MIDTERMS REVIEWER (CIVIL LAW REVIEW 2) debtor he only has the

rights of a usufructuary.
He can only ask for
Suspensive Condition (condition precedent) a future and uncertain event upon reimbursement for
the happening or fulfillment of which rights arising out of the obligation are acquired. necessary expenses, but
(1181) not for useful expenses
The effectivity of the obligation is suspended until the happening or fulfillment of to the benefit of and those for mere
the condition. nt
the creditor pleasure. He has the
If the suspensive condition does not take place, the obligation will not exist. right to remove such
Effect: Upon the constitution of the obligation and pending the happening of the improvements if possible
condition, what is acquired is only a mere hope or expectancy, which is however, without damage to the
protected by law. property, or set it off to
Doctrine of Constructive Fulfillment (1186) The condition shall be deemed any damage to the
fulfilled when the obligor voluntarily prevent its fulfillment. (only to suspensive, same.
and not to resolutory conditions) Loss when it perishes, goes out of commerce, or disappears in
During the pendency of the condition (1188) such a way that its existence is unknown or it cannot be
o Creditor may bring actions for the preservation of his right recovered.
o Debtor his obligation is held in suspense until the fulfillment of the
Resolutory Condition (condition subsequent) a future and uncertain event upon
condition. Hence, he can recover what he has paid by mistake.
the happening or fulfillment of which, rights already acquired by virtue of the obligation
Principle of Retroactivity (1187) the effects of the conditional obligation to
are extinguished or lost.
give, once the condition has been fulfilled, shall retroact to the day of the
The juridical relation established by the obligation is subject to the threat or
constitution of the obligation.
danger of extinction.
Ratio: The condition is only an accidental, not an essential element of the
obligation. Effect: Upon the establishment of the obligation, it is immediately demandable.
Only to consensual contracts, not to real contracts If the condition is not fulfilled, the juridical relation is consolidated.
Obligation to Give Example: Donation of a parcel of land upon the condition that it will be developed
1. Reciprocal prestation The fruits and interests during into a public school and park within 6 months.
the pendency of the condition shall be deemed to be In resolutory conditions, the debtor stands like the creditor in suspensive
mutually compensated. conditions. He also has the right under the 1st paragraph of Art. 1188. (protection
2. Unilateral The debtor shall appropriate the fruits of his hope or expectancy)
and interests received. Principle of Retroactivity (1190) Ratio: The parties must return to status quo.
Obligation to do or not to do The courts will determine the Obligation to Give The parties shall return to each other what they have
effects. received, whether the obligation is reciprocal or unilateral, with the obligation to
Effect of Loss, Deterioration or Improvement in Obligations to reimburse for the expenses for production, gathering and preservation of the
Give (1189) fruits.
Without the Fault of With the Fault of the Obligation to do or not to do The courts will determine the effects.
the Debtor Debtor Effect of Loss, Deterioration, Improvement the same rule in Art. 1189 is
Obligation applicable but the debtor is the person obliged to return, while the creditor is the
Loss Payment of damages
extinguished person to whom the thing must be returned.
Creditor to choose
between 1) rescission
Deteriorati Impairment borne by
with damages or 2)
6. OBLIGATIONS WITH A PERIOD (Articles 1193-1198)
on the creditor
specific performance
Obligations with a Period those whose demandability or extinguishment is subject
with damages
to the expiration of a term or period
Improveme By nature of by time At the expense of the
 Period or Term an interval of time, which exerting an influence on an GR For the benefit of both the creditor and debtor. (1196)
obligation, either suspends its demandability or produces its extinguishment. XPN: It appears from the tenor or some other circumstances that it has been
Day Certain that which must necessarily come, although it may not be known established to favor one of the parties.
when. Effect:
Term vs. Condition For the creditor He can demand fulfillment at any time, but the
Term or Period Condition debtor may not compel him to accept payment before the
As to requisites Future and certain Future and uncertain expiration of the period.
