9.3. PURE AND CONDITIONAL OBLIGATIONS

"ART. 1179: Every obligation whose performance does not depend upon a future or unertain event, or upon a future or uncertain event, or upon a past event unknown to the parties, is demanadable at once.

 Every obligation which contain a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event."

Pure obligation is one free from any condition and there is no period of fulfillment, thus it is immediately demandable.

Conditional obligation is one where its fulfillment is upon the condition stipulated.

Condition is a future and uncertain event which can draw the effectivity or extinguishment of an obligation.

9.3.1. KINDS OF CONDITION

1. Suspensive condition - the fulfillment of the condition will give rise to an obligation.
2. Resolutory condition - the fulfillment of the condition will extinguish an obligation.

9.3.2. DURATION OF PERIOD DEPENDING ON THE WILL OF DEBTOR

"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."

Period is a future and certain event upon the subject matter of an obligation may either arise or extinguished.

1. The debtor promises to pay when his means permit him to do so. There is no definite time frame given.
2. 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

9.3.3. EFFECTS OF HAPPENING OF CONDITION

"ART. 1181: In conditional obligations, the acquisition of rights, as well as teh extinguishment of loss of those already acquired, shall depend upon the happening of the event which constitutes the condition."

1. Acquisition of rights
2. Loss of rights already acquired

9.3.4. CLASSIFICATION OF CONDITIONS

"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."

AS TO EFFECT:

1. Suspensive - the happening gives rise to the obligation
2. Resolutory - The happening 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 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 teh will of a third person.

AS TO MODE:

1. Positive - the condition consists of the performance of an act.
2. Negative - the condition consists of 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

9.3.5. POTESTATIVE CONDITION

A condition suspensive in nature and which depends upon the sole will of one of the contracting parties.

9.3.6. SUSPENSIVE CONDITION

WHEN SUSPENSIVE CONDITION DEPENDS UPON THE WILL OF DEBTOR

1. Conditional obligation void. The condition depends solely upon the will of the debtor. There is no burden on the debtor and no juridical tie is created.
• I will pay you if I want.
• I will pay you after I receive a loan from a bank.
• I will continue to lease your property for as long as I need the premises and pay the rent.
2. Only the condition void. The obligation is pre-existing and does not depend for its existence upon the fulfillment by the debtor of the postestative condition, only the condition is void leaving unaffected the obligation itself.
• Jane borrowed money from John, payable in a month. Subsequently, she promised to pay after selling her car where John agreed.  >> The condition is void but the obligation still exists.

WHEN SUSPENSIVE CONDITION DEPENDS UPON THE 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.)

WHEN RESOLUTORY CONDITION DEPENDS UPON THE WILL OF DEBTOR

If the condition is resolutory in nature, 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.

9.3.7. CASUAL CONDITION

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

(Example: A building contractor obliges himself to repair at his expense any damage that may be caused to his building by any earthquake occurring within 10 years from the date of the completion of its construction.)

9.3.8. MIXED CONDITION

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

(Example: A building contractor obliges himself to repair at his expense any damage that may be caused to his building by an earthquake if found by a panel of arbitrators that construction defects contributed in any way to the damage.)

9.3.9. SUSPENSIVE CONDITIONS

"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.

The condition not to do an impossible thing shall be considered as not having been agreed upon."

The Article refers to suspensive conditions. It only applies when the impossibility already existed at the time of constitution of the obligation.

9.3.9.1. KINDS OF IMPOSSIBLE CONDITIONS

1. Physically impossible conditions - ones which cannot exist or cannot be done.
2. Legally impossible conditions - those which are contrary to law, morals, good customs, public order, or public policy.

9.3.9.2. EFFECT OF IMPOSSIBLE CONDITIONS

1. Conditional obligation is void. The obligor knows his obligation cannot be fulfilled. He has no intention to comply with his obligation.
2. 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.
3. Only the affected obligation void. If the obligation is divisible, the part thereof not affected by the impossible condition shall be valid. (
4. Only the condition void. If the obligation is preexisting and does not depend upon the fulfillment of the condition which is impossible, for its existence, only the condition is void. (

9.3.10. POSITIVE CONDITION

"ART. 1184: The condition that some extent happen at a determinate time shall extinguish teh obligation as soon as teh time expires or if it has become indubitable that the event will not take place."

 Positive condition is the happening of an event at a determinate time. The obligation is extinguished when:

1. As soon as the time expires without the event taking place
2. As soon as it has become indubitable that the event will not take place although the time specified has not expired.

9.3.11. NEGATIVE CONDITION

"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 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." 

