Oblicon Finals Reviewer

OBLIGATIONS*AND*CONTRACTS*REVIEWER* ATTY.*MEL*STA.
*MARIA* CROMBONDS*201172012*
! !
TITLE.*IV.**PRESCRIPTION* 2!
Chapter(1:(General(Provisions( 2!
* Chapter(2:(Prescription(of(Ownership(and(Other(Real(Rights(
Chapter(3:(Prescription(of(Actions(
TITLE.*I.*7*OBLIGATIONS*
5!
10!
15!
OBLIGATIONS**
Chapter(2:(Nature(and(Effect(of(Obligations( 17!
Chapter(3:(Different(Kinds(of(Obligations( 22!
SECTION!1.!+!Pure!and!Conditional!Obligations! 22!
SECTION!2.!+!Obligations!with!a!Period! 28!
AND**
SECTION!3.!+!Alternative!Obligations! 31!
SECTION!4.!+!Joint!and!Solidary!Obligations! 33!
SECTION!5.!+!Divisible!and!Indivisible!Obligations! 37!
SECTION!6.!+!Obligations!with!a!Penal!Clause! 38!
CONTRACTS*
Chapter(4:(Extinguishment(of(Obligations( 40!
GENERAL!PROVISIONS! 40!
SECTION!1.!+!Payment!or!Performance! 40!
Title*II**CONTRACTS* 59!
* Chapter(2:(Essential(Requisites(of(Contracts(
General!Provisions!
65!
65!
Section!1!!Consent! 65!
ATTY.*MEL*STA.*MARIA* Section!2!!Object!of!Contracts!
Section!3!!Cause!of!Contracts!
Chapter(3:(Form(of(Contracts(
74!
75!
77!
CROMBONDS*201172012!
Chapter(4:(Reformation(of(Instruments( 78!
Chapter(5:(Interpretation(of(Contracts( 80!
Chapter(6:(Rescissible(Contracts( 83!
Chapter(7:(Voidable(Contracts( 86!
Chapter(8:(Unenforceable(Contracts( 89!
* Chapter(9:(Void(and(Inexistent(Contracts( 92!
Title*III**NATURAL*OBLIGATIONS* 97!
* Title*IV**ESTOPPEL* 98!
* Title*V**TRUSTS*
Chapter(1:(General(Provisions(
100!
101!
* Chapter(2:(Express(Trusts(
Chapter(3:(Implied(Trusts(
102!
102!
! Title*XVII**EXTRA7CONTRACTUAL*OBLIGATIONS* 104!
Chapter(1:(QuasiSContracts( 104!
! Section!1!!Negotiorum!Gestio! 105!
Section!2!!Solutio!Indebiti! 107!
* Section!3!!Other!Quasi+Contracts! 108!
! CODAL*MEMORY*AID* 111!
!
!
1!
OBLIGATIONS*AND*CONTRACTS*REVIEWER* ATTY.*MEL*STA.*MARIA* CROMBONDS*201172012*
!
Prescription!and!Laches!compared:!
TITLE.*IV.**PRESCRIPTION* o
PRESCRIPTION* LACHES*
* Concerned!with!fact!of!delay! Concerned!with!effect!of!delay!
A!matter!of!time! A!question!of!inequity!
Chapter*1:*General*Provisions* Statutory! Not!provided!by!statutes!
Based!on!Law! Based!on!equity!
Prescribes!a!fixed!time! No!fixed!time!
Art.*1106**Prescription*Defined*
By!prescription,!one!acquires!ownership!and!other!real!rights!through!the!lapse!of! ZE( Lotho,( Inc.( v.( Ice( and( Cold( Storage! ! where! the! complainant!
time!in!the!manner!and!under!the!conditions!laid!down!by!law.! only! filed! a! suit! after! 9! years! despite! having! knowledge! of! the!
defendants! violative! practice,! and! where! the! material! records!
In!the!same!way,!rights!and!actions!are!lost!by!prescription.!(1930a)!
were! already! lost! making! it! difficult! for! the! defendant! to!
controvert! claims! for! damages,! the! case! was! dismissed! on! the!
Object! of! Prescription! ! to! suppress! fraudulent! and! stale! claims! from!
ground! of! laches.! Laches! can! bar! the! filing! or! the! prosecution! of!
springing! at! great! distances! of! time! and! surprising! the! parties! or! their!
the!suit.!
representatives! when! the! facts! have! become! obscure,! or! evidences! or!
Catholic(Bishop(of(Balanga(v.(CA!!although!prescription!does!not!
witnesses!might!already!be!lost.!Sinaoan(v.(Sorongan!
apply!to!registered!property,!a!registered!landowner!may!lose!his!
2!Kinds!of!Prescription!! right! to! recover! the! possession! of! his! registered! property! by!
1. Acquisitive! ! acquisition! of! a! right! or! property! by! the! lapse! of! reason!of!laches.!
time;!also!known!as!adverse!possession!and!usucapcion!
2. Extinctive!!rights!and!actions!are!lost!by!the!lapse!of!time;!also!
Art.*1107**Acquisition*by*Capable*Persons*and*Minors*
known!as!limitation!of!action!Morales(v.(CFI(of(Misamis(Occidental!
Persons!who!are!capable!of!acquiring!property!or!rights!by!other!legal!modes!may!
Laches! ! doctrine! of! stale! demands;! defendant! becomes! the! offended!
acquire!the!same!by!means!of!prescription.!
party! due! to! the! complainants! inaction! for! an! unreasonable! and!
unexplained!length!of!time;!founded!on!some!change!during!the!property! Minors! and! other! incapacitated! persons! may! acquire! property! or! rights! by!
or!the!relations!between!the!parties!during!the!lapse!of!time.!! prescription,! either! personally! or! through! their! parents,! guardians! or! legal!
o Requisites:!(C.D.L.I.)! representatives.!(1931a)!
1. Conduct! on! the! part! of! the! defendant! of! which! complaint! is!
made!to!seek!remedy!
Who!may!acquire!property!or!rights!through!prescription:!
2. Delay! in! asserting! the! complainants! rights,! having! had!
1. Persons*of*majority*age!!qualified!to!do!all!civil!acts!of!life!
knowledge!or!notice!of!the!defendants!conduct,!and!having!
2. Minors!and!other*incapacitated*persons!
been!afforded!opportunity!to!file!a!suit!
o Annullable! or! voidable! ! when! acquisition! is! made! without!
3. Lack!of!knowledge!or!notice!on!the!part!of!the!defendant!that!
the!assistance!of!parents!or!guardians!
the!complainant!would!assert!right!on!which!he!bases!his!suit!
o Ratified! ! when! such! minor! attains! majority! age! of! 18! years!
4. Injury! or! prejudice! to! the! defendant! in! the! event! relief! is!
(emancipation)!
accorded!to!the!complainant!
o Completely!valid!!when!acquisition!is!made!through!parents!
!
or!guardians!
!
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!
2!
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Art.*1108**Persons*Exempt*from*Prescription* corporation! whose! causes! of! action! are! subject! to! the! statute! of!
Prescription,!both!acquisitive!and!extinctive,!runs!against:! limitation.!
(1) Minors! and! other! incapacitated! persons! who! have! parents,! guardians! or!
other!legal!representatives;! Art.*1109**Between*Husband*and*Wife,*Children*and*Guardian*
(2) Absentees! who! have! other! administrators,! either! appointed! by! them! Prescription! does! not! run! between! husband! and! wife,! even! though! there! be! a!
before!their!disappearance,!or!appointed!by!the!courts;! separation! of! property! agreed! upon! in! the! marriage! settlements! or! by! juridical!
(3) Persons!living!abroad,!who!have!managers!or!administrators;! decree.!
(4) Juridical!persons,!except!the!State!and!its!subdivisions!
Neither!does!prescription!run!between!parents!and!children,!during!the!minority!or!
Persons!who!are!disqualified!from!administering!their!property!have!a!right!to!claim! insanity! of! the! latter;! and! between! guardian! and! ward! during! the! continuance! of!
damages!from!their!legal!representatives!whose!negligence!has!been!the!cause!of! the!guardianship.!(n)!
prescription.!(1932a)!
General!rule!!Prescription!does!not!run:!
General!rule!!Prescription!does!not!run!against:!(M.A.A.J.)! Between*husband*and*wife*
o Pacio( v.( Billion! ! where! the! first! wife! claims! that! possession! of! the!
1. Minors* and* other* incapacitated* persons! ! unless! they! have! parents,! property! for! 29! years! is! equivalent! to! a! title,! it! was! held! that!
guardians!or!other!legal!representatives.! prescription!by!adverse!possession!cannot!exist!between!husband!and!
Vda.( De( Alberto( v.( CA! ! an! illegitimate! child! who! still! has! a! living! wife.!
parent,!his!mother!who!actually!filed!the!suit,!cannot!claim!exemption! Between*parent*and*child!!during!the!childs!minority!or!insanity;!based!
from!prescription.! on!natural!bond!of!filiation!
2. Absentees!!unless!they!have!administrators.! Between*guardian*and*ward!!during!the!continuance!of!the!guardianship;!
Administrator! may! be! appointed! by! the! absentees! before! their! based!on!fiduciary!relationship!
disappearance!or!by!the!courts!(Art.!381!of!the!Civil!Code).! !
Absentees! must! be! absent! for! at! least! 2! years! and! must! prove! that! Exception!!When!the!law!so!provides!that!prescription!shall!apply.!
they!cannot!go!back!to!their!domicile.!! Ex.!1.!! Legal!separation!must!be!filed!within!5!years!from!the!occurrence!of!the!
If! they! can! go! back! but! intentionally! do! not! want! to! return,! cause!(Art.!57,!Family!Code)!
prescription!will!lie!against!them.! 2. Annulment! on! the! ground! of! impotency! must! be! filed! within! 5! years!
3. Persons*living*abroad!!unless!they!have!managers!or!administrators.! from!the!marriage!ceremony!(Art.!47,!Family!Code)!
It!must!be!shown!that!they!cannot!return!to!their!domicile!within!the! 3. Husband!may!impugn!the!legitimacy!of!the!child!within!1!year,!2!years!or!
period!which!prescription!should!have!run.! 3! years! from! his! knowledge! of! the! birth! of! the! child,! depending! on! his!
4. The* State* and* its* subdivisions! ! unless! not! acting! in! their! sovereign! residence!and!the!place!of!birth!of!the!child!(Art.!170,!Family!Code)!
capacity!or!juridical!persons.!
Juridical! persons! are! endowed! by! law! of! the! attributes! of! a! natural! Art.*1110**Married*Woman* *
person!to!acquire!and!lose!properties!and!rights.! Prescription,!acquisitive!and!extinctive,!runs!in!favor!of!or!against!a!married!woman.!
Republic( v.( PNB! ! if! the! political! subdivision! (AFP)! is! acting! in! its!
proprietary! character,! or! if! the! government! instrumentality! is! not! Presupposes! a! situation! involving! a!married! woman!and! another! person!
acting!in!a!sovereign!capacity,!prescription!will!lie!against!it.! not!her!husband.!Prescription!shall!run!for!or!against!a!married!woman.!
National( Development( Co.( v.( Tobia! ! upheld! the! applicability! of! !
prescription!against!petitioner,!acting!in!its!proprietary!character,!who!
like!all!other!corporations!capitalized!by!the!government,!is!a!business!
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Art.*1111**Co7Proprietor*or*Co7owner* Excludes! property! of! the! State! and! its! subdivisions! not! patrimonial! in!
Prescription! obtained! by! a! co+proprietor! or! a! co+owner! shall! benefit! the! others.! character,!things!within!commerce!of!men!but!prohibited!by!law:!
(1933)! Ex.!!1.!Movables!possessed!through!a!crime!can!never!be!acquired!by!
prescription!by!the!offender!(Art.!1133)!
o Co7ownership! ! exists! when! the! ownership! of! an! undivided! thing! or! right! 2.!Lands!covered!by!Torrens!Title!
belongs!to!different!persons.! 3.! Properties! of! spouses,! parents! and! children,! wards! and!
guardians!under!the!restrictions!imposed!by!law!(Art.!1109)!
o There! could! be! valid! acquisition! by! all! owners! even! though! only! one! or! a! few!
are!in!actual!possession.! Dir.(of(Forest(Administration(v.(Fernandez!!forest!lands!of!public!domain!
cannot!be!acquired!by!prescription!and!its!possession!however!long!cannot!
ripen!into!private!ownership.!
Art.*1112**Renunciation*
Lovina(v.(Moreno(!a!navigable!stream!or!any!of!its!bed!is!not!acquired!by!
Persons! with! capacity! to! alienate! property! may! renounce! prescription! already!
prescription.!
obtained,!but!not!the!right!to!prescribe!in!the!future.!
Republic( v.( CA! ! [1]! area! adjacent! to! bay! which! was! covered! with! water!
Prescription! is! deemed! to! have! been! tacitly! renounced! when! the! renunciation! due! to! rain! is! not! land! of! public! domain.! Highest! ordinary! depth! is!
results!from!acts!which!imply!the!abandonment!of!the!right!acquired.!(1935)! defined!as!the!regular,!common,!natural!depth,!which!occurs!most!of!the!
time!during!the!year.![2]!Having!established!his!registerable!title!(Torrens!
title! does! not! grant! acquisition),! applicant! may! avail! of! a! judicial!
When! a! debt! is! already! barred! by! prescription,! it! cannot! be! enforced! by!
the!creditor.!! confirmation! of! imperfect! title! which! may! be! availed! by:! those! who,! by!
themselves! or! through! their! predecessors+in+interest,! have! been! in! the!
o Statutory! limitation! merely! bars! the! remedy! but! does! not!
open,! continuous,! exclusive,! and! notorious! possession! and! occupation! of!
discharge!the!debt.!
agricultural! lands! of! the! public! domain,! under! bona! fide( claim! of!
Renunciation! ! a! waiver! of! ones! right! to! the! prescriptive! period.! It! is!
ownership,! for! at! least! 30! years! immediately! preceding! the! filing! of! the!
unilateral,!hence!does!not!require!the!approval!of!the!person!benefited!by!
application!for!confirmation!of!title.!
it.!
1. Express* renunciation! ! made! by! a! person! capacitated! to! alienate!
property.! Art.*1114**Right*to*Enforce*Prescription*
2. Implied* renunciation! ! deduced! from! acts! which! imply! the! Creditors!and!all!other!persons!interested!in!making!the!prescription!effective!may!
abandonment!of!right!acquired.! avail! themselves! thereof! notwithstanding! the! express! or! tacit! renunciation! by! the!
Development( Bank( of( the( Philippines( v.( Adil! ! where! the! debtor! issued! a! debtor!or!proprietor.!(1937)!
new! promissory! note! recognizing! his! indebtedness,! promises! to! pay! and!
agrees! to! the! foreclosure! of! a! mortgage! should! he! fail! to! do! so,! such! Persons* interested! ! may! be! the! creditor,! guarantor,! sureties! or! other!
debtor! effectively! and! expressly! renounced! his! right! to! prescription! third!persons!
covering!the!first!promissory!note.! May!ask!the!enforcement!of!prescription!even!though!it!has!been!waived!
by!the!debtor!
Art.*1113**Subjects*of*Prescription*
!
All! things! which! are! within! the! commerce! of! men! are! susceptible! of! prescription,!
unless! otherwise! provided.! Property! of! the! State! or! any! of! its! subdivisions! not! !
patrimonial!in!character!shall!not!be!the!object!or!prescription.!(1936a)!
! *
Includes!all!things!within!the!commerce!(with!commercial!value)!of!man!!
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Art.*1115**Special*Laws* Chapter* 2:* Prescription* of* Ownership* and* Other* Real*

The!provisions!of!the!present!Title!are!understood!to!be!without!prejudice!to!what! Rights*
in! this! Code! or! in! special! laws! is! established! with! respect! to! specific! cases! of!
prescription.!(1938)!
Art.*1117**Acquisitive*Prescription*
In!case!of!conflict!between!the!period!provided!in!this!Title!and!in!another! Acquisitive! prescription! of! dominion! and! other! real! rights! may! be! ordinary! and!
portion! of! the! Civil! Code! or! special! laws:! the! more! specific! provision! will! extraordinary.!
prevail.!
Ordinary! acquisitive! prescription! requires! possession! of! things! in! good! faith! and!
If!different!statutes!are!providing!for!different!prescriptive!periods,!and!the!
with!just!title!for!the!time!fixed!by!law.!(1940a)!
cause!of!action!contemplated!by!them!are!apparently!conflicting,!they!do!
not!exclude!each!other!from!being!availed!of!by!the!aggrieved!party.!!
Kinds!of!Acquisitive!Prescription:!
Ex.!!!!Callanta(v.(Carnation(Philippines(Inc.!!although!Labor!Code!
1. Ordinary! ! requires! uninterrupted! possession! during! the! required!
provides! that! money! claims! prescribe! in! 3! years,! the! aggrieved!
statutory!period,!good!faith!(Art.!1128)!and!just!title!(Art.!1129)!
party!in!illegal!dismissal!case!may!avail!of!the!4+year!prescriptive!
Ex.! ! Godinez( v.( CA! ! property! was! acquired! after! adverse,!
period!for!injury!to!rights!under!Article!1146!of!the!Civil!Code.!
continuous!and!notorious!possession!for!more!than!50!years!with!
corrected!decree!of!registration!and!good!faith!on!the!part!of!the!
Art.*1116**Transition* buyers.!
Prescription!already!running!before!the!effectivity!of!this!Code!shall!be!governed!by! 2. Extraordinary! ! requires! uninterrupted! possession! for! the! required!
laws!previously!in!force;!but!if!since!the!time!this!Code!took!effect!the!entire!period! statutory!period!without!need!of!good!faith!and!just!title!
herein!required!for!prescription!should!elapse,!the!present!Code!shall!be!applicable,!
even!though!by!the!former!laws,!a!longer!period!might!be!required.!(1939)!
Art.*1118**Possession*
Possession! has! to! be! in! the! concept! of! an! owner,! public,! peaceful! and!
1. Prescriptive!period!under!the!old!law!has!lapsed!before!the!effectivity!of!
uninterrupted.!(1941)!
the!1950!Civil!Code!!old!law!shall!apply!!
2. Prescriptive!period!under!the!old!law!is!still!running!upon!the!effectivity!of!
Characteristics!of!Possession:!(O.P.P.U.)!
the!new!Code:!
a. New!code!provides!for!a!different!period!for!the!same!situation! 1. In*the*concept*of*an*Owner**
New!code!shall!apply!if!the!prescriptive!period!it!provides!has! possessor! asserts! dominion! over! the! property! to! the! exclusion! of! all!
already!lapsed!even!though!under!the!old!law,!the!period!has!not! others.!
yet!lapsed.!! must!be!adverse/concepto(de(dueno((as!to!claim!title)!!
b. The!remaining!balance!of!the!prescription!period!in!the!old!law! Ramirez( v.( CA! ! antichretic! creditor! (debtor! hands! over! his! property,!
since!the!effectivity!of!the!new!code!is!shorter!than!that!provided! allowing! the! use! thereof,! for! the! interest! on! the! money! lent)! cannot!
in!the!latter!!old!law!will!apply! acquire! the! land! by! prescription! because! such! property! was! not! given! to!
The!law!which!provides!the!shorter!prescription!period!shall!apply.! him!as!the!new!owner.!
! Republic(v.(CA!!prescription!does!not!apply!where!possession!of!property!
was!for!recreational!purposes!only.!
Ramos( v.( CA! ! paying! taxes! does! not! evidence! title! but! it! is! a! strong!
evidence!of!possession.!
!
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2. Public** Consequences!of!Natural!Interruption:!
must!be!a!notorious!holding!of!the!property!known!to!the!community.! Old!possession!is!not!revived!and!lapse!of!time!shall!begin!to!run!from!the!
must!not!be!of!a!surreptitious!character.!! beginning!should!possession!be!claimed!by!the!same!adverse!claimant.!
3. *Peaceful** If! the! natural! interruption! is! for! only! one! year! or! less,! the! time! elapsed!
there!must!be!no!valid!interference!from!others!claiming!or!asserting!their! shall!be!counted!in!favor!of!the!prescription.!
rights!to!the!property.!!
4. Uninterrupted** Art.*1123**Civil*Interruption*
possession!during!the!required!period!must!be!continuous.! Civil!interruption!is!produced!by!the!judicial!summons!to!the!possessor.!(1945a)!
Art.*1119**Possession*through*License*or*Tolerance* Art.*1124**Judicial*Summons*
Acts!of!possessory!character!executed!in!virtue!of!license!or!by!mere!tolerance!of! Judicial!summons!shall!be!deemed!not!to!have!been!issued!and!shall!not!give!rise!to!
the!owner!shall!not!be!available!for!the!purposes!of!possession.!(1942)! interruption:!
(1) If!it!should!be!void!for!lack!of!legal!solemnities;!
(2) It!the!plaintiff!should!desist!from!the!complaint!or!should!allow!the!!
Possession! by! license! or! tolerance! produces! no! effect! with! respect! to!
proceedings!to!lapse;!
possession! or! prescription! because! such! possession! acknowledges! that!
(3) If!the!possessor!should!be!absolved!from!the!complaint.!
somebody!else!owns!the!property.!
Coronado( v.( CA! ! being! allowed! to! enter! and! reap! produce! on! said! In!all!these!cases,!the!period!of!the!interruption!shall!be!counted!for!prescription.!
property!is!not!sufficient!possession!in!the!concept!of!an!owner.! (1946a)!
Art.*1120**Interruption* No!civil!interruption!in!the!following!cases:!(S.A.D.)!
Possession!is!interrupted!for!the!purposes!of!prescription,!naturally!or!civilly.!(1943)! 1. Lack*of*legal*solemnities**
May!consist!error!or!irregularity!in!the!form!or!process!required!to!
Uninterrupted!possession!strengthens!the!adverse!right!of!the!possessor.!! acquire!such!summon.!!
2!Kinds!of!Interruption:! Ex.! Judicial! summons! have! been! served! by! a! person! not!
1. Natural*!through!any!cause!it!should!cease!for!more!than!1!year.!! authorized!by!the!court.!!
2. Civil*!produced!by!judicial!summons!to!the!possessor.!! 2. Desistance*from*plaintiff*
Desistance!voluntarily!having!the!case!dismissed.!!
Art.*1121**Natural*Interruption* Allowing! the! proceeding! to! lapsemanifests! the! lack! of! interest!
Possession! is! naturally! interrupted! when! through! any! cause! it! should! cease! for! to!prosecute!the!case.!!
more!than!one!year.! 3. Possessor*is*absolved**
Absolutionthe! complaint! has! not! been! fully! substantiated! to!
The! old! possession! is! not! revived! if! a! new! possession! should! be! exercised! by! the! support!any!adverse!claim!by!the!complainant.!!
same!adverse!claimant.!(1944a)! The!possessor!is!always!presumed!to!be!in!good!faith.!!
Art.*1122**One*Year*or*Less* Art.*1125**Possessors*Recognition*of*Owners*Right*
If! the! natural! interruption! is! for! only! one! year! or! less,! the! time! elapsed! shall! be! Any!express!or!tacit!recognition!which!the!possessor!may!make!of!the!owners!right!
counted!in!favor!of!the!prescription.!(n)! also!interrupts!possession.!(1948)!
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6!
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Corpus( v.( Padilla! ! one! cannot! recognize! the! right! of! another! and! at! the! Art.*1127**Good*Faith*
same! time! claim! adverse! possession! which! can! ripen! to! ownership,! thru! The! good! faith! of! the! possessor! consists! in! the! reasonable! belief! that! the! person!
acquisitive!prescription.! from! whom! he! received! the! thing! was! the! owner! thereof,! and! could! transmit! his!
Dinoso(v.(CA!+!where!the!seller!and!buyer!executed!a!contract!of!sale!giving! ownership!(1950a)!
the! seller! the! right! to! repurchase! property! after! 10! years,! the! sale! is!
subject!to!the!owners!right!of!redemption.!The!purchasers!possession!has! Art.*1128**Other*Conditions*of*Good*Faith*
been!held!in!subordination!to!the!title!of!the!owner!prior!to!the!expiration! The! conditions! of! good! faith! required! for! possession! in! Articles! 526,! 527,! 528! and!
of!the!redemption!period.!! 529!of!this!Code!are!likewise!necessary!for!the!determination!of!good!faith!in!the!
prescription!of!ownership!and!other!real!rights.!(1951)!
Art.*1126**Titles*
Against! a! title! recorded! in! the! Registry! of! Property,! ordinary! prescription! of! Conditions!of!Good!Faith:!
ownership! or! real! rights! shall! not! take! place! to! the! prejudice! of! a! third! person,! o Art.* 526! ! not! aware! that! there! exists! any! flaw! which! invalidates! his!
except!in!virtue!of!another!title!also!recorded;!and!the!time!shall!begin!to!run!from! title!or!mode!of!acquisition!!
the!recording!of!the!latter.! o Art.*527!!good!faith!is!always!presumed!!
o Art.* 528! ! possession! acquired! in! good! faith! does! not! lose! this!
As!to!lands!registered!under!the!Land!Registration!Act,!the!provisions!of!that!special! character!!
law!shall!govern.!(1949a)! o Art.* 529! ! it! is! presumed! that! possession! continues! to! be! enjoyed! in!
the!same!character!in!which!it!was!acquired!!
General! rule! ! Torrens! title! recorded! in! the! Registry! of! Property! is! never! Negrete( v.( CFI( of( Marinduque! ! good! faith! is! not! complied! with! when! a!
subject!of!prescription!to!the!prejudice!of!a!third!person.!! person! claims! a! property! through! ordinary! acquisitive! prescription! based!
o However,!it!can!be!challenged!by!a!claim!of!laches! on!a!deed!of!sale!which!he!knew!involved!a!different!property.!
o Or! when! another! title! is! also! recorded.! Prescription! will! begin! to! Reyes( v.( CA! ! knowingly! using! a! forged! document! to! base! ones! just! title!
run!from!the!recording!of!such!title! for!the!purposes!of!acquisitive!prescription!is!an!act!of!bad!faith.!
Dimayuga(v.(CA!!no!title!to!registered!land!in!derogation!of!the!registered! Magtira(v.(CA!!good!faith!cannot!be!invoked!if!the!claimant!has!actual!or!
owner!shall!be!acquired!by!prescription!or!adverse!possession.! constructive! notice! of! the! legal! and! valid! rights! of! possession! of! another!
Reyes( v.( CA! ! where! petitioners! forged! a! document! and! claimed! during!the!prescriptive!period.!
acquisition,!their!title!cannot!defeat!the!real!rights!of!private!respondents!
who!stepped!into!the!shoes!of!their!father!as!successors+in+interest.! Art.*1129**Just*Title*
Catholic(Bishop(of(Balanga(v.(CA!!although!prescription!will!not!apply!to! For!the!purposes!of!prescription,!there!is!just!title!when!the!adverse!claimant!came!
registered! property,! the! doctrine! of! laches! is! applicable.! A! registered! into!possession!of!the!property!through!one!of!the!modes!recognized!by!law!for!the!
landowner! may! lose! his! right! to! recover! possession! of! his! registered! acquisition!of!ownership!or!other!real!rights,!but!the!grantor!was!not!the!owner!or!
property!by!reason!of!laches.! could!not!transmit!any!right.!(n)!
! Art.*1130**True*and*Valid*Title*
The!title!for!prescription!must!be!true!and!valid.!(1953)!
!
Art.*1131**Just*Title*must*be*Proved*
!
For! the! purposes! of! prescription,! just! title! must! be! proved;! it! is! never! presumed.!
! (1954a)!
7!
!
Just* title! ! constitutes! such! title! when! the! possession! of! a! property! is! Dira( v.( Tanega! ! after! 8! years,! the! active! partner,! who! took! over! of! the!
obtained!through!one!of!the!modes!recognized!by!law!for!acquisition!(Art.! shares!of!the!delinquent!partner!in!a!printing!business,!acquired!the!shares!
712)! but! the! grantor! was! not! the! owner,! or! has! no! power! to! transmit! of!stock!of!the!latter!(personal!property)!through!acquisitive!prescription.!
rights.! The! just! title! is! intended! to! transfer! ownership! and! could! have! !
actually!transmitted!such!had!the!grantor!been!the!true!owner.!Possession! Recovery!of!Property:!
from! a! just! title! can! ripen! into! ownership! if! the! other! elements! of! Art.* 559the! possession! of! movable! property! acquired! in! good! faith! is!
prescription!are!present.! equivalent!to!a!title.!If!the!possessor!lost!or!of!which!the!owner!has!been!
Doliendo( v.( Biarnesa! ! where! a! person! bought! a! property! from! a! public! unlawfully! deprived,! has! acquired! it! in! good! faith! at! a! public! sale,! the!
auction!and!took!possession!for!more!than!10!years!but!there!was!a!first! owner!cannot!obtain!its!return!without!reimbursing!the!price!paid.!
purchaser,! such! document! from! the! public! sale! constituted! a! just! title,! Art.* 1505! ! when! goods! are! sold! by! a! person! who! is! not! the! owner,! the!
hence!the!person!acquired!the!property!through!prescription.! buyer! gets! no! better! title! to! the! goods! than! the! seller! had,! unless! the!
Solis(v.(CA!!a!donacion!propter!nuptias!is!sufficient!to!constitute!just!title.! owner!of!the!goods!is!precluded!from!denying!the!sellers!authority!to!sell.!
Even!a!void!donation!may!ripen!into!title!by!prescription.!A!better!title!may! However,!nothing!in!the!title!shall!affect:!(
be!barred!by!that!adverse!possession.! 1. laws!which!enable!the!apparent!owner!to!dispose!of!goods!as!his!
o Titulo*Colorado((such!title!where,!although!there!was!a!mode! own!!
of! transferring! ownership,! still! something! is! wrong! because! the! 2. the!validity!of!any!contract!of!sale!under!the!order!of!the!court!
grantor!is!not!the!owner.!This!is!enough!to!constitute!just!title.! 3. purchases!made!from!the!merchant!in!accordance!with!the!Code!
of!Commerce!and!special!laws!
Art.*1132**Acquisition*of*Movables*or*Personal*Property*
The! ownership! of! movables! prescribes! through! uninterrupted! possession! for! four! Art.*1133**Movables*from*Crime*
years!in!good!faith.! Movables!possessed!through!a!crime!can!never!be!acquired!through!prescription!by!
the!offender.!(1956a)!
The! ownership! of! personal! property! also! prescribes! through! uninterrupted!
possession!for!eight!years,!without!need!of!any!other!condition.! The!benefits!of!prescription!are!denied!to!the!offender.!!
With!regard!to!the!right!of!the!owner!to!recover!personal!property!lost!or!of!which! Ex.! A! thief! cannot! acquire! title! for! a! stolen! car! even! if! the! owner! did! not!
he! has! been! illegally! deprived,! as! well! as! with! respect! to! movables! acquired! in! a! make!a!demand!and!the!prescriptive!period!has!already!lapsed.!
public!sale,!fair,!or!market,!or!from!a!merchants!store!the!provisions!of!Articles!559! Tan( v.( CA! ! however,! if! the! thing! was! in! the! meanwhile! passed! to! a!
and!1505!of!this!Code!shall!be!observed.!(1955a)! subsequent!holder,!prescription!begins!to!run!4!or!8!years!(depending!on!
the!existence!of!good!faith).!
SUMMARY:*ACQUISITION*THROUGH*PRESCRIPTION*
Movables*(witho* Immovables* Immovables* Art.*1134**Acquisition*of*Immovables**
Requisites* Movables*
other*conditions)* (Ordinary)* (Extraordinary)* Ownership! and! other! rights! over! immovable! property! are! acquired! by! ordinary!
Years! 4! 8! 10! 30!
prescription!through!possession!of!ten!years.!(1957a)!
Uninterrupted!
! ! ! !
Possession!
Good!Faith! ! ! ! ! Ordinary*acquisitive*prescription*of*immovables!!must!be!by!virtue!of!a!
Just!Title! ! ! ! ! just! title,! good! faith! and! possession! (in! the! concept! of! an! owner,!
! Art.!1132! Art.!1132! Art.!1134! Art.!1137!
uninterrupted,!adverse!and!public).!
! !
8!
!
Art.*1135**Mistake*in*Area* (2) It!is!presumed!that!the!present!possessor!who!was!also!the!possessor!at!a!

In!case!the!adverse!claimant!possesses!by!mistake!an!area!greater;!or!less,!than!that! previous! time,! has! continued! ! to! be! in! possession! during! the! intervening!
expressed!in!his!title,!prescription!shall!be!based!on!the!possession.!(n)! time,!unless!there!is!proof!to!the!contrary;!
(3) The!first!day!shall!be!excluded!and!the!last!day!included.!(1960a)!
The!extent!of!property!subject!to!the!prescription!shall!be!the!one!actually! !
possessed! or! held! by! the! claimant! regardless! of! the! size! indicated! or! 1. The!present!possessor!may!complete!the!period!necessary!for!prescription!
described!in!the!title.!! by!tacking!his!possession!to!that!of!his!grantor!or!predecessor!in!interest!!
Grantor! and! predecessor* in* interest! ! connote! a! transfer! in! a!
manner!provided!by!law!of!property!from!one!person!to!another.!!
Art.*1136**Wartime*
Tacking!!possession!is!allowed!only!when!there!is!a!privity!of!contract!
Possession!in!wartime,!when!the!civil!courts!are!not!open,!shall!not!be!counted!in!
or! relationship! between! the! previous! and! present! possessors.! South(
favor!of!the!adverse!claimant.!(n)!
City(Homes,(Inc.(v.(Republic(
o Tacking! is! not! allowed! if! the! predecessor! in! interest! has! not!
The! possession! of! the! adverse! claimant! during! that! time! shall! not! be! satisfied! the! requirements! of! prescription.! Otherwise,! there!
counted!where!it!must!be!observed!that!the!civil!courts!must!be!closed.! can!be!no!continuity!in!the!nature!of!the!possession.!
If!it!is!functioning,!even!during!wartime,!the!possession!may!be!counted!in! 2. It!is!presumed!that!the!present!possessor!who!was!also!the!possessor!at!a!
his!favor.! previous! time,! has! continued! to! be! in! possession! during! the! intervening!
time,!unless!there!is!proof!to!the!contrary.!
Art.*1137**Extraordinary*Prescription*of*Immovables* The!presumption!proceeds!from!a!set!of!facts.!!
Ownership! and! other! real! rights! over! immovables! also! prescribe! through! For!the!presumption!to!exist,!there!must!be!a!prior!showing!of!the!fact!
uninterrupted!adverse!possession!thereof!for!thirty!years,!without!need!of!title!or! that!the!person!presently!possessing!the!property!was!also!the!one!in!
of!good!faith.! possession!of!the!same!before!the!intervening!time.!
3. The!first!day!shall!be!excluded!and!the!last!day!included.!
Parcotilo(v.(Parcotilo!!where!a!persons!adverse!possession!of!a!property! !
for!38!years!ripened!into!a!title!by!extraordinary!prescription!although!all! ***Other!notes:!
the!requisites!of!a!valid!will!were!not!executed.! What(is(the(rule(to(follow(when(the(character(of(the(possession(of(the(predecessor(is(
Heirs( of( Celso( Amarante( v.( CA! ! acquisitive! prescription! has! set! in! when! different(from(that(of(the(present(possessor?(
alienable!public!land!was!under!the!adverse!possession!of!a!person!prior!to! The!law!does!not!provide!any!solution!to!such!kind!of!contingency.!Thus,!
the! war! although! the! titles! have! not! been! perfected.! The! possessor! may! sound!judgment!must!be!resorted!to.!
apply!for!the!confirmation!of!his!claims!to!the!proper!courts.! !
A.!If!the!predecessor!was!in!good!faith!but!the!successor!is!in!bad!faith:!!
Art.*1138**Computation*of*Prescription* There! are! different! views.! Some! writers! say! there! must! be! no! tacking.!
In! the! computation! of! time! necessary! for! prescription! the! following! rules! shall! be! Others!say,!the!good!faith!of!the!predecessor!should!not!be!set!at!naught.!
observed:! The!second!is!the!better!view.!The!computation!of!the!periods!to!be!tacked!
(1) The!present!possessor!may!complete!the!period!necessary!for!prescription! should! be! proportionate,! that! is,! in! the! proportion! of! what! the! period! of!
by! tacking! his! possession! to! that! of! his! guarantor! or! predecessor! in! possession!in!good!faith!bears!to!the!period!of!extraordinary!prescription.!
interest;! So! it! is! in! the! proportion! of! 2:1! as! regards! movables! and! 3:1! for!
immovables.!
!
9!
!
B.!If!the!possession!of!the!predecessor!was!in!bad!faith!and!the!possession!of!the! SUMMARY:*PRESCRIPTION*OF*ACTIONS*
successor!is!in!good!faith,!should!there!be!tacking!of!possession:!! Art.!1140! Movables! 8!years!!
Possession!of!the!predecessor!in!bad!faith!cannot!be!counted!and!added!to! Art.!1141! Immovables! 30!years!
that! of! the! present! possessor.! Here,! the! possession! of! the! predecessor! Art.!1142! Mortgages! 10!years!
cannot!be!considered!in!ordinary!prescription!because!such!requires!good! Art.!1143! Right!of!way,!public!or!private!nuisance! None!
faith!all!throughout!the!period!fixed!by!law.! Written! contracts,! obligations! created! by!
Art.!1144! 10!years!
! law,!judgment!
However,!for!purposes!of!extraordinary!prescription,!the!possession!in!bad!faith!of! Art.!1145! Oral!contract,!quasi+contract! 6!years!
the!predecessor!can!be!tacked!to!the!possession!in!bad!faith!of!the!successor!where! Art.!1146! Injury!to!the!rights,!quasi+delict! 4!years!
there!are!no!prohibitions!provided.! Art.!1147! Forcible!entry!and!detainer,!defamation! 1!year!
! Art.!1149! All!other!actions!with!no!fixed!periods! 5!years!
o Art.!1140+1142,!1144+1147!are!without!prejudice!to!those!specified!in!
Chapter*3:*Prescription*of*Actions* other!parts!of!this!Code,!in!the!Code!of!Commerce,!and!in!special!laws.!
(Art.!1148)!
Art.*1139**Lapse*of*Time* !
Actions!prescribe!by!the!mere!lapse!of!time!fixed!by!law.!(1961)! WHEN*PRESCRIPTION*SHALL*BEGIN*TO*RUN*
All! kinds! of! actions! when! no! From! the! day! they! may! be!
Art.!1150!
Prescription!of!actions!=!limitation!of!actions!! provision!provides!otherwise! brought!
o Actions! to! enforce! or! preserve! a! right! or! claim! must! be! brought! Art.!1151! Enforcement!of!obligation!to!pay! From!the!time!of!last!payment!
within!a!certain!period!of!time.! From!the!time!judgment!became!
Art.!1152! Enforcement!of!judgment!
final!
When!the!government!is!the!real!party!in!interest!and!is!proceeding!mainly!
From! the! time! the! person!
to! assert! its! own! rights! and! recover! its! own! property,! there! can! be! no! Demand!accounting!
responsible!ceases!to!perform!
defense!on!the!ground!of!laches!or!limitation.! Art.!1153! From! the! day! result! was!
o Prescription!of!action!does!not!run!against!the!government.! Bring! action! from! the! result! of!
recognized! by! agreement! of!
! accounting!
interested!parties!
Elements!of!a!cause!of!action:!(R.O.A)! !!
1. A!right!in!favor!of!the!plaintiff!by!whatever!means!and!under!whatever!law! Art.*1140**Prescription*of*Movables**
it!arises!or!is!created!must!be!present!! Actions! to! recover! movables! shall! prescribe! eight! years! from! the! time! the!
2. An!obligation!on!the!part!of!the!defendant!to!respect!such!right!! possession! thereof! is! lost,! unless! the! possessor! has! acquired! the! ownership! by!
3. An!act!or!omission!on!the!part!of!such!defendant!violative!of!the!right!of! prescription! for! a! less! period,! according! to! Article! 1132,! and! without! prejudice! to!
the!plaintiff!!!! the!provisions!of!Articles!559,!1505,!and!1133.!(1962a)!
It! is! the! legal! possibility! of! bringing! the! action! that! determines! the!
starting! point! for! the! computation! of! the! period! of! prescription,! that! This! refers! to! the! period! of! extraordinary! prescription! of! 8! years! for!
is,!only!upon!the!happening!of!the!third!requisite!when!it!can!be!said! movables!to!bring!an!action!to!recover.!!
that! a! cause! of! action! has! arisen.! Espanol( v.( Philippine( Veterans( o However,! action! shall! not! prosper! if! it! is! brought! when! the!
Administration(Art.(1144)( possessor! has! already! acquired! title! by! ordinary! acquisitive!
! prescription!within!4!years.!
!
!
!
10!
!
o Without* prejudice! ! if! a! possessor! has! acquired! ownership! no! Art.*1142**Prescription*of*Mortgages*
action! to! recover! may! be! filed! even! though! there! may! still! be! A!mortgage!action!prescribes!after!ten!years.!(1964a)!
several!years!remaining!in!the!prescribed!8!years.!
If! possessor! acquired! the! movable! in! good! faith! at! a! public! sale,! owner!
Mortgage! ! an! accessory! contract! constituted! to! secure! a! debt! so! that! if!
cannot!obtain!its!return!without!reimbursing!the!price!paid!therefore.!(Art.!
the! debtor! fails! to! pay! the! principal! obligation,! the! creditor! can! foreclose!
559)!!
on!the!mortgage!by!selling!it!in!a!public!sale!and!use!the!proceeds!to!pay!
In! certain! cases,! owner! is! precluded! from! recovery! without! right! to! off!the!debt.!
reimbursement!although!the!action!has!not!yet!prescribed.!(Art.!1505)!
Development(Bank(of(the(Philippines(v.(Tomeldan!!a!suit!for!the!recovery!
Movables! possessed! through! a! crime! cannot! be! acquired! through! of! the! deficiency! after! foreclosure! of! a! mortgage! is! in! the! nature! of!
prescription!by!offender!(Art.!1133)!!
mortgage!action!which!prescribes!in!10!years.!
Tan(v.(CA!!where!petitioner!claims!that,!through!bad!faith!and!fraud,!he!
was! led! to! assign! his! shares! of! stocks,! it! was! held! that! the! action! had!
Art.*1143**Rights*Not*Extinguished*by*Prescription*
already! prescribed,! hence! the! corporate! entities! have! acquired! such!
The! following! rights,! among! others! specified! elsewhere! in! this! Code,! are! not!
personal!property!after!possession!of!more!than!8!years!(without!need!of!
extinguished!by!prescription:!
good!faith).!
(1) To!demand!a!right!of!way,!regulated!in!Article!649;!
Dira( v.( Tanega! ! in! a! printing! partnership,! it! was! held! that! the! active!
(2) To!bring!an!action!to!abate!a!public!or!private!nuisance.!(n)!
partner! has! acquired! the! shares! of! the! delinquent! partner! through!
extraordinary!prescription!of!8!years,!regardless!of!bad!faith.! !
To*demand*a*right*of*way*(Art.*649)!!the!owner!by!virtue!of!a!real!right!
Art.*1141**Prescription*of*Immovables* may!use!any!immovable!surrounded!by!other!immovables!owned!by!other!
Real!actions!over!immovables!prescribe!after!thirty!years.! persons! and! without! access! to! a! public! highway,! is! entitled! to! demand! a!
right! of! way! across! the! neighboring! estates,! after! payment! of! the! proper!
This! provision! is! without! prejudice! to! what! is! established! for! acquisition! of! indemnity.!!
ownership!and!other!real!rights!by!prescription.!(1963)! o However,! this! easement! is! not! compulsory! if! the! isolation! of! the!
immovable!is!due!to!the!proprietor's!own!acts.!
This! refers! to! extraordinary! acquisitive! prescription! of! immovables! of! 30! To* abate* a* public* or* private* nuisance! ! involves! a! person,! thing,! or!
years!in!adverse!possession.!The!right!to!sue!prescribes!after!acquisition!of! circumstance! causing! inconvenience! or! annoyance;! unlawful! interference!
the!title.! with!the!use!and!enjoyment!of!a!person's!land.!
o However,! if! within! the! 30+year! period,! all! the! requisites! of!
Other*rights*not*barred*by*prescription:**
ordinary! acquisitive! prescription! are! present,! the! possessor!
1. To!demand!partition!of!a!co+ownership!as!long!as!the!co+ownership!is!
acquires! ownership! after! 10! years! of! uninterrupted! possession,!
expressly!or!impliedly!recognized!!
just!title!and!good!faith.!!
2. To!enforce!an!express!trust!!
In!case!of!fraud:!
3. To!demand!easement!of!light!and!view!!
o If! action! is! based! on! fraud,! action! prescribes! in! 4! years! from! the!
discovery! of! fraud! and! such! discovery! is! deemed! to! have! taken! 4. To!declare!the!inexistence!of!a!contract!or!the!nullity!of!a!void!judgment!or!
place! upon! the! issuance! of! the! certificate! of! title! over! the! of!a!void!title!!
property.! 5. To!compel!a!trustee!to!reconvey!property!registered!in!his!name!for!the!
o If! based! on! implied! or! constructive! trust,! in! 10! years! from! the! benefit!of!the!cestui(que(trust(!
alleged!fraudulent!registration!or!date!of!issuance!of!certificate!of! 6. To!compel!reconveyance!of!land!registered!in!bad!faith!provided!it!has!not!
title!over!the!property.! yet!passed!to!an!innocent!purchaser!for!value!!
11!
!
7. To!quiet!title!brought!by!a!person!in!possession!of!the!property!! b. Such! positive! acts! of! repudiation! have! been! made! known! to! the!
8. To!recover!real!property!or!its!value!where!the!property!was!taken!by!the! cestui!que!trust.!
government!for!public!use!without!first!acquiring!title!thereto!! c. The!evidence!thereon!is!clear!and!conclusive.!
9. To!seek!issuance!of!a!writ!of!possession!! o Such!repudiation!shall!be!the!reckoning!point!of!the!cause!of!
10. To!probate!a!will!! action.!
11. To!recover!by!the!State!non+registrable!land!!
! Art.*1145**6*Years**
The!following!actions!must!be!commenced!within!six!years:!
Art.*1144**10*Years* (1) Upon!an!oral!contract;!
The!following!actions!must!be!brought!within!ten!years!from!the!time!the!right!of! (2) Upon!a!quasi+contract.!(n)!
action!accrues:! 1. Oral*contract*
(1) Upon!a!written!contract;! Action!upon!an!oral!contract!of!tenancy!to!compel!the!reinstatement!
(2) Upon!an!obligation!created!by!law;! of!a!tenant!comes!under!the!provision.!
(3) Upon!a!judgment.!(n)! 2. Quasi7contract*
! Certain! lawful,! voluntary! and! unilateral! acts! give! rise! to! the! juridical!
1. Written*contracts** relation! of! quasi+contracts! to! the! end! that! no! one! shall! be! unjustly!
agreement!must!be!in!writing.! enriched!or!benefited!at!the!expense!of!another.!
a! promissory! note,! a! check! or! a! ticket! issued! for! transportation! is! a! Solutio* indebiti! ! quasi! contract! provided! in! the! Civil! Code! which!
written!contract.! occurs! if! something! is! received! when! there! is! no! right! to! demand! it,!
2. Obligations*created*by*law* and!it!has!been!delivered!by!mistake,!the!obligation!to!return!arises.!
obligation! of! the! possessor! to! reconvey! to! the! true! owner! real! Municipality( of( Opon( v.( Caltex! ! right! to! recover! taxes! illegally!
property!arising!from!a!constructive!or!implied!trust.! collected!upon!a!quasi+contract.!
obligation!of!the!lessor!to!indemnify!the!lessee!in!good!faith!for!useful!
improvements!on!the!property!leased.! Art.*1146**4*Years*
obligation!of!the!husband!and!wife,!parents!and!children,!and!brothers! The!following!actions!must!be!instituted!within!four!years:!
and!sisters!to!support!each!other.! (1) Upon!an!injury!to!the!rights!of!the!plaintiff;!
3. Judgmentjudgment!that!is!final!and!executory** (2) Upon!a!quasi+delict.!(n)!
under!the!Rules!of!Court,!judgment!may!be!executed!on!motion!within! (
5!years!from!the!date!of!its!entry!or!from!the!date!it!becomes!final!and! 1. Injury*to*the*rights*of*the*plaintiff(
executory.!After!the!lapse!of!such!time,!it!may!be!enforced!by!ordinary! Purpose! of! an! action! or! suit! and! the! law! to! govern! it,! including! the!
action!within!10!years.! period!of!prescription,!are!to!be!determined!by!the!complaint!itself,!its!
Espanol(v.(Philippine(Veterans(Administration!!right!of!action!accrues! allegations!and!prayer!for!relief.!
when! there! exists! a! cause! of! action! which! in! this! case! is! the! Action! for! recovery! of! damages! for! taking! or! retaining! personal!
declaration! of! the! Court! that! the! companys! administrative! policy! is! property,!or!incident!to!trespass!upon!real!estate!prescribes!within!4!
invalid.! years.!
Huang(v.(CA!!an!implied!trust!is!normally!not!subject!to!prescription,! Virgilio( Callanta( v.( Carnation( Phil.( Inc.! ! petition! for! illegal! dismissal,!
unless!the!trustee!openly!and!adversely!repudiates!the!trust!by:!! reinstatement! and! backwages! was! illegally! dismissed! because!
a. performing!unequivocal!acts!amounting!to!an!ouster!of!the!cestui! although! the! Labor! Code! provides! 3! years! for! such! claims,! the! case!
que!trust!(French!for!the!beneficiary!of!a!trust).! involved!the!profession!of!the!plaintiff!which!is!a!property!right,!hence!
12!
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was! predicated! upon! injury! to! the! rights! of! the! plaintiff! which! The! provisions! of! Title! V! on! Prescription! have! suppletory! application! to!
prescribes!in!4!years.!(In!relation!to!Art.!1148)! specific! cases! of! prescription! found! elsewhere! in! the! Civil! Code! and! in!
2. Quasi7delict* special!laws.!!
When! there! is! no! pre+existing! relations! between! parties,! whoever! by! Virgilio(Callanta(v.(Carnation(Phil.(Inc.!!where!a!petition!upon!injury!to!the!
act!or!omission!causes!damage!to!another!with!fault!or!negligence,!is! rights! of! the! plaintiff! was! found! with! merit,! it! was! held! that! a! statute! of!
obliged!to!pay!damages.!(Art.2176)! limitation! (pertaining! to! prescription! for! claims! under! the! Labor! Code)!
Dicosa( v.( Sarabia! ! prescriptive! period! is! counted! from! the! day! the! extinguishes!the!remedy!only.!Although!the!remedy!to!enforce!a!right!may!
quasi+delict!occurred!or!was!committed.!! be! barred,! that! right! may! be! enforced! by! some! other! available! remedy!
Liability!of!manufacturers!for!any!death!or!injuries!caused!by!noxious! (pertaining!to!Art.!1146!regarding!injury!upon!the!rights!of!the!plaintiff).!
or!harmful!substances!used,!although!no!contractual!relations!exist.!
CocaSCola( Bottlers( Philippines( Inc.( v.( CA! ! where! soft! drinks! sold! Art.*1149**No*Fixed*Period*=*5*Years*
contained!fiber+like!matter!and!other!foreign!substances!which!caused! All!other!actions!whose!periods!are!not!fixed!in!this!Code!or!in!other!laws!must!be!
sickness!to!students.! brought!within!five!years!from!the!time!the!right!of!action!accrues.!(n)!
Kramer(Jr.(v.(CA!!collision!of!two!vessels!is!a!quasi+delict.!
Allied(Banking(Corp.(v.(CA!+!action!against!the!Central!Bank!for!tortious! The! right! of! action! or! cause! of! action! accrues! from! the! moment! of!
inference,!in!closing!and!liquidating!a!bank.!! commission!or!omission!of!an!act!by!a!party!in!violation!of!his!duty!to,!or!of!
the!right,!of!another.!!
Art.*1147**1*Year* Essential!elements!are:!(R.O.A.)!
The!following!must!be!filed!within!one!year:! 1. Right!in!favor!of!a!person!(obligee)!!
(1) For!forcible!entry!and!detainer;! 2. A!correlative!obligation!on!the!part!of!another!(obligor)!!
(2) For!defamation.!(n)! 3. An!act!or!omission!in!violation!of!said!right!!
1. Forcible*entry*and*detainer* Espanol(v.(Philippine(Veterans(Administration(
A!summary!proceeding!to!recover!possession!of!land!that!is!instituted! Tolentino( v.( CA! ! action! to! prevent! the! former! spouse! from! using! the!
by! one! who! has! been! wrongfully! ousted! from,! or! deprived! of,! petitioners!husbands!surname!prescribes!in!5!years!counted!from!the!day!
possession.! such!action!might!be!brought.!
Vda.( De( Borromeo( v.( Pogoy! ! the! 1+year! prescriptive! period! is! Other!Ex.s:!
sufficient!time!for!complainant!to!file!a!case!and!this!period!is!counted! o Action!to!impugn!the!recognition!of!a!natural!child!(Art.!296)!
from!demand!to!vacate!the!premises.! o Action!to!impugn!the!legitimation!of!a!child!(Art.!275)!
2. Defamation* o Action! to! reduce! inofficious! donations! to! be! counted! from! the!
Any! intentional! false! communication,! either! written! or! spoken,! that! death!of!the!donor!(Vide!Art.!772,!Civil!Code).!
harms!a!person's!reputation.! !
Art.*1148**Code*of*Commerce*and*Special*Laws* Art.*1150**When*to*Count*Prescriptive*Periods*
The!limitations!of!action!mentioned!in!Articles!1140!to!1142,!and!1144!to!1147!are! The!time!for!prescription!for!all!kinds!of!actions,!when!there!is!no!special!provision!
without! prejudice! to! those! specified! in! other! parts! of! this! Code,! in! the! Code! of! which! ordains! otherwise,! shall! be! counted! from! the! day! they! may! be! brought.!
Commerce,!and!in!special!laws.!(n)! (1969)!
13!
!
Quasi7delict! ! prescriptive! period! for! actions! based! on! quasi+delict! shall! There! is! no! difference! between! actions! for! accounting! and! reliquidation!
begin!to!run!from!the!day!the!action!may!be!brought,!that!is,!from!the!day! since!both!involve!the!determination,!adjustment!and!settlement!of!what!
the!quasi+delict!was!committed.! is!due!to!the!parties!under!the!law!!
Criminal* action! ! unless! otherwise! provided,! the! statutory! limitation! for! Dira(v.(Tanega!!the!delinquent!partners!action!for!accounting,!filed!after!
period!for!filing!a!criminal!action!begins!to!run!on!the!commission!of!the! 14!years,!had!already!prescribed.!
offense.!
Separate*civil*action!+!where!offended!party!expressly!reserves!his!right!to! Art.*1154**Fortuitous*Event*
institute!a!separate!civil!action,!prescription!runs!from!the!date!reservation! The! period! during! which! the! obligee! was! prevented! by! a! fortuitous! event! from!
is!made!up!to!the!time!the!civil!action!is!actually!filed!in!court.! enforcing!his!right!is!not!reckoned!against!him.!(n)!
Art.*1151**Prescription*for*Actions*regarding*Payment** Provident( Savings( Bank( v.( CA! ! when! prescription! is! interrupted! by! a!
The!time!for!the!prescription!of!actions!which!have!for!their!object!the!enforcement! fortuitous! event,! all! the! benefits! acquired! so! far! from! the! possession! will!
of!obligations!to!pay!principal!with!interest!or!annuity!runs!from!the!last!payment! cease!and!when!prescription!starts!anew,!it!will!be!entirely!a!new!one.!!
of!the!annuity!or!of!the!interest.!(1970a)! Tan(v.(CA!!the!petitioners!arrest!and!detention!during!the!Marcos!regime!
was!not!considered!as!a!fortuitous!event!which!could!have!interrupted!the!
This! refers! to! obligations! where! payment! of! which! is! due! at! stipulated! prescription!for!his!right!of!action.!
intervals.!! !
o If!the!debt!is!not!yet!due,!payment!of!interest!or!annuity!will!not!
start!the!running!of!the!period.! Art.*1155**Interruption*of*Prescription*for*Actions*
The! prescription! of! actions! is! interrupted! when! they! are! filed! before! the! court,!
Art.*1152**Prescription*of*Actions*declared*by*Judgment* when! there! is! a! written! extrajudicial! demand! by! the! creditors,! and! when! there! is!
The! period! for! prescription! of! actions! to! demand! the! fulfilment! of! obligations! any!written!acknowledgment!of!the!debt!by!the!debtor.!(1973a)!
declared! by! a! judgment! commences! from! the! time! the! judgment! became! final.!
(1971)! Ledesma( v.( CA! ! this! means! that! the! period! of! prescription! begins! to! run!
anew,! and! whatever! time! of! limitation! might! have! already! elapsed! is!
Prescriptive! period! is! counted! not! from! the! time! the! judgment! was! thereby! negated! and! rendered! inefficacious.! ! The! effect! is! to! renew! the!
rendered!but!from!the!time!it!became!final.! obligation! and! to! make! prescription! run! again! from! the! date! of!
Philippine( National( Bank( v.( Bondoc! ! regarding! judgment! creditors,! the! interruption.!
purpose! of! the! revival! judgment! is! to! give! a! creditor! a! new! right! of! !
enforcement!from!the!date!of!revival!for!the!creditors!protection.! 1. *Filing*of*an*action*in*court*
Cabrera(v.(Tiano!!civil!actions!are!deemed!commenced!from!the!
Art.*1153**Prescription*for*Accounting* date!of!the!filing!and!docketing!of!the!complaint!with!the!Clerk!of!
The!period!for!prescription!of!actions!to!demand!accounting!runs!from!the!day!the! Court.!!
persons!who!should!render!the!same!cease!in!their!functions.! Interruption!lasts!during!the!pendency!of!the!action.!
Olympia( International( Inc.( v.( CA! ! if! the! plaintiff! desists! from!
The! period! for! the! action! arising! from! the! result! of! the! accounting! runs! from! the! prosecuting!the!action!to!its!final!conclusion,!the!action!is!deemed!
date! when! said! result! was! recognized! by! agreement! of! the! interested! abandoned!and!as!if!it!has!never!been!instituted.!!
parties.!(1972)! 2. Written*extrajudicial*demand*by*the*creditor**
14!
!
!Any!written!notice!given!by!the!creditor!to!the!debtor!to!enforce! Art.*1157*7*Sources*of*Obligations*
the!delivery!or!payment!of!an!obligation.! Obligations!arise!from:!
3. Written*acknowledgement*of*the*debt*by*the*debtor* (1)!Law;!
Written!offer!of!payment!works!as!a!renewal!of!the!obligation!! (2)!Contracts;!
Philippine( National( Bank( v.( Osete! ! not! all! acts! of! (3)!Quasi+contracts;!
acknowledgment! of! a! debt! interrupt! prescription.! To! produce! an! (4)!Acts!or!omissions!punished!by!law;!and!
effect,!it!must!be!written.! (5)!Quasi+delicts.!(1089a)!
Ramos( v.( Condez! ! although! actions! regarding! written! contracts!
prescribe! after! 10! years,! such! was! interrupted! when! the! Serves!as!the!juridical!tie!of!the!obligation.!
defendant! submitted! a! letter! acknowledging! the! validity! of! the! Enumeration!is!exclusive.!The!following!are!the!only!sources!of!obligations:!
deed!of!absolute!sale!and!promising!to!comply!with!the!terms.! 2)
(L.C.D.Q !
BOOK!IV:!OBLIGATIONS!AND!CONTRACTS! 1. Law*!imposed!by!the!law!itself.!
Ex.!Obligation!to!pay!taxes,!support!ones!family!(Art.!291)!
TITLE.*I.*7*OBLIGATIONS* 2. Contracts*!from!the!stipulation!of!the!parties!
Ex.! Obligation! to! repay! a! loan! or! indebtedness! by! virtue! of!
Chapter*1:*General*Provisions* an!agreement!
3. Quasi7contracts! ! from! lawful,! voluntary! and! unilateral! acts! which! are!
enforceable!to!the!end!that!no!one!shall!be!unjustly!enriched!or!benefited!
*Art.*1156**Definition**
at!the!expense!of!another.!
An!obligation!is!a!juridical!necessity!to!give,!to!do!or!not!to!do.!(n)!
Ex.! Obligation! to! return! money! paid! by! mistake! or! which! is!
not!due!
Juridical*necessity!!in!case!of!non+compliance,!the!courts!may!be!called! 4. Delicts*(Crimes)!!from!civil!liability!which!is!the!consequence!of!a!criminal!
upon!by!the!aggrieved!party!to!enforce!its!fulfilment! offense.!
Obligation! ! a! legal! bond! whereby! constraint! is! laid! upon! a! person! or! Ex.!! Obligation!to!return!a!car!stolen!
group!of!persons!to!act!or!forbear!on!behalf!of!another!person!or!group!of! Obligation!of!a!killer!to!indemnify!the!heirs!of!his!victim!
persons.! 5. Quasi7delicts!(Torts)!!from!damages!caused!to!another!through!an!act!or!
Requirements:!(J.O.S.)! omission,! there! being! fault! or! negligence,! but! no! contractual! relations!
1. Juridical*tie!!efficient!cause!established!by!sources!of!obligations.! between!the!parties.!
2. Object*or*Prestation!!conduct!required!to!be!observed!by!the!debtor.! Ex.! Obligation! of! the! possessor! of! an! animal! to! pay! for! the!
It!may!be!to!give,!to!do!or!not!to!do.! damage!which!it!may!have!caused!
3. Subject7persons! ! may! refer! to! both! natural! and! juridical! persons.! Obligations!are!civil!or!natural.!
May!be!either:! 1. Civil*obligation!!gives!a!right!of!action!to!compel!their!performance.!
a. Active! (obligee/creditor)! ! person! entitled! to! demand! 2. Natural* Obligations! ! not! based! on! positive! law! but! on! equity! and!
fulfilment;!he!who!has!the!right.! natural! law.! These! do! not! grant! a! right! of! action! to! enforce! their!
b. Passive! (obligor/debtor)! ! person! who! is! bound! to! the! performance,! but! after! voluntary! fulfilment! by! the! obligor,! they!
fulfilment!of!the!obligation;!he!who!has!the!duty.! authorize!retention!of!what!has!been!delivered!or!rendered!by!reason!
Ang(Yu(Asuncion(v.(CA( thereof.!(Art.!1423)!
! !
15!
!
Art.*1158**Obligations*from*Law* contract! which! states! the! insurers! liabilities,! whenever! the! intentions! of!
Obligations!derived!from!law!are!not!presumed.!Only!those!expressly!determined!in! the!parties!are!clear!and!the!essential!requirements!for!the!validity!of!such!
this!Code!or!in!special!laws!are!demandable,!and!shall!be!regulated!by!the!precepts! contract!exist.!
of! the! law! which! establishes! them;! and! as! to! what! has! not! been! foreseen,! by! the!
provisions!of!this!Book.!(1090)! Art.*1160**Obligations*from*Quasi*Contracts*
Obligations! derived! from! quasi+contracts! shall! be! subject! to! the! provisions! of!
Legal*Obligation!!the!law!is!the!most!important!source!of!obligation.! Chapter!1,!Title!XVII,!of!this!Book.!(n)!
o It!does!not!depend!upon!the!will!of!the!parties.!
o Imposed! by! the! State! and! is! generally! imbued! with! some! public! Quasi* Contract! +! certain! lawful,! voluntary! and! unilateral! acts! give! rise! to!
policy!considerations.! the! juridical! relation! of! quasi+contract! to! the! end! that! no! one! shall! be!
o The!basis!of!the!obligation!must!be!clear.! unjustly!enriched!or!benefited!at!the!expense!of!the!other.!(Art.!2142)!
o It!cannot!be!presumed.! 2*Kinds*of*Quasi+contracts:!
Existing!law!enters!into!and!forms!part!of!a!valid!contract!without!need!for! 1. Solutio* Indebiti! ! the! juridical! relation! which! is! created! when!
the!parties!expressly!making!reference!thereto.!! something!is!received!when!there!is!no!right!to!demand!it!and!it!was!
o The!provisions!of!a!contract!are!not!only!limited!to!what!we!see,! unduly!delivered!through!mistake.!
but!is!understood!to!include!what!is!prescribed!by!law.! Ex.! X!owes!Y!1,000.!X!paid!Y!2,000!by!mistake.!Y!is!obliged!to!return!
Special*laws!!refers!to!all!other!laws!not!contained!in!the!Civil!Code!like! the!excess!of!1,000.!
the! Corporation! Code,! Negotiable! Instruments! Law,! Insurance! Code,! 2. Negotiorum* gestio! ! the! voluntary! management! of! the! property! or!
National!Internal!Revenue!Code,!Revised!Penal!Code,!Labor!Code,!etc.! affairs!of!another!without!the!knowledge!or!consent!of!the!latter.!(Art.!
2144)!
Ex.! While!X!was!out!of!town,!a!fire!broke!out!near!his!house.!Through!
Art.*1159**Obligations*from*Contracts*
the!effort!of!Y,!Xs!house!was!spared!from!being!burned.!X!has!the!
Obligations! arising! from! contracts! have! the! force! of! law! between! the! contracting!
obligation! to! reimburse! Y! of! all! expenses! incurred! in! saving! the!
parties!and!should!be!complied!with!in!good!faith.!(1091a)!
house.!
Implied*contract!!a!contract!which!is!implied!in!fact!is!one!in!which!the!
Contract* * a! meeting! of! minds! between! two! persons! whereby! one! binds!
himself,! with! respect! to! the! other,! to! give! something! or! to! render! some! circumstances!imply!that!parties!have!reached!an!agreement!even!though!
service.!(Art.!1305)! they!have!not!done!so!expressly.!!
Binding!force*!a!contract!is!the!law!between!the!parties.! Ex.!! By!going!to!a!doctor,!a!patient!agrees!that!he!will!pay!a!fair!price!
o Upon! perfection! of! the! contract,! the! parties! are! bound! to! fulfill! for! the! service.! If! he! refuses! to! pay! after! being! examined,! he! has!
what!has!been!stipulated!including!consequences!should!there!be! breached!a!contract!implied!in!fact.!
a!breach!in!good!faith,!usage,!or!the!law.!
o Stipulations!should!not!be!contrary!to!law,!morals,!good!customs,!
Art.*1161**Obligations*from*Crimes*or*Delicts*
public!policy!or!public!order.!
Civil!obligations!arising!from!criminal!offenses!shall!be!governed!by!the!penal!laws,!
Compliance! in! good* faith! ! performance! in! accordance! with! the!
subject!to!the!provisions!of!Article!2177,!and!of!the!pertinent!provisions!of!Chapter!
stipulations!or!terms!of!the!contract!or!agreement.!
2,!Preliminary!Title,!on!Human!Relations,!and!of!Title!XVIII!of!this!Book,!regulating!
A! contract! may! involve! mutual! and! reciprocal! obligations! and! duties!
damages.!(1092a)!
between!and!among!the!parties.!!
Perla(Compania(de(Seguros(Inc.(v.(CA!!the!trial!court!cannot!disregard!and!
Civil*liability!+!attaches!to!an!individual!who!is!found!to!be!criminally!liable.!
substitute! their! own! interpretation! of! the! stipulations! in! an! insurance!
16!
!
The! extent! of! the! civil! liability! arising! from! crimes! is! governed! by! the! o Indeterminate* or* generic* object! ! any! object! which! belongs! to! the!
Revised! Penal! Code! which! includes:! restitution,! reparation! and! same!kind.!The!debtor!can!give!anything!of!the!same!class!as!long!as!it!
indemnification.! is!of!the!same!kind.!
Ex.!! X!stole!the!car!of!Y.!If!X!is!convicted,!the!court!will!order!X:!! Ex.! a!sum!of!1,000!
1)!to!return!the!car!or!pay!its!value! ! a!1995!Toyota!car!
2)!to!pay!for!any!damage!caused!to!the!car!! ! a!cavan!of!rice!
3)!to!pay!such!other!damages!suffered!by!Y!as!a!consequence!of! Diligence*of*a*good*father*of*a*family*(ordinary)!!if!there!is!no!stipulation!
the!crime!(like!moral!or!exemplary!damages)! as!to!the!diligence!which!should!be!observed,!that!which!is!expected!of!a!
good!father!of!a!family!is!required.!
Art.*1162**Obligations*from*Quasi7delicts* Another*standard*of*care!(extraordinary)!!if!the!law!or!stipulation!of!the!
Obligations! derived! from! quasi+delicts! shall! be! governed! by! the! provisions! of! parties!provides!for!another!standard!of!care,!said!law!or!stipulation!shall!
Chapter!2,!Title!XVII!of!this!Book,!and!by!special!laws.!(1093a)! prevail.!
o In!case!of!a!contrary!stipulation!of!the!parties,!such!should!not!be!
one!contemplating!relinquishment!or!waiver!of!the!most!ordinary!
Quasi7delict!or!Torts!!an!act!or!omission!which!causes!damage!to!another! diligence!!
person,! there! being! fault! or! negligence,! but! no! pre+existing! contractual! o Common* carrierspersons,! corporations,! firms! or! associations!
relation!between!the!parties.!(Art.!2176)* engaged!in!the!business!of!carrying!or!transporting!passengers!or!
Ex.!! Obligation! of! the! possessor! of! an! animal! to! pay! for! the! goods! or! both,! by! land,! water,! or! air,! for! compensation,! offering!
damage!which!it!may!have!caused! their! services! to! the! public.! They! are! bound! to! observe!
extraordinary!diligence.!
Chapter*2:*Nature*and*Effect*of*Obligations* Factors!to!be!considered!!the!diligence!required!depends!on!the!nature!of!
the!person,!time!and!place.!(Art.!1173)!
Art.*1163**Required*Diligence* Cases! of! presumed! negligence! ! substitute! parental! authority! of! schools,!
Every! person! obliged! to! give! something! is! also! obliged! to! take! care! of! it! with! the! common!carriers!
proper!diligence!of!a!good!father!of!a!family,!unless!the!law!or!the!stipulation!of!the!
parties!requires!another!standard!of!care.!(1094a)! Art.*1164**Right*Over*Fruits*
The! creditor! has! a! right! to! the! fruits! of! the! thing! from! the! time! the! obligation! to!
Involves!the!prestation!to!give! deliver!it!arises.!However,!he!shall!acquire!no!real!right!over!it!until!the!same!has!
Something!!connotes!a!determinate!object!! been!delivered!to!him.!(1095)!
o Determinate*object!!definite,!known!and!has!already!been!distinctly!
decided! and! particularly! specified! as! the! matter! to! be! given! from! Involves!the!prestation!to!give!
among!the!same!things!belonging!to!the!same!kind.!The!debtor!cannot! Kinds!of!Fruits:!(N.I.C.)!
substitute!it!with!another!although!the!latter!is!of!the!same!kind!and! 1. Natural* fruits! ! spontaneous! products! of! soil! and! the! young! or!
quality!without!the!consent!of!the!creditor.!(Art.!1244)!! other!products!of!animals!
Ex.! the!house!at!x!address! Ex.! grass,!trees,!puppies!
the!Toyota!car!with!plate!number!xxx! 2. Industrial*fruits!!produced!by!lads!of!any!kind!through!cultivation!
this!cavan!of!rice! or!labor!
the!money!I!gave!you! Ex.! sugar!cane,!vegetables,!rice!
3. Civil*fruits!!derived!by!virtue!of!a!juridical!relation!
Ex.! rent,!interest,!and!other!similar!income!
17!
!
Real* rightthe! right! or! power! of! a! person! over! a! specific! thing! (like! In! such! cases,! obligor! may! be! compelled! to! effect!
ownership,! possession,! mortgage),! without! a! definite! passive! subject! delivery!and!give!the!necessary!damages!(Art.!1170)!
against!whom!such!right!may!be!personally!enforced.! !
o Enforceable! against! the! whole! world! and! will! prejudice! anybody!
claiming!the!same!object!of!the!prestation!! Art.*1166**Accessions*and*Accessories*
o Accrues!when!the!thing!or!object!of!the!prestation!is!delivered!to! The! obligation! to! give! a! determinate! thing! includes! that! of! delivering! all! its!
the!creditor!! accessions! and! accessories,! even! though! they! may! not! have! been! mentioned.!
Personal* rightthe! right! or! power! of! a! person! (creditor)! to! demand! of! (1097a)!
another! (debtor),! as! a! definite! passive! subject,! the! fulfillment! of! a!
prestation!to!give,!to!do,!or!not!to!do.! Involves!the!prestation!to!give!
o Can! be! defeated! by! a! third! person! in! good! faith! who! has! Accessions!!fruits,!additions!to,!or!improvements!upon!a!thing!(principal),!
innocently! acquired! the! property! prior! to! the! scheduled! delivery! which!are!not!necessary!to!the!principal!thing.!
regardless! of! whether! or! not! such! third! person! acquired! the! Ex.! ! house! or! trees! on! a! land,! profits! or! dividends! accruing! from!
property!after!the!right!to!the!delivery!of!the!thing!has!accrued!in! shares!of!stocks!
favor!of!the!creditor!! Accessories! ! things! joined! to! or! included! with! the! principal! thing! for!
embellishment,!better!use!or!completion.!The!accessory!and!the!principal!
Art.*1165**Delivery*of*a*Determinate*or*Indeterminate*Thing* thing!must!go!together!
When!what!is!to!be!delivered!is!a!determinate!thing,!the!creditor,!in!addition!to!the! Ex.!!!frame!of!a!picture,!bracelet!of!a!watch,!charger!of!an!iPad!
right!granted!him!by!Article!1170,!may!compel!the!debtor!to!make!the!delivery.! Both!accessions!and!accessories!can!exist!only!in!relation!to!the!principal.!
If!the!thing!is!indeterminate!or!generic,!he!may!ask!that!the!obligation!be!complied!
Art.*1167**Obligation*To*Do*
with!at!the!expense!of!the!debtor.!
If!a!person!obliged!to!do!something!fails!to!do!it,!the!same!shall!be!executed!at!his!
If! the! obligor! delays,! or! has! promised! to! deliver! the! same! thing! to! two! or! more! cost.!
persons! who! do! not! have! the! same! interest,! he! shall! be! responsible! for! any!
This!same!rule!shall!be!observed!if!he!does!it!in!contravention!of!the!tenor!of!the!
fortuitous!event!until!he!has!effected!the!delivery.!(1096)!
obligation.! Furthermore,! it! may! be! decreed! that! what! has! been! poorly! done! be!
undone.!(1098)!
Involves!the!prestation!to!give!
Remedies!of!a!creditor!in!a!real!obligation:!
Involves!the!prestation!to!do!!
a. Non7delivery*of*a*determinate*thing!!to!file!an!action!to!compel!
Remedies!of!the!creditor:!
the! debtor! to! make! the! delivery,! also! known! as! specific!
a. Debtor* fails* to* perform* an* obligation* to* do* ! to! have! the!
performance!
obligation! performed! by! himself! or! by! another! at! the! debtors!
b. Non7delivery*of*an*indeterminate*or*generic*thing!!the!creditor!
expense!and!recover!damages!(Art.!1170)!
may!have!it!accomplished!or!delivered!in!any!reasonable!and!legal!
Unlike! obligations! to! give,! a! specific! performance! in!
way!charging!all!expenses!to!the!debtor!!
obligations!to!do!may!not!be!ordered!as!this!may!amount!
c. Non7delivery* due* to* fortuitous* event! (Art.! 1174)! ! general! rule:!
to!involuntary!servitude.!Feasible!remedy!is!damages.!
obligor!is!not!liable!for!fortuitous!event!
b. Debtor*performs*the*obligation*but*contrary*to*the*terms*or*in*a*
Except! when! the! obligor! delays! (Art.! 1169)! or! has!
poor* manner! ! in! addition! to! remedy! preciously! mentioned,! it!
promised! the! same! thing! to! 2! or! more! persons! with!
may! be! ordered! (by! the! court)! that! it! be! undone! if! it! is! still!
different!interests!
possible.!
18!
!
Chaves( v.( Gonzales! ! owner! of! the! typewriter! was! entitled! to! the! cost! of! Requisites:!
the! execution! of! the! obligation! plus! damages! when! the! repairer! of! the! 1. obligation!is!demandable!and!liquidated!
typewriter!returned!it!with!missing!parts!and!without!having!it!repaired.! 2. debtor!delays!performance!
3. creditor!demands!performance!!
Art.*1168**Obligation*Not*To*Do* SSS(v.(Moonwalk(Development(and(Housing(Corp.(
When! the! obligation! consists! in! not! doing,! and! the! obligor! does! what! has! been! General! rule! ! default! begins! from! the! moment! demand! is! made! by! the!
forbidden!him,!it!shall!also!be!undone!at!his!expense.!(1099a)! creditor! judicially! or! extrajudicially.! Commencement! of! a! suit! is! sufficient!
demand.!
Involves!the!prestation!not!to!do! o Except!in!3!cases:!(U.T.L.)!
Ex.!X!bought!a!land!from!Y!where!it!was!agreed!upon!that!Y!would!not! 1. When!the!obligation!or!the!law!so!provides!
construct! a! fence! on! certain! portions! of! the! land.! Should! Y! 2. When!time!is!of!the!essence!
construct!a!fence,!the!same!may!be!removed!at!Ys!expense.!! 3. When!demand!would!be!useless!
Reciprocal*Obligations!!the!obligation!of!one!is!a!resolutory!condition!of!
the!other,!the!non+fulfillment!of!which!entitles!the!other!party!to!rescind!
Art.*1169*7*Delay*
the!contract.!
Those!obliged!to!deliver!or!to!do!something!incur!in!delay!from!the!time!the!obligee!
o If!one!of!the!parties!fails!to!deliver,!the!other!cannot!insist!upon!
judicially!or!extrajudicially!demands!from!them!the!fulfillment!of!their!obligation.!
its!performance.!Legally,!there!is!no!default!or!delay!on!the!part!of!
However,! the! demand! by! the! creditor! shall! not! be! necessary! in! order! that! delay! both!parties.!!
may!exist:! o If!both!parties!incur!delay,!the!liability!of!the!first!infractor!shall!be!
(1)!When!the!obligation!or!the!law!expressly!so!declare;!or! equitably! tempered! by! the! courts.! If! it! cannot! be! determined,!
(2)! When! from! the! nature! and! the! circumstances! of! the!obligation!it!appears!that! each!shall!bear!his!own!damages.!(Art.!1192)!
the!designation!of!the!time!when!the!thing!is!to!be!delivered!or!the!service!is!to!be! 2*cases*where*Extrajudicial*Demand*is*necessary!before!filing!a!civil!suit:!
rendered!was!a!controlling!motive!for!the!establishment!of!the!contract;!or! 1. Ejectment!!
(3)!When!demand!would!be!useless,!as!when!the!obligor!has!rendered!it!beyond!his! 2. Consignment!
power!to!perform.! Extrajudicial* demand! ! necessary! so! that! the! courts! will! have! a! basis! on!
when!to!start!computing!damages!
In!reciprocal!obligations,!neither!party!incurs!in!delay!if!the!other!does!not!comply! Delay*in*the*payment*of*money!!Art.!2209!provides!that!unless!otherwise!
or! is! not! ready! to! comply! in! a! proper! manner! with! what! is! incumbent! upon! him.! stipulated,!legal!interest!for!delay!in!payment!is!6%!per!annum.!
From! the! moment! one! of! the! parties! fulfills! his! obligation,! delay! by! the! other! o However,! damages! shall! only! begin! to! run! after! judicial! or!
begins.!(1100a)! extrajudicial!demand.!!
Barzaga(v.(CA!!demand!was!not!necessary!where!a!contract!entered!into!
Delay!!understood!as!legal!delay!or!default;!failure!to!perform!or!deliver! for! the! construction! of! a! niche! for! the! wife! of! the! aggrieved! party! who!
on! time! which! constitutes! a! breach! of! an! obligation.! It! must! be! either! expressly!wished!that!she!be!buried!before!Christmas!day.!
malicious!or!negligent,!the!absence!of!which,!the!obligor!shall!not!be!liable! Binalbagan(Tech(Inc.(v.(CA!!through!no!fault!of!the!seller,!the!buyer!could!
under!Art.!1170.! not!take!possession!of!the!property!because!such!buyer!was!evicted!by!a!
o Kinds!of!Delay:! third! party! through! a! court! order.! Hence,! the! seller! cannot! rescind! the!
a. Mora*accipiendi!!delay!on!the!part!of!the!creditor!to!accept.! contract!for!the!buyers!non+payment!of!the!balance!of!a!property.!
the! debtor! may! release! himself! from! the! obligation! by! Agcaoili( v.( GSIS! ! respondent! had! no! right! to! rescind! the! contract! where!
consignation!(Art.!1256)! petitioner! failed! to! immediately! occupy! the! house! built! by! petitioner!
b. Mora*solvendi!!delay!on!the!part!of!the!debtor!to!deliver.! because!the!house!was!in!a!state!of!incompleteness.!Neither!party!incurs!
19!
!
in!delay!if!the!other!does!not!comply!or!is!not!ready!to!comply!in!a!proper! The! fraud! or! dolo! necessarily! involves! a! valid! agreement! but,! in! the!
manner!with!what!is!incumbent!upon!him.! performance!of!the!same,!fraud!is!committed.!!
Tanguilig( v.( CA! ! the! respondent! may! not! be! compelled! to! pay! for! the! A!waiver!of!an!action!for!future!fraud!produces!no!effect.!
balance!and!damages!where!the!petitioner!built!windmills!which!collapsed!
due!to!defects!in!the!construction.! Art.*1172**Responsibility*from*Negligence*
! Responsibility! arising! from! negligence! in! the! performance! of! every! kind! of!
Art.*1170**Sources*of*Liabilities* obligation! is! also! demandable,! but! such! liability! may! be! regulated! by! the! courts,!
Those!who!in!the!performance!of!their!obligations!are!guilty!of!fraud,!negligence,!or! according!to!the!circumstances.!(1103)!
delay,! and! those! who! in! any! manner! contravene! the! tenor! thereof,! are! liable! for!
damages.!(1101)! Liability!can!be!regulated!by!the!courts!depending!on!the!circumstances.!
Grounds!for!liability:! Art.*1173**Fault*or*Negligence*
1. Fraud! (deceit! or! dolo)! ! the! deliberate! or! intentional! evasion! of! the!
The! fault! or! negligence! of! the! obligor! consists! in! the! omission! of! that! diligence!
obligation;!it!implies!malice!or!dishonesty!and!is!synonymous!to!bad!faith!
which! is! required! by! the! nature! of! the! obligation! and! corresponds! with! the!
in! that,! it! involves! a! design! to! mislead! or! deceive! another.! (in! relation! to!
circumstances!of!the!persons,!of!the!time!and!of!the!place.!When!negligence!shows!
Art.!1171)!
bad!faith,!the!provisions!of!Articles!1171!and!2201,!paragraph!2,!shall!apply.!
2. Negligence!(fault!or!culpa)!!omission!of!that!diligence!which!is!required!by!
the!nature!of!the!obligation!and!corresponds!with!the!circumstances!of!the! If! the! law! or! contract! does! not! state! the! diligence! which! is! to! be! observed! in! the!
persons,!of!the!time!and!of!the!place.!!(Art.!1173)! performance,!that!which!is!expected!of!a!good!father!of!a!family!shall!be!required.!
o Standard!of!care!imposed!by!law!or!by!stipulation!of!the!parties.! (1104a)!
o In! the! absence! of! law! or! stipulation,! that! diligence! which! is!
expected!of!a!good!father!of!a!family!is!required.! Negligence! is! a! relative! or! comparative,! not! an! absolute! term! and! its!
3. Delay! (mora)! +! failure! to! perform! or! deliver! on! time! which! constitutes! a! application! depends! on! the! circumstances! of! the! persons,! of! time! and! of!
breach!of!an!obligation.!(Art.!1169)! the!place.!
o Barzaga( v.( CA! ! there! is! negligence! and! delay! where! a! contract! o Syquia(v.(CA!!the!memorial!company!was!not!negligent!when!it!
was! entered! into! for! the! construction! of! a! niche! for! the! wife! of! bore! a! hole! on! the! grave! of! the! deceased! to! prevent! the! vault!
the! aggrieved! party! who! expressly! wished! that! she! be! buried! from!falling!due!to!heavy!rains.!
before!Christmas!day,!and!the!constructors!failed!to!deliver.! o Philippine( National( Bank( v.( CA! ! the! bank! was! held! liable! for!
4. Contravention*of*the*terms*of*the*obligation!!violation!of!the!terms!and! negligently! dishonoring! the! petitioners! check! causing! serious!
conditions!stipulated!in!the!obligation.! anxiety,!humiliation!and!embarrassment!to!the!client.!!
General!rule!!negligence!must!always!be!proven!(burden!of!proof!on!the!
If! any! of! these! co+exists! with! a! fortuitous! event! or! aggravates! the! loss!
creditor).!
caused!by!a!fortuitous!event,!the!obligor!cannot!be!excused!from!liability.!
Negligence*shows*bad*faith!!can!be!implied!from!repeated!negligence;!
! hence!the!provision!on!fraud!(Art.!1171)!shall!apply.!!
o Art.! 2201,! 2nd! parthe! obligor! shall! be! responsible! for! all!
damages! which! may! be! reasonably! attributed! to! the! non+
Art.*1171**Responsibility*from*Fraud* performance!of!the!obligation!!
Responsibility!arising!from!fraud!is!demandable!in!all!obligations.!Any!waiver!of!an!
action!for!future!fraud!is!void.!(1102a)!
20!
!
o Samson(v.(CA!!bad!faith!is!a!state!of!mind!of!ill!will!and!it!does! e. given!the!opportunity!to!save!either!the!loaned!
not!simply!connote!bad!judgment!or!negligence.!It!is!synonymous! thing!or!a!personal!property,!he!chose!the!latter!
with!fraud!and!involves!a!design!to!mislead!or!deceive!another.! provisions!of!other!codes!
2. When!declared!by!the!stipulation!of!the!parties!
Art.*1174**Fortuitous*Events* 3. When!the!nature!of!the!obligation!so!requires!the!assumption*of*
Except!in!cases!expressly!specified!by!the!law,!or!when!it!is!otherwise!declared!by! risk*
stipulation,!or!when!the!nature!of!the!obligation!requires!the!assumption!of!risk,!no! Tanguilig( v.( CA! ! destruction! of! the! windmills! by! a! typhoon! was! not!
person!shall!be!responsible!for!those!events!which!could!not!be!foreseen,!or!which,! considered! a! fortuitous! event! because! of! the! windmills! inherent! defect!
th
though!foreseen,!were!inevitable.!(1105a)! attributable! to! the! petitioners.! 4 ! element! of! fortuitous! event! was! not!
present.!
Fortuitous*Event!!any!event!which!cannot!be!foreseen,!or!which!though! Dioquino( v.( Laureano! ! throwing! of! a! stone! directed! at! the! car! of! the!
foreseen,!is!inevitable;!force!majeur.! plaintiff!was!considered!a!fortuitous!event.!
o Act*of*man!!war,!fire,!robbery,!murder,!accident! Sia( v.( CA( ! fortuitous! event! was! not! considered! when! a! bank! failed! to!
o Act*of*God!!earthquake,!flood,!shipwreck!volcanic!eruption! notify! its! client! of! the! flooding! of! its! safety! box! which! resulted! to! the!

