ERNESTO V. RONQUILLO, petitioner,
SPECIAL FORMS OF PAYMENT
2. Loss of the thing due or Impossibility of Performance
Loss: means when the thing goes out of commerce, perishes or disappears in such a way that its existence is unknown or that it cannot be recovered.
Art. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay.
When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk. (1182a)
Fortuitous Event: generally, the debtor is not liable for damages if the thing is lost due to fortuitous event, EXCEPTIONS:
1. When the law so provides;
2. When stipulation so provides;
3. When the nature of the obligation requires the assumption of risk.
For fortuitous event to be invoked, there must be no negligence on the part of the party invoking.
Malfunction of the break system – is not a fortuitous event since this could’ve been prevented by a regular maintenance of the vehicle.
Robbery and Theft: are not considered Fortuitous Event for a pawnshop business or a bank. (Sicam vs. Jorge)
Reciprocal Obligations: the extinguishment of one party’s obligation due to loss due to a fortuitous event, likewise extinguishes the other party’s obligation based on the principle of res perit domino (the thing is lost to the owner).
Liability even if the loss is due to a fortuitous event as provided by law:
Article 1942. The bailee is liable for the loss of the thing, even if it should be through a fortuitous event:
(1) If he devotes the thing to any purpose different from that for which it has been loaned;
(2) If he keeps it longer than the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted;
(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous event;
(4) If he lends or leases the thing to a third person, who is not a member of his household;
(5) If, being able to save either the thing borrowed or his own thing, he chose to save the latter. (1744a and 1745)
Article 1979. The depositary is liable for the loss of the thing through a fortuitous event:
(1) If it is so stipulated;
(2) If he uses the thing without the depositor's permission;
(3) If he delays its return;
(4) If he allows others to use it, even though he himself may have been authorized to use the same. (n)
Article 2147. The officious manager shall be liable for any fortuitous event:
(1) If he undertakes risky operations which the owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith. (1891a)
Article 2159. Whoever in bad faith accepts an undue payment, shall pay 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.
He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for damages to the person who delivered the thing, until it is recovered. (1896a)
Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a)
Article 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096)
Article 1268. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it. (1185)
Art. 1263. In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.
(n)
Genus nunquam perit: Genus does not perish.
EXCEPTIONS:
1. When the thing goes out of commerce;
2. By legal impossibility;
3. Limited Generic: In such cases where the generic thing belongs to a particular group of thing and the loss pertains to the whole group and NOT ONLY to the thing itself, then the obligation is extinguished. E.g., A promise to deliver one of his horses and ALL the horses of the A died, the obligation is extinguished.
BAR EXAM QUESITON: For value received, Pedro promised to deliver to Juan on or before Aug. 15, 1984 a Mercedes benz with plate number 123 which he had just brought home from Germany as well as a 1984 tv set.
Unfortunately the two were destroyed by an accidental fire. Are obligations of Pedro extinguished?
ANSWER: CAR – due to fortuitous event – extinguished. This is an obligation to deliver a determinate thing, therefore, with the loss of the thing due to a FE, the obligation is extinguished without liability for damages on the part of the debtor.
TV – not extinguished. Generic. Loss of the thing of the same kind and quality as that of the thing to be delivered will not extinguish the obligation to deliver a generic thing. A genus does not perish. Genus nunquam perit.
Art. 1264. The courts shall determine whether, under the circumstances, the partial loss of the object of the obligation is so important as to extinguish the obligation. (n)
Partial Loss: may be determined by the court as so important to extinguish the obligation.
In doing so, intent of the parties must necessarily be considered. E.g., A promised to deliver a cellphone with its casing. The cellphone was stolen but A managed to save the casing. Would A still be liable to deliver the casing? Yes, if the primary consideration of the creditor was to obtain the casing.
The test is whether the parties would not have entered into the obligation without the thing that have been lost, then the obligation is extinguished.
Art. 1265. Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary, and without prejudice to the provisions of article 1165. This presumption does not apply in case of earthquake, flood, storm, or other natural calamity. (1183a)
Burden of proof: is generally with the creditor claiming that the loss was due to the fault of the debtor. However, if the thing is lost while in the possession of the debtor, a presumption arises that it was due to his fault, thus, the burden of proof shifts to him. However still, if the thing was lost on the occasion of a calamity, then no such presumption arises, the burden of proof is still with the creditor.
