STUDY GUIDE: Arts.

1187-1192 (Pure and Conditional Obligations)

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CHAPTER 3, Section 1
Pure and Conditional Obligations

 ART. 1187 – Retroactive effect of the fulfillment of a

suspensive condition

 What is the effect of the fulfillment of the

suspensive condition in an obligation to give?

Examine the following examples:

 EXAMPLE 1: On 15 October 2019, Maria obliged

herself to give Juan her farm lot in Liliw, Laguna if he will
pass the 2019 BAR examination. Maria’s farmlot was
wholly planted with lanzones trees. On 15 March 2020,
Maria made a bountiful harvest from her lanzones
plantation which she was able to sell to supermarket
suppliers for P5 million. On 15 April 2020, the list of bar
passers was published by the Supreme Court, and Juan
made it. On 15 April 2020, when Juan demands for the
delivery of the lot from Maria, will Maria be obliged to
deliver to Juan the P5 million proceeds from the sale of the
lanzones fruits harvested from the farm lot?

 EXAMPLE 2: On 15 October 2019, Maria obliged

herself to sell her farm lot in Liliw, Laguna to Juan for only
P10 million if he will pass the 2019 BAR examination.
Maria’s farmlot was wholly planted with lanzones trees.
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On 15 March 2020, Maria made a bountiful harvest from

her lanzones plantation which she was able to sell to
supermarket suppliers for P5 million. On 15 April 2020,
the list of bar passers was published by the Supreme
Court, and Juan made it. On 15 April 2020, when Juan
demands for the delivery of the lot from Maria, will Maria
be obliged to deliver to Juan the P5 million proceeds from
the sale of the lanzones fruits harvested from the farm lot?

DISCUSSION:

(a) EXAMPLE 1 is an example of a unilateral obligation

because only one party is obliged to perform a prestation.
Maria obliged herself to deliver her farm lot to Juan.

(b) EXAMPLE 2 is an example of a reciprocal

obligation because both the contracting parties are obliged
to perform a prestation. Maria is obliged to deliver her
farm lot to Juan, and Juan is obliged to pay the P5 million
purchase price for the farm lot.

(c) In both EXAMPLES 1 and 2, both real obligations

(obligations to give), the performance of the parties’
obligation is subject to a suspensive condition and will
arise only if the suspensive condition is fulfilled. Hence, in
EXAMPLE 1, Maria will be obliged to deliver her farm lot to
Juan only if Juan passes the 2019 bar examination. In
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EXAMPLE 2, Maria will be obliged to sell her farm lot to

Juan only if he passes the 2019 bar examination.

(d) Article 1187 enunciates that when the suspensive

obligation in a conditional obligation to give is fulfilled, its
effects on the right of the creditor to the principal thing
shall retroact to the day when the obligation was
constituted, i.e., when the contract was perfected. What
does this mean? It means that it will be deemed as if the
condition was already fulfilled as of the time of the
perfection of the contract when the obligation was
constituted. Hence, if we were to apply it to the facts in
the two examples above, when the suspensive condition is
fulfilled on 15 April 2020 (when Juan passed the bar), it will
be deemed as if the suspensive condition was already
fulfilled as of 15 October 2019, in which case it will also be
deemed as if Maria should have already made delivery of
the lot to Juan on 15 October 2019 making Juan the owner
of the lot already as of that date.

