CONTRACTS

Kinds of Obligations

 Pure and Conditional Obligations
 Obligations with a Period
 Alternative Obligations
 Joint and Solidary Obligations
 Divisible and Indivisible Obligations
 Obligations with a Penal Clause
 Pure & Conditional

Art. 1179. Every obligation whose performance does not depend
upon a future or uncertain event, or upon a past event unknown
to the parties, is demandable at once.

Every obligation which contains a resolutory condition shall also

be demandable, without prejudice to the effects of the
happening of the event.

PURE OBLIGATION: one without a condition or a term.

CONDITIONAL OBLIGATION: when there is a condition

 
Condition: an uncertain event which wields an
influence on a legal relationship. (Manresa)

Term or a Period: that which necessarily must come

whether the parties know when it will happen or not.

OBLIGATIONS DEMANDABLE AT ONCE:

(1) Pure Obligations
(2) Obligations with Resolutory Condition
 Classification of Conditions

 (a) suspensive: the happening of the condition gives
rise to the obligation.
(b) resolutory: happening of the condition
extinguishes the obligation.

 (a) potestative: depends on the will of the debtor.

(b) casual: depends on chance or hazard or the will
of a third person
(c) mixed: depends partly on the will of one of the
parties and partly on chance or the will of a 3rd person.
(Book IV, The New Civil Code, E. Paras)
 Classification of Conditions

 (a) divisible: capable of partial performance
(b) indivisible: not capable of partial performance because
of the nature of the thing or intent of the parties.

 (a) positive: an act is to be performed.

(b) negative: something will be omitted.

 (a) express: condition is stated.

(b) implied: condition is merely inferred.

(Book IV, The New Civil Code, E. Paras)

 Classification of Conditions

 (a) possible: capable of fulfillment in nature and in
law
(b) impossible: not capable of fulfillment due to
nature, or operation of law or morals or public policy.

 (a) conjunctive: if all conditions must be performed.

(b) alternative: if only a few of the conditions have
to be performed.

(Book IV, The New Civil Code, E. Paras)

 
Art. 1180. When the debtor binds himself to pay when
his means permit him to do so, the obligation shall be
deemed to be one with a period, subject to the
provisions of Article 1197.

Similar Phrases:
“when my means permit to do so”
“when I can afford it”
“when I am able to”
“when I have money”
 Suspensive & Resolutory

Art. 1181. In conditional obligations, the acquisition of rights, as
well as the extinguishment or loss of those already acquired,
shall depend upon the happening of the event which constitutes
the condition.

(a) suspensive: the happening of the condition gives rise

to the obligation.

(b) resolutory: happening of the condition extinguishes

the obligation.
 Potestative & Casual

Art. 1182. When the fulfillment of the condition depends
upon the sole will of the debtor, the conditional obligation
shall be void. If it depends upon chance or upon the will of
a third person, the obligation shall take effect in
conformity with the provisions of this Code.

(a) potestative: depends on the will of one of the parties.

(b) casual: depends on chance or hazard or the will of a third
person
(c) mixed: depends partly on the will of one of the parties
and partly on chance or the will of a 3rd person.
 Potestative

 Potestative on the part of the DEBTOR:

1. Suspensive => both condition and obligation are VOID, for being
sham
Ex. I will give you my car next year if I don’t want it anymore.

2. Resolutory => VALID

Ex. I am hiring you now as the manager of the restaurant I am
establishing, but if all the furniture I ordered from abroad do not arrive by
next month, your employment is terminated.

A condition both potestative and resolutory may be valid even if the condition
is made to depend upon the will of the obligor. (Taylor vs Tieng 43 Phil 873)
 Potestative

 Potestative on the part of the CREDITOR: => VALID
Ex. I will give you my notes, if you want them.

“I will give you my P500 if I can sell my iPhone.” Is it

valid?
 Impossible & Illegal

Article 1183. Impossible conditions, those contrary to good
customs or public policy and those prohibited by law shall annul
the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the
impossible or unlawful condition shall be valid.

The condition not to do an impossible thing shall be considered

as not having been agreed upon.

Impossible: can either be physical or logical

Illegal: prohibited by good customs, public policy and law
 Impossible & Illegal

 Effects:
If the condition is to do an impossible or illegal thing, both
condition and obligation are void.

Ex. I will give you P300 if you kill X. Both condition (kill X) and obligation (give
P300) are void.

If the condition is negative, or NOT TO DO the

IMPOSSIBLE, the condition is disregarded but the obligation
is valid.

Ex. I will give you P300 if you jump over the moon. Disregard the condition
(jump over the moon), but the obligation (give P300 ) is still valid.
 Impossible & Illegal

If the condition is negative, or NOT TO DO an
ILLEGAL act, both condition and obligation are valid.

Ex. I will give you P300 if you neither do nor sell drugs. The
condition (neither do nor sell drugs) and the obligation (give
P300 ) are valid. If you sell or do drugs, you would not be
entitled to P300.
 Positive Condition

Article 1184. The condition that some event happen at
a determinate time shall extinguish the obligation as
soon as the time expires or if it has become
indubitable that the event will not take place.

Note: Time or term must be indicated. Otherwise, the courts

will fix the time.

Ex. I will give you a ring if you join a marathon by the end of
the year.
 Negative Condition

Article 1185. The condition that some event will not happen at a
determinate time shall render the obligation effective from the
moment the time indicated has elapsed, or if it has become
evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled
at such time as may have probably been contemplated, bearing
in mind the nature of the obligation.

Ex. I will give you a ring if by the end of the year, you have not smoked a
cigarette. The obligation (to give the ring) shall take effect at the end of the
year if you have not smoked. What if the law prohibited cigarettes
effective today. When shall the obligation take effect?
 Constructive Fulfillment

Article 1186. The condition shall be deemed fulfilled
when the obligor voluntarily prevents its fulfillment.