2
Requisites!of!a!fortuitous!event:!(U.F.I .)! destruction!of!the!clients!stamp!collection.!
1. Independent!of!the!will!of!the!debtor! Victoria( Planters( Association( Inc.( v.( Victorias( Milling( Co.! ! the! obligee!
2. Event!must!be!unforeseeable!or!unavoidable! cannot!demand!the!fulfillment!of!the!delivery!of!an!obligation!after!6!years!
3. Event!must!be!such!as!to!render!it!impossible!for!the!debtor!to!fulfill! due!to!a!fortuitous!event,!for!such!will!be!an!extension!of!the!contract.!A!
his!obligation!in!a!normal!manner! fortuitous!event!relieves!the!obligor!from!performance.!
4. The!debtor!must!be!free!from!any!participation!therein,!or!aggravation! o However,! should! the! obligee! choose! to! enforce! his! right! which!
of!the!injury!! was! prevented! by! a! fortuitous! event,! the! prescription! for! such!
Nakpil(v.(CA( action!will!start!anew.!(Art.!1154)!
General!rule!!an!obligor!cannot!be!liable!for!a!fortuitous!event!except:! AceSAgro( Development( Corp.( v.( CA! ! suspension! of! the! employees!
1. When!expressly!specified!by!law! contract! was! brought! by! a! fortuitous! event! (burning),! hence! does! not!
obligor! promises! the! same! thing! to! 2! or! more! persons! of! justify! the! extension! of! such! contract.! The! contract! was! subject! to! a!
different!interests!(Art.!1165)! resolutory!period!which!relieved!the!parties!from!their!obligations,!but!did!
fraud,!negligence,!delay!or!violation!by!a!person!concurs!with! not!stop!the!running!of!the!period!of!their!contract.!
an!act!of!God!in!producing!a!loss,!such!person!is!not!exempt! Republic( v.( Luzon( Stevedoring! ! extraordinary! diligence! is! required! of! a!
from!liability!(Art.!1170)! towed!barge.!!
object!of!prestation!is!generic!even!if!the!object!is!wiped!out!
by!a!fortuitous!event!(Art.!1263)! Art.*1175**Usurious*Transactions*
Ex.! delivery!of!money! Usurious!transactions!shall!be!governed!by!special!laws.!(n)!
obligation!to!deliver!arises!from!a!crime!(Art.!1268)!
bailee!in!commodatum!!agreement!to!lend! The!law!does!not!prohibit!usurious!contracts.!
a. uses!the!thing!for!a!different!purpose! Usury! ! contracting! for! or! receiving! interest! in! excess! of! the! amount!
b. keeps!it!longer!than!what!was!agreed!
allowed!by!law!for!the!loan!or!use!of!money,!goods!etc.!
c. thing! loaned! was! delivered! with! appraisal! of! its! *
value! !
d. lends!of!leases!the!thing!to!a!third!person!
21!
!
Art.*1176**Presumption*in*Payment* Art.*1178*7*Transmissibility*
The!receipt!of!the!principal!by!the!creditor!without!reservation!with!respect!to!the! Subject!to!the!laws,!all!rights!acquired!in!virtue!of!an!obligation!are!transmissible,!if!
interest,!shall!give!rise!to!the!presumption!that!said!interest!has!been!paid.! there!has!been!no!stipulation!to!the!contrary.!(1112)!!
The! receipt! of! a! later! installment! of! a! debt! without! reservation! as! to! prior! In!general,!rights!growing!out!of!an!obligation!are!transmissible.!!
installments,!shall!likewise!raise!the!presumption!that!such!installments!have!been! o However,! the! person! who! transmits! the! right! cannot! transfer!
paid.!(1110a)! greater!rights!than!he!himself!has!by!virtue!of!the!obligation,!and!
vice!versa.!
A!presumption!must!always!arise!from!a!fact!or!a!set!of!facts.!! The! transmissibility! of! rights! may! be! limited,! or! altogether! prohibited! by!
o Presumption!can!be!rebutted!by!strong!evidence!to!the!contrary.! stipulation!of!the!parties.!!
To! have! probative! value,! the! creation! of! the! presumption! must! be!
Transmission!must!be!subject!to!pertinent!laws.!!
provided!by!law.!
Manila( Trading( &( Suppy( Co.( v.( Medina! ! receipts! must! clearly! show! *
evidence!of!partial!payment.!
Chapter*3:*Different*Kinds*of*Obligations*
Art.*1177**Rights*of*the*Creditor*
The! creditors,! after! having! pursued! the! property! in! possession! of! the! debtor! to! !SECTION!1.!+!Pure!and!Conditional!Obligations!
satisfy!their!claims,!may!exercise!all!the!rights!and!bring!all!the!actions!of!the!latter!
for!the!same!purpose,!save!those!which!are!inherent!in!his!person;!they!may!also!
impugn!the!acts!which!the!debtor!may!have!done!to!defraud!them.!(1111)! Art.*1179**Pure*Obligations*
Every! obligation! whose! performance! does! not! depend! upon! a! future! or! uncertain!
Remedies!of!creditors!to!satisfy!their!claims!(in!particular!order):! event,!or!upon!a!past!event!unknown!to!the!parties,!is!demandable!at!once.!
1. Exhaust* the*properties* of* the* debtor! through! levying! by! attachment! and!
Every! obligation! which! contains! a! resolutory! condition! shall! also! be! demandable,!
execution!upon!all!the!property!of!the!debtor,!except!such!as!are!exempt!
without!prejudice!to!the!effects!of!the!happening!of!the!event.!(1113)!
by!law!from!execution!
Ex.!exempt!property!+!family!home!!
2. Exercise* all* the* rights* and* actions* of* the* debtor,! save! those! personal! to! Pure* obligation* * an! unqualified! obligation! which! is! demandable!
him!(accion!subrogatoria)! immediately.!
Ex.!enforceable!rights!!right!to!collect!from!a!debtors!debtor! o Pay(v.(Vda.(De(Palanca!!an!action!filed!after!15!years!to!execute!
a! promissory! note! which! contains! an! obligation! immediately!
personal!rights!+!right!to!receive!legal!support!
demadable! may! no! longer! prosper,! considering! that! the!
3. Seek* rescission! of! the! contracts! executed! by! the! debtor! in! fraud! of! their!
prescription!of!written!documents!is!10!years.!
rights!(accion!pauliana)!
Conditional* obligation* * an! obligation! subject! to! the! fulfillment! of! a!
o Adorable( v.( CA! ! unless! a! debtor! acted! in! fraud,! the! creditor!
condition! which! may! be! a! future! and! uncertain! event,! or! past! event!
cannot! order! rescission! of! a! contract! between! the! debtor! and! a!
unknown!to!the!parties.!
third! party! on! the! ground! that! such! sale! will! prejudice! the!
o Condition! ! an! act! or! event,! other! than! a! lapse! of! time,! which,!
creditors!right!to!collect!from!the!debtor.!
unless! the! condition! is! excused,! must! occur! before! a! duty! to!
! perform!a!promise!in!the!agreement!arises!or!which!discharges!a!
duty!of!performance!that!has!already!risen.!!
Future!and!uncertain!!
22!
!
Past!but!unknown!! Javier(v.(CA!!when!a!contract!is!subject!to!a!suspensive!condition,!its!birth!
Kinds!of!Conditions:! or! effectivity! can! take! place! only! if! and! when! the! event! constitutes! the!
a. Suspensive*condition!(condition!precedent)!!the!fulfillment!of!which!will! condition!happens!or!is!fulfilled.!
give! rise! to! the! performance! of! an! obligation.! The! demandability! of! the!
obligation!is!suspended!until!the!fulfillment!of!the!condition.!
Ex.! Contract! to! sell! ! when! the! buyer! pays! the! last! installment,! the! Art.*1180**Payment*Depends*on*Debtors*Means*
title!of!the!property!shall!be!transferred!to!him! When! the! debtor! binds! himself! to! pay! when! his! means! permit! him! to! do! so,! the!
o Art.!1182!!potestative,!casual!conditions! obligation! shall! be! deemed! to! be! one! with! a! period,! subject! to! the! provisions! of!
b. Resolutory* condition! (condition! subsequent)! ! operates! to! discharge! a! Article!1197.!(n)!
duty!of!performance!that!has!already!arisen.!The!obligation!is!extinguished!
by!operation!of!law.! When!duration!of!the!period!depends!upon!the!will!of!the!debtor:!
Ex.! X!binds!himself!to!give!Y!1,000!allowance!until!Y!graduates!from! Debtor!!law!presumes!that!the!debtor!really!intends!to!pay.!!
college.! Creditor! ! the! problem! is,! the! creditor! is! left! to! speculate! and! payment!
o Reciprocal*obligations!!the!obligation!of!one!is!a!resolutory! could!be!an!uncertain!event.!
condition!of!the!obligation!of!the!other,!the!non+fulfillment!of! Remedy!of!the!law!!to!balance!the!presumed!intent!of!the!debtor!to!pay!
which!entitles!the!other!to!rescind!the!contract.! and!the!interest!of!the!creditor!by!classifying!the!obligation!as!one!with!a!
Coronel(v.(CA!!! period.!
* CONTRACT*TO*SELL* CONDITIONAL*CONTRACT*OF*SALE* o Art.!1197!!The!courts!may!fix!a!period.!
Suspensive! Promise!to!sell!upon!the!happening!of! The!seller!reserves!title!to!the! o Period!!a!future!and!certain!event!upon!the!arrival!of!which!the!
Condition! the!suspensive!condition!(payment!of! property!until!the!suspensive! obligation!subject!to!it!arises!or!is!extinguished.!(Art.!1193)!
the!final!installment).! condition!(full!payment)!is!fulfilled.!
Ownership! Ownership!will!not!automatically! Ownership!thereto!automatically! Art.*1181**Conditional*Obligations*
transfer!to!the!buyer!although!the! transfers!to!the!buyer!by!operation! In!conditional!obligations,!the!acquisition!of!rights,!as!well!as!the!extinguishment!or!
property!may!have!been!previously! of!law!without!any!further!act! loss!of!those!already!acquired,!shall!depend!upon!the!happening!of!the!event!which!
delivered!to!him.! having!to!be!performed!by!the!
constitutes!the!condition.!(1114)!
! seller.!
rd
Third! A!3 !person!buying!such!property! Prospective!buyer!can!seek!relief!
Persons! despite!the!fulfillment!of!the! of!reconveyance!of!the!property.! Suspensive* condition! (condition! precedent)! ! a! condition! which! must! be!
suspensive!condition,!cannot!be! fulfilled!before!the!obligation!may!be!demandable.!
deemed!a!buyer!in!bad!faith.! o Acquisition!of!rights!
Prospective!buyer!cannot!seek!relief!of! Resolutory* condition! (condition! subsequent)! ! operates! to! extinguish! an!
reconveyance!of!the!property!(only!a! already!existing!obligation.!
promise!to!sell).!
o Loss!of!rights!already!acquired!
Status!of! There!is!already!a!contract!from!the! If!the!suspensive!condition!is!not!
the! beginning!hence,!if!the!suspensive! fulfilled,!the!perfection!of!the!
Obligation! condition!is!not!fulfilled,!the!seller!may! contract!is!abated.! Art.*1182**Potestative*and*Casual*Conditions*
rescind!the!contract.! When!the!fulfillment!of!the!condition!depends!upon!the!sole!will!of!the!debtor,!the!
The!prospective!seller!still!has!to! conditional!obligation!shall!be!void.!If!it!depends!upon!chance!or!upon!the!will!of!a!
convey!title!to!the!prospective!buyer!by! third! person,! the! obligation! shall! take! effect! in! conformity! with! the! provisions! of!
entering!into!a!contract!of!sale! this!Code.!(1115)!
23!
!
When!fulfillment!of!a!condition!!connotes!!a!suspensive!character!of!the! C. Mixed*obligation!!depends!not!only!upon!the!will!of!the!debtor!but!also!
prestation!! upon!chance!and!some!other!factors.!
! Ex.!
Conditions!contemplated!in!this!provision:! 1. Romero(v.(CA!!downpayment!from!the!buyer!shall!be!
A. Potestative* condition* * fulfillment! depends! upon! the! sole! will! of! the! returned! if! the! seller! (will! of! the! vendor)! shall! not! be!
rd
debtor,!then!it!is!essentially!a!condition!because!whether!the!debtor!will!or! able!to!remove!the!squatters!(will!of!3 !persons)!from!
will!not!fulfill!the!obligation!is!a!future!and!uncertain!event,!which!is!void.!! the!property.!
Ex.! ! 2. Naga(Telephone(Co.(Inc.(v.(CA!!petitioner!can!use!the!
1. Lao(Lim(v.(CA!!the!lease!contract!shall!subsist!for!so!long!as!the! electrical!posts!of!the!respondent!as!long!as!it!needed!
defendant! needed! the! premises.! The! birth! of! the! new! lease! the! posts! and! the! contract! shall! terminate! when! the!
contract!depended!on!the!sole!will!of!the!lessee,!which!is!void.! respondent! is! forced! to! stop! its! operation! as! a! public!
rd
2. Trillana(v.(Quezon(College!!full!payment!of!the!shares!in!a!school! service!(dependent!on!chance,!hazard!and!3 !persons).!
was!to!be!made!only!after!the!obligor!had!harvested!fish.! A! condition! at! once! facultative! and! resolutory! may! be! valid! even! though!
o However,!if!the!potestative!condition!is!imposed!not!on!the!birth! the!condition!is!made!to!depend!upon!the!will!of!the!obligor!!
of! the! obligation! but! on! its! fulfillment,! only! the! condition! is!
avoided,! leaving! unaffected! the! obligation! itself.! This! happens! !
when!the!obligation!is!pre+existing.!
Ex.!! Art.*1183**Void*Conditions*
1. X!borrowed!10,000!from!Y!payable!within!2!months.! Impossible! conditions,! those! contrary! to! good! customs! or! public! policy! and! those!
Subsequently,!X!promised!to!pay!Y!after!X!sells!his!car! prohibited! by! law! shall! annul! the! obligation! which! depends! upon! them.! If! the!
to! which! Y! agreed.! In! this! case,! only! the! condition! is! obligation! is! divisible,! that! part! thereof! which! is! not! affected! by! the! impossible! or!
void!but!not!the!Xs!pre+existing!obligation!to!pay!Y.! unlawful!condition!shall!be!valid.!
2. Osmena( v.( Ramos! ! where! in! a! promissory! note! the!
obligor! promised! to! pay! after! the! house! is! sold,! the! The!condition!not!to!do!an!impossible!thing!shall!be!considered!as!not!having!been!
condition!is!void!but!the!obligation!to!pay!subsists.! agreed!upon.!(1116a)!
3. Security(Bank(and(Trust(Company(v.(CA(!where!upon!
stipulation! of! the! parties,! the! owner! shall! equitably! Impossible* conditions! ! render! the! obligation! dependent! upon! them! as!
make! appropriate! adjustments! was! void,! hence! the! legally!ineffective.!The!condition!annuls!the!prestation.!
bank!was!ordered!to!pay!the!obligation!in!full.! 1. Physically*impossible*conditions!!when!such!conditions!cannot!exist!
o Patente(v.(Omega!!when!the!condition!is!void!and!the!obligation! or!cannot!be!done!in!the!nature!of!things.!
subsists,! such! obligation! is! not! converted! into! one! which! is! pure! Ex.! If!it!will!not!rain!in!the!Philippines!for!one!year!
and! unconditional.! An! arraignment! might! be! enforced! which! is! ! If!you!can!carry!20!cavans!of!palay!on!your!shoulder!
not! within! the! contemplation! of! the! parties.! The! best! solution! is! 2. Legally* impossible* conditions! ! when! they! are! contrary! to! law,!
to! consider! the! parties! having! intended! a! period,! and! ask! the! morals,!good!customs,!public!order!or!public!policy.!
court!to!fix!a!period.! Ex.! If!you!kill!Z!(against!the!law)!
B. Casual*condition!!depends!on!chance,!hazard,!or!the!will!of!a!third!person! ! If!you!slap!your!father!(against!good!customs)!
o A! resolutory! condition! that! depends! upon! the! will! of! a! third! ! If!you!overthrow!the!government!(against!public!order)!
person!is!not!void.! !
Ex.!Ducusin(v.(CA!!agreement!shall!be!terminated!when! !
the!lessors!children!need!the!premises.!
24!
!
Art.*1184**Positive*Condition* Constructive* fulfillment* * the! obligor! voluntarily! prevents! the! fulfillment!

The! condition! that! some! event! happen! at! a! determinate! time! shall! extinguish! the! of!the!condition!in!an!obligation!where!the!law!states!that!the!obligation!
obligation!as!soon!as!the!time!expires!or!if!it!has!become!indubitable!that!the!event! shall!be!deemed!fulfilled.!
will!not!take!place.!(1117)! o Tayag(v.(CA!!as!a!condition!of!a!contract!of!sale,!the!buyer!was!
required! to! pay! the! balance! of! a! particular! loan! and! where! the!
vendors!prematurely!paid!the!loan,!thereby!preventing!the!buyer!
Positive* condition! ! the! happening! of! an! event! at! a! determinate! time!
to!fulfill!the!condition,!there!was!constructive!fulfillment.!
extinguishes!the!obligation.!
Ex.! X!obliges!to!give!Y!10,000!if!B!will!marry!C!before!B!reaches!the! Reciprocal* obligation! ! both! parties! are! mutually! obligors! and! also!
obligees,! and! any! of! the! contracting! parties! may,! upon! non+fulfillment! by!
age!of!23.!
the!other!party!of!his!part!of!the!prestation,! rescind!the!contract!or!seek!
X!is!liable!if!B!marries!C!before!B!turns!23.!
fulfillment.!!
X! is! not! liable! if! B! marries! C! when! B! turns! 23! or! after! B!
turns!23.!
If!C!dies!when!B!is!22,!it!has!become!indubitable!that!the! Art.*1187**Retroactive*Effects*of*the*Fulfillment*of*a*Suspensive*Condition*
condition! shall! happen.! Hence,! the! obligation! of! X! is! The!effects!of!a!conditional!obligation!to!give,!once!the!condition!has!been!fulfilled,!
extinguished.! shall! retroact! to! the! day! of! the! constitution! of! the! obligation.! Nevertheless,! when!
the! obligation! imposes! reciprocal! prestations! upon! the! parties,! the! fruits! and!
Art.*1185**Negative*Condition*** interests! during! the! pendency! of! the! condition! shall! be! deemed! to! have! been!
The!condition!that!some!event!will!not!happen!at!a!determinate!time!shall!render! mutually! compensated.! If! the! obligation! is! unilateral,! the! debtor! shall! appropriate!
the!fruits!and!interests!received,!unless!from!the!nature!and!circumstances!of!the!
the!obligation!effective!from!the!moment!the!time!indicated!has!elapsed,!or!if!it!has!
obligation! it! should! be! inferred! that! the! intention! of! the! person! constituting! the!
become!evident!that!the!event!cannot!occur.!
same!was!different.!
If! no! time! has! been! fixed,! the! condition! shall! be! deemed! fulfilled! at! such! time! as!
may! have! probably! been! contemplated,! bearing! in! mind! the! nature! of! the! In! obligations! to! do! and! not! to! do,! the! courts! shall! determine,! in! each! case,! the!
retroactive!effect!of!the!condition!that!has!been!complied!with.!(1120)!
obligation.!(1118)!
Negative*condition!!if!the!event!does!not!happen!at!a!determinate!time,! Presupposes!the!happening!of!a!suspensive!condition.!
the!obligation!shall!become!effective!and!binding.! The! effect! of! a! conditional! obligation! to! give! retroacts! to! the! day! of! the!
Ex.! X!will!give!Y!10,000!if!Y!does!not!fail!any!of!his!exams!at!the!end! constitution!of!the!obligation.!
of!the!semester.! o The! efficacy! of! the! obligation! is! merely! suspended! or! held! in!
abeyance!until!the!condition!is!fulfilled.!
Resolutory! condition! ! the! fulfillment! of! the! event! extinguishes! the!
Art.*1186**Constructive*Fulfillment*
obligation;!hence!retroactivity!is!not!relevant.!!
The! condition! shall! be! deemed! fulfilled! when! the! obligor! voluntarily! prevents! its!
!
fulfillment.!(1119)!
Situations!contemplated:!!
1. Reciprocal* obligations! ! the! fruits! and! interests! during! the! pendency! of!
The! good* faith7obligation! of! the! parties! includes! an! implied! term! on! the! the!condition!shall!be!deemed!to!have!been!mutually!compensated.!
part! of! the! said! parties! not! to! impede,! hinder,! obstruct! or! prevent! the!
Fruits! on! the! object! of! prestation! (from! debtor)! and! the! interest!
fulfillment!of!the!obligation.!!
on! the! payment! (from! creditor)! incurred! during! the! pendency! of!
the!condition!need!not!be!delivered.!
25!
!
2. Unilateral* obligations! ! the! debtor! or! obligor! shall! appropriate! the! fruits! (5)!If!the!thing!is!improved!by!its!nature,!or!by!time,!the!improvement!shall!inure!to!
and! interests! received,! unless! from! the! nature! and! circumstances! of! the! the!benefit!of!the!creditor;!
obligation! it! should! be! inferred! that! the! intention! of! the! person! (6)!If!it!is!improved!at!the!expense!of!the!debtor,!he!shall!have!no!other!right!than!
constituting!the!same!is!different.! that!granted!to!the!usufructuary.!(1122)!
Any! fruits! or! interests! incurred! by! the! object! of! prestation! shall!
belong!to!the!obligor,!prior!to!the!fulfillment!of!the!condition.! Involves! the! prestation! to! give! a! determinate! thing! which! is! subject! to! a!
3. Obligations*not*to*do*!courts!shall!determine!the!retroactive!effect!of!the! suspensive!condition!
fulfilled!condition.! o In! the! case! of! resolutory! conditions,! Art.! 1170,! 1173! and! 1174!
shall!apply.!
Art.*1188**Rights*Pending*Fulfillment*of*Suspensive*Condition** Definitions:!
The! creditor! may,! before! the! fulfillment! of! the! condition,! bring! the! appropriate! 1. Loss!+!when!a!thing!perishes!(physical!loss),!goes!out!of!commerce!
actions!for!the!preservation!of!his!right.! (legal! loss)! or! when! a! thing! disappears! in! such! a! way! that! its!
existence!is!unknown!(civil!loss).!
The!debtor!may!recover!what!during!the!same!time!he!has!paid!by!mistake!in!case! 2. Deterioration!!a!thing!deteriorates!when!its!value!is!reduced!or!
of!a!suspensive!condition.!(1121a)! impaired!with!or!without!the!fault!of!the!debtor.!
The! choice! of! the! remedies! to! be! pursued,! whether!
1. Creditor!+!can!file!an!injunction!suit!to!stop!the!debtor!from!alienating!his! rescission! plus! damages! or! fulfillment! plus! damages,!
property! which! is! supposed! to! be! given! to! the! creditor! once! a! particular! belongs! to! the! creditor! regardless! of! the! degree! of!
condition!is!fulfilled.!! deterioration!caused!by!the!debtor.!!
2. Debtor!+!can!recover!what!has!been!paid!by!mistake!when!the!obligation!is! If!the!deterioration!caused!by!the!debtor!is!so!grave!that!
not!yet!due!and!demandable.!! the! object! goes! out! of! commerce,! it! can! be! considered!
o A!case!of!solutio!indebiti! lost!and!the!creditor!can!seek!damages!from!the!debtor.!
3. Improvement!!a!thing!is!improved!when!its!value!is!increased!or!
Art.*1189**Loss,*Deterioration*or*Improvement*Pending*the*Condition* enhanced!by!nature!or!by!time,!or!at!the!expense!of!the!debtor!or!
When! the! conditions! have! been! imposed! with! the! intention! of! suspending! the! creditor.!!
efficacy!of!an!obligation!to!give,!the!following!rules!shall!be!observed!in!case!of!the! Usufruct!!gives!a!right!to!enjoy!the!property!of!another!
improvement,! loss! or! deterioration! of! the! thing! during! the! pendency! of! the! with!the!obligation!of!preserving!its!form!and!substance!
condition:! unless! the! title! constituting! it! or! the! law! otherwise!
provides.!!
(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;!
26!
!
Rules! in! case! of! loss,! deterioration! or! improvement! of! the! thing! during! rescission,! even! after! he! has! chosen! fulfillment,! if! the! latter! should! become!
pendency!of!suspensive!condition:! impossible.!
! Without*fault/participation* With*fault/participation** The!court!shall!decree!the!rescission!claimed,!unless!there!be!just!cause!authorizing!

