PART I: OBLIGATIONS

IN GENERAL
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I. NATURE

I.a. Definition

NCC 1156. An obligation is a juridical necessity to give, to do, not to do. (n)

Q: What is the Concept of an Obligation?

A: According to De Diego and Ruggiero, an obligation is the juridical relation, created by virtue
of certain facts, between two or more person, whereby one of them, known as the creditor or
oblige, may demand of the other, known as the debtor or obligor, a definite prestation. For
Sanchez Roman, Colin and Capitant, it is the passive aspect of an obligatory relation.

Q: Why does Justice J.B.L. Reyes criticize the definition of Sanchez Roman?
A: Justice J.B.L. Reyes criticizes the definition by Sanchez Roman because it only views the
obligation from the debt side. However, there is no debt without a credit and the credit is an
asset in the patrimony of the creditor just as the debt is a liability of the obligor.

Q: What then is a more accurate definition of an obligation as compared to that of

Sanchez Roman’s?
A: It is that which considers the juridical relation in its totality. An obligation then is a juridical tie
between two persons, by virtue of which one of them, the creditor, has the right to demand of
the other, the debtor, a determinate conduct, and, in case of breach, ma obtain satisfaction from
the assets of the latter.

Q: What are the elements of an Obligation?

A: The elements of an obligation are (1) the Active Subject; (2) the Passive Subject; (3) the
Object or Prestation; and (4) the Efficient Cause or Juridical Tie.

Q: What are the Personal Elements of an Obligation?

A: The personal elements are the active (creditor with right to demand) and passive (debtor with
the obligation to adjust his conduct to the demand of the creditor) subjects. The subjects may
also be individuals or juridical persons

Q: What is the Object or Prestation?

A: It is the particular conduct of the debtor. It is always a prestation, which may consist of giving,
doing, and not doing.

Q: How do you differentiate “Giving”, “Doing”, and “Not Doing?

 A: “To Give” is one in which the prestation consists in the delivery of a movable or immovable
thing, in order to create a real right, or for the use of the recipient. An obligation “To Do” includes
all kinds of work or services whether physical or mental. The obligation “No To Do” consists in
abstaining from some act.

Q: What are the requisites of a Prestation?

A: The prestations must (1) be legally and physically possible; (2) determinate, or, at least,
determinable according to pre-established elements or criteria; and (3) it must have a possible
equivalent in money.

Q: What is an Efficient Cause?

A: It is the vinculum, which may either be a relation established by (1) law; (2) bilateral acts; (3)
unilateral acts.

I.b. Sources of Obligations

NCC1157. Obligations arise from:

(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)

NCC1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special
laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has
not been foreseen, by the provisions of this Book. (1090)

Q: How can a law be a source of Obligations? Give examples.

A: When a law provides that a person must give, do, or not do. An example of a law that
obligates a person to give is a tax law. For a law mandating to do--one which requires a person
to obtain a valid driver’s license before operating a motor vehicle. For not to do, one which
prohibits a person from parking his vehicle on a certain street.

NCC1159. Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith. (1091a)

NCC1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this
Book. (n)

NCC1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the
provisions of Article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human Relations, and of
Title XVIII of this Book, regulating damages. (1092a)

NCC 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this
Book, and by special laws. (1093a)

Q: How do you distinguish obligations from laws, contracts, quasi-contracts, crimes, and
quasi-delicts?
A:O.

QUASI-CONTRACTS

NCC2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end
that no one shall be unjustly enriched or benefited at the expense of another. (n)

NCC2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come
within the purview of the preceding article. (n)

Negotiorum Gestio / Unauthorized Management

NCC 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another,
without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or
to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not
arise in either of these instances:

(1) When the property or business is not neglected or abandoned;

(2) If in fact the manager has been tacitly authorized by the owner.

In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.

In the second case, the rules on agency in Title X of this Book shall be applicable. (1888a)

NCC 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay
the damages which through his fault or negligence may be suffered by the owner of the property or business under
management.

The courts may, however, increase or moderate the indemnity according to the circumstances of each case. (1889a)

NCC 2146. If the officious manager delegates to another person all or some of his duties, he shall be liable for the
acts of the delegate, without prejudice to the direct obligation of the latter toward the owner of the business.

The responsibility of two or more officious managers shall be solidary, unless the management was assumed to save
the thing or business from imminent danger. (1890a)

NCC 2147. The officious manager shall be liable for any fortuitous event:

(1) If he undertakes risky operations which the owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith. (1891a)

NCC 2148. Except when the management was assumed to save property or business from imminent danger, the
officious manager shall be liable for fortuitous events:

(1) If he is manifestly unfit to carry on the management;

(2) If by his intervention he prevented a more competent person from taking up the management. (n)

NCC 2149. The ratification of the management by the owner of the business produces the effects of an express
agency, even if the business may not have been successful. (1892a)
NCC 2150. Although the officious management may not have been expressly ratified, the owner of the property or
business who enjoys the advantages of the same shall be liable for obligations incurred in his interest, and shall
reimburse the officious manager for the necessary and useful expenses and for the damages which the latter may
have suffered in the performance of his duties.