A condition when 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.

(Example: Richie binds himself to give 10,000Php to Eddie if he is not yet married to Lisa on the end of the year.
a. Richie is not obliged to pay 10,000 if Eddie marries Lisa on December 31.b. Richie is liable to pay if Eddie if he does not marry Lisa on December 31 but marries her on January 01.c. Suppose Lisa meets an accident and dies on December 20 without being married to Eddie, the obligation is rendered effective and Richie should pay 10,000Php to Eddie.

9.3.12. CONSTRUCTIVE FULFILLMENT 

"ART. 1186: The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment."

 

1. The condition is suspensive.
2. The obligor actually prevents the fulfillment of the condition.
3. He acts voluntarily.

9.3.13. RETROACTIVE EFFECTS OF FULFILLMENT OF SUSPENSIVE 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 teh fruits and interests received, unless fromt he 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."

• An obligation to give subject to 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.
• With respect to the retroactive effect of the fulfillment of a suspensive condition, in obligations to do or not to do, no fixed rule is provided.

RETROACTIVE EFFECTS AS TO FRUITS AND INTERESTS IN OBLIGATIONS TO GIVE

• In reciprocal obligations
• In unilateral obligations

9.3.14. RIGHTS PENDING FULFILLMENT OF SUSPENSIVE CONDITION

"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." 

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 will arise.

9.3.15. LOSS AND DETERIORATION

"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 teh 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 the 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 t the usufractuary. 

9.3.15.1. KINDS OF LOSS

Loss in civil law may be:

1. Physical loss - when a thing perishes (Example: A house is burned and reduced to ashes).
2. Legal loss - when a thing goes out of commerce (Example: when it is taken away from its owner) or when a thing, legal before, becomes illegal (US dollars had become impossible to use during the Japanese occupation)
3. Civil loss - a loss when a thing
1. disappears as if its existence is unknown (a missing dog).
2. cannot be recovered although the thing is known (a ring dropped in the sea)
3. cannot be recovered through law (property lost through prescription)

9.3.15.2. RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT OF THING DURING PENDENCY OF SUSPENSIVE CONDITION

1. Loss of thing without debtor's fault
2. Loss of thing through debtor's fault
3. Deteriorating of thing without debtor's fault
4. Deterioration of thing through debtor's fault
5. Improvement of thing by nature or by time
6. Improvement of thing at expense of debtor

*Usufruct is the right to enjoy the use and fruits of a thing belonging to another.

9.3.16. RESOLUTORY CONDITION

"ART. 1190: When the conditions have 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 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.

In obligations to give, if the resolutory condition in an obligation is fulfilled, the obligation is extinguished.

In obligations to do or not to do, the courts shall determine the retroactive effect of the completion of the resolutory condition.

9.3.17. OBLIGATIONS ACCORDING TO THE PERSON OBLIGED

"ART. 1191: The power to rescind obligations is impled 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 teh 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.

This is understood to be without prejudice to the rights of third persons who have acquired the thing.

1. Unilateral obligation - when only one party is obliged to comply with a prestation.
2. Bilteral obligation - when both parties are mutually bound to each other. Both parties are debtors and creditors of each other. These can be reciprocal or non-reciprocal.
1. Reciprocal obligations - each party is the debtor and the creditor of the other 
2. Non-reciprocal obligations - they do no impose simultaneous and correlative performance on both parties

9.3.17.1. REMEDIES IN RECIPROCAL OBLIGATIONS

1. Choice of remedies
• Action for specific fulfillment of the obligation with damages
• Action for rescission of the obligation also with damages
2. Remedy of rescission fo non-compliance - the revocation, cancellation, or repeal of a law, order, or agreement.

9.3.17.2. LIMITATIONS ON RIGHT TO DEMAND RESCISSION

The right to rescind by the injured party is not absolute.

1. Resort to the courts. The injured party has to resort t the courts to assert his rights judicially.
2. Power of court to fix period. The court has the power to allow a period within which a person may be permitted to perform his obligation.
3. Right of third person. If the thing subjet matter of the obligation is in th hands of a third person who acted in good faith, rescission is not available as a remedy.
4. Substantial violation. The rescission will no be granted for slight breaches of contract; the violation should be substantial.
5. Waiver of right. The right to rescind may be waived expressly, or impliedly.

9.3.18. BREACH

"ART. 1192: In case both parties have committed a breach of 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, teh same shall be deemed extinguished, and each shall bear his own damages."

WHEN BOTH PARTIES ARE GUILTY OF BREACH

1.  First infractor known - one party violated his obligation and then other violated his part. 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.