OBLICON (THIRD MEETING)
fulfillment of the impossible condition, is the
Article 1197
If the obligation does not fix a period, but from
its nature and the circumstances it can be
inferred that a period was intended, the courts
may fix the duration thereof.
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One which is imposed upon the birth of the
obligation and the condition is imposed upon the
performance. If the obligation is already there,
the performance which is potestative on the part
of the debtor then it is subject to the provisions
of Article 1197.
Article 1182
When the fulfillment of the condition depends
upon the sole will of the debtor, the conditional
obligation will 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.
SBTC vs. CA
SBTC Was amenable to paying the increase cost
incurred by Ferrer who is an architect. Based on
his contract with SBTC, the professional fee of
Ferrer and the basis of the computation of his
professional fee is based on ACTUAL FINAL
PROJECT COST. SBTC averred that Ferrer is
not entitled to additional compensation because
he did not render additional work.
Potestative condition on the part of the SBTC:
“If I don’t want to pay the additional costs then I
won't.” This is void. Since there is a preexisting
obligation, the obligation is valid, the condition
is void.
The Supreme Court ruled that the condition is
void, and the obligation is valid. Even if there’s
no additional work on the part of Ferrer, SBTC
is liable to pay him the escalation cost of 7% of
the ACTUAL FINAL PROJECT COST.
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Impossible condition- not capable of
performance. (Physical and legal impossibility)
 Physical impossibility- I will give you 1
million pesos if you drink 1 drum of
water.
 legal impossibility- I will give you 1
million pesos if you will kill Pedro.
If the birth of the obligation depends upon the
obligation valid? NO.
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 valid.
An effect of an impossible condition when it is
made as a condition for the birth of obligation is
to render the birth of obligation void. Correlate it
with Articles 873 and 727.
Article 873
Impossible conditions and those contrary to law
or good customs shall be considered as not
imposed and shall in no manner prejudice the
heir, even if the testator should otherwise
provide.
Article 727
Illegal or impossible conditions in simple and
remuneratory donations shall be considered as
not imposed.
What is the effect if Articles 873 and 727 are
attached to a donation? Considered not imposed.
In obligations, the effect of an impossible
condition would be to annul or to render void the
obligation. (Because the cause of the contract
between the contracting parties would be the
prestation to be rendered by the other. If the
prestation itself is dependent upon the
impossible condition, the obligation is void.)
If the impossible condition is imposed on a
donation, or as a condition for the institution for
the heirs, it shall be considered not imposed.
Here, the donee may still get the property,
disregarding the impossible condition and the
same thing is true about a testamentary
disposition. If an impossible obligation is
attached to a testamentary disposition, it will
also be considered not imposed and it should not
prejudice the heirs. The heirs will still be
allowed to inherit despite the nullity of
impossible conditions. (If it is a donation, it is
unilateral on the part of the donor. It is based
upon the liberality of the donor that’s why it is
valid disregarding the impossible condition)
Article 1186
The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment.
  Constructive fulfillment of the
suspensive and resolutory condition.
Constructive fulfillment of the suspensive
condition requisites:
a) The condition is suspensive
b) The obligor prevents the fulfillment of
the condition
c) He acts voluntarily
Constructive fulfillment of the resolutory
condition- article 1186 applies also to an
obligation subject to a resolutory condition with
respect to the debtor who is bound to return what
he has received upon the fulfillment of the
condition.
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. (1120)
The obligation shall be deemed to have been
fulfilled from the time it was entered into subject
to the provisions in 1189.
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:
 If the thing is lost without the fault of
the debtor, the obligation shall be
extinguished.
 If the thing is lost through the fault of
the debtor, he shall be obliged to pay
damages; it is understood that the things
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.
 When the thing deteriorates without the
fault of the debtor, the impairment is to
be borne by the creditor.
 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.
 If the thing is improved by its nature, or
by time, the improvement shall inure to
the benefit of the creditor.
 If its improved at the expense of the
debtor, he shall have no other right than
that granted to the usufructuary.
The provision of this article applies only to:
 Obligations to deliver a determinate or
specific thing.
 In case the suspensive condition is
fulfilled.
