OBLIGATIONS AND CONTRACTS

HANDOUT NO. 3

TRANSMISSIBILITY OF RIGHTS : As a rule, all rights acquired in virtue of an

obligation are transmissible, if there has been no stipulation to the contrary. Be it noted that
it is the right of a person that is transmissible, the obligation is not transmissible (Art. 1178)

Exception to the transmissibility of rights:

1. When the parties agreed against transmission

2. When the law prohibits the transmission of rights
3. When the nature of the obligation does not permit transmission of rights, such as
when the rights is personal

CONCEPT OF PURE AND CONDITIONAL OBLIGATIONS

1. Pure obligation one without a condition or a term therefore demandable at once.

2. Conditional obligation when there is a condition imposed in its performance.

CONDITION is a future and uncertain event upon which an obligation is subordinated or

made to depend.

Requisites:
a. Futurity
b. Uncertainty

Kinds of conditions:

1. Suspensive one which suspends the effectivity of the obligation until the condition
is fulfilled. It is the fulfillment of the condition that produces the efficacy of the
obligation. No fulfillment, no obligation.
2. Resolutory one which extinguishes the obligation upon the happening of the
condition. The obligation takes effect at once, but will terminate upon the happening
of the event.

WHEN AN OBLIGATION IS DEMANDABLE AT ONCE

1. When it is pure
2. When the obligation is subject to a resolutory condition or a period

Debtor to pay the creditor when his mean permit.

- If the debtor will pay when his means permit him to do so, or words of similar
import, such as,
1. when I can afford

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 2. when I am able to pay
3. when I have money
the obligation is not conditional but with a period. The payment here does not
depend upon the will of the debtor.

- It is only the time when payment is to be made. Since we are referring to the
tome of effectivity, we consider it a term or a period.

When is the obligation demandable?

- Since the time for payment (not the payment) depends upon the will of the
debtor, immediate performance cannot be enforced, the right of the creditor is to
go to court and let the court fix the date for payment. The creditor in this case is
not demanding payment, he is only asking the court to fix the date for payment,
Once fixed by the court, the obligation becomes demandable on the date fixed.

Kinds of Condition

1. Potestative one which depends upon the will of one of the parties. This is called
facultative condition.
2. Casual one which depends exclusively upon chance. This is a valid obligation.
3. Mixed one which demands upon the will of one of the contracting parties and
partly upon chance or the will of a third person. This is also a valid obligation.

Effects of Potestative, Casual, and Mixed Conditions

A. Potestative If the condition is potestative and the fulfillment depends

exclusively upon the will of the debtor, the conditional obligation shall be void. If
the condition is potestative and the fulfillment depends exclusively upon the will
of the creditor, the conditional obligation shall be valid.

B. Casual If the condition is casual and tis fulfillment depends upon chance
and/or upon the will of a third person, the obligation shall be valid.

C. Mixed IF the condition is mixed and its fulfillment depends partly upon the will
of a party to the obligation and partly upon chance and/or the will of a third
person, the obligation shall be valid.

When does an obligation to deliver arise?

1. When there is no term, period, or condition, the obligation to deliver arises from
the perfection of the contract or its constitution or creation, the obligation being
pure.
2. If subject to a suspensive condition, the obligation to deliver arises from the
moment the condition happens.

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 3. If subject to a suspensive term or period, the obligation to deliver arises upon the
expiration of the term or period.
4. In obligation arising from law, quasi-delicts, quasi-contract and crimes, the
specific provision of the laws applicable shall control.

Effects of impossible and illegal condition:

1. If the condition is to do an impossible or illegal thing, both the condition and the
obligation are void.
2. If the condition is negative, that is, not to do an illegal thing, both the condition
and the obligation are valid.
3. If the condition is negative, that is, not to do the impossible, just disregard the
condition, but the obligation remains.

Effects when the debtor voluntarily prevents fulfillment of the condition

When the debtor voluntarily prevents the fulfillment of the condition, the
condition is deemed fulfilled. The obligation, therefore, is effective. This is called
constructive or presumed fulfillment.

Rules to be observed in case of the loss, deterioration or improvement 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.
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. (Art. 1189)

LOST: It is understood that the things 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. (Art. 1189)

Rule on Loss

1. Loss without debtors fault obligation is extinguished.

2. Loss due to debtors fault obligation is to pay damages.

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 Rule on deterioration:

1. Without debtors fault impairment shall be borne by the creditor, debtor is not
liable.
2. Due to debtors fault creditor may choose between:
a. Rescission plus damages
b. Fulfillment plus damages

Rule in improvement of the thing:

1. By nature or by time it shall inure to the benefit of the creditor

2. At the expense of the debtor debtors right is that granted to a usufructuary

Effects when resolutory condition is fulfilled:

1. The obligation is extinguished

2. The parties should be return or restore to each other what they have received
including the fruits and interest.
3. The rule in Article 1189 will apply to whoever has got a duty to return in case of loss,
deterioration or improvement of the thing.
4. If the obligation is to do or not to do, the courts are given the power to determine the
retroactivity of the fulfillment of the condition as stated in Article 1187.