Elements:

1. Intent – debtor wants to prevent fulfillment.

2. Action – debtor caused the actual prevention

Note: If there is a lawful cause to prevent the fulfillment, this

provision does not apply.
 Constructive Fulfillment

Example:

Paula promised Nicole that she will give her an iPad if

Pauline sings inside the classroom on Wednesday. On
Tuesday night, Paula gave Pauline a bucket of
peanuts, knowing that the latter is allergic to it. What
happens if Pauline was not able to perform in class because of
her allergies?
Fulfillment of Suspensive Condition

Article 1187. The effects of a conditional obligation to give, once
the condition has been fulfilled, shall retroact to the day of the
constitution of the obligation. Nevertheless, when the obligation
imposes reciprocal prestations upon the parties, the fruits and
interests during the pendency of the condition shall be deemed
to have been mutually compensated. If the obligation is
unilateral, the debtor shall appropriate the fruits and interests
received, unless from the nature and circumstances of the
obligation it should be inferred that the intention of the person
constituting the same was different.

In obligations to do and not to do, the courts shall determine, in

each case, the retroactive effect of the condition that has been
complied with.
 Effects of Fulfillment of Suspensive
Condition

On the OBLIGATION, it becomes effective from the
day it was instituted.

Ex. In 2010, Joshua promised Alvin that he will sell his car
for P100 if Chris becomes the Student Council President on
School Year 2012-2013. In July 2012, Chris became the SC
President.
Therefore, Alvin’s right to compel Joshua to sell the car began
in 2010.
 Effects of Fulfillment of Suspensive
Condition

On the FRUITS AND INTERESTS:

(a) RECIPROCAL: those acquired or earned pending

the condition shall be deemed to compensate each other
even though it might be unequal in reality.

(b) UNILATERAL: debtor shall retain the fruits and

interests unless otherwise stated.
 PRESERVATION OF CREDITOR’S RIGHT


Art. 1188. The creditor may, before the fulfillment of
the condition, bring the appropriate actions for the
preservation of his right.

“Appropriate actions” refer to judicial and extra-judicial

actions available to the creditor to preserve his right.
 Right to Recovery of Debtor

The debtor may recover what during the same time he
has paid by mistake in case of a suspensive condition.

 The debtor is also entitled to the fruits or legal

interest if the creditor was in BAD FAITH, or he
knew that the debtor was paying prior to the
fulfillment of the condition.
 Loss, Deterioration, and Improvement during
Pendency of Conditions

Art. 1189. When the conditions have been imposed with the intention of suspending
the efficacy of an obligation to give, the following rules shall be observed in case of
the improvement, loss or deterioration of the thing during the pendency of the
condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be
extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay
damages; it is understood that the thing is lost when it perishes, or goes out of
commerce, or disappears in such a way that its existence is unknown or it cannot
be recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to
be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between
the rescission of the obligation and its fulfillment, with indemnity for damages
in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to
the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than
that granted to the usufructuary.
 Loss, Deterioration, and Improvement during
Pendency of Conditions

Elements:
(1) It is a real obligation;
(2) With a suspensive condition;
(3) The object is specific;
(4) Loss, deterioration or improvement happened to the
object pending fulfillment of the condition; and
(5) The suspensive condition has been fulfilled.
 Loss

 When it perishes

 When it goes out of commerce

 When it disappears in such a way that its existence is

unknown

 When it disappears in usch a way that it cannot be

recovered
 Loss

Effects:

 Without the fault of the debtor, the obligation is

EXTINGUISHED.

 With fault of the debtor, he will pay DAMAGES.

 Deterioration

Effects:

 Without fault of the debtor, the impairment is to be

borne by the creditor

 With fault of the debtor, the creditor may choose

either of the following, and indemnity for damages:
1. Rescission, or
2. Specific Performance (Fulfillment of obligation)
 Improvement

Effects:

 By nature or time, the creditor shall benefit.

 Through the expense of the debtor, the debtor gets

usufructuary rights.

Usufruct: the right to the enjoyment of use and fruits.

 Resolutory Condition

Art. 1190. When the conditions have for their purpose the
extinguishment of an obligation to give, the parties, upon
the fulfillment of said conditions, shall return to each
other what they have received.

In case of the loss, deterioration or improvement of the

thing, the provisions which, with respect to the debtor, are
laid down in the preceding article shall be applied to the
party who is bound to return.

As for the obligations to do and not to do, the provisions of

the second paragraph of Article 1187 shall be observed as
regards the effect of the extinguishment of the obligation.
 Resolutory Condition

Effects when fulfilled:
 The obligation is extinguished.
 Parties should restore to each other what they have
received.
 Fruits and interests thereon should be returned after
deducting the necessary expenses
 Rescission

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon
him.

The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.

The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who

have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
 Rescission

It is the cancellation (or resolution) of the contract or
reciprocal obligations in case of non-fulfillment on the
part of one.

Remedy of Rescission/Resolution:
(1) To reciprocal obligations; and
(2) The injured party is ready, willing and able to
comply his own obligation.
(3) The breach is substantial, not slight.
 Rescission

The right to rescind:

 Needs court intervention when the object has been

delivered;

 Does not need court intervention when the object has

not been delivered yet.
 Choice of Injured Party

1. Rescission, or
2. Fulfillment of the Obligation

 The choices are alternative. The injured party can ask

either, but not both. However, if he chooses
fulfillment, but it became impossible, he may resort
to rescission.
 Breach by Both Parties

Art. 1192. In case both parties have committed a
breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If
it cannot be determined which of the parties first
violated the contract, the same shall be deemed
extinguished, and each shall bear his own damages.