Choice
Fortuitous Event Debtor’s Fault
Debtor is released from
the obligation. Creditor shall have a right to indemnity for damages based on the value of the last thing which disappeared or service which become impossible.
Some Debtor to deliver that which he shall choose
from among the
remainder.
Debtor to deliver that which the creditor shall choose from among the remainder without damages.
One Remains Debtor to deliver that
which remains. Debtor to deliver that which remains. Art. 1205: Creditor’s Choice
Fortuitous Event Debtor’s Fault
All Lost Debtor is released from
the obligation. Creditor may claim the price/value of any of them with indemnity for damages.
Some Debtor to deliver that which he shall choose
from among the
remainder.
Creditor may claim any of those subsisting without a right to damages OR price/value of the thing lost with right to damages. One Remains
Creditor may claim the remaining thing without a right to damages OR the price/value of the thing lost with right to damages.
Creditor may claim the remaining thing without a right to damages OR the price/value of the thing lost with right to damages.