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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  Potestative Condition – (Potestas – 1. Purely Potestative Condition –
to Pandayan Inc. The sale agreement Power, Authority) it is a condition which one depends solely upon the will,
provided that the sale would depends upon the will of one of the contracting
be cancelled and the parties parties.
would restore each other to their original
position if the purchaser was unsuccessful in Ex. I will sell my house if I deem it proper.
obtaining rezoning.
It is the power in which one of the party realize
or prevent

Some time after taking possession of the Ex. A promised B to WILL pay the amount
property, the purchaser’s rezoning of Php 30,000 if the house WILL be finished
application failed. The sale of the property in three months.
had to be transferred back to the Mr X and Kinds of Potestative Condition
the purchase price remitted to Pandayan
Inc.

 Casual Condition – one which


ARTICLE 1182 1. Simple Potestative Condition – it is not depends on upon chance or other factors,
only Manifestation of a will but also arealization and not upon the will of the contracting
of an external act, it depends on the voluntary parties.
Art. 1182. When the Fulfillment of the
act of the obligor
condition depends upon the solve will of the
debtor, the conditional obligations shall be
void. If it depends upon chance or upon the It is a condition given by chance (IF, IF EVER,
will of a third party, the obligations shall Ex. Should A decide to sell his house (yet it is a etc) ibibigay ko sayo ang lupa ko, kapag
take effect in conformity with the provision condition depends on the will of A, external pumuti na ang uwak
of this code. consequence is do A need money of there is a
need to be relocated)

Ex. A will give Php 30,000 to B, IF they won


DEFINITION AND EXAMPLES the case
 Mixed Conditions – it is a will of the  –public policy manner prejudice the heir, even if the
other contracting parties and other  –good custom and morals testator should otherwise provide.
circumstances, including the will of a third Impossible Condition – not in accordance to
person possible conditions ARTICLE 1184. The condition that some
event happen at a determinate time shall
 Physically Impossible – contrary to the extinguish the obligation as soon as the
A contract agreed upon both parties law of nature (nature of things or cannot time expires or if it has become indubitable
including another third party be done) that the event will not take place.
 Juridically Impossible – contrary to
law, morals, public policy and good custom
Effects of Impossible Conditions:

Ex. A will give B Php 30,000 if A will marry C 1. Conditional obligation void Article 1185
2. Conditional obligation valid
3. Only affected obligation is void. The condition that some event will not
4. Only the condition void. happen at a determinate time shall render
Impossible Conditions in the obligation effective from the moment
Article 1183 Obligations distinguised from Impossible the time indicated has elapsed, or if it has
Conditions in Donations and Wills become evident that the event cannot
Impossible conditions, those contrary to occur.
good customs or public policy and those
If there are impossible conditions impossed on
prohibited by law shall annul the obligation
the disposition on the donation or will, the same
which depends upon them. If the obligation
shall not be considered written.
is divisible, that part thereof which is not
affected by the impossible or unlawful If no time has been fixed, the condition
condition shall be validDiscussion: Art 727. Illegal or impossible conditions in shall be deemed fulfilled at such time as
simple remunaratory donations shall be may have probably been contemplated,
considered as not imposed. bearing in mind the nature of the
Possible Condition – capable of realization
obligation. (1118)
or actualization in accordance to
Art 873. Impossible conditions and those
contrary to law and good customs shall be
 –nature
considered as not imposed and shall in no
 –law
Discussion: this case, even before the lapse of 9 years it 2. Actual prevention of compliance
is clear that the obligation has become effective
The condition that some even will not because of the disappearance of the
happen at a determinate time will make the Municipality. It is not evident that Mario can
never run for Vice-Mayor anymore in that Intent to Prevent Compliance – The law
obligation effective when:
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
a.) the determinate time has elapsed prevent the fulfillment of the condition. He
without the event having occured; ARTICLE 1186
should not be allowed to profit from his own
fault or bad faith.
Article 1186. The condition shall be deemed
Illustration: Jun obligated himself to deliver
fulfilled when the obligor voluntarily prevents
a piece of land to Mario on the condition
its fulfillment. (1119)
that Mario shall not run for Vice-Mayor in
their municipality within 9 years.
e.g. A agreed to give B 5% of the
commission if B could sell A’s property at a
More than 9 years had elapsed without
certain price. B found a buyer that agrees
Mario running for Vice-Mayor. The Constructive fulfillment – refers to an obligation upon A’s terms. To evade the payment of
obligation to deliver the piece of land prevented by the obligor from happening. commission agreed upon, A sold his
becomes effective.
property to the buyer at lower price without
B’s aid.
b.) it has become evident that the event will
not occur.
for the condition to be considered fulfilled these
two requisites shall be present.
Illustration: Jun obligated himself to deliver
a piece of land to Mario on the condition In case the obligor acts voluntarily but not
that Mario shall not run for Vice-Mayor in for cause of prevention of fulfillment of the
their municipality within 9 years. obligation. It is no longer considered part of
this article.
1. Intent of the obligor to prevent
Before 9 years had elapsed, the Municipality fulfillment of the condition
became totally submerged by lahar and
ceased to be a municipality. The residents
had to transfer to other municipalities. In
e.g. A binds a contract to B to construct him e.g. A asked B to paint him, but before B could In obligation to do and not to do, the court
a house, But before the construction is delivered the painting to A, A destroys it. shall determine, in each case, the
finished, A filed a case against B causing B to retroactive effect of the condition that has
be imprisoned and non-fulfillment of the been complied with. (1120)
condition.

