DIFFERENT KINDS OF OBLIGATION (PART 1)

Classification of obligations

1.Primary classification of obligation under the Civil Code:

a.Pure and conditional obligation

b.Obligation with a period

c.Alternative and Facultative

d.Joint and Solidary obligation

e.Divisible and indivisible obligation

f.Obligations with penal clause

2.Secondary classification of obligations under the Civil Code

a.Unilateral and bilateral obligation

b.Real and personal obligation

c.Determinate and generic obligation

Article 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. (1113)

Bawat obligasyon na ang pagganap ay hindi nakadepende sa hinaharap o sa hindi tiyak na

kaganapan o kaya sa nakalipas na pangyayari na hindi alam ng partido ay dapat maipatupad
kaagad.

Bawat obligasyon na naglalaman ng napatigil na kondisyon ay dapat maipatupad din ng walang

pagkiling sa epekto ng mga pangyayari.

Meaning of Pure Obligation

A Pure Obligation is one which is not subject to any condition and no specific date is mentioned for its
fulfillment and is, therefore, immediately demandable.

Examples:

(1) Carlo obliges himself to pay Dindo P1,000.

The obligation is immediately demandable because there is no condition and no date is mentioned for its
fulfillment. 

(2) Ana binds herself to pay Betty P10,000 “upon demand of Betty.

The obligation is immediately due and demandable.

Meaning of Conditional Obligation

A conditional obligation is one whose consequences are subject in one way or another to the fulfillment of
a condition.

Meaning of Condition

Condition is a future and uncertain event, upon the happening of which, the effectivity or extinguishment
of an obligation (or right) subject to it depends.

Characteristic of a condition

1.Future and uncertain

2.Past but unknown

A condition must not be impossible (see Art. 1183)

Two principal kinds of condition

They are:

(1)Suspensive condition (condition precedent or condition antecedent) or one the fulfillment of which will
give rise to an obligation (or right).

Example:

I will sell you the land if it is adjudicated to me in the division of my deceased father’s estate.

My obligation is demandable only after the condition is fulfilled-my becoming the owner of the
land. In the meantime, I am not liable to you.

(2)Resolutory condition (condition subsequent) or one the fulfillment of which will extinguish an
obligation(or right) already existing.

Example:

Di, in payment of his debt to Cay, binds himself to give Cay P3,000 monthly allowance until Cay
graduates from college.

Di’s obligation is demandable now but it shall be extinguished upon happening of the resolutory
condition ---Cay’s graduating from college.
Distinctions between suspensive and resolutory conditions

 The difference between the two (2) conditions is very clear: both bear an influence on the existence of
the obligation, but in diametrically opposed manner.

 (1) If the suspensive condition is fulfilled, the obligation arises, while if it is the resolutory condition that is
fulfilled, the obligation is extinguished;

(2) If the first does not take place, the tie of the law (juridical or legal tie) does not appear, while if it is the
other, the tie of law is consolidated; and

(3) Until the first takes place, the existence of the obligation is a mere hope, while in the second, its
effects flow, but over it hovers the possibility of termination. (see 8 Manresa 130-131.)

When obligation is demandable at once.

 An obligation is demandable at once -—-

 (1) when it is pure (Art. 1179, par. 1.);

(2)when it is subject to a resolutory condition (Ibid.,2.); or         

(3)when it is subject to a resolutory period. (Art. 1193, par. 2.)

Past event unknown to the parties.

 A condition really refers only to an uncertain and future event. A past event cannot be said to be a
condition since the demandability of an obligation subject to a condition depends upon whether the event
will happen or will not happen.

 What is really contemplated by the law is the knowledge to be acquired in the future of a past event
which at the moment is unknown to the parties interested, for it is only in that sense that the event can be
deemed uncertain. This knowledge determines whether the obligation will arise or not. (see 8 Manresa
120-121.)

EXAMPLE:

 X is the owner of a parcel of land which is being claimed by Y. Last week, the Supreme Court has
rendered a final decision upholding the right of X. However, X has not yet received the notice that
he had won the case. Now, X obliged himself to sell his land to B, should he win the case against
Y.

 Under the facts, X would be bound to sell the land to B upon receipt of the notice that he had won
the case

 
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

Where duration of period depends upon the will of debtor.

