CIVIL OBLIGATIONS (seventh/last, piece)
Friday, January 14, 2011
4:51 AM
Subtopic under civil obligations
H. Agreement
I. Difficulty
102) What is clausula rebus sic
stantibus?- A1267
- Clausula rebus sic
stantibus- a discredited
theory in public
international law where
parties stipulate in the light
of certain prevailing
conditions, and once these
conditions cease to exist, the
contract also ceases to exist.
- Considering practical needs
and equity and good faith,
disappearance of the basis
of a contract gives rise to a
right to relief in favor of the
party prejudiced.
J. Impossiblity
103) What is the effect of
What the law says What the commentaries, the professor etc.
say haha
Saura v. DBP (1972)
Art. 1267. When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may 3. Loss of protected interest
also be released therefrom, in whole or in part. (n) - Disappearance of creditor's interest which
is sought to be protected by the
Occena v. Jabson obligation, will extinguish the obligation.
(1976) ○ If obligation is based on interest of C
worthy of protection, juridical
Naga Telephone v.
protection cannot extend beyond that
CA (1994)
interest.
1. Change of circumstances
- General rule: impossibility of performance releases the obligor.
○ But when service has become so difficult as to be manifestly
beyond contemplation of the parties, court should be
authorized to release obligor, in whole or in part.
 But in such case, courts not authorized to remake, modify
or revise the contract.
- Intention of parties should govern XXX.
- 1267 states in our law the doctrine of unforeseen events.
○ Doctrine said to be based on discredited theory of rebus sic
stantibus.
- But 1267 is not an absolute application of rebus sic stantibus, which
would endanger the security of contractual relations.
○ Parties to the contract must be presumed to have assumed the
risk of unfavorable developments.
○ So, only in absolutely exceptional changes of circumstances that
equity demands assistance for the D.
- Equity
○ demands a certain economic equilibrium between the prestation
and the counter-prestation , and does not permit the unlimited
impoverishment of one party for the benefit of the other by the
excessive rigidity of the principle of the obligatory force of
contracts. Mainly a question of fact left to the courts.
○ Rule NA to obligations for payment of sum of money when
there is a change in value of the stipulated currency. In such
case, 1250 will apply.
2. Change of circumstances; requisites (four)
(1) Event or change in circumstances could not have been foreseen
at the time of the execution of the contract.
- Basis: events and risks which normally and in the ordinary
course of life, according to the circumstances of time and place,
the parties may reasonably contemplate as possible. Any change
of circumstances beyond these limits, beyond the contemplation
of the parties.
 But change must be greatly beyond XXX. Contract must
be respected as long as injustice not intolerable.
(2) Event makes the performance of the contract extremely difficult
but not impossible.
- Difficulty of performance
 A manifest disequilibrium in the prestations such that one
party would be placed at a disadvantage by the unforeseen
event. Such disadvantage does not pertain to small losses
which constitute normal risks of the contract.
(3) Event must not be due to the act of any of the parties.
(4) Contract is for a future prestation
- Excluded from 1267 are aleatory contracts and those which are
purely speculative.
Art. 1266. The debtor in obligations to do shall also be released when
the prestation becomes legally or physically impossible without the
fault of the obligor. (1184a)
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103) What is the effect of fault of the obligor. (1184a)
impossiblity?- A1266/NCC
1. Subsequent impossibility; nature of impossibility
104) Subsequent impossibility a. Physical impossibility- occurs when the act by reason of its
- Distinction: nature cannot be accomplished
Impossibility effect
according to Legal impossibility- occurs when the act by reason of a
time of subsequent law is prohibited
occurrence
b. Objective impossibility- when the act or service in itself, without
Impossibility Nullity of considering the person of the obligor, becomes impossible
existing at contract
the time the Subjective impossibility- when act or service cannot be done by
obligation is D himself but can be accomplished by others
constituted
(1348) Notes:
Impossibility modificatio 1. Both have same effect.
which n or 2. Impossibility extinguishes so long as it is not due to fault or
supervenes extinguishm negligence of D.
at the time ent of the
of obligation, 2. Effect of impossibility
performance depending - Debtor released but liable for restitution of what he may have
(1266)-> on WON received in advance from C.
after imputable - D cannot be made liable for damages.
obligation to D - It should be the prestation which should become impossible.
constituted
3. Partial impossibility
- Its importance and consequence should be considered and the
purpose of the obligation as well.
- Circumstances may be equivalent to a total impossibility. 1264 may
be applied.
If at time performance C pays part done so long as he
becomes impossible, D has benefits therefrom.
already fulfilled part:
If D has already received D must return anything excess
something from C of what corresponds to part
done when impossibility
supervened.

