Kinds of Obligations According To The Person Obliged

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Article 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 fulfillment, 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.

Kinds of Obligations According to the Person Obliged

(1) Unilateral
- only one party is obliged

(2) Bilateral
- both parties are mutually bound to each other
- both parties are debtors and creditors
- may be reciprocal or non-reciprocal

(a) Reciprocal Obligations


- arise from the same cause and in which each party is a debtor or creditor of the other.
- each party may treat the fulfillment of what is incumbent upon the other as suspensive condition to his
obligation and it non-fulfillment as an implied resolutory condition (right to demand rescission)

(b) Non-reciprocal Obligations


Do not impose simultaneous and correlative performance on both parties, and not dependent upon each
other.

Remedies in Reciprocal Obligations.

(1) Choice of Remedies.


(a) specific performance or fulfillment of obligation with damages;
(b) rescission of obligation with damages.

(2) Remedy of rescission for non-compliance.


- granted for breach by the other contracting party that violates the reciprocity between them.

The court may grant guilty party term or period for the performance of his obligation, if willing to comply, but
needs time to do so and not where he refuses to perform.

Remedies are alternative and not cumulative. The aggrieved party is privileged to choose only one of the
remedies, and not both.

Limitations on Right to Demand Rescission.

(1) Resort to the courts.


- the rescission is a juridical rescission or one granted by court
- the aggrieved party has to resort to court to assert his rights judicially and cannot take justice or the law in his
own hands and decide by himself what are his rights.

(2) Power of court to fix period.


- the court has discretionary power to allow a period within which a person in default may be permitted to
perform his obligation.

(3) Right of third person.


- if in the hands of a third person, rescission is not available as remedy.
(4) Substantial violation.
- rescission will not be granted for slight breaches of contract.

(5) Waiver of right.

Rescission without Previous Judicial Decree

(1) Where automatic rescission expressly stipulated.


- the parties may validly enter into an agreement that violation of the terms of the contract would cause
cancellations thereof even without judicial intervention or permission.

(2) Where contract still executory.


- there is no performance yet by both parties, but one is ready and willing to comply with what is incumbent
upon him and other is not, the willing party may, by his own declaration, rescind the contact.

After extrajudicial rescission, the party can resort to judicial action, and only the final decision of the court can
finally settle whether the rescission was proper or not.

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