Concept of Rescission

The power to rescind means the right to cancel or to resolve the contract in case
of non-fulfillment of the obligation on the part of one of them.

Characteristics:
1. It exists only in reciprocal obligations
2. It can be demanded only if the plaintiff is ready, willing and able to comply with
his own obligation and the other is not.

PERIOD
- A period is a certain length of time which determines the effectivity or the
extinguishment of an obligation.

Day Certain the day which will necessarily come whether we like it or not

Kinds of period

1. According to source

a. Legal fixed by law

b. Voluntary fixed by the parties
c. Judicial fixed by the court

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 2. According to effect

a. Ex-die (suspensive period) a period which must lapse before the obligations can
be demanded.
b. In-diem (resolutory period ) a period after which the obligation is extinguished

3. According to definiteness

a. Definite refers to a fixed known date or time.

b. Indefinite refers to an event which will necessarily happen but the date of its
happening is not known.

Requisites of Period:

1. IT must refer to the future

2. It must be certain
3. It must be possible

Condition vs. Term or Period

Condition Term or Period

Refers to an event Refers to an interval of time
Has for its requisites futurity and Has for its requisites futurity and
uncertainty certainty
May or may not happen Will surely come to pass, although it
may not be known when
When we are not even sure if something When we know that something will
will happen, as a fact or not happen but we are uncertain as to the
time it will happen

Effect of payment before the arrival of the period

The debtor may recover what he has paid including the fruits and interest if
he is unaware of the period. If he paid voluntarily knowing that the obligation is not
yet due, he cannot recover what he had paid.

The benefit of the period in an obligation

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 he tenor of
the same or other circumstances, it should appear that the period has been
established in favor of the other.

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 When the court may fix a period:

1. When the duration depends upon the will of the debtor.

2. When, though the obligation does not fix a period, it can be inferred that a period
was intended.

Instances when the court may not fix the term or period

1. When no term was specified by the parties because no term was ever intended, in
which case it is considered a pure obligation.
2. When the obligation is payable on demand.
3. When specified period is provided by law.

How the court fixes the period

The court determines the period by considering the time probably contemplated by
the parties. Once the period is fixed by the court, the period becomes part of the
contract, and the court cannot change it. However, the parties may change the period by
mutual agreement or even disregard the period making it demandable at once.

Instances when the debtor loses the benefit of the period

1. When, after the obligation has been contracted, the debtor 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 even 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. (Art. 1198, CC)

ALTERNATIVE OBLIGATION

Alternative obligation is one where out of two or more prestation which may be
given, only one is due. In short, there are several things due but the delivery of one is
sufficient to extinguish the obligation.

Right to Choose:

General Rule: The right belongs to the debtor

Exception: Unless given to the creditor

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Limitations on the right of the debtor to choose

The debtor shall have no right to choose those prestations which are:

1. Impossible
2. Unlawful
3. Those which could not have been the object of the obligation.

When alternative obligation is converted into a simple obligation:

1. When the debtors choice is communicated to the creditor

2. When the creditor communicated his choice to the debtor, if given the right to
choose
3. When only one of the prestations due is practicable.

Summary of the rules, obligations and rights of the debtor and creditor in an alternative
obligation if the debtor binds himself alternatively to deliver three (3) objects.

1. Choice belongs to the debtor

a. Loss is due to fortuitous event

1. If all are lost, obligation is extinguished
2. If 2 or more of the objects remain, the debtor can delivery any of the two
remaining
3. If only one remains, there is no more alternative obligation but a pure and
simple obligation. What he should deliver is the remaining object

b. Loss is due to debtors fault

1. If all are lost, the obligation is converted into monetary consideration as
indemnity for damages taking into consideration the value of the last thing
lost plus damages.
2. If 2 or more objects remains, the debtor can choose which one to deliver
(between the two) but no damages.
3. If only one remains, there is no more alternative obligation but a pure and
simple obligation. What he should deliver is the remaining object but no
damages.

2. Choice belongs to the creditor

a. Loss is due to fortuitous event If the loss is due to a fortuitous event, the effect
are the same as where the right of choice belongs to the debtor.
b. Loss is due to debtors fault
1. If none remains, the obligation is converted into monetary consideration
taking into consideration the value of any of the objects chosen by the creditor
because he is given the right of choice plus damages.

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 2. If two or more remains, the obligation is still alternative, the right of the
creditor is to choose between the two remaining object with damages. If he
chooses the lost object, the debtor is liable for the value plus damages
3. If only one remains, the obligation is converted into a simple one. The
creditor may choose the remaining object with damages. IF he chooses any
one of the two which were lost, the debtor must pay the value plus damages.

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Atty. Cherry L. Balanquit-Granado