Atty Uribe - Civil Law Review 2 - Codal Provisions

Based on the outline of ATTY.
CRISOSTOMO URIBE
CI VI L LAW REVI EW 2
I. OBLIGATIONS
II. CONTRACTS
a. SPECIAL CONTRACTS
1) SALE
2) BARTER
3) LEASE
4) LOAN
5) DEPOSIT
6) ALEATORY CONTRACTS
7) GUARANTY AND SURETYSHIP
8) PLEDGE, MORTGAGE,
ANTICHRESIS
b. PREPARATORY CONTRACTS
1) AGENCY
2) PARTNERSHIP
3) TRUSTS
III. EXTRA-CONTRACTUAL OBLIGATIONS
a. LAW
b. QUASI-CONTRACTS
c. DELICTS
d. QUASI-DELICTS
IV. DAMAGES
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Based on the outline of ATTY. CRISOSTOMO URIBE
C. DISJUNCTIVE there are several obligations and only one or some
of them must be fulfilled
I. OBLIGATIONS
(A.) IN GENERAL
(B.) SOURCES
(C.) COMPLIANCE
(D.) KINDS OF CIVIL OBLIGATIONS
(E.) BREACH
(F.) REMEDIES FOR BREACH
(G.) MODES OF EXTINGUISHMENT
4. AS TO PERFORMANCE OF PRESTATION
(ARTS. 1221-1225, 1209-1210)
(A.) IN GENERAL
5. AS TO THE PRESENCE OF AN ACCESSORY UNDERTAKING IN CASE

OF BREACH
A. DIVISIBLE
B. INDIVISIBLE
C. JOINT INDIVISIBLE
D. SOLIDARY INDIVISIBLE
1. DEFINITION Art. 1156
WITH A PENAL CLAUSE (distinguish from liquidated damages)

(ARTS. 122601230)
2. KINDS OF OBLIGATIONS AS TO BASIS & ENFORCEABILITY

Arts. 1423-1430; 1139-1155
Title III. - NATURAL OBLIGATIONS
(E.) BREACH OF OBLIGATIONS (ART 1170)
PRESCRIPTION OF ACTIONS
I. Manner of Breach
3. ELEMENTS OF OBLIGATIONS
1. FRAUD (ARTS. 1171, 1338, 1344)

2. NEGLIGENCE (ARTS. 1171-1173)
3. DELAY (ARTS. 1169, 1165, 1786, 1788, 1896, 1942)
4. ANY OTHER MANNER OF CONTRAVENTION
(B.) SOURCES OF OBLIGATIONS

1.
2.
3.
4.
5.
LAW Art. 1158

CONTRACTS Arts. 1159, 1305
QUASI-CONTRACTS Arts. 1160, 2142-2175
a. NEGOTORIUM GESTIO
b. SOLUTIO INDEBITI
c.
OTHER QUASI-CONTRACTS
DELICTS (ACTS OR OMISSIONS PUNISHABLE BY LAW)
QUASI-DELICTS
(C.) COMPLIANCE WITH OBLIGATIONS

- ARTS. 19, 1163-66,1244, 1246, 1460, 440, 442
II. Excuse for non-performance

1. FORTUITOUS EVENT (ARTS. 1174, 552, 1165, 2147, 2159)
2. ACT OF CREDITOR
(F.) REMEDIES FOR BREACH OF OBLIGATIONS
NCC Arts. 1165-68, 1170, 1177-78, 1191-92, 2236
FC Arts. 153, 155
Rule 39 Sec. 13
I.
HUMAN RELATIONS - Art. 19.
1. EXPRESSLY GRANTED BY LAW ARTS. 1786, 1788, 1526

2. STIPULATED
NATURE AND EFFECT OF OBLIGATIONS - Art. 1163.
II.
RIGHT OF ACCESSION - Art. 440, Art. 442.
JUDICIAL REMEDIES
1. PRINCIPAL REMEDIES ARTS. 1191, 1170

2. SUBSIDIARY REMEDIES ARTS. 1380, 1177
3. ANCILLARY REMEDIES RULES OF COURT
(D.) KINDS OF CIVIL OBLIGATIONS

1. AS TO PERFECTION AND EXTINGUISHMENT
A. PURE
B. CONDITIONAL
C. WITH A TERM OR PERIOD
EXTRA-JUDICIAL REMEDIES
(G.) MODES OF EXTINGUISHMENT OF OBLIGATIONS Art. 1231

1.
2. AS TO PLURALITY OF PRESTATION
A. CONJUNCTIVE
B. ALTERNATIVE (ARTS. 1199-1205)
C. FACULTATIVE (ART. 1206)
PAYMENT OR PERFORMANCE
ARTS. 1232-44, 1246-51, 1302
RA 8183
PD 72, SECS. 31-32
SPECIAL FORMS OF PAYMENT
A.
B.
C.
D.
3. AS TO RIGHTS & OBLIGATIONS OF MULTIPLE PARTIES

A. JOINT (Arts. 1207-1222)
B. SOLIDARY (NCC ARTS 927, 1824, 1911, 1945, 2157, 2194, 2146;
FC ARTS 94, 121; RPC ART. 90)
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2.
DATION IN PAYMENT ART. 1245

APPLICATION OF PAYMENTS ARTS. 1252-54, 1248
PAYMENT BY CESSION OR ASSIGNMENT ART. 1255
TENDER OF PAYMENT AND CONSIGNATION ARTS. 1256-61
LOSS OF THE THING DUE OR IMPOSSIBILITY OF PERFORMANCE

ARTS. 1262-69, 1189, 1174, 1165, 1268, 1942, 1979, 2147, 2159

3.
CONDONATION OR REMISSION OF THE DEBT ARTS. 1270-74, 748,

749
4.
CONFUSION OR MERGER OF RIGHTS ARTS. 1275-77, 1215, 1217
5.
COMPENSATION ARTS. 1278-1290, 1243, 1215
KINDS OF COMPENSATION
A. LEGAL
B. CONVENTIONAL/FACULTATIVE
C. JUDICIAL
6.
NOVATION ARTS. 1291-1304, 1215

KINDS OF NOVATION
A. AS TO ITS NATURE
1. SUBJECTIVE OR PERSONAL
2. OBJECTIVE RO REAL
B. AS TO ITS FORM
1. EXPRESS
2. IMPLIED
7.
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OTHER MODES - ACT OF CREDITOR
I. OBLIGATIONS
A. IN GENERAL
1. DEFINITION
Art. 1156
Art. 1156. An obligation is a juridical necessity to give, to do or
not to do.
2. KINDS OF OBLIGATIONS AS TO BASIS & ENFORCEABILITY
Arts. 1423-1430; 1139-1155
Title III. - NATURAL OBLIGATIONS
Art. 1423. Obligations are civil or natural.
Civil obligations
o Give a right of action to compel their performance.
Natural obligations
o Not being based on positive law but on equity and
natural law,
o Do not grant a right of action to enforce their
performance,
o But after voluntary fulfillment by the obligor,
o They authorize the retention of what has been
delivered or rendered by reason thereof.
Some natural obligations are set forth in the following

articles.
Art. 1424. When a right to sue
Upon a civil obligation
Has lapsed by extinctive prescription,
The obligor who voluntarily performs the contract
Cannot recover
o What he has delivered or
o The value of the service he has rendered.
Art. 1425. When
Without the knowledge of the debtor or
Against the will of the debtor,

o A third person pays a debt
o Which the obligor is not legally bound to pay
o Because the action thereon has prescribed,
o But the debtor later voluntarily reimburses the
third person,
The obligor cannot recover what he has paid.

Art. 1426. When a minor
Between 18 and 21 years of age
Who has entered into a contract
Without the consent of the parent or guardian,

o After the annulment of the contract
Voluntarily returns the whole thing or price received,
notwithstanding the fact the he has not

been benefited thereby,
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There is no right to demand the thing or price thus returned.
Art. 1427. When a minor
Between eighteen and twenty-one years of age,
Who has entered into a contract
Without the consent of the parent or guardian,

o Voluntarily pays a sum of money or
o Delivers a fungible thing in fulfilment of the
obligation,
There shall be no right to recover the same
From the obligee

o Who has spent or consumed it in good faith.
Art. 1428. When,
o after an action to enforce a civil obligation has
failed
The defendant voluntarily performs the obligation,
He cannot demand
o The return of what he has delivered or
o The payment of the value of the service he has
rendered.
Art. 1429. When a testate or intestate heir
Voluntarily pays a debt of the decedent
Exceeding the value of the property
Which he received
o By will or
o By the law of intestacy from the estate of the
deceased,
The payment is valid and
Cannot be rescinded by the payer.

Art. 1430. When a will is declared void
o Because it has not been executed
o In accordance with the formalities required by law,
But one of the intestate heirs, after the settlement of the

debts of the deceased,
Pays a legacy
o In compliance with a clause in the defective will,
The payment is effective and irrevocable.

PRESCRIPTION OF ACTIONS
Art. 1139. Actions prescribe
By the mere lapse of time
Fixed by law.
Art. 1140. Actions to recover movables
Shall prescribe eight years
From the time the possession thereof is lost,

o Unless the possessor
o Has acquired the ownership by prescription
o For a less period,
o According to Article 1132
Art. 1132. The ownership of movables

prescribes through uninterrupted possession
for four years in good faith.
o and without prejudice to the provisions of
Article 559
Art. 559. The possession of movable property

acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or
has been unlawfully deprived thereof may
recover it from the person in possession of the
same. If the possessor of a movable lost or
which the owner has been unlawfully
deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return
without reimbursing the price paid therefor.
Article 1505, and
Art. 1505. Subject to the provisions of this

Title, where goods are sold by a person who is
not the owner thereof, and who does not sell
them under authority or with the consent of
the owner, the buyer acquires no better title to
the goods than the seller had, unless the
owner of the goods is by his conduct precluded
from denying the seller's authority to sell.
Nothing in this Title, however, shall affect:
(1) The provisions of any factors' act, recording
laws, or any other provision of law enabling
the apparent owner of goods to dispose of
them as if he were the true owner thereof;
(2) The validity of any contract of sale under
statutory power of sale or under the order of a
court of competent jurisdiction;
(3) Purchases made in a merchant's store, or in
fairs, or markets, in accordance with the Code
of Commerce and special laws.
Article 1133
Art. 1133. Movables possessed through a crime can

never be acquired through prescription by the
offender.
Art. 1141. Real actions over immovable
Prescribe after thirty years.

Art. 1142. A mortgage action
Prescribes after ten years.

Art. 1143. The following rights,
Are not extinguished by prescription:

(1) To demand a right of way,
a. Regulated in Article 649;
Art. 649. The owner, or any person who by virtue of
a real right may cultivate or use any immovable,
which is surrounded by other immovables
pertaining to other persons and without adequate
outlet to a public highway, is entitled to demand a
right of way through the neighboring estates, after
payment of the proper indemnity.
Should this easement be established in such a
manner that its use may be continuous for all the
needs of the dominant estate, establishing a
permanent passage, the indemnity shall consist of
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the value of the land occupied and the amount of
the damage caused to the servient estate.
In case the right of way is limited to the necessary
passage for the cultivation of the estate surrounded
by others and for the gathering of its crops through
the servient estate without a permanent way, the
indemnity shall consist in the payment of the
damage caused by such encumbrance. (SECTION 3.
- Easement of Right of Way)
(2) To bring an action to abate a public or private nuisance.
Art. 1144. The following actions
Must be brought within ten years
From the time the right of action accrues: Upon

(1) Written contract;
(2) Obligation created by law;
(3) Judgment.
Must be commenced within six years , upon

(1) Oral contract;
(2) Quasi-contract.
General Rule: Must be instituted within four years, upon

(1) Injury to the rights of the plaintiff;
(2) Quasi-delict;
Exception: However, when the action

o Arises from or out of any
o Act, activity, or conduct of
o Any public officer
o Involving the exercise of powers or authority
arising from Martial Law
o Including the arrest, detention and/or trial of the
plaintiff,
The same must be brought within one year.
Must be filed within one year, for

(1) Forcible entry and detainer;
(2) Defamation.
Art. 1148. The limitations of action
Mentioned in Articles 1140 to 1142, and 1144 to 1147
Are without prejudice to
Those specified in other parts of this Code, in the Code of

Commerce, and in special laws.
Art. 1149. All other actions
Whose periods are not fixed
In this Code or in other laws
Must be brought within five years
From the time the right of action accrues.

Art. 1150. The time for prescription for all kinds of actions,
When there is no special provision which ordains otherwise,
Shall be counted from
The day they may be brought.
Art. 1151. The time for the prescription of actions
Which have for their object
The enforcement of obligations to pay principal
With interest or annuity
Runs from the last payment of the

o Annuity or
o Interest.
Art. 1152. The period for prescription of actions
To demand the fulfillment of
Obligation declared by a judgment
Commences from the time
The judgment became final.

Art. 1153. The period for prescription of actions
To demand accounting
Runs from the day
The persons who should render the same
Cease in their functions.
The period for the action

Arising from the result of the accounting
Runs from the date
When said result was recognized
By agreement of the interested parties.
Art. 1154. The period during which the obligee
Was prevented
By a fortuitous event
From enforcing his right
Is not reckoned against him.

Art. 1155. The prescription of actions
Is interrupted when:
a. They are filed before the court,
b. There is a written extrajudicial demand by the
creditors, and
c. There is any written acknowledgment of the debt
by the debtor.
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3. ELEMENTS OF OBLIGATIONS
B. SOURCES OF OBLIGATIONS
6.
7.
8.
LAW Art. 1158

CONTRACTS Arts. 1159, 1305
QUASI-CONTRACTS Arts. 1160, 2142-2175
b. SOLUTIO INDEBITI
c. OTHER QUASI-CONTRACTS
9. ACTS OR OMISSIONS PUNISHABLE BY LAW
10. QUASI-DELICTS
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
1. LAW
- Art. 1158
Art. 1158. Obligations derived from law
Are not presumed.
Only those expressly determined in this Code or
In special laws are

o Demandable, and
o Shall be regulated by the precepts of the law which
establishes them; and
As to what has not been foreseen,

o By the provisions of this Book.
2. CONTRACTS
- Arts. 1159, 1305
Art. 1159. Obligations arising from contracts
Have the force of law
Between the contracting parties and
Should be complied with in good faith.

Art. 1305. A contract
Is a meeting of minds
Between two persons
Whereby one binds himself, with respect to the other, to

o Give something or
o Render some service.
3. QUASI-CONTRACTS
- Arts. 1160, 2142-2175
Art. 1160. Obligations derived from quasi-contracts
Shall be subject to the provisions of
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Chapter 1, Title XVII, of this Book.
Title XVII. - EXTRA-CONTRACTUAL OBLIGATIONS

CHAPTER 1
QUASI-CONTRACTS
Art. 2142. Certain
o Lawful,
o Voluntary and
o Unilateral acts
Give rise to the juridical relation of quasi-contract
To the end that

o No one shall be unjustly enriched or
o Benefited at the expense of another.
Art. 2143. The provisions for quasi-contracts
In this Chapter
Do not exclude other quasi-contracts
Which may come within the purview of the preceding article.

SECTION 1. - Negotiorum Gestio
Art. 2144. Whoever
Voluntarily takes charge
Of the agency or management of the
Business or property of another,
Without any power from the latter, is
Obliged to continue the same

o Until the termination of the affair and its incidents,
or
To require the person concerned to substitute him,

o If the owner is in a position to do so.
This juridical relation does not arise in either of these

instances:
(1) When the property or business is not neglected or
abandoned;
(2) If in fact the manager has been tacitly authorized by the
owner.
In the first case, the provisions of Articles 1317, 1403, No. 1,

and 1404 regarding unauthorized contracts shall govern.
o Art. 1317. No one may contract in the name of
another without being authorized by the latter, or
unless he has by law a right to represent him.
A contract entered into in the name of another by

one who has no authority or legal representation,
or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has
been executed, before it is revoked by the other
contracting party.
(UNENFORCEABLE CONTRACTS) Art. 1403. The
following contracts are unenforceable, unless they
are ratified:
(1) Those entered into in the name of another

person by one who has been given no authority or
legal representation, or who has acted beyond his
powers;
Art. 1404. Unauthorized contracts are governed by
Article 1317 and the principles of agency in Title X
of this Book.
In the second case, the Rules on Agency in Title X of this Book

shall be applicable.
Art. 2145. The officious manager
Shall perform his duties
With all the diligence of a good father of a family, and
Pay the damages
Which through his fault or negligence
May be suffered by
o The owner of the property or
o Business under management.
The courts may, however,
Increase or moderate the indemnity
According to the circumstances of each case.

Art. 2146. If the officious manager
Delegates to another person
All or some of his duties,
He shall be liable for the acts of the delegate,
Without prejudice to
The direct obligation of the latter
Toward the owner of the business.
The responsibility of two or more officious managers

Shall be solidary,
o Unless
o The management was assumed
o To save the thing or business
o From imminent danger.

Shall be liable for any fortuitous event:
(1)
If he undertakes risky operations
Which the owner was not accustomed to

embark upon;
(2)
If he has preferred his own interest
To that of the owner;

(3)
If he fails to return the property or business
After demand by the owner;

(4)
If he assumed the management
In bad faith.
Art. 2148.
General Rule: The officious manager shall be liable for fortuitous
events if:
(1)
He is manifestly unfit
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To carry on the management;
By his intervention
He prevented a more competent person
From taking up the management.
(2)
Exception:
Except when the management was

Assumed to save property or business
From imminent danger
Art. 2149. The ratification of the management by the owner of

the business
Produces the effects of an express agency,

o Even if the business may not have been successful.
Art. 2150. Although the officious management may not have been
expressly ratified,
The owner of the property or business

o who enjoys the advantages of the same
Shall be liable for obligations incurred in his interest,

and
Shall reimburse the officious manager for the necessary

and useful expenses and for the damages which the
latter may have suffered in the performance of his
duties.
The same obligation shall be incumbent upon him

o When the management had for its purpose
o The prevention of an imminent and manifest loss,
Although no benefit may have been derived.
Art. 2151. Even though the owner did not derive any benefit and
there has been no imminent and manifest danger to the property
or business,
The owner is liable as under the first paragraph of the

preceding article, provided:
(1) The officious manager has acted in good faith, and
(2) The property or business is intact, ready to be returned
to the owner.
Is personally liable for
Contracts which he has entered into
With third persons,

o Even though he acted in the name of the owner,
and
o There shall be no right of action between the
owner and third persons.
These provisions shall not apply:

(1) If the owner has
Expressly or tacitly ratified the management,

or
(2) When the contract
Refers to things
Pertaining to the owner of the business.
Art. 2153. The management is extinguished:

(1) When the owner
a. Repudiates it or
b. Puts an end thereto;
(2) When the officious manager
a. Withdraws from the management, subject to
the provisions of Article 2144;
(3) By
a. The death,
b. Civil interdiction,
c. Insanity or
d. Insolvency
Of the owner or the officious manager.
b. SOLUTIO INDEBITI
SECTION 2. - Solutio Indebiti
Art. 2154.
If something is received when there is no right to demand it,

and
It was unduly delivered through mistake,

o The obligation to return it arises.
Art. 2155. Payment by reason of a mistake
In the construction or application of a doubtful or difficult

question of law
May come within the scope of the preceding article.

Art. 2156. If the payer was in doubt whether the debt was due,
He may recover
If he proves that it was not due.

Art. 2157. The responsibility of two or more payees,
When there has been payment of what is not due,

o Is solidary.
Art. 2158. When the property delivered or money paid belongs to
a third person,
The payee shall comply with the provisions of article 1984.

Art. 1984. The depositary cannot demand that the depositor prove his
ownership of the thing deposited.
Art. 2159. Whoever in bad faith accepts an undue payment,
Shall pay legal interest

o If a sum of money is involved, or
Shall be liable for fruits received or which should have been

received
o If the thing produces fruits.
He shall furthermore be answerable

o For any loss or impairment of the thing from any cause,
and
o For damages to the person who delivered the thing,
until it is recovered.
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Art. 2160. He who in good faith accepts an undue payment of a
thing certain and determinate
Shall only be responsible for the

o Impairment or loss of the same or
o Its accessories and accessions
Insofar as he has thereby been benefited.
If he has alienated it,

o He shall return the price or
o Assign the action to collect the sum.
Art. 2161. As regards the reimbursement for improvements and

expenses incurred by him who unduly received the thing,
The provisions of Title V of Book II* shall govern.

*BOOK II - PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS. Title V POSSESSION
Art. 2162. He shall be exempt from the obligation to restore
Who, believing in good faith that the payment was being

made of a legitimate and subsisting claim,
o Destroyed the document, or
o Allowed the action to prescribe, or
o Gave up the pledges, or
o Cancelled the guaranties for his right.
He who paid unduly may proceed only against

o The true debtor or the guarantors
With regard to whom the action is still effective.
Art. 2163. It is presumed that there was a mistake in the payment
If something which had never been due or had already been

paid
o Was delivered;
But he from whom the return is claimed

o May prove that the delivery was made out of liberality
or for any other just cause.
C. OTHER QUASI-CONTRACTS
SECTION 3. - Other Quasi-Contracts
Art. 2164. When, without the knowledge of the person obliged to
give support, it is given by a stranger,
The latter (stranger) shall have a right to claim the same from
the former,
o Unless it appears that he gave it out of piety and
o Without intention of being repaid.
Art. 2165. When funeral expenses are borne by a third person,
Without the knowledge of those relatives
Who were obliged to give support to the deceased,

o Said relatives shall reimburse the third person,
Should the latter claim reimbursement.

Art. 2166.
When the person obliged to support
o An orphan, or
o An insane or
o other indigent person unjustly
refuses to give support to the latter,
o Any third person may furnish support to the needy
individual,
o With right of reimbursement from the person obliged to
give support.
The provisions of this article apply
o When the father or mother of a child under 18 years of
age
o Unjustly refuses to support him.
Art. 2167. When through an accident or other cause
A person is injured or becomes seriously ill, and
He is treated or helped
While he is not in a condition to give consent to a contract,

o He shall be liable to pay for the services of
o The physician or other person aiding him,
Unless the service has been rendered
Out of pure generosity.

Art. 2168. When during a fire, flood, storm, or other calamity,
property is saved from destruction
By another person
Without the knowledge of the owner,

o The latter (owner) is bound to pay the former
o Just compensation.
Art. 2169. When the government, upon the failure of any person
to comply with health or safety regulations concerning property,
Undertakes to do the necessary work,
Even over his objection,

o He shall be liable to pay the expenses.
Art. 2170. When by accident or other fortuitous event,
Movables separately pertaining to two or more persons
Are commingled or confused,

o The rules on co-ownership shall be applicable.
Art. 2171. The rights and obligations of the finder of lost personal
property
Shall be governed by Articles 719 and 720*.

