Bawat obligasyon na may kaakibat na kondisyon kung saan sa pamamagitan ng isang pangyayari ay nawawalan ng bisa ang obligasyon ay maari ding e akyat o hingin sa korte o kaya’y nang isang partido nang walang epekto sa inaasahang pangyayari na mag papawalang bisa sa obligasyon.
Comment:
Article 1179 first paragraph speaks of pure obligation. A pure obligation is one that is demandable at once because it does not depend upon a future or uncertain event, not on a past event unknown to the parties and is not an obligation with a resolutory condition. A simple promissory note to pay certain amount within a certain period is an example of a pure obligation.
(Ex.) I promise to pay Mr. Algy Riguer, the amount of ten thousand pesos (10,000) on January 30, 2019.
A conditional obligation is one the fulfillment of which is a subject to a certain condition which may be an event, which may or may not happen. It could be suspensive or resolutory.
A suspensive condition is a future or uncertain event, the happening of which give birth to the obligation.
(ex.) Algy Reguir Promises to give Miss Capio a condo unit if she pass the bar exam.
The obligation cannot be demanded at once bur becomes demandable only upon Miss Capio passing the Bar.
Resolutory condition is an event the passing of which extinguishes the obligation.
(ex.) A promises to pension B in the amount of five thousand per month until such time that she gets married.
The obligation to give monthly pension starts immediately. But the moment B is married the obligation stops. Marriage is the resolutory condition as it extinguishes the obligation.
Kung ang nangutang ay nangako sa kanyang sarili na bayaran ang kanyang utang kapag ang kanyang pamamaraan o kakayahan ay pinahihintulutan na gawin ito, ang pananagutan ay itinuturing bilang isa na may nakatakdang panahon, dapat may nakatakdang panahon, na naayon sa probisyon ng Artikulo 1197.
Phrases
“when my means permit to do so”
“when I am able to”
“when I have money”, etc.
Leaving the discretion to either of the creditor or debtor would be unjust, therefore, Article 1197 should be applied, where the Court is obliged to fix the duration of the period.
General Rule: The creditor must ask the court first for the fixing of the term, and it is only when that term set arrives that he can demand fulfillment.
Case
Levy Hermanos Vs. Pedro Paterno
Facts: Pedro Paterno (defendant) executed a document in favor of Levy Hermanos (plaintiff), indicating that a balance of P6,177.35 will be payable in partial payments. The defendant made several payments and later claimed to establish the installment of P30.00 per month payment. The plaintiff disagreed and brought suit and asked that he should be paid the sum of P5,862.35 (unpaid balance) or that a period be specified within which he should pay the same, in case the court should deem such manner of payment more equitable. During the trial, it was agreed by the parties that the sum which the defendant owed the plaintiff was P5,317.35. In view of the evidence adduced during the trial, a monthly payment of P200 would be reasonable compliance with the agreement to pay the debt in installment. The payment will be rendered on or before the 15 th of each month.
The defendant appealed that: The obligation is one of payment by installment, its fulfillment cannot be required immediately; No fixed day was specified for its fulfillment, and Payment is undetermined or was not fixed by parties when they executed the contract.
ISSUE:
Whether or not the defendant should pay the plaintiff according to the period fixed by the court.
RULING:
Yes. The trial court acted in accordance with the law in exercising said power by fixing the duration of the period on the basis that the payment of the debt should be made at the rate of P200.00 a month.
There was no abuse of judicial discretion in fixing such a rate, considering the importance of the obligation and the absence of any stipulation of the interest in favor of the creditor.
Sa kondisyong obligasyon, ang pagkuha ng mga karapatan, pati na ang pagpatay o pagkawala ng mga natamo ay dapat na depende sa nangyayari sa kaganapan na bumubuo sa kondisyon.
CONDITIONAL OBLIGATION IS THAT KIND OF OBLIGATION WHICH SUBJECT TO A CONDITION WHICH EITHER SUSPENSIVE OR RESOLUTORY CONDITION
Kinds of Condition
Example: I promise to give Bryan Php 5,000.00 if he passes the school entrance exam; the obligation cannot be demandable at once but becomes demandable only upon Bryan’s passing the school entrance exam.
