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OBLIGATIONS AND CONTRACTS

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Jennifer Burce

on 20 July 2015

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Transcript of OBLIGATIONS AND CONTRACTS

Article 1182
Article 1181
When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of the third person, the obligation shall take effect in conformity with the provisions of this Code.

Article 1183
Effect of happening of condition
This article reiterates the distinction between a suspensive(antecedent) condition and a resolutory (subsequent) condition .
Prepared by:
Jennifer Burce
Kristel Magnaye
Khimberly Yutuc

OBLIGATIONS AND CONTRACTS
July 16, 2015
Wednesday

1. Acquisition of rights.

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



In obligations subject to a suspensive condition, the acquisition of rights by the creditor depends upon the happening of the event which constitutes the condition.
What characterizes this kind of obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinate to the happening of a future and uncertain event. It follows that if the suspensive condition does not take place and it is certain that it will not be fulfilled, the parties would stand as if the conditional obligations had never existed. During the pendency of the suspensive condition, the creditor has only a mere hope or expectancy of acquiring a right. (Art.1188,par.1)
Examples:
1. T, the testator, in his last will and testament gave some property to H(heir) provided T would die within two(2) years.
In this case, H would acquire a right to the land only upon the happening of the suspensive condition: the death of T within two(2) years. (If there is no length of time within which the death must take place, the obligation is one with a period.) If T died after two(2) years, the situation would be the same as if no provision was made by T in his will in favor of H.
2. The surrender of the sweepstakes tickets is a condition precedent to the payment of the prize.

2. Loss of rights already acquired.
In obligations subject to a resolutory condition, the happening of the event which constitutes the condition produces the extinguishments or loss of rights already acquired.
Examples:

1. X binds himself to support Y until Y graduates from college. Here, the right already acquired by Y ─ the right to receive support─ shall be extinguished or lost once condition is fulfilled.

2. S sold to B a parcel of land subject to S’s right of repurchase. The ownership already acquired by B under the contract shall be extinguished or lost should S exercise his right of repurchase.

3. A lease contract expressly stipulates that R, lessor, may terminate the lease in case his children shall need the leased premises. Here, the happening of the condition depends upon the will of a third person ─ R’s children.

Classification of conditions
Conditions may be classified as follows:
1. as to effect:
a. Suspensive- the happening of which gives rise to the obligation; and
b. Resolutory- the happening of which extinguishes the obligation.

2. as to form:
a. Express- the condition is clearly stated; and
b. Implied- the condition is merely inferred.

3. as to possibility:
a. Possible- the condition is capable of fulfillment, legally and physically; and
b. Impossible- the condition is not capable of fulfillment, legally or physically.

4. as to cause or origin:
a. Potestative- the condition depends upon the will of one of the contracting parties;
b. Casual- the condition depends upon chance or upon the will of the third person; and
c. Mixed- the condition depends partly upon chance and partly upon the will of a third person.

5. as to mode:
a. Positive- the condition consists in the performance of an act; and
b. Negative- the condition consists of an act.

6. as to numbers:
a. Conjuctive- there are several conditions and all must be fulfilled; and
b. Disjunctive- there are several conditions and only one or some of them must be fulfilled.
7. as to divisibility:
a. Divisible- the condition is susceptible of partial performance; and
b. Indivisible- the condition is not susceptible of partial performance.
POTESTATIVE CONDITION
A condition suspensive in nature which depends upon the sole will of one of the contracting parties is known as potestative condition.
Where suspensive condition depends upon will of DEBTOR
1. Conditional Obligation Void
- Where the potestative condition depends solely upon the will of the debtor, the conditional obligation shall be void because its validity and compliance is left to the will of the debtor and it cannot, therefore, be easily demanded. In order not to be liable, the debtor will not just fulfil the condition. There is no burden on the debtor and consequently, no juridical tie is created.

Examples:
1. I will pay you if I want.
2. I will pay you after I receive a loan from a bank.
3. I will pay you after I recover what X owes.
4. I will pay you after I have harvested fish.
5. I will pay you upon the sale of the house in which I live.
6. I will pay you the price of the forest concession you sold me upon my operation of the same.
7. I will continue to lease your property for as long as I needthe premises and pay the rent.

