Art.

1186
- Constructive fulfillment of suspensive condition
- Creditor voluntarily prevents fulfillment of the
condition.
- Ex. The company unreasonably increase the
quota of its salesmen after one almost reach it.
- Applies also to resolutory condition if the
debtor is bound to return what he has received
upon the happening of the condition. Debtor
prevents the fulfillment of the condition.
- Ex. Employer provides daily allowance for hotel
expenses to an employee if the latter cannot
find an apartment to stay. Employee did not
look for a place so he will continue to receive
the daily allowance.

Art. 1187 - Retroactive effect of fulfillment of

suspensive condition

a)Obligation to give
- retroacts to the day the obligation is
constituted not from the time condition is
fulfilled
- Ex. Teachers are promised a salary increase at
the start of the school year provided the CHED
approves the application for salary increase.
CHED approved the application in December.
Increase in salary is effective from June.
 - No retroactive effect as to fruits and interests in
reciprocal obligations; deemed mutually
compensated.
- Ex. Sale of taxi. Interest on the selling price and
income from rentals of taxi is deemed set-off
- No retroactive effect also as to fruits and
interests in unilateral obligations unless there is
a clear intention to give the fruits and interest;
gratuitous in nature.
- Ex. Reimbursement of tuition fee if student tops
the board exam. Student cannot ask for interest
on the tuition fee paid as the intention to return
only the tuition fees paid.

b) obligation to do or not to do
- no fixed rule, discretionary on the courts to
apply retroactive effect of suspensive condition
- intention of the parties is taken into
consideration
- Ex. A week before, a contractor submitted a
quotation for the repair of the wall of the house
on the condition it will not rain on the coming
weekend. On weekend, it did not rain but the
prices of materials increase. Quoted price
prevails despite the increase.

Art. 1188 – Creditor’s rights pending the happening

of the suspensive condition.
 a)Bring action to preserve the thing
- Ex. In case of sale of land, cause the annotation
in the Registry of Property.
b) Debtor can recover payment by mistake
before the happening of the condition.

Art. 1189 – Rules in case of loss (before the

happening of the suspensive condition)

Kinds of loss
a)Physical loss – thing perishes i.e. house gutted
by fire
b) Legal loss – goes out of commerce i.e. sale
of firearms when a law is pass declaring it
illegal.
c)Civil loss – disappears or cannot be recovered
i.e. a ship that sank in the bottom of the sea.

Rules:
1) Lost without debtor’s fault – obligation is
extinguished
2) Lost through debtor’s fault – debtor liable to
pay damages
3) Deteriorates without debtor’s fault – borne by
the creditor
4) Deteriorate with debtor’s fault – creditor may
choose between rescission or fulfillment of the
obligation, with damages in either case.
5) Improve by nature, inure to the benefit of the
creditor
6) Improve at debtor’s expense – debtor shall
have usufructuary rights (remove the
improvements without destroying the principal
thing; not subject to reimbursement)

Art. 1190 – effects of fulfillment of resolutory

condition.
a)Obligation to give
- Return to each other what they have received
including the fruits and interest. Except when it
is with a third person in good faith, the remedy
is restitution.
- Ex. A scholar who violates the scholarship
contract shall return the school fees paid plus
interest.

b) Obligation to do or not to do
- The courts shall determine the retroactive
effect of the fulfillment of the resolutory
condition.
- Ex. Salesman is allowed to use company car
provided he reached the quota. If quota is not
reached, salesman must return the car but is
not required to pay rental because the intention
is to use the car for company’s business.
Art. 1191 – Reciprocal obligations

Alternative remedies in reciprocal obligations if

one party fails to perform his obligation (needs
time and not refusal to perform):

a) Ask for specific performance with damages

b) Action for rescission with damages
(implied); different from rescission due to
lesion, defect in consent or violation of
contract.

Ex. Sale of taxi – the buyer is ready with the

payment but the seller needs time to deliver the
car as it is not returned by the taxi driver.

Limitations on the right to demand rescission:

- Must be granted by the court (judicial
rescission) except when automatic rescission is
expressly stipulated (extrajudicial rescission).
However, notice must be given to the other
party. If there is objection, resort to court is
necessary. Ex. Violation of lease contract.
 - The court has discretion to allow the party in
default a term or period to perform the
obligation.
- Rescission is not available if the thing is in the
hands of a third person in good faith.
- There must be substantial breach of contract.
- Right of rescission may be waived such as the
acceptance of a security.

Art. 1192 – both parties are guilty of breach

a)First infractor known
o Liability for damages of the first infractor is
equitably tempered.
b) First infractor is not known
o Contract is extinguished, each shall bear his
own damage.