The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an
imminent and manifest loss, although no benefit may have been derived. (1893)

NCC 2151. Even though the owner did not derive any benefit and there has been no imminent and manifest danger
to the property or business, the owner is liable as under the first paragraph of the preceding article, provided:

(1) The officious manager has acted in good faith, and

(2) The property or business is intact, ready to be returned to the owner. (n)

NCC 2152. The officious manager is personally liable for contracts which he has entered into with third persons, even
though he acted in the name of the owner, and there shall be no right of action between the owner and third persons.
These provisions shall not apply:

(1) If the owner has expressly or tacitly ratified the management, or

(2) When the contract refers to things pertaining to the owner of the business. (n)

NCC 2153. The management is extinguished:

(1) When the owner repudiates it or puts an end thereto;

(2) When the officious manager withdraws from the management, subject to the provisions of Article 2144;
(3) By the death, civil interdiction, insanity or insolvency of the owner or the officious manager. (n)
Solutio Indebiti / Undue Payment

NCC 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake,
the obligation to return it arises. (1895)

NCC 2155. Payment by reason of a mistake in the construction or application of a doubtful or difficult question of law
may come within the scope of the preceding article. (n)

NCC 2156. If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. (n)

NCC 2157. The responsibility of two or more payees, when there has been payment of what is not due, is solidary.
(n)

NCC 2158. When the property delivered or money paid belongs to a third person, the payee shall comply with the
provisions of article 1984. (n)

NCC 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money is involved, or
shall be liable for fruits received or which should have been received if the thing produces fruits.
He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for damages to the
person who delivered the thing, until it is recovered. (1896a)

NCC 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall only be
responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been
benefited. If he has alienated it, he shall return the price or assign the action to collect the sum. (1897)
NCC 2161. As regards the reimbursement for improvements and expenses incurred by him who unduly received the
thing, the provisions of Title V of Book II shall govern. (1898)

NCC 2162. He shall be exempt from the obligation to restore who, believing in good faith that the payment was being
made of a legitimate and subsisting claim, destroyed the document, or allowed the action to prescribe, or gave up the
pledges, or cancelled the guaranties for his right. He who paid unduly may proceed only against the true debtor or the
guarantors with regard to whom the action is still effective. (1899)

NCC 2163. It is presumed that there was a mistake in the payment if something which had never been due or had
already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out
of liberality or for any other just cause. (1901)
Other Quasi-Contracts

NCC 2164. When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter
shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without
intention of being repaid. (1894a)

NCC 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were
obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim
reimbursement. (1894a)

NCC 2166. When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to
give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement
from the person obliged to give support. The provisions of this article apply when the father or mother of a child under
eighteen years of age unjustly refuses to support him.

NCC 2167. When through an accident or other cause a person is injured or becomes seriously ill, and he is treated
or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the
physician or other person aiding him, unless the service has been rendered out of pure generosity.

NCC 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person
without the knowledge of the owner, the latter is bound to pay the former just compensation.

NCC 2169. When the government, upon the failure of any person to comply with health or safety regulations
concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the
expenses.

NCC 2170. When by accident or other fortuitous event, movables separately pertaining to two or more persons are
commingled or confused, the rules on co-ownership shall be applicable.

NCC 2171. The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and
720.

NCC 2172. The right of every possessor in good faith to reimbursement for necessary and useful expenses is
governed by Article 546.

NCC 2173 When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are
governed by Articles 1236 and 1237.
NCC 2174 When in a small community a nationality of the inhabitants of age decide upon a measure for protection
against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to
the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses.

NCC 2175 Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the
latter.

QUASI-DELICTS

NCC 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter. (1902a)

NCC 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the
civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the
same act or omission of the defendant. (n)

NCC 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict. (n)

NCC 2179. When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being
the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be
awarded. (n)

NCC 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the
minor children who live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and
live in their company.
The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope
of their assigned tasks, even though the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent; but not when the damage has been
caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be
applicable.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and
students or apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed
all the diligence of a good father of a family to prevent damage. (1903a)

NCC 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what
he has paid or delivered in satisfaction of the claim. (1904)

NCC 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person
shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. (n)
NCC 2183. The possessor of an animal or whoever may make use of the same is responsible for the damage which
it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come
from force majeure or from the fault of the person who has suffered damage. (1905)

NCC 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the
vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver
was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the
next preceding two months.

If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. (n)

NCC 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any traffic regulation. (n)

NCC 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a
government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and
other terms shall be fixed by the competent public official. (n)

NCC 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for
death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between
them and the consumers. (n)

NCC 2188. There is prima facie presumption of negligence on the part of the defendant if the death or injury results
from his possession of dangerous weapons or substances, such as firearms and poison, except when the possession
or use thereof is indispensable in his occupation or business. (n)

NCC 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by,
any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works
under their control or supervision. (n)

NCC 2190. The proprietor of a building or structure is responsible for the damages resulting from its total or partial
collapse, if it should be due to the lack of necessary repairs. (1907)

NCC 2191. Proprietors shall also be responsible for damages caused:

(1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of
explosive substances which have not been kept in a safe and adequate place;
(2) By excessive smoke, which may be harmful to persons or property;
(3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure;
(4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions
suitable to the place. (1908)

NCC 2192. If damage referred to in the two preceding articles should be the result of any defect in the construction
mentioned in Article 1723, the third person suffering damages may proceed only against the engineer or architect or
contractor in accordance with said article, within the period therein fixed. (1909)

NCC 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused by things
thrown or falling from the same. (1910)

NCC 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary. (n)

Q: What is the Roman Law source of punishing Quasi-delicts?

