Suspensive and Resolutory Conditions (1181)

A. Suspensive

The happening gives rise to the obligation. If the suspensive condition does not take place, the
parties would stand as if the conditional obligation did not exist.

B. Resolutory

The happening of which extinguishes obligations and rights already existing. In other words, the
obligation already exists but is under the threat of extinction via the happening of the condition.

Potestative, Casual, and Mixed (1182)

Conditions that depend upon the sole will of the debtor (purely potestative) are invalid. Those
that depend on chance and/or upon the will of a third person (casual and mixed) are valid.

a. Potestative

Fulfillment of the condition is solely dependent on the will of either party (debtor or creditor). It is
invalid if the suspensive condition is solely dependent on the will of the debtor, but any condition
is valid if it is dependent on the exclusive will of the creditor.

The rationale of making void suspensive conditions that depend on the exclusive will of the
debtor is to prevent the establishment of obligations that are illusory and contravenes the
principle that the validity of or the compliance to a contract cannot be left to the will of one of
them (Article 1308).

b. Casual

Fulfillment of condition depends upon (1) chance or upon (2) the will of a third person. These
are valid upon the eyes of the law.
Example: A promised to buy B’s house for double the price if the lotto ticket given to him by C
will win. This is a condition that is dependent upon chance.

c. Mixed

Fulfillment of condition depends upon the (1) partly upon the will of the parties, and (2) partly
upon chance or the will of a third person. These are valid upon the eyes of the law.
Example: Debtor promised to pay as soon as he received funds derived from the sale of his
property in Spain. It is mixed because the fulfillment of the condition depends partly on the will
of the debtor and the will of a third person, a buyer who is ready and willing to purchase the
property.
Impossible Conditions (1183)
 A. Definition

In cases wherein the condition was already impossible from the time of the constitution of the
obligation, it is void. It should be emphasized that the condition must be already existing at the
time of the creation of the obligation.

B. Possible v (and Kinds of) Impossible Conditions

A condition is possible if it is capable of realization or actualization according to nature, law,

public policy or good customs, otherwise it is an impossible condition and is either of the two
kinds: (1) physically impossible (if contrary to the law of nature) and (2) juridically impossible (if
contrary to law, public policy, morals, and good customs).

C. Existence of Supervening Events

Despite the existence of a supervening possibility that would make the impossible condition
possible, the parties would still have to agree again. This also applies when a supervening
impossibility exists and would make a possible condition an impossible one.

D. Condition Not To Do An Impossible Thing

Only positive impossible conditions affect the obligation. On the contrary, if the impossible
condition is negative, it does not need to be stipulated nor agreed upon. This is because,
despite the absence of such a condition, for example, if involving an unlawful act, the rule has
always been that no person is allowed to commit an unlawful act. Consequently, the obligation
shall stand without any condition; it becomes simple and pure, and immediately demandable.

E. Divisible Obligation

If the obligation is divisible, only the portion which is affected by the impossible condition will be
deemed void; the rest unaffected by the aforementioned obligation remains valid.
Example: A obligated himself to build a road on the land of B for PhP 1M, on the condition that
the PhP 500k would be paid through Philippine currency, and the other PhP 500k would be paid
through illegal drugs. Only the other former would be valid.

F. IC in Obligations v IC in Donation and Wills

In donations and wills, the impossible conditions imposed on the disposition or the will are
considered not written, but the said instruments are valid nonetheless.
Art. 727 - IC in simple and remuneratory donations shall be considered not imposed.
Art. 873 - IC in wills will not be considered imposed and will not prejudice the heir.
Condition of the Happening of a Future Event within a Fixed Period (1184)
 A. Scope

This covers only positive conditions, which refers to the fulfillment of an event or performance of
an act. 1185 covers negative conditions.

B. Fixed Period for the Happening of an Event

If the condition has a determinate time or fixed period for the fulfillment of the condition, and that
period had elapsed without the condition being fulfilled, then the obligation is extinguished.
Example: A binds himself to buy B a car if he becomes a lawyer by 2024. It is already 2025 yet
B is still a law student, hence A’s obligation is extinguished.