Art. 719. Whoever finds a movable, which is not treasure, must return it to
its previous possessor. If the latter is unknown, the finder shall
immediately deposit it with the mayor of the city or municipality where the
finding has taken place.
The finding shall be publicly announced by the mayor for two consecutive
weeks in the way he deems best.
If the movable cannot be kept without deterioration, or without expenses
which considerably diminish its value, it shall be sold at public auction
eight days after the publication.
Six months from the publication having elapsed without the owner having
appeared, the thing found, or its value, shall be awarded to the finder. The
finder and the owner shall be obliged, as the case may be, to reimburse the
expenses.
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Art. 720. If the owner should appear in time, he shall be obliged to pay, as
a reward to the finder, one-tenth of the sum or of the price of the thing
found.
Art. 2172. The right of every possessor in good faith to

reimbursement for necessary and useful expenses is governed by
Article 546.
Art. 2173. When a third person, without the knowledge of the
debtor, pays the debt,
The rights of the former (third person) are governed by

Articles 1236 and 1237.
Art. 1236. The creditor is not bound to accept
Payment or performance by a third person
Who has no interest in the fulfillment of the obligation,

o
Unless there is a stipulation to the contrary.
Whoever pays for another

o
May demand from the debtor
o
What he has paid,
Except that if he paid
Without the knowledge or
He can recover
Only insofar as the payment
Has been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor

o
Cannot compel the creditor
o
To subrogate him (creditor) in his (creditors) rights,
o
Such as those arising from a mortgage, guaranty, or penalty.
Art. 2174. When in a small community a majority of the

inhabitants of age
Decide upon a measure
For protection against lawlessness, fire, flood, storm or other

calamity,
o Any one who objects to the plan and refuses to
contribute to the expenses
o But is benefited by the project as executed
o Shall be liable to pay his share of said expenses.
Art. 2175. Any person who is constrained to pay the taxes of
another
Shall be entitled to reimbursement
From the latter.

4. ACTS OR OMISSIONS PUNISHED BY LAW
- NCC Arts. 1167, 2177
- RPC Arts. 100, 104
Art. 1167. If a person obliged to do something
Fails to do it,
The same shall be executed
At his cost.
CHAPTER 2
QUASI-DELICTS
10
Art. 2177. Responsibility for fault or negligence
Under the preceding article is
Entirely separate and distinct from the
Civil liability
Arising from negligence under the Penal Code.
But the plaintiff cannot recover damages

Twice for the same act or omission
Of the defendant.
REVISED PENAL CODE

CIVIL LIABILITY
Chapter One
PERSON CIVILLY LIABLE FOR FELONIES
Art. 100. Civil liability of a person guilty of felony

Every person criminally liable
For a felony is also
Civilly liable.
Chapter Two
WHAT CIVIL LIABILITY INCLUDES
Art. 104. What is included in civil liability
The civil liability established in
Articles 100, 101, 102, and 103 of this Code includes:

1. Restitution
2. Reparation
Of the damage caused;

3. Indemnification
For consequential damages.

5. QUASI-DELICTS
- Arts. 1162, 2176
Art. 1162. Obligations derived from
Quasi-delicts
Shall be governed by
The provisions of Chapter 2, Title XVII of this Book (QuasiDelicts), and by special laws.
Art. 2176. Whoever by act or omission
Causes damage to another,
There being fault or negligence,
Is obliged to pay for the damage done.
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Such fault or negligence,

If there is no pre-existing contractual relation
Between the parties,
Is called a Quasi-Delict and is
Governed by the provisions of this Chapter.
11
C. COMPLIANCE WITH OBLIGATIONS

- ARTS. 19, 1163-66,1244, 1246, 1460, 440, 442
CHAPTER 2
HUMAN RELATIONS
Art. 19. Every person must,
In the exercise of his rights and
In the performance of his duties,

o Act with justice,
o Give everyone his due, and
o Observe honesty and good faith.
CHAPTER 2
NATURE AND EFFECT OF OBLIGATIONS
Art. 1163.
General Rule: Every person
Obliged to give something
Is also obliged
To take care of it
With the proper diligence of a good father of a family
Exception:
o Unless the law or
o The stipulation of the parties
o Requires another standard of care.
Art. 1164. The creditor
Has a right
To the fruits of the thing
From the time the obligation to deliver it arises.
However, he shall acquire no real right over it
Until the same has been delivered to him.
Art. 1165. When what is to be delivered is
A determinate thing,
o The creditor,
o In addition to the right granted him by Article
1170*,
o May compel the debtor
o To make the delivery.
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If the thing is indeterminate or generic,

o He may ask that the obligation
o Be complied with
o At the expense of the debtor.
If the obligor
o Delays, or
o Promised to deliver the same thing to two or more
persons who do not have the same interest,
o He shall be responsible for any fortuitous event
o Until he has effected the delivery.
*Art. 1170. Those who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in any manner
contravene the tenor thereof, are liable for damages.
Art. 1166. The obligation to give
A determinate thing
Includes that of delivering
All its accessions and accessories,
Even though they may not have been mentioned.
Art. 1244. The debtor of a thing
Cannot compel the creditor
To receive a different one,
Although the latter

o May be of the same value as, or
o More valuable than
o That which is due.
In obligations to do or not to do, an act or forbearance

o Cannot be substituted
o By another act or forbearance
o Against the obligee's will.
Art. 1246. When the obligation consists in the delivery
Of an indeterminate or generic thing,
Whose quality and circumstances
Have not been stated,
The creditor cannot demand a thing of superior quality.
Neither can the debtor
Deliver a thing of inferior quality.
The purpose of the obligation and other circumstances shall

be taken into consideration.
Art. 1460. A thing is determinate
When it is particularly designated or
Physical segregated
From all other of the same class.

CHAPTER 3
RIGHT OF ACCESSION
GENERAL PROVISIONS
Art. 440. The ownership of property
Gives the right by accession
To everything which is
o Produced thereby, or
o Incorporated or attached thereto,
o Either naturally or artificially.
Art. 442.
Natural fruits are the

o
Spontaneous products of the soil, and the
o
Young and other products of animals.
Industrial fruits are those

o
Produced by lands of any kind
o
Through cultivation or labor.
12
D. KINDS OF CIVIL OBLIGATIONS

1. AS TO PERFECTION AND EXTINGUISHMENT
A. PURE
B. CONDITIONAL
Impossible conditions,
Those contrary to good customs or public policy and
Those prohibited by law
o Shall annul the obligation
Which depends upon them.
If the obligation is divisible,

o That part thereof
o Which is not affected by
o The impossible or unlawful condition
Shall be valid.
The condition not to do an impossible thing

Shall be considered as
o Not having been agreed upon.
A. PURE
CHAPTER 3
DIFFERENT KINDS OF OBLIGATIONS
SECTION 1. - Pure and Conditional Obligations
Art. 1179.
Every obligation
o Whose performance
o Does not depend upon a:
Future or uncertain event, or
Past event unknown to the parties,

o Is demandable at once.
Every obligation
o Which contains a resolutory condition
o Shall also be demandable,
Without prejudice to the
Effects of the happening of the event.
Art. 1197. If the obligation
Does not fix a period,

o But from its nature and the circumstances
o It can be inferred
o That a period was intended,
The courts may fix the duration thereof.
Art. 1184. The condition that
Some event happen
At a determinate time
Shall extinguish the obligation

o As soon as the time expires or
o If it has become indubitable that the event will not
take place.
Art. 1185. The condition that
Some event will not happen
At a determinate time
Shall render the obligation effective

o From the moment the time indicated has elapsed,
or
o If it has become evident that the event cannot
occur.
B. CONDITIONAL
Art. 1181. In conditional obligations,
The acquisition of rights, as well as
The extinguishment or loss of those already acquired,

o Shall depend upon the happening of the event
o Which constitutes the condition.
Art. 1182. When the fulfillment of the condition
Depends upon the sole will of the debtor,

o The conditional obligation shall be void.
If the fulfillment of the condition

Depends upon
o Chance or
o The will of a third person,
o The obligation shall take effect
o In conformity with the provisions of this Code.
Art. 1183.
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If no time has been fixed,

o The condition shall be deemed fulfilled
o At such time as may have probably been contemplated,
o Bearing in mind the nature of the obligation.
Art. 1186. The condition shall be deemed fulfilled
When the obligor
Voluntarily prevents its fulfillment.

Art. 1187. The effects of a conditional obligation to give
Shall retroact to the day of the constitution of the obligation

o Once the condition has been fulfilled
Nevertheless, when the obligation imposes

Reciprocal prestations upon the parties,
o The fruits and interests
o During the pendency of the condition
Shall be deemed to have been mutually

compensated.
If the obligation is unilateral,

The debtor shall appropriate the fruits and interests
received,
13
o
o
o
o
Unless from the nature and circumstances of the

obligation
It should be inferred that the intention of
The person constituting the same
Was different.
The debtor may recover what,
During the same time

o He has paid by mistake
o In case of a suspensive condition.
(6) If it is improved
At the expense of the debtor,
He shall have no other right
Than that granted to the usufructuary.

Art. 1190. When the conditions have for their purpose
The extinguishment of an obligation to give,
The parties,
Upon the fulfillment of said conditions,

o Shall return to each other
o What they have received.
Art. 1189.
When the conditions have been imposed
With the intention of suspending the efficacy of an obligation

to give,
The following rules shall be observed
In case of the
o Improvement,
o Loss or
o Deterioration of the thing
During the pendency of the condition:

(1) If the thing is lost
Without the fault of the debtor,
The obligation shall be extinguished;

Through the fault of the debtor,
He shall be obliged to pay damages;
It is understood that the thing is lost

i. When it perishes, or
ii. Goes out of commerce, or
iii. Disappears in such a way that its
existence is unknown or it cannot be
recovered;
(3) When the thing deteriorates
The impairment is to be borne by the creditor;

(4) If it deteriorates
The creditor may choose between
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i. The rescission of the obligation and

ii. Its fulfillment,
With indemnity for damages in either case;
(5) If the thing is improved
By its nature, or
By time,
The improvement shall inure to
The benefit of the creditor;
In obligations to do and not to do,

o The courts shall determine, in each case,
o The retroactive effect of the condition
That has been complied with.
Art. 1188. The creditor may bring
The appropriate actions
For the preservation of his right

o Before the fulfillment of the condition.
In case of the
o Loss,
o Deterioration or
o Improvement of the thing,
The provisions which,
With respect to the debtor,
Are laid down in the preceding article
o Shall be applied to the party
o Who is bound to return.
As for the obligations to do and not to do,
o The provisions of the second paragraph* of Article 1187
Shall be observed
As regards the effect of the extinguishment of the

obligation.
* In obligations to do and not to do,

o
The courts shall determine, in each case,
o
The retroactive effect of the condition
o That has been complied with.

Art. 1180. When the debtor binds himself to pay
When his means permit him to do so,

o The obligation shall be deemed to be
One with a period,

o Subject to the provisions of Article 1197*.
*Art. 1197. If the obligation does not fix a period, but from its
nature and the circumstances it can be inferred that a period was
intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends
upon the will of the debtor.
In every case, the courts shall determine such period as may under
the circumstances have been probably contemplated by the
14

parties. Once fixed by the courts, the period cannot be changed by
them.
SECTION 2. - Obligations with a Period
Art. 1193. Obligations for whose fulfillment
A day certain has been fixed,

o Shall be demandable
Only when that day comes.
Obligations with a resolutory period

Take effect at once,
o But terminate upon
o Arrival of the day certain.
A day certain
Is understood to be
o That which must necessarily come,
Although it may not be known when.

If the uncertainty consists in
o Whether the day will come or not,
The obligation is conditional, and
It shall be regulated
By the rules of the preceding Section.
Art. 1194. In case of

o Loss,
o Deterioration or
o Improvement
Of the thing
Before the arrival of
The day certain,
The rules in Article 1189 shall be observed.

Art. 1195. Anything paid or delivered
Before the arrival of the period,
The obligor
o Being unaware of the period or
o Believing that the obligation has become due and
demandable,
May be recovered,
With the fruits and interests.

Art. 1196.
General Rule: Whenever in an obligation a period is

designated,
o It is presumed
o To have been established
For the benefit of both the creditor and the debtor,
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Exception: Unless from the tenor of the same or other

circumstances
o It should appear
o That the period has been established
In favor of one or of the other.
Art. 1197. If the obligation does not fix a period,
But from its nature and the circumstances
It can be inferred
That a period was intended,

o The courts may fix the duration thereof.
The courts shall also fix

o The duration of the period
When it depends upon
The will of the debtor.
In every case,
o The courts shall determine such period
o As may under the circumstances
Have been probably contemplated by the parties.
Once fixed by the courts,

o The period cannot be changed by them.
Art. 1198. The debtor shall lose
Every right to make use of the period:

1.
When after the obligation has been contracted,
He becomes insolvent,
Unless he gives
i. A guaranty or
ii. Security for the debt;
2.
When he does not furnish
To the creditor
The guaranties or securities
Which he has promised;

3.
When by his own acts
He has impaired said guaranties or securities
After their establishment, and
4.
When through a fortuitous event
They disappear,
- Unless he immediately gives
- New ones equally satisfactory;
When the debtor violates

Any undertaking,
In consideration of which
The creditor agreed to the period;
When the debtor attempts to abscond.
5.
2. AS TO PLURALITY OF PRESTATION
A. CONJUNCTIVE
B. ALTERNATIVE (ARTS. 1199-1205)
C. FACULTATIVE (ART. 1206)
A. CONJUNCTIVE
15
Taking as a basis
o The value of the last thing which disappeared, or
o That of the service which last became impossible.
Damages
Other than the value
Of the last thing or service
o May also be awarded.
B. ALTERNATIVE
SECTION 3. - Alternative Obligations
Art. 1199. A person alternatively bound
By different prestations
o Shall completely perform one of them.
The creditor cannot be compelled

To receive
o Part of one and
o Part of the other undertaking.
Art. 1200.
GENERAL RULE: The right of choice
Belongs to the debtor,

EXCEPTION: Unless right of choice has been expressly granted*
To the creditor.
The debtor shall have no right to choose

Those prestations which are
o Impossible,
o Unlawful or
o Which could not have been the object of the
obligation.
*Article 1205
Art. 1201. The choice
Shall produce no effect

o Except from the time
It has been communicated.

Art. 1202. The debtor shall lose
The right of choice

o When among the prestations
o Whereby he is alternatively bound,
Only one is practicable.

Art. 1203. If through the creditor's acts
The debtor cannot make a choice
According to the terms of the obligation,

o The debtor may
o Rescind the contract
o With damages.
Art. 1204. The creditor shall have a right
To indemnity for damages

o When, through the fault of the debtor,
o All the things which are alternatively the object of the
obligation
Have been lost, or
The compliance of the obligation has become

impossible.
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The indemnity
Shall be fixed
Art. 1205. When the choice
Has been expressly given
To the creditor,
o The obligation shall cease to be alternative
From the day when the selection
Has been communicated to the debtor.
Until then
The responsibility of the debtor
Shall be governed by the following rules:

(1)
If one of the things is lost
Through a fortuitous event,

Debtor shall perform the obligation
By delivering that
Which the creditor should choose from
ii. Among the remainder, or
iii. That which remains if only one subsists;
(2)
If the loss of one of the things
Occurs through the fault of the debtor,

The creditor may claim
ii. Any of those subsisting, or
iii. The price of that which, through the fault
of the debtor, has disappeared,
With a right to damages;
(3)
If all the things are lost

The choice by the creditor
Shall fall upon the price of
Any one of them,
i. Also with indemnity for damages.
The same rules shall be applied to

o Obligations to do or not to do
In case one, some or all of the prestations
Should become impossible.
C. FACULTATIVE
Art. 1206. When only one prestation
Has been agreed upon,

o But the obligor may render another in substitution,
o The obligation is called facultative.
GENERAL RULE: The loss or deterioration of
The thing intended as a substitute,

o Through the negligence of the obligor,
16
Does not render him liable.
EXCEPTION: But once the substitution has been made,
The obligor is liable for

o The loss of the substitute
On account of his
Delay,
Negligence or
Fraud.
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17
o
3. AS TO RIGHTS & OBLIGATIONS OF MULTIPLE PARTIES
A. JOINT (Arts. 1207-1222)
B. SOLIDARY (NCC ARTS 927, 1824, 1911, 1945, 2157, 2194, 2146;
FC ARTS 94, 121; RPC ART. 90)
C. DISJUNCTIVE
A. JOINT (Arts. 1207-1222)
SECTION 4. - Joint and Solidary Obligations
Art. 1207. The concurrence of
o Two or more creditors or
o Two or more debtors
In one and the same obligation
Does not imply

o That each one of the former has a right to demand,
or
o That each one of the latter is bound to render,
Entire compliance with the prestation.
There is a solidary liability

Only when:
o The obligation expressly so states, or
o The law or the nature of the obligation requires
solidarity.
Art. 1208. If from

o The law, or
o The nature or the wording of the obligations
To which the preceding article refers

o The contrary does not appear,
The credit or debt
Shall be presumed to be divided
Into as many shares as there are creditors or debtors,
The credits or debts being considered

o Distinct from one another,
Subject to the Rules of Court governing the

multiplicity of suits.
Art. 1211. Solidarity may exist
Although the creditors and the debtors
May not be bound

o In the same manner and
o By the same periods and conditions.
Art. 1212. General Rule: Each one of the solidary creditors
May do whatever
May be useful to the others,

o Exception: But not anything
o Which may be prejudicial to the latter (other
solidary creditors).
Art. 1213. A solidary creditor
Cannot assign his rights
Without the consent of the others.

Art. 1214. The debtor may pay
Any one of the solidary creditors;
But if any demand,

o Judicial or
o Extrajudicial,
Has been made by one of them,
Payment should be made to him.

Art. 1215.
o
o
o
o
Made by
Art. 1209. If the division is impossible,
The right of the creditors
May be prejudiced
o Only by their collective acts, and
The debt can be enforced

o Only by proceeding against all the debtors.
If one of the latter should be insolvent,

o The others shall not be liable
o For his share.
Art. 1210. The indivisibility of an obligation
Does not necessarily give rise
To solidarity.
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Nor does solidarity of itself
Imply indivisibility.
Novation,
Compensation,
Confusion or
Remission of the debt,
Any of the solidary creditors or
With any of the solidary debtors,

Shall extinguish the obligation,
o Without prejudice to the provisions of Article 1219.
The creditor
o Who may have executed
o Any of these acts, as well as
He who collects the debt,
Shall be liable to the others
For the share in the obligation
Corresponding to them.
Art. 1216. The creditor may proceed against
Any one of the solidary debtors or
Some or all of them

o Simultaneously.
The demand made against

One of them
o Shall not be an obstacle
o To those which may subsequently be directed
o Against the others,
18
So long as the debt

o Has not been fully collected.
Art. 1217. Payment made by
One of the solidary debtors

o Extinguishes the obligation.
Art. 1221.
If the thing has been lost or
If the prestation has become impossible

o Without the fault of the solidary debtors,
The obligation shall be extinguished.
If two or more solidary debtors

Offer to pay,
o The creditor may choose
Which offer to accept.
He who made the payment

May claim from his co-debtors
o Only the share
o Which corresponds to each,
With the interest
For the payment already made.
If the payment is made

Before the debt is due,
o No interest
o For the intervening period
o May be demanded.
When one of the solidary debtors cannot,

o Because of his insolvency,
Reimburse his share
To the debtor paying the obligation,
Such share shall be borne
By all his co-debtors,
In proportion to the debt of each.
Art. 1218. Payment by a solidary debtor
Shall not entitle him
To reimbursement
o From his co-debtors
If such payment is made

o After the obligation has
o Prescribed or become illegal.
Art. 1219. The remission made by the creditor
Of the share
o Which affects one of the solidary debtors
Does not release the latter (one of the solidary debtors)
From his responsibility

o Towards the co-debtors,
o In case the debt had been totally paid
By anyone of them
Before the remission was effected.

Art. 1220. The remission of the whole obligation,
o Obtained by one of the solidary debtors,
Does not entitle him (one of the solidary debtors)
To reimbursement
o From his co-debtors.
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If there was fault

On the part of any one of them,
o All shall be responsible
o To the creditor, for
The price and
The payment of damages and interest,

o Their action against
o The guilty or negligent debtor.
If through a fortuitous event,
o The thing is lost or
o The performance has become impossible
After one of the solidary debtors
o Has incurred in delay
o Through the
Judicial or
Extrajudicial demand
o Upon him by the creditor,
The provisions of the preceding paragraph shall apply.
Art. 1222. In actions filed by the creditor
A solidary debtor
May avail himself of
All defenses which are

o Derived from the nature of the obligation and
o Of those which are personal to him, or pertain to
his own share.
With respect to those which personally belong to the others

(other solidary debtors),
o He may avail himself thereof
o Only as regards that part of the debt
o For which the latter (other solidary debtors) are
responsible.
B. SOLIDARY
(NCC ARTS 927, 1824, 1911, 1945, 2157, 2194, 2146; FC ARTS 94,
121; RPC ART. 90)
Art. 927
If two or more heirs take possession of the estate,

o They shall be solidarily liable
o For the loss or destruction of
A thing devised or bequeathed,
Even though only one of them
Should have been negligent.
19

Art. 1824. All partners are liable solidarily with the partnership
For everything chargeable to the partnership

o Under Articles 1822 and 1823.
o
Art. 1822. Where, by any wrongful act or omission

of any partner
Acting in the ordinary course of the business

of the partnership or
With the authority of co-partners,
Loss or injury is caused to any person, not

being a partner in the partnership, or
Any penalty is incurred,

o The partnership is liable therefor
o To the same extent as the partner so
acting or omitting to act.
Art. 2194. The responsibility of two or more persons
Who are liable for quasi-delict

o Is solidary.
Art. 2146. If the officious manager delegates
To another person
All or some of his duties,

o He shall be liable
o For the acts of the delegate,
o The direct obligation of the latter (delegate)
o Toward the owner of the business.
Family Code
Art. 1823. The partnership is bound to make good

the loss:
Art. 94. The absolute community of property
Shall be liable for:
(1) Where one partner acting within the scope of

his apparent authority
Receives money or property of a third

person and
Misapplies it; and
1.
(2) Where the partnership in the course of its

business
Receives money or property of a third

person and
The money or property so received is

misapplied by any partner while it is in
the custody of the partnership.
Art. 1911. Even when the agent has exceeded his authority,
The principal is
o Solidarily liable with the agent
If the former (principal)
Allowed the latter (agent)
To act as though he (agent) had full powers.

