ObliCon-Reviewer-Tolentino.pdf

Obligations and Contracts: Sources 2006 Lectures of Atty. Lydia Galas (Hann Sevilla! 200" Case #igests (fro$ %r&in 'icente! oo) of *olentino! +A, -otes Co$iled by: Hanniya/ Sevilla! C/rist ,ay Andolana! erlyn Ong for 1t/ year atc/ 200

OBLIGATIONS & CONTRACTS Chap Ch apte ter r 1Art. Art. 1156 1156.. •

GENERAL GENE RAL PROVIS PRO VISIONS IONS

An obli obliga gati tion on is a jur jurid idic ical al nece necess ssit ity y to to giv give, e, to do or not not to to do. do.

An inco$lete definition because it only refers to t/e debt side3 it only refers to t/e conduct to be observed by t/e obligor3 t/ere is no debt &it/out credit. o

Complete definition: A definition: A 4uridical relation bet&een t&o ersons! )no&n as t/e creditor and debtor! &/ereby t/e for$er can de$and fro$ t/e latter t/e observance of a deter$inate conduct and in case of breac/! $ay obtain satisfaction fro$ t/e assets of t/e latter.

-

5/y is it a 4uridical necessity ecause t/e ter$! 74uridical necessity8 connotes t/at in case of nonco$liance! t/ere &ill be legal sanction. -ote: 9t covers only civil obligations! not natural obligations.

•

Characteristics Characteri stics of an a n Obligation: Obligati on:

•

1. 2. 3.

•

It repre represen sents ts an an exclus exclusive ively ly privat privatee intere interest st It creat creates es ties ties that that are are by natu nature re tran transit sitory ory It involves involves the power to make the juridic juridical al tie effective effective in case case of non-fulfillm non-fulfillment ent through through an economic euival euivalent ent obtained from the debtor!s patrimony.

Types of obligations o bligations::

a.

Civil obligations  obligations  t/ose &/ic/ derive t/eir binding force fro$ ositive la&! and can be enforced by court action or t/e coercive o&er of ublic aut/ority.

b.

Natural obligations  obligations  refer to t/ose &/ic/ derive t/eir binding force fro$ e;uity and natural 4ustice! and its fulfill$e fulfill$ent nt cannot be co$elled co$elled by court action action but deends e
c.

oral obligations  obligations  are t/ose &/ic/ arise fro$ $oral la& develoed by t/e c/urc/ and not enforceable in court. 9t deals &it/ t/e siritual obligation of a erson in relation to /is God and c/urc/

!"!!NT# of an $%"&'AT&$N C$(!: A ) $ !

".

Active subject (creditor! obligee Has t/e o&er o&er to de$and de$and t/e rest restati ation3 on3 it is /e &/o in /is favor favor t/e obligati obligation on is constitu constituted ted!! establis/ed or created3 it is /e &/o /as t/e rig/t to de$and. •

#.

Passive Pass ive subject subj ect (debtor! obligor One &/o is bound to erfor$ t/e restation3 assive because &it/out t/e de$and! t/ere &ill be no action! /e /as to &ait for t/e de$and fro$ t/e creditor. Has t/e 4uridical necessity of ad4usting /is conduct to t/e de$and of t/e creditor ursuant to t/e obligatory tie. •

•

•

N%: N%: 9t is not necessary necessary t/at t/e active=ass active=assive ive sub4ect (also )no&n as t/e ersonal ersonal ele$ents of t/e obligation be deter$inate at t/e ti$e of t/e constitution! but t/ey $ust at least be deter$inable. 5/en t/e sub4ect cannot be deter$ined! t/e obligatory tie can /ave no effect.

C.

The obje object ct or the the prestat prestation ion */e ob4ect is not a t/ing but a articular conduct of t/e debtor. 9t is t/e sub4ect $atter of t/e obligation &/ic/ /as an econo$ic value or suscetible to ecuniary substitution in case of nonco$liance. D. Efficient Efficient cause cause or juridical juridical tie tie between the the two subjects subjects */e vinculu$ by &/ic/ t/e debtor is bound to in favor of t/e creditor to erfor$ t/e restation. 9t is deter$ined by )no&ing t/e sources of t/e obligation (Art. >>?" -ote: Additional ele$ents fro$ +A, -otes: •

•

$. Causa debendi/ obligationes %&astan'.-obligationes %&astan'.-- (his is what makes makes the obligation demandable. demandable. (his is the proximate proximate why of an obligation.

1


).

Form.- Form.-- (his is controversial. controversial. (his is acceptable acceptable only if form means some manifestation manifestation of the intent of the parties. parties.

KINDS OF PRESTATION:

a.

7to give give8 consis consists ts of t/e delive delivery ry of a $ovabl $ovable e or i$$ova i$$ovable ble t/ing &/ic/ &/ic/ is eit/er eit/er deter$ deter$ina inate te (seci (secific fic or indeter$inate (generic. */is is in order to create a real rig/t! or for t/e use of t/e creditor! or for its si$le ossession! or in order to return to its o&ner.

b.

“to do8 do8 involves all )inds of &or) or services &/et/er /ysical or $ental! but in $ost cases t/e essence of t/e act $an not be suc/! but $erely t/e necessity of concluding a 4uridical oeration! suc/ as! &/en a erson ro$ises to give a bond.

c.

7not to do8 do8 is a negative obligation &/ic/ consists of abstaining fro$ so$e act! it includes 7not to give8.

*!+&#&T!# $- )*!#TAT&$N >. 2. @.

it $ust $ust be /ysi /ysical cally ly and and 4uridic 4uridicall ally y ossib ossible3 le3 it $ust be be deter$inate deter$inate or at least least deter$ina deter$inable ble according according to reest reestablis ablis/ed /ed ele$ents ele$ents or criteria criteria33 it $ust $ust /ave a ossible ossible e;uivale e;uivalent nt in $oney $oney or a ecuniary ecuniary value. value. (&/y: (&/y: so in case of of breac/! breac/! one can de$and de$and da$ages

Article 115  115  Sources of obligation a. b. c. d. e.

La&3 Contracts3 Buas Buasi iCo Cont ntra ract cts3 s3 Cri$es3 Buas Buasi ide dellicts icts33 •

*/e enu$eration of t/e sources of obligation is e
Note: >. nilateral ral r ro$ise is ad$itted by $odern do doctrine! &/ic/ recogniDes t/at unilateral engage$ents $ay give rise to obligations &it/out t/e need of accetance. 2. Contrary to Eineda! *olentino suorts t/at it cannot be said &i &it/ certainty t/at t/e enu$erat ration in t/is article is e
(he cle clear ar impl implica icati tion on of *agrad *agradaa +rden +rden vs. vs. ,aco ,acoco co is is that that these these five five %$' are are the the only only sour sources ces of oblig obligati ations ons..

Articles 115 ! 11"# specify the general principles regarding the sources of obligation enumerated in "rt. 11$.

Art. 115/. 115/. Obligations derived fro$ la& are not resu$ed. Only t/ose e<ressly deter$ined in t/is Code or in secial la&s are de$andable! and s/all be regulated by t/e recets of t/e la& &/ic/ establis/es t/e$3 and as to &/at /as not been foreseen! by t/e rovisions of t/is oo). -ote: 5/en &e say t/at la& is an indeendent source of obligation! it does not $ean t/at la& and /u$an acts e
2

Obligations and Contracts: Sources 2006 Lectures of Atty. Lydia Galas (Hann Sevilla! 200" Case #igests (fro$ %r&in 'icente! oo) of *olentino! +A, -otes Co$iled by: Hanniya/ Sevilla! C/rist ,ay Andolana! erlyn Ong for 1t/ year atc/ 200 •

•

•

no&n as t/e Principle of autonomy of will . */e arties can stiulate anyt/ing (t/ey /ave t/e freedo$! rovided t/at t/e ter$s of t/e contract are not contrary to la&! ublic olicy or ublic order. Contracts are erfected by $ere consent! and fro$ t/at $o$ent t/e arties are bound not only to t/e fulfill$ent of &/at /as been e<ressly stiulated but also to all t/e conse;uences &/ic/ according to t/eir nature! $ay be in )eeing &it/ good fait/! usage and la&. Since a contract /as t/e force of la& bet&een arties! eac/ is bound to fulfill &/at /as been e<ressly stiulated t/erein. does not aly to attorneyFs contracts: courts can decide &/et/er or not attorneyFs fees are reasonable. Art. 116. Obligations derived fro$ ;uasicontracts s/all be sub4ect to t/e rovisions of C/ater >! *itle '99!of t/is boo).

•

A ;uasicontract is a 4uridical relation &/ic/ arises fro$ certain la&ful! voluntary and unilateral act=s e
a. b. c.

C2aracteristics of a +uasi3Contract */e acts acts e
•

T4$ )*&NC&)"! T)!#: T)!# :

•

1.

-%GO*9O+, G%S*9O (officious $anager 4uridical relation &/ic/ ta)es lace &/en so$ebody ta)es c/arge of t/e agency or $anage$ent of t/e business or roerty of anot/er &it/out any o&er for$ t/e latter. */e o&ner s/all rei$burse t/e gestor for t/e necessary and useful e<enses incurred by t/e latter! and for t/e da$ages suffered by /i$ in t/e erfor$ance of /is functions.

2.

SOL*9O 9-#%9*9  a 4uridical 4uridical relation relation &/ic/ ta)es lace &/en so$ebody received received so$et/ing so$et/ing fro$ anot/er &it/out any rig/t to de$and for it! and t/e t/ing &as unduly delivered through mistake (co$ared mistake (co$ared to Art. 22 or un4ust enric/$ent &/erein t/ere &as no $ista)e. Obligation to return t/e t/ing arises on t/e art of t/e reciient. Art. Art. 1161. Civil obligations arising fro$ cri$inal offenses s/all be governed by t/e enal la&s! sub4ect to t/e rovisions of Article 2>""! and of t/e ertinent rovisions of C/ater 2! Ereli$inary *itle on Hu$an +elations! and of *itle '999 of t/is oo)! regulating da$ages. •

asis is Article >00 of +EC! t/at every erson cri$inally liable is also civilly liable Art. 116. Obligations derived fro$ ;uasidelicts s/all be governed by t/e rovisions of C/ater 2! *itle '99 of t/is oo)! and by secial la&s. C2apter 3 NAT*! AN( !--!CT $- $%"&'AT&$N# Art. 1167. %very erson obliged to give so$et/ing is also obliged to ta)e care of it &it/ t/e roer diligence of a good fat/er of a fa$ily! unless t/e la& or t/e stiulation of t/e arties re;uires anot/er standard of care.

•

+efers to t/e obligation to give.

•

*/e obligation to give $ay refer to a deter$inate ob4ect = t/ing or to an indeter$inate or generic t/ing.

•

•

•

A generi generic c t2ing8 t2ing8 indeterm indetermin inate ate t2ing t2ing is one t/at is indica indicated ted by its )inds! )inds! &it/ou &it/outt being being design designate ated d and distinguis/ed fro$ t/e ot/ers of t/e sa$e )ind. 9n an obligation to deliver a generic or indeter$inate t/ing! t/e t/ing is deter$inable and beco$es deter$inate fro$ t/e ti$e t/e obligation /as been fulfilled or erfor$ed. A generic t/ing is so$et/ing &/ic/ is not articulariDed or secified but /as reference to a class or genus. A limited generic obligation is obligation is one &/en a t/e generic ob4ects are classified to a articular class! i.e. one of $y cars A (eterminate t2ing is so$et/ing &/ic/ is suscetible of articular designation or secification. 9t is one &/ic/ is individualiDed and can be identified or distinguis/ed for$ t/e ot/ers of its )ind.

3


+ead in relation relation to Art. >>"@ >>"@  The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 111 and !!"1, paragraph !, shall apply.

•

%ffect of breac/: Liability for da$ages! unless t/e loss or da$age of t/e t/ing is due to a fortuitous event.

•

Art. 1169.*/e 1169.*/e creditor creditor /as a rig/t to t/e fruits fruits of t/e t/ing fro$ t/e ti$e t/e obligation obligation to deliver it arises. Ho&ever! /e s/all ac;uire no real rig/t over it until t/e sa$e /as been delivered to /i$. •

#elivery is essential to ac;uire real rig/t>.

•

4!N ($!# $%"&'AT&$N T$ (!"&;!* A*&#!< a. b.

Eerfec Eerfectio tion n of contra contract ct if no ter$ ter$=c =cond onditi ition3 on3 ro$ t/e t/e $o$ent $o$ent t/e t/e ter$=co ter$=conditi ndition on arrives arrives ifif t/ere t/ere is a ter$

*/e creditor /as a rig/t to t/e fruits of t/e t/ing fro$ t/e ti$e to deliver it arises. */e fruits referred involve only deter$inate t/ings.

•

=inds of fruits: (cf: Eroerty

•

> -atur atural al 2 Civil @ 9ndu 9ndust stri rial al */e $o$ent &/en t/e obligation to deliver arises varies in different tyes of obligations:

•

a.

9n obligations arising for$ law, quasi-delicts, quasi-contracts and crimes! crimes ! t/e secific rovisions of la& alicable to t/e obligation deter$ine &/en t/e delivery s/ould be $ade.

b. Susensive conditions att attac/ed to an obligation to deliver aris rises only for$ t/e $o$ent t/e condition /aens. c. Sus Susen ensi sive ve eri eriod ods s agr agree eed d uo uon n for for t/e t/e er erfo for$ r$an ance ce of t/e t/e obl oblig igat atio ion n giv gives es rise rise to its its del deliv iver ery y onl only y uon t/e e<iration of t/e ter$. d.

Eure obligations are i$$ediately de$andable

*/e rig/t to t/e fruits of t/e t/ing s/all only be ersonal! and only uon t/e delivery of t/e t/ing! its fruits! accessory and accession s/all t/e creditor ac;uire a real rig/t over it.

•

Classes of (elivery (eliver y or Tradition: Traditi on:

•

a.

*!A" or ACTA" ACTA" tradition tradition */is conte$late conte$lates s t/e actual delivery of t/e t/ing fro$ t/e /and of t/e grantor to t/e /and of t/e grantee ! if it is a ersonal roerty. 9f it is a real roerty! it is $anifested by certain ossessory acts e
b.

C$N#T*CT&;! tradition3 &/en tradition3 &/en t/e delivery of t/e t/ing is not actual but reresentative or sy$bolical in essence. ut t/ere $ust be intention to deliver t/e o&ners/i. •

1

=inds of C$N#T*CT&;! C$N#T*C T&;! T*A(&T&$N: T*A(&T &$N:

REAL REAL rightright- is the power belonging belonging to a person person over a specific specific thing, without without a passive passive subject subject individu individually ally determined, against whom such right may be personally exercised. t gives to a person a direct and immediate juridical power over a thing, which is susceptible of being exercised against the whole world. !here is a need for tradition or delivery since from the time the obligation to deliver a determinate thing arises, the creditor has only a personal right. "e can only demand that the debtor deliver such thing and its fruit. !he delivery or tradition of a thing constitutes a necessary and indispensable indispensable re#uisite for the purpose of ac#uiring ownership. !he ownership of things is transferred not by mere agreements but by delivery.

/


i.

Tradicion ymbolica! delivery of certain sy$bols or t/ings reresenting t/e t/ing to be delivered suc/ as )eys! titles.

ii.

Tradicion "nstrumental  consists in t/e delivery of t/e instru$ent of conveyance to t/e grantee by t/e grantor.

iii.

Tradicion #onga $anu  consists in t/e ointing to a $ovable roerty &it/in sig/t by t/e grantor to t/e grantee but &/ic/ at t/e ti$e of t/e transaction! t/e t/ing could not be laced yet in t/e ossession of t/e grantee.

iv.

Tradicion %revi $anu  consists in t/e granteeFs continuation of /is ossession over t/e t/ing delivered but no& under a title of o&ners/i as in case of a lessee &/o /ad urc/ased t/e roerty leased to /i$. (Iovellanos

v.

Tradicion Constitutum Possessorium  consists in t/e o&nerFs continuous ossession of t/e roerty /e /ad sold to anot/er erson and /is resent ossession t/ereof is no longer t/at of t/e o&ner but of a lessee.

vi.

Tradicion by operation of law  consists in t/e delivery of t/e t/ing by oeration of la& suc/ as intestate succession

vii.

&uasi!Tradicion consists in t/e delivery of incororeal roerty.

Art. 1156. 5/en &/at is to be delivered is a deter$inate t/ing! t/e creditor! in addition to t/e rig/t granted to /i$ by article >>"0! $ay co$el t/e debtor to $a)e t/e delivery. 9f t/e t/ing is indeter$inate or generic! /e $ay as) t/at t/e obligation be co$lied &it/ at t/e e<ense of t/e debtor. 9f t/e obligor delays! or /as ro$ised to deliver t/e sa$e t/ing to 2 or $ore ersons &/o do not /ave t/e sa$e interest! /e s/all be resonsible for any fortuitous event until /e /as effected t/e delivery. +L%S: OL9GA*9O- *O #%L9'%+ >. #eter$inate t/ing 2. 9ndeter$inate or generic t/ing

+%,%#J Creditor $ay co$el debtor to deliver Creditor $ay as) for co$liance at t/e e<ense of t/e debtor

+%,%#9%S O C+%#9*O+

a. b. c. d.

#e$and for secific erfor$ance  */is action resuoses t/at it is based on a contractual relations/i bet&een t/e contending arties. Secific erfor$ance is available even if t/e t/ing to be delivered is indeter$inate. +escission of t/e obligation &/ic/ is under Art. >@K0. +esolution of t/e contract under Art. >>> if it is a recirocal obligation. #a$ages e
General +ule: e. 2.

Obligation to deliver a secific t/ing is e
9f obligor delays or in default3 Obligor is guilty of bad fait/3

Art. 1166. Obligation to give a deter$inate t/ing includes t/at of delivering all its accessions and accessories! even t/oug/ t/ey $ay not /ave been $entioned.

Art. 116. 9f a erson obliged to do so$et/ing fails to do it! t/e s/all be e
$


*/is sa$e rule s/all be observed if /e does it in contravention of t/e tenor of t/e obligation. urt/er$ore! it $ay be decreed t/at &/at /as been oorly done be undone. +e$edies: >. 2. •

/ave obligation e
*/ing $ay be ordered undone if done oorly or obligation is a negative one T/is article resuoses t/at t/e t/ing can be done by t/e creditor /i$self or a t/ird erson. Ho&ever! if t/e restation can be done only by t/e debtor! t/e only recourse available to t/e creditor is a clai$ for da$ages since it is against t/e constitution to force t/e debtor to erfor$ t/e obligation. Coverage: t/e obligor failed to fulfill a ositive ersonal obligation! t/at is *O #O so$et/ing3 /e fulfilled t/e obligation but in contravention of t/e agree$ent3 */ere &as fulfill$ent but t/e sa$e &as oor or inade;uate. •

a. b. c. •

-ote: if any of t/e above /aens! t/e creditor is entitled to /ave t/e t/ing done in a roer $anner! by /i$self or by a t/ird erson! at t/e e<ense of t/e debtor. The court has no discretion to merely award damages to the creditor when the act can be done in spite of the refusal or failure of the debtor to do so. Art. 116/. 42en t2e obligation consists in not doing and t2e obligor does >2at 2as been forbidden 2im, it s2all also be undone at 2is e?pense. Art. 1160. T2ose obliged to deliver or to do somet2ing incur in delay from t2e time t2e obligee judicially or e?trajudicially demands from t2em t2e fulfillment of t2eir obligation

#e$and is generally necessary! even if a eriod /as been fi
a. b. c. d. e.

&/en t/ere is an e<ress stiulation bet&een t/e arties to t/at effect3 &/ere t/e la& so rovides3 &/en ti$e or eriod is t/e controlling $otive or t/e rincial induce$ent for t/e creation of t/e obligation3 &/en de$and &ould useless3 &/en t/e obligor ad$its /e is in delay

9n recirocal obligations! neit/er arty incurs in delay if t/e ot/er does not co$ly or is not ready to co$ly in a roer $anner &it/ &/at is incu$bent uon /i$. ro$ t/e $o$ent one of t/e arties fulfills /is obligation! delay by t/e ot/er begins. • •

•

•

•

-ote: */e de$and $ust refer to t/e restation due and not to anot/er! /o&ever! t/ere &ill still be delay even if t/e de$and &as &rong if: >. even if t/e de$and /ad been absolutely correct! t/e debtor &ould not /ave erfor$ed t/e obligation! or 2. in t/e lig/t of good fait/ /e s/ould /ave offered t/e restation in t/e for$ and $anner t/at it is due. 5/en t/e ti$e for t/e fulfill$ent of t/e obligation is fi
&. $*A #$";!N(&3 *!+&#&T!# -$* $*A #$";!N(& T$ !&#T: >. t/e obligation ertains to t/e debtor or obligor3 2. t/e obligation is deter$inate or li;uidated! due and de$andable3

)


@. 1.

>. 2.

t/e obligation /as not been erfor$ed on its $aturity date3 t/ere is a de$and $ade by t/e creditor on t/e debtor for t/e fulfill$ent of t/e obligation t/at is due.

($!# N$T A))" &N T! --. $%"&'AT&$N#: natural obligations3 negative obligations C$N#!+!NC!#8!--!CT# $- $*A #$";!N(&: >. debtor $ay be liable for da$ages or interests3 2. debtor $ay bear t/e ris) or loss of t/e t/ings even if t/e default is due to fortuitous event! sub4ect to e;uitable $itigation if t/e loss &ould /ave still occurred even if t/ere &as no default on t/e art of t/e debtor.