2. Only the Condition Void
–If the obligation is a pre-existing one and, therefore,does not depend for its existence upon the fulfillment by the debtor of the potestative condition, only the condition is void leaving unaffected the obligation itself.Here, the condition is imposed not on the birth of the obligation but on its fulfillment.
EXAMPLE:
D borrowed P10,000 from C payable within two months. Subsequently, D promised to pay C “ after D sells his car” to which C agreed. In this case, only the condition is void but not the pre-existing obligation of D to pay C.

Where suspensive condition depends upon will of CREDITOR

If the condition depends exclusively upon the will of the creditor, the obligation is valid.

EXAMPLE:
I will pay you my indebtedness upon your demand.
The obligation does not become illusiory. Normally , the creditor is interested in the fulfillment of the obligation because it is for his benefit. It is up to him whether to enforce his right or not.


Where resolutory condition depends upon will of debtor
If the condition is resolutory in nature, like the right to purchase in a sale with pacto de retro , the obligation is valid although its fulfillment depends upon the sole will of the debtor (seller). The fulfillment of the condition merely causes the extinguishment or loss of rights already acquired.(Art.1181.)The debtor is naturally interested in its fulfillment.
The position of the debtor when the condition is resolutory is exactly the same as that of the creditor when the condition is suspensive.
Casual Condition
If the suspensive condition depends upon chance or upon the will of third person, the obligation subject to it is valid.
EXAMPLES:
1.Where X, building contructor, obliges himself infavor of Y, owner , to repair at X’s expense any damage that may be caused to the building by any the earthquake occurring within 10 years from the date of the completion of its construction.
2. Where S binds himself to sell his land to B if he wins a case which is pending before the Supreme Court.

Mixed Condition
The obligation is valid if the suspensive condition depends partly upon chance and partly upon the will of a third person.
Example:

Where X, building contractor, obliges himself in favor of Y, owner, to repair at X’s expense, any damage to the building taking place after an earthquake if found by a panel of arbitrators that construction defects contributed in any way to damage.
Both conditions must take place in order that X’s obligation will arise. The decision of the panel (third party) must be accepted by X and Y as final unless it can be shown that it was incompetent to act in that capacity or was obviously biased favoring X or Y.
Where suspensive condition depends partly upon will of DEBTOR
According to
Manresa
, the used of word “exclusive”(now “sole”) makes it clear that conditional obligations whose fulfillment depends partly upon the will of the debtor and partly upon the will of a third person, or upon chance are
perfectly valid.
It is believed, however, that if the compliance with the obligation still depends upon that part of condition whose fulfillment depends upon the will of the debtor, the obligation is void as it is within his power to comply or not to comply with the same. The situation is the same as if the condition depends entirely upon the will of the debtor.


Impossible conditions, those contrary to good customs of public policy and those prohibited by law shall annul the obligation which depends upon them. If theobligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be considered as not having been agreed upon.
(1116a)
When Article 1183 applies
Article 1183 refers to suspensive conditions. It applies only to cases where the impossibility already existed at the time the obligation was constituted. If the impossibility arises after the creation of the obligation, Article 1266
Two Kinds of Impossible Conditions
1. Physically impossible conditions
– when they, in nature of things, cannot exist or cannot be done.
Examples:

1. I will pay you P10, 000 if it will not rain for one year in the Philippines.

2. I will pay you P10, 000 if you can carry twenty(20) cavans of palay in your shoulder.

2. Legally Impossible Conditions

– when they are contrary to law, morals, good customs, public order or policy.

Examples:
X will give Y P1,000 if Y:

1. Will kill Z (against the law)
; or

2. Will be the common-law wife of X (against morals
); or

3. Will slap father (against good customs)
; or

4. Will publicly advocate the overthrow of the government (against public order)
; or

5. Will not appear as a witness against X in a criminal case (against public policy)
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