Different Kinds of Obligation

Section 1

Pure and Conditional Obligations

A. Pure (1179)

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.

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.

Example:

D obliges himself to pay C 1,000.00. The obligation is immediately demandable because there is
no condition and no date is mentioned for its fulfillment. Of course, if the loan has just been
contracted by D, a period must have been intended by the parties for performance but the duration
thereof will depend upon the nature of the obligation and the circumstances. (Art. 1197.)

D binds himself to pay C 1,000.00 “upon demand of C.” The obligation is immediately due and
demandable.

Note:

If the loan has just been contracted, a period must have been intended by the parties for
performance but the duration thereof will depend upon the nature of the obligation and the
circumstances. (Art. 1197)

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 subject to it depends.

Characteristics of a Condition

 Future and uncertain

 Past but unknown
 Two Principal Kinds of Condition

 Suspensive Condition- Fulfillment of the condition will give rise to the obligation.
 Resolutory Condition- Fulfillment of the condition will extinguish the obligation.

Distinctions Between Suspensive and Resolutory Conditions.

Suspensive
If the suspensive condition is fulfilled, the
obligation arises.
If the first does not take place, the tie of the law
(juridical or legal tie) does not appear.
Until the first takes place, the existence of the
obligation is a mere hope.
Resolutory
If it is the resolutory condition that is fulfilled, the
obligation is extinguished.
If it is the other, the tie of law is consolidated.
Its effects flow, but over it hovers the possibility
of termination. (see 8 Manresa 130-131)

Suspensive vs. Resolutory (1181)

Article 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.

• Suspensive Condition- Condition Precedent or Condition antecedent

Ex: I will give you my laptop if you pass the accountancy board exam.

• Resolutory Condition- Condition Subsequent

Ex: I bind myself to support your education until you finish college.

When Obligation is Demandable at Once

1. When it is pure (Art.1179, par.1)

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

When his means permit him (1180)

Article 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.

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.
 When the debtor promises to pay when his means permit him to do so – The obligation shall be
deemed to be one with a period.
 The same rule applies in case the debtor binds himself to pay:
a. Little by little
b. As soon as possible
c. From time to time
 d. At any time, I have the money
e. In partial payments
f. When I am in a position to pay

Article 1181.

Effect of Happening of 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.

Example:

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.

Example:

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.

Article 1182.

Classification of Conditions.

As to effect:

1. Suspensive- the happening of which gives rise to the obligation.

2. Resolutory- the happening of which extinguishes the obligation.

As to form:

1. Express- the condition is clearly stated.

2. Implied- the condition is merely inferred.

As to possibility

1. Possible- the condition is capable of fulfillment, legally and physically.

2. Impossible- the condition is not capable of fulfillment, legally or physically.

As to cause or origin:

1. Potestative- the fulfillment of the condition depends upon the will of one of the contracting
parties.
2. Casual- the condition depends upon chance or upon the will of a third person.
3. Mixed- the condition depends partly upon chance and partly upon the will of a third person.
 As to mode:

1. Positive- the condition consists in the performance of an act.

2. Negative- the condition consists in the omission of an act.

As to numbers:

1. Conjunctive- there are several conditions and all must be fulfilled.

2. Disjunctive- there are several conditions and only one or some of them must be fulfilled.

As to divisibility:

1. Divisible- the condition is susceptible of partial performance.

2. Indivisible- the condition is not susceptible of partial performance.

Potestative vs. Casual vs. Mixed (1182)

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.

• POTESTATIVE CONDITION-

-suspensive in nature

-depends upon the sole will of one of the parties

Where Suspensive Condition Depends Upon Will of Debtor.

1. Conditional Obligation Void- Where the potestative condition depends solely upon the will of
the debtor, the conditional obligation shall be void because its validity and compliance is left to
the will of the debtor. (Art.1308)

Example:

I will pay you after I receive a loan from a bank.: (Berg vs. Magdalena Estate, Inc., 92 Phil. 110)

2. Only the Condition Void- If the obligation is a pre-existing one and, therefore, does not depend
for its existence upon the fulfillment by the debtor of the potestative condition, only the
condition is void leaving unaffected the obligation itself.

Example:

D borrowed 10,000.00 from C payable within two (2) months. Subsequently, D promised to pay
C “after D sells his car” to which C agreed. In this case, only the condition is void but not the pre-
existing obligation D to pay C.
Where Suspensive Condition Depends Upon Will of Creditor.

 If the condition depends exclusively upon the will of the creditor, the obligation is valid.

Example:

I will pay you my indebtedness upon your demand.

The obligation does not become illusory. Normally, the creditor is interested in the fulfillment of the
obligation because it is for his benefit. It is up to him whether to enforce his right or not.