A period is a future and certain event upon the arrival of which the obligation subject to it either arises or
is extinguished.

(1) The debtor promises to pay when his means permit him to do so. The obligation shall be deemed to
be one with a period. In this case, what depends upon the debtor's will is not whether he should pay or
not for indeed he binds himself to pay. What is left only to his will is the duration of the period.

If the debtor and the creditor cannot agree as to the specific time for payment, the court shall fix the same
on the application of either party. (Art. 1197, par. 2.)

(2) Other cases. — As when the debtor binds himself to pay:

(a) "little by little" (Scone vs. Francisco, 24 Phil.309.);

(b)"as soon as possible" (Gonzales vs. Jose, 66 Phil. 369.);

(c)"from time to time" ;

(d) "at any time I have the money" (Soriano vs. Abalos, 84 Phil. 206.);

(e) "in partial payments" (Levy Hermanos vs. Paterno, 18 Phil. 353.); and

(f) "when I am in a position to pay." (see Luding Hahn vs. Lazatin, [unrep.1 105 Phil. 1358.)

Obligations with a period are discussed in the next sections. (Arts. 1193-1198.)

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. (1114)

Sa mga obligasyon condisyonal, ang pagtatamo ng karapatan, pati na rin ang pagtapos o kawala
ng mga natamong karapatan  ay nakasalalay sa mga pangyayari ng mga kaganapan na bumubuo
ng kundisyon.

Effect of happening of condition.     

This article reiterates the distinction between a suspensive (or antecedent) condition and a resolutory (or
subsequent) condition.

 (1) Acquisition of rights. In obligations subject to a suspensive condition, the acquisition of rights by the
creditor depends upon the happening of the event which constitutes the condition.
What characterizes this kind of obligation is the fact that its efficacy or obligatory force (as distinguished
from its demandability) is subordinate to the happening of a future and uncertain event. It follows that if
the suspensive condition does not take place and it is certain that it will not be fulfilled, the parties would
stand as if the conditional obligation had never existed. During the pendency of the suspensive condition,
the creditor has only a mere hope or expectancy of acquiring a right. (Art. 1188, par. 1.)

EXAMPLES:

(1)T, testator, in his last will and testament gave some property to H (heir) provided T would die
within two (2) years.

In this case, H would acquire a right to the land only upon the happening of the suspensive
condition: the death of T within two (2) years. (If there is no length of time within which the death
must take place, the obligation is one with a period.) If T died after two (2) Years, the situation
would be the same as if no provision was made by T in his will in favor of H.

(2)The surrender of the Sweepstakes ticket is a condition precedent to the payment of the prize.
(Santiago vs. Millar, 68 Phil.39)

(2) Loss of rights already acquired. In Obligations subject to a resolutory condition, the happening of
the event which constitutes the condition produces the extinguishment or loss of rights already acquired.

EXAMPLES:

1)X binds himself to support Y until Y graduates from college. Here, the right already acquired by
Y the right to receive support ----- shall be extinguished or lost once the condition is fulfilled.

2)S sold to B a parcel of land subject to S's right of repurchase. The ownership already acquired
by B under the contract shall be extinguished or lost should S exercise his right of repurchase.

3)A lease contract expressly stipulates that R, lessor, may terminate the lease in case his children
shall need the leased premises. Here, the happening of the condition depends upon the will of a
third person — R's children.

Article 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. (1115)

Kung ang pagtupad ng kasunduan ay nakasasalay lamang sa umutang ito ay walang bisa. At kung ito
naman ay nakasalalay sa ikatlong tao, ang obligasyon ay magiging epektibo ayon sa pinaguutos ng
probisyon ng Batas.

Classification of Condition
Conditions  may be classified as follows:

As to effect:

Suspensive – when the performance or fulfillment of the condition results in the birth or acquisition of the
rights contemplated in the obligation.

Resolutory – results in the extinguishment of the rights which have previously arisen out of the
obligation.

As to Cause/Origin:

Potestative – depends upon the will of the debtor

Casual – depends upon chance and/or upon the will of the third person

Mixed – depends partly upon the will of a party to the obligation and partly upon chance and/or the will of
a third person.