(e) QUESTION: Assume that in the two examples

above Maria sells the lot to Pedro for P12 million on 15
January 2020. Can she do that? YES, because she is still
the owner of the farm lot because the suspensive
condition had not yet been fulfilled, i.e., Juan did not pass
the bar examination yet. Assume also that Maria
promised to deliver the lot to Pedro on 15 April 2020,
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although Pedro had already paid Maria the P12 million

purchase price on 15 January 2020. Under the facts, if
Juan passes the bar exams based on the list of passers
released on 15 April 2020, who will have priority in right
over the lot – Juan or Pedro? In this case, Juan. Since the
effect of the fulfillment of the suspensive condition will
retroact to the date of the constitution of the obligation on
15 October 2019, then Juan will have been deemed the
owner of the farm lot already as of 15 October 2019. That
is why, when Maria sold the farm lot to Pedro on 15
January 2020, she was considered no longer the owner of
the farm lot then in view of the fulfillment of the
suspensive condition. Of course, if Juan does not pass the
bar examination, Maria will not be obliged to deliver the
farm lot to Pedro, and it is Pedro who can rightfully
demand for the delivery of the lot from Maria on the basis
of his 15 January 2020 contract of sale with her.

(f) The discussion in the preceding letter centers on

the right of the creditor to the principal thing which will
retroact to the date of the constitution of the obligation.
But how about the right of the creditor to the fruits, will it
likewise retroact to the date of the constitution of the
obligation? In other words, when the suspensive condition
is fulfilled, will the creditor likewise be entitled to all fruits
obtained from the principal thing from the time of the
constitution of the obligation? If your answer is YES, then
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in both EXAMPLES 1 and 2 above, when Juan passes the

bar examination, he will be entitled to all fruits harvested
from Maria’s farm lot from the time of the constitution of
the obligation on 15 October 2019. To answer this
question, and to determine the creditor’s right to the fruits
upon fulfillment of the suspensive condition, we
distinguish whether the suspensive conditional obligation
is unilateral or reciprocal.

(f.1) unilateral – If the obligation is unilateral,

there is no retroactive effect because the obligation is
gratuitous. The creditor acquires a right to the principal
thing upon fulfillment of the condition without any
obligation to perform on his part. Hence, if the obligation
is unilateral, the creditor is entitled to the fruits of the
thing from the time the obligation to deliver arises – that
is, upon fulfillment of the suspensive condition. Hence, in
EXAMPLE 1 above where the obligation is unilateral, Juan
cannot demand from Maria the P5 million proceeds from
the sale of lanzones harvested on 15 March 2020.

(f.2) reciprocal – If the obligation is reciprocal, the

fruits and interests received during the pendency of the
condition shall be deemed to have been mutually
compensated, i.e., they are not required to be delivered
for convenience. Hence, in EXAMPLE 2 above, upon
fulfillment of the suspensive condition on 15 April 2020
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(when Juan passes the bar examinations), Maria will be

obliged to deliver the farm lot to Juan (but not the fruits
harvested therefrom since 15 October 2020 until 15 April
2020) although Juan is already considered the owner
thereof as of 15 October 2019 in view of the retroactive
effect of the fulfillment of the suspensive condition. On
the other hand, Juan will be obliged to pay Maria the
purchase price of P5 million (but not the legal interest
thereon computed from 15 October 2020 until 15 April
2020), although Maria will be deemed to have already
been paid the price as of the constitution of the obligation
on 15 October 2019 in view again of the retroactive effect
of the fulfillment of the suspensive condition. Here, the
fruits due to Juan and the interest due to Maria will offset
each other.

 ART. 1188 –
(a) Pending fulfillment of the suspensive condition, the
law gives the creditor certain measures of protection for
the preservation of his rights so that this right may not be
defeated by the dispositions or alienations that the debtor
may make of the thing promised before the happening of
the condition.

 EXAMPLE 3: On 15 January 2020, Maria obliged herself

to give Juan her house and lot in Alabang if he completes
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his course in Architecture and passes the board

examinations given therefor. To preserve his right
(because Maria might sell her house and lot before the
suspensive condition is fulfilled, i.e., before he becomes a
licensed architect), Juan may cause the annotation or
recording of their contract and his expected right on the
Transfer Certificate of Title (TCT) covering the Alabang
house and lot with the Register of Deeds. In this case,
even if Maria attempts to alienate or sell the lot to Pedro
before the fulfillment of the suspensive condition, the
prospective buyer will be notified of the agreement. And if
the buyer Pedro insists on buying the house and lot
despite the annotation of Juan and Maria’s agreement in
the title, Pedro will likewise be bound by the agreement to
deliver the lot to Juan if Juan should make it as a licensed
architect.

