CHAPTER 3: DIFFERENT KINDS OF OBLIGATIONS

Kinds of Obligations
Pure Obligations
-aren’t subject to condition or period
Conditional obligations as compared to obligations with a period
-have either a condition or a period but not both
-looks forward to the future; condition is uncertain and with a period is certian
Alternative obligations as compared to Facultative obligations
-the prestations comprising the obligations are more than one; in alternative, all have equal footing, anyone of them can be
complied and then the entire obligation is extinguished; facultative there is only one prestation that has to be complied with but
another one in substitution can be done by an obligee
Joint obligations as compared to Solidary obligations
-personalities of the obligation may be more than one (creditor and debtor)
-joint have more than one personality in the point of view of the law; solidary may have many personalities but only one is
considered in the point of view of the law
Divisible obligations as compared to indivisible obligations
-can be divided into units (divisible)
-can’t be divided into units (indivisible)
Obligations with a penal cause
-carries within a penalty in case of non-performance

Section 1: Pure and Conditional Obligations

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.
Meaning of Pure Obligations
-not subject to any condition and no specific date is mentioned and is immediately demandable
-does not depend on a future or past event

Meaning of Conditional Obligations

-whose consequences are subject in one way or another to the fulfillment of a condition
-a future event that may or not happen or a past unknown to the parties

Meaning of condition
-a future and uncertain event, the acquisition or extinguishment of an obligation subject to it depends

Characteristics of a condition
Future and uncertain
-in order to constitute an event as a condition, it is not enough that it be future, it must also be uncertain.
Past but unknown
-a condition may refer to a past event unknown to the parties. If it refers to the future, its occurrence and its time must be
uncertain
A condition must not be impossible (ART. 1183)

Two principal kinds of condition

Suspensive condition (obligation but dapat)
-condition precedent/antecedent
-fulfillment of which will give rise to an obligation
-demandability of the obligation is suspended until the happening of the uncertain event
Resolutory condition (obligation but hangtud)
-condition subsequent
-fulfillment of which will extinguish an obligation (or right) already existing
-demandable at once

Distinction between suspensive and resolutory conditions

-both influence on the existence of the obligation
When obligation is demandable at once
• when it is pure (para. 1, ART. 1179)
• when it is subject to resolutory condition
• when it is subject to a resolutory period
(par. 2, ART. 1193)

Past event unknown to the parties

A condition refers only to an uncertain and future event. A past event cannot be said to be a condition since demandability of an
obligation depends upon whether the event will happen or will not happen.
What really is contemplated by the law if the future of a past event which at the moment is unknown to the parties interested.

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.

Where duration of period depends upon the will of debtor

Period- future and certain event upon the arrival of which the obligation is subject to it either arises or extinguished.
• The debtor promises to pay when his means permit him to do so
→ obligation shall be deemed to be one with a period. What is left to the will of the debtor is the duration of the period
→ if debtor and creditor can’t agree as to the specific time for payment, the court shall fix the same application of either party
• other cases- as when the debtor binds himself to pay
→ little by little; as soon as possible; from time to time; at any time I have the money; in partial payments; when I am in a
position to pay

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.
Effect of happening of condition
Acquisition of rights (suspensive condition)
-acquisition of rights depends upon the happening of the event which constitutes the condition
- if such condition does not take place, it would be as of the conditional obligation had never existed
- during pendency of the suspensive condition, creditor has only a mere hope or expectancy of acquiring a right
Loss of rights already acquired (resolutory condition)
-the happening of the event which constitutes the condition produces the extinguishment or loss of rights already acquired

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 (valid)
If the sole will of creditor- obligation is valid
Classification of conditions
As to effect
• Suspensive- happening that gives rise to obligations
• Resolutory- happening that extinguishes obligations
As to from
• Express- condition is clearly stated
• Implied condition is merely inferred
As to possibility
• Possible- capable of fulfillment, legally, and physically
• Impossible- not capable
As to cause or origin
• Potestative- condition depends upon the will of one of the contracting parties
• Casual- condition depends upon chance or upon the will of a third person
• Mixed- condition depends partly upon chance and partly upon the will of a third person
As to mode
• Positive- consists in the performance of an act
• Negative- consists in the omission of an act
As to numbers
• Conjunctive- there are several conditions and all must be fulfilled
• Disjunctive- there are several conditions and only one or some of them must be fulfilled
As to divisibility
• Divisible- susceptible of partial performance
• Indivisible- not susceptible of partial performance

