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Art. 1168. When the obligation Art. 1172. Responsibility arising from
consists in not doing, and the obligor negligence in the performance of
does what has been forbidden him, it every kind of obligation is also
shall also be undone at his expense. demandable, but such liability may
(1099a) be regulated by the courts, according
to the circumstances. (1103)
Art. 1169. Those obliged to deliver or
to do something incur in delay from Art. 1173. The fault or negligence of
the time the obligee judicially or the obligor consists in the omission
extrajudicially demands from them of that diligence which is required by
the fulfillment of their obligation. the nature of the obligation and
corresponds with the circumstances
However, the demand by the creditor of the persons, of the time and of the
shall not be necessary in order that place. When negligence shows bad
delay may exist: faith, the provisions of Articles 1171
and 2201, paragraph 2, shall apply.
(1) When the obligation or the
law expressly so declare; or If the law or contract does not state
the diligence which is to be observed
(2) When from the nature and in the performance, that which is
the circumstances of the expected of a good father of a family
obligation it appears that the shall be required. (1104a)
designation of the time when
the thing is to be delivered or Art. 1174. Except in cases expressly
the service is to be rendered specified by the law, or when it is
was a controlling motive for otherwise declared by stipulation, or
the establishment of the when the nature of the obligation
contract; or requires the assumption of risk, no
person shall be responsible for those
(3) When demand would be events which could not be foreseen,
useless, as when the obligor or which, though foreseen, were
has rendered it beyond his inevitable. (1105a)
power to perform.
Art. 1175. Usurious transactions shall
In reciprocal obligations, neither be governed by special laws. (n)
party incurs in delay if the other does
not comply or is not ready to comply Art. 1176. The receipt of the principal
in a proper manner with what is by the creditor without reservation
incumbent upon him. From the with respect to the interest, shall give
moment one of the parties fulfills his rise to the presumption that said
obligation, delay by the other begins. interest has been paid.
(1100a)
The receipt of a later installment of a
Art. 1170. Those who in the debt without reservation as to prior
performance of their obligations are installments, shall likewise raise the
guilty of fraud, negligence, or delay, presumption that such installments
and those who in any manner have been paid. (1110a)
contravene the tenor thereof, are
liable for damages. (1101) Art. 1177. The creditors, after having
pursued the property in possession
Art. 1171. Responsibility arising from of the debtor to satisfy their claims,
fraud is demandable in all may exercise all the rights and bring
all the actions of the latter for the Art. 1183. Impossible conditions,
same purpose, save those which are those contrary to good customs or
inherent in his person; they may also public policy and those prohibited by
impugn the acts which the debtor law shall annul the obligation which
may have done to defraud them. depends upon them. If the obligation
(1111) is divisible, that part thereof which is
not affected by the impossible or
Art. 1178. Subject to the laws, all unlawful condition shall be valid.
rights acquired in virtue of an
obligation are transmissible, if there The condition not to do an
has been no stipulation to the impossible thing shall be considered
contrary. (1112) as not having been agreed upon.
(1116a)
Art. 1194. In case of loss, (3) When by his own acts he has
deterioration or improvement of the impaired said guaranties or
thing before the arrival of the day securities after their establishment,
certain, the rules in Article 1189 shall and when through a fortuitous event
be observed. (n) they disappear, unless he
immediately gives new ones equally
Art. 1195. Anything paid or delivered satisfactory;
before the arrival of the period, the
obligor being unaware of the period (4) When the debtor violates any
or believing that the obligation has undertaking, in consideration of
become due and demandable, may which the creditor agreed to the
be recovered, with the fruits and period;
interests. (1126a)
(5) When the debtor attempts to
Art. 1196. Whenever in an obligation abscond. (1129a)
a period is designated, it is presumed
to have been established for the
benefit of both the creditor and the SECTION 3. - Alternative Obligations
debtor, unless from the tenor of the
same or other circumstances it Art. 1199. A person alternatively
should appear that the period has bound by different prestations shall
completely perform one of them.
The creditor cannot be compelled to Until then the responsibility of the
receive part of one and part of the debtor shall be governed by the
other undertaking. (1131) following rules:
Art. 1200. The right of choice belongs (1) If one of the things is lost
to the debtor, unless it has been through a fortuitous event, he
expressly granted to the creditor. shall perform the obligation by
delivering that which the
The debtor shall have no right to creditor should choose from
choose those prestations which are among the remainder, or that
impossible, unlawful or which could which remains if only one
not have been the object of the subsists;
obligation. (1132)
(2) If the loss of one of the
Art. 1201. The choice shall produce things occurs through the fault
no effect except from the time it has of the debtor, the creditor may
been communicated. (1133) claim any of those subsisting,
or the price of that which,
Art. 1202. The debtor shall lose the through the fault of the former,
right of choice when among the has disappeared, with a right
prestations whereby he is to damages;
alternatively bound, only one is
practicable. (1134) (3) If all the things are lost
through the fault of the debtor,
Art. 1203. If through the creditor's the choice by the creditor shall
acts the debtor cannot make a choice fall upon the price of any one
according to the terms of the of them, also with indemnity
obligation, the latter may rescind the for damages.
contract with damages. (n)
The same rules shall be applied to
Art. 1204. The creditor shall have a obligations to do or not to do in case
right to indemnity for damages when, one, some or all of the prestations
through the fault of the debtor, all the should become impossible. (1136a)
things which are alternatively the
object of the obligation have been Art. 1206. When only one prestation
lost, or the compliance of the has been agreed upon, but the
obligation has become impossible. obligor may render another in
substitution, the obligation is called
The indemnity shall be fixed taking facultative.
as a basis the value of the last thing
which disappeared, or that of the The loss or deterioration of the thing
service which last became intended as a substitute, through the
impossible. negligence of the obligor, does not
render him liable. But once the
Damages other than the value of the substitution has been made, the
last thing or service may also be obligor is liable for the loss of the
awarded. (1135a) substitute on account of his delay,
negligence or fraud. (n)
Art. 1205. When the choice has been
expressly given to the creditor, the
obligation shall cease to be SECTION 4. - Joint and Solidary
alternative from the day when the Obligations
selection has been communicated to
the debtor. Art. 1207. The concurrence of two or
more creditors or of two or more
debtors in one and the same Art. 1214. The debtor may pay any
obligation does not imply that each one of the solidary creditors; but if
one of the former has a right to any demand, judicial or extrajudicial,
demand, or that each one of the latter has been made by one of them,
is bound to render, entire compliance payment should be made to him.
with the prestation. There is a (1142a)
solidary liability only when the
obligation expressly so states, or Art. 1215. Novation, compensation,
when the law or the nature of the confusion or remission of the debt,
obligation requires solidarity. (1137a) made by any of the solidary creditors
or with any of the solidary debtors,
Art. 1208. If from the law, or the shall extinguish the obligation,
nature or the wording of the without prejudice to the provisions of
obligations to which the preceding Article 1219.
article refers the contrary does not
appear, the credit or debt shall be The creditor who may have executed
presumed to be divided into as many any of these acts, as well as he who
shares as there are creditors or collects the debt, shall be liable to
debtors, the credits or debts being the others for the share in the
considered distinct from one another, obligation corresponding to them.
subject to the Rules of Court (1143)
governing the multiplicity of suits.
(1138a) Art. 1216. The creditor may proceed
against any one of the solidary
Art. 1209. If the division is debtors or some or all of them
impossible, the right of the creditors simultaneously. The demand made
may be prejudiced only by their against one of them shall not be an
collective acts, and the debt can be obstacle to those which may
enforced only by proceeding against subsequently be directed against the
all the debtors. If one of the latter others, so long as the debt has not
should be insolvent, the others shall been fully collected. (1144a)
not be liable for his share. (1139)
Art. 1217. Payment made by one of
Art. 1210. The indivisibility of an the solidary debtors extinguishes the
obligation does not necessarily give obligation. If two or more solidary
rise to solidarity. Nor does solidarity debtors offer to pay, the creditor may
of itself imply indivisibility. (n) choose which offer to accept.
Art. 1211. Solidarity may exist He who made the payment may claim
although the creditors and the from his co-debtors only the share
debtors may not be bound in the which corresponds to each, with the
same manner and by the same interest for the payment already
periods and conditions. (1140) made. If the payment is made before
the debt is due, no interest for the
Art. 1212. Each one of the solidary intervening period may be
creditors may do whatever may be demanded.
useful to the others, but not anything
which may be prejudicial to the latter. When one of the solidary debtors
(1141a) cannot, because of his insolvency,
reimburse his share to the debtor
Art. 1213. A solidary creditor cannot paying the obligation, such share
assign his rights without the consent shall be borne by all his co-debtors,
of the others. (n) in proportion to the debt of each.
(1145a)
Art. 1218. Payment by a solidary which the latter are responsible.
debtor shall not entitle him to (1148a)
reimbursement from his co-debtors if
such payment is made after the
obligation has prescribed or become SECTION 5. - Divisible and Indivisible
illegal. (n) Obligations
Art. 1219. The remission made by the Art. 1223. The divisibility or
creditor of the share which affects indivisibility of the things that are the
one of the solidary debtors does not object of obligations in which there is
release the latter from his only one debtor and only one creditor
responsibility towards the co- does not alter or modify the
debtors, in case the debt had been provisions of Chapter 2 of this Title.
totally paid by anyone of them before (1149)
the remission was effected. (1146a)
Art. 1224. A joint indivisible
Art. 1220. The remission of the whole obligation gives rise to indemnity for
obligation, obtained by one of the damages from the time anyone of the
solidary debtors, does not entitle him debtors does not comply with his
to reimbursement from his co- undertaking. The debtors who may
debtors. (n) have been ready to fulfill their
promises shall not contribute to the
Art. 1221. If the thing has been lost or indemnity beyond the corresponding
if the prestation has become portion of the price of the thing or of
impossible without the fault of the the value of the service in which the
solidary debtors, the obligation shall obligation consists. (1150)
be extinguished.
Art. 1225. For the purposes of the
If there was fault on the part of any preceding articles, obligations to give
one of them, all shall be responsible definite things and those which are
to the creditor, for the price and the not susceptible of partial
payment of damages and interest, performance shall be deemed to be
without prejudice to their action indivisible.
against the guilty or negligent debtor.
When the obligation has for its object
If through a fortuitous event, the the execution of a certain number of
thing is lost or the performance has days of work, the accomplishment of
become impossible after one of the work by metrical units, or analogous
solidary debtors has incurred in things which by their nature are
delay through the judicial or susceptible of partial performance, it
extrajudicial demand upon him by the shall be divisible.
creditor, the provisions of the
preceding paragraph shall apply. However, even though the object or
(1147a) service may be physically divisible,
an obligation is indivisible if so
Art. 1222. A solidary debtor may, in provided by law or intended by the
actions filed by the creditor, avail parties.
himself of all defenses which are
derived from the nature of the In obligations not to do, divisibility or
obligation and of those which are indivisibility shall be determined by
personal to him, or pertain to his own the character of the prestation in
share. With respect to those which each particular case. (1151a)
personally belong to the others, he
may avail himself thereof only as
regards that part of the debt for
SECTION 6. - Obligations with a clause. (1155)
Penal Clause
Art. 1274. It is presumed that the (3) That the two debts be due;
accessory obligation of pledge has
been remitted when the thing (4) That they be liquidated and
pledged, after its delivery to the demandable;
creditor, is found in the possession
of the debtor, or of a third person (5) That over neither of them
who owns the thing. (1191a) there be any retention or
controversy, commenced by
third persons and
SECTION 4. - Confusion or Merger of communicated in due time to
Rights the debtor. (1196)
Art. 1277. Confusion does not Art. 1282. The parties may agree
extinguish a joint obligation except upon the compensation of debts
as regards the share corresponding which are not yet due. (n)
to the creditor or debtor in whom the
two characters concur. (1194) Art. 1283. If one of the parties to a
suit over an obligation has a claim for
damages against the other, the
SECTION 5. - Compensation former may set it off by proving his
right to said damages and the
Art. 1278. Compensation shall take amount thereof. (n)
place when two persons, in their own
right, are creditors and debtors of Art. 1284. When one or both debts
each other. (1195) are rescissible or voidable, they may
be compensated against each other
Art. 1279. In order that compensation before they are judicially rescinded
may be proper, it is necessary: or avoided. (n)
Art. 1285. The debtor who has shall apply to the order of the
consented to the assignment of compensation. (1201)
rights made by a creditor in favor of a
third person, cannot set up against Art. 1290. When all the requisites
the assignee the compensation mentioned in Article 1279 are
which would pertain to him against present, compensation takes effect
the assignor, unless the assignor by operation of law, and extinguishes
was notified by the debtor at the time both debts to the concurrent amount,
he gave his consent, that he reserved even though the creditors and
his right to the compensation. debtors are not aware of the
compensation. (1202a)
If the creditor communicated the
cession to him but the debtor did not
consent thereto, the latter may set up SECTION 6. - Novation
the compensation of debts previous
to the cession, but not of subsequent Art. 1291. Obligations may be
ones. modified by:
(1) Changing their object or
If the assignment is made without the principal conditions;
knowledge of the debtor, he may set
up the compensation of all credits (2) Substituting the person of
prior to the same and also later ones the debtor;
until he had knowledge of the
assignment. (1198a) (3) Subrogating a third person
in the rights of the creditor.
Art. 1286. Compensation takes place (1203)
by operation of law, even though the
debts may be payable at different Art. 1292. In order that an obligation
places, but there shall be an may be extinguished by another
indemnity for expenses of exchange which substitute the same, it is
or transportation to the place of imperative that it be so declared in
payment. (1199a) unequivocal terms, or that the old
and the new obligations be on every
Art. 1287. Compensation shall not be point incompatible with each other.
proper when one of the debts arises (1204)
from a depositum or from the
obligations of a depositary or of a Art. 1293. Novation which consists in
bailee in commodatum. substituting a new debtor in the place
of the original one, may be made
Neither can compensation be set up even without the knowledge or
against a creditor who has a claim for against the will of the latter, but not
support due by gratuitous title, without the consent of the creditor.
without prejudice to the provisions of Payment by the new debtor gives him
paragraph 2 of Article 301. (1200a) the rights mentioned in Articles 1236
and 1237. (1205a)
Art. 1288. Neither shall there be
compensation if one of the debts Art. 1294. If the substitution is
consists in civil liability arising from without the knowledge or against the
a penal offense. (n) will of the debtor, the new debtor's
insolvency or non-fulfillment of the
Art. 1289. If a person should have obligations shall not give rise to any
against him several debts which are liability on the part of the original
susceptible of compensation, the debtor. (n)
rules on the application of payments
Art. 1295. The insolvency of the new (1) When a creditor pays
debtor, who has been proposed by another creditor who is
the original debtor and accepted by preferred, even without the
the creditor, shall not revive the debtor's knowledge;
action of the latter against the
original obligor, except when said (2) When a third person, not
insolvency was already existing and interested in the obligation,
of public knowledge, or known to the pays with the express or tacit
debtor, when the delegated his debt. approval of the debtor;
(1206a)
(3) When, even without the
Art. 1296. When the principal knowledge of the debtor, a
obligation is extinguished in person interested in the
consequence of a novation, fulfillment of the obligation
accessory obligations may subsist pays, without prejudice to the
only insofar as they may benefit third effects of confusion as to the
persons who did not give their latter's share. (1210a)
consent. (1207)
Art. 1303. Subrogation transfers to
Art. 1297. If the new obligation is the persons subrogated the credit
void, the original one shall subsist, with all the rights thereto
unless the parties intended that the appertaining, either against the
former relation should be debtor or against third person, be
extinguished in any event. (n) they guarantors or possessors of
mortgages, subject to stipulation in a
Art. 1298. The novation is void if the conventional subrogation. (1212a)
original obligation was void, except
when annulment may be claimed only Art. 1304. A creditor, to whom partial
by the debtor or when ratification payment has been made, may
validates acts which are voidable. exercise his right for the remainder,
(1208a) and he shall be preferred to the
person who has been subrogated in
Art. 1299. If the original obligation his place in virtue of the partial
was subject to a suspensive or payment of the same credit. (1213)
resolutory condition, the new
obligation shall be under the same
condition, unless it is otherwise Title II. - CONTRACTS
stipulated. (n)
CHAPTER 1
Art. 1300. Subrogation of a third GENERAL PROVISIONS
person in the rights of the creditor is
either legal or conventional. The Art. 1305. A contract is a meeting of
former is not presumed, except in minds between two persons whereby
cases expressly mentioned in this one binds himself, with respect to the
Code; the latter must be clearly other, to give something or to render
established in order that it may take some service. (1254a)
effect. (1209a)
Art. 1306. The contracting parties
Art. 1301. Conventional subrogation may establish such stipulations,
of a third person requires the clauses, terms and conditions as
consent of the original parties and of they may deem convenient, provided
the third person. (n) they are not contrary to law, morals,
good customs, public order, or public
Art. 1302. It is presumed that there is policy. (1255a)
legal subrogation:
Art. 1307. Innominate contracts shall Art. 1313. Creditors are protected in
be regulated by the stipulations of cases of contracts intended to
the parties, by the provisions of defraud them. (n)
Titles I and II of this Book, by the
rules governing the most analogous Art. 1314. Any third person who
nominate contracts, and by the induces another to violate his
customs of the place. (n) contract shall be liable for damages
to the other contracting party. (n)
Art. 1308. The contract must bind
both contracting parties; its validity Art. 1315. Contracts are perfected by
or compliance cannot be left to the mere consent, and from that moment
will of one of them. (1256a) the parties are bound not only to the
fulfillment of what has been
Art. 1309. The determination of the expressly stipulated but also to all
performance may be left to a third the consequences which, according
person, whose decision shall not be to their nature, may be in keeping
binding until it has been made known with good faith, usage and law. (1258)
to both contracting parties. (n)
Art. 1316. Real contracts, such as
Art. 1310. The determination shall not deposit, pledge and Commodatum,
be obligatory if it is evidently are not perfected until the delivery of
inequitable. In such case, the courts the object of the obligation. (n)
shall decide what is equitable under
the circumstances. (n) Art. 1317. No one may contract in the
name of another without being
Art. 1311. Contracts take effect only authorized by the latter, or unless he
between the parties, their assigns has by law a right to represent him.
and heirs, except in case where the
rights and obligations arising from A contract entered into in the name
the contract are not transmissible by of another by one who has no
their nature, or by stipulation or by authority or legal representation, or
provision of law. The heir is not liable who has acted beyond his powers,
beyond the value of the property he shall be unenforceable, unless it is
received from the decedent. ratified, expressly or impliedly, by the
person on whose behalf it has been
If a contract should contain some executed, before it is revoked by the
stipulation in favor of a third person, other contracting party. (1259a)
he may demand its fulfillment
provided he communicated his
acceptance to the obligor before its CHAPTER 2
revocation. A mere incidental benefit ESSENTIAL REQUISITES OF
or interest of a person is not CONTRACTS
sufficient. The contracting parties
must have clearly and deliberately GENERAL PROVISIONS
conferred a favor upon a third
person. (1257a) Art. 1318. There is no contract unless
the following requisites concur:
Art. 1312. In contracts creating real (1) Consent of the contracting
rights, third persons who come into parties;
possession of the object of the
contract are bound thereby, subject (2) Object certain which is the
to the provisions of the Mortgage subject matter of the contract;
Law and the Land Registration Laws.
(n) (3) Cause of the obligation
which is established. (1261)
SECTION 1. - Consent proposals, and the advertiser is not
bound to accept the highest or
Art. 1319. Consent is manifested by lowest bidder, unless the contrary
the meeting of the offer and the appears. (n)
acceptance upon the thing and the
cause which are to constitute the Art. 1327. The following cannot give
contract. The offer must be certain consent to a contract:
and the acceptance absolute. A
qualified acceptance constitutes a (1) Unemancipated minors;
counter-offer.
(2) Insane or demented
Acceptance made by letter or persons, and deaf-mutes who
telegram does not bind the offerer do not know how to write.
except from the time it came to his (1263a)
knowledge. The contract, in such a
case, is presumed to have been Art. 1328. Contracts entered into
entered into in the place where the during a lucid interval are valid.
offer was made. (1262a) Contracts agreed to in a state of
drunkenness or during a hypnotic
Art. 1320. An acceptance may be spell are voidable. (n)
express or implied. (n)
Art. 1329. The incapacity declared in
Art. 1321. The person making the Article 1327 is subject to the
offer may fix the time, place, and modifications determined by law, and
manner of acceptance, all of which is understood to be without prejudice
must be complied with. (n) to special disqualifications
established in the laws. (1264)
Art. 1322. An offer made through an
agent is accepted from the time Art. 1330. A contract where consent
acceptance is communicated to him. is given through mistake, violence,
(n) intimidation, undue influence, or
fraud is voidable. (1265a)
Art. 1323. An offer becomes
ineffective upon the death, civil Art. 1331. In order that mistake may
interdiction, insanity, or insolvency invalidate consent, it should refer to
of either party before acceptance is the substance of the thing which is
conveyed. (n) the object of the contract, or to those
conditions which have principally
Art. 1324. When the offerer has moved one or both parties to enter
allowed the offeree a certain period into the contract.
to accept, the offer may be withdrawn
at any time before acceptance by Mistake as to the identity or
communicating such withdrawal, qualifications of one of the parties
except when the option is founded will vitiate consent only when such
upon a consideration, as something identity or qualifications have been
paid or promised. (n) the principal cause of the contract.