A: The Roman Law source of punishing Quasi-delicts is the Lex Aquilia.
RPC 218. Failure of accountable officer to render accounts. — Any public officer, whether in the service or separated
therefrom by resignation or any other cause, who is required by law or regulation to render account to the Insular
Auditor, or to a provincial auditor and who fails to do so for a period of two months after such accounts should be
rendered, shall be punished by prision correccional in its minimum period, or by a fine ranging from 200 to 6,000
pesos, or both.chanrobles virtual law library

RPC 219. Failure of a responsible public officer to render accounts before leaving the country. — Any public officer
who unlawfully leaves or attempts to leave the Philippine Islands without securing a certificate from the Insular Auditor
showing that his accounts have been finally settled, shall be punished by arresto mayor, or a fine ranging from 200 to
1,000 pesos or both.chanrobles virtual law library

RULE 111, ROC (Prosecution of Civil Action)

Section 1. Institution of criminal and civil actions. — (a) When a criminal action is instituted, the civil action for the
recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action unless the
offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to
the criminal action.

The reservation of the right to institute separately the civil action shall be made before the prosecution starts
presenting its evidence and under circumstances affording the offended party a reasonable opportunity to make such
reservation.

When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate, or
exemplary damages without specifying the amount thereof in the complaint or information, the filing fees thereof shall
constitute a first lien on the judgment awarding such damages.

Where the amount of damages, other than actual, is specified in the complaint or information, the corresponding filing
fees shall be paid by the offended party upon the filing thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be required for actual damages.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause
of action which could have been the subject thereof may be litigated in a separate civil action. (1a)

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil
action. No reservation to file such civil action separately shall be allowed.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees based on
the amount of the check involved, which shall be considered as the actual damages claimed. Where the complaint or
information also seeks to recover liquidated, moral, nominal, temperate or exemplary damages, the offended party
shall pay additional filing fees based on the amounts alleged therein. If the amounts are not so alleged but any of
these damages are subsequently awarded by the court, the filing fees based on the amount awarded shall constitute
a first lien on the judgment.

Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with
the criminal action upon application with the court trying the latter case. If the application is granted, the trial of both
actions shall proceed in accordance with section 2 of this Rule governing consolidation of the civil and criminal
actions. (cir. 57-97)

Section 2. When separate civil action is suspended. — After the criminal action has been commenced, the
separate civil action arising therefrom cannot be instituted until final judgment has been entered in the criminal action.
If the criminal action is filed after the said civil action has already been instituted, the latter shall be suspended in
whatever stage it may be found before judgment on the merits. The suspension shall last until final judgment is
rendered in the criminal action. Nevertheless, before judgment on the merits is rendered in the civil action, the same
may, upon motion of the offended party, be consolidated with the criminal action in the court trying the criminal action.
In case of consolidation, the evidence already adduced in the civil action shall be deemed automatically reproduced
in the criminal action without prejudice to the right of the prosecution to cross-examine the witnesses presented by
the offended party in the criminal case and of the parties to present additional evidence. The consolidated criminal
and civil actions shall be tried and decided jointly.
During the pendency of the criminal action, the running of the period of prescription of the civil action which cannot be
instituted separately or whose proceeding has been suspended shall be tolled. (n)

The extinction of the penal action does not carry with it extinction of the civil action. However, the civil action based on
delict shall be deemed extinguished if there is a finding in a final judgment in the criminal action that the act or
omission from which the civil liability may arise did not exist. (2a)

In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil
action may be brought by the offended party. It shall proceed independently of the criminal action and shall require
only a preponderance of evidence. In no case, however, may the offended party recover damages twice for the same
act or omission charged in the criminal action. (3a)
Section 3. When civil action may proceeded independently. —

Section 4. Effect of death on civil actions. — The death of the accused after arraignment and during the pendency
of the criminal action shall extinguish the civil liability arising from the delict. However, the independent civil action
instituted under section 3 of this Rule or which thereafter is instituted to enforce liability arising from other sources of
obligation may be continued against the estate or legal representative of the accused after proper substitution or
against said estate, as the case may be. The heirs of the accused may be substituted for the deceased without
requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor
heirs.

The court shall forthwith order said legal representative or representatives to appear and be substituted within a
period of thirty (30) days from notice.