Art. 1915. If two or more persons have appointed an agent
o For a common transaction or undertaking,
They shall be solidarily liable

o To the agent
For all the consequences of the agency.

Art. 1945. When there are two or more bailees
To whom a thing is loaned
In the same contract,

o They (bailees) are liable solidarily.
Art. 2157. The responsibility of two or more payees,
When there has been payment
Of what is not due,

o Is solidary.
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The support of
The spouses,
Their common children, and
Legitimate children of either spouse;

o However, the support of
o Illegitimate children
Shall be governed by
The provisions of this Code on Support;
2.
All debts and obligations
Contracted during the marriage

o By the designated administrator-spouse
For the benefit of the community, or
o By both spouses, or
o By one spouse
With the consent of the other;
3.
Debts and obligations
Contracted by either spouse
Without the consent of the other

o To the extent that the family
o May have been benefited;
4.
All taxes, liens, charges and expenses,
Including major or minor repairs,
Upon the community property;
5.
All taxes and expenses
For mere preservation made

o During marriage
Upon the separate property
Of either spouse
o Used by the family;
6.
Expenses
To enable either spouse
To commence or complete
o A professional or vocational course, or
20

o Other activity for self-improvement;
7.
8.
The value
Of what is donated or promised
By both spouses
- In favor of their common legitimate children
- For the exclusive purpose of
o Commencing or completing
- A professional or vocational course or
- Other activity for self-improvement; and
9.
Expenses of litigation
Between the spouses

- Unless the suit is found to be groundless.
If the conjugal partnership is insufficient

o To cover the foregoing liabilities,
The spouses shall be solidarily liable
For the unpaid balance
With their separate properties.
Ante-nuptial debts
Of either spouse
o Insofar as they have redounded
o To the benefit of the family;
Section 4. Charges Upon and Obligations of the Conjugal

Partnership
Art. 121. The conjugal partnership
Shall be liable for:

1.
The support of
The spouse,
Their common children, and
The legitimate children of either spouse;

- However, the support of
- Illegitimate children
o Shall be governed by
o The provisions of this Code on Support;
2.
3.
All debts and obligations
Contracted during the marriage

- By the designated administrator-spouse
o For the benefit of the conjugal partnership of
gains, or
- By both spouses or
- By one of them
o With the consent of the other;
Debts and obligations
Contracted by either spouse
Without the consent of the other

- To the extent that the family
- May have benefited;
4.
All taxes, liens, charges, and expenses,
Including major or minor repairs
Upon the conjugal partnership property;
5.
All taxes and expenses
For mere preservation made

- During the marriage
Upon the separate property

- Of either spouse;
6.
7.
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Expenses
To enable either spouse
To commence or complete
- A professional, vocational course, or
- Other activity for self-improvement;
Ante-nuptial debts
Of either spouse
Insofar as they have redounded
To the benefit of the family;
Revised Penal Code

Art. 90. Prescription of crime
i.
Crimes punishable by
o Death,
o Reclusion perpetua or
o Reclusion temporal
Shall prescribe in twenty years.

ii.
Crimes punishable
o By other afflictive penalties
Shall prescribe in fifteen years.
iii.
General Rule: Those punishable by a correctional penalty (1m

& 1d to 6 y)
Shall prescribe in ten years;
Exception: With the exception of those

punishable by arresto mayor (1m & 1d to 6m),
o Which shall prescribe in five years.
iv.
The crime of libel or Other similar offenses
Shall prescribe in one year.
v.
The crime of
o Oral defamation and
o Slander by deed
Shall prescribe in six months.
vi.
Light offenses (arresto menor 1 d to 30 d)
Prescribe in two months.
C. DISJUNCTIVE
Disjunctive there are several obligations and only one or some
of them must be fulfilled
21
4. AS TO PERFORMANCE OF PRESTATION
(ARTS. 1221-1225, 1209-1210)
A. DIVISIBLE
B. INDIVISIBLE
Art. 1221.
If the thing has been lost or
If the prestation has become impossible

o Without the fault of the solidary debtors,
The obligation shall be extinguished.
If there was fault on the part of any one of them (solidary

debtors),
o All (solidary debtors) shall be responsible to the
creditor, for
The price and
The payment
of damages and
Interest
Their action against
o The guilty or negligent debtor.
If through a fortuitous event,

o The thing is lost or
o The performance has become impossible
After one of the solidary debtors
Has incurred in delay
Through the
Judicial or
Extrajudicial demand
Upon him by the creditor,
All (solidary debtors) shall be responsible to

the creditor, for
o The price and
o The payment
of damages and
o Interest
Art. 1222. In actions filed by the creditor
A solidary debtor may avail himself of

o All defenses which are
1. Derived from the nature of the obligation and
2. Of those which are personal to him, or pertain to
his own share.
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With respect to those which personally belong to the others

(other solidary debtors),
o He may avail himself thereof
Only as regards that part of the debt
For which the latter (other solidary debtors) are

responsible.
A. DIVISIBLE
B. INDIVISIBLE
SECTION 5. - Divisible and Indivisible Obligations
Art. 1223. The divisibility or indivisibility of the things
That are the object of obligations
In which there is
o Only one debtor and
o Only one creditor
Does not alter or modify
The provisions of Chapter 2 (NATURE AND EFFECT

OF OBLIGATIONS Arts 1163-1178) of this Title.
Art. 1224. A joint indivisible obligation
Gives rise to indemnity

o For damages
From the time any one of the debtors
Does not comply with his undertaking.
The debtors
o Who may have been ready to fulfill their promises
Shall not contribute to the indemnity
Beyond the corresponding portion of
The price of the thing or
The value of the service
In which the obligation consists.
Art. 1225. For the purposes of the preceding articles,
GENERAL RULE: Obligations to give

o Definite things and
o Those which are not susceptible of partial performance
Shall be deemed to be indivisible.
When the obligation has for its object

o The execution of a certain number of days of work,
The accomplishment of work by metrical units, or

o Analogous things
Which by their nature are susceptible of partial

performance,
It shall be divisible.
EXCEPTION: However, even though the object or service

May be physically divisible,
o An obligation is indivisible if
1. So provided by law or
2. Intended by the parties.
In obligations not to do,
o Divisibility or indivisibility
o Shall be determined by
The character of the prestation in each particular

case.
22
Art. 1209. If the division is impossible,
The right of the creditors
May be prejudiced
o Only by their (creditors) collective acts, and
The debt can be enforced only by

o Proceeding against
o All the debtors.
If one of the debtors

Should be insolvent,
o The other debtors
o Shall not be liable for his share.
Art. 1210. The indivisibility of an obligation
Does not necessarily give rise
To solidarity.
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Nor does solidarity of itself

Imply indivisibility.
23
5. AS TO THE PRESENCE OF AN ACCESSORY UNDERTAKING IN

CASE OF BREACH
WITH A PENAL CLAUSE (distinguish from liquidated damages)
(ARTS. 122601230)
SECTION 6. - Obligations with a Penal Clause
Art. 1226. In obligations with a penal clause,
The penalty
Shall substitute
o The indemnity for damages and
o The payment of interests
In case of noncompliance,
If there is no stipulation to the contrary.
Nevertheless, damages shall be paid

If the obligor
a. Refuses to pay the penalty or
b. Is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced

o Only when it is demandable
o In accordance with the provisions of this Code.
If it is
Iniquitous or
Unconscionable.
Art. 1230. The nullity of the penal clause
Does not carry with it

o Nullity of the principal obligation.
The nullity of the principal obligation

Carries with it
o Nullity of the penal clause.
E. BREACH OF OBLIGATIONS (ART 1170)
Art. 1227.
General Rule:
The debtor cannot exempt himself
From the performance of the obligation
By paying the penalty,

Exception:
o Save in the case where
o This right has been expressly reserved for him.
General Rule:
Neither can the creditor demand

o The fulfillment of the obligation and
o The satisfaction of the penalty at the same time,
Exception:
o Unless this right has been clearly granted him.
However, if after the creditor has decided

To require the fulfillment of the obligation,
o The performance thereof should become impossible
o Without his fault,
The penalty may be enforced.
Art. 1228. Proof of actual damages
Suffered by the creditor

o Is not necessary
o In order that the penalty may be demanded.
Art. 1229. The judge shall equitably reduce the penalty
When the principal obligation
Has been partly or irregularly complied with
By the debtor.
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Even if there has been no performance,

o The penalty may also be reduced by the courts
24
Which is required by the nature of the obligation
and
Corresponds with
o The circumstances of the
Persons,
Time, and
Place.
I. Manner of Breach
1. FRAUD (ARTS. 1171, 1338, 1344)
3. DELAY (ARTS. 1169, 1165, 1786, 1788, 1896, 1942)
II. Excuse for non-performance

2. ACT OF CREDITOR
Art. 1170.
Those who
o In the performance of their obligations are
o Guilty of
Fraud, negligence, or delay, and

Those who
o In any manner
o Contravene the tenor thereof,
Are liable for damages.
I. MANNER OF BREACH
1. FRAUD (ARTS. 1171, 1338, 1344)
Art. 1171. Responsibility arising from fraud
Is demandable in all obligations.
Any waiver of
An action for future fraud
o Is void.
Art. 1338. There is fraud when,
Through insidious words or machinations

o Of one of the contracting parties,
The other is induced
To enter into a contract

o Which without them,
o He would not have agreed to.
Art. 1344. In order that fraud
May make a contract voidable, it

o Should be serious and
o Should not have been employed by both
contracting parties.
If the law or contract

Does not state the diligence
o Which is to be observed in the performance,
That which is expected of a good father of a family
o Shall be required.
EXCEPTION:
However, the demand by the obligee/creditor
Shall not be necessary
In order that delay may exist:

(1) When the obligation or the law
Expressly so declares; or
(2) When from the nature and circumstances of the
obligation
It appears that the designation of the time when

o The thing is to be delivered or
o The service is to be rendered
Was a controlling motive

o For the establishment of the contract; or
Any waiver of
o Is void.
Art. 1172. Responsibility arising from negligence
In the performance of every kind of obligation
Is also demandable,
o But such liability may be regulated by the courts,
o According to the circumstances.
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Art. 2201, paragraph 2: In case of

o Fraud,
o Bad faith,
o Malice or
o Wanton attitude,
The obligor shall be responsible for
All damages
o Which may be reasonably attributed to
the
o Non-performance of the obligation.
Art. 1169. Those obliged to deliver or to do something

GENERAL RULE:
Incur in delay
From the time the obligee/creditor

o Judicially or extrajudicially demands from them
o The fulfillment of their obligation.
Art. 1173. The fault or negligence of the obligor
Consists in
o The omission of that
Diligence
Any waiver of
Is void.
3. DELAY (ARTS. 1169, 1165, 1786, 1788, 1896, 1942)
When negligence shows bad faith,

o The provisions of Articles 1171 and 2201, paragraph 2,
shall apply.
(3) When demand would be useless,
As when the obligor has rendered it beyond his

power to perform.
In reciprocal obligations,
Neither party incurs in delay if the other
o Does not comply or
o Is not ready to comply
In a proper manner
With what is incumbent upon him.
25
From the moment one of the parties fulfills his obligation,

o Delay by the other begins.
Art. 1165.,
When what is to be delivered is a determinate thing
The creditor,
o In addition to the right granted him by Article 1170,
May compel the debtor
To make the delivery.
o
o
Longer than the period stipulated, or

After the accomplishment of the use
For which the commodatum has been

constituted;
(3) If the thing loaned has been delivered

o General Rule: With appraisal of its value,
Exception: Unless there is a stipulation

o Exempting the bailee from responsibility
o In case of a fortuitous event;
*Art. 1170. Those who in the performance of their obligations

are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages.
(4) If he lends or leases the thing
To a third person,
Who is not a member of his household;
If the thing to be delivered is indeterminate or generic,

He may ask that the obligation
o Be complied with
(5) If, being able to save either
The thing borrowed or
His own thing,

o He chose to save the latter (his own thing).
If the obligor delays, or has promised to deliver

The same thing to two or more persons
o Who do not have the same interest,
He shall be responsible for any fortuitous event
Art. 1786.
Every partner
Is a debtor of the partnership

o For whatever he may have promised to contribute to
the partnership.
He (partner) shall also be bound for warranty

In case of eviction
o With regard to specific and determinate things
Which he may have contributed to the partnership,
In the same cases and in the same manner as
o The vendor is bound with respect to the vendee.
He shall also be liable for the fruits thereof
o From the time they should have been delivered,
o Without the need of any demand.
Art. 1788. A partner who
Has undertaken to contribute a sum of money and
Fails to do so
o Becomes a debtor
o For the interest and damages
From the time he should have complied with

his obligation.
The same rule applies to

o Any amount he may have taken from the partnership
coffers, and
o His liability shall begin from
The time he converted the amount to his own use.
Art. 1896. The agent owes interest
On the sums he has applied to his own use
From the day on which he did so, and
On those which he still owes

o After the extinguishment of the agency.
Art. 1942. The bailee is liable for the loss of the thing,
Even if it should be through a fortuitous event:

(1) If he devotes the thing
o To any purpose
o Different from that for which it has been loaned;
(2) If he keeps it
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26
II. EXCUSE FOR NON-PERFORMANCE

Art. 1174.
General Rule: No person shall be responsible for those

events
o Which could not be foreseen, or
o Which though foreseen, were inevitable.
Exception: Except in cases

o Expressly specified by the law, or
o When it is otherwise declared by stipulation, or
o When the nature of the obligation
Requires the assumption of risk,


received

For any loss or impairment of the thing
o From any cause, and
For damages to the person who delivered the thing,
o Until it is recovered.
2. ACT OF CREDITOR
Art. 552. A possessor in good faith
General Rule: Shall not be liable for

o The deterioration or
o Loss of the thing possessed,
Exception: Except in cases in which it is proved that

o He has acted with
Fraudulent intent or
Negligence,
o After the judicial summons.
A possessor in bad faith

Shall be liable for deterioration or loss
In every case,
o Even if caused by a fortuitous event.
Art. 1165.,
The creditor,


o Be complied with


(1)
Which the owner was not accustomed to embark

upon;
(2)

(3)

(4)
In bad faith.
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27
F. REMEDIES FOR BREACH OF OBLIGATIONS

NCC Arts. 1165-68, 1170, 1177-78, 1191-92, 2236
FC Arts. 153, 155
Rule 39 Sec. 13
III.
EXTRA-JUDICIAL REMEDIES
1.
2.
IV.
EXPRESSLY GRANTED BY LAW ARTS. 1786, 1788, 1526

STIPULATED
PRINCIPAL REMEDIES ARTS. 1191, 1170

SUBSIDIARY REMEDIES ARTS. 1380, 1177
ANCILLARY REMEDIES RULES OF COURT
F. REMEDIES FOR BREACH OF OBLIGATIONS

NCC Arts. 1165-68, 1170, 1177-78, 1191-92, 2236
FC Arts. 153, 155
Rule 39 Sec. 13
Art. 1165.,
The creditor,


o Be complied with

Art. 1166. The obligation to give a determinate thing

o Includes that of delivering
All its accessions and accessories,

o Even though they may not have been mentioned.
Art. 1177. The creditors,
o After having pursued the property
In possession of the debtor

o To satisfy their claims,
May exercise all the rights and
Bring all the actions of the debtor
o For the same purpose (to satisfy their claims),
Save those which are inherent in his

(debtors) person;
They may also impugn
o The acts which the debtor
o May have done to defraud them.
Art. 1178. Subject to the laws,
General rule:
All rights acquired
o In virtue of an obligation
Are transmissible,
Exception:
o If there has been no stipulation to the contrary.
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*Art. 1191. The power to rescind obligations
Is implied in reciprocal ones,
In case one of the obligors

o Should not comply
o With what is incumbent upon him.
JUDICIAL REMEDIES
1.
2.
3.
The injured party

May choose between
(1) The fulfillment or
(2) The rescission of the obligation,
With the payment of damages in either case.

He may also seek rescission,
o Even after he has chosen fulfillment,
If the fulfillment should become impossible.
The court shall decree the rescission claimed,

o Unless there be just cause
o Authorizing the fixing of a period.
This is understood to be without prejudice to

The rights of third persons
o Who have acquired the thing,
o In accordance with Articles 1385 and 1388 and
o The Mortgage Law.
Art. 1385. Rescission creates the obligation to return the things which were
the object of the contract, together with their fruits, and the price with its
interest; consequently, it can be carried out only when he who demands
rescission can return whatever he may be obliged to restore.
Neither shall rescission take place when the things which are the object of
the contract are legally in the possession of third persons who did not act
in bad faith.
In this case, indemnity for damages may be demanded from the person
causing the loss.
Art. 1388. Whoever acquires in bad faith the things alienated in fraud of
creditors, shall indemnify the latter for damages suffered by them on
account of the alienation, whenever, due to any cause, it should be
impossible for him to return them.
If there are two or more alienations, the first acquirer shall be liable first,
and so on successively.
Art. 1192. In case both parties

Have committed a breach of the obligation,
o The liability of the first infractor
o Shall be equitably tempered by the courts.
If it cannot be determined
Which of the parties
First violated the contract,
o The contract shall be deemed extinguished, and
o Each shall bear his own damages.
Art. 2236. The debtor is liable

With all his property,
o Present and future,
For the fulfillment of his obligations,
o Subject to the exemptions provided by law.
Art. 302.
Neither the right to receive legal support
Nor any money or property obtained as such support or
Any pension or gratuity from the government
o Is subject to attachment or execution.
Art. 1708. The laborer's wages
General Rule
Shall not be subject to execution or attachment,
Exception:
Except for debts incurred for
28
Food,
Shelter,
Clothing and
Medical attendance.
Family Code
Art. 153. The family home
Is deemed constituted
On a house and lot
o From the time it is occupied as a family residence.
o From the time of its constitution and
So long as any of its beneficiaries actually

resides therein,
The family home continues to be such and
Is exempt from
Execution,
Forced sale or
Attachment
Except as hereinafter provided and to the

extent of the value allowed by law.
Art. 155.
General Rule:
o The family home shall be exempt from execution, forced sale
or attachment
Exception:
o Except for:
(1) Non-payment of taxes;
(2) Debts incurred
Prior to the constitution of the family home;

(3) Debts
Secured by mortgages on the premises
Before or after such constitution; and

(4) Debts due to
Labourers, mechanics, architects, builders,

materialmen and others
Who have rendered service or
Who furnished material

o For the construction of the building.
RULE 39 - EXECUTION, SATISFACTION AND EFFECT OF
JUDGMENTS
Sec. 13. Property exempt from execution.
(b) Ordinary tools and implements
Personally used by him
In his trade, employment, or livelihood;

(c) Three horses, or three cows, or three carabaos, or other
beasts of burden
Such as the judgment obligor may select
Necessarily used by him
In his ordinary occupation;

(d) His necessary clothing and articles for ordinary personal use,
Excluding jewelry;
(e) Household furniture and utensils
Necessary for housekeeping, and
Used for that purpose

o By the judgment obligor and his family,
Such as the judgment obligor may select,
Of a value not exceeding P100;
(f) Provisions
For individual or family use
Sufficient for 4 months;

(g) The professional libraries and equipment of
Judges,
Lawyers,
Physicians,
Pharmacists,
Dentists,
Engineers,
Surveyors,
Clergymen,
Teachers, and
Other professionals,
o Not exceeding P300,000 in value;
(h) One fishing boat and accessories
Not exceeding the total value of P100,000
Owned by a fisherman and
By the lawful use of which he earns his livelihood;

(i) So much of the salaries, wages, or earnings
Of the judgment obligor
Of his personal services

o Within the 4 months preceding the levy
As are necessary for the support of his family;

(j) Lettered gravestones;
(k) Monies benefits, privileges, or annuities
Accruing or in any manner growing out of

o Any life insurance;
(l) The right to receive
Legal support, or money or property

o Obtained as such support, or
Any pension or gratuity from the Government;

(m) Properties specially exempt by law.
Except as otherwise expressly provided by law,

The following property, and no other,
Shall be exempt from execution: (13)
(a) The judgment obligor's
Family home as provided by law, or
The homestead in which he resides, and
Land necessarily used in connection therewith;
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But no article or species of property mentioned in his section

Shall be exempt from execution
Issued upon a judgment
o Recovered for its price or
o Upon a judgment of foreclosure of a mortgage
thereon.
I. EXTRA-JUDICIAL REMEDIES
1. EXPRESSLY GRANTED BY LAW ARTS. 1786, 1788, 1526
Art. 1786.
Every partner
Is a debtor of the partnership

o For whatever he may have promised to contribute to
the partnership.
He (partner) shall also be bound for warranty

In case of eviction
o With regard to specific and determinate things
Which he may have contributed to the partnership,
In the same cases and in the same manner as
o The vendor is bound with respect to the vendee.
He shall also be liable for the fruits thereof
29

o
o
From the time they should have been delivered,

Without the need of any demand.
Art. 1788. A partner who
Has undertaken to contribute a sum of money and
Fails to do so
o Becomes a debtor
o For the interest and damages
From the time he should have complied with

his obligation.
The same rule applies to

o Any amount he may have taken from the partnership
coffers, and
o His liability shall begin from
The time he converted the amount to his own use.
Art. 1526. Subject to the provisions of this Title, notwithstanding
That the ownership in the goods may have passed to the

buyer,
o The unpaid seller of goods, as such, has:
(1) A lien
On the goods or right to retain them

For the price
While he is in possession of them;
(2) A right of stopping the goods in transitu
After he has parted with the possession of

them
In case of the insolvency of the buyer;

(3) A right of resale
As limited by this Title;

(4) A right to rescind
The sale as likewise limited by this Title.
Where the ownership in the goods

Has not passed to the buyer,
o The unpaid seller has,
In addition to his other remedies

o A right of withholding delivery
Similar to and coextensive with
His rights of lien and stoppage in transitu

o Where the ownership has passed to the buyer.
2. STIPULATED
II. JUDICIAL REMEDIES

1. PRINCIPAL REMEDIES ARTS. 1191, 1170
* Art. 1191. The power to rescind obligations

o Should not comply
o
o
In accordance with Articles 1385 and 1388 and

The Mortgage Law.
in bad faith.
causing the loss.
Art. 1170.
Those who
o In the performance of their obligations are
o Guilty of
Fraud, negligence, or delay, and

Those who
o In any manner
o Contravene the tenor thereof,
Are liable for damages.
2. SUBSIDIARY REMEDIES ARTS. 1380, 1177

Art. 1380. Contracts validly agreed upon
May be rescinded
o In the cases established by law.
o After having pursued the property

o To satisfy their claims,
Bring all the actions of the debtor
o For the same purpose (to satisfy their claims),
Save those which are inherent in his

(debtors) person;
o The acts which the debtor
o May have done to defraud them.
3. ANCILLARY REMEDIES RULES OF COURT
The injured party

May choose between
(1) The fulfillment or
(2) The rescission of the obligation,

If the fulfillment should become impossible.