As to It must necessarily come, although it For the debtor The creditor cannot compel him to make payment
May or may not happen before the expiration of the period, or he may, if he so desires,
fulfillment may not be known when
Exerts an influence on the time of make payment before the expiration of the period.
As to influence Exerts an influence on When the courts may fix the term (1197)
demandability or extinguishment of an
on obligation the very obligation itself
obligation 1. If the obligation does not fix a term but from its nature and circumstances,
As to it can be inferred that a period is intended by the parties.
No retroactive effect except when there 2. If the duration of the period depends upon the will of the debtor. (Including
retroactivity of Has retroactive effects
is an agreement to the contrary when the debtor binds himself to pay when his means permit him to do
effects
As to effect of so.)
The existence of the o Mere silence with regard to the term or period does not necessarily mean
the will of the No effect on the obligation
obligation is affected.
debtor that the courts are empowered to fix the period, such as in this cases:
1. Contract of services the period is implicitly fixed, in accordance
Types with customs.
The obligation becomes demandable only upon the arrival of a 2. Pure obligations
Suspensive (ex day certain. o There can be no breach of the obligation until the period has been fixed by
die) Effect: The obligation is effective upon its establishment but the court. An action for collection brought before the period has been fixed
once the period expires, it becomes demandable. by the court is premature.
Resolutory (in The obligation is demandable at once, although it is o Effect of the judicial period Once fixed by the courts, it can no longer be
diem) terminated at a day certain. judicially changed. Ratio: It becomes a covenant between the parties, a
Legal Granted by law law governing their contract.
Conventional Fixed by the parties The action for fixing a period and specific performance may be
Judicial Fixed by the courts combined if it can be shown that a separate action would be a
Definite The date or time is known beforehand. mere formality because no additional proofs other than the
An event which must necessarily come to pass, although it admitted facts will be presented and would serve no other purpose
Indefinite other than to delay.
may not be known when.
Effect of a Fortuitous Event A stipulation in the contract that in case of a When the debtor loses the right to make use of a period (1198) I-D-I-V-A
fortuitous event, the contract shall be deemed suspended during the term or Effect: The obligation becomes a pure obligation, and is immediately due and
period does not mean that the happening of fortuitous event shall stop the demandable.
running of the period agreed upon. The contract cannot be extended after its 1. When after the obligation has been contracted, he becomes insolvent,
termination to make up for the time lost when the contract was suspended. unless he gives a guaranty or security for the debt; (does not require
judicial declaration of insolvency)
Advance Payment or Delivery under Article 1195 There is a right to
2. When he does not furnish to the creditor the guaranties or securities which
recover what has been paid or delivered, together with fruits and interests.
he has promised;
Requisites:
3. When by his own acts he has impaired said guaranties or securities after
1. Obligation is to give
their establishment, and when through a fortuitous event they disappear,
2. Obligor is unaware of the period or believed that the obligation has
unless he immediately gives new ones equally satisfactory;
become due and demandable
4. Impaired: Through his fault he loses the benefit of the period
3. Payment or delivery is before the arrival of the period
Not through his fault he retains his right.
Benefit of the Term or Period
 Disappears: In any case, through his fault or not, he loses the benefit of 1. All of the objects are lost debtor liable for indemnity for
the period. damages on the basis of the value of the last thing or
5. When the debtor violates any undertaking, in consideration of which the service that became impossible
creditor agreed to the period; 2. Not all objects are lost debtor is not liable for damages
6. When the debtor attempts to abscond. because he can still comply with the obligation
o Effect: Obligation became pure, immediately demandable. Right of choice belongs to the creditor (1205)
If due to fortuitous event
12. ALTERNATIVE AND FACULTATIVE OBLIGATIONS (Articles 1199- 1. All of the objects are lost debtor is released from the
1206) obligation and not liable for damages
Alternative when several objects or prestations are due but it may be complied 2. Not all the objects are lost creditor shall choose from the
with by the delivery or performance of only one of them. remainder
o GR: The right of choice belongs to the debtor. 3. All except one are lost debtor deliver or perform that which
XPNs: Expressly granted to the creditor (1200), or a third person. remains
The choice cannot be unlawful, impossible or that which could not be If due to the fault of the debtor
the object of the obligation (not included among those which the
obligor may select, not yet due and demandable at the time of the 1. All of the objects are lost creditor may claim the price of
selection, or that which by reason of accident have acquired a new any of them plus indemnity for damages.