of*the*debtor* of*the*debtor* the!fixing!of!a!period.!
Obligation!is!extinguished!
LOSS* Debtor!shall!pay!damages! This!is!understood!to!be!without!prejudice!to!the!rights!of!third!persons!who!have!
(fortuitous!event)!
Creditor!may!choose! acquired! the! thing,! in! accordance! with! Articles! 1385! and! 1388! and! the! Mortgage!
Creditor!shall!bear! rescission!of!the!obligation! Law.!(1124)!
DETERIORATION*
impairment! or!its!fulfillment,!plus!
damages! Reciprocal*obligations!!the!obligation!of!one!is!a!resolutory!condition!of!
Creditor!shall!enjoy!the! Debtor!shall!only!have! the! other,! the! non+fulfillment! of! which! entitles! the! other! to! rescind! the!
IMPROVEMENT* contract.!Songcua(v.(IAC!
benefits! usufructuary!rights!
* Remedies*!fulfillment!of!the!obligation!or!rescission!plus!damages.!
o The! injured! party! may! also! seek! rescission! even! after! he! has!
Art.*1190**Effects*of*Fulfillment*of*a*Resolutory*Condition* chosen!fulfillment.!
When!the!conditions!have!for!their!purpose!the!extinguishment!of!an!obligation!to! o Areola(v.(CA!!the!aggrieved!party!who!opted!for!the!fulfillment!of!
give,!the!parties,!upon!the!fulfillment!of!said!conditions,!shall!return!to!each!other! the!obligation!was!also!entitled!to!damages.!
what!they!have!received.! o Ayson( Simon( v.( Adamos! ! where! both! heirs! of! the! deceased!
owner!and!a!buyer!of!a!property!won!cases!against!a!seller,!and!
In!case!of!the!loss,!deterioration!or!improvement!of!the!thing,!the!provisions!which,!
both!filed!for!the!delivery!of!such!property,!the!buyers!action!for!
with!respect!to!the!debtor,!are!laid!down!in!the!preceding!article!shall!be!applied!to!
rescission! and! damages! was! proper! considering! that! the! heirs!
the!party!who!is!bound!to!return.!
already!had!possession!of!the!property.!
As!for!the!obligations!to!do!and!not!to!do,!the!provisions!of!the!second!paragraph!of! o Siy(v.(CA!!the!law!does!not!authorize!the!injured!party!to!rescind!
Article! 1187! shall! be! observed! as! regards! the! effect! of! the! extinguishment! of! the! the! obligation! and! at! the! same! time! seek! its! partial! fulfillment!
obligation.!(1123)! instead!of!collecting!damages.!
!
Once!a!resolutory*condition!is!fulfilled,!the!obligation!is!extinguished!and! Rescission!!to!declare!the!contract!void!at!its!inception!and!to!put!an!end!to!it!as!
there!must!be!restitution!of!what!has!been!obtained.!! though!it!never!was.!!
In! the! case! of! loss,! deterioration! or! improvement! of! the! thing! during! the! Predicated!on!the!breach!of!faith!by!any!of!the!parties!to!a!contract!that!
pendency!of!the!resolutory!condition,!Art.!1189!shall!apply.! violates!the!reciprocity!between!them.!
In!obligations!to!do!and!not!to!do,!the!courts!shall!determine!the!effect!of! The! power! to! rescind! is! not! absolute! and! must! be! based! on! a! serious! or!
the!extinguishment!of!the!obligation.! substantial*breach*of*an*obligation!as!to!defeat!the!object!of!the!parties!in!
making!the!agreement.!
Art.*1191**Remedies*in*Reciprocal*Obligations* o A!mere!casual!breach!does!not!justify!rescission!of!the!contract.!
The! power! to! rescind! obligations! is! implied! in! reciprocal! ones,! in! case! one! of! the! o The! question! of! whether! a! breach! of! a! contract! is! substantial!
obligors!should!not!comply!with!what!is!incumbent!upon!him.! depends!upon!the!attendant!circumstances.!
! !
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!
27!
!
Cases:( rescission!made!is!not!the!revocatory!act!of!rescission!but!merely*
o Philippine( Amusement( Enterprises( Inc.( v.( Natividad( ! that! there! declaratory*or*an*affirmation!of!the!revocation.!
were!times!when!the!jukebox!did!not!work!did!not!constitute!the! o Palay( Inc.( v.( Clave! ! stipulation! which! states! that! the! seller! may!
substantial!breach!sufficient!to!effect!a!rescission.! declare!the!contract!cancelled!without!notice!is!void.!
o Tan(v.(CA(!private!respondents!have!substantially!complied!with! o Jison(v.(CA!!sending!a!notice!to!the!buyer!is!an!indispensable!act.!
the! obligation.! Time! not! being! of! essence,! a! slight! delay! on! the! Notice!!revocatory*act!in!express!stipulation!to!rescind.!
part! of! the! private! respondent! is! not! sufficient! ground! for! the! !
resolution!of!the!agreement.! Art.*1192**Breach*by*Both*Parties*
o Velarde(v.(CA!!although!a!slight!delay!in!payment!of!1!month!may! In!case!both!parties!have!committed!a!breach!of!the!obligation,!the!liability!of!the!
be! a! casual! breach! considering! that! time! is! not! of! the! essence,! first!infractor!shall!be!equitably!tempered!by!the!courts.!If!it!cannot!be!determined!
pre+conditions! to! pay! by! the! debtor! left! the! creditor! with! no! which! of! the! parties! first! violated! the! contract,! the! same! shall! be! deemed!
choice!but!to!opt!for!rescission.! extinguished,!and!each!shall!bear!his!own!damages.!(n)!!
o Santos( v.( CA! ! if! the! contract! involved! is! a! contract! to! sell,! the!
termination! is! not! a! rescission! under! Art.! 1191,! but! an!
First* infractor* known! ! subsequently,! the! other! also! violated! his! part! of!
enforcement!of!the!contract.!
the! obligation.! The! liability! of! the! first! infractor! should! be! equitably!
!
reduced.!
Forms!of!power!to!rescind:!
First* infractor* cannot* be* determined! ! obligation! shall! be! deemed!
a. Implied*power*to*rescind!+!can!only!be!enforced!through! court!action,!in!
extinguished!and!shall!bear!his!own!damages.!
the!absence!of!stipulation!to!the!contrary.!!
o The!decision!of!the!court!is!the!revocatory*act!of!rescission!!
o Court! shall! decree! the! rescission! claimed! unless! there! is! just! !
cause!to!authorize!fixing!a!period.!
Roman(v.(CA(!if!the!buyer!paid!within!60!days!according! SECTION!2.!+!Obligations!with!a!Period!
to!the!terms,!there!would!have!been!just!cause!to!grant!
an!extension.! !!!
Central(Philippine(University(v.(CA!!no!just!cause;!fixing!
of! a! period! would! be! a! mere! technicality! and! formality! Art.*1193**Obligations*with*a*Period*
that!would!serve!no!purpose!than!to!delay!or!lead!to!an! Obligations!for!whose!fulfillment!a!day!certain!has!been!fixed,!shall!be!demandable!
unnecessary!and!expensive!multiplication!of!suits.! only!when!that!day!comes.!
b. Express* unilateral* extrajudicial* stipulation* to* rescind! ! power! to! rescind!
need!not!be!implied!in!all!cases.!! Obligations!with!a!resolutory!period!take!effect!at!once,!but!terminate!upon!arrival!
o Parties! may! stipulate! that! the! violation! of! the! terms! of! the! of!the!day!certain.!
contract! shall! cause! the! cancellation,! termination! or! rescission!
thereof!even!without!court!intervention!! A! day! certain! is! understood! to! be! that! which! must! necessarily! come,! although! it!
o University( of( the( Philippines( v.( De( Los( Angeles! ! stipulation! is! may!not!be!known!when.!
always! provisional,! subject! to! scrutiny! and! review! by! the! proper!
court.! Notice! must! always! be! given! to! the! defaulter! before! If! the! uncertainty! consists! in! whether! the! day! will! come! or! not,! the! obligation! is!
rescission!can!take!effect!! conditional,!and!it!shall!be!regulated!by!the!rules!of!the!preceding!Section.!(1125a)!
o De( Luna( v.( Abrigo! ! when! there! is! an! express! stipulation! to!
rescission,! any! court! decision! validating! the! propriety! of! the!
28!
!
Period!!a!future!and!certain!event!upon!the!arrival!of!which!the!obligation! o Natural* fruits! ! spontaneous! products! of! soil! and! the! young! or!
subject! to! it! either! arises! or! is! terminated.! It! is! a! day! which! must! other!products!of!animals!
necessarily! come! (like! next! Christmas),! although! it! may! not! be! known! o Industrial*fruits!!produced!by!lads!of!any!kind!through!cultivation!
when!(like!the!death!of!a!person).! or!labor!
Obligation*with*a*period*!an!obligation!constituted!at!a!much!earlier!date! o Civil*fruits!!derived!by!virtue!of!a!juridical!relation!
but!its!effectivity!only!commences!on!a!certain!future!period!of!time.!
Suspensive*period!!gives!rise!to!the!effectivity!of!the!obligation.! Art.*1196**Period*Benefits*Both*Creditor*and*Debtor**
o Gaite( v.( Fonacier! ! where! the! balance! was! to! be! paid! from! and! Whenever! in! an! obligation! a! period! is! designated,! it! is! presumed! to! have! been!
out!of!the!first!letter!of!credit!covering!the!first!shipment!of!iron! established! for! the! benefit! of! both! the! creditor! and! the! debtor,! unless! from! the!
derived!from!the!local!sale!of!iron!by!the!client,!the!stipulation!is!a! tenor!of!the!same!or!other!circumstances!it!should!appear!that!the!period!has!been!
suspensive!period!not!a!suspensive!condition.! established!in!favor!of!one!or!of!the!other.!(1127)!
o A! suspensive! condition! is! comparatively! more! onerous! than! a!
suspensive!period.! General! rule! ! the! presumption! of! the! law! is! that! the! period! is! for! the!
Resolutory*period!!gives!rise!to!the!extinguishment!of!the!obligation.!! benefit!of!both!debtor!and!creditor.!!
o Fernandez(v.(CA!!a!contract!of!lease!is!a!reciprocal!contract.!The!
period! of! lease! must! be! deemed! to! have! been! agreed! upon! for!
Art.*1194**Loss,*Deterioration*or*Improvement*before*Day*Certain*
the!benefit!of!both!parties.!
In!case!of!loss,!deterioration!or!improvement!of!the!thing!before!the!arrival!of!the!
Exception!!when!the!nature!of!the!obligation!or!stipulation!of!the!parties!
day!certain,!the!rules!in!Article!1189!shall!be!observed.!(n)!
shows!that!the!period!was!for!the!benefit!of!either!party.!
The!benefit!of!the!period!may!be!waived!by!the!person!in!whose!favor!it!
The!same!rules!in!Article!1189!shall!apply!in!obligations!subject!to!a!suspensive!or!a!
was!constituted.!
resolutory!period.!!
o Abesamis( v.( Woodcraft( Works( Inc.! ! where! the! obligor! informed!
the! obligee! that! he! will! make! an! early! delivery! of! the! subject!
Art.*1195**Debtor*May*Recover*Payment*** portions! of! shipment,! the! obligor! was! made! liable! for! failure! to!
Anything! paid! or! delivered! before! the! arrival! of! the! period,! the! obligor! being! make!such!delivery.!Use!of!the!period!was!effectively!waived.!
unaware! of! the! period! or! believing! that! the! obligation! has! become! due! and!
demandable,!may!be!recovered,!with!the!fruits!and!interests.!(1126a)!
Art.*1197**Court*May*Fix*a*Period**
If!the!obligation!does!not!fix!a!period,!but!from!its!nature!and!the!circumstances!it!
Applies!only!to!obligations!to!give!
can!be!inferred!that!a!period!was!intended,!the!courts!may!fix!the!duration!thereof.!
o The!provision!may!not!be!applied!in!obligations!to!do!or!not!to!do!
The!courts!shall!also!fix!the!duration!of!the!period!when!it!depends!upon!the!will!of!
because!it!is!physically!impossible!to!recover!a!service!rendered.!
the!debtor.!
Similar! to! Art.! 1188! paragraph! 2! where! a! creditor! cannot! unjustly! enrich!
himself!by!retaining!payment!which!is!not!due.! In! every! case,! the! courts! shall! determine! such! period! as! may! under! the!
Burden!of!proof!of!paying!by!mistake!is!on!the!debtor.!Debtor!is!presumed! circumstances!have!been!probably!contemplated!by!the!parties.!Once!fixed!by!the!
to!be!aware!of!the!period.! courts,!the!period!cannot!be!changed!by!them.!(1128a)!
If! the! obligor! delivered! the! object! before! the! arrival! of! the! period,! and!
upon! arrival! of! the! period,! the! obligee! is! in! the! possession! of! the! object,! Related!articles:!
the!obligor!can!only!recover!the!fruits!and!interests!accruing!from!the!time! Art.*1180!!when!the!debtor!binds!himself!to!pay!when!his!means!permit!
of!the!delivery!up!to!the!arrival!of!the!period.!! him!to!do!so!
Kinds!of!Fruits:!(N.I.C.)!
29!
!
Art.*1191*par.*3!!instead!of!issuing!a!decree!of!rescission,!the!court!may! 1. When!debtor!becomes!insolvent!
authorize!the!fixing!of!a!period!when!there!is!just!cause! o Unless!he!gives!a!guaranty!or!security!for!the!debt!!a!debtor!may!
! ask! a! third! person! to! guarantee! his! debt! or! put! up! his! house! as!
Presumption!!the!court!is!generally!without!power!to!fix!a!period.!If!the!obligation! collateral.!
does!not!state!a!period!and!no!period!is!intended,!the!court!is!not!authorized!to!fix! o Insolvency!need!not!be!judicially!declared.!
a!period!because!it!has!no!right!to!make!contracts!for!parties.! 2. When!debtor!does*not*furnish*the*guaranties*or*securities*promised*!
! o Securities!can!take!the!form!of!real+estate!mortgages!or!pledges!!
Gregorio(Araneta,(Inc.(v.(Phil.(Sugar(Estates(Development(Co.(Ltd.( 3. When! guaranties! or! securities! given! have! been! impaired* or* have*
27step*process:** disappeared*through!the!debtors!acts!
1. The! court! must! first! determine! that! the! obligation! does! not! fix! a! o Unless!he!immediately!gives!new!ones!equally!satisfactory.!
period! or! that! a! period! is! made! to! depend! upon! the! will! of! the! o Gaite(v.(Fonacier!!because!of!the!companys!failure!to!renew!the!
debtor,!but!from!the!nature!and!circumstances!it!can!be!inferred! bond!of!a!surety!or!else!replace!it!with!an!equivalent!guarantee,!
that!a!period!was!intended.! the! debtor! has! forfeited! it! right! to! the! period! making! the!
2. The! court! must! decide! what! period! was! probably! contemplated! obligation!immediately!demandable.!
by!the!parties.!! o The!debtor!loses!the!benefit!of!the!period!even!if!the!guaranties!
Radiowealth(Finance(Company(v.(Del(Rosario(!the!fact!that!the!due!date! and!securities!disappear!through!a!fortuitous!event.!
was!left!blank!does!not!necessarily!mean!that!payment!was!left!on!the!sole! 4. When!the!debtor!violates*any*undertaking,!in!consideration!of!which!the!
will!of!the!debtor.!The!promissory!note!indicated!that!the!debt!should!be! creditor!agrees!to!the!period!
amortized!monthly!in!installments.! o Allen(v.(Province(of(Albay!!
Constructive* waiver* of* period! ! when! the! owner! prevents! the!
Art.*1198**When*Debtor*Cannot*Make*Use*of*the*Period* period! from! arriving.! Hence,! the! obligor! shall! be! allowed! to!
The!debtor!shall!lose!every!right!to!make!use!of!the!period:! furnish!the!obligation!within!reasonable!time.!
5. When!the!debtor!attempts!to!abscond*!
(1) When! after! the! obligation! has! been! contracted,! he! becomes! insolvent,! o A! mere! attempt! by! the! debtor! to! flee! from! his! obligations,! or! to!
unless!he!gives!a!guaranty!or!security!for!the!debt;! move! away! to! evade! payment! of! his! indebtedness,! is! sufficient!
(2) When! he! does! not! furnish! to! the! creditor! the! guaranties! or! securities! ground!to!demand!from!him!immediately.!
which!he!has!promised;! !
(3) When! by! his! own! acts! he! has! impaired! said! guaranties! or! securities! after! ! !
their!establishment,!and!when!through!a!fortuitous!event!they!disappear,!
unless!he!immediately!gives!new!ones!equally!satisfactory;!
(4) When! the! debtor! violates! any! undertaking,! in! consideration! of! which! the!
creditor!agreed!to!the!period;!
(5) When!the!debtor!attempts!to!abscond.!(1129a)!!
!
!
2
When!debtor!cannot!make!use!of!the!period:!(G.A.V.I .)!
30!
!
SECTION!3.!+!Alternative!Obligations! Ex.!!
A! owes! B! 30,000.! He! can! either! pay! by! giving! B! his!
! horse,!his!piano,!or!30,000!in!cash.!
A! has! two! horses,! one! worth! 30,000! and! another! crap!
*Art.*1199**Alternative*Obligations* one! worth! 5,000.! He! cannot! choose! the! 5,000! horse!
A!person!alternatively!bound!by!different!prestations!shall!completely!perform!one! because! it! could! not! have! been! the! object! of! the!
of!them.! obligation.!
!
The! creditor! cannot! be! compelled! to! receive! part! of! one! and! part! of! the! other!
undertaking.!(1131)!
Art.*1201**Choice*Communicated*
The!choice!shall!produce!no!effect!except!from!the!time!it!has!been!communicated.!
Different*Prestations!!refers!to!both!strict!and!loose!sense!of!the!word.! (1133)!
o Either!different!kinds!of!prestations!(1!to!give,!and!1!to!do)!
o Or!merely!different!objects!(give!a!car,!or!give!a!boat)!
Creditor!is!entitled!to!be!notified!of!the!choice.!
Partial!Performance!of!different!prestations!does!not!fulfill!the!obligation,!
Mode!of!communication!may!vary!!it!is!also!the!debtors!choice!
unless! the! creditor! accepts! such! partial! performance! as! complete!
Choice!is!given!effect!only!upon!communication!to!the!creditor.!
performance.!!
o Debtor!must!choose!complete!performance!of!one!or!the!other.! Creditor! has! no! right! to! oppose! the! choice,! provided! such! choice! of!
prestation!is!not!unlawful,!impossible,!or!outside!what!the!parties!wanted.!
If! all! but! one! of! the! alternatives! becomes! legally! impossible,! obligation!
becomes!simple.!
o Loan! payable! in! Pesos! or! USD,! alternative! obligation! ceased! to! Art.*1202**Only*One*Choice*is*Practicable*
exist!when!USD!was!illegal!(Japanese!time)! The!debtor!shall!lose!the!right!of!choice!when!among!the!prestations!whereby!he!is!
alternatively!bound,!only!one!is!practicable.!(1134)!
Art.*1200**Debtors*Right*of*Choice**
The! right! of! choice! belongs! to! the! debtor,! unless! it! has! been! expressly! granted! to! Right!of!choice!is!given!to!the!debtor!!according!to!law!
the!creditor.! o This! right! implies! that! the! debtor! can! destroy/impair! all! other!
choices!as!long!as!one!remains!
The! debtor! shall! have! no! right! to! choose! those! prestations! which! are! impossible,! Practicable**capable!of!being!done;!feasible.!!
unlawful!or!which!could!not!have!been!the!object!of!the!obligation.!(1132)! o Thus,!when!only!one!of!the!choices!is!practicable,!the!debtor!loses!
his!right!of!choice.!
Any!doubt!as!to!whom!the!choice!is!given!as!to!which!prestation!to!comply! o A!prestation!can!be!possible!and!lawful,!but!not!practicable.!
with!is!always!construed!in!favor!of!the!debtor.!! Ex.!! Kissing! a! highly! contagious! leper! ! possible,! and! not!
General!rule!!debtor!always!has!choice.! illegal,! but! impracticable! and! thus! cannot! be! chosen! by!
o Exception!!when!such!choice!is!expressly!granted!to!the!creditor.! debtor.!
Restriction* on* Debtors* Power* of* Choice! ! the! law,! the! intention! of! the!
parties,!and!the!realm!of!possibility.! Art.*1203**Debtor*Cannot*Choose*due*to*Creditors*Acts*
Debtor!has!no!right!to!choose!those!prestations!which!are:!! If! through! the! creditor's! acts! the! debtor! cannot! make! a! choice! according! to! the!
o Impossible**Ex.!fly!to!the!moon,!turn!water!into!wine,!! terms!of!the!obligation,!the!latter!may!rescind!the!contract!with!damages.!(n)!
o Unlawful!!Ex.!steal!a!car,!deal!drugs!!
o Could*not*have*been*the*object*of*the*obligation* Creditor!cannot!stop!the!debtor!from!fulfilling!his!obligation.!
31!
!
If!creditors!own!acts!result!in!the!loss!of!a!choice,!the!debtor!can!(he!is!not! Art.*1205**Choice*Given*to*Creditor*
bound!to!do!so)!rescind!with!a!right!to!damages.! When!the!choice!has!been!expressly!given!to!the!creditor,!the!obligation!shall!cease!
Ex.! A! can! pay! his! debt! to! B! by! giving! a! certain! cellphone,! giving! a! to!be!alternative!from!the!day!when!the!selection!has!been!communicated!to!the!
certain!horse,!or!dancing!in!a!show.! debtor.!
o If! the! creditor! through! his! own! acts! makes! any* of! these! choices!
impossible:!! Until!then!the!responsibility!of!the!debtor!shall!be!governed!by!the!following!rules:!
Kills!horse!
Destroys!phone! (1)! If! one! of! the! things! is! lost! through! a! fortuitous! event,! he! shall! perform! the!
Burns!club! obligation! by! delivering! that! which! the! creditor! should! choose! from! among! the!
o Debtor!has!the!option!to!rescind!with!damages.! remainder,!or!that!which!remains!if!only!one!subsists;!
As! long! as! the! creditor! makes! one* of! the! choices! impossible,! the! debtor!
may!rescind.!(contrast!this!with!next!article)! (2)! If! the! loss! of! one! of! the! things! occurs! through! the! fault! of! the! debtor,! the!
creditor!may!claim!any!of!those!subsisting,!or!the!price!of!that!which,!through!the!
fault!of!the!former,!has!disappeared,!with!a!right!to!damages;!
Art.*1204**Through*Debtors*Fault,*All*Choices*are*Lost*
The!creditor!shall!have!a!right!to!indemnity!for!damages!when,!through!the!fault!of! (3)! If! all! the! things! are! lost! through! the! fault! of! the! debtor,! the! choice! by! the!
the!debtor,!all!the!things!which!are!alternatively!the!object!of!the!obligation!have! creditor! shall! fall! upon! the! price! of! any! one! of! them,! also! with! indemnity! for!
been!lost,!or!the!compliance!of!the!obligation!has!become!impossible.! damages.!
The! indemnity! shall! be! fixed! taking! as! a! basis! the! value! of! the! last! thing! which! The!same!rules!shall!be!applied!to!obligations!to!do!or!not!to!do!in!case!one,!some!
disappeared,!or!that!of!the!service!which!last!became!impossible.! or!all!of!the!prestations!should!become!impossible.!(1136a)!
Damages! other! than! the! value! of! the! last! thing! or! service! may! also! be! awarded.!
(1135a)! Conferment!of!right!of!choice!to!the!creditor!must!always!be!express.!
Obligation! ceases! to! be! alternative! when! choice! is! communicated! to! the!
debtor.!
Debtor! will! not! be! liable! for! loss! of! choices,! even! if! obligation! ceases! to!
become!alternative!and!becomes!simple.!! Until! communication! is! done,! law! provides! rules! as! to! the! debtors!
o He! has! the! right! of! choice,! after! all,! and! the! creditor! cannot! responsibility:!
complain.! o One*of*the*things*is*lost*through*a*fortuitous*event*
Debtor! delivers! what! creditor! chooses! from! the!
However,!when!all!of!the!alternative!prestations!are!rendered!impossible,!
the!creditor!is!entitled!to!damages.!! remainder,!or!the!only!one!remaining.!
o Loss*of*one*of*the*things*occurs*through*fault*of*the*debtor*
The!value!of!the!damages!will!be!based!on!the!value!of!the!last!choice!to!
be!lost/rendered!impossible,!be!it!a!service!or!a!thing!to!give.! Creditor!may!claim!any!of!the!remaining!options.!
Creditor! may! claim! the! price! of! the! thing! which!
Contrast!with!previous!provision:!
o Creditor! only! needs! to! render! impossible! at! least! one! of! the! disappeared.!
prestations.! Regardless! of! what! the! creditor! picks,! he! has! a! right! to!
o Debtor!must!impair!all!of!the!prestations! damages.!
! o If*all*things*are*lost*through*fault*of*the*debtor*
! Creditor!chooses!the!price!of!any!one!of!them.!
! Also!with!an!indemnity!for!damages.!
!
32!
!
Art.*1206**Facultative*Obligations* o Individually!has!the!same!meaning!as!collectively,!separately,!
When! only! one! prestation! has! been! agreed! upon,! but! the! obligor! may! render! distinctly,!etc.!!
another!in!substitution,!the!obligation!is!called!facultative.! Ex.! An! agreement! (where! the! parties! agree)! to! be!
individiaully!liable!creates!a!several!obligation.!
The! loss! or! deterioration! of! the! thing! intended! as! a! substitute,! through! the! o Other!words/phrases!denoting!several!obligation!
negligence!of!the!obligor,!does!not!render!him!liable.!But!once!the!substitution!has! Juntos!o!sepadaramente!
been! made,! the! obligor! is! liable! for! the! loss! of! the! substitute! on! account! of! his! Mancomun!o!insolidum!
delay,!negligence!or!fraud.!(n)!! o When!a!contract!says!I!promise!(singular)!and!is!signed!by!two!
or!more!promisors!!
Facultative* Obligation! ! only! one! prestation! has! been! agreed! upon,! but!
obligor!may!render!another!in!substitution! Art.*1208**Joint*Obligations*
Ex.! I!will!give!you!my!piano,!but!I!may*give!you!my!TV!as!a!substitute.! If! from! the! law,! or! the! nature! or! the! wording! of! the! obligations! to! which! the!
Thus,!only!the!piano!is!due!and!only!the!loss!of!this!piano!makes!me! preceding! article! refers! the! contrary! does! not! appear,! the! credit! or! debt! shall! be!
liable!for!damages.! presumed!to!be!divided!into!as!many!shares!as!there!are!creditors!or!debtors,!the!
Creditor!cannot!refuse!the!substitute,!unless!such!is!unlawful.! credits!or!debts!being!considered!distinct!from!one!another,!subject!to!the!Rules!of!
Once!substitution!has!been!made,!obligor!is!liable!for!its!loss.! Court!governing!the!multiplicity!of!suits.!(1138a)!
!
Presumption!of!law!!obligation!is!always!a!joint!one.!
SECTION!4.!+!Joint!and!Solidary!Obligations( o Un( Pak( Leung( v.( Negorra! ! in! the! absence! of! facts! that! the!
defendants! made! themselves! individually! liable! for! the! whole!
!!! amount,!they!are!only!liable!for!their!share!in!the!debt.!
Joint*Obligation**an!obligation!where!the!debtors!are!only!bound!to!pay!
Art.*1207**Solidary*Obligations*
their!share!and!the!creditors!can!only!claim!their!share.*
The!concurrence!of!two!or!more!creditors!or!of!two!or!more!debtors!in!one!and!the!
Ex.! A!and!B!owe!C!and!D!1000.!
same!obligation!does!not!imply!that!each!one!of!the!former!has!a!right!to!demand,!
o C!can!collect!250!each!from!A!and!B.!
or! that! each! one! of! the! latter! is! bound! to! render,! entire! compliance! with! the!
o D!can!also!collect!250!each!from!A!and!B.!
prestation.!There!is!a!solidary!liability!only!when!the!obligation!expressly!so!states,!
o But!if!A!owns!only!1/3!of!the!indebtedness,!and!C!only!1/5!of!
or!when!the!law!or!the!nature!of!the!obligation!requires!solidarity.!(1137a)!
the!credit:!
o Creditors! and! debtors! shall! collect! and! pay! only! in!
Solidary* Obligation! ! a! situation! where! there! are! debts! incurred! by! 2! or! proportion!to!what!they!own!and!owe.!
more! debtors! in! favor! of! 2! or! more! creditors,! and! the! right! is! given! to! o In!this!case,!A!only!pays!1/3!of!the!1000,!split!such!that!
anyone,!some!or!all!of!creditors,!to!demand!the!satisfaction!of!the!TOTAL! C!gets!1/5!and!D!gets!4/5.!
obligation!from!anyone,!some,!or!all!of!the!debtors.!
o Anyone! of! the! creditors! may! demand! fulfillment! of! the! entire!
Art.*1209**When*Division*is*Impossible*
obligation! from! any! one! of! the! debtor,! not! just! for! the! share! of!
If! the! division! is! impossible,! the! right! of! the! creditors! may! be! prejudiced! only! by!
that!debtor.!
their!collective!acts,!and!the!debt!can!be!enforced!only!by!proceeding!against!all!the!
o Only!exists!when!it!is!expressly!stated,!or!when!law!or!nature!of!
debtors.!If!one!of!the!latter!should!be!insolvent,!the!others!shall!not!be!liable!for!his!
obligation!so!requires.!
share.!(1139)!
Ronquillo(v.(CA(!the!following!terms!indicate!a!solidary!obligation:!
Art.*1210**Indivisibility*and*Solidarity*
33!
!
The! indivisibility! of! an! obligation! does! not! necessarily! give! rise! to! solidarity.! Nor! D! can! collect! the! whole! amount! from! anyone,! BUT! the!
does!solidarity!of!itself!imply!indivisibility.!(n)! debtor! can! only! pay! the! balance! of! the! debts! that! have!
already!matured.!
If! division! of! the! obligation! is! impossible,! and! the! obligation! is! joint,! the!! 2. A!due!on!Monday,!B!on!Tues,!C!on!Wed.!
creditors!must!act!collectively!! D!can!collect!from!any!one!of!them,!but!can!only!collect!
o One! creditor! cannot* undertake! an! act! which! will! prejudice! the! 5,000!on!Monday!(since!only!As!debt!has!matured)!
others,!unless!he!is!authorized!by!the!others!to!undertake!such!an! !
act.!
If!several!debtors!are!obliged!to!give!an!indivisible!obligation!(like!a!house)! Art.*1212**Acts*of*Solidary*Creditors*
all!of!them!must!be!sued!if!they!renege!on!their!obligation.! Each!one!of!the!solidary!creditors!may!do!whatever!may!be!useful!to!the!others,!but!
o So! if! one! of! the! debtors! refuses! to! deliver! the! house,! the! not!anything!which!may!be!prejudicial!to!the!latter.!(1141a)!
obligation!is!turned!into!a!claim!for!damages.!
o A! joint! indivisible! obligation! becomes! a! claim! for! damages! the! As! mentioned! before,! solidary! creditors! may! not! do! anything! which! may!
moment! any! one! of! the! debtors! does! not! comply! with! the! prejudice!the!others.!
undertaking.! Ex.! Refusing!payment!when!debtors!are!ready!to!pay!is!prejudicial!to!the!
o How!will!the!damages!be!divided?! others!creditors.!
Those! debtors! who! were! ready! to! fulfill! the! obligation! Thus,!the!other!creditors!can!ask!for!damages.!
are!only!liable!for!their!corresponding!portion.!! They!can,!however,!do!things!that!may!be!useful!for!the!others.!
Ex.!! 3!debtors!must!give!a!house,!and!one!refuses.!In! Ex.! ! Quisumbing( v.( CA! ! one! of! the! solidary! creditors! filed! a! suit! for!
the! following! claim! for! damages,! the! 2! debtors! collection! against! the! solidary! debtors.! This! was! held! to! be! a! useful!
who! were! going! to! deliver! the! house! are! each! act,!and!thus!could!be!done!just!by!one!of!the!creditors.!
only!liable!for!1/3!the!price!of!the!house.!
The! debtor! who! is! responsible! for! the! damages! claim! Art.*1213**Mutual*Trust*among*Solidary*Creditors*
may!be!liable!for!the!additional!damages.! A!solidary!creditor!cannot!assign!his!rights!without!the!consent!of!the!others.!(n)!
o Debtors!shall!not!be!responsible!for!another!debtor!who!becomes!
insolvent.!
The! relationship! between! the! solidary! creditors! should! be! one! of! mutual!
Solidarity!does!not!mean!indivisibility!and!vice!versa.! trust.!!
o Solidary!refers!to!nature!of!the!obligors!and!obligees!
To! preserve! this! ! a! solidary! creditor! cannot! assign! his! rights! to! others!
o Indivisibility!refers!to!nature!of!the!prestation! without!consent!of!the!others.!(they!might!not!know!the!new!co+creditor!
as!well,!for!Ex.!!the!trust!may!be!lost)!
Art.*1211**Not*Bound*in*the*Same*Manner*
Solidarity!may!exist!although!the!creditors!and!the!debtors!may!not!be!bound!in!the! Art.*1214**Judicial*or*Extrajudicial*Demand*by*a*Solidary*Creditor*
same!manner!and!by!the!same!periods!and!conditions.!(1140)! The!debtor!may!pay!any!one!of!the!solidary!creditors;!but!if!any!demand,!judicial!or!
extrajudicial,! has! been! made! by! one! of! them,! payment! should! be! made! to! him.!
Solidarity!can!still!exist!even!if!creditors!and!debtors!are!bound!in!different! (1142a)!
manners,!or!have!different!conditions/periods.!
Ex.!!1.! A,!B!and!C!are!solidarily!indebted!to!D!for!15,000.!
General!Rule!+!debtor!may!pay!any!of!the!solidary!creditors.!
o However,!when!demand!(judicial!or!extrajudicial)!is!made!by!one!
of!the!creditors,!payment!should!be!made!to!he!who!demanded.!!
34!
!
Payment* to* another* creditor! ! the! obligation! will! not! be! extinguished,! This!reiterates!the!rule!that!any!one!or!some!or!all!of!the!solidary!debtors!
payment!is!invalid!insofar!as!the!share!of!the!demanding!creditor,!in!case! may!be!made!to!pay!the!debt,!so!long!as!it!has!not!been!fully!collected.(
the!other!creditor!does!not!give!it.! Thus,! proceedings! against! one! of! the! debtors! will! not! be! a! bar! to! any!
Ex.! A!is! liable! to!pay! B!and!C!10,000.!If!B!demands!from!A,!A!must! further! proceedings! against! another,! provided! that! the! debt! is! still!
pay!to!B.! subsisting!(at!the!end!of!the!day,!if!the!debtors!still!owe!something,!then!
If!A!pays!C,!B!is!still!entitled!to!his!share!from!A!in!case!C! they! must! pay! it! ! and! since! the! obligation! is! solidary,! the! creditor! can!
does!not!give!B!his!share.! claim!from!anyone.)(
Atty.! Mel! disagrees! with! this! interpretation! ! collecting! payment! is! Solidary! creditor! has! a! right! to! refuse! partial* payment! ! however,! if! he!
beneficial!to!the!other!creditors!and!thus!should!be!allowed.! does!accept!partial!payment!from!one!debtor,!this!does!not!bar!him!from!
If! there! are! 2! or! more! debtors,! only! the! debtor! upon! whom! demand! is! demanding!from!the!others!the!rest!of!the!obligation.(
made!is!bound!to!pay!to!the!specific!creditor!who!made!the!demand.!
! Art.*1217**Payment*by*Solidary*Debtors**
Payment!made!by!one!of!the!solidary!debtors!extinguishes!the!obligation.!If!two!or!
Art.*1215**Extinguishment*by*a*Solidary*Creditor** more!solidary!debtors!offer!to!pay,!the!creditor!may!choose!which!offer!to!accept.!
Novation,! compensation,! confusion! or! remission! of! the! debt,! made! by! any! of! the!
solidary!creditors!or!with!any!of!the!solidary!debtors,!shall!extinguish!the!obligation,! He! who! made! the! payment! may! claim! from! his! co+debtors! only! the! share! which!
without!prejudice!to!the!provisions!of!Article!1219.! corresponds! to! each,! with! the! interest! for! the! payment! already! made.! If! the!
payment!is!made!before!the!debt!is!due,!no!interest!for!the!intervening!period!may!
The!creditor!who!may!have!executed!any!of!these!acts,!as!well!as!he!who!collects! be!demanded.!
the!debt,!shall!be!liable!to!the!others!for!the!share!in!the!obligation!corresponding!
to!them.!(1143)! When!one!of!the!solidary!debtors!cannot,!because!of!his!insolvency,!reimburse!his!
share! to! the! debtor! paying! the! obligation,! such! share! shall! be! borne! by! all! his! co+
These!are!modes!of!extinguishing!obligations,!to!be!discussed!in!the!next! debtors,!in!proportion!to!the!debt!of!each.!(1145a)!
title.!Briefly,!they!are:!
1. Novation!!change!of!creditors,!debtors,!or!principal!condition.! This! article! deals! with! the! effect! of! payment! by! solidary! debtors,! with!
2. Compensation! ! two! persons! are! creditors! and! debtors! of! each! regard!to!several!relationships.!
other.! !
3. Confusion!!creditor!and!debtor!are!merged!in!the!same!person.! 1. Between*solidary*debtors*and*creditor(s)*
4. Remission!!condonation!of!an!obligation.! Payment! made! by! one! of! the! solidary! debtors! (payment! in! full)!
Any! of! the! solidary! debtors! can! undertake! these! options! with! any! of! the! extinguishes!the!obligation.!
solidary!debtors,!and!thus!the!obligation!will!be!extinguished.!However,!he! Creditor!is!given!a!right!to!choose!which!offer!to!accept,!if!there!
who!does!these!acts!will!be!liable!to!his!fellow!creditors!for!their!share!in! are!more!than!one!debtors!offering!to!pay.!
the!obligation.!! 2. Among*the*solidary*debtors*
He! who! paid! the! debt! can! demand! reimbursement! from! his! co+
Art.*1216**Rights*of*Creditor*Against*Solidary*Debtors** debtors! for! their! proportionate! shares! (with! legal! interest! from!
The!creditor!may!proceed!against!any!one!of!the!solidary!debtors!or!some!or!all!of! the!time!that!he!paid).!
them! simultaneously.! The! demand! made! against! one! of! them! shall! not! be! an! When! one! of! the! debtors! cannot! reimburse! because! he! is!
obstacle!to!those!which!may!subsequently!be!directed!against!the!others,!so!long!as! insolvent,!the!other!debtors!will!pay!his!share,!in!proportion!with!
the!debt!has!not!been!fully!collected.!(1144a)! their!respective!debts.!
3. Among*the*solidary*creditors*
35!
!
o The! receiving! creditor! (the! person! who! was! paid)! is! jointly! liable! If!payment!was!made!BEFORE!remission,!A!is!liable!to!B!
to!the!others!for!their!corresponding!shares.! for!500!because!the!remission!had!no!effect.!
!
Art.* 1221* * Loss* or* Impossibility* of* Prestation* in* Relation* to* Solidary*
Art.*1218**When*Payment*has*Prescribed*or*become*Illegal* Debtors*
Payment! by! a! solidary! debtor! shall! not! entitle! him! to! reimbursement! from! his! co+ If! the! thing! has! been! lost! or! if! the! prestation! has! become! impossible! without! the!
debtors! if! such! payment! is! made! after! the! obligation! has! prescribed! or! become! fault!of!the!solidary!debtors,!the!obligation!shall!be!extinguished.!
illegal.!(n)!
If! there! was! fault! on! the! part! of! any! one! of! them,! all! shall! be! responsible! to! the!
If! a! debtor! pays! after! the! obligation! is! prescribed! or! has! become! illegal,! creditor,!for!the!price!and!the!payment!of!damages!and!interest,!without!prejudice!
essentially,!he!is!paying!a!non+existent!debt.! to!their!action!against!the!guilty!or!negligent!debtor.!
o Prescription! means! that! the! cause! of! action! has! already! lapsed!
and!ceased!to!exist.! If! through! a! fortuitous! event,! the! thing! is! lost! or! the! performance! has! become!
impossible! after! one! of! the! solidary! debtors! has! incurred! in! delay! through! the!
Thus,! he! cannot! demand! that! his! co+debtors! reimburse! him! for! their!
judicial! or! extrajudicial! demand! upon! him! by! the! creditor,! the! provisions! of! the!
shares.!
preceding!paragraph!shall!apply.!(1147a)!
Art.*1219**Remission*of*a*Solidary*Debtors*Liability*
This!article!provides!rules!for!when!the!thing!to!be!delivered!is!lot,!or!when!
The!remission!made!by!the!creditor!of!the!share!which!affects!one!of!the!solidary!
the!prestation!becomes!impossible!to!comply!with.!
debtors!does!not!release!the!latter!from!his!responsibility!towards!the!co+debtors,!
1. Loss* is* without* fault* of* debtors,* and* without* delay! ! obligation! is!
in!case!the!debt!had!been!totally!paid!by!anyone!of!them!before!the!remission!was!
extinguished.!
effected.!(1146a)!
2. If* with* fault* of* any* of* the* debtors! ! all! shall! be! liable! for! damages! with!
Art.*1220**Remission*of*the*Whole*Obligation* interest! without! ! prejudice! innocent! debtors! actions! against! the! guilty! or!
The! remission! of! the! whole! obligation,! obtained! by! one! of! the! solidary! debtors,! the!negligent!debtor.!
3. Loss*is*due*to*fault*of*a*solidary*debtor*
does!not!entitle!him!to!reimbursement!from!his!co+debtors.!(n)!
Ex.! A,!B,!and!C!are!obliged!to!deliver!a!truck!worth!15,000!to!D!
If! it! is! lost! through! the! fault! of! C,! A! and! B! are! still!
When!a!creditor!remits!the!debt!of!one!of!the!solidary!debtors,!the!effects!
responsible! to! D! for! the! price! of! the! truck! as! well! as!
depend!on!when!such!remission!was!done.!
damages.! (in! solidary! obligations,! the! fault/delay! of! one!
o If!the!creditor!remits!the!whole!debt!before!payment!was!made,!
of!the!debtors!is!the!fault/delay!of!all)!
the! person! who! convinced! the! creditor! to! remit! cannot! claim!
A!and!B!can!recover!from!C!damages.!!
anything!from!his!co+debtors,!because!he!hasnt!paid!anything.!
4. Loss*is*without*fault*but*after*delay*
o If! debt! had! been! paid! already,! and! the! creditor! is! convinced! to!
o D! can! recover! damages! from! the! innocent! debtors,! and! the!
condone! the! debt,! this! has! no! effect.! However,! the! debtor! who!
innocent! debtors! have! the! same! action! against! the! offending!
paid!can!still!go!after!his!other!co+debtors!for!their!share.!
debtor!as!mentioned!in!the!previous!number.!
This!article!is!only!applicable!when!there!is!one!creditor.!
o Because! one! of! them! was! in! default,! all! of! them! now! are!
Ex.! A!and!B!are!solidarily!liable!to!C!for!1,000.!
responsible!even!for!a!fortuitous!event.!
C!remits!As!share.!
!
If!B!pays!C!1,000,!he!cannot!go!after!A!for!500.!!
!
C,!however,!has!to!return!500!to!B.!
36!
!
Art.*1222**Solidary*Debtors*Defenses** Divisible* obligation! ! an! obligation! whose! object,! in! its! delivery! or!
A!solidary!debtor!may,!in!actions!filed!by!the!creditor,!avail!himself!of!all!defenses! performance,!is!capable!of!partial!fulfillment!
which! are! derived! from! the! nature! of! the! obligation! and! of! those! which! are! Indivisible*Obligation!!not!capable!of!partial!fulfillment!
personal! to! him,! or! pertain! to! his! own! share.! With! respect! to! those! which! Test! ! not! the! possibility! or! impossibility! of! partial! performance,! but!
personally!belong!to!the!others,!he!may!avail!himself!thereof!only!as!regards!that! rather,!the!purpose!of!the!obligation!or!the!intention!of!the!parties!
part!of!the!debt!for!which!the!latter!are!responsible.!(1148a)!! o The! object/service! may! be! physically! divisible,! but! if! the!
parties/law!say!it!should!be!indivisible,!its!indivisible.!
Defenses!available!to!a!solidary!debtor( o However,!if!physically!indivisible,!its!always!indivisible.!
1. Derived*from*the*nature*of*the*obligation* This! article! says! that! the! Nature! and! Effect! of! Obligations! (arts! 1163+
1178)!are!also!applicable!to!these!kinds!of!obligations,!even!if!there!is!only!
Ex.! A! and! B! are! solidarily! liable! to! C! for! 4,000.! D! pays! this!
one!debtor!or!creditor.!
entire!debt.!
If!C!sues!A,!A!can!raise!the!defense!of!payment.!! Art.*1224*7*Liabilities*in*Joint*Indivisible*Obligations*
This!is!a!complete!defense!!because!the! A! joint! indivisible! obligation! gives! rise! to! indemnity! for! damages! from! the! time!
obligation!is!nullified!and!extinguished! anyone!of!the!debtors!does!not!comply!with!his!undertaking.!The!debtors!who!may!
o Other!examples:! have! been! ready! to! fulfill! their! promises! shall! not! contribute! to! the! indemnity!
Prescription! beyond! the! corresponding! portion! of! the! price! of! the! thing! or! of! the! value! of! the!
Remission! service!in!which!the!obligation!consists.!(1150)!
Fraud!
Joint* Debtors! ! only! bound! to! perform! their! respective! portion.! In!
2. Personal*to*debtor*sued**
divisible,!this!is!easy!
o Insanity!at!the!time!the!obligation!was!contracted!(only!
If!obligation!is!indivisible,!each!debtor!must!coordinate!with!his!co+debtors!
with!respect!to!the!specific!insane!debtor)! for!the!fulfillment!of!the!obligation.!
o Incapacity! A,!B,!and!C!are!required!to!give!a!computer!worth!30,000!to!D,!but!when!
o Mistake! D!demands!payment,!only!C!unjustly!refuses!to!deliver.!
o Violence! o Obligation!is!then!turned!into!a!claim!for!damages,!as!well!as!the!
3. Personal*to*other*solidary*debtors* amount!of!the!computer.!
o A!and!B!are!liable!for!their!share!in!the!value!of!the!PC!(10,000!
*
each).!
o But!only!C!shall!be!liable!for!all!damages.!
SECTION!5.!+!Divisible!and!Indivisible!Obligations(
Art.*1225**Divisible*and*Indivisible*Obligations*
!!! For! the! purposes! of! the! preceding! articles,! obligations! to! give! definite! things! and!
those! which! are! not! susceptible! of! partial! performance! shall! be! deemed! to! be!
Art.*1223**Nature*and*Effect*of*Divisible*and*Indivisible*Obligations* indivisible.!
The! divisibility! or! indivisibility! of! the! things! that! are! the! object! of! obligations! in!
which!there!is!only!one!debtor!and!only!one!creditor!does!not!alter!or!modify!the! When!the!obligation!has!for!its!object!the!execution!of!a!certain!number!of!days!of!
provisions!of!Chapter!2!of!this!Title.!(1149)! work,!the!accomplishment!of!work!by!metrical!units,!or!analogous!things!which!by!
their!nature!are!susceptible!of!partial!performance,!it!shall!be!divisible.!
37!
!
However,! even! though! the! object! or! service! may! be! physically! divisible,! an! Indivisible!!A!promises!not!to!sell!cigarettes!for!one!year!!the!
obligation!is!indivisible!if!so!provided!by!law!or!intended!by!the!parties.! performance!is!continuous.!
Divisible!!A!promises!not!to!sell!cigarettes!during!Sundays!and!
In! obligations! not! to! do,! divisibility! or! indivisibility! shall! be! determined! by! the! holidays!!performance!is!NOT!continuous!
character!of!the!prestation!in!each!particular!case.!(1151a)!! o Generally,!to!do!and!not!to!do!are!indivisible!(except!to!do!
mentioned!above).!
This!article!deems!some!obligations!indivisible,!and!others,!divisible.!It!lays! !
down!the!general!rule.!
Again,!the!purpose!of!the!obligation!is!the!controlling!circumstance.! SECTION!6.!+!Obligations!with!a!Penal!Clause(
!
A. Obligations*deemed*indivisible:* !
1. Obligations*to*give*definite*things!!a!particular!electric!fan!
2. Obligations* which* are* not* susceptible* of* partial* performance! ! Art.*1226**Definition*of*Oblig*with*Penal*Clause**
to!sing!a!song,!to!dance!a!dance! In! obligations! with! a! penal! clause,! the! penalty! shall! substitute! the! indemnity! for!
3. Obligations*provided*by*law*to*be*indivisible!!payment!of!taxes! damages! and! the! payment! of! interests! in! case! of! noncompliance,! if! there! is! no!
4. Obligations*intended*by*parties*to*be*indivisible,!even!if!the!thing! stipulation! to! the! contrary.! Nevertheless,! damages! shall! be! paid! if! the! obligor!
is!physically!divisible:! refuses!to!pay!the!penalty!or!is!guilty!of!fraud!in!the!fulfillment!of!the!obligation.!
Pay!me!2,000!on!January!5.!
The!intention!is!clear!!the!2,000!should!be!delivered!at! The! penalty! may! be! enforced! only! when! it! is! demandable! in! accordance! with! the!
one!time!and!as!a!whole! provisions!of!this!Code.!(1152a)!
De! Leon:! Suppose! there! are! 2! debtors,! is! the! obligation!
still!indivisible?!YES! SSS( v.( Moonwalk! ! a! penal! clause! is! an! accessory! obligation! which! the!
o It!is!divisible!as!to!the!two!debtors,!because!they! parties! attach! to! a! principal! obligation! for! the! purpose! of! insuring! the!
can!deliver!it!in!parts! performance! thereof! by! imposing! on! the! debtor! a! special! prestation!
o However,! as! far! as! creditor! is! concerned,! the! (generally!consisting!in!the!payment!of!money)!in!case!the!obligation!is!not!
money! should! be! delivered! as! a! whole! and! is! fulfilled!or!irregularly!or!inadequately!fulfilled.!
thus! indivisible! ! intention! of! the! parties! is! Obligation* with* a* penal* clause! ! is! one! which! contains! an! accessory!
controlling! undertaking!to!pay!a!previously!stipulated!indemnity!in!case!of!breach!of!
B. Obligations*deemed*divisible:* the!principal!prestation,!intended!primarily!to!induce!its!fulfillment.!
o Obligations!which!have!for!their!object!the!execution!of!a!certain! Purposes!of!penal!clauses:!!
number! of! days! of! work! ! Paint! my! house! and! finish! within! 10! o To!insure!performance!
days.! o To!substitute!a!penalty!for!the!indemnity!of!damages/payment!of!
o Obligations! which! have! for! their! object! the! accomplishment! of! interest!
work! by! metrical! units.! ! Make! a! table! 3! feet! wide! and! 5! feet! o To!punish!the!debtor!
long! Kinds!of!Penal!Clause:!
o Obligations! which! by! their! nature! are! susceptible! of! partial! a. As!to!Origin!
performance!!Obligation!to!render!3!song!numbers,!obligation!to! 1. Legal*penal*Clause!!provided!by!law!
pay!money!in!installments.! 2. Conventional* Penal*Clause!!provided!for!by!stipulation!
C. Divisibility/Indivisiblity*of*obligations*not*to*do* of!the!parties!
o Character!of!the!prestation!in!the!particular!case!shall!determine! b. As!to!Purpose!
38!
!
1. Compensatory!!penalty!takes!place!of!damages! Art.*1228**Proof*is*Not*Necessary*
2. Punitive!!imposed!as!a!penalty/punishment!for!breach! Proof!of!actual!damages!suffered!by!the!creditor!is!not!necessary!in!order!that!the!
c. As!to!demandability/effect! penalty!may!be!demanded.!(n)!
1. Subsidiary/Alternative! ! only! the! penalty! can! be!
enforced! Art.*1229**Court*Intervention*
2. Joint/Cumulative!!both!principal!obligation!and!penalty! The!judge!shall!equitably!reduce!the!penalty!when!the!principal!obligation!has!been!
can!be!enforced! partly! or! irregularly! complied! with! by! the! debtor.! Even! if! there! has! been! no!
General! Rule! ! in! obligations! with! a! penal! clause,! the! penalty! takes! the! performance,! the! penalty! may! also! be! reduced! by! the! courts! if! it! is! iniquitous! or!
place!of!damages!and!the!payment!of!interest!in!case!of!non+compliance.!! unconscionable.!(1154a)!
Thus,! proof! of! actual! damage! suffered! is! not! necessary! to! enforce! the!
penalty!as!long!as!there!is!non+compliance.!! One!of!the!cases!where!the!court!steps!in!between!the!parties.!
Creditor!may!recover!damages!in!addition!to!the!penalty:! If!the!penalty!is!so!unconscionable,!then!the!court!may!temper,!reduce,!or!
1. When!so!stipulated! delete!it.!
2. When!obligor!refuses!to!pay!the!penalty! If! penalty! clause! is! so! unconscionable! that! its! enforcement! would!
3. When!obligor!is!guilty!of!fraud!in!the!fulfillment!of!the!obligation!! constitute!an!undue!deprivation!or!confiscation!of!property,!the!courts!can!
creditor!can!recover!damages!caused!by!such!fraud.! strike!it!down!as!invalid.!
Art.*1227**Penalty*and*Fulfillment* Art.*1230**Nullity*of*the*Penal*Clause*
The! debtor! cannot! exempt! himself! from! the! performance! of! the! obligation! by! !The!nullity!of!the!penal!clause!does!not!carry!with!it!that!of!the!principal!obligation.!
paying!the!penalty,!save!in!the!case!where!this!right!has!been!expressly!reserved!for!
him.! Neither! can! the! creditor! demand! the! fulfillment! of! the! obligation! and! the! The!nullity!of!the!principal!obligation!carries!with!it!that!of!the!penal!clause.!(1155)!!
satisfaction! of! the! penalty! at! the! same! time,! unless! this! right! has! been! clearly!
granted!him.!However,!if!after!the!creditor!has!decided!to!require!the!fulfillment!of! If!the!penal!clause!is!null,!the!original!obligation!still!persists.!
the! obligation,! the! performance! thereof! should! become! impossible! without! his! If!the!original!obligation!is!null,!the!penal!clause!is!null!as!well.!
fault,!the!penalty!may!be!enforced.!(1153a)!
Penalty!is!an!accessory!obligation,!not!a!substitute.!
! *
Debtor!cannot!merely!pay!the!penalty!instead!of!performing!the!obligation!
in!order!to!extinguish!the!obligation.!(as!always,!however,!the!parties!can!
stipulate!otherwise)!
Creditor! cannot! demand! fulfillment! of! obligation! and! payment! of! penalty!
at!the!same!time!(unless!stipulated)!
Penalty!may!be!enforced!if,!after!creditor!demands!fulfillment,!it!becomes!
impossible!without!fault!of!the!creditor.!
If! the! creditor! requires! the! obligation! to! be! fulfilled,! and! performance!
becomes!impossible!without!his!or!her!fault,!the!penalty!may!be!imposed.!
!
!
39!
!
Chapter*4:*Extinguishment*of*Obligations* o Receipt!of!principal!without!reservation!as!to!interest!gives!rise!to!
presumption!of!payment!of!interest.!
o Receipt! of! a! later! instalment! without! reservation! as! to! a! prior!
GENERAL!PROVISIONS! installment!gives!rise!to!the!presumption!of!payment!of!the!prior!
installment.!
!!! Burden! of! proof! to! show! payment,! once! debt! is! established,! is! on! the!
debtor.!
Payment!and!performance!are!synonymous.!
Art.*1231**Modes*of*Extinguishment*
Obligations!are!extinguished:!
Art.*1233*7*Payment*must*be*Complete*
(1)!By!payment!or!performance:! A! debt! shall! not! be! understood! to! have! been! paid! unless! the! thing! or! service! in!
(2)!By!the!loss!of!the!thing!due:! which! the! obligation! consists! has! been! completely! delivered! or! rendered,! as! the!
(3)!By!the!condonation!or!remission!of!the!debt;! case!may!be.!(1157)!
(4)!By!the!confusion!or!merger!of!the!rights!of!creditor!and!debtor;!
(5)!By!compensation;! Payment!!full!satisfaction!of!the!debt/obligation!
(6)!By!novation.! o everything! that! is! necessary! to! satisfy! the! obligation,! consistent!
with!the!object!of!the!same.!
Other! causes! of! extinguishment! of! obligations,! such! as! annulment,! rescission,! Anything! less! than! complete! performance! may! be! considered! to! be! a!
fulfillment! of! a! resolutory! condition,! and! prescription,! are! governed! elsewhere! in! breach.!
this!Code.!(1156a)!!
Art.*1234**Substantial*Performance*in*Good*Faith*
Provides!modes!by!which!obligations!can!be!extinguished.!! If! the! obligation! has! been! substantially! performed! in! good! faith,! the! obligor! may!
Death! does! not! extinguish! an! obligation! unless! such! is! personal! or! recover! as! though! there! had! been! a! strict! and! complete! fulfillment,! less! damages!
intransmissible! suffered!by!the!obligee.!(n)!
!
First*Exception!!substantial!performance!!!
o Generally,!anything!less!than!complete!=!breach!
SECTION!1.!+!Payment!or!Performance! In! this! case,! there! is! substantial! fulfillment! ! the! breach! is! not! material!
enough!to!compel!the!creditor!to(rescind.!
!
o Thus,!the!unperformed!part!should!not!destroy!the!value/purpose!
of!the!contract.!
Art.*1232**Payment*Defined* Debtor!may!recover!as!if!there!had!been!a!strict!and!complete!fulfillment,!
Payment! means! not! only! the! delivery! of! money! but! also! the! performance,! in! any! less!damages!suffered!by!creditor.!
other!manner,!of!an!obligation.!(n)! o Creditor! is! benefitted! by! the! substantial! performance,! so! the!
obligor!should!be!allowed!to!recover.!
Payment!is!not!exclusively!limited!to!giving!of!money! o The!damages!are!compensation!for!the!relative!breach!committed!
Payment!is!any*manner*of*performing*the*obligation*with*the*end*in*view* by!obligor.!
of*extinguishing*it.! Pagsibigan( v.( CA( ( the! debtor,! because! of! high! interest! rate! and! several!
Certain!presumptions!are!made!in!favor!of!payment! penalty!charges,!had!effectively!paid!more!than!the!original!amount!of!the!
40!
!
loan.! ! SC! ruled! that! there! was! substantial! compliance.! Thus,! debtor! was! Art.*1237**No*Subrogation*
released!from!his!mortgage!!debtor!may!recover!as!if! Whoever!pays!on!behalf!of!the!debtor!without!the!knowledge!or!against!the!will!of!
the!latter,!cannot!compel!the!creditor!to!subrogate!him!in!his!rights,!such!as!those!
Art.*1235**Creditor*Accepts*Incompleteness*or*Irregularity* arising!from!a!mortgage,!guaranty,!or!penalty.!(1159a)!
When! the! obligee! accepts! the! performance,! knowing! its! incompleteness! or!
irregularity,! and! without! expressing! any! protest! or! objection,! the! obligation! is! Art.*1238*7*Donation*
deemed!fully!complied!with.!(n)! Payment! made! by! a! third! person! who! does! not! intend! to! be! reimbursed! by! the!
debtor! is! deemed! to! be! a! donation,! which! requires! the! debtor's! consent.! But! the!
Second* Exception! ! the! creditor! waives! the! damages! arising! from! the! payment!is!in!any!case!valid!as!to!the!creditor!who!has!accepted!it.!(n)!
breach!of!contract!resulting!in!the!incompleteness/irregularity.!!
He!must!express!his!objection,!because!if!not,!he!accepts!the!performance( People!whose!payment!the!creditor!is!bound!to!accept:!
as!fully!complied!with.! 1. The!debtor!
Esguerra(v.(Villanueva( 2. Any!person!who!has!an!interest!in!the!obligation!(ex.!Guarantor)!
o Debtor! said! that! since! creditor! received! partial! payments,! he! 3. A!third!person!uninterested!in!the!obligation,!WHEN!STIPULATED.!
rd
accepted! partial! performance! and! thus! the! obligation! should! be! Payment* by* a* 3 * person! ! several! situations! may! arise.! These! will!
considered!complied!with! determine!whether!the!third!person!becomes!a!creditor!as!to!the!original!
o SC:!receipt!is!not!equivalent!to!acceptance.! debtor.!
o Mere! receipt! is! not! enough! to! constitute! acceptance! ! in! fact,! 1. Third! person! pays! without* knowledge* or* against* the* will* of! the!
creditor!actually!manifested!their!dissatisfaction! debtor!
o No*particular*manner*prescribed*for*the*creditors*objection**so! o The! third! person! can! only! recover! from! the! debtor! to! the!
long! as! the! acts! of! the! creditor! at! the! time! of! the! irregular! extent!that!the!debtor!is!benefitted.!
payment!show!that!the!former!is!not!satisfied.!! o What!is!beneficial!to!the!debtor!is!determined!by!law!and!not!
Tayag(v.(CA( the!will!of!the!debtor.!
o Sellers!accepted!numerous!payments!in!installment!after!the!due! Ex.!A!owed!B!500,000!secured!by!a!mortgage.!
date,! without! any! protest,! it! was! even! the! buyers! (debtors)! who! C!pays!B!without!knowledge/against!the!will!of!A.!
filed!a!case!for!performance!of!the!sale!!SC!held!that!these!acts! C! can! recover! the! 500,000,! but! he! does! not! acquire!
were!clearly!a!waiver!of!the!right!to!rescind! the!right!to!the!mortgage!!he!cannot!foreclose!on!the!
property.!
Art.*1236**Payment*by*a*Third*Person* 2. Third! person! pays! with* knowledge,* but* against* the* will! of! the!
The!creditor!is!not!bound!to!accept!payment!or!performance!by!a!third!person!who! debtor!!same!as!above!
has! no! interest! in! the! fulfillment! of! the! obligation,! unless! there! is! a! stipulation! to! 3. Third!person!pays!with*knowledge*and*consent*of*the*debtor*!
the!contrary.! o Third!person!can!recover!the!amount!he!paid!to!the!creditor.!
o He! may! also! compel! the! creditor! to! transfer! to! him! any!
Whoever!pays!for!another!may!demand!from!the!debtor!what!he!has!paid,!except! mortgage,!guaranty!or!penalty!
that! if! he! paid! without! the! knowledge! or! against! the! will! of! the! debtor,! he! can! o There!is!legal!subrogation!here.!
recover!only!insofar!as!the!payment!has!been!beneficial!to!the!debtor.!(1158a)! 4. Creditor! accepts* payment* from* third* person,* because* its*
stipulated* * same! as! previous,! because! obviously! the! debtor!
! agrees!with!such!payment.!
5. Third! person! pays! creditor! without* intending* to* be* reimbursed*
!
by*the*debtor!
41!
!
o Obligation! is! extinguished,! regardless! of! the! debtors! Art.*1241**Payment*to*Incapacitated*or*Third*Persons*
consent.! Payment!to!a!person!who!is!incapacitated!to!administer!his!property!shall!be!valid!if!
o Its!treated!as!a!donation.! he! has! kept! the! thing! delivered,! or! insofar! as! the! payment! has! been! beneficial! to!
him.!
Art.*1239**Payment*by*an*Incapacitated*Person*
In!obligations!to!give,!payment!made!by!one!who!does!not!have!the!free!disposal!of! Payment!made!to!a!third!person!shall!also!be!valid!insofar!as!it!has!redounded!to!
the!thing!due!and!capacity!to!alienate!it!shall!not!be!valid,!without!prejudice!to!the! the!benefit!of!the!creditor.!Such!benefit!to!the!creditor!need!not!be!proved!in!the!
provisions!of!Article!1427!under!the!Title!on!"Natural!Obligations."!(1160a)! following!cases:!
(1)!If!after!the!payment,!the!third!person!acquires!the!creditor's!rights;!
Free*Disposal*of*the*Thing!!the!thing!must!not!be!subject!to!any!claim! (2)!If!the!creditor!ratifies!the!payment!to!the!third!person;!
or!lien!or!encumbrance!of!a!third!person.! (3)! If! by! the! creditor's! conduct,! the! debtor! has! been! led! to! believe! that! the! third!
Capacity*to*alienate**person!is!not!incapacitated!to!enter!into!contracts! person!had!authority!to!receive!the!payment.!(1163a)!
and!to!make!a!disposition!of!the!thing!due.*
Thus,!payments!by!any!person!not!possessing!these!qualities!is!invalid.!! Effect*of*payment*to*an*incapacitated*person* *