As to Possibility:

Possible – when the condition is capable of fulfillment according to nature, law, public policy or good
customs. (Art. 1183)

Impossible – not capable of fulfillment according to nature, law, public or good customs. (Art. 1183)

As to mode:

Positive – when the condition involves the doing of an act. (Art. 1184)

Negative – when the condition involves the omission of an act. (Art. 1184)

As to Divisibility

Divisible – when the condition is susceptible of partial performance.

Indivisible – when the condition is not susceptible of partial performance.

As to numbers:

Conjunctive – when there are several conditions in an obligation and all of which must be performed.

Alternative – when there are several conditions in an obligation but only one must be performed.

As to form:

Express – when the condition is expressly stated.

Implied – when the condition is not expressly stated but merely inferred from the conduct of the parties.

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.

Imposibleng kondisyon, na kasalungat ng magandang kinagisnang kaugalian o  mga pampublikong

patakaran at mga pinagbabawal ng batas ay dapat ipawalang-bisa ang obligasyon o pananagutan na
naka salaysay sa kanila. Kung ang obligasyon ay nahahati, ang bahagi na hindi apektado ng imposible at
hindi makatarungang kondisyon ay may bisa.

Ang kundisyon na hindi gawin ang imposibleng bagay ay ipinagpapalagay na hindi napag kasunduan.

Discussion:

Possible Condition  – capable of realization or   actualization in accordance to

  –nature

  –law

  –public policy

  –good custom and morals

Impossible Condition – not in accordance   to possible conditions

  Physically Impossible – contrary to the law   of nature (nature of things or cannot be   done)

  Juridically Impossible  – contrary to law,   morals, public policy and good custom

Effects of Impossible Conditions:

a. Conditional obligation void

b. Conditional obligation valid
c. Only affected obligation is void.
d. Only the condition void.

Impossible Conditions in Obligations distinguised from Impossible Conditions in Donations and

Wills

If there are impossible conditions impossed  on the disposition on the donation or will, the same shall not
be considered written.

  Art 727.   Illegal or impossible conditions in simple remunaratory donations shall be considered as not
imposed.
  Art 873.   Impossible conditions and those contrary to law and good customs shall be considered as not
imposed and shall in no manner prejudice the heir, even if the testator should otherwise provide.

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.

Ang kalagayan na ang ilang mga kaganapan mangyari sa isang takdang panahon ay maaaring mawala
na ang obligasyon hanggang sa dumating ang takdang panahon na ito ay wala ng bisa o kung ito ay
walang kadudaduda na ang pangyayari at hindi na mangyayari.

  Positive condition

The above article refers to positive (suspensive) condition-the happening of an event at a determinate
time. The obligation is extinguished:

(1) as soon as the time expires without the event taking place or

(2) as soon as it has become indubitable that the event will not take place although the time specified has
not expired.

 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. (1118)

Ang obligasyon para sa kondisyon na may mga pangyayari na hindi magaganap sa nakatakdang

panahon ay magkakaroon lamang ng bisa mula sa pagkalipas ng oras na nakasaad or kung naging
malinaw na hindi na ito maaaring mangyari.

Sakaling walang panahon ang naitakda, ang kondisyon ay dapat ituring na nangyari na sa panahong
napagnilayan, nang may pagsangalang-alang sa kalikasan ng obligasyon.

 Negative condition

The above provision speaks of a negative condition-that an event will not happen ata determinate time.
The obligation shall become effective and binding:

(1) from the moment the time indicated has elapsed without the event taking place; or

(2) from the moment it has become evident that the event cannot occur, although the time indicated has
not yet elapsed

 
 

Article 1186 - The condition shall be deemed fulfilled when obligor voluntarily prevents its
fulfillment.

Ang kondisyon ay masasabing natupad na kung ang may obligasyon mismo ang boluntaryong pumigil sa
pagtupad nito.

Discussion:

This article refers to constructive fulfillment of the condition. For constructive fulfilment to operate, the
following requisites must be present:

(a) The condition is suspensive

(b) The obligor actually prevents the fulfillment of the condition; and

(c) He acts voluntarily.

Hence, when the obligor committed an act voluntarily which is not intended to prevent the fulfillment of the
condition but nevertheless resulted to in the frustration of the condition, there is no constructive
fulfillment. 

