Notes on Obligations and Contracts

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    BOOK IIITITLE V. PRESCRIPTION

    CHAPTER 1 G ENERAL P ROVISIONS

    W HAT IS PRESCRIPTION ?

    Prescription is a mode of acquiring (or losing) ownership andother real rights thru the lapse of time in the manner and under theconditions laid down by law ( Article 1106 ).

    W HAT ARE THE DIFFERENT CONCEPTS OF PRESCRIPTION ?

    Prescription is a legal term used to refer to

    a. Acquisitive prescription -- the acquisition of right by the lapseof time under the conditions laid down by law ( Article 1106,

    par. 1 ), which may be ordinary or extra-ordinary.b. xtinctive prescription (or statute of limitation or limitation of

    actions)!whereby rights and actions are lost by the lapse oftime ( Articles 1106, par. 2 and 1139 ). "his refers to the timeframe within which an action should be filed in court from thetime the cause of action has accrued, failing in which, theaction is deemed barred by the lapse of the prescribed time.

    W HAT IS THE DIFFERENCE BETWEEN THE TWO CONCEPTS ?

    a. Acquisitive prescription is a mode of acquiring ownership whileextinctive prescription is a way of extinguishing a cause of actionfor failure to file it within the required period.

    b. #n acquisitive prescription, a party becomes the owner of aproperty by prescription while the previous owner loses theproperty. #n extinctive prescription, if a party is barred to file anaction because of prescription, the opposite party, on the otherhand, is liberated from the obligation or liability.

    c. Acquisitive prescription applies to civil cases while extinctiveprescription is applicable to all $inds of action whether civil orcriminal. "here are, however, exceptions wherein the action, bymandate of the law, does not prescribe li$e an action to demanda right of way ( Article 1143 )% action to abate nuisance ( Article1143 )% action to declare the invalidity of a void contract ( Article

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    1410 ). 0Vide Morales vs. Court of First Instance of Misa is!ccidental, ".#. $o. %&'22(), Ma* 29, 19)0, 9( +C#A )(2. 1W HAT IS LACHES ?

    2aches is unreasonable delay in the bringing of a cause of action

    before the courts of 3ustice.#t is failure or neglect, for an unreasonable and unexplained

    length of time, to do that which, by exercising due diligence, could orshould have been done earlier% it is negligence or omission to assert aright within a reasonable time, warranting a presumption that theparty entitled thereto either has abandoned it or declined to assert it.

    "he principle of laches is a creation of equity. #t is applied, notreally to penali4e neglect or sleeping upon one5s right, but rather toavoid recogni4ing a right when to do so would result in a clearly

    inequitable situation.

    W HAT ARE THE REQUISITES OF LACHES ?

    "he following are the requisites of laches6

    a. onduct on the part of the defendant, or of one under whom heclaims, giving rise to the situation of which complaint is madeand for which the complaint see$s a remedy%

    b. elay in asserting the complainant5s rights, the complainanthaving had $nowledge or notice of the defendant5s conduct and

    having been afforded an opportunity to institute a suit%c. 2ac$ of $nowledge or notice on the part of the defendant that thecomplainant would assert the right which he bases his suit% and

    d. #n3ury or pre3udice to the defendant in the event relief isaccorded to the complainant, or the suit is not held barred( A ra-a vs. #ecto& asten, ".#. $o. %&16(41, /anuar* 1962 ).

    H OW IS PRESCRIPTION DISTINGUISHED FROM LACHES ?

    a. Prescription is concerned with the fact of delay while laches isconcerned with the effect of delay%

    b. Prescription is a matter of time while laches is principally aquestion of the inequity of permitting a claim to be enforced, thisinequity being founded on some change in the condition of theproperty or the relations of the parties.

    c. Prescription is statutory% laches is not.d. 2aches applies in equity, whereas prescription applies at law.

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    >owever, if the minor or incapacitated person has nodiscernment, he can become an owner by prescription onlythrough representatives.

    W HO ARE THE PERSONS AGAINST WHOM PRESCRIPTION MAY RUN ?

    Acquisitive and extinctive prescriptions run against certainpersons6

    (');inors and other incapacitated persons who have parents,guardians or other legal representatives%

    (&)Absentees who have administrators, either appointed bythem before their disappearance, or appointed by thecourts%

    (7)Persons living abroad, who have managers oradministrators%

    (=)?uridical persons, except the /tate and its subdivisions( Article 110) ).(@)Prescription, acquisitive and extinctive, runs in favor of, or

    against a married woman ( Article 1110 ). "his presupposesa situation where the parties involved are a marriedwoman and another person not her husband. Prescriptionmay be in favor of or against the married woman.

    Persons who are disqualified from administering their propertyhave a right to claim damages from their legal representatives whosenegligence has been the cause of prescription.

    M AY PRESCRIPTION RUN BETWEEN HUSBAND AND WIFE OR BETWEEN PARENTS AND CHILDREN OR BETWEEN GUARDIAN AND WARD ?

    Prescription does not run between husband and wife, eventhough there be a separation of property agreed upon in the marriagesettlements or by 3udicial decree.

    *either does prescription run between parents and children,during the minority or insanity of the latter, and between guardian andward during the continuance of the guardianship ( Article 1109 ).

    *ote that the prescription contemplated here is acquisitive andnot extinctive. "hus, in the filing of actions against each other,extinctive prescription is applicable.

    EXAMPLES :

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    2egal separation must be filed within five (@) years from theoccurrence of the ground for legal separation ( Article '(, FC %

    enerally, action for annulment of marriage by a spouse against theother must be filed within five (@) years ( Article 4(, FC )%

    Alienation made by the husband without the wife5s consent

    provided that the marriage was celebrated under the ivil ode( Article 1(3, CC ).

    W HAT IS THE EFFECT OF PRESCRIPTION OBTAINED BY A CO -PROPRIETOR OR A CO -OWNER ?

    Prescription obtained by a co-proprietor or a co-owner shallbenefit the others ( Article 1111 ). "hus, if a co-owner obtained aproperty by prescription which property incidentally must be related tothe property held in common, the prescription benefits them all.

    M AY PRESCRIPTION RUN AGAINST CO -OWNERS ?

    Prescription does not run against co-owners except when a co-owner made a definite repudiation of the co-ownership disclosed to theother co-owners ( Article 494 ).

    W HO CAN RENOUNCE PRESCRIPTION ALREADY OBTAINED ?

    Persons with capacity to alienate property may renounceprescription already obtained, but not the right to prescribe in thefuture ( Article 1112, par. 1 ). "he renouncing must not pre3udice the

    rights of others ( Article 6 ).

    W HEN IS THERE TACIT RENUNCIATION ?

    Prescription is deemed to have been tacitly renounced when therenunciation results from acts which imply the abandonment of theright acquired ( Article 1112, par. 2 ).

    W HAT THINGS MAY BE SUB ECT OF PRESCRIPTION ?

    All things which are within the commerce of men are susceptible

    of prescription, unless otherwise provided. Property of the /tate or anyof its subdivisions not patrimonial in character shall not be the ob3ectof prescription ( Article 1113 ).

    EXAMPLES OF EXCEPTION :

    a. ;ovables possessed through a crime can never be acquired byprescription by the offender ( Article 1133 )%

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    b. 2ands covered by "orrens "itle%c. "hose outside the commerce of men ( Article 1133 )%d. Properties of spouses, parents and children, wards and

    guardians, under the restrictions imposed by law ( Article 1109 ).

    W HAT ARE THE RIGHTS OF CREDITORS AND ALL OTHER PERSONS INTERESTED IN MAKING THE PRESCRIPTION EFFECTIVE ?

    reditors and all other persons interested in ma$ing theprescription effective may avail themselves thereof notwithstandingthe express or tacit renunciation by the debtor or proprietor ( Article1114 ).

    "hus, where a current creditor of a corporation which hadobtained prescription of its debts, may interpose and pleadprescription to stop the corporation from paying prescribed debts to

    the pre3udice of the said creditor. "his complements Article of theivil ode.

    W HAT IS THE RULE IN CASE OF CONFLICT BETWEEN THE PROVISIONS ON PRESCRIPTION AND SPECIFIC PROVISIONS IN THE SAME C ODE ! OR IN SPECIFIC LAWS ?

    "he provisions of the present "itle are understood to be withoutpre3udice to what in this ode or in special laws is established withrespect to specific cases of prescription ( Article 111' ).

    "hus, specific provisions on prescription separately found in theode and in special laws shall prevail over the general provisions onprescription provided under "itle B of the ode.

    W HAT ARE THE TRANSITIONAL RULES FOR PRESCRIPTION ?

    Prescription already running before the effectivity of this odeshall be governed by laws previously in force% but if since the time thisode too$ effect the entire period herein required for prescription

    should elapse, the present ode shall be applicable, even though bythe former laws a longer period might be required ( Article 1116 ).

    "hus6

    a. #f the period for prescription began and ended under the oldlaws, said old laws govern.

    b. #f the period for prescription began under the new ivil ode, thenew ivil ode governs.

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    c. #f the period began under the old law, and continues under thenew ivil ode, the old law applies.

    EXCEPTION :

    #n this third rule, it is the new ivil ode that will apply, providedtwo conditions are present6

    a. "he new ivil ode requires a shorter period% andb. "his shorter period has already elapsed since August 79, 'C@9.

    N OTE : #t is more than fifty years since the new ivil ode becameeffective. "he transitional rules may no longer find application today,although the same were applied before in several cases.

