HANDOUT NO.

Arts. 1189/1194

A. Rules in case of loss, deterioration or improvement of thing during pendency of

Suspensive Condition (Art. 1189)/Effect of loss, deterioration or improvement
before the arrival of the period (Art. 1194)

(1) Loss of the thing without debtor’s fault –obligation is EXTINGUISHED

Why? No person shall be responsible for those events which could not be
foreseen, or which though foreseen were inevitable. (Art. 1174)

(2) Loss of the thing through debtor’s fault – Debtor is liable to pay DAMAGES
(Arts. 1189/1170)

(3) Deterioration of the thing without debtor’s fault –

Creditor suffers the deterioration/impairment, debtor is not liable.

(4) Deterioration of the thing through debtor’s fault –

Creditor has two choices/remedies –

a) Rescission (or cancellation) plus DAMAGES
b) Fulfillment of the obligation plus DAMAGES

(5) Improvement of thing by nature or by time – Improvement belongs to Creditor

Why? Creditor suffers the loss in case of deterioration of the thing through a
fortuitous event.

(6) Improvement of thing at the expense of the debtor –

Rights given to a usufructuary –

1) No right to be paid for the improvement.
2) Right to remove the improvements provided no damage will be
made against the property/principal thing. (Art. 579)
3) Right to set-off the improvements against any damages on the
property. (Art. 580)
Definitions

a) Thing is Lost -- when it perishes (Physical loss), or goes out of commerce

(Legal loss), or disappears in such a way that its existence is unknown or it
cannot be recovered (Civil loss). (Art 1189 [2])
b) Thing Deteriorates – a thing deteriorates when its value is reduced or impaired
with or without the fault of the debtor.
c) Improvement of a Thing – a thing is improved when its value is increased or
enhanced by nature or by time at the expense of the debtor or creditor.
Source: The Law on Obligations and Contracts, Hector S. De Leon, 2011 Edition
A. Villegas