THE LAW ON

OBLIGATIONS AND
CONTRACTS
CHAPTER 3
DIFFERENT KINDS OF OBLIGATIONS

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. (1113)
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 P1,000. the

obligation is immediately demandable bec.
there is no condition and no date is
mentioned for its fulfillment
CONDITIONAL OBLIGATION

> is one whose consequences are subject

in one way or another to the fulfillment of a
condition

CONDITION
> is a future and uncertain event upon the
happening of which, the effectivity or
extinguishment of an obligation.

CHARACTERISTICS OF A CONDITION
1. Future and uncertain
2. Past but unknown
TWO PRINCIPAL KINDS OF CONDITION

1. SUSPENSIVE CONDITION – the fulfillment

of the condition will give rise to an
obligation.
EX. I will sell you the land if I pass the
CPA board exam.

2. RESOLUTORY CONDITION – the fulfillment

of the condition will extinguish an obligation
(right) already existing
EX. D, is under obligation to give C P1000
monthly until he pass the CPA board exam. C
pass the exam, hence, D’s obligation is
extinguish, or C right to received 1,000 is
extinguished
DISTINCTIONS BETWEEN SUSPENSIVE AND
RESOLUTORY CONDITIONS

1. If the suspensive condition is fulfilled, the

obligation arises, while if the resolutory
condition is fulfilled, the obligation is
extinguished
2. If the suspensive condition does not take
place, the tie of the law(juridical tie) does
not appear, while if it is the other, the tie
of law is consolidated
3. Until the first takes place, the existence of
obligation is a mere hope, while in the
second, its effects flow but the possibility
of termination
WHEN OBLIGATION DEMANDABLE AT ONCE

1. Pure obligation
2. Subject to Resolutory condition
3. Subject to Resolutory period
CAN THE PAST EVENT BE A CONDITION BY
THE PARTIES?

> YES, 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.

Ex. X is the owner of the land which is being

claimed by Y. Last week the Supreme Court
has rendered final decision upholding the
right of X. However, X has not yet received
the notice that he won the case. Now, X
obliged himself to sell his land to B should
he win the case against Y
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. (n)
WHEN DURATION OF PERIOD DEPENDS
UPON THE WILL OF DEBTOR?

1. The debtor promises to pay when his

means permit him to do so
2. As when 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. when I am in the 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.
(1114)
EFFECT OF HAPPENING OF CONDITION

1. Acquisition of rights
2. 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. (1115)
CLASSIFICATION OF CONDITIONS

A. AS TO EFFECT
1. SUSPENSIVE- the happening of which
gives rise to the obligation
2. RESOLUTORY- the happening of which
extinguishes the obligation

B. AS TO FORM
1. EXPRESS- the condition is clearly
stated
2. IMPLIED- the condition is merely
infered
CLASSIFICATION OF CONDITIONS

C. AS TO POSSIBILITY
1. POSSIBLE- the condition is capable of
fulfillment
2. IMPOSSIBLE- the condition is not
capable of fulfillment

D. AS TO CAUSE OR ORIGIN
1. POTESTATIVE- 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
CLASSIFICATION OF CONDITIONS

C. MIXED- conditions partly upon chance

and partly upon the will of a third person

E. AS TO MODE
1. POSITIVE- the condition consist in the
performance of an act
2. NEGATIVE- the condition consist in
omission of an act
CLASSIFICATION OF CONDITIONS

F. 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

G. AS TO DIVISIBILITY
1. DIVISIBLE- the condition is susceptible
of partial performance
2. INDIVISIBLE- the condition is not
susceptible of partial performance
POTESTATIVE CONDITION

> a condition suspensive in nature and

which depends upon the sole will of one of
the contracting parties
WHAT IS THE EFFECT IF CONDITION
DEPENDS UPON THE SOLE WILL OF DEBTOR

> the conditional obligation is void

because its validity and compliance is left to
the will of the debtor.