o Exception:! People! 17! years! old! and! below! who! enter! into! a! o not!valid,!unless!such!person!keeps!the!thing!paid!or!delivered,!or!
contract! without! the! consent! of! their! parent/guardian,! and! who! was!benefitted!by!the!payment!
pay! voluntarily! to! fulfill! the! obligation! have! no! right! to! recover! Ex.! If!A!gives!to!B,!a!minor,!1000!in!payment!of!the!debt,!and!C!
from! the! creditor! who! has! spent! it! in! good! faith.! (based! on! Art.! loses! 700! because! of! negligence! ! the! payment! should! be!
1427!of!Civil!Code!and!234!and!236!of!the!Family!Code)! considered!made!only!to!the!extent!of!300.!
If! B! keeps! the! money,! or! spent! it! on! purposes! useful! to! him! !
Art.*1240**To*Whom*Payment*Should*be*Made* payment!shall!be!valid!
Payment! shall! be! made! to! the! person! in! whose! favor! the! obligation! has! been! Effect*of*payment*to*a*third*person*
constituted,! or! his! successor! in! interest,! or! any! person! authorized! to! receive! it.! o Not!valid,!except!insofar!as!it!has!redounded!to!the!benefit!of!the!
(1162a)! creditor.!
o Thus!benefit!is!not!presumed!and!must!be!proven!by!evidence.!
Payment!should!only!be!paid!to!! o Exceptions!!when!it!need!not!be!proven!(S.R.E.)!
o The!creditor! 1. Subrogation! +! If! after! the! payment,! the! 3rd! person! acquires!
o His!successors!in!interest! the!creditors!rights!!
o Any!person!authorized!to!receive!it.! A! owed! B! 1000.! He! does! not! pay! on! due! date,! so! B!
Authorized!by!the!creditor! adds!100!as!interest.!
Authorized!by!the!law! A!pays!X,!a!third!person,!the!1000.!
Payment!made!to!a!third!person,!even!if!through!error!and!good!faith!does! If!B!empowers!X!to!collect!the!P100!interest!for!himself!
not!release!debtor!of!obligation!to!pay.!Creditor!can!still!demand!payment.! (X),! then! the! benefit! to! the! creditor! need! not! be!
o If!it!becomes!impossible!to!recover,!any!loss!shall!be!borne!by!the! proven.!!
deceived!debtor! 2. Ratification!by!the!creditor!
3. Estoppel!on!the!part!of!the!creditor!
! B!tells!A!that!he!can!pay!X!the!indebtedness.!
B!cannot!disclaim!the!payment!to!X.!
! !
42!
!
Art.*1242**Payment*to*Possessor*of*Credit* 3. There! must! be! an! agreement! between! creditor! and! debtor! that!
Payment!made!in!good!faith!to!any!person!in!possession!of!the!credit!shall!release! the!obligation!is!immediately!extinguished.(
the!debtor.!(1164)! If!thing!is!of!less!value!!for!example,!the!piano(
o The!debt!is!extinguished!to!the!extent!of!the!value!of!the!thing.(
o Unless!the!parties!agree!that!the!whole!obligation!is!extinguished.(
A!person!in!possession!of!the!credit!is!presumed!to!own!the!credit.!
(
The!examples!about!to!bearer!checks!fall!under!this!article.!
Art.*1246**Delivery*of*a*Generic*Thing*
Art.*1243**Judicial*Order*to*Retain*the*Debt*
When! the! obligation! consists! in! the! delivery! of! an! indeterminate! or! generic! thing,!
Payment! made! to! the! creditor! by! the! debtor! after! the! latter! has! been! judicially!
whose!quality!and!circumstances!have!not!been!stated,!the!creditor!cannot!demand!
ordered!to!retain!the!debt!shall!not!be!valid.!(1165)!
a!thing!of!superior!quality.!Neither!can!the!debtor!deliver!a!thing!of!inferior!quality.!
The! purpose! of! the! obligation! and! other! circumstances! shall! be! taken! into!
The!debtor!is!prohibited!from!paying!a!creditor!if!the!court!prohibits!him!
consideration.!(1167a)!
from!doing!so!!if!he!does,!such!is!invalid!
The!purpose!!to!protect!other!creditors!of!the!debtor!
Rule*of*Medium*Quality*
o Creditor!cannot!demand!the!best.!
Art.*1244**Creditor*Cannot*be*Compelled*to*Receive*a*Different*Thing* o Debtor!cannot!give!the!worst.!
The! debtor! of! a! thing! cannot! compel! the! creditor! to! receive! a! different! one,! What! is! delivered! should! be! consistent! with! the! purpose! and! goal! of! the!
although!the!latter!may!be!of!the!same!value!as,!or!more!valuable!than!that!which! obligation.!
is!due.! o Rent!a!car!to!be!used!in!a!simple!wedding!
o Creditor!cannot!demand!a!Rolls+Royce!that!debtor!cannot!afford!
In! obligations! to! do! or! not! to! do,! an! act! or! forbearance! cannot! be! substituted! by!
o Obligor!cannot!give!a!crap!Kia!Pride!that!does!not!brake.!
another!act!or!forbearance!against!the!obligee's!will.!(1166a)!
Debtor!has!no!choice!in!the!payment!except!to!give!what!is!agreed!upon.!
Art.*1247**Extrajudicial*Expenses*
o Unless!the!obligation!is!facultative/alternative.! Unless! it! is! otherwise! stipulated,! the! extrajudicial! expenses! required! by! the!
payment! shall! be! for! the! account! of! the! debtor.! With! regard! to! judicial! costs,! the!
Rules!of!Court!shall!govern.!(1168a)!
Art.*1245**Dation*in*Payment*
Dation!in!payment,!whereby!property!is!alienated!to!the!creditor!in!satisfaction!of!a!
Principal! behind! this! is! that! the! creditor! usually! is! the! beneficiary! of! the!
debt!in!money,!shall!be!governed!by!the!law!of!sales.!(n)!
obligation!
Thus,! it! is! the! debtor! who! does! service,! and! must! bear! any! extra+judicial!
Dation*in*payment*/*dacion!en!pago!!conveyance!of!ownership!of!a!thing!
costs!in!his!performance.!
as!an!accepted!equivalent!or!performance.!
Ex.! D!owes!C!30,000.!To!fulfill!this!obligation,!D,!with!consent!of!C,!
delivers!a!piano.!( Art.*1248**Partial*Receipt*and*Payment*
Unless! there! is! an! express! stipulation! to! that! effect,! the! creditor! cannot! be!
Requisites!of!dation!in!payment:!(P.D.A.)(
compelled! partially! to! receive! the! prestations! in! which! the! obligation! consists.!
1. The!performance*of*the*prestation!in!lieu!of!payment(
Neither!may!the!debtor!be!required!to!make!partial!payments.!
Delivery!of!a!realy!thing,!or!a!real!right,!or!a!credit(
2. There! must! be! some! difference! between! the! prestation! due! and!
that!given!in!substitution(
43!
!
However,!when!the!debt!is!in!part!liquidated!and!in!part!unliquidated,!the!creditor! Legal*Tender!!that!currency!which!a!debtor!can!legally!compel!a!creditor!
may!demand!and!the!debtor!may!effect!the!payment!of!the!former!without!waiting! to!accept!in!payment!of!a!debt!in!money!when!tendered!by!debtor!in!the!
for!the!liquidation!of!the!latter.!(1169a)! right!amount.!
o Debts!in!money!shall!be!paid!in!the!currency!stipulated.!
This! contemplates! obligations! where! there! is! only! one! creditor! and! only! o If! impossible! to! deliver! such! currency,! or! in! the! absence! of!
one!debtor.! stipulation,! the! default! is! that! payment! shall! be! made! in! the!
currency! which! is! legal! tender! in! the! Philippines.! (all! coins! and!
General!rule!!payment!must!be!in!full!in!order!to!extinguish!an!obligation.!
o Creditor! may! accept! partial! performance,! but! he! may! not! be! notes!issued!by!the!Bangko!Sentral!ng!Pilipinas)!
compelled!to.! Payment* by* means* of* instruments* of* credits! ! do! not! extinguish! the!
o Debtor!should!fulfill!the!obligation,!but!he!cannot!be!required!to! obligation!until:! !
make!partial!payments.! o They!have!been!cashed.!
o They!have!been!impaired!through!the!fault!of!the!creditor.!
When*is*partial*performance*allowed:** rd
1. Express!stipulation!in!the!obligation! Applicable! only! to! instruments! executed! by! 3 ! persons! and!
2. Debt!is!part!liquidated!(computed)!and!in!part!unliquidated! delivered!by!debtor!to!creditor!
Does!not!apply!to!instruments!executed!by!debtor!himself!and!
Ex.!The!obligation!is!to!deliver!1,000,!and!whatever!debtor!gets!
from!his!fathers!estate.! delivered!to!creditor!
He! can! give! the! 1,000! first! without! waiting! for! the! Bill*of*exchange**unconditional!order!in!writing!addressed!by!one!person!
determination!of!his!inheritance.! to!another,!signed!by!the!person!giving!it,!requiring!the!addresee!to!pay!on!
3. If!creditor!accept!such!payment!and!benefits!from!it! demand!a!sum!certain!in!money!to!the!bearer.!*
4. When! the! different! prestations! in! which! the! obligation! consists! o A! check! is! a! bill! of! exchange! addressed! to! the! bank,! payable! on!
are!subject!to!different*terms*or*conditions*which*affect*some*of* demand.!
them.! If! payment! is! tendered! by! way! of! check,! and! the! obligee!
Ex.!Obligation!to!pay!debt!in!installments! accepts,!such!obligee!is!estopped!from!questioning!the!efficacy!
Prestations! (each! installment)! need! not! be! given! of!such!tender!
simultaneously.!
! Art.*1250**Inflation*or*Deflation*
In! case! an! extraordinary! inflation! or! deflation! of! the! currency! stipulated! should!
Art.*1249**Currency*and*Legal*Tender* supervene,! the! value! of! the! currency! at! the! time! of! the! establishment! of! the!
The!payment!of!debts!in!money!shall!be!made!in!the!currency!stipulated,!and!if!it!is! obligation! shall! be! the! basis! of! payment,! unless! there! is! an! agreement! to! the!
not!possible!to!deliver!such!currency,!then!in!the!currency!which!is!legal!tender!in! contrary.!(n)!
the!Philippines.!
Extraodrinary*Inflation!!a!decrease!or!increase!in!the!purchasing!power!of!
The! delivery! of! promissory! notes! payable! to! order,! or! bills! of! exchange! or! other! the! Philippine! currency! which! is! unusual! or! beyond! the! common!
mercantile! documents! shall! produce! the! effect! of! payment! only! when! they! have! fluctuation!of!the!value!of!the!said!currency,!and!such!decrease!or!increase!
been!cashed,!or!when!through!the!fault!of!the!creditor!they!have!been!impaired.! could! not! have! been! foreseen,! or! was! beyond! contemplation! of! the!
parties.!
In!the!meantime,!the!action!derived!from!the!original!obligation!shall!be!held!in!the! o Cannot!be!applied!without!an!official!declaration!from!competent!
abeyance.!(1170)! authorities.!
o Applies!only!to!cases!where!a!contract/agreement!is!involved.!
o Does!not!apply!when!obligation!to!pay!is!derived!from!law.!
44!
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Art.*1251**Place*of*Payment* These!apply!to!a!person!who!has!several!debts!of!the!same!kind*to!a!single!
Payment!shall!be!made!in!the!place!designated!in!the!obligation.! creditor.*
When!a!person!pays,!he!is!given!the!choice!to!which!debt!the!payment!is!
There!being!no!express!stipulation!and!if!the!undertaking!is!to!deliver!a!determinate! applied.*
thing,!the!payment!shall!be!made!wherever!the!thing!might!be!at!the!moment!the! The!payments!must!still!conform!to!the!rules!given!in!the!previous!articles*
obligation!was!constituted.! o Creditor!can!refuse!if!the!payment!is!applied!to!a!debt!that!would!
only!be!partially!fulfilled*
In!any!other!case!the!place!of!payment!shall!be!the!domicile!of!the!debtor.! Application!of!payments!cannot!be!made*on!debts!which!are!not!yet!due.*
1. Unless!parties!agree*
If!the!debtor!changes!his!domicile!in!bad!faith!or!after!he!has!incurred!in!delay,!the! 2. Payment! is! made! by! the! party! for! whose! benefit! the! term! has!
additional!expenses!shall!be!borne!by!him.! been!constituted*
Ex.! A! owes! B! 1,000! pesos,! and! such! debt! will! not! incur!
These!provisions!are!without!prejudice!to!venue!under!the!Rules!of!Court.!(1171a)!!
interest!before!a!certain!date,!the!term!is!constituted!for!
the!debtors!benefit.*
Provides!where!to!pay!in!order!to!ensure!certainty!in!payment.! 3. If!the!debtor!receives!and!accepts*a!receipt!for!the!application!he!
1. If!there!is!a!stipulated!place,!then!it!shall!be!made!there.!
cannot!complain!about!where!it!was!applied.*
2. If! there! is! no! stipulation,! and! the! thing! is! determinate,! payment!
shall!be!made!where!the!thing!was!at!the!time!of!the!perfection!of!
the!contract!
Art.*1253*7*Interest*
If!the!debt!produces!interest,!payment!of!the!principal!shall!not!be!deemed!to!have!
3. No!stipulation,!generic!thing!!domicile!of!the!debtor!
Domicile* ! a! persons! place! of! habitual! residence;! ! true! fixed! been!made!until!the!interests!have!been!covered.!(1173)!
permanent!home;!he!has!the!intention!of!returning!
Costs!shall!be!borne!by!by!the!creditor!in!going!to!the!domicile,! This!is!only!directory!and!not!mandatory.!
unless!such!has!been!changed!in!bad!faith,!or!unless!debtor!is!in! Payment!of!both!interest!and!principal!!two!payments!by!the!debtor.!
delay! This!article!is!why!the!presumption!of!payment!of!interest!arises!when!the!
principal!is!received!by!the!creditor.!
SUBSECTION*1.*7*Application*of*Payments* Right!to!apply!payment!to!interest!first!can!be!waived.!
!!!
Art.*1254**Most*Onerous*Debt*
Art.*1252**Application*of*Payments* When!the!payment!cannot!be!applied!in!accordance!with!the!preceding!rules,!or!if!
He!who!has!various!debts!of!the!same!kind!in!favor!of!one!and!the!same!creditor,! application! cannot! be! inferred! from! other! circumstances,! the! debt! which! is! most!
may!declare!at!the!time!of!making!the!payment,!to!which!of!them!the!same!must! onerous!to!the!debtor,!among!those!due,!shall!be!deemed!to!have!been!satisfied.!
be! applied.! Unless! the! parties! so! stipulate,! or! when! the! application! of! payment! is!
made! by! the! party! for! whose! benefit! the! term! has! been! constituted,! application! If!the!debts!due!are!of!the!same!nature!and!burden,!the!payment!shall!be!applied!to!
shall!not!be!made!as!to!debts!which!are!not!yet!due.! all!of!them!proportionately.!(1174a)!!
If! the! debtor! accepts! from! the! creditor! a! receipt! in! which! an! application! of! the! If!there!is!no!indication!as!to!which!debt!the!payment!goes!to!!it!goes!to!
payment!is!made,!the!former!cannot!complain!of!the!same,!unless!there!is!a!cause! the!most!onerous,!provided!it!is!due.!
for!invalidating!the!contract.!(1172a)! o Onerous!!indebtedness!which!exacts!the!heaviest!burden*!
45!
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Ex.! A! debt! with! interest! is! more! onerous! than! one! without! Effect*of*Cession*
interest.! o Unless!otherwise!stipulated,!creditors!do!now!become!owners.!
Same!nature!and!burden!+!there!is!no!most!onerous! o Debtor!is!only!released!up!to!the!net!proceeds!of!the!sale.!
o Payment!shall!be!applied!to!all!proportionally.! If!his!properties,!when!sold,!dont!raise!enough!money,!he!still!
Ex.! A! owes! B! three! debts! totalling! 30,000,! and! he! gives! 9,000! has!a!debt!to!pay!
without!saying!where!it!will!go.! !
Each!debt!will!be!reduced!by!3,000.!
Ex.! A! owes! B! 10,000,! 20K,! and! 30,000.! He! pays! 6,000! ! the! SUBSECTION*3.*7*Tender*of*Payment*and*Consignation*
proportion!is!1:2:3.! !!!
1,000!applied!to!the!10,000!debt,!2,000!to!the!20,000,!and!
3,000!to!the!30,000.! Art.*1256**Tender*of*Payment*and*Consignment*
If! the! creditor! to! whom! tender! of! payment! has! been! made! refuses! without! just!
* cause! to! accept! it,! the! debtor! shall! be! released! from! responsibility! by! the!
consignation!of!the!thing!or!sum!due.!
SUBSECTION*2.*7*Payment*by*Cession*
! Consignation!alone!shall!produce!the!same!effect!in!the!following!cases:!
Art.*1255*7*Cession* (1)! When! the! creditor! is! absent! or! unknown,! or! does! not! appear! at! the! place! of!
The!debtor!may!cede!or!assign!his!property!to!his!creditors!in!payment!of!his!debts.! payment;!
This!cession,!unless!there!is!stipulation!to!the!contrary,!shall!only!release!the!debtor! (2)!When!he!is!incapacitated!to!receive!the!payment!at!the!time!it!is!due;!
from! responsibility! for! the! net! proceeds! of! the! thing! assigned.! The! agreements! (3)!When,!without!just!cause,!he!refuses!to!give!a!receipt;!
which,!on!the!effect!of!the!cession,!are!made!between!the!debtor!and!his!creditors! (4)!When!two!or!more!persons!claim!the!same!right!to!collect;!
(5)!When!the!title!of!the!obligation!has!been!lost.!(1176a)!
shall!be!governed!by!special!laws.!(1175a)!!
Art.*1257*7*Announcement*
Payment*by*Cession** In!order!that!the!consignation!of!the!thing!due!may!release!the!obligor,!it!must!first!
o Special!form!of!payment!
be!announced!to!the!persons!interested!in!the!fulfillment!of!the!obligation.!
o Assignment/abandonment! of! all! the! properties! of! the! debtor! for!
the!benefit!of!his!creditors.! The!consignation!shall!be!ineffectual!if!it!is!not!made!strictly!in!consonance!with!the!
Only!the!properties!which!are!susceptible!and!not!exempted!by! provisions!which!regulate!payment.!(1177)!
law!from!being!alienated!(example!family!home)!
o Such!that!the!latter!may!sell!the!same!and!apply!the!proceeds!to! Art.*1258**Consignation*Process*
the!satisfaction!of!their!credits! Consignation!shall!be!made!by!depositing!the!things!due!at!the!disposal!of!judicial!
Only!the!proceeds!!no!right!of!creditors!as!to!ownership!of!the! authority,! before! whom! the! tender! of! payment! shall! be! proved,! in! a! proper! case,!
properties!ceded.! and!the!announcement!of!the!consignation!in!other!cases.!
Requisites*of*Cession*
1. Two!or!more!creditors! The! consignation! having! been! made,! the! interested! parties! shall! also! be! notified!
2. Debtor!(partially)!insolvent! thereof.!(1178)!
3. Cession!must!be!accepted!by!creditors!
Creditors! must! agree! which! debt! will! be! paid! first,! or! the! * *
proportioning.!
46!
!
Tender*of*payment** o Expenses! are! chargeable! to! the! debtor* if! the! consignation! is! not!
o Act!on!the!part!of!the!debtor! properly!made.!
o Offering!to!the!creditor!the!thing!or!the!amount!due! Proper*consignation:!!
o Debtor!must!show!that!he!has!the!thing/money!in!his!possession! 1. When! creditor! accepts! the! thing! or! sum! deposited,! without!
o Must!be!made!in!lawful!currency!! objection,!as!payment!of!the!obligation!
o Extrajudicial! 2. When! creditor! questions! the! validity! of! consignation,! and! court!
o Requisites!for!valid!tender!of!payment! deems!it!valid!
1. Must!comply!with!the!rules!on!payment!(Arts!1256+1258)! 3. When! creditor! neither! accepts! or! questions! validity,! and! court!
2. Must!be!unconditional!and!for!the!whole!amount! orders!cancellation!of!the!obligation!
3. It!must!actually!be!made!
Consignation* Art.*1260**Judicial*Declaration*
o Act!of!depositing!the!thing!or!amount!due!with!the!proper!court! Once!the!consignation!has!been!duly!made,!the!debtor!may!ask!the!judge!to!order!
o When!the!creditor!does!not!desire!or!cannot!receiev!it! the!cancellation!of!the!obligation.!
o Consignation! is! judicial! ! generally! requires! a! prior! tender! of!
payment! Before!the!creditor!has!accepted!the!consignation,!or!before!a!judicial!declaration!
o Requisites! of! a! valid! consignation! ! in! order! that! debtor! may! be! that!the!consignation!has!been!properly!made,!the!debtor!may!withdraw!the!thing!
released!(V.T.R.P.A.S.)! or!the!sum!deposited,!allowing!the!obligation!to!remain!in!force.!(1180)!
1. Existence!of!a!valid*debt,!which!is!due!
2. Tender*of*payment!by!debtor! Once!consignation!is!deemed!proper,!debtor!should!be!released!from!the!
3. Refusal!without!justifiable!reason!by!creditor!! obligation!
4. Previous*notice*of!consignation!to!persons!interested!in! o Court!order!to!that!effect!
the!fulfillment!of!the!obligation! o Court!orders!creditor!to!accept!the!money/thing!
5. Actual*consignation*of!the!thing/sum!due/the!amount!is! Consignation!is!retroactive.!
placed!at!the!disposal!of!the!court! o Payment!deemed!to!have!been!made!at!the!time!of!the!deposit!of!
6. Subsequent*notice*to!interested!parties! the!money/when!the!thing!was!placed!at!the!disposal!of!the!court!
When! consignation! produce! the! same! effect! (Ex.! even! without! tender! of! Creditor!may!accept!either!unconditionally!or!with!reservation.!
payment)!!five*cases!(A.I.G.T.T.)! o Reservation!does!not!completely!extinguish!obligation.!
1. Creditor! is! absent/unknown/does! not! appear! at! the! place! of! Withdrawal*of*thing/sum*by*debtor!!debtor!may!withdraw!the!thing!or!
payment! sum!deposited.!
2. Creditor!is!incapacitated*to!receive!payment!at!the!time!it!is!due.! o Before!creditor!has!accepted!the!consignation!
3. Creditor!refuses!without!just!cause!to!give*a*receipt.! o Before! a! judicial! declaration! that! the! consignation! has! been!
4. Two*or*more*persons*claim!the!same!right!to!collect! properly!made!
5. Title*of!the!obligation!has!been!lost! o This!is!because!he!is!still!the!owner!of!the!thing!
o Obligation!shall!continue!to!remain!in!force!
Art.*1259**Expenses*Borne*by*the*Creditor* o Expenses!paid!by!debtor!
The! expenses! of! consignation,! when! properly! made,! shall! be! charged! against! the!
creditor.!(1178)! ! *
Creditor! is! responsible! because! it! is! his! fault! that! consignation! was!
necessary!!his!refusal!to!accept!payment.!
47!
!
Art.*1261**Creditor*Authorizes*Debtor*to*Withdraw* Ex.!If!he!is!in!delay!
If,!the!consignation!having!been!made,!the!creditor!should!authorize!the!debtor!to! o When!stipulated!by!parties!
withdraw! the! same,! he! shall! lose! every! preference! which! he! may! have! over! the! o When!nature!of!obligation!requires!the!assumption!of!risk!
thing.!The!co+debtors,!guarantors!and!sureties!shall!be!released.!(1181a)!! o When!obligation!to!deliver!a!specific!thing!arises!from!a!crime!
!
Contemplates! a! situation! where! there! has! already! been! a! finding! by! the!
court!that!the!consignation!is!valid.! Art.*1263**Loss*of*a*Generic*Thing*
o In! this! case,! it! is! incumbent! on! the! creditor! to! obtain! from! the! In!an!obligation!to!deliver!a!generic!thing,!the!loss!or!destruction!of!anything!of!the!
court!the!thing!deposited.! same!kind!does!not!extinguish!the!obligation.!(n)!
o However,! if! the! debtor! withdraws! the! thing,! with! the! creditors!
consent!!nothing!to!retrieve! Generic!thing!cannot!really!be!lost!unless!the!whole!class!of!the!said!thing!
Essentially!reviving!the!indebtedness! is!destroyed!!hence,!obligation!persists.!
However,! the! creditor! loses! any! preference! to! the! thing! !
deposited!!anyone!can!now!go!after!it!!
Art.*1264**Partial*Loss*
SECTION*2.*7*Loss*of*the*Thing*Due* The!courts!shall!determine!whether,!under!the!circumstances,!the!partial!loss!of!the!
!!! object!of!the!obligation!is!so!important!as!to!extinguish!the!obligation.!(n)!
Art.*1262*7*Loss* Partial* Loss! ! the! courts! may! consider! it! as! a! complete! loss! which!
An! obligation! which! consists! in! the! delivery! of! a! determinate! thing! shall! be! extinguishes!the!obligation.!
extinguished! if! it! should! be! lost! or! destroyed! without! the! fault! of! the! debtor,! and! This!happens!if!the!loss!is!so!important!that!it!affects!the!whole!object*of!
before!he!has!incurred!in!delay.! the!obligation.!
Ex.! Obligation! to! give! a! specific! computer! with! a! specialized!
When!by!law!or!stipulation,!the!obligor!is!liable!even!for!fortuitous!events,!the!loss! keyboard!and!monitor,!such!that!the!parts!are!dependent!on!each!
of! the! thing! does! not! extinguish! the! obligation,! and! he! shall! be! responsible! for! other.!
damages.! The! same! rule! applies! when! the! nature! of! the! obligation! requires! the! Loss! of! the! keyboard,! though! only! partial,! renders! the! whole!
assumption!of!risk.!(1182a)! thing!useless.!
Debtor!may!go!to!court!and!declare!that!this!partial!loss!has!extinguished!
When*a*thing*is*considered*lost* the!obligation.!
o When!it!perishes!
o Goes!out!of!commerce! Art.*1265**Loss*of*Thing*in*the*Possession*of*the*Debtor**
o Disappears! in! a! way! such! that! its! existence! is! unknown! or! it! Whenever!the!thing!is!lost!in!the!possession!of!the!debtor,!it!shall!be!presumed!that!
cannot!be!recovered! the! loss! was! due! to! his! fault,! unless! there! is! proof! to! the! contrary,! and! without!
When*does*loss*of*a*thing*extinguish*an*obligation*to*give* prejudice!to!the!provisions!of!article!1165.!This!presumption!does!not!apply!in!case!
o Obligation!is!to!deliver!a!specific!or!determinate!thing! of!earthquake,!flood,!storm,!or!other!natural!calamity.!(1183a)!
o Loss!of!the!thing!occurs!without!fault!of!the!debtor!
o Debtor!is!not!guilty!of!delay! If!debtor!is!not!in!possession!of!the!thing!when!it!is!lost,!the!presumption!
When*does*loss*NOT*extinguish?* does!not!arise.!
o When!law!so!provides!
48!
!
Debtor! must! prove! that! he! is! not! at! fault,! or! that! loss! was! because! of! a! Requisites*of*Rebus*Sic*Stantibus*
fortuitous!event.! 1. Prestation!has!become!so!difficult!to!render!
Presumption!does!not!apply!in!case!of!natural!calamities.! 2. Service! has! become! manifestly! beyond! contemplation! of! the!
parties!
Art.*1266**Legal*or*Physical*Impossibility*
The!debtor!in!obligations!to!do!shall!also!be!released!when!the!prestation!becomes! Art.*1268**Proceeds*from*a*Criminal*Offense*
legally!or!physically!impossible!without!the!fault!of!the!obligor.!(1184a)! When! the! debt! of! a! thing! certain! and! determinate! proceeds! from! a! criminal!
offense,!the!debtor!shall!not!be!exempted!from!the!payment!of!its!price,!whatever!
This!involves!obligations!to!do.! may!be!the!cause!for!the!loss,!unless!the!thing!having!been!offered!by!him!to!the!
o Without! debtors! fault,! obligation! becomes! legally! or! physically! person! who! should! receive! it,! the! latter! refused! without! justification! to! accept! it.!
impossible! (1185)!
Effect!of!impossibility!of!performance!
o Impossibility!extinguishes!the!obligation! Another! instance! where! a! fortuitous! event! does! not! extinguish! the!
o This! impossibility! must! take! place! after* the! constitution! of! the! obligation!
obligation! Ex!.!A!stole!a!watch!from!B,!and!was!charged!for!it.!If!the!watch!is!
Kinds!of!Impossibility! lost!through!a!fortuitous!event,!A!must!still!pay!the!price!of!the!
1. Physical*Impossibility**in!purely!personal!obligations!(obligations! watch.!
where! personal! qualifications! are! involved)! death! or! physical! EXCEPTION! ! if! the! creditor! refuses! to! accept! the! thing! when! offered! to!
incapacity!results!in!physical!impossibility* him!by!the!debtor!
Ex.! A! is! obliged! to! paint! Bs! house.! Two! days! later,! A! is! !
attacked! by! a! shark! and! loses! both! his! arms.! He! is! thus!
released.! Art.*1269**Creditors*Right*of*Action*
2. Legal*Impossibility!!Obligation!cannot!be!performed!because!it!is! The!obligation!having!been!extinguished!by!the!loss!of!the!thing,!the!creditor!shall!
rendered!impossible!by!provision!of!law! have! all! the! rights! of! action! which! the! debtor! may! have! against! third! persons! by!
reason!of!the!loss.!(1186)!!
Art.*1267**Difficult*Beyond*Contemplation*
When! the! service! has! become! so! difficult! as! to! be! manifestly! beyond! the! Designed!to!protect!interests!of!the!creditor!
contemplation!of!the!parties,!the!obligor!may!also!be!released!therefrom,!in!whole! He!is!given!right!to!proceed!against!a!third!person!responsible!for!the!loss!
or!in!part.!(n)! Ex.!A!is!obliged!to!give!B!a!specific!horse.!The!horse!is!lost!through!
the!fault!of!C.!As!obligation!is!extinguished,!but!B!is!allowed!to!
Difficulty!alone!does!not!excuse!the!debtor.! go!after!C!to!recover!the!price!of!the!horse,!with!damages.!
What! must! happen! is! that! the! service! is! so! difficult! as! to! be! manifestly*
beyond*the*contemplation*of*the*parties.*! *
This!is!the!principal!of!rebus!sic!stantibus! ! *
o Where!the!parties!stipulate!in!the!light!of!certain!conditions!
o When!these!conditions!cease!to!exist,!the!contract!also!ceases!to!
exist!
This! is! one! case! where! the! court! can! enter! into! a! contract! and! judge!
whether!its!the!performance!is!still!within!what!the!parties!contemplated!
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!
SECTION*3.*7*Condonation*or*Remission*of*the*Debt* Ex.! Promissory! note! ! if! the! creditor! gives! the! debtor! his!
!!! promissory!note,!it!implies!that!he!is!no!longer!interested!in!
! the!debt.!
This!waiver!can!be!nullified!by!showing!that!it!is!inofficious.!
Art.*1270**Condonation*Defined* o What!the!debtor!can!do!is!show!that!the!delivery!of!the!document!
Condonation!or!remission!is!essentially!gratuitous,!and!requires!the!acceptance!by! was!made!because!of!payment,!and!not!because!of!remission.!
the!obligor.!It!may!be!made!expressly!or!impliedly.! !
One! and! the! other! kind! shall! be! subject! to! the! rules! which! govern! inofficious! Art.*1272**Presumption*when*Credit*is*in*the*Possession*of*the*Debtor*
donations.! Express! condonation! shall,! furthermore,! comply! with! the! forms! of! Whenever! the! private! document! in! which! the! debt! appears! is! found! in! the!
donation.!(1187)! possession! of! the! debtor,! it! shall! be! presumed! that! the! creditor! delivered! it!
voluntarily,!unless!the!contrary!is!proved.!(1189)!
Condonation!:!an!act!of!liberality!
Creditor!decides!not!to!enforce!the!debtors!prestation! If! the! debtor! has! the! document! and! it! is! not* known* where! he! got! it,! the!
o In!effect,!a!donation!of!the!obligees!credit!in!favor!of!the!debtor! presumption!is!that!it!was!voluntarily!given!by!the!creditor!
It!requires!the!implied/express!consent!of!the!debtor! !It!is!believed!that!presumption!of!voluntary!delivery!!presumption!of!
Governed!by!the!rules!of!Inofficious!donation! payment,*not!remission.!Only!when!it!is!known*that!there!is!no!payment!
o Inofficious! ! the! amount! remitted! encroaches! on! the! should!there!be!a!presumption!of!remission.!
legitime/successional!rights!of!the!heirs!of!the!condoning!creditor!
o Ex.!Creditor!condones!debt!worth!50K! Art.*1273**Extinguishment*of*Accessory*Obligations*
o Creditor!gives!birth!to!a!child,!when!her!properties!are!only!worth! The!renunciation!of!the!principal!debt!shall!extinguish!the!accessory!obligations;!but!
10,000!(thus,!with!remitted!debt,!the!overall!estate!is!60K)! the!waiver!of!the!latter!shall!leave!the!former!in!force.!(1190)!
o Child! has! ! of! this! as! his! legitime.! Hence,! free! portion! is! only!
30,000.!The!remission!will!only!be!30,000.! Accessory* follows* the* principal! ! existence! of! the! accessory! obligation!
Other!rules!on!donation!are!provided!in!the!Civil!Code! depends!on!the!existence!of!the!principal!obligation.!
When!principal!is!waived,!the!accessory!is!waived!as!well.!!
Art.*1271**Delivery*of*a*Credit*to*the*Debtor* But!when!accessory!is!waived,!principal!remains!in!force.!
The! delivery! of! a! private! document! evidencing! a! credit,! made! voluntarily! by! the!
creditor!to!the!debtor,!implies!the!renunciation!of!the!action!which!the!former!had! Art.*1274**Accessory*Obligation*of*Pledge*
against!the!latter.! It!is!presumed!that!the!accessory!obligation!of!pledge!has!been!remitted!when!the!
thing! pledged,! after! its! delivery! to! the! creditor,! is! found! in! the! possession! of! the!
If! in! order! to! nullify! this! waiver! it! should! be! claimed! to! be! inofficious,! the! debtor!
debtor,!or!of!a!third!person!who!owns!the!thing.!(1191a)!!
and!his!heirs!may!uphold!it!by!proving!that!the!delivery!of!the!document!was!made!
in!virtue!of!payment!of!the!debt.!(1188)!
Pledge! ! a! contract! where! the! debtor! gives! to! the! creditor! or! a! third!
person!a!movable!or!instrument!evidencing!incorporeal! rights! in! order! to!
This!article!creates!a!presumption!:!If!a!private!document!evidencing!credit!
secure! the! fulfillment! of! a! principal! obligation,! such! that! when! the!
is! given! by! the! creditor! to! the! debtor,! it! implies! that! he! is! condoning! the!
obligation!is!fulfilled,!the!thing!delivered!shall!be!returned!with!all!its!fruits!
debt.!
and!accessories.!
50!
!
If!the!thing!pledged!is!found!in!the!possession!of!the!debtor,!then!there!is!a! There!is!merger!in!persons!of!X!and!C.!
presumption!that!the!obligation!has!been!remitted.! Obligation!is!extinguished!as!to!the!1,000!share!of!C,!but!not!
! to!the!rest.!
A!and!B!still!owe!1,000!each.!!
SECTION*4.*7*Confusion*or*Merger*of*Rights* If!solidary!!merger!in!C!and!X!extinguishes!the!obligation.!
!!! o If!A!pays!the!3,000!to!X!before!the!merger,!A!can!collect!from!X!
and!B!their!respective!shares!in!the!indebtedness!(1,000!each)!
Art.*1275**When*Obligation*is*Extinguished* !
The!obligation!is!extinguished!from!the!time!the!characters!of!creditor!and!debtor!
are!merged!in!the!same!person.!(1192a)! SECTION*5.**Compensation*
!!!
Ex.! A! son! owes! his! father! 10,000,! and! his! father! dies,! leaving,!
among! others,! 10,000! owed! by! the! son! to! his! dad.! In! this! Art.*1278**Compensation*Defined*
case,!there!is!a!merger.! Compensation!shall!take!place!when!two!persons,!in!their!own!right,!are!creditors!
Chittick( v.( CA! ! wife! filed! a! complaint! against! her! father! for! support! in! and!debtors!of!each!other.!(1195)!
arrears.!She!died,!and!her!children!continued!the!case.!The!father!died.!SC!
held! that! since! the! children! are! also! heirs! of! their! grandfather,! the! Compensation!!extinguishment!to!the!concurrent!amount!of!the!debts!of!
obligation!had!been!extinguished.! two! persons,! who,! in! their! own! right,! are! debtors! and! creditors! of! each!
other.!
Art.*1276**Effect*on*Guarantors* o The!simultaneous!balancing!of!2!obligations!in!order!to!extinguish!
Merger!which!takes!place!in!the!person!of!the!principal!debtor!or!creditor!benefits! them!to!the!extent!in!which!the!amount!of!one!is!covered!by!that!
the!guarantors.!Confusion!which!takes!place!in!the!person!of!any!of!the!latter!does! of!the!other.!
not!extinguish!the!obligation.!(1193)! Kinds!of!compensation!
a. As!to!effect/extent!
Indebtedness!guaranteed!by!a!third!person!is!also!extinguished!if!there!is! 1. Total! ! both! obligations! are! of! the! same! amount,! and!
confusion/merger.! thus!are!entirely!extinguished.!
Thus,! guarantor! is! benefitted! because! the! accessory! obligation! of! the! 2. Partial*!two!obligations!are!of!different!amounts!and!a!
guarantee!is!extinguished.!! balance!remains.!(partial!only!as!to!the!larger!debt)!
o Merger! of! persons! of! guarantor! and! creditor! only! extinguishes! b. As!to!cause/origin!
accessory!obligation,!not!the!whole!thing.! 1. Legal! ! takes! place! by! operation! of! law,! even! without!
o Merger!of!debtor!and!guarantor!only!extinguishes!the!accessory.! knowledge!of!the!parties!
2. Voluntary/Conventional! ! takes! place! by! agreement! of!
the!parties!
Art.*1277**Confusion*in*Joint*Obligations*
3. Judicial!!takes!place!by!order!from!a!court!in!litigation!
Confusion! does! not! extinguish! a! joint! obligation! except! as! regards! the! share!
4. Facultative!!can!be!set!up!by!only!one!of!the!parties!
corresponding!to!the!creditor!or!debtor!in!whom!the!two!characters!concur.!(1194)!!
Art.*1279**Requisites*of*Compensation*
Joint!debtors!owe!only!their!share,!and!creditors!can!only!collect!from!each!
In!order!that!compensation!may!be!proper,!it!is!necessary:!
debtor!his!respective!share.!
Ex.!A,!B,!and!C!owe!X!3,000.!!
51!
!
(1)!That!each!one!of!the!obligors!be!bound!principally,!and!that!he!be!at!the!same! Ex.!A!owes!B!1,000,!due!on!Jan!1.!B!owes!A!1,000,!due!on!Jan.!21.!!
time!a!principal!creditor!of!the!other;! Third! person! C! filed! suit! against! A,! and! was! able! to! obtain! a!
(2)!That!both!debts!consist!in!a!sum!of!money,!or!if!the!things!due!are!consumable,! resolution! garnishing! all! money! and! credits! of! A! (including! the!
they!be!of!the!same!kind,!and!also!of!the!same!quality!if!the!latter!has!been!stated;! indebtedness!of!B!in!As!favor).!
(3)!That!the!two!debts!be!due;! If! B! only! found! out! about! the! garnishment! on! Feb.! 1,! then!
(4)!That!they!be!liquidated!and!demandable;! compensation! would! have! set! in! already,! and! C! cannot! make!
(5)!That!over!neither!of!them!there!be!any!retention!or!controversy,!commenced!by! use!of!these!credits!to!satisfy!As!debt!to!C.!
third!persons!and!communicated!in!due!time!to!the!debtor.!(1196)! If! B! found! out! about! the! garnishment! on! Jan! 15,! then! no!
compensation!sets!in.!
Requisites!of!Compensation:!
Art.*1280**Set7up*by*Guarantor*
1. Mutual*principal*creditors*and*debtors*!each!one!of!the!obligors!is!bound! Notwithstanding!the!provisions!of!the!preceding!article,!the!guarantor!may!set!up!
principally,!and!that!each!of!them!be!at!the!same!time!a!principal!creditor! compensation!as!regards!what!the!creditor!may!owe!the!principal!debtor.!(1197)!
of!the!other.!
2. Both*in*money,*or*same*kind!!both!debts!consist!in!a!sum!of!money,!or!if! Guarantor! +! a! person! who! promises! to! pay! the! creditor! in! case! the!
the!things!due!are!consumable,!they!be!of!the!same!kind,!and!also!of!the! principal!debtor!cannot!pay!the!indebtedness.!
same!quality.!! Before!a!creditor!can!go!after!the!guarantor,!he!must!exhaust!all!possible!
o Consumable!!fungible;!susceptible!of!substitution! ways!to!collect!debt!from!principal!debtor.!
o Ong( v.( Court( of( Appeals( ( no! compensation! could! take! place! o Unless!guarantor!is!bound!solidarily.!
because!one!party!owed!money,!and!the!other!owed!zippers.!! A!possible!defense!of!a!guarantor!is!that!compensation!had!set!in!between!
3. Both*debts*are*due* the!creditor!and!the!principal!debtor.!
o Debts!need!not!be!contracted!at!the!same!time! o This! is! the! case! when! the! guarantor! sets! up! compensation!
o Parties,!however,!can!agree!that!compensation!can!be!made!even! between!the!two!parties.!
if!debts!are!not!yet!due.!
o PNB(Madecor(v.(Uy((one!of!the!debts!was!payable!upon!demand,!
Art.*1281**Total*or*Partial*Compensation*
and! no! demand! was! made.! There! is! no! compensation,! because!
Compensation! may! be! total! or! partial.! When! the! two! debts! are! of! the! same!
the!debts!were!not!yet!due.!
amount,!there!is!a!total!compensation.!(n)!
4. Liquidated*and*demandable*!
o Debts!must!be!determined!and!certain.!
Total* Compensation! ! when! both! debts! are! equal,! and! both! are!
o Compensation! cannot! take! place! where! one! of! the! debts! is! not!
extinguished.!
liquidated.!
o Compania( Maritima( v.( CA( ( since! legal! interest! was! still! accruing! Partial* Compensation! ! one! of! the! debts! is! bigger;! the! smaller! debt! is!
deducted!from!the!bigger!debt.!
on!the!debt,!it!was!not!liquidated.!Thus,!no!compensation!
Ex.! A!owes!B!2000.!B!owes!A!1,500.!A!will!still!owe!B!500.!
o Miailhe(v.(Halili(!no!compensation!because!a!certain!amount!was!
still!under!litigation,!and!thus,!not!being!liquidated!and!certain.!
5. No* controversy* from* third* persons! ! Over! neither! of! them! be! any! Art.*1282**Debts*Not*Due*
retention!or!controversy!commenced!by!third!persons!and!communicated! The!parties!may!agree!upon!the!compensation!of!debts!which!are!not!yet!due.!(n)!
in!due!time!to!the!debtor.!!
o Due*Time!!period!before!legal!compensation!was!supposed!to! This! is! an! exception! to! the! general! rule! that! debts! should! be! due! for!
take!place! compensation!to!set!in.!
52!
!
An!example!of!contractual!compensation.! If!the!assignment!is!made!without!the!knowledge!of!the!debtor,!he!may!set!up!the!
compensation! of! all! credits! prior! to! the! same! and! also! later! ones! until! he! had!
!
knowledge!of!the!assignment.!(1198a)!
Art.*1283**Judicial*Set7off* Situations!when!a!creditor!gives!his!credit!to!a!third!person:!
If!one!of!the!parties!to!a!suit!over!an!obligation!has!a!claim!for!damages!against!the!
other,! the! former! may! set! it! off! by! proving! his! right! to! said! damages! and! the! 1. Debtor* has* consented* to* the* assignment* of* rights* to* a* third* person* 7*
amount!thereof.!(n)! cannot!set!up!compensation!against!the!assignee,!which!would!pertain!to!
the!debtor!against!the!original!creditor.*
Contemplates!a!situation!of!a!judicial!set+off.! o Exception:!when!debtor!reserves!this!right.!
Essentially,!compensation!when!it!comes!to!damages.! Ex.! A!owes!B!1,000,!due!on!Jan!1.!B!owes!A!1,000!due!on!Feb!2.!!
Ex.! A! files! a! collection! case! against! B! for! 1,000.! B! can! file! a! On!Jan!3,!B!assignes!his!credit!to!C,!with!consent!of!A,!and!without!
counterclaim!for!1,000,!claiming!damages*arising!from!the!same! reservation!as!to!right!of!compensation!against!B.!
transaction* C!demands!payment!from!A!on!Feb!5,!and!A!cannot!claim!that!the!
B!requests!the!court!to!off7set*the!damages.* debts!have!been!extinguished!because!of!compensation!
If!court!agrees,!there!can!be!compensation.* If!A!told!B!that!he!was!reserving!his!right!to!compensation,!he!can!
Ong(v.(CA((amount!of!damages!must!be!duly!proven!in!order!for!judicial! validly!invoke!that!the!debts!had!been!extinguished.!
set+off!to!apply.* 2. Debtor* did* not* consent* to* the* assignment* of* rights* * debtor! can! set! up!
compensation!of!debts!prior!to!the!cession,!but!not!of!subsequent!ones.*
Ex.! A!has!two!debts!to!B.!!
Art.*1284**Compensation*of*Voidable*Debts*before*Voided*
Debt!1!is!due!on!Jan!1.!Debt!2!is!due!on!Feb!1.!
When! one! or! both! debts! are! rescissible! or! voidable,! they! may! be! compensated!
B!owes!A!in!the!same!amounts.!Debt!1!is!due!on!March!1.!Debt!2!
against!each!other!before!they!are!judicially!rescinded!or!avoided.!(n)!
is!due!on!March!3.!
On!March!2,!B!gives!all!his!credits!to!C.!A!does!not!consent.!!
These!are!valid!until!voided.! A! can! say! that! Debt! 1! is! extinguished! due! to! compensation,!
Thus,!if!all!requisites!to!a!valid!compensation!are!present!before!contract!is! because!they!became!due!before!the!cession.!
voided,!then!compensation!can!take!place.! He! cannot! say! that! Debt! 2! has! been! extinguished,! because! it!
became!due!after!the!cession.!
Art.*1285**Assignment*of*the*Creditors*Rights*to*a*Third*Person* 3. Assignment*is*made*without*the*knowledge*of*the*debtor*
The! debtor! who! has! consented! to! the! assignment! of! rights! made! by! a! creditor! in! o Debtor!can!claim!compensation!for!debts!prior!to!the!cession!
favor!of!a!third!person,!cannot!set!up!against!the!assignee!the!compensation!which! o Debtor! can! claim! compensation! for! debts! after! the! cession,! as!
would!pertain!to!him!against!the!assignor,!unless!the!assignor!was!notified!by!the! long!as!he!has!no!knowledge!of!the!cession.!
debtor! at! the! time! he! gave! his! consent,! that! he! reserved! his! right! to! the! o When! he! finds! out,! he! can! no! longer! claim! compensation! for!
compensation.! debts!coming!after!that!point.!
If! the! creditor! communicated! the! cession! to! him! but! the! debtor! did! not! consent!
Art.*1286**Different*Places*
thereto,!the!latter!may!set!up!the!compensation!of!debts!previous!to!the!cession,!
Compensation! takes! place! by! operation! of! law,! even! though! the! debts! may! be!
but!not!of!subsequent!ones.!
payable! at! different! places,! but! there! shall! be! an! indemnity! for! expenses! of!
exchange!or!transportation!to!the!place!of!payment.!(1199a)!
53!
!
Once!all!requisites!are!present,!compensation!takes!place!by!operation!of! Ex.! If!B!borrows!the!PS3!of!A,!he!cannot!refuse!to!return!it!on!
law!(legal!compensation).! the!ground!that!A!owes!him!something.!
Parties! need! not! notify! each! other! that! they! want! to! have! their! debts! 3. Duty*to*support*
compensated.! Compensation!cannot!arise!if!the!other!obligation!is!of!support!
The! indemnity! for! transportation! in! this! article! only! applies! in! a! case! of! A!father!cannot!refuse!to!support!his!son!on!the!ground!that!the!
partial!compensation.! son!owes!him!money!
Ex.!A!owes!B!1,000,!due!in!CBTL!Rockwell.!B!owes!A!500,!due!in! Without! prejudice! to! the! provisions! ! refers! to! the! fact! that!
CBTL!Katipunan.! support!in!arrears!can!be!compensated.!
If!B!has!to!commute!to!Rockwell!to!receive!the!balance!of!500,! of! doubtful! application,! because! the! Family! Code! has! deleted!
he!should!be!reimbursed!by!A,!the!debtor.! the!provision!mentioned.!
Art.*1247!!extrajudicial!expenses!to!be!borne!by!debtor! 4. Civil*liability*arising*from*a*penal*offense*
! Ex.! A!owes!B!1000.!B!stole!the!ring!of!D!worth!1000.!!
B!cannot!claim!compensation!
Art.*1287**No*Compensation* But!A,!the!offended!party,!can!claim!compensation!
Compensation!shall!not!be!proper!when!one!of!the!debts!arises!from!a!depositum! Prohibition!only!applies!to!the!accused!
or!from!the!obligations!of!a!depositary!or!of!a!bailee!in!commodatum.!
Art.*1289**Several*Debts*
Neither!can!compensation!be!set!up!against!a!creditor!who!has!a!claim!for!support! If! a! person! should! have! against! him! several! debts! which! are! susceptible! of!
due!by!gratuitous!title,!without!prejudice!to!the!provisions!of!paragraph!2!of!Article! compensation,!the!rules!on!the!application!of!payments!shall!apply!to!the!order!of!
301.!(1200a)! the!compensation.!(1201)!
!
Art.*1288**Civil*Liability* See!Arts!1252+1254.!!
Neither! shall! there! be! compensation! if! one! of! the! debts! consists! in! civil! liability! !
arising!from!a!penal!offense.!(n)!
Art.*1290**By*Operation*of*Law*
4!Cases!where!Legal!Compensation!is!not*allowed:! When!all!the!requisites!mentioned!in!Article!1279!are!present,!compensation!takes!
effect!by!operation!of!law,!and!extinguishes!both!debts!to!the!concurrent!amount,!
1. Depositum,*or*from*the*obligations*of*a*depository*
even!though!the!creditors!and!debtors!are!not!aware!of!the!compensation.!(1202a)!!
Deposit!!constituted!from!the!moment!a!person!receives!a!thing!
belonging!to!another!with!the!obligation!of!safely!keeping!it!and!
returning!it.! Compensation!takes!place!by!mere!operation*of*law!
Ex.! A! owes! B! 1,000.! Previously,! A! deposited! with! B! for! o From!the!moment!all!requisites!concur,!compensation!takes!place!
safekeeping!1,000.!! automatically.!
There!is!no!compensation,!because!Bs!obligation!to!give!A!the! o Even!without!the!agreement!of!parties.!
1000!arises!from!the!obligations!of!a!depository.! o Retroactive!!from!the!day!the!requisites!concurred.!
2. Bailee*in*Commodatum* Full*legal*capacity*!not!required!
o Because! of! the! fact! that! it! takes! place! by! operation! of! law.!
A!bailee!in!commodatum!acquires!the!use!of!the!thing!loaned,!but!
!!
not!its!fruits.!
Bailee!cannot!retain!the!thing!loaned!just!because!the!bailor!(true!
owner!of!the!thing)!owes!him!something!
54!
!
SECTION*6.*7*Novation* Art.*1292**Express*and*Implied*Novation*
! In! order! that! an! obligation! may! be! extinguished! by! another! which! substitute! the!
same,! it! is! imperative! that! it! be! so! declared! in! unequivocal! terms,! or! that! the! old!
Art.*1291**Kinds*of*Novation* and!the!new!obligations!be!on!every!point!incompatible!with!each!other.!(1204)!
Obligations!may!be!modified!by:!
(1)!Changing!their!object!or!principal!conditions;! Requisites*of*Novation:!(V.E.I.N.)!
(2)!Substituting!the!person!of!the!debtor;! 1. A!previous!valid!obligation!
(3)!Subrogating!a!third!person!in!the!rights!of!the!creditor.!(1203)! 2. Capacity! and! intention! of! parties! to! modify/extinguish! the!
obligation!
Novation!!extinction!of!an!obligation!through!the!creation!of!a!new!one! 3. Modification/Extinguishment!
which!substitutes!it.! 4. Creation!of!a!new*valid*obligation!
o The!Civil!Code!refers!to!extinctive!novation!and!not!modificatory! All!parties!must!consent!or!be!made!parties!to!the!new!contract.!
novation.! Novation!is!never!presumed.!2!indications!of!the!presence!of!novation:!
Kinds!of!Novation:! 1. Novation!is!explicitly!stated!and!declared!in!unequivocal!terms.!
a. According!to!Origin! 2. Old!and!new!obligations!are!incompatible!on!every!point.!
1. Legal!!takes!place!by!operation!of!law.! Test* ! whether! or! not! the! two! obligations! can! stand! together,!
2. Conventional!!takes!place!by!agreement!of!the!parties.! each!one!having!its!independent!existence.!
b. According!to!how!Constituted! If! they! cannot,! then! they! are! incompatible! and! the! latter!
1. Express!!declared!in!unequivocal!terms.! novates!the!first!one.!
2. Implied! ! old! and! new! obligation! are! essentially! incompatible!
with!each!other.! Art.*1293**Substituting*a*New*Debtor*
c. According!to!Extent!or!Effect! Novation! which! consists! in! substituting! a! new! debtor! in! the! place! of! the! original!
1. Total/Extinctive!!old!obligation!is!completely!extinguished.! one,!may!be!made!even!without!the!knowledge!or!against!the!will!of!the!latter,!but!
2. Partial/Modificatory!!old!obligation!is!merely!modified.! not!without!the!consent!of!the!creditor.!Payment!by!the!new!debtor!gives!him!the!
d. According!to!Subject! rights!mentioned!in!Articles!1236!and!1237.!(1205a)!
1. Real*or*Objective!!the!objective,!cause,!or!principal!conditions!
of!the!obligation!are!changed.! Substituting! a! new! debtor! may! be! made! without! the! knowledge! and!
Ajax(v.(CA(!to!effect!an!objective!novation,!there!must! consent!of!the!original!debtor.!
be! express! declaration! that! old! obligation! is! Creditor!must!always!consent!and!have!knowledge!of!the!replacement.!
extinguished,! or! that! the! new! obligation! be! on! every!
point!incompatible!with!the!new!one.! Art.*1294**Insolvency*of*the*New*Debtor*in*Expromision*
2. Personal* or* Subjective! ! when! the! person! of! the! debtor! is! If! the! substitution! is! without! the! knowledge! or! against! the! will! of! the! debtor,! the!
substituted/third!person!is!subrogated!in!rights!of!the!creditor! new! debtor's! insolvency! or! non+fulfillment! of! the! obligations! shall! not! give! rise! to!
Ibid!!To!effect!a!subjective!novation!in!the!person!of! any!liability!on!the!part!of!the!original!debtor.!(n)!
the!debtor,!it!is!necessary!that!old!debtor!be!expressly!
released!from!the!obligation.! Substitution!!person!of!the!debtor*is!substituted.!
3. Mixed**a!combination!of!real!and!personal!novation.* Subrogation!!a!third!person!is!subrogated!in!the!rights!of!the!creditor.!!
* Kinds!of!Personal!Novation!
55!
!
1. Expromision! ! a! third! person! of! his! own! initiative! and! without! In!both!cases,!the!creditor!must!not*have*knowledge*of!such!insolvency.!
knowledge! or! against! the! will! of! the! original! debtor! assumes! the! o If! he! has! knowledge,! he! cannot! claim! the! benefits! of! these!
latters!obligation!with!consent!of!creditor! exceptions.!
o Creditor!must!consent.! In! both! cases,! the! insolvency! must! have! existed! at! the! time! of! the!
o Right! of! new! debtor! who! pays! +! right! to! beneficial! delegation.!
reimbursement!(Art.!1236)!
o Insolvency! of! new! debtor! shall! not* give! rise! to! an! action! Art.*1296**Effect*on*Accessory*Obligations*
against!the!old!debtor! When! the! principal! obligation! is! extinguished! in! consequence! of! a! novation,!
Ex.!! A!owes!B!1,000.!Without!knowledge!or!consent!of! accessory! obligations! may! subsist! only! insofar! as! they! may! benefit! third! persons!
A,!C!commits!to!pay!B.! who!did!not!give!their!consent.!(1207)!
Novation! occurs! only! if! B! agrees! to! release! A!
from!his!obligation.!!
General!Rule!!accessory!follows!the!principal.!!
Thus,!if!C!only!pays!B!partially,!B!cannot!go!after!
o If!principal!is!extinguished,!accessories!are!extinguished!
A!anymore.!
Ex.! Mortgage,!guarantee,!pledge!
C! can! go! after! A! for! reimbursement! to! the!
Exception!!accessory!obligations!persist!only!insofar!as!they!may!benefit!
extent!C!was!benefited.!
third!persons!who!do!not!give!consent!to!the!novation.!
2. Delegacion**creditor!accepts!a!third!person!to!take!the!place!of!the!
Ex.! A!owes!B!2,000,!with!interest!of!14%.!
debtor,!at!the!suggestion!of!the!latter.*
B!owes!C!280.!
o Creditor!must!consent*
IT!was!agreed!that!A!would!pay!the!interest!of!280!to!C.!
o Right! of! new! debtor! who! pays! ! reimbursement! and!
This!is!a!stipulation!in!favor!of!C,!a!third!person.!
subrogation!(Art.!1237)*
Later,! A! and! B! novate! the! obligation,! and! A! is! now! obliged! to!
Bangayan( v.( CA( ( assignment! of! a! lease! contract! by! the! lessee! needs! give!a!TV!set!in!payment!of!the!loan.!
consent! of! lessor,! because! assignment! involves! transfer! of! obligations.! It!
Inspite!of!the!novation,!the!accessory!obligation!to!give!C!280!
constitutes!novation!by!substitution.! subsists,!unless!C!gives!his!consent!to!the!novation.!
!
Art.*1297**New*Obligation*is*Void,*Old*one*shall*subsist*
Art.*1295*7*Insolvency*of*the*New*Debtor*in*Delegacion* If! the! new! obligation! is! void,! the! original! one! shall! subsist,! unless! the! parties!
The! insolvency! of! the! new! debtor,! who! has! been! proposed! by! the! original! debtor!
intended!that!the!former!relation!should!be!extinguished!in!any!event.!(n)!
and! accepted! by! the! creditor,! shall! not! revive! the! action! of! the! latter! against! the!
original! obligor,! except! when! said! insolvency! was! already! existing! and! of! public!
A!void!obligation!intended!to!novate!an!old!one!has!no!legal!effect.!
knowledge,!or!known!to!the!debtor,!when!the!delegated!his!debt.!(1206a)!
General!Rule!!when!new!obligation!is!void,!old!obligation!subsists.!
Exception!!when!the!parties!stipulate!that!in!any!event,!the!old!obligation!
General!Rule!!in!delegacion,!when!accepted!by!the!creditor,!the!original!
shall!be!extinguished.!
debtors! obligation! is! completely! extinguished.! Thus,! creditor! cannot! go!
after!old!debtor!in!case!of!insolvency!of!the!new!debtor!
Exceptions:!! Art.*1298**Original*Obligation*was*Void*
1. Insolvency!of!new!debtor!has!already*been*existing*and!of!public* The!novation!is!void!if!the!original!obligation!was!void,!except!when!annulment!may!
knowledge*when!the!old!debtor!delegated!the!debt.! be! claimed! only! by! the! debtor! or! when! ratification! validates! acts! which! are!
2. Insolvency!of!the!new!debtor!is!known*to*the*old*debtor*when!he! voidable.!(1208a)!
delegates!the!debt.!
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!
Novation!presupposes!an!original!valid!obligation.! Art.*1301**Conventional*Subrogation*
If! original! obligation! is! void,! a! subsequent! obligation! to! novate! it! is! also! Conventional! subrogation! of! a! third! person! requires! the! consent! of! the! original!
void.! parties!and!of!the!third!person.!(n)!
o Unless!it!is!clear!that!the!subsequent!one!can!stand!on!itself!and!
without!any!reference!to!the!old!one! Consent!of!all!parties!is!required!!this!is!a!contractual!subrogation.!
If!original!is!voidable,*it!is!valid!until!annulled.!
o Thus,!it!can!be!novated!before!it!is!annulled.!
Art.*1302**When*Legal*Subrogation*is*Presumed*
Ex.! Through!force!and!intimidation,!A!was!obliged!togive!B!a!
It!is!presumed!that!there!is!legal!subrogation:!
car.!Later,!also!through!force,!prestation!was!novated!to!
a!house.! (1)! When! a! creditor! pays! another! creditor! who! is! preferred,! even! without! the!
In!such!a!way!that!only!A,!the!debtor,!can!file!a!case!to!annul!it.! debtor's!knowledge;!
He!does!not!annul!it.! (2)!When!a!third!person,!not!interested!in!the!obligation,!pays!with!the!express!or!
This!novation!may!be!given!effect.! tacit!approval!of!the!debtor;!
o Also,!if!by!As!acts!the!obligation!is!ratified,!it!is!valid!as!well.! (3)! When,! even! without! the! knowledge! of! the! debtor,! a! person! interested! in! the!
fulfillment!of!the!obligation!pays,!without!prejudice!to!the!effects!of!confusion!as!to!
Art.*1299**Subject*to*a*Suspensive*or*Resolutory*Condition* the!latter's!share.!(1210a)!
If! the! original! obligation! was! subject! to! a! suspensive! or! resolutory! condition,! the!
new!obligation!shall!be!under!the!same!condition,!unless!it!is!otherwise!stipulated.! 3! cases! where! legal! subrogation! is! presumed! (subrogation! happens! by!
(n)! operation!of!law):!
1. Creditor! pays! another! creditor! who! is! preferred,! even! without!
General! Rule! ! new! prestation! is! also! subject! to! the! same! suspensive! or! knowledge!of!debtor!
resolutory!condition.! o Preferred*Creditor!!a!creditor!who!is!preferred!because!of!the!
Exception!!unless!otherwise!stipulated.! stipulation!of!law!
Ex.! A! owes! B! 1000,! secured! by! a! first! mortgage.! A! owes! C!
Art.*1300**Kinds*of*Subrogation* 2000,!which!is!unsecured.!Under!the!law,!B!is!a!preferred!
Subrogation! of! a! third! person! in! the! rights! of! the! creditor! is! either! legal! or! creditor.! If! C! pays! the! debt! of! A! to! B,! then! C! will! be!
conventional.!The!former!is!not!presumed,!except!in!cases!expressly!mentioned!in! subrogated! in! Bs! right! ! he! can! then! foreclose! on! the!
this! Code;! the! latter! must! be! clearly! established! in! order! that! it! may! take! effect.! mortgage!of!A.!
(1209a)! 2. When!a!third!person!not!interested!in!the!obligation!pays!with!the!
express/tacit!approval!of!the!debtor!
Subrogation! ! substitution! of! one! person! in! the! place! of! a! creditor! with! o Debtor!agrees!to!the!payment.!
reference!to!a!lawful!claim!or!right,!giving!the!former!all!the!rights!of!the! Ex.! A!owes!B!1000.!C!pays!B!with!express/implied!consent!of!
latter,!including!rights!to!employ!all!remedies!to!enforce!payment! A.!C!will!be!subrogated!in!the!rights!of!B.!
Kinds!of!Subrogation:! 3. Third! person! interested! in! the! obligation! pays! weven! without!
1. Conventional!!Expressly!agreed!upon!by!original!parties!and!the! knowledge!of!the!debtor!
new!creditor.! o person*interested!!one!who!will!be!affected!by!the!payment!
2. Legal!!takes!place!by!operation!of!law!(Art.!1302)! Ex.!! Suppose! in! above! example,! C! is! guarantor! of! A! (he! is!
! interested! in! the! fulfillment! of! obligation).! If! C,! the!
guarantor,!pays!B,!even!without!the!knowledge!of!A,!C!is!
subrogated!in!the!rights!of!B.!
57!
!
Confusion!takes!place!in!person!of!C.! !
Guaranty! is! extinguished,! but! principal!
obligation!subsists.! !
!
! *
Art.*1303**General*Effect*of*Subrogation*
Subrogation! transfers! to! the! persons! subrogated! the! credit! with! all! the! rights!
thereto! appertaining,! either! against! the! debtor! or! against! third! person,! be! they!
guarantors! or! possessors! of! mortgages,! subject! to! stipulation! in! a! conventional!
subrogation.!(1212a)!
Effect!of!Subrogation:!
o Stepping!into!the!shoes!of!the!creditor!
o Conventional* subrogation! ! parties! may! stipulate! and! limit! the!
scope!of!this!subrogation!
Art.*1304**Effect*of*Partial*Subrogation*
A!creditor,!to!whom!partial!payment!has!been!made,!may!exercise!his!right!for!the!
remainder,!and!he!shall!be!preferred!to!the!person!who!has!been!subrogated!in!his!
place!in!virtue!of!the!partial!payment!of!the!same!credit.!(1213)!!
Contemplates! a! situation! where! the! original! creditor! has! been! partially!