(b) When a suspensive condition is imposed, the law

also allows the debtor to recover what he has paid by
mistake as this is a case of solutio indebiti in quasi-
contracts.

 EXAMPLE 4: On 15 January 2020, Juan promised to

deliver to Maria his BMW car if Mt. Makiling erupts within
the year. On 18 August 2020, Juan delivered to Maria his
BMW car because he received news that Mt. Makiling had
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erupted. On 25 August 2020, Juan found out the it was

Mt. Banahaw which had erupted.

 solutio indebiti - Since Juan made the payment by

mistake, and the suspensive condition which will give rise
to his obligation has not yet been fulfilled, then Maria will
be obliged to return to Juan the BMW car if Juan demands
for its delivery from her on 25 August 2020.

 waiver of condition – If Juan, knowing fully well that

it was Mt. Banahaw which erupted, nonetheless delivers
the BMW car to Maria thus waiving the condition for his
obligation, he can no longer recover it from Maria.

 when condition is fulfilled - If on 25 August 2020

Juan demands from Maria delivery of the BMW car back to
him after being notified that it was Mt. Banahaw that had
erupted, but is unaware of the fact that Mt. Makiling had
in the meantime erupted on 23 August 2020, then he can
no longer compel Maria to return the car to him.

 ART. 1189 – Rule when there is loss, deterioration

or improvement of the thing pending fulfillment of the
suspensive condition in a specific real obligation.

(a) Loss of the thing – This includes physical loss, legal

loss, and civil loss.
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 If the thing is lost without the fault of the

debtor, the obligation shall be extinguished. This is based
on the rule that no person shall be responsible for a
fortuitous event and the object, being determinate, cannot
be replaced.

 EXAMPLE 5: On 15 January 2020, Maria obliged herself

to give her lawyer Atty. Juan her BMW car worth P6 million
if she will win the collection suit filed in court by Atty. Juan
for her. On 15 December 2020, a post of the LRT station
collapsed and crashed the BMW car while parked in a car
park near the station. On 15 January 2021, the court
rendered judgment in favor of Maria in the civil case for
collection. Under the facts, the obligation of Maria to
deliver the car should Atty. Juan demand it on 15 January
2021 is now extinguished since its loss was without fault
on the part of the debtor Maria.

 If the thing is lost through the fault of the

debtor, he shall be obliged to pay for damages.

 EXAMPLE 6: In EXAMPLE 5 above, if the BMW car

crashed to an LRT post on 15 December 2020 while Maria
was overspeeding and driving the car in a state of
intoxication, then Atty. Juan will be entitled to damages
equivalent to the value of the car plus consequential
damages if Maria is not able to deliver the car on 15
January 2021.
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(b) Deterioration of the thing – the thing becomes

impaired in quality, functioning or condition.

 If the thing deteriorates without the fault of the

debtor, the impairment shall be borne by the creditor.

 EXAMPLE 7: In EXAMPLE 5, if the car depreciates in

value from P6 million to P5.7 million due to wear and tear
from a normal use of the car from day to day, then upon
fulfillment of the suspension condition on 15 January
2021, when Atty. Juan demands for the delivery of the car,
he cannot demand from Maria the P300,000.00 decrease
in the value of the car from the time that Maria made the
promise on 15 January 2020. In this case, Atty. Juan will
bear the cost of depreciation since the deterioration was
without fault on the part of Maria.

 If the thing deteriorates through the fault of the

debtor, the creditor may choose between (a) rescission of
the obligation and (b) its fulfillment, with a right to
damages in either case.