Provoking Resolutory Condition – when the


obligation is subject to resolutory condition and
the obligee unjustifiably provokes the Retroactivity of Obligation
There is no constructive case fulfillment of agreement. It will not be considered fulfilled and
the condition in this case. 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.
In Exercise of Right – If the obligation
prevented is a violation to a right, the
condition is not considered fulfilled. 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.
e.g. A asked B to construct him a house but the obligation. Nevertheless, when the
due to violation of city ordinances, B wasn’t obligation imposes reciprocal prestations upon
able to finish constructing the house. 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,
Actual Prevention of Compliance – If the unless from the nature and circumstances of the
result is not specified to the condition set by obligation it should be inferred that the
the obligor. There is no constructive intention of the person constituting the same
fulfillment. 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. Action for prohibition restraining the disappears in such a way that its existence is
circumstances. alienation of the thing pending the happening of unknown or it cannot be recovered;
the suspensive condition;
2. Petition (with the appropriate Registry
of property like land is involved), for the (3) When the thing deteriorates without the
annotation of the creditor’s right; fault of the debtor, the impairment is to be
Article 1188 3. Action to demand security if the debtor borne by the creditor;
has become insolvent;
The creditor may, before the fulfillment of 4. Action to set aside alienation made by
the condition, bring the appropriate actions the debtor in fraud of creditors; or (4) If it deteriorates through the fault of the
for the preservation of his right. 5. Action against adverse possessors to debtor, the creditor may choose between
interrupt the running of the prescriptive period. the rescission of the obligation and its
fulfillment, with indemnity for damages in
ARTICLE 1189 either case;

The debtor may recover what during the When the conditions have been imposed with
same time he the intention of suspending the efficacy of an (5) If the thing is improved by its nature, or
obligation to give, the following rules shall be by time, the improvement shall inure to the
observed in case of the improvement, loss or benefit of the creditor;
deterioration of the thing during the pendency
of the condition:
Pending the happening of the suspensive (6) If it is improved at the expense of the
condition, the creditor cannot compel the debtor, he shall have no other right than
debtor to perform the prestation. All that (1) If the thing is lost without the fault of the that granted to the usufructuary. (1122)
the creditor has in the meanwhile is a mere debtor, the obligation shall be extinguished;
expectancy contingent to the happening of
the condition. ARTICLE 1190
(2) If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages; it is RESOLUTORY CONDITION
Remedies that the creditor may avail for the
preservation of the prestation. understood that the thing is lost when it
perishes, or goes out of commerce, or
When the conditions have for their purpose If the condition does not happen, the rights of LOSS, DETERIORATION, IMPROVEMENT
the extinguishment of an obligation to the creditor will become absolute. But if the
give, the parties, upon the fulfillment of condition happens, such rights will be
said conditions, shall return to each other extinguished, and the obligation will be treated
what they have received. 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
In case of the loss, deterioration or resolutory condition occurs.
Each party is bound to return to the other
improvement of the thing, the provisions
which, with respect to the debtor, are laid whatever has received. Every vestige of
down in the preceding article shall be obligation is wiped out through the process of
mutual restitution.
applied to the party who is bound to return.
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.
As for obligations to do and not to do, the RIGHTS OF THIRD PERSON
provisions of the second paragraph of article
1187 shall be observed as regards the effect
of the extinguishment of the obligation.
(1123) 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


applicable on object and price but also to
the fruits and interest. This is the only way
That party has no real right that can be enforce by which the parties can be restored to their
against third person in good faith. status quo.
General rule:
In determining the fruits to be Accion Reinvindicatoria QUESTION
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. -An action to recover ownership over real Distinguish suspensive condition from
property resolutory condition of a contract.

