Obligations

and Contracts
Course Material No. 4.
Part 1
(Arts. 1179 – 1192)

Your Full Name Here

Course Instructor
CM 4.a Pure and Conditional Obligations • NU LAGUNA

Obligations – Pure and

Conditional Obligations
LESSON OUTLINE
LEARNING OUTCOMES
 Pure Obligations Here’s what I will teach you in this course material:
 Pure and Conditional Obligations
 Conditional
S Obligations  Kinds of Conditions
Unit Outline  Reciprocal Obligations
 Reciprocal
Obligations

 Potestative,
Casual and Mixed
Conditions RESOURCES NEEDED
 Possible and
Impossible For this lesson, you would need the following resources:
Conditions
 Book of Hector De leon, Obligation and Contract
 Positive and
Negative
Conditions
CM 4.a Pure and Conditional Obligations• NU LAGUNA 3

Pretest
Before you start, try answering the following questions.

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

2. _______ is one whose consequences are subject in one way or another to the fulfillment of a
condition.

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

4. ________ is a condition the fulfillment of which will give rise to an obligation (or right)..

5. ________ is a condition the fulfillment of which will extinguish an obligation (or right) already
existing.

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

7. ________ is a condition suspensive in nature and which depends upon the sole will of one of the
contracting parties.

8. ________ 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.

9.________ 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.

10. _______ the performance of one party is not dependent upon the simultaneous performance by
the other.
CM 4.a Pure and Conditional Obligations • NU LAGUNA

Topics

Basis of Classification

From the viewpoint of the presence or absence of a condition or term (period), obligations are
classified into:

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.

Conditional Obligation - is one whose consequences are subject in one way or another to the
fulfillment of a condition.

Obligation with a term or period - is one whose consequences are subjected in one way or another
to the expiration of said period or term.

Pure Obligation

Effect: If the obligation is pure, it is immediately demandable.

Conditional Obligations

Condition, defined: is a future and uncertain event, upon the happening of which, the effectivity or
extinguishment of an obligation (or rights) subject to it depends.
 Future and uncertain
 Past but unknown

Suspensive and Resolutory Conditions

1. Suspensive condition (condition precedent or condition antecedent) or one the fulfillment of

which will give rise to an obligation (or right). When the acquisition of rights or the existence of
obligations is made to depend upon the fulfillment of the condition, the condition is suspensive
(condition precedent). If the suspensive condition is fulfilled, the obligation arises. If the
suspensive condition doesn’t take place, the parties would stand as if the conditional obligation
had never existed.

During the pendency of the condition:

No obligation yet. The debtor may therefore, pending the fulfillment of a suspensive
condition, recover what during the same time he has paid by mistake.

No right yet. In the same way, the creditor doesn’t acquire a right until the happening of
the event which constitutes the condition. Nevertheless, before the fulfillment of the
condition, bring the appropriate actions for the preservation of his right.

Effects of fulfillment of suspensive condition:

Birth of rights and obligation. The happening of the suspensive condition gives birth to
the right (of the creditor) or to the obligation (of the debtor).

Retroactivity.
CM 4.a Pure and Conditional Obligations• NU LAGUNA 5

 In obligation to give: Once the suspensive condition is fulfilled, the effects of

conditional obligation to give retroact to the day on which the obligation was
constituted. In other words, the obligation is considered as if pure and simple from
the first day.

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.

In unilateral obligations. — There is usually no retroactive effect

because they are gratuitous. Thus, fruits and interests 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.

 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.

Effect of loss, deterioration or improvement occurring during the pendency of condition (if the
condition is later on fulfilled)

If the thing is lost. A thing is considered lost when it perishes, when it goes out of
commerce or when it disappears in such a way that its existence is unknown or it cannot be
recovered. If the loss occurs without the fault of the debtor, the obligation is extinguished unless
there is a stipulation to the contrary. But if the loss occurs through the fault of the debtor, he is
liable for damages to the creditor upon fulfillment of the condition.

If the thing deteriorated. If it occurs without the fault of the debtor, the impairment is to
be borne by the creditor. If due to the fault of the debtor, the creditor may choose between: (1)
rescission, with indemnity for damages; or (2) fulfillment with indemnity for damages.

If the thing improved. If the thing improves by nature without the intervention of the
debtor, such improvement insures to the benefit of the creditor. If it is improved at the expense of
the debtor, the latter is granted only the rights of usufructuary. Hence,

 The debtor is not entitled to demand reimbursement of his expenses.