 EXAMPLE 8: In EXAMPLE 5, assume that pending

fulfillment of the suspensive condition Maria lends the car
to his son knowing that the latter will use it for drag racing
every week with his friends. As a result, the car suffered
from serious mechanical problems including scratches in
its body, and in the interior upholstery. When Maria wins
the case and Atty. Juan demands for the car on 15 January
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2021, he is given by law the right either (a) to cancel the

obligation and require Maria to pay him the value of the
car in the amount of P6 million, plus consequential
damages, or (b) to demand that Maria deliver the car in its
deteriorated condition, and pay him the amount necessary
for its repair, plus consequential damages.

(c) Improvement of the thing – there is enhancement

in its value or quality, such as when something is
added or attached to it.

 If the thing is improved by its nature, or by time,

the improvement shall inure to the benefit of the creditor.
This is to compensate the creditor who would otherwise
suffer in case the thing deteriorates without the debtor’s
fault.

 EXAMPLE 9: In EXAMPLE 5, assume that on 15 January

2021, when Maria won the case, the value of the BMW car
had appreciated from P6 million to P6.5 million because of
the availability of spare parts locally. In this case, when
Atty. Juan demands for the delivery of the car on 15
January 2021, Maria cannot demand that Atty. Juan pay
her the P500,000.00 increase in the value of the car from
the time that it was promised to him on 15 January 2020.
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 If the thing is improved at the expense of the

debtor, he shall have no other right than that granted to
the usufructuary.

 Usufruct is the right to enjoy the property of

another with the obligation of preserving its form and
substance. (Art. 562) The debtor may remove the
improvements provided he does not cause damage to the
thing. If the removal of the improvements will damage the
principal thing, the debtor must deliver the thing in its
improved condition to the creditor without any right to
reimbursement. (Art. 579) He may however set-off the
improvements against any damage caused on the thing.
(Art. 580)

 EXAMPLE 10: In EXAMPLE 5, assume that pending

fulfillment of the suspensive condition, Maria had the car
repainted for which she was charged P300,000.00. She
also bought the car imported German leather seat covers
to protect the seats, which cost her another P200,000.00.
On 15 January 2021, when Atty. Juan demands from Maria
delivery of the car after she wins the case, she must give
the BMW car to Atty. Juan. She can remove the leather
seat covers as no damage will be caused on the car by its
removal. However, she cannot remove the paint of the car
as it will damage the car; neither can she ask for
reimbursement of the P300,000.00 she spent on the
repainting job. But if she had caused a dent on the car
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which may require Atty. Juan to spend for its repair, she
may set-off the cost of repainting against the damage
caused by such dent.

 ART. 1190 – Retroactive effect of the fulfillment of a

resolutory condition

 What are the effects of the fulfillment of the

resolutory condition in an obligation to give?

(a) The debtor’s obligation shall be extinguished.

 The effect of the happening of the resolutory
condition likewise retroacts to the day of the constitution
of the obligation. It will then annul the obligation as if it
had never been constituted at all.
(b) The parties shall return to each other what they
have received, including the fruits and interests, unless a
contrary intent appears.
(c) In case of loss, deterioration or improvement of the
thing, the provisions of Article 1189 shall be applied to the
party who is bound to return.
 The fulfillment of the resolutory condition
converts the creditor into debtor, and the debtor into
creditor. Hence, the applicability of the provisions of Art.
1189 in case of loss, deterioration or improvement of the
thing.
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 Pending fulfillment of the condition, the

parties are entitled to the rights granted by Article 1188.

 EXAMPLE 11: On 15 June 2020, Maria obliged herself

to give Juan her beagle if Juan will not join any fraternity in
college. She then delivered her beagle to him on the same
day. On 15 September 2020, while in Juan’s possession,
the beagle gave birth to six cute puppies. On 15 January
2021, Maria found out that Juan had become member of a
school fraternity as of 15 December 2020.

QUESTION: Under the facts, what will be the effect of the

fulfillment of the resolutory condition on the parties’ rights
and obligations.

