Module 5 – Different kinds of obligation (Art.

1186 – 1192)

ARTICLE 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.

Constructive fulfillment of conditions

If the debtor prevents the creditor from fulfilling the condition of the
obligation, the condition is deemed fulfilled and obligation demandable.

Example

D obliged himself to deliver C a specific car if C could pass the 1970 CPA
examinations. By means of intimidation D prevented C from taking the
examination. Notwithstanding C’s failure to take the examination, D obliged to
deliver the car to C because he voluntarily prevented the latter from fulfilling the
condition of passing the CPA examintaions.

ARTICLE 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 the fruits and interests 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.

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.

Effects of fulfillment of condition

a) In a reciprocal obligation to give

From the moment the suspensive condition is fulfilled, the obligation

becomes effective and demandable. However, the effects of the obligation
shall retroact to the day of the constitution of the obligation. Hence, the
 creditor’s right on the thing shall vest in him from the date of the perfection
of the obligation. But the retroactivity of conditional obligation is not
absolute. As to fruits and interests during the pendency of the condition,
there is no retroactivity in:

1) Reciprocal obligations – the fruits and interests received by the parties

before the condition is fulfilled shall deemed to have been mutually
compensated.
2) Unilateral obligations – the fruits and interests received by the debtor
before the condition is fulfilled are kept by the debtor, unless otherwise
agreed.

Examples

a) On Jan. 10 1992 D obliged himself to give C a certain ring provided C

passes the CPA examinations. If C passes the CPA examination on Aug.
10, 1992, C shall have a right on the ring beginning Jan. 10, 1992.
b) On Jan. 10 1992 D obliged himself to give C a certain ricefield and C
agreed to give D a certain fishpond provided X passes the CPA
examination on Aug. 10, 1992, C is obliged to deliver the fishpond to D
and D is not obliged to deliver the ricefield to C. However, D is not
obliged to deliver the fruit of the ricefield to C. Neither is C required to
give the fruits of the fishpond to D.
c) On Jan. 10 1992 D obliged himself to give C a certain ricefield provided
C passes the CPA examinations. If on Aug. 10, 1992 C passes the CPA
examinations, D obliged to deliver the ricefield to C but not the fruits
received from Jan. 10, 1992.
d) In conditional obligations to do or not to do.

The courts shall determine whether or not to give obligation a retroactive

effect.

ARTICLE 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.
Creditor’s right before the fulfillment of the condition

To demand the performance of the obligation. However, the creditor may

bring appropriate actions for the preservation of his right such as the registration of
the deeds evidencing the contract and set aside fraudulent sales made by the
debtor;

Example

Angel Rimando obliged himself to deliver to Moises Gonzales a specific

ricefield provided the latter passes the CPA examinations. Moises Gonzales, in
order to preserve his right against Angel Rimando may cause the registration and
annotation of Rimando’s obligation at the back of the Torrens Certificate of Title
covering said ricefield, so that even if the ricefield is alienated by Angel Rimando,
the buyers will take the ricefield subject to Moises Gonzales.

Effects of payment before the condition is fulfilled

a) Payment by mistake.

The debtor may recover what during pendency of the condition he has paid
by mistake, In addition the debtor can recover the fruits or legal interest if
the creditor accepts the payment in bad faith.

b) Payment with knowledge of the condition.

If the payment was made with knowledge of the pendency of the condition,
the condition is deemed waived, and the debtor can no longer recover what
has been paid.

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.

Nature of subject matter

To apply Art. 1189, the thing must be determinate.

Application of the rules

The loss, deterioration or improvement should take place after the obligation
is perfected and before the condition is fulfilled.

Loss of the thing

a) Concept

A thing is lost when it perished, or goes out of commerce, or disappears in

such a way that its existence is unknown or it cannot be recovered.

b) Loss without debtor’s fault.

The debtor’s obligation is extinguished if the thing is lost without his fault.

c) Loss due to debtor’s fault.

The debtor is obliged to pay damages if the thing is lost due to his fault.
Deterioration of the thing

a) Without the debtor’s fault

The debtor is not obliged to pay damages, and the creditor bears the
impairment.

b) Due to debtor’s fault

The creditor may choose between:

1) Rescission plus damages, or

2) Fulfilment of the obligation plus damages

Improvement of the thing

a) By nature or by time.