A final judgment entered in favor of the offended party shall be enforced in the manner especially provided in these
rules for prosecuting claims against the estate of the deceased.
If the accused dies before arraignment, the case shall be dismissed without prejudice to any civil action the offended
party may file against the estate of the deceased. (n)

Section 5. Judgment in civil action not a bar. — A final judgment rendered in a civil action absolving the defendant
from civil liability is not a bar to a criminal action against the defendant for the same act or omission subject of the civil
action. (4a)

Section 6. Suspension by reason of prejudicial question. — A petition for suspension of the criminal action based
upon the pendency of a prejudicial question in a civil action may be filed in the office of the prosecutor or the court
conducting the preliminary investigation. When the criminal action has been filed in court for trial, the petition to
suspend shall be filed in the same criminal action at any time before the prosecution rests. (6a)

Section 7. Elements of prejudicial question. — The elements of a prejudicial question are: (a) the previously
instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal
action, and (b) the resolution of such issue determines whether or not the criminal action may proceed. (5a)

Q: How would you classify the possible sources of obligations into two?
A: Those obligations arising from contract and those arising from law (which includes delicts
and quasi-delicts).

CASES:
Barrdeo v. Garcia, 73 Phil 607 (1942)
Civil liability arising from crime is subsidiary to the employer or principal and is different from civil liability arising from
Civil Code (Art. 1903) which is primarily directed against the principal or employer. The latter is more expeditious

Mendoza v. Arrieta, 91 SCRA 113 (1975)

Sec 2 Rule 111 Rules of Court is contrary to Art 32, 33, 34 of the Civil Code. It is inoperative and no reservation of
right to proceed for civil liability arising from culpa aquiline is required. However, when case arises from culpa criminal
and the judgement states that the fact from which civil liability might arise did not exist bars a separate proceeding for
civil cases.

PSBA v. CA, 205 SCRA 729 (1992)

Negligence from breach of contract between school and student is not culpa aquilania.

Amadora v. CA, 160 SCRA 315

Teachers-in-charge are the ones liable for acts of students and not the school.

I.c. Transmissibility

NCC 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no
stipulation to the contrary. (1112)

Q: What is the general rule on transmissibility rights acquired from obligations?

A: The general rule is that all rights acquired by virtue of an obligations are transmissible,
unless there is a stipulation with regard to its assignment.

II. POSSIBLE CLASSIFICATIONS

II.a. By Enforceability

II.a.i. Civil, Natural

NCC 1423. Obligations are civil or natural. Civil obligations give a right to compel their performance. Natural
obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce
their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been
delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles. (n)

Q: How do you distinguish Natural Obligations from Civil Obligations?

A: Civil Obligations are those that give a right of action to compel their performance. Natural
Obligations are those which cannot be enforced by courts but which are binding on the party
who makes them, in conscience and natural justice.

NCC 1424. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who
voluntarily performs the contract cannot recover what he has delivered or the value of the service he has rendered..
(n)
NCC 1425. When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor
is not legally bound to pay because the action thereon has prescribed, but the debtor later voluntarily reimburses the
third person, the obligor cannot recover what he has paid. (n)

NCC 1426. When a minor between eighteen and twenty-one years of age who has entered into a contract without the
consent of the parent or guardian, after the annulment of the contract voluntarily returns the whole thing or price
received, notwithstanding the fact that he has not been benefitted thereby, there is no right to demand the thing or
price thus returned. (n)

NCC 1427. When a minor between eighteen and twenty-one years of age, who has entered into a contract without
the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the
obligation, there shall be no right to recover the same from the obligee who has spent or consumed it in good faith.
(1160a)

NCC 1428. When, after an action to enforce a civil obligation has failed, the defendant voluntarily performs the
obligation, he cannot demand the return of what he has delivered or the payment of the value of the service he has
rendered. (n)

NCC 1429. When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the
property which he received by will or by the law of intestacy from the estate of the deceased, the payment is valid and
cannot be rescinded by the payer. (n)

Q: What are some of the Natural Obligations as enumerated in the Civil Code?
A: Voluntarily, (1) When the right to sue has lapsed by prescription and the debtor still pays, (2)
When the debtor later reimburses a third person after said person pays a prescribed debt
without his knowledge, (3) When a minor between 18-21 without the consent of a parent or
guardian returns the thing received, (4) When a minor between 18-21 without the consent of a
parent or guardian pays the debt which the creditor spends in good faith, (5) When the debtor
pays after the action to enforce the obligation has failed, and (6) When a testate or intestate heir
pays the decedent’s debt which exceeds the value of the inheritance received.

CASES:
Villaroel v. Estrada, 71 Phil 140 (1940)
The moral obligation to pay his mother’s debt (a previous legal obligation) was sufficient consideration for the
obligation Villaroel voluntarily assumed (promise to pay) to be legally enforceable.

Fisher v. Robb, 69 Phil 101 (1939)

The mere moral obligation unconnected with any previous legal obligation was not deemed a valid consideration for
the letter to be a valid onerous contract.