4. Temporary impossibility
- Do not extinguish obligation but merely delay fulfillment
○ Unless by its nature or by the will of the parties it has to be
performed at a determinate time
- But if obstacles of unknown and unforeseen duration, obligation may
be considered juridically impossible--> extinguished. And not
revived by fact that it becomes possible later when circumstances
change.

5. Reciprocal obligations
- Release of D due to impossibility also releases C from counter-
prestation, because:
○ Each obligation depends upon the other.
IV. Other performance excuses
K. Volenti non fit injuria Art. 1174. Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the
104) What is volenti non fit obligation requires the assumption of risk, no person shall be
injuria?- A1174/NCC responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable. (1105a)

1. Fortuitous event; force majeure

- An event which takes place by accident and could not have been
foreseen.
- Essential element: some extraordinary circumstance independent of
the will of the obligor or of his employees.
- May be produced by two general causes
(1) Nature (earthquakes, storms, floods, epidemics, fires etc.)
(2) Act of man(armed invasion, attack by bandits, governmental
prohibitions, robbery, war etc.)
- Element: force of an imposition which the D could not have
resisted
- Includes unavoidable accidents, even if there has been an
intervention of human element, provided fault or negligence cannot
be imputed to D.
- No essential difference between fortuitous event and force
majeure--> both refer to causes independent of the will of the

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 majeure--> both refer to causes independent of the will of the
obligor.
- In a legal sense and in relation to contracts, has the following
characteristics:
(1) Cause of the unforeseen and unexpected occurrence, or failure
of D to comply with his obligations, must be independent of the
human will.
(2) It must be impossible to foresee the event which constitute the
caso fortuito or if it can be foreseen, it must be impossible to
avoid.
(3) The occurrence must be such as to render it impossible for D to
fulfill his obligation in a normal manner.
(4) The obligor must be free from any participation in the
aggravation of the injury resulting to C.

○ One who creates a dangerous condition cannot escape liability

although an act of God may have intervened.

- Effect in general: no liability for damages for non-performance.

- Effect of negligence: not exempt from liability

- Express stipulation:
○ Parties may expressly stipulate in contract that D shall be liable
to C even of performance is rendered impossible by fortuitous
event or force majeure.
 Stipulation must be clearly expressed.

- Assumption of risks:
○ One of the exception to the general rule on fortuitous event is
when the nature of obligation requires assumption of risk.
○ Principle of * based on social justice: Owners who benefit from
operation of properties should also bear risks arising therefrom.

2. Acts of creditor
- D released from liability not only when nonperformance is due to
fortuitous event but also when due to act of C himself.

L. Fortuitous event
105) What are acts of God?-
A1174, 1262, 1221/NCC
Art. 1174. Except in cases expressly specified by the law, or when it is 4. Exceptions to the rule: please see
otherwise declared by stipulation, or when the nature of the handwritten notes under loss of thing due.
obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which, 5. [1221] limited to loss of thing
though foreseen, were inevitable. (1105a) - If loss due to fault of any SD or due to FE
after D delayed, O converted into an O to
Art. 1262. An obligation which consists in the delivery of a pay indemnity, consisting of the price,
determinate thing shall be extinguished if it should be lost or damages and interest.
destroyed without the fault of the debtor, and before he has incurred
in delay. 6. [1221] Nonperformance without loss
- No loss but delay, fraud, fault or
When by law or stipulation, the obligor is liable even for fortuitous negligence or some other breach of O: C
events, the loss of the thing does not extinguish the obligation, and may recover indemnity for damages from
he shall be responsible for damages. The same rule applies when the any of the SDs.--> SDs will perform still,
nature of the obligation requires the assumption of risk. (1182a) each to give his share, but guilty D
shoulders damages alone.
Art. 1221. If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation
shall be extinguished.

If there was fault on the part of any one of them, all shall be
responsible to the creditor, for the price and the payment of damages
and interest, without prejudice to their action against the guilty or
negligent debtor.