paid!by!new!creditor:!
o He!remains!a!creditor!to!the!extent!of!the!balance!of!the!debt.!
o In!case!of!insolvency!of!debtor,!he!has!a!preferential!right!above!
the!new!creditor.!
Ex.! A!owes!B!10,000.!C!pays!B!6,000,!with!consent!of!A.!B!remains!
creditor!with!balance!of!4,000.!
*
!
58!
!
Stages!of!Contracts:!!
Title*II**CONTRACTS* 1.!!! Negotiation!!covers!the!period!from!the!time!the!prospective!contracting!
parties! indicate! interest! in! the! contract! to! the! time! the! contract! is!
Chapter*1:*General*Provisions* concluded!(perfected).!!
2.!!! Perfection!!takes!place!upon!the!concurrence!of!the!essential!elements!of!
**Art.*1305**Contracts*Defined* the!contract.!
A!contract!is!a!meeting!of!minds!between!two!persons!whereby!one!binds!himself,! o A!contract!which!is!consensual!as!to!perfection!is!so!established!upon!
with!respect!to!the!other,!to!give!something!or!to!render!some!service.!(1254a)! a! mere! meeting! of! the! minds! i.e.( the! concurrence! of! offer! and!
acceptance,!on!the!object!and!on!the!cause!thereof.!
!!
3.!!! Consummation! ! begins! when! the! parties! perform! their! respective!
Contract:!
undertakings! under! the! contract! culminating! in! the! extinguishment!
a! source! of! obligation! and! it! can! also! be! defined! as! a! legally! enforceable! thereof.!
agreement.! !
A!juridical!convention!manifested!in!legal!form,!by!virtue!of!which!one!or! Kinds!of!Contracts:!!
more! persons! bind! themselves! in! favor! of! another! or! others,! or! 1. Real* contract! ! a! contract! which! requires,! in! addition! to! the! above,! the!
reciprocally,!to!the!fulfillment!of!a!prestation!to!give,!to!do!or!not!to!do.!! delivery!of!the!object!of!the!agreement,!as!in!a!pledge!or!commodatum(!
An!agreement!whereby!at!least!one!of!the!parties!acquires!a!right,!either!in( 2. Solemn*contract!!compliance!with!certain!formalities!prescribed!by!law!is!
rem(or!in(personam,!in!relation!to!some!person,!thing,!act!or!forbearance.! essential!in!order!to!make!the!act!valid,!the!prescribed!form!being!thereby!
Agreements! falling! under! the! Statute! of! Frauds! are! useless! contracts! for! an!essential!element!thereof.!!
they! cannot! be! implemented! which,! in! effect,! negates! the! existence! of! a! 3. Auto7contracts* ! one! person! contracts! himself.! As! a! general! rule,! it! is!
contract.!! accepted! in! our! law.! The! existence! of! a! contract! does! not! depend! on! the!
! number! of! persons! but! on! the! number! of! parties.! There! is! no! general!
Characteristics!of!Contracts:!! prohibition!against!auto+contracts;!hence,!it!should!be!held!valid.!!
1. Essential*elements!!without!the!following!there!is!no!contract!(COC):!! 4. Contracts* of* Adhesion! ! contracts! prepared! by! another,! containing!
a. Consent!! provisions!that!he!desires,!and!asks!the!other!party!to!agree!to!them!if!he!
b. Object! wants!to!enter!into!a!contract.!!
c. Cause!! Ex.!Transportation!tickets!!other!party!can!reject!it!entirely!!
2. Natural*elements!!exist!as!part!of!the!contract!even!if!the!parties!do!not! !
provide!for!them,!because!the!law,!as!suppletory!to!the!contract,!creates! Other!Terms:!
them.!! Perfect* promise! ! distinguished! from! a! contract,! in! that! the! latter!
3. Accidental* elements! ! those! which! are! agreed! by! the! parties! and! which! establishes! and! determines! the! obligations! arising! therefrom;! while! the!
cannot!exist!without!being!stipulated.!! former! tends! only! to! assure! and! pave! the! way! for! the! celebration! of! a!
! contract!in!the!future.!!
Number!of!Parties:!! Imperfect*Promise!!mere!unaccepted!offer!!
The!Code!states!two!persons!but!what!is!meant!actually!is!two!parties.! Pact* ! a! special! part! of! the! contract,! sometimes! incidental! and! separable!
For!a!contract!to!exist,!there!must!be!at!least!two!parties.!A!party!can!be! for!the!principal!agreement.!!
one!or!more!persons.!! Stipulation!!similar!to!a!pact;!when!the!contract!is!an!instrument,!it!refers!
Ex.! Husband!&!Wife!!cannot!sell!to!each!other!as!a!protection!of!the! to!the!essential!and!dispositive!part,!as!distinguished!from!the!exposition!
conjugal! partnership.! They! can! however! enter! into! a! contract! of! of!the!facts!and!antecedents!upon!which!it!is!based.!!
agency.! !
59!
!
Art.*1306**Guarantee*of*Freedom*to*Contract** countenance! disrespect! for! or! failure! to! observe! a! legal! prescription.!
The! contracting! parties! may! establish! such! stipulations,! clauses,! terms! and! The!Statute!takes!precedence.!!
conditions! as! they! may! deem! convenient,! provided! they! are! not! contrary! to! law,! o Only! laws! existing! at! the! time! of! the! execution! of! a! contract! are!
morals,!good!customs,!public!order,!or!public!policy.!(1255a)! applicable! thereto! and! that! later! statutes! do! not! govern! said!
contract! unless! the! latter! is! specifically! intended! to! have! a!
retroactive!effect.!!
Autonomous!Nature!of!Contracts:!!
Ortigas(v.(CA(!construction!of!a!commercial!edifice!was!
Freedom* to* stipulate* terms* and* conditions! ! essence! of! the! contractual!
proper! provided! that! the! area! was! reclassified! from! a!
system! provided! such! stipulations! are! not! contrary! to! law,! morals,! good!
residential!to!a!commercial!zone.!
customs,!public!order,!or!public!policy.!
o Prohibits! a! party! from! coercing! or! intimidating! or! unduly! o Non7impairment* of* contracts* or* vested* rights* clauses! ! must! to!
influencing!another!to!enter!into!a!contract.!! yield!to!the!superior!and!legitimate!exercise!by!the!State!of!police!
o Azcuna(Jr.(v.(CA!!there!is!nothing!immoral!or!illegal!in!a!provision! power! to! promote! the! health,! morals,! peace,! education,! good!
stating! that! the! lessee! shall! be! charged! 1000/day! if! the! lessee! order,!safety!and!general!welfare!of!the!people.!
shall!not!vacate!the!premises!on!the!due!date.! Ex.!!
o Manila(Bay(Club(Corporation(v.(CA!!termination!of!a!lease!is!valid! Pakistan( International( Airlines( v.( Ople! ! contractual!
when! it! is! due! to! the! failure! of! the! lessee! to! comply! with! the! stipulations! contravening! provisions! of! law! designed! to!
insurance! clause! of! the! contract.! Contracts! are! respected! as! the! protect!laborers!and!employees!are!not!valid.!!
law!between!the!contracting!parties.! stipulations!to!pay!usurious!interests!!
Teves(v.(Peoples(Homesite(and(Housing(Corp.!!in!the!absence!of!express! agreement!to!declare!valid!a!law!or!ordinance!
legislation! or! constitutional! prohibition,! a! court! may! declare! a! contract! 2. Contrary*to*Morals!+!morals!mean!those!generally!accepted!principles!
void!as!against!public!policy!when:! of! morality! which! have! received! some! kind! of! social! and! practical!
1.!!! It!has!a!tendency!to!injure!the!public.! confirmation.!!
Ex.!!
2.!!! It!is!against!the!public!good.!
Philippine(American(General(Insurance(v.!Mutuc!!a!provision!that!
3.!!! It!contravenes!some!established!interest!of!society.! a! bond! may! be! extended! without! notification! is! not! necessarily!
4.!!! It!is!inconsistent!with!sound!policy!and!good!morals!which!tends! contrary! to! law! or! morals! as! to! render! the! stipulation! null! and!
to! undermine! the! security! of! individual! rights,! whether! of! void.!
personal!liability!or!of!private!property.! De(Leon(v.(CA!!agreement!by!the!husband!and!wife!to!terminate!
! their!relations!is!contrary!to!law,!Filipino!morals!and!public!policy.!
Principle!of!Autonomy:!! The! termination! of! a! marriage! by! the! parties! cannot! be! done! on!
Freedom*to*contract!!any!person!has!the!liberty!to!enter!into!a!contract! their!own!and!without!legal!basis.!
so!long!as!they!are!not!contrary!to!law,!morals,!good!customs,!public!order! a!promise!to!marry!or!not!to!marry,!to!secure!legal!separation,!or!
or!public!policy.!The!legislature,!under!the!constitution,!is!prohibited!from! to!adopt!a!child!!
enacting!laws!to!prescribe!the!terms!of!a!legal!contract.! a!promise!to!change!citizenship,!profession,!religion!or!domicile!!
Validity* of* Stipulations! ! any! and! all! stipulations! not! contrary! to! law,! a! promise! not! to! hold! public! office! or! which! limits! the!
morals,!good!customs,!public!order!or!public!policy!is!valid.!! performance!of!official!duties!!
1. Contrary*to*law!!freedom!of!contract!is!restricted!by!law!for!the!good! a!promise!to!enter!a!particular!political!party!or!separate!from!it!!
of! the! public.! It! is! fundamental! postulate! that! however! broad! the! 3. Contrary*to*Public*Order!!if!the!court!finds!that!the!contract!as!to!the!
freedom!of!the!contracting!parties!may!be,!it!does!not!go!so!far!as!to! consideration!or!the!thing!to!be!done,!contravenes!some!established!
60!
!
interest! of! society,! or! is! inconsistent! with! sound! policy! and! good! obligatory! and! it! must! be! proved! as! a! fact! according! to!
morals,!or!tends!to!undermine!the!security!of!individual!rights.!! the!rules!of!evidence!!
Ex.! !
Common!carrier!cannot!stipulate!for!exemption!for!liability!unless! Innominate!Contracts!according!to!Kind!of!Prestation:!
such! exemption! is! justifiable! and! reasonable! and! the! contract! is! 1.!!! do* ut* des! (I! give! that! you! may! give)! ! An! agreement! in! which! A! will! give!
freely!and!fairly!made.!! one!thing!to!B,!so!that!B!will!give!another!thing!to!A.!!
Payment! to! intermediaries! in! securing! import! licenses! or! quota! 2.!!! do* ut* facias! (I! give! that! you! may! do)! ! An! agreement! under! which! A! will!
allocations! give!something!to!B,!so!that!B!may!do!something!for!A.!!
Contract! of! scholarship! stipulating! that! the! student! must! remain! 3.!!! facio*ut*facias!(I!do!that!you!may!do)!!An!agreement!under!which!A!does!
in! the! same! school! and! that! he! waives! his! right! to! transfer! to! something!for!B,!so!that!B!may!render!some!other!service!for!A.!!
another!school!without!refunding!the!school!! 4.!!! facio*ut*des!(I!do!that!you!may!give)!!An!agreement!under!which!A!does!
! something!for!B,!so!that!B!may!give!something!to!A.!!
!
Art.*1307**Innominate*Contracts* Cases:!
Innominate! contracts! shall! be! regulated! by! the! stipulations! of! the! parties,! by! the! Dizon( v.( Gaborro! ! a! contract! where! respondent! shall! pay! for! the!
provisions!of!Titles!I!and!II!of!this!Book,!by!the!rules!governing!the!most!analogous! obligations! of! the! petitioner,! and! the! petitioner! grants! possession,!
nominate!contracts,!and!by!the!customs!of!the!place.!(n)! enjoyment!and!the!use!of!certain!lands!until!full!reimbursement,!partakes!
the!nature!of!an!antichresis.!
Innominate!Contracts:! Corpus( v.( CA! ! contract! between! lawyer! and! client! is! analogous! to! a!
Those!which!are!not!specifically!governed!by!any!provision!in!the!Civil!Code! contract!of!agency.!
or!special!law!but!which!likewise!involve!the!fulfillment!or!accomplishment! !
of!some!prestations!
They!are!actually!not!extraordinary!contracts.!Such!contracts!are!common! Art.*1308**Mutuality*of*Contracts*
and!frequently!encountered.! The! contract! must! bind! both! contracting! parties;! its! validity! or! compliance! cannot!
Ex.!!!contract!to!translate!a!book,!contract!to!model,!! be!left!to!the!will!of!one!of!them.!(1256a)!
contract!between!lawyer!and!client!
They!are!governed!by!the!following!(SLAC):!! Mutuality!of!Contracts:!!
a. Stipulation!of!the!parties!! In!order!that!obligations!arising!from!contracts!may!have!the!force!of!law!
b. Law!!provisions!of!obligations!and!contracts!under!Title!I!and! between! the! parties,! there! must! be! mutuality! between! the! parties! based!
II!of!the!Civil!Code! on!their!essential!equality.!A!contract!containing!a!condition!which!makes!
c. Rules!governing!the!most!analogous!nominate!contracts!! its!fulfillment!dependent!upon!the!exclusive!will!of!the!contracting!parties!
Sale,! barter! or! exchange,! lease,! partnership,! agency,! is!void.!PNB(v.(CA!
loan,! deposit,! aleatory,! contracts,! compromises,! Garcia( v.( Rita( Legarda( Inc.! ! a! contract! expressly! giving! to! one! party! the!
guaranty,!pledge,!mortgage,!and!antichresis!! right!to!cancel!the!same!if!a!resolutory!condition!therefor!agreed!upon!is!
Governed! by! special! laws:! insurance,! real! estate! not! fulfilled,! is! valid,! the! reason! being! that! when! the! contract! is! thus!
mortgage,!and!charter!party!! cancelled,!the!agreement!of!the!parties!is!in!reality!being!fulfilled.!
d. Customs!of!the!place!! Allied(Banking(Corp.(v.(CA(!a!stipulation!which!states!that!a!contract!may!
o Custom!!a!rule!of!conduct!formed!by!repetition!of!acts! be! renewed! for! a! like! term! at! the! option! of! the! lessee! is! valid! since! such!
uniformly! observed! as! a! social! rule,! legally! binding! and! right!of!the!lessee!is!part!of!the!consideration!in!the!contract.!
61!
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Contract* of* adhesion! ! wherein! a! party,! usually! a! corporation,! prepares! Art.*1310**When*Determination*is*Inequitable**
the! stipulations! in! the! contract,! while! the! other! party! merely! affixes! his! The!determination!shall!not!be!obligatory!if!it!is!evidently!inequitable.!In!such!case,!
signature!or!his!adhesion!thereto.!Serra(v.(CA! the!courts!shall!decide!what!is!equitable!under!the!circumstances.!(n)!
o Not!per!se!void.!
o Binding! as! ordinary! contracts! because! the! party! who! adheres! to! Exception!to!Mutuality!of!Contracts!(Art.!1308)!!
the!contract!is!free!to!reject!it!entirely.!!
Qualifies!determination!in!Art.!1309!
!
When! the! decision! cannot! be! arrived! due! to! inequity,! the! courts! shall!
Cancellation!by!One!Party:!
decide!what!is!equitable!for!the!parties!involved.!!
Unilateral* Cancellation! ! just! as! nobody! can! be! forced! to! enter! into! a!
!
contract,!in!the!same!manner!once!a!contract!is!entered!into,!no!party!can!
renounce!it!unilaterally!or!without!the!consent!of!the!other.!! Art.*1311**Stipulation*Pour*Atrui*
o Nobody!is!allowed!to!enter!into!a!contract,!and!while!the!contract! Contracts! take! effect! only! between! the! parties,! their! assigns! and! heirs,! except! in!
is! in! effect,! leaves,! denounces! or! disavows! the! contract! to! the! case! where! the! rights! and! obligations! arising! from! the! contract! are! not!
prejudice!of!the!other.!! transmissible!by!their!nature,!or!by!stipulation!or!by!provision!of!law.!The!heir!is!not!
Upon*Stipulation!!however,!when!the!contract!so!stipulates!that!one!may! liable!beyond!the!value!of!the!property!he!received!from!the!decedent.!
terminate!the!contract!upon!a!reasonable!period!is!valid.!!
o Judicial! action! for! the! rescission! of! the! contract! is! no! longer! If! a! contract! should! contain! some! stipulation! in! favor! of! a! third! person,! he! may!
necessary!when!the!contract!so!stipulates!that!it!may!be!revoked! demand! its! fulfillment! provided! he! communicated! his! acceptance! to! the! obligor!
before! its! revocation.! A! mere! incidental! benefit! or! interest! of! a! person! is! not!
and!cancelled!for!the!violation!of!any!of!its!terms!and!conditions.!
sufficient.! The! contracting! parties! must! have! clearly! and! deliberately! conferred! a!
This!right!of!rescission!may!be!waived.!!
favor!upon!a!third!person.!(1257a)!
!
Relativity!of!Contracts!(General!Rule):!!
Art.*1309**Determination*of*Performance*by*a*Third*Person*
Between* Principals* (parties)! ! contracts! take! effect! only! between! parties!
The! determination! of! the! performance! may! be! left! to! a! third! person,! whose!
to!the!same.!A!stranger!cannot!invoke!the!contract!of!another!for!his!own!
decision! shall! not! be! binding! until! it! has! been! made! known! to! both! contracting!
interest!or!for!a!source!of!an!alleged!prejudice.!!
parties.!(n)!
o Integrated(Packaging(Corp.(v.(CA!!supplier!private!respondent!is!
not!a!party!to!the!agreement,!hence!cannot!be!held!liable!for!any!
Exception!to!Mutuality!of!Contracts!(Art.!1308)!!
breach!between!the!contracting!parties.(
A!third*person!may!be!called!upon!to!decide!whether!or!not!performance!
Transmissibility* to* Assigns* and* Heirs! ! the! law! operates! to! effect! the!
has! been! done! for! the! fulfillment! of! the! contract.! Such! decision! becomes!
transfer! of! a! chosen! of! action! from! one! person! to! another! without! any!
binding!when!communicated!to!the!parties.!!
concurring!act!on!the!part!of!the!parties!or!indeed!without!their!assent.!
Ex.!! A! sold! his! parcel! of! land! to! B.! It! was! agreed! that! C,! a! real! estate!
o Heirs! are! not! third! persons! because! there! is! privity! of! interest!
appraiser,!would!be!the!one!to!determine!the!reasonable!price!of!
between!them!and!their!predecessor.!
the! land.! C,! then! fixed! the! price! after! considering! all! the!
o Transfer!of!an!interest!in!land!may!be!by!marriage,!and!by!death.!
circumstances!affecting!the!value!of!the!land.!C!must!make!known!
o DKH(Holdings(Corp.(v.(CA!!upon!acquiring!the!property,!the!heir!
his!decision!to!A!and!B!who!will!be!bound!by!the!same.!
has!acquired!all!the!rights!and!obligations!of!the!deceased!lessor!
! with!respect!to!the!property.!
o Transmission!of!rights!and!obligations!in!a!contract!may!be!agreed!
! upon!by!the!parties.!
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o The!heir!may!not!be!held!liable!beyond!the!value!of!the!property! Stipulation!Pour!Autrui!Cases:!
received.! Marmont(Resort(Hotel(v.(Guiang!!spouses!may!be!held!liable!as!Marmont!
o 3! cases! where! contracts! cannot! take! effect! with! respect! to! the! hotel!is!a!third!party!who!is!benefitted!upon!the!second!memorandum!of!
heirs!or!assigns!(SNL):!! agreement!which!the!spouses!executed!with!Maris!Trading.!
1.!!! Nature!!of!the!contract!does!not!allow!transmission!! Coquia( v.( Fieldmans( Insurance( Co.( Inc.! ! insurance! contract! is! contract!
Where! acts! stipulated! in! a! contract! require! the! exercise! pour!autrui.!Any!authorized!driver!of!the!insured!taxi!company!has!a!right!
of! special! knowledge,! genius,! skill,! taste,! ability,! of!claim!in!case!of!a!death!or!bodily!injury!suffered!through!an!accident.!
experience,! judgment,! discretion,! integrity,! or! other! Mandarin( Villa,( Inc.( v.( CA! ! in! a! transaction! between! a! restaurant,! bank!
personal! qualification! of! one! or! both! parties,! the! and! a! credit! card! holder,! the! card! holders! offer! to! pay! by! means! of! his!
agreement!is!of!a!personal!nature,!and!terminates!on!the! credit!card!constitutes!not!only!an!acceptance!of!the!said!!stipulation!but!
death!of!the!party!who!is!required!to!render!such!service!! also!an!explicit!communication!of!his!acceptance!to!the!obligor.!
2.!!! Stipulation*!that!no!transmission!of!rights!shall!be!allowed!! Young( v.( CA! ! when! given! a! right! of! first! refusal,! the! sale! of! subject!
3.!!! Law!!provides!non+transmission!! property!to!some!other!person!constitutes!a!revocation!of!such!right.!
!
!
4!Exceptions!to!the!Relativity!of!Contracts:!
1. Contracts* Pour* Autrui! (Art.! 1311! par.! 2)! ! enforcement! of! which! may! be! Art.*1312**Contracts*Creating*Real*Rights*Bind*Third*Persons*
demanded!by!a!third!party!for!whose!benefit!it!has!been!made,!although! In! contracts! creating! real! rights,! third! persons! who! come! into! possession! of! the!
not! a! party! to! the! contract,! before! the! stipulation! in! his! favor! has! been! object!of!the!contract!are!bound!thereby,!subject!to!the!provisions!of!the!Mortgage!
revoked!by!the!contracting!parties.!There!must!be!a!clear!intent!to!benefit! Law!and!the!Land!Registration!Laws.!(n)!
the!third!party.!It!is!insufficient!that!the!third!party!be!merely!incidentally!
benefited.! Real!Rights!in!Property:!
o Requisites!of!a!Stipulation!Pour!Autrui!(SPCLA):! A!real!right!directly!affects!property!subject!to!it.!
a. There!must!be!a!stipulation!in!favor!of!a!third!person!(who!is! Whoever!is!in!possession!of!such!property!must!respect!that!real!right.!!
not!necessarily!named)! Ex.!! If! the! lessor! terminates! the! lease! contract! for! a! valid! cause,! the!
b. The!stipulation!must!be!a!part,!not!the!whole!of!the!contract!! sublessee! can! be! ejected! from! the! leased! premises! even! if! he! is!
c. The! contracting! parties! must! have! clearly! and! deliberately! not!a!party!to!the!lease!contract.!
conferred!a!favor!upon!a!third!person,!not!a!mere!incidental! !
benefit!or!interest!!
d. Neither! of! the! contracting! parties! bears! the! legal!
Art.*1313**Right*of*Creditors*to*Impugn*Fraudulent*Contracts**
representation!or!authorization!of!the!third!party!! Creditors!are!protected!in!cases!of!contracts!intended!to!defraud!them.!(n)!
e. The! favored! party! must! have! communicated! his! acceptance!
of!the!stipulation!to!the!obligor!before!its!revocation! Art.* 1381(3)! ! provides! that! a! contract! shall! be! rescissible! if! it! is!
2. Contracts*creating*Real*Rights!(Art.!1312)! undertaken! in! fraud! of! creditors! when! the! latter! cannot! in! any! other!
3. Right*of*Creditors*to*Impugn*Fraudulent*Contracts!(Art.!1313)! manner!collect!the!claim!due!them.!
4. Person*who*Induces*Another*to*Violate*a*Contract!(Art.!1314)! Even!if!the!creditor!is!not!a!party!to!the!contract!intended!to!defraud!him,!
he!is!given!legal!personality!by!law!to!terminate!the!contract.!
!
!
!
! !
!
63!
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Art.*1314**Liability*of*Third*Persons*Responsible*for*Breach*of*Contract* Art.*1315**Perfection*of*Contracts*and*Implied*Terms*
Any! third! person! who! induces! another! to! violate! his! contract! shall! be! liable! for! Contracts! are! perfected! by! mere! consent,! and! from! that! moment! the! parties! are!
damages!to!the!other!contracting!party.!(n)! bound!not!only!to!the!fulfillment!of!what!has!been!expressly!stipulated!but!also!to!
all!the!consequences!which,!according!to!their!nature,!may!be!in!keeping!with!good!
A! stranger! owes! to! the! parties! to! the! agreement! a! duty! not! to! interfere! faith,!usage!and!law.!(1258)!
with!its!performance.!
o This! covers! every! case! where! one! person! maliciously! persuades! Implied* terms! ! obligations! not! stipulated! in! a! contract! but! includes! all!
another!to!break!any!contract!with!a!third!person.! consequences!that!may!be!in!keeping!with!good!faith,!usage!and!law.!
Malicious* act! ! if! the! persuasion! be! used! for! the! indirect! purpose! of! Ex.! observance!of!proper!diligence!
injuring! the! plaintiff,! or! benefiting! the! defendant,! at! the! expense! of! the! delivery!includes!all!accessions!and!accessories!!
plaintiff.! provisions!on!fortuitous!events!
o Lack! of! malice! precludes! damages.! But! it! does! not! relieve! !
petitioner! of! the! legal! liability! for! entering! into! contracts! and! Art.*1316**Real*Contracts*are*Perfected*upon*Delivery*
causing!breach!of!existing!ones.! Real!contracts,!such!as!deposit,!pledge!and!Commodatum,!are!not!perfected!until!
The!party!guilty!of!such!breach!may,!nevertheless,!recover!against!the!one! the!delivery!of!the!object!of!the!obligation.!(n)!
who!induces!him!to!violate!his!contract!when!the!latter,!by!such!acts!and!
persuasion,!intended!to!injure!the!other!contracting!party!or!to!coerce!him!
General!Rule!!contracts!are!perfected!by!mere!consent!of!the!parties.!
into!adopting!a!line!of!business!against!his!will!and!judgment!!
o Exceptions:!!
Damage! ! the! loss,! hurt,! or! harm! which! results! from! injury! and! damages! 1.!!! Contract* of* Sale* ! ownership! over! the! object! is! transferred! only!
are! the! recompense! or! compensation! awarded! for! the! damage! suffered.! upon!actual!or!constructive!delivery.!
Song(Pin(Bun(v.(CA!! 2.!!! Real*Contracts!
o One! becomes! liable! in! an! action! for! damages! for! a! non+ a. Deposit! ! constituted! from! the! moment! a! person!
trespassory! invasion! of! anothers! interest! in! the! private! use! and! receives!a!thing!belonging!to!another!for!the!purpose!of!
enjoyment!of!asset!if!(RILS):!! safely!keeping!it!and!returning!the!same.!(Art.!1962)!
1.!!! The!other!has!property!rights!and!privileges!with!respect! b. Pledge! ! constituted! by! the! owner! of! the! object! to!
to!the!use!or!enjoyment!interfered!with.!! secure! a! loan.! It! is! indispensable! that! the! thing! pledged!
2.!!! The!invasion!is!substantial.! be!in!possession!of!the!creditor.!
3.!!! The!defendants!conduct!is!a!legal!cause!of!the!invasion.! c. Commodatum!!bailee!in!commodatum!acquires!the!use!
4.!!! The! invasion! is! either! intentional! and! unreasonable! or! of!the!thing!loaned.!
unintentional! and! actionable! under! general! negligence! !
rules.!
o Elements!of!Tort!Interference!(EKI):!! Art.*1317**Unauthorized*Contracts*are*Unenforceable*
1.!!! Existence!of!a!valid!contract!! No!one!may!contract!in!the!name!of!another!without!being!authorized!by!the!latter,!
2.!!! Knowledge!on!the!part!of!the!third!person!of!the!existence!of! or!unless!he!has!by!law!a!right!to!represent!him.!
contract!!
A! contract! entered! into! in! the! name! of! another! by! one! who! has! no! authority! or!
3.!!! Interference! of! the! third! person! is! without! legal! justification!
legal!representation,!or!who!has!acted!beyond!his!powers,!shall!be!unenforceable,!
or!excuse!
unless! it! is! ratified,! expressly! or! impliedly,! by! the! person! on! whose! behalf! it! has!
!
been!executed,!before!it!is!revoked!by!the!other!contracting!party.!(1259a)!!
!
64!
!
General!rule!!no!person!may!contract!in!the!name!of!another.! Concur! ! all! the! three! requisites! must! be! present.! Absence! of! one!
o Exception!!if!such!person!has!by!law!a!right!to!represent!him.! negates!the!existence!of!a!contract.!
Ex.! Parents! exercising! parental! authority! have! the! right! and! The*rule*on*pari!delicto((when!both!parties!are!equally!at!fault.!
duty!to!represent!their!unemancipated!child.! o Void* and* inexistent* contracts! ! when! any! of! the! elements! are!
Contract*of*Agency!!a!person!binds!himself!to!render!some!service!or!to! absent!pari(delicto!shall!not!apply.!!
do!something!in!representation!or!on!behalf!of!another,!with!the!consent! o Ostensible*contracts!!when!the!elements!are!all!present!but!the!
or!authority!of!the!latter.! contract!is!void,!pari(delicto!shall!apply.!
o The! principal! of! the! agent! must! comply! with! all! the! obligations! Ex.! purchase!and!delivery!of!drugs!
which! the! agent! may! have! contracted! with! the! scope! of! his! !
authority.! Section!1!!Consent!
o Wherein! the! agent! has! exceeded! his! power,! the! principal! is! not!
bound!except!when!he!ratifies!it!expressly!or!tacitly.!
o When!the!agent!exceeded!his!authority,!the!principal!is!solidarily! Art.*1319**Consent*Defined*
liable! with! the! agent! if! the! former! allowed! the! latter! to! act! as! Consent! is! manifested! by! the! meeting! of! the! offer! and! the! acceptance! upon! the!
though!he!had!full!powers.! thing!and!the!cause!which!are!to!constitute!the!contract.!The!offer!must!be!certain!
o When!a!sale!of!a!piece!of!land!or!any!interest!therein!is!through! and!the!acceptance!absolute.!A!qualified!acceptance!constitutes!a!counter+offer.!
an!agent,!the!authority!of!the!latter!shall!be!in!writing,!or!else,!the! Acceptance!made!by!letter!or!telegram!does!not!bind!the!offerer!except!from!the!
sale!shall!be!void.! time! it! came! to! his! knowledge.! The! contract,! in! such! a! case,! is! presumed! to! have!
Yao( Ka( Sin( v.( CA( ! if! a! private! corporation! intentionally! or! negligently! been!entered!into!in!the!place!where!the!offer!was!made.!(1262a)!
clothes! its! officers! or! agents! with! apparent! power! to! perform! acts! for! it,!
the! corporation! cannot! deny! that! the! existence! of! such! authority,! as! to! Consent* * the! concurrence! of! the! wills! of! the! offerer! and! acceptor! as! to!
innocent!third!persons!dealing!in!good!faith!with!such!officers!or!agents.!! the!thing!and!the!cause!which!constitute!a!contract.!
Regal( Films( v.( Concepcion( ! such! an! agreement! is! void! where! the! agent! o Requisites!of!Consent:!!
was!no!longer!acting!on!behalf!of!the!movie!actor.! 1.!!! Consent! must! be! manifested! by! the! concurrence! of! the!
! offer!and!the!acceptance!(Arts.!1319+1326)!
2.!!! Contracting! parties! must! possess! the! necessary! legal!
* capacity!(Arts.!1327+1329)!!
3.!!! Consent! must! be! intelligent,! free,! spontaneous! and! real!
Chapter*2:*Essential*Requisites*of*Contracts* (Arts.!1330+1346)!!
!
General!Provisions! Offer**a!manifestation!of!a!willingness!to!enter!into!a!bargain!so!made!as!
to!justify!another!person!in!understanding!that!his!assent!to!that!bargain!is!
invited!and!will!conclude!it.!
Art.*1318**Elements*of*a*Contract* o Making!an!offer!means!inviting!an!acceptance!which,!if!given,!will!
There!is!no!contract!unless!the!following!requisites!concur:! finally!create!a!contract.!
o It!must!be!so!complete!that!its!acceptance!will!form!an!agreement!
(1)!Consent!of!the!contracting!parties;!
containing!all!the!terms!necessary!and!intended!by!the!parties,!for!
(2)!Object!certain!which!is!the!subject!matter!of!the!contract;!
it! is! obvious! that! there! can! be! no! agreement! until! its! terms! are!
(3)!Cause!of!the!obligation!which!is!established.!(1261)!
settled,!and!that!an!offer!which!is!not!complete!is!merely!a!step!in!
the!negotiations.!
65!
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o The! following! relations,! until! a! contract! is! perfected,! are! not! other! party! options! and/or! remedies! to! protect!
considered! binding! commitments,! and! if! withdrawn,! such! interests.!
withdrawal!is!effective!immediately!after!its!manifestation!such!as! o Person! making! the! offer! must! have! actual! knowledge! of! the!
by!its!mailing!and!not!necessarily!when!the!offeree!learns!of!the! acceptance.!
withdrawal:!! !
1.!!! Negotiation**is!formally!initiated!by!an!offer!! Art.*1321**Offerer*Fixes*Manner,*Time*and*Place*of*Acceptance*
2.!!! Imperfect*promise!(policitacion)**is!merely!an!offer!! The!person!making!the!offer!may!fix!the!time,!place,!and!manner!of!acceptance,!all!
3.!!! Public* advertisements* or* solicitations! * are! ordinarily! of!which!must!be!complied!with.!(n)!
construed! as! mere! invitations! to! make! offers! or! only! as!
proposals.!!
General! rule! ! offerer! will! not! be! bound! by! an! acceptance! made! by! the!
!
acceptor!in!any!other!manner!than!that!specified!by!the!offerer.!
Art.*1320*7*Acceptance* o Exception!!when!the!offerer!acquiesces!in!the!change.!
An!acceptance!may!be!express!or!implied.!(n)! Matias( v.( CA( ! a! lessee! may! not! compel! the! subsequent! owner! of! a!
property!to!sell!it!in!an!amount!which!the!lessee!feels!reasonable.!
Acceptance! ! must! exist! to! establish! concurrence! of! the! wills! of! the! Contract! of! sale! ! the! manner! of! payment! of! the! purchase! price! is! an!
parties,!otherwise!there!is!no!consent!to!form!a!contract.! essential!element!before!a!valid!and!binding!contract!of!sale!can!exist.!!
Salonga( v.( Farrales! ! where! the! defendant! merely! !
offered! the! property! but! which! offer! was! not! accepted,!
there!was!no!consent.!
Art.*1322**Communication*of*Acceptance*to*Agent*
An! offer! made! through! an! agent! is! accepted! from! the! time! acceptance! is!
o Must!be!absolute!!it!may!be!express!or!implied.!
Adelfa( Properties( Inc.( v.( CA( ! except! where! formal! communicated!to!him.!(n)!
acceptance!is!required,!it!may!be!shown!by!acts,!conduct!
or! words! of! the! accepting! party! that! clearly! manifest! a! Contract*of*Agency!!a!person!binds!himself!to!render!some!service!or!to!
present!intention!or!determination!to!accept!the!offer!to! do!something!in!representation!or!on!behalf!of!another!with!the!consent!
buy!or!sell.! or!authority!of!the!latter.!!
o Must! be! unconditional! ! it! must! be! identical! to! the! terms! of! the! When!a!sale!of!a!piece!of!land!or!any!interest!therein!is!through!an!agent,!
offer.! the!authority!of!the!latter!shall!be!in!writing,!otherwise!the!sale!is!void.!!
It! must! not! vary! from! the! proposal! by! way! of! omission,! !
addition!or!alteration.!
Art.*1323**When*Offer*Becomes*Ineffective*
Counter7offer! ! a! qualified! acceptance! which! binds!
An! offer! becomes! ineffective! upon! the! death,! civil! interdiction,! insanity,! or!
neither!of!the!parties.!
insolvency!of!either!party!before!acceptance!is!conveyed.!(n)!
Jardine( Davies( v.( CA( ! when! the! acceptance! of! a!
construction! bid! was! subject! to! certain! basic! terms! and!
Before* acceptance* is* conveyed! ! before! acceptance! has! come! to! the!
conditions,! it! was! not! tantamount! to! a! qualified!
actual!knowledge!of!the!offeror.!
acceptance.!As!to!conditions:!
When!an!offer!becomes!ineffective,!nothing!can!be!accepted.!
Condition* imposed* on* the* perfection* of* a*
Villanueva( v.( CA! ! an! offer! became! ineffective! when! a! bank! became!
contract!!failure!to!comply!results!in!the!failure!
insolvent! and! was! placed! under! receivership! before! its! acceptance! of! the!
of!a!contract.!
purchase!of!a!certain!foreclosed!property!was!communicated!to!the!seller.!
Condition*imposed*merely*on*the*performance*
Hence,!no!contract!was!created.!
of* an* obligation! ! failure! to! comply! gives! the!
66!
!
! o However,!it!is!not!the!giving!of!the!earnest!money!per(se,!but!the!
Art.*1324**Contract*of*Option,*Option*Period,*Option*Money* proof! of! the! concurrence! of! all! the! essential! elements! of! the!
When!the!offerer!has!allowed!the!offeree!a!certain!period!to!accept,!the!offer!may! contract! of! sale! which! establishes! the! existence! of! a! perfected!
be! withdrawn! at! any! time! before! acceptance! by! communicating! such! withdrawal,! sale.!
except! when! the! option! is! founded! upon! a! consideration,! as! something! paid! or! !
promised.!(n)! Art.*1325**Business*Advertisements*
Unless! it! appears! otherwise,! business! advertisements! of! things! for! sale! are! not!
Option! ! a! contract! granting! a! privilege! to! buy! or! sell! at! a! determined! definite!offers,!but!mere!invitations!to!make!an!offer.!(n)!
price!within!an!agreed!time.!
Option*period!!when!the!offerer!has!allowed!the!offeree!a!certain!period! General! Rule( ! advertisements! of! things! for! sale! are! mere! invitations! to!
to!accept!the!offer.!! make!an!offer.!
Ang(Yu(Asuncion(v.(CA(!rules!on!option!period:( o Exception! ! unless! it! appears! otherwise! or! where! such!
PERIOD!NOT!FOUND!ON!A! PERIOD!HAS!A!SEPARATE! advertisement!may!constitute!an!offer!which!is!certain.!
CONSIDERATION! CONSIDERATION! !
The! offerer! is! still! free! and! has! the! A! contract! of! option! is! deemed! Art.*1326**Advertisements*for*Bidders**
right! to! withdraw! the! offer! before! perfected!and!it!would!be!a!breach! Advertisements! for! bidders! are! simply! invitations! to! make! proposals,! and! the!
its! acceptance! or! if! an! acceptance! of! that! contract! to! withdraw! the!
advertiser!is!not!bound!to!accept!the!highest!or!lowest!bidder,!unless!the!contrary!
was! made,! before! the! offerors! offer!during!the!agreed!period.!
appears.!(n)!
coming! to! know! of! such! fact,! by!
communicating! that! withdrawal! to! If! the! optioner+offeror! withdraws!
the! offer! before! its! acceptance! by! Jardine(Davies(Inc.(v.(CA(!when!a!company!starts!the!process!of!a!bidding!
the!offeree.!
and! disseminates! the! document! denominated! the! Terms! Conditions! of!
The! right! to! withdraw! must! not! be! the! optionee+offeree,! the! latter!
the! Biddingto! the! bidders,! the! dissemination! of! the! said! documents!
exercised! whimsically! or! arbitrarily;! may! not! sue! for! specific!
constitutes! an! advertisement! to! bid! in! the! project.! The! bid! proposals! or!
otherwise,! it! could! give! rise! to! a! performance! on! the! proposed!
quotations! submitted! by! the! prospective! suppliers! are! the! offers.! The!
damage! claim! under! Art.! 19! of! the! contract! since! it! has! failed! to! reach!
its!own!stage!of!perfection.! favorable!reply!of!the!company!to!one!of!the!prospective!suppliers!is!the!
Civil!Code.!
The! optioner+offeror! renders! acceptance.!
! !
himself! liable! for! damages! for!
breach!of!the!option.! Art.*1327**Persons*who*Cannot*Give*Consent*
Serra(v.(CA(!an!optional!contract!is!a!privilege!existing!only!in!one!party The!following!cannot!give!consent!to!a!contract:!
the!buyer.!
(1)!Unemancipated!minors;!
o He! is! given! the! right! to! decide! to! purchase! or! not,! a! certain!
merchandise!or!property,!at!any!time!within!the!agreed!period,!at! (2)! Insane! or! demented! persons,! and! deaf+mutes! who! do! not! know! how! to! write.!
a!fixed!price.! (1263a)!
Consideration!!in!an!option!contract,!may!be!anything!of!value,!unlike!in!
sale!where!it!must!be!the!price!certain!in!money!or!its!equivalent.!
Persons!who!are!capable!cannot!allege!the!incapacity!of!those!with!whom!
Earnest*money*!considered!part!of!the!price!in!a!contract!of!sale!and!can! they!contracted!to!annul!the!contract.!
be!a!proof!of!the!perfection!of!the!contract!of!sale.!
!
!
67!
!
Unemancipated!Minors:! Deaf+mutes:!
Emancipation! takes! place! by! the! attainment! of! majority! age! which! Being!deaf+mute!is!not!by!itself!alone!a!disqualification!for!giving!consent.!!
commences!at!the!age!of!18!years.! The!law!refers!to!the!deaf+mute!who!does!not!know!how!to!write.!!
Any! contract! entered! into! by! an! unemancipated! person! is! annullable! or! !
voidable.! Art.*1328**Lucid*Intervals,*Drunkenness,*Hypnotic*Spell*
o Unless!they!ratify!the!same!upon!reaching!the!age!of!majority.! Contracts! entered! into! during! a! lucid! interval! are! valid.! Contracts! agreed! to! in! a!
Only! the! minor! can! invoke! the! ground! that! a! contract! is! annullable! state!of!drunkenness!or!during!a!hypnotic!spell!are!voidable.!(n)!
because,!at!the!time!it!was!entered!into,!he!was!still!a!minor.!
Misrepresentation!by!a!Minor:! Lucid!Interval:!
a. Braganza( v.( De( Villa( Abrille! (passive! misrepresentation)! ! where! Lucid* interval! ! that! period! of! time! when! an! insane! person! acts! with!
minors! signed! a! promissory! note! without! telling! the! creditor! their! reasonable! understanding,! comprehension! and! discernment! with! respect!
ages,! and! where! the! creditor! sought! to! enforce! the! promissory! note! to!what!he!is!doing.!
against! them,! it! was! held! that! the! minors! can! set! up! the! defense! of! Lunacy! may! be! intermittent! in! character,!but! when!one!is!shown!to!have!
minority!to!resist!claim.! been!mentally!deranged!at!a!recent!period!anterior!to!the!execution!of!the!
o Minors!have!no!juridical!duty!to!disclose!their!inability!or!age.! contract,!that!condition!is!presumed!to!continue!and!the!burden!is!on!the!
o Even!if!the!written!contract!is!unenforceable!because!of!non+ other! party! to! show! that! the! agreement! was! entered! into! during! a! lucid!
age,! they! shall! make! restitution! to! the! extent! that! they! may! interval.!!
have!profited!by!the!money!they!received.! !
b. Mercado(v.(Espiritu!(active!misrepresentation)! !document!signed!by! Drunkenness!or!Hypnotic!Spell:!
the! minor! specifically! stated! he! was! of! age.! The! minor! is! estopped! Intoxication* ! must! be! such! a! character! as! to! perpetuate! an! undue!
from!!setup!the!defense!of!minority.! advantage!over!the!drunken!person.!
! o It! must! render! the! person! incapable! of! intelligent! assent! and!
Insane!or!Demented!Persons:! deprived!of!the!power!to!know!what!he!is!doing.!
Contracts!entered!into!by!insane!or!demented!persons!are!annullable,!not! o Anything!short!of!this!will!not!invalidate!the!contract.!
void!ab!initio.! o An!agreement!made!by!a!person!when!so!drunk,!is!voidable!at!the!
o Valid!up!to!the!time!they!are!rendered!ineffective!by!the!courts.! intoxicated!persons!option!under!any!of!the!following!(OFC):!
o Insanity! of! the! other! party! at! the! time! of! the! perfection! of! the! 1.!!! When!it!appears!that!the!drunkenness!was!brought!about!by!
contract!must!be!proven.!! the!opposite!party!!
o When! the! insane! is! not! under! a! guardian! and! the! other! 2.!!! That!a!fraudulent!advantage!was!taken!of!it!!
contracting! party! has! no! reasonable! cause! to! believe! him! 3.!!! That! the! drunkenness! was! so! complete! as! to! deprive! the!
otherwise! insane,! the! agreement! is! valid! if! equitable! and! party!of!his!reason!of!an!agreeing!mind!
beneficial!to!such!insane!person.! Hypnosis* ! an! artificially! induced! state,! resembling! sleep,! but!
3!classes!of!mental!incapacity:!! characterized! by! exaggerated! suggestibility! and! continued! responsiveness!
1.!!! Idiot!!one!who!has!been!insane!from!birth.! to!the!voice!of!the!hypnotist.!
2.!!! Lunatic!!one!who!was!at!one!time!sane,!but!who!from!some!cause! !
or!other!has!lost!use!of!his!reason.!
Art.*1329**Incapacity*Subject*to*Modifications*
3.!!! Mentally* Weak! ! not! totally! incapable! of! transacting! business! or! The! incapacity! declared! in! Article! 1327! is! subject! to! the! modifications! determined!
managing!affairs.! by! law,! and! is! understood! to! be! without! prejudice! to! special! disqualifications!
! established!in!the!laws.!(1264)!
68!
!
The!Rules!of!Court!provide!a!list!of!incompetents!who!need!guardianship:!! Annulment!of!contract!on!the!ground!of!error!is!limited!to!cases!in!which!it!
o persons!suffering!from!the!penalty!of!civil!interdiction! may! reasonably! be! said! that! without! such! error! the! consent! would! not!
o hospitalized!lepers! have!been!given.!
o prodigals! For!mistake!to!make!a!contract!voidable!or!annullable,!the!law!states!that!
o deaf!and!dumb!who!are!unable!to!write!and!read! the!consent!must!either!refer!to!the!(SC):!
o those!of!unsound!mind!(even!though!they!have!lucid!intervals)! 1. Substance!of!the!thing!which!is!the!object!of!the!contract!!
o persons!not!being!of!unsound!mind!but!by!reason!of!age,!disease,! 2. Conditions! which! principally! moved! the! parties! to! enter! into! a!
weak!mind,!and!other!similar!causes!cannot,!without!outside!aid,! contract!!
take!care!of!themselves!and!manage!their!propertybecoming!an! Unilateral*mistake!!of!which!the!other!party!is!entirely!
easy!prey!for!deceit!and!exploitation.!! ignorant!and!to!which!he!in!no!way!contributes,!will!not!
The!incapacity!to!give!consent!(Arts.!1327!&!1328)!to!contracts!renders!the! affect! the! agreement! or! afford! ground! for! its! avoidance!
contract!merely!voidable,!while!special!disqualification!(Art.!1329)!makes!it! or! rescission,! unless! it! is! such! a! mistake! as! goes! to! the!
void.!! substance!of!the!agreement!itself.!
! Identity*or*qualifications!!even!when!there!is!no!error!
as! to! person,! is! a! cause! vitiating! consent,! if! such!
Art.*1330**Characteristics*of*Consent*
qualifications! have! been! the! principal! cause! of! the!
A! contract! where! consent! is! given! through! mistake,! violence,! intimidation,! undue!
contract.!!
influence,!or!fraud!is!voidable.!(1265a)!
Motive! ! does! not! affect! the! contract! unless! such!
motive!was!a!condition!of!the!consent!given,!because!an!
Meeting!of!the!minds!must!be!free,!voluntary,!willful!and!with!reasonable! accidental! element! is,! by! the! will! of! the! parties,!
understanding!of!the!various!obligations!the!parties!intend!to!be!bound.! converted!into!a!substantial!element.!
Mistake,* intimidation,* violence,* undue* influence,* fraud* ! grounds! to! Spouses(Heinzrich(Theis(and(Betty(Theis(v.(CA!!Mistake!involves!either:!
annul!a!contract!because!there!is!no!real!assent!to!the!contract.! 1. Ignorance!!absence!of!knowledge!which!respect!to!a!thing.!
Intimidation,* violence,* undue* influence* ! acts! of! duress! where! the! 2. Mistake* properly* speaking! ! a! wrong! conception! about! said!
coerced!party!is!compelled!to!execute!the!contract!against!his!will.! thing! or! a! belief! in! the! existence! of! some! circumstance,! fact! or!
A! contract! obtained! through! duress! or! mistake! is! voidable! or! annullable! event!which!in!reality!does!not!exist.!!
under!Art.!1390.! A!simple!mistake!of!account!shall!give!rise!to!its!correction!!it!does!not!
! go!into!the!essentials!of!a!contract.!!
Art.*1331**Mistake*or*Error** !
In!order!that!mistake!may!invalidate!consent,!it!should!refer!to!the!substance!of!the!
thing! which! is! the! object! of! the! contract,! or! to! those! conditions! which! have! Art.*1332**Burden*of*Proof*in*case*of*Fraud*or*Mistake*
principally!moved!one!or!both!parties!to!enter!into!the!contract.! When! one! of! the! parties! is! unable! to! read,! or! if! the! contract! is! in! a! language! not!
understood! by! him,! and! mistake! or! fraud! is! alleged,! the! person! enforcing! the!
Mistake!as!to!the!identity!or!qualifications!of!one!of!the!parties!will!vitiate!consent! contract!must!show!that!the!terms!thereof!have!been!fully!explained!to!the!former.!
only! when! such! identity! or! qualifications! have! been! the! principal! cause! of! the! (n)!
contract.!
A!simple!mistake!of!account!shall!give!rise!to!its!correction.!(1266a)! Presumption!!when!entering!into!a!contract,!the!parties!are!presumed!to!
have! understood! the! terms! of! the! contract! they! voluntarily! signed!
especially!when!there!is!proof!that!they!are!educated.!
Mistake:!
69!
!
o May!be!rebutted!by!evidence!that!the!person!invoking!the!same! Art.*1335**Violence*or*Force*
has!either!of!these!conditions:! There! is! violence! when! in! order! to! wrest! consent,! serious! or! irresistible! force! is!
Inability!to!read! employed.!
Inability!to!understand!the!language!of!the!contract!
Burden!of!proof!shifts!to!the!one!enforcing!the!contract!to!show!that!the! There! is! intimidation! when! one! of! the! contracting! parties! is! compelled! by! a!
terms!have!been!explained!to!the!other!party.!! reasonable!and!well+grounded!fear!of!an!imminent!and!grave!evil!upon!his!person!
The!fact!of!not!understanding!is!not!enough;!it!must!be!coupled!with!fraud.! or! property,! or! upon! the! person! or! property! of! his! spouse,! descendants! or!
Lustan( v.( CA! ! a! deed! of! definite! sale! was! ruled! to! be! an! equitable! ascendants,!to!give!his!consent.!
mortgage! where! an! illiterate! woman! was! made! to! believe! that! what! she!
signed!evidenced!an!indebtedness!to!the!creditor.! To!determine!the!degree!of!intimidation,!the!age,!sex!and!condition!of!the!person!
Lim(v.(CA!!where!a!contract!was!written!in!English!signed!by!an!elderly! shall!be!borne!in!mind.!
woman! who! claimed! that! she! did! not! understand! it,! was! upheld! because!
fraud!was!not!proven.! A!threat!to!enforce!one's!claim!through!competent!authority,!if!the!claim!is!just!or!
Arriola( v.( Mahilum( ! upheld! the! cause! of! an! illiterate! where! her! sister! legal,!does!not!vitiate!consent.!(1267a)!
fraudulently! had! her! sign! a! document! including! the! partition! of! her! own!
property.! Violence!!refers!to!physical!force!or!compulsion.!
! o There!is!total!absence!of!free!will!in!case!a!person!is!compelled!to!
enter!into!a!contract!through!violence.!
Art.*1333**Knowledge*of*Risk* o Requisites!of!violence:!!
There! is! no! mistake! if! the! party! alleging! it! knew! the! doubt,! contingency! or! risk! 1. that! the! physical! force! employed! must! be! irresistible! or! of!
affecting!the!object!of!the!contract.!(n)! such! degree! that! the! victim! has! no! other! course,! under! the!
circumstances,!but!to!submit.!!
If!the!parties!are!conscious!of!their!ignorance!as!to!the!existence!of!some! 2. that!such!force!is!the!determining!cause!in!giving!the!consent!
facts,!the!non+existence!of!such!facts!is!of!no!consequence.! to!the!contract.!
Wood(v.(Boynton(!contract!cannot!be!annulled!where!a!Topaz!turned!out! Intimidation!!refers!to!moral!force!or!compulsion.!!
to! be! actually! a! Diamond! because! there! was! conscious! uncertainty! and! o It! is! necessary! that! the! threats! and! circumstances! be! of! a!
both!parties!took!the!risk.! character! as! to! excite! the! reasonable! apprehensions! of! a! person!
! of!ordinary!courage,!and!that!the!agreement!be!made!under!the!
Art.*1334**Mistake*of*Law*May*Vitiate*Consent* influence!of!such!threats!or!menace.!
Mutual! error! as! to! the! legal! effect! of! an! agreement! when! the! real! purpose! of! the! o Threat!must!be!tangible!and!direct!
parties!is!frustrated,!may!vitiate!consent.!(n)! o Requisites!of!intimidation:!!
1. that! the! intimidation! must! be! the! determining! cause! of! the!
contract,!or!must!have!caused!the!consent!to!be!given.!
General! rule! ! A! unilateral! mistake! of! law! as! to! the! legal! effect! of! an!
2. that!the!threatened!act!be!unjust!or!unlawful.!
agreement!is!not!a!ground!to!annul!a!contract.!
3. that! the! threat! be! real! and! serious,! there! being! an! evident!
o Exception!!when!the!following!requisites!concur:!!
disproportion! between! the! evil! and! the! resistance! which! all!
1. The!mistake!as!to!the!legal!effect!of!the!agreement!must!be!
men!can!offer.!
mutual.!
2. Such! mutual! mistake! frustrates! the! real! purpose! of! the! 4. that! it! produces! a! reasonable! and! well+grounded! fear! from!
parties.! the! fact! that! the! person! from! whom! it! comes! has! the!
necessary!means!or!ability!to!inflict!the!threatened!injury.!
!
70!
!
De(Leon(v.(CA(( been!unduly!influenced!was!suffering!from!mental!weakness,!or!was!ignorant!or!in!
Duress! ! that! degree! of! constraint! or! danger! either! actually! inflicted! financial!distress.!(n)!
(violent)! or! threatened! and! impending! (intimidation),! sufficient! to!
overcome!the!mind!and!will!of!a!person!of!ordinary!firmness.!! Annulling*a*contract*based*on*undue*influence!is!based!upon!principles!
o Vda.( De( Lacson( v.( Granada! ! the! duress! or! intimidation! must! be! of!highest!morality,!it!reaches!every!case!and!grants!relief!where!influence!
more!than!the!general!feeling!of!fear.! is!acquired!and!abused,!or!where!confidence!is!reposed!and!betrayed.!!
There! must! be! specific! acts! or! instances! of! such! nature! Undue!unrighteous,!illegal!and!designed!to!perpetrate!a!wrong.!!
and!magnitude!as!to!have,!of!themselves,!inflicted!fear!or! o It!must!amount!to!fraud!or!coercion.!
terror!upon!the!subject!thereof!that!his!execution!of!the! Due* influence* ! solicitation,! importunity,! argument! and! persuasion!
questioned!deed!or!act!cannot!be!considered!voluntary.! used!by!one!party!as!means!to!the!consent!of!the!other.!
Mere!threat!to!bring!a!good!faith!action,!maintainable!at! o Banez(v.(CA!!influence!obtained!by!persuasion!or!argument!or!by!
law,!does!not!amount!to!duress.! appeals!to!the!affections!is!not!prohibited!either!in!law!or!morals!
o Laperal(v.(Rogers!!where!fearing!for!his!life!and!that!of!his!family,! and!is!not!obnoxious!even!in!courts!of!equity.!
he!sold!the!house,!it!was!held!that!the!contract!can!be!annulled!as! o Marubeni( Corporation( v.( Lirag! ! an! agreement! entered! into!
the!consent!was!coerced!by!direct!intimidation.! because!of!the!actual!or!supposed!influence...which!contemplates!
o Legal*actions*which*amount*to*duress:** the! use! of! personal! influence! and! solicitation! rather! than! appeal!
A!threatened!civil!action!where!the!parties!are!not!on!an! to!the!judgment!of!the!official!on!the!merits!of!the!object!sought!
equal!footing.! is!contrary!to!public!policy.!
Threats!made!against!a!person!of!inferior!intellect,!or!an! !
aged! weakened! in! body! and! mind! to! the! effect! that!
certain!civil!proceedings!will!be!instituted.! Art.*1338**Causal*Fraud*
Threatening! litigation! while! the! defendant! is! ill,! or! to! There! is! fraud! when,! through! insidious! words! or! machinations! of! one! of! the!
continue! litigation! when! the! circumstances! are! contracting! parties,! the! other! is! induced! to! enter! into! a! contract! which,! without!
oppressive.!! them,!he!would!not!have!agreed!to.!(1269)!
!
Art.*1336**Violence*or*Intimidation*by*a*Third*Person* Fraud!!a!false!representation!of!a!material!fact!made!by!word!or!conduct!
Violence! or! intimidation! shall! annul! the! obligation,! although! it! may! have! been! with! knowledge! of! its! falsehood! or! in! reckless! disregard! of! its! truth,! in!
employed!by!a!third!person!who!did!not!take!part!in!the!contract.!(1268)! order!to!induce!and!actually!inducing!another!to!act!thereon!to!his!injury.!
o There!must!be!always!be!damage!or!injury!in!case!of!fraud.!
Ex.! If!A!is!coerced!to!enter!into!a!contract!with!X!because!G!threatens!to!kill!all! o Fraud!is!every!kind!of!deception,!whether!in!the!form!of!insidious!
the! children! of! A! if! he! does! not! do! so,! such! contract! may! be! annulled! machinations,! manipulations,! concealments,! or!
whether!or!not!X!knew!of!the!intimidation.!! misrepresentations,!for!the!purpose!of!leading!another!party!into!
! error!and!thus!executing!a!particular!act.!!
o Fraud! produces! qualified! error;! it! induces! in! the! other! party! an!
Art.*1337**Undue*Influence*
inexact!notion!of!facts.!The!will!of!another!is!maliciously!misled!by!
There! is! undue! influence! when! a! person! takes! improper! advantage! of! his! power!
means!of!false!appearance!of!reality.!!
over!the!will!of!another,!depriving!the!latter!of!a!reasonable!freedom!of!choice.!The!
o Insidious! words! or! machinations! include! false! promises;!
following! circumstances! shall! be! considered:! the! confidential,! family,! spiritual! and!
exaggeration! of! hopes! or! benefits;! abuse! of! confidence;! and!
other! relations! between! the! parties,! or! the! fact! that! the! person! alleged! to! have!
fictitious!names,!qualifications,!or!authority.!!
o The!result!of!fraud!is!error!on!the!part!of!the!victim.!!
71!
!
Kinds!of!fraud:!! If!a!party!is!induced!by!such!exaggerations,!there!may!be!fraud!amounting!
1. Dolo*causante!(Art.!1338)!!which!determines!or!is!the!essential! to!active!misrepresentation.!
cause!of!the!consent;!fraud!in!the!perfection!of!contract;!can!be!a! If!it!is!within!the!means!of!the!other!party!to!investigate!and!he!does!not!
ground!for!annulment.! do!so,!there!will!be!no!fraud!despite!the!exaggerations.!
2. Dolo*incidente!(Arts.!1344!&!1170)!!which!does!not!have!such!a! Tolerated* fraud! ! includes! minimizing! the! defects! of! the! thing,!
decisive!influence!and!by!itself!cannot!cause!the!giving!of!consent,! exaggeration! of! its! good! qualities,! and! giving! it! qualities! that! it! does! not!
but! refers! only! to! some! particular! or! accident! of! the! obligation;! have.! This! is! lawful! misrepresentation! known! as! dolus( bonus.! This! is! also!
cannot!be!a!ground!for!annulment.! called!lawful!astuteness.!!
Requisites!of!fraud:!! o These! misrepresentations! are! usually! encountered! in! fairs,!
1. Employed!by!one!contracting!party!upon!the!other! markets,!and!almost!all!commercial!transactions.!They!do!not!give!
2. Induced!the!other!party!to!enter!into!the!contract! rise! to! an! action! for! damages,! either! because! of! their!
3. Serious! insignificance!or!because!the!victims!gullibility!is!the!real!cause!of!
4. Resulted!in!damage!or!injury!to!the!party!seeking!annulment!! his!loss.!!
Rivero( v.( CA! ! it! was! held! that! consent! of! the! old! woman! was! obtained! !
through!fraudulent!misrepresentation!of!her!nephew!when!she!was!made! Art.*1341**Expert*Opinion*
to!believe!that!the!contract!was!a!mortgage!when!in!fact!it!was!a!sale.! A!mere!expression!of!an!opinion!does!not!signify!fraud,!unless!made!by!an!expert!
! and!the!other!party!has!relied!on!the!former's!special!knowledge.!(n)!
Art.*1339**Fraud*by*Concealment*
Failure!to!disclose!facts,!when!there!is!a!duty!to!reveal!them,!as!when!the!parties! General!Rule!!Opinions!are!not!regarded!as!representation!of!facts!!
are!bound!by!confidential!relations,!constitutes!fraud.!(n)! Hence,! if! it! turns! out! to! be! wrong,! it! is! not! considered! legally! deceitful!
insidiously!inducing!a!party!to!enter!into!a!contract.!!
The!mere!fact!that!one!of!the!parties!has!superior!knowledge!of!the!value! o Exception! ! an! opinion! of! an! expert! is! like! a! statement! of! fact,!
of!the!property!subject!of!the!transaction!does!not!per(se(constitute!fraud.! and!if!false,!may!be!considered!a!fraud!giving!rise!to!annulment.!!
o There! is! only! fraud! when,! under! the! special! and! peculiar! !
circumstances! of! each! case,! a! legal! or! equitable! duty! is! imposed!
upon! the! dominant! party! to! reveal! certain! facts! material! to! the! Art.*1342**Fraud*by*a*Third*Person*
transaction! or! when! there! is! a! confidential! relationship! between! Misrepresentation! by! a! third! person! does! not! vitiate! consent,! unless! such!
the!parties.!! misrepresentation!has!created!substantial!mistake!and!the!same!is!mutual.!(n)!
Silence*or*concealment!!by!itself,!does!not!constitute!fraud,!unless!there!
is!a!special!duty!to!disclose!certain!facts,!or!unless!according!to!good!faith! A!contract!may!be!annulled!on!the!ground!of!vitiated!consent!if!deceit!by!a!
and!the!usages!of!commerce,!the!communication!should!be!made!! third! person,! even! without! connivance! or! complicity! with! one! of! the!
o The! innocent! non+disclosure! of! a! fact! does! not! affect! the! contracting! parties,! resulted! in! mutual! error! on! the! part! of! the! parties! to!
formation!of!the!contract!or!operate!to!discharge!the!parties!from! the!contract.!!
their!agreement.!! General!rule!!is!that!the!fraud!employed!by!a!third!person!upon!one!of!
! the!parties!does!not!vitiate!consent!and!cause!the!nullity!of!a!contract.!!
Art.*1340**Usual*Exaggerations*in*Trade* o Exception! ! If! one! of! the! parties! is! in! collusion! with! the! third!
The!usual!exaggerations!in!trade,!when!the!other!party!had!an!opportunity!to!know! person,! or! knows! of! the! fraud! by! the! third! person,! and! he! is!
the!facts,!are!not!in!themselves!fraudulent.!(n)! benefited!thereby,!he!may!be!considered!as!an!accomplice!to!the!
fraud,!and!the!contract!becomes!voidable.!
72!
!
Rural( Bank( of( Caloocan( v.( CA! ! there! was! misrepresentation! where! a! When!both!parties!use!fraud!reciprocally,!neither!one!has!an!action!against!
person! induced! an! elderly! woman! to! co+sign! a! promissory! note! as! a! co+ the! other;! the! fraud! of! one! compensates! that! of! the! other.! Neither! party!
debtor! and! such! person! claimed! false! qualifications! to! get! a! loan! from! a! can!ask!for!the!annulment!of!the!contract.!!
bank.! !
!
Art.*1343**Misrepresentation*Made*in*Good*Faith* Art.*1345**Simulation*of*a*Contract*
Misrepresentation! made! in! good! faith! is! not! fraudulent! but! may! constitute! error.! Simulation!of!a!contract!may!be!absolute!or!relative.!The!former!takes!place!when!
(n)! the! parties! do! not! intend! to! be! bound! at! all;! the! latter,! when! the! parties! conceal!
their!true!agreement.!(n)!
Misrepresentation!!inclusive!of!the!term!fraud.!
o Practically,! every! fraud! is! a! misrepresentation! but! not! every! Absolute*simulation!!renders!the!contract!null!and!void!when!the!parties!
misrepresentation!is!fraudulent.! do!not!intend!to!be!bound!at!all!by!the!same.!Umali(v.(CA(!
Misrepresentations!may!be!made!without!the!knowledge!of!its!falsity!and! o The!basic!characteristic!of!this!type!of!simulation!of!contract!is!the!
therefore!completely!done!in!good!faith.! fact!that!the!apparent!contract!is!not!really!desired!or!intended!to!
o In!such!case,!it!may!constitute!merely!an!error.! either! produce! legal! effects! or! in! any! way! alter! the! juridical!
o Hence,!breach!of!contracts!need!not!always!be!in!good!faith!as!it! situation!of!the!parties.!Umali(v.(CA!
could!be!the!due!to!an!honest!mistake.! Simulation! ! the! declaration! of! a! fictitious! will,! deliberately! made! by!
! agreement! of! the! parties,! in! order! to! produce,! for! the! purposes! of!
deception,! the! appearance! of! a! juridical! act! which! does! not! exist! or! is!
Art.*1344**Causal*Fraud*may*make*a*Contract*Voidable*
different!from!that!which!was!really!executed.!
In!order!that!fraud!may!make!a!contract!voidable,!it!should!be!serious!and!should!
!
not!have!been!employed!by!both!contracting!parties.!
Art.*1346**Absolute*and*Relative*Simulation*of*Contracts*
Incidental!fraud!only!obliges!the!person!employing!it!to!pay!damages.!(1270)! An!absolutely!simulated!or!fictitious!contract!is!void.!A!relative!simulation,!when!it!
does!not!prejudice!a!third!person!and!is!not!intended!for!any!purpose!contrary!to!
The!fraudulent!act!must!be!serious!! law,! morals,! good! customs,! public! order! or! public! policy! binds! the! parties! to! their!
o There!must!be!an!intention!to!injure!and!that!damage!or!injury!in! real!agreement.!(n)!!
fact!resulted.!!
o It! must! not! be! dolo( incidenteaccidental! and! collateral! fraud Javier( v.( CA! ! assignee! should! be! held! liable! considering! that! the!
which! does! not! necessarily! bear! on! the! decision! of! the! party! assignment!was!a!relatively!simulated!contract!which,!though!containing!a!
defrauded!to!enter!into!the!contract.!! false!consideration,!was!not!null!and!void!per(se.!
o It!must!be!dolo(causantewhich!refers!to!the!very!cause!why!the! JR(Blanco(v.(Quasha!!simulation!of!contracts!may!be!absolute!or!relative.!!
other!party!entered!into!the!contract.!! a. Absolute* simulation! ! there! is! color! of! a! contract,! without! any!
Fraud! is! serious! when! it! is! sufficient! to! impress,! or! to! lead! an! ordinarily! substance! thereof,! the! parties! not! having! any! intention! to! be!
prudent! person! into! error;! that! which! cannot! deceive! a! prudent! person! bound.!!
cannot!be!a!ground!for!nullity.!! b. Relative* simulation! ! the! parties! have! an! agreement! which! they!
Besides! being! serious,! the! fraud! must! be! the! determining! cause! of! the! conceal!under!the!guise!of!another!contract.!!
contract.!It!must!be!dolo(causante.!! Ex.! a!deed!of!sale!executed!to!conceal!donation.!!
73!
!
Pua( v.( CA! ! where! it! was! proven! that! the! person! who! allegedly! entered! Within*the*commerce*of*man!!any!property!or!service!can!be!the!object!
into! the! contract! was! not! even! conceived! at! the! time! the! contract! was! of!a!contract!provided!that!it!is!within!the!commerce!of!man.!
executed,!the!SC!said!that!the!contract!was!definitely!absolutely!simulated.! o Maneclang( v.( IAC! ! a! creek! cannot! be! converted! into! a! fishpond!
Velasquez( v.( CA! ! contract! was! clearly! simulated! to! facilitate! the! because! it! is! a! property! belonging! to! the! public! domain! which! is!
transaction! with! the! bank! as! there! was! absolutely! no! consideration! at! all! not! susceptible! to! private! appropriation! and! acquisitive!
and!the!parties!clearly!did!not!intend!to!be!bound!by!the!deed!of!sale!and! prescription.!
its!accompanying!documents.! o Things!which!are!outside!the!commerce!of!man:!!
Francisco( v.( FranciscoSAlfonso! ! when! two! illegitimate! daughters! claimed! Services! which! imply! an! absolute! submission! by! those!
they!bought!property!but!it!was!shown!that!they!could!not!have!possibly! who! render! them,! sacrificing! their! liberty,! their!
acquired!the!same!given!that!they!had!no!income,!the!contract!of!sale!was! independence! or! beliefs,! or! disregarding! in! any! manner!
void!for!being!simulated!because!there!was!no!consideration!for!the!same.! the! equality! and! dignity! of! persons,! such! as! perpetual!
! servitude!or!slavery;!!
! Personal!rights,!such!as!marital!authority,!the!status!and!
capacity!of!a!person,!and!honorary!titles!and!distinctions;!!
Section!2!!Object!of!Contracts! Public!offices,!inherent!attributes!of!the!public!authority,!
and! political! rights! of! individuals,! such! as! the! right! of!
Art.*1347**Object*of*a*Contract* suffrage;!!
All!things!which!are!not!outside!the!commerce!of!men,!including!future!things,!may! Property,!while!they!pertain!to!the!public!dominion,!such!
be!the!object!of!a!contract.!All!rights!which!are!not!intransmissible!may!also!be!the! as!the!roads,!plazas,!squares,!and!rivers;!!
object!of!contracts.! Sacred! things,! common! things,! like! the! air! and! the! sea,!
and! res! nullius,! as! long! as! they! have! not! been!
No!contract!may!be!entered!into!upon!future!inheritance!except!in!cases!expressly!
appropriated.!!
authorized!by!law.!
Even!future!things!can!be!the!object!of!contracts,!as!long!
All! services! which! are! not! contrary! to! law,! morals,! good! customs,! public! order! or! as!they!have!the!possibility!or!potentiality!of!coming!into!
public!policy!may!likewise!be!the!object!of!a!contract.!(1271a)! existence.!!
Future! things! that! can! be! reasonably! ascertained! can! be! the! object! of! a!
contract.!!
The!object!of!a!contract!is!its!subject!matter.!It!is!the!thing,!right,!or!service!
which!is!the!subject+matter!of!the!obligation!arising!from!the!contract.!! Rights! may! likewise! be! the! object! of! contracts! provided! they! are!
Requisites!(CILID):!! transmissible.!!
1. within!the!commerce!of!man;!! Future*inheritance!!any!property!or!right!not!in!existence!or!capable!of!
2. not!intransmissible!! determination!at!the!time!of!the!contract,!that!a!person!may!in!the!future!
3. must!be!licit,!or!not!contrary!to!law,!morals,!good!customs,!public! acquire!by!possession.!!
policy,!or!public!order;!! Blas(v.(Santos!!where!the!wife!agreed!to!give!whatever!her!share!in!the!
4. not!an!impossible!thing!or!service;!and!! conjugal! partnership! property! to! her! heirs! once! the! husband! dies,! the! SC!
5. it!must!be!determinate!as!to!its!kind.!! said!that!such!agreement!does!not!involve!future!inheritance.!
! o The!document!refers!to!existing!properties!which!she!will!receive!
Art.*1348**Impossible*Things*or*Services* by!operation!of!law!on!the!death!of!her!husband,!because!it!is!her!
Impossible!things!or!services!cannot!be!the!object!of!contracts.!(1272)! share!in!the!conjugal!assets.!!
74!
!
The! law,! however,! generally! does! not! allow! contracts! on! future! Consideration! ! the! reason,! motive,! or! inducement! by! which! a! man! is!
inheritance.!A!contract!entered!into!by!a!fideicommissary!heir!with!respect! moved!to!bind!himself!by!an!agreement.!!
to!his!eventual!rights!would!be!valid!provided!that!the!testator!has!already! The!contact!is!the!law!between!the!parties.!When!the!words!of!a!contract!
died.!The!right!of!a!fideicommissary!heir!comes!from!the!testator!and!not! are!plain!and!readily!understandable,!there!is!no!room!for!construction.!
from!the!fiduciary.!! Dihiansan( v.( CA! ! the! consideration! was! the! private! respondents!
! preferential!right!to!buy!the!property!from!the!owner.!
Art.*1349**Quantity*Need*Not*be*Determinate* !
The!object!of!every!contract!must!be!determinate!as!to!its!kind.!The!fact!that!the! Cause!of!contracts:!!
quantity! is! not! determinate! shall! not! be! an! obstacle! to! the! existence! of! the! 1. Onerous*contract!!for!each!contracting!party,!the!prestation!or!promise!
contract,!provided!it!is!possible!to!determine!the!same,!without!the!need!of!a!new! of!a!thing!or!service!by!the!other!!
contract!between!the!parties.!(1273)!! o The!cause!need!not!be!adequate!or!an!exact!equivalent!in!point!of!
actual! value,! especially! in! dealing! with! objects! which! have! a!
The!object!must!be!one!that!can!be!ascertained!with!reasonable!certainty! rapidly!fluctuating!price.!There!are!equal!considerations.!!
as!to!its!kind.! 2. Reciprocal*contracts*!the!obligation!or!promise!of!each!party.!
o Hence,!a!contract!engaging!a!certain!person!to!perform!a!deed,! o Republic( v.( Cloribel! ! in! a! compromise! agreement! designed! to!
without!specifying!what!deed!it!is,!does!not!make!the!service! terminate!the!case,!the!cause!of!the!compromise!was!the!mutual!
determinable!and!is!therefore!void.! waiver! and! abandonment! of! the! parties! of! their! claims! against!
!! each!other.!
3. Remuneratory*contracts!!the!service!or!benefit!which!is!remunerated!!
Section!3!!Cause!of!Contracts! o Where! a! party! gives! something! to! another! because! of! some!
service! or! benefit! given! or! rendered! by! the! latter! to! the! former,!
Art.*1350**Cause*Defined* where! such! service! or! benefit! was! not! due! as! a! legal! obligation.!
In!onerous!contracts!the!cause!is!understood!to!be,!for!each!contracting!party,!the! The!consideration!of!one!is!greater!than!the!others.!!
prestation!or!promise!of!a!thing!or!service!by!the!other;!in!remuneratory!ones,!the! 4. Contracts*of*pure*beneficence!!mere!liberality!of!the!benefactor!!
service!or!benefit!which!is!remunerated;!and!in!contracts!of!pure!beneficence,!the! o It! does! not! involve! any! material! thing! but! rather! it! involves! only!
mere!liberality!of!the!benefactor.!(1274)! the!generosity!of!the!benefactor.!!
!
Cause* of* the* contract! ! the! essential! or! more! proximate! purpose! which! Art.*1351**Motive*Defined*
the! contracting! parties! have! in! view! at! the! time! of! entering! into! the! The!particular!motives!of!the!parties!in!entering!into!a!contract!are!different!from!
contract!! the!cause!thereof.!(n)!
o It!may!or!may!not!be!tangible!!
o It!can!take!different!forms:!!
Cause*!essential!reason!for!the!contract.!
Prestation!or!promise!of!a!thing!or!service!by!another!!
Motive!particular!reason!for!a!contracting!party!which!does!not!affect!
Giving!of!a!sum!of!money,!an!object!!
the! other! party! and! which! does! not! preclude! the! existence! of! a! different!
Expectation!of!profits!from!a!subdivision!project!!
consideration.!
The! cause! as! to! each! party! is! the! undertaking! or! prestation! to! be!
o Motivation! of! the! parties! is! independent! from! the! cause! of! the!
performed! by! the! other.! The! object! of! the! contract! is! the! subject! matter!
contract!and!therefore!does!not!form!an!essential!part!of!it.!
thereof!!
General! rule! ! motive!or!particular!purpose!of!a!party!in!entering!into!a!
Ex.! the!land!which!is!sold!in!a!sales!contract!
contract!does!not!affect!the!validity!nor!existence!of!the!contract.!
75!
!
o Exception! ! when! the! realization! of! such! motive! or! particular! Art.*1353**False*Cause*
purpose! has! been! made! a! condition! upon! which! the! contract! is! The!statement!of!a!false!cause!in!contracts!shall!render!them!void,!if!it!should!not!
made!to!depend.!Philippine(National(Construction(Corp.(v.(CA! be! proved! that! they! were! founded! upon! another! cause! which! is! true! and! lawful.!
No! judicial! action! is! necessary! for! the! annulment! of! a! void! contract.! Any! (1276)!
such!action!would!be!merely!declaratory.!
Cause! is! the! objective,! intrinsic,! and! juridical! reason! for! the! existence! of! General!rule!!false!cause!stated!in!a!contract!makes!the!contract!void.!
the!contract!itself,!while!motive!is!the!psychological,!individual,!or!personal! o Exception! ! when! a! contract,! though! stating! a! false!
purpose!of!a!party!to!the!contract.!!
consideration,!has!in!fact!a!real!consideration,!the!contract!is!not!
General! principle! ! the! motives! of! a! party! do! not! affect! the! validity! or! void!!
existence!of!a!contract.!!
The!contract!is!at!least!a!relatively!simulated!one.!
o Exceptions! ! When! motive! predetermines! the! purpose! of! the!
!
contract,!such!as:!!
When!the!motive!of!a!debtor!in!alienating!property!is!to! Art.*1354**Cause*Presumed*to*Exist*and*Lawful*
defraud!his!creditors,!the!alienation!is!rescissible;!! Although!the!cause!is!not!stated!in!the!contract,!it!is!presumed!that!it!exists!and!is!
When! the! motive! of! a! person! in! giving! his! consent! is! to! lawful,!unless!the!debtor!proves!the!contrary.!(1277)!
avoid!a!threatened!injury,!as!in!the!case!of!intimidation,!
the!contract!is!voidable;!and!! Unless!the!contrary!is!proved,!a!contract!is!presumed!to!have!a!good!and!
When!the!motive!of!a!person!induced!him!to!act!on!the! sufficient!consideration.!!
basis! of! fraud! or! misrepresentation! by! the! other! party,! This!presumption!applies!when!no!cause!is!stated!in!the!contract.!!
the!contract!is!voidable.!! Liam( v.( Olympic( Sawmill( Co.! ! defendants! had! not! proven! that! the!
E.( Razon( v.( Philippine( Ports( Authority! ! contract! with! an! illegal! cause! is! obligation!was!illegal!hence,!it!subsists.!
void.! !
Uy(v.(CA!!where!the!NHA!purchased!lots!and!cancelled!because!the!lots! Art.*1355**Lesion*Defined*
turned! out! to! be! unsuitable! for! its! housing! project,! the! cancellation! was! Except!in!cases!specified!by!law,!lesion!or!inadequacy!of!cause!shall!not!invalidate!a!
valid!as!it!was!based!on!the!negation!of!the!cause!which!is!to!use!the!land! contract,!unless!there!has!been!fraud,!mistake!or!undue!influence.!(n)!!
for!housing.!
!
A!valuable!consideration,!however!small!or!nominal,!if!given!or!stipulated!
Art.*1352**Absence*of*Cause* in!good!faith!is,!in!the!absence!of!fraud,!sufficient.!Penaco(v.(Ruava!
Contracts!without!cause,!or!with!unlawful!cause,!produce!no!effect!whatever.!The! In!case!of!lesion!or!inadequacy!of!cause:!!
cause! is! unlawful! if! it! is! contrary! to! law,! morals,! good! customs,! public! order! or! o General!rule!!the!contract!is!not!subject!to!annulment.!!
public!policy.!(1275a)! Exception!!in!cases!provided!by!law,!however,!such!as!
those! mentioned! in! Art! 1381,! the! lesion! is! a! ground! for!
Absence!of!the!cause,!being!one!of!the!essential!elements!of!a!contract,!do! rescission!of!the!contract.!!
not!create!a!contract!as!there!can!be!no!meeting!of!the!minds.! Gross!inadequacy!naturally!suggests!fraud!and!is!evidence!thereof,!so!that!
! it! may! be! sufficient! to! show! it! when! taken! in! connection! with! other!
circumstances.!!
! Auyong( Hian( v.( Court( of( Tax( Appeals! ! petitioner! has! not! shown!that! the!
instant!sale!is!a!cause!exempted!by!law!from!the!operation!of!Art.!1355.!
! ! !
76!
!
Chapter*3:*Form*of*Contracts* A! party! who! wishes! to! have! his! contract! reduced! to! the! particular! form!
required* by* law* may* file! an! action! to* compel* the* other* party* to* comply*
with*such*form.*
*Art.*1356**Form*of*Contracts* If! requirement! is! merely! directory! ! no! impact! on! the! validity! or!
Contracts!shall!be!obligatory,!in!whatever!form!they!may!have!been!entered!into,! enforceability.!
provided! all! the! essential! requisites! for! their! validity! are! present.! However,! when! o Parties!may!enforce!the!contract.!
the! law! requires! that! a! contract! be! in! some! form! in! order! that! it! may! be! valid! or! o Demand!that!it!be!reduced!in!the!form!required!by!law.!
enforceable,! or! that! a! contract! be! proved! in! a! certain! way,! that! requirement! is! Zaide(v.(CA((unregistered!contract!of!sale!was!assailed!as!invalid,!SC!ruled!
absolute! and! indispensable.! In! such! cases,! the! right! of! the! parties! stated! in! the! in!favor!of!validity.!
following!article!cannot!be!exercised.!(1278a)! o The!deed!of!sale!was!defective!as!to!render!it!unregisterable!!no!
name!of!the!vendees!husband.!
Form!of!Contracts:!! o However,!such!defect!does*not*invalidate*the*deed.!
General! Rule! ! contracts! are! binding! from! perfection! in! whatever! form,! o Though!defective!in!form,!the!sale!was!valid.!