What can happen to the thing during the
pendency of the condition?
 Loss of the thing- it is understood that
thing is lost when it perishes, goes out of
commerce of man, or disappear in such
a way that existence is unknown or it
cannot be recovered.
 Deterioration of the thing- a thing
deteriorates when its value is reduced or
impaired which not amount to total loss.
In other words the thing still exist at the
time the condition is fulfilled.
 Improvement of the thing- a thing is
improved when its value is increased or
enhanced by nature or by time or at the
expense of 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
fulfilment and the rescission of the obligation,
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfiument, 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.
If the obligation is breached by both
parties particularly if it is a reciprocal obligation,
one of the remedies accorded to the injured party
under 1191 is to file for rescission of the
obligation. The power to rescind obligations is
implied in reciprocal ones in case one of the
parties fails to comply with what is incumbent
upon him.
Implied in reciprocal ones- if there is no
stipulation that either the seller or the buyer can
rescind in case of breach, rescission is still
available.
Limitations on the right to demand rescission
1. Resort to the courts
2. Power of court to fix period
3. Right of third person
4. Substantial violation
5. Waiver of right
Song Fo vs. Hawaiian Philippine Co.
A delay in payment for a small quantity of
molasses for some twenty days is not such a
violation of an essential condition of the contract
as warrants rescission for non-performance. Not
only this, but the Hawaiian-Philippine Co.
waived this condition when it arose by accepting
payment of the overdue accounts and continuing
with the contract. Thereafter, Song Fo &
Company was not in default in payment so the
Hawaiian Philippine Co. had in reality no excuse
for writing its letter of April 2, 1923, cancelling
the contract.
The Court ruled that the appellant had no legal
right to rescind the contract of sale because of
the failure of Song Fo & Company to pay for the
molasses within the time agreed upon by the
partie because a delay in payment for a small
quantity of molasses for some twenty days is not
such a violation of an essential condition of the
contract as warrants rescission for non-
performance. The general rule is that rescission
will not be permitted for a slight or casual
breach of the contract, but only for such
breaches as are so substantial and fundamental
as to defeat the object of the parties in making
the agreement.
Fundamental breach- it goes into the very
essence of the agreement.
Remedies for the injured party:
1. Rescission with damages
2. Fulfillment of the obligation with
damages
3. He may seek rescission, even after he
has chosen fulfillment if the latter
becomes impossible.
In case the breach is not fundamental or
substantial the court may:
1. It will refuse to issue the rescission.
2. Grant a longer period to fulfill the
obligation.
Roque vs. Lapuz
 Involves contract to sell but the Court
still applied Article 1191.
Lapuz was a buyer of a subdivision lot
promising to pay within 120 equal monthly
installments, yet he only paid 8% of the total
contract price, continued to possess the property,
and employed all delaying tactics when the case
was filed, he succeeded in the possession for
free without paying anything to Roque for 26
years. This is considered a fundamental breach.
Lapuz is not entitled to the benefits of paragraph
3 of Art. 1191, NCC. Having been in default, he
is not entitled to the new period of 90 days. To
allow and grant respondent an additional period
for him to pay the balance of the purchase price
would be tantamount to excusing his bad faith
and sanctioning the deliberate infringement of a
contractual obligation.
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In reciprocal obligations, the requirement is, that
the performance must be simultaneous unless
the other party is given a certain period different
from the compliance by the other. If the contract
is silent and the obligation is reciprocal, once the
other performs, delay by the other begins.
Cortez vs. CA
There is a delay in both parties (compensation
morae). Since Cortes did not perform his
obligation to have the Deed notarized and to
surrender the same together with the TCTs, the
trial court erred in concluding that he performed
his part in the contract of sale and that it is the
Corporation alone that was remiss in the
performance of its obligation which is to pay the
balance of the purchase price of the property.
Considering that their obligation was reciprocal,
the performance thereof must be simultaneous.
The mutual inaction of Cortes and the
Corporation therefore gave rise to a
compensation morae or default on the part of
both parties because neither has completed their
part in their reciprocal obligation.
Cortes is yet to deliver the original copy of the
notarized Deed and the TCTs, while the
Corporation is yet to pay the remaining balance
in the P3,700,000.00 purchase price.