    CHAPTER "P RESCRIPTION OF O WNERSHIP AND O THER R EAL R IGHTS

    W HAT ARE THE KINDS OF ACQUISITIVE PRESCRIPTION ?

    Acquisitive prescription of dominion and other real rights may beordinary or extraordinary 5Article 111( .

    W HAT ARE ORDINARY AND EXTRA -ORDINARY PRESCRIPTIONS ?

    Prescription where there is good faith is called ordinaryprescription% whereas prescription where there is bad faith is calledextra-ordinary prescription.

    Prescription may arise even if the possessor is in bad faith.>owever, when the possessor is in bad faith, the period required forthe actual possession is much longer to the case of a possessor in goodfaith.

    W HAT ARE THE ADDITIONAL REQUISITES IN ORDINARY PRESCRIPTION ?

    Aside from the basic requirements of acquisitive prescriptionalready stated, if prescription is ordinary, the additional requisites are6

    a. ood faith ( Article 112) ), andb. ?ust title ( Article 1129 )

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    *ote that the title for prescription must be true and valid ( Article1130 )% and for the purposes of prescription, 3ust title must be proved% itis never presumed ( Article 1131 ).

    W HEN IS A POSSESSOR CONSIDERED IN GOOD FAITH ?

    A possessor is considered in good faith, if he is not aware of theexistence of any flaw or defect in his title or mode of acquisition whichinvalidates it ( Article '26 in relation to Article 112) ). ood faithconsists in the reasonable belief that the person from whom hereceived the thing was the owner thereof, and could transmit hisownership ( Article 112( ).

    "he related Articles which must be considered in thedetermination of good faith in prescription of ownership are thefollowing6

    a. Article '26 -- >e is deemed a possessor in good faith who is notaware that there exists in his title or mode of acquisition any flawwhich invalidates it.

    >e is deemed a possessor in bad faith who possesses inany case contrary to the foregoing.

    ;ista$e upon a doubtful or difficult question of law may bethe basis of good faith.

    b. Article '2( -- ood faith is always presumed, and upon him who

    alleges bad faith on the part of a possessor rests the burden ofproof.c. Article '2) -- Possession acquired in good faith does not lose this

    character except in the case and from the moment facts existwhich show that the possessor is not unaware that he possessesthe thing improperly or wrongfully.

    d. Article '29 -- #t is presumed that possession continues to been3oyed in the same character in which it was acquired, until thecontrary is proved.

    W HAT IS MEANT BY # UST TITLE $?

    ?ust title means that the possessor obtained the possession ofthe property through one of the modes recogni4ed by law for acquiringownership (as enumerated under Article (12 ) but the transferor orgrantor was not the owner of the property or he has no power totransmit the right ( Article 1129 ). "he 3ust title is intended to transmitownership and could have actually transmitted ownership had thetransferor or grantor been the true owner of the property. "his $ind of

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    possession arising from a 3ust title can ripen into ownership if the otherelements of prescription are present.

    W HAT ARE THE CHARACTERISTICS OF POSSESSION NEEDED FOR PRESCRIPTION ?

    Possession has to be in the concept of an owner, public, peacefuland uninterrupted 5Article 111) .

    a. Possession in the +* P" +E A* +:* F means the possessor isexercising the attributes of ownership over the property. >e doesnot recogni4e any ownership over the property except his own.

    b. Possession of a property is considered P8G2# when theemployment thereof is visible to all, especially to the very personagainst whom possession is being asserted. "he possession mustbe publicly $nown to the community.

    c. Possession is P A E82 when it is acquired without force orintimidation, and such character is maintained all throughout theperiod fixed by law.

    d. Possession is 8*#*" FF8P" +F +*"#*8+8/ when the possessorhas not stopped exercising the rights of an owner over theproperty during the time fixed by law. >owever, if the right isexercisable at intervals, and the right is so exercised, there isstill continuity in the possession of the property. xample6>arvesting of seasonal fruits from fruit bearing trees.

    e. "he possession must be A B F/ . "hus, mere possession with 3uridical title, such as by a lessee, mortgagee, usufructuary,

    trustee, or agent does not hold the proper adversely and in theconcept of an owner, unless the 3uridical relationship is firstexpressly repudiated and such repudiation has beencommunicated to the other party.

    f. "he acts of possessory character must not be executed in virtueof 2# */ +F GH ; F "+2 FA* of the owner because the actsshall not be available for the purposes of possession ( Article1119 ).

    H OW IS POSSESSION INTERRUPTED FOR PURPOSES OF PRESCRIPTION ?

    Possession is interrupted for the purposes of prescription,naturally or civilly 5Article 1120 .

    W HEN IS POSSESSION INTERRUPTED ?

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    a. Possession is naturally interrupted when through anycause it should cease for more than one year ( Article1121, par. 1 ).

    b. ivil interruption is produced by 3udicial summons tothe possessor ( Article 1123 ), except6

    a) #f it should be void for lac$ of legalsolemnities%

    b) #f the plaintiff should desist from thecomplaint or should allow theproceedings to lapse%

    c) #f the possessor should be absolved fromthe complaint ( Article 1124 ).

    c. Any express or tacit recognition which the possessormay ma$e of the ownerIs right also interruptspossession ( Article 112' ).

    W HAT ARE THE CONSEQUENCES OF INTERRUPTION ?

    a. "he old possession is not revived if a new possession should beexercised by the same adverse claimant ( Article 1121, par. 2 .

    b. #f the natural interruption is for only one year or less, the timeelapsed shall be counted in favor of the prescription ( Article1122 ).

    AGAINST A TITLE RECORDED IN THE R EGISTRY OF P ROPERTY ! MAY ORDINARY PRESCRIPTION OF OWNERSHIP OR REAL RIGHTS TAKE PLACE TO THE PRE UDICE OF A THIRD PERSON ?

    Against a title recorded in the Fegistry of Property, ordinaryprescription of ownership or real rights shall not ta$e place to thepre3udice of a third person, except in virtue of another title alsorecorded% and the time shall begin to run from the recording of thelatter.

    As to lands registered under the 2and Fegistration Act, theprovisions of that special law shall govern 5Article 1126 .

    W HAT IS THE PERIOD OF PRESCRIPTION OF MOVABLES ?

    a. "he ownership of movables prescribes throughuninterrupted possession for E+8F H AF/ #* ++ EA#">.

    b. "he ownership of personal property also prescribesthrough uninterrupted possession for # >" H AF/ ,:#">+8" * +E A*H +"> F +* #"#+* .

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    c. :ith regard to the right of the owner to recoverpersonal property lost or of which he has beenillegally deprived, as well as with respect tomovables acquired in a public sale, fair, or mar$et,or from a merchantIs store the provisions of Articles

    ''9 '

    and 1'0' &

    of this ode shall be observed( Article 1132 ).d. ;ovables possessed through a crime can never be

    acquired through prescription by the offender( Article 1133 ).

    W HAT IS THE PRESCRIPTIVE PERIOD FOR IMMOVABLE ?

    a. +wnership and other real rights over immovable property areacquired by ordinary prescription through possession of " * H AF/ ( Article 1134 ).

    b. +wnership and other real rights over immovables also prescribethrough uninterrupted adverse possession thereof for ">#F"H H AF/ , without need of title or of good faith ( Article 113( ).

    W HAT IS THE RULE WHEN THERE IS DISCREPANCY IN THE AREA POSSESSED AND IN THE AREA EXPRESSED IN THE TITLE J

    #n case the adverse claimant possesses by mista$e an areagreater, or less, than that expressed in his title, prescription shall bebased on the possession 5Article 113' .

    W HAT IS THE EFFECT OF POSSESSION IN WAR TIME ON PRESCRIPTION ?

    1 Article @@C. "he possession of movable property acquired in good faithis equivalent to a title. *evertheless, one who has lost any movable or has beenunlawfully deprived thereof, may recover it from the person in possession of thesame. #f the possessor of a movable lost or which the owner has been unlawfullydeprived, has acquired it in good faith at a public sale, the owner cannot obtain itsreturn without reimbursing the price paid therefor.

    2 ARTICLE 1505. Subject to the provisions of this Tit e! "here #oo$s are so $ b% a person "ho is

    not the o"ner thereof! an$ "ho $oes not se the& un$er authorit% or "ith the consent of the o"ner! the bu%er ac'uires no better tit e to the #oo$s than the se er ha$! un ess the o"ner of the #oo$s is b% hiscon$uct prec u$e$ fro& $en%in# the se er(s authorit% to se .

    othin# in this Tit e! ho"ever! sha affect*+1) The provisions of an% factors( acts! recor$in# a"s! or an% other provision of a" enab in# theapparent o"ner of #oo$s to $ispose of the& as if he "ere the true o"ner thereof,+2) The va i$it% of an% contract of sa e un$er statutor% po"er of sa e or un$er the or$er of a court ofco&petent juris$iction,+-) urchases &a$e in a &erchant(s store! or in fairs! or &ar/ets! in accor$ance "ith the Co$e ofCo&&erce an$ specia a"s. +n) casia

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    Possession in wartime, when the civil courts are not open, shallnot be counted in favor of the adverse claimant 5Article 1136 .

    W HAT ARE THE RULES IN THE COMPUTATION OF TIME NECESSARY FOR PRESCRIPTION ?

