LOSS OF DETERMINATE THING DUE

a. Effect of loss of a determinate thing/impossibility of performance

As emphasized in the Article 1262, if an obligation requires the debtor to deliver a
specific thing, the duty will be forfeited in case of a fortuitous event, if the obligor did not
commit a delay beforehand. However, if the agreement stated explicitly that the debtor
will be accountable for any damages accumulated by the object before the execution of
the obligation, he or she will be responsible for its replacement. This article can also be
applied when the type of the obligation is most likely to be at risk during the
performance of it.
As stated in the Article 1266, if the debtor is required to do something and it
became impossible to be fulfilled legally or physically without the obligor’s fault, the
debtor will be deemed freed from the obligation.
For example, B paid A to deliver logs. However, due to a fortuitous event A is not
capable of delivering it since the machineries broke down. Due to the nature of their
contract, A is still obliged to deliver the logs. Moreover, he or she has been punished to
pay 100,000 php but due to his good faith it has been reduced into 50,000 php.

b. Exceptions
The obligation will be deemed void in case of its disappearance when the
obligation is to deliver a specific thing, has been gone without the debtor’s involvement
in the fortuitous event, and the obligor did not commit any delay. However, the
obligation of the debtor will not be terminated if the law or the agreement between the
two parties requires the obligor to perform the liability despite of the occurrence of a
fortuitous event, when the obligation’s fulfillment involves any risk in order to be done,
and if the thing to be delivered has been accumulated through an illegal act.

c. Partial loss of thing

As stated in the Article 1264, if the object of the prestation has been lost partially
the court will decide

ART. 1264. The courts shall determine whether, under the circumstnces, the partial
loss of the object of the obligation is so important as to extinguish the obligation. (n)

Effect of partial loss of a specific c thing.

There is partial loss when only a portion of the thing is lost or destroyed or when
it suffers depreciation or deterioration. Partial loss is the equivalent of diffi culty of
performance in obligations to do. (Art. 1267.)
In case of partial loss, the court is given the discretion, in case of disagreement
between the parties, to determine whether under the circumstances it is so important in
 relation to the whole as to extinguish the obligation. In other words, the court will decide
whether the partial loss is such as to be equivalent to a complete or total loss.

d. Difficulty of service to be rendered

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)
Effect of impossibility of performance.
This article lays down an exception to the obligatory force of contract. (see Art. 1159.)
It refers to a case when, without the obligor’s fault, an obligation to do becomes legally
or physically impossible. The supervening impossibility of performance will result in the
extinction of the debtor’s obligation after restitution of what he may have received, if
any, in advance from the other contracting party. The debtor incurs no liability for his
inability to perform.
For example, in a case, the employer was held not liable for breach of an employment
contract, where the second contract expressly made the renewal of the employee’s
residence and work permit by the concerned authorities in Saudi Arabia, a condition to
his continued employment in said country. The condition was resolutory in nature, that
is, the non-renewal had the effect of resolving or rendering cancellable the employment
contract and releasing the employer from its obligation to continue the employment.
(Phil. National Construction Corp. vs. National Labor Relations Commission, 193 SCRA
401 [1991].)
This impossibility must take place after the constitution of the obligation. If the
obligation is impossible from the very beginning, the obligation is void. (see Arts. 1183,
1348.) In such case, there is no obligation to be extinguished. Note that Article 1266
makes express reference to obligations to do or personal obligations. In obligations not
to do, impossibility of performance can hardly take place.
Kinds of impossibility.
(1) In purely personal obligations, when the personal qualifi cations of the obligor
are involved, physical impossibility takes place when, for example, the obligor dies or
becomes physically incapacitated to perform the obligation. The law does not make any
distinction as to whether or not the obligation can still be performed by others.
However, if the impossibility is due to the fault or negligence of the obligor, he shall be
liable for damages.
(2) Legal impossibility occurs when the obligation cannot be performed because it is
rendered impossible by provision of law, although physically it may be possible of
performance.

e. Remedy of creditor against third parties

 ART. 1269. The obligation having been extinguished by the loss of the thing, the
creditor shall have all the rights of action which the debtor may have against third
person by reason of the loss. (1186)

Right of creditor to proceed against third persons.

Under the above article, the creditor is given the right to proceed against the third
person responsible for the loss. There is no need for an assignment by the debtor. The
rights of action of the debtor are transferred to the creditor from the moment the
obligation is extinguished, by operation of law to protect the interest of the latter by
reason of the loss.
The rule finds frequent application in insurance.

CONDONATION OR REMISSION

f. Concept and nature of condonation/remission

ART. 1270. Condonation or remission is essentially gratuitous, and requires the
acceptance by the obligor. It may be made expressly or impliedly.

One and the other kind shall be subject to the rules which govern inoffi cious
donations. Express condonation shall, furthermore, comply with the forms of donation.
(1187)

Meaning of condonation or remission.

Condonation or remission is the gratuitous renunciation by the creditor of his right
against the debtor resulting in the extinguishment of the latter’s obligation in its entirely
or in that part of the same to which the renunciation refers.
It is thus a form of donation.

g. Implied condonation
Requisites of condonation or remission.
The requisites are the following:
(1) It must be gratuitous;
(2) It must be accepted by the obligor;
(3) The parties must have capacity;
(4) It must not be inoffi cious; and
(5) If made expressly, it must comply with the forms of donation.
It is also clear that remission, properly speaking, presupposes that the obligation is and
continues to be, demandable at the time of the remission. (8 Manresa 365.)
Evidence required to prove remission.
 Remission, being an act of liberality, should be proved by clearer and more convincing
evidence than what is required to establish payment. (Villahermosa vs. Medina, [CA] 44
O.G. 4429.)
h. Effect of renunciation of principal debt
ART. 1273. The renunciation of the principal debt shall extinguish the accessory
obligations; but the waiver of the latter shall leave the former in force. (1190)
Effect of renunciation of principal debt on accessory obligation.
The above provision follows the rule that the accessory follows the principal. While the
accessory obligations cannot exist without the principal obligation, the latter may exist
without the former. (see Art.

i. Presumed remission of pledge

ART. 1274. It is presumed that the accessory obligation of pledge has been remitted
when the thing pledged, after its delivery to the creditor, is found in the possession
of the debtor, or of a third person who owns the thing. (1191a)

Presumption in case thing pledged found in possession of

debtor.
In a contract of pledge (see Arts. 2085, 2093.), it is necessary that the thing pledged be
placed in the possession of the creditor, or of a third person by common agreement.
(Art. 2093.) A third person who is not a party to the principal obligation may secure the
latter by pledging his own property. (Art. 2085, last par.)
If the thing pledged is later found in the hands of the debtor or the third person, only
the accessory obligation of pledge is presumed remitted, not the obligation itself. The
debtor shall continue to be indebted but he does not have to return the thing pledged.
The presumption yields to contrary evidence. (see Lao vs. Yek Tong Lin Fire & Marine
Ins. Co., 55 Phil. 386 [1930].) It does not arise if the third person in possession of the
thing pledged does not own the same.