EXAMPLE:

(1) Miggs agreed to give Paul a 5% commission if the Paul could sell Miggs’ land at a certain price. Paul
found a buyer who definitely decided to buy the property upon the terms prescribed by Miggs. To evade
the payment of the commission agreed upon, Miggs herself sold to the buyer the property at a lower price
without the aid of Paul. (ka sama ng ugali)

In this case, it can be said that the due performance by Paul of his undertaking, the condition for the
payment of the commission, was purposely prevented by Paul, and is deemed fulfilled.

(2) Glydle promised to sell her land to Nica if Nica would be able to secure a loan from a certain bank.
Later on, Glydle changed his mind about selling her land. She induced the bank not to give Nica a loan.
(isa pa rin namang masama ang ugali)

Under the above article, the condition is deemed complied with and Glydle is liable to sell her land. Glydle
should not be allowed to profit by her own fault or bad faith.

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. (1120)

Ang epekto ng kondisyonal na obligasyon na magbigay, kapag ang kondisyon ay naisakatuparan na,
dapat bumalik ito sa araw na binuo ang obligasyon. Maliban na lang kapag ang obligasyon ay
nagpatupad ng kapalit na gawain sa bawat partido, ang bunga at tubo habang nakatigil ang kondisyon ay
dapat naipalagay na upang magkaroon ng parehong kabayaran. Kapag ang obligasyon ay nasa iisang
parte lang, ang nangutang ay nararapat na makatangap ng bunga at tubo, maliban na lang sa likas na
kalagayan ng obligasyon dapat din na ipagpalagay na ang intension ng taong gumagawa ng katulad nun
ay magkaiba.

Sa obligasyon na dapat gawin at hindi dapat gawin, ang korte ang magpapasya sa bawat kaso, ang may
bisa sa nakaraan na epekto ng kondisyon ay naipatupad na.

Discussion:

 Retroactive effects of fulfillment of suspensive condition:

1. In obligation to give – an obligation to give subject to a suspensive condition becomes

demandable only upon the fulfillment of the condition.

EFFECT- reason: from the moment that such obligation is constituted, all the elements of a valid
obligation are already present EXCEPT THAT since there is a condition that it is - and it is
suspensive, article 1187 applies. These are the suspension, or rather, the pendency of the
happening of the suspensive condition. It is just the effectivity or the efficacy of the obligation
that is suspended and not the birth of the obligation - the birth is already there subject to its
effectivity in a suspensive condition.

Rule is retroactivity of the EFFECTS.

Obligation to give - the obligor in this obligation cannot do anything in relation to that specific
object. He can’t consume it if it’s consumable, he cannot transfer it to another person because
from that time of the constitution, he has already that obligation to PRESERVE the object. ----
What if he defies that obligation and let’s say that he transfers it to another person, what is the
right of the obligee? The right of the obligee, once that condition has been fulfilled is to receive
the transfer - on the assumption that the third person to whom that thing was transferred,
received the thing from the obligor in bad faith. Meaning that he or she is aware that there is an
existing obligation at the time the transfer has been made to him. EXAMPLE OF ONCE A
CONDITION IS FULFILLED IN A

CONDITIONAL OBLIGATION TO GIVE, IT’S EFFECT WOULD RETROACT – meaning that the right
of that obligee to possess and to take ownership of the thing BEGINS from the moment of the
constitution of the obligation and not from the moment of the happening of the condition. Except
that, he CANNOT demand that right until such time that the condition has been complied with.

That’s why if you will not from ARTICLE 1188, there are things that the obligee can do for them to
preserve his right meanwhile that the condition has to be made. One of which is to rescind those
actions fraudulent in nature - which right to rescind will be validated once the suspensive
condition has been complied with BUT if such suspensive condition never happened, then that’s
the time that you can nullify that action for rescission that is filed by the obligee at the time they
are still waiting for the happening of the condition.

GOING BACK TO 1187, the rule is that there should be retroactivity in the consequences of the
happening of the suspensive condition.

Exceptions to the rule on retroactivity:

1.) Fruits of the object (provided for in 1187 itself) – fruits of the thing, fruits accruing, fruits
interest accruing prior to the happening of the suspensive condition will be given to the obligor
and NOT to the oblige even if that suspensive condition later on comes, and it doesn’t matter
whether that obligation is unilateral or reciprocal. The rule is if it is a reciprocal obligation, the
fruits and interests arising from both the obligation are deemed mutually compensated by each
other. When it is unilateral, the rule is clear that such interest, such rules will be appropriated by
the obligor unless there is a contrary intention.