Example: I promise to support Bryan Php 3,000.00 per month until such time that he has already got a job, the obligation to give a monthly pension starts immediately but the moment Bryan got a job the obligation stops.
CASE DIGEST
AVELINO BALURAN, Petitioner,
vs
HON. RICARDO Y. NAVARRO, Presiding Judge, Court of First Instance of Ilocos Norte, Branch I and ANTONIO OBEDENCIO, Respondents.
G.R. No. L-44428
September 30, 1977
Muñoz Palma, J.
Facts: Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they called barter, but in fact stipulated that they would only transfer the material possession of their respective properties to each other. Thus, Baluran will be allowed to construct a residential house on the land of Paraiso while Paraiso is entitled to reap the fruits of the riceland of Baluran. The contract prohibited them from alienating the properties of the other and contained a stipulation that should the heirs of Paraiso desire to re-possess the residential lot, Baluran is obliged to return the lot. Indeed, years after, Obedencio (grandchild of Paraiso) acquired the ownership of the residential lot from his mother and demanded that Baluran, who was in possession, vacate.
Issue: Whether or not the contract was a barter or usufruct.
Held: IT IS USUFRUCT. First, the contract is what the law defines it to be and not what the parties call it. It is very clear that what the parties exchanged was not ownership, but merely material possession or the right to enjoy the thing.
Now, because it is usufruct, the law allows the parties to stipulate the conditions including the manner of its extinguishment. In this case, it was subject to a resolutory condition which is in case the heir of Paraiso (aa third party) desires to repossess the property. Upon the happening of the condition, the contract is extinguished.
Therefore, Baluran must return the land to Obedencia. But since Art. 579 allows the usufructuary to remove improvements he made, Baluran may remove the house he constructed.
One last point. At the time of this case, the Obedencias were also in possession of the riceland of Baluran. Although it was not proper to decide the issue of possession in this case, the Court nevertheless decided on the matter and order the Obedencias to vacate the property inasmuch as there was an extinguishment of a reciprocal obligations and rights.
Kung ang pag ganap ng isang kundisyon ay nakadepende lamang sa may pagkakautang, ang kondisyonal na obligasyon ay walang bisa. Kung ito naman ay nakasalalay sa pagkakataon o di kaya sa kalooban ng ikatlong persona, ang obligasyon ay magkakabisa ng naayon sa probisyon ng pamantayang ito.
Kinds of Conditions:
An obligation dependent upon the will of a third person is valid.
Nazario Trillana vs Quezon College, Inc.
G.R. No. L-5003. June 27, 1953
Damasa Crisostomo subscribed to a 200 shares of capital stock with a par value of P100.00 each with Quezon College.Included in her letter to the to the Board of Trustees of the Quezon College was the initial payment and statement that she will pay the balance after she has harvested some fish. On October 26, 1948, Damasa Crisostomo passed away. No payment appears to have been paid, hence the claim before the CFI of Bulacan in her testate proceeding, for the collection of the sum of P20,000, representing the value of the subscription to the capital stock of the Quezon College, Inc. which was then opposed by the administrator of the estate.
Whether or not the condition entered into by both parties is valid.
No, Under article 1182 of the new Civil Code: “If the fulfillment of the condition should depend upon the exclusive will of the debtor, the conditional obligation shall be void.”
Article 1183. Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be considered as not having been agreed upon.
Ang kondisyon na mangyayari ang ilang kaganapan sa isang nakatakdang panahon ay dapat magpawalang-bisa sa obligasyon mula sa sandaling ang panahong ito ay lumipas, o sa sandaling maging walang dudang ang kaganapang ito ay hindi mangyayari.
POSITIVE / SUSPENSIVE CONDITION
EVENTS THAT MAY CAUSE EXTINCTION of OBLIGATION:
EXAMPLE:
Condition: Bautista marries Cruz before Bautista turns 23.
Obligation ceases as soon as Bautista turns 23.
Obligation ceases although the time has NOT expired.
Ang kondisyon na hindi mangyayari ang ilang kaganapan sa isang nakatakdang panahon ay magdudulot upang ang obligasyon ay maging epektibo mula sa sandaling ang panahong ipinahiwatig ay lumipas, o kung maging maliwanag na ang kaganapan ay hindi mangyayari.