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30
G. MODES OF EXTINGUISHMENT OF OBLIGATIONS Art. 1231

8.
PAYMENT OR PERFORMANCE ARTS. 1232-44, 1246-51,

1302
RA 8183
PD 72, SECS. 31-32
A. DATION IN PAYMENT ART. 1245
B. APPLICATION OF PAYMENTS ARTS. 1252-54, 1248
C. PAYMENT BY CESSION OR ASSIGNMENT ART. 1255
D. TENDER OF PAYMENT AND CONSIGNATION ARTS.
1256-61
9.
LOSS OF THE THING DUE OR IMPOSSIBILITY OF

PERFORMANCE ARTS. 1262-69, 1189, 1174, 1165, 1268,
1942, 1979, 2147, 2159
10. CONDONATION OR REMISSION OF THE DEBT ARTS. 127074, 748, 749

11. CONFUSION OR MERGER OF RIGHTS ARTS. 1275-77, 1215,
1217
12. COMPENSATION ARTS. 1278-1290, 1243, 1215
A. LEGAL
B. CONVENTIONAL/FACULTATIVE
C. JUDICIAL
13. NOVATION ARTS. 1291-1304, 1215
KINDS OF NOVATION
A. AS TO ITS NATURE
I. SUBJECTIVE OR PERSONAL
II. OBJECTIVE RO REAL
B. AS TO ITS FORM
I. EXPRESS
II. IMPLIED
14. OTHER MODES
ACT OF CREDITOR
G. MODES OF EXTINGUISHMENT OF OBLIGATIONS Art. 1231
Art. 1231. Obligations are extinguished by:
1. Payment or performance:
2.
Loss of the thing due:
3.
Condonation or remission of the debt;
4.
Confusion or merger of the rights of creditor and debtor;
5.
Compensation;
6.
Novation.
Other causes of extinguishment of obligations, such as
Annulment,
Rescission,
Fulfillment of a resolutory condition, and
Prescription,
Are governed elsewhere in this Code.
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1.
PAYMENT OR PERFORMANCE
ARTS. 1232-44, 1246-51, 1302
RA 8183
PD 72, SECS. 31-32
SECTION 1. - Payment or Performance

Art. 1232. Payment means
Not only the delivery of money
But also the performance,

o In any other manner,
Of an obligation.
Art. 1233. A debt shall not be understood to have been paid
Unless the thing or service
o In which the obligation consists
Has been completely delivered or rendered,
o As the case may be.
Art. 1234. If the obligation has been substantially performed in
good faith,
The obligor may recover
As though there had been a strict and complete fulfillment,
o Less damages
o Suffered by the obligee.
Art. 1235. When the obligee accepts the performance,
Knowing its incompleteness or irregularity, and
Without expressing any protest or objection,
o The obligation is deemed fully complied with.
Art. 1236. The creditor is not bound to accept
Payment or performance by a third person
Who has no interest in the fulfillment of the obligation,
o Unless there is a stipulation to the contrary.
Whoever pays for another

o May demand from the debtor
o What he has paid,
Except that if he paid
He can recover
Only insofar as the payment
Has been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor

o Cannot compel the creditor
o To subrogate him (creditor) in his (creditors) rights,
o Such as those arising from a mortgage, guaranty, or
penalty.
Art. 1238. Payment made
By a third person
o Who does not intend to be reimbursed
o By the debtor
Is deemed to be a donation,
o Which requires the debtor's consent.
But the payment is in any case

Valid as to the creditor
o Who has accepted it.
31

Art. 1239. In obligations to give,
Payment made by one
o Who does not have the
Free disposal of the thing due and
Capacity to alienate it
Shall not be valid,
o Without prejudice to the provisions of Article 1427
under the Title on "Natural Obligations."
Art. 1427. When a minor between eighteen and twenty-one years of age,
who has entered into a contract without the consent of the parent or
guardian, voluntarily pays a sum of money or delivers a fungible thing in
fulfillment of the obligation, there shall be no right to recover the same
from the obligee who has spent or consumed it in good faith.
Art. 1240. Payment shall be made to

The person
o In whose favor the obligation has been constituted,
or
His successor in interest, or
Any person authorized to receive it.
Art. 1241.
Payment to a person
o Who is incapacitated to administer his property
Shall be valid
o If he has kept the thing delivered, or
o Insofar as the payment has been beneficial to him.
Payment made to a third person

Shall also be valid
o Insofar as it has redounded to the benefit of the
creditor.
o Such benefit to the creditor
o Need not be proved in the following cases:
(1) If after the payment,
o The third person acquires the creditor's rights;
(2) If the creditor ratifies
o The payment to the third person;
(3) If by the creditor's conduct,
o The debtor has been led to believe
o That the third person had authority
o To receive the payment.
Art. 1242. Payment made in good faith

o To any person
o In possession of the credit
o Shall release the debtor.
Art. 1243. Payment made to the creditor
o By the debtor
o After the debtor has been judicially ordered
o To retain the debt
o Shall not be valid.
Art. 1244. The debtor of a thing
o Cannot compel the creditor
o To receive a different one,
o Although the latter may be
Of the same value as, or
More valuable than that which is due.

o
o
o
o
In obligations to do or not to do,

An act or forbearance
Cannot be substituted by
o Another act or forbearance
Against the obligee's will.
Art. 1246. When the obligation consists in the delivery
Of an indeterminate or generic thing,

o Whose quality and circumstances have not been stated,
The creditor cannot demand a thing of superior quality.
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Neither can the debtor

o Deliver a thing of inferior quality.
The purpose of the obligation and
Other circumstances
Shall be taken into consideration.
Art. 1247. Unless it is otherwise stipulated,

The extrajudicial expenses
o Required by the payment
Shall be for the account of the debtor.
With regard to judicial costs,

o The Rules of Court shall govern.
Art. 1248. Unless there is an express stipulation to that effect,

o Partially to receive the prestations

Neither may the debtor be required
o To make partial payments.
However, when the debt is

o In part liquidated and
o In part unliquidated,
The creditor may demand and the debtor may effect
o The payment of the creditor
Without waiting for the liquidation of the debtor.
Art. 1249.
The payment of debts in money
o Shall be made in the currency stipulated, and
o If it is not possible to deliver such currency,
Then in the currency which is legal tender in the

Philippines.
The delivery of
o Promissory notes payable to order, or
o Bills of exchange or
o Other mercantile documents
Shall produce the effect of payment
Only when they have been cashed, or
When through the fault of the creditor
They have been impaired.
In the meantime, the action derived from the original

obligation
o Shall be held in the abeyance.
Art. 1250. In case an extraordinary inflation or deflation

Of the currency stipulated
o Should supervene,
The value of the currency
o At the time of the establishment of the obligation
Shall be the basis of payment,
o Unless there is an agreement to the contrary.
Art. 1251. Payment shall be made
in the place designated in the obligation.
There being no express stipulation and

If the undertaking is to deliver a determinate thing,
o The payment shall be made
o Wherever the thing might be
At the moment the obligation was constituted.

In any other case
o The place of payment shall be
o The domicile of the debtor.
If the debtor
o Changes his domicile in bad faith or
o After he has incurred in delay,
The additional expenses
32
Shall be borne by him.
These provisions are without prejudice to venue under the

Rules of Court.
Art. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor
Who is preferred,
o Even without the debtor's knowledge;
(2) When a third person, not interested in the obligation, pays
With the express or tacit approval
Of the debtor;
(3) When, even without the knowledge of the debtor, a person
interested in the fulfillment of the obligation pays,
Without prejudice to the effects of confusion as to the

latter's share.
REPUBLIC ACT NO. 529
o
June 16, 1950

As repealed by RA 8183
AN ACT TO ASSURE UNIFORM VALUE TO PHILIPPINE COIN

AND CURRENCY
Be it enacted by the Senate and House of Representatives of

the Philippines in Congress assembled::
WHEREAS, the value of Philippine coin and currency

o Affects public interest and
o Is subject to regulation by the Congress of the
Philippines; and
WHEREAS, it has been disclosed that the provisions of certain

obligations contracted in the Philippines
o Purport to give the obligee
o The right to require payment
o In gold or
o In a particular kind of coin or currency or
o In an amount in money of the Philippines measured
thereby,
o Thus
Obstructing the power of the Congress to regulate

the value of the money of the Philippines and
Contravening the policy of the Congress, here

declared,
To maintain at all times the equal and stable

power of every peso coined or issued by the
Philippines, in the markets and in the payment
of debts; Now, therefore.
Section 1.
Every provision contained in, or made with
respect to, any obligation
o Which provision purports to give the obligee
o The right to require payment
In gold or in a particular kind of coin or currency
Other than Philippine currency or
In an amount of money of the Philippines

measured thereby,
o Be as it is hereby declared against public policy, and
null, void and of no effect, and
No such provision shall be contained in, or made

with respect to,
Any obligation hereafter incurred.

o
o
o
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Every obligation
Heretofore or hereafter incurred,
Whether or not any such provision as to payment is

contained therein or made with respect thereto,
Shall be discharged upon payment
In any coin or currency
Which at the time of payment is legal tender
For public and private debts:

Provided, That, if the obligation was
Incurred prior to the enactment of this Act and

required payment in a particular kind of coin or
currency other than Philippine currency,
It shall be discharged in Philippine currency
Measured at the prevailing rates of exchange at the
time the obligation was incurred,
Except in case of a loan made in a foreign

currency
Stipulated to be payable in the same currency

o In which case the rate of exchange
o Prevailing at the time of the stipulated
date of payment
o Shall prevail.
All coin and currency, including Central Bank

notes, heretofore or hereafter issued and
declared by the Government of the Philippines
o Shall be legal tender
o For all debts, public and private.
Section 2. All acts and parts of acts inconsistent with this Act
are hereby repealed.
Section 3. This Act shall take effect upon its approval.
Approved: June 16, 1950
REPUBLIC ACT NO. 8183
AN ACT REPEALING REPUBLIC ACT NUMBERED 529 AS

AMENDED,
ENTITLED "AN ACT TO ASSURE THE UNIFORM VALUE OF
PHILIPPINE COIN AND CURRENCY."
Section 1. All monetary obligations shall be settled
o In the Philippine currency
Which is legal tender in the Philippines.

o
However, the parties may agree
That the obligation or transaction
Shall be settled in any other currency
At the time of payment.
Sec. 2. - R.A. No. 529, as amended entitled "An Act to

Assume the Uniform Value of Philippine Coin and Currency,"
o Is hereby repealed.
Approved: June 11, 1996
PRESIDENTIAL DECREE No. 72

o November 29, 1972
o Amending RA 265, entitled "The Central Bank Act"
Section 31. Section 34 of the same Act (RA 265) is hereby

amended to read as follows:
"Sec. 54. Legal tender power.
All notes and coins issued by the Central Bank
Shall be fully guaranteed by the Government of the

Republic of the Philippines and
Shall be legal tender in the Philippines
For all debts, both public and private:
Provided, however, That coins shall be legal tender
In amounts not exceeding fifty pesos
For denominations from ten centavos to one peso,

and
In amounts not exceeding twenty pesos for

denominations of five centavos or less."
Section 32. Section 63 of the same Act (RA 529) is hereby

amended to read as follows:
o
"Sec. 63. Legal character.
Checks representing deposit money
Do not have legal tender power and
33
Their acceptance in the payment of debts,

both public and private,
Is at the option of the creditor:
Provided, however, That

A check which has been cleared and credited
o To the account of the creditor
Shall be equivalent to a delivery to the
creditor
Of cash
In an amount equal to the amount credited to
his account."
However, when the debt is

o In part liquidated and
o In part unliquidated,
The creditor may demand and the debtor may effect
o The payment of the creditor
Without waiting for the liquidation of the debtor.
C. PAYMENT BY CESSION OR ASSIGNMENT ART. 1255

SUBSECTION 2. - Payment by Cession
Art. 1255. The debtor may cede or assign his property

To his creditors
o In payment of his debts.
A. DATION IN PAYMENT ART. 1245
Art. 1245. Dation in payment,

Whereby property is alienated
To the creditor
In satisfaction of a debt in money,
o Shall be governed by the law of sales.
B. APPLICATION OF PAYMENTS ARTS. 1252-54, 1248
SUBSECTION 1. - Application of Payments

Art. 1252. He who has various debts of the same kind
In favor of one and the same creditor,
o May declare
At the time of making the payment,

o To which of them the same must be applied.
Unless
The parties so stipulate, or
When the application of payment
Is made by the party
For whose benefit
The term has been constituted,
Application shall not be made
As to debts which are not yet due.
If the debtor accepts from the creditor

A receipt
In which an application of the payment is made,
o The former cannot complain of the same,
o Unless there is a cause for invalidating the
contract.
If the debts due are of the same nature and burden,

o The payment shall be applied
o To all of them proportionately.
Art. 1248. Unless there is an express stipulation to that effect,

o Partially to receive the prestations

Neither may the debtor be required
o To make partial payments.
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The agreements which,

o On the effect of the cession,
Are made between the debtor and his creditors
o Shall be governed by special laws.
D. TENDER OF PAYMENT AND CONSIGNATION ARTS. 1256-61

SUBSECTION 3. - Tender of Payment and Consignation
Art. 1256. If the creditor
o To whom tender of payment has been made
Refuses to accept it,
o Without just cause
The debtor shall be released from responsibility
By the consignation of
o The thing or sum due.
Art. 1253. If the debt produces interest,

Payment of the principal
Shall not be deemed to have been made
o Until the interests have been covered.
Art. 1254. When the payment cannot be applied
o In accordance with the preceding rules, or
If application cannot be inferred from other circumstances,
The debt which is most onerous to the debtor,
o Among those due,
Shall be deemed to have been satisfied.
This cession,
o Unless there is stipulation to the contrary,
Shall only release the debtor
From responsibility
o For the net proceeds
o Of the thing assigned.
Consignation alone
Shall produce the same effect
In the following cases:
1. When the creditor is
Absent or unknown, or
Does not appear at the place of payment;

2. When creditor is
Incapacitated to receive the payment
At the time it is due;

3. When, without just cause, creditor
Refuses to give a receipt;

4. When two or more persons
Claim the same right to collect;

5. When the title of the obligation
Has been lost.
Art. 1257.
In order that the consignation of the thing due
May release the obligor,
o It must first be announced
o To the persons
o Interested in the fulfillment of the obligation.
The consignation shall be ineffectual

If it is not made strictly
In consonance with the provisions
o Which regulate payment.
Art. 1258. Consignation shall be made

By depositing
o The things due
At the disposal of judicial authority,
o Before whom the tender of payment shall be
proved, in a proper case, and
34
The announcement of the consignation in other cases.
The consignation having been made,

The interested parties
o Shall also be notified thereof.
Art. 1259. The expenses of consignation,

When properly made,
Shall be charged against the creditor.
Art. 1260. Once the consignation has been duly made,
The debtor may ask the judge
o To order the cancellation of the obligation.
Before the creditor

o Has accepted the consignation, or
Before a judicial declaration
o That the consignation has been properly made,
The debtor may withdraw the thing or the

sum deposited,
Allowing the obligation to remain in force.
Art. 1261. If, the consignation having been made, the creditor
should authorize the debtor to withdraw the same,
He shall lose
o Every preference which he may have
o Over the thing.
The co-debtors, guarantors and sureties
o Shall be released.
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35
2.
LOSS OF THE THING DUE OR IMPOSSIBILITY OF

PERFORMANCE
ARTS. 1262-69, 1189, 1174, 1165, 1268, 1942, 1979, 2147,
2159
SECTION 2. - Loss of the Thing Due

Art. 1262.
An obligation
o Which consists in the delivery
o Of a determinate thing
Shall be extinguished
If it should be lost or destroyed
Without the fault of the debtor, and
Before he has incurred in delay.
When by law or stipulation,

o The obligor is liable
o Even for fortuitous events,
The loss of the thing
Does not extinguish the obligation, and
He shall be responsible for damages.

o The same rule applies when
o The nature of the obligation
Requires the assumption of risk.
To the person who should receive it,

The latter refused
Without justification to accept it.
Art. 1269. The obligation having been extinguished

By the loss of the thing,
The creditor shall have all the rights of action
o which the debtor may have
Against third persons
o By reason of the loss.
Art. 1189.
When the conditions have been imposed

o With the intention of
o Suspending the efficacy of an obligation to give,
The following rules shall be observed
In case of the
o Improvement,
o Loss or
o Deterioration of the thing
During the pendency of the condition:

The obligation shall be extinguished;

He shall be obliged to pay damages;
It is understood that the thing is lost

i. When it perishes, or
ii. Goes out of commerce, or
iii. Disappears in such a way that its existence is
unknown or it cannot be recovered;
Art. 1263. In an obligation to deliver a generic thing,

The loss or destruction
Of anything of the same kind
o Does not extinguish the obligation.
Art. 1264. The courts shall determine whether, under the
circumstances,
The partial loss of the object of the obligation
Is so important
o As to extinguish the obligation.
(3) When the thing deteriorates
The impairment is to be borne by the creditor;
Art. 1265.
Whenever the thing is lost
o In the possession of the debtor,
It shall be presumed that the loss
Was due to his fault,
o Unless there is proof to the contrary, and
o Without prejudice to the provisions of article 1165.
(4) If it deteriorates
The creditor may choose between

i. The rescission of the obligation and
ii. Its fulfillment,
With indemnity for damages in either case;
This presumption does not apply

In case of
o Earthquake,
o Flood,
o Storm, or
o Other natural calamity.
Art. 1266. The debtor in obligations to do

Shall also be released
o When the prestation becomes
o Legally or physically impossible
Without the fault of the obligor.

Art. 1267. When the service has become so difficult
As to be manifestly beyond
The contemplation of the parties,
o The obligor may also be released therefrom,
o In whole or in part.
Art. 1268.
When the debt
o of a thing certain and determinate
Proceeds from a criminal offense,
o The debtor shall not be exempted from
o The payment of its price,
o Whatever may be the cause for the loss,
Unless the thing having been offered by him
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(5) If the thing is improved
By its nature, or
By time,
The improvement shall inure to
The benefit of the creditor;

(6) If it is improved
At the expense of the debtor,
He shall have no other right
Than that granted to the usufructuary.

Art. 1174.
General Rule: No person shall be responsible

o For those events
o Which could not be foreseen, or
o Which though foreseen, were inevitable.
Exception: Except in cases

1. Expressly specified by the law, or
2. When it is otherwise declared by stipulation, or
3. When the nature of the obligation
Requires the assumption of risk,
Art. 1165. When what is to be delivered is
A determinate thing,
o The creditor,
36

o
o
o
In addition to the right granted him by Article

1170*,
Art. 1268.
When the debt
o of a thing certain and determinate
Proceeds from a criminal offense,
o The debtor shall not be exempted from
o The payment of its price,
o Whatever may be the cause for the loss,
Unless the thing having been offered by him
To the person who should receive it,
The latter refused
Without justification to accept it.
Which the owner was not accustomed to

embark upon;



In bad faith.
(2)
(3)
If the thing is indeterminate or generic,

o He may ask that the obligation
o Be complied with
If the obligor
o Delays, or
o Promised to deliver the same thing to two or more
persons who do not have the same interest,
o He shall be responsible for any fortuitous event
(4)


received

For any loss or impairment of the thing
o From any cause, and
For damages to the person who delivered the thing,
Until it is recovered.
Art. 1942. The bailee is liable for the loss of the thing,
Even if it should be through a fortuitous event:

(1) If he devotes the thing
To any purpose
Different from that
For which it has been loaned;

(2) If he keeps it
Longer than the period stipulated, or
After the accomplishment of the use

o For which the commodatum has been constituted;
(3) If the thing loaned has been delivered
General Rule: With appraisal of its value,

o Exception: Unless there is a stipulation
o Exempting the bailee from responsibility
In case of a fortuitous event;

(4) If he lends or leases the thing
To a third person,
Who is not a member of his household;

(5) If, being able to save either
The thing borrowed or
His own thing,
He chose to save the latter (his own thing).

Art. 1979. The depositary is liable
For the loss of the thing
Through a fortuitous event if:
1. It is so stipulated;
2. He uses the thing
Without the depositor's permission;
3. If he delays its return;
4. If he allows others to use it,
Even though he himself may have been authorized
to use the same.
(1)
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37
3.
May be valid,
o It must be made in a public document,
o Specifying therein
The property donated and
The value of the charges which the donee must

satisfy.
The acceptance may be made

o In the same deed of donation or
o In a separate public document,
But it shall not take effect
o Unless it is done
o During the lifetime of the donor.
CONDONATION OR REMISSION OF THE DEBT

ARTS. 1270-74, 748, 749
SECTION 3. - Condonation or Remission of the Debt

Art. 1270. Condonation or remission is
Essentially gratuitous, and
Requires the acceptance by the obligor.
It may be made
o Expressly or impliedly.
One and the other kind

o Shall be subject to the rules
o Which govern inofficious donations.
Express condonation
Shall, furthermore, comply with the forms of

donation.
If the acceptance is made in a separate instrument,

o The donor shall be notified thereof
o In an authentic form, and
o This step shall be noted in both instruments.
Art. 1271. The delivery of a private document

Evidencing a credit,
o Made voluntarily
o By the creditor to the debtor,
Implies the renunciation of the action
o Which the creditor had against the debtor.
If in order to nullify this waiver

o It should be claimed to be inofficious,
The debtor and his heirs may uphold it

o By proving that the delivery of the document
o Was made in virtue of payment of the debt.
Art. 1272.
Whenever the private document
o In which the debt appears
Is found in the possession of the debtor,
It shall be presumed
o That the creditor delivered it voluntarily,
Unless the contrary is proved.

Art. 1273. The renunciation of the principal debt
Shall extinguish the accessory obligations;
o But the waiver of the accessory obligations
o Shall leave the principal debt in force.
Art. 1274. It is presumed that the accessory obligation of pledge
Has been remitted
When the thing pledged,
o after its delivery to the creditor,
Is found in the possession
o of the debtor, or
o of a third person
Who owns the thing.
Art. 748. The donation of a movable
May be made orally or in writing.
An oral donation
o Requires the simultaneous delivery
of the thing or
of the document
o Representing the right donated.
If the value of the personal property donated

o Exceeds five thousand pesos,
The donation and the acceptance
o Shall be made in writing,
Otherwise, the donation shall be void.
Art. 749. In order that the donation of an immovable
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38
4.
CONFUSION OR MERGER OF RIGHTS

ARTS. 1275-77, 1215, 1217
SECTION 4. - Confusion or Merger of Rights

Art. 1275. The obligation is extinguished
From the time the characters
o Of creditor and debtor
Are merged in the same person.
Art. 1276.
Merger
o
o
Which takes place in the person of

The principal debtor or creditor
Benefits the guarantors.