character distinct from that contemplated by the parties) 2. Not all the objects are lost creditor may claim any of those
When choice takes effect from the time it has been communicated subsisting, or without damages, or the price of that which
(1201). has been lost, plus damages
No form is required
May the creditor impugn? Facultative only one prestation has been agreed upon, but the obligor may
According to the SC, yes. Creditor must give his consent, render another in substitution (1206).
or impugn, and in such case the court will decide. o Vs. alternative
Dean Capistrano, no. Because the law does not require
the creditors concurrence, as it would destroy the Facultative Alternative
nature of alternative obligations. Only one object is due Several objects are due
Effect of choice The election is binding on the person who made it. Delivery of another object or performance Delivery of one of the objects
It cannot be renounced. It becomes a simple obligation. of another prestation in substitution performance of one of the prestations
When only one choice is practicable the debtor loses the right of Right of choice is with the de
Right of choice is with the debtor
choice. It becomes a simple obligation (1202). creditor, or third person
If the debtor cannot make a choice through the act of the creditor Loss or impossibility of the object due to a Loss or impossibility of all the objects
debtor may rescind, plus damages (1203). fortuitous event without fault of the to a fortuitous event without fault of
o Loss of objects of obligation debtor is sufficient to extinguish the debtor is sufficient to extinguish
Right of choice belongs to the debtor (1204) obligation obligation
If due to fortuitous event Culpable loss of the object before
Culpable loss of the object alternat
1. All of the objects are lost debtor is released from the substitution does not make the debtor
due may make the debtor liable
obligation and not liable for damages liable
2. Not all the objects are lost debtor shall choose from the o When substitution takes effect? When the creditor has been notified of the
remainder substitution, the obligation ceases to become facultative, and will now be
3. All except one are lost debtor deliver or perform that which a simple obligation.
remains o Effect of the loss of the substitute
Before substitution debtor is not liable whatever may be the
If due to the fault of the debtor cause of the loss
 After substitution has been made the debtor will be liable on In case of breach, converted into Solidarity remains
account of his delay, negligence, or fraud. indemnity, indivisibility is terminated

1-3. JOINT AND SOLIDARY OBLIGATIONS (Articles 1207-1222) SOLIDARY

Joint each of the creditors is entitled to demand payment of only a o Types
proportionate part of the credit, while each of the debtors is liable for the 1. Active (among creditors) each creditor, in relation to each of them,
payment of only a proportionate part of the debt. possesses such character only with respect to his share, but with
Solidary each of the creditors is entitled to demand the payment of the entire respect to the debtors, represents all other creditors.
credit, while each of the debtors is liable for the payment of the entire debt. Effects: There is mutual agency among solidary creditors. The creditor
GR: Joint obligation may exercise not only the rights that correspond to him, but also all
XPN: Solidary when: that correspond to other creditors, with the consequent obligation to
1. Obligation expressly states (jointly and severally) render accounting of his acts.
2. Law requires (liability of principals, accomplices, accessories, or 2. Passive (among debtors) each debtor, in relation to each of them,
torts) possesses such character only with respect to his share, but with
3. Obligation requires (torts) (1207) respect to the creditors, represents all other debtors.
JOINT Effects: Liability to pay the entire obligation, with a consequent right of
o In joint divisible obligations, the credit or debt shall be presumed to be reimbursement from the others.
divided into as many equal shares as there are creditors or debtors, the 3. Mixed (among debtors and creditors)
credits or debts being considered distinct from one another. (1208) o Vs. Suretyship both are solidarily liable to the creditor for the payment of
Effects: the obligation.