C. Indubitability that the Event will not Happen

If the same type of condition exists, and it is indubitable that the event will not occur, then the
obligation is extinguished.
Example: A binds himself to buy B a car if he becomes a lawyer by 2024. B dropped from the
law program and went abroad on a 5-year contract of employment. Hence, it is now certain that
B will not become a law student by 2024 and, thus, the obligation is extinguished.

Condition of Non-Happening of a Future Event within a Fixed Period (1185)

The condition that some event will not happen at a specified time will make the obligation
effective only when: (1) the said period had already elapsed without the happening of said
event, or (2) it has become definite that the event will not occur.

Example:

(1) A obligated himself to deliver a parcel of land to B on the condition that B will not run for
Mayor in their municipality within 6 years. 6 years later, the period had lapsed and B has
not yet run for mayor. A’s obligation becomes effective.
(2) A obligated himself to deliver a parcel of land to B on the condition that B will not run for
Mayor in their municipality within 6 years. 1 year later, a calamity befell the said
municipality and all the residents have transferred to other municipalities rendering the
municipality inexistent. B cannot run for Mayor in an inexistent municipality, hence A’s
obligation becomes effective.

Doctrine of Constructive Fulfillment (1186)

 A. Constructive Fulfillment - refers to an obligation prevented by the obligor from
happening

B. Constructive Fulfillment of Condition

If the obligor voluntarily prevents the fulfillment of a condition, the obligation is deemed fulfilled.
It has two requisites:
(1) obligor intends to prevent the fulfillment of the condition or the compliance of the obligee
thereof; and
(2) obligor actually and successfully consummates the prevention of the said condition.

It does not apply to:

(1) Resolutory conditions;
(2) External contingency that is lawfully within the control of the obligor; and
(3) Obligor, in preventing the fulfillment of the condition, acts pursuant to a right.

EXAMPLE:

(1) Liable for Damages

A made a bid for installations of plumbing works in a government building and was requierd to
put up the required performance of bond after the acceptance of his bid. A did neither the bond
nor the plumbing works.

In his defense, A asserted that because he did not comply with the condition of putting up a
bond, then there is no contract as the aforementioned condition was not fulfilled.

A is liable for damages since the putting up of a performance bond is not a condition before he
could be compelled to make the installation. Assuming that the bond is a condition, it was he
who voluntarily prevented its fulfillment.

(2) Not Liable for Damages

A, a hacienda owner, entered a contract with B to grind the former’s sugar cane. To make the
contract possible, B has to construct a railroad through the hacienda for the carriage of the
sugar cane to his facilities. A did not give permission for the construction of said railroad. A sued
B for failing to grind the sugar cane.

B is not liable since A voluntarily prevented the compliance of the obligation by refusing to allow
the construction of the needed railroad that would allow the loading and bringing of the sugar
cane to B’s facilities.

C. Rationale
No person shall profit by his own wrong. If the obligor deliberately prevents the fulfillment of the
condition imposed on the obligation, the law provides that the condition is deemed fulfilled.

Principle of Retroactivity of Suspensive Conditions (1187)

A. Scope

The article only applies to suspensive conditions that were fulfilled, it is not applicable without
fulfillment.

B. Rationale

Obligation is constituted when its essential elements concur. The condition imposed is only an
accidental element.

C. Effects of Fulfillment of Suspensive Conditions

a. To Give

i. Retroactivity from the Moment of Constitution

Upon fulfillment of the condition, the effects of the conditional obligation shall retroact to the date
of the constitution (refer to rationale). In other words, the effects of the obligation are deemed to
commence not from the time of the fulfillment of the suspensive condition, but from the moment
the obligation itself was constituted.