Art. 1334. Mutual error as to the legal Art. 1339. Failure to disclose facts,
effect of an agreement when the real when there is a duty to reveal them,
purpose of the parties is frustrated, as when the parties are bound by
may vitiate consent. (n) confidential relations, constitutes
fraud. (n)
Art. 1335. There is violence when in
order to wrest consent, serious or Art. 1340. The usual exaggerations in
irresistible force is employed. trade, when the other party had an
opportunity to know the facts, are not
There is intimidation when one of the in themselves fraudulent. (n)
contracting parties is compelled by a
reasonable and well-grounded fear of Art. 1341. A mere expression of an
an imminent and grave evil upon his opinion does not signify fraud,
person or property, or upon the unless made by an expert and the
person or property of his spouse, other party has relied on the former's
descendants or ascendants, to give special knowledge. (n)
his consent.
Art. 1342. Misrepresentation by a
To determine the degree of third person does not vitiate consent,
intimidation, the age, sex and unless such misrepresentation has
condition of the person shall be created substantial mistake and the
borne in mind. same is mutual. (n)
No contract may be entered into Art. 1354. Although the cause is not
upon future inheritance except in stated in the contract, it is presumed
cases expressly authorized by law. that it exists and is lawful, unless the
debtor proves the contrary. (1277)
All services which are not contrary to
law, morals, good customs, public Art. 1355. Except in cases specified
order or public policy may likewise by law, lesion or inadequacy of cause
be the object of a contract. (1271a) shall not invalidate a contract, unless
there has been fraud, mistake or
Art. 1348. Impossible things or undue influence. (n)
services cannot be the object of
contracts. (1272)
CHAPTER 3
Art. 1349. The object of every FORM OF CONTRACTS
contract must be determinate as to
its kind. The fact that the quantity is Art. 1356. Contracts shall be
not determinate shall not be an obligatory, in whatever form they
obstacle to the existence of the may have been entered into, provided
contract, provided it is possible to all the essential requisites for their
determine the same, without the need validity are present. However, when
of a new contract between the the law requires that a contract be in
parties. (1273) some form in order that it may be
valid or enforceable, or that a
contract be proved in a certain way,
SECTION 3. - Cause of Contracts that requirement is absolute and
indispensable. In such cases, the
Art. 1350. In onerous contracts the right of the parties stated in the
cause is understood to be, for each following article cannot be exercised.
contracting party, the prestation or (1278a)
promise of a thing or service by the
other; in remuneratory ones, the Art. 1357. If the law requires a
service or benefit which is document or other special form, as in
remunerated; and in contracts of the acts and contracts enumerated in
pure beneficence, the mere liberality the following article, the contracting
of the benefactor. (1274) parties may compel each other to
observe that form, once the contract
Art. 1351. The particular motives of has been perfected. This right may be
the parties in entering into a contract exercised simultaneously with the
action upon the contract. (1279a)
Art. 1358. The following must appear If mistake, fraud, inequitable conduct,
in a public document: or accident has prevented a meeting
of the minds of the parties, the
(1) Acts and contracts which proper remedy is not reformation of
have for their object the the instrument but annulment of the
creation, transmission, contract.
modification or extinguishment
of real rights over immovable Art. 1360. The principles of the
property; sales of real property general law on the reformation of
or of an interest therein a instruments are hereby adopted
governed by Articles 1403, No. insofar as they are not in conflict with
2, and 1405; the provisions of this Code.
(4) The cession of actions or Art. 1363. When one party was
rights proceeding from an act mistaken and the other knew or
appearing in a public believed that the instrument did not
document. state their real agreement, but
concealed that fact from the former,
All other contracts where the amount the instrument may be reformed.
involved exceeds five hundred pesos
must appear in writing, even a private Art. 1364. When through the
one. But sales of goods, chattels or ignorance, lack of skill, negligence or
things in action are governed by bad faith on the part of the person
Articles, 1403, No. 2 and 1405. drafting the instrument or of the clerk
(1280a) or typist, the instrument does not
express the true intention of the
CHAPTER 4 parties, the courts may order that the
REFORMATION OF INSTRUMENTS instrument be reformed.
(n)
Art. 1365. If two parties agree upon
Art. 1359. When, there having been a the mortgage or pledge of real or
meeting of the minds of the parties to personal property, but the instrument
a contract, their true intention is not states that the property is sold
expressed in the instrument absolutely or with a right of
purporting to embody the agreement, repurchase, reformation of the
by reason of mistake, fraud, instrument is proper.
inequitable conduct or accident, one
of the parties may ask for the Art. 1366. There shall be no
reformation of the instrument to the reformation in the following cases:
end that such true intention may be
expressed.
(1) Simple donations inter Art. 1373. If some stipulation of any
vivos wherein no condition is contract should admit of several
imposed; meanings, it shall be understood as
bearing that import which is most
(2) Wills; adequate to render it effectual. (1284)
(3) When the real agreement is Art. 1374. The various stipulations of
void. a contract shall be interpreted
together, attributing to the doubtful
Art. 1367. When one of the parties ones that sense which may result
has brought an action to enforce the from all of them taken jointly. (1285)
instrument, he cannot subsequently
ask for its reformation. Art. 1375. Words which may have
different significations shall be
Art. 1368. Reformation may be understood in that which is most in
ordered at the instance of either party keeping with the nature and object of
or his successors in interest, if the the contract. (1286)
mistake was mutual; otherwise, upon
petition of the injured party, or his Art. 1376. The usage or custom of the
heirs and assigns. place shall be borne in mind in the
interpretation of the ambiguities of a
Art. 1369. The procedure for the contract, and shall fill the omission of
reformation of instrument shall be stipulations which are ordinarily
governed by rules of court to be established. (1287)
promulgated by the Supreme Court.
Art. 1377. The interpretation of
obscure words or stipulations in a
CHAPTER 5 contract shall not favor the party who
INTERPRETATION OF CONTRACTS caused the obscurity. (1288)
(4) Those which refer to things Art. 1387. All contracts by virtue of
under litigation if they have which the debtor alienates property
been entered into by the by gratuitous title are presumed to
defendant without the have been entered into in fraud of
knowledge and approval of the creditors, when the donor did not
litigants or of competent reserve sufficient property to pay all
judicial authority; debts contracted before the donation.
(5) All other contracts specially Alienations by onerous title are also
declared by law to be subject presumed fraudulent when made by
to rescission. (1291a) persons against whom some
judgment has been issued. The
Art. 1382. Payments made in a state decision or attachment need not refer
of insolvency for obligations to to the property alienated, and need
whose fulfillment the debtor could not have been obtained by the party
not be compelled at the time they seeking the rescission.
were effected, are also rescissible.
(1292) In addition to these presumptions,
the design to defraud creditors may
Art. 1383. The action for rescission is be proved in any other manner
subsidiary; it cannot be instituted recognized by the law of evidence.
except when the party suffering (1297a)
damage has no other legal means to
obtain reparation for the same. (1294) Art. 1388. Whoever acquires in bad
faith the things alienated in fraud of
creditors, shall indemnify the latter
for damages suffered by them on And when the action refers to
account of the alienation, whenever, contracts entered into by minors or
due to any cause, it should be other incapacitated persons, from the
impossible for him to return them. time the guardianship ceases.
(1301a)
If there are two or more alienations,
the first acquirer shall be liable first, Art. 1392. Ratification extinguishes
and so on successively. (1298a) the action to annul a voidable
contract. (1309a)
Art. 1389. The action to claim
rescission must be commenced Art. 1393. Ratification may be
within four years. effected expressly or tacitly. It is
understood that there is a tacit
For persons under guardianship and ratification if, with knowledge of the
for absentees, the period of four reason which renders the contract
years shall not begin until the voidable and such reason having
termination of the former's ceased, the person who has a right to
incapacity, or until the domicile of the invoke it should execute an act which
latter is known. (1299) necessarily implies an intention to
waive his right. (1311a)
(2) When only one of the Art. 1418. When the law fixes, or
contracting parties is at fault, authorizes the fixing of the maximum
he cannot recover what he has number of hours of labor, and a
given by reason of the contract is entered into whereby a
contract, or ask for the laborer undertakes to work longer
fulfillment of what has been than the maximum thus fixed, he may
promised him. The other, who demand additional compensation for
is not at fault, may demand the service rendered beyond the time
return of what he has given limit.
without any obligation to
comply his promise. (1306) Art. 1419. When the law sets, or
authorizes the setting of a minimum
Art. 1413. Interest paid in excess of wage for laborers, and a contract is
the interest allowed by the usury agreed upon by which a laborer
laws may be recovered by the debtor, accepts a lower wage, he shall be
with interest thereon from the date of entitled to recover the deficiency.
the payment.
Art. 1420. In case of a divisible
Art. 1414. When money is paid or contract, if the illegal terms can be
property delivered for an illegal separated from the legal ones, the
purpose, the contract may be latter may be enforced.
repudiated by one of the parties
before the purpose has been Art. 1421. The defense of illegality of
accomplished, or before any damage contract is not available to third
has been caused to a third person. In persons whose interests are not
such case, the courts may, if the directly affected.
public interest will thus be
subserved, allow the party Art. 1422. A contract which is the
repudiating the contract to recover direct result of a previous illegal
the money or property. contract, is also void and inexistent.
Title III. - NATURAL OBLIGATIONS from the obligee who has spent or
consumed it in good faith. (1160A)
Art. 1423. Obligations are civil or
natural. Civil obligations give a right Art. 1428. When, after an action to
of action to compel their enforce a civil obligation has failed
performance. Natural obligations, not the defendant voluntarily performs
being based on positive law but on the obligation, he cannot demand the
equity and natural law, do not grant a return of what he has delivered or the
right of action to enforce their payment of the value of the service
performance, but after voluntary he has rendered.
fulfillment by the obligor, they
authorize the retention of what has Art. 1429. When a testate or intestate
been delivered or rendered by reason heir voluntarily pays a debt of the
thereof. Some natural obligations are decedent exceeding the value of the
set forth in the following articles. property which he received by will or
by the law of intestacy from the
Art. 1424. When a right to sue upon a estate of the deceased, the payment
civil obligation has lapsed by is valid and cannot be rescinded by
extinctive prescription, the obligor the payer.
who voluntarily performs the contract
cannot recover what he has delivered Art. 1430. When a will is declared
or the value of the service he has void because it has not been
rendered. executed in accordance with the
formalities required by law, but one
Art. 1425. When without the of the intestate heirs, after the
knowledge or against the will of the settlement of the debts of the
debtor, a third person pays a debt deceased, pays a legacy in
which the obligor is not legally bound compliance with a clause in the
to pay because the action thereon defective will, the payment is
has prescribed, but the debtor later effective and irrevocable.
voluntarily reimburses the third
person, the obligor cannot recover
what he has paid. Title IV. - ESTOPPEL (n)
(3) The party misled must have Art. 1443. No express trusts
been unaware of the true facts; concerning an immovable or any
and interest therein may be proved by
parol evidence.
(4) The party defrauded must
have acted in accordance with Art. 1444. No particular words are
the misrepresentation. required for the creation of an
express trust, it being sufficient that
Art. 1438. One who has allowed a trust is clearly intended.
another to assume apparent
ownership of personal property for Art. 1445. No trust shall fail because
the purpose of making any transfer of the trustee appointed declines the
it, cannot, if he received the sum for designation, unless the contrary
which a pledge has been constituted, should appear in the instrument
set up his own title to defeat the constituting the trust.
pledge of the property, made by the
other to a pledgee who received the Art. 1446. Acceptance by the
same in good faith and for value. beneficiary is necessary.
Nevertheless, if the trust imposes no
Art. 1439. Estoppel is effective only onerous condition upon the
as between the parties thereto or beneficiary, his acceptance shall be
presumed, if there is no proof to the Art. 1452. If two or more persons
contrary. agree to purchase property and by
common consent the legal title is
taken in the name of one of them for
CHAPTER 3 the benefit of all, a trust is created by
IMPLIED TRUSTS force of law in favor of the others in
proportion to the interest of each.
Art. 1447. The enumeration of the
following cases of implied trust does Art. 1453. When property is conveyed
not exclude others established by the to a person in reliance upon his
general law of trust, but the limitation declared intention to hold it for, or
laid down in Article 1442 shall be transfer it to another or the grantor,
applicable. there is an implied trust in favor of
the person whose benefit is
Art. 1448. There is an implied trust contemplated.
when property is sold, and the legal
estate is granted to one party but the Art. 1454. If an absolute conveyance
price is paid by another for the of property is made in order to
purpose of having the beneficial secure the performance of an
interest of the property. The former is obligation of the grantor toward the
the trustee, while the latter is the grantee, a trust by virtue of law is
beneficiary. However, if the person to established. If the fulfillment of the
whom the title is conveyed is a child, obligation is offered by the grantor
legitimate or illegitimate, of the one when it becomes due, he may
paying the price of the sale, no trust demand the reconveyance of the
is implied by law, it being disputably property to him.
presumed that there is a gift in favor
of the child. Art. 1455. When any trustee, guardian
or other person holding a fiduciary
Art. 1449. There is also an implied relationship uses trust funds for the
trust when a donation is made to a purchase of property and causes the
person but it appears that although conveyance to be made to him or to a
the legal estate is transmitted to the third person, a trust is established by
donee, he nevertheless is either to operation of law in favor of the
have no beneficial interest or only a person to whom the funds belong.
part thereof.
Art. 1456. If property is acquired
Art. 1450. If the price of a sale of through mistake or fraud, the person
property is loaned or paid by one obtaining it is, by force of law,
person for the benefit of another and considered a trustee of an implied
the conveyance is made to the lender trust for the benefit of the person
or payor to secure the payment of the from whom the property comes.
debt, a trust arises by operation of
law in favor of the person to whom Art. 1457. An implied trust may be
the money is loaned or for whom its proved by oral evidence.
is paid. The latter may redeem the
property and compel a conveyance
thereof to him. Title VI. - SALES
Art. 1479. A promise to buy and sell a Art. 1483. Subject to the provisions of
determinate thing for a price certain the Statute of Frauds and of any
is reciprocally demandable. other applicable statute, a contract of
sale may be made in writing, or by
An accepted unilateral promise to word of mouth, or partly in writing
buy or to sell a determinate thing for and partly by word of mouth, or may
a price certain is binding upon the be inferred from the conduct of the
promissor if the promise is parties. (n)
supported by a consideration distinct
from the price. (1451a) Art. 1484. In a contract of sale of
personal property the price of which
Art. 1480. Any injury to or benefit is payable in installments, the vendor
from the thing sold, after the contract may exercise any of the following
has been perfected, from the moment remedies:
of the perfection of the contract to
the time of delivery, shall be (1) Exact fulfillment of the
governed by Articles 1163 to 1165, obligation, should the vendee
and 1262. fail to pay;
This rule shall apply to the sale of (2) Cancel the sale, should the
fungible things, made independently vendee's failure to pay cover
and for a single price, or without two or more installments;
consideration of their weight,
number, or measure.
(3) Foreclose the chattel Art. 1490. The husband and the wife
mortgage on the thing sold, if cannot sell property to each other,
one has been constituted, except:
should the vendee's failure to
pay cover two or more (1) When a separation of
installments. In this case, he property was agreed upon in
shall have no further action the marriage settlements; or
against the purchaser to
recover any unpaid balance of (2) When there has been a
the price. Any agreement to the judicial separation or property
contrary shall be void. (1454-A- under Article 191. (1458a)
a)
Art. 1491. The following persons
Art. 1485. The preceding article shall cannot acquire by purchase, even at
be applied to contracts purporting to a public or judicial auction, either in
be leases of personal property with person or through the mediation of
option to buy, when the lessor has another:
deprived the lessee of the (1) The guardian, the property
possession or enjoyment of the of the person or persons who
thing. (1454-A-a) may be under his
guardianship;
Art. 1486. In the case referred to in
two preceding articles, a stipulation (2) Agents, the property whose
that the installments or rents paid administration or sale may
shall not be returned to the vendee or have been entrusted to them,
lessee shall be valid insofar as the unless the consent of the
same may not be unconscionable principal has been given;
under the circumstances. (n)
(3) Executors and
Art. 1487. The expenses for the administrators, the property of
execution and registration of the sale the estate under
shall be borne by the vendor, unless administration;
there is a stipulation to the contrary.
(1455a) (4) Public officers and
employees, the property of the
Art. 1488. The expropriation of State or of any subdivision
property for public use is governed thereof, or of any government-
by special laws. (1456) owned or controlled
corporation, or institution, the
administration of which has
CHAPTER 2 been intrusted to them; this
CAPACITY TO BUY OR SELL provision shall apply to judges
and government experts who,
Art. 1489. All persons who are in any manner whatsoever,
authorized in this Code to obligate take part in the sale;
themselves, may enter into a contract
of sale, saving the modifications (5) Justices, judges,
contained in the following articles. prosecuting attorneys, clerks
of superior and inferior courts,
Where necessaries are those sold and other officers and
and delivered to a minor or other employees connected with the
person without capacity to act, he administration of justice, the
must pay a reasonable price therefor. property and rights in litigation
Necessaries are those referred to in or levied upon an execution
Article 290. (1457a) before the court within whose
jurisdiction or territory they which the ownership will pass,
exercise their respective if the sale was divisible. (n)
functions; this prohibition
includes the act of acquiring
by assignment and shall apply CHAPTER 4
to lawyers, with respect to the OBLIGATIONS OF THE VENDOR
property and rights which may
be the object of any litigation SECTION 1. - General Provisions
in which they may take part by
virtue of their profession. Art. 1495. The vendor is bound to
transfer the ownership of and deliver,
(6) Any others specially as well as warrant the thing which is
disqualified by law. (1459a) the object of the sale. (1461a)
Art. 1492. The prohibitions in the two Art. 1496. The ownership of the thing
preceding articles are applicable to sold is acquired by the vendee from
sales in legal redemption, the moment it is delivered to him in
compromises and renunciations. (n) any of the ways specified in Articles
1497 to 1501, or in any other manner
CHAPTER 3 signifying an agreement that the
EFFECTS OF THE CONTRACT possession is transferred from the
WHEN THE THING SOLD HAS BEEN vendor to the vendee. (n)
LOST
Art. 1493. If at the time the contract of SECTION 2. - Delivery of the Thing
sale is perfected, the thing which is Sold
the object of the contract has been
entirely lost, the contract shall be Art. 1497. The thing sold shall be
without any effect. understood as delivered, when it is
placed in the control and possession
But if the thing should have been lost of the vendee. (1462a)
in part only, the vendee may choose
between withdrawing from the Art. 1498. When the sale is made
contract and demanding the through a public instrument, the
remaining part, paying its price in execution thereof shall be equivalent
proportion to the total sum agreed to the delivery of the thing which is
upon. (1460a) the object of the contract, if from the
deed the contrary does not appear or
Art. 1494. Where the parties purport a cannot clearly be inferred.
sale of specific goods, and the goods
without the knowledge of the seller With regard to movable property, its
have perished in part or have wholly delivery may also be made by the
or in a material part so deteriorated in delivery of the keys of the place or
quality as to be substantially depository where it is stored or kept.
changed in character, the buyer may (1463a)
at his option treat the sale:
Art. 1499. The delivery of movable
(1) As avoided; or property may likewise be made by
the mere consent or agreement of the
(2) As valid in all of the existing contracting parties, if the thing sold
goods or in so much thereof as cannot be transferred to the
have not deteriorated, and as possession of the vendee at the time
binding the buyer to pay the of the sale, or if the latter already had
agreed price for the goods in it in his possession for any other
reason. (1463a)
Art. 1500. There may also be in the goods until certain conditions
tradition constitutum possessorium. have been fulfilled. The right of
(n) possession or ownership may be
thus reserved notwithstanding the
Art. 1501. With respect to incorporeal delivery of the goods to the buyer or
property, the provisions of the first to a carrier or other bailee for the
paragraph of article 1498 shall purpose of transmission to the buyer.
govern. In any other case wherein
said provisions are not applicable, Where goods are shipped, and by the
the placing of the titles of ownership bill of lading the goods are
in the possession of the vendee or deliverable to the seller or his agent,
the use by the vendee of his rights, or to the order of the seller or of his
with the vendor's consent, shall be agent, the seller thereby reserves the
understood as a delivery. (1464) ownership in the goods. But, if
except for the form of the bill of
Art. 1502. When goods are delivered lading, the ownership would have
to the buyer "on sale or return" to passed to the buyer on shipment of
give the buyer an option to return the the goods, the seller's property in the
goods instead of paying the price, goods shall be deemed to be only for
the ownership passes to the buyer of the purpose of securing performance
delivery, but he may revest the by the buyer of his obligations under
ownership in the seller by returning the contract.