&&. $*A ACC&)&!N(&3 delay in t/e erfor$ance of t/e obligation based on t/e o$ission by t/e creditor of t/e necessary cooeration! esecially in accetance on /is art. -

it is necessary t/at it be la&ful for t/e debtor to erfor$! and t/at /e can erfor$. *!+&#&T!# -$* $*A ACC&)&!N(& T$ !&#T >. an offer of erfor$ance by t/e debtor &/o /as t/e re;uired caacity3 2. t/e offer $ust be to co$ly &it/ t/e obligation as it s/ould be erfor$ed3 @. t/e creditor refuses t/e erfor$ance &it/out 4ust cause C$N#!+!NC!# $- $*A ACC&)&!N(& 1. t/e resonsibility of t/e debtor for t/e t/ing is reduced and li$ited to fraud and gross negligence3 ?. t/e debtor is e
&&&. C$)!N#AT&$ $*A!  alies only in recirocal obligations. 5/ere t/e arties are bot/ guilty of $ora or $utual default! t/e default of one co$ensates t/e default of t/e ot/er. #elay begins &/en one arty fulfills /is obligation. o 5/en one arty does not fulfill /is obligation! /e releases t/e ot/er fro$ /is obligations! &/o t/erefore does o not beco$e delin;uent in t/e fulfill$ent. -eit/er arty incurs delay if t/e ot/er does not co$ly or is not ready to co$ly in a roer $anner &it/ o &/at is incu$bent uon /i$. C!##AT&$N $- T! !--!CT# $- (!"A: ($ay t/e rig/t to lace t/e debtor in delay be renounced or &aived Jes. Ho&:  1. +enunciation by t/e creditor! &/ic/ $ay be i$lied or e<ressed. */ere is i$lied renunciation &/en t/e creditor! even after t/e delay! grants an e
Erescrition

Art. 11. T2ose >2o in t2e performance of t2eir obligations are guilty of fraud, negligence, or delay and t2ose >2o in any manner contravene t2e tenor t2ereof, are liable for damages. G+O-#S O+ >. 2. @. 1.

L9A9L9*J: raud3 negligence3 default3 and violation of ter$s of obligations.

#a$ages:

,%-*AL

9nde$nity for da$ages consists of: a. b.

t/at agreed uon3 in absence of agree$ent! legal rate of interest.

Art. 111. *esponsibility arising from fraud is demandable in all obligations. Any >aiver of an action for future fraud is void.




Art. 11. *esponsibility arising from negligence in t2e performance of every Bind of obligation is also demandable, but suc2 liability may be regulated by t2e Courts, according to t2e circumstances. 9-#S: >. 2. @.

Cula Contractual  breac/ of contract Cula A;uiliana  civil negligence! tort or ;uasidelict3 Cula Cri$inal  cri$inal negligence t/at &/ic/ results in co$$ission of cri$e or a delict.

Culpa Contractual >. negligence is incidental3 oblig. %
Culpa Auiliana - is direct! substantive indeendent3 -o ree
@. reonderance of evidence

 sa$e 

1. $asterservant rule

#efense of a good fat/er of a fa$ily

?. t/ere is a contract

Erove t/at defendant is negligent

and

Culpa Criminal - is direct! substantive -o ree
Case: )rudential %anB vs. CA: resonsibility fro$ negligence in t/e erfor$ance of every )ind of obligation is de$andable. 5/ile in t/e case at bar t/ere &as no bad fait/! resondent still suffered an2ic2 is reuired by t2e nature of t2e obligation and corresponds >it2 t2e circumstances of t2e persons, of t2e time and of t2e place. 42en negligence s2o>s bad fait2, t2e provisions of articles 111 and 1, paragrap2 , s2all apply. &f t2e la> or contract does not state t2e diligence >2ic2 is to be observed in t2e performance, t2at >2ic2 is e?pected of a good fat2er of a family s2all be reuired. #9L9G%-C% +%B9+%#: >. 2. @.

t/at agreed uon by arties3 in t/e absence of >! t/at re;uired by la&3 in absence of 2! t/at e<ected of a good fat/er of a fa$ily.

(cases SA%#A airlines! Erudential an) cases Art. 119.!?cept in cases e?pressly specified by t2e la>, or >2en it is ot2er>ise declared by stipulation, or >2en t2e nature of t2e obligation reuires t2e assumption of risB, no person s2all be responsible for t2ose events >2ic2 could not be foreseen, or >2ic2, t2oug2 foreseen, >ere inevitable. o

General +ule:

ortuitous events absolve Obligor fro$ liability.

o

!"!!NT# $- -$*T&T$# !;!NT:

>. The cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations must be independent of the human will , or of the debtor’s will. 9n t/e case of EAL! t/e /i4ac)ing &as indeendent of t/e &ill of EAL. 2. It must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen, it was inevitable to avoid Alt/oug/ under nor$al circu$stances! it &as not i$ossible for EAL to foresee t/e /i4ac)ing of t/e airlane! t/e $ilitary ta)e over t/at too) lace t/at afternoon rendered t/e foreseeability of t/e event as i$ossible since it &as t/e ar$y already conducting t/e c/ec)ing and fris)ing.

0


-ote: 9n t/e case of EH9LCO,SA* v Globe: t/e SC /eld t/at alt/oug/ t/e arties could /ave foreseen t/e closure of t/e $ilitary bases! it &as i$ossible to avoid. @. The occurrence must be of such as to render it impossible for the debtor to fulfill his obligation in a normal manner. 1. The obligor must be free from any participation in, or aggravation of, the inury resulting to the creditor. -ote: o

o

o

An obligation consisting of t/e delivery of a secified t/ing s/all be e. 5/en t/e la& so rovides3 2. 5/en it is e<ressly stiulated by t/e arties3 @. 5/en t/e nature of t/e obligation re;uires t/e assu$tion of ris)3 1. 5/en t/e obligor is in delay already3 ?. 5/en t/e obligor /as ro$ised t/e sa$e t/ing to t&o or $ore ersons &/o do not /ave t/e sa$e interest (Art. >>6?3 6. 5/en t/e ossessor is in bad fait/ and t/e t/ing is lost or deteriorated due to a fortuitous event3 ". 5/en t/e obligor contributed to t/e loss of t/e t/ing during t/e fortuitous event3 K. 5/en t/e obligor is guilty of fraud! negligence or delay or if /e contravened t/e tenor of t/e obligation. A##)T&$N $- *&#=#: (doctrine of created ris)

o

*/e es. DnE Art. 116. T2e receipt of t2e principal by t2e creditor >it2out reservation >it2 respect to t2e interest, s2all give rise to t2e presumption t2at said interest 2as been paid. T2e receipt of a later installment of a debt >it2out reservation as to prior installments s2all liBe>ise raise t2e presumption t2at suc2 installments 2ave been paid. Art. 11. T2e creditors, after 2aving pursued t2e property in possession of t2e debtor to satisfy t2eir claims, may e?ercise all t2e rig2ts and bring all t2e actions of t2e latter for t2e same purpose, save t2ose >2ic2 are in2erent in 2is personF t2ey may also impugn t2e acts >2ic2 t2e debtor may 2ave done to defraud t2em. D1111E +ig/ts of Creditors: >. 2. @. 1.

e
Art. 11/. #ubject to t2e la>s, all rig2ts acuired in virtue of an obligation are transmissible, if t2ere 2as been no stipulation to t2e contrary. D111E Gen. +ule:

All rig/ts ac;uired in virtue of an obligation are trans$issible.




%. if la& rovides ot/er&ise3 2. if contract rovides ot/er&ise3 @. if obligation is urely ersonal Note: */e e
CHAPTER 3 DIERENT !INDS O OBLIGATIONS SECTION 1" - P#re an d C$nditi$na% O%i'ati$n( )*! AN( C$N(&T&$NA" $%"&'AT&$N#: o

o

Condition: An event &/ic/ is bot/ future and uncertain uon &/ic/ t/e e
EAS* %'%-*S can be conditions too. */e futurity re;uired in ast events is t/e future )no&ledge or roof of a ast event un)no&n to t/e arties! not t/e event itself. %!000 if t/e nu$ber of eole &/o died in t/e =>> attac) e2ose performance does not depend upon a future or uncertain event, or upon a past event unBno>n to t2e parties, is demandable at once. !very obligation >2ic2 contains a resolutory condition s2all also be demandable, >it2out prejudice to t2e effects of t2e 2appening of t2e event. D1117E

o

=inds of $bligations:

a. )*!  5/en t/e obligation contains no ter$ or condition &/atever uon &/ic/ deends t/e fulfill$ent of t/e obligation contracted by t/e debtor. it is i$$ediately de$andable and t/ere is not/ing to e
b. C$N(&T&$NA"  &it/ a condition CO-#9*9O- is an uncertain event &=c &ields an influence on a legal relation. *%+,  is t/at &=c necessarily $ust co$e &/et/er t/e arties )no& &/en it &ill /aen or not. I!"T#!$%" &'%! #! ()*I+#TI(! I" %#!#)*% #T (!$% a. b.

&/en it is ure3 &/en it /as resolutory condition.

$*#""I/I$#TI(! (/ $(!ITI(!" A.

SSE%-S9'%

 /aening of event=condition gives rise to obligation.

+%SOL*O+J  /aening of event=condition e
EO*%S*A*9'%  deends uon t/e &ill of t/e debtor. CASAL  deends on c/ance=&ill of a @ rd erson. ,9%#  deends artly on &ill of @ rd erson and artly on c/ance.

C.

#9'9S9L%  caable of artial fulfill$ent. 9-#9'9S9L%  not caable of artial fulfill$ent.

1


#.

EOS9*9'%  an act is to be erfor$ed -%GA*9'%  so$et/ing &ill be o$itted.

%.

CO-I-C*9'%  if all t/e conditions $ust be erfor$ed. AL*%+-A*9'%  if only a fe& of t/e conditions /ave to be erfor$ed.

B: 5/at does auto$atically=i$$ediately de$andable $ean A: 9$$ediate de$andability is not i$aired &/en t/e erfor$ance of t/e obligation is allotted a reasonable ti$e by t/e court. 9t does not i$ly i$$ediate instantaneous co$liance. Art. >>K0. 5/en t/e debtor binds /i$self to ay &/en /is $eans er$it /i$ to do so! t/e obligation s/all be dee$ed to be one &it/ a eriod! sub4ect to t/e rovisions of article >>". (n  

ay$ent does not deend on debtorFs &ill for /e /as ro$ised to ay. *9,% &/en ay$ent is to be $ade deends uon t/e #%*O+.

HO5 LO-G

CO+*S &ill fi< t/e duration of t/e eriod.

Article 11/3 read in relation &it/ Art. >>". in cases falling under t/is article! t/e creditor s/ould file an action to fi< a eriod for t/e ay$ent of t/e obligation. An action to enforce t/e obligation is re$ature if t/e court /as not yet fiell as t2e e?tinguis2ment or loss of t2ose already acuired, s2all depend upon t2e 2appening of t2e event >2ic2 constitutes t2e condition. D1119E a. b.

Susensive  conditions recedent=antecedent. */e /aening of &=c &ill give rise to t/e ac;uisition of a rig/t  future N uncertain event. +esolutory  conditions subse;uent  rig/ts are lost once t/e condition is fulfilled.

Case: Eadilla vs. Earedes: t/ere &as no obligation to erfor$ since t/e susensive condition did not /aen. Art. 11/. 42en t2e fulfillment of t2e condition depends upon t2e sole >ill of t2e debtor, t2e conditional obligation s2all be void. &f it depends upon c2ance or upon t2e >ill of a t2ird person, t2e obligation s2all taBe effect in conformity >it2 t2e provisions of t2is Code. D1115E

@ 9-#S O CO-#9*9O-S a. b. c.

Eotestative (facultative Casual ,i
EO*%S*A*9'% O- *H% EA+* O *H% #%*O+ >. 9 SSE%-S9'%  bot/ condition and obligation are void. 2. 9 +%SOL*O+J  valid. Pure potestative conditions renders the whole obligation void. o

o

*/is article alies only to otestative SSE%-S9'% CO-#9*9O-S. Eotestative and resolutory valid since t/ere is i$$ediate erfor$ance on t/e art of t/e obligor. 9f it deends solely on t/e &ill of t/e creditor! it is valid. +eason: to allo& conditions &/ose fulfill$ent deends e
11


Art. 11/7. &mpossible conditions, t2ose contrary to good customs or public policy and t2ose pro2ibited by la> s2all annul t2e obligation >2ic2 depends upon t2em. &f t2e obligation is divisible, t2at part t2ereof >2ic2 is not affected by t2e impossible or unla>ful condition s2all be valid. T2e condition not to do an impossible t2ing s2all be considered as not 2aving been agreed upon. D1116aE %%C*S: >. 2. @.

9f condition is to do an i$ossible or illegal t/ing  CO-#9*9O- N OL9GA*9O- A+% 'O9#. 9f condition is negative (not to do #9S+%GA+# CO-#9*9O- * OL9GA*9O- +%,A9-S. 9f condition is negative (not to do an illegal t/ing O*H CO-#9*9O- N OL9GA*9O- A+% 'AL9#.

Note: */is article alies only to cases &/ere t/e conditions &as already i$ossible fro$ t/e ti$e of t/e constitution of t/e obligation! and also to EOS9*9'% SSE%-S9'% CO-#9*9O-S.

o

*/e condition $ust already be e
o

o

-%GA*9'% SSE%-S9'% CO-#9*9O-S /ave t/e effect of converting t/e obligation into a ure and si$le one. 9t is si$ly considered not &ritten! t/us as if no condition e
Art. 11/9. T2e condition t2at some event 2appen at a determinate time s2all e?tinguis2 t2e obligation as soon as t2e time e?pires or if it 2as become indubitable t2at t2e event >ill not taBe place. D111E  ositive condition

%ffect if Eeriod of ulfill$ent is not fiill not 2appen at a determinate time s2all render t2e obligation effective from t2e moment t2e time indicated 2as elapsed, or if it 2as become evident t2at t2e event cannot occur. &f no time 2as been fi?ed, t2e condition s2all be deemed fulfilled at suc2 time as may 2ave probably been contemplated, bearing in mind t2e nature of t2e obligation. @ Negative Condition

Art. 11/6. T2e condition s2all be deemed fulfilled >2en t2e obligor voluntarily prevents its fulfillment. D1110E +e;uisites: >. 2.

'oluntarily $ade  t/e intent to revent is resent. Actual revention of co$liance.

Note: T2is refers to Constructive -ulfillment8 &mplied fulfillment o

o

o

Alies to a condition &/ic/! alt/oug/ not e
12


Art. 11/. T2e effects of a conditional obligation to give, once t2e condition 2as been fulfilled, s2all retroact to t2e day of t2e constitution of t2e obligation. Nevert2eless, >2en t2e obligation imposes reciprocal prestations upon t2e parties, t2e fruits and interests during t2e pendency of t2e condition s2all be deemed to 2ave been mutually compensated. &f t2e obligation is unilateral, t2e debtor s2all appropriate t2e fruits and interests received, unless from t2e nature and circumstances of t2e obligation it s2ould be inferred t2at t2e intention of t2e person constituting t2e same >as different. &n obligations to do and not to do, t2e courts s2all determine, in eac2 case, t2e retroactive effect of t2e condition t2at 2as been complied >it2. D11E    

9n conditional oblig! to give! once fulfilled! s/all retroact to t/e day of t/e constitution of obligation. 9n recirocal oblig.  t/e fruits and interests during t/e endency of condition! s/all be dee$ed to /ave been $utually co$ensated. 9n unilateral oblig.  t/e debtor s/all aroriate t/e fruits and interests received -L%SS fro$ t/e nature of t/e obligation it s/ould be inferred t/at t/e intention of erson &as different. 9n Obligation to do or not to do  t/e Court s/all deter$ine t/e retroactive effect of condition t/at /as been co$lied &it/. -

-

-

+e$e$ber: bet&een t/e constitution and t/e /aening of t/e susensive condition! t/e creditor cannot enforce t/e obligation. */e rig/t of t/e creditor during t/e eriod is $ere e<ectancy. (Iovellanos case: */e rig/t of #aniel to t/e roerty &as $erely inc/oate and e<ectant rig/t &/ic/ &ould rien into a vested rig/t only uon /is ac;uisition of t/e o&ners/i */e $o$ent t/e susensive condition /aens! t/e rig/t beco$es enforceable and t/e debtor $ay be co$elled to erfor$ t/e obligation. Cause of action accrues! and rescrition is co$uted fro$ t/is ti$e. */e %%C*S! /o&ever! +%*+OAC*S to t/e $o$ent of constitution of suc/ obligation. +eason: susensive conditions are $erely accidental to t/e obligation! t/ey are not essential ele$ents of t/e obligation. An obligation is dee$ed constituted &/en all t/e necessary ele$ents are resent. */e susensive condition only revents t/e efficacy of t/e obligation. Case: #E vs. CA Li$itations to retroactivity: t/e rig/t to t/e fruits or interests of t/e t/ing accruing before t/e /aening of t/e condition! unless ot/er&ise stiulated by t/e arties. Art. 11//. T2e creditor may, before t2e fulfillment of t2e condition, bring t2e appropriate actions for t2e preservation of 2is rig2t. T2e debtor may recover >2at during t2e same time 2e 2as paid by mistaBe in case of a suspensive condition. D111aE

AEE+OE+9A*% AC*9O-S O+ C+%#9*O+ *O E+%S%+'% H9S +9GH*S: a. b. c. d.

action for ro/ibition restraining t/e alienation of t/e t/ing ending t/e /aening of t/e condition etition for t/e annotation of t/e creditorFs rig/t! if real roerty is involved3 action to de$and security in case t/e debtor beco$es insolvent3 action to set aside alienations $ade by t/e debtor in fraud of t/e creditors3

2nd Ear: a case of solutio indebiti (undue ay$ent if creditor is in bad fait/! debtor is entitled to fruits and interests. 9 EAJ,%-* 5AS -O* J ,9S*A%! CA- *H%+% % +%CO'%+J a. b. Note: -

-

9f condition is fulfilled  -O +%CO'%+J 9f condition is not fulfilled! t/ere s/ould be recovery %C%E* &/en a ure donation &as intended.

efore t/e /aening of t/e susensive condition! t/e debtor cannot alienate t/e sub4ect roerty if it is a deter$inate t/ing. 9f t/e obligor alienated t/e deter$inate roerty to a @ rd erson (good fait/ on art of t/e @ rd erson! t/e creditor cannot reclai$ t/e roerty as t/e delivery of t/e t/ing vests o&ners/i. His only recourse is da$ages against t/e debtor. Ho&ever! if t/ere &as bad fait/ on t/e art of t/e @ rd erson! /e $ay be co$elled to deliver t/e t/ing to t/e creditor. Creditors can /o&ever! alienate t/eir inc/oate rig/t.

13


-

9f ay$ent &as a deter$inate t/ing! t/e cause of action is accion revindicatoria! ot/er&ise t/e rovisions of solution indebiti alies. 9f /o&ever! ay$ent &as $ade &it/ t/e )no&ledge of t/e condition! t/ere is an i$lied &aiver of t/e condition and &/at /as been aid cannot be recovered. -o e<ress rovision regarding fruits and interests! /o&ever! t/ere can be recovery by t/e rovisions of solution indebiti. Art. 11/0. 42en t2e conditions 2ave been imposed >it2 t2e intention of suspending t2e efficacy of an obligation to give, t2e follo>ing rules s2all be observed in case of t2e improvement, loss or deterioration of t2e t2ing during t2e pendency of t2e condition: D1E &f t2e t2ing is lost >it2out t2e fault of t2e debtor, t2e obligation s2all be e?tinguis2edF DE &f t2e t2ing is lost t2roug2 t2e fault of t2e debtor, 2e s2all be obliged to pay damagesF &t is understood t2at t2e t2ing is lost: a. >2en it peris2esF Dp2ysical lossE or b. goes out of commerceF Dlegal lossE or c. disappears in suc2 a >ay t2at its e?istence is unBno>n or it cannot be recoveredF Dcivil lossE D7E 42en t2e t2ing deteriorates >it2out t2e fault of t2e debtor, t2e impairment is to be borne by t2e creditorF D9E &f it deteriorates t2roug2 t2e fault of t2e debtor, t2e creditor may c2oose bet>een t2e rescission of t2e obligation and its fulfillment, >it2 indemnity for damages in eit2er caseF D5E &f t2e t2ing is improved by its nature, or by time, t2e improvement s2all inure to t2e benefit of t2e creditorF D6E &f it is improved at t2e e?pense of t2e debtor, 2e s2all 2ave no ot2er rig2t t2an t2at granted to t2e usufructuary. D11E

#rticle applies if a. b.

susensive condition is fulfilled3 and if ob4ect is secified (not generic

Art. 110. 42en t2e conditions 2ave for t2eir purpose t2e e?tinguis2ment of an obligation to give, t2e parties, upon t2e fulfillment of said conditions, s2all return to eac2 ot2er >2at t2ey 2ave received. &n case of t2e loss, deterioration or improvement of t2e t2ing, t2e provisions >2ic2, >it2 respect to t2e debtor, are laid do>n in t2e preceding article s2all be applied to t2e party >2o is bound to return. As for t2e obligations to do and not to do, t2e provisions of t2e second paragrap2 of article 11/ s2all be observed as regards t2e effect of t2e e?tinguis2ment of t2e obligation. D117E %%C*S 5H%- +%SOL*O+J CO-#9*9O- 9S L9LL%#: >. 2. @. 1.

Obligation is e>K.

