ARTICLE 1180 Manuel barrowed money from Enrique in the Uncertain future event

amount of P50, 000 promising to pay the

When the debtor binds himself to pay when amount “as soon as possible.” If later on, they
his means permit him to do so, the cannot agree on the specific date of payment,
the remedy of Enrique is to go to court to fix the Is an occurrence which beyond the control
obligation shall be deemed to be one with a
date when the debt is to be paid of both parties
period, subject to the provisions of article
1197.

These aspect prevent them from

manipulating the event’s outcome
Article 1181
Explanation:

In conditional obligations, the acquisition of SUSPENSIVE RESOLUTORY

rights , as well as the extinguishment or loss of
those already acquired, shall depends upon the
An obligation with a period arises when a happening of the event which Constitutes the
day certain has been fixed for its condition. (1114) The fulfillment of the The fulfillment of the
fulfillment. It is not the same as event event
condition. A condition may or may not will give rise will extinguish
happen while a period or a term is sure to
come or to happen. Where A binds himself Discussion:
to an obligation an obligation already
to pay B P100 when his means permit him to existing
do so, the court will fix the time when the
obligation is to be fulfilled. A conditional obligation is an obligation wherein
its fulfillment or termination depends on certain
conditions.

Example: RESOLUTORY CONDITION EXAMPLE

The conditions can be an uncertain future event
or a past event that is unknown to both the
agreeing parties
On 15 January 2004 Mr. X sold his property 
to Pandayan Inc. The sale agreement
provided that the sale would
be cancelled and the parties
would restore each other to their original
position if the purchaser was unsuccessful in
obtaining rezoning.
Some time after taking possession of the
property, the purchaser’s rezoning
application failed. The sale of the property
had to be transferred back to the Mr X and
the purchase price remitted to Pandayan
Inc.
ARTICLE 1182
Art. 1182. When the Fulfillment of the
condition depends upon the solve will of the
debtor, the conditional obligations shall be
void. If it depends upon chance or upon the
will of a third party, the obligations shall
take effect in conformity with the provision
of this code.
DEFINITION AND EXAMPLES
Potestative Condition – (Potestas – 1.
Power, Authority) it is a condition which one
depends upon the will of one of the contracting
parties.
It is the power in which one of the party realize
or prevent
Kinds of Potestative Condition
1. Simple Potestative Condition – it is not
only Manifestation of a will but also arealization
of an external act, it depends on the voluntary
act of the obligor
Ex. Should A decide to sell his house (yet it is a
condition depends on the will of A, external
consequence is do A need money of there is a
need to be relocated)
Purely Potestative Condition –
depends solely upon the will,
Ex. I will sell my house if I deem it proper.
Ex. A promised B to WILL pay the amount
of Php 30,000 if the house WILL be finished
in three months.
 Casual Condition – one which
depends on upon chance or other factors,
and not upon the will of the contracting
parties.
It is a condition given by chance (IF, IF EVER,
etc) ibibigay ko sayo ang lupa ko, kapag
pumuti na ang uwak
Ex. A will give Php 30,000 to B, IF they won
the case
 Mixed Conditions – it is a will of the 
other contracting parties and other
circumstances, including the will of a third
person
A contract agreed upon both parties
including another third party
–public policy
 –good custom and morals
Impossible Condition – not in accordance to
possible conditions
 Physically Impossible – contrary to the
law of nature (nature of things or cannot
be done)
 Juridically Impossible – contrary to
law, morals, public policy and good custom
Effects of Impossible Conditions:
manner prejudice the heir, even if the
testator should otherwise provide.
ARTICLE 1184. The condition that some
event happen at a determinate time shall
extinguish the obligation as soon as the
time expires or if it has become indubitable
that the event will not take place.