Postestative Condition
-suspensive in nature and which depends upon the sole will of one of the contracting parties

Where Suspensive condition depends upon will of debtor

Conditional obligation void
-where potestatiive condition depends upon the will of the debtor, the conditional obligation should be void because its validity
and compliance is left to the will of the debtor and can’t be easily demanded.
-to not be liable, the debtor will just not fulfill the condition as there is no burden on debtor
Only the condition is void
-If obligation is a pre-existing one and does not depend for its existence upon the fulfillment by the debtor, only the condition is
void leaving unaffected the obligation itself

Where suspensive condition depends upon the will of creditor

-the obligation is valid

Where resolutary condition depends upon the will of debtor

-the obligation is valid although its fulfillment depends upon the sole will of the debtor.
-The fulfillment of the condition merely causes the extinguishment or loss of rights already acquired (ART 1181).
-The position of the debtor when condition is resolutory is exactly the same as that of the creditor when the condition is
suspensive

Casual condition
-if the suspensive condition depends upon the change or upon the will of a third person, the obligation subject to it is valid.

Mixed condition
-obligation is valid if the suspensive condition depends partly upon chance and partly upon the will of a third person

Where suspensive condition depends partly upon will of debtor

-Word “exclusive”(sole) makes it clear that conditional obligation fulfillment depends partly on the will of debtor and partly third
person/chance, are perfectly valid
-if the compliance with the obligation still depends upon that part of the condition where fulfillment depends on the will of the
debtor, it is void as it is within his power to comply or not. (same situation of entirely depends on the debtor)

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.
When Article 1183 applies
-refers to suspensive condition
-applies only to cases where impossibility already existed at the time it was constituted
-if impossibility arises after the creation of the obligation, article 1266 governs

Two kinds of impossible conditions

Physically Impossible
– cannot exist or cannot be done in its nature
Legally Impossible
– contrary to law, good customs, or public policy

Effect of impossible conditions

Conditional obligation void
-impossible obligation annul the obligation which depends upon them
-both obligation and condition is void because debtor knows his obligation can’t be fulfilled and has not intention to comply
Conditional obligation valid
-if the condition is negative, it is disregarded and the obligation is rendered pure and valid. Conditions is fulfilled not to do an
impossible thing so is the same if there were no condition
-the negative condition may not be to gice an impossible thing
Only the affected obligation void
-if obligation is divisible, the part thereof not affected by the impossible condition shall be valid
Only the condition void
-if obligation is a pre-existing obligation and does not depend upon the fulfillment of the condition which is impossible, only the
condition is void

ART 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.
Positive condition
-Above refers to positive (suspensive) condition- the happening of an event at a determinate time.
-obligation is extinguished
• as soon as time expires without the event taking place
• as soon as it has become indubitable that the event will not take place although the time specified has not expired

ART 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
Negative condition
-above provision speaks of a negative condition-that an event will not happen at a determinate time
-obligation shall become effective and binding:
• from the moment the time indicated has elapsed without the event taking palace
• from the moment it has become evident that the event cannot occur, although the time indicated has not yet elapsed

If no time is fixed, shall be considered to arrive at the intention of the parties. This rule may also be applied to a positive
condition

ART 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
Condition fulfillment of suspensive condition
3 requisites for application of the article:
• the condition is suspensive
• obligor actually prevents the fulfillment of the condition
• he acts voluntarily

Law does nor require that the obligor acts with malice or fraud as long as his purpose is to prevent the fulfillment of the
condition. He should not be allowed to profit from his own fault or bad faith to the prejudice of the obligee.

