business law 8

8/7/2019 Business law 8

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Art. 1190 Effects when the

resolutory condition is fulfilledj The obligation is extinguished

j The parties should return or restore to each other

what they have received including the fruits and

interest

j By the one who has the duty to return in case of

loss, deterioration or improvement of the thing

j If the obligation is to do, the courts are given thepower to determine the retroactivity of the

fulfillment of the condition


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For example

j C gave D a parcel of land on condition that D willnever go to the casinos. Two months later, D wentto the Casino at the Heritage.

j The obligation of C here is extinguished becauseD violated the condition.

j D will have to return the land plus the fruitsreceived by him

j If the land is improved by time or by nature, C isentitled to the improvements.

j He is considered the creditor in the obligation


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Art. 1191- Concept of Rescission

j The power to rescind means the right to cancel orto resolve the contract in case of non-fulfillment ofthe obligation on the part of one of them

j This is applicable only to reciprocal obligation thatis if one of the parties perform his undertaking,

delay by the latter shall begin

j The right of the injured party is to choose between

: A. Rescission of the contract plus damages B.

fulfillment of the obligation plus damages


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Kinds of Obligation according to

persons obligedj A. Unilateral when of the party is to comply with the

obligation

j Example: D obliged himself to give C specific car on June30

j B.Bilateral obligation when both parties are mutuallybound to each other but the performance of their obligationare not the same time or simultaneous

j Example: S sold to B a specific car for 10,000. Delivery of

the car is June 20, while the payment of the price is onJune 30

j C. Reciprocal Obligations arising out of the same causeand are to be fulfilled at the same time


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Essential features of rescission

jThe right is implied, so there is no need tostipulate it in the contract

j

The right is not automatic or absolute. Theinjured party should apply to the court for a

decree of rescission

jThe court is given discretionary power to

fix a period


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Art 1192 Both parties

committed breach of obligationjThe liability of the 1st infractor or violator

must be equitably tempered by the courtbecause to the other party is likewise guilty

of violating his obligation

j If it cannot determined which is the 1st

infractor the obligation of the parties

extinguished and each shall bear his owndamages. To each his own.


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Art 1193 Obligation with a

periodjObligations for whose fulfillment a day

certain has been fixed, shall be demandableonly when that day comes

jPeriod it is certain length of time which

determines the effectivity ot the

extinguishment of the obligation

jDay certain the day which will necessarily

come whether we like it or not


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Requisites

j It must refer to the future

j It must be certain

j It must be possible

j If it is stated in the contract that the obligation is toput up something within a reasonable time

j Then he was able to fulfill the same, you shouldasked the court to fix the time of performance

j Then if fails, asked now for the specificperformance


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Art 1194 - 1195

jThe debtor may recover what he has paidincluding the fruits and interest if he isunaware of the period

j If he paid voluntarily knowing that the

obligation is not yet due, he cannot recover

what he has paid


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Art 1196

jWhenever in an obligation a period isdesignated, it is presumed to have been forthe benefit of both the creditor and the

debtor

jUnless from the tenor of the same or other

circumstances, it should appear that the

period has been established in favor of theother


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For example

j D binds himself to pay 10,000 on December 20,2006. This is for the benefit of both D and C

j D binds himself to pay C within 2 years. This is

for the benefit of D only. D can pay before the endof 2 years but he cannot be compelled to pay

before the 2 year period

j D binds himself to pay within 2 years on demand.

This is for the benefit of C because of the word on

demand


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Instances when the court may not

fix the term or periodj a. when no term was specified by the parties

because no term was ever intended, in which

case it is considered a pure obligation

j b. When the obligation is payable on demand

j c. When specidied period is provided by law

jThe court determines the period by

considering the time probably contemplated

by the parties


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Art. 1198 The debtor shall lose evry

right to make use of the period:j 1. When after the obligation has been contracted, he

becomes insolvent, unless he gives a quaranty orsecurity for the debt

j Example:

j D owes C P10,000 payable on June 30. If by June

15, D becomes insolvent, C can immediately

demand payment unless D can offer sufficient

security.

j Insolvency here means the liability exceeds his

capital and there is no need for a judicial

declaration


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j 2. When he does not furnish to the creditor theguaraties or securities which he has promised

j D owes P10,000 payable on June 30. To secure the

obligation, he promised to mortgage his residentialhouse to C on june 15.

j However, D failed on his promise. C can now

demand payment without waiting for June 30,

because D failed to furnish the securities or

guaranty he promised


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j 3. When by his own acts he has impaired saidguaraties or securities after their establishment,when through a fortuitous event they disappear,

unless he immediately gives a new ones equallysatisfactory

j If he mortgaged the house to C on June 15, but the

next day, the house got lost due to D's fault or even

due to a fortuitous event, D's obligation isimmediately demandable unless he gives another

security equally satisfactorily as the first


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j 5. When the debtor attempts to abscond

jD borrowed from C 1 million payable after 2

years. After the obligation was contracted, hechanges residence every now and then with

an intention to avoid his obligation.

jC can demand payment without waiting for

the 2-year period because D attempts to

abscond


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