1. Creditor cannot act in representation of others, nor can the debtor be Solidary Debtor Surety
compelled to answer for the liability of others Liable not only for the payment of the Liable only for the payment of the deb
2. Damage caused by one debtor will be borne by him alone debt of another, but also that of his own. another
3. Defenses purely personal to one debtor can be availed only by him. May demand reimbursement from the May demand reimbursement for th
In joint and indivisible obligation, like joint divisible obligations, a other debtors of the amount that whole amount
creditor cannot act in representation of a co-creditor, while a debtor correspond to them
cannot answer for the liability of a co-debtor. (1209) An extension of time granted to other An extension of time granted to th
Distinguishing Characteristics: debtors does not extend to the other debtor applies to the surety.
o Creditor must still proceed with all the debtors. o Effect of varied condition or period Solidarity is not destroyed by
o The concurrence of all the creditors is necessary for the enforcement of difference in periods and conditions among the debtors (1211).
the obligation. Example: A, B, and C solidarily bound to X, Y, and Z. A is bound to pay on
o In case of breach, if one of the debtors cannot fulfill, the obligation is 2012, B on 2014, and C on 2016. The creditors may enforce payment from
converted into indemnity, in which only the debtor liable therefor A only on 2012 for 1/3 of the obligation, to A or B on 2014 for 2/3, and for
will have to answer for damages, while the other co-debtors will not be A, B, or C on 2016 for the entire amount.
liable for damages. o Rights of the Parties
o In case of insolvency of a debtor, the others shall not be liable for his 1. Beneficial and Prejudicial Acts (1212)
share. Beneficial acts by one creditor extends to the co-creditors
o To interrupt the period of prescription, there must be collective action (because of principle of mutual agency)
of all creditors. Prejudicial acts as to the debtors, binding. But as to the
o Indivisibility vs. Solidarity indivisibility does not necessarily give creditors, the one which made the act will be liable to the co-
rise to solidarity. Nor does solidarity of itself imply indivisibility (1210). creditors.
Indivisibility Solidarity 2. Assignment by creditor of his rights (1213)
Refers to object of obligation Refers to tie or the parties to the To co-creditors may be without consent
obligation To third persons must be with consent (because of
Plurality of subjects is not required Plurality of subjects required personal or confidential relations, mutual agency)
 Effect solidary creditors and co-debtors may not
recognize the validity of the assignment, and the
creditor-assignor will be liable for damages to his co-
creditors
3. Payment by the debtor (1214)
To any of the solidary creditors
If there is judicial or extrajudicial demand to the creditor
who made such demand
In mixed solidarity the debtor upon whom the demand was
made may pay to the creditor who made such demand.
Other co-debtors may pay to any of the creditors.
o Effects of Novation, Compensation, Confusion or Remission (1215)
Novation changing or substitution of an obligation by another,
resulting in its extinguishment or modification, either by changing
its object or principal condition, substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor.
Changing its object
Prejudicial creditor shall reimburse others for damages
Beneficial creditor liable to the others for their share in the
obligation and the benefits
Substitution of debtor creditor liable for damages to other
co-creditors in case of deficiency in the performance
Subrogation of a third person to the rights of the creditor
obligation is not extinguished
Extension of time granted to one debtor This is not a
novation. But the effect is that other debtors may invoke a
partial defense of extension of time given to the other co-
debtor.
Compensation (weighing two obligations in order to extinguish
them to the extent of the amount covered by the other) and
Confusion (merging of the qualities of the creditor and debtor)
Total obligation is extinguished, what remains is reimbursement
within groups
Partial apply the rules on application of payments as to which
should be extinguished first
Remission (an act of liberality by virtue of which, the creditor,
without having received any compensation renounces his right to
enforce the obligation.