This mutual delay of the parties cancels out the
effects of default, such that it is as if no one is
guilty of delay.
Gil vs. CA and heirs of Matulac
After the death of the seller, the heirs of the
seller were asking for the rescission of the sale
to the original buyer, Pacetes because of the
alleged breach that she paid but there was still a
balance and eventually, she consigned it in the
court. Despite the consignation, the heirs of the
seller still want to rescind the contract arguing
that there was a breach on the part of Pactetes
which entitled them to rescind the sale.
The Supreme Court said that they are not
entitled to rescind because the obligation of
Concepcion is to deliver that title in the name of
Pacetes within 120 days from the execution of
the agreement, but she failed to do it. The
balance of Pacetes was not due because of the
failure of the former to comply with what is
incumbent upon her in the reciprocal obligation
but as a measure of good faith, Pacetes made
consignation in court even if she is not obligated
to do so.
The remedy for rescission must belong to
Pacetes because it was Concepcion who first
breached the contract. The petitioners therefore,
as successors-in-interest of the vendor, are not
the injured parties entitled to a rescission of the
deed of absolute sale.
Rescission is for an obligation that is existing. If
there’s no obligation yet on the part of one of the
contracting parties like in a contract to sell,
rescission is not appropriate.
Contract of sale vs. Contract to sell
 Contract of sale- the obligation of the
seller to deliver the property and the
obligation of the buyer is to pay the
purchase price. There is already an
obligation on the part of the seller to
transfer the title to the buyer once the
buyer pays the purchase price. It is
reciprocal.
If there is a contract of sale and there is breach
on the part of the buyer because he did not pay
the price, rescission is appropriate.
 Contract to sell- the seller does not yet
agree to transfer the title to the buyer
and the seller only agrees to transfer the
title upon the fulfillment by the buyer of
the positive suspensive condition
which is the payment of the purchase
price. This is not considered as a breach
of obligation but it will prevent the
obligation of the seller to transfer the
title from arising or acquiring obligatory
force.
If it is a contract to sell and there is breach on
the part of the buyer because he did not pay the
price, rescission is not available. Because
rescission aims to restore the parties to their
original position if the conditional obligation
never existed. In a contract to sell, cancellation
is proper and not rescission.
Nonfulfillment of a suspensive condition
prevents the obligation from arising.
Olivarez Realty vs. Castillo
The down payment required for Olivarez is 5M
but they only paid 2.5M. The reason for Olivarez
is because, on their agreement, they agreed that
within 6 months, Castillo must clear the tenants
on the parcel of land, and he must assist them in
filing a case against PTA but he failed to do so.
However, the disturbance compensation is a pure
obligation of Olivarez under the contract, but
they did not pay. Also, when Olivarez did not
pay the 2.5 million, the 6-month period has not
yet expired.
This case involved contact to sell and Article
1191 is not applicable because there is no
obligation yet on the part of Castillo to transfer
the title until Olivarez has complied with the
positive suspensive condition which is the full
payment of the property including all other
obligations which Olivarez agreed to such as the
payment of disturbance compensation.
The Supreme Court said that since there is a
failure to comply with a suspensive condition, it
is appropriate to cancel the contract to sell.
Rescission is not available since there’s no
obligation to speak of yet on the part of Castillo.
The Wellex Group vs. U-Land Airlines
The Supreme Court ruled that U-land is entitled
to rescission under 1191 because it is a violation
of reciprocal obligation wherein Wellex was
guilty of breach because their agreement was to
transfer shares of stock in APIC to U-Land when
in the first place, Wellex did not own any shares
of the stock of corporation they were claiming.
Article 1381 vs. Article 1191
Article 1191- rescission or resolution of the
contract. The basis of granting the injured party
of rescission is the breach committed by the
other contracting party. This is also a breach
based on reciprocal obligation. The only party
who can file a case for rescission would be a
party to the obligation or the contract sought
to be rescinded.
Article 1381- enumerates the rescissible
contracts. Rescission here is based not on breach
but on economic prejudice suffered by the
injured party. Any party who suffered economic
prejudice is considered a proper party to bring
the suit for rescission.