If the improvement is caused by the nature of the thing or by time, such as

deposits of soil or sediments on a land bordering a river, the improvement
shall inure to the benefit of the creditor.

b) At the debtor’s expense

If the thing is improved at the expense of the debtor, the improvement can be
removed by the debtor if there will be no injury to the principal thing. If t he
improvement cannot be removed without injury to the thing, the thing
together with the improvement should be given to the creditor without the
debtor being entitled to recover its value. However, if the debtor has caused
deterioration to the thing, he may set off the value of the improvements
against the damages caused.

ARTICLE 1190. 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.

Effects of fulfilment of resolutory condition

a) In a conditional obligation to give

An obligation which is subject to a resolutory condition is immediately

demandable. However, upon the fulfilment of the resolutory condition, the
obligation is extinguished and the parties shall return to each other what they
have received.

Example

I will give you a car until you pass the CPA examination. The creditor can
ask the immediate delivery of the car. But after passing the CPA examinations the
creditor shall return the car to the debtor.

b) In conditional obligations to do or not to do.

The courts shall determine whether or not to give the extinguishment of the
obligation any retroactive effect.

Effects of the loss, deterioration or improvement of the thing before the

fulfillment of the resolutory condition

The provisions of Art. 1189 shall be applied and the party who received the
thing and obliged to make restitution being considered the debtor.

ARTICLE 1191. 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.

Application of article

This article applies only to reciprocal obligations, that is, to obligations

arising out of the same cause and to be fulfilled at the same time.

Rights of the aggrieved party in case the other does not perform his
obligation.

In reciprocal obligations, from the moment one of the parties fulfills his
obligation and the other does not perform his undertaking, delay by the latter shall
begin. Hence, the aggrieved party may choose between;

a) Rescission with damages

The right of recission is available to the aggrieved party even if there is no

stipulation to that effect. This is so because the right to rescind a reciprocal
obligation is implied in case the other party is guilty of delay. However, the
obligation is not ipso facto rescinded by the mere fact that the other party is
guilty of delay. The party entitled to rescind whould apply to the court for a
decree of rescission. Without the order of the court rescinding the contract,
the contract is not rescinded because the third paragraph of Art. 1191 states
that “the court shall decree rescission claimed, unless there be just cause
authorizing the fixing of a period”. However, judicial approval is not
necessary when there has been no delivery yet or even if delivery has
already been made, the contract stipulates that either party can rescind the
same or take possession of the party upon non-fulfilment by the other party.

The right to rescind the obligation is not an absolute right. Courts are given
discretionary power to fix a period instead of rescinding the obligation.
Hence, rescission is not available for a slight or casual breach of the
 contract, but only for such breaches which are so fundamental or substantial
as to defeat the object of the parties in making the contract.

Neither is rescission available when the thing is transferred to a third person

who acquired it in good faith.

b) Fulfilment of obligation with damages.

Nature of remedy

The remedy given to the aggrieved party is alternative. He cannot ask for
both. If he elects a rescission and rescission is granted by the court, he cannot
ask for fulfillment. If he elects fulfillment and the obligation is fulfilled, he
cannot later ask for rescission. However, the fulfillment is impossible, he may
seek rescission.

ARTICLE 1192. In case both parties have committed a breach of the

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, the same shall be deemed extinguished, and each shall bear his own
damages.

Grace Park Engineering Co., Inc. vs. Dimaporo

Held: The findings of the fact of the trial court that the appellant Dimaporo and
appellate corporation have committed a breach of obligation are fully supported by
the evidence on record. As we have stated, We are not in a position to disturb the
same. Therefore, it correctly applied Article 1192 of the New Civil Code to the
effect that in case both parties have committed a breach of obligation and it cannot
be determined who was the first infractor, the court shall be deemed extinguished
and each shall bear his/its own damages, Consequently, the trial court committed
no reversible error when it ordered appellee corporation to pay appellant the
amount of P15,570.00 representing partial payment of the purchased price of the
machinery and equipment. This is but a consequence of the decree of rescission
granted by the trial court. Neither did it commit any error when it refused to grant
any interest on the aforesaid amount of P15,570.00. This is also but a consequence
of the enunciated rule that each party should bear his/its own damages.