 He can remove the improvements, should it possible to do so without damage to
the property.
 He may set off the improvements made on the property against any damage he
caused to the same.

2. Resolutory condition (condition subsequent) or one the fulfillment of which will extinguish an
obligation (or right) already existing. When the extinguishment of rights and obligations is made
to depend upon the fulfillment of the condition, the condition is resolutory. An obligation subject to
a resolutory condition is immediately demandable but it is extinguished upon the happening of the
condition.

During the pendency of the condition:

CM 4.a Pure and Conditional Obligations • NU LAGUNA

The debtor has an expectancy that the thing he delivered to the creditor will be eventually returned
to him upon the fulfillment of the condition. In other words, the condition that is resolutory for the
principal obligation becomes suspensive condition for the obligation to return.

Effects of fulfillment of resolutory condition:

An obligation subject to a resolutory condition is demandable at once but the happening of the
resolutory condition produces the extinguishment of the obligation as though it had not existed
resulting, as well, in the extinguishment or loss of rights already acquired.

Accordingly, the parties must make mutual restitution of what they have received from each other,
including not only the thing delivered with its fruits, but also the price paid with its interests. The
restitution is absolute, each one must restore everything he has received, because an obligation
that has not existed could not have produced any effects.

Retroactive effects in obligations to do and not to do: The courts shall determine the
retroactive effects of the fulfillment of a resolutory condition.

Effects of loss, deterioration or improvement of the thing during the pendency of the
condition (if the resolutory condition is later on fulfilled): The rules in Article 1189 of the
NCC are also applicable to the creditor who is also bound to return upon the fulfillment of
resolutory condition, because in that respect he becomes a debtor.

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 general rule is that they are to be
performed simultaneously or at the same time such that 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 non-fulfillment, as a tacit or implied resolutory condition, giving him the right to
demand the rescission of the contract, i.e., it may be exercised even if it is not provided in the
agreement of the parties.

Alternative remedies in case of breach of reciprocal obligations

Article 1191 is the general provision on rescission of reciprocal obligations. It speaks of the right
of the “injured party’’ to choose between rescission or fulfillment of the obligation, with the right to
claim damages in either case. 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 Article 1191, 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, nor seek partial fulfillment under the
guise of recovering damages.

Right to rescind is implied

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, such that absent any provision providing for a right
to rescind, the parties may nevertheless rescind the contract should the other obligor fail to comply
with its obligations.

Power must be invoked judicially

CM 4.a Pure and Conditional Obligations• NU LAGUNA 7

In the absence of a stipulation to the contrary, the power to rescind must be invoked judicially. It
cannot be exercised solely on the party’s own judgment that the other has committed a breach of
the obligation. Where there is nothing in the contract empowering the injured party to rescind it
without resort to the courts, the injured party’s action in unilaterally terminating the contract is
unjustified. However, 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. There is nothing in Article 1191 which prohibits the parties from entering into such
stipulation which is in the nature of a facultative resolutory condition.

Right to ask rescission not absolute

Right to ask rescission not absolute, since rescission cannot be demanded by an injured party who
is not in a possession to return what he has received. Neither may rescission take place when the
object of the contract is in the possession of a third person who has not acted in bad faith.

Where the non-compliance by the other party is with respect only to time, the court has
discretionary power to refuse to grant rescission and instead fix or grant a period when there exists
a just cause. The general rule is that rescission will not be permitted for slight or casual breach of
the contract, but only for such breaches as are so substantial and fundamental as to defeat the
object of the parties in making the agreement.

Prescriptive Period

The prescriptive period is 10 years from accrual of the right of action, for written contracts or 6
years, for verbal contracts.

Effect of rescission under Article 1191

Mutual rescission is required.

If both parties have committed a breach of reciprocal obligations

If it can be determined who is the first infractor: 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.

If it cannot be determined who is the first infractor: The rule is that the contract shall
be deemed extinguished and each shall bear his own damages

Potestative, Casual and Mixed Conditions

Potestative condition – the condition depends upon the will of one of the contracting parties

Effect of potestative condition

Which is also a suspensive: 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.) and it cannot, therefore, be legally demanded. In
order not to be liable, the debtor will not just fulfill the condition. There is no burden on the
debtor and consequently, no juridical tie is created.
CM 4.a Pure and Conditional Obligations • NU LAGUNA

However, 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. Here, the condition is imposed not on the
birth of the obligation but on its fulfillment.

Which is also a resolutory: A condition that is both potestative and resolutory is valid,
even though the condition is made to depend upon the sole will of the debtor.