Ex.
1. I will pay you if I want
2. I will pay you after I receive a loan from a
bank
3. I will pay you after I recover what X owes
4. I will pay you after I have harvested fish
WHAT IS THE EFFECT IF CONDITION
DEPENDS UPON THE SOLE WILL OF
CREDITOR?

> the obligation is valid

Ex.

I will pay you my indebtedness upon your

demand
WHAT IS THE EFFECT IF RESOLUTORY
CONDITION DEPENDS UPON WILL OF
DEBTOR?

> the obligation is valid

Ex. Right to repurchase in sale of pacto de

retro
WHAT IS THE EFFECT IF CASUAL CONDITION

> the obligation is VALID

Ex.

X building contractor obliges himself in

favor of Y, to repair any damage that may
cause to the building by any earthquake
occurring within 10 years from the date of
completion
WHAT IS THE EFFECT IF MIXED CONDITION?

> obligation is valid

Ex.

X building contractor obliges himself in

favor of Y, to repair any damage that may
cause to the building by any earthquake
occurring within 10 years from the date of
completion IF found by a panel of arbitration
that construction defects contributed in any
way to the damage
Art. 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.
TWO KINDS OF IMPOSSIBLE CONDITIONS

1. PHYSICALLY IMPOSSIBLE CONDITIONS

> when they, in nature of things cannot
exist or cannot be done
ex. I will pay you P10,000 if it will not
rain for one year in the Phil
I will pay you P10,000 if you can carry 20
cavans of palay in one shoulder

2. LEGALLY IMPOSSIBLE CONDITIONS

> when they are contrary to law, morals,
good customs, public order or public policy
ex. X will give Y P10,000 if Y will kill Z
EFFECT OF IMPOSSIBLE CONDITIONS

1. Conditional obligation void – impossible

conditions annul the obligation which
depends upon them. Both the obligation
and the condition are void

2. Conditional obligation is valid – if the

condition is negative, that is not do an
impossible thing, it is disregarded and the
obligation is rendered pure and valid

ex. I will sell my land if you do not carry

20 cavans of palay on your shoulder.
EFFECT OF IMPOSSIBLE CONDITIONS

3. Only the affected obligation void – if the

obligation is divisible, the part thereof not
affected by the impossible condition shall be
valid

ex. I will give you P10,000 if you sell my

land and a car if you kill Pedro
EFFECT OF IMPOSSIBLE CONDITIONS

4. 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

Ex. D borrowed P10,000 from C. If C later

agreed to kill X before D pays him, the
condition to kill X is void but not the pre-
existing obligation of D to pay C
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. (1117)
POTESTATIVE CONDITION
> refers to positive (suspensive)
condition – the happening of an event at a
determinate time. The obligation is
extinguished:

a. As soon as the time expires without the

event taking place or

b. As soon as it has become indubitable that

the event will not take place although the
time specified has not expired
POTESTATIVE CONDITION

Example

1. X obliges himself to give B P10,000 if B

will marry C before B reaches the age of
23.

a. X is liable if B marries C before he reaches

the age of 23
b. X is not liable if B marries C at the age of
23 or after he reaches the age of 23
c. If B dies at the age of 22 without having
married C, the obligation is extinguish
because it has become indubitable that
the condition will not take place.
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. (1118)
NEGATIVE CONDITION:
> That an event will not happen at a
determinate time.
> the obligation shall become effective
and binding

1. From the moment the time indicated has

elapsed without the event taking place
2. 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, the circumstances

shall be considered to arrive at the intention
of the parties. This rule may also be applied
to a positive condition.
Example:

X binds himself to give B P10,000 if B is not

yet married to C on Dec. 30, 2014.

a. X is not liable to B if B marries C on

Dec.30, 2014
b. X is liable to B if on Dec.30, 2014, B is not
married to C and if B marries after Dec.30
c. Suppose C dies on November 20, 2014
without having been married to B. The
obligation is rendered effective because it
is certain that the condition not to marry
C will be fulfilled.
Art. 1186. The condition shall be deemed
fulfilled when the obligor voluntarily
prevents its fulfillment. (1119)
CONSTRUCTIVE FULFILLMENT OF
SUSPENSIVE CONDITION:
> the three requisites for the application
of this article

1. The condition is suspensive

2. The obligor actually prevents the
fulfillment of the condition
3. He acts voluntarily
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. (1120)
RETROACTIVE EFFECTS OF FULFILLMMENT
OF SUSPENSIVE CONDITION.