Expenses incurred by the person obliged to


make restitution should be deducted from Ipso jure Answer:
the gross value of the fruits to be returned.

-By the act of the law itself; by mere operation As to the effect of these conditions, the
PROTECTION OF RIGHTS of law 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
Parties during the pendency of the Real right did not exist.
resolutory condition are entitled to take the
same action allowed to the creditor under
the first paragraph of Article 1188.

-Refers to a right that is attached to a thing Article 1191


rather than a person. Real rights include
ownership, use, pledge, usufruct, mortgage, March 25, 2016
DEFINITION OF TERMS habitation and predial servitude.
The power to rescind obligations is implied
in reciprocal ones, in case one of the
obligors should not comply with what is Rescission referred to in this Article is of a condition to render binding that
incumbent upon him. RESOLUTION or cancellation of the contract obligation. There can be no rescission of
which is: an obligation that is non-existent,
considering that the suspensive condition
therefore has not yet happened.
A principal action that is based on breach
The injured party may choose between the of a party, (while rescission under Art. 1383 is Application:
fulfillment and the rescission of the a subsidiary action limited to cases of
obligation, with the payment of damages in rescission for lesion under Art. 1381 of the
either case. He may also seek rescission, -Article on applies to Reciprocal Obligations
New Civil Code). where both parties are mutually Debtor &
even after he has chosen fulfillment, if the
latter should become impossible. Creditor of each other in the same
transaction.
Abrogate and undo a contract from
the beginning [ill. A Contract of Sale of a Brand New
Laptop is entered into between Jericho
The court shall decree the rescission (Buyer) and Jayson (Seller) at the price of
claimed, unless there be just cause Annul the contract and Restore the P50,000.00. In absence of stipulation, the
authorizing the fixing of a period. parties to the relative positions which they delivery of the laptop by Jayson is
would have occupied if no such contract had conditioned upon the payment of the
ever been made. purchase price by Jericho or vice
versa. Jayson, being the owner and seller
of the laptop is the creditor as to the
This is understood to be without prejudice Requires mutual restitution of the purchase price and debtor as to the laptop.
to the rights of third persons who have benefits received Whereas, Jordan being the buyer, is the
acquired the thing, in accordance with creditor as to the laptop and debtor as to
Articles 1385 and 1388 and the Mortgage the purchase price.]
Breach of Contract – Failure of a party without
Law. (1124)
legal reason/excuse to comply with the terms
Non-Payment of the purchase price
of a contract incumbent upon him.
constitute a very good reason to rescind a
contract of sale.
Breach of Faith – the obligor’s failure to comply
with an obligation already extant, not a failure
Article 1191 is not Applicable to the ff: 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
 Sales of Real Property by non-fulfillment on the part of one contracting decision
Installments (Maceda Law RA 6552 governs) parties. 3. Slight breaches of the contract will
 Sales of Personal Property by not justify rescission
Installments (Recto Law) ** If the sale is not ü The party who is ready, willing and able to
by installment Art 1191 applies** comply with his own obligations
 Contracts of Partnership (Law on ARTICLE 1192
Partnership) ü The party who is in the position to return
Remedies Available to the Aggrieved Party 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
1.Specific performance or fulfillment of the
by the courts. If it cannot be determined
obligation with damages; 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
2.Rescission of the contract with damages 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)
*The injured party cannot seek both,
except: **RTC has the jurisdiction over cases of
rescission**
If fulfillment had been chosen but the the
Offset Equitability
same had become impossible, rescission Restrictions:
may still be sought.(Art 1191 par 2)
1.Due Process must be observed; “the court
If there is a valid basis for the extension of shall decree the rescission , unless, there be a
the performance of reciprocal obligation, just cause authorizing a period fixing it” (Art › Where both parties are in default in their
the court will not decree rescission but will 1191 par 3) respective liability for damages shall be
rather fix a period for the fulfillment of the offset equitably.
obligation. (Art. 1191 par 3)
1. Right to rescind is subordinated to the
rights of third persons who acquired the thing in
The Power to Rescind an Obligation 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.