Where Resolutory Condition Depends Upon Will of Debtor

 If the condition is resolutory in nature, like the right to repurchase in a sale with pacto de retro,
the obligation is valid although its fulfillment depends upon the sole will of the debtor (seller).

Ex: A sold his land to B with a right to repurchase within 5 years from sale.

- Resolutory condition- whether A, the seller, repurchases the land from B within 5 years

-this is dependent upon the will of A as the obligee of the obligation (repurchase)

Casual Condition

 If the suspensive condition depends upon chance or upon the will of a third person, the
obligation subject to its valid.

 CASUAL CONDITION- chance or will of third person

EX: S binds himself to sell the land to B if he wins a case which is pending before the Supreme Court

I will give you my car if you recover from COVID-19 while you are the hospital on medication.

Mixed Condition

 The obligation is valid if the suspensive condition depends partly upon chance and partly upon
the will of a third person.

Impossible and Illegal (1183)

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.

Article 1183

Two Kinds of Impossible Conditions

1. Physically Impossible Conditions- when they, in nature of things, cannot exist or cannot be done.

Example:

I will pay you 10,000.00 if it will not rain for one year in the Philippines.
 2. Legally impossible conditions- when they are contrary to law, morals, good customs, public
order or public policy.

Example:

X will give 1,000.00 if Y –

1. Will kill Z (against the law); or

2. Will be the common-law wife of X (against morals); or
3. Will slap his father (against good customs); or
4. Will publicly advocate the overthrow of the government (against public order); or
5. Will not appear as a witness against X in a criminal case (against public policy.)

Effect of Impossible Conditions

 Conditional Obligation Void- Impossible conditions annul the obligation which depends upon
them.
 Conditional Obligation Valid- If the condition is negative, that is, not to do an impossible thing, it
is disregarded and the obligation is rendered pure and valid.

Example

I will give you my phone if you will not jump off the cliff and kill yourself.

I will spend P 50, 000.00 if you do not carry 50 tons of metal on your head.

-These obligations are rendered pure, as if no condition at all.

 Only the affected obligation void- If the obligation is divisible, the part thereof not affected by
the impossible condition shall be valid.

 Obligation is divisible- affected ones are rendered void

Ex:

I will give you my car if you pass the Bar exams, and my P 100, 000.00 cash if you can fly by yourself.

-to give the car is valid while to give P100, 000.00 is void
  Only the condition void- If the obligation is a pre-existing obligation, and, therefore, does not
depend upon the fulfillment of the condition which is impossible, for its existence, only the
condition is void.

• Obligation is a pre-existing one, which does not depend upon the condition which is impossible,
only the condition is void.

Ex:

X got a loan from Y for P 100, 000.00. payable within 3 days from date of execution. Both parties later
agreed that X will pay Y if X buys a pack of shabu.

To buy shabu is against the law, hence, this condition is void, but the obligation to pay still remains
because this is pre-existing.

IV. Effects

Positive Condition (1184)

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.

-refers to positive suspensive condition (happening of an event at a determinate time)

 Positive Condition

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.

Ex:

X obliges to give B P 10, 000 if B will marry C before B reaches the age of 23.

Effects:

a) X must give the money if B marries C before the age of 23.

b) X is not liable if B marries at the age of 23 or at a later age. Obligation is extinguished when B
becomes 23 years old without marrying C.

c) If B dies at the age of 22 without marrying C or C having died while B is still 22 without having
married each other, obligation is extinguished. Obligation is extinguished when B died at 22
years old or when C died, as the case may be.
Negative Condition (1185)

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.

 Negative Condition

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.

Ex:

X binds himself to give B P 10, 000 if B is not yet married to C on December 30.

Effects:

a) X is not liable to B if B marries C on December 30 or prior thereto.

b) X is liable to B if on December 30, B is not married to C and if B marries C after December 30.

c) If C dies on November 20 without marrying B, the obligation is rendered effective because it is

certain that B can never marry C. The obligation is effective on November 20, when C died, not
December 30.

Constructive Fulfillment (1186)

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

-applies even if the obligor lacks malice or fraud, as long as there is fault

 Constructive Fulfillment of Suspensive Condition

Requisites:

1. The condition is suspensive;

2. The obligor actually prevents the fulfillment of the condition; and
3. He acts voluntarily.

Ex:

X promised to give Y a car after Y passes the accountancy board exams. X later connived with the
examiner to change Y’s scores so that the latter fails though he got a passing mark.

The condition is thus deemed complied.

Retroactivity, as to fruits and interest (1187)

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.

 Retroactive Effects of Fulfillment of Suspensive Condition.