Art. 1101. T2e po>er to rescind obligations is implied in reciprocal ones, in case one of t2e obligors s2ould not comply >it2 >2at is incumbent upon 2im. T2e injured party may c2oose bet>een t2e fulfillment and t2e rescission of t2e obligation, >it2 t2e payment of damages in eit2er case. e may also seeB rescission, even after 2e 2as c2osen fulfillment, if t2e latter s2ould become impossible.

1/


T2e court s2all decree t2e rescission claimed, unless t2ere be just cause aut2oriGing t2e fi?ing of a period. T2is is understood to be >it2out prejudice to t2e rig2ts of t2ird persons >2o 2ave acuired t2e t2ing, in accordance >it2 articles 17/5 and 17// and t2e ortgage "a>. D119E $'#0#$T%0I"TI$" (/ 0I+'T T( 0%"$I! >. 2. @.

1.

?. 6. o

a b

9t e
Note: */is article is alicable only to recirocal obligations. +ecirocal obligations are t/ose &/ic/ arise fro$ t/e sa$e cause! and in &/ic/ eac/ arty is a debtor and a creditor of eac/ ot/er! suc/ t/at t/e obligation of one is deendent uon t/e obligation of t/e ot/er. */ey are to be erfor$ed si$ultaneously! so t/at t/e erfor$ance of one is conditioned uon t/e si$ultaneous fulfill$ent of t/e ot/er. 9t is not enoug/ t/at bot/ arties are creditor and debtor or eac/ ot/er! t/e recirocity in t/e obligation must arise from t2e same cause. -

%ven if t/ere is no corresonding agree$ent bet&een t/e arties! t/e la& rovides for suc/ o&er to rescind. */is article does not aly &/en t/e arties $ade a stiulation roviding for t/e auto$atic rescission of t/e contract in case of violation of t/e ter$s t/ereof &it/out need of 4udicial intervention or er$ission.

-

*/e breac/ conte$lated is t/e obligorFs failure to co$ly &it/ an obligation already e
-

Case: )adilla vs. )aredes : */ere can be no rescission of an obligation t/at is none>> of t/e Civil Code is redicated on a breac/ of fait/ by t/e ot/er arty &/o violates t/e recirocity bet&een t/e$. */e breac/ conte$lated in t/e said rovision is t/e obligorFs failure to co$ly &it/ an e
-

7+escission8 /ere is to be understood as 7resolution8 or cancellation of t/e contract.

-

5/o can de$and rescission: */e arty &/o can de$and rescission s/ould be t/e arty &/o is ready! &illing and able to co$ly &it/ /is o&n obligations &/ile t/e ot/er is not caable to erfor$ /is o&n. A arty &/o /as not erfor$ed /is at of t/e obligation cannot rescind.

-

5/en one arty fails to co$ly &it/ /is obligation under a contract! t/e ot/er arty /as t/e rig/t to eit/er de$and erfor$ance! or as) for t/e resolution of t/e contract. */ese re$edies=c/oices are $utually e
1$


alt/oug/ 'elarde oted to ay! t/e c/oice /ad already been $ade and to allo& 'elarde to ay t/e e
9n cases of secific erfor$ance! t/ere is al&ays a need for 4udicial action if t/e ot/er arty refuses to $a)e t/e delivery of t/e t/ing ro$ised. e?ception: &/en t/e in4ured arty c/ose secific erfor$ance! and t/e restation /ad beco$e i$ossible to erfor$! /e $ay t/en cancel or rescind t/e contract. Ho&ever! so long as t/ere /as been no 4udg$ent declaring rescission! /o&ever! t/e creditor &/o /as as)ed for it $ay c/ange /is $ind and de$and secific erfor$ance instead! or viceversa! unless /e /as reviously renounced one of t/ese re$edies.

-

5/ere bot/ arties /ave co$$itted a breac/ of obligation! and it cannot be deter$ined &/o &as t/e first infractor! t/e contract s/all be dee$ed e
-

%*+AI#9C9AL rescission roduces legal effects. Once one of t/e arties fails to co$ly &it/ /is obligation! t/e ot/er is relieved fro$ co$lying &it/ /is! and /e $ay t/erefore by /is o&n declaration elect to rescind by not erfor$ing /is o&n underta)ing.

-

-

5/en can t/ere be e
o

"imitations8*estrictions on t2e rig2t to rescind: >.

2.

@.

#% E+OC%SS ,S* % OS%+'%# t/e rescission aut/oriDed is 4udicial rescission3 t/e ot/er arty $ust be given /is day in court. 9t is t/e 4udg$ent of t/e court and not t/e $ere act of t/e vendor &/ic/ roduces t/e rescission of t/e sale (Cannu */e rig/t to rescind is SO+#9-A*%# *O *H% +9GH*S O @ +# E%+SO-S &/o ac;uired t/e t/ing in good fait/. */e in4ured arty $ust resect t/e o&er of t/e court to fi< eriod in lieu of decreeing rescission. (case: Central niv t/e court $ay fi< t/e eriod for t/e fulfill$ent of t/e obligation! /o&ever! in t/is case! t/e court /eld t/at t/ere &as no need to fi< t/e eriod since sufficient ti$e /ad already lase for t/e laintiff to fulfill t/e condition.

Note: 5/en t/e contract! /o&ever! is one of lease! and t/e lessee fails to ay t/e rents stiulated &it/in t/e ti$e agreed uon! t/e court &ill /ave no discretion to grant t/e lessee a eriod &it/in &/ic/ to ay t/e rents. 1.  ?.

o

-

%vidence is needed to 4ustify t/e rescission. Slig/t breac/ of t/e contract &ill not 4ustify rescission! t/e breac/ s/ould be substantial and funda$ental as to defeat t/e ob4ect of t/e arties in $a)ing t/e contract. !--!CT# $- *!#C&##&$N

-ote t/at t/e e
(case: Laeral vs. Solid Ho$es. +escission under Art. >>> al&ays carries &it/ it t/e obligation of $utual restitution. Ho&ever! in t/is case! Laeral &as not $ade to ay restitution since t/e arties /ad e<ressly stiulated t/e ay$ent for da$ages in case of breac/. 9n Ong vs. CA! t/e SC /eld t/at Ong &as not entitled to rei$burse$ent as regards t/e i$rove$ents /e $ade on t/e roerty because /e contracted t/ese i$rove$ents in bad fait/. 9n esti$ating t/e da$ages to be a&arded in case of rescission or resolution! t/ose ele$ents of da$ages only can be ad$itted t/at are co$atible &it/ t/e idea of rescission 9n case of resolution of a contract of sale! t/e urc/aser is entitled to inde$nity for da$ages. */is inde$nity! in case of resolution for nondelivery of t/e t/ing sold cannot consist in t/e fruits! to &/ic/ /e is entitled only &/en delivery is $ade. Having c/osen rescission! /e is only entitled to t/e interest on t/e a$ount /e /as aid. *ayag case: 5A9'%+. o

&napplicability of Art. 1101:

1)


>. 2. @. 1. o

a. b.

in obligations of sales of real roerty by install$ents since ,aceda La& +A 6??2 governs3 sales of ersonal roerty by install$ents governed by +A >1K1 (+ecto La& Contracts of artners/is Contracts of lease

Cases >2en judicial approval is not needed in rescission: if t/ere is an e<ress stiulation of auto$atic rescission3 if t/ere is no e<ress stiulation of auto$atic rescission in case of breac/! 4udicial aroval is needed &/en t/ere /as been already delivery of t/e ob4ectunless t/e debtor voluntarily returned t/e t/ing. Art. 110. &n case bot2 parties 2ave committed a breac2 of t2e obligation, t2e liability of t2e first infractor s2all be euitably tempered by t2e courts. &f it cannot be determined >2ic2 of t2e parties first violated t2e contract, t2e same s2all be deemed e?tinguis2ed, and eac2 s2all bear 2is o>n damages. DnE

SECTION )" - O%i'ati$n( *ith a Peri$d Art. 1107. $bligations for >2ose fulfillment a day certain 2as been fi?ed, s2all be demandable only >2en t2at day comes. $bligations >it2 a resolutory period taBe effect at once, but terminate upon arrival of t2e day certain. A day certain is understood to be t2at >2ic2 must necessarily come, alt2oug2 it may not be Bno>n >2en. &f t2e uncertainty consists in >2et2er t2e day >ill come or not, t2e obligation is conditional, and it s2all be regulated by t2e rules of t2e preceding #ection. D115aE

Eeriod: A certain lengt/ of ti$e &/ic/ deter$ines t/e effectivity or t/e e
As to t/eir fulfill$ent  >. 2.

.

5it/ reference to ti$e >. 2.

C.

a condition is an uncertain event3 a eriod is an event &/ic/ $ust /aen sooner or later at a date )no&n before/and or a ti$e &/ic/ cannot be deter$ined.

Eeriod refers to future3 Condition $ay under t/e la& refer to ast.

As to 9nfluence on t/e obligation >. 2.

Condition causes an obligation to arise or to cease3 Eeriod $erely fi
I//%0%!T 2I!" (/ T%0"31%0I(" a.

#%9-9*%  e
b.

L%GAL  a eriod granted by la& CO-'%-*9O-AL='OL-*A+J  eriod agreed uon or stiulated by arties. I#9C9AL  eriod or ter$ fi
c. % #9% or SSE%-S9'% E%+9O# a eriod &it/ susensive effect. Obligation begin only fro$ a day certain3 uon arrival of eriod.

1


9- #9%, or +%SOL*O+J E%+9O# a eriod=ter$ &it/ a resolutory effect. *er$ination of obligation uon t/e arrival of said eriod. 0%45I"IT%" /(0 # 6#*I 1%0I(3T%0

1. 2. 3.

,ust refer to t/e future3 $ust be certain but can be e
-O*%: An action $ay be broug/t to i$$ediately enforce an obligation originally &it/ a ter$ if: a. t/e contract in &/ic/ t/e ter$s is i$osed /as been cancelled by $utual agree$ent of t/e arties3 or b. 5/en t/e nonfulfill$ent of t/e ter$s of t/e contract resolves t/e eriod and aut/oriDes t/e creditor to i$$ediately de$and erfor$ance. (t/e obligation is converted into a ure obligation Art. 1109. &n case of loss, deterioration or improvement of t2e t2ing before t2e arrival of t2e day certain, t2e rules in article 11/0 s2all be observed. DnE Article 11093 Article >>K is alicable in cases of loss! deterioration! and i$rove$ent during t/e endency of condition. */ing 9s Lost 5/en  >. 9t eris/es. 2. 9t goes out of co$$erce.

@. 1.

9t disaears in suc/ a &ay t/at its e
-ote: 7+enus nunquam perit8 9 in an obligation to deliver generic t/ing t/e loss or destruction of anyt/ing of t/e sa$e )ind does not e
9f t/e t/ing is lost t/roug/ t/e fault of t/e debtor! /e s/all be obliged to ay da$ages.

9f t/e t/ing deteriorates t/roug/ t/e fault of t/e debtor! t/e creditor $ay c/oose bet&een ( :; rescission of the agreement or obligation plus damages, or <=; fulfillment of the obligation plus damages. •

•

9f t/e t/ing is i$roved by nature! or by ti$e! t/e creditor gets t/e benefit.

9f t/e t/ing /as i$roved t/roug/ t/e e<ense of t/e debtor! /e s/all /ave t/e rig/ts granted to a usufructuary for i$rove$ents on a t/ing /eld in usufruct. •

Art. 1105. Anyt2ing paid or delivered before t2e arrival of t2e period, t2e obligor being una>are of t2e period or believing t2at t2e obligation 2as become due and demandable, may be recovered, >it2 t2e fruits and interests. D116aE 1%0I( &3I! &3$ 0%$(6%0> #> )% #% 5it/out #ebtorFs )no&ledge  >. efore t/e debt $atures ( Art. >>1 2. %ven after $aturity  if creditor is in bad fait/  t/e rig/t rescribes in ? years after re$ature ay$ent 5it/ #ebtorFs )no&ledge  -O +%CO'%+J (i$lied &aiver -ote: t/e la& resu$es t/at t/e debtor )ne& of t/e re$atureness. Art. 1106. 42enever in an obligation a period is designated, it is presumed to 2ave been establis2ed for t2e benefit of bot2 t2e creditor and t2e debtor, unless from t2e tenor of t2e same or ot2er circumstances it s2ould appear t2at t2e period 2as been establis2ed in favor of one or of t2e ot2er. D11E Art. 110. &f t2e obligation does not fi? a period, but from its nature and t2e circumstances it can be inferred t2at a period >as intended, t2e courts may fi? t2e duration t2ereof.

10


T2e courts s2all also fi? t2e duration of t2e period >2en it depends upon t2e >ill of t2e debtor. &n every case, t2e courts s2all determine suc2 period as may under t2e circumstances 2ave been probably contemplated by t2e parties. $nce fi?ed by t2e courts, t2e period cannot be c2anged by t2em. D11/aE 5H%- *H% CO+* ,AJ 9 A E%+9O# >. 2.

5/en t/e duration deends uon t/e &ill of t/e debtor. 5/en alt/oug/ t/e obligation does not fi< a eriod! it can be inferred t/at a eriod &as intended.

9-S*A-C%S 5H%- *H% CO+* ,AJ -O* 9 *H% *%+,: >. 2. @. 1. ?.

5/en no ter$ &as secified because no ter$ &as ever intended3 5/en t/e obligation or not is 7ayable on de$and83 5/en secific eriods are rovided for in t/e la&3 5/en &/at aears to be a ter$ is really a condition3 5/en t/e eriod &=in &/ic/ to as) t/e court to /ave t/e eriod fi
E+%SC+9E*9'% E%+9O#: AC*9O- ,S* 9 *H% E%+9O#  >0 J%A+S Art. 110/. T2e debtor s2all lose every rig2t to maBe use of t2e period: D1E 42en after t2e obligation 2as been contracted, 2e becomes insolvent, unless 2e gives a guaranty or security for t2e debtF DE 42en 2e does not furnis2 to t2e creditor t2e guaranties or securities >2ic2 2e 2as promisedF D7E 42en by 2is o>n acts 2e 2as impaired said guaranties or securities after t2eir establis2ment, and >2en t2roug2 a fortuitous event t2ey disappear, unless 2e immediately gives ne> ones eually satisfactoryF D9E42en t2e debtor violates any undertaBing, in consideration of >2ic2 t2e creditor agreed to t2e periodF D5E42en t2e debtor attempts to abscond. Davoid legal processE D110aE @ actual absconding, intent to do so is sufficient. -ote: t/e insolvency referred to does not /ave to be 4udicially declared3 it is sufficient for /i$ to find a /ard ti$e aying off /is obligations because of financial reverses t/at /ave $ade /is assets less t/an /is liabilities.

$E%!&' (. - Alternative &bligations Art. 1100. A person alternatively bound by different prestations s2all completely perform one of t2em. T2e creditor cannot be compelled to receive part of one and part of t2e ot2er undertaBing. D1171E Alternative Obligation is one &/ere out of t/e 2 or $ore restations &/ic/ $ay be given! only one is due. Art. 1. T2e rig2t of c2oice belongs to t2e debtor, unless it 2as been e?pressly granted to t2e creditor. T2e debtor s2all 2ave no rig2t to c2oose t2ose prestations >2ic2 are impossible, unla>ful or >2ic2 could not 2ave been t2e object of t2e obligation. D117E 9n obligation &it/ a ter$  general rule: ter$ is for bot/ artiesF benefit 9n obligation=alternative oblig  general rule: #ebtor /as t/e rig/t of c/oice. */e #ebtor S/all Have -o +ig/t *o C/oose */ose Erestations 5/ic/ Are:

1


>. 2. @.

9$ossible. nla&ful. Or &/ic/ could not /ave been t/e ob4ect of t/e obligation. Art. 11. T2e c2oice s2all produce no effect e?cept from t2e time it 2as been communicated. D1177E

,eans of Co$$unication to ot/er arty  oral! &ritten! i$lied! e<ress %%C* O -O*9C% *HA* CHO9C% HAS %%- ,A#% Obligation beco$es a si$le obligation to do or deliver t/e ob4ect selected. E+EOS%: *o infor$ t/e creditor t/at t/e obligation is no& a si$le one! no longer alternative and if already due! for t/e creditor to receive t/e ob4ect being delivered! if tender of t/e sa$e /as been $ade. 0%45I"IT%" /(0 #2I!+ # $'(I$% >. 2. @. 1. ?. 6. ".

,ade roerly so t/at creditor or agent &ill )no&3 $ade &it/ full )no&ledge t/at a selection is indeed being $ade (if t/ere is error  c/oice can be annulled $ade voluntarily and freely (no force! coercion etc.  $ade in due ti$e and t/at is before or uon $aturity3 $ade to all t/e roer ersons3 $ade &=o conditions unless agreed to by t/e creditor3 $ay be &aived! e<ressly=i$liedly. Art. 1. T2e debtor s2all lose t2e rig2t of c2oice >2en among t2e prestations >2ereby 2e is alternatively bound, only one is practicable. D1179E

%it2 damages. DnE Art. 19. T2e creditor s2all 2ave a rig2t to indemnity for damages >2en, t2roug2 t2e fault of t2e debtor, all t2e t2ings >2ic2 are alternatively t2e object of t2e obligation 2ave been lost, or t2e compliance of t2e obligation 2as become impossible. T2e indemnity s2all be fi?ed taBing as a basis t2e value of t2e last t2ing >2ic2 disappeared, or t2at of t2e service >2ic2 last became impossible. (amages ot2er t2an t2e value of t2e last t2ing or service may also be a>arded. D1175aE Art. 15. 42en t2e c2oice 2as been e?pressly given to t2e creditor, t2e obligation s2all cease to be alternative from t2e day >2en t2e selection 2as been communicated to t2e debtor. ntil t2en t2e responsibility of t2e debtor s2all be governed by t2e follo>ing rules: D1E &f one of t2e t2ings is lost t2roug2 a fortuitous event, 2e s2all perform t2e obligation by delivering t2at >2ic2 t2e creditor s2ould c2oose from among t2e remainder, or t2at >2ic2 remains if only one subsistsF DE &f t2e loss of one of t2e t2ings occurs t2roug2 t2e fault of t2e debtor, t2e creditor may claim any of t2ose subsisting, or t2e price of t2at >2ic2, t2roug2 t2e fault of t2e former, 2as disappeared, >it2 a rig2t to damagesF D7E &f all t2e t2ings are lost t2roug2 t2e fault of t2e debtor, t2e c2oice by t2e creditor s2all fall upon t2e price of any one of t2em, also >it2 indemnity for damages. T2e same rules s2all be applied to obligations to do or not to do in case one, some or all of t2e prestations s2ould become impossible. D1176aE if contract does not state to &/o$ t/e rig/t to c/oose is given! *H% #%*O+ ,AJ CHOOS%. %ffect if Creditor delays in $a)ing t/e c/oice: /e cannot /old t/e debtor in default for t/e debtor does not )no& &/at to deliver3

2


if debtor &ants to relieve /i$self fro$ t/e obligation! /e $ay etition t/e court to co$el Creditor to accet in t/e alternative! at t/e etitionerFs otion &it/ da$ages. Art. 16. 42en only one prestation 2as been agreed upon, but t2e obligor may render anot2er in substitution, t2e obligation is called facultative. T2e loss or deterioration of t2e t2ing intended as a substitute, t2roug2 t2e negligence of t2e obligor, does not render 2im liable. %ut once t2e substitution 2as been made, t2e obligor is liable for t2e loss of t2e substitute on account of 2is delay, negligence or fraud. DnE ACL*A*9'% OL9GA*9O-  it is one &/ere only one restation /as been agreed uon but t/e obligor $ay render anot/er in substitution. #9S*9-C*9O-S A"T!*NAT&;!

-AC"TAT&;!

>. various t/ings are due! but giving of one is enoug/3 2. if one restation is illegal! ot/ers $ay be valid and t/e obligation re$ains3

@. if it is i$ossible to give all e
>. only one t/ing is rincially due but $ay be substituted. 2. if rincial obligation is void! giving of t/e substitute is no longer necessary. (-LL9*J O E+9-C9EAL CA++9%S 59*H 9* *H% -LL9*J O SS*9**%. @. 9f it is i$ossible to give t/e rincial! t/e substitute does not /ave to be given3 if vice versa! t/e rincial $ust be given. 1. */e rig/t to c/oose is given only to t/e debtor.

$E%!&' ). - *oint and $olidary &bligations Art. 1. T2e concurrence of t>o or more creditors or of t>o or more debtors in one and t2e same obligation does not imply t2at eac2 one of t2e former 2as a rig2t to demand, or t2at eac2 one of t2e latter is bound to render, entire compliance >it2 t2e prestation. T2ere is a solidary liability only >2en t2e obligation e?pressly so states, or >2en t2e la> or t2e nature of t2e obligation reuires solidarity. D117aE I$&NT %ac/ of t/e debtors is liable only for a roortionate art of t/e debt and eac/ creditor is entitled to a roortionate art of t/e credit. G%-%+AL +L%:

#$"&(A* %ac/ debtor  entire obligation3 eac/ creditor is entitled to de$and t/e &/ole obligation.

5/en t/ere are 2 or $ore debtors or creditors! t/e obligation is IO9-*.

%C%E*9O-S: &/en t/ere is a stiulation in t/e contract t/at t/e obligation is solidary3 &/en t/e nature of t/e obligation re;uires liability to be solidary3 &/en t/e la& declares so

>. 2. @.

a b c

•

9-S*A-C%S 5H%+% LA5 9,EOS%S SOL9#A+J L9A9L9*J

a. b. c. d. e.

obligation arising fro$ torts3 ;uasicontracts3 legal rovisions re: t/e obligation of legatees and devisees3 liability of rincials! acco$lices and accessories of a felony3 bailees in co$$odatu$.