provided!the!three!requisites!exist:! o Thus,!the!parties!may!compel!each!other!to!do!what!is!needed!to!
1. Consent! make*the*document*of*sale*registerable.*
2. Object!
3. Cause!
Art.*1358**Contracts*Which*Must*Appear*in*a*Public*Document*
1356*establishes*Exceptions!!where!form!is!required!for!validity.! The!following!must!appear!in!a!public!document:!
1. Contracts!which!law*itself!requires!that!they!be!in!some!particular!
form! (1)! Acts! and! contracts! which! have! for! their! object! the! creation,! transmission,!
2. Donation! of! immovable! property! must! be! in! a! public! instrument! modification!or!extinguishment!of!real!rights!over!immovable!property;!sales!of!real!
such!that!the!donation!may!be!valid! property!or!of!an!interest!therein!a!governed!by!Articles!1403,!No.!2,!and!1405;!
Donation!of!movables!worth!more!than!P!5,000!
3. Contracts! that! law! requires! to! be! proven! by! some! writing! of! its! (2)!The!cession,!repudiation!or!renunciation!of!hereditary!rights!or!of!those!of!the!
terms! conjugal!partnership!of!gains;!
Statute!of!Frauds!
Cenido(v.(Apacionado!the!purposes!of!prescribing!form:! (3)!The!power!to!administer!property,!or!any!other!power!which!has!for!its!object!
1. Validity!!non+observance!of!form!renders!contract!void! an!act!appearing!or!which!should!appear!in!a!public!document,!or!should!prejudice!
2. Enforceability! ! non+compliance! with! form! will! not! permit! the! a!third!person;!
contract!to!be!proved!or!enforced!
3. Greater!efficacy!!if!not!done,!would!not!adversely!affect!validity! (4)! The! cession! of! actions! or! rights! proceeding! from! an! act! appearing! in! a! public!
or!enforceability!of!the!!contract!between!the!parties!themselves! document.!
All! other! contracts! where! the! amount! involved! exceeds! five! hundred! pesos! must!
Art.*1357**Form*for*the*Convenience*of*the*Parties* appear!in!writing,!even!a!private!one.!But!sales!of!goods,!chattels!or!things!in!action!
If! the! law! requires! a! document! or! other! special! form,! as! in! the! acts! and! contracts! are!governed!by!Articles,!1403,!No.!2!and!1405.!(1280a)!!!
enumerated!in!the!following!article,!the!contracting!parties!may!compel!each!other!
to! observe! that! form,! once! the! contract! has! been! perfected.! This! right! may! be! Failure!to!put!in!a!public!or!private!document!of!matters!enumerated!:!
exercised!simultaneously!with!the!action!upon!the!contract.!(1279a)!
Does!not!render!the!agreement!void.!
Compulsion!to!follow!form!:!
77!
!
Agreement!is!still*valid*between*the*parties.! o The! written! instrument! does* not* express* the* true* agreement* or*
Requirement!is!only!for!purpose!of:! intention*of!the!parties.!
1. Greater!efficacy! o Failure! to! express! the! true! intention! is! due! to! mistake,* fraud,*
inequitable*conduct,*or*accident.!
2. Convenience!
o The! facts! upon! relief! by! way! of! reformation! of! the! instrument! is!
3. Binding*of*third*persons! sought!are!put!in!issue!by!the!pleadings.!
Dalion( v..( CA( ( requirement! under! 1358! is! only! for! convenience,! not! a! o There!is!clear*and*convincing*evidence*(more!than!a!preponderance)!
requisite!for!validity!or!enforceability.! of!the!mistake,!fraud,!inequitable!conduct,!or!accident.!
Reformation!distinguished!from!annulment:!
Chapter*4:*Reformation*of*Instruments* o Reformation!!there!is!a!meeting!of!the!minds:!a!contract!exists.!The!
deficiency!lies!in!the!written!instrument!embodying!such!contract.!
o Annulment!!there!was!no!valid!contract!perfected.!
Art.*1359*7*Reformation*
Art.*1360**Principles*of*the*General*Law*on*Reformation*
When,!there!having!been!a!meeting!of!the!minds!of!the!parties!to!a!contract,!their!
The! principles! of! the! general! law! on! the! reformation! of! instruments! are! hereby!
true! intention! is! not! expressed! in! the! instrument! purporting! to! embody! the!
adopted!insofar!as!they!are!not!in!conflict!with!the!provisions!of!this!Code.!
agreement,!by!reason!of!mistake,!fraud,!inequitable!conduct!or!accident,!one!of!the!
parties! may! ask! for! the! reformation! of! the! instrument! to! the! end! that! such! true! Art.*1361**Mutual*Mistake*as*Basis*of*Reformation*
intention!may!be!expressed.!
When! a! mutual! mistake! of! the! parties! causes! the! failure! of! the! instrument! to!
If!mistake,!fraud,!inequitable!conduct,!or!accident!has!prevented!a!meeting!of!the! disclose!their!real!agreement,!said!instrument!may!be!reformed.!
minds! of! the! parties,! the! proper! remedy! is! not! reformation! of! the! instrument! but!
annulment!of!the!contract.! Mutual!Mistake!as!Basis!for!Reformation:!
Mutual*Mistake!!mistake!of!fact!that!is!common!to!both!parties!which!causes!
Reformation!!defined:!
the!failure!of!the!instrument!to!express!true!intention.!
o That!remedy!by!means!of!which!a!written!instrument!is! amended*or*
Gonzales( Mondragon( v.( Santos( ( contracts! solemnly! and! deliberately! entered!
rectified!
into! may! not! be! overturned! by! inconclusive! proof! or! by! reason! of! mistake! of!
o As! to! express! or! conform! to! the* real* agreement* or* intention* of* the*
one!of!the!parties!to!which!the!other!in!no!way!has!contributed.!
parties,*when!
The! following! requisites! must! concur! to! justify! reformation! under! this! article!
o By!reason!of!mistake,*fraud,*inequitable*conduct,*or*accident!
(FCMC):!
o The!instrument!fails*to*express*such!agreement!or!intention.!
1. Mistake!must!be!of!fact*.!
Reason!!equity!
2. Such!mistake!proved!by!clear*and*convincing*evidence.!
o Courts!do!not!attempt!to!make!a!new!contract!
3. Mistake!must!be!mutual*!common!to!both!parties.!
o Reformation! is! based! on! the! doctrine! that! it! would! be! unjust! and!
4. Mistake! must! cause* the* failure* of! the! instrument! to! express! true!
inequitable! to! allow! the! enforcement! of! a! written! instrument! which!
intention.!
does! not! reflect! or! disclose! the! real! meeting! of! the! minds! of! the!
If!the!mutual!mistake!is!one!of!law**the!remedy!is!annulment.!
parties.!
Requisites!of!Reformation!!(ME7MFIA7FC)! !
o There!is!a!meeting*of*the*minds!of!the!parties!to!the!contract.!
!
78!
!
Art.*1362*Mistaken,*Fraud*and*Inequitable*Conduct* o Lack!of!skill!
If!one!party!was!mistaken!and!the!other!acted!fraudulently!or!inequitably!in!such!a! o Negligence/bad!faith!
way!that!the!instrument!does!not!show!their!true!intention,!the!former!may!ask!for! Such!mistake!will!be!deemed!mutual,!and!either!party!may!ask!for!reformation!
the!reformation!of!the!instrument.! !this!is!because!neither*party*is*responsible.*!
The! right! to! ask! for! reformation! is! given! to! the! party! whose! mistake! was! in! Art.*1365**Mortgage*or*Pledge*Stated*as*a*Sale*
good!faith.! If!two!parties!agree!upon!the!mortgage!or!pledge!of!real!or!personal!property,!but!
It!must!be!shown!that!the!other!party!has!acted!fraudulently!or!inequitably!! the! instrument! states! that! the! property! is! sold! absolutely! or! with! a! right! of!
and!such!act!resulted!in!the!drafting!of!a!document!that!does!not!correspond! repurchase,!reformation!of!the!instrument!is!proper.!
to!the!actual!agreement!
General!Rule!!mistake!of!law!cannot!result!in!reformation! Situation* contemplated! :! the! real! agreement! is! mortgage! or! pledge,! but! the!
o Exception!!where,!on!account!of!misplaced!confidence,!and!because! instrument!says!that!such!property!is!sold!absolutely.!
of!some!artifice!or!deception!fraudulently!practiced!upon!him!by!the! Reformation!in!this!case!will!be!proper.!
other! party,! a! material* part* of* the* contract* was* omitted* from* the* Palileo( v.( Cosio( ( parties! to! a! contract! intended! that! a! house! was! to! be!
writing,*or!he!was!otherwise!misled,!equity!will!decree!a!reformation.! collateral!for!a!previous!loan.!Agreement!apparently!stated!that!the!house!was!
subject!of!a!conditional!sale.!It!was!held!that!the!courts!do!not!make!another!
Art.*1363**Concealment*of*Mistake*by*the*Other*Party* contract! they! merely! inquire! into! the! intention! of! the! parties,! and,! having!
When!one!party!was!mistaken!and!the!other!knew!or!believed!that!the!instrument! found!it,!reform!the!written!instrument!(not!the!contract)!in!order!that!it!may!
did! not! state! their! real! agreement,! but! concealed! that! fact! from! the! former,! the! express!the!real!intention.!!
instrument!may!be!reformed.!
Art.*1366*Cases*when*Reformation*Not*Allowed*
Concealment*of*mistake*of*other*party* There!shall!be!no!reformation!in!the!following!cases:!
o Remedy!of!reformation!may!be!availed!of!the!party!who!acted!in!good!
(1)!Simple!donations!inter!vivos!wherein!no!condition!is!imposed;!
faith.!
(2)!Wills;!
o The!concealment!of!mistake!constitutes!fraud.!
(3)!When!the!real!agreement!is!void.!
Knowledge!by!one!party!of!the!others!mistake!regarding!the!expression!of!the!
agreement!is!equivalent!to!a!mutual!mistake.!
Art.*1367**Party*who*Brought*Action*to*Enforce*Cannot*Reform*
o Injured!party!may!seek!reformation.!
When! one! of! the! parties! has! brought! an! action! to! enforce! the! instrument,! he!
cannot!subsequently!ask!for!its!reformation.!
Art.*1364*Ignorance,*etc.*on*the*Part*of*Third*Person*
When!through!the!ignorance,!lack!of!skill,!negligence!or!bad!faith!on!the!part!of!the! When!is!reformation!not!allowed!!DWEV*:**
person! drafting! the! instrument! or! of! the! clerk! or! typist,! the! instrument! does! not!
express!the!true!intention!of!the!parties,!the!courts!may!order!that!the!instrument! Simple!donations!inter!vivos!where!no!condition!is!involved!
be!reformed.! o Donation!!an!act!of!liberality!whereby!a!person!disposes!gratuitously*
of!a!thing!or!right!in!favor!of!another.!
Situation* contemplated:! If! person! drafting! or! typing! the! instrument! is! unable! o Inter( vivos( ( a! donation! intended! to! take! place! during* the* donors*
to! come! up! with! a! correct! written! document! that! embodies! the! will! of! the! lifetime!
parties,!because!of:! o Since! act! is! essentially! gratuitous,! donee! has! no! just! cause! for!
o Ignorance! complaint!
79!
!
o Donor!is!not*bound*to*correct*mistakes*in!deed!of!donation! If!the!words!appear!to!be!contrary!to!the!evident!intention!of!the!parties,!the!latter!
Donor!may!ask!for!reformation.! shall!prevail!over!the!former.!(1281)!
o Donations!do*not*involve*a*meeting*of*the*minds.!
o If!donation!is!onerous*in*character*!or!involves!a!condition,!the!deed! Purpose*of*interpretation!!to!be!able!to!know!the!intent!of!the!parties,!so!that!
may! be! reformed! so! that! the! true! conditions! imposed! by! the! donor! the!contract!can!be!properly!implemented.!
may!be!expressed.! o Making! intelligible! what! was! not! before! understood,! ambiguous,! or!
Will!!an!act!whereby!a!person!is!permitted,!with!formalities!of!law,!to!control! not!obvious.!
to!a!certain!degree!the!disposition!of!his!estate,!to!take!effect!after!his!death.! o The!meaning!of!language!is!ascertained.!
o It!is!a!strictly!personal!and!free!act.! Rules!in!statutory!construction!can!likewise!be!applied.!
Where!the!real!agreement!is!void! o Finman( General( Assurance( Corp( v.( CA( ( the! statcon! rule! expressio!
o When!the!real!agreement!is!void,!there!is!nothing!to!reform.! unius!exclusio!alterius!!was!applied!in!deciding!the!case!
When!one!party!has!brought!an!action!to!enforce!the!instrument!(Art!1367)! Generally,!intention!of!parties!is!reflected!in!the!wordings!!Thus,!the!general*
o Based!on!estoppel.! rule*is!that!the!literal*meaning*of!stipulations!shall!control.!
o When! a! party! brings! an! action! to! enforce! a! contract,! he! admits* its* o Adelfa( Properties( Inc( v.( CA( ( the! important! task! in! contract!
validity*and!that!it!expresses!the!true!intention!of!the!parties.! interpretation!is!the!ascertainment!of!the!intention!of!the!parties.!And!
that! task! is! to! be! discharged! by! looking! toall* the* words,! not! just! a!
Art.*1368**Party*Entitled*to*Reformation* particular!word!or!two,!and!words*in*context,*not!words!in!isolation.!
Reformation! may! be! ordered! at! the! instance! of! either! party! or! his! successors! in! o !Conde(v.(CA((if!the!contract!is!plain!and!unequivocal!in!its!terms,!he!is!
interest,!if!the!mistake!was!mutual;!otherwise,!upon!petition!of!the!injured!party,!or! ordinarily! bound! thereby.! It! is! the! duty! of! every! contracting! party! to!
his!heirs!and!assigns.! learn!and!know!its!contents!before!he!signs.!Thus,!parties!must!every!
contract!they!enter!into!very!carefully.!
This!article!gives!the!persons!who!are!given!legal!standing!to!initiate!an!action! o Santi( v.( CA( ( lease! contract! provided:! 20! year! period! of! lease! being!
for!reformation:! extendable! for! another! period! of! 20! years.! Lower! court! interpreted!
1. Either*of!parties,!if!mistake!is!mutual!(Arts.!1361,!1364,!1365)! this! as! automatic! renewal.! It! was! held! that! we! must! look! at! literal!
2. In!all*other*cases,*the!injured!party!(Arts!1362!!1365)! meaning! when! the! terms! are! clear! and! unequivocal.! There! is! no*
3. Heirs*or*successors*in*interest,!in!lieu!of!the!party!entitled! reason*to*construe*these!terms!in!a!different!meaning.!If!they!wanted!
Effect! of! reformation! is! retroactive* from* the* time* of* the* execution* of! the! automatic!extension,!they!could!have!just!provided!for!a!period!of!40!
original!contract.! years.!
o Universal( Textile( Mills,( Inc.( v.( NLRC( ( SS( NLRC! misread! and! misapplied!
provisions! of! a! CBA.! It! was! held! that! the! NLRC! cannot! remake! a!
Art.*1369**Procedure*for*Reformation*
contract! by! eviscerating! it,! by! deleting! words! placed! there! by! the!
The!procedure!for!the!reformation!of!instrument!shall!be!governed!by!rules!of!court!
parties.! No! court,! interpreter,! or! applier! of! a! contract! has! such!
to!be!promulgated!by!the!Supreme!Court.!
prerogative.!
The! interpretation! or! construction! of! a! contract! does* not*
Chapter*5:*Interpretation*of*Contracts* include* its* modification* or* creation* of* a* new* and* different*
one.!
Art.*1370**Interpretation*of*Contracts*Defined* Whatever!interpretation!the!court!will!make!should!be!within!
If! the! terms! of! a! contract! are! clear! and! leave! no! doubt! upon! the! intention! of! the! the!realm!of!what!the!parties!intended.!
contracting!parties,!the!literal!meaning!of!its!stipulations!shall!control.! They!cannot!revise!or!modify.!
80!
!
Art.*1371**Contemporaneous*and*Subsequent*Acts*Determine*Intent* o It! should! not! include! Ss! refrigerator,! which! is! distinct! from!
In! order! to! judge! the! intention! of! the! contracting! parties,! their! contemporaneous! furniture.!
and!subsequent!acts!shall!be!principally!considered.!(1282)!
Art.*1373**Interpretation*of*Stipulation*with*Several*Meanings*
An!interpreter!must!look!at!the!reasons!and!surrounding!circumstances!behind! If! some! stipulation! of! any! contract! should! admit! of! several! meanings,! it! shall! be!
a! contracts! execution! ! This! is! so! he! may! place! himself! in* the* situation* understood! as! bearing! that! import! which! is! most! adequate! to! render! it! effectual.!
occupied*by*the*parties*concerned*at!the!time!of!the!writing.! (1284)!
Pingol(v.(CA((there!was!a!dispute!as!to!whether!the!purchase!agreement!was!a!
contract!to!sell,!or!an!absolute!sale.!The!court!looked!at!the!contemporaneous! Basic*Rule!:!Terms!in!a!construct!must!be!given!a!construction!as!will!give!effect!
and!subsequent!acts!of!the!parties.!Pursuant!to!the!deed,!the!vendor!delivered! to!them.!
actual! and! constructive! possession! of! the! property! to! the! vendee.! Vendee! Ex.!S!sells!his!parcel!of!land!to!B.!
occupied!and!took!such!possession,!constructed!a!building!thereon.!These!acts! S!owns!2!lands!!one!owned!by!him!absolutely,!and!another!
are! demonstrative! that! the! vendor,! since! the! sale,! recognized! the! vendee! as! that!he!co+owns!with!C.!C!did!not!give!consent.!
the!absolute!owner!of!the!property.!Thus,!it!was!a!contract!of!absolute!sale.! We! must! interpret! it! as! referring! to! the! land! owned! by! him!
Rapanut(v.(CA((the!controversy!was!about!the!interpretation!of!a!provision!on! alone,!as!this!would!give!the!contract!effect.!
the! application! of! interest.! Significant! is! the! fact! that! private! respondent! Lao(Lim(v.(CA((where!the!instrument!is!susceptible!of!two!interpretations,!one!
accepted! the! payments! petitioner! religiously! made! for! four! years.! Thus,! the! which!will!make!it!invalid!and!illegal,!and!another!which!will!make!it!valid!and!
acts*of*the*respondent*made*the*application*of*the*provision*clearer!!it!was! legal,!the*latter*interpretation*should!be!interpreted.!
that! interest! that! was! applicable.! Since! there! was! no! objection! or! rescission,! Ridjo( Tape( and( Chemical( Corp( v.( CA( ( construction! resulting! in! impairment! or!
respondent!was!now!estopped.! loss!of!right!is!not!favored.!
Carceller(v.(CA((analysis!and!construction!should!not!be!limited!to!the!words! o Conservation! and! preservation,! not! waiver,! forfeiture,! or!
used!in!the!contract,!as!they!may!not!accurately!reflect!the!parties!true!intent.! abandonment!of!a!right!is!the!rule.!
Reasonableness* of* the* result* obtained* ought! to! be! considered.! Contracts!
should!not!be!interpreted!in!a!harsh!and!iniquitous!way.! Art.*1374**Interpretation*of*Various*Stipulations*
The! various! stipulations! of! a! contract! shall! be! interpreted! together,! attributing! to!
Art.*1372**Special*Intent*Prevails*Over*General*Intent* the!doubtful!ones!that!sense!which!may!result!from!all!of!them!taken!jointly.!(1285)!
However!general!the!terms!of!a!contract!may!be,!they!shall!not!be!understood!to!
comprehend! things! that! are! distinct! and! cases! that! are! different! from! those! upon! Provisions!of!a!contract!must!be!read!as*a*whole,*and*not*in*isolation.*
which!the!parties!intended!to!agree.!(1283)! Each!provision!must!be!related!to!each!other!to!clearly!know!the*total*import*
and!application!of!the!law.*
Two!latin!maxims!are!in!the!purview!of!this!article!:! Ex.! R!leased!his!house!to!E.!*
Noscitur(a(sociis! The! contract! said! that! E! should! not! sublease! the! house!
o General!and!unlimited!terms!are!restrained*and*limited! without!the!written!consent!of!R.*
o By!the!particular*terms*that!follow.! Another!stipulation!said!that!E!should!pay!P1000!as!additional!
Ejusdem(generis! rent!a!month,!should!he!violate!the!condition.*
o A! general! term! joined! with! a! specific! one! will! be! deemed! to! include! E!subleased!the!house!without!consent!of!R.*
only*things*that*are*like,*of*the*same*genus*as,*the*specific*one.! R! has* no* right* to* eject* E,* because! of! the! clause! stating! the!
Ex.! S!sells!his!house!including!all!the!furniture!therein.! penalty*for*the*violation*of!the!condition.*
o all!only!modifies!furniture!!
81!
!
Ruiz( v.( Sherriff( of( Manila( ( controversy! involving! a! mortgage! contract,! and! Art.*1377**Interpretation*of*Obscure*Words**
foreclosure.!Its!entirety!must!be!taken!into!account,!and!not!merely!its!last!two! The!interpretation!of!obscure!words!or!stipulations!in!a!contract!shall!not!favor!the!
sentences.! A! reading! of! the! entire! provision! will! readily! show! that! appellants! party!who!caused!the!obscurity.!(1288)!
were! allowed! to! amortize! their! loan.! This! illustrates! that! like! statutory!
construction,! meaning! can! be! found! by! reading! all* of* the* provisions,* as* a*
Words! or! stipulations! that! cause! ambiguity! in! application! shall! be! construed!
whole.*
against*the*person*who*chose*to*use*such*language.*
o This!is!the!contra(preferentem(rule.*
Art.*1375**Interpretation*of*Words*with*Different*Significations* o Against*the*profferer!!he!who!drafted!the!documents*
Words!which!may!have!different!significations!shall!be!understood!in!that!which!is! o Reason! for! this! is! that! the! one! who! drafted! the! contract! had! better!
most!in!keeping!with!the!nature!and!object!of!the!contract.!(1286)! opportunity!to!prevent!mistake!or!ambiguity*
This!rule!is!generally!applied!to!contracts*of*adhesion*
Ex.!R!leased!to!E!a!roof!for!the!purpose!of!erecting*an*advertising*sign.* o Those!contracts!which!do!not!result!in!negotiation*
o Contract! provides! for! termination! of! the! lease! by! E! if! a! building! should! o Prepared! by! one! party! to! which! the! other! may! adhere! to! if! he!
be!constructed!on!the!adjoining!property!that!would!obscure!Es!sign.* wishes,!but!which!he!cannot!change!!a!take!it!or!leave!it!contract*
o There! was! erected! on! the! roof! of! an! adjoining! building! a! sign* that! Capitol( Insurance( v..( Sadang( ( ambiguity! in! the! mortgage! contract! drafted! by!
obstructed!the!view!of!Es!sign.* lawyer! of! insurance! company! led! to! ambiguity! in! application.! The! court! ruled!
o The! term! building! may! be! included! as! to! include! the! obstructing! sign,! that! the! doubt! must! be! resolved! against! Capitol,! whose! lawyer! prepared! the!
having! in! mind! the* nature* and* object* of* the* contract* * that! situation! document.*
where!Es!sign!was!obscured.*
*
Art.*1378**Rules*in*Case*Doubts*are*Impossible*to*Settle*
When! it! is! absolutely! impossible! to! settle! doubts! by! the! rules! established! in! the!
Art.*1376**Usage*or*Custom*as*aid*in*Interpretation** preceding!articles,!and!the!doubts!refer!to!incidental!circumstances!of!a!gratuitous!
The!usage!or!custom!of!the!place!shall!be!borne!in!mind!in!the!interpretation!of!the! contract,!the!least!transmission!of!rights!and!interests!shall!prevail.!If!the!contract!is!
ambiguities! of! a! contract,! and! shall! fill! the! omission! of! stipulations! which! are! onerous,!the!doubt!shall!be!settled!in!favor!of!the!greatest!reciprocity!of!interests.!
ordinarily!established.!(1287)!
If!the!doubts!are!cast!upon!the!principal!object!of!the!contract!in!such!a!way!that!it!
Ex.! X! rendered! services! to! Y,! but! the! contract! did! not! state! the! amount! of! cannot! be! known! what! may! have! been! the! intention! or! will! of! the! parties,! the!
compensation!to!be!paid.!In!this!case,!the!amount!must!be!determined!by!the! contract!shall!be!null!and!void.!(1289)!
rate!customarily!paid!in!the!place!where!the!services!where!rendered.!!
Situation*contemplated!:!after!application!of!all!the!preceding!rules,!there!are!
It!is!necessary!to!prove!the!existence!of!usage!or!custom!!burden!of!proof!on! still!doubts!that!exist.!
he!who!alleges!it.! This!article!gives!supplementary!rules,!depending!on!what!kind!of!contract!it!is,!
Usage! or! custom! cannot! supersede! or! vary! the! plain! and! literal! terms! of! a! and!where!the!doubts!lie.!!
contract.! o Gratuitous* Contract! ! such! interpretation! should! be! made! which!
o The! proper! office! of! a! custom! or! usage! in! trade! is! to! ascertain* and* would!result!in!the!least!transmission!of!rights!and!interests.!!
explain* the* meaning* and* intention! of! the! parties.! It! does! not! go! Ex.! R! gave! his! car! to! E.! It! is! not! clear! whether! contract! is! a!
beyond! this,! and! is! used! as! a! mode! of! interpretation! on* the* theory* donation!or!a!commodatum.!
that*the*parties*knew*of*its*existence*and*contracted*with*reference* The! contract! is! presumed! to! be! a! mere! commodatum!
to*it.! because!that!transmits!less!rights.!
82!
!
o Onerous!Contract!!doubts!should!be!settled!in!favor!of!the*greatest* Requisites*of*Rescission:*
reciprocity*of*interests.! 1. Contract!validly!agreed!upon!
Ex.!D!borrows!from!C!P5,000!at!12%!interest.! 2. Pecuniary!prejudice!to!one!of!the!parties!or!a!third!person!
It! cannot! be! determined! whether! the! loan! is! payable! in! 6! 3. Rescission!must!be!based!on!a!case!provided!by!law!
months!or!one!year.! 4. No!other!legal!remedy!
It!must!be!assumed!that!the!period!agreed!upon!is!one!year! 5. Party! asking! for! rescission! must! be! able! to! return! what! he! is!
which! results! in! greater* reciprocity,* since! D! can! use! the! obliged!to!restore!
money!for!one!year,!and!C!can!earn!interest!due!for!one!year! 6. Object! of! the! contract! must! not! be! legally! in!the! possession! of! a!
rd
instead!of!just!6!months.! 3 !person!who!acquired!it!in!good!faith!
A! contract! for! sale! is! generally! onerous! ! thus,! if! doubt! is! 7. Period!for!filing!has!not!prescribed.!(De!Leon)!
between! a! suspensive! condition! or! a! suspensive! period! for! Rescissible!contracts!are!valid,!but!may!be!terminated!upon*legal*grounds.*
the!payment!of!a!price,!the!doubt!shall!be!resolved!in!favor!of! o Rescissibility!predicated!not!on!breach!of!trust,!but!on!economic!
the!latter.(Gaite(v.(Fonacier! damage!as!a!result!of!inequitable!conduct!by!a!party.!
o Principal!object!of!the!contract!!doubt!refers!to!the!principal*object* Dilag(v.(CA((Contract!in!fraud!of!creditors!but!completely!simulated!is!void!
of* the* contract,* leaving! the! intention! of! the! parties! to! be! unknown,* ab!initio.!
then!the!contract!shall!be!null!and!void.!
Art.*1381**Cases*of*Rescissible*Contracts*
Ex.! S! sold! to! B! his! land.! S! has! many! lands,! and! it! cannot! be!
The!following!contracts!are!rescissible:!
determined!which!land!was!intended.!
This!contract!is!null!and!void.! (1)! Those! which! are! entered! into! by! guardians! whenever! the! wards! whom! they!
! represent!suffer!lesion!by!more!than!one+fourth!of!the!value!of!the!things!which!are!
! the!object!thereof;!
Art.*1379**Rules*of*Court*Applicable*
The! principles! of! interpretation! stated! in! Rule! 123! of! the! Rules! of! Court! shall! (2)!Those!agreed!upon!in!representation!of!absentees,!if!the!latter!suffer!the!lesion!
likewise!be!observed!in!the!construction!of!contracts.!(n)!!! stated!in!the!preceding!number;!
(3)! Those! undertaken! in! fraud! of! creditors! when! the! latter! cannot! in! any! other!
It!is!now!contained!in!Rule!130.!
manner!collect!the!claims!due!them;!
The!sections!are!reproduced!in!the!book.!
(4)! Those! which! refer! to! things! under! litigation! if! they! have! been! entered! into! by!
Chapter*6:*Rescissible*Contracts* the!defendant!without!the!knowledge!and!approval!of!the!litigants!or!of!competent!
judicial!authority;!
Art.*1380**Rescissible*Contracts*Defined*
(5)!All!other!contracts!specially!declared!by!law!to!be!subject!to!rescission.!(1291a)!
Contracts! validly! agreed! upon! may! be! rescinded! in! the! cases! established! by! law.!
(1290)!
Entered! into! by! guardians! whenever! the! wards! whom! they! represent! suffer!
lesion!by!more!than!one+fourth!of!the!value!of!the!things!which!are!the!object!
Rescissible* Contracts! are! those! validly! agreed! upon! because! al! the!
thereof.!
essential! elements! exist,! and! therefore,! legally! effective,! but! in! the! cases!
o Lesion!!economic!damage.!
established! by! law,! the! remedy! of! rescission! is! granted! in! the! interest! of!
o Act! of! ownership! by! guardian! on! behalf! of! his! ward,! with! respect! to!
equity.!
wards!property,!without!court!approval!is!void.!
83!
!
o What! is! contemplated! here! is! a! transaction! with! court! approval! ! Debtor! collateralized! his! property! to! secure! such!
which!is!valid.! loan!
o If! by! guardians! act! of! ownership! however,! causes! ward! to! suffer! Failure! of! debtor! to! recognize/implement! the!
economic!damage!!more!than!one+fourth!of!the!value!of!the!things!of! stipulated! right! of! first! refusal! of! the! creditor! will!
the!object!of!the!contract!!the!contract!can!be!rescinded.! make! any! sale! of! the! property! to! a! third! person!
Those!agreed!upon!in!representation!of!absentees,!if!the!latter!suffer!the!lesion! rescissible!
stated!in!the!preceding!number.! All!other!contracts!specially!declared!by!law!to!be!subject!to!rescission!
o Provisional* absence! ! person! disappears! from! his! domicile,!
whereabouts!unknown,!without!leaving!an!agent!!judge!can!appoint! Art.*1382**Payments*Made*in*State*of*Insolvency*
an! administrator! at! the! instance! of! an! interested! party,! relative,! or! Payments! made! in! a! state! of! insolvency! for! obligations! to! whose! fulfillment! the!
friend.! debtor!could!not!be!compelled!at!the!time!they!were!effected,!are!also!rescissible.!
o How*is*absence*declared**court!may!declare!a!person!absent!when:! (1292)!
Absence!for!more!than!two!years!without!news!
Absence!for!five!years!(if!person!has!left!administrator)!
Insolvency!!when!a!debtor!has!liabilities!in!excess!of!his!assets!and!can!barely!
o Same!rule!as!in!the!previous!number!applies!
pay!off!his!debts.!
Those! undertaken! in! fraud! of! creditors! when! the! latter! cannot! in! any! other!
If!he!pay!a!creditor!whose!credit!is*not*yet*due,*such!payment!can!be!rescinded!
manner!collect!the!claims!due!them.!
Prior!judicial!declaration!of!insolvency!not!required.!
o Contract!entered!to!in!bad!faith.!
o Designed!to!evade!the!due!obligations!in!favor!of!creditors,!who!have!
no!other!way!of!collecting!their!debts.! Art.*1383**Nature*of*Action*for*Rescission*
o Bobis(v.(Provincial(Sheriff(of(Camarines(Norte((it!is!essential!to!prove! The!action!for!rescission!is!subsidiary;!it!cannot!be!instituted!except!when!the!party!
that!both!contracting!parties!have!acted!maliciously!and!with!fraud!in! suffering! damage! has! no! other! legal! means! to! obtain! reparation! for! the! same.!
order!to!prejudice!creditors.! (1294)!
This!refers!only!to!actual!creditors!of!the!debtor!
Marsman( Investment( Ltd( v..( Philippine( Abaca( Development( Action! for! rescission! can! only! be! made! in! a! proper! and! direct! action! filed* for*
Company( ( plaintiff! corporations! had! ceased! to! be! the! that*purpose,*and!not!on!a!mere!motion!incidental!to!another!case.!
creditors! of! transferer! PADCO! as! of! 1959,! and! were! Air( France( v.( CA( ( Action! for! rescission! may! not! be! raised! or! set! up! in! a!
thereafter!deprived!of!any!interest!in!assailing!the!validity!of! summary! proceeding! through! a! motion,! but! in! a! an! independent! civil! action!
the!transfer!of!its!properties!to!Marsman.! and!only!after!a!full!blown!trial.!
Those!which!refer!to!things!under!litigation!if!they!have!been!entered!into!by! It! must! also! be! the! last* remedy.* Other! means! to! claim! reparation! must! be!
the! defendant! without! the! knowledge! and! approval! of! the! litigants! or! of! availed!of!first!!included!here!is!the!filing!of!a!court!case.!
competent!judicial!authority! Khe( Hong( Cheng( v.( CA( ( presuppositions! for! an! accion( pauliana,( or! action! for!
Ex.! In! a! suit! for! replevin! wherein! plaintiff! seeks! to! recover! personal! rescission!that!highlight!the!point!that!it!has!to!be!the!last!remedy.!
property!from!the!defendant! 1. A!judgment!
Defendant! cannot* in* bad* faith* sell! the! property! being! 2. Issuance! by! trial! court! of! a! writ! of! execution! for! satisfaction! of! the!
liquidated!to!any!third!person! judgment!
If! he! does,! and! the! third! person! is! in! bad! faith! as! well,! such! 3. Failure!of!sheriff!to!enforce!and!satisfy!courts!judgment!
contract!is!rescissible!
Litonjua(v.(LR(Corporation(! Art.*1384**Extent*of*Rescission*
Creditor!lent!money!to!debtor! Rescission!shall!be!only!to!the!extent!necessary!to!cover!the!damages!caused.!(n)!
84!
!
Rescission!presupposes!a!valid!contract.! Art.*1387**When*Alienation*Presumed*in*Fraud*of*Creditors*
o It! need! not! be! rescinded! totally! ! rescission! shall! only! be! up! to! the! All!contracts!by!virtue!of!which!the!debtor!alienates!property!by!gratuitous!title!are!
extent!needed!to!cover!the!damage.! presumed!to!have!been!entered!into!in!fraud!of!creditors,!when!the!donor!did!not!
Recall! :! Rescission! is! based! on! economic! damage! as! a! result! of! inequitable! reserve!sufficient!property!to!pay!all!debts!contracted!before!the!donation.!
conduct.!
Alienations! by! onerous! title! are! also! presumed! fraudulent! when! made! by! persons!
Art.*1385**Rescission*Creates*Obligation*of*Mutual*Restitution* against! whom! some! judgment! has! been! issued.! The! decision! or! attachment! need!
Rescission!creates!the!obligation!to!return!the!things!which!were!the!object!of!the! not!refer!to!the!property!alienated,!and!need!not!have!been!obtained!by!the!party!
contract,!together!with!their!fruits,!and!the!price!with!its!interest;!consequently,!it! seeking!the!rescission.!
can!be!carried!out!only!when!he!who!demands!rescission!can!return!whatever!he!
may!be!obliged!to!restore.! In!addition!to!these!presumptions,!the!design!to!defraud!creditors!may!be!proved!in!
any!other!manner!recognized!by!the!law!of!evidence.!(1297a)!
Neither! shall! rescission! take! place! when! the! things! which! are! the! object! of! the!
contract!are!legally!in!the!possession!of!third!persons!who!did!not!act!in!bad!faith.! This!article!provides!rebuttable*presumptions.*
o It! creates! the! presumption! that! acts! have! been! done! in! fraud! of!
In!this!case,!indemnity!for!damages!may!be!demanded!from!the!person!causing!the! creditors*
loss.!(1295)! o However,!all!these!presumptions!may!be!rebutted!by!strong!evidence!
that!the!contract!was!not!in!fraud!of!creditors.*
Objective!of!restitution!is!to!restore!their!parties!to!their!original!(pre+contract)! First! ! debtor! alienates! property! by! gratuitous! title,! when! donor! did! not!
position.! reserve!sufficient!property!to!pay!all!debts!contracted!before!such!donation!
Upon!rescission,!parties!must!return:! o Ex.!B!owes!a!total!of!P30,000!to!several!creditors!
1. The!object!of!the!contract! o He!has!P60,000!in!the!bank!
2. Fruits!and!interests!of!such!object,!if!any! o He!donates!P55,000!to!X!!donation!is!presumed!to!be!fraudulent!
If!object!cannot!be!restored!because!of!loss!!damages!may!be!claimed.! o Maturity!of!debts!immaterial!
Rescission!cannot!take!place*if!the!object!of!the!contract!is!legally!in!possession! Second! ! Alienation! by! onerous! title! is! made! by! persons! against! whom! some!
of!a!third!party!in!good!faith.! judgment!has!been!issued!
o Good!faith!is!presumed!unless!contrary!evidence!is!adduced.! o This!refers!to!a!person!against!whom!a*writ*of*attachment*has*already*
been*issued!
Art.*1386**Contracts*Approved*by*the*Courts* o Mere! alienation! during! pendency! of! suit! does! not! create! the!
Rescission! referred! to! in! Nos.! 1! and! 2! of! Article! 1381! shall! not! take! place! with! presumption!
respect!to!contracts!approved!by!the!courts.!(1296a)! o Alienation!need!not!refer!to!property!attached!
Ex.!A!obtains!a!writ!of!attachment!against!debtor!B,!with!respect!to!a!
Numbers!1!and!2:! property!in!Mandaluyong.!
o Guardian!with!respect!to!wards!property! If!B!sells!his!property!in!Laguna!the!presumption!arises,!even!
o Administrator!!absentee! if!it!is!not!the!property!attached!
Contracts! entered! into! by! these! people,! once! judicially! approved,! cannot! be!
subject!of!rescission.! ! Art.*1388**Liability*of*Purchaser*in*Bad*Faith*
o Approval!implies!that!the!contract!was!justified!already!in!the!eyes!of! Whoever! acquires! in! bad! faith! the! things! alienated! in! fraud! of! creditors,! shall!
the!court.! indemnify! the! latter! for! damages! suffered! by! them! on! account! of! the! alienation,!
! whenever,!due!to!any!cause,!it!should!be!impossible!for!him!to!return!them.!
85!
!
If!there!are!two!or!more!alienations,!the!first!acquirer!shall!be!liable!first,!and!so!on! These! contracts! are! binding,! unless! they! are! annulled! by! a! proper! action! in! court.!
successively.!(1298a)! They!are!susceptible!of!ratification.!(n)!
Buyer!who!knows!that!conveyance!has!been!made!in!fraud!of!creditors!shall!be! Voidable* or* annullable* contracts! ! those! which! possess! all! the! essential!
liable! for! damages! to! the! creditor,* should! it! be! impossible! to! return! the! requisites,!but!one!of!the!parties.!
property.! a. Is!incapable!of!giving!consent.!
If!he!can,!he!has!obligation!to!return!what!has!been!transferred!to!him!in!bad! b. Has! his! consent! vitiated! by! mistake,! violence,! undue! influence! or!
faith.! fraud.!
They!may!be!cured!by!the!aggrieved!party!!ratification!
Art.*1389**Period*for*Filing*Action*for*Rescission* Lim(Tay(v.(CA((annulment!operates!prospectively,!and!does!not!retroact.!!
The!action!to!claim!rescission!must!be!commenced!within!four!years.!
Art.*1391**Period*for*Filing*Action*for*Annulment*
For! persons! under! guardianship! and! for! absentees,! the! period! of! four! years! shall! The!action!for!annulment!shall!be!brought!within!four!years.!
not! begin! until! the! termination! of! the! former's! incapacity,! or! until! the! domicile! of!
the!latter!is!known.!(1299)!! This!period!shall!begin:!
In! cases! of! intimidation,! violence! or! undue! influence,! from! the! time! the! defect! of!
When!the!four!year!period!begins!:!
the!consent!ceases.!
Generally,! when! the! aggrieved! party! has! unsuccessfully* exhausted* all*
possible* remedies* to! enforce! the! obligation! or! to! recover! what! has! been! In!case!of!mistake!or!fraud,!from!the!time!of!the!discovery!of!the!same.!
lost!
o Persons! under! guardianship* * from! the! time! the! incapacity! And! when! the! action! refers! to! contracts! entered! into! by! minors! or! other!
terminates! incapacitated!persons,!from!the!time!the!guardianship!ceases.!(1301a)!
o For!absentees**from!the!time!he!learns!of!the!contract!
o Defrauded*creditors**from!the!time!the!fraud!is!discovered! Prescriptive!period!to!annul!a!contract!is!four*years.!
o Things* under* litigation* * from! the! time! of! knowledge! of! the! Starting!point!depends!on!the!ground!invoked.!
transaction! 1. Intimidation,!violence,!undue!influence!!when!such!defect*ceases.!
Ex.! A! intimidates! B! with! bodily! harm! in! order! to! enter! into! a! lease!
Chapter*7:*Voidable*Contracts* contract.! The! moment! A! reforms! and! stops! the! threats,! the! four!
year!period!begins!counting.!
Art.*1390**Voidable*Contracts*Defined* 2. Mistake!or!Fraud!!from!the!discovery!of!such!defect!
The! following! contracts! are! voidable! or! annullable,! even! though! there! may! have! Ex.! A!fools!B!into!thinking!that!a!jewel!is!made!of!diamond,!when!in!
been!no!damage!to!the!contracting!parties:! fact! it! is! made! of! glass.! Once! B! discovers! the! fraud,! the! period!
begins!running.!
(1)!Those!where!one!of!the!parties!is!incapable!of!giving!consent!to!a!contract;! 3. Contracts! entered! into! by! minors! or! other! incapacitated! persons! +!
from!the!moment!guardianship*ends!
(2)! Those! where! the! consent! is! vitiated! by! mistake,! violence,! intimidation,! undue! Ex.! If! As! guardian! fraudulently! transfers! his! property! to! a!
influence!or!fraud.! third!party,!A!must!wait!until!the!guardianship!ceases!to!
file! the! case,! and! from! there,! the! period! will! begin!
running.!
86!
!
Art.*1392**Effect*of*Ratification* Art.*1395**Conformity*of*Guilty*Party*to*Ratification*Not*Required*
Ratification!extinguishes!the!action!to!annul!a!voidable!contract.!(1309a)! Ratification! does! not! require! the! conformity! of! the! contracting! party! who! has! no!
right!to!bring!the!action!for!annulment.!(1312)!
Art.*1393**Forms*of*Ratification*
Ratification!may!be!effected!expressly!or!tacitly.!It!is!understood!that!there!is!a!tacit! Ratification!!unilateral!act!
ratification! if,! with! knowledge! of! the! reason! which! renders! the! contract! voidable! Consent!of!injuring!party!is!not!required.!
and! such! reason! having! ceased,! the! person! who! has! a! right! to! invoke! it! should!
execute!an!act!which!necessarily!implies!an!intention!to!waive!his!right.!(1311a)! Art.*1396**Retroactive*Effect*of*Ratification*
Ratification! cleanses! the! contract! from! all! its! defects! from! the! moment! it! was!
Ratification!!the!act!of!curing!the!defect!which!made!the!contract!annullable!! constituted.!(1313)!
it!extinguishes!the!action!to!annul!
May!be!express!or!tacit:! Ratification!retroacts!to!the!day!the!contract!was!entered!into.!
A. Express!!after!coercion!ceases,!A!tells!B!that!he!will!continue!to!pay!
It!makes!the!contract!valid!from!its!inception,!subject!to!the!prior!rights!of!third!
the!lease!payments!
persons.!
B. Tacit!!After!coercion!ceases,!A!merely!continues!to!pay!the!rentals!for!
o prior!!means!prior!to!ratification!
the!property!
Requisites:!
1. Knowledge!of!reason!which!renders!contrct!voidable! Art.*1397**Party*Entitled*to*Bring*an*Action*to*Annul*
2. Such!reason!ceases! The!action!for!the!annulment!of!contracts!may!be!instituted!by!all!who!are!thereby!
3. Injured! party! executes! an! act! which! implies! an! obliged!principally!or!subsidiarily.!However,!persons!who!are!capable!cannot!allege!
intention!to!waive!his!right! the! incapacity! of! those! with! whom! they! contracted;! nor! can! those! who! exerted!
o In! both! cases,! the! defect! is! cured! whuch! erases! the! infirmity! in! the! intimidation,! violence,! or! undue! influence,! or! employed! fraud,! or! caused! mistake!
contract.! base!their!action!upon!these!flaws!of!the!contract.!(1302a)!
Yao(Ka(Sin(Trading(v.(CA((no!ratification!by!a!corporation!of!acts!performed!by!
an!officer!if!he!has!no!authority!from!such!corporation,!or!if!such!acts!are!not! General! rule! ! only! parties! to! the! contract! may! bring! an! action! for! its!
later!validated.! annulment.!
Requisites!for!capacity!to!annul:!
1. Must!be!interested!in!the!contract!
Art.*1394**Who*May*Ratify*
2. The!victim!is!the!one!who!must!assert!the!same!(in!other!words,!the!
Ratification!may!be!effected!by!the!guardian!of!the!incapacitated!person.!(n)!
person!who!caused!the!defect!cannot!be!the!one!to!bring!the!action!
for!annulment)!
Guardian!!takes!with!the!administration!of!person!and!properties!of!the!ward!
Capacitated! persons! may! not! allege! the! incapacity! of! the!
A!contract!entered!into!by!an!incapacitated!person!may!be!ratified!by:! other!party!in!order!to!annul!
A. Guardian!! However,! in! case! the! incapacity! involved! is! minority,! the!
B. Injured!party!himself,!once!capacitated! capacitated! party! may! file! a! case! for! enforcement,* provided!
No!longer!insane,!for!example! that!the!misrepresentation!of!majority!was!active!
Reaches!age!of!majority! Users!of!intimidation,!etc!cannot!annul!the!contract!based!on!
In! case! contract! is! voidable! on! ground! of! mistake,! etc! ! ratification! can! be! these!acts.!!
made!by!party!whose!consent!is!vitiated.!
!
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Exceptions:! However,! since! as! a! general! rule,! capacitated! persons! may!
1. A!person!who!is!not!a!partymay!exercise!an!action!for!the!nullity!of! not! allege! incapacity! in! order! to! annul.! A! may! only! recover!
the!contract!if*he*is*prejudiced*in*his*rights*with!respect!to!one!of!the! upon! an! action! for! annulment! filed! by! B! when! he! reaches!
contracting!parties! majority!
2. and! can* show* the* detriment* which! would! positively! result! to! him!
from!the!said!contract.(Banez(v.(CA! Art.*1400**Effect*of*Loss*of*Thing*to*be*Returned*
Thus,!a!stranger!to!the!contract!must!show:! Whenever!the!person!obliged!by!the!decree!of!annulment!to!return!the!thing!can!
1. Prejudice!to!his!rights! not! do! so! because! it! has! been! lost! through! his! fault,! he! shall! return! the! fruits!
2. Detriment!that!would!result! received!and!the!value!of!the!thing!at!the!time!of!the!loss,!with!interest!from!the!
same!date.!(1307a)!
Art.*1398**Duty*of*Mutual*Restitution*upon*Annulment*
An! obligation! having! been! annulled,! the! contracting! parties! shall! restore! to! each! Effect!of!Loss!of!Thing!to!be!Returned:!
other! the! things! which! have! been! the! subject! matter! of! the! contract,! with! their!
fruits,!and!the!price!with!its!interest,!except!in!cases!provided!by!law.! If!lost!without*the*fault!of!person!obliged:!
o No!more!obligation!to!return!such!thing.!
In! obligations! to! render! service,! the! value! thereof! shall! be! the! basis! for! damages.! o The!other!party!cannot!be!compelled!to!restore!what!he!had!received.!
(1303a)! If!lost*through*fault!of!person!obliged:!
o Obligation!converted!into!a!claim!for!damages!
Parties,!as!a!general!rule,!must!restore!to!each!other,!upon!annulment:! o Damages! ! value! of! the! thing! at! the! time! of! the! loss,! with! interest!
1. Subject!matter!of!the!contract,!with!fruits! from!the!same!date,!and!fruits!received!from!the!thing.!
2. Price!thereof,!with!legal!interest!
Like!in!rescission,!the!purpose!is!to!restore!the!parties!to!their!original*position.! Ex.!S!sold!his!plow!and!carabao!to!B.!On!petition!of!S,!contract!was!
In! personal! obligations,! where! service! had! already! been! rendered,! the! value! annulled.!However,!carabao!died!through!fault!of!B.!
thereof!with!interest!is!the!basis!for!damages.!
B! must! pay! value! of! carabao! at! the! time! of! its! death,! with!
interest!from!the!same!date.!
Art.*1399**Restitution*by*an*Incapacitated*Person* If! carabao! had! given! birth,! the! baby! carabao! would! be!
When!the!defect!of!the!contract!consists!in!the!incapacity!of!one!of!the!parties,!the! delivered!to!S!as!a!fruit.!
incapacitated!person!is!not!obliged!to!make!any!restitution!except!insofar!as!he!has!
been!benefited!by!the!thing!or!price!received!by!him.!(1304)!
Art.*1401**Extinguishment*of*Action*for*Annulment*
The!action!for!annulment!of!contracts!shall!be!extinguished!when!the!thing!which!is!
When! defect! consists! in! incapacity,! the!incapacitated!person!is!not!obliged!to!
the!object!thereof!is!lost!through!the!fraud!or!fault!of!the!person!who!has!a!right!to!
make!any!restitution!except*insofar!as!he!has!been!benefited*by*the*thing*or*
institute!the!proceedings.!
price*received!by!him.!
Ex.!A!loans!B,!a!minor,!money.!! If! the! right! of! action! is! based! upon! the! incapacity! of! any! one! of! the! contracting!
parties,!the!loss!of!the!thing!shall!not!be!an!obstacle!to!the!success!of!the!action,!
If! B! spends! it! uselessly,! A! cannot! recover! even! if! court!
unless!said!loss!took!place!through!the!fraud!or!fault!of!the!plaintiff.!(1314a)!
declares!the!obligation!annulled.!
If! B! spends! it! on! things! beneficial! to! him,! such! as! tuition! for!
!
school,!A!may!recover.!!
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Extinguishment!of!Action!for!Annulment:! subscribed! by! the! party! charged,! or! by! his! agent;! evidence,! therefore,! of! the!
agreement!cannot!be!received!without!the!writing,!or!a!secondary!evidence!of!its!
No!one!can!come!to!court!with!unclean!hands.! contents:!
If!the!person!who!had!a!right!to!institute!an!action!for!annulment!is!unable*to*
restore* the* thing* he! would! be! obliged! to! return,! because* such* thing* is* lost* (a)! An! agreement! that! by! its! terms! is! not! to! be! performed! within! a! year! from! the!
through*his*fault,*the!right!to!annul!is!extinguished.! making!thereof;!
o If!A!coerces!B!to!sell!him!a!car,!B!can!seek!annulment.!
o However,! if! B! loses! the! car! by! intentionally! destroying! it,! his! right! to! (b)!A!special!promise!to!answer!for!the!debt,!default,!or!miscarriage!of!another;!
file!the!action!would!be!extinguished.!
(c)!An!agreement!made!in!consideration!of!marriage,!other!than!a!mutual!promise!
Right!of!action!based!on!incapacity!!the!rule!is!the!same.!
to!marry;!
o Generally,!if!an!incapacitated!person!loses!the!object,!there!is!no!bar!
to!the!action!for!annulment.! (d)!An!agreement!for!the!sale!of!goods,!chattels!or!things!in!action,!at!a!price!not!
This!is!because!he!is!only!obliged!to!restore!to!the!extent!of! less! than! five! hundred! pesos,! unless! the! buyer! accept! and! receive! part! of! such!
how!he!was!benefited.! goods!and!chattels,!or!the!evidences,!or!some!of!them,!of!such!things!in!action!or!
If!the!object!was!lost,!he!could!not!have!benefited.! pay! at! the! time! some! part! of! the! purchase! money;! but! when! a! sale! is! made! by!
o However,!if!he!loses!it!through!his!own!fault,!the!case!for!annulment! auction! and! entry! is! made! by! the! auctioneer! in! his! sales! book,! at! the! time! of! the!
will!be!dismissed.! sale,! of! the! amount! and! kind! of! property! sold,! terms! of! sale,! price,! names! of! the!
purchasers! and! person! on! whose! account! the! sale! is! made,! it! is! a! sufficient!
Art.*1402**Effect*where*a*Party*Cannot*Restore*Object** memorandum;!
As! long! as! one! of! the! contracting! parties! does! not! restore! what! in! virtue! of! the!
decree! of! annulment! he! is! bound! to! return,! the! other! cannot! be! compelled! to! (e)!An!agreement!of!the!leasing!for!a!longer!period!than!one!year,!or!for!the!sale!of!
comply!with!what!is!incumbent!upon!him.!(1308)! real!property!or!of!an!interest!therein;!
When!a!contract!is!annulled,!a!reciprocal*obligation*of*restitution*is!created.! (f)!A!representation!as!to!the!credit!of!a!third!person.!
Return!by!one!party!of!what!he!is!obliged!to!restore!is!regarded!as!a!condition!
(3)!Those!where!both!parties!are!incapable!of!giving!consent!to!a!contract.!
to!the!fulfillment!of!the!others!obligation!to!return.!
Thus,! if! a! party! cannot! return! what! he! has! received,! the! other! may! not! be!
Unenforceable!Contracts!:!
compelled!to!return!what!he!has!received.!
Those! that! cannot! be! enforced! in! court! or! sued! upon! by! reason! of! certain!
Chapter*8:*Unenforceable*Contracts* defects!provided!by!law.!!
o Even!if!they!have!all!the!requisites!for!perfection.!
Art.*1403**Uneforceable*Contracts*Defined* Until!and!unless!they!are!ratified!according!to!law.!
The!following!contracts!are!unenforceable,!unless!they!are!ratified:! Binding*force!!none!until!they!are!ratified.!
(1)!Those!entered!into!in!the!name!of!another!person!by!one!who!has!been!given! Kinds!of!Unenforceable!Contracts!:!
no!authority!or!legal!representation,!or!who!has!acted!beyond!his!powers;!
1. Unauthorized* contracts! ! those! entered! into! in! the! name! of! another! by! one!
(2)!Those!that!do!not!comply!with!the!Statute!of!Frauds!as!set!forth!in!this!number.! without,!OR!acting!in!excess!of,!authority.*
In! the! following! cases! an! agreement! hereafter! made! shall! be! unenforceable! by! o Governed!by!Article!1317*
action,!unless!the!same,!or!some!note!or!memorandum,!thereof,!be!in!writing,!and! 2. Those*that*do*not*comply*with*the*Statute*of*Frauds*
89!
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3. Those*where*both*parties*are*incapable*of*giving*consent*to*a*contract.* o The! defense! of! the! SoF! is! personal! to! the! parties! ! cannot! be!
interposed!by!strangers!to!the!contract!
The!Statute!of!Frauds!!in!General:! o No*particular*form*of*language*or*instrument!needed!to!constitute!a!
memorandum!or!note!in!writing!under!the!SoF!
Purpose:! Need!not!be!contained!in!a!single!document!
1. Prevent!fraud! 2! or! more! writings! properly! connected! may! serve! as! the!
2. Guard!against!mistakes!by!honest!men! required!memorandum!
3. By!requiring!certain!agreements!that!are!susceptible*to*fraud*must!be! Ex.!Limketkai(Sons(Milling(Inc(V.(CA!
in!writing! While!there!was!no!written!contract!of!sale!there!
4. For!certain!executory!contracts!to!be!enforceable!in!a!court!of!law,!the! are! abundant! notes! and! memoranda! extant! in! the!
only* evidence! that! can! prove! such! contract! is! a! written* proof* of* the* records! of! this! case! evidencing! the! elements! of! a!
agreement.! perfected!contract.!
Application!(some!fundamental!principles!relative!to!the!Statute!of!Frauds)!!
Note! ! when! we! say! applicable,! it! means! that! such! contracts! must! be! The!Statute!of!Frauds!!Agreements!within!its!Scope:!!
reduced!to!writing.!If!not!applicable,!its!okay!that!its!not!in!writing!
o SoF!not!applicable!in!actions!that!are!not!for! Agreement!not!to!be!performed!within*one*year*from*the*making*thereof*
Damages!because!of!violation!of!contract! Ex.! On! Oct! 10,! 2007,! S! entered! into! an! oral! contract! with! B! for! the!
Specific!performance!of!a!contract.! construction! of! Bs! house! to! begin* on! October! 20,! 2008.! ! Such!
o SoF! applicable! only* to* executory* contracts* (that! is,! where! no! contract!must!be!in!writing*
performance!has!yet!to!be!made!by!either!party)! For! such! contract! to! fall! under! the! SoF,! it! must! appear! that!
Not!to!contracts!which!are!totally!or!partially!performed! the! parties! intended* when* they* made* the* contract* that* it*
Why?!!Performance,!like!writing,!furnishes!reliable*evidence* should*not*be*performed*within*a*year.**
of!the!intention!of!the!parties!or!the!existence!of!the!contract! o If! a! contract! stipulates! that! a! certain! type! of! activity! shall! be!
Ex.!Contract!of!sale!of!real!property!in!installment!not!within! commenced*within!the!year,!but!can!only!be!finished*after*one*year,*
the! Statute,! if! the! first! installment! has* already* been* paid.* * the!SoF!will!apply.*
this!constitutes!partial!performance! Ex.!On!March!21,!2012,!A!enters!into!a!contract!with!B!that!B!
Babao( v.( Perez( ( oral! contract! partially! performed! must! be! will! construct! a! skyscraper,! to! commence* on! June! 30,! 2012.!
proven!clearly!in!court.! Obviously,! such! contract! cannot! be! finished! by! March! 2012,!
Partial! performance! can! also! be! manifested! when! so!it!must!be!in!writing.*
improvements! are! made! on! property,! rentals! are! paid,! etc! ! o If! a! party! fully! paid! the! boulder! of! the! building! for! the! complete!
in! general,! acts! of! partial! performance! remove! the! contract! construction!of!the!same!six!months!after!the!making!of!the!contract,!
from!the!SoF! it!does!not!come!within!the!statute.*
o SoF! not! applicable! when! the! contract! is! admitted! expressly,! or! Babeo(v.(Perez((contracts!which!y!their!terms!are!not!to!be!
impliedly!by!the!failure!to!deny!specifically!its!existence.! performed! within! one! year! may! be! taken! out! of! the! statute!
o SoF!applicable!only*to*the*agreements*enumerate*therein! by!performance!of!one!party!thereto.*
o SoF! not! applicable! where! a! writing! does* not* express* the* true* All( that( is( requiredis* complete* performance*
agreement*of*the*parties.! within* one* year* of* one* party,* however! many! years!
o It!does!not!declare!contracts!void.! elapse! before! agreement! is! performed! by! another!
o The!defense!of!the!SoF!may!be!waived.! party.*
90!
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nothing( less( than( full( performance( by( one( party( o Other!examples*
will( suffice,( and! it! has! been! held! that! if! anything! Marriage!settlements*
remains! to! be! done! after! expiration! of! the! year,! Donations!propter!nuptias*
besides!the!mere!payment!of!money,!the!statute!will! Agreement!for!sale*of*goods,*at!a!price!not*less*that*P500.*
apply.* Ex.!S!and!B!mutually!promised!to!sell!and!buy!a!piano!worth!P12,000.*
Promise!to!answer!for!the!debt,*default,*or*miscarriage*of!another* This!agreement!must!be!in!writing!to!be!enforceable!against!
Ex.!D!owes!C!P!10,000,!with!G!as!guarantor.* either!party*
G!promises!to!answer!for!the!debt!of!D!in!case!D!fails.* Unless*there*is*already*delivery*or*partial/full*payment.*
This!agreement!(between!G!and!D)!is!unenforceable!unless!it! Agreement!for!leasing*for!a!longer*period*than*one*year.*
is!in!writing!signed!by!G.* Ex.!R!agreed!to!lease!his!house!to!E!for!two!years.*
o The!promise!here!is!merely!subsidiary*or*collateral*to!the!promise!of! Must!be!in!writing,!unless!partially!executed.*
another!(original!debtor,!D)* Agreement!for!sale!of!real*property*or!of!an!interest*therein.*
o If! the! promise! is! an! original* or* independent* one,* the! promise! is! not! Ex.!B!orally!sold!his!land!or!his!right!of!usufruct!in!said!land!to!B.*
within!the!SoF!and!thus!may!be!proven!by!oral!evidence.* Such!agreement!is!unenforceable,!unless!it!has!been!partially!
o Special!promise!!express!and!tacit!promises!in!fact!made.* executed.*
Does! not! apply! in! cases! where! duties! are! created! by! law! Representation!as!to!the!credit*of*a*third*person**
without!any!promissory!assent.* Ex.!D!is!seeking!a!loan!from!C.!*
o Debt,! default,! miscarriage! ! includes! all! legal! obligations! under! T! represents! to! C! that! D! is! solvent! and! has! a! good! credit!
which!a!person!can!come,!contractual!or!non+contractual,!requiring!a! reputation.*
money!payment!or!any!other!kind!of!performance.* Such!representation!must!be!in!writing.!*
o If!obligation!is!joint**no*special*promise*
one! is! not! considered! as! promisingwithin! the! meaning! of! Art.*1404**Rules*Governing*Unauthorized*Contracts*
the! statute! where! his! performance! will! also! extinguish! the! Unauthorized!contracts!are!governed!by!Article!1317!and!the!principles!of!agency!in!
promisors!own!debt.* Title!X!of!this!Book.!
o If! obligation! is! solidary* * depends! on! whether* or* not* the* promisor*
knew*that*only*one*of*the*solidary*debtors*would*truly*be*benefited* Art.*1405**Modes*of*Ratification*under*Statutes*of*Fraud*
by*payment.* Contracts!infringing!the!Statute!of!Frauds,!referred!to!in!No.!2!of!Article!1403,!are!
But! if! one! of! several! promisors! is! to! have! the! purchased! ratified! by! the! failure! to! object! to! the! presentation! of! oral! evidence! to! prove! the!
goods!or!the!borrowed!money,!the!others!lending!their!credit! same,!or!by!the!acceptance!of!benefit!under!them.!
as!security,!the!latter!are!answering!for!the!debt!of!another!
within!the!statute.* Modes!of!Ratification!under!the!SoF!:!
Agreement!in!consideration*of*marriage*other*than*promise*to*marry*
Ex.!M!agrees!to!build!a!house!worth!P1M!for!W,!if!W!marries!M.* Failure!to!object!to!the!presentation!of!oral!evidence!to!prove!the!contract!
Applicable!even!when!promise!to!build!the!house!is!made!by! o This!amounts!to!a!waiver!of!the!SoF.!
a!third!person!to!W.* o Makes!the!contract!as!binding!as!if!it!had!been!reduced!to!writing.!
o Mutual!promise!to!marry!between!M!and!W!need!not!be!in!writing.* o Limketkai( Sons( Milling( v.( CA( ! contacts! infringing! the! SoF! are! ratified!
Note!!law!states!no!period!to!performance,!unlike!number!1* when! the! defense! fails! to! object,! or! asks! questions! on! cross+
An! oral! mutual! promise! to! marry! may! be! proved! by! parol! examination.!
evidence,! even* if* marriage* is* to* be* celebrated* beyond* one* as!no!timely!objection!or!protest!was!made!to!the!admission!
year* of!the!testimony!of!the!plaintiff!with!respect!to!the!contract!
91!
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[defendants]! tacitly! waived! there! right! to! have! it! stricken! o They!are!not!parties!to!the!contract.!
out.!
Acceptance!of!benefits!under!the!contract.! *
o In!this!case,!the!contract!is!no!longer!executory.!
Ex.! A! sold! to! G! a! particular! real! property,! and! A! benefited! from! the!
Chapter*9:*Void*and*Inexistent*Contracts*
transaction!by!already!obtaining!the!purchase!price!.!
Articles! 1409! and! 1422! provide! for! the! instances! where! contracts! are!
Contract!of!sale!can!be!enforced,!even!if!not!in!writing.!
deemed!void!or!inexistent.!It!must!be!noted!that!where!contracts!are!divisible!and!
the!illegal!terms!can!be!separated,!the!legal!ones!may!be!enforced!(1420).!
Art.*1406**Right*of*a*Party*where*Contract*Enforceable* !The!defense!against!the!nullity!of!void!contracts!does!not!prescribe!(1410)!
When!a!contract!is!enforceable!under!the!Statute!of!Frauds,!and!a!public!document! rd
and! this! defense! may! even! be! raised! by! a! 3 ! person! provided! that! his! interest! is!
is! necessary! for! its! registration! in! the! Registry! of! Deeds,! the! parties! may! avail! directly!affected!(1421).!!
themselves!of!the!right!under!Article!1357.! Usually,! when! parties! enter! into! a! contract! that! is! contrary! to! law,! the!
parties! are! not! in! good! faith.! Thus,! Articles! 1411! to! 1419! talk! about! pari( delicto.(
When!the!agreements!in!the!SoF!are!in!writing!and!thus!enforceable,!and!the! Generally,!parties!who!are!in!pari!delicto!may!not!recover!what!has!been!given!nor!
law! requires! that! such! document! should! be! transformed! into! a! pbulic! compel! the! other! to! comply! with! what! has! been! agreed! upon! (1411! +1412)!
document!for!registration.! However,!the!law!provides!some!exceptions!to!this!rule!and!gives!instances!when!
Contracting! parties! may! compel* each* other* to* observe* the* form* once! the! recovery!may!be!made!(1413!!1419).!!
contract!has!been!perfected.! !
*Art.*1409**Instances*of*void*or*inexistent*contracts*
Art.*1407**When*Uneforceable*Contract*becomes*Voidable* The!following!contracts!are!inexistent!and!void!from!the!beginning:!
In!a!contract!where!both!parties!are!incapable!of!giving!consent,!express!or!implied!
ratification!by!the!parent,!or!guardian,!as!the!case!may!be,!of!one!of!the!contracting! (1)!Those!whose!cause,!object!or!purpose!is!contrary!to!law,!morals,!good!customs,!
parties! shall! give! the! contract! the! same! effect! as! if! only! one! of! them! were! public!order!or!public!policy;!
incapacitated.! (2)!Those!which!are!absolutely!simulated!or!fictitious;!
(3)!Those!whose!cause!or!object!did!not!exist!at!the!time!of!the!transaction;!
If! ratification! is! made! by! the! parents! or! guardians,! as! the! case! may! be,! of! both! (4)!Those!whose!object!is!outside!the!commerce!of!men;!
contracting!parties,!the!contract!shall!be!validated!from!the!inception.! (5)!Those!which!contemplate!an!impossible!service;!
(6)!Those!where!the!intention!of!the!parties!relative!to!the!principal!object!of!the!
If!both!parties!have!no!guardian,!for!example,!then!it!is!unenforceable.! contract!cannot!be!ascertained;!
If!there!is!one!guardian,!or!if!one!of!the!parties!upon!gaining!capacity!ratiies!it,! (7)!Those!expressly!prohibited!or!declared!void!by!law.!
it!becomes!voidable.!
If!ratification!is!made!by!guardians,!or!by!both!parties!upon!attaining!capacity,! These! contracts! cannot! be! ratified.! Neither! can! the! right! to! set! up! the! defense! of!
this!bevcomed!valid.! illegality!be!waived.!
!
Art.*1408**Right*of*Third*Persons*to*Assail*an*Unforceable*Contract* What!are!void!and!inexistent!contracts?!
Unenforceable!contracts!cannot!be!assailed!by!third!persons.!!
Void* Contracts* * those! which,! because! of! certain! defects! generally(
Third!persons!cannot!assail!unenforceable!contracts.! produce!no!effect!at!all.!It!is!no!contract!at!all.!
o They!cannot!be!executed!anyway.!
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!
o Exception* ! see! Art! 1411+1412! where! illegal! contracts! may! protect! a! party! was! held! as! absolutely! simulated! and! therefore!
produce!effects!where!parties!are!not!of!equal!guilt.! null!and!void.!(See!Art.!1345!and!1346!for!more!examples)!
Inexistent* Contracts* * agreements! which! lack! one! or! some! or! all! of! the! 3. Contracts*without*cause*or*object!
elements! or! do! not! comply! with! formalities! which! are! essential! for! the! The!phrase!did(not(exist(at(the(time(of(the(transaction(does!not!
existence!of!contracts.! apply! to! a! future! thing! which! may! legally! be! the! object! of! a!
contract!(De!Leon).!
Characteristics!of!a!void!or!inexistent!contract:! See(Art.!1347,!1352,!and!1353!for!examples!and!comments.(
4. Contracts*whose*object*is*outside*the*commerce*of*men(
1. Generally!produces(no(effect(
See(comments!and!examples!under!Art.!1347!and!1348.(
2. It!cannot!be!ratified!(Art!1409,!Par!2)!
5. Contracts*which*contemplate*an*impossible*service(
3. The!right!to!set!up!the(defense(of(illegality(cannot(be(waived!
See(comments!and!examples!under!Art.!1347!and!1348(
4. The! action! or! defense! for! the! declaration! of! its! inexistence! does( not(
6. Contracts*where*the*intention*of*the*parties*relative*to*the*object*cannot*
prescribe((Art.!1410)!
rd be*ascertained(
5. The!defense!of!illegality!is(not(available(to(3 (persons!whose!interest!are!
See(comments!and!examples!under!Art.!1378,!par.!2(
not!directly!affected!(Art.!1421)!
7. Contracts*expressly*prohibited*or*declared*void*by*law(
6. It!cannot!give!rise!to!a!valid!contract!(Art.!1422)!
Ex.(
Instances!of!void!or!inexistent!contracts:! a. A! stipulation! prohibiting! a! mortgagor! to! sell! property!
mortgaged! is! void! for! being! contrary! to! the! express!
1. Contracts*whose*cause,*object*or*purpose*is*contrary*to*law,*etc.! provision!of!Art.!2130!of!the!Civil!Code(
De(Leon(v.(CA(!A!contract!whose!consideration!is!the!termination! b. Contracts!upon!future!inheritance!except!those!expressly!
of!the!marriage!by!the!parties!is!void!for!being!contrary!to!law!and! authorized!by!law!(Art.!1347)(
Filipino!morals!and!public!policy.! c. Sale!of!property!between!husband!and!wife!except!when!
Prudential(bank(v.!Panis(!Mortgage!contract!entered!into!by!the! there!is!separation!of!property!(Art.!1490)(
grantee!within!the!prohibited!period!!provided!by!the!Public!Land! d. Donation!between!spouses!(Art.!87,!FC)(
Act!is!null!and!void.!
The!defect!in!a!void!contract!is!permanent!and!incurable:!
Maharlika( Publishing( Co.! v.( Tagle( A! contract! of! sale! in! a! public!
beidding! entered! into! by! a! wife! acting! in! behalf! of! her! husband,! Chavez(v.(PCGG((A!void!agreement!will!not!be!rendered!operative!by!the!
an!influential!public!official,!was!declared!void!for!being!violative! parties!alleged!partial*or*full*performance!of!their!respective!prestations.!
of!public!policy/order.! It!produces!no!legal!effect.!
Cui( v.! Arellano( University( ( A! contract! that! provides! a! refund! of! Arsenal(v.!IAC((Neither!can!an!infirmity!be!cured!by!equity.!
scholarship!grant!as!a!precondition!to!a!students!transfer!is!void! Acierto(v.(De(Los(Santos((The!pari*delicto*doctrine!may!not!be!invoked!in!
for!being!contrary!to!public!policy!and!morals.! void!contracts!that!run!contrary!to!state!policy.!
a. Public* Policy! ! court! must! find! that! the! contract! 19( Am.( Jur.( 802( ( it! is! generally! considered! that! as! between! parties! to! a!
contravenes! some! established! interest( of( society,( or( contract,!validity!cannot!be!given!to!it!by!estoppel*!if!it!is!prohibited!by!law!
inconsistent(with(sound(policy(and(good(morals(or(tends( or!against!public!policy.!
to( undermine( the( security( of( individual( rights.( (See( Art.! Eugenio( v.! Perfido( ! the! mere* lapse* of* time! cannot! give! efficacy! to!
1306!and!1416!for!more!examples)! contracts!that!are!null!and!void.!
2. Contracts*which*are*absolutely*simulated*or*fictitious.! (
Gardner( v.( CA( ( a! contract! purporting! a! sale! of! land! was! really! !
without! consideration! and! was! actually! intended! merely! to!
93!
!
Art.*1410**Action*or*Defense*is*Imprescriptible* A!has!no!action!against!B!if!B!does!not!give!the!car!even!if!the!
The!action!or!defense!for!the!declaration!of!the!inexistence!of!a!contract!does!not! former!succeeded!in!kidnapping!X.!The!same!rule!applies!if!B!
prescribe.! complies!and!A!does!not.!
Both! A! and! B! will! be! prosecuted! and! the! car! will! be!
There! is! no! need! to! judicially! file! an! action! to! make! the! contract! void.! A! confiscated! in! favour! of! the! government! when! kidnapping! is!
case! is! filed! merely! to! declare! that! the! contract,! which! is! void,! is! in! fact! committed.!
void.!!
Ex.! For!a!consideration!of!!2,000,000,!B!will!construct!As!house!in!3! Where*only*one*party*is*guilty**the!same!rule!as!above!will!apply!against!
days.! This! is! void! for! being! impossible.! There! is! no! need! to! file! a! the!guilty!party!but!the!innocent!party!(1)!may!claim!what!he!has!given!and!
case.!It!is!void.!However,!A!may!file!a!case!to!have!it!declared!void! (2)!shall!not!be!bound!to!comply!with!his!promise!!
if!A!has!already!paid!the!!2,000,000!!
Doctrine!of!Laches!does!not!apply.!! Articles!1411!and!1412!do!not!apply!to!inexistent!contracts:!
DBP( v.( CA( ( restitution! should! generally! apply! in! void! contracts! if! both!
parties!have!no!fault!or!are!not!guilty.! Modina( v.( CA( ( An! inexistent! contract! has! absolutely! no! consideration! at!
all,! or! there! is! total! absence! of! consent,! or! there! is! no! object.! Thus,! pari(
Art.*1411**Rules*where*Contract*is*Illegal*and*Act*is*Criminal*Offense* delicto( will! not! apply! because! these! contracts! have! considerations! or!
objects,!but!are!illegal.!Simulated(Contract(is!an!example.!
When!the!nullity!proceeds!from!the!illegality!of!the!cause!or!object!of!the!contract,!
and! the! act! constitutes! a! criminal! offense,! both! parties! being! in! pari! delicto,! they!
shall! have! no! action! against! each! other,! and! both! shall! be! prosecuted.! Moreover,! Art.*1412**Rules*where*Contract*is*Illegal*but*Act*is*not*Criminal*Offense*
the!provisions!of!the!Penal!Code!relative!to!the!disposal!of!effects!or!instruments!of! If! the! act! in! which! the! unlawful! or! forbidden! cause! consists! does! not! constitute! a!
a!crime!shall!be!applicable!to!the!things!or!the!price!of!the!contract.! criminal!offense,!the!following!rules!shall!be!observed:!
This!rule!shall!be!applicable!when!only!one!of!the!parties!is!guilty;!but!the!innocent! (1)! When! the! fault! is! on! the! part! of! both! contracting! parties,! neither! may! recover!
one! may! claim! what! he! has! given,! and! shall! not! be! bound! to! comply! with! his! what! he! has! given! by! virtue! of! the! contract,! or! demand! the! performance! of! the!
promise.!(1305)! other's!undertaking;!
(2)!When!only!one!of!the!contracting!parties!is!at!fault,!he!cannot!recover!what!he!
NOTE:! Articles! 1411! and! 1412! embody! the! general! principle! that! the! law! refuse!
has! given! by! reason! of! the! contract,! or! ask! for! the! fulfillment! of! what! has! been!
remedy!when!parties!are!in!pari!delicto.!Some!exceptions!to!this!rule!are!contained!
promised! him.! The! other,! who! is! not! at! fault,! may! demand! the! return! of! what! he!
in!Articles!1413!to!1419.!
has!given!without!any!obligation!to!comply!his!promise.!(1306)!
Rules!where!contract!is!illegal!and!the!act!constitutes!an!illegal!offense:!
Where*both*parties*are*in*pari*delicto*(NPC)! Rules!where!the!contract!is!illegal!but!the!act!does!not!constitute!a!criminal!offense:!
a. The!parties!shall!have!no(action(against!each!other.! Where*both*parties*are*in*pari*delicto!
b. Both!shall!be!prosecuted.! 1. Neither! party! may! recover! what! he! has! given! by! virtue! of! the!
c. The!things!or!the!price!of!the!contract,!as!effects!or!instruments! contract.!
of!the!crime!shall!be!confiscated!in!favour!of!the!Government.! 2. Neither! party! may! demand! the! performance! of! the! others!
undertaking.!
Ex.! A!and!B!enter!into!a!contract!where!A!will!kidnap!X!and!bring! Where*only*one*party*is*guilty!
him!to!B.!In!return,!B!will!give!the!car!used!to!kidnap!X!to!A.!! 1. The!guilty!party!loses!what!he!has!given!by!reason!of!the!contract.!
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!
2. The! guilty! party! cannot! ask! for! the! fulfilment! of! the! others! Art.*1415**Recovery*by*an*Incapacitated*Person*
undertaking.! Where! one! of! the! parties! to! an! illegal! contract! is! incapable! of! giving! consent,! the!
3. The!innocent!party!may!demand!the!return!of!what!he!has!given.! courts! may,! if! the! interest! of! justice! so! demands! allow! recovery! of! money! or!
4. The! innocent! party! cannot! be! compelled! to! comply! with! his! property!delivered!by!the!incapacitated!person.!
promise.!
This!rule!is!within!the!discretion!of!the!court!hence!it!may!issue!an!order!
Art.*1413**Recovery*of*Usurious*Interest* allowing!or!disallowing!recover!of!money.!
Interest!paid!in!excess!of!the!interest!allowed!by!the!usury!laws!may!be!recovered!
by!the!debtor,!with!interest!thereon!from!the!date!of!the!payment.! Ex.! A,!a!minor,!enters!into!a!contract!with!B!for!the!purchase!of!illegal!drugs!
worth! 10,000.! The! court! may! allow! the! minor! to! recover! the! 10,000!
Payment!of!usurious!interest!is!void.! pesos!if(it!finds!that!the!interest!of!justice!so!demands.!
Angel(Jose(v.(Chelda(Enterprise(!the!phrase!interest!paid!in!excess!of!the!
interest!allowed!by!law!means!the!whole*interest*paid.! Art.*1416**Recovery*where*Contract*is*Not*Illegal*per*se*
Ex.! In! a! loan! of! 1,000,! with! interest! of! 20%! per! annum! (w/c! is! a! When! the! agreement! is! not! illegal! per! se! but! is! merely! prohibited,! and! the!
usurious! rate)! or! 200! per! year,! if! the! borrower! pays! said! 200,! prohibition! by! the! law! is! designated! for! the! protection! of! the! plaintiff,! he! may,! if!
the! whole! 200! is! the! usurious! interest.! The! borrower! may! public!policy!is!thereby!enhanced,!recover!what!he!has!paid!or!delivered.!
recover!the!whole!200!and!not!just!the!part!which!is!in!excess!of!
the!interest!allowed!by!law.! When!is!recovery!permitted?!
1. The!agreement!is!not!illegal!per!se!but!is!merely!prohibited!
Art.*1414**Recovery*where*Contract*Entered*Into*for*Illegal*Purpose* 2. The!prohibition!is!designed!for!the!protection!of!the!plaintiff!
When!money!is!paid!or!property!delivered!for!an!illegal!purpose,!the!contract!may! 3. Public!policy!would!be!enhanced!by!allowing!the!plaintiff!to!recover!what!
be!repudiated!by!one!of!the!parties!before!the!purpose!has!been!accomplished,!or! he!has!paid(or!delivered.!
before!any!damage!has!been!caused!to!a!third!person.!In!such!case,!the!courts!may,!
if!the!public!interest!will!thus!be!subserved,!allow!the!party!repudiating!the!contract! Ex.! Ras(v.(Sua((The!Supreme!Court!allowed!repossession!of!a!certain!land!to!
to!recover!the!money!or!property.! the!owner!who!acquired!the!same!pursuant!to!a!law!designed!to!give!land!
to!the!landless!even!when!the!said!owner!leased,!in!violation!of!the!spirit!
Recovery!where!contract!entered!into!for!illegal!purpose:! of!the!law,!the!said!land!to!another!person!who!later!refused!to!return!the!
1. The!contract!is!for!an!illegal!purpose.! same!despite!demand!of!the!owner!and!even!after!the!former!violated!the!
2. The! contract! is! repudiated! before! the! purpose! has! been! accomplished! or! lease!agreement!on!the!ground!of!pari(delicto(
before!any!damage!has!been!caused!to!a!third!person.!
3. The! court! considers! that! public! interest! will! be! subserved! by! allowing! Art.*1417**Recovery*of*Amount*Paid*in*Excess*of*Ceiling*Price*
recover.! When! the! price! of! any! article! or! commodity! is! determined! by! statute,! or! by!
Ex.( De( leon( v.( Court( of( Appeals( ( the! Supreme! Court! allowed! the! authority! of! law,! any! person! paying! any! amount! in! excess! of! the! maximum! price!
recovery! of! 380,! 000! pesos! paid! by! the! husbands! mother! who! allowed!may!recover!such!excess.!
resisted!the!wifes!attempt!to!enforce!the!other!provisions!of!the!
void! contract! (as! its! consideration! is! the! termination! of! marital! It!is!illegal!to!charge!a!price!higher!than!the!statutory!ceiling.!Any!payment!
status!between!the!husband!and!the!wife).! in!excess!of!such!may!be!recovered.!
!
!
95!
!
Art.*1418**Recovery*of*Additional*Compensation* Ex.! An!annual!subscription!to!a!weekly!magazine!where!X!pays!1,000!is!a!