Comparative Illustration: In the legitimation of a natural child, the legitimation does not
commence at the time of the belated marriage, but retroacts to the time of the child’s birth.

ii. Reciprocal Prestation

If the obligation imposes a reciprocal prestation, the fruits and interests they received and
accrued from during the pendency of the condition shall be deemed to have been mutually
compensated. The compensation shall be up to the concurrent amount.

iii. Unilateral Obligation

If the obligation is unilateral (like donations), the debtor is allowed to appropriate (or use for his
own interests) the fruits or interests he received. The rationale for this is that the debtor has not
received anything from the creditor as the obligation is unilateral, unless if the intention of the
parties are different.

iv. Non-alienability of Determinate or Specific Subject During Pendency

of the Fulfillment Suspensive Condition
The obligor is not allowed to alienate the object of the conditional obligation if it is a determinate
or specific thing. The rationale is the expected right of the obligee might become illusory should
the condition be fulfilled and the property is already gone.

If the obligor alienates the property, the alienation will be abrogated or repealed upon the
happening of the condition because the obligee has a better and superior right than the
transferee.

However, if the third person acted in good faith and acquired the ownership of the property
before the happening suspensive condition. The only remedy of the obligee is to sue for
damages against the obligor who alienated the said property. Otherwise, if the third person
acted in bad faith, he can be compelled to deliver the property to the obligee with damages
upon the happening of the suspensive condition.

v. Alienation of Obligee
If obligee alienates his expected right before the happening of the suspensive condition, the
alienation shall be deemed convalidated (making an act valid following the removal of some
impediment) by the fulfillment of the condition and the rights of the transferee are consolidated
(or combined).

Comparative Example: In estoppel: “when a person who is not the owner of a thing sells or
alienates and delivers it, and later he seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee.”

b. To Do or not to Do

In positive and negative personal obligations, their retroactive effect shall be determined by the
court using its sound discretion in consideration of the intention of the parties. The court may
also refuse to grant retroactivity depending on the circumstances.

Preservation of the Creditor’s Rights and Available Remedies During the Pendency of
Suspensive Conditions (1188)
Pending the happening of the suspensive condition, the creditor cannot compel the compliance
of the debtor to perform the prestation, he only has a mere expectancy dependent on the
happening of the condition.

It is possible that when the suspensive condition becomes fulfilled, the expectancy, that has
become a right, may no longer be available due to intervening acts attributable to the debtor or
events during the interregnum (interregnums are periods wherein governments or social are
discontinued). Hence these remedies are available to the creditor:

(1) action for prohibition restraining the alienation of the thing pending the happening of the
suspensive condition;
(2) petition (with the appropriate Registry of Property if real property like land is involved), for the
annotation of the creditor’s right;
(3) action to demand security if the debtor has become insolvent;
(4) action to set aside alienations made by the debtor in fraud of creditors; or
(5) actions against adverse possessors to interrupt the running of the prescriptive period.

This article does not grant any preference of credit, but only allows the bringing of the proper
action for the preservation of the credit.

NOTE: Preference of credit - right held by a creditor to be preferred in the payment of his
claim above others out of the debtor’s assets.

Suspensive Conditions in Case of Improvement, Loss or Deterioration during Pendency

(1189)

A. Applicability

Applies only to fulfilled suspensive conditions with obligations that involve specific or
determinate things.

The article talk about the possible risks, changes or alterations during the pendency of the
suspensive condition, to wit: (a) loss, (b) deterioration or impairment, and (c) improvement or
betterment.

If the conditions have not been fulfilled, the effects of the improvement, loss or deterioration of
the things subject of the condition will become the concern of the debtor alone, The creditor will
have nothing to do anymore with the loss etc. if condition was not fulfilled.

B. Article Simplified

In case of improvement, loss, or deterioration of the thing during pendency of the condition, the
following rules shall apply:
 (1) Thing is lost without fault of the debtor, obligation shall be extinguished;

(2) Thing is lost through fault of the debtor, he shall be obliged to pay damages upon the
happening of the condition;

Loss of the Thing, Defined

The thing is considered lost when it:

(1) perishes (building gutted by fire and collapsed to the ground);
(2) goes out of commerce (land converted into public plaza, this is considered out of commerce
because it can no longer be alienated; a thing which used to be sold in the market but now
declared a prohibited good); or
(3) disappears in such a way that its existence is unknown or it cannot be recovered (standing
crops washed away by flood).