Effects:
Payment The obligation is totally extinguished. The creditor who
collected payment has to account to his co-creditors.
The creditors responsible has the obligation to reimburse the others for their
As to
share.
credit
As among the creditors responsible for the remission no need for
ors
reimbursement.
Total Remission extinguishment of obligation (Even if the remission is only
in favor of only one of the debtors.)
Remission for the benefit of only one of the debtors As to creditors he is
As to
released. As to his co-debtors, if one of them is insolvent, he may be made
debtor
liable for the share of the insolvent.
s
Remission for the benefit of only one of the debtors, for his partial share
His being debtor as to creditors and co-debtors continues.
**The defense of partial remission may be invoked in these cases.
o Rights of the Parties
Creditor
1. Proceed against any, some, or all of the solidary debtors
(1216).
2. Choose which offer to take when 2 or more debtors offer to
pay (1217).
Debtor
1. To claim from his co-debtors only the share which
corresponds to each, with interest from the time payment is
made.
If payment was made before debt is due no interest
for the intervening period. Interest only from the time
that the debt is due.
When one of the debtors is insolvent his share shall
be borne by the other co-debtors in proportion to the
debt of each.
Payment after prescription, or when illegal no
reimbursement (1217).
Upon payment by any of the co-debtors, their
obligation to the creditor is extinguished, and a new
one is created in favor of the co-debtor who paid the
obligation. There is no subrogation.
2. The remission of the whole obligation in favor of one of the
debtors, does not entitle him to reimbursement from his co-
debtors (1220).
3. Invoke the following defenses:
a. Derived from the nature of the obligation
(prescription, payment, res judicata, vimfu)
b. Those which are personal to him or pertaining to his
own share (minority, insanity)
c. Defenses personally belonging to his co-debtors but
only with respect to that part in which they are liable
(1222).
o Effect of Loss or Impossibility of Performance (1221).
1. Not due to the fault of the debtors obligation is extinguished
2. Due to the fault of one of the debtors obligation is converted
into indemnity. The creditors may proceed against any of the
 debtors for the value of the obligation plus damages. The debtor
who paid shall have the right against the debtor at fault for amount
he has paid plus interest.
3. Due to a fortuitous event, one of the debtors caused the
delay same as number 2 above.
7. OBLIGATION WITH A PENAL CLAUSE (Articles 1226-1230)
Obligation with a Penal Clause 52 an accessory obligation attached to the principal
obligation by virtue of which the obligor is bound to pay a stipulated indemnity or
perform a stipulated prestation in cases of breach of obligation.
Kinds
o As to origin
1. Legal constituted by law
2. Conventional by the agreement of the parties
o As to effect
1. Subsidiary only penalty may be demanded in case of breach
2. Joint both penalty and obligation may be demanded in case of
breach.
o As to purpose
1. General to insure the performance of the obligation
2. Compensatory to liquidate the amount of damages to be
awarded. (General Rule)
The legitimate estimate of the parties of the damages caused
by non-fulfillment
Proof of actual damages is not necessary (1228). By imposing
penalty, the parties do away with proving the existence and
measure of the damage caused by the breach.
3. Punitive to punish the obligor in case of breach. (Exception)
Damages, in addition to the penalty may be recovered, but this
must be proved.
GR: The penalty is the substitute for damages and payment of interest in case of
non-compliance.
XPNs:
1. Stipulation to the contrary when interest and penalty are both stipulated
2. Obligor refused to pay the penalty when penalty is imposed upon failure
to pay, an action was brought to enforce payment. Penalty can earn
interest from the time of the filing of the complaint.
3. Obligor is guilty of fraud (1226)
Rights of the Parties
Debtor cannot choose pay the penalty and exempt himself from the
performance of the obligation.