When! the! law! fixes,! or! authorizes! the! fixing! of! the! maximum! number! of! hours! of! divisible!obligation!(for!the!publisher)!but!is!an!indivisible!contract!of!
labor,!and!a!contract!is!entered!into!whereby!a!laborer!undertakes!to!work!longer! subscription.!!
than!the!maximum!thus!fixed,!he!may!demand!additional!compensation!for!service! ! !
rendered!beyond!the!time!limit.! ! If!the!agreement!is!that!the!publisher!will!deliver!magazine!every!week!
and!X!will!pay!20!upon!delivery,!the!contract!is!divisible.!
!
If! a! contract! provides! that! an! employee! shall! work! only! for! 8! hours! at! a!
certain!legal!rate,!any!work!done!beyond!the!8!hour!period!should!be!paid! Art.*1421**Persons*Entitled*to*Raise*Defense*of*Illegality*or*Nullity*
for!extra!time.! The!defense!of!illegality!of!contract!is!not!available!to!third!persons!whose!interests!
Articles!1418!and!1419!are!general!provisions!on!labor.!The!Labor!Code!of! are!not!directly!affected.!
the! Philippines! (PD.! 442)! provides! for! the! specific! rights! and! remedies! of!
employees.! General! Rule! ! Only! parties! to! the! void! contract! can! raise! the! defense! of!
illegality! or! nullity! because! contracts! are! mutual! obligations! between! the!
Art.*1419**Recovery*of*Amount*of*Wage*Less*than*Minimum*Fixed* parties.!
rd
When!the!law!sets,!or!authorizes!the!setting!of!a!minimum!wage!for!laborers,!and!a! o Exception! ! 3 ! persons! are! may! avail! the! defense! of! illegality! or!
contract! is! agreed! upon! by! which! a! laborer! accepts! a! lower! wage,! he! shall! be! set! up! its! nullity! as( long( as( his( interest( is( directly( affected( by( the(
entitled!to!recover!the!deficiency.! contract.!
Ex.! A!sold!a!parcel!of!land,!which!he!does!not!own,!to!B.!X,!the!owner!of!
If! an! employee! receives! less! than! the! minimum! wage! rate,! s/he! can! still!
the!land!which!is!encroached!by!said!illegal!sale,!may!go!to!court!and!
recover!the!deficiency!with!legal!interest!(PD.!442).!
seek!nullification!of!the!contract.!!
Art.*1420**Effect*of*Illegality*where*Contract*is*Indivisible/Divisible*
Art.*1422**Void*Contract*Cannot*be*Novated*
In! case! of! a! divisible! contract,! if! the! illegal! terms! can! be! separated! from! the! legal!
A! contract! which! is! the! direct! result! of! a! previous! illegal! contract,! is! also! void! and!
ones,!the!latter!may!be!enforced.!
inexistent.!!
Effects!of!illegality!where!contract!is!in/divisible:!
A! subsequent! contract! which! proceeds! from! a! void! contract! is! likewise!
1. When!the!consideration!is!entire!and!single,!the!whole!contract!is!void!and!
void.!
unenforceable!
2. Where!contract!is!divisible!or!severable,!the!illegal!ones!can!be!separated! Ex.! A! contract! of! repurchase! is! dependent! of! the! validity! of! the! original!
from!the!legal!portions,!the!latter!may!be!enforced!subject!to!the!intention! contract! of! sale.! If! the! latter! is! void,! then! there! is! no! right! of!
of!the!parties.!! repurchase.!
Ex.! Pactum(commisorium(is!void!but!the!loan!agreement!is!valid!
! Usurious!rate!is!illegal!but!the!loan!is!valid.! !
!
Divisible!contracts!distinguished!from!divisible!obligation:! !
Divisible! contracts! refer! to! divisibility! of! cause! while! divisibility! of!
obligation!refer!to!susceptibility!to!partial!fulfilment.!! !
!
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!
Title*III**NATURAL*OBLIGATIONS* If! a! third! person! pays! the! prescribed! debt! of! the! debtor! without! his!
knowledge! or! against! his! will,! the! latter! is! not! legally! bound! to! pay! him!
!
(Art.!1236,!par.!2).!But!the!debtor!cannot!recover!what!he!has!paid!in!case!
he!voluntarily!reimburses!the!third!person.!
Art.*1423**Concept*of*Natural*Obligations*
Obligations!are!civil!or!natural.!Civil!obligations!give!a!right!of!action!to!compel!their! Ex.! A! debt! has! already! prescribed! but! X,! a! third! person,! pays! the! debt,! and!
performance.! Natural! obligations,! not! being! based! on! positive! law! but! on! equity! later!on,!the!original!debtor!pays!X,!such!payment!shall!be!considered!valid!
and! natural! law,! do! not! grant! a! right! of! action! to! enforce! their! performance,! but! and!original!debtor!cannot!recover!such!amount!from!the!creditor!on!the!
after!voluntary!fulfillment!by!the!obligor,!they!authorize!the!retention!of!what!has! ground!that!X!should!not!have!paid!him.!
been! delivered! or! rendered! by! reason! thereof.! Some! natural! obligations! are! set!
forth!in!the!following!articles.! Art.*1426**Restitution*by*Minor*After*Annulment*of*Contract*
When!a!minor!between!eighteen!and!twenty+one!years!of!age!who!has!entered!into!
Concept!of!Natural!Obligations:! a! contract! without! the! consent! of! the! parent! or! guardian,! after! the! annulment! of!
These! obligations! rest! upon! morality! and! are! recognized! in! leading! civil! the!contract!voluntarily!returns!the!whole!thing!or!price!received,!notwithstanding!
codes.!! the! fact! the! he! has! not! been! benefited! thereby,! there! is! no! right! to! demand! the!
It!is!based!on!equity!and!natural!law.! thing!or!price!thus!returned.!
Civil!Obligations!and!Natural!Obligations!distinguished:!
When! a! contract! is! annulled,! a! minor! is! not! legally! obliged! to! make!
restitution! except! insofar! as! he! has! been! benefited! (Art.! 1399).! But! if! he!
1. Civil! obligations! arise! from! law,! contracts,! quasi! contracts,! delicts,! and!
nevertheless! returns! the! thing! or! price! although! he! has! not! been!
quasi+delicts,!while!natural!obligations!are!based!on!equity!and!natural!law!
benefited,!he!cannot!recover.!!
2. The!former!gives!a!right!of!action!to!compel!performance!while!the!latter!
do!not!grant!such!right!of!action.! A!minor!pursuant!to!RA!6809!means!below!18!years.!
Ex.! If!a!minor!sold!his!car!for!100,000!without!consent!of!his!parent!but!the!
Art.*1424**Performance*After*Civil*Obligation*has*Prescribed* minor!lost!30,000!due!to!negligence!but!was!able!to!deposit!the!rest!in!a!
When!a!right!to!sue!upon!a!civil!obligation!has!lapsed!by!extinctive!prescription,!the! bank,! he! is! legally! obliged! to! return! only! 70,000! in! case! the! contract! is!
obligor!who!voluntarily!performs!the!contract!cannot!recover!what!he!has!delivered! later!annulled.!However,!if!he!returns!the!whole!100,000!amount,!there!is!
or!the!value!of!the!service!he!has!rendered.! no!right!to!demand!the!same.!!
Ex.! If!a!debtor,!despite!the!lapse!of!the!prescriptive!period!and!knowing!that! Art.*1427**Delivery*by*Minor*of*Money*or*Fungible*Thing*