(3) Thing deteriorates without fault of the debtor, creditor must accept the thing in its
damaged or impaired condition;

(4) Thing deteriorates through fault of the debtor, creditor may either (1) accept the thing
with damages, or (2) seek the recission of the obligation with damages;

Deterioration of the Thing, Defined

Opposite of improvement, it is the worsening of the condition. It is the impairment or reduction of

value or utility of the thing but does not amount to loss of the thing. The thing exists at the time
of the fulfillment of the condition but its value or utility has lessened compared to the time of the
constitution of the obligation.

Example: House partly damaged by floods or termites.

(5) Thing is improved by its nature or time, improvement shall inure (come into operation
or take effect) to the benefit of the creditor; and

(6) Thing is improved at the expense of the debtor, his rights shall be similar to an
usufructuary.
Improvement of the Thing, Defined

Anything which increases the value of the thing or its utility is improvement through:

(1) time (wine ameliorated by time); or

(2) addition of something that adds into its value (instance of improvement by natural addition:
alluvium or alluvial deposit wherein a riparian land (land situated on the banks of a river) is
enlarged by accretion process (he process of growth or increase, typically by the gradual
accumulation of additional layers or matter).

Right of Debtor When He Spent for Improvements

As similar to an usufructuary who had introduced improvements on the property in usufruct,

debtor is not entitled to indemnification for the improvements. However, he may:

(1) remove the improvements he had introduced when it can be possibly be removed without
causing damage to the property; otherwise
(2) he must deliver the thing to the creditor together with the improvements without indemnity
therefore

If debtor made improvements and at the same time caused deterioration to the thing, the value
of the improvements may be set off against the value of the deteriorations.

Resolutory Conditions in Case of Improvement, Loss or Deterioration during Pendency

(1190)

A. Applicability

The said article only applies to fulfillment of a resolutory condition, wherein an obligation that is
already existing is extinguished.

B. In case of Loss, Deterioration, and Improvement

Same rules in Article 1189 will apply except the party bound to return something under 1190 will
be considered as the debtor.

If the thing is lost without fault, before the happening of the resolutory condition, the loss will be
borne by the party who is supposed to return it. If the loss is due to his fault, he will still be liable
for damages.

If the thing is given improvements, the same shall inure the benefit of the party who is bound to
receive the thing in the restoration process.
 C. Positive and Negative Obligations

Same in 1189, the effect of the extinguishment of the obligations by the happening of the
resolutory condition, the retroactivity of its fulfillment shall be determined by the discretion of the
courts with consideration of the intention of parties if the same could be determined.

D. Nature of Resolutory Condition

The presence of a resolutory condition in an obligation immediately vests the contemplated

rights unto the creditor subject to extinguishment should the condition be fulfilled. If it does not
happen, the rights become consolidated and absolute.

E. Effect of Resolutory Condition

Upon the happening of the resolutory condition, the obligation is considered as if it did not exist.
Thus, parties are now bound to return or restore whatever they had received. There is a return
to the status quo before the constitution of the obligation.

As for the fruits and intersets derived from the things they had actually received, expenses
incurred for their production, gathering, and preservation shall be deducted from the value of the
fruits and interests to be accounted for.

Example: A owns a fishpond. He gave it to B on the condition that he shall not run for Governor
in their province. 3 years later, B ran for Governor. The condition having been fulfilled, B must
return the fishpond and the fruits thereof.

F. Reciprocal Restitutions

In reciprocal restitutions, fruits and interests shall be compensated against each other (1187).
This rule should also apply even if 1187 is silent on the matter of compensation.

Example: Following from the same example, B mortgaged the fishpond to C, and the latter
settled the mortgage obligations, there is reciprocal restitution. A will return the money paid by B
for the settlement of the obligation plus interests; while B will return the fishpond including the
fruits (fish gathered) or value thereof.

Recission of Reciprocal Obligations