Ex. A will give B Php 30,000 if A will marry C 1.
2.
3.
4.
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 validDiscussion:
Possible Condition – capable of realization
or actualization in accordance to
 –nature
 –law
Conditional obligation void
Conditional obligation valid
Only affected obligation is void.
Only the condition void.
Impossible Conditions in
Obligations distinguised from Impossible
Conditions in Donations and Wills
If there are impossible conditions impossed on
the disposition on the donation or will, the same
shall not be considered written.
Art 727. Illegal or impossible conditions in
simple remunaratory donations shall be
considered as not imposed.
Art 873. Impossible conditions and those
contrary to law and good customs shall be
considered as not imposed and shall in no
Article 1185
The condition that some event will not
happen at a determinate time shall render
the obligation effective from the moment
the time indicated has elapsed, or if it has
become evident that the event cannot
occur.
If no time has been fixed, the condition
shall be deemed fulfilled at such time as
may have probably been contemplated,
bearing in mind the nature of the
obligation. (1118)
Discussion:
The condition that some even will not
happen at a determinate time will make the
obligation effective when:
a.) the determinate time has elapsed
without the event having occured;
Illustration: Jun obligated himself to deliver
a piece of land to Mario on the condition
that Mario shall not run for Vice-Mayor in
their municipality within 9 years.
More than 9 years had elapsed without
Mario running for Vice-Mayor. The
obligation to deliver the piece of land
becomes effective.
b.) it has become evident that the event will
not occur.
Illustration: Jun obligated himself to deliver
a piece of land to Mario on the condition
that Mario shall not run for Vice-Mayor in
their municipality within 9 years.
1.
Before 9 years had elapsed, the Municipality
became totally submerged by lahar and
ceased to be a municipality. The residents
had to transfer to other municipalities. In
this case, even before the lapse of 9 years it 2. Actual prevention of compliance
is clear that the obligation has become effective
because of the disappearance of the
Municipality. It is not evident that Mario can
never run for Vice-Mayor anymore in that Intent to Prevent Compliance – The law
Municipality because it ceased to be one. does not require that the obligor acts with
malice or fraud as long as his purpose is to
prevent the fulfillment of the condition. He
ARTICLE 1186
should not be allowed to profit from his own
fault or bad faith.
Article 1186. The condition shall be deemed
fulfilled when the obligor voluntarily prevents
its fulfillment. (1119)
e.g. A agreed to give B 5% of the
commission if B could sell A’s property at a
certain price. B found a buyer that agrees
Constructive fulfillment – refers to an obligation upon A’s terms. To evade the payment of
prevented by the obligor from happening. commission agreed upon, A sold his
property to the buyer at lower price without
B’s aid.
for the condition to be considered fulfilled these
two requisites shall be present.
In case the obligor acts voluntarily but not
for cause of prevention of fulfillment of the
obligation. It is no longer considered part of
this article.
Intent of the obligor to prevent
fulfillment of the condition
e.g. A binds a contract to B to construct him
a house, But before the construction is
finished, A filed a case against B causing B to
be imprisoned and non-fulfillment of the
condition.
There is no constructive case fulfillment of
the condition in this case.
In Exercise of Right – If the obligation
prevented is a violation to a right, the
condition is not considered fulfilled.
e.g. A asked B to construct him a house but
due to violation of city ordinances, B wasn’t
able to finish constructing the house.
Actual Prevention of Compliance – If the
result is not specified to the condition set by
the obligor. There is no constructive
fulfillment.
e.g. A asked B to paint him, but before B could In obligation to do and not to do, the court
delivered the painting to A, A destroys it. shall determine, in each case, the
retroactive effect of the condition that has
been complied with. (1120)
Provoking Resolutory Condition – when the
obligation is subject to resolutory condition and
the obligee unjustifiably provokes the Retroactivity of Obligation
agreement. It will not be considered fulfilled and
there will be no extinguishment of rights. The
obligee cannot be excused from non-compliance
of the obligation.
-Refers to effect of the happening of
suspensive conditions.
ARTICLE 1187
Art. 1187 The effect of a conditional obligation -Creditor cannot enforce his right between
to give, once the condition has been fulfilled, the creation of conditional obligation and
shall retroact to the day of the constitution of fulfilment of suspensive condition.
the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon
the parties, the fruit interest during the
pendency of the condition shall be deemed to
have been mutually compensated. If the -Condition is only accidental, not essential
obligation is unilateral, the debtor shall elements of obligation.
appropriate the fruits and interest 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. Contracts of debtor
-Debtor has no authority to make such an -Inures to the creditor, the increase in value Fruits and Interests
act before the happening of suspensive which the thing acquire before happening of
condition. suspensive condition.

