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STUDY GUIDE :
(a) Loss – physical, legal & civil loss (Art. 1189, No. 2)
(b) Deteriorate – value is reduced or impaired
Effect of : DEBTOR’S INTENT
(Art. 1189) Without Fault With Fault
LOSS Extinguished (No. 1) Damages incurred
(No. 2)
Creditor’s remedies :
Creditor bears
DETERIORATI (No. 4)
impairment (No. 3)
ON (a) rescission +
damages OR
(b) fulfillment +
damages
(a) By nature or by time – Creditor benefits from
improvement (No. 5)
IMPROVEMEN (b) At debtor’s expense – Debtor will have the
T rights of a usufructuary (No. 6); no right to
indemnity but he may remove improvements
without damage to the property and/or set-off
improvements against damage to the property.
(Arts. 579 & 580, NCC)
11. Art. 1190 – Effects of fulfillment of resolutory condition
(a) In real obligations (par. 1)
(a.1.) the obligation is extinguished
(a.2.) there should be restitution, not only of the thing
received, but also of the fruits or interests thereon
(b) In personal obligations (par. 3) – subject to court’s determination
(c) In case of loss, deterioration or improvement of the thing after
fulfillment of the resolutory condition but before restitution is effected
(par. 2) – the party who is bound to return in a resolutory
conditional obligation shall have the same rights and duties as
that of the debtor under Art. 1189.
12. Art. 1191 – The right to rescind in reciprocal obligations
in case of breach or non-fulfillment
(a) Kinds of obligations according to the person obliged :
(a.1.) Unilateral – when only one party is obliged to comply with
a prestation
(a.2.) Bilateral – when both parties are debtors and creditors of
each other
(a.2.1.) Reciprocal – the parties’ obligations arise from the
same cause; the obligation or promise of each
party is the cause or consideration for the
obligation or promise of the other.
(a.2.2.) Non-reciprocal – the performance of one party is
not dependent upon the simultaneous
performance by the other.
(b) Remedies of the aggrieved party in a reciprocal obligation in case the
other party does not comply with his undertaking : (par. 2)
(b.1.) specific performance + damages; OR
(b.2.) rescission/cancellation of contract + damages
REMEMBER : The remedies provided in Art. 1191, par. 2 are
alternative, and not cumulative.
HOWEVER : An action for rescission may still be availed of even
after an action for specific performance has been
preferred IF fulfillment should have become impossible.
BUT : Once an action for rescission is chosen, specific
performance can no longer be demanded.
(c) Limitations on the right to rescind :
(c.1.) Only substantial (not trivial or slight) breaches can cause
rescission.
(c.2.) If there is just cause for fixing the period within which
the debtor can comply, the court will not decree the
rescission claimed. (par. 3)
(c.3.) If the property, subject of the contract, is not in the
hands of an innocent third party who has lawful
possession of the same. (par. 4)
13. Art. 1192 – Rule if both parties have committed a breach
(a) If the first infractor is known – the liability of the first infractor shall
be proportionately reduced. (1st sentence)
(b) If the first infractor is not known – the contract shall not be
enforced. Each party shall bear his own loss/damages. (2nd
sentence)
APPLICATION/PROBLEMS :