II.b. By Number of Parties

II.b.i. Sole/Unilateral (Prestation to be demanded on one party)

II.b.ii. Joint/Bilateral (2 or more creditors/debtors)

II.b.ii.1. Separate (Debtor pays only his share in the debt)

II.b.ii.2. Solidary (Debtor pays for whole obligation, subject to reimbursement)

 II.b.iii. Collective

II.c. By Nature of Parties’ Undertakings

II.c.i. Unilateral

II.c.ii. Reciprocal

II.d. By Presence of Conditions

II.d.i. Pure/Unconditional (Obligation is demandable at once)

II.d.ii. Conditional

II.d.ii.1. Period (Future and certain event)

II.d.ii.2. Prestation

II.d.ii.3. Event (Future and uncertain event, or past event known to the parties)

II.d.ii.4. Penal Clause (Liability in case of breach)

II.e. By Variability of Obligation

II.e.i. Definitive

II.e.ii. Alternative

II.f. Divisibility of Obligation

II.f.i. Divisible (Performance of obligation may be partial)

II.f.ii. Indivisible (Performance must be done in full/cannot be partially fulfilled)

II.g. By Relationship

II.g.i. Principal

II.g.ii. Accessory

II.h. By Nature of Action to Enforce

 II.h.i. Real (Obligation to give)

II.h.i. Personal (Obligation to do or not do)

II.i. By Object of the Prestation

II.i.i. Simple (1 Prestation)

II.i.ii. Multiple (2 or more Prestations)

II.i.iii. Conjunctive (All Prestations must be performed)

II.i.iv. Distributive (One or some must be performed)

II.i.v. Alternative (Multiple prestations, where only one, or some but not all, must be
performed)

II.i.vi. Facultative (Multiple prestations, where there is a principal obligation, and substitute
prestations)

II.j. By Nature of Object

II.j.i. Generic (Not a unique, determinate thing)

II.j.ii. Specific (Unique, determinate thing)

KINDS OF OBLIGATIONS UNDER NCC

____________________________________________________________________________
I. PURE OBLIGATIONS

NCC 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past
event unknown to the parties, is demandable at once.

Tolentino - Obligations which contain no terms or conditions whatever upon which depends the fulfillment of the
obligation contracted by the obligor.

Its effectivity or extinguishment does not depend upon the fulfillment or non-fulfillment of a condition or upon the
expiration of a term or period and characterized by the quality of its being immediately demandable.

II. CONDITIONAL OBLIGATIONS

● Definition

NCC 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the condition. (1114)

Q: What is a pure obligation?

A: One without a condition or a term (hence, demandable at once, provided there will be no
absurdity).

Q: What are the characteristics of a condition?

A: The following are the characteristics of a condition:
1. FUTURE and UNCERTAIN event
2. Uncertain but POSSIBLE
3. Imposed by the WILL of the party (shouldn’t be a legal requisite)
4. Past event but UNKNOWN to parties

CASES:
Gaite vs Fonacier
The Court held that the obligation to pay Gaite P65,000 is one with a period, and not one with a suspensive
condition. The term expired. The words of the contract express no uncertainty in the existence of the obligation to
pay. Only the maturity and demandability are deferred, not the existence.

Gonzales v. Heirs of Thomas

If a stipulation in a contract admits of several meanings, it shall be understood as bearing that import most adequate
to render it effectual. An obligation cannot be enforced unless the plaintiff has fulfilled the condition upon which it is
premised. Hence, an obligation to purchase cannot be implemented unless and until the sellers have shown their title
to the specific portion of the property being sold.

● When effective/demandable

NCC 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the condition. (1114)

NCC 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation
shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity
with the provisions of this Code. (1115)
NCC 1185. The condition that some event will not happen at a determinate time shall render the obligation effective
from the moment the time indicated has elapsed, or if it has become evident that the event cannot occur.

If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been
contemplated, bearing in mind the nature of the obligation. (1118)

NCC 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Q: What is a suspensive condition?

A: Fulfillment of the condition results in the acquisition of rights arising out of obligation (Art.
1181)

Q: What is a resolutory condition?

A: Fulfillment of the condition results in the extinguishment of rights arising out of obligation
(Art. 1181)

● Types of Conditions

● As to Effect of Obligation

○ Suspensive (condition precedent) - Fulfillment of the condition results in the acquisition

of rights arising out of obligation (Art. 1181)

What is acquired by the obligee upon the constitution of the obligation is mere hope or expectancy,
but is protected by law.

Cases:

Gonzales vs Heirs, supra.

Coronel vs CA
The rights and obligations of the parties with respect to the perfected contract of sale became mutually due and
demandable as of the time of fulfillment or occurrence of the suspensive condition. As of that point in time, reciprocal
obligations of both seller and buyer arose.

○ Resolutory (condition subsequent) - Fulfillment of the condition results in the

extinguishment of rights arising out of obligation (Art. 1181)

The rights are immediately vested to the creditor, but always subject to the threat or danger of
extinction by the happening of the resolutory condition.
Cases:

Parks vs Province of Tarlac

A donation with a condition that certain structures be built on land is deemed one with a resolutory condition as the
acquisition of the ownership is necessary for the condition to be enforced.

CPU vs CA
When a person donates land to another on the condition that a construction be made, the condition is akin to a
resolutory (not suspensive) one. The non-compliance to the condition extinguishes the right to the donation, but it
need not occur first in order for the donation to be effected and validated.

Quijada vs CA
Donation is perfected once acceptance by the donee is made known to the donor. Ownership is immediately
transferred to the former and will only revert to the donor if the resolutory condition is not fulfilled.

Q: What is a potestative condition?

A: One which depends upon the will of one of the contracting parties; the power of one to
realize or to prevent.

Q: What is the difference between simple potestative and purely potestative?

A: Simple potestative presupposes not only a manifestation of will but also realization of an
external act of a 3rd party while in purely potestative, it is dependent upon the will of one of the
parties.