or tendering the goods within the
time fixed in the contract, or, if no Where goods are shipped, and by the
time has been fixed, within a bill of lading the goods are
reasonable time. (n) deliverable to order of the buyer or of
his agent, but possession of the bill
When goods are delivered to the of lading is retained by the seller or
buyer on approval or on trial or on his agent, the seller thereby reserves
satisfaction, or other similar terms, a right to the possession of the
the ownership therein passes to the goods as against the buyer.
buyer:
Where the seller of goods draws on
(1) When he signifies his the buyer for the price and transmits
approval or acceptance to the the bill of exchange and bill of lading
seller or does any other act together to the buyer to secure
adopting the transaction; acceptance or payment of the bill of
exchange, the buyer is bound to
(2) If he does not signify his return the bill of lading if he does not
approval or acceptance to the honor the bill of exchange, and if he
seller, but retains the goods wrongfully retains the bill of lading
without giving notice of he acquires no added right thereby.
rejection, then if a time has If, however, the bill of lading provides
been fixed for the return of the that the goods are deliverable to the
goods, on the expiration of buyer or to the order of the buyer, or
such time, and, if no time has is indorsed in blank, or to the buyer
been fixed, on the expiration of by the consignee named therein, one
a reasonable time. What is a who purchases in good faith, for
reasonable time is a question value, the bill of lading, or goods
of fact. (n) from the buyer will obtain the
ownership in the goods, although the
Art. 1503. When there is a contract of bill of exchange has not been
sale of specific goods, the seller may, honored, provided that such
by the terms of the contract, reserve purchaser has received delivery of
the right of possession or ownership the bill of lading indorsed by the
consignee named therein, or of the court of competent
goods, without notice of the facts jurisdiction;
making the transfer wrongful. (n)
(3) Purchases made in a
Art. 1504. Unless otherwise agreed, merchant's store, or in fairs, or
the goods remain at the seller's risk markets, in accordance with
until the ownership therein is the Code of Commerce and
transferred to the buyer, but when special laws. (n)
the ownership therein is transferred
to the buyer the goods are at the Art. 1506. Where the seller of goods
buyer's risk whether actual delivery has a voidable title thereto, but his
has been made or not, except that: title has not been avoided at the time
of the sale, the buyer acquires a good
(1) Where delivery of the goods title to the goods, provided he buys
has been made to the buyer or them in good faith, for value, and
to a bailee for the buyer, in without notice of the seller's defect of
pursuance of the contract and title. (n)
the ownership in the goods
has been retained by the seller Art. 1507. A document of title in
merely to secure performance which it is stated that the goods
by the buyer of his obligations referred to therein will be delivered to
under the contract, the goods the bearer, or to the order of any
are at the buyer's risk from the person named in such document is a
time of such delivery; negotiable document of title. (n)
Art. 1524. The vendor shall not be Where the ownership in the goods
bound to deliver the thing sold, if the has not passed to the buyer, the
vendee has not paid him the price, or unpaid seller has, in addition to his
if no period for the payment has been other remedies a right of withholding
fixed in the contract. (1466) delivery similar to and coextensive
with his rights of lien and stoppage in
Art. 1525. The seller of goods is transitu where the ownership has
deemed to be an unpaid seller within passed to the buyer. (n)
the meaning of this Title:
Art. 1527. Subject to the provisions of
(1) When the whole of the price this Title, the unpaid seller of goods
has not been paid or tendered; who is in possession of them is
entitled to retain possession of them
(2) When a bill of exchange or until payment or tender of the price in
other negotiable instrument the following cases, namely:
has been received as
conditional payment, and the (1) Where the goods have been
condition on which it was sold without any stipulation as
received has been broken by to credit;
reason of the dishonor of the
instrument, the insolvency of (2) Where the goods have been
the buyer, or otherwise. sold on credit, but the term of
credit has expired;
In Articles 1525 to 1535 the
term "seller" includes an agent of the (3) Where the buyer becomes
seller to whom the bill of lading has insolvent.
been indorsed, or a consignor or
agent who has himself paid, or is The seller may exercise his right of
directly responsible for the price, or lien notwithstanding that he is in
any other person who is in the possession of the goods as agent or
position of a seller. (n) bailee for the buyer. (n)
Art. 1528. Where an unpaid seller has behalf, takes delivery of them
made part delivery of the goods, he from such carrier or other
may exercise his right of lien on the bailee;
remainder, unless such part delivery
has been made under such (2) If the goods are rejected by
circumstances as to show an intent the buyer, and the carrier or
to waive the lien or right of retention. other bailee continues in
(n) possession of them, even if the
seller has refused to receive
Art. 1529. The unpaid seller of goods them back.
loses his lien thereon:
Goods are no longer in transit within
(1) When he delivers the goods the meaning of the preceding article:
to a carrier or other bailee for (1) If the buyer, or his agent in
the purpose of transmission to that behalf, obtains delivery of
the buyer without reserving the the goods before their arrival
ownership in the goods or the at the appointed destination;
right to the possession
thereof; (2) If, after the arrival of the
goods at the appointed
(2) When the buyer or his agent destination, the carrier or other
lawfully obtains possession of bailee acknowledges to the
the goods; buyer or his agent that he
holds the goods on his behalf
(3) By waiver thereof. and continues in possession of
them as bailee for the buyer or
The unpaid seller of goods, having a his agent; and it is immaterial
lien thereon, does not lose his lien by that further destination for the
reason only that he has obtained goods may have been
judgment or decree for the price of indicated by the buyer;
the goods. (n)
(3) If the carrier or other bailee
Art. 1530. Subject to the provisions of wrongfully refuses to deliver
this Title, when the buyer of goods is the goods to the buyer or his
or becomes insolvent, the unpaid agent in that behalf.
seller who has parted with the
possession of the goods has the If the goods are delivered to a ship,
right of stopping them in transitu, freight train, truck, or airplane
that is to say, he may resume chartered by the buyer, it is a
possession of the goods at any time question depending on the
while they are in transit, and he will circumstances of the particular case,
then become entitled to the same whether they are in the possession of
rights in regard to the goods as he the carrier as such or as agent of the
would have had if he had never buyer.
parted with the possession. (n)
If part delivery of the goods has been
Art. 1531. Goods are in transit within made to the buyer, or his agent in
the meaning of the preceding article: that behalf, the remainder of the
goods may be stopped in transitu,
(1) From the time when they unless such part delivery has been
are delivered to a carrier by under such circumstances as to
land, water, or air, or other show an agreement with the buyer to
bailee for the purpose of give up possession of the whole of
transmission to the buyer, until the goods. (n)
the buyer, or his agent in that
Art. 1532. The unpaid seller may resell the goods be given by the
exercise his right of stoppage in seller to the original buyer. But where
transitu either by obtaining actual the right to resell is not based on the
possession of the goods or by giving perishable nature of the goods or
notice of his claim to the carrier or upon an express provision of the
other bailee in whose possession the contract of sale, the giving or failure
goods are. Such notice may be given to give such notice shall be relevant
either to the person in actual in any issue involving the question
possession of the goods or to his whether the buyer had been in
principal. In the latter case the notice, default for an unreasonable time
to be effectual, must be given at such before the resale was made.
time and under such circumstances
that the principal, by the exercise of It is not essential to the validity of a
reasonable diligence, may prevent a resale that notice of the time and
delivery to the buyer. place of such resale should be given
by the seller to the original buyer.
When notice of stoppage in transitu
is given by the seller to the carrier, or The seller is bound to exercise
other bailee in possession of the reasonable care and judgment in
goods, he must redeliver the goods making a resale, and subject to this
to, or according to the directions of, requirement may make a resale either
the seller. The expenses of such by public or private sale. He cannot,
delivery must be borne by the seller. however, directly or indirectly buy
If, however, a negotiable document of the goods. (n)
title representing the goods has been
issued by the carrier or other bailee, Art. 1534. An unpaid seller having the
he shall not obliged to deliver or right of lien or having stopped the
justified in delivering the goods to goods in transitu, may rescind the
the seller unless such document is transfer of title and resume the
first surrendered for cancellation. (n) ownership in the goods, where he
expressly reserved the right to do so
Art. 1533. Where the goods are of in case the buyer should make
perishable nature, or where the seller default, or where the buyer has been
expressly reserves the right of resale in default in the payment of the price
in case the buyer should make for an unreasonable time. The seller
default, or where the buyer has been shall not thereafter be liable to the
in default in the payment of the price buyer upon the contract of sale, but
for an unreasonable time, an unpaid may recover from the buyer damages
seller having a right of lien or having for any loss occasioned by the
stopped the goods in transitu may breach of the contract.
resell the goods. He shall not
thereafter be liable to the original The transfer of title shall not be held
buyer upon the contract of sale or for to have been rescinded by an unpaid
any profit made by such resale, but seller until he has manifested by
may recover from the buyer damages notice to the buyer or by some other
for any loss occasioned by the overt act an intention to rescind. It is
breach of the contract of sale. not necessary that such overt act
should be communicated to the
Where a resale is made, as buyer, but the giving or failure to give
authorized in this article, the buyer notice to the buyer of the intention to
acquires a good title as against the rescind shall be relevant in any issue
original buyer. involving the question whether the
buyer had been in default for an
It is not essential to the validity of unreasonable time before the right of
resale that notice of an intention to rescission was asserted. (n)
Art. 1535. Subject to the provisions of the latter should demand it, all that
this Title, the unpaid seller's right of may have been stated in the contract;
lien or stoppage in transitu is not but, should this be not possible, the
affected by any sale, or other vendee may choose between a
disposition of the goods which the proportional reduction of the price
buyer may have made, unless the and the rescission of the contract,
seller has assented thereto. provided that, in the latter case, the
lack in the area be not less than one-
If, however, a negotiable document of tenth of that stated.
title has been issued for goods, no
seller's lien or right of stoppage in The same shall be done, even when
transitu shall defeat the right of any the area is the same, if any part of the
purchaser for value in good faith to immovable is not of the quality
whom such document has been specified in the contract.
negotiated, whether such negotiation
be prior or subsequent to the The rescission, in this case, shall
notification to the carrier, or other only take place at the will of the
bailee who issued such document, of vendee, when the inferior value of the
the seller's claim to a lien or right of thing sold exceeds one-tenth of the
stoppage in transitu. (n) price agreed upon.
Art. 1536. The vendor is not bound to Nevertheless, if the vendee would not
deliver the thing sold in case the have bought the immovable had he
vendee should lose the right to make known of its smaller area of inferior
use of the terms as provided in quality, he may rescind the sale.
Article 1198. (1467a) (1469a)
Art. 1537. The vendor is bound to Art. 1540. If, in the case of the
deliver the thing sold and its preceding article, there is a greater
accessions and accessories in the area or number in the immovable
condition in which they were upon than that stated in the contract, the
the perfection of the contract. vendee may accept the area included
in the contract and reject the rest. If
All the fruits shall pertain to the he accepts the whole area, he must
vendee from the day on which the pay for the same at the contract rate.
contract was perfected. (1468a) (1470a)
Art. 1538. In case of loss, Art. 1541. The provisions of the two
deterioration or improvement of the preceding articles shall apply to
thing before its delivery, the rules in judicial sales. (n)
Article 1189 shall be observed, the
vendor being considered the debtor. Art. 1542. In the sale of real estate,
(n) made for a lump sum and not at the
rate of a certain sum for a unit of
Art. 1539. The obligation to deliver measure or number, there shall be no
the thing sold includes that of placing increase or decrease of the price,
in the control of the vendee all that is although there be a greater or less
mentioned in the contract, in area or number than that stated in the
conformity with the following rules: contract.
If the sale of real estate should be The same rule shall be applied when
made with a statement of its area, at two or more immovables as sold for a
the rate of a certain price for a unit of single price; but if, besides
measure or number, the vendor shall mentioning the boundaries, which is
be obliged to deliver to the vendee, if indispensable in every conveyance of
real estate, its area or number should nonperformance of the condition as a
be designated in the contract, the breach of warranty.
vendor shall be bound to deliver all
that is included within said Where the ownership in the thing has
boundaries, even when it exceeds the not passed, the buyer may treat the
area or number specified in the fulfillment by the seller of his
contract; and, should he not be able obligation to deliver the same as
to do so, he shall suffer a reduction described and as warranted
in the price, in proportion to what is expressly or by implication in the
lacking in the area or number, unless contract of sale as a condition of the
the contract is rescinded because the obligation of the buyer to perform his
vendee does not accede to the failure promise to accept and pay for the
to deliver what has been stipulated. thing. (n)
(1471)
Art. 1546. Any affirmation of fact or
Art. 1543. The actions arising from any promise by the seller relating to
Articles 1539 and 1542 shall the thing is an express warranty if the
prescribe in six months, counted natural tendency of such affirmation
from the day of delivery. (1472a) or promise is to induce the buyer to
purchase the same, and if the buyer
Art. 1544. If the same thing should purchase the thing relying thereon.
have been sold to different vendees, No affirmation of the value of the
the ownership shall be transferred to thing, nor any statement purporting
the person who may have first taken to be a statement of the seller's
possession thereof in good faith, if it opinion only, shall be construed as a
should be movable property. warranty, unless the seller made
such affirmation or statement as an
Should it be immovable property, the expert and it was relied upon by the
ownership shall belong to the person buyer. (n)
acquiring it who in good faith first
recorded it in the Registry of Art. 1547. In a contract of sale, unless
Property. a contrary intention appears, there is:
Art. 1551. If the property is sold for (5) The damages and interests,
nonpayment of taxes due and not and ornamental expenses, if
made known to the vendee before the the sale was made in bad faith.
sale, the vendor is liable for eviction. (1478)
(n)
Art. 1556. Should the vendee lose, by
Art. 1552. The judgment debtor is reason of the eviction, a part of the
also responsible for eviction in thing sold of such importance, in
judicial sales, unless it is otherwise relation to the whole, that he would
decreed in the judgment. (n) not have bought it without said part,
he may demand the rescission of the
Art. 1553. Any stipulation exempting contract; but with the obligation to
the vendor from the obligation to return the thing without other
answer for eviction shall be void, if encumbrances that those which it
he acted in bad faith. (1476) had when he acquired it.
Art. 1554. If the vendee has He may exercise this right of action,
renounced the right to warranty in instead of enforcing the vendor's
case of eviction, and eviction should liability for eviction.
take place, the vendor shall only pay
The same rule shall be observed SUBSECTION 2. - Warranty Against
when two or more things have been Hidden Defects
jointly sold for a lump sum, or for a of or Encumbrances Upon the Thing
separate price for each of them, if it Sold
should clearly appear that the vendee
would not have purchased one Art. 1561. The vendor shall be
without the other. (1479a) responsible for warranty against the
hidden defects which the thing sold
Art. 1557. The warranty cannot be may have, should they render it unfit
enforced until a final judgment has for the use for which it is intended, or
been rendered, whereby the vendee should they diminish its fitness for
loses the thing acquired or a part such use to such an extent that, had
thereof. (1480) the vendee been aware thereof, he
would not have acquired it or would
Art. 1558. The vendor shall not be have given a lower price for it; but
obliged to make good the proper said vendor shall not be answerable
warranty, unless he is summoned in for patent defects or those which
the suit for eviction at the instance of may be visible, or for those which are
the vendee. (1481a) not visible if the vendee is an expert
who, by reason of his trade or
Art. 1559. The defendant vendee shall profession, should have known them.
ask, within the time fixed in the Rules (1484a)
of Court for answering the complaint,
that the vendor be made a co- Art. 1562. In a sale of goods, there is
defendant. (1482a) an implied warranty or condition as
to the quality or fitness of the goods,
Art. 1560. If the immovable sold as follows:
should be encumbered with any non-
apparent burden or servitude, not (1) Where the buyer, expressly
mentioned in the agreement, of such or by implication, makes
a nature that it must be presumed known to the seller the
that the vendee would not have particular purpose for which
acquired it had he been aware the goods are acquired, and it
thereof, he may ask for the rescission appears that the buyer relies
of the contract, unless he should on the seller's skill or judgment
prefer the appropriate indemnity. (whether he be the grower or
Neither right can be exercised if the manufacturer or not), there is
non-apparent burden or servitude is an implied warranty that the
recorded in the Registry of Property, goods shall be reasonably fit
unless there is an express warranty for such purpose;
that the thing is free from all burdens
and encumbrances. (2) Where the goods are
brought by description from a
Within one year, to be computed from seller who deals in goods of
the execution of the deed, the vendee that description (whether he be
may bring the action for rescission, the grower or manufacturer or
or sue for damages. not), there is an implied
warranty that the goods shall
One year having elapsed, he may be of merchantable quality. (n)
only bring an action for damages
within an equal period, to be counted Art. 1563. In the case of contract of
from the date on which he discovered sale of a specified article under its
the burden or servitude. (1483a) patent or other trade name, there is
no warranty as to its fitness for any
particular purpose, unless there is a of the vendor the price which he paid,
stipulation to the contrary. (n) less the value which the thing had
when it was lost.
Art. 1564. An implied warranty or
condition as to the quality or fitness If the vendor acted in bad faith, he
for a particular purpose may be shall pay damages to the vendee.
annexed by the usage of trade. (n) (1488a)
Art. 1565. In the case of a contract of Art. 1570. The preceding articles of
sale by sample, if the seller is a this Subsection shall be applicable to
dealer in goods of that kind, there is judicial sales, except that the
an implied warranty that the goods judgment debtor shall not be liable
shall be free from any defect for damages. (1489a)
rendering them unmerchantable
which would not be apparent on Art. 1571. Actions arising from the
reasonable examination of the provisions of the preceding ten
sample. (n) articles shall be barred after six
months, from the delivery of the thing
Art. 1566. The vendor is responsible sold. (1490)
to the vendee for any hidden faults or
defects in the thing sold, even Art. 1572. If two or more animals are
though he was not aware thereof. sold together, whether for a lump
sum or for a separate price for each
This provision shall not apply if the of them, the redhibitory defect of one
contrary has been stipulated, and the shall only give rise to its redhibition,
vendor was not aware of the hidden and not that of the others; unless it
faults or defects in the thing sold. should appear that the vendee would
(1485) not have purchased the sound animal
or animals without the defective one.
Art. 1567. In the cases of Articles
1561, 1562, 1564, 1565 and 1566, the The latter case shall be presumed
vendee may elect between when a team, yoke pair, or set is
withdrawing from the contract and bought, even if a separate price has
demanding a proportionate reduction been fixed for each one of the
of the price, with damages in either animals composing the same. (1491)
case. (1486a)
Art. 1573. The provisions of the
Art. 1568. If the thing sold should be preceding article with respect to the
lost in consequence of the hidden sale of animals shall in like manner
faults, and the vendor was aware of be applicable to the sale of other
them, he shall bear the loss, and things. (1492)
shall be obliged to return the price
and refund the expenses of the Art. 1574. There is no warranty
contract, with damages. If he was not against hidden defects of animals
aware of them, he shall only return sold at fairs or at public auctions, or
the price and interest thereon, and of live stock sold as condemned.
reimburse the expenses of the (1493a)
contract which the vendee might
have paid. (1487a) Art. 1575. The sale of animals
suffering from contagious diseases
Art. 1569. If the thing sold had any shall be void.
hidden fault at the time of the sale,
and should thereafter be lost by a A contract of sale of animals shall
fortuitous event or through the fault also be void if the use or service for
of the vendee, the latter may demand which they are acquired has been
stated in the contract, and they are CHAPTER 5
found to be unfit therefor. (1494a) OBLIGATIONS OF THE VENDEE
Art. 1576. If the hidden defect of Art. 1582. The vendee is bound to
animals, even in case a professional accept delivery and to pay the price
inspection has been made, should be of the thing sold at the time and place
of such a nature that expert stipulated in the contract.
knowledge is not sufficient to
discover it, the defect shall be If the time and place should not have
considered as redhibitory. been stipulated, the payment must be
made at the time and place of the
But if the veterinarian, through delivery of the thing sold. (1500a)
ignorance or bad faith should fail to
discover or disclose it, he shall be Art. 1583. Unless otherwise agreed,
liable for damages. (1495) the buyer of goods is not bound to
accept delivery thereof by
Art. 1577. The redhibitory action, installments.
based on the faults or defects of
animals, must be brought within forty Where there is a contract of sale of
days from the date of their delivery to goods to be delivered by stated
the vendee. installments, which are to be
separately paid for, and the seller
This action can only be exercised makes defective deliveries in respect
with respect to faults and defects of one or more instalments, or the
which are determined by law or by buyer neglects or refuses without
local customs. (1496a) just cause to take delivery of or pay
for one more instalments, it depends
Art. 1578. If the animal should die in each case on the terms of the
within three days after its purchase, contract and the circumstances of
the vendor shall be liable if the the case, whether the breach of
disease which cause the death contract is so material as to justify
existed at the time of the contract. the injured party in refusing to
(1497a) proceed further and suing for
damages for breach of the entire
Art. 1579. If the sale be rescinded, the contract, or whether the breach is
animal shall be returned in the severable, giving rise to a claim for
condition in which it was sold and compensation but not to a right to
delivered, the vendee being treat the whole contract as broken.
answerable for any injury due to his (n)
negligence, and not arising from the
redhibitory fault or defect. (1498) Art. 1584. Where goods are delivered
to the buyer, which he has not
Art. 1580. In the sale of animals with previously examined, he is not
redhibitory defects, the vendee shall deemed to have accepted them
also enjoy the right mentioned in unless and until he has had a
article 1567; but he must make use reasonable opportunity of examining
thereof within the same period which them for the purpose of ascertaining
has been fixed for the exercise of the whether they are in conformity with
redhibitory action. (1499) the contract if there is no stipulation
to the contrary.