XPN: This is expressly reserved to him.
Creditor cannot demand both the fulfillment of obligation and payment of
penalty.
XPN: This is clearly granted him. (This may be implied.)
When fulfillment is chosen and performance became impossible without
his fault, he can still demand payment of penalty.
With fault of debtor? Penalty and damages may both be enforced
When damages may be reduced (1229)
1. Obligation is partially complied with
2. Irregularly complied with
3. Iniquitous or unconscionable
The nullity of the penal clause does not carry with it that of the principal
obligation. The nullity of the principal obligaton carries with it that of the penal
clause. (1230)
12. DACION EN PAGO (Article 1245)
Dation En Pago (Dation in Payment) delivery and transmission of ownership by the
debtor to the creditor as an accepted equivalent of the performance of the obligation.
o In effect, there is a novation of the obligation with the property of the
debtor as the object, and his debt as consideration.
o There must be consent by the creditor.
o In case of doubt as to whether a transaction is a pledge or a dation in
payment, the presumption is in favor of pledge, the latter being the lesser
transmission of rights and interests.
10. APPLICATION OF PAYMENTS (Articles 1252-1254)
Application of Payments designation of the debt to which the payment must be
applied when the debtor has several obligations of the same kind in favor of the same
creditor. (1252)
Requisites:
1. There must be only one debtor and only one creditor.
o Applies also to a solidary debtor who may have several solidary obligations
in favor of the same creditor.
o Applies also when a person is indebted to a partnership and the managing
partner. (Under Art. 1792, the payment is to be applied in proportion to
their amounts, if the creditor gave receipt to his own credit only. If he have
given it for the account of the partnership credit, the amount shall be fully
applied to the latter.)
2. The debtor has two or more debts of the same kind in favor of the same creditor.
o Not applicable when one obligation is for the payment of money, and the
other is for the delivery of a thing.
XPN: When the obligation to deliver is converted into obligation to
indemnify with damages
3. All the debts are due.
 XPNs:
When there is a stipulation to the contrary
It is made by the party for whose benefit the term or period has
been constituted
4. The amount paid is not sufficient to cover the total amount of all the debts.
5. Where one debt is liquidated, and the other is not, the former is more onerous to
the debtor.
Rules of Legal Payment When Debts are of the Same Burden
o Applied pro rata or proportionately

Right to Application 14. TENDER OF PAYMENT AND CONSIGNATION (Articles 1256-

GR: Made by the debtor exercised at the time of payment. Otherwise, Art. 1254 1261)
applies.
XPN: Made by the creditor. Creditor proposes the application of payment, subject Tender of Payment Consignation
to the approval of the debtor, whose express or tacit approval can no longer be Manifestation made by the debtor to Deposit of the object of the obligation in a
impugned. (If the debtor accepts from the creditor a receipt in which an the creditor of his decision to comply competent court in accordance with the rules,
application of the payment is made, the former cannot complain of the same, immediately with his obligation. after refusal or inability of the creditor to
unless there is a cause for invalidating the contract. such as VIMFU, Art. 1252, accept the tender of payment.
last paragraph) Preparatory act Principal act which produces the effect of
payment
Article 1253. If the debt produces interest, payment of the principal shall not be Extrajudicial Judicial
deemed to have been made until the interests have been covered.
o According to jurisprudence, this is only directory and not mandatory. It will Special Requisites of Consignation
not apply when there is a verbal or written agreement to the contrary. 1. There is a debt due.
2. The creditor either refused the tender of payment without just cause, or the
Article 1254. When the payment cannot be applied in accordance with the preceding causes enumerated by Art. 1256 for effective consignation without previous
rules or inferred from other circumstances, the debt which is most onerous to the debtor, tender of payment.
among those due shall be deemed to have been satisfied. o Requisites of a valid tender of payment:
o Payment according to other rules such as payment as to the debt which is i. Tender of payment made prior to consignation
demanded, or if places of payment have been designated and payment ii. It is unconditional.
was made in one of those places. If unconditional, but creditor assented to the condition, even with
some expression of dissatisfaction, the tender is considered
Rules of Legal Payment When Debts are not of the Same Burden unconditional.