    #n the computation of time necessary for prescription thefollowing rules shall be observed6

    (') :hen the possession of the present possessor is 3ust acontinuation of the possession of the predecessor in interest - "hepresent possessor may complete the period necessary for prescriptionby tac$ing his possession to that of his grantor or predecessor ininterest%(&) :hen the character of the possession of the possessor haschanged from good faith to bad faith - #t is presumed that the present

    possessor who was also the possessor at a previous time, hascontinued to be in possession during the intervening time, unless thereis proof to the contrary%(7) "he first day shall be excluded and the last day included 5Article113) .

    W HAT IS MEANT BY TACKING OF POSSESSIONS OF TWO OR MORE POSSESSORS ?

    "ac$ing of possession is the lin$ing of the possession of thepresent possessor to the possession of the immediate past possessor

    of an identical property for the purpose of completing the periodneeded for the prescription.

    "he condition for the tac$ing of possession is that privity mustexist between the present possessor and the predecessor in interest.#n brief, the present possessor got his possession from the predecessorin interest. onsequently, a mere usurper cannot invo$e thepossession of the previous possessor.

    "here is no privity of interest where the present possessor cameinto possession of the disputed land by virtue of a void and fictitious

    sale ( #ui vs. CA, (9 +C#A '2' ).

    "ac$ing is not allowed if the predecessor in interest has notsatisfied the requirements of prescription. +therwise, there can be nocontinuity in the nature of the possession.

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    W HAT IS THE RULE TO FOLLOW WHEN THE CHARACTER OF THE POSSESSION OF THE PREDECESSOR IS DIFFERENT FROM THAT OF THE PRESENT POSSESSOR ?

    "he law does not provide any solution to such $ind of

    contingency. "hus, sound 3udgment must be resorted to, thus6a. #f the predecessor was in good faith but the successor is in bad

    faith, should there be any tac$ing of possessionJ

    "here are different views. /ome writers say there must be notac$ing. +thers say, the good faith of the predecessor should not beset at naught. "he second is the better view. "he computation of theperiods to be tac$ed should be proportionate, that is, in the proportionof what the period of possession in good faith bears to the period ofextraordinary prescription. /o it is in the proportion of &6' as regards

    movables and 76' for immovables.

    b. #f the possession of the predecessor was in bad faith and thepossession of the successor is in good faith, should there betac$ing of possessionJPossession of the predecessor in bad faith cannot be counted

    and added to that of the present possessor. >ere, the possession ofthe predecessor cannot be considered ordinary prescription becausesuch requires good faith all throughout the period fixed by law.

    >owever, for purposes of extraordinary prescription, the

    possession in bad faith of the predecessor can be tac$ed to thepossession in bad faith of the successor. "here is no prohibition to this.

    CHAPTER %P RESCRIPTION OF A CTIONS

    H OW DO ACTIONS PRESCRIBE ?

    Actions prescribe by the mere lapse of time fixed by law 5Article1139 .

    W HEN DO ACTIONS PRESCRIBE ?

    '. A "#+*/ "+ F +B F ; +BAG2 / 6

    Actions to recover movables shall prescribe # >" H AF/ from the time the possession thereof is lost, unless the possessor

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    has acquired the ownership by prescription for a less period,according to Articles ''7&, and without pre3udice to theprovisions of articles @@C, '@9@, and ''77 ( Article 1140 ), thus6

    '. "he ownership of movables prescribes through

    uninterrupted possession for E+8F H AF/ #* ++ EA#">.&. "he ownership of personal property also prescribes throughuninterrupted possession for # >" H AF/ , :#">+8" * +E A*H +"> F +* #"#+* .

    7. :ith regard to the right of the owner to recover personalproperty lost or of which he has been illegally deprived, aswell as with respect to movables acquired in a public sale,fair, or mar$et, or from a merchantIs store the provisions ofArticles @@C and '@9@ of this ode shall be observed( Article 1132 ).

    =. ;ovables possessed through a crime can never be

    acquired through prescription by the offender ( Article1133 ).

    &. F A2 A "#+*/ +B F #;;+BAG2 / 6

    Feal actions over immovables prescribe after ">#F"H H AF/ . "his provision is without pre3udice to what is established for theacquisition of ownership and other real rights by prescription( Article 1141 ).

    7. ; +F" A A "#+* 6

    A mortgage action prescribes after " * H AF/ ( Article 1142 ).

    =. A "#+*/ 8 P+* A : F#"" * +*"FA " % 8P+* A* + G2# A"#+* F A" G H 2A: % 8P+* A ?8 ; *" 6

    "hey must be brought within " * H AF/ from the time theright of action accrues ( Article 1144 ).

    @. A"#+*/ 8 P+* A* + FA2 +*"FA " % A"#+*/ 8 P+* A K8A/# - +*"FA " 6 "hey must be commenced within /#L H AF/ ( Article 114' ).

    . A "#+*/ 8 P+* A* #*?8FH "+ "> F # >"/ +E "> P2A#*"#EE% A"#+*/ 8 P+* A K8A/# - 2# " 6

    "hey must be instituted within E+8F H AF/ .

    >owever, when the action arises from or out of any act,activity, or conduct of any public officer involving the exercise of

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    powers or authority arising from ;artial 2aw including the arrest,detention andMor trial of the plaintiff, the same must be broughtwithin +* (') H AF . ( Article 1146 as a ended * 7 $o. 1('',ec. 24, 19)0. )

    . E +F #G2 *"FH A* "A#* F % E+F EA;A"#+* 6 "hey must be filed within +* H AF ( Article 114( ).

    N OTE : "he limitations of action mentioned in Articles ''=9 to''=&, and ''== to ''= are without pre3udice to those specified inother parts of this ode, in the ode of ommerce, and in special laws( Article 114) ).

    "he phrase Nwithout pre3udiceO means that, in proper cases, theprescriptive period in this chapter may be availed of notwithstanding

    other special provisions in other parts of the ivil ode, in the ode ofommerce and in special laws. "hus, even though the claim falls underthe prescriptive period provided for in the 2abor ode because ofillegal and unlawful dismissal, the case may still fall within the ambit ofNin3ury to the rights of the plaintiff ( Vir ilio Callanta vs. Carnation 7-i.,Inc., ".#. $o. %&(061', !cto er 2), 19)6, 14' +C#A 2)6 ).

    W HAT RIGHTS ARE NOT EXTINGUISHED BY PRESCRIPTION ?

    "he following rights, among others specified elsewhere in thisode, are not extinguished by prescription6

    (') "o demand a right of way, regulated in Article =C%(&) "o bring an action to abate a public or private nuisance ( Article1143 ).

    O THERS :

    (')An action to declare a contract null and void%(&)An action to quite title initiated by the person having possession

    of the property%(7)An action to partition a property among co-heirs%(=):hen the trust is merely an implied one, unless expressly

    repudiated by the trustee.

    W HAT IS THE PRESCRIPTIVE PERIOD FOR FILING ACTIONS WHOSE PERIODS ARE NOT FIXED BY THE C IVIL C ODE AND OTHER LAWS ?

    All other actions whose periods are not fixed in this ode or inother laws must be brought within five years from the time the right ofaction accrues ( Article1149 ).

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    EXAMPLES :

    a. Action to impugn the recognition of a natural child ( Article 296Civil Code )%

    b. Action to impugn the legitimation of a child ( Article 2(', CivilCode )%c. Action to reduce inofficious donations (to be counted from the

    death of the donor) ( Vide Article ((2, Civil Code ).

    F ROM WHAT TIME SHALL THE PERIOD OF PRESCRIPTION BE COUNTED ?

    a. "he time for prescription for all $inds of actions, whenthere is no special provision which ordains otherwise,shall be counted from the day they may be brought( Article 11'0 ).

    b. "he time for the prescription of actions which havefor their ob3ect the enforcement of obligations to payprincipal with interest or annuity runs from the lastpayment of the annuity or of the interest ( Article11'1 ).

    c. "he period for prescription of actions to demand thefulfillment of obligation declared by a 3udgmentcommences from the time the 3udgment became final( Article 11'2 ).

    d. "he period for prescription of actions to demandaccounting runs from the day the persons who should

    render the same cease in their functions ( Article11'3 ).e. "he period for the action arising from the result of the

    accounting runs from the date when said result wasrecogni4ed by agreement of the interested parties( Article 11'3, 2 nd par. ).

    f. "he period during which the obligee was preventedby a fortuitous event from enforcing his right is notrec$oned against him ( Article 11'4 ).

    W HEN IS PRESCRIPTION OF ACTIONS INTERRUPTED UNDER THE C IVIL

    CODE ?

    "he prescription of actions is interrupted when6

    a. "hey are filed before the court% orb. :hen there is a written extra3udicial demand by the creditors,

    and when there is any written ac$nowledgment of the debt bythe debtor 5Article 11'' .

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    BOOK IVOBLIGATIONS AND CONTRACTS

    TITLE IO BLIGATIONS

    OVERVIEW OF LAW

    #. S OURCES OF L AW

    A. onstitutionG. 2egislative nactment. xecutive #ssuance. #nternational 2aw. /upreme ourt ecisions

    AF"# 2 D. ?udicial decisions applying or interpretingthe laws or the onstitution shall form part of the legalsystem of the Philippines.

    ##. EFFECTIVITY AND I NTERPRETATION OF L AWS

    A. EE "#B#"H

    AF"# 2

    &. 2aws shall ta$e effect after fifteen daysfollowing the completion of their publication in the +fficiala4ette, unless it is otherwise provided.

    :hile law may provide for the date of its effectivity,the requirement of publication may not be dispensed with.(8anada vs. 8uvera )

    AF"# 2 7. #gnorance of the law excuses no one fromcompliance therewith.