Q: Is the obligation with a potestative condition void?

A: It depends. If it depends solely and exclusively upon the will of the debtor, it is void for the
debtor cannot fulfill an obligation arising from his own choice.

● As to the Origin of Condition

■ Potestative - One which depends upon the will of one of the contracting parties; the power of
one to realize or to prevent

● Simple Potestative - Presupposes not only a manifestation of will but also realization of an
external act of a 3rd party
● Purely Potestative - Will of one of the parties
If it depends solely and exclusively upon the will of the debtor, it is void for the debtor
cannot fulfill an obligation arising from his own choice.

● Effects - Depends on Debtor

1. Suspensive- Illusory obligation which is in direct contravention of the principle
announced in Art. 1308.
2. Resolutory- the condition and obligation is valid
■ The position of the debtor is like a creditor in a suspensive condition.
■ Does not render the obligation illusory
■ Obligation is already there!

● Effects - Depends on Creditor

It is valid if it depends on the will of the creditor
❖ Only condition is void if it depends on a pre-existing one.
➢ The condition is imposed not on the birth of the obligation (kasi pre-existing) but
on its fulfillment
➢ EXAMPLE
■ Edward owes Kendall Jenner $500,000.
■ Edward will pay Kendall when he finally likes her. (depends solely on
Edward)
■ Edward still owes Kendall $500,000. The condition is VOID but the
obligation still exists/subsists.
■ Becomes a pure obligation- Kendall can already demand.
Case:

Lim vs CA
A condition which stipulates that a lessor may continuously renew his lease “for as long as needed” is purely
potestative and must be struck down as void.

Q: What is a casual condition?

A: One which depends on chance or hazard or the will of a third person (if I win in the lotto).

Q: What is a mixed condition?

A: One which depends partly upon the will of a party to the obligation and partly upon chance
and/or will of a third person (Art. 1182)

● Casual - One which depends upon chance and/or upon the will of a third person (Art. 1182).
○ Effects: Obligation and Condition shall take effect

Case:

Naga Telephone vs CA
A condition which stipulates that the contract terminates “when the second party is forced to stop and abandon its
operation, and it becomes necessary to remove the electric light posts” is considered to be casual since it is purely
dependent on chance, hazard, or the will of a third person.

● Mixed - One which depends partly upon the will of a party to the obligation and partly upon chance and/or
will of a third person (Art. 1182)
○ Effect: Obligation and Condition shall take effect.

Cases:

Osmena vs Rama
A condition dependent upon the sole will of the debtor is void.

Hermosa vs Longora
A condition that does not depend exclusively upon the will of the debtor, but also upon other circumstances beyond
his power or control is mixed and valid.
Taylor vs Uy Tieng Piao
A resolutory condition may be valid even though the condition is made to depend upon the will of the obligor
(potestative).

Smith Bell vs Sotelo Matti

f a period is uncertain, despite having an expected date, then it becomes a condition. (Art. 1193).

Rustan Pulp and Paper vs IAC

Rustan’s right to unilaterally stop delivery of raw materials constitute a potestative condition solely dependent on their
will and is therefore void.

Romero vs CA
The presence of squatters makes the condition mixed because the condition does not depend on the will of the
vendor alone but also on third persons.
 ● As to Possibility

Q: How do you define possible and impossible conditions?

A: A possible condition is When the condition is capable of realization according to the nature,
law, public policy or good customs. An Impossible condition on the other hand, is when the
condition is not capable of realization according to the nature (physical), law, public policy,
morals, good customs (legal). (e.g., To jump off a building, to fly, etc).

NCC 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. (1116)

Q: What are the effects of impossible conditions?

A: If the obligation is divisible, that part thereof which is not affected by the impossible or
unlawful condition shall be valid.

General Rule: If the obligation is divisible, the impossible conditions shall annul the obligation which
depends upon them (Both the obligation and condition become void).

Exceptions:
a. Pre-existing obligation;
b. Divisible obligation;
i. e.g., I’ll give you a house if you get a 90 in an exam AND additional horse named
Chestnut if you kill Clark Beneeg.
1. The 1st obligation can be complied with- it’s not impossible.
c. Negative impossible things - Condition is disregarded, obligation is rendered pure and valid.
i. e.g., I, Edward, will pay you (Kendall) P100 which I owe you if you don’t jump off the
building. Edward has to pay Kendall immediately.
d. Testamentary disposition/Donation - Condition considered not imposed.
i. Ex. When I die, give my iPhone 10 and my mansion in Forbes to Kendall if she jumps off
a building.
1. Only the jumping off is not imposed.
2. Kendall still gets my iPhone 10 and Forbes Mansion

Effects:
a. Positive - obligation is extinguished as soon as the time expires or if it becomes indubitable that the
event will not take place (art 1184)

e.g., If the LA Lakers win in the playoffs in 2016. But they weren’t able to qualify for the playoffs,
thus the obligation is extinguished.

b. Negative - The obligation is effective from the moment the time indicated has lapsed, or if it has
become evident that the event cannot occur, although the time indicated has not yet lapsed (art
1195)

e.g., If they don’t win in the playoffs this year, but they weren’t able to qualify for the playoffs.