Art. 1581. The form of sale of large
cattle shall be governed by special Unless otherwise agreed, when the
laws. (n) seller tenders delivery of goods to
the buyer, he is bound, on request, to
afford the buyer a reasonable
opportunity of examining the goods If he voluntarily constitutes himself a
for the purpose of ascertaining depositary thereof, he shall be liable
whether they are in conformity with as such. (n)
the contract.
Art. 1588. If there is no stipulation as
Where goods are delivered to a specified in the first paragraph of
carrier by the seller, in accordance article 1523, when the buyer's refusal
with an order from or agreement with to accept the goods is without just
the buyer, upon the terms that the cause, the title thereto passes to him
goods shall not be delivered by the from the moment they are placed at
carrier to the buyer until he has paid his disposal. (n)
the price, whether such terms are
indicated by marking the goods with Art. 1589. The vendee shall owe
the words "collect on delivery," or interest for the period between the
otherwise, the buyer is not entitled to delivery of the thing and the payment
examine the goods before the of the price, in the following three
payment of the price, in the absence cases:
of agreement or usage of trade
permitting such examination. (n) (1) Should it have been so
stipulated;
Art. 1585. The buyer is deemed to
have accepted the goods when he (2) Should the thing sold and
intimates to the seller that he has delivered produce fruits or
accepted them, or when the goods income;
have been delivered to him, and he
does any act in relation to them (3) Should he be in default,
which is inconsistent with the from the time of judicial or
ownership of the seller, or when, extrajudicial demand for the
after the lapse of a reasonable time, payment of the price. (1501a)
he retains the goods without
intimating to the seller that he has Art. 1590. Should the vendee be
rejected them. (n) disturbed in the possession or
ownership of the thing acquired, or
Art. 1586. In the absence of express should he have reasonable grounds
or implied agreement of the parties, to fear such disturbance, by a
acceptance of the goods by the buyer vindicatory action or a foreclosure of
shall not discharge the seller from mortgage, he may suspend the
liability in damages or other legal payment of the price until the vendor
remedy for breach of any promise or has caused the disturbance or
warranty in the contract of sale. But, danger to cease, unless the latter
if, after acceptance of the goods, the gives security for the return of the
buyer fails to give notice to the seller price in a proper case, or it has been
of the breach in any promise of stipulated that, notwithstanding any
warranty within a reasonable time such contingency, the vendee shall
after the buyer knows, or ought to be bound to make the payment. A
know of such breach, the seller shall mere act of trespass shall not
not be liable therefor. (n) authorize the suspension of the
payment of the price. (1502a)
Art. 1587. Unless otherwise agreed,
where goods are delivered to the Art. 1591. Should the vendor have
buyer, and he refuses to accept them, reasonable grounds to fear the loss
having the right so to do, he is not of immovable property sold and its
bound to return them to the seller, price, he may immediately sue for the
but it is sufficient if he notifies the rescission of the sale.
seller that he refuses to accept them.
Should such ground not exist, the of title and the buyer wrongfully
provisions of Article 1191 shall be neglects or refuses to pay such price,
observed. (1503) the seller may maintain an action for
the price although the ownership in
Art. 1592. In the sale of immovable the goods has not passed. But it
property, even though it may have shall be a defense to such an action
been stipulated that upon failure to that the seller at any time before the
pay the price at the time agreed upon judgment in such action has
the rescission of the contract shall of manifested an inability to perform the
right take place, the vendee may pay, contract of sale on his part or an
even after the expiration of the intention not to perform it.
period, as long as no demand for
rescission of the contract has been Although the ownership in the goods
made upon him either judicially or by has not passed, if they cannot readily
a notarial act. After the demand, the be resold for a reasonable price, and
court may not grant him a new term. if the provisions of article 1596,
(1504a) fourth paragraph, are not applicable,
the seller may offer to deliver the
Art. 1593. With respect to movable goods to the buyer, and, if the buyer
property, the rescission of the sale refuses to receive them, may notify
shall of right take place in the interest the buyer that the goods are
of the vendor, if the vendee, upon the thereafter held by the seller as bailee
expiration of the period fixed for the for the buyer. Thereafter the seller
delivery of the thing, should not have may treat the goods as the buyer's
appeared to receive it, or, having and may maintain an action for the
appeared, he should not have price. (n)
tendered the price at the same time,
unless a longer period has been Art. 1596. Where the buyer wrongfully
stipulated for its payment. (1505) neglects or refuses to accept and pay
for the goods, the seller may
maintain an action against him for
CHAPTER 6 damages for nonacceptance.
ACTIONS FOR BREACH OF
CONTRACT OF SALE OF GOODS The measure of damages is the
estimated loss directly and naturally
Art. 1594. Actions for breach of the resulting in the ordinary course of
contract of sale of goods shall be events from the buyer's breach of
governed particularly by the contract.
provisions of this Chapter, and as to
matters not specifically provided for Where there is an available market
herein, by other applicable for the goods in question, the
provisions of this Title. (n) measure of damages is, in the
absence of special circumstances
Art. 1595. Where, under a contract of showing proximate damage of a
sale, the ownership of the goods has different amount, the difference
passed to the buyer and he between the contract price and the
wrongfully neglects or refuses to pay market or current price at the time or
for the goods according to the terms times when the goods ought to have
of the contract of sale, the seller may been accepted, or, if no time was
maintain an action against him for fixed for acceptance, then at the time
the price of the goods. of the refusal to accept.
Where, under a contract of sale, the If, while labor or expense of material
price is payable on a certain day, amount is necessary on the part of
irrespective of delivery or of transfer the seller to enable him to fulfill his
obligations under the contract of the seller for damages for the
sale, the buyer repudiates the breach of warranty;
contract or notifies the seller to
proceed no further therewith, the (4) Rescind the contract of sale
buyer shall be liable to the seller for and refuse to receive the
labor performed or expenses made goods or if the goods have
before receiving notice of the buyer's already been received, return
repudiation or countermand. The them or offer to return them to
profit the seller would have made if the seller and recover the price
the contract or the sale had been or any part thereof which has
fully performed shall be considered been paid.
in awarding the damages. (n)
When the buyer has claimed
Art. 1597. Where the goods have not and been granted a remedy in
been delivered to the buyer, and the anyone of these ways, no other
buyer has repudiated the contract of remedy can thereafter be
sale, or has manifested his inability granted, without prejudice to
to perform his obligations the provisions of the second
thereunder, or has committed a paragraph of Article 1191.
breach thereof, the seller may totally
rescind the contract of sale by giving Where the goods have been
notice of his election so to do to the delivered to the buyer, he
buyer. (n) cannot rescind the sale if he
knew of the breach of warranty
Art. 1598. Where the seller has when he accepted the goods
broken a contract to deliver specific without protest, or if he fails to
or ascertained goods, a court may, notify the seller within a
on the application of the buyer, direct reasonable time of the election
that the contract shall be performed to rescind, or if he fails to
specifically, without giving the seller return or to offer to return the
the option of retaining the goods on goods to the seller in
payment of damages. The judgment substantially as good
or decree may be unconditional, or condition as they were in at the
upon such terms and conditions as time the ownership was
to damages, payment of the price and transferred to the buyer. But if
otherwise, as the court may deem deterioration or injury of the
just. (n) goods is due to the breach or
warranty, such deterioration or
Art. 1599. Where there is a breach of injury shall not prevent the
warranty by the seller, the buyer may, buyer from returning or
at his election: offering to return the goods to
the seller and rescinding the
(1) Accept or keep the goods sale.
and set up against the seller,
the breach of warranty by way Where the buyer is entitled to
of recoupment in diminution or rescind the sale and elects to
extinction of the price; do so, he shall cease to be
liable for the price upon
(2) Accept or keep the goods returning or offering to return
and maintain an action against the goods. If the price or any
the seller for damages for the part thereof has already been
breach of warranty; paid, the seller shall be liable
to repay so much thereof as
(3) Refuse to accept the goods, has been paid, concurrently
and maintain an action against with the return of the goods, or
immediately after an offer to mortgage, in any of the following
return the goods in exchange cases:
for repayment of the price.
(1) When the price of a sale
Where the buyer is entitled to with right to repurchase is
rescind the sale and elects to unusually inadequate;
do so, if the seller refuses to
accept an offer of the buyer to (2) When the vendor remains in
return the goods, the buyer possession as lessee or
shall thereafter be deemed to otherwise;
hold the goods as bailee for
the seller, but subject to a lien (3) When upon or after the
to secure payment of any expiration of the right to
portion of the price which has repurchase another instrument
been paid, and with the extending the period of
remedies for the enforcement redemption or granting a new
of such lien allowed to an period is executed;
unpaid seller by Article 1526.
(4) When the purchaser retains
(5) In the case of breach of for himself a part of the
warranty of quality, such loss, purchase price;
in the absence of special
circumstances showing (5) When the vendor binds
proximate damage of a greater himself to pay the taxes on the
amount, is the difference thing sold;
between the value of the goods
at the time of delivery to the (6) In any other case where it
buyer and the value they would may be fairly inferred that the
have had if they had answered real intention of the parties is
to the warranty. (n) that the transaction shall
secure the payment of a debt
or the performance of any
CHAPTER 7 other obligation.
EXTINGUISHMENT OF SALE
In any of the foregoing cases, any
Art. 1600. Sales are extinguished by money, fruits, or other benefit to be
the same causes as all other received by the vendee as rent or
obligations, by those stated in the otherwise shall be considered as
preceding articles of this Title, and by interest which shall be subject to the
conventional or legal redemption. usury laws. (n)
(1506)
Art. 1603. In case of doubt, a contract
SECTION 1. - Conventional purporting to be a sale with right to
Redemption repurchase shall be construed as an
equitable mortgage. (n)
Art. 1601. Conventional redemption
shall take place when the vendor Art. 1604. The provisions of Article
reserves the right to repurchase the 1602 shall also apply to a contract
thing sold, with the obligation to purporting to be an absolute sale. (n)
comply with the provisions of Article
1616 and other stipulations which Art. 1605. In the cases referred to in
may have been agreed upon. (1507) Articles 1602 and 1604, the apparent
vendor may ask for the reformation
Art. 1602. The contract shall be of the instrument. (n)
presumed to be an equitable
Art. 1606. The right referred to in Art. 1612. If several persons, jointly
Article 1601, in the absence of an and in the same contract, should sell
express agreement, shall last four an undivided immovable with a right
years from the date of the contract. of repurchase, none of them may
exercise this right for more than his
Should there be an agreement, the respective share.
period cannot exceed ten years.
The same rule shall apply if the
However, the vendor may still person who sold an immovable alone
exercise the right to repurchase has left several heirs, in which case
within thirty days from the time final each of the latter may only redeem
judgment was rendered in a civil the part which he may have acquired.
action on the basis that the contract (1514)
was a true sale with right to
repurchase. (1508a) Art. 1613. In the case of the
preceding article, the vendee may
Art. 1607. In case of real property, the demand of all the vendors or co-heirs
consolidation of ownership in the that they come to an agreement upon
vendee by virtue of the failure of the the purchase of the whole thing sold;
vendor to comply with the provisions and should they fail to do so, the
of article 1616 shall not be recorded vendee cannot be compelled to
in the Registry of Property without a consent to a partial redemption.
judicial order, after the vendor has (1515)
been duly heard. (n)
Art. 1614. Each one of the co-owners
Art. 1608. The vendor may bring his of an undivided immovable who may
action against every possessor have sold his share separately, may
whose right is derived from the independently exercise the right of
vendee, even if in the second repurchase as regards his own share,
contract no mention should have and the vendee cannot compel him to
been made of the right to repurchase, redeem the whole property. (1516)
without prejudice to the provisions of
the Mortgage Law and the Land Art. 1615. If the vendee should leave
Registration Law with respect to third several heirs, the action for
persons. (1510) redemption cannot be brought
against each of them except for his
Art. 1609. The vendee is subrogated own share, whether the thing be
to the vendor's rights and actions. undivided, or it has been partitioned
(1511) among them.
Art. 1610. The creditors of the vendor But if the inheritance has been
cannot make use of the right of divided, and the thing sold has been
redemption against the vendee, until awarded to one of the heirs, the
after they have exhausted the action for redemption may be
property of the vendor. (1512) instituted against him for the whole.
(1517)
Art. 1611. In a sale with a right to
repurchase, the vendee of a part of Art. 1616. The vendor cannot avail
an undivided immovable who himself of the right of repurchase
acquires the whole thereof in the without returning to the vendee the
case of article 498, may compel the price of the sale, and in addition:
vendor to redeem the whole property,
if the latter wishes to make use of the (1) The expenses of the
right of redemption. (1513) contract, and any other
legitimate payments made by redemptioner shall pay only a
reason of the sale; reasonable one.
(2) The necessary and useful Should two or more co-owners desire
expenses made on the thing to exercise the right of redemption,
sold. (1518) they may only do so in proportion to
the share they may respectively have
Art. 1617. If at the time of the in the thing owned in common.
execution of the sale there should be (1522a)
on the land, visible or growing fruits,
there shall be no reimbursement for Art. 1621. The owners of adjoining
or prorating of those existing at the lands shall also have the right of
time of redemption, if no indemnity redemption when a piece of rural
was paid by the purchaser when the land, the area of which does not
sale was executed. exceed one hectare, is alienated,
unless the grantee does not own any
Should there have been no fruits at rural land.
the time of the sale and some exist at
the time of redemption, they shall be This right is not applicable to
prorated between the redemptioner adjacent lands which are separated
and the vendee, giving the latter the by brooks, drains, ravines, roads and
part corresponding to the time he other apparent servitudes for the
possessed the land in the last year, benefit of other estates.
counted from the anniversary of the
date of the sale. (1519a) If two or more adjoining owners
desire to exercise the right of
Art. 1618. The vendor who recovers redemption at the same time, the
the thing sold shall receive it free owner of the adjoining land of
from all charges or mortgages smaller area shall be preferred; and
constituted by the vendee, but he should both lands have the same
shall respect the leases which the area, the one who first requested the
latter may have executed in good redemption. (1523a)
faith, and in accordance with the
custom of the place where the land is Art. 1622. Whenever a piece of urban
situated. (1520) land which is so small and so
situated that a major portion thereof
cannot be used for any practical
SECTION 2. - Legal Redemption purpose within a reasonable time,
having been bought merely for
Art. 1619. Legal redemption is the speculation, is about to be re-sold,
right to be subrogated, upon the the owner of any adjoining land has a
same terms and conditions stipulated right of pre-emption at a reasonable
in the contract, in the place of one price.
who acquires a thing by purchase or
dation in payment, or by any other If the re-sale has been perfected, the
transaction whereby ownership is owner of the adjoining land shall
transmitted by onerous title. (1521a) have a right of redemption, also at a
reasonable price.
Art. 1620. A co-owner of a thing may
exercise the right of redemption in When two or more owners of
case the shares of all the other co- adjoining lands wish to exercise the
owners or of any of them, are sold to right of
a third person. If the price of the
alienation is grossly excessive, the pre-emption or redemption, the
owner whose intended use of the
land in question appears best unless the insolvency was prior to
justified shall be preferred. (n) the sale and of common knowledge.
Art. 1623. The right of legal pre- Even in these cases he shall only be
emption or redemption shall not be liable for the price received and for
exercised except within thirty days the expenses specified in No. 1 of
from the notice in writing by the Article 1616.
prospective vendor, or by the vendor,
as the case may be. The deed of sale The vendor in bad faith shall always
shall not be recorded in the Registry be answerable for the payment of all
of Property, unless accompanied by expenses, and for damages. (1529)
an affidavit of the vendor that he has
given written notice thereof to all Art. 1629. In case the assignor in
possible redemptioners. good faith should have made himself
responsible for the solvency of the
The right of redemption of co-owners debtor, and the contracting parties
excludes that of adjoining owners. should not have agreed upon the
(1524a) duration of the liability, it shall last
for one year only, from the time of the
assignment if the period had already
CHAPTER 8 expired.
ASSIGNMENT OF CREDITS AND
OTHER INCORPOREAL RIGHTS If the credit should be payable within
a term or period which has not yet
Art. 1624. An assignment of creditors expired, the liability shall cease one
and other incorporeal rights shall be year after the maturity. (1530a)
perfected in accordance with the
provisions of Article 1475. (n) Art. 1630. One who sells an
inheritance without enumerating the
Art. 1625. An assignment of a credit, things of which it is composed, shall
right or action shall produce no effect only be answerable for his character
as against third person, unless it as an heir. (1531)
appears in a public instrument, or the
instrument is recorded in the Art. 1631. One who sells for a lump
Registry of Property in case the sum the whole of certain rights,
assignment involves real property. rents, or products, shall comply by
(1526) answering for the legitimacy of the
whole in general; but he shall not be
Art. 1626. The debtor who, before obliged to warrant each of the
having knowledge of the assignment, various parts of which it may be
pays his creditor shall be released composed, except in the case of
from the obligation. (1527) eviction from the whole or the part of
greater value. (1532a)
Art. 1627. The assignment of a credit
includes all the accessory rights, Art. 1632. Should the vendor have
such as a guaranty, mortgage, pledge profited by some of the fruits or
or preference. (1528) received anything from the
inheritance sold, he shall pay the
Art. 1628. The vendor in good faith vendee thereof, if the contrary has
shall be responsible for the existence not been stipulated. (1533)
and legality of the credit at the time
of the sale, unless it should have Art. 1633. The vendee shall, on his
been sold as doubtful; but not for the part, reimburse the vendor for all that
solvency of the debtor, unless it has the latter may have paid for the debts
been so expressly stipulated or of and charges on the estate and
satisfy the credits he may have of the possession or control of
against the same, unless there is an the goods, or authorizing or
agreement to the contrary. (1534) purporting to authorize the
possessor of the document to
Art. 1634. When a credit or other transfer or receive, either by
incorporeal right in litigation is sold, endorsement or by delivery,
the debtor shall have a right to goods represented by such
extinguish it by reimbursing the document.
assignee for the price the latter paid
therefor, the judicial costs incurred "Goods" includes all chattels
by him, and the interest on the price personal but not things in
from the day on which the same was action or money of legal tender
paid. in the Philippines. The term
includes growing fruits or
A credit or other incorporeal right crops.
shall be considered in litigation from
the time the complaint concerning "Order" relating to documents
the same is answered. of title means an order by
endorsement on the
The debtor may exercise his right documents.
within thirty days from the date the
assignee demands payment from "Quality of goods" includes
him. (1535) their state or condition.
Art. 1635. From the provisions of the "Specific goods" means goods
preceding article shall be excepted identified and agreed upon at
the assignments or sales made: the time a contract of sale is
made.
(1) To a co-heir or co-owner of
the right assigned; An antecedent or pre-existing
claim, whether for money or
(2) To a creditor in payment of not, constitutes "value" where
his credit; goods or documents of title are
taken either in satisfaction
(3) To the possessor of a thereof or as security therefor.
tenement or piece of land
which is subject to the right in (2) A person is insolvent within
litigation assigned. (1536) the meaning of this Title who
either has ceased to pay his
CHAPTER 9 debts in the ordinary course of
GENERAL PROVISIONS business or cannot pay his
debts as they become due,
Art. 1636. In the preceding articles in whether insolvency
this Title governing the sale of proceedings have been
goods, unless the context or subject commenced or not.
matter otherwise requires:
(1) "Document of title to (3) Goods are in a "deliverable
goods" includes any bill of state" within the meaning of
lading, dock warrant, this Title when they are in such
"quedan," or warehouse a state that the buyer would,
receipt or order for the delivery under the contract, be bound
of goods, or any other to take delivery of them. (n)
document used in the ordinary
course of business in the sale Art. 1637. The provisions of this Title
or transfer of goods, as proof are subject to the rules laid down by
the Mortgage Law and the Land period which may be definite or
Registration Law with regard to indefinite. However, no lease for
immovable property. (1537a) more than ninety-nine years shall be
valid. (1543a)
Title VII. - BARTER OR EXCHANGE
Art. 1644. In the lease of work or
Art. 1638. By the contract of barter or service, one of the parties binds
exchange one of the parties binds himself to execute a piece of work or
himself to give one thing in to render to the other some service
consideration of the other's promise for a price certain, but the relation of
to give another thing. (1538a) principal and agent does not exist
between them. (1544a)
Art. 1639. If one of the contracting
parties, having received the thing Art. 1645. Consumable goods cannot
promised him in barter, should prove be the subject matter of a contract of
that it did not belong to the person lease, except when they are merely to
who gave it, he cannot be compelled be exhibited or when they are
to deliver that which he offered in accessory to an industrial
exchange, but he shall be entitled to establishment. (1545a)
damages. (1539a)
(1) To deliver the thing which is Art. 1658. The lessee may suspend
the object of the contract in the payment of the rent in case the
such a condition as to render it lessor fails to make the necessary
fit for the use intended; repairs or to maintain the lessee in
peaceful and adequate enjoyment of
the property leased. (n)
Art. 1659. If the lessor or the lessee proprietor, within the shortest
should not comply with the possible time, every usurpation or
obligations set forth in Articles 1654 untoward act which any third person
and 1657, the aggrieved party may may have committed or may be
ask for the rescission of the contract openly preparing to carry out upon
and indemnification for damages, or the thing leased.
only the latter, allowing the contract
to remain in force. (1556) He is also obliged to advise the
owner, with the same urgency, of the
Art. 1660. If a dwelling place or any need of all repairs included in No. 2
other building intended for human of Article 1654.
habitation is in such a condition that
its use brings imminent and serious In both cases the lessee shall be
danger to life or health, the lessee liable for the damages which,
may terminate the lease at once by through his negligence, may be
notifying the lessor, even if at the suffered by the proprietor.
time the contract was perfected the
former knew of the dangerous If the lessor fails to make urgent
condition or waived the right to repairs, the lessee, in order to avoid
rescind the lease on account of this an imminent danger, may order the
condition. (n) repairs at the lessor's cost. (1559a)
Art. 1661. The lessor cannot alter the Art. 1664. The lessor is not obliged to
form of the thing leased in such a answer for a mere act of trespass
way as to impair the use to which the which a third person may cause on
thing is devoted under the terms of the use of the thing leased; but the
the lease. (1557a) lessee shall have a direct action
against the intruder.