    AF"# 2 =. 2aws shall have no retroactive effect,unless the contrary is provided.

    AF"# 2 @. Acts executed against the provisions ofmandatory or prohibitory laws shall be void, except whenthe law itself authori4es their validity.

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    AF"# 2 . 2aws are repealed only by subsequentones, and their violation or non-observance shall not beexcused by disuse, or custom or practice to the contrary.

    AF"# 2 '=. Penal laws and those of public security

    and safety shall be obligatory upon all who live or so3ournin Philippine territory, sub3ect to the principles ofinternational law and treaty stipulations.

    AF"# 2 ' . Feal property as well as personal propertyis sub3ect to the law of the country where it is situated.

    B. #*" FPF "A"#+*

    AF"# 2 '9. #n case of doubt in the interpretation orapplication of laws, it is presumed that the lawma$ing body

    intended right and 3ustice to prevail.

    AF"# 2 . :hen the courts declare a law to beinconsistent with the onstitution, the former shall be voidand the latter shall govern.

    Administrative or executive acts, orders andregulations shall be valid only when they are not contraryto the laws or the onstitution.

    ###. K INDS OF L AWS

    A. P *A2

    "hose which prescribe imprisonment as a penalty incase of violation.

    G. ivil

    "hose which govern relations between persons.

    . +;; F #A2

    "hose which deal with transactions entered into bypersons.

    . F ; #A2

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    "hose which prescribe the procedure to be followedin order to see$ remedies in law.

    #B. CONCEPT OF P ERSONS

    A. * A"8FA2 P F/+*/

    AF"# 2 =9. Girth determines personality% but theconceived child shall be considered born for all purposesthat are favorable to it, provided it be born later with theconditions specified in the following articles.

    AF"# 2 ='. Eor all civil purposes, the foetus isconsidered born if it is alive at the time it is completelydelivered from the mother5s womb. >owever, if the foetus

    had an intra-uterine life of less than seven months, it is notdeemed born if it dies within twenty-four hours after itscomplete delivery from the maternal womb.

    AF"# 2 =&. ivil personality is extinguished by death.G. ?8F# # A2 P F/+*/

    AF"# 2 ==. "he following are 3uridical persons6

    (1) "he /tate and its political subdivisions%(2) +ther corporations, institutions and entities for public

    interest or purpose, created by law% their personalitybegins as soon as they have been constitutedaccording to law%

    (3) orporations, partnerships and associations for privateinterest or purpose to which the law grants a 3uridicalpersonality, separate and distinct from that of eachshare-holder, partner or member.

    AF"# 2 = . ?uridical persons may acquire and possessproperty of all $inds as well as incur obligations and bringcivil or criminal actions, in conformity with the laws and

    regulations of their organi4ation.

    AF"# 2 = . 8pon the dissolution of corporations,institutions and other entities for public interest or purposementioned in *o. & of Article ==, their property and otherassets shall be disposed of in pursuance of law or thecharter creating them. #f nothing has been specified on thispoint, the property and other assets shall be applied to

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    similar purposes for the benefit of the region, province, cityor municipality which during the existence of the institutionbenefits from the same.

    B. CAPACITY

    A. ?8F# # A2 APA #"H

    AF"# 2 7 . ?uridical capacity, which is the fitness tobe the sub3ect of legal relations, is inherent in everynatural person and is lost only through death.

    G. APA #"H "+ A "

    AF"# 2 7 . apacity to act, which is the power to doacts with legal effect, is acquired and may be lost.

    AF"# 2 7D. ;inority, insanity, or imbecility, the stateof being a deaf-mute, prodigality and civil interdiction aremere restrictions on capacity to act, and do not exempt theincapacitated person from certain obligations, as when thelatter arise from his acts or from property relations, such aseasements.

    AF"# 2 7C. "he following circumstances, amongothers, modify or limit capacity to act6 age, insanity,imbecility, the state of being a deaf-mute, penalty,

    prodigality, family relations, alienage, absence, insolvencyand trusteeship.

    VI. H UMAN R ELATIONS

    AF"# 2 'C. very person must, in the exercise of hisrights and in the performance of his duties, act with 3ustice,give everyone his due, and observe honesty and goodfaith.

    AF"# 2 &9. very person who, contrary to law,

    willfully or negligently causes damage to another, shallindemnify the latter for the same.

    AF"# 2 &'. Any person who willfully causes loss orin3ury to another in a manner that is contrary to morals,good customs or public policy shall compensate the latterfor the damage.

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    AF"# 2 &&. very person who through an act ofperformance by another, or any other means, acquires orcomes into possession of something at the expense of thelatter without 3ust or legal ground, shall return the same tohim.

    AF"# 2 &7. ven when an act or event causingdamage to another5s property was not due to the fault ornegligence of the defendant, the latter shall be liable forindemnity if through the act or event he was benefited.

    AF"# 2 & . very person shall respect the dignity,personality, privacy and peace of mind of his neighborsand other persons.

    AF"# 2 & . Any person suffering material or moral

    loss because a public servant or employee refuses orneglects, without 3ust cause, to perform his official dutymay file an action for damages and other relief against thelatter, without pre3udice to any disciplinary administrativeaction that may be ta$en.

    AF"# 2 &D. 8nfair competition in agricultural,commercial or industrial enterprises or in labor through theuse of force, intimidation, deceit, machination or any otherun3ust, oppressive or highhanded method shall give rise toa right of action by the person who thereby suffers

    damage.

    AF"# 2 &C. :hen the accused in a criminalprosecution is acquitted on the ground that his guilt hasnot been proved beyond reasonable doubt, a civil actionfor damages for the same act or omission may beinstituted. /uch action requires only a preponderance ofevidence.

    AF"# 2 79. :hen a separate civil action is brought todemand civil liability arising from a criminal offense, and

    no criminal proceedings are instituted during the pendencyof the civil case, a preponderance of evidence shallli$ewise be sufficient to prove the act complained of.

    AF"# 2 7'. :hen the civil action is based on anobligation not arising from the act or omission complainedof as a felony, such civil action may proceed independently

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    of the criminal proceedings and regardless of the result ofthe latter.

    CHAPTER 1

    G ENERAL P ROVISIONS

    W HAT IS AN OBLIGATION ?

    An obligation is a 3uridical necessity to give, to do or not to do( Article 11'6 ).

    W HAT ARE THE ELEMENTS OF AN OBLIGATION ?

    a. An active sub3ect $nown as the obligee or creditor < he isthe possessor of a right in whose favor the obligation is

    constituted and who can demand the fulfillment of theobligation%b. A passive sub3ect $nown as the obligor or the creditor

    from whom the obligation is 3uridically demanded < hewho has the duty of giving, doing or not doing%

    c. "he fact, prestation or service which constitutes theob3ect or sub3ect matter of the obligation and mayconsist of giving a thing, doing or not doing a certain act.

    "he law spea$s of an obligation as a 3uridical necessity tocomply with a prestation. "here is N3uridical necessityOfor non-compliance can result in 3uridical or legal

    sanction.d. "he efficient cause or the vinculu or 3uridical tie whichbinds the parties to the obligation, and which may ariseeither from bilateral or unilateral acts of persons < this isthe reason why the obligation exists.

    E&'()*+: A promises to paint G5s picture as a result of anagreement. >ere A is the obligor% G is the obligee% the painting of G5spicture is the ob3ect or prestation% and the agreement is contract whichis the efficient cause.

    W HAT ARE THE SOURCES OF OBLIGATIONS ?

    +bligations arise from6

    (') 2aw (obligations le le e )%(&) ontracts (obligations e contractu )%(7) Kuasi-contracts (obligations e &:uasi contractu )%(=) Acts or omissions punished by law (obligations e delicto )% and

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    (@) ;uasi&delicts (obligations e :uasi delicto ) ( Article 11'( ).

    R ULES :

    +bligations derived from law are not presumed. +nly those

    expressly determined in this ode or in special laws aredemandable, and shall be regulated by the precepts of the lawwhich establishes them% and as to what has not been foreseen,by the provisions of this Goo$ ( Article 11') ).

    +bligations arising from contracts have the force of law betweenthe contracting parties and should be complied with in good faith( Article 11'9 ).

    +bligations derived from quasi-contracts shall be sub3ect to theprovisions of hapter ', "itle LB##, of this Goo$ ( Article 1160 ).

    ivil obligations arising from criminal offenses shall be governedby the penal laws, sub3ect to the provisions of article &' , andof the pertinent provisions of hapter &, Preliminary "itle, on>uman Felations, and of "itle LB### of this Goo$, regulatingdamages ( Article 1161 ).

    +bligations derived from :uasi&delicts shall be governed by theprovisions of hapter &, "itle LB## of this Goo$, and by speciallaws ( Article 1162 ).

    CHAPTER "N ATURE AND E FFECT OF O BLIGATIONS

    W HAT IS THE DEGREE OF DILIGENCE REQUIRED OF A PERSON IN THE PERFORMANCE OF AN OBLIGATION ?

    very person obliged to give something is also obliged to ta$ecare of it with the proper diligence of a good father of a family, unlessthe law or the stipulation of the parties requires another standard ofcare ( Article 1163 ).

    *otes6

    "his article involves the prestation Nto giveO. "he word NsomethingO connotes a determinate ob3ect which isdefinite, $nown, and has already been distinctly decided andparticularly specified as the matter to be given from among thesame things belonging to the same $ind. xample6 #f the ob3ect isa computer, it does not involve any $ind of computer but a veryparticular computer such as the computer with serial number

    .