Confusion
o Which takes place in the person of
o Any of the latter
Does not extinguish the obligation.
Art. 1277. Confusion does not extinguish

A joint obligation
o Except as regards the share
o Corresponding to the creditor or debtor
In whom the two characters concur.

Art. 1215.
o Novation,
o Compensation,
o Confusion or
o Remission of the debt,
Made by any of the solidary creditors or
With any of the solidary debtors,
Without prejudice to the provisions of Article

1219.
The creditor
o Who may have executed any of these acts,
o As well as he who collects the debt,
Shall be liable to the others
o For the share in the obligation
o Corresponding to them.
Art. 1219. The remission made by the creditor of the share which affects
one of the solidary debtors does not release the latter from his
responsibility towards the co-debtors, in case the debt had been totally
paid by anyone of them before the remission was effected.
Art. 1217.
Payment made
By one of the solidary debtors
If two or more solidary debtors

o Offer to pay,
The creditor may choose
o Which offer to accept.

o May claim from his co-debtors
Only the share which corresponds to each,
With the interest for the payment already made.
If the payment is made before the debt is due,

o No interest for the intervening period
o May be demanded.
Because of his insolvency,

o Reimburse his share to the debtor paying the obligation,
Such share shall be borne by all his co-debtors,
o In proportion to the debt of each.
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39
5.
COMPENSATION
ARTS. 1278-1290, 1243, 1215
A. LEGAL ARTS. 1279, 1286, 1290
B. CONVENTIONAL ART. 1282
FACULTATIVE ARTS. 1287, 1288
C. JUDICIAL- ART. 1283
If the creditor communicated the cession to him (debtor)

o But the debtor did not consent thereto,
o The latter (debtor) may set up the compensation of
debts
o Previous to the cession,
But not of subsequent ones.
If the assignment is made

Without the knowledge of the debtor,
o He may set up the compensation of all credits
o Prior to the same and
o Also later ones
Until he had knowledge of the assignment.
SECTION 5. - Compensation
Art. 1278. Compensation shall take place
When two persons,
o in their own right,
Are creditors and debtors of each other.
LEGAL
Art. 1279. In order that compensation may be proper, it is
necessary that:
1. Each one of the obligors
Be bound principally, and
That he be at the same time a principal creditor of the
other;
2. Both debts consist in a sum of money, or
If the things due are consumable,
They be of the same kind, and
Also of the same quality
If the latter has been stated;

3. The two debts be due;
4. They be liquidated and demandable;
5. Over neither of them
There be any retention or controversy,
Commenced by third persons and
Communicated in due time to the debtor.
Art. 1280. Notwithstanding the provisions of the preceding article,
The guarantor may set up compensation
o As regards what the creditor may owe the principal
debtor.
Art. 1281. Compensation may be
o Total or partial.
When the two debts are of the same amount,

o There is a total compensation.
CONVENTIONAL
Art. 1282. The parties may agree upon the compensation of debts
which are not yet due.
JUDICIAL
Art. 1283. If one of the parties to a suit
Over an obligation
Has a claim for damages against the other,
o The former may set it off
o By proving his right
To said damages and
the amount thereof.

Art. 1284. When one or both debts
o Total or partial.
They may be compensated against each other
Before they are judicially rescinded or avoided.
Art. 1285.
The debtor who has consented to the assignment of rights
o Made by a creditor
o In favor of a third person,
Cannot set up against the assignee
The compensation which would pertain to him
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Against the assignor,
Unless the assignor was notified by the debtor
At the time he gave his consent,
That he reserved his right to the

compensation.
LEGAL
Art. 1286. Compensation takes place
By operation of law,
o Even though the debts may be payable
o At different places,
But there shall be an indemnity
For expenses of
Exchange or
Transportation to the place of payment.

FACULTATIVE
Art. 1287. Compensation shall not be proper
When one of the debts arises
o From a depositum or
o From the obligations
Of a depositary or
Of a bailee in commodatum.
Neither can compensation be set up against a creditor

o Who has a claim for support
o Due by gratuitous title,
Without prejudice to the provisions of paragraph 2

of Article 301.
Art. 301. The right to receive support cannot be renounced; nor can it be
transmitted to a third person. Neither can it be compensated with what
the recipient owes the obligor.
However, support in arrears may be compensated and renounced, and the
right to demand the same may be transmitted by onerous or gratuitous
title.
FACULTATIVE
Art. 1288. Neither shall there be compensation
If one of the debts consists in civil liability
Arising from a penal offense.
Art. 1289. If a person should have against him several debts
Which are susceptible of compensation,
o The rules on the application of payments
o Shall apply to the order of the compensation.
LEGAL
Art. 1290. When all the requisites mentioned in Article 1279 are
present,
Compensation takes effect
o By operation of law, and
Extinguishes both debts
o To the concurrent amount,
Even though the creditors and debtors
Are not aware of the compensation.
Art. 1243. Payment made to the creditor by the debtor
After the latter has been judicially ordered to retain the debt
Shall not be valid.
40
Art. 1215.
o Novation,
o compensation,
o confusion or
o remission of the debt,
Made by
o Any of the solidary creditors or
o With any of the solidary debtors,
Without prejudice to the provisions of Article 1219.
The creditor
Who may have executed
Any of these acts,
As well as he who collects the debt,
o Shall be liable to the others
Art. 1217.
Payment made
By one of the solidary debtors
If two or more solidary debtors Offer to pay,

o The creditor may choose
o Which offer to accept.

o May claim from his co-debtors
o Only the share which corresponds to each,
With the interest for the payment already made.
If the payment is made before the debt is due,

o No interest for the intervening period may be
demanded.

o Because of his insolvency,
Reimburse his share to the debtor
o Paying the obligation,
Such share shall be borne by all his co-debtors,
o In proportion to the debt of each.
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41
6.
NOVATION
ARTS. 1291-1304, 1215
KINDS OF NOVATION
A. AS TO ITS NATURE
I. SUBJECTIVE or PERSONAL ART. 1291 # 2, 3
II. OBJECTIVE or REAL - ART. 1291 # 1
B. AS TO ITS FORM
I. EXPRESS ART. 1292
II. IMPLIED ART. 1292
C. OTHER MODES
SECTION 6. - Novation
Art. 1291. Obligations may be modified by:
1. Changing their object or principal conditions;
2. Substituting the person of the debtor;
3. Subrogating a third person in the rights of the creditor.
B. AS TO ITS FORM
I. EXPRESS ART. 1292
II. IMPLIED ART. 1292
Art. 1292. In order that an obligation may be extinguished
By another
o Which substitutes the same,
It is imperative
o That it be so declared
In unequivocal terms, or
o That the old and the new obligations
Be on every point incompatible with each other.

Art. 1293. Novation which consists in
Substituting a new debtor
o In the place of the original one,
May be made even
o Without the knowledge or
o Against the will of the latter (original one),
But not without the consent of the creditor.
Payment by the new debtor

o Gives him the rights
o Mentioned in Articles 1236 and 1237.
Art. 1294. If the substitution is

o Without the knowledge or
o Against the will of the debtor,
The new debtor's insolvency or
Nonfulfillment of the obligations
Shall not give rise to any liability
On the part of the original debtor.

Art. 1295. The insolvency of the new debtor,
Who has been proposed by the original debtor and
Accepted by the creditor,
o Shall not revive the action of the latter
o Against the original obligor,
Except when said insolvency
Was already existing and of public knowledge, or
Known to the debtor, when the delegated his debt.

Art. 1296. When the principal obligation is extinguished
In consequence of a novation,
o Accessory obligations may subsist
o Only insofar as they may benefit third persons
Who did not give their consent.
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Art. 1297. If the new obligation is void,
The original one shall subsist,
o Unless
The parties intended
That the former relation should be extinguished
In any event.
Art. 1298. The novation is void
If the original obligation was void,
o Except
When annulment may be claimed only by the

debtor or
When ratification validates acts which are voidable.

Art. 1299. If the original obligation was subject to
A suspensive or resolutory condition,
o The new obligation
o Shall be under the same condition,
Unless it is otherwise stipulated.

Art. 1300. Subrogation of a third person
In the rights of the creditor
o Is either legal or conventional.
The former (legal subrogation) is not presumed,

o Except in cases expressly mentioned in this Code;
The latter (conventional subrogation) must be clearly

established
o In order that it may take effect.
CONVENTIONAL SUBROGATION
Art. 1301. Conventional subrogation of a third person
Requires the consent
o Of the original parties and
o Of the third person.
LEGAL SUBROGATION
Art. 1302. It is presumed that there is legal subrogation when:
1. A creditor pays another creditor
Who is preferred,
Even without the debtor's knowledge;
2. A third person, not interested in the obligation, pays
With the express or tacit approval
Of the debtor;
3. Even without the knowledge of the debtor, a person
interested in the fulfillment of the obligation pays,
Without prejudice to the effects of confusion
As to the latter's share.
Art. 1303. Subrogation
Transfers to the persons subrogated
o The credit
With all the rights thereto appertaining,
Either
Against the debtor or
Against third person,

o Be they guarantors or possessors of
mortgages,
o Subject to stipulation in a conventional
subrogation.
Art. 1304. A creditor, to whom partial payment has been made,
May exercise his right for the remainder, and
He shall be preferred
To the person who has been subrogated in his place
o In virtue of the partial payment
o Of the same credit.
42
Art. 1215.
o Novation,
o compensation,
o confusion or
o remission of the debt,
Made by
o Any of the solidary creditors or
o With any of the solidary debtors,
Without prejudice to the provisions of Article 1219.
The creditor
Who may have executed
Any of these acts,
As well as he who collects the debt,
o Shall be liable to the others
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43
2.
3.
4.
II. CONTRACTS
ARTS. 1305-1422
A.
IN GENERAL
1. DEFINITION ARTS. 1305
AUTO-CONTRACT ARTS. 1491, 1646, 1890
2. ELEMENTS OF CONTRACTS
i. ESSENTIAL
ii. NATURAL
iii. ACCIDENTAL
B.
FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF
CONTRACTS
1. CONSENSUALITY OF CONTRACTS ARTS.
1305, 1317
CONTRACT OF ADHESION
2. AUTONOMY OF CONTRACTS ARTS. 1306,
1799, 2088, 2130
3. MUTUALITY OF CONTRACTS ARTS. 1308-10,
1182
ACCELERATION CLAUSE
ESCALATION CLAUSE
4. OBLIGATORY FORCE OF CONTRACTS ARTS.
1159, 1315-16, 749
5. RELATIVITY OF CONTRACTS ARTS. 1311-14,
1177-78, 1381(3)
PRIVITIY OF CONTRACTS
C.
D.
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CLASSIFICATION OF CONTRACTS
1. ACCORDING TO DEGREE OF DEPENDENCE
i. PREPARATORY ARTS. 1479, 1767,
1868
ii. PRINCIPAL ARTS. 1458, 1638,
1642, 1933, 1962
iii. ACCESSORY ARTS. 2047, 2085
2. ACCORDING TO PERFECTION
i. CONSENSUAL ARTS. 1315, 1475
ii. REAL ARTS. 1316, 1934
iii. FORMAL ARTS. 1356
3. ACCORDING TO SOLEMNITY OR FORM
ARTS. 1356
i. ANY FORM
ii. SPECIAL FORM
4. ACCORDING TO PURPOSE
i. TRANSFER OF OWNERSHIP ARTS.
725, 1458, 1638
ii. CONVEYANCE OF USE ARTS. 562,
1642, 1933
iii. RENDITION OF SERVICE ARTS.
1642, 1868
5. ACCORDING TO NATURE OF OBLIGATION
PRODUCED
i. BILATERAL ARTS. 1642, 1458
ii. UNILATERAL ARTS. 2047, 2093
6. ACCORDING TO CAUSE ARTS. 1350
i. ONEROUS ARTS. 1458, 1638, 1642
ii. GRATUITOUS OR LUCRATIVE
ARTS. 725, 1933
iii. REMUNERATORY
7. ACCORDING TO RISK
i. COMMUTATIVE
ii. ALEATORY ART. 2010
8. ACCORDING TO NAME
i. NOMINATE
ii. INNOMINATE ART. 1307
9. ACCORDING TO SUBJECT MATTER
i. THING
ii. RIGHT
iii. SERVICE
E.
CONTRACT OF OPTION ARTS. 1324, 1479,

1482
PERFECTION
PERFORMANCE
CONSUMMATION
ESSENTIAL ELEMENTS OF CONTRACTS ART. 1318

1. CONSENT OF THE CONTRACTING PARTIES
ARTS. 1319-46, 37-42, 739, 1476 (4), 1490-91,
1533 (5), 1646, 1782, 1409 (7), 5
ARTS. 87, 124, 234 FC
RA 6809
ART. XII, SECS. 7 & 8 CONSTITUTION
COGNITION THEORY
MANIFESTATION THEORY
2.
3.
4.
5.
OBJECT CERTAIN, WHICH IS THE SUBJECT

MATTER OF THE CONTRACT ARTS. 1347-49,
1311, 1178
CAUSE OF THE OBLIGATION ARTS. 1350-55
DELIVERY
DUE OBSERVANCE OF PRESCRIBED
FORMALITIES
F.
FORM OF CONTRACTS ARTS. 1356-58

1. ANY FORM ORAL
2. SPECIAL FORM
i. VALIDITY ARTS 748, 749, 1744,
1773, 1874, 1956, 2134, ACT 1147
SEC. 22
ii. ENFORCEABILITY ARTS. 1403,
1878
iii. GREATER EFFICACY OR
CONVENIENCE ARTS. 1358
G.
H.
I.
REFORMATION OF CONTRACTS ARTS. 1359 69

INTERPRETATION OF CONTRACTS ARTS. 1370-79
KINDS OF CONTRACTS AS TO VALIDITY
1. VALID AND BINDING
2. VALID BUT DEFECTIVE
i. RESCISSIBLE CONTRACTS ARTS.
1380-89, 1191
ii. VOIDABLE CONTRACTS ARTS.
1390-1402, 1327-28, 1330
iii. UNENFORCEABLE CONTRACTS
ARTS. 1403-08, 1317, 1878
3. VOID OR INEXISTENT ARTS. 1409-22, 1318,
1353, 1378, 1491, 1898
STAGES OF CONTRACTS
1. NEGOTIATION
44
II. CONTRACTS
A.
IN GENERAL
1. DEFINITION ARTS. 1305
2. ELEMENTS OF CONTRACTS
i. ESSENTIAL
ii. NATURAL
iii. ACCIDENTAL
Art. 1890.
If the agent has been empowered to borrow money,
o He may himself be the lender
o At the current rate of interest.
If he has been authorized to lend money at interest,

o He cannot borrow it
o Without the consent of the principal.
1. DEFINITION
Art. 1305. A contract
Is a meeting of minds
Between two persons
Whereby one binds himself, with respect to the other, to

o Give something or
o Render some service.
*Art. 1491. The following persons cannot acquire by purchase,
Even at a public or judicial auction,
Either in person or through the mediation of another:

1. The guardian,
The property of
The person or persons who may be under his

guardianship;
2. Agents,
The property
Whose administration or sale may have been

entrusted to them,
o Unless the consent of the principal has been
given;
3. Executors and administrators,
The property of the estate under administration;

4. Public officers and employees,
The property
o Of the State or
o Of any subdivision thereof, or
o Of any government-owned or controlled
corporation, or institution,
The administration of which has been intrusted to

them;
This provision shall apply to judges and
government experts
Who, in any manner whatsoever, take part in the
sale;
5. Justices, judges, prosecuting attorneys, clerks of superior
and inferior courts, and other officers and employees
connected with the administration of justice,
The property and rights

o In litigation or levied upon an execution before
the court
o Within whose jurisdiction or territory they
exercise their respective functions;
o This prohibition includes the act of acquiring
by assignment and
o Shall apply to lawyers,
With respect to the property and rights
Which may be the object of any litigation
In which they may take part
By virtue of their profession.
6.
Any others specially disqualified by law.
*Art. 1646. The persons disqualified to buy

Referred to in Articles 1490 and 1491,
o Are also disqualified
o To become lessees of the things mentioned therein.
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45
B.
FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF
CONTRACTS
Without being authorized by the latter, or

Unless he has by law a right to represent him.
A contract entered into in the name of another

o By one
Who has no authority or legal representation, or
Who has acted beyond his powers,

o Shall be unenforceable,
Unless it is ratified,
Expressly or impliedly,
By the person
On whose behalf it has been executed,
Before it is revoked by the other contracting party.
1. CONSENSUALITY OF CONTRACTS ARTS. 1305, 1315, 1317
- Perfection by mere consent of consensual contracts: Consensual
contracts are perfected by mere consent.
2. AUTONOMY OF CONTRACTS ARTS. 1306, 1799, 2088, 2130
- Freedom to stipulate: The parties are free to create or establish
stipulations, clauses, terms and conditions as they may deem
convenient, provided these are not contrary to law, morals,
good customs, public order, or public policy (Art. 1306).
3. MUTUALITY OF CONTRACTS ARTS. 1308-10, 1182
ACCELERATION CLAUSE
ESCALATION CLAUSE
- Mutuality of contracts: A contract binds both contracting
parties and its validity or the compliance therewith cannot be
left to the will of only one party (Art. 1308).
4. OBLIGATORY FORCE OF CONTRACTS ARTS. 1159, 1308, 131516, 749
- Obligatory force of contracts: Obligations arising from contracts
have the force of law between the contracting parties, and
should be complied with in good fiath.
5. RELATIVITY OF CONTRACTS ARTS. 1311-14, 1177-78, 1381(3)
PRIVITY OF CONTRACTS
- Relativity of contracts: Contracts take effect only between the
parties, their assigns, and heirs. Except where the rights and
obligations arising from the contract are not transmissible by
their nature, by stipulation, or by provision of law (Art. 1311) in
which case the assigns or heirs are not affected anymore.
2. AUTONOMY OF CONTRACTS ARTS. 1306, 1799, 2088, 2130

Art. 1306. The contracting parties may establish such
Stipulations,
Clauses,
Terms and conditions
o As they may deem convenient,
Provided they are not contrary to
Law,
Moral,
Good customs,
Public order, or
Public policy.
Art. 1799. A stipulation which excludes
One or more partners
From any share in the profits or losses
o Is void.
Art. 2088. The creditor cannot
Appropriate the things
o Given by way of pledge or mortgage, or
Dispose of them.
1. CONSENSUALITY OF CONTRACTS ARTS. 1305, 1315, 1317

Contract of Adhesion - A contract in which one party has already
prepared a form of a contract, containing stipulations desired by
him and he simply asks the other party to agree to them if he
wants to enter into the contract.
Adhesion contracts are not entirely prohibited. The one who
agrees to the contract is in reality, free to reject it entirely; if he
adheres, he gives his consent. Void if there is UNDUE ADVANTAGE
on the part of the dominant party. Ambiguity construed strictly
against the drafter.
Art. 1305. A contract is
A meeting of minds
Between two persons
Whereby one binds himself, with respect to the other,
o To give something or
o To render some service.
Art. 1315. Contracts are perfected by mere consent, and
From that moment the parties are bound

o Not only to the fulfillment of what has been expressly
stipulated
o But also to all the consequences
Which, according to thFeir nature,
May be in keeping with good faith, usage and law.

*Art. 1317. No one may contract in the name of another
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Any stipulation to the contrary

o Is null and void.
Art. 2130. A stipulation forbidding the owner

From alienating the immovable mortgaged
o Shall be void.
3. MUTUALITY OF CONTRACTS ARTS. 1308-10, 1182
ACCELERATION CLAUSE
ACCELERATION CLAUSE, or the stipulation stating that on the
occasion of the mortgagors default, the whole sum remaining
unpaid automatically becomes due and demandable. It is
ALLOWED
ESCALATION CLAUSE
Requirements for a valid escalation clause

a. Increase is provided by law/resolution by the monetary
board
b. There is a corresponding deescalation clause
c. The effectivity of the clause is on or after the effect of
increase ordered on the maximum interest
In lease, a clause authorizing the lessor to increase the rent
should real estate taxes or operating costs increase.
Art. 1308.
The contract must bind both contracting parties;
Its validity or compliance

o Cannot be left
o To the will of one of them.
46
Art. 1309. The determination of the performance

May be left to a third person,
o Whose decision shall not be binding
o Until it has been made known
To both contracting parties.

Art. 1310. The determination shall not be obligatory
If it is evidently inequitable.
o In such case,
o The courts shall decide
What is equitable
Under the circumstances.

Art. 1182
When the fulfillment of the condition
o Depends upon the sole will of the debtor,
o The conditional obligation shall be void.
If it depends upon chance or
Upon the will of a third person,
o The obligation shall take effect
o In conformity with the provisions of this Code.
4. OBLIGATORY FORCE OF CONTRACTS ARTS. 1159, 1315-16,
749
Art. 1159. Obligations arising from contracts
Have the force of law
Between the contracting parties and
o Should be complied with in good faith.
Art. 1308.
The contract must bind both contracting parties;
Its validity or compliance

o Cannot be left
o To the will of one of them.

From that moment
The parties are bound
stipulated
Which, according to their nature,
May be in keeping with
Good faith, usage and law.