the! debt! had! already! prescribed,! pays! the! creditor,! such! debtor! can! no! When! a! minor! between! eighteen! and! twenty+one! years! of! age,! who! has! entered!
longer!recover!such!payment.! into! a! contract! without! the! consent! of! the! parent! or! guardian,! voluntarily! pays! a!
sum!of!money!or!delivers!a!fungible!thing!in!fulfillment!of!the!obligation,!there!shall!
!
be!no!right!to!recover!the!same!from!the!obligee!who!has!spent!or!consumed!it!in!
good!faith.!(1160A)!
Art.*1425**Reimbursement*of*Third*Person*for*Prescribed*Debt*
When!without!the!knowledge!or!against!the!will!of!the!debtor,!a!third!person!pays!a!
After! annulment,! the! parties! are! generally( obliged! to! make! mutual!
debt!which!the!obligor!is!not!legally!bound!to!pay!because!the!action!thereon!has!
restitution! (Art.! 1398).! However,! the! obligee! who! spent! or! consumed! in!
prescribed,!but!the!debtor!later!voluntarily!reimburses!the!third!person,!the!obligor!
good!faith!the!money!or!consumable!thing!voluntarily!paid!or!delivered!by!
cannot!recover!what!he!has!paid.!
the!minor,!is!not!bound!to!make!restitution.!
97!
!
This! article! refers! not! only! to! fungible( things( but! also! to! things! that! are! therefore! void! as! such! should! be! wholly! hand+written! by! the! testator.! If!
nonSconsumable.! despite!this,!Ns!heir,!Y,!still!voluntarily!gives!the!legacy!of!the!ab+roller!to!J,!
it!shall!be!valid!and!cannot!be!revoked!anymore.!
Art.*1428**Performance*After*Action*to*Enforce*Civil*Obligation*Failed*
!
When,! after! an! action! to! enforce! a! civil! obligation! has! failed! the! defendant!
voluntarily! performs! the! obligation,! he! cannot! demand! the! return! of! what! he! has!
delivered!or!the!payment!of!the!value!of!the!service!he!has!rendered.! Title*IV**ESTOPPEL*
!
Ex.! A!is!indebted!to!B!for!50,000!and!a!civil!suit!is!filed!to!collect!the!amount!
but! such! is! dismissed,! A! is! not! legally! obliged! to! pay! the! said! amount! Art.*1431**Estoppel*Defined*
because! he! won.! However,! if! he! voluntarily! makes! payment,! he! can! no! Through!estoppel!an!admission!or!representation!is!rendered!conclusive!upon!the!
longer!recover!such!payment.!! person!making!it,!and!cannot!be!denied!or!disproved!as!against!the!person!relying!
thereon.!
Art.*1429**Payment*by*Heir*of*Debt*Exceeding*Value*of*Property*Inherited*
When!a!testate!or!intestate!heir!voluntarily!pays!a!debt!of!the!decedent!exceeding! General* Rule* * Doctrine! of! Estoppel! applies! to! any! particular! case! and! its!
the!value!of!the!property!which!he!received!by!will!or!by!the!law!of!intestacy!from! applicability!depends!largely!on!the!special!circumstances!of!the!case!(Beronilla(
the! estate! of! the! deceased,! the! payment! is! valid! and! cannot! be! rescinded! by! the! v.( GSIS)( after! careful! consideration! of! the! material! facts! in! order! to! avoid!
payer.! injustice!(Kalalo(v.(Luz).!
The! heir! is! not! liable! beyond! the! value! of! the! property! he! received! from! Exceptions*(G7P7Q):!
the!decedent!(Art.!1311,!par.!1).!But!if!he!pays!the!difference!voluntarily,! 1. Estoppel! is! not! applicable! against! the! government! suing! in! its!
payment!is!valid!and!cannot!be!rescinded!by!him.!! capacity!as!sovereign!or!asserting!governmental!rights!
It! follows! that! the! government! cannot! be! estopped! by!
Ex.!! A! is! indebted! to! X! for! 10,000.! A! later! dies,! with! B! as! his! heir! who! is! the!mistake!and!errors!of!its!officers!(Collector(of(Internal(
entitled! only! to! 5,000! from! the! estate! of! A.! If! B! voluntarily! pays! X! Revenue(v.(McGrath).!
P10,000,!B!can!no!longer!recover!such!an!amount.! 2. If! law! and! public! policy! will! be! violated,! there! is! no! estoppel!
(Republic(v.(Go(Bon(Lee).!
Art.*1430**Payment*of*Legacy*After*Will*has*been*Declared*Void* 3. Estoppel!does!not!apply!to!questions!of!law,!as!it!applies!only!to!
When!a!will!is!declared!void!because!it!has!not!been!executed!in!accordance!with! questions!of!fact!
the!formalities!required!by!law,!but!one!of!the!intestate!heirs,!after!the!settlement! In!Kalalo(v.(Luz,!if!the!act,!conduct,!or!misrepresentation!
of! the! debts! of! the! deceased,! pays! a! legacy! in! compliance! with! a! clause! in! the! of! party! sought! to! be! estopped! is! due! to! ignorance!
defective!will,!the!payment!is!effective!and!irrevocable.!! founded!on!an!innocent!mistake,!estoppels!will!not!arise.!
!
Legacy! ! the! act! of! disposition! by! the! testator! in! separating! from! the! Estoppel!is!characterized!as!harsh!and!odious,!and!not!favoured!in!law.!It!
inheritance!for!definite!purposes,!things,!rights!or!a!definite!portion!of!his! can!only!be!sustained!by!clear!and!convincing!evidence.!
property.!!Its!purpose!is!to!reward!friends,!servants,!and!others!for!services! !
they!rendered,!etc.! !
!
Ex.! N!provided!in!his!holographic!will!that!his!ab+roller!shall!go!to!his!friend!J.! !
Later,! the! holographic! will! turns! out! to! be! partly! type+written! and!
98!
!
Art.*1432**Application*of*Estoppel* Art.*1434**Sale*by*Person*not*the*Owner*
The! principles! of! estoppel! are! hereby! adopted! insofar! as! they! are! not! in! conflict! When!a!person!who!is!not!the!owner!of!a!thing!sells!or!alienates!and!delivers!it,!and!
with! the! provisions! of! this! Code,! the! Code! of! Commerce,! the! Rules! of! Court! and! later! the! seller! or! grantor! acquires! title! thereto,! such! title! passes! by! operation! of!
special!laws.! law!to!the!buyer!or!grantee.!
*
Art.*1433**Kinds*of*Estoppel* Ex.! A,! who! without! authority! of! the! owner,! sold! Bs! car! to! C.! This! sale! is!
Estoppel!may!be!in!pais!or!by!deed.! unenforceable!because!A!is!not!the!owner.!If!later!on!A!buys!the!car!of!B,!A!
can!no!longer!claim!the!property!as!his!own!on!the!ground!that!when!he!
Kinds!of!Estoppel:! sold!it!to!C,!he!was!not!the!owner!of!the!same.!
1. Estoppel* by* Deed* ! A! bar! which! precludes! one! party! to! a! deed! and! his!
privies!from!asserting!as!against!the!other!party!and!his!privies!any!right!or! Art.*1435**Sale*by*a*Person*Representing*Another*
title!in!derogation!of!the!deed,!or!from!denying!the!truth!of!any!material! If!a!person!in!representation!of!another!sells!or!alienates!a!thing,!the!former!cannot!
facts!asserted!in!it.! subsequently!set!up!his!own!title!as!against!the!buyer!or!grantee.!
It! is! technical! in! nature! and! such! an! estoppel! may! conclude! a!
party!without!reference!to!the!moral!equities!of!his!conduct.!! Ex.! A!constituted!B!as!his!agent!to!sell!a!car!and!the!car!was!in!fact!sold!by!B.!A!
It!is!generally!limited!to!an!action!on!the!deed!itself;!in!a!collateral! cannot!later!on!claim!that!he!was!the!owner!to!invalidate!the!transaction.!
action,!there!is!ordinarily!no!estoppel!(28!Am!Jur!2d!602!!603)!
Requisites:!(RKIA)! Art.*1436**Lessee*or*Bailee*Estopped*from*Asserting*Title*
1. There! must! have! been! a! representation! or! concealment! A!lessee!or!a!bailee!is!estopped!from!asserting!title!to!the!thing!leased!or!received,!
of!material!facts! as!against!the!lessor!or!bailor.!
2. The! representation! must! have! been! with! knowledge! of!
the!facts! Both! the! lessee! and! the! bailee! are! not! the! owner.! They! merely! enjoy!
3. The!party!to!whom!it!was!made!must!have!been!ignorant! possession!of!the!property!or!thing!leased!or!loaned.!
of!the!truth!of!the!matter!!
4. It!must!have!been!made!with!the!intention!that!the!other!
Art.*1437**Estoppel*in*Contracts*where*One*Party*is*Mislead*
party!would!act!upon!it!
When!in!a!contract!between!third!persons!concerning!immovable!property,!one!of!
2. Equitable* Estoppel* or* Estoppel* in* pais! ! situation! where! the! party! is!
them!is!misled!by!a!person!with!respect!to!the!ownership!or!real!right!over!the!real!
denied! the! right! to! plead! or! prove! a! fact! because! of! his! own! act! or!
estate,! the! latter! is! precluded! from! asserting! his! legal! title! or! interest! therein,!
omission!
provided!all!these!requisites!are!present:!
Rests! on! the! facts! and! circumstance! of! the! case! in! which! it! is!
urged! (1)! There! must! be! fraudulent! representation! or! wrongful! concealment! of! facts!
Requisites:!(CIK)! known!to!the!party!estopped;!
1. Conduct! amounting! to! false! representation! or! (2)! The! party! precluded! must! intend! that! the! other! should! act! upon! the! facts! as!
concealment! of! material! facts! or! at! least! calculated! to! misrepresented;!
convey! the! impression! that! the! party! subsequently! (3)!The!party!misled!must!have!been!unaware!of!the!true!facts;!and!
attempts!to!assert! (4)!The!party!defrauded!must!have!acted!in!accordance!with!the!misrepresentation.!
2. Intent,! or! at! least! expectation! that! this! conduct! shall! be!
acted!upon,!or!at!least!influenced!by!the!other!party! Ex.! A! leased! the! apartment! of! B.! Said! contract! of! lease! gave! A! preferential!
3. Knowledge,!actual!or!constructive,!of!the!actual!facts! right!to!buy!the!apartment!in!case!B!decides!to!sell.!!
99!
!
A!approaches!X!and!misrepresented!that!the!former!has!already!exercised!
his! preferential! right! to! buy! and! that! another! person,! Y,! is! interested! in!
Title*V**TRUSTS*
!What!is!a!Trust?!
buying! although! in! fact! there! is! none.! A! proposes! a! scheme! where! X! will!
purchase!said!apartment!from!A!and!then!sell!the!same!to!Y!for!a!higher!
Trust!in!its!technical!legal!sense,!it!is!the!right!enforceable!solely!in!equity,!
price.! Because! A! is! a! great! broker,! X! agrees! to! purchase.! B,! the! owner!
to!the!beneficial!enjoyment!of!property,!the!legal!title!of!which!is!vested!in!
ratified!the!sale.!
another.!
Later!on,!A!cannot!assert!a!claim!on!the!property!contending!that!the!sale! It!is!a!fiduciary!relationship!with!respect!to!property,!subjecting!the!person!
is!unenforceable!for!not!having!the!consent!of!the!true!owner,!B.! holding!it!to!deal!with!the!property!for!the!benefit!of!another!
Characteristic!of!a!Trust:!!
Art.*1438**Estoppel*where*Personal*Property*is*Pledged*
One!who!has!allowed!another!to!assume!apparent!ownership!of!personal!property! 1. Fiduciary!
for! the! purpose! of! making! any! transfer! of! it,! cannot,! if! he! received! the! sum! for! 2. Created!by!law!or!agreement!
which! a! pledge! has! been! constituted,! set! up! his! own! title! to! defeat! the! pledge! of! 3. Where!the!legal!title!is!held!by!one,!the!equitable!title!or!beneficial!title!is!
the!property,!made!by!the!other!to!a!pledgee!who!received!the!same!in!good!faith! held!by!another!
and!for!value.!
Kinds!of!Trust:!
Ex.! P! owns! a! BMW! but! does! not! want! to! be! known! as! the! owner.! He! tells!
everybody! that! X! is! the! owner! and! even! gives! X! authority! to! sell,! TRUST*
encumber,!or!alienate!said!BMW.!X!knows!this!and!goes!along.!! EXPRESS* IMPLIED*
Intention! is! expressly! present;! the! Intention! is! not! expressly! present,!
Later,!P!instructs!X!to!pledge!the!BMW!as!collateral!for!a!loan!from!Y.!The! intent! is! created! by! the! direct! and! but!it!is!deducible!from!the!nature!
money! goes! to! P.! On! due! date,! Y! warned! X! of! foreclosure! in! case! of! non! positive! acts! of! the! parties,! some! of!the!transaction!(resulting(trust);!
payment.!P!cannot!resist!the!foreclosure!by!claiming!that!the!pledge!of!the! writing! or! deed! or! will! or! words! the!law!may!also!induce!the!intent!
BMW!is!invalid!because!X!is!not!the!actual!owner.!P!is!estopped.! evidencing! the! intention! to! create! a! in! the! transaction! and! thus,! this!
trust.! kind!of!trust!works!by!operation!of!
Art.*1439**Between*Parties*and*Successors*in*Interest* No!form!is!required!for!the!words.! law!(constructive(trust).!
Estoppel! is! effective! only! as! between! the! parties! thereto! or! their! successors! in! Trusts! over! immovable! property! May!be!barred!by!laches.!
interest.!! cannot!be!proved!by!oral!evidence.! May!be!proved!by!oral!evidence.!
! !
Estoppel! does! not! operate! in! favour! nor! against! a! stranger! (persons! who! Prescription:( 2(kinds:(
are!neither!parties!not!privies!to!the!transaction!out!of!which!the!estoppel! GR:* The! trustee! cannot! acquire! the! 1. Resulting*Trust:*
arose).! thing!in!trust!by!prescription! o Intent! is! presumed( to! be!
Castrillo( v.( CA( ( The! SC! did! not! permit! the! heirs! to! assail! the! validity! of! EXC:* contemplated!by!the!parties.!
estoppel! because! it! is! only! the! person! against! whom! it! may! be! invoked! 1. The! trustee! has! performed! o Imprescriptible,!as!long!as!the!
who!is!allowed!to!assail!it.!! unequivocal!acts!of!repudiation! trustee!has!not!repudiated!the!
2. Such!acts!were!made!known!to!the! trust.!
! beneficiary! 2. Constructive*trust:*
3. The! evidence! thereon! us! clear! and! o No! intention! presumed! from!
conclusive! any! of! the! acts! of! the! parties,!
100!
!
! but! is! a! mere! construction! of! Kinds!of!Trust:!
Acceptance(of(Trust( equity.! 1. Express*Trust**those!which!are!created!by!the!direct!and!positive!acts!of!
A. Trustee:* Not! necessary,! unless! the! o Prescription!may!supervene.! the!parties,!by!some!writing!or!deed,!or!will,!or!by!words!either!expressly!
appointment! of! such! trustee! is! o Substantially! an! appropriate! or!impliedly!evincing!an!intention!to!create!a!trust.!!
material! and! is! provided! in! the! remedy! against! unjust! 2. Implied*Trust*!those!which,!without!being!expressed,!are!deducible!from!
instrument!constituting!the!trust.!In( enrichment.! the!nature!of!the!transaction!as!matters!of!intent,!or!which!are!
case( the! trustee! refuses! to! accept,! ! superinduced!on!the!transaction!by!operation!of!law!as!matters!of!equity,!
the!court!will!appoint!a!trustee! Examples! of! implied! trust! in! the! independently!of!the!particular!intention!to!create!a!trust;!two!kinds:!
! provisions!below!are!not!exclusive.! a. Resulting*Trust**a!trust!raised!by!implication!of!law!and!
B. Beneficiary:* It! is! necessary.! Such! Also,!even!if!a!trust!takes!the!form! presumed!always!to!have!been!contemplated!by!the!parties,!the!
acceptance! will! be! presumed( in! of! any! of! the! provisions! under! intention!as!to!which!is!to!be!found!in!the!nature!!of!their!
cases! where! the! trust! imposes! no! implied! trust,! it! will! be! considered! transaction,!but!not!expressed!in!the!deed!or!instrument!of!
onerous! condition! to! the! an!express!trust!if!there!is!express! conveyance.!!
beneficiary.! intention!of!the!trustor!to!create!a! o Simply,!it!is!imposed!by!law!to!carry!out!the!actual!or!
! trust.! presumed!intent!of!the!parties,!where!the!express!trust!
! fails.!!
! o Articles!1448!!1455!are!Resulting!trusts.!
b. Constructive*Trust**trusts!arising!from!the!construction!of!law,!or!
Chapter*1:*General*Provisions* arising!by!operation!of!law.!It!is!established!by!law,!regardless!of!
intention!of!parties,!in!order!to!prevent!fraud,!oppression!or!
unjust!enrichment.!
Art.*1440**Trustor,*Trustee*and*Beneficiary*
A! person! who! establishes! a! trust! is! called! the! trustor;! one! in! whom! confidence! is! Rules!on!Prescription!of!Express!Trust:!
reposed! as! regards! property! for! the! benefit! of! another! person! is! known! as! the! Express!trusts!do!not!prescribe!because!possession!of!trustee!is!not!
trustee;!and!the!person!for!whose!benefit!the!trust!has!been!created!is!referred!to! adverse.!Thus:!
as!the!beneficiary.! o A!trustee!cannot!acquire!by!prescription!the!ownership!of!
property!entrusted!to!him!
Trustor**person!who!establishes!a!trust! o There!is!no!prescription!on!an!action!to!compel!a!trustee!to!
Trustee**person!in!whom!confidence!is!reposed!for!the!benefit!of!another! convey!property!registered!in!his!name!in!trust!for!the!benefit!of!
person! the!beneficiary!
Beneficiary* * person! for! whose! benefit! the! trust! has! been! created.! Also! o No!prescription!in!an!action!to!recover!property!held!by!a!person!
called!cestui(que(trust! in!trust!for!the!benefit!of!another!
o Property!held!in!trust!can!be!recovered!by!the!beneficiary!
Art.*1441**Kinds*of*Trusts* regardless!of!the!laps!of!time!!
Trusts!are!either!express!or!implied.!Express!trusts!are!created!by!the!intention!of! However,!acquisitive!prescription!may!bar!the!action!of!the!beneficiary!
the!trustor!or!of!the!parties.!Implied!trusts!come!into!being!by!operation!of!law.! against!the!trustee!in!an!express!trust!for!the!recovery!of!the!property!held!
in!trust!where:!
! o The!trustee!has!performed!unequivocal!acts!of!repudiation!
! amounting!to!an!ouster!of!the!beneficiary!
!
101!
!
o Such!positive!acts!of!repudiation!have!been!made!known!to!the! Art.*1445**When*Trustee*Declines*Designation*
beneficiary! No! trust! shall! fail! because! the! trustee! appointed! declines! the! designation,! unless!
o The!evidence!thereon!is!clear!and!conclusive! the!contrary!should!appear!in!the!instrument!constituting!the!trust.!
Rules!on!Prescription!of!Implied!Trust:!
For!Resulting*Trust,*imprescriptibility!may!apply!as!long!as!the!trustee!has! In!case!of!refusal!to!accept!the!trust!by!the!trustee,!the!court!will!appoint!a!
not!repudiated!the!trust.! trustee.!
Constructive*Trust*prescribes.!! If! the! appointment! of! the! trustee! is! a! material! provision,! the! trustor! can!
provide!that!a!refusal!of!the!trustee!to!accept!the!trust!shall!result!in!the!
The!enforcement!of!both!may,!however,!be!barred!by!laches.!
failure!or!nullification!of!the!same.!
Art.*1442**Application*of*the*Principles*of*the*General*Law*of*Trusts*
The! principles! of! the! general! law! of! trusts,! insofar! as! they! are! not! in! conflict! with!
Art.*1446**Acceptance*by*the*Beneficiary*
Acceptance! by! the! beneficiary! is! necessary.! Nevertheless,! if! the! trust! imposes! no!
this! Code,! the! Code! of! Commerce,! the! Rules! of! Court! and! special! laws! are! hereby!
onerous!condition!upon!the!beneficiary,!his!acceptance!shall!be!presumed,!if!there!
adopted.!!!
is!no!proof!to!the!contrary.!!
Chapter*2:*Express*Trusts* If! there! is! no! onerous! condition,! the! law! presumes! acceptance! unless!
there!is!proof!to!the!contrary.!
Art.*1443**Immovable*Cannot*be*Proven*by*Parol*Evidence* o Thus,! when! the! beneficiary! is! required! to! perform! something! to!
No!express!trusts!concerning!an!immovable!or!any!interest!therein!may!be!proved! make! the! trust! effective,! there! is! an! onerous! condition.!
by!parol!evidence.! Beneficiary!needs!to!accept.!
o If! there! is! no! such! condition,! the! trust! is! a! liberality! or! gratuity!
Parole!evidence!refers!to!oral(evidence! and!acceptance!is!presumed.!!
Pascual(v.(Meneses((To!prove!an!express!trust!over!immovable!properties! This!presumption!is!rebuttable!by!proof!to!the!contrary.!
or! any! interest! therein,! there! must! be! a! showing! of! some! document!
proving!the!same.! Chapter*3:*Implied*Trusts*
Ramos( v.( Ramos( ( A! trust! may! be! proven! by! clear,! satisfactory,! and!
convincing!evidence.! Art.*1447**Application*of*Implied*Trusts*Enumerated*
The! enumeration! of! the! following! cases! of! implied! trust! does! not! exclude! others!
Art.*1444**No*Words*Required* established!by!the!general!law!of!trust,!but!the!limitation!laid!down!in!Article!1442!
No! particular! words! are! required! for! the! creation! of! an! express! trust,! it! being! shall!be!applicable.!
sufficient!that!a!trust!is!clearly!intended.!
The!situations!giving!rise!to!implied!trust!provided!under!this!chapter!are!
Cuaycong( v.( Cuaycong( ( No! form! is! required,! for! as! long! as! the! intent! to! not!exclusive.!
establish! trust! is! very! clear! from! the! proofs,! whether! by! some! writing! or! Even!if!the!situation!falls!under!any!of!the!provisions!of!this!chapter,!it!will!
deed!or!will!or!by!words.!! be! considered! an! express! trust! if! there! is! an! express! intention! of! the!
trustor!to!create!a!trust.!
! An!implied!trust!is!not!created!when!the!purpose!is!to!evade!the!law.!
!
102!
!
o Saltiga(v.(CA((trust!will!not!be!created!when!for!the!purpose!of! of!the!debt,!a!trust!arises!by!operation!of!law!in!favor!of!the!person!to!whom!the!
evading! the! law! prohibiting! one! from! taking! real! property,! he! money!is!loaned!or!for!whom!its!is!paid.!The!latter!may!redeem!the!property!and!
rd
takes!conveyance!thereof!in!the!name!of!a!3 !person.! compel!a!conveyance!thereof!to!him.!
The!principles!of!general!law!of!trust,!in!so!far!as!they!are!not!contrary!to!
the! Civil! Code,! Code! of! Commerce,! Rules! of! Court,! and! special! laws! are! Ex.! A!wants!to!buy!land!from!B!but!A!has!no!money.!So!A!asks!C!to!pay!for!the!
applicable!as!limitations!to!implied!trust.! land.!The!land!is!then!given!in!Cs!name.!This!is!supposed!to!be!Cs!security!
o Policarpio( v.( CA( ( an! implied! trust! is! created! when! a! until!the!debt!of!A!is!paid.!Here,!an!implied!trust!is!created.!C!is!a!trustee!
representative!is!tasked!to!negotiate!the!sale!of!an!apartment!on! and! the! beneficiary! is! A.! When! A! has! the! money,! he! may! redeem! the!
behalf! of! the! tenants.! When! such! representative! buys! the! property!from!C!and!compel!a!conveyance!to!A!
apartment! for! himself! to! the! detriment! of! the! tenants,! the!
implied!trust!is!breached.! NOTE:!! This! is! not! the! same! as! mortgage.! Mortgage! is! when! A! borrows! money!
from!C!and!A!later!buys!land!in!his!own!name.!A!then!executes!a!mortgage!
Art.*1448**When*a*Third*Party*Pays*for*a*Property** on!the!land!in!favor!of!C.!This!is!not!an!implied!trust.!
There! is! an! implied! trust! when! property! is! sold,! and! the! legal! estate! is! granted! to!
one!party!but!the!price!is!paid!by!another!for!the!purpose!of!having!the!beneficial! Art.*1451**When*Land*Passes*by*Succession*
interest! of! the! property.! The! former! is! the! trustee,! while! the! latter! is! the! When! land! passes! by! succession! to! any! person! and! he! causes! the! legal! title! to! be!
beneficiary.! However,! if! the! person! to! whom! the! title! is! conveyed! is! a! child,! put! in! the! name! of! another,! a! trust! is! established! by! implication! of! law! for! the!
legitimate!or!illegitimate,!of!the!one!paying!the!price!of!the!sale,!no!trust!is!implied! benefit!of!the!true!owner.!
by!law,!it!being!disputably!presumed!that!there!is!a!gift!in!favor!of!the!child.!
Ex.! B!is!the!only!compulsory!heir!of!M!who!dies.!After!payment!of!the!debts!of!
Ex.! A!sold!his!share!of!stock!to!B.!While!it!is!in!the!name!of!B,!it!is!X!who!pays! M,!the!net!estate!will!go!to!B.!However,!if!B!causes!the!title!to!the!estate!to!
for!the!stocks!such!that!X!is!the!one!who!receives!the!dividends.!There!is! be!placed!in!the!name!of!X,!an!implied!trust!is!created!for!the!benefit!of!B.!!
an!implied!trust;!B!is!the!trustee!and!X!is!the!beneficiary.!!
Art.*1452**When*Legal*Title*is*Named*after*One*of*Many*Purchasers*
If!B!is!the!legitimate!or!illegitimate!child!of!X,!no!trust!is!implied!by!law,!it! If! two! or! more! persons! agree! to! purchase! property! and! by! common! consent! the!
being!disputably!presumed!that!a!gift!has!been!made!to!B!by!X.!! legal!title!is!taken!in!the!name!of!one!of!them!for!the!benefit!of!all,!a!trust!is!created!
by!force!of!law!in!favor!of!the!others!in!proportion!to!the!interest!of!each.!
Art.*1449**When*a*Donation*is*Made*but*Donee*has*Partial*Interest*
There!is!also!an!implied!trust!when!a!donation!is!made!to!a!person!but!it!appears! Ex.!! A,! B! and! C! are! co+owners! of! a! particular! land! with! a! clubhouse! in! equal!
that!although!the!legal!estate!is!transmitted!to!the!donee,!he!nevertheless!is!either! parts! but,! by! agreement! of! all! of! them,! the! whole! of! the! property! is!
to!have!no!beneficial!interest!or!only!a!part!thereof.! registered! under! the! name! only! of! C.! In! this! case,! C! is! the! trustee! of! the!
respective!1/3!shares!of!A!and!B.!C!is!the!trustee!for!the!other!co+owners.!
Ex.! A!donated!to!B!a!lot!and!the!apartment!on!it.!Despite!this,!B!still!has!to!pay! Thus!when!the!clubhouse!is!rented,!C!is!obliged!to!make!proper!accounting!
rentals!to!for!the!apartment!to!A.!This!is!an!implied!trust!where!the!trustee! for!profit!sharing!as!he!is!merely!a!trustee.!!!
is!the!donee!and!the!beneficiary!is!the!donor.!
Art.*1453**When*Property*is*Conveyed*to*Hold*or*Transfer*
Art.*1450**When*a*Person*Acquires*Property*through*a*Loan* When! property! is! conveyed! to! a! person! in! reliance! upon! his! declared! intention! to!
If!the!price!of!a!sale!of!property!is!loaned!or!paid!by!one!person!for!the!benefit!of! hold!it!for,!or!transfer!it!to!another!or!the!grantor,!there!is!an!implied!trust!in!favor!
another!and!the!conveyance!is!made!to!the!lender!or!payor!to!secure!the!payment! of!the!person!whose!benefit!is!contemplated.!
103!
!
Ex.! A!told!B!(the!seller)!that!the!property!should!be!in!his!(A)!name!because!he! Art.*1457**May*be*Proved*by*Oral*Evidence*
shall! only! hold! it! for! the! benefit! of! X,! the! real! owner.! An! implied! trust! is! An!implied!trust!may!be!proved!by!oral!evidence.!
created!in!favour!of!X.!!
Because! it! is! deducible! from! the! nature! of! the! transaction! as! matters! of!
Art.*1454**When*Property*is*Conveyed*to*Fulfill*an*Obligation* intent!or!which!are!superinduced!on!the!transaction!by!operation!of!law,!
If!an!absolute!conveyance!of!property!is!made!in!order!to!secure!the!performance! independently!of!the!particular!intention!of!the!parties.!!
of! an! obligation! of! the! grantor! toward! the! grantee,! a! trust! by! virtue! of! law! is!
established.! If! the! fulfillment! of! the! obligation! is! offered! by! the! grantor! when! it!
becomes!due,!he!may!demand!the!reconveyance!of!the!property!to!him.!
*
Title*XVII**EXTRA7CONTRACTUAL*OBLIGATIONS*
Ex.!! A! is! indebted! to! B.! A! conveyed! a! particular! property! to! B! to! secure! such! !!
indebtedness.! B! holds! the! property! only! in! trust! for! A.! B! is! the! trustee.!
Upon!payment!by!A,!he!can!demand!that!the!property!be!returned.!! Chapter*1:*Quasi7Contracts*
Art.*1455**When*Trust*Fund*is*Used*to*Purchase*Property*
When! any! trustee,! guardian! or! other! person! holding! a! fiduciary! relationship! uses! **Art.*2142**Quasi7Contracts*Defined*
trust!funds!for!the!purchase!of!property!and!causes!the!conveyance!to!be!made!to! Certain! lawful,! voluntary! and! unilateral! acts! give! rise! to! the! juridical! relation! of!
him!or!to!a!third!person,!a!trust!is!established!by!operation!of!law!in!favor!of! the! quasi+contract!to!the!end!that!no!one!shall!be!unjustly!enriched!or!benefited!at!the!
person!to!whom!the!funds!belong.! expense!of!another.!(n)!
Ex.!! X! created! a! trust! fund! for! the! benefit! of! A! of! which,! Y! is! the! trustee.! If! Y! A!quasi+contract!is!not!an!implied!contract.!
uses! the! fund! to! purchase! a! property! and! places! it! under! his! name! or! It!is!not!properly!a!contract!at!all!because!there!is!no!meeting!of!minds.!
under! the! name! of! Z! (a! third! person),! an! implied! trust! is! created! and! the! A! juridical! relation! is! created! by! a! quasi+contract! so! that! nobody! shall!
trustee!is!either!X!or!Z!and!the!trust!is!in!favor!of!Z.!! enrich!himself!at!the!expense!of!another.!
NOTE:! Acquisition! by! an! agent! inures! to! the! benefit! of! the! principal.! Severino( v.( Art.*2143**Other*Quasi7Contracts*
Severino( The! provisions! for! quasi+contracts! in! this! Chapter! do! not! exclude! other! quasi+
contracts!which!may!come!within!the!purview!of!the!preceding!article.!(n)!!
Art.*1456**When*Property*is*Acquired*through*Mistake*or*Fraud*
If!property!is!acquired!through!mistake!or!fraud,!the!person!obtaining!it!is,!by!force! This! article! provides! that! the! number! of! quasi+contracts! is! indefinite! and!
of!law,!considered!a!trustee!of!an!implied!trust!for!the!benefit!of!the!person!from! not!only!confined!to!the!two!kinds!specified!by!the!Civil!Code!in!Section!1!
whom!the!property!comes.! and!2!of!this!Chapter.!*
*
Ex.!! X! fraudulently! made! Y! sign! an! alleged! loan! agreement! which! actually! Two!obligations!treated!in!the!chapter!devoted!to!Quasi+contracts:!
turned!out!to!be!an!absolute!sale!of!Xs!property.!The!sale!is!voidable!and!a! 1. Negotiorum* Gestio* * the! voluntary! management! of! the! property! or!
trust! is! deemed! created! by! force! of! law.! The! trustee! is! X! and! is! merely! affairs!of!another!without!the!knowledge!or!consent!of!the!latter.!
holding!the!property!for!the!benefit!of!X.! 2. Solutio* Indebiti* * the! juridical! relation! which! is! created! when!
something!is!received!when!there!is!no!right!to!demand!it!and!it!was!
NOTE:! This!refers!to!mistake!by!a!third!person!and!fraud!is!extra+contractual! unduly!delivered!through!mistake.!
104!
!
Section!1!!Negotiorum!Gestio! The! courts! may,! however,! increase! or! moderate! the! indemnity! according! to! the!
circumstances!of!each!case.!(1889a)!
Art.*2144**Negotiorum*Gestio*Defined*and*Its*Exceptions* An! officious! manager! is! in! a! sense! an! intruder! in! the! business! or! that!
Whoever!voluntarily!takes!charge!of!the!agency!or!management!of!the!business!or! property!of!the!owner.!
property!of!another,!without!any!power!from!the!latter,!is!obliged!to!continue!the!
However,!if!his!intrusion!is!with!the!objective!of!preserving,!managing,!and!
same!until!the!termination!of!the!affair!and!its!incidents,!or!to!require!the!person!
taking!care!of!the!property!without!any!intent!to!gain,!a!quasi+contract!is!
concerned! to! substitute! him,! if! the! owner! is! in! a! position! to! do! so.! This! juridical!
created.!
relation!does!not!arise!in!either!of!these!instances:!
Ordinary! diligence! is! required! by! law;! once! quasi+contract! is! created,! he!
(1)!When!the!property!or!business!is!not!neglected!or!abandoned;! cannot!escape!liability!if!the!owner!suffers!damages!due!to!negligence!or!
(2)!If!in!fact!the!manager!has!been!tacitly!authorized!by!the!owner.! fault.!
In! the! first! case,! the! provisions! of! Articles! 1317,! 1403,! No.! 1,! and! 1404! regarding! Art.*2146**Liability*of*Officious*Manager*upon*Delegation*
unauthorized!contracts!shall!govern.! If! the! officious! manager! delegates! to! another! person! all! or! some! of! his! duties,! he!
shall!be!liable!for!the!acts!of!the!delegate,!without!prejudice!to!the!direct!obligation!
In! the! second! case,! the! rules! on! agency! in! Title! X! of! this! Book! shall! be! applicable.! of!the!latter!toward!the!owner!of!the!business.!
(1888a)!
The! responsibility! of! two! or! more! officious! managers! shall! be! solidary,! unless! the!
Negotiorum*Gestio(!a!quasi+contract!which!should!not!be!performed!for! management! was! assumed! to! save! the! thing! or! business! from! imminent! danger.!
profit! (1890a)!
Circumstances! under! which! one! may! undertake! to! carry! out! a! business!
matter!for!another:! The!liability!of!two!or!more!officious!managers!is!solidary;!the!owner!may!
1. They!relate!to!determined!things!or!affairs,!and!that!there!be!no! seek!full!payment!of!damages!from!anyone!of!them.!
administrator!or!representative!of!the!owner!who!is!charged!with!
the!management!thereof.! Art.*2147**When*Officious*Manager*shall*be*Liable*for*Fortuitous*Event*
2. That! it! be! foreign! to! all! idea! of! express! or! tacit! mandate! on! the! The!officious!manager!shall!be!liable!for!any!fortuitous!event:!
part!of!the!owner,!for!it!very!often!may!happen!even!without!his!
knowledge.! (1)! If! he! undertakes! risky! operations! which! the! owner! was! not! accustomed! to!
3. That! the! actor! be! inspired! by! the! beneficent! idea! of! averting! embark!upon;!
losses! and! damages! to! the! owner! or! to! the! interested! party! (2)!If!he!has!preferred!his!own!interest!to!that!of!the!owner;!
through!abandonment!of!the!things!that!belong!to!him!or!of!the! (3)!If!he!fails!to!return!the!property!or!business!after!demand!by!the!owner;!
business!in!which!he!may!be!interested,!that!is,!the!administration! (4)!If!he!assumed!the!management!in!bad!faith.!(1891a)!
is!not!for!profit.!
Art.*2148**Liability*for*Fortuitous*Event*as*to*Managers*Capacity**
Art.*2145**Diligence*Required*of*an*Officious*Manager* Except! when! the! management! was! assumed! to! save! property! or! business! from!
The!officious!manager!shall!perform!his!duties!with!all!the!diligence!of!a!good!father! imminent!danger,!the!officious!manager!shall!be!liable!for!fortuitous!events:!
of! a! family,! and! pay! the! damages! which! through! his! fault! or! negligence! may! be!
(1)!If!he!is!manifestly!unfit!to!carry!on!the!management;!
suffered!by!the!owner!of!the!property!or!business!under!management.!
(2)!If!by!his!intervention!he!prevented!a!more!competent!person!from!taking!up!the!
management.!(n)*
105!
!
General*Rule**No!person!shall!be!liable!in!case!of!fortuitous!event.!! Art.*2150**Officious*Manager*Entitled*to*Reimbursement*
Exception**(1)*ARTICLE*2147* Although! the! officious! management! may! not! have! been! expressly! ratified,! the!
1. First* case:! The! business! is! simply! providing! a! warehouse! for! owner!of!the!property!or!business!who!enjoys!the!advantages!of!the!same!shall!be!
dolls,!the!officious!manger!stored!highly!flammable!materials! liable! for! obligations! incurred! in! his! interest,! and! shall! reimburse! the! officious!
2. Second* case:! same! business,! but! the! officious! manager! also! manager! for! the! necessary! and! useful! expenses! and! for! the! damages! which! the!
stored! some! of! his! goods! in! the! warehouse.! During! a! flood,! latter!may!have!suffered!in!the!performance!of!his!duties.!
he!chose!to!save!his!goods!first!before!that!of!the!owner,!the!
officious!manager!will!be!liable!for!the!loss! The!same!obligation!shall!be!incumbent!upon!him!when!the!management!had!for!
3. Third*case:!same!business,!but!the!officious!manager!did!not! its!purpose!the!prevention!of!an!imminent!and!manifest!loss,!although!no!benefit!
return! the! warehouse! despite! demand! by! owner.! The! may!have!been!derived.!(1893)!
warehouse!is!destroyed!by!an!earthquake!and!so!the!officious!
manager! will! be! held! liable! for! his! act! of! unduly! retaining! Art.*2151**Reimbursement*when*there*is*No*Benefit*or*Danger*
what!is!not!his.! Even!though!the!owner!did!not!derive!any!benefit!and!there!has!been!no!imminent!
4. Fourth* case:! same! business,! but! the! officious! manager! took! and!manifest!danger!to!the!property!or!business,!the!owner!is!liable!as!under!the!
over!in!bad!faith!such!as!when!he!does!so!to!get!the!clients!of! first!paragraph!of!the!preceding!article,!provided:!
the! owner! for! his! (officious! managers)! own! warehousing!
business.! (1)!The!officious!manager!has!acted!in!good!faith,!and!
(2)*ARTICLE*2148* (2)!The!property!or!business!is!intact,!ready!to!be!returned!to!the!owner.!(n)!
1. First* case:* A! farmer! takes! over! a! Nuclear! Power! plant!!
business!of!another! General*Rule**Reimbursement!is!required!when!(Art.!2150):!
2. Second* case:* Such! farmer! prevents! another! person! who! is! a! 1. When!owner!is!benefited!by!officious!management!of!property!or!business!
nuclear! scientist! from! taking! over! the! Nuclear! Power! plant! Ex.! The! manager! pays! taxes! on! the! property! so! that! it! will! not! be!
business.! foreclosed,! owner! must! reimburse! payment! made! by! officious!
o EXC*to*2148:*When! management! was! assumed! to! manager.!
save! property! or! business! from! imminent! danger! 2. When!officious!management!is!made!to!prevent!loss!
such!as!when!the!farmer!enters!the!Nuclear!Plant!in! Ex.! A!is!the!neighbor!of!B.!One!day,!Bs!kitchen!was!on!fire.!A!entered!
order!to!avert!a!meltdown.! the! house! and! extinguished! the! fire! using! his! (As)! fire!
! extinguisher.!B!is!obliged!to!reimburse!A!for!the!fire!price!of!the!
! fire!extinguisher!used.!!
! Exception:* Benefit! or! imminent! danger! is! not! required! when! the! manager!
Art.*2149**Ratification*of*Owner*results*to*Agency* acted! in! good! faith! and! the! business! is! intact,! ready! to! be! returned! to! the!
The! ratification! of! the! management! by! the! owner! of! the! business! produces! the! owner!(Art.!2151).!
effects! of! an! express! agency,! even! if! the! business! may! not! have! been! successful.!
(1892a)! Art.*2152*Officious*Manager*as*to*Contracts*with*Third*Persons*
The! officious! manager! is! personally! liable! for! contracts! which! he! has! entered! into!
When! the! owner! ratifies! management,! the! manager! becomes! the! agent! with!third!persons,!even!though!he!acted!in!the!name!of!the!owner,!and!there!shall!
and!all!the!defects!made!by!the!latter!are!cured.! be!no!right!of!action!between!the!owner!and!third!persons.!These!provisions!shall!
! not!apply:!
(1)!If!the!owner!has!expressly!or!tacitly!ratified!the!management,!or!
106!
!
(2)!When!the!contract!refers!to!things!pertaining!to!the!owner!of!the!business.!(n)! Prescriptive!period!is!6!years.!
rd
!General*Rule*77*Officious!manager!is!liable!for!contracts!entered!with!3 !persons.! Art.*2155**Applicable*to*Doubtful*or*Difficult*Question*of*Law*
Thus,!when!the!manager!buys!a!photocopying!machine,!he!is!liable.! Payment!by!reason!of!a!mistake!in!the!construction!or!application!of!a!doubtful!or!
difficult!question!of!law!may!come!within!the!scope!of!the!preceding!article.!(n)!
Exceptions* * (1)* When! the! owner! ratifies! management! in! which! case!
manager! becomes! agent! and! (2)* When! the! contract! refers! to! things! Genearal*Rule!!Solutio(Indebiti(involves!only!a!mistake!of!fact!
pertaining! to! the! business.! Thus,! where! the! owner! is! engaged! in!
photocopying! business,! the! purchase! of! photocopying! machine! must! be! Exception!!A!mistake!of!law!is!allowed!if!the!mistake!is!brought!about!by!
shouldered!by!the!owner.!! the!construction!or!application!of!a!doubtful!or!difficult!question!of!law!
Puyat(v.(Manila((There!is!solutio(indebiti!when!tax!is!paid!by!mistake!due!
Art.*2154**The*management*is*extinguished:* to! complicated! correlation! and! application! of! various! municipal! and!
(1)!When!the!owner!repudiates!it!or!puts!an!end!thereto;! national!laws.!Voluntariness!is!incompatible!with!protest!and!mistake.!
(2)! When! the! officious! manager! withdraws! from! the! management,! subject! to! the!
provisions!of!Article!2144;!
Art.*2156**Doubt*on*whether*the*Debt*was*Due*
(3)! By! the! death,! civil! interdiction,! insanity! or! insolvency! of! the! owner! or! the!
If!the!payer!was!in!doubt!whether!the!debt!was!due,!he!may!recover!if!he!proves!
officious!manager.!(n)!
that!it!was!not!due.!(n)!
!
Ex.!! A!debtor!can!recover!what!he!has!paid!prior!to!the!due!date!provided!that!
1. Benedicto( v.( Board( of( Administrators( ( The! PCGG! may! not! lawfully!
the! demand! for! reimbursement! is! not! made! after! the! debt! has! become!
intervene! and! participate! in! the! management! of! a! private! mass! media!
due.!
where!the!owner!demands!the!return!of!the!same.!!
2. The! officious! manager! can! withdraw! from! the! property! only! after!
substitution,! otherwise! he! may! only! withdraw! upon! termination! of! the! Art.*2157**Solidary*Responsibility*of*Two*or*More*Payees*
affair!and!its!incidents!pursuant!to!Article!2144.! The!responsibility!of!two!or!more!payees,!when!there!has!been!payment!of!what!is!
3. Death,! civil! interdiction,! insanity! or! insolvency! incapacitates! the! officious! not!due,!is!solidary.!(n)!
manager!or!owner.!!
Ex.!! A!owes!B!and!C!2,000!who!are!solidary!creditors.!A!pays!B!2,000!before!
Section!2!!Solutio!Indebiti! due!date.!A!can!recover!from!B!or!C!the!amount!he!has!paid!(even!if!C!has!
not!yet!received!his!share!of!the!2,000)!provided!demand!is!made!before!
debt!becomes!due.!
Art.*2154**Solutio*Indebiti*Defined*
If! something! is! received! when! there! is! no! right! to! demand! it,! and! it! was! unduly! Art.*2158**Property*or*Money*Delivered*Belongs*to*Third*Person*
delivered!through!mistake,!the!obligation!to!return!it!arises.!(1895)! When! the! property! delivered! or! money! paid! belongs! to! a! third! person,! the! payee!
shall!comply!with!the!provisions!of!article!1984.!(n)!
Requisites*(N7M):!
o That!he!who!paid!was!not*under*obligation!to!do!so! Art.*2159**Acceptance*of*Undue*Payment*in*Bad*Faith*
o That!payment!was!made!by!reason!of!an!essential!mistake*of*fact!
Principles! of! equity! cannot! be! applied! if! there! is! a! provision! of! law!
specifically!applicable!to!a!case.!
107!
!
Whoever!in!bad!faith!accepts!an!undue!payment,!shall!pay!legal!interest!if!a!sum!of! Ex.! A! is! indebted! to! B! in! the! amount! of! 1,000.! It! is! an! oral! contract! which!
money!is!involved,!or!shall!be!liable!for!fruits!received!or!which!should!have!been! prescribes!in!6!years.!X!is!the!guarantor!of!the!loan!and!is!liable!to!pay!the!
received!if!the!thing!produces!fruits.! 1,000!only!when!B!has!exhausted!all!means!to!collect!from!A.!!
th
He! shall! furthermore! be! answerable! for! any! loss! or! impairment! of! the! thing! from! Believing!that!he!is!principally!liable,!X!pays!on!the!5 !year!and!B!accepts!
any! cause,! and! for! damages! to! the! person! who! delivered! the! thing,! until! it! is! the!payment!in!good!faith.!After!the!lapse!of!the!6!year!prescriptive!period,!
recovered.!(1896a)! X!may!not!recover!from!B!what!he!has!paid!by!mistake.!Instead,!X!can!only!
recover!from!A!the!1,000!who!was!the!original!debtor.!!
Ex.! If! the! creditor! knows! that! payment! is! not! yet! due,! yet! he! accepted! such!
without!informing!the!debtor!that!it!is!not!yet!due,!he!is!therefore!in!bad! Art.*2163**Presumed*Mistake*
faith!and!shall!be!liable!for!interest!from!the!time!he!accepts!payment!up! It! is! presumed! that! there! was! a! mistake! in! the! payment! if! something! which! had!
to!the!time!he!returns!it!upon!demand!of!the!debtor.! never! been! due! or! had! already! been! paid! was! delivered;! but! he! from! whom! the!
return!is!claimed!may!prove!that!the!delivery!was!made!out!of!liberality!or!for!any!
Art.*2160**Acceptance*of*Undue*Payment*in*Good*Faith* other!just!cause.!(1901)!!
He!who!in!good!faith!accepts!an!undue!payment!of!a!thing!certain!and!determinate!
shall!only!be!responsible!for!the!impairment!or!loss!of!the!same!or!its!accessories! Ex.!! The! person! to! whom! the! payment! has! been! made! can! show! that! such!
and!accessions!insofar!as!he!has!thereby!been!benefited.!If!he!has!alienated!it,!he! payment!is!a!gift!or!a!donation!by!showing!the!proper!evidence!like!a!valid!
shall!return!the!price!or!assign!the!action!to!collect!the!sum.!(1897)! deed!of!donation.!
Ex.! A! is! obliged! to! give! B! a! house! on! Dec.! 1.! Believing! it! was! due! on! July,! A! Section!3!!Other!Quasi+Contracts!
delivered!the!house.!B!likewise!did!not!know!that!the!house!is!only!due!on!
Dec.!1!and!accepted!it.!On!Sept.,!the!house!was!rented!but!the!kitchen!was! Art.*2164**Support*Given*by*a*Stranger*
accidently!burned.!On!Nov.,!A!discovered!that!the!delivery!was!not!yet!due! When,!without!the!knowledge!of!the!person!obliged!to!give!support,!it!is!given!by!a!
and!demandable!for!its!return.!B!can!return!the!house!and!pay!the!amount! stranger,!the!latter!shall!have!a!right!to!claim!the!same!from!the!former,!unless!it!
of!the!Kitchen!which!has!been!impaired,!because!B!has!been!benefited!by! appears!that!he!gave!it!out!of!piety!and!without!intention!of!being!repaid.!(1894a)!
the!house!when!it!had!been!rented.!
This!is!under!Article!206!of!the!Family!Code:!
!
When,!without!the!knowledge!of!the!person!obliged!to!give!support,!it!is!
Art.*2161**Reimbursement*for*Improvements*and*Expenses* given!by!a!stranger,!the!latter!shall!have!a!right!to!claim!the!same!from!the!
As! regards! the! reimbursement! for! improvements! and! expenses! incurred! by! him! former,! unless! it! appears! that! he! gave! it! without! the! intention! of! being!
who! unduly! received! the! thing,! the! provisions! of! Title! V! of! Book! II! shall! govern.! reimbursed.!
(1898)! De(Marcaida(v.(Redfern((For!one!to!recover!under!this,!it!must!be!alleged!
and!proved!that:!
Art.*2162**Exemption*from*Obligation*to*Restore* 1. Support! has! been! furnished! a! dependent! of! one! bound! to! give!
He!shall!be!exempt!from!the!obligation!to!restore!who,!believing!in!good!faith!that! support!but!who!fails!to!do!so!
the! payment! was! being! made! of! a! legitimate! and! subsisting! claim,! destroyed! the! 2. The!support!was!supplied!by!a!stranger!
document,!or!allowed!the!action!to!prescribe,!or!gave!up!the!pledges,!or!cancelled! 3. The! support! was! given! without! the! knowledge! of! the! person!
the!guaranties!for!his!right.!He!who!paid!unduly!may!proceed!only!against!the!true! charged!with!the!duty!
debtor!or!the!guarantors!with!regard!to!whom!the!action!is!still!effective.!(1899)!
108!
!
Art.*2165**Funeral*Expenses*Borne*by*a*Third*Person* refuses! to! support! or! fails! to! give! support! to! the! child! when! urgently!
When! funeral! expenses! are! borne! by! a! third! person,! without! the! knowledge! of! needed.!
those! relatives! who! were! obliged! to! give! support! to! the! deceased,! said! relatives!
shall!reimburse!the!third!person,!should!the!latter!claim!reimbursement.!(1894a)! Art.*2167**Services*Given*by*a*Physician*in*an*Accident*
When!through!an!accident!or!other!cause!a!person!is!injured!or!becomes!seriously!
The!following!are!obliged!to!support!each!other:! ill,! and! he! is! treated! or! helped! while! he! is! not! in! a! condition! to! give! consent! to! a!
1. Spouses! contract,!he!shall!be!liable!to!pay!for!the!services!of!the!physician!or!other!person!
2. Legitimate!ascendants!and!descendants! aiding!him,!unless!the!service!has!been!rendered!out!of!pure!generosity.!
3. Parents! and! their! legitimate! children,! and! the! legitimate! and! illegitimate!
children!of!the!latter! Ex.!! X! was! a! victim! of! a! hit+and+run! incident! and! is! seriously! injured.! He! is!
4. Parents!and!their!illegitimate!children,!and!the!legitimate!and!illegitimate! brought!to!the!hospital!and!needs!operation.!However!he!is!in!a!coma!and!
children!of!the!latter! cannot! give! consent.! Dr.! House! nevertheless! treats! his! injuries! lest! it!
5. Legitimate!brothers!and!sisters,!whether!full!or!half!blood! becomes!more!serious.!When!X!recovers,!he!has!the!obligation!to!pay!Dr.!
House!unless!the!latter!does!not!want!to!be!paid.!!
Whenever! two! or! more! persons! are! obliged! to! give! support,! the! liability! shall!
devolve!upon!the!following!persons!in!the!following!order:! Art.*2168**Property*is*Saved*from*Fire,*Flood,*Storm*or*Calamity*
1. Spouses! When! during! a! fire,! flood,! storm,! or! other! calamity,! property! is! saved! from!
2. Descendants!in!the!nearest!degree! destruction! by! another! person! without! the! knowledge! of! the! owner,! the! latter! is!
3. Ascendants!in!the!nearest!degree! bound!to!pay!the!former!just!compensation.!
4. Brothers!and!sisters!
Ex.! During!Ondoy,!The!village!where!Xs!house!is!located!began!flooding.!X!was!
Ex.!! A!was!the!son!of!X!and!Y.!A!died.!Z!shouldered!the!cost!of!the!funeral.!If!Z!did!
abroad!during!the!typhoon.!When!the!flood!reached!Xs!house,!Y!pushed!
this! as! an! act! of! charity,! X! and! Y! need! not! reimburse! him.! Otherwise,! Z! can!
the! car! of! the! former! to! higher! grounds! such! that! it! was! saved! from!
demand!payment!from!X!and!Y.!
destruction.! X! is! bound! to! pay! Y! just! compensation! unless! Y! does! not!
wasnt!to!accept!it.!
Art.*2166**Support*Given*to*an*Orphan,*Insane*or*Indigent*Person*
When! the! person! obliged! to! support! an! orphan,! or! an! insane! or! other! indigent!
Art.*2169**Government*Work*regarding*Health*and*Safety*Regulations*
person!unjustly!refuses!to!give!support!to!the!latter,!any!third!person!may!furnish!
When! the! government,! upon! the! failure! of! any! person! to! comply! with! health! or!
support! to! the! needy! individual,! with! right! of! reimbursement! from! the! person!
safety!regulations!concerning!property,!undertakes!to!do!the!necessary!work,!even!
obliged! to! give! support.! The! provisions! of! this! article! apply! when! the! father! or!
over!his!objection,!he!shall!be!liable!to!pay!the!expenses.!
mother!of!a!child!under!eighteen!years!of!age!unjustly!refuses!to!support!him.!
Ex.! An! ordinance! requires! residents! to! segregate! trash! into! recyclable! and!
This!has!been!adopted!by!Article!207!of!the!Family!Code:!
non+recyclable.!Mr.!X!refuses!to!comply!with!this!ordinance!and!throws!all!
When! the! person! obliged! to! support! another! unjustly! refuses! or! fails! to! his! trash! in! one! plastic! bag.! The! city! government! may! segregate! his! trash!
give! support! when! urgently! needed! by! the! latter,! any! third! person! may! and!provide!him!with!two!trash!cans!at!his!own!expense.!
furnish!support!of!the!needy!individual!with!a!right!of!reimbursement!from!
!
the! person! obliged! to! give! support.! This! article! shall! apply! particularly!
when!the!father!or!the!mother!of!a!child!under!the!age!of!majority!unjustly! !
109!
!
Art.*2170**Rules*of*Co7Ownership*in*Accident*or*Fortuitous*Event* Article* 1237.! Whoever! pays! on! behalf! of! the! debtor! without! the! knowledge! or!
When!by!accident!or!other!fortuitous!event,!movables!separately!pertaining!to!two! against! the! will! of! the! latter! cannot! compel! the! creditor! to! subrogate! him! in! his!
or! more! persons! are! commingled! or! confused,! the! rules! on! co+ownership! shall! be! rights,!such!as!those!arising!from!a!mortgage,!guaranty!or!penalty.!!
applicable.!
Art.*2174**Measures*for*Protection*Against*Lawlessness*
Ex.! Brothers! X! and! Y! each! bought! a! black! 32Gb! Ipad3.! Upon! reaching! their! When! in! a! small! community! a! nationality! of! the! inhabitants! of! age! decide! upon! a!
home! and! after! opening! the! boxes,! a! magnitude! 8.7! earthquake! hit! their! measure!for!protection!against!lawlessness,!fire,!flood,!storm!or!other!calamity,!any!
locality.! Luckily! both! of! them! survived! but! their! home! was! completely! one! who! objects! to! the! plan! and! refuses! to! contribute! to! the! expenses! but! is!
destroyed.! In! the! rubble,! they! found! two! Ipad3s! but! not! knowing! which! benefited! by! the! project! as! executed! shall! be! liable! to! pay! his! share! of! said!
belongs!to!whom,!the!rules!on!co+ownership!will!apply.!! expenses.!
Art.*2171**Finder*of*Lost*Property* Ex.! People! of! Barrio! X! decided! to! engage! in! a! security! force! to! protect! their!
The!rights!and!obligations!of!the!finder!of!lost!personal!property!shall!be!governed! community.! For! this! reason,! the! people! of! X! agreed! to! contribute! for! the!
by!Articles!719!and!720.! expenses! of! this! security! force.! Mr.! K! however! refused! to! make! any!
contribution.!In!the!event!the!security!force!apprehends!robbers!intending!
to!rob!the!house!of!Mr.!K,!he!should!pay!his!share!in!the!expenses!for!the!
Article* 719.! Whoever! finds! a! movable,! which! is! not! treasure,! must! return! it! to! its!
communitys!engagement!of!the!security!force!to!protect!the!people.!!
previous!possessor.!
Article*720.!If!the!owner!should!appear!in!time,!he!shall!be!obliged!to!pay!as!reward! Art.*2175**Person*Paying*for*Taxes*of*Another*
to!the!finder,!1/10!of!the!sum!or!of!the!price!of!the!thing!found.! Any! person! who! is! constrained! to! pay! the! taxes! of! another! shall! be! entitled! to!
reimbursement!from!the!latter.!
!
Ex.! X! who! pays! the! real! estate! taxes! of! G! (whose! land! will! be! forfeited! if! he!
Art.*2172**Right*to*Reimbursement*of*Possessor*in*Good*Faith* fails!to!pay!taxes)!must!be!reimbursed!by!the!latter.!
The! right! of! every! possessor! in! good! faith! to! reimbursement! for! necessary! and!
useful!expenses!is!governed!by!Article!546.! ! *
Art.*2173**Third*Person*Paying*a*Debt*
When! a! third! person,! without! the! knowledge! of! the! debtor,! pays! the! debt,! the!
rights!of!the!former!are!governed!by!Articles!1236!and!1237.!
Article* 1236.! The! creditor! is! not! bound! to! accept! payment! or! performance! by! a!
third!person!who!has!no!interest!in!the!fulfilment!of!the!obligation,!unless!there!is!a!
stipulation!to!the!contrary.!Whoever!pays!for!another!may!demand!from!the!debtor!
what!he!has!paid,!except!that!if!he!paid!without!the!knowledge!or!against!the!will!of!
the!debtor,!he!can!recover!only!insofar!as!the!payment!has!been!beneficial!to!the!
debtor.!
110!
!
Art.!1139!!Lapse!of!Time!
CODAL*MEMORY*AID* Art.!1140!!Prescription!of!Movables!
*
Art.!1141!!Prescription!of!Immovables!
TITLE.*IV.**PRESCRIPTION* Art.!1142!!Prescription!of!Mortgages!
Chapter*1:*General*Provisions* Art.!1143!!Rights!Not!Extinguished!by!Prescription!
Art.!1106!!Prescription!Defined! Art.!1144!!10!Years!
Art.!1107!!Acquisition!by!Capable!Persons!and!Minors! Art.!1145!!6!Years!
Art.!1108!!Persons!Exempt!from!Prescription! ! Art.!1146!!4!Years!
Art.!1109!!Between!Husband!and!Wife,!Children!and!Guardian! Art.!1147!!1!Year!
Art.!1110!!Married!Woman!
Art.!1148!!Code!of!Commerce!and!Special!Laws!
Art.!1111!!Co+Proprietor!or!Co+owner!
Art.!1149!!No!Fixed!Period!=!5!Years!
Art.!1112!!Renunciation! Art.!1150!!Prescription!for!All!Kinds!of!Actions!
Art.!1113!!Subjects!of!Prescription! Art.!1151!!Prescription!for!Actions!regarding!Payment!
Art.!1114!!Right!to!Enforce!Prescription! Art.!1152!!Prescription!of!Actions!declared!by!Judgment!
Art.!1115!!Special!Laws! Art.!1153!!Prescription!for!Accounting!
Art.!1116!!Transition! Art.!1154!!Fortuitous!Event!
Chapter*2:*Prescription*of*Ownership*and*Other*Real*Rights*
Art.!1155!!Interruption!of!Prescription!for!Actions!
Art.!1117!!Acquisitive!Prescription!
*
Art.!1118!!Possession!
TITLE.*I.*7*OBLIGATIONS*
Art.!1119!!Possession!through!License!or!Tolerance!
Chapter*1:*General*Provisions*
Art.!1120!!Interruption!
Art.!1156!!Definition!
Art.!1121!!Natural!Interruption!
Art.!1157!!Sources!of!Obligations!
Art.!1122!!One!Year!or!Less!
Art.!1158!!Obligations!from!Law!
Art.!1123!!Civil!Interruption!
Art.!1159!!Obligations!from!Contracts!
Art.!1124!!Judicial!Summons!
Art.!1160!!Obligations!from!Quasi!Contracts!
Art.!1125!!Possessors!Recognition!of!Owners!Right!
Art.!1161!!Obligations!from!Crimes!or!Delicts!
Art.!1126!!Titles!
Art.!1162!!Obligations!from!Quasi+delicts!
Art.!1127!!Good!Faith!
Chapter*2:*Nature*and*Effect*of*Obligations*
Art.!1128!!Other!Conditions!of!Good!Faith!
Art.!1163!!Required!Diligence!
Art.!1129!!Just!Title!
Art.!1164!!Right!Over!Fruits!
Art.!1130!!True!and!Valid!Title!
Art.!1165!!Delivery!of!a!Determinate!or!Indeterminate!Thing!
Art.!1131!!Just!Title!Must!Be!Proved!
Art.!1166!!Accessories!!
Art.!1132!!Acquisition!of!Movables!or!Personal!Property! !
Art.!1167!!Obligation!To!Do!
Art.!1133!!Movables!from!Crime!
Art.!1168!!Obligation!Not!To!Do!
Art.!1134!!Acquisition!of!Immovables!
Art.!1169!!Delay!
Art.!1135!!Mistake!in!Area!
Art.!1170!!Sources!of!Liabilities! !
Art.!1136!!Wartime!
Art.!1171!!Responsibility!from!Fraud!
Art.!1137!!Extraordinary!Prescription!of!Immovables!
Art.!1172!!Responsibility!from!Negligence!
Art.!1138!!Computation!of!Prescription!
Art.!1173!!Fault!or!Negligence!
*
Art.!1174!!Fortuitous!Events!
Chapter*3:*Prescription*of*Actions*
111!
!
Art.!1175!!Usurious!Transactions! Art.!1207!!Solidary!Obligations!
Art.!1176!!Presumption!in!Payment! Art.!1208!!Joint!Obligations!
Art.!1177!!Rights!of!the!Creditor! Art.!1209!!When!Division!is!Impossible!
Art.!1178!!Transmissibility!! Art.!1210!!Indivisibility!and!Solidarity!
Chapter*3:*Different*Kinds*of*Obligations* * Art.!1211!!Not!Bound!in!the!Same!Manner!
SECTION(1.(S(Pure(and(Conditional(Obligations( Art.!1212!!Acts!of!Solidary!Creditors!
Art.!1179!!Pure!Obligations! Art.!1213!!Mutual!Trust!among!Solidary!Creditors!
Art.!1180!!Payment!Depends!on!Debtors!Means! Art.!1214!!Judicial!or!Extrajudicial!Demand!by!a!Solidary!Creditor!
Art.!1181!!Conditional!Obligations! Art.!1215!!Extinguishment!by!a!Solidary!Creditor!
Art.!1182!!Potestative!and!Casual!Conditions! Art.!1216!!Rights!of!Creditor!Against!Solidary!Debtors!
Art.!1183!!Void!Conditions! Art.!1217!!Payment!by!Solidary!Debtors!
Art.!1184!!Positive!Condition! Art.!1218!!When!Payment!has!Prescribed!or!become!Illegal!
Art.!1185!!Negative!Condition! Art.!1219!!Remission!of!a!Solidary!Debtors!Liability!
Art.!1186!!Constructive!Fulfillment! Art.!1220!!Remission!of!the!Whole!Obligation!
Art.!1187!!Retroactive!Effects!of!the!Fulfillment!of!a!Suspensive! Art.! 1221! ! Loss! or! Impossibility! of! Prestation! in! Relation! to!
Condition! Solidary!Debtors!
Art.!1188!!Rights!Pending!Fulfillment!of!Suspensive!Condition! Art.!1222!!Solidary!Debtors!Defenses!
Art.! 1189! ! Loss,! Deterioration! or! Improvement! Pending! the! SECTION(5.(S(Divisible(and(Indivisible(Obligations(
Condition! Art.! 1223! ! Nature! and! Effect! of! Divisible! and! Indivisible!
Art.!1190!!Effects!of!Fulfillment!of!Resolutory!Condition! Obligations!
Art.!1191!!Remedies!in!Reciprocal!Obligations! Art.!1224!!Liabilities!in!Joint!Indivisible!Obligations!
Art.!1192!!Breach!by!Both!Parties! Art.!1225!!Divisible!and!Indivisible!Obligations!
SECTION(2.(S(Obligations(with(a(Period( SECTION(6.(S(Obligations(with(a(Penal(Clause(
Art.!1193!!Obligations!with!a!Period! Art.!1226!!Penalties!
Art.! 1194! ! Loss,! Deterioration! or! Improvement! before! Day! Art.!1227!!Penalty!and!Fulfillment!
Certain! Art.!1228!!Proof!is!Not!Necessary!
Art.!1195!!Debtor!May!Recover!Payment! Art.!1229!!Court!Intervention!
Art.!1196!!Period!Benefits!Both!Creditor!and!Debtor! Art.!1230!!Nullity!of!the!Penal!Clause!
Art.!1197!!Court!May!Fix!a!Period! Chapter*4:*Extinguishment*of*Obligations*
Art.!1198!!When!Debtor!Cannot!Make!Use!of!the!Period! GENERAL(PROVISIONS(
SECTION!3.!+!Alternative!Obligations! Art.!1231!!Modes!of!Extinguishment!
Art.!1199!!Alternative!Obligations! SECTION(1.(S(Payment(or(Performance(
Art.!1200!!Debtors!Right!of!Choice! Art.!1232!!Payment!Defined!
Art.!1201!!Choice!Communicated! Art.!1233!!Payment!must!be!Complete!
Art.!1202!!Only!One!Choice!is!Practicable! Art.!1234!!Substantial!Performance!
Art.!1203!!Debtor!Cannot!Choose!due!to!Creditors!Acts! Art.!1235!!Creditor!Accepts!Incompleteness!or!Irregularity!
Art.!1204!!Through!Debtors!Fault,!All!Choices!are!Lost! Art.!1236!!Payment!by!a!Third!Person!
Art.!1205!!Choice!Given!to!Creditor! Art.!1237!!No!Subrogation!
Art.!1206!!Facultative!Obligations! Art.!1238!!Donation!
SECTION(4.((Joint(and(Solidary(Obligations( Art.!1239!!Payment!by!an!Incapacitated!Person! !
112!
!
Art.!1240!!To!Whom!Payment!Should!be!Made! Art.!1274!!Accessory!Obligation!of!Pledge!
Art.!1241!!Payment!to!Incapacitated!or!Third!Persons! SECTION(4.(S(Confusion(or(Merger(of(Rights(
Art.!1242!!Payment!to!Possessor!of!Credit! Art.!1275!!When!Obligation!is!Extinguished!
Art.!1243!!Judicial!Order!to!Retain!the!Debt! Art.!1276!!Effect!on!Guarantors! !
Art.!1244!!Creditor!Cannot!be!Compelled!to!Receive!a!Different!Thing! Art.!1277!!Confusion!in!Joint!Obligations!
Art.!1245!!Dation!in!Payment! SECTION(5.(S(Compensation(
Art.!1246!!Delivery!of!a!Generic!Thing! Art.!1278!!Compensation!Defined!
Art.!1247!!Extrajudicial!Expenses! Art.!1279!!Requisites!of!Compensation!
Art.!1248!!Partial!Receipt!and!Payment! ! Art.!1280!!Set+up!by!Guarantor!
Art.!1249!!Currency! Art.!1281!!Total!or!Partial!Compensation!
Art.!1250!!Inflation!or!Deflation! Art.!1282!!Debts!Not!Due!
Art.!1251!!Place!of!Payment! Art.!1283!!Claim!for!Damages!
SUBSECTION(1.(S(Application(of(Payments( Art.!1284!!Voidable!Debts!
Art.!1252!!Application!of!Payments! Art.!1285!!Assignment!of!the!Creditors!Rights!to!a!Third!Person!
Art.!1253!!Interest! Art.!1286!!Different!Places!
Art.!1254!!Most!Onerous!Debt! Art.!1287!!No!Compensation!
SUBSECTION(2.(S(Payment(by(Cession( Art.!1288!!Civil!Liability! !
Art.!1255!!Cession! Art.!1289!!Several!Debts!
SUBSECTION(3.((Tender(of(Payment(and(Consignation( ( Art.!1290!!By!Operation!of!Law!
Art.!1256!!Tender!of!Payment!and!Consignment! SECTION(6.(S(Novation(
Art.!1257!!Announcement! Art.!1291!!Kinds!of!Novation!
Art.!1258!!Consignation!Process! Art.!1292!!Express!and!Implied!Novation!
Art.!1259!!Expenses!Borne!by!the!Creditor! Art.!1293!!Substituting!a!New!Debtor!
Art.!1260!!Judicial!Declaration! Art.!1294!!Insolvency!of!the!New!Debtor!in!Expromision!
Art.!1261!!Creditor!Authorizes!Debtor!to!Withdraw! Art.!1295!!Insolvency!of!the!New!Debtor!in!Delegacion!
SECTION(2.(S(Loss(of(the(Thing(Due( Art.!1296!!Effect!on!Accessory!Obligations!
Art.!1262!!Loss! Art.!1297!!New!Obligation!is!Void!
Art.!1263!!Loss!of!a!Generic!Thing! Art.!1298!!Original!Obligation!was!Void!
Art.!1264!!Partial!Loss! Art.!1299!!Subject!to!a!Suspensive!or!Resolutory!Condition!
Art.!1265!!Loss!of!Thing!in!the!Possession!of!the!Debtor! Art.!1300!!Legal!or!Conventional!Subrogation!
Art.!1266!!Legal!or!Physical!Impossibility! Art.!1301!!Conventional!Subrogation!
Art.!1267!!Difficult!Beyond!Contemplation! Art.!1302!!When!Legal!Subrogation!is!Presumed!
Art.!1268!!Proceeds!from!a!Criminal!Offense! Art.!1303!!Rights!Transferred!Upon!Subrogation!
Art.!1269!!Creditors!Right!of!Action! Art.!1304!!Partial!Payment!and!Preference!
SECTION(3.(S(Condonation(or(Remission(of(the(Debt( Title*II**CONTRACTS*
Art.!1270!!Condonation!Defined! Chapter*1:*General*Provisions*
Art.!1271!!Delivery!of!a!Credit!to!the!Debtor! Art.!1305!!Contracts!Defined!
Art.! 1272! ! Presumption! when! Credit! is! in! the! Possession! of! the! Art.!1306!!Guarantee!of!Freedom!to!Contract!
Debtor! Art.!1307!!Innominate!Contracts!
Art.!1273!!Extinguishment!of!Accessory!Obligations! Art.!1308!!Mutuality!of!Contracts!
113!
!
Art.!1309!!Determination!of!Performance!by!a!Third!Person! Art.!1346!!Absolute!and!Relative!Simulation!of!Contracts!
Art.!1310!!When!Determination!is!Inequitable! Section(2((Object(of(Contracts(
Art.!1311!!Stipulation!Pour!Atrui! Art.!1347!!Object!of!a!Contract!
Art.!1312!!Contracts!Creating!Real!Rights!Bind!Third!Persons! Art.!1348!!Impossible!Things!or!Services!
Art.!1313!!Right!of!Creditors!to!Impugn!Fraudulent!Contracts! Art.!1349!!Quantity!Need!Not!be!Determinate!
Art.!1314!!Liability!of!Third!Persons!Responsible!for!Breach!of!Contract! Section(3((Cause(of(Contracts(
Art.!1315!!Perfection!of!Contracts!and!Implied!Terms! Art.!1350!!Cause!Defined!
Art.!1316!!Real!Contracts!are!Perfected!upon!Delivery! Art.!1351!!Motive!Defined!
Art.!1317!!Unauthorized!Contracts!are!Unenforceable! Art.!1352!!Absence!of!Cause!
Chapter*2:*Essential*Requisites*of*Contracts* Art.!1353!!False!Cause!
General(Provisions( Art.!1354!!Cause!Presumed!to!Exist!and!Lawful!
Art.!1318!!Elements!of!a!Contract! Art.!1355!!Lesion!Defined!
Section(1((Consent( Chapter*3:*Form*of*Contracts*
Art.!1319!!Consent!Defined! Art.!1356!!Form!of!Contracts!
Art.!1320!+!Acceptance! Art.!1357!!Form!for!the!Convenience!of!the!Parties!
Art.!1321!!Offerer!Fixes!Manner,!Time!and!Place!of!Acceptance! Art.!1358!!Contracts!Which!Must!Appear!in!a!Public!Document!
Art.!1322!!Communication!of!Acceptance!to!Agent! Chapter*4:*Reformation*of*Instruments*
Art.!1323!!When!Offer!Becomes!Ineffective! Art.!1359!+!Reformation!
Art.!1324!!Contract!of!Option,!Option!Period,!Option!Money! Art.!1360!!Principles!of!the!General!Law!on!Reformation!
Art.!1325!!Business!Advertisements! Art.!1361!!Mutual!Mistake!as!Basis!of!Reformation!
Art.!1326!!Advertisements!for!Bidders! Art.!1362!Mistaken,!Fraud!and!Inequitable!Conduct!
Art.!1327!!Persons!who!Cannot!Give!Consent! Art.!1363!!Concealment!of!Mistake!by!the!Other!Party!
Art.!1328!!Lucid!Intervals,!Drunkenness,!Hypnotic!Spell! Art.!1364!Ignorance,!etc.!on!the!Part!of!Third!Person!
Art.!1329!!Incapacity!Subject!to!Modifications! Art.!1365!!Mortgage!or!Pledge!Stated!as!a!Sale!
Art.!1330!!Characteristics!of!Consent! Art.!1366!Cases!when!Reformation!Not!Allowed!
Art.!1331!!Mistake!or!Error! Art.!1367!!Party!who!Brought!Action!to!Enforce!Cannot!Reform!
Art.!1332!!Burden!of!Proof!in!case!of!Fraud!or!Mistake! Art.!1368!!Party!Entitled!to!Reformation!
Art.!1333!!Knowledge!of!Risk! Art.!1369!!Procedure!for!Reformation!
Art.!1334!!Mistake!of!Law!May!Vitiate!Consent! Chapter*5:*Interpretation*of*Contracts*
Art.!1335!!Violence!or!Force! Art.!1370!!Interpretation!of!Contracts!Defined!
Art.!1336!!Violence!or!Intimidation!by!a!Third!Person! Art.!1371!!Contemporaneous!and!Subsequent!Acts!Determine!Intent!
Art.!1337!!Undue!Influence! Art.!1372!!Special!Intent!Prevails!Over!General!Intent!
Art.!1338!!Causal!Fraud! Art.!1373!!Interpretation!of!Stipulation!with!Several!Meanings!
Art.!1339!!Fraud!by!Concealment! Art.!1374!!Interpretation!of!Various!Stipulations!
Art.!1340!!Usual!Exaggerations!in!Trade! Art.!1375!!Interpretation!of!Words!with!Different!Significations!
Art.!1341!!Expert!Opinion! Art.!1376!!Usage!or!Custom!as!Aid!in!Interpretation!
Art.!1342!!Fraud!by!a!Third!Person! Art.!1377!!Interpretation!of!Obscure!Words!
Art.!1343!!Misrepresentation!Made!in!Good!Faith! Art.!1378!!Rules!in!Case!Doubts!are!Impossible!to!Settle!
Art.!1344!!Causal!Fraud!may!make!a!Contract!Voidable! Art.!1379!!Rules!of!Court!Applicable!
Art.!1345!!Simulation!of!a!Contract! Chapter*6:*Rescissible*Contracts*
114!
!
Art.!1380!!Rescissible!Contracts!Defined! Art.!1417!!Recovery!of!Amount!Paid!in!Excess!of!Ceiling!Price!
Art.!1381!!Cases!of!Rescissible!Contracts! Art.!1418!!Recovery!of!Additional!Compensation!
Art.!1382!!Payments!Made!in!State!of!Insolvency! Art.!1419!!Recovery!of!Amount!of!Wage!Less!than!Minimum!Fixed!
Art.!1383!!Nature!of!Action!for!Rescission! Art.!1420!!Effect!of!Illegality!where!Contract!is!Indivisible/Divisible!
Art.!1384!!Extent!of!Rescission! Art.!1421!!Persons!Entitled!to!Raise!Defense!of!Illegality!or!Nullity!
Art.!1385!!Rescission!Creates!Obligation!of!Mutual!Restitution! Art.!1422!!Void!Contract!Cannot!be!Novated!
Art.!1386!!Contracts!Approved!by!the!Courts! *
Art.!1387!!When!Alienation!Presumed!in!Fraud!of!Creditors! Title*III**NATURAL*OBLIGATIONS*
Art.!1388!!Liability!of!Purchaser!in!Bad!Faith! Art.!1423!!Concept!of!Natural!Obligations!
Art.!1389!!Period!for!Filing!Action!for!Rescission! Art.!1424!!Performance!After!Civil!Obligation!has!Prescribed!
Chapter*7:*Voidable*Contracts* Art.!1425!!Reimbursement!of!Third!Person!for!Prescribed!Debt!
Art.!1390!!Voidable!Contracts!Defined! Art.!1426!!Restitution!by!Minor!After!Annulment!of!Contract!
Art.!1391!!Period!for!Filing!Action!for!Annulment! Art.!1427!!Delivery!by!Minor!of!Money!or!Fungible!Thing!
Art.!1392!!Effect!of!Ratification! Art.!1428!!Performance!After!Action!to!Enforce!Civil!Obligation!Failed!
Art.!1393!!Forms!of!Ratification! Art.!1429!!Payment!by!Heir!of!Debt!Exceeding!Value!of!Property!Inherited!
Art.!1394!!Who!May!Ratify! Art.!1430!!Payment!of!Legacy!After!Will!has!been!Declared!Void!
Art.!1395!!Conformity!of!Guilty!Party!to!Ratification!Not!Required! *
Art.!1396!!Retroactive!Effect!of!Ratification! Title*IV**ESTOPPEL*
Art.!1397!!Party!Entitled!to!Bring!an!Action!to!Annul! Art.!1431!!Estoppel!Defined!
Art.!1398!!Duty!of!Mutual!Restitution!upon!Annulment! Art.!1432!!Application!of!Estoppel!
Art.!1399!!Restitution!by!an!Incapacitated!Person! Art.!1433!!Kinds!of!Estoppel!
Art.!1400!!Effect!of!Loss!of!Thing!to!be!Returned! Art.!1434!!Sale!by!Person!not!the!Owner!
Art.!1401!!Extinguishment!of!Action!for!Annulment! Art.!1435!!Sale!by!a!Person!Representing!Another!
Art.!1402!!Effect!where!a!Party!Cannot!Restore!Object! Art.!1436!!Lessee!or!Bailee!Estopped!from!Asserting!Title!
Chapter*8:*Unenforceable*Contracts* Art.!1437!!Estoppel!in!Contracts!where!One!Party!is!Mislead!
Art.!1403!!Unenforceable!Contracts!Defined! Art.!1438!!Estoppel!where!Personal!Property!is!Pledged!
Art.!1404!!Rules!Governing!Unauthorized!Contracts! Art.!1439!!Between!Parties!and!Successors!in!Interest!
Art.!1405!!Modes!of!Ratification!under!Statutes!of!Fraud! *
Art.!1406!!Right!of!a!Party!where!Contract!Enforceable! Title*V**TRUSTS*
Art.!1407!!When!Uneforceable!Contract!becomes!Voidable! Chapter*1:*General*Provisions*
Art.!1408!!Right!of!Third!Persons!to!Assail!an!Unforceable!Contract! Art.!1440!!Trustor,!Trustee!and!Beneficiary!
Chapter*9:*Void*and*Inexistent*Contracts* Art.!1441!!Forms!of!Trusts!
Art.!1409!!Void!Contracts!Defined! Art.!1442!!Application!of!the!Principles!of!the!General!Law!of!Trusts!
Art.!1410!!Action!or!Defense!is!Imprescriptible! Chapter*2:*Express*Trusts*
Art.!1411!!Rules!where!Contract!is!Illegal!and!Act!is!Criminal!Offense! Art.!1443!!Immovable!Cannot!be!Proven!by!Parol!Evidence!
Art.!1412!!Rules!where!Contract!is!Illegal!but!Act!is!not!Criminal!Offense! Art.!1444!!No!Words!Required!
Art.!1413!!Recovery!of!Usurious!Interest! Art.!1445!!When!Trustee!Declines!Designation!
Art.!1414!!Recovery!where!Contract!Entered!Into!for!Illegal!Purpose! Art.!1446!!Acceptance!by!the!Beneficiary!
Art.!1415!!Recovery!by!an!Incapacitated!Person! Chapter*3:*Implied*Trusts*
Art.!1416!!Recovery!where!Contract!is!Not!Illegal!per!se! Art.!1447!!Application!of!Implied!Trusts!Enumerated!
115!
!
Art.!1448!!When!a!Third!Party!Pays!for!a!Property! Art.!2167!!Services!Given!by!a!Physician!in!an!Accident!
Art.!1449!!When!a!Donation!is!Made!but!Donee!has!Partial!Interest! Art.!2168!!Property!is!Saved!from!Fire,!Flood,!Storm!or!Calamity!
Art.!1450!!When!a!Person!Acquires!Property!through!a!Loan! Art.!2169!!Government!Work!regarding!Health!and!Safety!Regulations!
Art.!1451!!When!Land!Passes!by!Succession! Art.!2170!!Rules!of!Co+Ownership!in!Accident!or!Fortuitous!Event!
Art.!1452!!When!Legal!Title!is!Named!after!One!of!Many!Purchasers! Art.!2171!!Finder!of!Lost!Property!
Art.!1453!!When!Property!is!Conveyed!to!Hold!or!Transfer! Art.!2172!!Right!to!Reimbursement!of!Possessor!in!Good!Faith!
Art.!1454!!When!Property!is!Conveyed!to!Fulfill!an!Obligation! Art.!2173!!Third!Person!Paying!a!Debt!
Art.!1455!!When!Trust!Fund!is!Used!to!Purchase!Property! Art.!2174!!Measures!for!Protection!Against!Lawlessness!
Art.!1456!!When!Property!is!Acquired!through!Mistake!or!Fraud! Art.!2175!!Person!Paying!for!Taxes!of!Another!
Art.!1457!!May!be!Proved!by!Oral!Evidence!
*
*
Title*XVII**EXTRA7CONTRACTUAL*OBLIGATIONS*
Chapter*1:*Quasi7Contracts* SOURCES*
Art.!2142!!Quasi+Contracts!Defined! Sta.!Maria,!Obligations!and!Contracts!(2003)!
Art.!2143!!Other!Quasi+Contracts! De!Leon,!The!Law!on!Obligations!and!Contracts!(2008)!
Section(1((Negotiorum(Gestio( Salanga!RA,!Obligations!and!Contracts!Reviewer!
Art.!2144!!Negotiorum!Gestio!Defined!and!Its!Exceptions! Civil!Law!Obligations!and!Contracts!Reviewer!
Art.!2145!!Diligence!Required!of!an!Officious!Manager! http://legal+dictionary.thefreedictionary.com/!
Art.!2146!!Liability!of!Officious!Manager!upon!Delegation! !
Art.!2147!!When!Officious!Manager!shall!be!Liable!for!Fortuitous!Event!
Art.!2148!!Liability!for!Fortuitous!Event!as!to!Managers!Capacity!
Art.!2149!!Ratification!of!Owner!results!to!Agency!
Art.!2150!!Officious!Manager!Entitled!to!Reimbursement!
Art.!2151!!Reimbursement!when!there!is!No!Benefit!or!Danger!
Art.!2152!Officious!Manager!as!to!Contracts!with!Third!Persons!
Section(2((Solutio(Indebiti(
Art.!2154!!Solutio!Indebiti!Defined!
Art.!2155!!Applicable!to!Doubtful!or!Difficult!Question!of!Law!
Art.!2156!!Doubt!on!whether!the!Debt!was!Due!
Art.!2157!!Solidary!Responsibility!of!Two!or!More!Payees!
Art.!2158!!Property!or!Money!Delivered!Belongs!to!Third!Person!
Art.!2159!!Acceptance!of!Undue!Payment!in!Bad!Faith!
Art.!2160!!Acceptance!of!Undue!Payment!in!Good!Faith!
Art.!2161!!Reimbursement!for!Improvements!and!Expenses!
Art.!2162!!Exemption!from!Obligation!to!Restore!
Art.!2163!!Presumed!Mistake!
Section(3((Other(QuasiSContracts(
Art.!2164!!Support!Given!by!a!Stranger!
Art.!2165!!Funeral!Expenses!Borne!by!a!Third!Person!
Art.!2166!!Support!Given!to!an!Orphan,!Insane!or!Indigent!Person!
116!

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OBLIGATIONSANDCONTRACTSREVIEWER ATTY.MELSTA.

Art.*1115**SpecialLaws Chapter* 2:* Prescription* of* Ownership* and* Other* Real*

Art.*1135**MistakeinArea* (2) It!is!presumed!that!the!present!possessor!who!was!also!the!possessor!at!a!

Art.*1184**PositiveCondition Constructive* fulfillment* * the! obligor! voluntarily! prevents! the! fulfillment!

! Withoutfault/participation With*fault/participation** The!court!shall!decree!the!rescission!claimed,!unless!there!be!just!cause!authorizing!

Contemplates! a! situation! where! the! original! creditor! has! been! partially!

Art.*1418**RecoveryofAdditionalCompensation Ex.! An!annual!subscription!to!a!weekly!magazine!where!X!pays!1,000!is!a!

Ex.! If!a!debtor,!despite!the!lapse!of!the!prescriptive!period!and!knowing!that! Art.*1427**DeliverybyMinorofMoneyorFungibleThing

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