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    #n case of a contrary stipulation of the parties, such stipulationshould not be one contemplating a relinquishment or waiver ofthe most ordinary diligence.

    An example where the law requires another standard of care isthat which involves common carriers. Article ' 77 provides that

    common carries are bound to observe extraordinary diligence inthe vigilance over the goods and for the safety of thepassengers. Article ' @@ provides that common carriers is boundto carry the passengers safely as far as human care andforesight can provide, using the utmost diligence of very cautiouspersons, with due regard for all circumstances.

    W HAT IS THE DILIGENCE NEEDED IN THE PERFORMANCE OF ONE , S OBLIGATION ?

    "he diligence needed is that which is required by the nature of

    the obligation and corresponds with the circumstances of the persons,of the time and of the place. "his is diligence of a good father of afamily. #f the law or contract does not state the diligence which is to beobserved in the performance, that which is expected of a good fatherof a family shall be required ( Article 11(3 ).

    >owever, if the law or contract provides for a different standardof care, said law or stipulation must prevail ( Article 1163 ) provided thatit should not be one contemplating a relinquishment or waiver of themost ordinary diligence

    IN OBLIGATIONS TO GIVE ! WHEN DOES THE CREDITOR ACQUIRE A RIGHT TO THE THING WHICH CONSTITUTES THE OB ECT OF THE OBLIGATIONS AS WELL AS TO THE FRUITS THEREOF ?

    "he creditor has a right to the fruits of the thing from the timethe obligation to deliver it arises. >owever, he shall acquire no realright over it until the same has been delivered to him ( Article 1164 ).

    "hus, we must distinguish between the time when the creditoracquires a personal right to the thing and the fruits thereof, and thetime when he acquires a real right thereto.

    After the right to deliver the ob3ect of the prestation has arisen infavor of the creditor but prior to the delivery of the same, there is noreal right enforceable or binding against the whole world over theob3ect and its fruits in favor of the person to whom the same should begiven. "he acquisition of a real right means that such right can beenforceable against the whole world and will pre3udice anybody

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    claiming the same ob3ect of the prestation. "he real right only occurswhen the thing or ob3ect of the prestation is delivered to the creditor.

    #n obligations arising from contracts, the obligation to deliverarises from the moment of the perfection of the contract, unless there

    is a stipulation to the contrary. Erom this it is clear that before thedelivery of the thing and the fruits thereof, the creditor has merely apersonal right against the debtor < a right to as$ for the delivery of thething and the fruits. +nce the thing and the fruits are delivered, thenhe acquires a real right over them, a right which is enforceable againstthe whole world.

    EXAMPLE :

    +n Eebruary ', &99@, A buys a mango orchard from L to bedelivered on ;arch ', &99@. +n the latter date, A shall have the right

    to the fruits of the mango orchard. #f the property is delivered only onApril ', &99@, A can nevertheless as$ that the fruits accruing since;arch ', &99@ be li$ewise delivered to him. L cannot resist by sayingthat he is entitle to the fruits before the actual delivery on April ',&99@.

    #f, however, L sells the fruits on ;arch &9, &99@ to G who doesnot $now the previous sale to A and who immediately ta$es possessionof the fruits, G shall have a better right over the said fruits. onsideringthat there is no delivery of the property to A on ;arch &9, &99@, A hasno real right over the said property at that time binding upon the

    whole world. A5s remedy is to see$ damages from L in connection withthe fruits.#f however, the mango orchard has already been delivered, A has

    a real right binding upon the whole world. #f L sells to G the fruits afterthe delivery to A, A can recover from G who in turn can see$ damagesfrom L.

    W HEN DOES THE OBLIGATION TO DELIVER ARISE ?

    #t depends - #f there is no term or condition, then from theperfection of the contract. #f there is a term or condition, then from the

    moment the term arrives or the condition happens.

    IN OBLIGATIONS TO GIVE ! WHAT ARE THE DIFFERENT RIGHTS WHICH ARE AVAILABLE TO THE CREDITOR ?

    :e must distinguish between the rights which are available tothe creditor when the obligation is determinate and those which areavailable to him when the obligation is indeterminate or generic.

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    '. :hen what is to be delivered is a determinate thing (in the sensethat the ob3ect thereof is particularly designated or physicallysegregated from all others of the same class), the rights of thecreditor are6

    a. "he creditor may compel specific performance (compel thedebtor to ma$e the delivery ( Article 116' )% and

    b. "o recover damages in case of breach of the obligation( Article 11(0 ).

    &. #f the thing is indeterminate or generic, the rights of the creditorare6

    a. "o as$ for performance of the obligation ( Article 1246 )%b. "o as$ that the obligation be complied with at the expense

    of the debtor ( Article 116', par. 2 )% andc. "o recover damages in case of breach of the obligation( Article 11(0 ).

    W HAT IS THE EFFECT OF FORTUITOUS EVENT IF THE OBLIGOR DELAYS !OR HAS PROMISED TO DELIVER THE SAME THING TO TWO OR MORE PERSONS WHO DO NOT HAVE THE SAME INTEREST ?

    #f the obligor delays, or has promised to deliver the same thing totwo or more persons who do not have the same interest, he shall beresponsible for any fortuitous event until he has effected the delivery

    ( Article 116' ).

    IN OBLIGATION TO GIVE ! WHAT ARE THE DIFFERENT DUTIES OR OBLIGATIONS WHICH ARE IMPOSED UPON THE DEBTOR OR OBLIGOR ?

    a. #f the obligation is determinate, the duties which are imposedupon the debtor are the following6

    a. "o deliver the thing which he has obligated himself togive%

    b. "o ta$e care of the thing with the proper diligence of a

    good father of a family ( Article 1163 )%c. "o deliver all its accessions and accessories, even

    though they may not have been mentioned. ( Article1166 ).

    d. "o pay damages in case of breach of the obligation( Article 11(0 ).

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    b. #f the obligation is indeterminate or generic, the duties which areimposed are6a. "o deliver a thing that which must be neither of superior

    nor inferior quality ( Article 1246 )%b. "o pay damages in case of breach of the obligation

    ( Article 11(0 ).IN OBLIGATIONS TO DO OR NOT TO DO ! WHAT ARE THE DIFFERENT

    RIGHTS WHICH ARE AVAILABLE TO THE CREDITOR ?

    '. #n obligations to do6

    a) #f a person obliged to do something fails to do it, the same shall beexecuted at his cost.

    b) "his same rule shall be observed if he does it in contravention of thetenor of the obligation.

    c) Eurthermore, it may be decreed that what has been poorly done beundone ( Article 116( ).

    &. #n obligations not to do6

    a. :hen the obligation consists in not doing, and the obligor doeswhat has been forbidden him, it shall also be undone at hisexpense ( Article 116) ).

    IN OBLIGATIONS TO GIVE OR TO DO ! WHEN DOES THE OBLIGOR DEEMED TO HAVE INCURRED IN DELAY ?

    "hose obliged to deliver or to do something incur in delay fromthe time the obligee 3udicially or extra3udicially demands from themthe fulfillment of their obligation

    >owever, the demand by the creditor shall not be necessary inorder that delay may exist6

    (') :hen the obligation or the law expressly so declare% or(&) :hen from the nature and the circumstances of the obligation itappears that the designation of the time when the thing is to bedelivered or the service is to be rendered was a controlling motive forthe establishment of the contract% or(7) :hen demand would be useless, as when the obligor hasrendered it beyond his power to perform.

    #n reciprocal obligations, neither party incurs in delay if the otherdoes not comply or is not ready to comply in a proper manner withwhat is incumbent upon him. Erom the moment one of the partiesfulfills his obligation, delay by the other begins ( Article 1169 par. 1 ).

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    W HAT IS MORA SOLVENDI ; MORA ACCIPIENDI ; MORA MORAE ?

    elay or default committed by the debtor is $nown asora solvendi .

    "he delay is called ora solvendi e re when the obligationis an obligation to give and ora solvendi e persona when theobligation is an obligation to do.

    elay or default committed by the creditor to accept thedelivery of the thing which is the ob3ect of the obligation is $nown asora accipiendi .

    Co pensation orae occurs when in a reciprocalobligation, both parties are in default (here, it is as if neither is in

    default).

    *ote6 elay in the performance of the obligation musteither be malicious or negligent. >ence, if the delay was only due toinadvertence without any malice or negligence, the obligor will not beheld liable under Article '' 9.

    W HAT ARE THE REQUISITES FOR MORA SOLOVENDI ?

    a) "he obligation must be due, enforceable, and already liquidated ordeterminate in amount%

    b) "here must be non-performance%c) "here must be demand, unless the demand is not required% and$) "he demand must be for the obligation that is due.

    *ote6 "here is no ora solvendi in negative obligations (onecannot be late in not doing or giving). "here is no ora also in naturalobligations.

    W HAT ARE THE EFFECTS OF MORA SOLVENDI ?

    '. #f the debtor is in default, he may be liable for interest ordamages%

    &. >e may have to bear the ris$ of loss%7. >e is liable for a fortuitous event (although damages may be

    mitigated if he can prove that even if he had not been in default,loss would have occulted 3ust the same 0 Article 221' 1)

    W HEN IS THE OBLIGOR DEEMED TO BE IN DEFAULT ?