Sakaling walang panahong itinakda, ang kondisyon ay dapat ituring na natupad na sa panahong maaaring napagnilayan, na isinasaaalang-alang ang katangian ng obligasyon.
Obligations dependent on NEGATIVE CONDITION
INSTANCES OF NEGATIVE CONDITION
EXAMPLE
Aquino obliges himself to deliver a parcel of land to Garcia.
Condition: Garcia shall NOT run for Mayor in their municipality w/in 6 yrs.
Ang kondisyon ay dapat ituring na natupad na kapag ang may obligasyon mismo ang boluntaryong pumigil sa pagtupad nito.
PRINCIPLES
CONSTRUCTIVE FULFILLMENT OF A CONDITION REQUISITES
HOWEVER, there is NO Constructive Fulfillment:
Ang mga epekto ng kondisyonal na obligasyong magbigay, kapag ang kondisyon ay natupad na, ay dapat bumalik ito sa araw na binuo ang obligasyon. Gayunpaman, kapag ang obligasyon ay nagpapataw ng resiprokal na prestasyon sa mga partido, ang mga bunga at interes sa panahon ng pagpapaliban ng kondisyon ay dapat ituring na kapwa nabayaran. Kung ang obligasyon ay sarilinan, ang may utang ang dapat mag-angkop sa mga bunga at interes na natanggap, maliban kung sang-ayon sa katangian at kalagayan ng obligasyon ay dapat ipalagay na iba ang intensyon ng taong bumuo nito.
Sa mga obligasyon na dapat gawin at hindi dapat gawin, ang mga korte ay dapat magtakda, sa bawat kaso, ng retroaktibong epekto ng kondisyon na sinunod.
EFFECTS OF THE HAPPENING of the POSITIVE/ SUSPENSIVE CONDITION
Between the creation of conditional obligation and fulfillment of positive/suspensive condition, the creditor/obligee CANNOT enforce the obligation; his right is a mere expectancy.
The moment POSITIVE/SUSPENSIVE CONDITION happens:
If the condition is for the delivery of a determinate thing:
EXAMPLE
NOTE: It is delivery that actually transfers ownership.
Art. 1188. The Creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his rights (1) action for prohibition restraining the alienation of the thing pending the happening of suspensive condition; (2) petition (with the appropriate Registry of Property if real property like land is involved), for the annotation of the creditor’s right; (3) action to demand security if the debtor in fraud of creditors; or (5) actions against adverse possessors to interrupt the running of prescriptive period
Order of Preference of Credits
Art. 2246. Those credits which enjoy preference with respect to the same specific movable property, they shall be satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision thereof. (1926a)
Art. 2256. Acts and contracts under the regime of the old laws, if they are valid in accordance therewith, shall continue to be fully operative as provided in the same, with the limitations established in these rules. But the revocation or modification of these acts and contracts after the beginning of the effectivity of this Code, shall be subject to the provisions of this new body of laws. (Rule2a)
The debtor may recover what during the same time has paid by mistake in case of a suspensive condition. (1121a)
Suspensive Condition or Condition Precedent.-
This is a condition, the happening of which gives rise to the obligation. In other words, if it does not happen, the expected obligation will not come into existence. A suspensive condition or “condition precedent is also known as “condition antecedents.”
Resolutory Condition- when the performance or fulfillment of the condition results in the extinguishment of the rights which have previously arisen out of the obligation (Art 1181) A resolutory condition is one the happening of which extinguishes rights and obligations already existing. In fine, the rights of obligations already exists but are under threat or extinction upon the happening or fulfillment of the resolutory condition.
Solutio Indebiti – this is a judicial relation which takes place when somebody received something from another without any right to demand for it, and the thing was unduly delivered to him through mistake the obligation to return the thing arises on the part of the recipient (Art 2154); and
EXAMPLE no. 1:
A piece of land was donated subject to the condition that it shall be used as a park. No park was constructed.