2.) With regard to acts of administration in relation to that obligation to give a specific object- the
obligor, in the meantime that the suspensive condition has yet to come, can exercise acts of
administration. When it comes to acts of disposition, that obligor cannot do it because that’s part
of the rule regarding retroactivity. But with regard to simple acts of administration, it can. And
even if that suspensive condition later on happens, the obligee cannot repudiate whatever acts of
administration that obligor has done before the happening of that suspensive condition.

Example: If Erwin had obligated himself to sell a certain parcel of land to Cherry Mae for 100k
subject to a condition of a suspensive character, and such condition was fulfilled 2 years after the
perfection of the contract a literal application of the principle of retroactivity would have the effect
of compelling Erwin to deliver to Cherry Mae not only the land, but also all the fruits which he may
have gathered or received therefrom during the period from the time of the perfection of the
contract to the time of the fulfillment of the condition; and as far as Cherry Mae is concerned, it
would have the effect of compelling him to pay to Cherry Mae not only the 100k but also the
interest thereon during the same period. But because of the reciprocal character of the obligation,
the law, as a matter of justice and convenience, considers the fruits and interest as the equivalent
of each other.

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

The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition. (1121a)

Ang nagpapautang ay maari, mbago matupad ang kundisyon, ay gumawa ng nauukol na

hakbangin upang mapanatili ang kanyang karapatan.
Ang nagpautang ay maaaring mabawi ang anuman na naibayad kung ito ay sa pagkakamali mula
sa suspensive condition.

Rights of the Creditor – he may take or bring appropriate actions for the preservation of his right, as the
debtor may render nugatory the obligation upon the happening of the condition.

Rights of Debtor – he is entitled to recover what he has paid by mistake prior to the happening of the
suspensive condition.

Example:

Whenever, Mr. Danilo who is a father of Ms. Senesa promised to give a parcel of land, provided that
Senesa finished her Bachelor’s Degree. Senesa, in order to preserve her right against Danilo, may take
appropriate actions such as causing registration and put annotation at the back portion of the title
covering said parcel of land, so that even if the parcel of land is alienated by Danilo, the buyer will take
that land subject to the right to Senesa.

Article 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. (1122)

  Kung ang kondisyon o kasunduan ay naipatupad na at ang layunin nito ay ipagpaliban ang mga
pananagutan ng pagbibigay ng mga ito , ang mga sumusunod ay dapat ipatupad kung may mga
pagbabago, pagkawala, o pagkasira sa mga panahong suspensido ang kondisyon.

Kung ang bagay ay mawala na walang kasalanan ang may utang ang pananagutan ay mawawala din.

Kung ang pagkawala ng bagay ay kasalanan ng may utang, mananagot siya magbayad ng danyos at
ipagpapalagay ang gayon bagay ay hindi na muling mababawi pa.
Kung ang bagay ay kumupas o sumama na, ang may utang ay walang kasalanan, ang pagpapagawa o
pagbabalik ng dating kaanyuan ay sasagutin ng nagpapautang.

Kung ang pagkupas o pagbaba ng halaga ay kagagawan o kasalanan ng may pagkakautang ang
nagpapautang ay magpapasiya upang pawalan saysay/kansilahin ang obligasyon at pagsasakatuparan
noon na may kabayaran sa danyos alin man sa dalawa ang pipiliin nya.

Kung ang bagay ay umunlad ng natural o ng panahon, ang kaunlaran ay sa pakinabang ng

nagpapautang.

Kung ang pagunlad ay kagagawan ng may utang wala siyang karapatan maliban sa karapatan
ipinagkaloob ng usufructuary o pag bibigay ng karapatan upang magamit ito.

 Requisites for application of Article 1189

Article 1189 applies only if:

(1) The obligation is a real obligation

(2) The object is a specific or determinate thing

(3) The obligation is subject to a suspensive condition

(4) The condition is fulfilled; and

(5) There is loss, deterioration, or improvement of the thing during the pedency of the condition

Kinds of loss

Loss in civil law may be:

(1) Physical loss-when a thing perishes as when a house is burned and reduced to ashes

(2) Legal loss- when a thing goes out of commerce or when a thing heretofore legal becomes illegal

(3) Civil loss- when a thing disappears in such a way that its exixtence is unknown or even if known it
cannot be recovered, whether as a matter of fact or of law.