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    Eor an obligation to become due, there must generally be ademand. efault generally begins from the moment the creditordemand the performance of the obligation. :ithout such demand,

    3udicial or extra-3udicial, the effects of default will not arise.ommencement of a suit is a sufficient demand. onsequently, an

    obligor is liable for damages for the delay not from the time the ob3ectof the prestation is to be delivered but from the time of extra-3udicial or 3udicial demand.

    *ote that Article '' C is applicable only when the obligation is todo something other than the payment of money. #n obligations for thepayment of money, Article &&9C shall apply which provides that6

    N#f the obligation consists in the payment of a sum ofmoney, and the debtor incurs in delay, the indemnity fordamages, there being no stipulation to the contrary, shall

    be the payment of the interest agreed upon, and in theabsence of stipulation, the legal interest, which is six percent per annum.O

    >ence, in obligation for the payment of sum of money, theinterest replaces the damages.

    W HAT ARE THE GROUNDS FOR LIABILITY IN THE PERFORMANCE OF OBLIGATIONS ?

    "hose who in the performance of their obligations are guilty of

    fraud, negligence, or delay, and those who in any manner contravenethe tenor thereof, are liable for damages ( Article 11(0 ).

    Fesponsibility arising from fraud is demandable in all obligations.Any waiver of an action for future fraud is void ( Article 11(1 ).

    Fesponsibility arising from negligence in the performance ofevery $ind of obligation is also demandable, but such liability may beregulated by the courts, according to the circumstances ( Article 11(2 ).

    W HAT DOES THE PHRASE # IN ANY MANNER CONTRAVENE THE TENOR $OF THE OBLIGATION AS STATED UNDER A RTICLE 11 COVER ?

    #t includes any illicit act or omission which impairs the strict andfaithful fulfillment of the obligation and every $ind of defectiveperformance ( Arrieta vs. $ational #ice and Corn Corp., 10 +C#A (9Ma at vs. Medialdea, %&3(120, April 20, 19)3 ).

    W HAT IS MEANT BY FRAUD OR DOLO ?

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    Eraud or dolo consists in the conscious and intentionalproposition to evade the normal fulfillment of an obligation. #t is badfaith in the performance of an obligation oftentimes referred as malice.#n contracts it is deceit which if substantial ( dolo causante ) may resultin annulment of contract.

    W HAT ARE THE KINDS OF FRAUD ?

    '. Eraud in obtaining consent (may be casual or merely incidental)%&. Eraud in performing a contract, which may either be6

    A. asual fraud or dolo causante < Eraud in the performanceof a pre-existing obligation%

    G. #ncidental fraud or dolo incidente < Eraud in the perfectionof contract.

    W HAT ARE DISTINCTIONS BETWEEN INCIDIENTAL FRAUD AND CAUSAL FRAUD ?

    '. "he first is present only during the performance of a pre-existingobligation, whereas the second is present only at the time of thebirth of the obligation%

    &. "he first is employed for the purpose of evading the normalfulfillment of an obligation, whereas the second is employed forthe purpose of securing the consent of the other party to enterinto the contract%

    7. "he first results in the non-fulfillment or breach of the obligation,

    whereas the second, if it is the reason for the other party uponwhom it is employed for entering into the contract, results in thevitiation of his consent%

    =. olo causante or causal fraud in Article '77D are thosedeceptions or misrepresentations of a serious characteremployed by one party and without which the other party wouldnot have entered into the contract. olo incidente or incidentalfraud in Article '7== are those which are not serious in characterand without which the other party would still have entered intothe contract%

    @. olo causante determines or is the essential cause of the

    consent% while dolo incidente refers only to some particular oraccident of the obligation%

    . "he effects of dolo causante are the nullity of the contract andthe indemnification of damages% dolo incidente obliges theperson employing it to pay damages.

    . "he first gives rise to a right of the creditor or obligee to recoverdamages from the debtor or obligor, whereas the second givesrise to a right of the innocent party to as$ for the annulment of

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    the contract if the fraud is casual ( dolo causante ) or to recoverdamages if it is incidental ( dolo incidente ) ( Vide Articles 11(0,11(1, 133) 1344 ).

    W HAT IS N EGLIGENCE OR C ULPA ?

    #t is the omission of the diligence which is required by the natureof the obligation and corresponds with the circumstances of thepersons, of the time and of the place. :hen negligence shows badfaith, the provisions of Articles '' ' and &&9', par. &, may apply.

    #f the law or contract does not state the diligence which is to beobserved in the performance, that which is expected of a good fatherof a family shall be required ( Article 11(3 ).

    H OW IS FRAUD DISTINGUISHED FROM NEGLIGENCE ?

    a) #n fraud, there is deliberate intention to cause damage or pre3udice%while in negligence, although voluntary (not done through force),still there is no deliberate intention to cause damage%

    b) 2iability arising from fraud cannot be mitigated or reduced by thecourts% while liability due to negligence may be reduced in certaincases%

    c) :aiver of an action to enforce liability die to future fraud is void%while waiver of an action to enforce liability due to futurenegligence may in a certain sense be allowed% however, grossnegligence can never be excused in advance for this would be

    contrary to public policy% but simple negligence may in certaincases be excused or mitigated.

    W HAT IS THE TEST OF NELIGENCE ?

    "he test by which we can determine the existence of negligencein a particular case may be stated as follows6

    id the defendant in doing the alleged negligent act use thereasonable care and caution which an ordinarily prudent person wouldhave used in the same situationJ #f not, then he is guilty of negligence.

    "he law here in effect adopts the standard supposed to be supplied bythe imaginary conduct of the discreet pater fa ilias of the Foman law. "he existence of negligence in a given case is not determined byreference to the personal 3udgment of the actor in the situation beforehim. "he law considers what would be rec$less, blameworthy, ornegligent in the man of ordinary intelligence and prudence anddetermines liability by that ( 7icart vs. + it-, 3( 7-il. )09 ).

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    W HAT IS THE GENERAL RULE FOR FORTUITOUS EVENT ?

    *o person shall be responsible for those events which could notbe foreseen, or which, though foreseen, were inevitable ( Article 11(4 ).

    EXCEPTIONS :

    '. #n cases expressly specified by the law < example, thosefound in Articles @@&, par. &% '' @, par. 7, '' 9% '& D%'C=&% 'C C% &'= % &'=D% &'@C ( ivil ode)% and 'C ,par. (Eamily ode). 7

    - AF"# 2 @@& (Par. &). A possessor in bad faith shall be liable for deteriorationor loss in every case, even if caused by a fortuitous event.

    AF"# 2 '' @ (Par. 7). #f the obligor delays, or has promised to deliver thesame thing to two or more persons who do not have the same interest, he shall beresponsible for any fortuitous event until he has effected the delivery.

    AF"# 2 '' 9. "hose who in the performance of their obligations areguilty of fraud, negligence, or delay, and those who in any manner contravene thetenor thereof, are liable for damages. ("he obligor shall be liable for damages and hecannot escape liability ( $a

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    &. :hen it is otherwise declared by stipulation < thus, ifthe contracting parties expressly agree that the debtorcan be held liable even in case of fortuitous events,such an agreement shall be binding.

    7. :hen the nature of the obligation requires the

    assumption of ris$ < "his is an aspect of what is $nownas the doctrine of assumption of ris$. As applied toobligations, it refers to a situation in which the obligoror debtor, with full $nowledge of the ris$, voluntarilyenters into some obligatory relation with the creditor. #tis based on the principle of violenti non fit in=uria < nowrong is done to one who consents. "his is illustrated byobligations arising from insurance contracts andwor$men5s compensation acts.

    W HAT IS A FORTUITOUS EVENT ?

    A fortuitous event is an event which cannot be foreseen, or whichthough foreseen, is inevitable.

    W HAT ARE THE REQUISITES OF FORTUITOUS EVENT ?

    '. "he cause of the breach of the obligation must beindependent of the will of the debtor%

    &. "he even must either be unforseeable or unavoidable%7. "he event must be such as to render it impossible for the

    debtor to fulfill his obligation in a normal manner% and

    =. "he debtor must be free from any participation in, oraggravation of, the in3ury to the creditor.

    AF"# 2 &'=D. xcept when the management was assumed to save theproperty or business from imminent danger, the officious manager shall be liable forfortuitous events6(') #f he is manifestly unfit to carry on the management%(&) #f by his intervention he prevented a more competent person from ta$ing upthe management.

    AF"# 2 &'@C. :hoever in bad faith accepts an undue payment, shallpay 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.AF"# 2 '&C. 8pon the dissolution of the con3ugal partnership regime, thefollowing procedure shall apply6 x x x ( ) 8nless the owner has been indemnifiedfrom whatever source, the loss or deterioration of movables used for the benefit ofthe family, belonging to either spouse, even due to fortuitous event, shall be paid tosaid spouse from the con3ugal funds, if any.

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    IS THERE A DIFFERENCE BETWEEN FORTUITOUS EVENTS AND FORCE MA EURE ?

    +rdinarily, the terms Nfortuitous eventO and N force a=eure O areused interchangeably. "here is, however, a technical difference. N Force

    a=eure O is a term that is applicable only to those fortuitous eventswhich are dependent upon human intervention, such as wars, stri$es,riots, etc., while Nfortuitous eventO is the general term that isapplicable regardless of whether the event is independent of ordependent upon human intervention.

    N OTE that when the ob3ect of the prestation is generic (li$e paymentof a sum of money as a consequence of a loan contract), the debtorcannot avail of the benefit of a fortuitous event.