DISCUSSION: In this case, the obligation of Maria is “to

deliver the beagle to Juan.” The resolutory condition is
“Juan’s joining a school fraternity in college.” Hence, in
this case, on 15 June 2020, Maria obliged herself to deliver
to Juan the beagle subject only to extinguishment upon
Juan’s fulfillment of the resolutory condition. Maria is like
saying to Juan, “I will give you my beagle now, but if you
join a fraternity, my obligation will be extinguished and
you will obliged to return to me the beagle.” Hence, based
on Art. 1190, these are the rights and obligations of the
parties upon fulfillment of the resolutory condition – that
is, when Juan joins the fraternity:
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(a) The obligation of Maria will be extinguished; hence,

she can now demand from Juan delivery of the beagle
back to her.

(b) Juan, the original creditor in this obligation, will

now become the debtor after fulfillment of the suspensive
condition. He will be obliged to return to Maria the
beagle, as well as the six puppies even if they were born at
a time when the beagle was still in his possession, before
the fulfillment of the resolutory condition.
 When Juan joined the fraternity (or fulfilled
the resolutory condition), the effect will retroact to the
date the obligation was constituted. In other words, it is
as if the resolutory condition was already fulfilled as of 15
June 2020. If the resolutory condition was already fulfilled
as of 15 June 2020, then Maria would not have been
obliged to deliver the beagle as of that date, and the
beagle will be deemed to have given birth while in the
possession of Maria. Hence, when Juan returns the
beagle, he will likewise be obliged to return to Maria its six
puppies.

(c) Assume that the beagle and the six puppies were
ran over by a ten-wheeler truck in the highway on 1
November 2020. On 1 January 2021, Juan will be obliged
to compensate Maria the value of the beagle and its six
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puppies, plus consequential damages, for his negligence

which was the cause of the death of the animals.

 ART. 1191 – What are the remedies of the injured

party in reciprocal obligations?

 Remedies are alternative – The injured party in a

reciprocal obligation can choose between:

(a) Rescission of the contract, plus damages; or

(b) Specific performance or fulfillment of the obligation,

plus damages.

 These remedies are alternative and not

cumulative. The injured party can only choose one, not
both, because they are incompatible. If he demands
performance, he cannot rescind or cancel anymore. And if
he cancels, he can no longer demand performance.
Exception: The injured party may, however, seek
rescission even after he has chosen fulfillment if
performance of the obligation by the other party has
already become impossible.

 EXAMPLE 12: Juan offered to sell his BMW car to Maria

for P8 million on 15 January 2021. The parties agreed in
writing that delivery of the car and payment of the
purchase price will be made on 15 February 2021. On 15
February 2021, Maria offered to pay Juan the P8 million
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purchase price, but Juan refused to accept it and to deliver

the car as agreed upon. Under the facts, Maria’s remedy is
to go to court and (a) file an action for specific
performance to compel Juan to accept the P8 million
purchase price for the car, and to deliver the car to her,
plus damages, or she can (b) file an action to cancel the
contract, and compel Juan to pay him consequential
damages for breach.

 Assume that on 25 January 2021, Juan

delivered and sold the BMW car for P8.5 million to Pedro,
who paid the purchase price on the same day. On 15
February 21, when Maria filed an action for specific
performance, delivery of the car was no longer possible
because it had passed to Pedro, a buyer in good faith (Art.
1191, par. 3). Hence, in this case, although Maria had
already availed of specific performance, she can still avail
of rescission since performance under the factual
circumstances obtaining was no longer feasible (Art. 1191,
par. 2).

 Applicability of Art. 1191 – The above provision

is applicable only to reciprocal obligations.

 A reciprocal obligation is one that arises from

the same cause and in which each party is a debtor and a
creditor of the other, such that the obligation of one is
dependent upon the obligation of the other.
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 Reciprocal obligations are to be performed

simultaneously so that the performance of one is
conditioned upon the simultaneous fulfillment of the
other.

