Overview
In Philippine civil law, a potestative condition is one “the fulfillment of which depends exclusively upon the will of one of the contracting parties.” It is governed principally by Article 1182 of the Civil Code and interpreted in light of the broader principles on conditions (Arts. 1181–1184) and mutuality of contracts (Art. 1308).
Art. 1182: “When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void….” (Potestative conditions in contracts - Lawyers in the Philippines)
1. Classes of Conditions and Where “Potestative” Fits
| Type | Depends on | Typical Effect |
|---|---|---|
| Casual | Chance/fortuitous event | Valid |
| Mixed | Will of a party + chance/3rd person | Valid |
| Purely potestative | Sole will of a party | Void if it is the debtor’s sole will and the clause is suspensive |
A potestative condition may be suspensive (affects birth of the obligation) or resolutory (affects its extinction/performance). The sanction differs:
- Suspensive & purely potestative (debtor-controlled) ➔ entire obligation is void (Art. 1182 ¶1).
- Potestative, but only on performance or resolutory ➔ the condition is struck out, while the main obligation stands (SC doctrine beginning with Naga Telephone (NATELCO) v. CA, 1994). (Potestative conditions in contracts - Lawyers in the Philippines, G.R. No. 223825 - LawPhil)
2. Key Doctrinal Rules from Jurisprudence
| Rule | Leading cases & gist |
|---|---|
| Void where birth of the obligation rests on debtor’s whim | NATELCO v. CA, G.R. 107112 (1994): clause letting the debtor decide if it would perform rendered the entire undertaking void. (Potestative conditions in contracts - Lawyers in the Philippines) |
| If the potestative clause relates only to performance, strike out the clause, keep the contract | Catungal v. Rodriguez, G.R. 146839 (2011): seller’s promise to pay balance “once squatters are removed” was mixed (involving 3rd persons); even if viewed as potestative, only that clause would be void, not the sale itself. (G.R. No. 146839) |
| Employment & service contracts: purely potestative “deployment upon employer’s sole approval” clauses are void | XXX v. YYY (seafarer case), G.R. 223825 (2020): the Addendum letting the employer decide alone when the contract would actually start was annulled; only the potestative stipulation was excised. (G.R. No. 223825 - LawPhil) |
| Options that benefit the creditor/lessee are usually valid | Allied Banking v. CA, G.R. 124290 (1998): lease “may be renewed for a like term at the option of the lessee” was not potestative because once the option is exercised, both parties become bound—thus mutuality is preserved. ([Allied Banking Corp. vs. CA, 284 SCRA 357 |
| Potestative analysis is tied to mutuality (Art. 1308) | Courts void or read down clauses that leave validity/compliance “to the will of one” to preserve contractual balance. ([Mutuality of Contracts |
3. Practical Tests Philippine Courts Apply
- Whose will? – Article 1182 literally targets conditions “upon the sole will of the debtor.” If it is the creditor’s exclusive option, courts instead examine mutuality (Art. 1308) but do not automatically void the clause.
- At what stage?
- Birth of the obligation → stricter; whole obligation may fail.
- Performance/extinction → only the offending condition is dropped.
- Is it really “sole”? If some element—time, approval of a third person, chance—must intervene, courts treat it as mixed and therefore valid.
- Does the option ripen into mutuality? Lease-renewal or buy-back options are upheld where the non-choosing party is nonetheless bound once the option is exercised.
4. Drafting / Litigation Tips
| Do ✔ | Avoid ✖ |
|---|---|
| Frame contingent duties on objective events (regulatory approval, delivery milestones). | “At the sole discretion of X, this contract shall take effect.” |
| For options (lease renewal, purchase), say that once exercised both parties are bound under specified terms. | Escalation clauses letting the lender change rates “at any time it deems fit” without a ceiling or reference index. |
| Convert vague “when I have money” promises into obligations “with a period” (Art. 1180); the court can fix the date if parties disagree. | Conditions whose fulfillment is impossible or solely within the obligor’s caprice; they will be stricken and may void the promise. |
5. Checklist for spotting a void potestative condition
- Is the clause suspensive? (Does the obligation ‘spring’ only after the event?)
- Does only the debtor decide whether it happens?
- Is there any external factor (chance/third party) involved?
- Would striking the clause salvage the rest of the contract? – If yes, courts will often apply blue-pencil doctrine rather than nullify the whole contract.
Bottom-line
A pure, debtor-controlled suspensive potestative condition is still automatically void in the Philippines. But modern Supreme Court decisions finely distinguish between (a) birth vs. performance, (b) debtor vs. creditor options, and (c) pure vs. mixed conditions, usually rescuing the main agreement by invalidating only the offensive stipulation. The safest course for drafters—and the strongest argument for litigators—is to anchor contingent obligations on factors that do not rest solely on one party’s whim and to ensure that once an option is exercised, mutuality is fully restored.