USUFRUCT – is the right to enjoy the use and fruits of a thing belonging to another.

Article 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.

Kung sakalit ang mga kondisyon ay hindi naisakatuparan na siyang naging sanhi sa pagbabalewala ng
kasunduan, ang anumang naibayad o naibigay ng bawat partido ay kinakailangang magsaulian.

Discussion:
Paliwanag sa Pamamagitan ng Halimbawa: Si Pedro at Juan ay nagkasundo na bibilhin ni Juan ang
palayan na mga isang ektarya ni Pedro kung ito ay hindi dadaanan ng highway road. Nagbigay na ng
paunang bayad si Juan kay Pedro ngunit ng mga isang taon ay natuloy ang proyekto ng gobyerno kayat
kinakailangang ibigay ni Pedro ang pera ibinigay ni Juan.

Article 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. (1124)

May kapangyarihang bawiin o ipawalang bisa ang isang kasunduan na ipinapahayag sa palitan ng
obligasyon, kung ang isa sa may pananagutan ay hindi tumupad sa mga nrarapat niyang gawin.

Ang nasugatang   partido ay maaring pumili sa pagsasakatuparan o ang pag-bawi ng obligasyon na may
parehas na katapat na kabayaran para sa danyos. Maaring  piliin ang ikalawa kung an ang
pagsasakatuparan ng obligasyon ay imposible.

Ang hukuman ang mag uutos ng pagpapawalang bisa na hinihingi maliban kung may makatarungang
dahilan para payagan ang pagtatakda ng tiyak ng panahon.

Ito ay nauunawaan ng walang pinsala sa karapatan ng taong walang kinalaman na siyang nakakuha ng
pag mamay-ari ng bagay na naaayon sa Article 1385 at 1388 at ng Mortgage Law.

KINDS OF OBLIGATION ACCORDING TO THE PERSON OBLIGED 

They are:

(1) Unilateral- When only one party is obliged to comply with a prestation.

EXAMPLES:

Donation; In a contract of loan, the lender has the obligation to give. After the lender has complied with
his obligation, the debtor bas the obligation to pay.

(2) Bilateral. -— when both parties are mutually bound to each other. In other words, both parties are
debtors and creditors of each other. Bilateral obligations may be reciprocal or non-reciprocal.

(a) Reciprocal obligations are those which arise from the same cause and in which each party is a debtor
and creditor of the other, such that the performance of one is designed to be the equivalent and the
condition for the performance of the other.
Each party may treat the fulfillment of what is incumbent upon the other as a suspensive condition to his
obligation (see Art. 1169, last par.) and its nonfulfillment, as a tacit or implied resolutory condition, giving
him the right to demand the rescission Of the contract.

EXAMPLE:

In a contract of sale, in the absence of any stipulation' the delivery of the thing sold by the seller is
conditioned upon the simultaneous payment of the purchase price by the buyer and vice versa.

The seller is the creditor as to the price and debtor as to the thing, while the buyer is the creditor as to the
thing and debtor as to the price

(b) Non-reciprocal obligations are those which do not impose simultaneous and correlative Performance
on both parties. In other words, the Performance of one party is not dependent upon the SimultaneoUS
performance by the other.

EXAMPLE:

X borrowed from Y P5,000. Y, On the other hand, borrowed X's car. The performance by X Of his
obligation to Y is not conditioned upon the performance by Y of his obligation and vice versa.

Although X and Y are debtors and creditors of each other, their obligations are not reciprocal. The
obligation of X arises from the contract of loan, while that of Y, from the contract of commodatum. The
obligations are not dependent upon each other and are not simultaneous. Article 1191 applies only if the
reciprocity arises from the same cause.

Remedies in reciprocal obligations.

(1) Choice of remedies. — In case one of the obligors does not comply with what is incumbent upon him,
the aggrieved party may choose between two (2) remedies:

(a) action for specific performance (fulfillment) of the obligation with damages; or

(b) action for rescission of the obligation also with damages.

(2) Remedy of rescission for non-compliance. —The principal action for rescission for non-performance
under Article 1191 must be distinguished from the subsidiary action for rescission by reason of lesion or
damage under Article 1381, et seq., and from cancellation of a contract based, for example, on defect in
the consent (see Arts. 1318, 1330.) and not on violation by a party of his obligation.