1. Debts incurred at different dates: iii. Creditor refused to accept the payment without just cause.
The oldest are most onerous to the debtor than the recent ones. o Manresa is of the opinion that mere refusal of the creditor is sufficient.
When one debt bears interest and the other does not, even if the latter o XPNs to tender of payment:
was incurred at an earlier date, the first is more onerous to the debtor. i. The creditor is absent, unknown, or does not appear at the place of
2. Where one debt is secured, and the other is not, the first is more onerous to the payment.
debtor. ii. The creditor is incapacitated to receive it at the time it is due.
3. Capacity of the debtor iii. When without just cause, he refuses to give a receipt.
Where the debtor is bound as principal in one obligation and as a iv. When two or more persons claim the right to collect.
guarantor or surety in the other, the former is more onerous to him. v. When the title of the obligation is lost.
When the debtor is bound as a solidary debtor in one obligation, and as a o Effect of valid tender of payment: debtor will not be liable for interest and
sole debtor in the other, the former is more onerous to him. damages.
Within a solidary obligation, the share which corresponds to the solidary 3. There is previous notice of consignation given to the persons interested in the
debtor would be most onerous to him. fulfillment of the obligation. (Art. 1257)
4. Where one obligation is for indemnity and the other is by way of penalty, the 4. The thing or amount due had been placed at the disposal of judicial authority.
former is more onerous to the debtor. (Art. 1258)
 5. After consignation, the persons interested in the fulfillment of the obligation had
been notified thereof. (Art. 1258)
Subject matter of consignation both movable and immovable properties
Expenses of consignation charged against the creditor (Art. 1259)
Effects of Consignation
1. Obligation is extinguished; accrual of interest is suspended from the time of
deposit; deterioration or loss of the thing consigned without the fault of the
debtor must be borne by the creditor; and any increment or increase of the thing
after consignation inures to the benefit of the creditor:
a. If the creditor accepts the thing or amount deposited
b. If the creditor contests the validity or efficacy of the consignation, or if any
of the exceptions to a valid tender of payment is present, there will be a
litigation, and the debtor establishes all the requisites of a valid
consignation.
2. Withdrawal
a. Before the creditor accepted consignation or before the judicial declaration
obligation remains in force. (Art. 1260)
b. After consignation having been made and with the consent of the debtor
1) creditor loses every preference which he may have over the thing; and
2) guaranties and sureties are released. (Art. 1261 )
9. LOSS OF THE THING DUE (Articles 1262-1269)
Loss of the Thing when the object of the obligation perishes, or goes out of
commerce, or disappears in such a way that its existence is unknown or it cannot be
recovered.
1. Obligation to Give
o Determinate Thing Extinguished if:
1. The thing is determinate
2. It is lost without the fault of the debtor
If through the fault of the debtor It is converted into an
obligation to indemnify the creditor for damages.
3. Before the debtor has incurred in delay
Fortuitous Event Except in cases expressly specified by the
law, or when it is otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of risk, no
person shall be responsible for those events which, could not be
foreseen, or which though foreseen, were inevitable. (Art.
1174)
Debtor is not liable EXCEPT:
1. Cases specified by law (Art. 1174)
2. Stipulation of the parties (Art. 1174)
3. The nature of the obligation requires the
assumption of risk (Art. 1174)
4. The loss of the thing is due partly to the fault of the
debtor
5. The loss of the thing occurs after the debtor has
incurred delay (Art. 1262)
6. When the debtor promised to deliver the same
thing to two or more persons who do not have the
same interest (Art. 1165)
7. When the obligation to deliver arises from a
criminal offense (Art. 1268)
8. When the obligation is generic (Art. 1263)
Partial loss due to a fortuitous event does not
extinguish the obligation; thing due shall be
delivered in its present condition, without any liability
on the part of the debtor
Subjective Impossibility - Where there is no physical or legal
loss, but the thing belongs to another, the performance by the
debtor becomes impossible. The debtor must indemnify the
creditor for damages.