*/ere $ay be lurality of creditors Elurality of bot/ debtors and creditors3 Elurality of debtors.

!--!CT# $- I$&NT "&A%&"&T

21


a. b. c. d. e.

#e$and by one creditor uon one debtor roduces effects of default only &it/ resect to bot/ arties but not &it/ resect to t/e ot/ers3 9nterrution of rescrition by 4udicial de$and of one creditor uon one debtor does not benefit t/e ot/er creditors3 'ices of eac/ obligation arising fro$ ersonal defect of a articular debtor or creditor does not affect t/e obligation or rig/ts of t/e ot/ers3 9nsolvency of a debtor does not increase t/e resonsibility of /is codebtors nor does it aut/oriDe a creditor to de$and anyt/ing fro$ /is cocreditors3 9n 4oint divisible obligation! t/e defense of res 4udicata is not e, or t2e nature or t2e >ording of t2e obligations to >2ic2 t2e preceding article refers t2e contrary does not appear, t2e credit or debt s2all be presumed to be divided into as many s2ares as t2ere are creditors or debtors, t2e credits or debts being considered distinct from one anot2er, subject to t2e *ules of Court governing t2e multiplicity of suits. D117/aE Art. 10. &f t2e division is impossible, t2e rig2t of t2e creditors may be prejudiced only by t2eir collective acts, and t2e debt can be enforced only by proceeding against all t2e debtors. &f one of t2e latter s2ould be insolvent, t2e ot2ers s2all not be liable for 2is s2are. D1170E 9ndivisible 4oint obligation  re;uires t/e consent of all debtors

$'#0#$T%0I"TI$" Obligation is 4oint but since it is indivisible! creditor $ust roceed against all t/e 4oint debtors. #e$and $ust be to all 4oint debtors3 9n case of insolvency of one debtor3 ot/ers are not liable for /is s/are3 9f t/ere are 4oint creditors! delivery $ust be $ade to all unless aut/oriDed by ot/ers3 %ac/ 4oint creditor $ay renounce /is s/are Art. 11. T2e indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility. DnE  

Solidarity t/e tie bet&een arties 9ndivisibility  sub4ect $atter

2I!" (/ "(*I#0IT> >. 2. @. 1. ?.

AC*9'%  on t/e art of creditors=obliges EASS9'%  debtors=obligors art ,9%#  bot/ CO-'%-*9O-AL  agreed by arties L%GAL  i$osed by la&

Art. 111. #olidarity may e?ist alt2oug2 t2e creditors and t2e debtors may not be bound in t2e same manner and by t2e same periods and conditions. D119E Art. 11. !ac2 one of t2e solidary creditors may do >2atever may be useful to t2e ot2ers, but not anyt2ing >2ic2 may be prejudicial to t2e latter. D1191aE Art. 117. A solidary creditor cannot assign 2is rig2ts >it2out t2e consent of t2e ot2ers. DnE Art. 119. T2e debtor may pay any one of t2e solidary creditorsF but if any demand, judicial or e?trajudicial, 2as been made by one of t2em, payment s2ould be made to 2im. D119aE Art. 115. Novation, compensation, confusion or remission of t2e debt, made by any of t2e solidary creditors or >it2 any of t2e solidary debtors, s2all e?tinguis2 t2e obligation, >it2out prejudice to t2e provisions of article 110. T2e creditor >2o may 2ave e?ecuted any of t2ese acts, as >ell as 2e >2o collects t2e debt, s2all be liable to t2e ot2ers for t2e s2are in t2e obligation corresponding to t2em. D1197E -O'A*9O-3 %%C* ,odification of an obligation by c/anging its ob4ect or rincial conditions3 by substituting t/e erson of debtor3  subrogation

22


CO,E%-SA*9O9s t/at &=c ta)es lace &/en 2 ersons in t/eir o&n rig/t! are creditors and debtors of eac/ ot/er.  CO-S9O-= ,%+G%+ 5=c ta)es lace &/en t/e c/aracters of creditor and debtor are $erged in t/e sa$e erson! as &/en a c/ec) issued  by A! in t/e course of negotiation! is eventually endorsed to /i$.  */e solidary obligation is e2ic2 may subseuently be directed against t2e ot2ers, so long as t2e debt 2as not been fully collected. D1199a.E %ffect of not roceeding against ALL  t/ere is no &aiver against t/ose not yet sued3 t/ey $ay be roceeded against later.  Alies only to solidary obligation! not 4oint. EASS9'% SOL9#A+9*J N S+%*JSH9E (si$ilarities >. bot/ t/e solidary debtor and t/e surety guarantee for anot/er erson. 2. bot/ can de$and rei$burse$ent (ifferences: >. 2. @.

Solidary debtor indebted for o&n s/are only3 S+%*J is indebted only for t/e s/are of t/e rincial debtor3 Solidary debtor can be rei$bursed &it/ &/at /e /as aid less /is o&n s/are3 S+%*J can be rei$bursed for everyt/ing /e /as aid. S# receives an eo or more solidary debtors offer to pay, t2e creditor may c2oose >2ic2 offer to accept. e >2o made t2e payment may claim from 2is co3debtors only t2e s2are >2ic2 corresponds to eac2, >it2 t2e interest for t2e payment already made. &f t2e payment is made before t2e debt is due, no interest for t2e intervening period may be demanded. 42en one of t2e solidary debtors cannot, because of 2is insolvency, reimburse 2is s2are to t2e debtor paying t2e obligation, suc2 s2are s2all be borne by all 2is co3debtors, in proportion to t2e debt of eac2. D1195aE Art. 11/. )ayment by a solidary debtor s2all not entitle 2im to reimbursement from 2is co3 debtors if suc2 payment is made after t2e obligation 2as prescribed or become illegal. DnE Art. 110. T2e remission made by t2e creditor of t2e s2are >2ic2 affects one of t2e solidary debtors does not release t2e latter from 2is responsibility to>ards t2e co3debtors, in case t2e debt 2ad been totally paid by anyone of t2em before t2e remission >as effected. D1196aE Art. 1. T2e remission of t2e >2ole obligation, obtained by one of t2e solidary debtors, does not entitle 2im to reimbursement from 2is co3debtors. DnE Art. 11. &f t2e t2ing 2as been lost or if t2e prestation 2as become impossible >it2out t2e fault of t2e solidary debtors, t2e obligation s2all be e?tinguis2ed. &f t2ere >as fault on t2e part of any one of t2em, all s2all be responsible to t2e creditor, for t2e price and t2e payment of damages and interest, >it2out prejudice to t2eir action against t2e guilty or negligent debtor. &f t2roug2 a fortuitous event, t2e t2ing is lost or t2e performance 2as become impossible after one of t2e solidary debtors 2as incurred in delay t2roug2 t2e judicial or e?trajudicial demand upon 2im by t2e creditor, t2e provisions of t2e preceding paragrap2 s2all apply. D119aE

23


1#>%!T Eay$ent is one of t/e &ays by &/ic/ an obligation is e >. 2. @.

if &=out fault  no liability if &= fault  liable P da$ages and interest fortuitous event after default  t/ere is liability because of default.

Art. 1. A solidary debtor may, in actions filed by t2e creditor, avail 2imself of all defenses >2ic2 are derived from t2e nature of t2e obligation and of t2ose >2ic2 are personal to 2im, or pertain to 2is o>n s2are. 4it2 respect to t2ose >2ic2 personally belong to t2e ot2ers, 2e may avail 2imself t2ereof only as regards t2at part of t2e debt for >2ic2 t2e latter are responsible. D119/aE 9-#S O #%%-S%S a. b.

*/ose derived fro$ t/e nature of t/e obligation */ose ersonal to t/e debtor sued.

$E%!&' +. - ivisible and ndivisible &bligations Art. 17. T2e divisibility or indivisibility of t2e t2ings t2at are t2e object of obligations in >2ic2 t2ere is only one debtor and only one creditor does not alter or modify t2e provisions of C2apter  of t2is Title. D1190E  

#ivisible obligation  caable of artial erfor$ance3 9ndivisible  not caable of artial fulfill$ent.

#$%#&#'#(#)#T* vs. '+)#%-#T*

SOL9#A+9*J >. refers to t/e tie bet&een arties3 2. needs at least 2 debtors or creditors3 @. fault of one is fault of ot/ers

9-#9'9S99L9*J +efers to nature of obligation3  ,ay e
CLASS%S=9-#S O 9-#9'9S99L9*J >. 2. @.

Conventional  agreed to by arties3 -atural=absolute  nature of obligation Legal  by la&

9-#S O #9'9S9O>. Buantitative  deends of ;uantity 2. Bualitative  deends of ;uality @. 9ntellectual= $oral  one t/at eit2 2is undertaBing. T2e debtors >2o may 2ave been ready to fulfill t2eir promises s2all not contribute to t2e indemnity beyond t2e corresponding portion of t2e price of t2e t2ing or of t2e value of t2e service in >2ic2 t2e obligation consists. D115E %%C* O -O-CO,EL9A-C%  t/e obligation is converted into a $onetary one for inde$nity. Art. 15. -or t2e purposes of t2e preceding articles, obligations to give definite t2ings and t2ose >2ic2 are not susceptible of partial performance s2all be deemed to be indivisible. 42en t2e obligation 2as for its object t2e e?ecution of a certain number of days of >orB, t2e accomplis2ment of >orB by metrical units, or analogous t2ings >2ic2 by t2eir nature are susceptible of partial performance, it s2all be divisible.

2/


o>ever, even t2oug2 t2e object or service may be p2ysically divisible, an obligation is indivisible if so provided by la> or intended by t2e parties. &n obligations not to do, divisibility or indivisibility s2all be determined by t2e c2aracter of t2e prestation in eac2 particular case. D1151aE

OL9GA*9O-S *HA* A+% #%%,%# 9-#9'9S9L% >. Obligations to give definite t/ings. 2. */ose &/ic/ are not suscetible of artial erfor$ance. @. %ven if t/e t/ing is /ysically divisible! it $ay be indivisible if so rovided by la&. 1. %ven if t/e t/ing is /ysically divisible! it $ay be indivisible if suc/ &as t/e intention of t/e arties concerned. OL9GA*9O-S *HA* A+% #%%,%# #9'9S9L% >. 5/en t/e ob4ect of t/e obligation is t/e e
$E%!&' . - &bligations with a enal %lause Art. 16. &n obligations >it2 a penal clause, t2e penalty s2all substitute t2e indemnity for damages and t2e payment of interests in case of noncompliance, if t2ere is no stipulation to t2e contrary. Nevert2eless, damages s2all be paid if t2e obligor refuses to pay t2e penalty or is guilty of fraud in t2e fulfillment of t2e obligation. T2e penalty may be enforced only >2en it is demandable in accordance >it2 t2e provisions of t2is Code. (>>?2a •

•

a. b. c. d.

E%-AL CLAS%  a coercive $eans to obtain fro$ debtor co$liance. 9t is an accessory underta)ing to assu$e greater liability in case of breac/. 9-#S O E%-AL CLAS% legal3 conventional= voluntary Subsidiary  &/en only enalty $ay be as)ed. Ioint  &/en bot/ t/e rincial contract and enal clause can be enforced

QQQ be noted on t/is oints (read t/e boo)  Eenal Clause constitutes an obligation alt/oug/ an accessory  ,ay beco$e de$andable in default of t/e unerfor$ed rincial obligation )*)$#!: to insure erfor$ance and also to substitute for da$ages and t/e ay$ent of interest in case of nonco$liance !C!)T&$N#: >. %<ressly stiulated  to t/e effect t/at da$ages and interests $ay still be recovered desite t/e resence of Eenal clause 2. 5/en debtor refuses to ay t/e enalty i$osed in t/e obligation. @. 5/en debtor is guilty of fraud or dolo in t/e fulfill$ent of t/e obligaton. (reason: no &aiver of future action for fraud Art. 1. T2e debtor cannot e?empt 2imself from t2e performance of t2e obligation by paying t2e penalty, save in t2e case >2ere t2is rig2t 2as been e?pressly reserved for 2im. Neit2er can t2e creditor demand t2e fulfillment of t2e obligation and t2e satisfaction of t2e penalty at t2e same time, unless t2is rig2t 2as been clearly granted 2im. o>ever, if after t2e creditor 2as decided to reuire t2e fulfillment of t2e obligation, t2e performance t2ereof s2ould become impossible >it2out 2is fault, t2e penalty may be enforced. D1157aE Art. 1/. )roof of actual damages suffered by t2e creditor is not necessary in order t2at t2e penalty may be demanded. DnE

2$


Art. 10. T2e judge s2all euitably reduce t2e penalty >2en t2e principal obligation 2as been partly or irregularly complied >it2 by t2e debtor. !ven if t2ere 2as been no performance, t2e penalty may also be reduced by t2e courts if it is iniuitous or unconscionable. D1159aE 5H%- E%-AL CLAS% CA--O* % %-O+C%#: a b c

*/e breac/ is t/e fault of creditor3 ortuitous event intervened unless t/e debtor e<ressly agreed on /is liability in case of fortuitous event.3 5/en debtor is not yet in default.

Art. 17. T2e nullity of t2e penal clause does not carry >it2 it t2at of t2e principal obligation. */e nullity of t/e rincial obligation carries &it/ it t/at of t/e enal clause. (>>??

%"A!ER ) E/!'01$"2E'! &3 &4L0A!&'$ Art. 171. $bligations are e?tinguis2ed: D1E %y payment or performance: DE %y t2e loss of t2e t2ing due: D7E %y t2e condonation or remission of t2e debtF D9E %y t2e confusion or merger of t2e rig2ts of creditor and debtorF D5E %y compensationF D6E %y novation. $t2er causes of e?tinguis2ment of obligations, suc2 as annulment, rescission, fulfillment of a resolutory condition, and prescription, are governed else>2ere in t2is Code. D1156aE C"A##&-&CAT&$N $- CA#!# $- !T&N'&#!NT A. 'OL-*A+J >. Eerfor$ance ay$ent consignation 2. Substitution of Eerfor$ance co$ensation novation dacion en ago @. Agree$ent to Obligation a. -

Subse;uent to Obligation unilateral &aiver natural &aiver re$ission $utual dissent co$ro$ise

-

Si$ultaneous &it/ Creation of Obligation resolutory ter$ or e
b.

.

9-'OL-*A+J a by failure to bring an action (rescrition b resolutory= condition subse;uent ($erger=confusion3 in ersonal obligation deat/3 c/ange of civil status c by reason of ob4ect  i$ossibility of erfor$ance3 loss of t/ing due

$E%!&' 5. - ayment or erformance Art. 17 )ayment means not only t2e delivery of money but also t2e performance, in any ot2er manner, of an obligation. DnE EAJ,%-*  $ode of e
2)


)ayment is defined as not only t/e delivery of $oney but also t/e erfor$ance! in any ot/er $anner! of an obligation. Eay$ent is t/e satisfaction or fulfill$ent of a restation t/at is due! resulting in t/e e
T>o Binds of payment: >. 9t is nor$al (or voluntary &/en t/e obligor voluntarily ays t/e obligation. 2. 9t beco$es abnor$al (involuntary &/en t/e creditor institutes an action to collect ay$ent in order t/at t/e obligor s/all co$ly &it/ /is obligation. •

>. 2. @. 1. ?.

*euisites of a valid payment: Caacity of t/e erson aying3 Caacity of t/e erson receiving t/e ay$ent3 #elivery of t/e full a$ount or t/e full erfor$ance of t/e restation3 Eroriety of ti$e! lace and $anner of ay$ent3 Accetance of t/e ay$ent by t/e creditor.

Art. 177: A debt s2all not be understood to 2ave been paid unless t2e t2ing or service in >2ic2 t2e obligation consists 2as been completely delivered or rendered, as t2e case may be. D115E +e;uisites of 'alid Eay$ent: >. 2.

t/e very t/ing= service conte$lated $ust be aid3 fulfill$ent $ust be co$lete.

HO5 EAJ,%-*= E%+O+,A-C% 9S ,A#% >. 2. @.

9f $onetary obligation! by delivery of $oney  in full ay$ent unless ot/er&ise stiulated in contract3 if debt is delivery of t/ing=s! by delivery of suc/ t/ing=s if debt is doing of a ersonal underta)ing! by erfor$ance of said underta)ing3if debt is not doing of so$et/ing! by refraining fro$ doing suc/.

-ote: A debtor cannot co$el t/e creditor to accet artial ay$ent. ut! /e can accet artial ay$ent. 9f /e voluntarily accets suc/ ay$ents t/en /e is dee$ed to /ave &aived t/e re;uire$ents in Art. >2@@ t/at t/e erfor$ance of t/e obligation is not considered co$lete unless t/ere is co$lete delivery or co$lete erfor$ance. 5/ile it $ay be true t/at t/ere is no ay$ent if t/ere is no co$lete delivery or erfor$ance of t/e service! t/ere are t&o e2@1 and >2@?. Art. 179. &f t2e obligation 2as been substantially performed in good fait2, t2e obligor may recover as t2oug2 t2ere 2ad been a strict and complete fulfillment, less damages suffered by t2e obligee. -ote: >. 9n 179 t/ere /as been substantial erfor$ance by t/e obligor in good fait/. So! if t/ere /as been substantial erfor$ance 9- GOO# A9*H by t/e obligor! t/en t/e obligor can recover as t/oug/ t/ere /ad been strict and co$lete fulfill$ent! less of course t/e da$ages suffered by t/e creditor. 2. */e o$ission or defect $ust be slig/t and uni$ortant! t/at is! it $ust not be so $aterial as to frustrate t/e acco$lis/$ent of t/e intended &or). @. */ere $ust be no &illful or intentional deviation fro$ t/e contract or restation by t/e debtor! and t/e o$ission or defect $ust not be $aterial! ot/er&ise! t/e erfor$ance &ill not a$ount to substantial co$liance. Art. 175. 42en t2e obligee accepts t2e performance, Bno>ing its incompleteness or irregularity, and >it2out e?pressing any protest or objection, t2e obligation is deemed fully complied >it2. DnE 

9n t/is case! OL9G%% is in %S*OEE%L  barred fro$ furt/er action for clai$s.

2


Ho& s/all it /aen */e creditor accets t/e erfor$ance desite )no&ledge of t/e inco$leteness or irregularity and &it/out rotest or ob4ection accets t/e erfor$ance. 9n effect! /e is dee$ed to /ave &aived t/e irregularity because t/e la& re;uires t/at /e $ust )no& t/e inco$leteness or irregularity of t/e erfor$ance and accet it &it/out rotest or ob4ection. Art. 176. T2e creditor is not bound to accept payment or performance by a t2ird person >2o 2as no interest in t2e fulfillment of t2e obligation, unless t2ere is a stipulation to t2e contrary. 42oever pays for anot2er may demand from t2e debtor >2at 2e 2as paid, e?cept t2at if 2e paid >it2out t2e Bno>ledge or against t2e >ill of t2e debtor, 2e can recover only insofar as t2e payment 2as been beneficial to t2e debtor. D115/aE Art. 17. 42oever pays on be2alf of t2e debtor >it2out t2e Bno>ledge or against t2e >ill of t2e latter, cannot compel t2e creditor to subrogate 2im in 2is rig2ts, suc2 as t2ose arising from a mortgage, guaranty, or penalty. D1150aE */e creditor can refuse ay$ent by a @ rd erson! %C%E*: a.

b.

5/en stiulated3 9f said @ rd erson /as an interest in t/e fulfill$ent of t/e obligation.

9nstance &/en +%CO'%+J can be /ad fro$ Creditor and not fro$ #ebtor: >. 2. @. 1.

Erescrition3 +e$ission3 Eaid=erfor$ed debt3 5/en legal co$ensation /ad already ta)en lace

-: 9f t/e @rd erson ays t/e obligation of t/e debtor with the knowledge and consent of the debtor, t/e ayor is entitled to be rei$bursed for t/e full amount . */e sa$e alies if t/e debtor )no&s t/at t/e t/ird erson is $a)ing t/e ay$ent but /e did not ob4ect t/ereto! or /e did not reudiate t/e sa$e at anyti$e. •

9f ay$ent &as $ade &it/out t/e )no&ledge or &it/out t/e consent of t/e debtor! t/e rei$burse$ent s/all be only u to t/e a$ount or e
ro$ transcrition: So! if /e does not consent even if /e )ne& about it! /o& $uc/ can t/e @rd erson de$and rei$burse$ent Only to t/e e
Conse;uently! if t/e debt /ad already rescribed or /ad already been co$ensated! t/e ay$ent &ould no longer be beneficial. nder t/is situation! t/e ayor is definitely not entitled to rei$burse$ent fro$ t/e debtor. •

Anot/er effect if ay$ent &as &it/ t/e )no&ledge and consent is t/at t/e @ rd is subrogated into t/e rig/ts of t/e for$er creditor. He beco$es t/e ne& creditor. ut if it is &it/out t/e consent or against t/e &ill of t/e debtor or &it/out t/e )no&ledge! t/en /e /as no rig/t to de$and t/at /e be subrogated into t/e rig/t of t/e creditors. Suc/ rig/t is not granted to /i$ by la& as stated in Art. 17. •

S+OGA*9O-  act of utting so$ebody into t/e s/oes of t/e Creditor! /ence! enabling t/e for$er to e. 2. @.

arising fro$ $ortgage3 guaranty3 enalty #%*$'AT&$N

*!&%*#!!NT

20


>. recourse can be /ad to t/e $ortgage or guaranty or ledge3 2. debt is e


no recourse



ne& creditor /as different rig/ts



Eersonal action

Art. 17/. )ayment made by a t2ird person >2o does not intend to be reimbursed by t2e debtor is deemed to be a donation, >2ic2 reuires t2e debtorHs consent. %ut t2e payment is in any case valid as to t2e creditor >2o 2as accepted it. 9f t/e creditor accets ay$ent even if it is against t/e &ill of t/e debtor! t/e ay$ent is still valid! only t/at &e &ill aly >2@6! &it/ resect to rei$burse$ent. ut ta)e note t/at if t/e ay$ent $ade by t/e t/ird erson &/o does not intend to be rei$bursed e2o does not 2ave t2e free disposal of t2e t2ing due and capacity to alienate it s2all not be valid, >it2out prejudice to t2e provisions of article 19 under t2e Title on JNatural $bligations.J D116aE EAJ,%-* J A- 9-CAEAC9*A*%# E%+SOG%-%+AL +L%: 9f ay$ent is $ade by a erson incaacitated to give: >. ay$ent is not valid  if acceted3 2. creditor cannot be co$elled to accet3 @. re$edy of consignation is not roer. 4&5(6 Art. >21"  */e $inors &/o entered into a contract! &it/out t/e consent of t/e arents or t/e guardian! but voluntarily ays a su$ of $oney or delivers a fungible t/ing for t/e fulfill$ent of t/e obligation! t/e $inor cannot recover t/e sa$e fro$ t/e creditor &/o acceted it or consu$ed it in good fait/.

