ARTICLE 1174
amounting to a negligent act
FORTUITOUS EVENT
 Any event which cannot be foreseen, or which, though
foreseen, is inevitable
 Essence of fortuitous event: being a happening independent
of the will of the debtor (Act of God)
 Force majeure – events which arises from legitimate or
illegitimate acts of a persons other than the obligor
 Antecedent of fortuitous event: caso fortuito is an event
which takes place by accident and could not have been
foreseen
 2 general causes:
o by nature
o act of man
 Classifications
o act of God
o force majeure
Effecs:
 GR: If the obligor is unable to comply with his obligation by
reason of fortuitous event, his obligation is extinguished.
o can only be applied to determinate obligations
Characteristics of cso fortuito:
a. The cause of unforeseen and unexpected occurrence, or of
the failure of the debtor to comply with his obligation must be
independent of the human will
b. It must be impossible to foresee the event which constitute
caso fortuito, or if it can be foreseen, it must be impossible to
avoid
c. The occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner
d. The obligor must be free from any participation in the
aggravation of the injury resulting to the creditor
 In order that a fortuitous event may exempt a person from
liability, he be free from any previous negligence or
misconduct by reason of which the loss may have been
occasioned.
o There should have been no human participation
Exceptions:
1. Expressly specified by law
2. Declared by stipulation of the parties
3. The nature of the obligation requires the assumption of risk
o Assumption of risk – ordinarily requires knowledge
and appreciation of the risk and a voluntary choice to
encounter it
o The obligor or debtor, with full knowledge of the risk,
voluntarily enters into some relation with the obligee
or creditor
 Based on the doctrine volenti non fit injuria –
no wrong is done to one who consents
ARTICLE 1175 – USURIOUS TRANSACTIONS
USURY – contracting for or receiving something in excess of the
amount allowed by law for the loan or forebearance of money, goods,
or chattels; taking of more interest
Usury Law – special law referred to in Art. 1175
 Ceiling rates under the Usury Law have been abolished
ARTICLE 1176 – EXTINGUISHMENT OF INTERESTS AND PRIOR
INSTALLMENTS
Presumption – inference of a fact not actually known arising from its
usual connection with another which is known or proved
First paragraph – if the debtor is issued a receipt by the creditor and
on the face of the receipt it is hown that the principal has been paid
without any reservation with respect to the interest, there arises a
disputable presumption that the interest has already been paid.
Second paragraph – if the debtor is issued a receipt by the creditor
acknowledging paymrny of a latter installment of a specified debt
without any reservation with respect to prior installments, there
arises a disputable presumption that the interest has already
been paid.
ARTICLE 1177 – REMEDIES OF CREDITOR
3 GENERAL REMEDIES:
1. Exhaust the property in possession of the debtor
2. To be subrogated to all of the rights and actions of the debtor
save those which are inherent in his persons
o Accion subrogatoria
o The debtor may defeat the right of the creditor by
mere omission or inaction; hence, this remedy
o Conditions that should be met before availing this
remedy:
 The debtor to whom the right or action
properly pertains must be indebted to the
creditor
 The credirot must be prejudiced by the
inaction or failure of the debtor to proceed
against the third person
 The creditor must have first pursued or
exhausted all of the properties of the debtor
which are not exempted from execution
o XPN: rights which are purely personal in the sense
that they are inherent in the person of the debtor
3. To impugn all of the acts which the debtor may have done to
defraud him
o Accion pauliana
o Illustrated by alienations or conveyances of property
o The property of the debtor, whether present or future,
stands as a guaranty for the parment of the obligation
or credit
o It is therefore the right available to the creditor by
virtue of which he can secure the rescission of any act
of the debtor which is in fraud and to the prejudice of
his rights as credity
o Can only be availed in the absence of any other
remedy
ARTICLE 1178 – TRANSMISSINILITY OF RIGHTS
 Rights of obligation, rights which are acquired by virtue of an
obligations, are transmissible in character.
 XPNS:
1. Not transmissible by their very nature
2. There is a stipulation of the parties
3. Not transmissible by operation of law
 The intransmissibility by stipulation of parties must be
clearly established not merely implied.
ARTICLE 1179 – PURE AND CONDITIONAL OBLIGATION
PURE OBLIGATION – one which is not subject to any condition and
no specific date is mentioned for its fulfillment is immediately
demandable
 Distinctive characteristic: immediate demandability
CONDITIONAL OBLIGATION – one whose effectivity is subordinated
to the fulfillment or nonfulfillment of a future and uncertain fact or event
 Both requisites must concur – it must not only be future, but it
must also be uncertain
 If the past event is unknown to the parties as well as to the
whole word, so that the ascertainment thereof may or may not
happen or come to pass, it constitutes a condition
Kinds of Condition:
 SUSPENSIVE – when the fulfillment of the condition results in
the acquisition of rights arising out of the obligation
 RESOLUTORY – when the fulfillment of the condition results
in the extinguishment of rights
ARTICLE 1180 – DURATION OF PERIOD
Period – future and certain event upon the arrival of which the
obligation subject to it either arises or is extinguished
  When the debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with
a period
o Court shall determine such period: once fixed by
court, period cannot be changed
ARTICLE 1181 – SUSPENSIVE AND RESOLUTORY CONDITIONS
SUSPENSIVE
 Signifies a future and uncertain event upon the happening or
fulfillment of which right arising out of the obligation are
acquired
 When obligation is subject to a suspensive condition, its birth
or effectivity can take place only if and when the even
constitutes the condition happens or is fulfilled
 if suspensive condition does not take place, parties would
stand as if the conditional obligation had never existed
 EFFECT:
o The obligation shall become effective only upon the
fulfillment of the condition
o What is acquired by the oblige upon the constitution
of the obligation is only a mere hope or expectancy
but protected by law
RESOLUTORY
 the judicial relation which is established as a result of the
obligation is subject to a threat of extinction.
 EFFECT:
o Becomes demandable immediately after its
establishment or constitution
o Although rights are immediately vested in the oblige,
such rights are always subject to the threat or danger
of extinction
ARTICLE 1182 – CLASSIFICATION OF CONDITIONS
 POTESTATIVE – one whose fulfillment depends exclusively
upon the will of the creditor and the effects of one whose
fulfillment depends upon the will of the debtor (applicable
only to a suspensive condition)
o Will of creditor –
 condition as well as the obligation is valid
 cannot have the effect of nullifying the
obligation to which it is attached
 prohibition directed in here only extends to
those which are potestaitve to the debtor
o Will of the debtor – condition and obligation is void
 (applicable only to a suspensive condition)
 applicable only to an obligation which
depends for its perfection upon a condition
which is poterstative to the debtor and not to
a pre-existing obligation
 CAUSAL CONDITON – If the suspensive condition depends
upon chance or upon the will of a third person, the obligation
subject to it is valid
 MIXED – the obligation is valid if the suspensive condtion
depends partly upon the will of a third person
ARTICLE 1183 – POSSIBLE AND IMPOSSIBLE CONDITIONS
POSSIBLE – when it is capable or realization not only according to its
nature, but also according to the law, good customs, and public policy.
IMPOSSIBE – not capable of realization not only according to its
nature, but also according to the law, good customs, and public policy.
 Effect:
o Annul the obligation
o Because the fulfillment entails an obligation which is
either impossible, illegal, inappropriate or illicit
o However, if the obligation id a pre-exesting obligation
and does not depend upon the fulfillment of the
obligation of the condition for its perfection, the
condition is void but not the obligation
  If the condition is to do an impossible thing, it shall be
considered as not having been agreed upon.
ARTICLE 1184 – POSITIVE CONDITION
ARTICLE 1185 – NEGATIVE CONDITION
POSITIVE – involves the performance of an act or the fulfillment of an
event
 EFFECTS:
o Shall extinguish the obligation as soon as the time
expires without the event taking place
o Or as soon as it has become indubitable that the
event will not take place although the time
specified has not expired
NEGATIVE – nonperformance of an act or nonfulfillment of an event
 Shall become effective and binding:
o From the time indicated has elapsed
o If it has become evident that the event cannot occur,
although the time indicated has not yet elapsed
ARTICLE 1186 – CONSTRUCTIVE FULFILLMENT OF
SUSPENSIVE CONDITIONS
DOCTINE OF.. – the obligor must have actually prevented the oblige
from complying with the condition, and that such prevention must have
been voluntary or willful in character
 Only for suspensive conditions
 The act prevented must be unwarranted and unlawful,
involving breach of contract
ARTICLE 1187 & 1188
Effect of Suspensive Condition BEFORE Fulfillment –
 the demandability as well as the acquisition of rights is
suspended pending the happening or fulfillment of the act
which constitute the condition
 for obligor or debtor, during the pendency of condition, his
obligation is to comply with the prestation which constitutes
the object of the obligation is held in suspense until the
fulfillment of the condition
Effect of Suspensive Condition AFTER Fulfillment
 right of the creditor was a mere hope or expectancey, before
the fulfillment of the condition is perfected
 obligor or debtor – can thereafter be compelled to comply with
what is incumbent upon him
retroactivity of effect
 the condition which is imposed is only accidental element of
the obligation
 once the event which constitutes the condition is fulfilled, its
effect must logically retroact to the moment when the
essential elements which give birth to the obligations
have taken place.
 Can only apply to consensual contract
Obligation to give
 When obligation imposes reciprocal prestations, the fruits and
interests during the pendency of the condition shall be
deemed to have been mutually compensated
 When obligation is unilateral, debtor shall appropriate the
fruits and income
Obligations to do or not t o do
 Courts will have to determine the retroactive effect of the
condition
ARTICLE 1189 – LOSSES
LOSSES:
 When it persishes
 Goes out of commerce
 Disappears in such a way that its existence is unknown
KINDS OF LOSS Obligations to give
 Physical  Upon the fulfillment, parties shall return to each other what
 Legal they have received
 Civil  Applicable in unilateral and reciprocal