Art. 1662. If during the lease it should
become necessary to make some There is a mere act of trespass when
urgent repairs upon the thing leased, the third person claims no right
which cannot be deferred until the whatever. (1560a)
termination of the lease, the lessee is
obliged to tolerate the work, although Art. 1665. The lessee shall return the
it may be very annoying to him, and thing leased, upon the termination of
although during the same, he may be the lease, as he received it, save what
deprived of a part of the premises. has been lost or impaired by the
lapse of time, or by ordinary wear
If the repairs last more than forty and tear, or from an inevitable cause.
days the rent shall be reduced in (1561a)
proportion to the time - including the
first forty days - and the part of the Art. 1666. In the absence of a
property of which the lessee has statement concerning the condition
been deprived. of the thing at the time the lease was
constituted, the law presumes that
When the work is of such a nature the lessee received it in good
that the portion which the lessee and condition, unless there is proof to the
his family need for their dwelling contrary. (1562)
becomes uninhabitable, he may
rescind the contract if the main Art. 1667. The lessee is responsible
purpose of the lease is to provide a for the deterioration or loss of the
dwelling place for the lessee. (1558a) thing leased, unless he proves that it
took place without his fault. This
Art. 1663. The lessee is obliged to burden of proof on the lessee does
bring to the knowledge of the not apply when the destruction is due
to earthquake, flood, storm or other (3) Violation of any of the
natural calamity. (1563a) conditions agreed upon in the
contract;
Art. 1668. The lessee is liable for any
deterioration caused by members of (4) When the lessee devotes
his household and by guests and the thing leased to any use or
visitors. (1564a) service not stipulated which
causes the deterioration
Art. 1669. If the lease was made for a thereof; or if he does not
determinate time, it ceases upon the observe the requirement in No.
day fixed, without the need of a 2 of Article 1657, as regards
demand. (1565) the use thereof.
(1) When the period agreed If the buyer makes use of this right,
upon, or that which is fixed for the lessee may demand that he be
the duration of leases under allowed to gather the fruits of the
Articles 1682 and 1687, has harvest which corresponds to the
expired; current agricultural year and that the
vendor indemnify him for damages
(2) Lack of payment of the suffered.
price stipulated;
If the sale is fictitious, for the
purpose of extinguishing the lease,
the supposed vendee cannot make
use of the right granted in the first right to a reduction of the rent on
paragraph of this article. The sale is account of the sterility of the land
presumed to be fictitious if at the leased, or by reason of the loss of
time the supposed vendee demands fruits due to ordinary fortuitous
the termination of the lease, the sale events; but he shall have such right
is not recorded in the Registry of in case of the loss of more than one-
Property. (1571a) half of the fruits through
extraordinary and unforeseen
Art. 1677. The purchaser in a sale fortuitous events, save always when
with the right of redemption cannot there is a specific stipulation to the
make use of the power to eject the contrary.
lessee until the end of the period for
the redemption. (1572) Extraordinary fortuitous events are
understood to be: fire, war,
Art. 1678. If the lessee makes, in pestilence, unusual flood, locusts,
good faith, useful improvements earthquake, or others which are
which are suitable to the use for uncommon, and which the
which the lease is intended, without contracting parties could not have
altering the form or substance of the reasonably foreseen. (1575)
property leased, the lessor upon the
termination of the lease shall pay the Art. 1681. Neither does the lessee
lessee one-half of the value of the have any right to a reduction of the
improvements at that time. Should rent if the fruits are lost after they
the lessor refuse to reimburse said have been separated from their stalk,
amount, the lessee may remove the root or trunk. (1576)
improvements, even though the
principal thing may suffer damage Art. 1682. The lease of a piece of rural
thereby. He shall not, however, cause land, when its duration has not been
any more impairment upon the fixed, is understood to have been for
property leased than is necessary. all the time necessary for the
gathering of the fruits which the
With regard to ornamental expenses, whole estate leased may yield in one
the lessee shall not be entitled to any year, or which it may yield once,
reimbursement, but he may remove although two or more years have to
the ornamental objects, provided no elapse for the purpose. (1577a)
damage is caused to the principal
thing, and the lessor does not Art. 1683. The outgoing lessee shall
choose to retain them by paying their allow the incoming lessee or the
value at the time the lease is lessor the use of the premises and
extinguished. (n) other means necessary for the
preparatory labor for the following
Art. 1679. If nothing has been year; and, reciprocally, the incoming
stipulated concerning the place and lessee or the lessor is under
the time for the payment of the lease, obligation to permit the outgoing
the provisions or Article 1251 shall lessee to do whatever may be
be observed as regards the place; necessary for the gathering or
and with respect to the time, the harvesting and utilization of the
custom of the place shall be fruits, all in accordance with the
followed. (1574) custom of the place. (1578a)
Art. 1689. Household service shall Art. 1697. If the period for household
always be reasonably compensated. service is fixed neither the head of
Any stipulation that household the family nor the house helper may
terminate the contract before the with public interest that labor
expiration of the term, except for a contracts must yield to the common
just cause. If the house helper is good. Therefore, such contracts are
unjustly dismissed, he shall be paid subject to the special laws on labor
the compensation already earned unions, collective bargaining, strikes
plus that for fifteen days by way of and lockouts, closed shop, wages,
indemnity. If the house helper leaves working conditions, hours of labor
without justifiable reason, he shall and similar subjects.
forfeit any salary due him and
unpaid, for not exceeding fifteen Art. 1701. Neither capital nor labor
days. shall act oppressively against the
other, or impair the interest or
Art. 1698. If the duration of the convenience of the public.
household service is not determined
either by stipulation or by the nature Art. 1702. In case of doubt, all labor
of the service, the head of the family legislation and all labor contracts
or the house helper may give notice shall be construed in favor of the
to put an end to the service relation, safety and decent living for the
according to the following rules: laborer.
Art. 1699. Upon the extinguishment Art. 1708. The laborer's wages shall
of the service relation, the house not be subject to execution or
helper may demand from the head of attachment, except for debts incurred
the family a written statement on the for food, shelter, clothing and
nature and duration of the service medical attendance.
and the efficiency and conduct of the
house helper. Art. 1709. The employer shall neither
seize nor retain any tool or other
SECTION 2. - Contract of Labor (n) articles belonging to the laborer.
Art. 1700. The relations between Art. 1710. Dismissal of laborers shall
capital and labor are not merely be subject to the supervision of the
contractual. They are so impressed Government, under special laws.
Art. 1711. Owners of enterprises and transfer dominion over the thing.
other employers are obliged to pay This contract shall be governed by
compensation for the death of or the following articles as well as by
injuries to their laborers, workmen, the pertinent provisions on warranty
mechanics or other employees, even of title and against hidden defects
though the event may have been and the payment of price in a
purely accidental or entirely due to a contract of sale. (n)
fortuitous cause, if the death or
personal injury arose out of and in Art. 1715. The contract shall execute
the course of the employment. The the work in such a manner that it has
employer is also liable for the qualities agreed upon and has no
compensation if the employee defects which destroy or lessen its
contracts any illness or disease value or fitness for its ordinary or
caused by such employment or as stipulated use. Should the work be
the result of the nature of the not of such quality, the employer may
employment. If the mishap was due require that the contractor remove
to the employee's own notorious the defect or execute another work. If
negligence, or voluntary act, or the contract fails or refuses to
drunkenness, the employer shall not comply with this obligation, the
be liable for compensation. When the employer may have the defect
employee's lack of due care removed or another work executed,
contributed to his death or injury, the at the contractor's cost. (n)
compensation shall be equitably
reduced. Art. 1716. An agreement waiving or
limiting the contractor's liability for
Art. 1712. If the death or injury is due any defect in the work is void if the
to the negligence of a fellow worker, contractor acted fraudulently. (n)
the latter and the employer shall be
solidarily liable for compensation. If Art. 1717. If the contractor bound
afellow worker's intentional malicious himself to furnish the material, he
act is the only cause of the death or shall suffer the loss if the work
injury, the employer shall not be should be destroyed before its
answerable, unless it should be delivery, save when there has been
shown that the latter did not exercise delay in receiving it. (1589)
due diligence in the selection or
supervision of the plaintiff's fellow Art. 1718. The contractor who has
worker. undertaken to put only his work or
skill, cannot claim any compensation
if the work should be destroyed
SECTION 3. - Contract for a Piece of before its delivery, unless there has
Work been delay in receiving it, or if the
destruction was caused by the poor
Art. 1713. By the contract for a piece quality of the material, provided this
of work the contractor binds himself fact was communicated in due time
to execute a piece of work for the to the owner. If the material is lost
employer, in consideration of a through a fortuitous event, the
certain price or compensation. The contract is extinguished. (1590a)
contractor may either employ only
his labor or skill, or also furnish the Art. 1719. Acceptance of the work by
material. (1588a) the employer relieves the contractor
of liability for any defect in the work,
Art. 1714. If the contractor agrees to unless:
produce the work from material
furnished by him, he shall deliver the (1) The defect is hidden and
thing produced to the employer and the employer is not, by his
special knowledge, expected to likewise responsible for the damages
recognize the same; or if the edifice falls, within the same
period, on account of defects in the
(2) The employer expressly construction or the use of materials
reserves his rights against the of inferior quality furnished by him,
contractor by reason of the or due to any violation of the terms of
defect. (n) the contract. If the engineer or
architect supervises the
Art. 1720. The price or compensation construction, he shall be solidarily
shall be paid at the time and place of liable with the contractor.
delivery of the work, unless there is a
stipulation to the contrary. If the work Acceptance of the building, after
is to be delivered partially, the price completion, does not imply waiver of
or compensation for each part having any of the cause of action by reason
been fixed, the sum shall be paid at of any defect mentioned in the
the time and place of delivery, in the preceding paragraph.
absence if stipulation. (n)
The action must be brought within
Art. 1721. If, in the execution of the ten years following the collapse of
work, an act of the employer is the building. (n)
required, and he incurs in delay or
fails to perform the act, the Art. 1724. The contractor who
contractor is entitled to a reasonable undertakes to build a structure or any
compensation. other work for a stipulated price, in
conformity with plans and
The amount of the compensation is specifications agreed upon with the
computed, on the one hand, by the land-owner, can neither withdraw
duration of the delay and the amount from the contract nor demand an
of the compensation stipulated, and increase in the price on account of
on the other hand, by what the the higher cost of labor or materials,
contractor has saved in expenses by save when there has been a change
reason of the delay or is able to earn in the plans and specifications,
by a different employment of his time provided:
and industry. (n)
(1) Such change has been
Art. 1722. If the work cannot be authorized by the proprietor in
completed on account of a defect in writing; and
the material furnished by the
employer, or because of orders from (2) The additional price to be
the employer, without any fault on paid to the contractor has been
the part of the contractor, the latter determined in writing by both
has a right to an equitable part of the parties. (1593a)
compensation proportionally to the
work done, and reimbursement for Art. 1725. The owner may withdraw at
proper expenses made. (n) will from the construction of the
work, although it may have been
Art. 1723. The engineer or architect commenced, indemnifying the
who drew up the plans and contractor for all the latter's
specifications for a building is liable expenses, work, and the usefulness
for damages if within fifteen years which the owner may obtain
from the completion of the structure, therefrom, and damages. (1594a)
the same should collapse by reason
of a defect in those plans and Art. 1726. When a piece of work has
specifications, or due to the defects been entrusted to a person by reason
in the ground. The contractor is
of his personal qualifications, the If the work is subject to the approval
contract is rescinded upon his death. of a third person, his decision shall
be final, except in case of fraud or
In this case the proprietor shall pay manifest error. (1598a)
the heirs of the contractor in
proportion to the price agreed upon, Art. 1731. He who has executed work
the value of the part of the work upon a movable has a right to retain
done, and of the materials prepared, it by way of pledge until he is paid.
provided the latter yield him some (1600)
benefit.
The same rule shall apply if the SECTION 4. - Common Carriers (n)
contractor cannot finish the work due
to circumstances beyond his control. SUBSECTION 1. - General Provisions
(1595)
Art. 1732. Common carriers are
Art. 1727. The contractor is persons, corporations, firms or
responsible for the work done by associations engaged in the
persons employed by him. (1596) business of carrying or transporting
passengers or goods or both, by
Art. 1728. The contractor is liable for land, water, or air, for compensation,
all the claims of laborers and others offering their services to the public.
employed by him, and of third
persons for death or physical injuries Art. 1733. Common carriers, from the
during the construction. (n) nature of their business and for
reasons of public policy, are bound
Art. 1729. Those who put their labor to observe extraordinary diligence in
upon or furnish materials for a piece the vigilance over the goods and for
of work undertaken by the contractor the safety of the passengers
have an action against the owner up transported by them, according to all
to the amount owing from the latter to the circumstances of each case.
the contractor at the time the claim is
made. However, the following shall Such extraordinary diligence in the
not prejudice the laborers, vigilance over the goods is further
employees and furnishers of expressed in Articles 1734, 1735, and
materials: 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety
(1) Payments made by the of the passengers is further set forth
owner to the contractor before in Articles 1755 and 1756.
they are due;
(3) That the common carrier Art. 1749. A stipulation that the
need not observe any diligence common carrier's liability is limited to
in the custody of the goods; the value of the goods appearing in
the bill of lading, unless the shipper
(4) That the common carrier or owner declares a greater value, is
shall exercise a degree of binding.
diligence less than that of a
good father of a family, or of a Art. 1750. A contract fixing the sum
man of ordinary prudence in that may be recovered. by the owner
the vigilance over the or shipper for the loss, destruction,
movables transported; or deterioration of the goods is valid,
if it is reasonable and just under the
(5) That the common carrier circumstances, and has been fairly
shall not be responsible for the and freely agreed upon.
acts or omission of his or its
employees; Art. 1751. The fact that the common
carrier has no competitor along the
(6) That the common carrier's line or route, or a part thereof, to
liability for acts committed by which the contract refers shall be
thieves, or of robbers who do taken into consideration on the
not act with grave or question of whether or not a
irresistible threat, violence or stipulation limiting the common
force, is dispensed with or carrier's liability is reasonable, just
diminished; and in consonance with public
policy.
Art. 1752. Even when there is an The reduction of fare does not justify
agreement limiting the liability of the any limitation of the common
common carrier in the vigilance over carrier's liability.
the goods, the common carrier is
disputably presumed to have been Art. 1759. Common carriers are liable
negligent in case of their loss, for the death of or injuries to
destruction or deterioration. passengers through the negligence
or wilful acts of the former's
Art. 1753. The law of the country to employees, although such
which the goods are to be employees may have acted beyond
transported shall govern the liability the scope of their authority or in
of the common carrier for their loss, violation of the orders of the common
destruction or deterioration. carriers.
Art. 1754. The provisions of Articles This liability of the common carriers
1733 to 1753 shall apply to the does not cease upon proof that they
passenger's baggage which is not in exercised all the diligence of a good
his personal custody or in that of his father of a family in the selection and
employee. As to other baggage, the supervision of their employees.
rules in Articles 1998 and 2000 to
2003 concerning the responsibility of Art. 1760. The common carrier's
hotel-keepers shall be applicable. responsibility prescribed in the
preceding article cannot be
eliminated or limited by stipulation,
SUBSECTION 3. - Safety of by the posting of notices, by
Passengers statements on the tickets or
otherwise.
Art. 1755. A common carrier is bound
to carry the passengers safely as far Art. 1761. The passenger must
as human care and foresight can observe the diligence of a good
provide, using the utmost diligence father of a family to avoid injury to
of very cautious persons, with a due himself.
regard for all the circumstances.
Art. 1762. The contributory
Art. 1756. In case of death of or negligence of the passenger does not
injuries to passengers, common bar recovery of damages for his
carriers are presumed to have been death or injuries, if the proximate
at fault or to have acted negligently, cause thereof is the negligence of the
unless they prove that they observed common carrier, but the amount of
extraordinary diligence as prescribed damages shall be equitably reduced.
in Articles 1733 and 1755.
Art. 1763. A common carrier is
Art. 1757. The responsibility of a responsible for injuries suffered by a
common carrier for the safety of passenger on account of the wilful
passengers as required in Articles acts or negligence of other
1733 and 1755 cannot be dispensed passengers or of strangers, if the
with or lessened by stipulation, by common carrier's employees through
the posting of notices, by statements the exercise of the diligence of a
on tickets, or otherwise. good father of a family could have
prevented or stopped the act or
Art. 1758. When a passenger is omission.
carried gratuitously, a stipulation
limiting the common carrier's liability
for negligence is valid, but not for SUBSECTION 4. - Common
wilful acts or gross negligence. Provisions
(1) Except as provided by
Art. 1764. Damages in cases Article 1825, persons who are
comprised in this Section shall be not partners as to each other
awarded in accordance with Title are not partners as to third
XVIII of this Book, concerning persons;
Damages. Article 2206 shall also
apply to the death of a passenger (2) Co-ownership or co-
caused by the breach of contract by a possession does not of itself
common carrier. establish a partnership,
whether such-co-owners or co-
Art. 1765. The Public Service possessors do or do not share
Commission may, on its own motion any profits made by the use of
or on petition of any interested party, the property;
after due hearing, cancel the
certificate of public convenience (3) The sharing of gross
granted to any common carrier that returns does not of itself
repeatedly fails to comply with his or establish a partnership,
its duty to observe extraordinary whether or not the persons
diligence as prescribed in this sharing them have a joint or
Section. common right or interest in
any property from which the
Art. 1766. In all matters not regulated returns are derived;
by this Code, the rights and
obligations of common carriers shall (4) The receipt by a person of a
be governed by the Code of share of the profits of a
Commerce and by special laws. business is prima facie
evidence that he is a partner in
the business, but no such
Title IX. - PARTNERSHIP inference shall be drawn if
such profits were received in
CHAPTER 1 payment:
GENERAL PROVISIONS
Art. 1795. The risk of specific and Art. 1798. If the partners have agreed
determinate things, which are not to intrust to a third person the
fungible, contributed to the designation of the share of each one
partnership so that only their use and in the profits and losses, such
designation may be impugned only concurrence of all shall be necessary
when it is manifestly inequitable. In for the validity of the acts, and the
no case may a partner who has absence or disability of any one of
begun to execute the decision of the them cannot be alleged, unless there
third person, or who has not is imminent danger of grave or
impugned the same within a period of irreparable injury to the partnership.
three months from the time he had (1694)
knowledge thereof, complain of such
decision. Art. 1803. When the manner of
management has not been agreed
The designation of losses and profits upon, the following rules shall be
cannot be intrusted to one of the observed:
partners. (1690)
(1) All the partners shall be
Art. 1799. A stipulation which considered agents and
excludes one or more partners from whatever any one of them may
any share in the profits or losses is do alone shall bind the
void. (1691) partnership, without prejudice
to the provisions of Article
Art. 1800. The partner who has been 1801.
appointed manager in the articles of
partnership may execute all acts of (2) None of the partners may,
administration despite the opposition without the consent of the
of his partners, unless he should act others, make any important
in bad faith; and his power is alteration in the immovable
irrevocable without just or lawful property of the partnership,
cause. The vote of the partners even if it may be useful to the
representing the controlling interest partnership. But if the refusal
shall be necessary for such of consent by the other
revocation of power. partners is manifestly
prejudicial to the interest of the
A power granted after the partnership partnership, the court's
has been constituted may be revoked intervention may be sought.
at any time. (1692a) (1695a)
Art. 1801. If two or more partners Art. 1804. Every partner may
have been intrusted with the associate another person with him in
management of the partnership his share, but the associate shall not
without specification of their be admitted into the partnership
respective duties, or without a without the consent of all the other
stipulation that one of them shall not partners, even if the partner having
act without the consent of all the an associate should be a manager.