Art. 19. )ayment s2all be made to t2e person in >2ose favor t2e obligation 2as been constituted, or 2is successor in interest, or any person aut2oriGed to receive it. D116aE *O 5HO, EAJ,%-* ,S*% ,A#% >. 2. @.

*o erson in &/ose favor t/e obligation /as been constituted (creditor3 successor in interest3 to any erson aut/oriDed to receive it (eg. Guardian of insane! agent

B: Eedro borro&ed $oney (00!000 fro$ Iuan! &/o is $arried to Eetra. Eetra died. */ey /ad a c/ild! I+ (>" years old. Iuan re$arried to Iane. Iuan died. Eedro! &/en t/e obligation beca$e due and de$andable! aid Iane. 9s t/e ay$ent valid Ans&er: */e ay$ent is not valid desite t/e aut/ority of Iuan. 9t belongs to t/e first $arriage. 5/at about t/e aut/ority Aut/ority ter$inates uon t/e deat/ of t/e erson e2o is incapacitated to administer 2is property s2all be valid if 2e 2as Bept t2e t2ing delivered, or insofar as t2e payment 2as been beneficial to 2im. )ayment made to a t2ird person s2all also be valid insofar as it 2as redounded to t2e benefit of t2e creditor. #uc2 benefit to t2e creditor need not be proved in t2e follo>ing cases: D1E &f after t2e payment, t2e t2ird person acuires t2e creditorHs rig2tsF DE &f t2e creditor ratifies t2e payment to t2e t2ird personF D7E &f by t2e creditorHs conduct, t2e debtor 2as been led to believe t2at t2e t2ird person 2ad aut2ority to receive t2e payment. D1167aE

2


•

•

9f ay$ent &as $ade to t/e incaacitated creditor &/o cannot ad$inister /is roerty! or if /e /as not )et t/e t/ing delivered! t/e debtor $ay be co$elled by t/e creditor to ay ane& &/en /e regains caacity! or by t/e latterFs reresentative during t/e ti$e of t/e incaacity of t/e creditor. (Eineda enefit $ay be in t/e for$ of financial! $oral or intellectual advantages &/ic/ $ust be roved.

ro$ *ranscrition: Eay$ent to a t/ird erson s/all also be valid if it /as redounded to t/e benefit of t/e creditor. So! you /ave t/e burden of roving t/at ay$ent $ade to t/e t/ird erson redounded to t/e benefit of t/e creditor. ut benefit need not be roved in t/e follo&ing instances: >. if after t2e payment, t2e t2ird person acuires t2e creditorHs rig2ts  %<: you /ave an obligation to deliver a dia$ond ring! and it &as received by a t/ird erson! and later on you sa& t/e t/ird erson &earing t/e sa$e ring! t/e resu$tion is t/at /e /ad ac;uired o&ners/i over t/e roerty you /ad delivered3 2. t/e creditor ratifies t/e ay$ent to t/e t/ird erson. So it follo&s t/at at t/e ti$e of ay$ent! t/e creditor /ad no aut/ority to accet ay$ent! but &/en you $ade t/e ay$ent! /e ratified it. +atification co$es after! because if it is rior! ano yan Aut/oriDation. */e resu$tion is t/at t/e ay$ent &as &it/out /is aut/ority! only t/at /e ratified it. @. Jou lead t/e debtor to believe t/at t/e t/ird erson is aut/oriDed to receive ay$ent. •

$t2er instances >2ere payment to a t2ird person releases t2e debtor:

>. 5/en t/e creditor assigns /is credit to a t/ird erson! &it/out t/e consent of t/e debtor! and t/e debtor aid t/e original creditor. 5/en a creditor assigns credit to a t/ird erson! t/e t/ird erson beco$es t/e ne& creditor! but in as $uc/ as /e did not infor$ t/e debtor! and t/e debtor aid t/e old creditor! t/e ay$ent is still valid. 5/y ecause /e did not infor$ t/e debtor. 2. Anot/er instance is! under 19 ay$ent is $ade to a t/ird erson in ossession of t/e credit. 9n ossession of t/e credit! not t/e evidence of t/e credit. 5/at is t/e difference bet&een a erson in ossession of t/e credit An e. 2.

ay$ent $ust be in good fait/3 ayee $ust be in ossession of t/e credit itself. Art. 197. )ayment made to t2e creditor by t2e debtor after t2e latter 2as been judicially ordered to retain t2e debt s2all not be valid. D1165E



4udicial order ro$ted by an order of attac/$ent! in4unction! or garnis/$ent

GA+-9SH,%-* ta)es lace &/en t/e debtor of a debtor is ordered not to ay t/e latter so t/at reference &ould be given to t/e latterFs creditor. 9-*%+EL%A#%+  action in &=c a certain erson in ossession of certain roerty &ants clai$ants to litigate a$ong t/e$selves for t/e sa$e. 9-I-C*9O-  a 4udicial rocess by virtue of &=c a erson is generally ordered to refrain fro$ doing so$et/ing.

Art. 199. T2e debtor of a t2ing cannot compel t2e creditor to receive a different one, alt2oug2 t2e latter may be of t2e same value as, or more valuable t2an t2at >2ic2 is due.

3


&n obligations to do or not to do, an act or forbearance cannot be substituted by anot2er act or forbearance against t2e obligeeHs >ill. D1166aE %C%E*9O-S: a b

c

9n case of ACL*A*9'% OL9GA*9O9n case t/ere is anot/er agree$ent resulting in: #ation in ay$ent -ovation 9n case of &aiver by creditor

#)!C&A" -$*# $- )A!NT A. . C. #.

I.

#ation in ay$ent Alication of ay$ents Assign$ent in favor of Creditors (cession *ender of ay$ent and consignation.

DATION IN PA+,ENT  DATION EN PAGO AD./DICACION EN PAGO

Art. 195. (ation in payment, >2ereby property is alienated to t2e creditor in satisfaction of a debt in money, s2all be governed by t2e la> of sales. DnE Concept: Eroerty is alienated to t/e creditor in satisfaction of a debt in $oney. At t/e ti$e of t/e constitution of t/e obligation &/at is due is $oney! but at t/e ti$e of fulfill$ent! t/e debtor could no longer deliver t/e $oney. So! &/at /e did instead is to offer t/at instead of t/e $oney! /e &ill deliver anot/er t/ing in lieu of t/e $oney. 9f t/e creditor accets! t/en t/e obligation is e
#A"! >. no ree
>. 2. @.

1. greater freedo$ in deter$ining rice3 ?. giving of rice $ay generally end t/e obligation of buyer.

1. ?.

(AT&$N &N )A!NT */ere is ree
CO-#9*9O-S under &=c a #ation in Eay$ent is valid a b c

9f creditor consents3 9f dation in ay$ent &ill not re4udice t/e ot/er creditors3 9f debtor is not 4udicially declared insolvent.

B: Suose t/ere &as an agree$ent bet&een t/e arties but t/e debtor delivered a car and t/e creditor accets! &/at resu$tion arises 9s dation in ay$ent resu$ed A: 5/en t/ere is delivery and you cannot resu$e &/at t/e agree$ent of t/e arties is! and $oney is e2ose uality and circumstances 2ave not been stated, t2e creditor cannot demand a t2ing of superior uality. Neit2er can t2e debtor deliver a t2ing of inferior uality. T2e purpose of t2e obligation and ot2er circumstances s2all be taBen into consideration. D116aE %
5/en t/e ind and ;uantity cannot be deter$ined &=out need of a ne& agree$ent! t/e contract is 'O9#.

31


Art. 19. nless it is ot2er>ise stipulated, t2e e?trajudicial e?penses reuired by t2e payment s2all be for t2e account of t2e debtor. 4it2 regard to judicial costs, t2e *ules of Court s2all govern. D116/aE

Art. 19/. nless t2ere is an e?press stipulation to t2at effect, t2e creditor cannot be compelled partially to receive t2e prestations in >2ic2 t2e obligation consists. Neit2er may t2e debtor be reuired to maBe partial payments. o>ever, >2en t2e debt is in part liuidated and in part unliuidated, t2e creditor may demand and t2e debtor may effect t2e payment of t2e former >it2out >aiting for t2e liuidation of t2e latter. D1160aE • •

'!N. *"!: Eay$ent s/all be co$lete %C%E*: >. &/en it is stiulated ot/er&ise3 2. &/en different restations are sub4ect to different conditions or ter$s3 @. &/en debt is art li;uidated and art unli;uidated3 1. &/en a 4oint debtor ays /is s/are or t/e creditor de$ands t/e sa$e3 ?. &/en a solidary debtor ays only t/e art de$andable3 6. in case of co$ensation! &/en one debt is bigger t/an t/e ot/er3 ". &/en &or) is to be done by arts.

Art. 190. T2e payment of debts in money s2all be made in t2e currency stipulated, and if it is not possible to deliver suc2 currency, t2en in t2e currency >2ic2 is legal tender in t2e )2ilippines. T2e delivery of promissory notes payable to order, or bills of e?c2ange or ot2er mercantile documents s2all produce t2e effect of payment only >2en t2ey 2ave been cas2ed, or >2en t2roug2 t2e fault of t2e creditor t2ey 2ave been impaired. &n t2e meantime, t2e action derived from t2e original obligation s2all be 2eld in t2e abeyance. D11E "!'A" T!N(!*  is t/at &=c a debtor $ay co$el a creditor to accet in ay$ent of t/e debt. case of &nternational Corporate %anB vs. 'ueco Art. 15. &n case an e?traordinary inflation or deflation of t2e currency stipulated s2ould supervene, t2e value of t2e currency at t2e time of t2e establis2ment of t2e obligation s2all be t2e basis of payment, unless t2ere is an agreement to t2e contrary. DnE •

Alies only to cases &/ere a contract or agree$ent is involved. */is does not aly &/ere obligation to ay arises fro$ la&! indeendent of contracts. (*/is alies only to contractual obligations! to indebtedness. */is &ill not aly to ;uasidelict! ;uasicontract! to obligations arising fro$ la&. Eurely contractual obligations3 ay$ent of $onetary obligations.

Case of -ilipino %anB vs. 4#A! Art. 151. )ayment s2all be made in t2e place designated in t2e obligation. T2ere being no e?press stipulation and if t2e undertaBing is to deliver a determinate t2ing, t2e payment s2all be made >2erever t2e t2ing mig2t be at t2e moment t2e obligation >as constituted. &n any ot2er case t2e place of payment s2all be t 2e domicile of t2e debtor. &f t2e debtor c2anges 2is domicile in bad fait2 or after 2e 2as incurred in delay, t2e additional e?penses s2all be borne by 2im. T2ese provisions are >it2out prejudice to venue under t2e *ules of Court. D111aE

32


&'%0% 1#>%!T 5"T )% #% >. 2.

9f t/ere is a stiulation  in designated lace. if t/ere is no stiulation i. if its deter$inate! at t/e lace &/ere t/e t/ing $ig/t be at t/e ti$e t/e obligation &as constituted. ii. 9f its generic=ersonal! at t/e do$icile of t/e #ebtor. -ote: t/e creditor s/all bear t/e e<enses! unless t/e debtor c/anges /is do$icile in bad fait/. •

*ranscrition: -o& &/at about if ay$ent is $ade t/roug/ couriers! li)e t/e LC Suose t/e debtor sent t/e $oney t/roug/ t/e LC! and t/e courier ran a&ay &it/ t/e $oney! &/o s/all bear t/e loss 9t deends. 9f it &as t/e creditor &as t/e one &/o said t/at it s/ould be sent to /i$ t/roug/ t/e courier! t/en /e bears t/e loss. 5/at &ill t/e creditor do 5ala na syang ag asa */e creditor &ould run after t/e courier. ut if it &as t/roug/ t/e initiative of t/e debtor! t/en /e s/ould bear t/e loss ,erisi. 5/y is /e $erisi 5/at &ill be your defense 9n t/e absence of any stiulation! ay$ent s/all be $ade in t/e do$icile of t/e debtor.

II"

APPLICATION O PA+,ENT

Art. 15. e >2o 2as various debts of t2e same Bind in favor of one and t2e same creditor, may declare at t2e time of maBing t2e payment, to >2ic2 of t2em t2e same must be applied. nless t2e parties so stipulate, or >2en t2e application of payment is made by t2e party for >2ose benefit t2e term 2as been constituted, application s2all not be made as to debts >2ic2 are not yet due. &f t2e debtor accepts from t2e creditor a receipt in >2ic2 an application of t2e payment is made, t2e former cannot complain of t2e same, unless t2ere is a cause for invalidating t2e contract. D11aE

AEEL9CA*9O- O EAJ,%-*  s/o&s &=c debt! out of 2 or $ore debts o&ing t/e sa$e creditor! is

•

being aid. 'ote: */e rig/t to c/oose &=c debt to serve first is vested to t/e #%*O+ e
>. 2. @. 1. ?.

*/ere $ust be 2 or $ore debts (severalty of debts3 #ebts $ust be of t/e sa$e )ind3 #ebts are o&ed by t/e sa$e debtor in favor of t/e sa$e creditor3 All debts $ust be due unless contrary is rovided  eg. Stiulated by arties. Eay$ent is not enoug/ to e
a. b.

*!+&#&T!# -$* A))"&CAT&$N $- )A!NT

*"! 4!N (!%T# A*! N$T !T (!  t/ere $ay be alication of ay$ents &/en:

t/e arties so stiulate3 &/en alication of ay$ent is $ade by t/e arty for &/ose benefit t/e ter$ /as been constituted.

$4 A))"&CAT&$N &# A(! A.

#ebtor designates

33


. 9f not! creditor $a)es it  )no&n or $ade at t/e ti$e of t/e issuance of t/e receit3 unless t/ere is cause for voiding t/e contract ( e<. Creditor does it &=o debtorFs consent C.

9f bot/ do not avail of it! by oeration of la&. (Alying Arts. >2?@ and >2?1 •

*!;$CAT&$N G%-. +L%:

Once alication of ay$ent is $ade! it cannot be revo)ed.

%C%E*: 9f bot/ arties agree 

 •

%ven if bot/ arties agree! if it &ill re4udice @ rd ersonscannot revo)e

4!N A))"&CAT&$N CANN$T %! A;A&"!( $-< >. 2.

9n case of artnercreditor Surety or a solidary guarantor  one debt only not several.

ro$ transcrition: -o&! suose! t/e debtor /as ?0!000! and t/e debtor /as to $a)e t/e c/oice under t/e given situation:

@. 1. ?. 6.

>. 20!000 due on Iune 2?! 2001 &it/ an interest of 6R lus a enalty of 2R on t/e interest in case of delay3 20!000 due on #ec. 2?! 2001! secured by a $ortgage. >0!000 &it/out interest3 a 1 carat in) dia$ond ring ?0!000 &it/ interest and enalty due on #ec. 21! 2006.

*o &/ere s/all t/e ?0!000 be alied *o t/e $ost onerous of t/e debts already due and de$andable. */e $ost onerous of t/e @ debts due is t/e 20!000 because of t/e enalty. */e debt &it/ a $ortgage is less onerous because t/ere is only t/at tendency to lose t/e $ortgage! and once t/e $ortgage is foreclosed! t/e obligation is e
9nterest $ust be aid first e
5HA* 9-*%+%S* 9S SEEOS%# *O % EA9# a. interest by &ay of co$ensation3 b. interest by &ay of da$ages by &ay of default. Art. 159. 42en t2e payment cannot be applied in accordance >it2 t2e preceding rules, or if application cannot be inferred from ot2er circumstances, t2e debt >2ic2 is most onerous to t2e debtor, among t2ose due, s2all be deemed to 2ave been satisfied. &f t2e debts due are of t2e same nature and burden, t2e payment s2all be applied to all of t2em proportionately. D119a urdenso$e #ebts >. Older accounts in case of running accounts 2. 9nterestbearing debts3 @. 9f 2 interestbearing debts! t/at &=c c/arges t/e /ig/er interest3 1. debts secured by $ortgage=ledge3 ?. debts &= enal clause3 6. advances for subsistence t/an cas/ advances3 ". a debt &/ere debtor is in $ora (default K. e. Creditor cannot be forced to accet artial ay$ent. 2. Eay$ent cannot be alied to t/e rincial first if t/ere is interest due. %
3/


@. 1. ?.

*/e debtor cannot also ay t/e debt not yet due. %
III" PA+,ENT B+ CESSION OR ASSIGN,ENT •

•

9t is t/e rocess of transfer of debtorFs roerty to creditors not sub4ect to e2ic2, on t2e effect of t2e cession, are made bet>een t2e debtor and 2is creditors s2all be governed by special la>s. D115aE

= 2inds of #ssignment a. b.

Legal  $a4ority of creditors $ust agree 'oluntary  all creditors $ust agree •

>. 2. @. 1. ?.

,ore t/an > debt ,ore t/an > creditor Co$lete or artial insolvency of debtor Abandon$ent of all debtorFs roerty not e
a b c

+%B9S9*%S O+ 'OL-*A+J ASS9G-,%-*

%%C*S O 'OL. ASS9G-,%-*

Creditors do not beco$e o&ners3 $erely assignees &it/ aut/ority to sell3 #ebtor is released u to t/e a$ount of t/e net roceeds unless stiulated3 Creditors &ill collect credits in t/e order of reference agreed uon or in default! in t/e order establis/ed by la&. #AC9O- %- EAGO

C%SS9O-

1. does not affect all propertiesF

&n general, affects all propertiesF

. does not reuire plurality of creditorsF

*euires more t2an 1 creditorF

7. only t2e specific creditorKs consent is neededF Dtransfer is only in favor of one creditor to satisfy a debtE

All creditorsK consentF Dt2ere are various creditorsE

9. may taBe place during solvencyF Dno presumption of insolvencyE

*euires full8partial insolvencyF Dt2ere is presumption of insolvencyE

5. transfers o>ners2ip upon deliveryF

(oes not transfer o>ners2ip, only possession and administration are transferred to t2e creditors >it2 t2e aut2oriGation to convert t2e property into cas2 >it2 >2ic2 t2e debts s2all be paid.

6. t2ere is an act of novation

Not an act of novation

. ay totally e?tinguis2 t2e obligation and release t2e debtor

$nly e?tinguis2es t2e credits to t2e e?tent of t2e amount realiGed from t2e properties assigned, unless ot2er>ise agreed upon.

3$


$14$E%!&' (. - !ender of ayment and %onsignation IV" TENDER O PA+,ENT AND CONSIGNATION T!N(!* $- )A!NT  t/e act of offering t/e creditor &/at is due /i$ toget/er &it/ a de$and t/at t/e creditor accet t/e sa$e. C$N#&'NAT&$N  t/e act of deositing t/e t/ing due &it/ court or 4udicial aut/orities &/enever t/e creditor cannot accet or refuse to accet ay$ent. ro$ transcrition: tender of ay$ent is t/e $anifestation $ade by t/e debtor to t/e creditor of /is desire to co$ly &it/ /is obligation &it/ t/e offer of i$$ediate erfor$ance. ut $ere tender alone does not e2om tender of payment 2as been made refuses >it2out just cause to accept it, t2e debtor s2all be released from responsibility by t2e consignation of t2e t2ing or sum due. Consignation alone s2all produce t2e same effect in t2e follo>ing cases: D1E 42en t2e creditor is absent or unBno>n, or does not appear at t2e place of paymentF DE 42en 2e is incapacitated to receive t2e payment at t2e time it is dueF D7E 42en, >it2out just cause, 2e refuses to give a receiptF D9E 42en t>o or more persons claim t2e same rig2t to collectF D5E 42en t2e title of t2e obligation 2as been lost. D116aE

•

a b c d

*!+&#&T!# $- A ;A"&( T!N(!* $- )A!NT

,ust be in legal tender (la&ful currency  not a c/ec) but if t/ere is consent  valid3 9t $ust include &/atever interest is due3 9t $ust be unconditional3 but if $ade &it/ conditions and no rotest on creditorFs art! /e cannot later on rescribe t/e ter$s for t/e validity of t/e accetance &=c /e /ad already $ade  co$lete ay$ent3 */e obligation $ust be due.