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)
Loss of the thing may likewise cover impossibility of performance, e.g., a debtor is obliged to paint a building and the building was destroyed (physical impossibility) or a law took effect making the obligation illegal (legal impossibility).
When: In impossibility, the law should take effect, or the impossibility happened DURING the existence of the obligation so as to extinguish it. If the law took effect or the impossibility arose BEFORE the existence of the obligation, the obligation is void.
Types of Impossibility:
1. As to nature: Physical (by reason of its nature); and Legal (through some subsequent law);
2. As to whom impossibility refers:
a. Objective – impossibility of the act or service itself without considering the person of the debtor;
b. Subjective - impossibility refers to the fact that the act or service can no longer be done by the debtor but may still be performed by another person
3. As to extent: Partial or Total;
4. As to period of impossibility: Permanent or Temporary.
Not applicable to a surety company who issued a bail bond even if the DFA provided the accused with a passport: it is still the duty of the surety to make sure that the accused will appear before the trial and to do everything and take all steps necessary to prevent departure. As such, it should have informed the DFA of the pending case against the accused.
Moreover, Art. 1266 is not applicable since it pertains to the relationship of creditor and debtor which does not exists between a surety company on one hand, and the State on the other. (See People vs. Franklin)
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.
NATIVIDAD FRANKLIN, accused, ASIAN SURETY & INSURANCE COMPANY, INC., bondsman-appellant.
G.R. No. L-21507 | June 7, 1971 | EN BANC | J. Dizon
FACTS: Natividad Franklin was charged before the Justice of the Peace Court of Angeles, Pampanga with estafa. Upon a bail bond posted by the Asian Surety & Insurance Company, Inc. in the amount of P2,000, she was released from custody.
After preliminary investigation, the Justice of the Peace Court elevated it to the CFI of Pampanga where the Provincial Fiscal filed the corresponding information against the accused. As the accused failed to appear on the date set for her arraignment, the court ordered her arrest and required the surety company to show cause why the bail bond posted by it should not be forfeited.
Due to the failure of the surety company to produce the accused again notwithstanding the 60-day period granted to it, the court rendered the judgment of forfeiture of the bail bond posted by it for the provisional release of Natividad Franklin.
Subsequently, the trial court denied the surety company’s motion for a reduction of bail and its ensuing motion for reconsideration.
The surety company appealed before the SC.
Appellant contended that the lower court should have released it from all liability under the bail bond posted by it because its failure to produce and surrender the accused was due to the negligence of the Philippine Government itself in issuing a passport to said accused, thereby enabling her to leave the country and proceed to the United States. In support of this contention the provisions of Article 1266 of the New Civil Code are invoked.
ISSUE: WON Article 1266 of the NCC is applicable in this case?
HELD: NO. Appellant's contention is untenable. The abovementioned legal provision does not apply to its case, because the same speaks of the relation between a debtor and a creditor, which does not exist in the case of a surety upon a bail bond, on the one hand, and the State, on the other.
In U.S. vs. Bonoan, et al., 22 Phil., p. 1, We held that:
The rights and liabilities of sureties on a recognizance or bail bond are, in many respects, different from those of sureties on ordinary bonds or commercial contracts. The former can discharge themselves from liability by surrendering their principal; the latter, as a general rule, can only be released by payment of the debt or performance of the act stipulated.
In the more recent case of Uy Tuising, 61 Phil. 404, We also held that:
By the mere fact that a person binds himself as surety for the accused, he takes charge of, and absolutely becomes responsible for the latter's custody, and under such circumstances it is incumbent upon him, or rather, it is his inevitable obligation not merely a right, to keep the accused at all times under his surveillance, inasmuch as the authority emanating from his character as surety is no more nor less than the Government's authority to hold the said accused under preventive imprisonment. In allowing the accused Eugenio Uy Tuising to leave the jurisdiction of the Philippines, the appellee necessarily ran the risk of violating and in fact it clearly violated the terms of its bail bonds because it failed to produce the said accused when on January 15, 1932, it was required to do so. Undoubtedly, the result of the obligation assumed by the appellee to hold the accused at all times to the orders and processes of the lower court was to prohibit said accused from leaving the jurisdiction of the Philippines because, otherwise, said orders and processes would be nugatory and inasmuch as the jurisdiction of the court from which they issued does not extend beyond that of the Philippines, they would have no binding force outside of said jurisdiction.