1. IN OBLIGATION TO GIVE – an obligation

to give subject to suspensive condition
becomes demandable only upon the
fulfillment of the condition
> HOWEVER, once the condition is
fulfilled, it effects shall retroact to the day
when the obligation was constituted
Ex. On Jan.20, S agreed to sell his parcel of
land to B for P50,000 should B lose a case
involving the recovery of another parcel of
land. On April 10, S sold his land to C. B lost
the case on Dec.4

> before Dec.4, B had no right to demand

the sale of the land by S. When the
condition, however, was fulfilled on Dec.4, it
is as if B was entitled to the land beginning
Jan.20. Hence, as between B and C will have
a better right over the land
> if the land was sold by B to D on May
15, D would still have a better right as
against C since the sale by B will be
considered valid
2. IN OBLIGATION TO DO OR NOT TO DO
> with respect to the retroactive effect of
the fulfillment of a suspensive condition, in
obligation to do or not to do, no fixed rules is
provided

> this does not mean, however, that in

these obligations the principle of
retroactivity is not applicable. 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.
2. IN OBLIGATION TO DO OR NOT TO DO

Example

C obliged himself to condone the debt of D,

his lawyer should the latter win C’s case in
the SC.
> in this case the fulfillment of the
condition, shall not be entitled, unless the
contrary has been stipulated, to the earned
interest of the capital during the pendency
of the condition as the intention of C is to
extinguish the debt. Here, the fulfillment of
the condition has a retroactive effect.
2. IN OBLIGATION TO DO OR NOT TO DO

Example

C obliged himself to condone the debt of D,

his lawyer should the latter win C’s case in
the SC.
> suppose in the preceding example, the
obligation contracted by C was to construct
gratis the house of D upon the fulfillment of
the condition
> in this case, unless the contrary
appears, there is no retroactive effect if the
condition is fulfilled
RETROACTIVE EFFECTS AS TO FRUITS AND
INTEREST IN OBLIGATION TO GIVE

1. In reciprocal obligations- there is no

retroactivity because the fruits and
interest received during the pendency of
the condition are deemed to have been
mutually compensated
Example .

On Jan.20, S agreed to sell his parcel of

land to B for P50,000 should B lose a case
involving the recovery of another parcel of
land. On April 10, S sold his land to C. B lost
the case on Dec.4
> when B lost the case on Dec.4, S must
deliver the land and B must pay P50,000
> S does not have to give the fruits
received from the land before Dec.4 and B is
not obliged to pay legal interest on the price
since the fruits and interest received are
deemed to have been mutually compensated
2. UNILATERAL OBLIGATIONS
> there is usually retroactive effect
because they are gratuitous. The debtor
receives nothing from the creditor. Thus,
fruits and interest belong to the debtor
unless from the nature and circumstances of
the obligation it should be inferred that the
intention of the person constituting the
same was different
2. UNILATERAL OBLIGATIONS

Example

Suppose in the same example, the promise

of S was to donate the parcel of land to B

> upon fulfillment of the condition, S has

to deliver the land but he has the right to
keep to himself all the fruits and interest he
may have received during the pendency of
the condition, that is, from January 20 to
Dec.4, unless contrary intention by S may be
inferred.
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. (1121a)
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.
This right is 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
Art. 1189. When the conditions have been
imposed with the intention of suspending
the efficacy of an obligation to give, the
following rules shall be observed in case of
the improvement, loss or deterioration of the
thing during the pendency of the condition:
(1) If the thing is lost without the fault of
the debtor, the obligation shall be
extinguished;
(2) If the thing is lost through the fault of
the debtor, he shall be obliged to pay
damages; it is understood that the thing is
lost when it perishes, or goes out of
commerce, or disappears in such a way that
its existence is unknown or it cannot be
recovered;
(3) When the thing deteriorates without the
fault of the debtor, the impairment is to be
borne by the creditor;
(4) If it deteriorates through the fault of the
debtor, the creditor may choose between the
rescission of the obligation and its
fulfillment, with indemnity for damages in
either case;
(5) If the thing is improved by its nature, or
by time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the
debtor, he shall have no other right than
that granted to the usufructuary. (1122)
REQUISITES FOR APPLICATION OF ART.1189

