The resolutory condition in our contract was met and the obligation is extinguished — must we return what we each received?

The duty to return on resolutory condition

Article 1190 of the Civil Code deals with the practical consequence of a fulfilled resolutory condition: 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. The logic mirrors what happens in rescission: the event that ends the obligation requires both parties to unwind the transfers made under it. What you gave goes back to the giver; what the other party gave goes back to them. The obligation is extinguished, and with it, the basis for keeping what was received.

What happens if the thing was lost, deteriorated, or improved

Article 1190 acknowledges that the thing to be returned may not be in the same condition as when it was received. It applies to the returning party the same rules that govern the debtor under the preceding article — rules that address how responsibility is allocated when the thing was lost through no fault of the party, was lost through their fault, deteriorated, or improved while in their hands. A party bound to return a thing that has been lost without fault is generally excused from return but may not be entitled to receive back what they gave. Deterioration and improvement are handled according to those specific rules, which distinguish between fault-based and fortuitous causes.

Obligations to do and not to do

For obligations to do and not to do — as opposed to obligations to give — Article 1190 applies a different reference point. It directs that the second paragraph of Article 1187 governs the effect of extinguishment for these types of obligations. Under that provision, courts determine in each case what the retroactive effect of the fulfilled condition will be. The courts have discretion to decide what the appropriate consequence is when a resolutory condition ends an obligation to act or refrain from acting, based on the specific facts and the nature of the obligation involved.

Practical implications

When the resolutory condition in your contract is fulfilled, you and the other party are obliged to make mutual restitution. The clock does not run from when you demand return — it runs from the fulfillment of the condition itself. Neither party has the right to retain what they received simply because they are reluctant to give it back. The duty is immediate and mutual. If one party refuses to return what they received while demanding return of what they gave, that imbalance is itself a legal problem. Both sides are subject to the same Article 1190 obligation, and both are bound to fulfill it at the same time.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Mactan-Cebu International Airport Authority vs. Benjamin Tudtud, et al, G.R. No. 174012, November 14, 2008 — read the decision on LawPhil →
• National Power Corporation vs Socorro T. Posada, Renato Bueno, Alice Balin, Adrian Tablizo, et al, G.R. No. 191945, March 11, 2015 — read the decision on LawPhil →
• Mactan-Cebu International Airport Authority (MCIAA) and Air Transportation Office (ATO) vs. Bernardo Lozada, et al, G.R. No. 176625, February 25, 2010 — read the decision on LawPhil →
• Heirs of TImoteo Moreno, et al. vs. Mactan-Cebu International Airport Authority, G.R. No. 156273, October 15, 2003 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1190 — Effect of a Resolutory Condition Fulfilled