It is clear, therefore, that in the eyes of the law a surety becomes the legal custodian and jailer of the accused, thereby assuming the obligation to keep the latter at all times under his surveillance, and to produce and surrender him to the court upon the latter's demand.
That the accused in this case was able to secure a Philippine passport which enabled her to go to the United States was, in fact, due to the surety company's fault because it was its duty to do everything and take all steps necessary to prevent that departure. This could have been accomplished by seasonably informing the Department of Foreign Affairs and other agencies of the government of the fact that the accused for whose provisional liberty it had posted a bail bond was facing a criminal charge in a particular court of the country. Had the surety company done this, there can be no doubt that no Philippine passport would have been issued to Natividad Franklin.
Difficulty of prestation
Art. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. (n)
Court action: when the performance of the obligation is difficult, it does not, on its own, warrant extinguishment of the obligation. However, when it has become so difficult beyond the contemplation of the parties, the debtor may go to court to release him from the obligation but not to modify the terms of the contract.
International law: the rule in international law is pacta sunt servanda, an exception thereto similar to Art. 1267 is rebus sic stantibus. However, Art.
1267 is not an absolute application of the latin maxim since it may impair the rights of parties to an agreement.
Rebus sic stantibus: or “things thus standing” is the legal doctrine allowing for treaties to become inapplicable because of a fundamental change of circumstances. It is essentially an "escape clause" that makes an exception to the general rule of pacta sunt servanda (promises must be kept).
Requisites for applicability:
1. Event or change in the circumstances that could not have been foreseen at the time of the execution of the contract;
2. Such event or change makes the performance extremely difficult but not impossible;
3. Such event or change is not due to the act of any of the parties;
4. The contract concerns a future prestation.
Loss of protected interest: where the creditor’s interest which is sought to be protected by the obligation disappears, such obligation is extinguished Difficulty must be caused by an event not contemplated by the parties: For Art. 1267 to apply, the difficulty must be something beyond the contemplation of the parties, such that, increase in the prices of construction materials would not warrant extinguishment of the obligation as this is not a fortuitous event beyond the contemplation of the parties.
Moreover, assuming it was not foreseen, the power of the court is only to release the debtor from his obligations and does not cover changing the terms of the obligation. (see Occena vs. Jabson)
JESUS V. OCCENA and EFIGENIA C. OCCENA, petitioners, vs.
HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal, Branch XXVI; COURT OF APPEALS and TROPICAL HOMES, INC., respondents.
G.R. No. L-44349 | October 29, 1976 |
FACTS: On February 25, 1975, private respondent Tropical Homes, Inc.
filed a complaint for modification of the terms and conditions of its subdivision contract with petitioners (landowners of a 55,330 square meter parcel of land in Davao City), making the following allegations:
"That due to the increase in price of oil and its derivatives and the concomitant worldwide spiralling of prices, which are not within the control of plaintiff, of all commodities including basis raw materials required for such development work, the cost of development has risen to levels which are unanticipated, unimagined and not within the remotest contemplation of the parties at the time said agreement was
entered into and to such a degree that the conditions and factors which formed the original basis of said contract, Annex 'A', have been totally changed;
That further performance by the plaintiff under the contract, Annex 'S', will result in situation where defendants would be unustly enriched at the expense of the plaintiff; will cause an iniquitous distribution of proceeds from the sales of subdivided lots in manifest actually result in the unjust and intolerable exposure of plaintiff to implacable losses, all such situations resulting in an unconscionable, unjust and immoral situation contrary to and in violation of the primordial concepts of good faith, fairness and equity which should pervade all human relations.
Under the subdivision contract, respondent "guaranteed (petitioners as landowners) as the latter's fixed and sole share and participation an amount equivalent to 40% percent of all cash receipts from the sale of the subdivision lots."
Petitioners moved to dismiss the complaint principally for lack of cause of action, and upon denial thereof and of reconsideration by the lower court, elevated the matter on certiorari to the CA.
The CA dismissed the petition on the ground that under Article 1267 of the Civil Code which provides that:
ART. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.
.. a positive right is created in favor of the obligor to be released from the performance of an obligation in full or in part when its performance 'has become so difficult as to be manifestly beyond the contemplation of the parties.
Hence, the petition at bar wherein petitioners insist that the worldwide increase in prices cited by respondent does not constitute a sufficient cause of action for modification of the subdivision contract.
ISSUE: WON the worldwide increase in prices cited by respondent
ISSUE: WON the worldwide increase in prices cited by respondent