    D OES THE C IVIL C ODE PROHIBIT USURIOUS TRANSACTIONS ?

    Article '' @ provides that usurious transactions shall begoverned by special laws. "he article in itself does not prohibit usuriouscontracts. >owever, it specifically provides that it shall be governed byspecial laws. A special law may prohibit usurious interest, allow it, ormerely put a ceiling as to what can be the highest interest that can belegally imposed.

    X IS INDEBTED TO Y IN THE AMOUNT OF P/ ! . ! PAYABLE IN TEN MONTHLY INSTALLMENBTS AND WITH INTEREST AT % 0 PER ANNUM .W HAT IS THE EFFECT IF Y WOULD BE RECEIVING PAYMENT OF THE PRINCIPAL WITHYOUT RECEIVING FIRST THE INTEREST ?

    "he receipt of the principal by the creditor, without reservationwith respect to the interest, shall give rise to the presumption that saidinterest has been paid ( Article 11(6, par. 1 ).

    W HAT IS THE EFFECT IF THE OBLIGATION IS PAYABLE FROM ANUARY " TO O CTOBER " AND X DID NOT PAY THE INSTALLMENT FOR UNE " BUT WHEN HE PAID IN ULY " ! Y ISSUED A RECEIPT FOR ULY " ?

    "here is a presumption that the ?une &99= installment has

    already been paid. "he receipt of a later installment of a debt withoutreservation as to prior installments, shall li$ewise raise thepresumption that such installments have been paid ( Article 11(6 ).

    N OTE that the presumption here is only pri a facie. "hepresumption can be rebutted by strong evidence to the contrary. "heburden of proof to show that the interestMinstallment has not been paidshifts to the creditor.

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    W HAT ARE THE RIGHTS AND REMEDIES WHICH ARE AVAILABLE TO THE CREDITOR IN ORDER TO PROTECT HIS RIGHTS AGAINST THE DEBTOR ?

    a) xact payment%

    b) Pursue the property in possession of the debtor to satisfy theirclaims (generally through levying by attachments and executionupon all the property of the debtor, except such as are exempt bylaw from execution),

    c) xercise all the rights and bring all the actions of the latter for thesame purpose, save those which are inherent in his person ( accionsu ro atoria )%

    $) #mpugn the acts which the debtor may have done to defraud them(accion pauliana ) ( Article 11(( ).

    N OTES :

    "he third and the fourth remedies are merely subsidiary tothe second.

    "he above-cited rights are not absolute as the creditorcannot bring those which are inherent in the person of the obligor.

    Article'7D' (') which provides that a contract entered intoby the debtor is rescissible if it were made in fraud of creditors whenthe latter cannot in any manner collect the claim due is anotherremedy.

    W HAT IS THE RULE AS TO TRANSMISSIBILITY OF RIGHTS ?

    All rights acquired in virtue of an obligation are transmissible( Article 11() ).

    EXCEPTIONS :a) #f there has been no stipulation to the contrary.

    b) #f the law provides otherwise.c) #f the obligation is purely personal.

    CHAPTER %D IFFERENT K INDS OF O BLIGATIONS

    SECTION 1P URE AND C ONDITIONAL O BLIGATIONS

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    W HAT ARE THE DIFFERENT CLASSES OF OBLIGATIONS ACCORDING TO THE C IVIL C ODE ?

    "he following is the primary classification of obligations underthe ivil ode6

    a) Pure, conditional, and with a term ( Articles 11(9 11(9 > 1192 1193& 119) )%

    b) Alternative and facultative ( Articles 1199 > 1206 )%c) ?oint and solidary ( Articles 120( > 1222 )%$) ivisible and indivisible ( Articles 1223 > 122' )% ande) :ith and without a penal clause ( Articles 1226 > 1230 ).

    "here are however other classifications of a secondary characterwhich can be gathered from scattered provisions of the ode, such as6

    a) *atural and civil ( Articles 11'6 1424 )% b) 2egal, conventional and penal ( Articles 11') > 1162 )%c) Feal and personal ( Articles 11'6 1163 > 116) )%$) eterminative and generic ( Articles 1163 > 1166 )%e) Positive and negative ( Articles 1163 > 116) )%f) Accessory and principal ( Articles 1166, 1230 )%#) 8nilateral and bilateral ( Article 1191 )%h) /ingle and multiple ( Articles 1199 1206 )% andi) #ndividual and collective ( Article 120( )%

    W HAT IS MEANT BY PURE OBLIGATION ?

    very obligation whose performance does not depend upon afuture or uncertain event, or upon a past event un$nown to the parties,is demandable at once.

    very obligation which contains a resolutory condition shall alsobe demandable, without pre3udice to the effects of the happening ofthe event ( Article 11(9 ).

    >ere, there are no conditions imposed, except if they areresolutory.

    W HAT IS THE MOST DISTINCTIVE CHARACTERISTIC OF PURE CONDITIONS ?

    "he most distinctive characteristic of a pure obligation is itsdemandability. "his quality, however, must not be understood in sucha way as to lead to absurd interpretations which would literally requirethe obligor or debtor to comply immediately with his obligation. A

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    distinction must be made between (') immediate demadability of theobligation% and (&) its performance or fulfillment by the obligor ordebtor. Although the obligee or creditor can demand the performanceof the obligation immediately, the quality of immediate demandabilityis not infringed or violated when a reasonable period is granted for

    performance.W HAT ARE CONDITIONAL OBLIGATIONS ?

    onditional obligations are those where the acquisition of a rightor the extinguishment or loss of those already acquired shall dependupon the happening of an even which constitutes the condition.

    :hat characteri4es a conditional obligation is the fact that itsefficacy or obligatory force is subordinated to the happening of afuture or uncertain event.

    W HAT ARE THE KINDS OF CONDITIONAL OBLIGATIONS ?

    a) F /+28"+FH +* #"#+* - is one which is demandable at once, but thehappening of an event would extinguish the obligation. "his isbecause once the condition is established and ac$nowledged, theright immediately exists and therefore the obligation concomitant tothe right can be demanded at once. >owever, once the future oruncertain event happens which constitutes the condition, itoperates to discharge the obligation. "he obligation is resolved orextinguished by operation of law (but such resolution can be made

    effective at some later date if the parties so stipulate in theircontract, such as when the parties stipulate that resolutionbecomes effective only from the date of written notice thereof issent)

    b) / 8/P */#B +* #"#+* - is one where the happening of an event givesrise to an obligation. A suspensive obligation is not demandable atonce. #t can be demanded only upon the happening of the future orun$nown event or a past event un$nown to the parties, whichconstitutes the condition. >appening of a suspensive conditiongives rise to the performance of the obligation. #f the condition doesnot ta$e place, the parties would stand as if the conditionalobligation had never existed.

    c) P+" /"A"#B < depends upon the will of the debtor. "his is also calledEA 82"A"#B condition.

    $) A/8A2 < depends on chance or ha4ard or the will of a third persone) ; #L < depends partly on the will of one of the parties and partly on

    chance or the will of a third person.f) +*?8* "#B < if all the conditions must be performed.#) A2" F*A"#B < if only a few of the condition have to be performed.

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    W HAT IS AN OBLIGATION WITH A TERM OR PERIOD ?

    "hat which necessarily must come whether the parties $nowwhen it will happen or not.

    A AND B ENTERED INTO A CONTRACT OF LOAN ! PROVIDING THAT BSHALL PAY WHEN HIS MEANS PERMIT HIM TO DO SO . W HAT KIND OF OBLIGATION IS THIS ? W HAT IS THE REMEDY OF A IN CASE OF NON -PAYMENT BY B?

    :hen the debtor binds himself to pay when his means permithim to do so, the obligation shall be deemed to be one with a period,sub3ect to the provisions of article ''C ( Article 11)0 ).

    According to Article ''C , if the obligation does not fix a period,

    but from its nature and the circumstances it can be inferred that aperiod was intended, the courts may fix the duration thereof.

    "he courts shall also fix the duration of the period when itdepends upon the will of the debtor.

    #n every case, the courts shall determine such period as mayunder the circumstances have been probably contemplated by theparties. +nce fixed by the courts, the period cannot be changed bythem.

    D ISTINGUISH BETWEEN THE EFFECTS OF SUSPENSIVE AND RESOLUTORY CONDITIONS .

    #n conditional obligations, the acquisition of rights, as well as theextinguishment or loss of those already acquired, shall depend uponthe happening of the event which constitutes the condition ( Article11)1 ).

    "hus, a resolutory condition affects the obligation to which it isattached in a manner which is diametrically opposed to that of asuspensive condition. #f the suspensive condition is fulfilled, the

    obligation arises or becomes effective% if the resolutory condition isfulfilled, the obligation is extinguished. #f the first is not fulfilled, no

    3uridical relation is created% if the second is not fulfilled, the 3uridicalrelation is consolidated. #n other words, in the first, rights are not yetacquired, but there is a hope or expectancy that they will soon beacquired% in the second, rights are already acquired, but sub3ect to thethreat of extinction.

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    A suspensive condition is also called a condition precedent whilea resolutory condition is also $nown as a condition subsequent. Acondition precedent is an act or event, other than a lapse of time,which must exist or occur before a duty to perform a promisedperformance arises. #f the condition does not occur and is not excused,

    the promised performance need not be rendered. A conditionsubsequent is an event, the existence of which, by agreement of theparties, operates to discharge a duty of performance that has arisen.