Effect of casual and mixed condition

Casual. — the condition depends upon chance or upon the will of a third person; and

Mixed. — the condition depends partly upon chance and partly upon the will of a third person.

Obligations which are made to depend on casual or mixed conditions are valid.

It is only when the potestative condition depends exclusively upon the will of the debtor that the
conditional obligation is void. When the condition depends partly on the will of the debtor and partly
upon chance or the will of a third person (or mixed condition), the conditional obligation is valid. In
such cases of mixed conditions, as to the part that depends on the will of the debtor, the provisions
of Article 1186 of the NCC will be applicable. Said article provides that the condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Possible and Impossible Conditions

Two kinds of impossible conditions.

1. Physically impossible conditions — when the y, in the nature of things, cannot exist or
cannot be done; and

2. Legally impossible conditions — when they are contrary to law, morals, good customs, public
order, or public policy.

Effect of impossible conditions

Conditional obligation void — Impossible conditions annul the obligation which depends
upon them. Both the obligation and the condition are void. The reason behind the law is
that the obligor knows his obligation cannot be fulfilled. He has no intention to comply with
his obligation.

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. Actually, the condition
is always fulfilled when it is not to do an impossible thing so that it is the same as if there
were no condition. The negative condition may be not to give an impossible thing.

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

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.
CM 4.a Pure and Conditional Obligations• NU LAGUNA 9

Positive and Negative Conditions

Positive condition. 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. 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 yet expired.

Negative condition. 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. 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.
CM 4.a Pure and Conditional Obligations • NU LAGUNA

LESSON SUMMARY

 From the viewpoint of the presence or absence of a condition or term (period),

obligations are classified into pure obligation, conditional obligation and obligation with
a period.

 Conditions may be either suspensive or resolutory, potestative, mixed, casual, possible

or impossible and positive or negative.

 Alternative remedies in case of breach of reciprocal obligations are rescission or

fulfillment of obligation.

 Right to ask rescission not absolute

CM 4.a Pure and Conditional Obligations• NU LAGUNA 11

POSTTEST

1. R donated to T a parcel of land subject to the condition that it was to be used for the erection
of a central school and a public park, the work to commence within the period of 7 months from
the date of the ratification by the parties of the deed of donation.

The donation was accepted by T and title to the property was transferred to it. Subsequently, R
sold the land to C. C claimed that since the condition imposed was not complied with, there was
no donation. Is the condition suspensive or subsequent?

2. D, as principal, and S, as surety, executed a promissory note in favor of C for the price of goods
purchased by D from C, “upon condition that D will pay over to C at the end of each month all
sums which he may receive from the sale of said goods, and that in the contrary event, both (D
and S) undertake to pay to C such sums as D may fail to turn in as above stated.” In an action by
C to recover the amount of the promissory note, C did not prove that he has not, in fact, received
all the money derived from the sale of the goods mentioned. Is S liable on the note?

3. S agreed to sell a parcel of land to B. Under the contract, B was given a certain period within
which to arrange and complete the papers relating to the property. S refused to proceed with the
sale in view of the failure of B to complete the title papers. B brought action for specific
performance. Is the agreement on the part of B to complete the title papers a condition
subsequent?

4. S (seller) filed an action for specific performance of a contract relating to the sale of a parcel of
land with the improvements existing thereon consisting of a residential house. The contract
stipulates that the balance of P39,000.00 will be paid as soon as the premises have been vacated
by the present occupants, with the further understanding that “the buyer will take care for the
present occupants to vacate the place.” S contends that the contract is void because the fulfillment
of the condition stipulated depends upon the exclusive will of the debtor. Does the payment of the
purchase price by the vendee (B) depends upon his will?

5. The contract of services provides that the contingent fees of L (lawyer) shall be 12% of the
share of (Mrs.) W in the conjugal partnership between her and her husband, H. This contract was
made principally, in contemplation of a suit for divorce that W intended to file and of the liquidation
of the conjugal partnership. With the purpose of defeating L’s claim for attorney’s fees, W and H
entered into an agreement. Should the condition for the payment of attorneys’ fees be deemed
fulfilled?

6. Explain the rules in case of loss, deterioration or improvement of thing during pendency of
suspensive condition.

7. S sold to B shares of stock of a corporation engaged in tourism, without prior approval of the
Department of Tourism as required by the law. The purpose of the requirement is to ensure that
only those persons and entities who are fit and responsible should engage in tour operation
business. Is the sale void ab initio or merely rescissible for lack of the required approval?