Article 1191 governs where there is non-compliance by one of the contracting parties in case of reciprocal
obligations. The remedy is granted for breach by the other contracting party that violates the reciprocity
between them.

EXAMPLE:

In Contract of sale of a car between S and B, it was agreed that S, the owner, would deliver the car and
the necessary document duly signed by him to B at the house of C on December 1, and B would deliver
the payment at the same place and on the same date.

If S does not comply with his obligation:

(a) B may, in an action for specific performance, demand the delivery of the car with damages; or

(b) B may demand from the court the rescission of the contract also with damages.

When a party demands rescission in reciprocal obligations he, in effect, treats the non-fulfillment by the
other party of his obligation as a resolutory condition.

Court may grant guilty party term for performance

The court shall order the rescission claimed unless there shoüld be just cause for granting the party in
default a term or period for the performance of his obligation. (par. 3.)

Obviously, this exception applies only where the guilty party is willing to comply with his obligation but
needs time to do so and not where he refuses to perform.

Remedies are alternative.

The remedies of the injured or aggrieved party are alternative and not cumulative, that is, he is privileged
to choose only one of the remedies, and not both, subject only to the exception in paragraph 2, to wit: he
may also seek rescission even after he has chosen fulfillment if the latter should become impossible. But
after choosing rescission of the obligation, he cannot thereafter demand its compliance

EXAMPLE:

In the preceding example, B may not choose both fulfillment and rescission. If he has chosen rescission,
he may not subsequently ask for fulfillment and if he has selected to enforce compliance with the contract,
he may not later seek rescission.

However, if fulfillment becomes impossible because the car was lost or destroyed through the fault of S, b
is allowed to convert his action into that of rescission.

Limitations on right to demand rescission.

The right to rescind by the injured party (the one who has performed what is incumbent upon him) is not
absolute. Thus —        

(1)Resort to the courts. — The rescission contemplated by Article 1191 is a judicial rescission (par. 3.) or
one granted by a court. The injured party has to resort to the courts to assert his rights judicially (e.g., to
recover what he has delivered under the contract) for the same article provides that . . . "the court shall
decree the rescission claimed, unless there be just cause authorizing the fixing of a period."

No person can take justice or the law in his own hands and decide by himself what are his rights in the
matter. The other party must be given an opportunity to be heard.

(2)Power of court to fix period. The court has discretionary power to allow a period within which a person
in default may be permitted to perform his obligation if there is a just cause for giving time to the debtor
(par. 3.), as where the default incurred was not willful or could be excused in view of the surrounding
circumstances.

(3) Right of third person. If the thing subject matter of the Obligation is in the hands of a third person who
acted in good faith, rescission is not available as a remedy (par. 4; Arts. 1385, 1388.)
(4) Substantial violation. The general rule is that rescission will not be granted for slight breaches of
contract; the violation should be substantial as to defeat the object of 'the parties in making the
agreement. Thus, in a case, it was held that delays on four (4) occassions in the payment of rentals  for a
few days were not substantial violations in a contract of lease to justify rescission because the law is not
concerned with trifles. (Fil Oil Refinery Corp v$• Mendoza, 150 SCRA 632 [19871.)

(5) Waiver of right. The right to rescind may be waived, expressly or impliedly. Thus, the acceptance by
the seller of the land sold as security for the balance of the price is an implied waiver of the right to
rescind in case of nonpayment by the buyer. His remedy is to recover the balance. (Roman vs. Blas,
[C.A.] 51 0.G. 1920, April 1955.)

Rescission without previous judicial decree.

(1) Where automatic rescission expressly stipulated.

The parties may validly enter into an agreement that violation of the terms of the contract would cause
cancellation thereof even without judicial intervention or permission. (U.P. vs. De Los Angeles, 35 SCRA
102.) Where the contract itself contains such a stipulation, the right to rescind is not "implied" but
expressly recognized by the parties. Hence, Article 1191 is not applicable.

However, there must be at least a written notice sent to the other party informing him of the rescission.
The extrajudicial rescission has legal effect where such party does not oppose it. Where it is objected to,
a determination of the issues by the court is still necessary. (Palay, Inc. vs. Clare, 124 SCRA 638.)