Case:
Roman Catholic Archbishop of Manila vs CA
A condition that stipulates a 100-year period in which the donee is not allowed to dispose of the land is an undue
restriction on rights, making it against public policy (impossible condition).

Q: What are positive and negative conditions?

A: Positive conditions are those that suppose that some event will happen at a determinate time
shall extinguish the obligation as soon as the time expires or become indubitable that the event
will not take place (Art. 1184). Negative conditions are those that suppose that some event will
NOT happen at a determinate time shall render the obligation effective from the moment the
time has elapsed or it has become evident that event cannot occur (Art. 1185).

Note: If there is no period fixed in the foregoing, Art. 1185 par. 2 shall apply. Intention of the parties is controlling and
the time shall be that which the parties may have probably contemplated, taking into account the nature of the
obligation.

Q: What are divisible and indivisible conditions?

A: Divisible conditions are those that are susceptible to partial realization/fulfillment (e.g.,
Building a house). Indivisible conditions are those that are NOT susceptible to partial
realization/fulfillment (e.g., Delivery of Chestnut the Horse as Chestnut can’t be delivered
halfway or can’t be divided into two)

Principle of Indivisibility of Conditions - Indivisibility of condition passes to the heirs of the debtor, hence,
some heirs can’t demand partial performance of the obligation by offering to fulfill part of the condition corresponding
to them.

Exceptions: The condition may be divisible: a) by nature of the condition; b) by stipulation; c) by law

● When obligation is ineffective

○ When condition is not fulfilled

NCC1184. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the
time expires for it or if it has become indubitable that the event will not take place. (1117)

○ When condition is ab initio

NCC 1182. When the fulfillment of the obligation depends upon the sole will of the debtor, the conditional
obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in
conformity with the provisions of this Code. (1115)

NCC 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. (1116a)

○ Rescission of reciprocal obligations

NCC 1191.The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in
accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)

NCC 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be
equitably tempered by the courts. If it cannot be determined which of the parties violated the contract, the same shall
be deemed extinguished, and each shall bear his own damages. (n)

NCC 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. (1122)

● Events pending the happening of the condition

NCC 1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation
of his right. (1121a)

Q: What are the protective actions that the creditor, before the fulfillment of a condition,
is entitled to?
A: 1) To prevent loss or deterioration by enjoining or restraining acts of alienation and destruction by the debtor or
3rd person; 2) To prevent concealment of the debtor’s properties which constitute the guaranty in case of non
performance of the obligation; 3) To demand security if the debtor becomes insolvent; 4)To compel the
acknowledgement of the debtor’s signature on a private document or the execution of the proper public documents
for registration so as to affect third persons; 5) To register the deeds of sale or mortgages evidencing the contract; 6)
To set aside fraudulent alienations made by the debtor and; 7) To interrupt the period of prescription.

○ Loss, deterioration, improvement of the thing

NCC 1190. When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon
the fulfillment of said conditions, shall return to each other what they have received.
 In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the
debtor, are laid down in the preceding article shall be applied to the party who is bound to return.

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.

Note: 2nd paragraph - The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition.

Q: What is a specific/determinate thing?

A: Particularly designated or physically segregated from all other of the same class; identified
by individuality.

For specific/determinate thing, just follow the table:

LOSS/LOST DETERIORATION IMPROVEMENT-

a. Perishes- (like horse
dies or house is
destroyed)
b. Out of Commerce- (like
private land becomes
public or marijuana in
amsterdam suddenly
becomes illegal)
c. Existence unknown and
cannot be recovered
Reduction or impairment Added to, incorporated in,
in the substance or value attached to a thing
of a thing which does not
amount to loss. e.g., Mango tree in a land
Still existing but no longer
intact; less than what was
constituted,

Fault of DEBTOR Obliged to pay damaged Creditor may choose
to Creditor between:
a.) Rescision w/damages
b.) fulfillment
w/indemnification
Merely Usufructuary. (Art.
579 & 580)
(He can remove what he
can before delivery;
They can stipulate on this.

Fault of CREDITOR
Unilateral- extinguish and Fulfillment? Not sure Benefit of Creditor
damages for the expenses
of debtor in trying to fulfill
the obligation
Reciprocal- fulfillment of
obligation on the part of

FORTUITOUS (As long as Obligation is extinguished Impairment is borne by Benefit of Creditor

there is no delay) the Creditor

Q: What is a generic/indeterminate thing?

A: Object is designated only by its class/ genus/ species. Debtor can give anything of the same
class as long as it is of the same kind.

Limited Generic - When the generic objects are confined to a particular class.

Mutual restitution - Bound to return whatever he has received in the ORIGINAL condition.
 Note: Before resolutory condition happens, the party who has a right, is practically in the same
position as one who has an obligation subject to a suspensive condition.

○ Prevention of fulfillment of the condition by the obligor

NCC 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. (1122)

Cases:

Taylor vs Uy Tieng Piao, supra

Herrera vs Leviste
Leviste loaned from GSIS and mortgaged property in Buendia and Paranaque. He subsequently sold the Buendia
property to Herrera upon certain conditions, including assumption of Leviste’s debt to GSIS. However, GSIS required
Herrera to submit the final deed of sale in order for him to assume the debt, which Leviste refused to execute despite
receiving full payment. According to the dissent of Justice Teehankee, there should have been, therefore, a
constructive fulfilment on Herrera’s part under Art. 1186 NCC, “The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment.