Art. 1316. Real contracts,
Such as deposit, pledge and commodatum,
o Are not perfected
o Until the delivery
o Of the object of the obligation.
May be valid,

satisfy.
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o
o
In an authentic form, and

This step shall be noted in both instruments.
5. RELATIVITY OF CONTRACTS ARTS. 1311-14, 1177-78, 1381(3)

PRIVITY OF CONTRACTS
*Art. 1311. Contracts take effect only between
The parties,
Their assigns and heirs,
o Except in case where
o The rights and obligations arising from the contract
o Are not transmissible
By their nature, or
By stipulation or
By provision of law.
o The heir is not liable
Beyond the value of the property
He received from the decedent.
If a contract should contain

Some stipulation in favor of a third person,
o He may demand its fulfillment
Provided he communicated his acceptance
To the obligor
Before its revocation.
A mere incidental benefit or interest of a person is not

sufficient.
o The contracting parties
o Must have clearly and deliberately conferred
o A favor upon a third person.
Art. 1312. In contracts creating real rights,

Third persons who come into possession of the object of the
contract
Are bound thereby,
o Subject to the provisions of the
o Mortgage Law and the Land Registration Laws.
Art. 1313. Creditors are protected
In cases of contracts
o Intended to defraud them.
Art. 1314. Any third person who induces another
To violate his contract
o Shall be liable for damages
o To the other contracting party.
All rights acquired
o
In virtue of an obligation
Are transmissible,
o
If there has been no stipulation to the contrary.
o
After having pursued the property

o
To satisfy their claims,
Bring all the actions of the latter (debtor)
o
For the same purpose,
Save those which are inherent in his person;

o
The acts which the debtor
o
May have done to defraud them.

o Unless it is done
47
C.
CLASSIFICATION OF CONTRACTS

I. PREPARATORY ARTS. 1479, 1767, 1868
II. PRINCIPAL ARTS. 1458, 1638, 1642, 1933, 1962
III. ACCESSORY ARTS. 2047, 2085
Art. 1767. By the contract of partnership
Two or more persons bind themselves
o To contribute money, property, or industry
o To a common fund,
With the intention of
o Dividing the profits among themselves.
I. CONSENSUAL ARTS. 1315, 1475
II. REAL ARTS. 1316, 1934
III. FORMAL ART. 1356
3. ACCORDING TO SOLEMNITY OR FORM ARTS. 1356
I. ANY FORM
II. SPECIAL FORM
I. TRANSFER OF OWNERSHIP ARTS. 725, 1458, 1638
II. CONVEYANCE OF USE ARTS. 562, 1642, 1933
III. RENDITION OF SERVICE ARTS. 1642, 1868
5. ACCORDING TO NATURE OF OBLIGATION PRODUCED
I. BILATERAL ARTS. 1642, 1458
II. UNILATERAL ARTS. 2047, 2093
I. ONEROUS ARTS. 1458, 1638, 1642
II. GRATUITOUS OR LUCRATIVE ARTS. 725, 1933
III. REMUNERATORY
I. COMMUTATIVE
II. ALEATORY ART. 2010
I. NOMINATE
II. INNOMINATE ART. 1307
I. THING
II. RIGHT
III. SERVICE
Two or more persons may also form

o A partnership for the exercise of a profession.
*Art. 1868. By the contract of agency

A person binds himself
o To render some service or
o To do something
In representation or on behalf of another,
o With the consent or authority of the latter.
II. PRINCIPAL
ARTS. 1458, 1638, 1642, 1933, 1962
*Art. 1458. By the contract of sale
One of the contracting parties
o Obligates himself
To transfer the ownership and
To deliver a determinate thing, and

The other
o To pay therefor
o A price certain in money or its equivalent.
A contract of sale may be

o Absolute or conditional.
Art. 1638. By the contract of barter or exchange

One of the parties binds himself
o To give one thing
o In consideration of the other's promise
To give another thing.

* Art. 1642. The contract of lease may be of
a. Things, or
b. Work and service.
*Art. 1933. By the contract of loan,
One of the parties delivers to another, either
o Something not consumable
So that the latter may use the same
For a certain time and return it,
In which case the contract is called a

Commodatum; or
o Money or other consumable thing,
Upon the condition that
The same amount
of the same kind and quality shall be paid,
In which case the contract is simply called a

Loan or Mutuum.
Commodatum is essentially gratuitous.
I. PREPARATORY ARTS. 1479, 1767, 1868
Art. 1479. A promise to buy and sell a determinate thing

For a price certain
o Is reciprocally demandable.
Simple loan may be

o Gratuitous or
o With a stipulation to pay interest.
In Commodatum
o The bailor retains the ownership of the thing loaned,
While in simple loan,
o Ownership passes to the borrower.
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An accepted unilateral promise to buy or to sell a

determinate thing
For a price certain
o Is binding upon the promissor
If the promise is supported by a consideration
Distinct from the price.
48
Art. 1962. A deposit is constituted

From the moment a person
o Receives a thing belonging to another,
o With the obligation
Of safely keeping it and
Of returning the same.
If the safekeeping of the thing delivered

o Is not the principal purpose of the contract,
There is no deposit
But some other contract.
II. REAL ARTS. 1316, 1934
Art. 1316. Real contracts,
Such as deposit, pledge and commodatum,
o Are not perfected
o Of the object of the obligation.
Art. 1934. An accepted promise
To deliver something by way of commodatum or simple loan
o Is binding upon parties,
III. ACCESSORY ARTS. 2047, 2085

*Art. 2047. By Guaranty
A person, called the guarantor,
o Binds himself to the creditor
o To fulfill the obligation of the principal debtor
In case the latter should fail to do so.
If a person binds himself solidarily

With the principal debtor,
o The provisions of Section 4, Chapter 3, Title I of this
Book (Joint and Solidary Obligations)
o Shall be observed.
In such case the contract is called a Suretyship.
Art. 2085
The following requisites are essential
o To the contracts of pledge and mortgage:
1. That they be constituted
To secure the fulfillment
Of a principal obligation;
2. That the pledgor or mortgagor
Be the absolute owner
Of the thing pledged or mortgaged;
3. That the persons constituting the pledge or mortgage
Have the free disposal of their property, and
In the absence thereof,
That they be legally authorized for the

purpose.
But the commodatum or simple loan itself

o Shall not be perfected
o Of the object of the contract.
III. FORMAL ART. 1356
*Art. 1356.
Contracts shall be obligatory,
o In whatever form they may have been entered into,
Provided all the essential requisites for their

validity are present.
However, when the law requires

o That a contract be in some form
o In order
That it may be valid or enforceable, or
That a contract be proved in a certain way,

o That requirement is absolute and indispensable.
In such cases,
o The right of the parties stated in the following article
o Cannot be exercised.
*Art. 1357.
If the law requires a
o Document or
o Other special form,
As in the acts and contracts enumerated in the

following article,
The contracting parties may compel each other to observe
that form,
o Once the contract has been perfected.
I. CONSENSUAL ARTS. 1315, 1475
Third persons who are not parties to the principal obligation

o May secure the latter (principal obligation)
o By pledging or mortgaging
o Their own property.

From that moment
o Not only to the fulfillment of what has been
expressly stipulated

Art. 1475. The contract of sale is perfected
At the moment there is a meeting of minds
o Upon the thing
Which is the object of the contract and

o Upon the price.
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From that moment,

o The parties may reciprocally demand performance,
Subject to the provisions of the law
Governing the form of contracts.
This right may be exercised

o Simultaneously with the action upon the contract.
3. ACCORDING TO SOLEMNITY OR FORM ARTS. 1356

I. ANY FORM
II. SPECIAL FORM
* Art. 1356.
Provided all the essential requisites
For their validity
Are present.

o In order

49
In such cases,
The right of the parties stated in the following article
Cannot be exercised.
I. TRANSFER OF OWNERSHIP ARTS. 725, 1458, 1638
*Art. 725. Donation
Is an act of liberality
Whereby a person disposes gratuitously of

o A thing or
o Right
In favor of another,
o Who accepts it.

o Obligates himself

The other
o To pay therefor

* Art. 1638. By the contract of barter or exchange

One of the parties binds himself
o To give one thing
o In consideration of the other's promise
o To give another thing.
II. CONVEYANCE OF USE ARTS. 562, 1642, 1933
Art. 562. Usufruct
Gives a right
o To enjoy the property of another
With the obligation
o Of preserving its form and substance,
Unless
o The title constituting it or
o The law
Otherwise provides.
o Things, or
o Work and service.
* Art. 1933. By the contract of loan,

Commodatum; or
The same amount

Loan or Mutuum.
Simple loan may be

o Gratuitous or
In Commodatum
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III. RENDITION OF SERVICE ARTS. 1642, 1868
Art. 1642. The contract of lease may be of
a. Things, or
*Art. 1868. By the contract of agency
A person binds himself
o To render some service or
o To do something
In representation or on behalf of another,
With the consent or authority of the latter.
I. BILATERAL ARTS. 1642, 1458
a. Things, or
o Obligates himself

The other
o To pay therefor


II. UNILATERAL ARTS. 2047, 2093
*Art. 2047. By Guaranty
A person, called the guarantor,
o Binds himself to the creditor
o To fulfill the obligation of the principal debtor
In case the latter should fail to do so.
If a person binds himself solidarily

With the principal debtor,
o The provisions of Section 4, Chapter 3, Title I of this
Book (Joint and Solidary Obligations)
o Shall be observed.
In such case the contract is called a Suretyship.
Art. 2093.
In addition to the requisites prescribed in Article 2085*,
o It is necessary,
In order to constitute
The contract of pledge,

o That the thing pledged
Be placed in the possession
Of the creditor, or
Of a third person
By common agreement.
*Art. 2085. The following requisites are essential to the contracts of pledge
and mortgage:
50

(1) That they be constituted to secure the fulfillment of a principal
obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing
pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free
disposal of their property, and in the absence thereof, that they be legally
authorized for the purpose.
Third persons who are not parties to the principal obligation may secure
the latter by pledging or mortgaging their own property.

I. ONEROUS ARTS. 1458, 1638, 1642
*Art. 1350.
In onerous contracts
o The cause
o Is understood to be,
o For each contracting party,
The prestation or
Promise of
A thing or service
o By the other;
In remuneratory ones,
o The service or benefit
o Which is remunerated; and
In contracts of pure beneficence,

o The mere liberality of the benefactor.

II. GRATUITOUS OR LUCRATIVE ARTS. 725, 1933
*Art. 725. Donation
Is an act of liberality
Whereby a person disposes gratuitously of

o A thing or
o Right
In favor of another,
o Who accepts it.
* Art. 1933. By the contract of loan,


Commodatum; or
The same amount

Loan or Mutuum.
Simple loan may be

o Gratuitous or
In Commodatum
Remuneratory those contracts where one party gives
something or renders service to another in consideration of a
previous or past deeds of the other.
I. COMMUTATIVE
- Those contracts where the contracting parties contemplate the
assured fulfillment of the terms and conditions of their
agreement such as contracts of mortgage and pledge. Here,
generally, there is no risk to anticipate.
II. ALEATORY ART. 2010
Art. 2010. By an aleatory contract,
One of the parties or both
Reciprocally bind themselves
o To give or
o To do something
In consideration of
o What the other shall give or do
o Upon the happening of an event
Which is uncertain, or
Which is to occur at an indeterminate time.

I. NOMINATE
- Those which have been given particular names or
denominations by law.
- E.g. Sale, barter, mortgage, lease, agency, partnership,
commodatum, deposit, insurance, antichresis
II. INNOMINATE ART. 1307
Art. 1307. Innominate contracts
Shall be regulated by the
1) Stipulations of the parties,
2) Provisions of Title I (OBLIGATIONS) and Title II
(CONTRACTS) of this Book,
3) Rules governing the most analogous nominate
contracts, and
4) Customs of the place.
I. THINGS
- Contracts covering things such as contract of sale, deposit, pledge.
II. RIGHT
- Contract covering transmissible rights or credits such as a contract of usufruct,
assignment of credits.
III. SERVICE
- Contracts covering services such as carriage whether common or simple, agency,
deposit.

III. REMUNERATORY
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51
D.
STAGES OF CONTRACTS
1.NEGOTIATION
CONTRACT OF OPTION ARTS. 1324, 1479, 1482
2. PERFECTION
3. PERFORMANCE
4. CONSUMMATION
1.
NEGOTIATION
CONTRACT OF OPTION ARTS. 1324, 1479, 1482
Art. 1324.
When the offerer
Has allowed the offeree
o A certain period to accept,
The offer may be withdrawn

o At any time before acceptance
By communicating such withdrawal,
Except when the option
Is founded upon a consideration,
As something paid or promised.
Art. 1479.
A promise to buy and sell
A determinate thing
o For a price certain
Is reciprocally demandable.
An accepted unilateral promise to buy or to sell

A determinate thing
o For a price certain
Is binding upon the promissor
If the promise is supported
By a consideration
Distinct from the price.
Art. 1482. Whenever earnest money is given in a contract of sale,

It shall be considered
o As part of the price and
o As proof of the perfection of the contract.
2.
PERFECTION

From that moment
stipulated

3.
PERFORMANCE/PAYMENT/FULFILLMENT
SECTION 1. - Payment or Performance

Art. 1232. Payment means
Not only the delivery of money
But also the performance,

o In any other manner,
Of an obligation.
4.
CONSUMMATION
- Begins when the parties perform their respective undertakings

under the contract, culminating in the extinguishment thereof
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52
o
E.
ESSENTIAL ELEMENTS OF CONTRACTS ART. 1318

ARTS. 1319-46, 37-42, 739, 1476 (4), 1490-91, 1533 (5), 1646,
1782, 1409 (7), 5
ARTS. 87, 124, 234 FC
RA 6809
COGNITION THEORY
2. OBJECT CERTAIN, WHICH IS THE SUBJECT MATTER OF THE
CONTRACT
ARTS. 1347-49, 1311, 1178
Does not bind the offerer
Except from the time
It came to the offerers knowledge.
The contract, in such a case,
Is presumed to have been entered into
In the place where the offer was made.
Art. 1320. An acceptance may be

Express or
Implied.
Art. 1321. The person making the offer
May fix the
o Time,
o Place, and
o Manner
Of acceptance,
All of which
o Must be complied with.
3. CAUSE OF THE OBLIGATION ARTS. 1350-55

4. DELIVERY
5. DUE OBSERVANCE OF PRESCRIBED FORMALITIES
CHAPTER 2 - ESSENTIAL REQUISITES OF CONTRACTS
GENERAL PROVISIONS
*Art. 1318. There is no contract
Unless the following requisites concur:
(1) Consent
Of the contracting parties

(2) Object
Certain
Which is the subject matter of the contract

(3) Cause
Of the obligation
Which is established.
ARTS. 1319-46, 37-42, 739, 1476 (4), 1490-91, 1533 (5), 1646,
1782, 1409 (7), 5
ARTS. 87, 124, 234 FC
RA 6809
COGNITION THEORY
Art. 1322. An offer made through an agent

Is accepted
o From the time acceptance
o Is communicated to the offerer.
Art. 1323. An offer becomes ineffective upon the
Death,
Civil interdiction,
Insanity , or
Insolvency
o Of either party
Before acceptance is conveyed.

Art. 1324.
When the offerer
Has allowed the offeree
o A certain period to accept,
The offer may be withdrawn
At any time before acceptance
By communicating such withdrawal,

o Except when the option
Is founded upon a consideration,
As something paid or promised.

Art. 1325.
Business advertisements
o Of things for sale
Are not definite offers,
o But mere invitations to make an offer.
Unless it appears otherwise

Art. 1326. Advertisements for bidders
Are simply invitations to make proposals, and
SECTION 1. - Consent
Art. 1319. Consent is manifested by
The meeting of the offer and
The acceptance upon
o The thing and
o The cause
Which are to constitute the contract.
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The offer must be certain and

The acceptance absolute.
A qualified acceptance
o Constitutes a counter-offer.
Acceptance made by letter or telegram
The advertiser is not bound

o To accept the highest or lowest bidder,
Unless the contrary appears.
*Art. 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;
(2) Insane or Demented persons, and
(3) Deaf-mutes
Who do not know how to write.
Art. 1329. The incapacity declared in Article 1327
Is subject to the modifications
o Determined by law, and
Is understood to be
o Without prejudice to
53

o
Special disqualifications established in the laws.
*Art. 1328.
Contracts entered into during a lucid interval
o Are valid.
Contracts agreed to in a state of drunkenness or during
a hypnotic spell
o Are voidable.
*Art. 1330.
A contract where consent
Is given through
o Mistake,
o Violence,
o Intimidation,
o Undue influence, or
o Fraud
Is voidable.
Art. 1331. In order that mistake may invalidate consent,
It should refer
o To the substance of the thing
Which is the object of the contract, or

o To those conditions
Which have principally moved one or both

parties
To enter into the contract.
Mistake as to the identity or qualifications of one of the

parties
o Will vitiate consent
o Only when such identity or qualifications
o Have been the principal cause of the contract.
A simple mistake of account

o Shall give rise to its correction.
Art. 1332.
When one of the parties is unable to read, or
If the contract is in a language not understood by him,
and
o Mistake or fraud is alleged,
The person enforcing the contract
Must show that the terms thereof
Have been fully explained to the former.

Art. 1333. There is no mistake
If the party alleging it
Knew the doubt, contingency or risk
o Affecting the object of the contract.
Art. 1334. Mutual error
As to the legal effect of an agreement
When the real purpose of the parties is frustrated,
o May vitiate consent.
Art. 1335.
There is violence
o When in order to wrest consent,
o Serious or irresistible force is employed.
There is intimidation
o When one of the contracting parties
o Is compelled by
o A reasonable and well-grounded fear
o Of an imminent and grave evil
Upon his person or property, or
Upon the person or property of his

spouse, descendants or ascendants,
To give his consent.

To determine the degree of intimidation,
o The age, sex and condition of the person
o Shall be borne in mind.
Art. 1336. Violence or intimidation

Shall annul the obligation,
Although it may have been employed
o By a third person
o Who did not take part in the contract.
Art. 1337. There is undue influence
When a person takes improper advantage of his power
o Over the will of another,
Depriving the latter
o Of a reasonable freedom of choice.
The following circumstances

Shall be considered:
o The confidential, family, spiritual and other
relations between the parties, or
o The fact that the person alleged to have been
unduly influenced
Was suffering from mental weakness, or
Was ignorant or in financial distress.
Art. 1338. There is fraud when,

Through insidious words or machinations
o Of one of the contracting parties,
The other is induced
To enter into a contract
o Which, without them,
o He would not have agreed to.
Art. 1339. Failure to disclose facts,
When there is a duty to reveal them,
o As when the parties are bound
o By confidential relations,
Constitutes fraud.
Art. 1340. The usual exaggerations in trade,
When the other party had an opportunity to know the
facts,
o Are not in themselves fraudulent.
Art. 1341. A mere expression of an opinion
Does not signify fraud,
o Unless made by an expert and
o The other party has relied on the former's special
knowledge.
Art. 1342. Misrepresentation by a third person
Does not vitiate consent,
o Unless such misrepresentation
Has created substantial mistake and
The same is mutual.

Art. 1343. Misrepresentation made in good faith
Is not fraudulent
o But may constitute error.
Art. 1344. In order that fraud may make a contract voidable,
It should be serious and
Should not have been employed by both contracting
parties.
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A threat to enforce one's claim

o Through competent authority,
o If the claim is just or legal,
Does not vitiate consent.
Incidental fraud
54

o
o
Only obliges the person employing it

To pay damages.
The property
o Of the State or

them;
government experts
sale;

the court
by assignment and
Art. 1345. Simulation of a contract

May be
o Absolute or
o Relative.
Absolute
o
o
o
Relative
o
o
Takes place when

The parties do not intend
To be bound at all;
When the parties
Conceal their true agreement.
Art. 1346.
An absolutely simulated or fictitious contract
Is void.
A relative simulation,
o When it does not prejudice a third person and
o Is not intended for any purpose contrary to law,
morals, good customs, public order or public policy
Binds the parties
To their real agreement.
12. Any others specially disqualified by law.

Art. 1476. In the case of a sale by auction:
Where notice has not been given
That a sale by auction is subject to a right to bid
o On behalf of the seller,
It shall not be lawful for the seller
o To bid himself or
o To employ or induce any person
To bid at such sale
On his behalf or for the auctioneer,

o To employ or induce any person
To bid at such sale
On behalf of the seller or
Knowingly to take any bid from the seller or

any person employed by him.
Any sale contravening this rule

o May be treated as fraudulent
o By the buyer.
Art. 1490. The husband and the wife cannot sell property to each
other,
Except:
(1) When a separation of property
Was agreed upon in the marriage settlements; or

(2) When there has been a judicial separation of property under
Article 191.

7. The guardian,
The property of

guardianship;
8. Agents,
The property

entrusted to them,
given;

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*Art. 1646. The persons disqualified to buy

Referred to in Articles 1490 and 1491,
o Are also disqualified
o To become lessees of the things mentioned therein.
Art. 1782. Persons who are prohibited from giving each other any
donation or advantage
Cannot enter into universal partnership.
Art. 1409. The following contracts are inexistent and void from
the beginning:
(7) Those expressly prohibited or declared void by law.
FC Art. 87. Every donation or grant of gratuitous advantage,
Direct or indirect,
Between the spouses during the marriage
Shall be void,
o Except moderate gifts
o Which the spouses may give each other
o On the occasion of any family rejoicing.
-
The prohibition shall also apply

To persons living together as husband and wife
Without a valid marriage.
FC Art. 124. The administration and enjoyment of the conjugal

partnership
Shall belong to both spouses jointly.
-
In case of disagreement,
The husband's decision shall prevail,
o Subject to recourse to the court
o By the wife for proper remedy,
o Which must be availed of within five years
o From the date of the contract implementing such
decision.
FC Art. 234. Emancipation takes place

By the attainment of majority.
o Unless otherwise provided,
o Majority commences at the age of 21 years.
(Now 18, RA 6809)
55

-
Emancipation also takes place:

(1) By the marriage of the minor; or
(2) By the recording in the Civil Register of an
agreement in a public instrument executed by the
parent exercising parental authority and the minor at
least eighteen years of age.
Such emancipation shall be irrevocable.
-
Art. 1349. The object of every contract

Must be determinate
As to its kind.
-
RA 6809
December 13, 1989
AN ACT LOWERING THE AGE OF MAJORITY FROM 21 TO 18
YEARS, AMENDING FOR THE PURPOSE EXECUTIVE ORDER
NUMBERED TWO HUNDRED NINE, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::
Section 1.Article 234 of Executive Order No. 209, the Family Code
of the Philippines, is hereby amended to read as follows:
"Art. 234. Emancipation takes place by the attainment
of majority. Unless otherwise provided, majority
commences at the age of 18 years."
Section 4.Upon the effectivity of this Act, existing wills, bequests,
donations, grants, insurance policies and similar instruments
containing references and provisions favorable to minors will not
retroact to their prejudice.
Section 7.
Save in cases of hereditary succession,
o No private lands shall be transferred or conveyed
Except to individuals, corporations, or associations
Qualified to acquire or hold lands of the public

domain.
Section 8. Notwithstanding the provisions of Section 7 of this
Article,
A natural-born citizen of the Philippines
Who has lost his Philippine citizenship
o May be a transferee of private lands,
o Subject to limitations provided by law.
2. OBJECT CERTAIN, WHICH IS THE SUBJECT MATTER OF THE
CONTRACT ARTS. 1347-49, 1311, 1178
SECTION 2. - Object of Contracts
Art. 1347.
All things which are not outside the commerce of men,
Including future things,
o May be the object of a contract.
-
All rights which are not intransmissible

o May also be the object of contracts.
No contract may be entered into

Upon future inheritance
o Except in cases expressly authorized by law.
All services
Which are not contrary to law, morals, good customs,
public order or public policy
o May likewise be the object of a contract.
Art. 1348. Impossible things or services
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The fact that the quantity is not determinate

Shall not be an obstacle
To the existence of the contract,
o Provided it is possible to determine the same,
o Without the need of a new contract between the
parties.
*Art. 1311. Contracts take effect only between

The parties,
Their assigns and heirs,
o Except in case where
o The rights and obligations arising from the contract
o Are not transmissible
By their nature, or
By stipulation or
By provision of law.
o The heir is not liable
Beyond the value of the property
He received from the decedent.
If a contract should contain

Some stipulation in favor of a third person,
o He may demand its fulfillment
Provided he communicated his acceptance
To the obligor
Before its revocation.
A mere incidental benefit or interest of a person is not

sufficient.
o The contracting parties
o Must have clearly and deliberately conferred
o A favor upon a third person.
Approved: December 13, 1989

ARTICLE XII - NATIONAL ECONOMY AND PATRIMONY
Cannot be the object of contracts.