-Not required before the happening of the

suspensive condition.
-It will abrogate the contract, cause of Limitations on Retroactivity
retroactivity of obligation.

-When obligation to give is reciprocal, fruits

– Not Absolute, subject to certain limitations and interest pending the happening of the
-Creditor retains a superior right dictated by justice and required by practicability condition are deemed to mutually
or convenience. compensate each other

Contracts of Creditor
Acts of Administration Obligation to Do, Not to Do

-Pendente Conditione, when the creditor

disposed of his expected right before -Performed by debtor before happening of -Court determined retroactive effect of the
happening of the condition. suspensive condition. fulfillment of condition.

Increase in Value -Can be asserted against the creditor after -Determine to what date retroactivity shall
happening of the condition. be allowed, or it may refuse to permit
retroactivity depending upon the 1.
circumstances.
2.
Article 1188 3.
The creditor may, before the fulfillment of 4.
the condition, bring the appropriate actions
for the preservation of his right. 5.
The debtor may recover what during the
same time he
Pending the happening of the suspensive
condition, the creditor cannot compel the
debtor to perform the prestation. All that
the creditor has in the meanwhile is a mere
expectancy contingent to the happening of
the condition.
Remedies that the creditor may avail for the
preservation of the prestation.
Action for prohibition restraining the
alienation of the thing pending the happening of
the suspensive condition;
Petition (with the appropriate Registry
of property like land is involved), for the
annotation of the creditor’s right;
Action to demand security if the debtor
has become insolvent;
Action to set aside alienation made by
the debtor in fraud of creditors; or
Action against adverse possessors to
interrupt the running of the prescriptive period.
ARTICLE 1189
When the conditions have been imposed with
the intention of suspending the efficacy of an
obligation to give, the following rules shall be
observed in case of the improvement, loss or
deterioration of the thing during the pendency
of the condition:
(1) If the thing is lost without the fault of the
debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered;
(3) When the thing deteriorates without the
fault of the debtor, the impairment is to be
borne by the creditor;
(4) If it deteriorates through the fault of the
debtor, the creditor may choose between
the rescission of the obligation and its
fulfillment, with indemnity for damages in
either case;
(5) If the thing is improved by its nature, or
by time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the
debtor, he shall have no other right than
that granted to the usufructuary. (1122)
ARTICLE 1190
RESOLUTORY CONDITION
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.
(1123)
If the condition does not happen, the rights of LOSS, DETERIORATION, IMPROVEMENT
the creditor will become absolute. But if the
condition happens, such rights will be
extinguished, and the obligation will be treated
as if it did not exist.
Provisions of Article 1189 shall be applicable
if there is a loss, deterioration or
improvement that took place before the
resolutory condition occurs.
Each party is bound to return to the other
whatever has received. Every vestige of
obligation is wiped out through the process of
mutual restitution.
The thing lost before the happening of the
resolutory condition must be borne by the
owner at the time of the loss; that is the
party bound to return it.
RIGHTS OF THIRD PERSON
FRUITS AND INTERESTS
Third persons cannot be sued for the recovery of
the thing by an accion reinvindicatoria during
the happening of the resolutory condition.