No compliance with condition entitles the donor to revoke the obligation. The condition is not suspensive but a resolutory condition (Barreto vs. City of Manila, 7 Phil. 596; See also: Parks vs. Province of Tarlac, 49 Phil. 142)
EXAMPLE no. 2:
Karen owes Gina P5,000.00. If Karen paid Agnes believing Agnes was authorized to receive payment for Gina, the obligation to return on the part of Agnes arise. If Karen paid Gina P10,000.00 by mistake, Gina must return the excess of P5,000.00
Inure: to become of advantage. Policies that inure to the benefit of employees.
Article 1189 applies only if:
Marie obliged herself to give Anna his car worth P1,000,000.00 if Anna will sell Marie’s property. The car was lost without the fault of Marie.
The obligation is extinguished and Marie is not liable to Anna even if Anna sells property. A person, as a general rule, is not liable for a fortuitous event. (Art. 1174.)
In the same example, if the loss occurred because of the negligence of Marie, Anna will be entitled to demand damages (Art. 1170.), i.e P100,000.00 plus incidental damages, if any.
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 Jason, thereby reducing its value to P900,000.00, Jake will have to suffer the deterioration or impairment in the amount of P100,000.00. (Art.1174)
Suppose the market value of the car increased, who gets the benefit?
The improvement shall inure to the benefit of Jake. Inasmuch as Jake would suffer in case of deterioration of the car through fortuitous event, it is but fair that the he should be compensated in case of improvement of the car instead.
During the pendency of the condition, Jason had the car painted and its seat cover changed at his expense.
In this case, Jason will have the right granted to a usufructuary with respect to improvements made on the thing held in usufruct.
Example No. 1:
“Badette” owns a first class fishpond. She conveyed it to “BJ” on condition that “BJ” shall not run for Governor in their province. After three (3) years “BJ” ran for Governor. The condition having been fulfilled, “BJ” must return the fishpond and the fruits thereof
Example No. 2:
Nestor allows Wilmer to use the former’s car until Nestor returns from the province. Upon the return of Nestor from the province, Wilmer give back the car. The effect of the happening of the condition is to annul the obligation as if it had never been constituted at all. In this case, the parties intend the return of the car.
Example No. 3:
Nestor binds himself to give Wilmer P500.00 a month until Wilmer passes the CPA examination. If Wilmer passes the CPA examination, he need to return the amounts he has received. It is clear that the parties do not intend the return of the same.
RIGHT TO RESCIND in RECIPROCAL OBLIGATIONS:
RECIPROCAL OBLIGATIONS – obligations where two parties are reciprocally obliged to do or give something like a contract of sale. It is NOT enough that both parties are indebted to each other.
The CAUSE must be INDENTICAL and the obligations should arise simultaneously.
Parenthetically, in reciprocal contracts or transactions, the obligation or promise of each party is the cause or consideration for the obligation or promise of the other.
The “power to rescind”, as used in this Article, means the right to cancel (or resolve) the contract or reciprocal obligations in case of non-fulfillment on the part of one of the parties.
Rescission referred to here is NOT predicated on injury to economic interests on the part of the Party-plaintiff, but on the breach of faith by the defendant, which breach is violative of the reciprocity between the parties.
Substantial Breach of Reciprocal Obligations – entitles the injured party to rescind the obligation.
EFFECT OF RESCISSION:
Rescission abrogates the contract from its inception and requires a mutual restitution of benefits received. It creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore.
To rescind is to declare the contract void from its inception and to put an end to it as though it never was. It is NOT merely to terminate it and release the parties from further obligations to each other, but to abrogate it from the beginning and restore the parties to their relative positions as if no contract has been made.
Example No.1:
Carlo borrowed from Bryan P5,000.00. Bryan, on the other hand, borrowed Carlo’s car. The performance by Carlo of his obligation to Bryan is not conditioned upon the performance by Bryan of his obligation and vice versa.
Example No.1:
Although Carlo and Bryan are debtors and creditors of each other, their obligations are not reciprocal. The obligation of Carlo arises from the contract of loan, while that of Bryan from the contract of commodatum (A contract by which one of the parties binds himself to return to the other certain personal chattels which the latter deliver to him to be used by him without reward; loan for use.) The obligations are not dependent upon each other and are not not simultaneous. Article 1191 applies only if the reciprocity arises from the same cause.