    #n case a contract involves a reciprocal obligation, the obligationof one is a resolutory condition of the obligation of the other, the non-fulfillment of which entitles the other party to rescind the contract.

    G IVE THE EFFECTS OF POTESTATIVE ! CASUAL AND MIXED CONDITIONS UPON OBLIGATION .

    Article ''D& provides that when the fulfillment of the conditiondepends upon the sole will of the debtor, the conditional obligationshall be void. #f it depends upon chance or upon the will of a thirdperson, the obligation shall ta$e effect in conformity with theprovisions of this ode.

    "he phrase Nwhen fulfillment of a conditionO connotes asuspensive character of the prestation. "here is the expectation of theexistence or accomplishment of a duty to give or to render someservice in the future. "hus6

    a) #f the condition is potestative in the sense that fulfillment of thecondition depends upon the sole will of the debtor, the conditionalobligation shall be void ( Article 11)2 ). "his happens when the birthof the contract depends upon the sole will of the debtor. >ence,according to Article '79D, this is li$ewise prohibited and may ma$ethe whole contract invalid. >owever, if the potestative condition isimposed not on the birth of the obligation but on its fulfillment, onlythe condition is avoided, leaving unaffected the obligation itself.

    b) #f the condition is potestative in the sense that its fulfillmentdepends upon the will of the creditor, the conditional obligationshall be valid. "his is because the provision of the first sentence ofArticle ''D& extends only to conditions which are potestative to theobligor or debtor. Gesides, the creditor is naturally interested in thefulfillment of the condition since it is only such fulfillment that theobligation arises or becomes effective.

    c) #f the condition is casual in the sense that its fulfillment dependspartly upon chance or upon the will of a third person, the obligationshall ta$e effect ( Article 11)2 ).

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    $) #f the condition is mixed in the sense that its fulfillment dependspartly upon the will of a party to the obligation and partly uponchance andMor will of a third person, the obligation shall be valid.

    IN THE EVENT THAT THE CONDITION IS DECLARED VOID BUT THE

    OBLIGATION IS STILL VALID ! SHOULD THE OBLIGATION BE DECLARED PURE AND UNCONDITIONAL ?

    *o, because in converting it into a pure and demandableobligation, an arrangement might be enforced which is not within thecontemplation of the parties. >ence, the best solution is to considerthe parties as having intended a period within which the validobligation is to be complied with such that the creditor should as$ thecourt to fix a period for compliance ( 7atente vs. ! e a, 93 7-il. 21) ).

    S UPPOSE THAT THE DEBTOR EXECUTED A PROMISSORY NOTE

    PROMISSING TO PAY HIS OBLIGATION TO THE CREDITOR AS SOON AS HE HAS RECEIVED FUNDS FROM THE SALE OF HIS PROPERTY IN A CERTAIN PLACE ! IS THE CONDITION POTESTATIVE OR MIXED ?

    "he condition is mixed because its fulfillment depends not onlyupon the will of the debtor but also upon the concurrence of otherfactors, such as the acceptability of the price and other conditions ofthe sale as well as the presence of the buyer, ready, able and willing topurchase the property.

    S UPPOSE THAT IN THE ABOVE PROBLEM ! THE DEBTOR PROMISED TO PAY HIS OBLIGATION AS SOON AS HE HAS RECEIVED THE FUNDS DERIVED FROM THE SALE OF THE PROPERTY IF HE FINALLY DECIDES TO SELL IT ! WILL THAT MAKE ANY DIFFERENCE IN YOUR ANSWER ?

    Hes, in such case, the condition is potestative with respect to thedebtor because its fulfillment would then depend upon his will.onsequently, the condition is void. "he validity of the obligation is, ofcourse, not affected, because the rule stated in Article ''D& to theeffect that when the fulfillment of the condition depends upon the solewill of the debtor, the conditional obligation itself shall be void, isapplicable only when the obligation shall depend for its perfection upon

    the fulfillment of the condition and not when the obligation is a pre-existing one.

    W HAT ARE THE EXCEPTIONS TO A RTICLE 112" 3 CONDITIONAL OBLIGATIONS DEPENDING UPON THE SOLE WILL OF THE DEBTOR ARE VOID 4?

    a) "he rule is applicable only to a suspensive condition. >ence, if thecondition is resolutory and potestative, the obligation is valid even if

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    the fulfillment of the condition is made to depend upon the sole willof the debtor. "his is because the position of the debtor when thecondition is resolutory is exactly the same as the position of thecreditor when the condition is suspensive.

    b) "he rule that even the obligation itself shall be void is applicable

    only to an obligation which depends for its perfection upon thefulfillment of the potestative condition and not to a pre-existingobligation. xample, if the debtor binds himself to pay a previousindebtedness as soon as he decides to sell his house, although thecondition is void because of its potestative character, the obligationitself is not affected since it refers to a pre-existing indebtedness.

    "hus, when the potestative condition is imposed on the fulfillmentof the obligation, the condition alone is voided but not theobligation.

    c) A condition at once facultative and resolutory is valid though thecondition is made to depend upon the will of the obligor.

    $) A resolutory condition that depends upon the will of a third person isnot void.

    S UMMARY :

    a) #f potestative (facultative) on the part of the debtor6

    #f also suspensive < both the condition and the obligations arevoid.

    #f also resolutory < valid.

    b) #f potestative on the part of the creditor < valid.c) #f casual < valid.$) #f mixed < valid.

    W HAT IS THE EFFECT IF IN AN OBLIGTION ! IMPOSSIBLE CONDITIONS !ETC . ARE IMPOSED ?

    #mpossible conditions, those contrary to good customs or publicpolicy and those prohibited by law shall annul the obligation whichdepends upon them. #f the obligation is divisible, that part thereofwhich is not affected by the impossible or unlawful condition shall bevalid.

    "he condition not to do an impossible thing shall be consideredas not having been agreed upon ( Article 11)3 ).

    N OTE : #t is very clear from the law that it is not only the conditionwhich is annulled but the whole obligation itself. "hus, an obligation togive money as a loan only if it snows in the Philippines destroys theefficacy of the prestation. "he condition annuls the prestation. "his is

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    also true if the condition is against good customs, public policy or isprohibited by law.

    Also, an impossible thing can never be done. >ence, to ma$e asa condition the doing of an impossible thing is a useless stipulation

    which should not be considered as not having been agreed upon. "hewhole obligation which involves an impossible condition can beannulled.

    S UMMARY :

    '. #f the condition is to do an impossible or illegal thing < bothcondition and the obligation are void%

    &. #f the condition is not to do the impossible (negative) < obligationis valid but the condition is disregarded.

    7. #f the condition is not to do an illegal thing (negative) < both

    condition and the obligation are valid.

    IN OBLIGATIONS WITH POSITIVE CONDITIONS ! WHEN DOES THE OBLIGATION DEEMED EXTINGUISHED ?

    "he condition that some event happen at a determinate timeshall extinguish the obligation as soon as the time expires or if it hasbecome indubitable that the event will not ta$e place ( Article 11)4 ).

    #f the period is not fixed in the contract, the court, consideringthe parties5 intentions, should determine what period was really

    intended ( Vide Article 11)', par. 2 ).

    IN OBLIGATIONS WITH NEGATIVE CONDITIONS ! WHEN DOES THE OBLIGATION DEEMED EFFECTIVE ?

    "he condition that some event will not happen at a determinatetime shall render the obligation effective from the moment the timeindicated has elapsed, or if it has become evident that the eventcannot occur.

    #f no time has been fixed, the condition shall be deemed fulfilled

    at such time as may have probably been contemplated, bearing inmind the nature of the obligation ( Article 11)' ).

    W HAT IS THE EFFECT WHEN THE DEBTOR VOLUNTARILY PREVENTS THE FULFILLMENT OF THE CONDITION ?

    "he condition shall be deemed fulfilled when the obligorvoluntarily prevents its fulfillment ( Article 11)6 ).

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    "his is $nown as constructive (or presumed) fulfillment. "hisgenerally applies only to suspensive condition.

    W HAT ARE THE REQUISITES IN ORDER THAT CONSTRUCTIVE

    FULFILLMENT WILL ARISE ?

    '. #t must be made by the obligor%&. #t must be voluntarily made% and7. #t must actually prevent the performance of the condition.

    W HEN DO THE EFFECTS OF THE FULFILLMENT OF A CONDITION IN AN OBLIGATION TO GIVE RETROACT ? W HAT ARE THE EXCEPTIONS ?

    :hen a suspensive condition ta$es effect, the obligationbecomes effective.

    "he effects of a conditional obligation to give, once the conditionhas been fulfilled, shall retroact to the day of the constitution of theobligation. "his rule is applicable only to suspensive conditionsbecause the efficacy of the obligation is merely suspended or held inabeyance until the condition is fulfilled. "his is not applicable toresolutory conditions because the fulfillment of the event extinguishesthe obligation% hence, retroactivity is not relevant.

    "here is no retroactivity as to6

    a) Eruits or interests in reciprocal and unilateral obligations (unlessthere is contrary stipulation)% b) Period of prescription.c) "his principle of retroactivity applies only to consensual contracts.

    #n real contracts, there is immediate delivery. #n consensual ones,delivery may be made on another day.

    W HAT ARRE THE RULES IF THE OBLIGATION 314 IMPOSES RECIPROCAL OBLIGATIONS 5 3"4 IF THE OBLIGATION IS UNILATERAL 5 3%4 IN OBLIGATIONS TO DO AND NOT TO DO ?

    a) :hen th