(2)Where contract still executory. ---- Where there is no performance yet by both parties, but one is ready
and willing to comply with what is incumbent upon him and the other is not (see Art. 1169, last par.), the
willing party may, by his own declaration, rescind the contract withoUt a previous judicial decree of
rescission. In such a case, it is not necessary that there be stipulation providing for authomatic.

In any case where the extrajudicial rescission is contested by the other pacts, to resort to judicial action.
and only the final decision Of the court can finally settle whether the rescission was proper or not.

Breach of Contract – Failure of a party without legal reason/excuse to comply with the terms of a contract
incumbent upon him.
 

Breach of Faith – the obligor’s failure to comply with an obligation already extant, not a failure of a
condition to render binding that obligation.  There can be no rescission of an obligation that is non-
existent, considering that the suspensive condition therefore has not yet happened.

Application:

Article on applies to Reciprocal Obligations where both parties are mutually Debtor & Creditor of each
other in the same transaction.

A Contract of Sale of a Brand New Laptop is entered into between Ivy (Buyer) and Leny (Seller) at the
price of P50, 000.00. In absence of stipulation, the delivery of the laptop by Leny is conditioned upon the
payment of the purchase price by Ivy or vice versa.  Leny, being the owner and seller of the laptop is the
creditor as to the purchase price and debtor as to the laptop. Whereas, Ivy being the buyer, is the creditor
as to the laptop and debtor as to the purchase price.

Non-Payment of the purchase price constitute a very good reason to rescind a contract of sale.

Article 1191 is not Applicable to the ff:

Sales of Real Property by Installments (Maceda Law RA 6552 governs)

Sales of Personal Property by Installments (Recto Law) ** If the sale is not by installment  Art 1191
applies**

Contracts of Partnership (Law on Partnership)

Remedies Available to the Aggrieved Party

1. Specific performance or fulfillment of the obligation with damages;

2. Rescission of the contract with damages

*The injured party cannot seek both, except:

If fulfillment had been chosen but the same had become impossible, rescission may still be sought. (Art
1191 par 2)

If there is a valid basis for the extension of the performance of reciprocal obligation, the court will not
decree rescission but will rather fix a period for the fulfillment of the obligation. (Art. 1191 par 3)
 

The Power to Rescind an Obligation

 The party who has the right to cancel or resolve the reciprocal obligation in case of non-
fulfillment on the part of one contracting parties. 
 The party who is ready, willing and able to comply with his own obligations
 The party who is in the position to return whatever he may be obliged to return to the other party
In reciprocal obligations, the power to (rescind) resolve is given to the injured/aggrieved party because
the party who is at wrong cannot use his own wrong for his own benefit or protection.

**RTC has the jurisdiction over cases of rescission**

Restrictions:

1. Due Process must be observed; “the court shall decree the rescission , unless, there be a just
cause authorizing a period fixing it” (Art 1191 par 3)

Right to rescind is subordinated to the rights of third persons who acquired the thing in good faith (Art
1191 par4)

He must respect the power of the Court to fix period in lieu of decreeing decision

Slight breaches of the contract will not justify rescission

Article 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.

Sa kasong parehong partido ay magkasala ng paglabag ng mga obligasyon, ang pananagutan ng unang
infractor ay magakapareho sa pamamagitan ng mga korte. Kung hindi ito ay maaaring tinutukoy kung alin
sa mga partido unang lumabag sa kontrata, ang parehong ay dapat ituring mawala, at ang bawat ay
magpapasan ng kaniyang sariling mga pinsala.

 The above article contemplates two(2) situations:

1. First infractor known- one party violated his obligation, subsequently the other also violated his part of
the obligation. In this case, the liability of the first infractor should be equitably reduced.

2. First infractor cannot be determined-one party violated his obligation followed by the other, but it cannot
be determined which of them was the first infractor. The rule is that the contract shall be deemed
extinguished and each shall bear his own damage

In effect, the court shall not provide remedy to either of the parties, who must suffer the damages
allegedly sustained by them.

 
REFERENCES:

The Law on obligation and Contracts. Hector S. De Leon, Hector M. De Leon Jr. Rex Bookstore, Manila ,
2014.

https://www.haikudeck.com/oblicon-chapter-3-uncategorized-presentation