1. The obligation is a real obligation

2. The object is a specific or determinate
things
3. The obligation is subject to a suspensive
conditions
4. The condition is fulfilled
5. There is no loss, deterioration, or
improvement of the thing during the
pendency of the condition
KINDS OF LOSS

1. PHYSICAL LOSS – when a thing perishes.

Ex. as when a house is burned and reduced
to ashes.
2. LEGAL LOSS – when thing goes out of
commerce. Ex. When lot is expropriated.
When the things becomes illegal
3. CIVIL LOSS – when a thing disappears in
such a way that its existence is unknown.
Ex. A particular dog has been missing for
sometime
RULES IN CASE OF LOSS, DETERIORATION,
OR IMPROVEMENT OF THING DURING
PENDENCY OF SUSPENSIVE CONDITION

1. Loss of thing without debtor’s fault

ex. X obliged himself to give Y his car
worth P100,000, if Y will sell X’s property.
The car was lost without the fault of X.
> the obligation is extinguished and X is
not liable to Y even if Y sell X’s property. The
car was lost without the fault of X
2. Loss of thing through debtor’s fault
ex. X obliged himself to give Y his car
worth P100,000, if Y will sell X’s property.
The car was lost through negligence of X.
> Y will be entitled to demand damages
3. Deterioration of thing without debtor’s
fault -
ex. X obliged himself to give Y his car
worth P100,000, if Y will sell X’s property. If
the car figured in an accident, as a result of
which its windshield was broken and some of
its paints were scratched away without the
fault of X, thereby reducing its value to
P90,000, Y will have to suffer the
deterioration or impairment in the amount of
P10,000
4. Deterioration of thing through debtor’s
fault -
ex. Same case, B may choose between:

1. Rescission (or cancellation) of the

obligation with damages; in this case, X is
liable to pay Y P100,000, the value of the
car before its deterioration plus incidental
damages if any.
5. 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

Ex. Suppose the market value of the car

increased, who get the benefits?

> the benefit shall inure to the benefit of Y,

In as much as y would suffer in case of
deterioration of the car through fortuitous
event, it is but fair that he should be
compensated in case of improvement of the
car instead
6. Improvement of thing at the expense of
debtor –

Ex. During the pendency of the condition, X

had the car painted and its seat cover
changed at his expense

> in this case, X will have the right granted

to a usufructuary with respect to
improvements made on the thing held in
usufruct.

USUFRUCT – is the right to enjoy the use and

fruits of a thing belonging to another
Art. 1190. When the conditions have for
their purpose the extinguishment of an
obligation to give, the parties, upon the
fulfillment of said conditions, shall return to
each other what they have received.

In case of the loss, deterioration or

improvement of the thing, the provisions
which, with respect to the debtor, are laid
down in the preceding article shall be
applied to the party who is bound to return.
As for the obligations to do and not to do,
the provisions of the second paragraph of
Article 1187 shall be observed as regards
the effect of the extinguishment of the
obligation. (1123)
EFFECT OF FULFILLMENT OF RESOLUTORY
CONDITION:

1. IN OBLIGATION TO GIVE – the obligation

is extinguished and the parties are
obliged to return to each other what they
have received under the obligation

ex. X allows Y to use the former’s car until

X return from the province. Upon return of X
from the province, Y must give back the car
EFFECT OF FULFILLMENT OF RESOLUTORY
CONDITION:

1. IN OBLIGATION TO DO OR NOT TO DO –
in such obligations, the courts shall
determine the retroactive effect of the
fulfillment of the resolutory condition as
in the case where the condition is
suspensive