others, each one may separately (1696)
execute all acts of administration, but
if any of them should oppose the acts Art. 1805. The partnership books
of the others, the decision of the shall be kept, subject to any
majority shall prevail. In case of a tie, agreement between the partners, at
the matter shall be decided by the the principal place of business of the
partners owning the controlling partnership, and every partner shall
interest. (1693a) at any reasonable hour have access
to and may inspect and copy any of
Art. 1802. In case it should have been them. (n)
stipulated that none of the managing
partners shall act without the Art. 1806. Partners shall render on
consent of the others, the demand true and full information of
all things affecting the partnership to (2) His interest in the
any partner or the legal partnership; and
representative of any deceased
partner or of any partner under legal (3) His right to participate in
disability. (n) the management. (n)
Art. 1807. Every partner must Art. 1811. A partner is co-owner with
account to the partnership for any his partners of specific partnership
benefit, and hold as trustee for it any property.
profits derived by him without the
consent of the other partners from The incidents of this co-ownership
any transaction connected with the are such that:
formation, conduct, or liquidation of
the partnership or from any use by (1) A partner, subject to the
him of its property. (n) provisions of this Title and to
any agreement between the
Art. 1808. The capitalist partners partners, has an equal right
cannot engage for their own account with his partners to possess
in any operation which is of the kind specific partnership property
of business in which the partnership for partnership purposes; but
is engaged, unless there is a he has no right to possess
stipulation to the contrary. such property for any other
purpose without the consent of
Any capitalist partner violating this his partners;
prohibition shall bring to the common
funds any profits accruing to him (2) A partner's right in specific
from his transactions, and shall partnership property is not
personally bear all the losses. (n) assignable except in
connection with the
Art. 1809. Any partner shall have the assignment of rights of all the
right to a formal account as to partners in the same property;
partnership affairs:
(3) A partner's right in specific
(1) If he is wrongfully excluded partnership property is not
from the partnership business subject to attachment or
or possession of its property execution, except on a claim
by his co-partners; against the partnership. When
partnership property is
(2) If the right exists under the attached for a partnership debt
terms of any agreement; the partners, or any of them, or
the representatives of a
(3) As provided by article 1807; deceased partner, cannot claim
any right under the homestead
(4) Whenever other or exemption laws;
circumstances render it just
and reasonable. (n) (4) A partner's right in specific
partnership property is not
SECTION 2. - Property Rights of a subject to legal support under
Partner Article 291. (n)
Art. 1810. The property rights of a Art. 1812. A partner's interest in the
partner are: partnership is his share of the profits
(1) His rights in specific and surplus. (n)
partnership property;
Art. 1813. A conveyance by a partner purchased without thereby causing a
of his whole interest in the dissolution:
partnership does not of itself
dissolve the partnership, or, as (1) With separate property, by
against the other partners in the any one or more of the
absence of agreement, entitle the partners; or
assignee, during the continuance of
the partnership, to interfere in the (2) With partnership property,
management or administration of the by any one or more of the
partnership business or affairs, or to partners with the consent of all
require any information or account of the partners whose interests
partnership transactions, or to are not so charged or sold.
inspect the partnership books; but it
merely entitles the assignee to Nothing in this Title shall be held to
receive in accordance with his deprive a partner of his right, if any,
contract the profits to which the under the exemption laws, as regards
assigning partner would otherwise be his interest in the partnership. (n)
entitled. However, in case of fraud in
the management of the partnership, SECTION 3. - Obligations of the
the assignee may avail himself of the Partners
usual remedies. With Regard to Third Persons
The liability of a partner under the Nothing in this article shall affect the
first paragraph, No. 2, shall be liability under Article 1825 of any
satisfied out of partnership assets person who, after dissolution,
alone when such partner had been represents himself or consents to
prior to dissolution: another representing him as a
(1) Unknown as a partner to the partner in a partnership engaged in
person with whom the contract carrying business. (n)
is made; and
Art. 1835. The dissolution of the
(2) So far unknown and partnership does not of itself
inactive in partnership affairs discharge the existing liability of any
that the business reputation of partner.
the partnership could not be
said to have been in any A partner is discharged from any
degree due to his connection existing liability upon dissolution of
with it. the partnership by an agreement to
that effect between himself, the
The partnership is in no case bound partnership creditor and the person
by any act of a partner after or partnership continuing the
dissolution: business; and such agreement may
be inferred from the course of shall have:
dealing between the creditor having
knowledge of the dissolution and the (a) All the rights
person or partnership continuing the specified in the first
business. paragraph of this article,
and
The individual property of a deceased
partner shall be liable for all (b) The right, as against
obligations of the partnership each partner who has
incurred while he was a partner, but caused the dissolution
subject to the prior payment of his wrongfully, to damages
separate debts. (n) breach of the agreement.
Art. 1836. Unless otherwise agreed, (2) The partners who have not
the partners who have not wrongfully caused the dissolution
dissolved the partnership or the legal wrongfully, if they all desire to
representative of the last surviving continue the business in the
partner, not insolvent, has the right same name either by
to wind up the partnership affairs, themselves or jointly with
provided, however, that any partner, others, may do so, during the
his legal representative or his agreed term for the partnership
assignee, upon cause shown, may and for that purpose may
obtain winding up by the court. (n) possess the partnership
property, provided they secure
Art. 1837. When dissolution is caused the payment by bond approved
in any way, except in contravention by the court, or pay any
of the partnership agreement, each partner who has caused the
partner, as against his co-partners dissolution wrongfully, the
and all persons claiming through value of his interest in the
them in respect of their interests in partnership at the dissolution,
the partnership, unless otherwise less any damages recoverable
agreed, may have the partnership under the second paragraph,
property applied to discharge its No. 1 (b) of this article, and in
liabilities, and the surplus applied to like manner indemnify him
pay in cash the net amount owing to against all present or future
the respective partners. But if partnership liabilities.
dissolution is caused by expulsion of
a partner, bona fide under the (3) A partner who has caused
partnership agreement and if the the dissolution wrongfully
expelled partner is discharged from shall have:
all partnership liabilities, either by
payment or agreement under the
second paragraph of Article 1835, he (a) If the business is not
shall receive in cash only the net continued under the
amount due him from the provisions of the second
partnership. paragraph, No. 2, all the
rights of a partner under
When dissolution is caused in the first paragraph,
contravention of the partnership subject to liability for
agreement the rights of the partners damages in the second
shall be as follows: paragraph, No. 1 (b), of
this article.
(1) Each partner who has not
caused dissolution wrongfully (b) If the business is
continued under the
second paragraph, No. 2, Art. 1839. In settling accounts
of this article, the right between the partners after
as against his co- dissolution, the following rules shall
partners and all claiming be observed, subject to any
through them in respect agreement to the contrary:
of their interests in the (1) The assets of the
partnership, to have the partnership are:
value of his interest in
the partnership, less any (a) The partnership
damage caused to his property,
co-partners by the
dissolution, ascertained (b) The contributions of
and paid to him in cash, the partners necessary
or the payment secured for the payment of all the
by a bond approved by liabilities specified in No.
the court, and to be 2.
released from all
existing liabilities of the (2) The liabilities of the
partnership; but in partnership shall rank in order
ascertaining the value of of payment, as follows:
the partner's interest the
value of the good-will of (a) Those owing to
the business shall not be creditors other than
considered. (n) partners,
(15) Any other act of strict He must also finish the business
dominion. (n) already begun on the death of the
principal, should delay entail any
Art. 1879. A special power to sell danger. (1718)
excludes the power to mortgage; and
a special power to mortgage does not Art. 1885. In case a person declines
include the power to sell. (n) an agency, he is bound to observe
the diligence of a good father of a
Art. 1880. A special power to family in the custody and
compromise does not authorize preservation of the goods forwarded
submission to arbitration. (1713a) to him by the owner until the latter
should appoint an agent or take
Art. 1881. The agent must act within charge of the goods. (n)
the scope of his authority. He may do
such acts as may be conducive to the Art. 1886. Should there be a
accomplishment of the purpose of stipulation that the agent shall
the agency. (1714a) advance the necessary funds, he
shall be bound to do so except when
Art. 1882. The limits of the agent's the principal is insolvent. (n)
authority shall not be considered
exceeded should it have been Art. 1887. In the execution of the
performed in a manner more agency, the agent shall act in
advantageous to the principal than accordance with the instructions of
that specified by him. (1715) the principal.
Art. 1883. If an agent acts in his own In default thereof, he shall do all that
name, the principal has no right of a good father of a family would do, as
action against the persons with required by the nature of the
whom the agent has contracted; business. (1719)
Art. 1888. An agent shall not carry latter has contracted under the
out an agency if its execution would substitution. (1722a)
manifestly result in loss or damage to
the principal. (n) Art. 1894. The responsibility of two or
more agents, even though they have
Art. 1889. The agent shall be liable for been appointed simultaneously, is
damages if, there being a conflict not solidary, if solidarity has not
between his interests and those of been expressly stipulated. (1723)
the principal, he should prefer his
own. (n) Art. 1895. If solidarity has been
agreed upon, each of the agents is
Art. 1890. If the agent has been responsible for the non-fulfillment of
empowered to borrow money, he may agency, and for the fault or
himself be the lender at the current negligence of his fellows agents,
rate of interest. If he has been except in the latter case when the
authorized to lend money at interest, fellow agents acted beyond the
he cannot borrow it without the scope of their authority. (n)
consent of the principal. (n)
Art. 1896. The agent owes interest on
Art. 1891. Every agent is bound to the sums he has applied to his own
render an account of his transactions use from the day on which he did so,
and to deliver to the principal and on those which he still owes
whatever he may have received by after the extinguishment of the
virtue of the agency, even though it agency. (1724a)
may not be owing to the principal.
Art. 1897. The agent who acts as
Every stipulation exempting the such is not personally liable to the
agent from the obligation to render party with whom he contracts, unless
an account shall be void. (1720a) he expressly binds himself or
exceeds the limits of his authority
Art. 1892. The agent may appoint a without giving such party sufficient
substitute if the principal has not notice of his powers. (1725)
prohibited him from doing so; but he
shall be responsible for the acts of Art. 1898. If the agent contracts in the
the substitute: name of the principal, exceeding the
scope of his authority, and the
(1) When he was not given the principal does not ratify the contract,
power to appoint one; it shall be void if the party with whom
the agent contracted is aware of the
(2) When he was given such limits of the powers granted by the
power, but without designating principal. In this case, however, the
the person, and the person agent is liable if he undertook to
appointed was notoriously secure the principal's ratification. (n)
incompetent or insolvent.
Art. 1899. If a duly authorized agent
All acts of the substitute appointed acts in accordance with the orders of
against the prohibition of the the principal, the latter cannot set up
principal shall be void. (1721) the ignorance of the agent as to
circumstances whereof he himself
Art. 1893. In the cases mentioned in was, or ought to have been, aware.
Nos. 1 and 2 of the preceding article, (n)
the principal may furthermore bring
an action against the substitute with Art. 1900. So far as third persons are
respect to the obligations which the concerned, an act is deemed to have
been performed within the scope of
the agent's authority, if such act is Art. 1906. Should the commission
within the terms of the power of agent, with authority of the principal,
attorney, as written, even if the agent sell on credit, he shall so inform the
has in fact exceeded the limits of his principal, with a statement of the
authority according to an names of the buyers. Should he fail
understanding between the principal to do so, the sale shall be deemed to
and the agent. (n) have been made for cash insofar as
the principal is concerned. (n)
Art. 1901. A third person cannot set
up the fact that the agent has Art. 1907. Should the commission
exceeded his powers, if the principal agent receive on a sale, in addition to
has ratified, or has signified his the ordinary commission, another
willingness to ratify the agent's acts. called a guarantee commission, he
(n) shall bear the risk of collection and
shall pay the principal the proceeds
Art. 1902. A third person with whom of the sale on the same terms agreed
the agent wishes to contract on upon with the purchaser. (n)
behalf of the principal may require
the presentation of the power of Art. 1908. The commission agent who
attorney, or the instructions as does not collect the credits of his
regards the agency. Private or secret principal at the time when they
orders and instructions of the become due and demandable shall
principal do not prejudice third be liable for damages, unless he
persons who have relied upon the proves that he exercised due
power of attorney or instructions diligence for that purpose. (n)
shown them. (n)
Art. 1909. The agent is responsible
Art. 1903. The commission agent not only for fraud, but also for
shall be responsible for the goods negligence, which shall be judged
received by him in the terms and with more or less rigor by the courts,
conditions and as described in the according to whether the agency was
consignment, unless upon receiving or was not for a compensation. (1726)
them he should make a written
statement of the damage and
deterioration suffered by the same. CHAPTER 3
(n) OBLIGATIONS OF THE PRINCIPAL
Art. 1904. The commission agent who Art. 1910. The principal must comply
handles goods of the same kind and with all the obligations which the
mark, which belong to different agent may have contracted within the
owners, shall distinguish them by scope of his authority.
countermarks, and designate the
merchandise respectively belonging As for any obligation wherein the
to each principal. (n) agent has exceeded his power, the
principal is not bound except when
Art. 1905. The commission agent he ratifies it expressly or tacitly.
cannot, without the express or (1727)
implied consent of the principal, sell
on credit. Should he do so, the Art. 1911. Even when the agent has
principal may demand from him exceeded his authority, the principal
payment in cash, but the commission is solidarily liable with the agent if
agent shall be entitled to any interest the former allowed the latter to act as
or benefit, which may result from though he had full powers. (n)
such sale. (n)
Art. 1912. The principal must advance Art. 1918. The principal is not liable
to the agent, should the latter so for the expenses incurred by the
request, the sums necessary for the agent in the following cases:
execution of the agency.
(1) If the agent acted in
Should the agent have advanced contravention of the principal's
them, the principal must reimburse instructions, unless the latter
him therefor, even if the business or should wish to avail himself of
undertaking was not successful, the benefits derived from the
provided the agent is free from all contract;
fault.
(2) When the expenses were
The reimbursement shall include due to the fault of the agent;
interest on the sums advanced, from
the day on which the advance was (3) When the agent incurred
made. (1728) them with knowledge that an
unfavorable result would
Art. 1913. The principal must also ensue, if the principal was not
indemnify the agent for all the aware thereof;
damages which the execution of the
agency may have caused the latter, (4) When it was stipulated that
without fault or negligence on his the expenses would be borne
part. (1729) by the agent, or that the latter
would be allowed only a
Art. 1914. The agent may retain in certain sum. (n)
pledge the things which are the
object of the agency until the
principal effects the reimbursement CHAPTER 4
and pays the indemnity set forth in MODES OF EXTINGUISHMENT OF
the two preceding articles. (1730) AGENCY
Art. 1943. The bailee does not answer Art. 1948. The bailor may demand the
for the deterioration of the thing immediate return of the thing if the
loaned due only to the use thereof bailee commits any act of ingratitude
and without his fault. (1746) specified in Article 765. (n)
Art. 1944. The bailee cannot retain Art. 1949. The bailor shall refund the
the thing loaned on the ground that extraordinary expenses during the
the bailor owes him something, even contract for the preservation of the
though it may be by reason of thing loaned, provided the bailee
expenses. However, the bailee has a brings the same to the knowledge of
right of retention for damages the bailor before incurring them,
mentioned in Article 1951. (1747a) except when they are so urgent that
the reply to the notification cannot be
Art. 1945. When there are two or awaited without danger.
more bailees to whom a thing is
loaned in the same contract, they are If the extraordinary expenses arise
liable solidarily. (1748a) on the occasion of the actual use of
the thing by the bailee, even though
he acted without fault, they shall be
SECTION 3. - Obligations of the borne equally by both the bailor and
Bailor the bailee, unless there is a
stipulation to the contrary. (1751a)
Art. 1946. The bailor cannot demand
the return of the thing loaned till after Art. 1950. If, for the purpose of
the expiration of the period making use of the thing, the bailee
stipulated, or after the incurs expenses other than those
accomplishment of the use for which referred to in Articles 1941 and 1949,
the commodatum has been he is not entitled to reimbursement.
constituted. However, if in the (n)
meantime, he should have urgent
need of the thing, he may demand its Art. 1951. The bailor who, knowing
return or temporary use. the flaws of the thing loaned, does
not advise the bailee of the same,
In case of temporary use by the shall be liable to the latter for the
bailor, the contract damages which he may suffer by
of commodatum is suspended while reason thereof. (1752)
the thing is in the possession of the
bailor. (1749a) Art. 1952. The bailor cannot exempt
himself from the payment of
Art. 1947. The bailor may demand the expenses or damages by abandoning
thing at will, and the contractual the thing to the bailee. (n)
relation is called a precarium, in the
following cases:
CHAPTER 2
SIMPLE LOAN OR MUTUUM
added principal, shall earn new
Art. 1953. A person who receives a interest. (n)
loan of money or any other fungible
thing acquires the ownership thereof, Art. 1960. If the borrower pays
and is bound to pay to the creditor an interest when there has been no
equal amount of the same kind and stipulation therefor, the provisions of
quality. (1753a) this Code concerning solutio indebiti,
or natural obligations, shall be
Art. 1954. A contract whereby one applied, as the case may be. (n)
person transfers the ownership of
non-fungible things to another with Art. 1961. Usurious contracts shall be
the obligation on the part of the latter governed by the Usury Law and other
to give things of the same kind, special laws, so far as they are not
quantity, and quality shall be inconsistent with this Code. (n)
considered a barter. (n)
(2) If he uses the thing without Should the deposit consist of money,
the depositor's permission; the provisions relative to agents in
article 1896 shall be applied to the
(3) If he delays its return; depositary. (1770)
(4) If he allows others to use it, Art. 1984. The depositary cannot
even though he himself may demand that the depositor prove his
have been authorized to use ownership of the thing deposited.
the same. (n)
Nevertheless, should he discover
Art. 1980. Fixed, savings, and current that the thing has been stolen and
deposits of money in banks and who its true owner is, he must advise
similar institutions shall be governed the latter of the deposit.
by the provisions concerning simple
loan. (n) If the owner, in spite of such
information, does not claim it within
Art. 1981. When the thing deposited the period of one month, the
is delivered closed and sealed, the depositary shall be relieved of all
depositary must return it in the same responsibility by returning the thing
condition, and he shall be liable for deposited to the depositor.
damages should the seal or lock be
broken through his fault. If the depositary has reasonable
grounds to believe that the thing has
Fault on the part of the depositary is not been lawfully acquired by the
presumed, unless there is proof to depositor, the former may return the
the contrary. same. (1771a)
Art. 1985. When there are two or Art. 1989. Unless the deposit is for a
more depositors, if they are not valuable consideration, the
solidary, and the thing admits of depositary who may have justifiable
division, each one cannot demand reasons for not keeping the thing
more than his share. deposited may, even before the time
designated, return it to the depositor;
When there is solidarity or the thing and if the latter should refuse to
does not admit of division, the receive it, the depositary may secure
provisions of Articles 1212 and 1214 its consignation from the court.
shall govern. However, if there is a (1776a)
stipulation that the thing should be
returned to one of the depositors, the Art. 1990. If the depositary by force
depositary shall return it only to the majeure or government order loses
person designated. (1772a) the thing and receives money or
another thing in its place, he shall
Art. 1986. If the depositor should lose deliver the sum or other thing to the
his capacity to contract after having depositor. (1777a)
made the deposit, the thing cannot
be returned except to the persons Art. 1991. The depositor's heir who in
who may have the administration of good faith may have sold the thing
his property and rights. (1773) which he did not know was
deposited, shall only be bound to
Art. 1987. If at the time the deposit return the price he may have received
was made a place was designated for or to assign his right of action
the return of the thing, the depositary against the buyer in case the price
must take the thing deposited to has not been paid him. (1778)
such place; but the expenses for
transportation shall be borne by the
depositor. SECTION 3. - Obligations of the
Depositor
If no place has been designated for
the return, it shall be made where the Art. 1992. If the deposit is gratuitous,
thing deposited may be, even if it the depositor is obliged to reimburse
should not be the same place where the depositary for the expenses he
the deposit was made, provided that may have incurred for the
there was no malice on the part of the preservation of the thing deposited.
depositary. (1774) (1779a)
Art. 1988. The thing deposited must Art. 1993. The depositor shall
be returned to the depositor upon reimburse the depositary for any loss
demand, even though a specified arising from the character of the
period or time for such return may thing deposited, unless at the time of
have been fixed. the constitution of the deposit the
former was not aware of, or was not
This provision shall not apply when expected to know the dangerous
the thing is judicially attached while character of the thing, or unless he
in the depositary's possession, or notified the depositary of the same,
should he have been notified of the or the latter was aware of it without
opposition of a third person to the advice from the depositor. (n)
return or the removal of the thing
deposited. In these cases, the Art. 1994. The depositary may retain
depositary must immediately inform the thing in pledge until the full
the depositor of the attachment or payment of what may be due him by
opposition. (1775) reason of the deposit. (1780)
Art. 1995. A deposit its extinguished: which have been introduced or
placed in the annexes of the hotel.