If the court finds out that the breach is
not substantial, it may grant the debtor a longer
period to comply with his obligation. This option
is not available to Article 1381 because the basis
is not breach.
But both 1381 and 1191 are similar once
rescission is decreed by the court, there will be
mutual restitution. They have to return what they
have received by virtue of the contract.
Article 1191 does not refer to a defective
contract, only a breach but Article 1381 refers to
a defective contract.
Fong vs. Duenas
The Supreme Court held Fong and Duenas
guilty of a breach. The SC applied articles 1191
and 1192 in this case. Article 1192 was applied
since it cannot be determined if who among
them has first violated the contract since their
agreement is verbal. No evidence as to when
exactly the 32.5M should be delivered in full
and when exactly should the alliance corporation
be incorporated. The SC applied Article 1192.
The breach of Fong was he committed to
contribute 32.5M but he limited it to 5M. On the
other hand, the breach of Duenas was his failure
to submit the documents containing the
valuation of his 2 companies.
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.
Correlate Article 1180 to 1197
Article 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, subject to the
provisions of Article 1197.
Article 1197
If the obligation does not fix a period, but from
its nature and the circumstances it can be
inferred that a period was intended, the courts
may fix the duration thereof.
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Period- a day certain which must necessarily
come although it may not be known when. It can
be suspensive or resolutory.
 Ex die- a period with suspensive effect.
Here, the obligation becomes
demandable upon the lapse of the
period.
 In diem- - a period with resolutory
effect. Here, the obligation is
demandable at once but is extinguished
upon the lapse of the period.
Solante vs. COA
Issue: whether approximately 6 years is a day
certain
SC: Pursuant to the contract between the parties,
the period to complete the project is fixed at 6
years. There was no basis for the COA to say
that the housing facilities automatically became
the property of Cebu just because the project
was not completed within 6 years because that is
just as an approximate time based on the
agreement of the parties and it should not be
considered as a day certain.
At the time that the project was finished, no
demand was made by the City of Cebu yet and
this does not consider FF Cruz to be in delay
therefore the housing facilities at the time of the
preparation of the voucher still belong to FF
Cruz. The Court ruled in favor of FF Cruz and
said the housing facilities still belonged to the
contractor at the time that vouchers were
prepared by Solante.
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PERIOD
Whenever a period is designated in an
obligation, that period is deemed established for
the benefit of both parties. The creditor cannot
compel performance prior to the arrival of the
period neither the debtor cannot compel the
creditor to accept performance prior to the
arrival of the period.
When the debtor pays the obligation prior to the
arrival of the period not knowing that the period
has not yet arrived but the creditor has accepted
payment. In case the creditor has accepted
payment prior to the arrival of the period and
there was a mistake on the part of the debtor in
paying, the remedy is: the debtor can recover the
payment made with fruits and interest from that
date. This is a case of solution indebiti.
When the debtor loses the benefit of the
period
ARTICLE 1198 (5 INSTANCES)
1. When the debtor becomes insolvent
2. When the debtor does not furnish
guarantees or securities
3. When guarantees or securities given
have been impaired or have disappeared
4. When the debtor violates an undertaking
5. When debtor attempts to abscond
If any of these circumstances occur after the
constitution of the obligation, it becomes a pure
obligation, and the obligation becomes
demandable at once. Since the debtor loses the
benefit to make use of the period, the obligation
becomes now pure and demandable.
There are obligations with several prestations. In
such a case, the obligation may either be
conjunctive or distributive.
 Conjunctive-if all the several prestations
are due.
 Distributive- if among the several
prestations, only one is due.
 Alternative obligations- fall under
distributive because here, there are
several prestations agreed upon, but the
debtor may fulfill the obligation by
complying with only one.
Who has the right to choose the prestation
agreed? Generally, it is the debtor who has the
right to choose but by stipulation, it may be
given to the creditor.
The debtor can only be liable once the
substitution has already been communicated
because upon communication of the choice to
the creditor, the obligation ceases to be
facultative and it will become a simple
obligation.