 If one party performs his obligation but the

other does not, the party performing his obligation suffers
injury by reason of the delay. Example: In a contract of
sale, the buyer can rescind (cancel) the contract if the
seller does not deliver the thing sold, or the seller can
rescind if the buyer does not pay the purchase price.

 Concept of Rescission as used in Art. 1191 – The

power to rescind means the right to cancel or to resolve
the contract in case of non-fulfillment of the obligation on
the part of one of them.

 This is not the rescission referred to in Article

1380, which involves damage or lesion, or injury to the
economic interest of a person. The rescission
contemplated by Article 1191 is predicated on a breach by
the other party who violates the reciprocity between
them.

 Rescission must be judicial – As a general rule,

judicial approval is necessary in order to rescind a contract
based on the express terms of Art. 1191, par. 3. However,
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in the following instances, rescission can be had even

without previous judicial decree:

(a) When it is stipulated that rescission is automatic . –

There is nothing in Art. 1191 that prohibits the parties
from entering into an agreement that a violation of the
terms of the contract would cause its cancellation even
without court intervention. However, should there be an
opposition, the party seeking the remedy may go to court.

 The rationale for this is that in contracts

providing for automatic revocation, judicial intervention is
necessary not for the purpose of obtaining a judicial
declaration rescinding a contract already rescinded by
virtue of the agreement providing for rescission even
without judicial intervention, but in order to determine
whether or not the rescission was proper. Where the
court finds the rescission in order, the decision of the court
will be merely declaratory of the revocation, but it is not
itself the revocatory act.

(b) When the contract is still executory. – When there

is no performance yet by both parties, the party willing to
comply may be declaration of intention rescind the
contract. But if rescission is contested by the other, he is
free to resort to judicial rescission.
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 ART. 1192 – Where both parties to a contract are

guilty of breach.

(a) Where the party who first violated the contract

(first infractor) is known – The liability of the first infractor
shall be equitably tempered or reduced. The rule is fair
because the second infractor also derived or thought he
would derive some advantage by his own act or neglect.

 EXAMPLE 13: Maria sold her laptop to Juan for

P100,000.00. The parties agreed that the delivery of the
laptop would be made on 16 January 2021, and the
payment of the price on 18 January 2021, without need of
demand by either party. Maria failed to deliver the laptop
on 16 January 2021, but he delivered on 18 January 2021.
On the other hand, Juan failed to pay the purchase price
on 18 January 2021, but he paid it on 20 January 2021.
Under the facts, Maria shall be liable for damages because
she was the first one who committed a breach of the
obligation. However, since Juan likewise committed a
breach of his obligation, the liability of Maria shall be
equitable reduced by the court.

(b) Where it cannot be determined who first violated

the contract – The contract shall be deemed extinguished
and each shall bear his own damages. This rule is likewise
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just, because it is presumed that both at about the same

time tried to reap some benefit.

SOURCES of NOTES:

The discussions outlined in this lecture have

been collectively lifted from the cases cited
and commentaries made by the authors in the
references cited in our course syllabus, to wit:

1. De Leon, Hector S., De Leon, Hector M. Jr. The Law on

Obligations and Contracts. Manila: Rex Book Store;
2014.

2. Soriano, Fidelito R. Obligations and Contracts (Law

and Application). Manila: GIC Enterprises & Co., Inc.;
2011.

3. Torres, Justo P. Jr. Obligations and Contracts. Manila:

Rex Book Store; 2003.

4. Suarez, Carlos. B. The Law on Obligations and

Contracts. Manila: GIC Enterprises & Co., Inc.; 2006.

Prepared by:

Atty. Harriet Reyes Linsangan

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13 March 2021

FOOD FOR THOUGHT

Great things come from hard work and

perseverance. No excuses.
Kobe Bryant