Constructive fulfillment of resolutory condition

-applies also to an obligation subject to a resolutory condition with respect to the debtor who is bound to return what he has
received upon the fulfillment of the condition

ART. 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.
Retroactive effects of fulfillment of suspensive condition
In obligations to give
- 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.
- the rule on retroactivity has no application to real contracts as they are perfected only by delivery of the object of the obligation
(art 1316)
In obligations to do or not to do
-no fixed rule is provided but does not mean that the principle of retroactivity is not applicable.
-courts are empowered, to determine, in each case, the retroactive effect of the suspensive condition that has been complied with
and includes the power to decide that the fulfillment of the condition shall have (and its date) or no retroactive effect
Retroactive effects as to fruits and interests in obligations to give
In reciprocal obligations(prestations)(or bilateral)
-no retroactivity because the fruits and interests received during the pendency of the condition are deemed to have been mutually
compensated
In unilateral obligations
-no retroactive effect because they are gratuitous, the debtor shall appropriate the fruits and interest
-debtor receives nothing from the creditor, making fruits and interest belong to the debtor unless from the nature and other
circumstances it should be inferred that the intention of the person constituting the same was different.

ART. 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.
Rights pending fulfillment of a suspensive condition
Rights of creditor
- 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.
-thus, he may go to court to prevent the alienation or concealment of the property to have his right annotated in the registry of the
property
-applies to obligation subject to a resolutory condition i
Rights of debtor
- entitled to recover what he has paid by mistake prior to the happening of the suspensive condition
-granted to the debtor because the creditor may or may not be able to fulfill the condition imposed and hence, it is not certain that
the obligation will arise
-a case of solutio indebiti
-note: must be by mistake, if not then debtor is deemed to have impliedly waived the condition
-In any case, he cannot recover what he has prematurely paid once the suspensive condition is fulfilled. But if the condition was
not fulfilled, the debtor should be allowed to recover any payment made even if paid not by mistake.

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 fulfi llment, 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 benefi t 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
debtor without fault – obligation is extinguished
debtor with fault – obligation to pay damages

DETERIORATION
debtor without fault – impairment is to be borne by the creditor
debtor with fault – creditor chooses: rescission of obligation, fulfillment, indemnity
IMPROVEMENT
by nature or time – improvement: inure to the benefit of the creditor
at the expense of the debtor – granted to the usufructuary

Requisites for application of Article 1189

• The obligation is a real obligation;
• The object is a specific or determinate thing;
• The obligation is subject to a suspensive condition;
• The condition is fulfilled;
• There is loss, deterioration, or improvement of the thing during the pendency of the happening on one condition.

Kinds of Loss (in civil law)

Physical loss — when a thing perishes as when a house is burned and reduced to ashes;
Legal loss. — when a thing goes out of commerce or heretofore legal becomes illegal
Civil loss — when a thing disappears in such a way that its existence is unknown; or even if known, cannot be recovered,whether
as a matter of fact or of law (Art. 1262)

Rules in case of loss, etc. of thing during pendency of suspensive condition

• loss of thing without debtor’s fault
→ the obligation is extinguished
• loss of thing through debtor’s fault
→ debtor is obliged to pay damages
• deterioration of thing without debtor’s fault
→ a thing deteriorates when its value is reduced or impaired with or without the fault of the debtor
→ impairment to be shouldered as such by the creditor
• deterioration of thing through debtor’s fault.
→ creditor may choose between (a) rescission of the obligation with indemnity for the damages caused (b) fulfillment of the
obligation with indemnity for the damages
• Improvement of thing by nature or by time.
→ A thing is improved when its value is increased or enhanced by nature or by time or at the expense of the debtor or creditor.
(see Art. 1187.)
→ improvement shall inure to the creditor
• Improvement of thing at expense of debtor.
→ the debtor shall only have the right to usufruct (use) but before the delivery of the obligation (usufructuary- someone who has
the right to usufructuary)
→ debtor may also remove the fruits he put into

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 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.

- Refers to the fulfillment of a resolutory condition.