Whenever the thing lost is in the possession of the debtor, it
shall be presumed that the loss was due to his fault (Art. 1265)
XPN:
1. Proof to the contrary
2. In case of earthquake, flood, storm, or other natural
calamity
o Generic Thing Obligation is not extinguished (Art. 1263). The debtor
can still be compelled to deliver a thing which is neither of superior or
inferior quality.
1. Generic thing the object is merely designated by its class or
genus without any particular designation or physical segregation
from all others of the same class.
XPN: If the object is in reality, a determinate thing, such as a cattle to
be taken from a specific ranch, and all the cattle in such ranch died of
an epidemic.
o Partial loss The court will determine if the loss is so important as to
extinguish the obligation (Art. 1264).
2. Obligation to Do Obligor is released from obligation if the prestation becomes
legally or physically impossible without the fault of the debtor
o Requisites:
1. Without the fault of the debtor
If through the fault of the debtor It is converted into an
obligation to indemnify the creditor for damages.
2. Before the debtor has incurred in delay
 3. The impossibility occurred after the constitution of the obligation.
Otherwise, obligation is ineffective from its inception.
o Types:
1. Legal Impossibility immoral or dangerous; or when the law
imposes superior obligation upon the debtor, although the act is
perfectly licit.
2. Physical Impossibility due to the death of the obligor or obligee,
when the act to be performed requires his personal qualifications,
by accident, acts of the debtor without his fault, or by third person
3. Relative Impossibility/Doctrine of Unforeseen Events When
the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may be released
therefrom in whole, or in part. (Art. 1267)
Based on rebus sic stantibus When the parties stipulate in the
light of prevailing conditions, and once these conditions cease
to exist, right to relief must be given to the party prejudiced.
Requisites:
1. Event or change in circumstance could not have been
foreseen at the time of the execution of the contract;
2. Such event makes the performance extremely difficult
but not impossible;
3. The event must not be due to the act of any of the
parties; and
4. The contract is for a future prestation. (Tolentino)
3. Obligation Not to Do legal or physical impossibility would also extinguish the
obligation
4. Reciprocal Obligation affects both the creditor and debtor; the entire
obligation is extinguished.
5. Obligation Arising From a Criminal Offense When the debt of a thing
certain and determinate proceeds from a criminal offense, the debtor shall not be
exempted from the payment of its price, whatever may be the cause for the loss.
o By way of reparation, restitution, indemnification
o Whether principally, or subsidiarily liable.
XPN: Having offered the thing to the person who should receive it, the latter
refused without justification to accept it.
o Remedy of the debtor: 1) Consignation; or 2) Keep the thing and in case of
fortuitous event, Art. 1262 and 1265 shall govern.
Effect The creditor shall have all the rights of action which the debtor may have
against the third persons by reason of the loss. (Art. 1269)
15. OPTION CONTRACT (Article 1324)
Option Contract a contract preparatory to a contract of sale whereby the owner of a
property agrees with another person that he shall have the right to elect to buy his
property at a fixed price, within a certain time.
o If not supported by a consideration (option money) It is a mere offer to
sell. If accepted by the other party, it will produce a perfected contract of
sale.
Should the owner of the property change his mind and the
other decided to buy the property, whether a contract of
sale is perfected will have to be determined by the party
who first communicated his decision to the other.
o If supported by a consideration Owner of the property cannot withdraw
his offer.
If consideration is insufficient, or the owner of the property
will suffer lesion These facts cannot invalidate the option
contract unless these are attended by the circumstances of
fraud, mistake, or undue influence.