+e;uisites &/erein t/e creditor is dee$ed to /ave un4ustly refused t/e tender of ay$ent >. */at t/ere &as revious tender of ay$ent 2. */at t/e tender of ay$ent &as of t/e very t/ing due! or in case of $oney obligations! t/at t/e legal tender currency &as offered3 @. */at t/e tender of ay$ent &as unconditional3 and! 1. t/at t/e creditor refused to accet ay$ent &it/out 4ust cause. •

Art. 15. &n order t2at t2e consignation of t2e t2ing due may release t2e obligor, it must first be announced to t2e persons interested in t2e fulfillment of t2e obligation. T2e consignation s2all be ineffectual if it is not made strictly in consonance >it2 t2e provisions >2ic2 regulate payment. D11E +%B9S9*%S O CO-S9G-A*9Oa b c d e f g

%
3)


#%EOS9*3 %%C*S O a b c d

*/e roer roerty ty is is in 7custo 7custodia dia legis8 legis833 -ot e
ro$ transcrition: •

*!+&#&T!# -$* - $* ;A"&( C$N#&'NAT& C $N#&'NAT&$N $N >. */ere */ere $ust $ust be a debt debt due3 due3 t/er t/ere e $ust $ust be a debt debt o&ing o&ing.. 2. */at t/e consig consignatio nation n &as $ade because because of so$e so$e legal cause cause rovided rovided in t/e resent resent article. article. (t/e (t/e un4ust un4ust refusal of t/e creditor @. Erevi Erevious ous notice notice of t/e consig consignat nation ion /as been given given to t/e ersons ersons intere interest sted ed in t/e erfor$ erfor$anc ance e of t/e obligation. 1. */at t/e t/e a$ount or t/ing t/ing due &as laced laced at t/e t/e disosal disosal of t/e t/e court (actual (actual consi consigning gning or deosit deositing ing t/e t/ing due &it/ t/e cler) of court3 and ?. */at after after t/e consignat consignation ion /ad been $ade! $ade! t/e ersons ersons interest interested ed &ere notified notified t/ereof t/ereof..

B: &/at if t/e debtor decides to &it/dra& &/at /as been consigned! &ould t/at be allo&ed A: Jes. */e */e original obligation is revived. B: Can /e &it/dra& after t/e court finds t/at consignation is roer A: Generally! no! unless or t/e e2om t2e tender of payment s2all be proved, proved, in a proper case, and t2e announcement of t2e consignation in ot2er cases. T2e consignation consignation 2aving been made, made, t2e interested interested parties parties s2all also be notified notified t2ereof. D11/E

HO5 9S CO-S9G-A*9O- ,A#% >. 2.

*/e t/ings t/ings due due $ust be deosite deosited d &it/ t/e t/e roer roer 4udicial 4udicial aut/or aut/orities ities33 */er */ere e $us $ustt be be ro roof of t/at t/at::  *ender &as reviously $ade3  Or t/at t/e creditor /ad reviously notified t/e debtor t/at consignation &ill be $ade (in case tender is not re;uired Art. 150. T2e e?penses of consignation, >2en properly made, s2all be c2arged against t2e creditor. D11/E Art. 16. $nce t2e consignation 2as been duly made, t2e debtor may asB t2e judge to order t2e cancellation of t2e obligation. %efore t2e creditor 2as accepted t2e consignation, or before a judicial declaration t2at t2e consig consignat nation ion 2as been been proper properly ly made, made, t2e debtor debtor may >it2dr >it2dra> a> t2e t2ing t2ing or t2e sum deposited, allo>ing t2e obligation to remain in force. D11/E

'AL9# CO-S9G-A*9O-! %%C*S O: >. 2. @.

#ebtor #ebtor $ay $ay as) as) t/e 4udg 4udge e to cance cancell t/e oblig obligati ation3 on3 */e runnin running g of intere interest st is is sus susend ended3 ed3 9t s/ould s/ould be observed observed t/at before before t/e creditor creditor accets accets or or before t/e 4udge 4udge declares declares t/at consign consignatio ation n /as been roerly $ade! t/e obligation re$ains.

3


9,E+OE%+ CO-S9G-A*9O-3 %%C*S: >. 2.

9f i$r i$roe oerly rly $ade $ade!! oblig obligati ation on re$ai re$ains3 ns3 At t/e ti$e ti$e of consignatio consignation! n! t/e debt already already due3 due3 re;uisites re;uisites are absent absent  #%*O+ #%*O+ is in default. default.

Art. 161. &f, t2e consignation 2aving been made, t2e creditor s2ould aut2oriGe t2e debtor to >it2dra> t2e same, 2e s2all lose every preference >2ic2 2e may 2ave over t2e t2ing. T2e co3debtors, guarantors and sureties s2all be released. D11/1aE %ffects of 5it/dra&al a Obli Obliga gati tion on re$a re$ain ins3 s3 b Credit Creditor or loses loses any any refer referenc ence e over over t/e t/ing t/ing33 c Codebtors! Codebtors! guarantors guarantors and and sureties sureties are are released released (unles (unless s t/ey consented consented

LOSS O THE THING D/E 5H%- 9S A *H9-G CO-S9#%+%# LOS* a b c

5/en 5/en it eri eris/ s/es es33 5/en 5/en itit goes goes out out of of co$$ co$$er erce ce33 5/en 5/en it disa disaear ears s in suc/ suc/ a &ay t/at: t/at:  9ts e
-ote: */e ter$ loss does not refer strictly to actual or /ysical loss but conte$lates also i$ossibility of erfor$ance. 5HA* 9,EOSS99L9*J O E%+O+,A-C% 9-CL#%S a b

c

E/ys E/ysic ical al i$o i$oss ssib ibil ilit ity3 y3 Lega Legall i$o i$oss ssib ibil ilit ity3 y3  #irectly  ro/ibited by la&3  9ndirectly  e.g &/en debtor is re;uired to enter a $ilitary draft. ,ora ,orall i$o i$oss ssib ibil ilit ity y

Art. 16. An obligation >2ic2 consists in t2e delivery of a determinate t2ing s2all be e?tinguis2ed if it s2ould be lost or destroyed >it2out t2e fault of t2e debtor, and before 2e 2as incurred in delay. 42en by la> or stipulation, t2e obligor is liable even for fortuitous events, t2e loss of t2e t2ing does not e?tinguis2 t2e obligation, and 2e s2all be responsible for damages. T2e same rule applies >2en t2e nature of t2e obligation reuires t2e assumption of risB. D11/aE  =inds of $bligation Lto giveM >. to giv give e a gene generi ric c t/i t/ing ng33 2. to give give a se seci cifi fic c t/i t/ing ng %ffect of Loss G%-. %-. +L +L% %: Obli Obliga gati tion on is is e. 9f debt debtor or is is at at fau fault lt33 2. 5/en debtor debtor is $ade liable liable for for fortuito fortuitous us event event because because of: of:  Erovision of la&3  Contractual stiulation3  -ature of obligation re;uires t/e assu$tion of ris) (debtor 9-S*A-C%S &/en La& re;uires Liability even in case of ortuitous %vent: >. 2. @. 1. ?.

#ebt #ebtor or is in defa defaul ult3 t3 5/en debtor debtor /as ro$ised ro$ised to deliver deliver t/e sa$e sa$e t/ing t/ing to 2 or $ore ersons ersons &/o do not /ave /ave t/e sa$e interest interest33 Obliga Obligatio tion n aris arises es fro$ fro$ a cri$e3 cri$e3 5/en borro&er borro&er /as /as lent lent t/e t/ing t/ing to anot/er anot/er &/o is is not a $e$ber $e$ber of of /is o&n o&n HH3 5/en t/ing t/ing loaned /as been delivered delivered &it/ &it/ araisal araisal of value unless unless stiulated stiulated e
30


6.

5/en 5/en ayee ayee in solu solutio tio inde indebit bitii is in bad bad fait/ fait/..

B: 5/at about artial loss 5ill t/at e. 9f t/e generi generic c t/in t/ing g is is deli deli$it $ited3 ed3 2. 9f generic generic t/ing t/ing /as been segreg segregated ated or set set aside aside  it beco$ beco$es es secifi secific c no&. e.g. e.g. ,O-%J ,O-%J Art. 169. T2e courts s2all determine >2et2er, under t2e circumstances, t2e partial loss of t2e object of t2e obligation is so important as to e?tinguis2 t2e obligation. DnE Art. 165. 42enever t2e t2ing is lost in t2e possession of t2e debtor, it s2all be presumed t2at t2at t2e loss >as due to 2is fault, fault, unless unless t2ere is proof proof to t2e contra contrary, ry, and >it2ou >it2outt prejudice to t2e provisions of article 1165. T2is presumption presumption does not apply in case of eart2uaBe eart2uaBe,, flood, flood, storm, storm, or ot2er natural natural calamity. D11/7aE Art. >266. */e debtor in obligations to do s/all also be released &/en t/e restation beco$es legally or /ysically i$ossible &it/out t/e fault of t/e obligor. (>>K1a 

Article >266 refers to i$ossibility in obligations to do &/en t/e restation /as beco$e legally or /ysically i$ossible &it/out t/e fault of t/e obligor. */e i$ossibility $ust arise after t/e constitution of t/e obligation. ecause if it &ere rior or at t/e ti$e of t/e incetion! t/e nullity of t/e contract. Legal=/ysical Legal=/ysical i$ossibility $ust be after t/e constitution of obligation.

%ffect of Loss */ru ortuitous %vent in +ecirocal Obligation G%-. G%-. +L%: +L%:

*/e obli obligat gation ion t/at t/at &as not not e
%C%E*9O-S: >. 9n case case of lease lease  if ob4ect ob4ect is destroye destroyed! d! bot/ lease lease and rent rent are e
1. 2. 3. /.

9t $ig/t be /ysical! &/en by reason of its nature t/e act cannot be erfor$ed. Second! legal: a la& is subse;uently assed $a)ing t/e act illegal. Ob4ective &/en t/e act or service itself! &it/out considering t/e erson of t/e obligor! beco$es i$ossible. 9t is t/e act itself. */e last is sub4ective sub4ective &/ic/ is t/e oosite of ob4ective. ob4ective. */e act or service service cannot be done by t/e obligor! and t/e reason &/y you entered into t/e obligation is t/e erson &/o &ould erfor$ t/e act or t/e service.

B: 5/at /aens if t/ere is te$orary i$ossibility A: Jou $erely &ait for t/e i$ossibility but you still /ave to co$ly &it/ t/e obligation. %2@1 and >2@?! Art. Art. 16. 16. 42en 42en t2e service service 2as become become so diffi difficul cultt as to be manife manifestl stly y beyond beyond t2e contemplation of t2e parties, t2e obligor may also be released t2erefrom, in >2ole or in part. DnE

3


   

+efers to $oral i$ossibility or i$racticability due to c/ange of certain conditions3 +efers to ersonal obligation (or obligations to do and not real ( to give #oes not cover /ig/ly seculative contracts or agree$ents suc/ as stoc)s and aleatory contracts suc/ as insurance contracts ased on t/e doctrine of unforeseen events or rebus sic stantibus

+e;uisites: >. %ven or c/ange of circu$stances could not /ave been forseen at t/e ti$e of t/e e2atever may be t2e cause for t2e loss, unless t2e t2ing 2aving been offered by 2im to t2e person >2o s2ould receive it, t2e latter refused >it2out justification to accept it. D11/5E 

%ffect of Loss in Cri$inal Offenses  #O%S -O* %*9-G9SH OL9GA*9O-! %'%- 9 O+*9*OS %'%-* 9-*%+'%-%S e.g t/eft. So t/is is one of t/e e


%2ic2 t2e debtor may 2ave against t2ird persons by reason of t2e loss. D11/6E

CONDONATIONRE,ISSION CONDONATIONRE ,ISSION O A DEBT 9t is t/e gratuitous gratuitous abandon$en abandon$entt by t/e creditor creditor of /is rig/t against t/e debtor. Condonation=re Condonation=re$iss $ission ion is essentially a donation of t/e credit to t/e debtor. 9t is a bilateral act (not recirocal! &/ic/ re;uires t/e accetance by t/e donor. 9t is t/erefore! sub4ect to t/e rules on donations &it/ resect to accetance! a$ount and revocation 2. 9t $ay be $ade e<ressly or i$liedly. %<ress condonation s/all! furt/er$ore! co$ly &it/ t/e for$s of donation.

•

Art. 1. Condonation or remission is essentially gratuitous, and reuires t2e acceptance by t2e obligor. &t may be made e?pressly or impliedly. $ne and t2e ot2er Bind s2all be subject to t2e rules >2ic2 govern inofficious donations. !?press condonation s2all, furt2ermore, comply >it2 t2e forms of donation. D11/E

•

>. 2. @. 1. ?. 6. ". K. .

*/er */ere e $us $ustt be be an an agr agree ee$e $ent nt33 Eartie Earties s $ust $ust be caaci caacitat tated ed and $ust $ust cons consent ent33 */ere $ust be sub4ect sub4ect $atter $atter (ob4ect=re (ob4ect=restat station3 ion3 */e cause cause or consid considerati eration on $ust $ust be liberali liberality ty  essent essentially ially gratuitous gratuitous33 Obligation Obligation re$itted re$itted $ust $ust be be de$andable de$andable at t/e t/e ti$e ti$e of re$is re$ission sion33 */e re$is re$ission sion $ust not be be inoffic inofficious ious  not e
•

A.

!##!NT&A" *!+&#&T!# -$* *!&##&$N *!&## &$N

C"A##!# C"A# #!# $- *!&##&$N *!&# #&$N AS *O %%C*=%*%-* %%C*=%*%-* >. *otal

2

-ote: On accetance: see Art. "1?! on a$ount Arts "?0"?2! and on revocation! Arts. "60"6? of t/e -e& Civil Code ($ore t/oroug/ly discussed in roerty /


2.

Eartial (uto t/e ortion= or $ay refer to accessory obligation

.

AS *O #A*% O %%C*9'9*J >. 9nter vivos (during lifeti$e 2. ,ortis Causa (after deat/

C.

AS *O O+, >. 9$lied (no for$ality  conduct is enoug/ 2. %<ress=for$al



9f debtor does not accet and creditor does not collect &it/in t/e statute of li$itations! t/e debt $ay be said to /ave been e
-ote fro$ transcrition: -o&! $ay t/e creditor &aive interest but de$and fulfill$ent of t/e rincial Jes. ,ay t/e court &aive interest -o. Can t/e court lo&er interest Jes! if unconscionable or ine;uitous. ,ay t/e court lo&er enalty Jes. Can it erase enalty -o. (Ligutan case! +CC case Art. 11. T2e delivery of a private document evidencing a credit, made voluntarily by t2e creditor to t2e debtor, implies t2e renunciation of t2e action >2ic2 t2e former 2ad against t2e latter. &f in order to nullify t2is >aiver it s2ould be claimed to be inofficious, t2e debtor and 2is 2eirs may up2old it by proving t2at t2e delivery of t2e document >as made in virtue of payment of t2e debt. D11//E Art. 1. 42enever t2e private document in >2ic2 t2e debt appears is found in t2e possession of t2e debtor, it s2all be presumed t2at t2e creditor delivered it voluntarily, unless t2e contrary is proved. D11/0E   

Eresu$tion of re$ission revails over resu$tion of ay$ent. */e rivate docu$ent $ust refer to t/e original of t/e original (because it $ay be issued in dulicate coies -ot true in case of ublic docu$ents because t/ere is al&ays a coy in t/e arc/ives to rove t/e credit.

)*!#)T&$N &N I$&NT8#$"&(A* $%"&'AT&$N  9n Solidary! &/ole obligation is re$itted3  9n 4oint! only t/e s/are of t/e #ebtor to &/o$ creditor /as granted re$ission. Art. 17. T2e renunciation of t2e principal debt s2all e?tinguis2 t2e accessory obligationsF but t2e >aiver of t2e latter s2all leave t2e former in force. D110E Art. 19. &t is presumed t2at t2e accessory obligation of pledge 2as been remitted >2en t2e t2ing pledged, after its delivery to t2e creditor, is found in t2e possession of t2e debtor, or of a t2ird person >2o o>ns t2e t2ing. D1101aE 

Only t/e accessory is re$itted! t/e rincial obligation re$ains in force.

%&'31$&' &R 2ER0ER &3 R0"!$ Art. 15. T2e obligation is e?tinguis2ed from t2e time t2e c2aracters of creditor and debtor are merged in t2e same person. D110aE ,%+G%+=CO-S9O-  t/e $eeting in one erson of t/e ;ualities of creditor and debtor &it/ resect to t/e sa$e obligation. +%B9S9*%S >. 2. @. 1.

9t s/ould ta)e lace bet&een rincial debtor and creditor.  -o confusion if #ebtor and Creditor reresent different 4uridical entities even if bot/ are t/e sa$e. ,erger $ust be clear and definite. */e very obligation involved $ust be t/e sa$e or identical */e confusion $ust be total or as regards t/e entire obligation (e2""  

9f t/e reason for confusion ceases! t/e obligation is revived. (%
/1


Art. 16. erger >2ic2 taBes place in t2e person of t2e principal debtor or creditor benefits t2e guarantors. Confusion >2ic2 taBes place in t2e person of any of t2e latter does not e?tinguis2 t2e obligation. D1107E 

*/e e2om t2e t>o c2aracters concur.

CO,PENSATION OR O SETTING 

9t is a $ode of e


9t is a si$lified or abbreviated ay$ent because t/e 2 debts are e
=inds8Classes of Compensation 9

A# T$ &T# !T!NT

a' b' 99

T(T#*  obligation are co$letely e
A# T$ &T# $*&'&N8CA#!

a'

*%+#*  ta)es lace by oeration of la&.

b'

6(*5!T#0>3$(!6%!TI(!#* agreed to by arties3 +e;uisites: (> eac/ of t/e arties can disose of t/e credit /e see)s to co$ensate3 (2 t/e arties agree to $utual e
c'

?5I$I#* <"%T-(//  $ust be leaded3 effective uon order of t/e Court. (*&o debts arising fro$ final and e
d'

/#$5*T#TI6%  one arty /as t/e c/oice of clai$ing t/e co$ensation. T2is is compensation >2ic2 can be set up only at t2e option of a creditor >2en legal compensation cannot taBe place because of >ant of some legal reuisites for t2e benefit of t2e creditor.

#9S*9-C*9O-S

-

)A!NT Eay$ent $ust be co$lete and indivisible3 9nvolves action=delivery Caacity to disose of t/e t/ing aid and caacity to receive ay$ent are re;uired

As to  of Eersons As to  of Obligation

-

-

C$)!N#AT&$N 2 ersons &/o are $utually creditor and debtor to eac/ ot/er3 2 obligation

C$)!N#AT&$N *a)es lace by oeration of la& and e
-

C$)!N#AT&$N Eartial e
-

!*'!* one erson in &/o$ is $erged t/e ;ualities of C and #3

-

one obligation

-

C$NT!*C"A& $* #!T3$-,ust be leaded to be effectual

-

/2


-

5or)s as a sort of 4udicial co$ensation! rovided t/at re;uire$ents of +OC are observed.

Art. 1/. Compensation s2all taBe place >2en t>o persons, in t2eir o>n rig2t, are creditors and debtors of eac2 ot2er. D1105E Art. 10. &n order t2at compensation may be proper, it is necessary: Dalt2oug2 t2e parties may not be a>are of it @ C- Art. 10E D1E T2at eac2 one of t2e obligors be bound principally, and t2at 2e be at t2e same time a principal creditor of t2e ot2erF DE T2at bot2 debts consist in a sum of money, or if t2e t2ings due are consumable, t2ey be of t2e same Bind, and also of t2e same uality if t2e latter 2as been statedF D7E

T2at t2e t>o debts be dueF

D9E

T2at t2ey be liuidated and demandableF

D5E T2at over neit2er of t2em t2ere be any retention or controversy, commenced by t2ird persons and communicated in due time to t2e debtor. D1106E



N!'AT&;! *!+&#&T!# $- "!'A" C$)!N#AT&$N

a'

*/at over neit/er of t/e debts $ust t/ere be any retention or controversy co$$enced by @ rd ersons and co$$unicated in due ti$e to t/e debtor. */ere $ust /ave been no &aiver of t/e co$ensation3 */e co$ensation of debts $ust not /ave been ro/ibited by la&.

b c



>. 2. @. 1. ?. 6.

E+OH99*%# CO,E%-SA*9O-

#ebts arising fro$ a deositu$ e
-ote: */ere can be no co$ensation &/en t/e ob4ect of t/e obligation is secific or deter$inate because t/ere is only one deter$inate or secific t/ing! you cannot dulicate t/at. B: ,ay t/ere be co$ensation of obligations sub4ect to conditions A: 9t deends. 9f t/e conditions are resolutory! &ede. ut if one is recirocal and t/e ot/er is susensive! t/ere can be no co$ensation. Art. 1/. Not>it2standing t2e provisions of t2e preceding article, t2e guarantor may set up compensation as regards >2at t2e creditor may o>e t2e principal debtor. D110E 5/y is a guarantor allo&ed to set u co$ensation ecause it &ill be beneficial to /i$! /e &ill be released fro$ t/e debt. Art. 1/1. Compensation may be total or partial. 42en t2e t>o debts are of t2e same amount, t2ere is a total compensation. DnE 

*rue for all different )inds of co$ensation &/et/er voluntary! legal! etc.