- The parties are bound to return or restore whatever they have received from each other – “reciprocal restitution”

Effects of Fulfillment of resolutory condition

In obligations to give
-if fulfilled, the obligation is extinguished (Art. 1181.) and the parties are obliged to return to each other what they have received
under the obligation.
• return to the status quo. In other words, the effect of the fulfillment of the condition is retroactive.
• The obligation of mutual restitution is absolute. It applies not only to the things received but also to the fruits and interests.
• In case the thing to be returned “is legally in the possession of a third person who did not act in bad faith” (see Art. 1384, par.
2.), the remedy of the party entitled to restitution is against the other.
• In obligations to give subject to a suspensive condition, the retroactivity admits of exceptions according to whether the
obligation is bilateral or unilateral. (see Art. 1187.) Here, there are no exceptions, whether the obligation is bilateral or unilateral.
→ reason: the fulfillment of the resolutory condition produces the extinguishment of the obligation as though it had never
existed.. The only possible exception is when the intention of the parties is otherwise.
• If the condition is not fulfilled, the rights acquired by a party become vested.
In obligations to do or not to do
-the courts shall determine 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.) and may even disallow retroactivity taking into account the circumstances of each
case

Applicability of Article 1189 to party with obligation to return

-the happening of a resolutory condition is same on the creditor as the suspensive condition has, on the debtor — an obligation
arises.
-The fulfillment of the resolutory condition converts the creditor into debtor, and the debtor into creditor. -Hence, the
applicability of the provisions of Article 1189; and pending the fulfillment of the condition, the parties are entitled to the rights
granted by Article 1188.

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.
Kinds of obligation according to the person obliged
Unilateral — when only one party is obliged to comply with a prestation
Bilateral — when both parties are mutually bound to each other. Where both are debtors and creditors of each other.
• Reciprocal obligations
→ 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.
→ to be performed simultaneously or at the same time
• Non-reciprocal obligations
→ do not impose simultaneous and correlative performance on both parties.
→ the performance of one party is not dependent upon the simultaneous performance by the other

Remedies in reciprocal obligations

Choice of remedies
-in case one of the obligations does not comply with what is incumbent upon him, the aggrieved party may choose between two
remedies:
-action for specific performance (fulfillment) of the obligation with damages
-action for rescission of the obligation also with damages

Recission- the remedy available to an obligee when the obligor fails to comply with his obligation, to abrogate their contract as if
it was never entered into, with the right to recover damages

Remedy of rescission for non-compliance

-rescission for non-performance must be distinguished from the subsidiary action for rescission by reason of lesion or damage
under Article 1381, anf from the cancellation of a contract based
-non-compliance by one of the contracting parties in case of reciprocal obligation
• remedy is granted for breach by the other contracting party that violates the reciprocity
-when a party demands rescission in reciprocal obligation, he treats the non-fulfillment by the other party as a resolutory
condition

Court may grant guilty party term for performance

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

-alternative and not cumulative, he is privileged to choose only one of the remedies, and not both, subject only to the exception in
paragraph 2
- he may also seek rescission even after he has chosen fulfillment if the latter should become impossible. But after choosing, he
cannot thereafter demand its compliance, nor seek partial fulfillment under the guise of recovering damages.

Limitations on right to demand rescission

- right to rescind by the injured party (the one who has performed what is incumbent upon him) is not absolute. Thus:
• Resort to the courts
→ The injured party has to resort to the courts to assert his rights judicially
• 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
• Waiver of right
→ The right to rescind may be waived, expressly or impliedly.

Rescission without previous judicial decree

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 or termination. This stipulation is in the nature of a resolutory condition.
— the right to rescind is not “implied” but expressly recognized
Where contract still executory
— when there is no performance yet by both parties, but one is ready and willing to comply and the other is not, the willing party
may rescind the contract without previous judicial decree of rescission. Such case is not necessary that there be stipulation for
automatic rescission
— in any case, where the extrajudicial rescission is contested by the other party, he is free to resort to judicial action, only the
final decision of the court can settle if recission was proper or not

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.
Where both parties guilty of breach
First infractor known.
— the liability of the first infractor should be equitably reduced
First infractor cannot be determined
— The rule is that the contract shall be deemed extinguished and each shall bear his own damages
— the court shall not provide remedy to either of the parties, who must suffer the damages allegedly sustained by them