(1) Upon the loss or (n)
destruction of the thing
deposited; Art. 2000. The responsibility referred
to in the two preceding articles shall
(2) In case of a gratuitous include the loss of, or injury to the
deposit, upon the death of personal property of the guests
either the depositor or the caused by the servants or employees
depositary. (n) of the keepers of hotels or inns as
well as strangers; but not that which
CHAPTER 3 may proceed from any force majeure.
NECESSARY DEPOSIT The fact that travellers are
constrained to rely on the vigilance
Art. 1996. A deposit is necessary: of the keeper of the hotels or inns
(1) When it is made in shall be considered in determining
compliance with a legal the degree of care required of him.
obligation; (1784a)
(2) When it takes place on the Art. 2001. The act of a thief or robber,
occasion of any calamity, such who has entered the hotel is not
as fire, storm, flood, pillage, deemed force majeure, unless it is
shipwreck, or other similar done with the use of arms or through
events. (1781a) an irresistible force. (n)
Art. 1997. The deposit referred to in Art. 2002. The hotel-keeper is not
No. 1 of the preceding article shall be liable for compensation if the loss is
governed by the provisions of the law due to the acts of the guest, his
establishing it, and in case of its family, servants or visitors, or if the
deficiency, by the rules on voluntary loss arises from the character of the
deposit. things brought into the hotel. (n)
The deposit mentioned in No. 2 of the Art. 2003. The hotel-keeper cannot
preceding article shall be regulated free himself from responsibility by
by the provisions concerning posting notices to the effect that he
voluntary deposit and by Article is not liable for the articles brought
2168. (1782) by the guest. Any stipulation between
the hotel-keeper and the guest
Art. 1998. The deposit of effects whereby the responsibility of the
made by the travellers in hotels or former as set forth in articles 1998 to
inns shall also be regarded as 2001 is suppressed or diminished
necessary. The keepers of hotels or shall be void. (n)
inns shall be responsible for them as
depositaries, provided that notice Art. 2004. The hotel-keeper has a
was given to them, or to their right to retain the things brought into
employees, of the effects brought by the hotel by the guest, as a security
the guests and that, on the part of the for credits on account of lodging, and
latter, they take the precautions supplies usually furnished to hotel
which said hotel-keepers or their guests. (n)
substitutes advised relative to the
care and vigilance of their effects.
(1783) CHAPTER 4
SEQUESTRATION OR JUDICIAL
Art. 1999. The hotel-keeper is liable DEPOSIT
for the vehicles, animals and articles
policy by the person who cannot
Art. 2005. A judicial deposit or make any donation to him, according
sequestration takes place when an to said article. (n)
attachment or seizure of property in
litigation is ordered. (1785)
CHAPTER 2
Art. 2006. Movable as well as GAMBLING
immovable property may be the
object of sequestration. (1786) Art. 2013. A game of chance is that
which depends more on chance or
Art. 2007. The depositary of property hazard than or skill or ability. For the
or objects sequestrated cannot be purposes of the following articles, in
relieved of his responsibility until the case of doubt a game is deemed to
controversy which gave rise thereto be one of chance. (n)
has come to an end, unless the court
so orders. (1787a) Art. 2014. No action can be
maintained by the winner for the
Art. 2008. The depositary of property collection of what he has won in a
sequestrated is bound to comply, game of chance. But any loser in a
with respect to the same, with all the game of chance may recover his loss
obligations of a good father of a from the winner, with legal interest
family. (1788) from the time he paid the amount
lost, and subsidiarily from the
Art. 2009. As to matters not provided operator or manager of the gambling
for in this Code, judicial house. (1799a)
sequestration shall be governed by
the Rules of Court. (1789) Art. 2015. If cheating or deceit is
committed by the winner, he, and
subsidiarily the operator or manager
Title XIII. - ALEATORY CONTRACTS of the gambling house, shall pay by
way of exemplary damages, not less
GENERAL PROVISIONS than the equivalent of the sum lost, in
addition to the latter amount. If both
Art. 2010. By an aleatory contract, the winner and the loser have
one of the parties or both reciprocally perpetrated fraud, no action for
bind themselves to give or to do recovery can be brought by either. (n)
something in consideration of what
the other shall give or do upon the Art. 2016. If the loser refuses or
happening of an event which is neglects to bring an action to recover
uncertain, or which is to occur at an what has been lost, his or her
indeterminate time. (1790) creditors, spouse, descendants or
other persons entitled to be
CHAPTER 1 supported by the loser may institute
INSURANCE the action. The sum thereby obtained
shall be applied to the creditors'
Art. 2011. The contract of insurance claims, or to the support of the
is governed by special laws. Matters spouse or relatives, as the case may
not expressly provided for in such be. (n)
special laws shall be regulated by
this Code. (n) Art. 2017. The provisions of Article
2014 and 2016 apply when two or
Art. 2012. Any person who is more persons bet in a game of
forbidden from receiving any chance, although they take no active
donation under Article 739 cannot be part in the game itself. (1799a)
named beneficiary of a life insurance
Art. 2018. If a contract which purports Art. 2023. Life annuity shall be void if
to be for the delivery of goods, constituted upon the life of a person
securities or shares of stock is who was already dead at the time the
entered into with the intention that contract was entered into, or who
the difference between the price was at that time suffering from an
stipulated and the exchange or illness which caused his death within
market price at the time of the twenty days following said date.
pretended delivery shall be paid by (1804)
the loser to the winner, the
transaction is null and void. The loser Art. 2024. The lack of payment of the
may recover what he has paid. (n) income due does not authorize the
recipient of the life annuity to
Art. 2019. Betting on the result of demand the reimbursement of the
sports, athletic competitions, or capital or to retake possession of the
games of skill may be prohibited by property alienated, unless there is a
local ordinances. (n) stipulation to the contrary; he shall
have only a right judicially to claim
Art. 2020. The loser in any game the payment of the income in arrears
which is not one of chance, when and to require a security for the
there is no local ordinance which future income, unless there is a
prohibits betting therein, is under stipulation to the contrary. (1805a)
obligation to pay his loss, unless the
amount thereof is excessive under Art. 2025. The income corresponding
the circumstances. In the latter case, to the year in which the person
the court shall reduce the loss to the enjoying it dies shall be paid in
proper sum. (1801a) proportion to the days during which
he lived; if the income should be paid
by installments in advance, the whole
CHAPTER 3 amount of the installment which
LIFE ANNUITY began to run during his life shall be
paid. (1806)
Art. 2021. The aleatory contract of life
annuity binds the debtor to pay an Art. 2026. He who constitutes an
annual pension or income during the annuity by gratuitous title upon his
life of one or more determinate property, may provide at the time the
persons in consideration of a capital annuity is established that the same
consisting of money or other shall not be subject to execution or
property, whose ownership is attachment on account of the
transferred to him at once with the obligations of the recipient of the
burden of the income. (1802a) annuity. If the annuity was
constituted in fraud of creditors, the
Art. 2022. The annuity may be latter may ask for the execution or
constituted upon the life of the attachment of the property. (1807a)
person who gives the capital, upon
that of a third person, or upon the Art. 2027. No annuity shall be claimed
lives of various persons, all of whom without first proving the existence of
must be living at the time the annuity the person upon whose life the
is established. annuity is constituted. (1808)
Art. 2029. The court shall endeavor to Art. 2035. No compromise upon the
persuade the litigants in a civil case following questions shall be valid:
to agree upon some fair compromise.
(n) (1) The civil status of persons;
Art. 2033. Juridical persons may However, one of parties cannot set
compromise only in the form and up a mistake of fact as against the
with the requisites which may be other if the latter, by virtue of the
necessary to alienate their property. compromise, has withdrawn from a
(1812a)
litigation already commenced. Art. 2044. Any stipulation that the
(1817a) arbitrators' award or decision shall
be final, is valid, without prejudice to
Art. 2039. When the parties Articles 2038, 2039, and 2040. (n)
compromise generally on all
differences which they might have Art. 2045. Any clause giving one of
with each other, the discovery of the parties power to choose more
documents referring to one or more arbitrators than the other is void and
but not to all of the questions settled of no effect. (n)
shall not itself be a cause for
annulment or rescission of the Art. 2046. The appointment of
compromise, unless said documents arbitrators and the procedure for
have been concealed by one of the arbitration shall be governed by the
parties. provisions of such rules of court as
the Supreme Court shall promulgate.
But the compromise may be annulled (n)
or rescinded if it refers only to one
thing to which one of the parties has
no right, as shown by the newly- Title XV. - GUARANTY
discovered documents. (n)
CHAPTER 1
Art. 2040. If after a litigation has been NATURE AND EXTENT OF
decided by a final judgment, a GUARANTY
compromise should be agreed upon,
either or both parties being unaware Art. 2047. By guaranty a person,
of the existence of the final judgment, called the guarantor, binds himself to
the compromise may be rescinded. the creditor to fulfill the obligation of
the principal debtor in case the latter
Ignorance of a judgment which may should fail to do so.
be revoked or set aside is not a valid
ground for attacking a compromise. If a person binds himself solidarily
(1819a) with the principal debtor, the
provisions of Section 4, Chapter 3,
Art. 2041. If one of the parties fails or Title I of this Book shall be observed.
refuses to abide by the compromise, In such case the contract is called a
the other party may either enforce the suretyship. (1822a)
compromise or regard it as rescinded
and insist upon his original demand. Art. 2048. A guaranty is gratuitous,
(n) unless there is a stipulation to the
contrary. (n)
Art. 2052. A guaranty cannot exist Art. 2057. If the guarantor should be
without a valid obligation. convicted in first instance of a crime
involving dishonesty or should
Nevertheless, a guaranty may be become insolvent, the creditor may
constituted to guarantee the demand another who has all the
performance of a voidable or an qualifications required in the
unenforceable contract. It may also preceding article. The case is
guarantee a natural obligation. excepted where the creditor has
(1824a) required and stipulated that a
specified person should be the
Art. 2053. A guaranty may also be guarantor. (1829a)
given as security for future debts, the
amount of which is not yet known;
there can be no claim against the CHAPTER 2
guarantor until the debt is liquidated. EFFECTS OF GUARANTY
A conditional obligation may also be
secured. (1825a) SECTION 1. - Effects of Guaranty
Between the Guarantor and the
Art. 2054. A guarantor may bind Creditor
himself for less, but not for more
than the principal debtor, both as Art. 2058. The guarantor cannot be
regards the amount and the onerous compelled to pay the creditor unless
nature of the conditions. the latter has exhausted all the
property of the debtor, and has
Should he have bound himself for resorted to all the legal remedies
more, his obligations shall be against the debtor. (1830a)
reduced to the limits of that of the
debtor. (1826) Art. 2059. The excussion shall not
take place:
Art. 2055. A guaranty is not
presumed; it must be express and (1) If the guarantor has
cannot extend to more than what is expressly renounced it;
stipulated therein.
(2) If he has bound himself
If it be simple or indefinite, it shall solidarily with the debtor;
compromise not only the principal
obligation, but also all its (3) In case of insolvency of the
accessories, including the judicial debtor;
costs, provided with respect to the
latter, that the guarantor shall only be (4) When he has absconded, or
liable for those costs incurred after cannot be sued within the
he has been judicially required to Philippines unless he has left a
pay. (1827a) manager or representative;
(5) If it may be presumed that guarantor and to the principal debtor.
an execution on the property of (1836)
the principal debtor would not
result in the satisfaction of the Art. 2065. Should there be several
obligation. (1831a) guarantors of only one debtor and for
the same debt, the obligation to
Art. 2060. In order that the guarantor answer for the same is divided
may make use of the benefit of among all. The creditor cannot claim
exclusion, he must set it up against from the guarantors except the
the creditor upon the latter's demand shares which they are respectively
for payment from him, and point out bound to pay, unless solidarity has
to the creditor available property of been expressly stipulated.
the debtor within Philippine territory,
sufficient to cover the amount of the The benefit of division against the co-
debt. (1832) guarantors ceases in the same cases
and for the same reasons as the
Art. 2061. The guarantor having benefit of excussion against the
fulfilled all the conditions required in principal debtor. (1837)
the preceding article, the creditor
who is negligent in exhausting the
property pointed out shall suffer the SECTION 2. - Effects of Guaranty
loss, to the extent of said property, Between the Debtor and the
for the insolvency of the debtor Guarantor
resulting from such negligence.
(1833a) Art. 2066. The guarantor who pays for
a debtor must be indemnified by the
Art. 2062. In every action by the latter.
creditor, which must be against the
principal debtor alone, except in the The indemnity comprises:
cases mentioned in Article 2059, the
former shall ask the court to notify (1) The total amount of the
the guarantor of the action. The debt;
guarantor may appear so that he
may, if he so desire, set up such (2) The legal interests thereon
defenses as are granted him by law. from the time the payment was
The benefit of excussion mentioned made known to the debtor,
in Article 2058 shall always be even though it did not earn
unimpaired, even if judgment should interest for the creditor;
be rendered against the principal
debtor and the guarantor in case of (3) The expenses incurred by
appearance by the latter. (1834a) the guarantor after having
notified the debtor that
Art. 2063. A compromise between the payment had been demanded
creditor and the principal debtor of him;
benefits the guarantor but does not
prejudice him. That which is entered (4) Damages, if they are due.
into between the guarantor and the (1838a)
creditor benefits but does not
prejudice the principal debtor. Art. 2067. The guarantor who pays is
(1835a) subrogated by virtue thereof to all the
rights which the creditor had against
Art. 2064. The guarantor of a the debtor.
guarantor shall enjoy the benefit of
excussion, both with respect to the If the guarantor has compromised
with the creditor, he cannot demand
of the debtor more than what he has (5) After the lapse of ten years,
really paid. (1839) when the principal obligation
has no fixed period for its
Art. 2068. If the guarantor should pay maturity, unless it be of such
without notifying the debtor, the latter nature that it cannot be
may enforce against him all the extinguished except within a
defenses which he could have set up period longer than ten years;
against the creditor at the time the
payment was made. (1840) (6) If there are reasonable
grounds to fear that the
Art. 2069. If the debt was for a period principal debtor intends to
and the guarantor paid it before it abscond;
became due, he cannot demand
reimbursement of the debtor until the (7) If the principal debtor is in
expiration of the period unless the imminent danger of becoming
payment has been ratified by the insolvent.
debtor. (1841a)
In all these cases, the action of the
Art. 2070. If the guarantor has paid guarantor is to obtain release from
without notifying the debtor, and the the guaranty, or to demand a security
latter not being aware of the that shall protect him from any
payment, repeats the payment, the proceedings by the creditor and from
former has no remedy whatever the danger of insolvency of the
against the debtor, but only against debtor. (1834a)
the creditor. Nevertheless, in case of
a gratuitous guaranty, if the Art. 2072. If one, at the request of
guarantor was prevented by a another, becomes a guarantor for the
fortuitous event from advising the debt of a third person who is not
debtor of the payment, and the present, the guarantor who satisfies
creditor becomes insolvent, the the debt may sue either the person
debtor shall reimburse the guarantor so requesting or the debtor for
for the amount paid. (1842a) reimbursement. (n)
(1) When he is sued for the Art. 2073. When there are two or
payment; more guarantors of the same debtor
and for the same debt, the one
(2) In case of insolvency of the among them who has paid may
principal debtor; demand of each of the others the
share which is proportionally owing
(3) When the debtor has bound from him.
himself to relieve him from the
guaranty within a specified If any of the guarantors should be
period, and this period has insolvent, his share shall be borne by
expired; the others, including the payer, in the
same proportion.
(4) When the debt has become
demandable, by reason of the The provisions of this article shall
expiration of the period for not be applicable, unless the
payment; payment has been made by virtue of
a judicial demand or unless the
principal debtor is insolvent. (1844a)
Art. 2074. In the case of the mortgages, and preference of the
preceding article, the co-guarantors latter. (1852)
may set up against the one who paid,
the same defenses which would have Art. 2081. The guarantor may set up
pertained to the principal debtor against the creditor all the defenses
against the creditor, and which are which pertain to the principal debtor
not purely personal to the debtor. and are inherent in the debt; but not
(1845) those that are personal to the debtor.
(1853)
Art. 2075. A sub-guarantor, in case of
the insolvency of the guarantor for
whom he bound himself, is CHAPTER 4
responsible to the co-guarantors in LEGAL AND JUDICIAL BONDS
the same terms as the guarantor.
(1846) Art. 2082. The bondsman who is to be
offered in virtue of a provision of law
or of a judicial order shall have the
CHAPTER 3 qualifications prescribed in Article
EXTINGUISHMENT OF GUARANTY 2056 and in special laws. (1854a)
Art. 2076. The obligation of the Art. 2083. If the person bound to give
guarantor is extinguished at the a bond in the cases of the preceding
same time as that of the debtor, and article, should not be able to do so, a
for the same causes as all other pledge or mortgage considered
obligations. (1847) sufficient to cover his obligation shall
be admitted in lieu thereof. (1855)
Art. 2077. If the creditor voluntarily
accepts immovable or other property Art. 2084. A judicial bondsman
in payment of the debt, even if he cannot demand the exhaustion of the
should afterwards lose the same property of the principal debtor.
through eviction, the guarantor is
released. (1849) A sub-surety in the same case,
cannot demand the exhaustion of the
Art. 2078. A release made by the property of the debtor of the surety.
creditor in favor of one of the
guarantors, without the consent of
the others, benefits all to the extent Title XVI. - PLEDGE, MORTGAGE
of the share of the guarantor to AND ANTICHRESIS
whom it has been granted. (1850)
CHAPTER 1
Art. 2079. An extension granted to PROVISIONS COMMON TO PLEDGE
the debtor by the creditor without the AND MORTGAGE
consent of the guarantor
extinguishes the guaranty. The mere Art. 2085. The following requisites
failure on the part of the creditor to are essential to the contracts of
demand payment after the debt has pledge and mortgage:
become due does not of itself (1) That they be constituted to
constitute any extention of time secure the fulfillment of a
referred to herein. (1851a) principal obligation;
Neither can the creditor's heir who Art. 2094. All movables which are
received his share of the debt return within commerce may be pledged,
the pledge or cancel the mortgage, to provided they are susceptible of
the prejudice of the other heirs who possession. (1864)
have not been paid.
Art. 2095. Incorporeal rights,
From these provisions is expected evidenced by negotiable instruments,
the case in which, there being several bills of lading, shares of stock,
things given in mortgage or pledge, bonds, warehouse receipts and
each one of them guarantees only a similar documents may also be
determinate portion of the credit. pledged. The instrument proving the
right pledged shall be delivered to
the creditor, and if negotiable, must amount may exceed that which is
be indorsed. (n) due, he shall apply it to the principal.
Unless there is a stipulation to the
Art. 2096. A pledge shall not take contrary, the pledge shall extend to
effect against third persons if a the interest and earnings of the right
description of the thing pledged and pledged.
the date of the pledge do not appear
in a public instrument. (1865a) In case of a pledge of animals, their
offspring shall pertain to the pledgor
Art. 2097. With the consent of the or owner of animals pledged, but
pledgee, the thing pledged may be shall be subject to the pledge, if there
alienated by the pledgor or owner, is no stipulation to the contrary.
subject to the pledge. The ownership (1868a)
of the thing pledged is transmitted to
the vendee or transferee as soon as Art. 2103. Unless the thing pledged is
the pledgee consents to the expropriated, the debtor continues to
alienation, but the latter shall be the owner thereof.
continue in possession. (n)
Nevertheless, the creditor may bring
Art. 2098. The contract of pledge the actions which pertain to the
gives a right to the creditor to retain owner of the thing pledged in order to
the thing in his possession or in that recover it from, or defend it against a
of a third person to whom it has been third person. (1869)
delivered, until the debt is paid.
