ART.

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:
ART. 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;
(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.
(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.
Rules on loss:
a. Loss without debtor's fault - obligation is extinguished
b. Loss due to debtor's fault - obligation is to pay damages
Rules on deterioration
a. Without debtor's fault - impairment shall be
borne by the creditor, debtor is not liable
b. Due to debtor's fault - creditor may choose
between:
1. recission plus damages
2. fulfillment plus damages
Rules on improvement of the thing
a. By nature or by time - it shall inure to the benefit of
the creditor
b. At the expense of the debtor - debtor's right is that
granted to a usufructuary.

By a contract of usufruct, a person has a right to enjoy

the use and the fruits of a thing belonging to another.
(Art 562, Civil Code)
Examples of loss, deterioration or improvement of the
thing while awaiting the fulfillment of the condition.
a. Loss
Cheng promised Zada to give her the Tesla Sonic Model 2 that he
owns if she passed the May 30, 2011 Japan ITEC exam.
On the 11th of March 2011, Cheng parked the car on the
portside just outside the building where he works.
It was swallowed by the waves of the tsunami, and was brought back to
the ocean now unrecoverable.
The March 11, 2011 tsunami was a fortuitous event without the
fault of Cheng. Therefore, his obligation to deliver is extinguished even
if Zada passed the exam.
b. Deterioration
Meanwhile, in a parallel universe, Cheng parked
the car in his garage located at higher ground. The
tsunami waves did not reach the area, but the
earthquake debris broke the windshied. This was not
Cheng's fault, therefore he is not liable for damages.
The repair is Zada's responsibility if ever she will pass
exam and recieve the car.
c. improvement
Meanwhile; In another parallel universe...
On March 11, 2011, Cheng traveled with the car to Kanagawa Province,
where it was far from the earthquake and tsunami.
A couple of weeks after the disaster, that Tesla Sonic Model 2 was the
only remaining of it's design, and was now considered a rare item.
It's commercial value went up to 123,000,000 Yen from 54,000,000
Yen.

Who reaps the benefit of this improvement?

ANSWER: Zada, if she will pass the exam.
ART. 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 when resolutory condition is fulfilled
a. The obligation is extinguished
b. The parties should return or restore to each other what they have
recieved including the fruits and interest
c. The rules in the preceeding Article (1189) will apply to whoever has
got a duty to return in case of loss, deterioration or improvement of
the thing
d. If the obligation is to do or not to do, the courts are given the
power to determine the retroactivity of the fulfillment of the
condition as stated in Article 1187
terms
Illustrative Case:
Kitt sold to RG a specic land for Php 1,000,000. There is a
stipulation in the contract of sale that RG will perfect the title, through
paper, within 6 months from the date of sale.

Question 1:
If 6 months had elepsed and RG failed to perfect the title, Can
Kitt rescind the contract of sale?
Answer:
No, the failure of the buyer to perfect the title within 6 months
will not give Kitt the right to resolve or rescind under the provision of
Article 1190, because such stipulation is not an essential element of
the contract.
Question 2:
In the same illustration, supporting it was stated that B will
perfect the title, through papers, on February 14, 2020, and failure to
do so the contract is automatically cancelled.
RG failed. Is the contract cancelled?

Answer:
Yes, because the performance of RG is subject to a suspensive
period. The time for performance has ended, therefore Kitt's right to
cancel or resolve the contract arises.
ART. 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 fulfi
llment, 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.
Concept of Rescission as used in this Article
The power to rescind means the right to cancel or to
resolve the contract in case of non-fulfillment of the obligation
on the part of one of them.
Application of this 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. Consequently, from the moment one of the parties fulfills his
obligation and the other does not perform his undertaking, delay by
the latter shall begin (Art. 1169, Civil Code)

The right now of the injured party is to choose between:

a. rescission of the contract plus damages
b. fulfillment of obligation plus damages
Kinds of obligations according to persons obliged
a. Unilateral - when only one party is obliged to comply with the obligation
Example: RG obliged himself to give Elle a specific car on February 14
b. Bilateral - obligation when both parties are mutually bound to each other
but the performance of their obligations are not at the same time or
simultaneous.
Example: Elle sold to Chen a specific car for Php10,000. Delivery of the
car is on June 20, while payment of the price is on June 30.
c. Reciprocal - Obligations arising out of the same cause and are to be
fulfilled at the same time.
Example: RG borrowed from Kaitu Php10,000. On the other hand, RG
deposited with Kaitu 100 cavans of rice.
Essential features of rescission in reciprocal
obligations.
a. The right to rescind is implied, so there is no need to stipulate it in
the contract.
b. This right is not automatic or absolute. The injured party should
apply to the court for a decree of rescission.
c. The court is given discretionary power to fix a period, instead of
rescinding the obligation especially if the breach is slight or casual.
Neither will rescission take place if the object is in the possession of
a third person who acted in good faith.
Effect of rescission
If the contract is rescinded, the obligatory
relations of the parties is extinguished, as if no relation
had ever been created. The extinction is retroactive.
The rescission is equivalent to invalidating and
unmaking the judicial tie, leaving things in their own
status before the celebration of the contract.
ART. 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.
Both parties committed a breach of the obligation

The liability of the first infractor or violator must be equitably

tempered by the court because the other party is likewise guilty of
violating his obligations. Be it noted that their corresponding obligations
remain to subsist.
If it cannot be determined which of the parties first
violated the contract.
The obligation of the parties is extingiushed,
and each shall bear his own damages.
The principle is “to each his own”
Illustrative Case
Kaitu sold to Chardy a specific car for
Php2,000,000. Kaitu to deliver and Chardy to pay on
February 14. Kaitu tenders delivery on February 14, but
Chardy cannot pay the P2,000,000. Later when Chardy
tenders payment. Kaitu cannot deliver the car until
after 4 days.

Who is at fault?
ANS: Chardy, because he breached the contract first