All rights acquired in virtue of an obligation
Are transmissible,
If there has been no stipulation to the contrary.
3. CAUSE OF THE OBLIGATION ARTS. 1350-55

*Art. 1350.
o The cause
The prestation or
Promise of
A thing or service
o By the other;

Art. 1351. The particular motives of the parties

In entering into a contract
Are different from the cause thereof.
Art. 1352.
Contracts without cause, or
With unlawful cause,
o Produce no effect whatever.
56
The cause is unlawful

If it is contrary to law, morals, good customs, public order or
public policy.
*Art. 1353. The statement of a false cause in contracts

Shall render them void,
o If it should not be proved
o That they were founded upon another cause
o Which is true and lawful.
Art. 1354.
Although the cause is not stated in the contract,
It is presumed that it exists and is lawful,
o Unless the debtor proves the contrary.
Art. 1355. Except in cases specified by law,
Lesion or inadequacy of cause
o Shall not invalidate a contract,
Unless there has been fraud, mistake or undue

influence.
4. DELIVERY
5. DUE OBSERVANCE OF PRESCRIBED FORMALITIES
ralc
57
F.
FORM OF CONTRACTS ARTS. 1356-58
1. ANY FORM ORAL

2. SPECIAL FORM
i. VALIDITY ARTS 748, 749, 1744, 1773, 1874, 1956, 2134,
ACT 1147 SEC. 22
ii. ENFORCEABILITY ARTS. 1403, 1878
iii. GREATER EFFICACY OR CONVENIENCE ARTS. 1358
FORM OF CONTRACTS
*Art. 1356.
Provided all the essential requisites for their

validity are present.

o In order

In such cases,
o The right of the parties stated in the following article
o Cannot be exercised.
*Art. 1357.
If the law requires a
o Document or
o Other special form,
As in the acts and contracts enumerated in the

following article,
The contracting parties may compel each other to observe
that form,
o Once the contract has been perfected.
This right may be exercised

o Simultaneously with the action upon the contract.
*Art. 1358. The following must appear in a public document:

1) Acts and contracts
The creation, transmission, modification or

extinguishment
i. Of real rights over immovable property;
Sales of real property or of an interest therein a
governed by Articles 1403, No. 2, and 1405;
The cession, repudiation or renunciation
Of hereditary rights or
Of those of the conjugal partnership of gains;

The power to administer property, or any other power
Which has for its object
An act
i. Appearing or which should appear in a public
document, or
ii. Should prejudice a third person;
The cession of actions or rights
Proceeding from an act
Appearing in a public document.

All other contracts
Where the amount involved exceeds P500
Must appear in writing,
Even a private one.
2)
3)
4)
5)
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But sales of goods, chattels or things in action
Are governed by Articles, 1403, No. 2 and

1405.
1.
2.
ANY FORM ORAL

SPECIAL FORM
i. VALIDITY ARTS 748, 749, 1744, 1773, 1874, 1956,
2134, ACT 1147 SEC. 22
Art. 748. The donation of a movable

May be made orally or in writing.
An oral donation
o Requires the simultaneous delivery
of the thing or
of the document
o Representing the right donated.
If the value of the personal property donated

o Exceeds five thousand pesos,
The donation and the acceptance
o Shall be made in writing,
Otherwise, the donation shall be void.

May be valid,

satisfy.

o Unless it is done
o In an authentic form, and
o This step shall be noted in both instruments.
Art. 1744. A stipulation between the common carrier and the

shipper or owner
Limiting the liability of the common carrier
For the loss, destruction, or deterioration of the goods
To a degree less than extraordinary diligence

o Shall be valid,
Provided it be:
1. In writing,
Signed by the shipper or owner;

2. Supported by a valuable consideration
Other than the service rendered by the common

carrier; and
3. Reasonable, just and not contrary to public policy.
Art. 1773. A contract of partnership is void,
Whenever immovable property is contributed thereto,
If an inventory of said property is not

o Made,
o Signed by the parties, and
o Attached to the public instrument.
Art. 1874. When a sale of a piece of land or any interest therein
Is through an agent,
o The authority of the agent
o Shall be in writing;
Otherwise, the sale shall be void.

Art. 1956. No interest shall be due
Unless it has been expressly stipulated in writing.
58

Art. 2134. The amount of the principal and of the interest
Shall be specified in writing;

o Otherwise , the contract of antichresis
o Shall be void.
ii.
ENFORCEABILITY ARTS. 1403, 1878
CHAPTER 8 - UNENFORCEABLE CONTRACTS

*Art. 1403. The following contracts are unenforceable, unless they
are ratified:
1.
Those entered into in the name of another person

- By one who has been given no authority or legal
representation, or
- Who has acted beyond his powers;
2.
Those that do not comply with the Statute of Frauds as

set forth in this number.
- In the following cases
- An agreement hereafter made
- Shall be unenforceable by action,
Unless
(1) The same, or
(2) Some note or
(3) Memorandum, thereof,
Be in writing, and
Subscribed by the party charged, or by his agent;

- Evidence, therefore, of the agreement
Cannot be received
Without the writing, or a secondary evidence of

its contents:
a. An agreement
That by its terms
Is not to be performed
Within a year from the making thereof;

b. A special promise
To answer for the debt, default, or

miscarriage
Of another;
c. An agreement made
In consideration of marriage,
Other than a mutual promise to marry;

d. An agreement for the sale
Of goods, chattels or things in action,
At a price not less than P500,

- Unless the buyer
- Accepts and receives
o Part of such goods and chattels,
or
o The evidences, or
o Some of them, of such things in
action or
- Pay at the time
o Some part of the purchase
money;
But when a sale is made by auction and

- Entry is made by the auctioneer in his
sales book, at the time of the sale,
- Of the amount and kind of property
sold, terms of sale, price, names of the
purchasers and person on whose
account the sale is made,
it is a sufficient memorandum;
e. An agreement of the leasing
For a longer period than 1 year, or
For the sale of real property or of an

interest therein;
f. A representation
As to the credit of a third person.
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3.
Those where both parties

- Are incapable of giving consent
- To a contract.
*Art. 1878. Special powers of attorney

Are necessary in the following cases:
1. To make such payments
As are not usually considered as acts of
administration;
2. To effect novations
Which put an end to obligations
Already in existence at the time the agency was
constituted;
3.
To compromise,
To submit questions to arbitration,
To renounce the right to appeal from a judgment,
To waive objections to the venue of an action or
To abandon a prescription already acquired;
4. To waive any obligation
Gratuitously;
5. To enter into any contract
By which the ownership of an immovable
Is transmitted or acquired
Either gratuitously or for a valuable consideration;
6. To make gifts,
Except customary ones
For charity or
Those made to employees in the business managed
by the agent;
7. To loan or borrow money,
Unless the latter act
Be urgent and indispensable
For the preservation of the things which are under
administration;
8. To lease any real property
To another person
For more than 1 year;
9. To bind the principal
To render some service
Without compensation;
10. To bind the principal
In a contract of partnership;
11. To obligate the principal
As a guarantor or surety;
12. To create or convey real rights
Over immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize obligations
Contracted before the agency;
15. Any other act of strict dominion.
iii. GREATER EFFICACY OR CONVENIENCE ARTS. 1358

* Art. 1358. The following must appear in a public document:
1) Acts and contracts
The creation, transmission, modification or

extinguishment
Of real rights over immovable property;
Sales of real property or of an interest therein a

governed by Articles 1403, No. 2, and 1405;
2) The cession, repudiation or renunciation
Of hereditary rights or
Of those of the conjugal partnership of gains;

3) The power to administer property, or any other power
Which has for its object
An act
i. Appearing or which should appear in a public
document, or
ii. Should prejudice a third person;
59

4)
5)
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The cession of actions or rights
Proceeding from an act
Appearing in a public document.

All other contracts
Where the amount involved
Exceeds P500
Must appear in writing,
Even a private one.

i. But sales of goods, chattels or things in
action
ii. Are governed by Articles, 1403, No. 2 and
1405.
60
G.
REFORMATION OF CONTRACTS
ARTS. 1359 69
CHAPTER 4 - REFORMATION OF INSTRUMENTS

Art. 1359.
There having been a meeting of the minds Of the parties to a
contract
When their true intention is not expressed in the instrument
o Purporting to embody the agreement,
By reason of
o Mistake, fraud, inequitable conduct or accident,
One of the parties may ask for the reformation of

the instrument
To the end that such true intention may be

expressed.
-
If mistake, fraud, inequitable conduct, or accident

Has prevented a meeting of the minds of the parties,
The proper remedy
o Is not reformation of the instrument
o But annulment of the contract.
1.
2.
3.
Simple donations inter vivos wherein no condition is

imposed;
Wills;
When the real agreement is void.
Art. 1367. When one of the parties has brought an action

To enforce the instrument,
He cannot subsequently ask for its reformation.
Art. 1368. Reformation may be ordered
At the instance of either party or his successors in
interest,
If the mistake was mutual;
-
Otherwise, upon petition of the injured party, or his

heirs and assigns.
Art. 1369. The procedure for the reformation of instrument

Shall be governed by rules of court
To be promulgated by the Supreme Court.
Art. 1360. The principles of the general law

On the reformation of instruments
o Are hereby adopted
Insofar as they are not in conflict
o With the provisions of this Code.
Art. 1361. When a mutual mistake of the parties
Causes the failure of the instrument
To disclose their real agreement,
o Said instrument may be reformed.
Art. 1362. If one party was mistaken and
The other acted fraudulently or inequitably
In such a way that the instrument
Does not show their true intention,
o The former may ask
o For the reformation of the instrument.
Art. 1363. When one party was mistaken and
The other knew or believed
That the instrument did not state their real agreement,
But concealed that fact from the former,
o The instrument may be reformed.
Art. 1364. When through the
Ignorance,
Lack of skill,
Negligence or
Bad faith
o On the part of the person drafting the instrument
or
o Of the clerk or typist,
The instrument does not express the true intention of
the parties,
The courts may order that the instrument be reformed.
Art. 1365. If two parties agree upon the mortgage or pledge of
real or personal property,
But the instrument states
That the property is sold
o Absolutely or with a right of repurchase,
Reformation of the instrument is proper.
Art. 1366. There shall be no reformation in the following cases:
ralc
61
H.
INTERPRETATION OF CONTRACTS
ARTS. 1370-79
Art. 1370. If the terms of a contract

Are clear and leave no doubt upon the intention of the
contracting parties,
o The literal meaning of its stipulations
o Shall control.
-
If the words appear to be contrary

To the evident intention of the parties,
o The evident intention
o Shall prevail over the words.
In favor of the greatest reciprocity of interests.
If the doubts are cast upon the principal object of the

contract
o In such a way that it cannot be known
o What may have been the intention or will of the parties,
The contract shall be null and void.
Art. 1379. The principles of interpretation
Stated in Rule 123 of the Rules of Court

o Shall likewise be observed in the construction of
contracts.
Art. 1371. In order to judge the intention of the contracting

parties,
Their contemporaneous and subsequent acts
Shall be principally considered.
Art. 1372. However general the terms of a contract may be,
They shall not be understood to comprehend
o Things
That are distinct and

o Cases
That are different from those
Upon which the parties intended to agree.

Art. 1373. If some stipulation of any contract
Should admit of several meanings,
o It shall be understood as
o Bearing that import
o Which is most adequate
o To render it effectual.
Art. 1374. The various stipulations of a contract
Shall be interpreted together,
o Attributing to the doubtful ones
o That sense which may result
o From all of them taken jointly.
Art. 1375. Words which may have different significations
Shall be understood
o In that which is most in keeping with
o The nature and object of the contract.
Art. 1376. The usage or custom of the place
Shall be borne in mind
o In the interpretation of the ambiguities of a
contract, and
Shall fill the omission of stipulations
o Which are ordinarily established.
Art. 1377. The interpretation of obscure words or stipulations in a
contract
Shall not favor the party
Who caused the obscurity.
*Art. 1378.
When it is absolutely impossible to settle doubts

o By the rules established in the preceding articles, and
The doubts refer to

o Incidental circumstances of a gratuitous contract,
The least transmission of rights and interests
Shall prevail.
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If the contract is onerous,

o The doubt shall be settled
62
I.
KINDS OF CONTRACTS AS TO VALIDITY

I. RESCISSIBLE CONTRACTS ARTS. 1380-89, 1191
II. VOIDABLE CONTRACTS ARTS. 1390-1402, 1327-28, 1330
III. UNENFORCEABLE CONTRACTS ARTS. 1403-08, 1317, 1878
Consequently, it can be carried out only

o When he who demands rescission
o Can return
o Whatever he may be obliged to restore.
Neither shall rescission take place

o When the things
Which are the object of the contract

o Are legally in the possession of third persons
o Who did not act in bad faith.
In this case, indemnity for damages
May be demanded from the person causing

the loss.
3. VOID OR INEXISTENT ARTS. 1409-22, 1318, 1353, 1378, 1491,

1898
I. RESCISSIBLE CONTRACTS ARTS. 1380-89, 1191
RESCISSIBLE CONTRACTS
Art. 1380. Contracts validly agreed upon
May be rescinded
In the cases established by law.

Art. 1381. The following contracts are RESCISSIBLE:
1.
Those which are entered into by guardians
Whenever the wards whom they represent
Suffer lesion
By more than 1/4 of the value of the things
Which are the object thereof
2.
Those agreed upon in representation of absentees,
If the absentees suffer the lesion

By more than 1/4 of the value of the things
Which are the object thereof
3.
Those undertaken in fraud of creditors
When the creditors cannot in any other manner
Collect the claims due them;
4.
Those which refer to things under litigation
If they have been entered into by the defendant
Without the knowledge and approval
Of the litigants or of competent judicial authority;
5.
All other contracts
Specially declared by law
To be subject to rescission.
Art. 1382. Payments made in a state of insolvency
For obligations
To whose fulfillment
The debtor could not be compelled
At the time they were effected,

o Are also rescissible.
Art. 1383. The action for rescission is subsidiary;
It cannot be instituted
Except when the party suffering damage

o Has no other legal means
o To obtain reparation for the same.
Art. 1384. Rescission shall be
Only to the extent
Necessary to cover the damages caused.
To return the things

o Which were the object of the contract,
Together with
o Their fruits, and
o The price
o With its interest;
Art. 1386. Rescission referred to in Nos. 1 and 2 of Article 1381
Shall not take place

o With respect to contracts
o Approved by the courts.
Art. 1387.
All contracts by virtue of which the debtor alienates property

by gratuitous title
Are presumed to have been entered into
In fraud of creditors,
When the donor did not reserve sufficient property
To pay all debts contracted before the donation.
Alienations by onerous title

o Are also presumed fraudulent
o When made by persons
Against whom some judgment has been issued.
The decision or attachment

o Need not refer to the property alienated, and
o Need not have been obtained by the party seeking the
rescission.
In addition to these presumptions,

o The design to defraud creditors
o May be proved
o In any other manner recognized by the law of evidence.
Art. 1388. Whoever acquires in bad faith
The things alienated
In fraud of creditors,
o Shall indemnify the creditors
o For damages suffered by them
o On account of the alienation,
Whenever, due to any cause, it should be

If there are two or more alienations,

o The first acquirer shall be liable first, and
o So on successively.
Art. 1389. The action to claim rescission
Must be commenced within 4 years.
For persons under guardianship and for absentees,

The period of four years
Shall not begin
o Until the termination of incapacity of the persons under
guardianship, or
o Until the domicile of the absentee is known.
Art. 1385. Rescission creates the obligation
ralc
63
*Art. 1191. The power to rescind obligations

o Should not comply
The injured party

May choose between
o The fulfillment and
o The rescission of the obligation,

If the latter should become impossible.


o In accordance with Articles 1385 and 1388 and
o The Mortgage Law.
in bad faith.
causing the loss.
II. VOIDABLE CONTRACTS ARTS. 1390-1402, 1327-28, 1330

Art. 1390. The following contracts are VOIDABLE OR
ANNULLABLE,
Even though there may have been no damage to the

contracting parties:
(1) Those where one of the parties
Is incapable of giving consent
To a contract;
(2) Those where the consent is vitiated by
Mistake,
Violence,
Intimidation,
Undue influence or
Fraud.
These contracts are binding,

o Unless they are annulled
o By a proper action in court.
They are susceptible of ratification.
Art. 1391. The action for annulment

Shall be brought within 4 years.
-
ralc
This period shall begin:
In cases of intimidation, violence or undue influence,
From the time the defect of the consent ceases.
In case of mistake or fraud,
From the time of the discovery of the same.

Contracts entered into by minors or other incapacitated
persons,
From the time the guardianship ceases.
Art. 1392. Ratification extinguishes

The action to annul
A voidable contract.
Art. 1393. Ratification may be effected
Expressly or tacitly.
It is understood that there is a tacit ratification if,

o With knowledge of the reason which renders the
contract voidable and
o Such reason having ceased,
The person who has a right to invoke it
Should execute an act
Which necessarily implies an intention to waive his

right.
Art. 1394. Ratification may be effected

By the guardian of the incapacitated person.
Art. 1395. Ratification does not require
The conformity of the contracting party
Who has no right to bring the action for annulment.
Art. 1396. Ratification cleanses the contract
From all its defects
From the moment it was constituted.
Art. 1397. The action for the annulment of contracts
May be instituted
By all who are thereby obliged
o Principally or subsidiarily.
However, persons who are capable

Cannot allege the incapacity of those with whom they
contracted;
Nor can those who exerted intimidation, violence, or
undue influence, or employed fraud, or caused mistake
o Base their action
o Upon these flaws of the contract.
Art. 1398. An obligation having been annulled,

The contracting parties
Shall restore to each other
o The things
Which have been the subject matter of the

contract,
With their fruits, and

o The price with its interest,
Except in cases provided by law.

-
In obligations to render service,

o The value thereof
o Shall be the basis for damages.
Art. 1399. When the defect of the contract consists in

The incapacity of one of the parties,
o The incapacitated person
o Is not obliged to make any restitution
Except insofar as he has been benefited
By the thing or price received by him.

Art. 1400.
Whenever the person
o Obliged by the decree of annulment
o To return the thing
Cannot do so
o Because it has been lost through his fault,
He shall return
64

o
o
The fruits received and

The value of the thing
At the time of the loss,
With interest from the same date.
Art. 1401. The action for annulment of contracts

Shall be extinguished
o When the thing which is the object thereof
o Is lost
Through the fraud or fault of the person
Who has a right to institute the proceedings.
- Evidence, therefore, of the agreement
Cannot be received
Without the writing, or a secondary evidence of

its contents:
g. An agreement
That by its terms
Is not to be performed
Within a year from the making thereof;

h. A special promise
To answer for the debt, default, or

miscarriage
Of another;
i.
An agreement made
In consideration of marriage,
Other than a mutual promise to marry;

j.
An agreement for the sale
Of goods, chattels or things in action,
At a price not less than P500,

- Unless the buyer
- Accepts and receives
o Part of such goods and chattels,
or
o The evidences, or
o Some of them, of such things in
action or
- Pay at the time
o Some part of the purchase
money;
But when a sale is made by auction and

- Entry is made by the auctioneer in his
sales book, at the time of the sale,
- Of the amount and kind of property
sold, terms of sale, price, names of the
purchasers and person on whose
account the sale is made,
it is a sufficient memorandum;
k. An agreement of the leasing
For a longer period than 1 year, or
For the sale of real property or of an

interest therein;
l.
A representation
As to the credit of a third person.
If the right of action

Is based upon
o The incapacity of any one of the contracting parties,
The loss of the thing
o Shall not be an obstacle
To the success of the action,

o Unless said loss took place through the fraud or fault of
the plaintiff.
Art. 1402. As long as one of the contracting parties

Does not restore
What he is bound to return
o In virtue of the decree of annulment,
The other cannot be compelled
o To comply with what is incumbent upon him.
*Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or Demented persons, and
(3) Deaf-mutes who do not know how to write.
*Art. 1328.
Contracts entered into during a lucid interval
o Are valid.
Contracts agreed to in a state of drunkenness or during
a hypnotic spell
o Are voidable.
*Art. 1330.
A contract where consent
Is given through
o Mistake,
o Violence,
o Intimidation,
o Undue influence, or
o Fraud
Is voidable.
III. UNENFORCEABLE CONTRACTS ARTS. 1403-08, 1317, 1878

CHAPTER 8 - UNENFORCEABLE CONTRACTS
*Art. 1403. The following contracts are unenforceable, unless they
are ratified:
4.
5.
ralc
Those entered into in the name of another person

- By one who has been given no authority or legal
representation, or
- Who has acted beyond his powers;
Those that do not comply with the Statute of Frauds as
set forth in this number.
- In the following cases
- An agreement hereafter made
- Shall be unenforceable by action,
Unless
(1) The same, or
(2) Some note or

(3) Memorandum, thereof,
Be in writing, and
Subscribed by the party charged, or by his agent;
6.
Those where both parties

- Are incapable of giving consent
- To a contract.
Art. 1404. Unauthorized contracts

Are governed by Article 1317 and
The principles of agency in Title X of this Book.
Art. 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers,
shall be unenforceable, unless it is ratified, expressly or impliedly, by the
person on whose behalf it has been executed, before it is revoked by the
other contracting party
Art. 1405.
Contracts infringing the Statute of Frauds,
o Referred to in No. 2 of Article 1403,
Are ratified
By the failure to object
To the presentation of oral evidence to prove

the same, or
By the acceptance of benefit under them.

