Business Law Articles

Art.
1190 When the condition 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 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 obligation 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 if fulfillment of resolutory
condition
(1) In obligation to give when the
resolutory condition in an obligation to
give is fulfilled, the obligation is
extinguished (art. 1181) and the parties
are obliged to return to each other what
they have received under the obligation.
(a) There is return to the status quo.
In other words, the effect of the
fulfillment of the condition is
retroactive.
(b) In case the thing to be returned is
legally in the possession of a
third person who did not act in
bad faith, the remedy of the party

entitled to restitution is against
the other.
(c) The
obligation
of
mutual
restitution is absolute. It applies
not only to thing received but
also to the fruits and interests.
(d) In obligations to give subject to
suspensive
condition,
the
retroactivity admits exceptions
according as the obligation is
bilateral or unilateral.
The reason for the difference is quite
plain. The happening of the suspensive
condition gives birth to the obligation.
On the other hand, the fulfillment of the
resolutory condition produces the
extinguishment of the obligation as
though it had never existed. The only
possible exception is when the intention
of the parties is otherwise.
Ex: X allows Y to use the formers car
until X returns from the province. Upon
the return of X from the province, Y must
give back the car. The effect of the
happening of the condition is to annul
the obligation as if it had never been
constituted at all. In this case, the
parties intend the return of the car.
Applicability of Article 1189 to party
with obligation to return.
In the first example above, X is the
debtor and Y, the creditor. Pending
fulfillment of the resolutory condition the

return of X from the province. Upon the
happening of the condition, X becomes
the creditor with a right to demand the
return of the car and Y, the debtor, with
the obligation to return the car.
Stated in another way, the happening of
a resolutory condition has the same
effect on the creditor as the happening
of a suspensive condition has on the
debtor an obligation arises. The
fulfillment of the resolutory condition
converts the creditor into debtor, and the
debtor into creditor. Hence, the
applicability of the provisions of article
1189 in case of loss, deterioration or
improvement of the thing. Pending the
fulfillment of the condition, the parties
are entitles to the rights granted by
article 1188.
Art. 11991. 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 choses fulfillment, if the
latter should become impossible.
The court shall decree the rescission

claimed, unless there be just cause
authorizing the fixing or 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.
Kinds of obligation according to the
person obliged.
They are:
(1) Unilateral - when only one party
is obliged to comply with a
prestation.
Ex: donation; in a contract of loan, the
lender has the obligation to give. After
the lender has complied with his
obligation, the debtor has the obligation
to play.
(2) Bilateral when both parties are
mutually bound to each other. In
other words, both parties are
debtors and creditors of each
other. Bilateral obligations may
be reciprocal or non-reciprocal.
(a) Reciprocal obligations are
those which arise from the
same cause and in which
each party us a debtor and
creditor of the other, such
that the performance of one
is designed to be the
equivalent and the condition
for the performance of the

other.
Each party may treat the fulfillment of
what is incumbent upon the other as a
suspensive condition to his obligation
and its non-fulfillment, as a tacit or
implied resolutory condition giving him
the right to demand the rescission of the
contract.
In a contract of sale, in the absence of

any stipulation upon the delivery of the
thing sold by the seller us conditioned
upon the simultaneous payment of the
purchase price by the buyer, and vice
versa.
The seller is the creditor as to the price
and debtor as to the thing, while the
buyer is the creditor as to the thing and
debtor as to price.
Example:
(b) non-reciprocal obligations are those

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Art.

1190 When the condition have for

bad faith, the remedy of the party

fulfillment of the resolutory condition the

The court shall decree the rescission

for the performance of the

In a contract of sale, in the absence of

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