Improvements: Obligation to do or not to do

 In case of natural accessions, the accession shall inure to the
benefit of the creditor
o If the thing is improved at the expense of the debtor,
he shall have no other right than that granted to the
usufructuary.
o Debtor cannot ask for reimbursement – only for
necessary improvements
 Retroactivity of effects of the resolutory conditions shall
depend upon the discretion of the courts
Effects of loss:
 Rules laid down in Article 1189
 However, the debtor is the person obliged to return and the
creditor is the person to whom the thing or object must be
return.

ARTICLE 1190

Effect of Resolutory Condition BEFORE Fulfillment

 Obliger or debtor is placed in a position very similar to that of
the oblige or creditor in obligations with a suspensive
condition
o Also has a hope or expectancy during the pendency
of condition
o This is because if the resolutory condition is fulfilled,
he will reacquire whatever he may have paid or
delivered to the oblige or creditor
o Right in the first paragraph of 1188 is also available
to debtor in resolutory conditions

Effect of Suspensive Condition AFTER Fulfillment

 If not fulfilled, such rights are consolidated – they become
absolute in character
 There is a return to the status quo: whatever may have been
paid or delivered by one or both of the parties upon the
constitution of the obligation shall have to be returned upon
the fulfillment of the condition

Retroactivity effect
 More patent than in suspensive condition
 There are no exceptions