RESOLUTORY CONDITION HAPPENING The duty of mutual restitution is not only

That party has no real right that can be enforce
against third person in good faith.
General rule:
applicable on object and price but also to
the fruits and interest. This is the only way
by which the parties can be restored to their
status quo.
In determining the fruits to be
returned, Article 443 of the Code states
“he who receives the fruits has the
obligation to pay the expenses made by a
third person in their production, gathering,
and preservation.
Expenses incurred by the person obliged to
make restitution should be deducted from
the gross value of the fruits to be returned.
PROTECTION OF RIGHTS
Parties during the pendency of the
resolutory condition are entitled to take the
same action allowed to the creditor under
the first paragraph of Article 1188.
DEFINITION OF TERMS
Accion Reinvindicatoria
-An action to recover ownership over real
property
Ipso jure
-By the act of the law itself; by mere operation
of law
Real right
-Refers to a right that is attached to a thing
rather than a person. Real rights include
ownership, use, pledge, usufruct, mortgage,
habitation and predial servitude.
QUESTION
Distinguish suspensive condition from
resolutory condition of a contract.
Answer:
As to the effect of these conditions, the
inoperative rights and obligations come into
existence upon the fulfillment of suspensive
condition while the fulfillment of the
resolutory condition cease or extinguish the
rights and obligations of the parties as if it
did not exist.
Article 1191
March 25, 2016
The power to rescind obligations is implied
in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the
obligation, with the payment of damages in
either case. He may also seek rescission,
even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law. (1124)
Rescission referred to in this Article is
RESOLUTION or cancellation of the contract
which is:
A principal action that is based on breach
of a party, (while rescission under Art. 1383 is
a subsidiary action limited to cases of
rescission for lesion under Art. 1381 of the
New Civil Code).
Abrogate and undo a contract from
the beginning
Annul the contract and Restore the
parties to the relative positions which they
would have occupied if no such contract had
ever been made.
Requires mutual restitution of the
benefits received
Breach of Contract – Failure of a party without
legal reason/excuse to comply with the terms
of a contract incumbent upon him.
Breach of Faith – the obligor’s failure to comply
with an obligation already extant, not a failure
of a condition to render binding that
obligation. There can be no rescission of
an obligation that is non-existent,
considering that the suspensive condition
therefore has not yet happened.
Application:
-Article on applies to Reciprocal Obligations
where both parties are mutually Debtor &
Creditor of each other in the same
transaction.
[ill. A Contract of Sale of a Brand New
Laptop is entered into between Jericho
(Buyer) and Jayson (Seller) at the price of
P50,000.00. In absence of stipulation, the
delivery of the laptop by Jayson is
conditioned upon the payment of the
purchase price by Jericho or vice
versa. Jayson, being the owner and seller
of the laptop is the creditor as to the
purchase price and debtor as to the laptop.
Whereas, Jordan being the buyer, is the
creditor as to the laptop and debtor as to
the purchase price.]
Non-Payment of the purchase price
constitute a very good reason to rescind a
contract of sale.
 Article 1191 is not Applicable to the ff:
 Sales of Real Property by
Installments (Maceda Law RA 6552 governs)
 Sales of Personal Property by
Installments (Recto Law) ** If the sale is not
by installment Art 1191 applies**
 Contracts of Partnership (Law on
Partnership)
Remedies Available to the Aggrieved Party
1.Specific performance or fulfillment of the
obligation with damages;
2.Rescission of the contract with damages
*The injured party cannot seek both,
except:
If fulfillment had been chosen but the the
same had become impossible, rescission
may still be sought.(Art 1191 par 2)
If there is a valid basis for the extension of
the performance of reciprocal obligation,
the court will not decree rescission but will
rather fix a period for the fulfillment of the
obligation. (Art. 1191 par 3)
1.
The Power to Rescind an Obligation
ü The party who has the right to cancel or 2. He must respect the power of the
resolve the reciprocal obligation in case of Court to fix period in lieu of decreeing
non-fulfillment on the part of one contracting decision
parties. 3. Slight breaches of the contract will
not justify rescission
ü The party who is ready, willing and able to
comply with his own obligations
ARTICLE 1192
ü The party who is in the position to return
In case both parties have committed a
whatever he may be obliged to return to the
breach of the obligation, the liability of the
other party
first infractor shall be equitably tempered
by the courts. If it cannot be determined
In reciprocal obligations, the power to (rescind) which of the parties first violated the
resolve is given to the injured/aggrieved party contract, the same shall be deemed
because the party who is at wrong cannot use extinguished, and each shall bear his own
his own wrong for his own benefit or protection. damages. (n)
**RTC has the jurisdiction over cases of
rescission**
Offset Equitability
Restrictions:
1.Due Process must be observed; “the court
shall decree the rescission , unless, there be a
just cause authorizing a period fixing it” (Art › Where both parties are in default in their
1191 par 3) respective liability for damages shall be
offset equitably.
Right to rescind is subordinated to the
rights of third persons who acquired the thing in
good faith (Art 1191 par4)
› Offset

› a consideration or amount that diminishes

or balances the effect of a contrary one.

› Equitably

› in a fair and impartial manner.