If through a fortuitous event, the thing is lost or the performance has

become impossible after one of the solidary debtors has incurred in
delay through the judicial or extrajudicial demand upon him by the
creditor, the provisions of the preceding paragraph shall apply.
(1147a)

1. Please see notes for 104.

2. Robbery and theft

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106) When will force majeure not
extinguish an obligation?-
A1174, 1262, 1221, 1262,
1268, 1165/NCC
2. Robbery and theft
- Thing lost via robbery with violence, D should show he could
not resist violence.
- If theft: D considered negligent for having placed thing within
reach of thieves XXX hence liable for damages.
3. Loss of determinate object, effect on reciprocal obligations
- Affects both C and D so entire juridical relation is extinguished. D
has to return to C whatever C may have already delivered by reason
of obligation.
- Rule: risk pertains to D. D released but cannot demand prestation
stipulated for his benefit.
Art. 1174. Except in cases expressly specified by the law, or when it is 1. Please see above notes for 1174, 1262 and
otherwise declared by stipulation, or when the nature of the obligation 1221.
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were 2. [1268] Offer of payment
inevitable. (1105a) - Two alternative for D:
(1) To consign thing
Art. 1262. An obligation which consists in the delivery of a determinate (2) Just keep thing in his possession,
thing shall be extinguished if it should be lost or destroyed without the with the obligation to use diligence
fault of the debtor, and before he has incurred in delay. subject to the general rules of
obligations but no longer to the
When by law or stipulation, the obligor is liable even for fortuitous special liability imposed by 1268.- Q:
events, the loss of the thing does not extinguish the obligation, and he What is that special liability?
shall be responsible for damages. The same rule applies when the nature
of the obligation requires the assumption of risk. (1182a) 3. [1165] Remedies of C when D fails to
comply:
Art. 1221. If the thing has been lost or if the prestation has become (1) An action for specific performance,
impossible without the fault of the solidary debtors, the obligation shall to obtain compliance of the
be extinguished. prestation;
If there was fault on the part of any one of them, all shall be responsible  Whether determinate or generic
to the creditor, for the price and the payment of damages and interest,  Generic: D cannot pay damages
without prejudice to their action against the guilty or negligent debtor. in lieu of thing if C wants the
thing. This is aside from
If through a fortuitous event, the thing is lost or the performance has damages.
become impossible after one of the solidary debtors has incurred in  Q: Where here is loan
delay through the judicial or extrajudicial demand upon him by the categorized?
creditor, the provisions of the preceding paragraph shall apply. (1147a) (2) An action in some cases to rescind or
resolve O
Art. 1262. An obligation which consists in the delivery of a determinate (3) An action for damages, exclusively or
thing shall be extinguished if it should be lost or destroyed without the in addition to either of the first
fault of the debtor, and before he has incurred in delay. actions
When by law or stipulation, the obligor is liable even for fortuitous 4. [1165] Imprisonment for debt
events, the loss of the thing does not extinguish the obligation, and he - CON87: No person shall be imprisoned
shall be responsible for damages. The same rule applies when the nature for debt.
of the obligation requires the assumption of risk. (1182a) ○ This without prejudice to subsidiary
imprisonement for nonpayment of
Art. 1268. When the debt of a thing certain and determinate proceeds civil liability imposed in a criminal
from a criminal offense, the debtor shall not be exempted from the case, or to imprisonment as a
payment of its price, whatever may be the cause for the loss, unless the punishment for contempt.
thing having been offered by him to the person who should receive it,
the latter refused without justification to accept it. (1185) 5. [1165] Delay and Fes
- German Civil Code: D in default not liable
Art. 1165. When what is to be delivered is a determinate thing, the for FEs if proves that even if he had
creditor, in addition to the right granted him by Article 1170, may performed O, loss would have occurred
compel the debtor to make the delivery. same manner.--> This is NA here.
Otherwise, it would encourage delay by
If the thing is indeterminate or generic, he may ask that the obligation permitting D to gamble on chance of
be complied with at the expense of the debtor. exemption if a FE of a general character
occurs. But damages for which D is liable
If the obligor delays, or has promised to deliver the same thing to two may be equitably mitigated under
or more persons who do not have the same interest, he shall be 2215(4)/NCC.
responsible for any fortuitous event until he has effected the delivery.
(1096)
NAPOCOR v. CA
(1993)
Nakpil and Sons v.
CA (1986)
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