Art. 1406.
When a contract is enforceable
65
o Under the Statute of Frauds, and

A public document is necessary
o For its registration in the Registry of Deeds,
The parties may avail themselves of
o The right under Article 1357.
Art. 1357. If the law requires a document or other special form, as in the
acts and contracts enumerated in the following article, the contracting
parties may compel each other to observe that form, once the contract has
been perfected. This right may be exercised simultaneously with the action
upon the contract.
Art. 1407.
In a contract where both parties are incapable of giving
consent,
o Express or implied
Ratification by the parent, or guardian, as the case

may be,
Of one of the contracting parties
Shall give the contract the same effect
As if only one of them were incapacitated.
If ratification is made by the parents or guardians, as the case

may be,
o Of both contracting parties,
The contract shall be validated from the inception.
Art. 1408. Unenforceable contracts

Cannot be assailed by third persons.
7.
These contracts cannot be ratified.
Neither can the right

o To set up the defense of illegality
o Be waived.
Art. 1410. The action or defense

For the declaration of the inexistence of a contract
Does not prescribe.
Art. 1411. When the nullity proceeds from
The illegality of the cause or object of the contract, and
The act constitutes a criminal offense,
o Both parties being in pari delicto,
They shall have no action against each other, and
Both shall be prosecuted.

-
Moreover, the provisions of the Penal Code

Relative to the disposal of effects or instruments of a crime
o Shall be applicable to the things or the price of the
contract.
This rule shall be applicable

When only one of the parties is guilty;
o But the innocent one may claim
o What he has given, and
o Shall not be bound to comply with his promise.
*Art. 1317. No one may contract in the name of another

Without being authorized by the latter, or
Unless he has by law a right to represent him.
A contract entered into in the name of another

o By one
Who has no authority or legal representation, or
Who has acted beyond his powers,

o Shall be unenforceable,
Unless it is ratified,
Expressly or impliedly,
By the person
On whose behalf it has been executed,
Before it is revoked by the other contracting party.
*Art. 1878. Special powers of attorney
Art. 1412.
If the act
o In which the unlawful or forbidden cause consists
Does not constitute a criminal offense,

o The following rules shall be observed:
1.
2.
3. VOID OR INEXISTENT
ARTS. 1409-22, 1318, 1353, 1378, 1491, 1898
CHAPTER 9 - VOID AND INEXISTENT CONTRACTS
Art. 1409. The following contracts are
INEXISTENT AND VOID from the beginning:
1.
2.
ralc
Those whose cause, object or purpose

Is contrary to law, morals, good customs, public
order or public policy;
Those which are absolutely simulated or fictitious;
3.
Those whose cause or object

Did not exist at the time of the transaction;
4.
Those whose object

Is outside the commerce of men;
5.
Those which contemplate

an impossible service;
6.
Those where the intention of the parties

Relative to the principal object of the contract
Cannot be ascertained;
Those expressly prohibited or declared

Void by law.
When the fault is on the part of both contracting

parties, neither may
Recover what he has given by virtue of the
contract, or
Demand the performance of the other's
undertaking;
When only one of the contracting parties is at fault,

He cannot
i. Recover what he has given by reason of the contract,
or
ii. Ask for the fulfillment of what has been promised
him.
The other, who is not at fault,
May demand the return of what he has given
Without any obligation to comply his promise.
Art. 1413. Interest paid
In excess of the interest allowed by the usury laws

o May be recovered by the debtor,
o With interest thereon
From the date of the payment.

Art. 1414. When money is paid or property delivered for an illegal
purpose,
The contract may be repudiated
By one of the parties

o Before the purpose has been accomplished, or
o Before any damage has been caused to a third person.
In such case, the courts may, if the public interest will thus be
subserved,
o Allow the party repudiating the contract
o To recover the money or property.
66
Art. 1415. Where one of the parties to an illegal contract
Is incapable of giving consent,
The courts may, if the interest of justice so demands, allow

o Recovery of money or
o Property delivered by the incapacitated person.
Art. 1416. When the agreement is not illegal per se
But is merely prohibited, and
The prohibition by the law

o Is designated for the protection of the plaintiff,
He may, if public policy is thereby enhanced,
Recover what he has paid or delivered.

Art. 1417. When the price of any article or commodity is
determined
By statute, or
By authority of law,
o Any person paying any amount
o In excess of the maximum price allowed
May recover such excess.

Art. 1418.
When the law fixes or authorizes the fixing of the

maximum number of hours of labor and
A contract is entered into

o Whereby a laborer undertakes to work
o Longer than the maximum thus fixed,
He may demand additional compensation
For service rendered beyond the time limit.

Art. 1419. When the law sets, or authorizes
The setting of a minimum wage for laborers, and
A contract is agreed upon

o By which a laborer accepts a lower wage,
He shall be entitled to recover the deficiency.

Art. 1420. In case of a divisible contract,
If the illegal terms can be separated
From the legal ones,

o The legal terms may be enforced.
Art. 1421. The defense of illegality of contract
Is not available to third persons

o Whose interests are not directly affected.
Art. 1422. A contract which is the direct result
Of a previous illegal contract,

o Is also void and inexistent.
*Art. 1318. There is no contract
Unless the following requisites concur:
(4) Consent
Of the contracting parties

(5) Object
Certain
Which is the subject matter of the contract

(6) Cause
Of the obligation
Which is established.
*Art. 1353. The statement of a false cause in contracts
Shall render them void,
o If it should not be proved
o That they were founded upon another cause
o Which is true and lawful.
o By the rules established in the preceding articles, and

The doubts refer to
o Incidental circumstances of a gratuitous contract,
The least transmission of rights and interests
Shall prevail.
If the contract is onerous,

o The doubt shall be settled
In favor of the greatest reciprocity of interests.
If the doubts are cast upon the principal object of the

contract
o In such a way that it cannot be known
o What may have been the intention or will of the parties,
The contract shall be null and void.

1. The guardian,
The property of

guardianship;
2. Agents,
The property

entrusted to them,
given;

The property
o Of the State or

them;
government experts
sale;

the court
by assignment and
6.
Art. 1898. If the agent contracts in the name of the principal,
Exceeding the scope of his authority, and
The principal does not ratify the contract,

o It shall be void
If the party with whom the agent contracted
Is aware of the limits of the powers granted by

the principal.
*Art. 1378.
When it is absolutely impossible to settle doubts
ralc
Any others specially disqualified by law.
In this case, however,

o The agent is liable
o If he undertook to secure
67

o
ralc
The principal's ratification.
68
ii.
SPECIAL CONTRACTS
A.
B.
C.
D.
E.
F.
G.
H.
A.
B.
C.
ralc
SALES
1. IN GENERAL
2. ELEMENTS
3. OBLIGATIONS OF SELLER/BUYER
4. REMEDIES
5. EXTINGUISHMENT OF SALE
BARTER OR EXCHANGE
LEASE
1. IN GENERAL
2. ELEMENTS
3. OBLIGATIONS OF LESSOR/LESSEE
4. REMEDIES
5. TERMINATION OF LEASE
LOAN
1. IN GENERAL
2. KINDS OF LOAN
i. COMMODATUM
ii. MUTUUM
3. NATURE/CHARACTERISTICS
4. SUBJECT MATTER
5. RIGHTS AND OBLIGATIONS OF BAILOR AND
BAILEE
6. MODES OF EXTINGUISHMENT
DEPOSIT WAREHOUSE RECEIPTS LAW / TRUST RECEIPTS
LAW
1. IN GENERAL
2. KINDS OF DEPOSIT
i. JUDICIAL
ii. EXTRA-JUDICIAL
1. VOLUNTARY
2. NECESSARY
3. NATURE/CHARACTERISTICS
4. SUBJECT MATTER
5. RIGHTS AND OBLIGATIONS OF DEPOSITOR AND
DEPOSITARY
ALEATORY CONTRACTS INSURANCE, GAMBLING, LIFE
ANNUITY
SPECIAL CONTRACTS: ACCESSORY CONTRACTS
GUARANTY AND SURETYSHIP
1. DEFINITION
2. NATURE/CHARACTERISTICS/EXTENT
3. EFFECTS OF GUARANTY, BETWEEN
i. GUARANTOR AND CREDITOR
ii. GUARANTOR AND DEBTOR
iii. CO-GUARANTORS
PLEDGE, MORTGAGE, AND ANTICHRESIS
1. IN GENERAL
2. ESSENTIAL ELEMENTS
3. EFFECTS/RIGHTS AND OBLIGATIONS
4. EXTINGUISHMENT/FORECLOSURES
IMPLIED
III. EXTRA-CONTRACTUAL OBLIGATIONS

A.
B.
C.
D.
LAW
QUASI-CONTRACTS
DELICTS
QUASI-DELICTS
IV. DAMAGES
A.
B.
IN GENERAL
KINDS OF DAMAGES
1. ACTUAL OR COMPENSATORY
2. MORAL
3. NOMINAL
4. TEMPERATE OR MODERATE
5. LIQUIDATED
6. EXEMPLARY
SPECIAL CONTRACTS: PREPARATORY CONTRACTS

(BUSINESS ASSOCIATIONS AND RELATIONS)
AGENCY
1. IN GENERAL
2. KINDS, CREATION, AND EXISTENCE
3. OBLIGATIONS OF THE AGENT/PRINCIPAL
4. MODES OF EXTINGUISHMENT OF AGENCY
PARTNERSHIP
1. IN GENERAL
2. CLASSES OF PARTNERSHIPS AND PARTNERS
3. CREATION AND DURATION
4. OBLIGATIONS OF PARTNERS TO ONE ANOTHER
5. PROPERTY RIGHTS OF A PARTNER
6. RELATIONS AND DEALINGS WITH THIRD PERSONS
7. DISSOLUTION, WINDING UP, AND TERMINATION
8. LIMITED PARTNERSHIP
TRUSTS
1. IN GENERAL
2. KINDS
i. EXPRESS
69
SPECIAL CONTRACTS
D.
SALES
1.
2.
3.
4.
5.
IN GENERAL
ELEMENTS
OBLIGATIONS OF SELLER/BUYER
REMEDIES
EXTINGUISHMENT OF SALE
Articles / Laws to Remember: 1458, 1467, 1477 transfer of

ownership,
1505, 559 who can transfer xxx, 1504, 1544, 1484 Recto Law,
R.A. 6552,
1602, 1606, 1620, 1623, Redemption xxx
Articles / Laws to Remember: 1458, 1467, 1477 transfer of
ownership,
1505, 559 who can transfer xxx, 1504, 1544, 1484 Recto Law, R.A.
6552,
1602, 1606, 1620, 1623, Redemption xxx
Art. 1458. By the contract of sale
One of the contracting parties obligates himself

o To transfer the ownership and
o To deliver a determinate thing, and
The other
o To pay therefor a price certain in money or its
equivalent.

Art. 1467.
A contract for the delivery at a certain price of an article

o Which the vendor in the ordinary course of his business
o Manufactures or procures for the general market,
o Whether the same is on hand at the time or not,
Is a contract of sale,
But if the goods are to be manufactured

o Specially for the customer and upon his special order,
and
o Not for the general market,
It is a contract for a piece of work.
Art. 1475. The contract of sale is perfected
At the moment there is a meeting of minds

o Upon the thing which is the object of the contract and
o Upon the price.
From that moment, the parties may reciprocally demand

performance,
o Subject to the provisions of the law governing the form
of contracts.
*Art. 1350.
o The cause
The prestation or
Promise of
A thing or service
o By the other;
ralc

Art. 2010. By an aleatory contract,

One of the parties or both
Reciprocally bind themselves
o To give or
o To do something
In consideration of
o What the other shall give or do
o Upon the happening of an event
Which is uncertain, or
Which is to occur at an indeterminate time.

Art. 1477. The ownership of the thing sold
Shall be transferred to the vendee

o Upon the actual or constructive delivery thereof.
Art. 559.
The possession of movable property acquired in good faith

o Is equivalent to a title.
Nevertheless, one who

o Has lost any movable or
o Has been unlawfully deprived thereof
May recover it from the person in possession of the

same.
If the possessor of a movable lost or which the owner has

been unlawfully deprived,
o Has acquired it in good faith at a public sale,
The owner cannot obtain its return
Without reimbursing the price paid therefor.
Art. 1504. Unless otherwise agreed, the goods remain at the

seller's risk
Until the ownership therein is transferred to the buyer,
But when the ownership therein is transferred to the buyer

o The goods are at the buyer's risk
o Whether actual delivery has been made or not,
o Except that:
(1) Where delivery of the goods has been made to the buyer or to
a bailee for the buyer,
In pursuance of the contract and
The ownership in the goods has been retained by the seller

merely to secure performance by the buyer of his obligations
under the contract,
o The goods are at the buyer's risk
o From the time of such delivery;
(2) Where actual delivery has been delayed through the fault of
either the buyer or seller
o The goods are at the risk of the party in fault.
Art. 1505. Subject to the provisions of this Title, where goods are
sold by a person
Who is not the owner thereof, and
Who does not sell them under authority or with the consent
of the owner,
o The buyer acquires no better title to the goods than the
seller had,
Unless the owner of the goods is by his conduct
Precluded from denying the seller's authority to

sell.
Nothing in this Title, however, shall affect:

(1) The provisions of
70
Any factors' act,

Recording laws, or
Any other provision of law enabling the apparent owner
of goods to dispose of them as if he were the true
owner thereof;
(2) The validity of any contract of sale
Under statutory power of sale or
Under the order of a court of competent jurisdiction;

(3) Purchases made
In a merchant's store, or
In fairs, or markets,
o In accordance with the Code of Commerce and
special laws.
Art. 1537. The vendor is bound to deliver
The thing sold and
Its accessions and accessories

o In the condition in which they were
o Upon the perfection of the contract.
All the fruits shall pertain to the vendee

o From the day on which the contract was perfected.
Art. 1544. If the same thing should have been sold to different
vendees,
The ownership shall be transferred to the person who may

have first taken possession thereof in good faith,
o If it should be movable property.
Should it be immovable property,

o The ownership shall belong to the person acquiring it
o Who in good faith first recorded it in the Registry of
Property.
Should there be no inscription, the ownership shall pertain to

o The person who in good faith was first in the
possession; and,
o In the absence thereof, to the person who presents the
oldest title, provided there is good faith.
Art. 1545.
Where the obligation of either party to a contract of sale is

subject to any condition which is not performed, such party
o May refuse to proceed with the contract or
o He may waive performance of the condition.
If the other party has promised that the condition should

happen or be performed,
o Such first mentioned party
o May also treat the nonperformance of the condition as
a breach of warranty.
Where the ownership in the thing has not passed,
o The buyer may treat the fulfillment by the seller of his
obligation to deliver the same as described and as
warranted expressly or by implication in the contract of
sale
o As a condition of the obligation of the buyer to perform
his promise to accept and pay for the thing.
Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and
1566,
The vendee may elect between

o Withdrawing from the contract and
o Demanding a proportionate reduction of the price,
With damages in either case.

Art. 1592.
In the sale of immovable property,

o Even though it may have been stipulated
ralc
That upon failure to pay the price at the time agreed

upon
o The rescission of the contract shall of right take place,
The vendee may pay,
o Even after the expiration of the period,
o As long as no demand for rescission of the contract has
been made upon him
o either judicially or by a notarial act.
o After the demand, the court may not grant him a new
term.
o
Art. 1570. The preceding articles of this Subsection (SUBSECTION

2. - Warranty Against Hidden Defects of or Encumbrances Upon
the Thing Sold)
Shall be applicable to judicial sales,

o Except that the judgment debtor shall not be liable for
damages.
Art. 1484. In a contract of sale of personal property the price of
which is payable in installments,
The vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to
pay;
(2) Cancel the sale, should the vendee's failure to pay cover two
or more installments;
(3) Foreclose the chattel mortgage on the thing sold,
If one has been constituted, should the vendee's failure to

pay cover two or more installments.
o In this case, he shall have no further action against the
purchaser
o To recover any unpaid balance of the price.
o Any agreement to the contrary shall be void.
Art. 1582. The vendee is bound to accept delivery and to pay the
price of the thing sold
At the time and place stipulated in the contract.

o
If the time and place should not have been stipulated,
The payment must be made
At the time and place of the delivery of the thing sold.
Art. 1524. The vendor shall not be bound to deliver the thing sold,
If the vendee has not paid him the price, or
If no period for the payment has been fixed in the contract.

Art. 1525. The seller of goods is deemed to be an unpaid seller
within the meaning of this Title:
(1) When the whole of the price has not been paid or tendered;
(2) When a bill of exchange or other negotiable instrument has
been received as conditional payment, and
The condition on which it was received
Has been broken by reason of

o The dishonor of the instrument, the insolvency of the
buyer, or otherwise.
In Articles 1525 to 1535 the term "seller" includes

o An agent of the seller to whom the bill of lading has
been indorsed, or
o A consignor or agent who has himself paid, or is directly
responsible for the price, or
o Any other person who is in the position of a seller.
Art. 1526. Subject to the provisions of this Title, notwithstanding
That the ownership in the goods may have passed to the

buyer,
71

o
The unpaid seller of goods, as such, has:

(5) A lien
On the goods or right to retain them

For the price
While he is in possession of them;
(6) A right of stopping the goods in transitu
After he has parted with the possession of

them
In case of the insolvency of the buyer;

(7) A right of resale
As limited by this Title;

(8) A right to rescind
The sale as likewise limited by this Title.
Where the ownership in the goods

Has not passed to the buyer,
o The unpaid seller has,
In addition to his other remedies

o A right of withholding delivery
Similar to and coextensive with
His rights of lien and stoppage in transitu

o Where the ownership has passed to the buyer.
From the time final judgment was rendered in a civil

action
On the basis that the contract was a true sale with

right to repurchase.
Art. 1620.
A co-owner of a thing may exercise the right of redemption

o In case the shares of all the other co-owners or of any of
them,
o Are sold to a third person.
If the price of the alienation is grossly excessive,
The redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of

redemption,
o They may only do so
o In proportion to the share they may respectively have in
the thing owned in common.
Art. 1623.
The right of legal pre-emption or redemption shall not be

exercised
o Except within thirty days from the notice in writing
By the prospective vendor, or
By the vendor, as the case may be.
Art. 1601. Conventional redemption shall take place
When the vendor reserves the right to repurchase the thing

sold,
With the obligation to comply with

o The provisions of Article 1616 and
o Other stipulations which may have been agreed upon.
The deed of sale shall not be recorded in the Registry of

Property,
o Unless accompanied by an affidavit of the vendor
o That he has given written notice thereof to all possible
redemptioners.
Art. 1602. The contract shall be presumed to be an equitable

mortgage, in any of the following cases:
The right of redemption of co-owners

o Excludes that of adjoining owners.
(1) When the price of a sale with right to repurchase
Is unusually inadequate;
(2) When the vendor remains in possession
As lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase
Another instrument extending the period of redemption

or granting a new period
Is executed;
(4) When the purchaser retains for himself
A part of the purchase price;

(5) When the vendor binds himself
To pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that
The real intention of the parties is
That the transaction shall secure

o The payment of a debt or
o The performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other

benefit to be received by the vendee as rent or otherwise
o Shall be considered as interest
o Which shall be subject to the usury laws.
Art. 1606. The right referred to in Article 1601, in the absence of

an express agreement,
Shall last four years
From the date of the contract.

o Should there be an agreement,
o The period cannot exceed ten years.
ralc
However, the vendor may still exercise the right to

repurchase
o Within thirty days
72

Atty Uribe - Civil Law Review 2 - Codal Provisions

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Atty Uribe - Civil Law Review 2 - Codal Provisions

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Based on the outline of ATTY.

Based on the outline of ATTY. CRISOSTOMO URIBE

5. AS TO THE PRESENCE OF AN ACCESSORY UNDERTAKING IN CASE

1. DEFINITION Art. 1156

WITH A PENAL CLAUSE (distinguish from liquidated damages)

2. KINDS OF OBLIGATIONS AS TO BASIS & ENFORCEABILITY

(E.) BREACH OF OBLIGATIONS (ART 1170)

1. FRAUD (ARTS. 1171, 1338, 1344)

(B.) SOURCES OF OBLIGATIONS

LAW Art. 1158

(C.) COMPLIANCE WITH OBLIGATIONS

II. Excuse for non-performance

HUMAN RELATIONS - Art. 19.

1. EXPRESSLY GRANTED BY LAW ARTS. 1786, 1788, 1526

NATURE AND EFFECT OF OBLIGATIONS - Art. 1163.

RIGHT OF ACCESSION - Art. 440, Art. 442.

1. PRINCIPAL REMEDIES ARTS. 1191, 1170

(D.) KINDS OF CIVIL OBLIGATIONS

(G.) MODES OF EXTINGUISHMENT OF OBLIGATIONS Art. 1231

3. AS TO RIGHTS & OBLIGATIONS OF MULTIPLE PARTIES

DATION IN PAYMENT ART. 1245

LOSS OF THE THING DUE OR IMPOSSIBILITY OF PERFORMANCE

Based on the outline of ATTY. CRISOSTOMO URIBE

CONDONATION OR REMISSION OF THE DEBT ARTS. 1270-74, 748,

CONFUSION OR MERGER OF RIGHTS ARTS. 1275-77, 1215, 1217

COMPENSATION ARTS. 1278-1290, 1243, 1215

NOVATION ARTS. 1291-1304, 1215

OTHER MODES - ACT OF CREDITOR

Based on the outline of ATTY. CRISOSTOMO URIBE

Some natural obligations are set forth in the following

Upon a civil obligation

Has lapsed by extinctive prescription,

The obligor who voluntarily performs the contract

Without the knowledge of the debtor or

Against the will of the debtor,

The obligor cannot recover what he has paid.

Between 18 and 21 years of age

Who has entered into a contract

Without the consent of the parent or guardian,

Voluntarily returns the whole thing or price received,

notwithstanding the fact the he has not

There is no right to demand the thing or price thus returned.

Art. 1427. When a minor

Between eighteen and twenty-one years of age,

Who has entered into a contract

Without the consent of the parent or guardian,

There shall be no right to recover the same

From the obligee

The defendant voluntarily performs the obligation,

Voluntarily pays a debt of the decedent

Exceeding the value of the property

The payment is valid and

Cannot be rescinded by the payer.

But one of the intestate heirs, after the settlement of the

The payment is effective and irrevocable.

By the mere lapse of time

Shall prescribe eight years

From the time the possession thereof is lost,

Art. 1132. The ownership of movables

Based on the outline of ATTY. CRISOSTOMO URIBE

Art. 559. The possession of movable property

Art. 1505. Subject to the provisions of this

Art. 1133. Movables possessed through a crime can