Joint and Solidary Obligations
Article 1207
The concurrence of two or more creditors or of
two or more debtors in one and the same
obligation does not imply that each one of the
former has a right to demand, or that each one of
the latter is bound to render, entire compliance
with the prestation. There is a solidary liability
only when the obligation expressly so states, or
when the law or the nature of the obligation
requires solidarity. (1137a)
Joint obligation- If the law or obligation is silent
or the nature of the obligation does not require
solidarity, it is presumed joint. Here, each one of
the joint debtors will only be liable for their
proportionate share of the obligation.
Solidary obligation- the creditors may demand
the fulfillment of the entire obligation from any
one of the solidary debtors. However, even if the
liability of the debtors to the creditor is solidary,
among the solidary debtors themselves, they are
entitled to their proportionate share of the
other solidary debtors.
Solidary liability- When the obligations
or the law states that the obligation is
solidary or when the nature of the
obligation requires solidarity.
NOTE: Even if the obligation is solidary, the
debtors can still be bound by periods and
conditions.
Article 1216
The creditor may proceed against any one of the
solidary debtors or some or all of them
simultaneously. The demand made against one
of them shall not be an obstacle to those which
may subsequently be directed against the others,
so long as the debt has not been fully collected.
BPI vs. Fernandez
Time deposit- there is a specific period within
which you should keep the money in the bank,
you cannot withdraw it unless the pretermination
is given to the depositor.
The spouses opened a time deposit in the bank.
In case of pre-termination, the bank would
require the presentation of the original time
deposit certificate and they must ascertain the
identity of the person preterminating.
It was Tarcilla who first requested the ----------------------
pretermination. Manuel would also like to
Article 1224
preterminate the account but since the original
time deposit certificate was possessed by Tarcila, A joint indivisible obligation gives the rise to
he presented the affidavit of loss of the indemnity for damages from the time anyone of
certificate and he was able to withdraw the the debtors does not comply with his
money using the account of his companion. undertaking. The debtors who may have been
ready to fulfill their promises shall not
Tarcilla demanded payment from the BPI due to
contribute to the indemnity beyond the
bad faith because the bank was well aware that
corresponding portion of the price of the thing or
the certificate was possessed by Tarcila yet they
of the value of the service in which the
did not allow her to preterminate and allowed
obligation consists.
the husband to preterminate on the basis of the
falsified affidavit of loss. Joint indivisible obligation- not capable of
partial performance. If one of the joint debtors is
The SC applied Article 1214. Since there was a
not ready to comply with what is incumbent
demand on the part of Tarcila and BPI failed to
upon him, the remedy of the creditor is to
comply, a delay set in.
proceed against all but he cannot compel the
Article 1214 delivery of the thing because one of them is not
capable therefore, it will be an indemnity for
The debtor may pay any one of the solidary
damages but the liability of the joint debtors
creditors; but if any demand, judicial or
who are ready to comply is limited to their
extrajudicial, has been made by one of them,
shares of the price of the object of the
payment should be made to him. (1142a)
obligation. The damages here, if any, will only
TRB vs. CA be demanded against the debtor who was not
ready to comply with what is incumbent upon
Ching acted as surety. This is different from a him.
guarantor because the surety’s liability is
solidary with the principal debtor. Divisible obligation- capable of partial
performance or work by metrical units.
Ching was a surety and therefore solidarily
liable and he is not a corporation but an
individual person, the suspension of the
liabilities of the corporation who was placed
under receivership will not carry with it the
suspension of the action of the bank against the
surety because he is treated as a solidary debtor.
Here, the action can be made either against the
surety or the principal debtor.
SC: the action against Ching should continue
and should not be suspended despite the pending
receivership proceedings of the Philippine
blooming mills.
Philippine Blooming Mills vs. CA and TRB
The suspension of the liability of the corporation
will not be granted to the individual capacity of
Ching now that TRB is demanding the payment
of the obligation to Ching. Ching assailed that he
should not be held liable until the SEC has
finalized the liability of Philippine blooming
mills.
SC: Since Ching is a solidary debtor entered into
by the PBM, the TRB may go against Ching the
sum of all obligations since he is a solidary
debtor. The entire obligation not only whatever
remains after the corporation is rehabilitated.