III. OBLIGATIONS WITH A PERIOD

● In General

○ Definition

NCC 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. (1125a)

NCC 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.
 In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

○ For whose benefit

NCC 1196. Whenever in an obligation a period is designated, it is presumed to have been established for the benefit
of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the
period has been established in favor of one or of the other. (1127)

NCC 1198. The debtor shall lose every right to make use of the period:

(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for
the debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has promised;
(3) When by his own acts he has 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) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
(5) When the debtor attempts to abscond. (1129a)

○ Kinds of Periods
■ As to Effect
● Suspensive (Must lapse before the performance of the obligation
becomes demandable)
● Resolutory (Period after which performance is terminated)
■ As to Expression
● Express (Specifically stated)
● Implied (If parties intended for there to be a period)
■ As to Definiteness
● Definite (Fixed or known time)
● Indefinite (Event which will necessarily occur but the time as to its
occurrence is unknown)
■ As to Source
● Voluntary (Stipulated by the parties involved)
● Legal (Established by laws)
● Judicial (Fixed by the courts)
○ Types

■ Suspensive Period (ex die)

■ Resolutory Period (in diem)

○ When Courts May Fix the Duration

NCC 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been proba bly
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

○ Incidents Before Arrival of Period

 ■ Loss, Deterioration, or Improvement of Thing

NCC 1194. In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in
Article 1189 shall be observed. (n)

NCC 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.
(1122)
■ Payment in Advance

NCC 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.
(1126a)

NCC 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

Cases:

Lachica v. Araneta (1922)

In view of varied interpretations of the parties involved as regards the period in the contract, it shall be presumed to
have been established for the benefit of both the creditor and the debtor (Art. 1196).

Ponce de Leon v. Syjuco (1951)

In order for a consignation to be valid, the following requisites must be present:
1. A debt due;
2. The creditor refused to accept payment (or is unable to);
3. The person interested in the performance of the obligation was notified prior to consignation;
4. The amount was given to the Court; and
5. The person interested in the performance of the obligation was notified subsequent to consignation.

Buce v. CA (2000)
In a contract that does not clearly indicate to whom discretion lies as regards renewal of the contract, the
presumption is always in favor of both parties (Lessor and Lessee). Hence, a lessee claiming to have full discretion
as to whether he could renew the contract is not valid. It has to be mutually agreed upon.

Examples of Obligations with a Period:

When Jimmy dies, you inherit his PlayStation 4. (Death is inevitable; although the exact date is
not known, the event is certain to occur.)

This building must be demolished within 6 months. (The employer cannot demand demolition of
building within 6 months; suspensive period.)

LeBron James, one of the greatest to have ever played, just entered into his final 4-year
contract with the Cleveland Cavaliers. (LeBron has an obligation to play basketball for 4 years;
resolutory period.)

Q. How do you differentiate Pure Obligation, Conditional Obligation, and Obligation with
a Period?

As to Pure Conditional Period

Fulfillment Demandable at once Depends upon a Depends upon a

future and uncertain future, certain, and
event or past event possible event
unknown

Influence on aaaaaaaaaaaaaaaaa Condition gives rise Period only affects

obligation aaaaaaaaaaaaaaaaa to or extinguishes an demandability of
aaaaaaaaaaaaaaaaa obligation performance

Reference to Time Immediate May refer to past Always refers to the

events unknown future

If purely dependent Obligation does not Void Valid. Courts will fix
on will of debtor exist the period

Retroactivity of aaaaaaaaaaaaaaaaa Happening of Unless there is an

effects aaaaaaaaaaaaaaaaa condition has agreement to the
aaaaaaaaaaaaaaaaa retroactive effect contrary, there is no
aaaaaaaaaaaaaaaaa retroactive effect

Q. Is there such a thing as an impossible period?

There is no mention of an impossible period in the Civil Code. However, the Civil Code
recognizes an unreasonable period where the Court may fix the period in order for the debtor to
be given a reasonable time to comply. (e.g., To build a 4-story mansion in 2 days.)

Q. When may the Courts fix the period?

1. If the obligation does not fix a period but it can be inferred that the parties intended that
there be a period.
 2. When period for compliance is purely dependent upon the will of the debtor.
3. When the debtor binds himself to pay when his means permit him to do so.

Q. What is a term or period

A space of time, which, exerting an influence on obligations as a consequence of a juridical act,

suspends their dependability or determines their extinguishment.

Q. Compare the effects of loss, deterioration, and improvement on a suspensive period

and resolutory period?

Sir J.B. did not give a definite answer regarding this question, but in terms of suspensive period
in obligations to give, Art. 1189 governs.

Q. To whom are contracts favorable to, the creditors or the debtors?

In the absence of stipulations indicating the contrary, the presumption is always to the benefit of
both parties.

Q. Is the phrase “reasonable time” a valid period?

Jurisprudence indicates that said phrase is a valid period, and therefore, courts cannot
arbitrarily declare a period, but can only identify whether such obligation has been complied with
within such “reasonable time”.