He who lends to another a thing for a definite time, to be enjoyed and used under certain conditions, without any pay or reward, called “commodans” the persons who receives the thing is called “commodatum.”
Remedies in reciprocal obligations
(1) Choice of remedies. – In case one of the obligors does not comply with what is incumbent upon him, the aggrieved party may choose between two remedies:
(a) action for specific performance (fulfillment) of the obligation with damages; or
(b) action for rescission of the obligation also with damages.
(2) Remedy of rescission for non-compliance.- The principal action of rescission for non-performance under Article 1191 must be distinguished from the subsidiary action for rescission by reason of lesion or damage under Article 1381, et seq. and from cancellation of a contract based, for example, on defect in the consent (see Art. 1381, 1330.) and not on violation by a party of his obligation.
Example:
In contract of sale of a car between Faye and Kaye, it was agreed that Faye, the owner, would deliver the car and the necessary document duly signed by her to Kaye at the house of Bea on December 1, and Kaye would deliver the payment at the same place and on the same date.
(a) Kaye may, in action for specific performance, demand the delivery of the car with damages; or
(b) Kaye may demand from the court the rescission of the contract also with damages.
When a party demands rescission in reciprocal obligation he, in effect, treats the non-fulfillment by the other party of his obligation as a resolutory condition.
Article Is Not Applicable To Non-Reciprocal Obligations. –
It is not enough that both parties are indebted to one another. The cause must be identical and the obligations must arise simultaneously.
Example:
“Kristine” deposited his goods in the warehouse of “Jacob” with an obligation to pay P100,000.00 a month. Jacob on the other hand borrowed P500,000.00 from ”Kristine” while “Kristine” and “Jacob” are both debtors and creditors to each other, their obligations are not reciprocal. The obligation of ”Kristine” is based on deposit, while the obligation of “Jacob” is based on loan.
Hence, the obligations are not dependent upon each other. Consequently, if ”Kristine” not pay her obligation to “Jacob” the latter cannot rescind/resolve his contract of loan with “Kristine” on account of “Kristine”’s nonpayment of his deposit fees.
In reciprocal contracts, the promise of each party is the cause or consideration for the promise of the other.
Sa pagkakataong ang parehas na magkabilang panig ang sumalungat sa kanilang obligasyon, ang pananagutan ng naunang panig na nagkamali ay maaring pagaanin ng korte sa patas na pamamaraan. Kapag hindi matukoy kung sino ang naunang nagkamali, ang kasunduan ang ipapawalang bias at ang bawat panig ang mananagot sa kanilang sariling pinsala.
Where both parties guilty of breach.
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.
“The above rules are deemed just. The first one is fair to both parties because the second infractor also derived, or thought he would derive, some advantage by his own act or neglect. The second rule is likewise just because it is presumed that both at about the same time tried to reap some benefit.”
It has been held that when both parties to a transaction are mutually negligent in the performance of their obligations, the fault of one cancels the negligence of the other and their rights and obligations may be determined equitably under the law proscribing unjust enrichment.
Under Article 1192, “the liability of the first infractor shall be equitably tempered by the courts’’ but it is for the courts, in the exercise of their sound discretion, to decide what is equitable under the circumstances. In other words, the mitigation liability for damages shall be offset equitably, exclusive of the interest due on the overdue loan portion (P17,000) since the borrower derived benefit for its use. (see Central Bank of the Phils. vs. Court of Appeals, 139 SCRA 46 [1985].)
Illustration:
Laki Meh is a manufacturer of dried noodles. He entered into a contract with Loh Me to deliver and install within three months a new pancit canton making equipment at his existing plant for a P300,000 consideration payable in three equal installments for three months.
Laki Meh failed to pay the third P100,000 installment on the due date, and it also turned out that Loh Me installed a noodle making equipment that produces thick noodles similar to lomi noodles. In this case, both parties are guilty of breach of their respective obligation in the contract.
If the first infractor is known, the liability of the first infractor shall be equitably reduced by the court. But if the first infractor cannot be determined, the contract shall be extinguished and each party shall be liable for their own damages.