Art. 1/. T2e parties may agree upon t2e compensation of debts >2ic2 are not yet due. DnE  Alies to conventional or voluntary co$ensation. Art. 1/7. &f one of t2e parties to a suit over an obligation 2as a claim for damages against t2e ot2er, t2e former may set it off by proving 2is rig2t to said damages and t2e amount t2ereof. DnE

/3


?50I"I$TI(! (/ $(50T 0% 6#*5% (/ %#! G%-. +L%: Iurisdictionn deends uon t/e totality of t/e de$and in all t/e causes of action! irresective of &/et/er t/e lural cases arose out of t/e sa$e or different transactions. %C%E*9O-S >. 5/ere t/e clai$ 4oined under t/e sa$e co$lainant are searately o&ed by! or due to! different arties in &=c cases eac/ searate clai$ furnis/es t/e 4urisdictional test. 2.

5/ere not all t/e causes of action 4oined are de$ands or clai$s for $oney. Art. 1/9. 42en one or bot2 debts are rescissible or voidable, t2ey may be compensated against eac2 ot2er before t 2ey are judicially rescinded or avoided. DnE

-ote: */e rescissible obligations /ere refer to Art. >@K>. Art. 1/5. T2e debtor >2o 2as consented to t2e assignment of rig2ts made by a creditor in favor of a t2ird person, cannot set up against t2e assignee t2e compensation >2ic2 >ould pertain to 2im against t2e assignor, unless t2e assignor >as notified by t2e debtor at t2e time 2e gave 2is consent, t2at 2e reserved 2is rig2t to t2e compensation. &f t2e creditor communicated t2e cession to 2im but t2e debtor did not consent t2ereto, t2e latter may set up t2e compensation of debts previous to t2e cession, but not of subseuent ones. &f t2e assignment is made >it2out t2e Bno>ledge of t2e debtor, 2e may set up t2e compensation of all credits prior to t2e same and also later ones until 2e 2ad Bno>ledge of t2e assignment. D110/aE *"!#:

1.

Assign$ent &it/ consent of debtor  Co$ensation cannot be setu! it serves as a &aiver e
2.

Assignment >it2 Bno>ledge but >it2out consent of debtor  co$ensation can be setu re: debts before t/e cession! but not after t/e assign$ent.

3.

Assignment made >8out Bno>ledge of debtor  debtor can set u co$ensation as a defense for all debts $aturing rior to /is )no&ledge of assign$ent.

ro$ transcrition: Situation: A o&es  : >. a bracelet &ort/ >00!000 due on Ian >! 20013 2. "?!00 due on Iune >!2006! @. >00!000 due on #ec. >! 0?! 1. 2?!000 due on Aug. >! 01  o&es A >. K0!000 due on eb. 2?! 063 2. ?0!000 due on Aug. >?!0?. @. "?! 000 due on Oct. >0!01. 1. A dining set &ort/ 200!000 due on Aril >! 0@ ?. A co& &ort/ >?!000 eonverted into da$ages by reason of non erfor$ance.  assigned /is credit to C on #ec. 2?! 200?. B: 5/at are t/e rig/ts of A 5/at debts can /e clai$ co$ensation 5/at debts can be t/e sub4ect of co$ensation A: 9t deends: >. 9f &it/ consent! &ala. (unless t/ere is reservation of rig/t to clai$. 2. 9f &it/ )no&ledge! &it/out consent: all debts revious to t/e assign$ent. (2! @! ?

//


@. Assign &it/out )no&ledge: it &ould no& deend &/en A ac;uired )no&ledge! because #ec. 2?! 0? is not t/e rec)oning oint. Art. 1/6. Compensation taBes place by operation of la>, even t2oug2 t2e debts may be payable at different places, but t2ere s2all be an indemnity for e?penses of e?c2ange or transportation to t2e place of payment. D1100aE 

Alies to co$ensation by oeration of la&3 9nde$nity for e<enses of transortation (of goods=ob4ects  9nde$nity for e<enses of e
Art. 1/. Compensation s2all not be proper >2en one of t2e debts arises from a depositum or from t2e obligations of a depositary or of a bailee in commodatum. Neit2er can compensation be set up against a creditor >2o 2as a claim for support due by gratuitous title, >it2out prejudice to t2e provisions of paragrap2  of article 71. D1aE Art. 1//. Neit2er s2all t2ere be compensation if one of t2e debts consists in civil liability arising from a penal offense. DnE •

>. 2. @. 1. ?.

4!N "!'A" C$)!N#AT&$N CANN$T TA=! )"AC!

5/en one debt arises fro$ a deositu$3 5/en one debt arises fro$ t/e obligation of a deositary3 5/en one debt arises fro$ t/e obligation of a bailee in co$$odatu$3 5/en one debt arises because of a clai$ for suort due to gratuitous title. 5/en t/e debt arises fro$ a cri$inal liability. ut t/e offended arty $ay clai$ co$ensation (t/is is an e
a

b' c' d e

$%"&'AT&$N# $- A (!)$#&TA*

*/e #eositary is obliged to )ee t/e t/ing safely and to return it &/en re;uired to t/e deositor! or to /is /eirs and successors or to erson &/o $ay /ave been designated in t/e contract. nless stiulated to contrary! t/e deositary cannot deosit t/e t/ing to @ rd ersons. 9f deosit to @ rd erson is allo&ed! t/e deositary is liable for t/e loss if t/e erson is careless or unfit. #eositary is resonsible for t/e negligence of /is e$loyees. #eositary cannot $a)e use of t/e t/ing deosited &=out e<ress er$ission of deositor ot/er&ise /e s/all be liable for da$ages  e2ic2 are susceptible of compensation, t2e rules on t2e application of payments s2all apply to t2e order of t2e compensation. Art. 10. 42en all t2e reuisites mentioned in article 10 are present, compensation taBes effect by operation of la>, and e?tinguis2es bot2 debts to t2e concurrent amount, even t2oug2 t2e creditors and debtors are not a>are of t2e compensation. D1aE   

Legal co$ensation ta)es lace auto$atically unless t/ere /as been valid &aiver t/ereof. Co$ensation &=c e
B: ,ay it be ossible for one clai$ing co$ensation desite t/e fact t/at t/e one clai$ing /as a debt t/at already rescribed A: Jes! for as long as t/e re;uisites /ave $et at a certain oint! even if one of t/e debts /ad already rescribed at t/e ti$e of t/e clai$ for co$ensation. As long as at one oint! all t/e re;uisites $entioned in >2" are resent before t/e debt actually rescribed! t/en t/ere can be co$ensation. B: ,ay t/e benefit of co$ensation be renounced or &aived A: Jes. %2K? aragra/ >.

NOVATION

/$


-O'A*9O-  substitution or c/ange of an obligation by anot/er &=c e st eit/er by c/anging its ob4ect or rincial condition or substituting anot/er in lace of debtor! or subrogating a @ rd erson in t/e rig/ts of creditor. Art. 101. $bligations may be modified by: D1E C2anging t2eir object or principal conditionsF DE #ubstituting t2e person of t2e debtorF D7E #ubrogating a t2ird person in t2e rig2ts of t2e creditor. D17E 2I!" (/ !(6#TI(! 9 According to its Ob4ect=Eurose a +eal=ob4ective  c/anging t/e ob4ect=rincial conditions of obligation. b Eersonal=sub4ective  c/ange of ersons i. Substituting t/e erson of debtor.

ii.

c

Subrogating a @rd erson in t/e rig/ts of creditor (by agree$ent or by la& ,i
99 According to or$ of its Constitution a %<ress b 9$lied (inco$atibility of 2 obligation 999 According to its %
0%45I"IT%" (/ !(6#TI(! a

*/e e
b c d

9s t/ere novation if t/e a$ount in t/e ne& obligation is increased -o. ut if t/e ne& obligation is increased but if searate fro$ t/e old obligation (*/ere is an increase in t/e old but it is found in a searate docu$ent */ere is because t/e rior ro$issory notes are e. */ere $ust be a revious valid obligation3 2. */e consent of t/e arties to e201

/)


a b

%<ress -ovation  declared in une;uivocal ter$s 9$lied  co$lete=substantial inco$atibility  substantial c/anges:  9n ob4ect=sub4ect $atter of contract  9n cause or consideration of contract  9n rincial ter$s or conditions of contract  9f debt sub4ect to condition is $ade an absolute one &=out a condition  +eduction of ter$=eriod stiulated  5=out consent of subscribers

9-S*A-C%S 5H%- CO+* H%L#: -O %*9-C*9'% -O'A*9Oa b c d e f g / i 4

Slig/t alterations or $odifications in construction lans of buildings. -e& contract $erely contains sule$entary agree$ent 5/en additional interest is agreed uon 5/en additional security is given 5/en after a final 4udg$ent! a contract &as entered into recisely to rovide a $et/od of ay$ent ot/er t/an t/at stated in 4udg$ent. 5/en a guarantor enters into an agree$ent &it/ creditor t/at /e (guarantor &ill also be a rincial debtor. 5/en creditor in t/e $eanti$e refrains fro$ suing debtor or even &/en creditor $erely e
Art. 107. -ovation &/ic/ consists in substituting a ne& debtor in t/e lace of t/e original one! $ay be $ade even &it/out t/e )no&ledge or against t/e &ill of t/e latter! but not &it/out t/e consent of t/e creditor. Eay$ent by t/e ne& debtor gives /i$ t/e rig/ts $entioned in articles >2@6 and >2@". (>20?a 2 inds of Eersonal=Sub4ective -ovation >. C/ange of debtor (assive 2. C/ange of Creditor (active O+,S (Eassive -ovation %<ro$ision  initiative co$es fro$ @rd erson3 it is essential t/at old debtor be released fro$ /is obligation.

9

*euisites

1. 2. @.

9nitiative fro$ @ rd erson -e& debtor and creditor $ust consent Old debtor $ust be released fro$ /is obligations

99 #elegacion  initiative fro$ debtor for it is /e &/o delegates anot/er to ay3 @ arties (old! ne& debtor and creditor $ust agree. +e;uisites >. 9nitiative fro$ old debtor 2. All arties concerned $ust consent  9$lied=e<ress  efore=after ne& debtor /as given consent  ,aybe conditional  /as to be fulfilled. @ Earties #elegante  original debtor #elegatario  creditor #elegado  ne& debtor 107: is e<ro$ission. 9n e<ro$ission! t/e original debtorMs consent is not necessary. -o&! &/at &ould be t/e effect: >2@6 and >2@". 5/at /aens if t/e ne& debtor is insolvent 9s t/e old debtor liable for t/e ne& debtor -o! recisely because /e did not consent or it &as $ade &it/out /is )no&ledge. He cannot be /eld liable by reason of insolvency of t/e ne& debtor.

/


-o&! &/at about delegacion. 5/o rooses t/e ne& debtor */e old debtor. So in bot/ cases t/e consent of t/e creditor is al&ays necessary. -o& &/at /aens if t/e ne& debtor is insolvent. 5ill t/at revive t/e old obligation 9t does not. %21. 9f t/e substitution is &it/out t/e )no&ledge or against t/e &ill of t/e debtor! t/e ne& debtorMs insolvency or nonfulfill$ent of t/e obligations s/all not give rise to any liability on t/e art of t/e original debtor. (n  +efers to e<ro$ision Art. 105. */e insolvency of t/e ne& debtor! &/o /as been roosed by t/e original debtor and acceted by t/e creditor! s/all not revive t/e action of t/e latter against t/e original obligor! e206a  +efers to delegacion +e;uisites to Hold Old debtor Liable >. 9nsolvency &as already e
a. b. c. d.

@rd erson is only an agent! $essenger or e$loyee of debtor @rd erson action only as guarantor= surety -e& debtor $erely agreed to $a)e /i$self solidarily liable for t/e obligation. -e& debtor $erely agreed to $a)e /i$self 4ointly or artly liable for t/e obligation

Art. 106. 5/en t/e rincial obligation is e20" Art. 10. 9f t/e ne& obligation is void! t/e original one s/all subsist! unless t/e arties intended t/at t/e for$er relation s/ould be e20Ka  9f old obligation is void  no valid novation3  9f old obligation is voidable and annulled  no $ore obligation3 novation is also void. 10/: 5/en can a debtor clai$ annul$ent 5/at &ould be an instance &/erein a debtor can clai$ annul$ent A very co$$on defense &ould be rescrition of debt. ut can a rescribed debt be t/e sub4ect of novation Can a rescribed debt be an ob4ect of a contract Jes. So a rescribed debt can be t/e sub4ect of novation in as $uc/ as t/e rescribed debt can be t/e sub4ect of a contract. ut can it be a defense of t/e obligor */e rescrition of t/e debt Jes. Can $inority be a defense Jes. ut can it also be sub4ect to ratification Jes. Art. 100. 9f t/e original obligation &as sub4ect to a susensive or resolutory condition! t/e ne& obligation s/all be under t/e sa$e condition! unless it is ot/er&ise stiulated. (n G%-. +L%: */e conditions attac/ed to t/e old obligation are also attac/ed to t/e ne& obligation. %C%E*9O-: 9f t/ere is a contrary stiulation.

Art. 17. Subrogation of a t/ird erson in t/e rig/ts of t/e creditor is eit/er legal or conventional. */e for$er is not resu$ed! e
/0


ASS9G-,%-* O C+%#9* ,ere transfer of sa$e rig/t or credit (transfer does not e
CO-'%-*9O-AL S+OGA*9O%
-

+e;uires debtorFs consent3 #efect in old obligation $ay be cured in suc/ a &ay t/at t/e ne& obligation beco$es entirely valid.

Art. 171. Conventional subrogation of a t/ird erson re;uires t/e consent of t/e original arties and of t/e t/ird erson. Subrogation is different fro$ e< ro$ission or delegacion because t/e latter involves a c/ange in t/e erson of t/e debtor! &/ile subrogation involves c/ange in t/e erson of t/e creditor. ut subrogation is classified into conventional (by agree$ent of t/e arties or legal (>@02. ut $ay a legal subrogation be c/anged into conventional subrogation Jes! diba Autono$y of &ill. So! &/en is t/ere conventional subrogation 9t &ould re;uire t/e consent of t/e original arties and of t/e t/ird erson. (Licaros vs. Gat$aitan case Art. 17. 9t is resu$ed t/at t/ere is legal subrogation: (> 5/en a creditor ays anot/er creditor &/o is referred! even &it/out t/e debtorMs )no&ledge3 (2 5/en a t/ird erson! not interested in t/e obligation! ays &it/ t/e e<ress or tacit aroval of t/e debtor3 (@ 5/en! even &it/out t/e )no&ledge of t/e debtor! a erson interested in t/e fulfill$ent of t/e obligation ays! &it/out re4udice to t/e effects of confusion as to t/e latterMs s/are. So! &/en is t/ere legal subrogation (17 >. &/en t/e creditor ays anot/er creditor &/o is referred! even &it/out t/e debtorMs )no&ledge3 Q5/o is t/e creditor &/o is referred A! &/ose credit of >00!000 /as an interest of >2R er annu$! or ! &/ose credit of >00!000 is secured by a c/attel $ortgage  is referred! because in t/e event of default by t/e debtor! need not go to court to file an action for t/e collection of t/e >00!000. All /e /as to do is to foreclose t/e $ortgage and /is credit is e2>2a  9f transferred credit is sub4ect to susensive condition! ne& creditor cannot collect until after suc/ condition is fulfilled. 177: So desite t/e fact t/at t/ere is legal subrogation! t/e arties $ay still enter into a conventional subrogation. Art. 179. A creditor! to &/o$ artial ay$ent /as been $ade! $ay e
C*'T+ACT

/


Art. 175. A contract is a $eeting of $inds bet&een t&o ersons &/ereby one binds /i$self! &it/ resect to t/e ot/er! to give so$et/ing or to render so$e service. (>2?1a CO-*+AC*  is a 4uridical convention $anifested in legal for$! by virtue of &=c! one or $ore ersons bind t/e$selves in favor of anot/er or ot/ers! or recirocally! to t/e fulfill$ent of a restation to give! to do or not to do. %L%,%-*S (%ssential Consent Sub4ect $atter Cause=consideration -A*+AL %le$ents  t/ose found in certain contracts and resu$ed to e
According to -ormation Consensual  erfected by consent +eal  erfected by delivery or$al=sole$n  t/ose &/ere secial for$alities are essential before contract $ay be erfected.

a. b. c.

According to Cause8!uivalence of ;alue of )restations Onerous  interc/ange of e;uivalent valuable considerations Gratuitous= lucrative  free! one arty receives no e;uivalent restation +e$unerative  one &/ere one restation is given for a benefit or service t/at /ad been rendered reviously.

a. b. c.

According to &mportance8 (ependence of $ne upon Anot2er Erincial  contract stands alone by itself Accessory  deends for its e
a. b.

)arties (elegated nilateral  one arty /as obligation ilateral  bot/ arties are obliged to give or render recirocal restations

a. b.

Name8(esignation -o$inate  contract /as a na$e 9nno$inate  contract /as no na$e

a. b.

*isB of -ulfillment Co$$utative  arties conte$lated a real fulfill$ent3 e;uivalent value are given (lease Aleatory  fulfill$ent is deendent uon c/ance3 values vary.

%.

C.

(.

!.

-.

'. a. b.

.

Time of )erformance %
a. b. c.

#ubject atter Contract involving t/ings (eg. Sale Contract involving +ig/ts=credits (usufruct! assign$ent of credits Contract involving services (carriage

a. b.

$bligation &mposed and regarded by "a> Ordinary 9nstitutional

a. b.

!vidence *euired for its )roof Earol=oral +e;uired &ritten roof

a. b.

No. of )ersons actually and p2ysically entering into Contracts Ordinary (2 Autocontracts  one reresents 2 oosite arties but in different caacities

&.

I.

=.

$


". a. b.

of )ersons participating in (rafting a Contract Ordinary  e.g sale Contract of Ad/esion  buyer or erson interested is insured! signifies /is consent by signing t/e contract.

a. b.

Nature Eersonal 9$ersonal

.

"T#+%" (/ $(!T0#$T >. 2. @.

Erearation (concetion  negotiations bet&een arties Eerfection (birt/  agree$ent3 ele$ents of sub4ect $atter and valid cause  acceted by $utual consent. Consu$$ation (ter$ination  ter$s of contract are erfected.

%asic )rinciples8C2aracteristics of Contract >. 2. @. 1. ?.

reedo$ to stiulate Obligatory force and co$liance in good fait/ Eerfection by $ere consent ot/ arties are $utually bound +elativity

$ontract 4uridical convention $anifested in legal for$! by virtue of &/ic/ one or $ore ersons bind t/e$selves in favor of anot/er or ot/ers! or recirocally! to t/e fulfill$ent of a restation to give! to do! or not to do. 175 says t/at a contract is t/e $eeting of $inds bet&een t&o ersons &/ereby one binds /i$self &it/ resect to t/e ot/er to give so$e t/ing or to render so$e service. 9t does not $ean t/at t/e arties are only li$ited to only t&o ersons. */e aroriate ter$ is to arties because t/ere can be as $any ersons in a contract as t/ey are interested in t/e contract. ,ay a erson enter into a contract &it/ /i$self Jes! but in different caacities. (contracts of ad/esion He can be a vendor and a vendee at t/e sa$e ti$e only t/at in one contract /e $ig/t $erely be an agent and t/e ot/er t/e buyer. So different caacities in one erson. -o&! $ay any erson 4ust enter into a contract 9s t/at rig/t absolute -o! because t/ere are certain li$itations. Suc/ as: /usbands and &ives cannot enter into contracts involving roerties! e
$1


*o arrive at a consu$$ated or erfected contract! t/ere are t/ree stages: &/en t/e arties bargain or negotiate! you call t/at rearation or generation. Ano ang )asa$a sa negotiation */e rice. */en you /ave erfection! t/e birt/ and t/e erfection of t/e contract. And &/en you ay t/e rice and /e delivers &/at you /ave boug/t! t/en t/at is consu$$ation or deat/ of t/e contract. ecause t/ere is no& fulfill$ent or erfor$ance of t/e ter$s agreed uon in t/e contract. -o&! /o& are contracts classified irst is according to t/e degree of deendence! a contract $ay be rearatory in nature suc/ as a contract of agency because t/is &ould lead to future transactions. 5/y is it called rearatory 9t is called suc/ in as $uc/ as it loo)s for&ard to future transactions. -o& &/at are t/ose future transactions t/at &ill arise fro$ a contract of agency 9t &ould deend to t/e o&ers granted. 9f J is aut/oriDed to lend $oney! &/at &ould be t/e future transaction t/at &ould arise A contract of loan. */is is &/at you call as future transactions. So! t/e contract of loan is t/e rincial contract. A contract $ig/t also be considered accessory because its e2@ located in %coland #.C. consisting of ?00 s;. $. And if A &ill be unable to reurc/ase t/e roerty &it/in t/e eriod of > year! t/en Ms rig/t over t/e roerty s/all be absolute and unconditional. -o&! loo)ing at it! &ould you believe t/at t/at is a valid deed of sale ta)ing into account t/at t/e land is located in %coland! and only for 20 for ?00s;. $. 5ould t/e arties no& be bound by t/at agree$ent in case t/ere is a doubt -o! because &/ile it $ig/t be true t/at t/e stiulation is t/e la& bet&een t/e arties! /o&ever! t/e rig/ts and obligations &/ic/ arise by reason of t/is contract is not governed by t/e stiulations. 9n fact! by loo)ing at it! it &ould see$ t/at t/e contract entered into is one of $ortgage! only couc/ed differently by t/e arties. or one! t/e consideration is very very lo&. Second! t/ere is a eriod to reurc/ase &it/in one year. So t/ose are t/e considerations t/at $ust be ta)en toget/er &/en t/e arties entered into t/e agree$ent. */ere &ould be no ;uestion if t/e consideration &as 20$illion! t/at &ould really be a deed of sale &it/ rig/t to reurc/ase because t/e consideration given is really e;uivalent to t/e value of t/e roerty based on its location. So in t/at case! t/e SC said! in case of doubt! it is one of e;uitable $ortgage! not of sale &it/ rig/t to reurc/ase. So! t/at is an e
$2


-

not absolute because t/ere are li$itations! suc/ as /usband and &ives cannot enter into a contract sub4ect to certain e
9nno$inate contracts s/all be regulated by t/e stiulations of t/e arties! by t/e rovisions of *itles 9 and 99 Art. 17. of t/is oo)! by t/e rules governing t/e $ost analogous no$inate contracts! and by t/e custo$s of t/e lace. (n 9 =inds of &nnominate Contracts i. #o ut #es ( 9 give t/at you $ay give ii. #o ut acias ( 9 give t/at you $ay do iii. acio ut #es (9 do t/at you $ay give iv. acio ut acias (9 do t/at you $ay do *ules 'overning &nnominate i. Stiulations of arties ii. Erovisions of *itle 9 and 99 iii. +ules governing $ost analogous no$inate contract iv. Custo$s of lace 17: 9nno$inate Contracts */ese are contracts t/at /ave no secific na$e. nli)e &/en you enter into a contract of sale! t/ere is t/is deed of sale3 &/en you rent! t/ere is t/is contract of lease! or &/en you borro& $oney! and it is secured by a ledge! it is a loan &it/ ledge. Here! t/e agree$ent /as no secific na$e! li)e &/en a la&yer and a client enters into an agree$ent &/ereby t/e client /ires t/e services of t/e la&yer! t/ere is no secific na$e. */ere are four )inds of inno$inate contracts >. #o ut des ( 9 give and you give 2. #o ut facias ( 9 give and you do @. acio ut des ( 9 do and you give 1. acio ut facias ( 9 do and you do */ere &as t/is very old case. */ere &as t/is Saniard &/o ca$e to t/e E/iliines and &anted to tour t/e E/iliines. nfortunately! /e did not )no& /o& to sea) t/e local dialect. 5/en one of t/e iliinos learned t/e dile$$a of t/e Saniard! t/e resented /i$self to do t/e interretation. So /e &ent around t/e island. After t/e tour! t/e iliino no& de$anded ay$ent for /is services. */e Saniard countered t/at t/ere &as no contract bet&een t/e$ because t/e iliino resented /i$self! voluntarily entered into t/e re;uest of t/e Saniard. ut t/e SC said t/at as soon as you /ave /ired t/e services of t/e erson and you $ade use of t/e talent of t/at erson! /e is t/erefore entitled for co$ensation. +egardless if t/ere is a contract or not. -o&! in one bar e2?6a 

*/e contract $ust bind bot/ contracting arties3 its validity or co$liance cannot be left to t/e &ill of one of ,utuality of contracts  bot/ arties are bound.