(1866a) Art. 2104. The creditor cannot use the
thing pledged, without the authority
Art. 2099. The creditor shall take care of the owner, and if he should do so,
of the thing pledged with the or should misuse the thing in any
diligence of a good father of a family; other way, the owner may ask that it
he has a right to the reimbursement be judicially or extrajudicially
of the expenses made for its deposited. When the preservation of
preservation, and is liable for its loss the thing pledged requires its use, it
or deterioration, in conformity with must be used by the creditor but only
the provisions of this Code. (1867) for that purpose. (1870a)
Art. 2100. The pledgee cannot Art. 2105. The debtor cannot ask for
deposit the thing pledged with a third the return of the thing pledged
person, unless there is a stipulation against the will of the creditor, unless
authorizing him to do so. and until he has paid the debt and its
interest, with expenses in a proper
The pledgee is responsible for the case. (1871)
acts of his agents or employees with
respect to the thing pledged. (n) Art. 2106. If through the negligence
or wilful act of the pledgee, the thing
Art. 2101. The pledgor has the same pledged is in danger of being lost or
responsibility as a bailor in impaired, the pledgor may require
commodatum in the case under that it be deposited with a third
Article 1951. (n) person. (n)
Art. 2102. If the pledge earns or Art. 2107. If there are reasonable
produces fruits, income, dividends, grounds to fear the destruction or
or interests, the creditor shall impairment of the thing pledged,
compensate what he receives with without the fault of the pledgee, the
those which are owing him; but if pledgor may demand the return of
none are owing him, or insofar as the the thing, upon offering another thing
in pledge, provided the latter is of the Art. 2112. The creditor to whom the
same kind as the former and not of credit has not been satisfied in due
inferior quality, and without prejudice time, may proceed before a Notary
to the right of the pledgee under the Public to the sale of the thing
provisions of the following article. pledged. This sale shall be made at a
public auction, and with notification
The pledgee is bound to advise the to the debtor and the owner of the
pledgor, without delay, of any danger thing pledged in a proper case,
to the thing pledged. (n) stating the amount for which the
public sale is to be held. If at the first
Art. 2108. If, without the fault of the auction the thing is not sold, a
pledgee, there is danger of second one with the same formalities
destruction, impairment, or shall be held; and if at the second
diminution in value of the thing auction there is no sale either, the
pledged, he may cause the same to creditor may appropriate the thing
be sold at a public sale. The pledged. In this case he shall be
proceeds of the auction shall be a obliged to give an acquittance for his
security for the principal obligation in entire claim. (1872a)
the same manner as the thing
originally pledged. (n) Art. 2113. At the public auction, the
pledgor or owner may bid. He shall,
Art. 2109. If the creditor is deceived moreover, have a better right if he
on the substance or quality of the should offer the same terms as the
thing pledged, he may either claim highest bidder.
another thing in its stead, or demand
immediate payment of the principal The pledgee may also bid, but his
obligation. (n) offer shall not be valid if he is the
only bidder. (n)
Art. 2110. If the thing pledged is
returned by the pledgee to the Art. 2114. All bids at the public
pledgor or owner, the pledge is auction shall offer to pay the
extinguished. Any stipulation to the purchase price at once. If any other
contrary shall be void. bid is accepted, the pledgee is
deemed to have been received the
If subsequent to the perfection of the purchase price, as far as the pledgor
pledge, the thing is in the possession or owner is concerned. (n)
of the pledgor or owner, there is a
prima facie presumption that the Art. 2115. The sale of the thing
same has been returned by the pledged shall extinguish the principal
pledgee. This same presumption obligation, whether or not the
exists if the thing pledged is in the proceeds of the sale are equal to the
possession of a third person who has amount of the principal obligation,
received it from the pledgor or owner interest and expenses in a proper
after the constitution of the pledge. case. If the price of the sale is more
(n) than said amount, the debtor shall
not be entitled to the excess, unless
Art. 2111. A statement in writing by it is otherwise agreed. If the price of
the pledgee that he renounces or the sale is less, neither shall the
abandons the pledge is sufficient to creditor be entitled to recover the
extinguish the pledge. For this deficiency, notwithstanding any
purpose, neither the acceptance by stipulation to the contrary. (n)
the pledgor or owner, nor the return
of the thing pledged is necessary, the Art. 2116. After the public auction,
pledgee becoming a depositary. (n) the pledgee shall promptly advise the
pledgor or owner of the result cause the public sale to be held
thereof. (n) within such period, the debtor may
require the return of the thing. (n)
Art. 2117. Any third person who has
any right in or to the thing pledged Art. 2123. With regard to pawnshops
may satisfy the principal obligation and other establishments, which are
as soon as the latter becomes due engaged in making loans secured by
and demandable.(n) pledges, the special laws and
regulations concerning them shall be
Art. 2118. If a credit which has been observed, and subsidiarily, the
pledged becomes due before it is provisions of this Title. (1873a)
redeemed, the pledgee may collect
and receive the amount due. He shall
apply the same to the payment of his CHAPTER 3
claim, and deliver the surplus, should MORTGAGE
there be any, to the pledgor. (n)
Art. 2124. Only the following property
Art. 2119. If two or more things are may be the object of a contract of
pledged, the pledgee may choose mortgage:
which he will cause to be sold, (1) Immovables;
unless there is a stipulation to the
contrary. He may demand the sale of (2) Alienable real rights in
only as many of the things as are accordance with the laws,
necessary for the payment of the imposed upon immovables.
debt. (n)
Nevertheless, movables may be the
Art. 2120. If a third party secures an object of a chattel mortgage. (1874a)
obligation by pledging his own
movable property under the Art. 2125. In addition to the requisites
provisions of Article 2085 he shall stated in Article 2085, it is
have the same rights as a guarantor indispensable, in order that a
under Articles 2066 to 2070, and mortgage may be validly constituted,
Articles 2077 to 2081. He is not that the document in which it appears
prejudiced by any waiver of defense be recorded in the Registry of
by the principal obligor. (n) Property. If the instrument is not
recorded, the mortgage is
Art. 2121. Pledges created by nevertheless binding between the
operation of law, such as those parties.
referred to in Articles 546, 1731, and
1994, are governed by the foregoing The persons in whose favor the law
articles on the possession, care and establishes a mortgage have no other
sale of the thing as well as on the right than to demand the execution
termination of the pledge. However, and the recording of the document in
after payment of the debt and which the mortgage is formalized.
expenses, the remainder of the price (1875a)
of the sale shall be delivered to the
obligor. (n) Art. 2126. The mortgage directly and
immediately subjects the property
Art. 2122. A thing under a pledge by upon which it is imposed, whoever
operation of law may be sold only the possessor may be, to the
after demand of the amount for which fulfillment of the obligation for whose
the thing is retained. The public security it was constituted. (1876)
auction shall take place within one
month after such demand. If, without Art. 2127. The mortgage extends to
just grounds, the creditor does not the natural accessions, to the
improvements, growing fruits, and Art. 2133. The actual market value of
the rents or income not yet received the fruits at the time of the
when the obligation becomes due, application thereof to the interest and
and to the amount of the indemnity principal shall be the measure of
granted or owing to the proprietor such application. (n)
from the insurers of the property
mortgaged, or in virtue of Art. 2134. The amount of the principal
expropriation for public use, with the and of the interest shall be specified
declarations, amplifications and in writing; otherwise, the contract of
limitations established by law, antichresis shall be void. (n)
whether the estate remains in the
possession of the mortgagor, or it Art. 2135. The creditor, unless there
passes into the hands of a third is a stipulation to the contrary, is
person. (1877) obliged to pay the taxes and charges
upon the estate.
Art. 2128. The mortgage credit may
be alienated or assigned to a third He is also bound to bear the
person, in whole or in part, with the expenses necessary for its
formalities required by law. (1878) preservation and repair.
Art. 2129. The creditor may claim The sums spent for the purposes
from a third person in possession of stated in this article shall be
the mortgaged property, the payment deducted from the fruits. (1882)
of the part of the credit secured by
the property which said third person Art. 2136. The debtor cannot
possesses, in the terms and with the reacquire the enjoyment of the
formalities which the law establishes. immovable without first having totally
(1879) paid what he owes the creditor.
Art. 2130. A stipulation forbidding the But the latter, in order to exempt
owner from alienating the immovable himself from the obligations imposed
mortgaged shall be void. (n) upon him by the preceding article,
may always compel the debtor to
Art. 2131. The form, extent and enter again upon the enjoyment of
consequences of a mortgage, both as the property, except when there is a
to its constitution, modification and stipulation to the contrary. (1883)
extinguishment, and as to other
matters not included in this Chapter, Art. 2137. The creditor does not
shall be governed by the provisions acquire the ownership of the real
of the Mortgage Law and of the Land estate for non-payment of the debt
Registration Law. (1880a) within the period agreed upon.
Art. 2148. Except when the Art. 2152. The officious manager is
management was assumed to save personally liable for contracts which
property or business from imminent he has entered into with third
danger, the officious manager shall persons, even though he acted in the
be liable for fortuitous events: name of the owner, and there shall be
(1) If he is manifestly unfit to no right of action between the owner
carry on the management; and third persons. These provisions
shall not apply:
(2) If by his intervention he (1) If the owner has expressly
prevented a more competent or tacitly ratified the
person from taking up the management, or
management. (n)
(2) When the contract refers to
Art. 2149. The ratification of the things pertaining to the owner
management by the owner of the of the business. (n)
business produces the effects of an
express agency, even if the business Art. 2153. The management is
may not have been successful. extinguished:
(1892a) (1) When the owner repudiates
it or puts an end thereto;
Art. 2150. Although the officious
management may not have been (2) When the officious manager
expressly ratified, the owner of the withdraws from the
property or business who enjoys the management, subject to the
advantages of the same shall be provisions of Article 2144;
liable for obligations incurred in his
interest, and shall reimburse the (3) By the death, civil
officious manager for the necessary interdiction, insanity or
and useful expenses and for the insolvency of the owner or the
damages which the latter may have officious manager. (n)
suffered in the performance of his
duties.
SECTION 2. - Solutio Indebiti
The same obligation shall be
incumbent upon him when the Art. 2154. If something is received
when there is no right to demand it, provisions of Title V of Book II shall
and it was unduly delivered through govern. (1898)
mistake, the obligation to return it
arises. (1895) Art. 2162. He shall be exempt from
the obligation to restore who,
Art. 2155. Payment by reason of a believing in good faith that the
mistake in the construction or payment was being made of a
application of a doubtful or difficult legitimate and subsisting claim,
question of law may come within the destroyed the document, or allowed
scope of the preceding article. (n) the action to prescribe, or gave up
the pledges, or cancelled the
Art. 2156. If the payer was in doubt guaranties for his right. He who paid
whether the debt was due, he may unduly may proceed only against the
recover if he proves that it was not true debtor or the guarantors with
due. (n) regard to whom the action is still
effective. (1899)
Art. 2157. The responsibility of two or
more payees, when there has been Art. 2163. It is presumed that there
payment of what is not due, is was a mistake in the payment if
solidary. (n) something which had never been due
or had already been paid was
Art. 2158. When the property delivered; but he from whom the
delivered or money paid belongs to a return is claimed may prove that the
third person, the payee shall comply delivery was made out of liberality or
with the provisions of article 1984. (n) for any other just cause. (1901)
Art. 2172. The right of every Art. 2179. When the plaintiff's own
possessor in good faith to negligence was the immediate and
reimbursement for necessary and proximate cause of his injury, he
useful expenses is governed by cannot recover damages. But if his
Article 546. negligence was only contributory, the
immediate and proximate cause of
Art. 2173. When a third person, the injury being the defendant's lack
without the knowledge of the debtor, of due care, the plaintiff may recover
pays the debt, the rights of the damages, but the courts shall
former are governed by Articles 1236 mitigate the damages to be awarded.
and 1237. (n)
Art. 2180. The obligation imposed by Art. 2181. Whoever pays for the
Article 2176 is demandable not only damage caused by his dependents or
for one's own acts or omissions, but employees may recover from the
also for those of persons for whom latter what he has paid or delivered in
one is responsible. satisfaction of the claim. (1904)
The father and, in case of his death Art. 2182. If the minor or insane
or incapacity, the mother, are person causing damage has no
responsible for the damages caused parents or guardian, the minor or
by the minor children who live in insane person shall be answerable
their company. with his own property in an action
against him where a guardian ad
Guardians are liable for damages litem shall be appointed. (n)
caused by the minors or
incapacitated persons who are under Art. 2183. The possessor of an animal
their authority and live in their or whoever may make use of the
company. same is responsible for the damage
which it may cause, although it may
The owners and managers of an escape or be lost. This responsibility
establishment or enterprise are shall cease only in case the damage
likewise responsible for damages should come from force majeure or
caused by their employees in the from the fault of the person who has
service of the branches in which the suffered damage. (1905)
latter are employed or on the
occasion of their functions. Art. 2184. In motor vehicle mishaps,
the owner is solidarily liable with his
Employers shall be liable for the driver, if the former, who was in the
damages caused by their employees vehicle, could have, by the use of the
and household helpers acting within due diligence, prevented the
the scope of their assigned tasks, misfortune. It is disputably presumed
even though the former are not that a driver was negligent, if he had
engaged in any business or industry. been found guilty or reckless driving
or violating traffic regulations at least
The State is responsible in like twice within the next preceding two
manner when it acts through a months.
special agent; but not when the
damage has been caused by the If the owner was not in the motor
official to whom the task done vehicle, the provisions of Article 2180
properly pertains, in which case what are applicable. (n)
is provided in Article 2176 shall be
applicable. Art. 2185. Unless there is proof to the
contrary, it is presumed that a person
Lastly, teachers or heads of driving a motor vehicle has been
establishments of arts and trades negligent if at the time of the mishap,
shall be liable for damages caused by he was violating any traffic
their pupils and students or regulation. (n)
apprentices, so long as they remain
in their custody. Art. 2186. Every owner of a motor
vehicle shall file with the proper
The responsibility treated of in this government office a bond executed
article shall cease when the persons by a government-controlled
herein mentioned prove that they corporation or office, to answer for
observed all the diligence of a good damages to third persons. The
father of a family to prevent damage. amount of the bond and other terms
(1903a)
shall be fixed by the competent lanes, if not caused by force
public official. (n) majeure;
(9) Credits for transportation, (2) For the unpaid price of real
upon the goods carried, for the property sold, upon the
price of the contract and immovable sold;
(3) Claims of laborers, masons, articles shall be considered as
mechanics and other workmen, mortgages or pledges of real or
as well as of architects, personal property, or liens within the
engineers and contractors, purview of legal provisions
engaged in the construction, governing insolvency. Taxes
reconstruction or repair of mentioned in No. 1, Article 2241, and
buildings, canals or other No. 1, Article 2242, shall first be
works, upon said buildings, satisfied. (n)
canals or other works;
Art. 2244. With reference to other
(4) Claims of furnishers of property, real and personal, of the
materials used in the debtor, the following claims or
construction, reconstruction, credits shall be preferred in the order
or repair of buildings, canals or named:
other works, upon said
buildings, canals or other (1) Proper funeral expenses for
works; the debtor, or children under
his or her parental authority
(5) Mortgage credits recorded who have no property of their
in the Registry of Property, own, when approved by the
upon the real estate court;
mortgaged;
(2) Credits for services
(6) Expenses for the rendered the insolvent by
preservation or improvement employees, laborers, or
of real property when the law household helpers for one year
authorizes reimbursement, preceding the commencement
upon the immovable preserved of the proceedings in
or improved; insolvency;
(9) Taxes and assessments Art. 2247. If there are two or more
due the national government, credits with respect to the same
other than those mentioned in specific movable property, they shall
Articles 2241, No. 1, and 2242, be satisfied pro rata, after the
No. 1; payment of duties, taxes and fees
due the State or any subdivision
(10) Taxes and assessments thereof. (1926a)
due any province, other than
those referred to in Articles Art. 2248. Those credits which enjoy
2241, No. 1, and 2242, No. 1; preference in relation to specific real
property or real rights, exclude all
(11) Taxes and assessments others to the extent of the value of
due any city or municipality, the immovable or real right to which
other than those indicated in the preference refers.
Articles 2241, No. 1, and 2242,
No. 1; Art. 2249. If there are two or more
credits with respect to the same
(12) Damages for death or specific real property or real rights,
personal injuries caused by a they shall be satisfied pro rata, after
quasi-delict; the payment of the taxes and
assessments upon the immovable
(13) Gifts due to public and property or real right. (1927a)
private institutions of charity
or beneficence; Art. 2250. The excess, if any, after the
payment of the credits which enjoy
(14) Credits which, without preference with respect to specific
special privilege, appear in (a) property, real or personal, shall be
a public instrument; or (b) in a added to the free property which the
final judgment, if they have debtor may have, for the payment of
been the subject of litigation. the other credits. (1928a)
These credits shall have
preference among themselves Art. 2251. Those credits which do not
in the order of priority of the enjoy any preference with respect to
dates of the instruments and of specific property, and those which
the judgments, respectively. enjoy preference, as to the amount
(1924a) not paid, shall be satisfied according
to the following rules:
Art. 2245. Credits of any other kind or
class, or by any other right or title not (1) In the order established in Article
comprised in the four preceding 2244;
articles, shall enjoy no preference.
(2) Common credits referred to in valid in accordance therewith, shall
Article 2245 shall be paid pro rata continue to be fully operative as
regardless of dates. (1929a) provided in the same, with the
limitations established in these rules.
But the revocation or modification of
TRANSITIONAL PROVISIONS these acts and contracts after the
beginning of the effectivity of this
Art. 2252. Changes made and new Code, shall be subject to the
provisions and rules laid down by provisions of this new body of laws.
this Code which may prejudice or (Rule 2a)
impair vested or acquired rights in
accordance with the old legislation Art. 2257. Provisions of this Code
shall have no retroactive effect. which attach a civil sanction or
penalty or a deprivation of rights to
For the determination of the acts or omissions which were not
applicable law in cases which are not penalized by the former laws, are not
specified elsewhere in this Code, the applicable to those who, when said
following articles shall be observed: laws were in force, may have
(Pars. 1 and 2, Transitional executed the act or incurred in the
Provisions). omission forbidden or condemned by
this Code.
Art. 2253. The Civil Code of 1889 and
other previous laws shall govern If the fault is also punished by the
rights originating, under said laws, previous legislation, the less severe
from acts done or events which took sanction shall be applied.
place under their regime, even
though this Code may regulate them If a continuous or repeated act or
in a different manner, or may not omission was commenced before the
recognize them. But if a right should beginning of the effectivity of this
be declared for the first time in this Code, and the same subsists or is
Code, it shall be effective at once, maintained or repeated after this
even though the act or event which body of laws has become operative,
gives rise thereto may have been the sanction or penalty prescribed in
done or may have occurred under this Code shall be applied, even
prior legislation, provided said new though the previous laws may not
right does not prejudice or impair any have provided any sanction or
vested or acquired right, of the same penalty therefor. (Rule 3a)
origin. (Rule 1)
Art. 2258. Actions and rights which
Art. 2254. No vested or acquired right came into being but were not
can arise from acts or omissions exercised before the effectivity of this
which are against the law or which Code, shall remain in full force in
infringe upon the rights of others. (n) conformity with the old legislation;
but their exercise, duration and the
Art. 2255. The former laws shall procedure to enforce them shall be
regulate acts and contracts with a regulated by this Code and by the
condition or period, which were Rules of Court. If the exercise of the
executed or entered into before the right or of the action was
effectivity of this Code, even though commenced under the old laws, but
the condition or period may still be is pending on the date this Code
pending at the time this body of laws takes effect, and the procedure was
goes into effect. (n) different from that established in this
new body of laws, the parties
Art. 2256. Acts and contracts under concerned may choose which
the regime of the old laws, if they are method or course to pursue. (Rule 4)
Art. 2259. The capacity of a married Art. 2265. The right of retention of
woman to execute acts and contracts real or personal property arising after
is governed by this Code, even if her this Code becomes effective,
marriage was celebrated under the includes those things which came
former laws. (n) into the creditor's possession before
said date. (n)
Art. 2260. The voluntary recognition
of a natural child shall take place Art. 2266. The following shall have
according to this Code, even if the not only prospective but also
child was born before the effectivity retroactive effect:
of this body of laws. (n)
(1) Article 315, whereby a
Art. 2261. The exemption prescribed descendant cannot be
in Article 302 shall also be applicable compelled, in a criminal case,
to any support, pension or gratuity to testify against his parents
already existing or granted before and ascendants;
this Code becomes effective. (n)
(2) Articles 101 and 88,
Art. 2262. Guardians of the property providing against collusion in
of minors, appointed by the courts cases of legal separation and
before this Code goes into effect, annulment of marriage;
shall continue to act as such,
notwithstanding the provisions of (3) Articles 283, 284, and 289,
Article 320. (n) concerning the proof of
illegitimate filiation;
Art. 2263. Rights to the inheritance of
a person who died, with or without a (4) Article 838, authorizing the
will, before the effectivity of this probate of a will on petition of
Code, shall be governed by the Civil the testator himself;
Code of 1889, by other previous laws,
and by the Rules of Court. The (5) Articles 1359 to 1369,
inheritance of those who, with or relative to the reformation of
without a will, die after the beginning instruments;
of the effectivity of this Code, shall
be adjudicated and distributed in (6) Articles 476 to 481,
accordance with this new body of regulating actions to quiet title;
laws and by the Rules of Court; but
the testamentary provisions shall be (7) Articles 2029 to 2031, which
carried out insofar as they may be are designed to promote
permitted by this Code. Therefore, compromise. (n)
legitimes, betterments, legacies and
bequests shall be respected; Art. 2267. The following provisions
however, their amount shall be shall apply not only to future cases
reduced if in no other manner can but also to those pending on the date
every compulsory heir be given his this Code becomes effective:
full share according to this Code. (1) Article 29, Relative to
(Rule 12a) criminal prosecutions wherein
the accused is acquitted on the
Art. 2264. The status and rights of ground that his guilt has not
natural children by legal fiction been proved beyond
referred to in article 89 and reasonable doubt;
illegitimate children mentioned in
Article 287, shall also be acquired by (2) Article 33, concerning
children born before the effectivity of cases of defamation, fraud,
this Code. (n) and physical injuries. (n)
Art. 2268. Suits between members of
the same family which are pending at
the time this Code goes into effect
shall be suspended, under such
terms as the court may determine, in
order that compromise may be
earnestly sought, or, in case of legal
separation proceedings, for the
purpose of effecting, if possible, a
reconciliation. (n)
REPEALING CLAUSE