1. In obligations to give- An obligation to give subject a suspensive condition becomes demandable
only upon the fulfillment of the condition. However, once the condition is fulfilled, its effects
shall retroact to the day when the obligation was constituted. (par. 1; see Enriquez vs. Ramos,
73 SCRA 116.)

Ex:

March 10- S agreed to sell his land to B for P 50, 000 if B fails the accountancy board exams to be
conducted on December 20.

April 20- S sold his land to C

B failed the accountancy board exams on December 20

B is entitled to the land beginning March 10, hence has better right as against C

But before December 10, B has no right over the land

2. In obligations to do or not to do- The courts are empowered by the use of sound discretion and
bearing in mind the intent of the parties, to determine, in each case, the retroactive effect of
the suspensive condition that has been complied with.

Ex:

C obliged himself to condone the debt of D, his lawyer, should the latter win C’s case in the court.

Upon fulfillment of the condition, C shall not be entitled to earn interest, unless the contrary is
stipulated, on the capital during the pendency of the condition, as C’s intent was to extinguish the debt.
Winning C’s case in court will have a retroactive effect on the date when condonation was agreed, thus
no interest.
Retroactive Effects as to Fruits and Interests in Obligations to Give.

1. In reciprocal obligations- There is no retroactivity because the fruits and interests received
during the pendency of the condition are deemed to have been mutually compensated. This
rule is necessary for purposes of convenience since the parties would not have to render mutual
accounting of what they have received. Fruits here may be natural, industrial, or civil fruits. (see
Art. 1164.)

Ex:

March 10- S agreed to sell his land to B for P 50, 000 if B fails the accountancy board exams to be
conducted on December 20.

B failed the accountancy board exams on December 20

B can now pay the price of P 50, 000 to purchase the land, and is entitled to the land since March 10

S however does not have to give the fruits of the land during the pendency of the condition before
December 20, or B to give the interest on the price because the fruits and interests are MUTUALLY
COMPENSATED.

2. In unilateral obligations- There is usually no retroactive effect because they are gratuitous. The
debtor receives nothing from the creditor. Thus, fruits and interests belong to the debtor unless
from the nature and other circumstances of the obligation it should be inferred that the
intention of the person constituting the same was different.

Payment before the condition is fulfilled (1188)

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

 Rights Pending Fulfillment of Suspensive Condition

1. Rights of 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.
2. Rights of debtor- He is entitled to recover what he has paid by mistake prior to the happening of
the suspensive condition. (solutio indebiti)

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;
3. When the thig 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.

Requisites for Application of the Rule.

Article 1189 applies only if:

1. The obligation is a real obligation;

2. The object is a specific or determine 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 pendency of the condition.

Kinds of Loss

 Physical loss is when a thing perishes

 Legal loss is when a thing becomes illegal or goes out of commerce
 Civil loss is when a thing disappears in such a way that its existence is unknown or even if
known, it cannot be recovered, whether as a matter of fact or of law.

Rules in Case of Loss, Deterioration, or Improvement of Thing During Pendency of Suspensive Condition

 Loss of thing without debtor’s fault

 Loss of thing through debtor’s fault
 Deterioration of thing without debtor’s fault
 Deterioration of thing through debtor’s fault
 Improvement of thing by nature or by time
 Improvement of thing at expense of debtor

When resolutory condition is fulfilled (1190)

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.

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.

 Effects of Fulfillment of Resolutory Condition

1. In obligation to give- When the resolutory condition in an obligation to give is fulfilled, the
obligation is extinguished (Art. 1181) and the parties are obliged to return to each other what
they have received under the obligation. (par. 2)
2. In obligations to do or not to do- In such obligations, the courts shall be determined the
retroactive effect of the fulfillment of the resolutory condition (par. 2) as in the case where the
condition is suspensive. (Art. 1187, par. 2)
Art. 1190 has the effect of return to the STATUS QUO. Effect is retroactive.

- Return to each other what they received under the obligation

Rescission in Reciprocal Obligations (1191)

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.

 Kinds of Obligation According to the Person Obliged

1. Unilateral- when only one party is obliged to comply with a prestation
2. Bilateral- when both parties are mutually bound to each other. Bilateral obligations may be
reciprocal or non-reciprocal.

What is a reciprocal obligation?

 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.
 The obligations of the parties are embodied in one contract.

What is a non-reciprocal obligation?

 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.
 The obligations of the parties are embodied in different contracts.

Remedies in Reciprocal Obligations.

a. Action for specific performance (fulfillment) of the obligation with damages

b. Action for rescission of the obligation also with damages
Limitations on Right to Demand Rescission.

 Resort to the courts

 Power of court to fix period
 Right of third person
 Substantial violation
 Waiver of right

Breach of obligations by both parties (1192)

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.

 Where Both Parties Are Guilty of Breach

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 damages.