$onsequences of utuality >. 2.

A arty cannot revo)e or renounce a contract &=o t/e consent of t/e ot/er! nor can /ave it set aside on t/e ground t/at /e /ad $ade a bad bargain. 5/en t/e fulfill$ent of condition deends uon t/e sole &ill of debtor! t/e conditional obligation is void if t/e condition is susensive3 if it is resolutory it is valid.

17/: Sea)s of $utuality of contracts t/at bot/ arties $ust be bound by t/e agree$ents t/at t/ey /ave entered into. 9ts validity and co$liance cannot be left to t/e &ill of only one of t/e$. So! in t/is case! t/e resu$tion is t/at bot/ arties at t/e ti$e of t/e negotiation! at t/e ti$e of t/e bargaining stage! t/ey stood on e;ual footing. ,eaning eac/ one of t/e$ articiated during t/e negotiation stage! recisely &/ic/ lead to t/e erfection of t/e contract. So! $utuality is t/at bot/ arties $ust be bound to t/e contract! it cannot be left to one of t/e arties alone leaving t/e ot/er arty free fro$ co$lying &it/ &/at is incu$bent uon /i$.

$3


-

-

>@0K: */e contract $ust bind bot/ contracting arties3 its validity cannot be left to t/e &ill of one of t/e$. ,utuality of contract. */e binding effect of t/e contract on bot/ t/e arties is based on t/e rinciles t/at (> obligations arising fro$ contracts /ave t/e force of la& bet&een t/e contracting arties3 and (2 t/ere $ust be $utuality bet&een t/e arties based on t/eir essential e;uality. Iust as nobody can be forced to enter into a contract! in t/e sa$e $anner once a contract is entered into! no arty can renounce it unilaterally or &it/out t/e consent of t/e ot/er. */e fact t/at a arty $ay not /ave fully understood t/e legal effect of t/e contract is no ground for setting it aside. */e unilateral act of one arty in ter$inating t/e contract &it/out legal cause $a)es it liable for da$ages.

-

Allied an) case: . 9t is a urely e
-

*/e fact t/at suc/ otion is binding only on t/e lessor and can be e
 %.g. in a contract of sale! t/e fi2at is euitable under t2e circumstances. DnE Art. 1711. Contracts taBe effect only bet>een t2e parties, t2eir assigns and 2eirs, e?cept in case >2ere t2e rig2ts and obligations arising from t2e contract are not transmissible by t2eir nature, or by stipulation or by provision of la>. T2e 2eir is not liable beyond t2e value of t2e property 2e received from t2e decedent. &f a contract s2ould contain some stipulation in favor of a t2ird person, 2e may demand its fulfillment provided 2e communicated 2is acceptance to t2e obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. T2e contracting parties must 2ave clearly and deliberately conferred a favor upon a t2ird person. D15aE

1rinciple of 0elativity 

Contracts are generally effective only bet&een t/e arties! t/eir assigns and t/eir /eirs.

%xceptions

1. 2.

5/ere obligations arising fro$ t/e contract are not trans$issible by t/eir nature! by stiulation in favor of a @ rd arty. 5/ere t/ere is stiulation Eour Autri ( a stiulation in favor of @ rd erson 5/ere a t/ird erson induces anot/er to violate /is contract

@.

/.

5/ere in so$e cases! @rd ersons $ay be adversely affected by a contract &/ere t/ey did not articiate. 5/ere la& aut/oriDes t/e creditor to sue on a contract entered into by /is debtor.

?.

*euisites of #tipulation )our Autri

a' b' c d

*/ere $ust be a stiulation in favor of a @ rd erson3 Contracting arties $ust /ave clearly and deliberately conferred a favor uon a @ rd erson3 A $ere incidental benefit or interest of a erson is not sufficient */e stiulation $ust be art of contract and not t/e &/ole of t/e contract3

$/


e' f' g

@rd erson co$$unicated /is accetance to obligor before its revocation3 */ere $ust be no relation of agency bet&een eit/er of t/e arties and @ rd erson. (-eit/er t/e contracting arties bears t/e reresentation or aut/oriDation of t/e @rd arty. */at t/e favorable condition s/ould not be conditioned or co$ensated by any )ind of obligation or &/atsoever3 Art. 171. &n contracts creating real rig2ts, t2ird persons >2o come into possession of t2e object of t2e contract are bound t2ereby, subject to t2e provisions of t2e ortgage "a> and t2e "and *egistration "a>s. Art. 1719. Any t2ird person >2o induces anot2er to violate 2is contract s2all be liable for damages to t2e ot2er contracting party.

+e;uisites: >. %2at 2as been e?pressly stipulated but also to all t2e conseuences >2ic2, according to t2eir nature, may be in Beeping >it2 good fait2, usage and la>. D15/E

 

Consensual contracts are erfected fro$ t/e $o$ent t/ere is agree$ent (consent on t/e sub4ect $atter! and t/e Cause or consideration. -ote: Contracts are not &/at t/e arties c/oose to call t/e$! but &/at t/ey really are as deter$ined by t/e rinciles of la&s. */e validity of stiulations is one t/ing! and t/e 4uridical ;ualification of t/e contract resulting t/erefro$ is anot/er.

Art. 1716. *eal contracts, suc2 as deposit, pledge and Commodatum, are not perfected until t2e delivery of t2e object of t2e obligation. DnE 

+e;uires Consent! Sub4ect $atter! Cause=consideration and #elivery.

Art. 171. No one may contract in t2e name of anot2er >it2out being aut2oriGed by t2e latter, or unless 2e 2as by la> a rig2t to represent 2im. A contract entered into in t2e name of anot2er by one >2o 2as no aut2ority or legal representation, or >2o 2as acted beyond 2is po>ers, s2all be unenforceable, unless it is ratified, e?pressly or impliedly, by t2e person on >2ose be2alf it 2as been e?ecuted, before it is revoBed by t2e ot2er contracting party. D150aE +e;uisites for a Eerson to Contract in t/e -a$e of Anot/er a b c

He $ust be duly aut/oriDed (e<ress=i$liedly He $ust /ave by la& a rig/t to reresent /i$ (guardian=ad$inistrator Contract $ust be subse;uently ratified (e<ress=i$lied! by &ord or deed

nenforceable contracts are valid contracts but t2ey cannot be enforced t 2roug2 court actions. C: La& on agency

ESSENTIAL RE0/ISITES O CONTRACTS Art. 171/. T2ere is no contract unless t2e follo>ing reuisites concur: D1E Consent of t2e contracting partiesF DE $bject certain >2ic2 is t2e subject matter of t2e contractF D7E Cause of t2e obligation >2ic2 is establis2ed. Note: 1. Consent presupposes legal capacity, ot2er>ise, contract is voidable. . $bject certain means at t2e very least determinable

I" CONSENT

$$


9t is t/e $eeting of t/e $inds bet&een arties on t/e sub4ect $atter and t/e cause of t/e contract! even if neit/er one /as been delivered. Consent $ay be e<ress or i$lied. •

T2eories:

>. Cognition T2eory  Contracts are erfected only uon t/e )no&ledge of t/e offer of t/e accetance of t/e offeree. (sed if consent is $anifested t/roug/ letter or telegra$3 ad/ered in t/e E/il. 2. anifestation T2eory  Contracts are erfected uon t/e $o$ent accetance is declared! regardless of &/et/er t/e declaration /as co$e to t/e )no&ledge of t/e offeror or not. @. !?pedition T2eory  Contracts are erfected t/e $o$ent t/e offeree trans$its t/e accetance to t/e offeror! suc/ as t/e letter or telegra$ of accetance is laced in t/e $ail bo<. 1. *eception T2eory  Contracts are erfected uon t/e ti$e t/e accetance is in t/e /and of t/e offeror (regardless of )no&ledge or if /e read t/e sa$e -ote: Offer by tele/one si$ilar to face to face conversation. -ote: 9n our la&! according to $aFa$ G.! silence does not aut/oriDe any definite conclusion. Ho&ever! according to *olentino! t/ere are re;uisites in order t/at silence roduces tacit accetance! na$ely: a. */ere is a duty or t/e ossibility to e<ress oneself3 b. */e $anifestation of t/e &ill cannot be interreted in any ot/er &ay3 c. */ere is a clear identity in t/e effect of t/e silence and t/e undisclosed &ill. Art. 1710. Consent is manifested by t2e meeting of t2e offer and t2e acceptance upon t2e t2ing and t2e cause >2ic2 are to constitute t2e contract. T2e offer must be certain and t2e acceptance absolute. A ualified acceptance constitutes a counter3offer. Acceptance made by letter or telegram does not bind t2e offerer e?cept from t2e time it came to 2is Bno>ledge. T2e contract, in suc2 a case, is presumed to 2ave been entered into in t2e place >2ere t2e offer >as made. D16aE *euisites of Consent a, b, c, d, e,

Plurality of subjects-parties Parties must be capable or capacitated There must be no vitiation of consent or consent must be made intelligently and freely There must be no conflict between what was e/pressly declared and what was really intended The intent must be declared properly 0legal formalities must be complied with,

-ote: Accdg. to *olentino: (f e<ress or tacit $anifestation of t/e &ill and (g confor$ity of t/e internal &ill and its $anifestation. *euisites for eeting of inds a, An offer that must be certain An offer $ust be definite! co$lete and intentional.

b,

And an acceptance that must be 1n2ualified and absolute.  9f t/ere are 2 contracts and t/ey are indeendent of eac/ ot/er! accetance of one does not i$ly accetance of t/e ot/er. A ;ualified accetance constitutes a counteroffer.

Note: Offer and accetance $ay be &it/dra&n before erfection of t/e contract. 9f a ersons offers t/e sa$e t/ing to t&o ersons! at different ti$es! and t/e second offeree accets t/e offer before t/e first! t/e offeror beco$es liable for da$ages to t/e >st offeree if /e does not &it/dra& /is offer rior to t/e accetance of t/e 2 nd offeree. +: 9s t/ere a erfected contract in a ;ualified accetance -o! t/ere is no contract if t/ere is a ;ualified accetance. 5/at /aens is a counteroffer. Note: Anot/er tye of accetance is a$lified accetance. Here! t/ere is accetance but t/ere is a ;ualification. So! t/ere is no erfected contract. 5/en &e say a$lified! T9M$ selling you $angosteen at ?=)l but you /ave to get >00 )ilos. 9 &ill buy anot/er >00 for t/e sa$e rice.T 9s t/ere a erfected contract t/ere Jes! &it/ resect to t/e first but not to t/e 2nd. */ere is a erfected contract &it/ resect to t/e first (sell at ?=)ilo but not to t/e second offer (buy >00 )ilos.

$)


Note: *ule on public offers: A ro$ise $ay be $ade ublicly by &ay of advertising a re&ard! co$ensation! or riDe for any erson &/o erfor$s of e. e<ress 2. i$lied @. resu$ed (by la&

171: T2e person maBing t2e offer may fi? t2e time, place and manner of acceptance, all of >2ic2 must be complied >it2. -ote: 5/en t/e offeror /as not fi2en $ffer becomes &neffective a 5/en t/e offeree e<ressly or i$liedly re4ects t/e offer3 b 5/en t/e offer is acceted &it/ a ;ualification or condition3 c 5/en before accetance is co$$unicated! t/e sub4ect $atter /as beco$e illegal or i$ossible3 d 5/en t/e eriod of ti$e given to t/e offeree &=in &/ic/ /e $ust signify /is accetance /as already lased. e 5/en t/e offer is revo)ed in due ti$e (before t/e offeror /as learned of its accetance by t/e offeree Art. 179. 42en t2e offerer 2as allo>ed t2e offeree a certain period to accept, t2e offer may be >it2dra>n at any time before acceptance by communicating suc2 >it2dra>al, e?cept >2en t2e option is founded upon a consideration, as somet2ing paid or promised. DnE '!N. *"!: 9f t/e offeror /as allo&ed t/e offeree a certain eriod to accet! t/e offer $ay be &it/dra&n at any ti$e before accetance (of t/ing being offered by co$$unicating suc/ &it/dra&al. !?ception:

&/en t/e otion is founded uon a consideration as so$et/ing aid or ro$ised.

OE*9O- CO-*+AC* contract granting a erson t/e rivilege to buy or not to buy certain ob4ects at anyti$e &=in t/e agreed eriod at a fi0!000 as earnest $oneyT and A says To)ay! i &ill accet it. 5e &ill 4ust e@21 because it says art of t/e urc/ase rice. %arnest $oney is actually art of t/e urc/ase rice. t/ere is no contract of otion /ere but a erfected contract of sale. Art. 175. nless it appears ot2er>ise, business advertisements of t2ings for sale are not definite offers, but mere invitations to maBe an offer. DnE nless t/e ob4ect is deter$inate! t/e business advertise$ent is not an offer. Art. 176. Advertisements for bidders are simply invitations to maBe proposals, and t2e advertiser is not bound to accept t2e 2ig2est or lo>est bidder, unless t2e contrary appears. DnE %
$


Art. 17. T2e follo>ing cannot give consent to a contract: D1E nemancipated minorsF DE &nsane or demented persons, and deaf3mutes >2o do not Bno> 2o> to >rite. D167aE 9n General! Contracts &=c t/ey enter into are 'oidable! nless: a b c d e f

on reac/ing t/e age of $a4ority! t/ey ratify t/e sa$e3 */ey &ere entered into t/roug/ a guardian and t/e court /aving 4urisdiction /ad aroved it3 Contracts of life insurance in favor of t/eir arents! souse! c/ildren! brot/ers and sisters and rovided furt/er$ore t/at t/e $inor is >K years and above. 9n t/e for$ of savings account! rovided t/at $inor &as at least " years old. */ey &ere contracts for necessities suc/ as food! but /ere t/e eole &/o are legally bound to give t/e$ suort s/ould ay t/erefore. */ey &ere contracts &/ere t/e $inor $isreresented /is age and retended to be one of $a4or age and is t/us in %stoel.

9-SA-%=#%,%-*%# E%+SO-S no roer declaration of insanity by t/e court is re;uired! as long as it is s/o&n t/at at t/e ti$e of contracting! t/e erson &as r eally insane. -ote: ut if bot/ are incaable of giving consent! t/e contract is unenforceable. Art. 17/. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunBenness or during a 2ypnotic spell are voidable. DnE 'oidable Contracts: a b c

%ntered into by insane=de$ented ersons (unless t/ey acted during a lucid interval */ose in state of drun)enness nder /ynotic sell

Art. 170. T2e incapacity declared in article 17 is subject to t2e modifications determined by la>, and is understood to be >it2out prejudice to special disualifications establis2ed in t2e la>s. D169E &ncompetents under *ules of Court a nder Civil interdiction b HositaliDed leers c Erodigals d #eaf and du$b3 unable to read and &rite e nsound $ind even t/oug/ t/ey /ave lucid intervals f */ose &/o by reason of age! disease! &ea) $ind! and ot/er si$ilar causes! cannot &=o aid! ta)e care of t/e$selves and $anage t/eir roerty. Art. 177. A contract >2ere consent is given t2roug2 mistaBe, violence, intimidation, undue influence, or fraud is voidable. D165aE ;ices8Causes of ;itiated Consent  ,ista)e (error  raud (deceit  'iolence  9nti$idation  ndue influence -ote: 'itiated consent does not avoid t/e contract but $erely renders it voidable. 

,ere reonderance of evidence is not sufficient. Art. 1771. &n order t2at mistaBe may invalidate consent, it s2ould refer to t2e substance of t2e t2ing >2ic2 is t2e object of t2e contract, or to t2ose conditions >2ic2 2ave principally moved one or bot2 parties to enter into t2e contract. istaBe as to t2e identity or ualifications of one of t2e parties >ill vitiate consent only >2en suc2 identity or ualifications 2ave been t2e principal cause of t2e contract. A simple mistaBe of account s2all give rise to its correction. D166aE

$0


*euisites -or istaBe to ;itiate Consent a */e error $ust be substantial regarding:  Ob4ect of contract  */e conditions &=c rincially $oved=induced one of t/e arties.  9dentity or ;ualifications but only if suc/ &as t/e rincial cause of t/e contract. b */e error $ust be e
-ote: 9f t/e error refers to t/e rig/ts of t/e arties in t/e contract! t/e contract is not invalidated. %rrors &/ic/ do not affect t/e validity of t/e contract: >. error &it/ resect to accidental ;ualifies of t/e ob4ect of t/e contract3 2. error in t/e value of t/e t/ing3 @. error &/ic/ refers to accessory $atters in t/e contract foreign to t/e deter$ination of t/e ob4ect. 1. error in t/e na$e of t/e erson! but &it/out error as to t/e erson. %rror as to t/e erson &ill invalidate consent &/en t/e consideration of t/e erson /as been t/e rincial cause of t/e contract. ?. error as to t/e solvency of t/e arty3 6. error as to t/e $otive of a arty Art. 177. 42en one of t2e parties is unable to read, or if t2e contract is in a language not understood by 2im, and mistaBe or fraud is alleged, t2e person enforcing t2e contract must s2o> t2at t2e terms t2ereof 2ave been fully e?plained to t2e former. DnE Eresu$tion: One al&ays acts &it/ due care and signs &it/ full )no&ledge of all t/e contents of a docu$ent even if t/e $ind of t/e arty signing &as confused at t/e ti$e of signing as long as /e )ne& &/at /e &as doing. 42en )resumption Cannot Apply a 5/en one of t/e arties is unable to read b Or if contract is in a language not understood by one of t/e arties  9n bot/ cases! t/e erson enforcing t/e contract $ust s/o& t/at t/e ter$s t/ereof /ave been fully e<lained to t/e for$er. Art. 1777. contract. (n

*/ere is no $ista)e if t/e arty alleging it )ne& t/e doubt! contingency or ris) affecting t/e ob4ect of t/e

Art. 1779. ,utual error as to t/e legal effect of an agree$ent &/en t/e real urose of t/e arties is frustrated! $ay vitiate consent. (n *euisites for utual !rror To ;itiate Consent a */ere $ust be $utual error b */e error $ust refer to t/e legal effect of t/e agree$ent. c */e real urose of t/e arties is frustrated.  9f t/ere is no $eeting of t/e $ind and bot/ arties erroneously t/at t/eir acts is intended to&ards a articular contract but t/e sa$e &as not $et=frustrated  t/en t/e re$edy is annul$ent! ot/er&ise it is +%O+,A*9O-. 1779: */e rovision /ere refers to $ista)es of doubtful ;uestions of la&. Legal effects. #oubtful ;uestions of la&! or t/e different interretations or construction of t/e la&. So in t/at case! you cannot agree to a certain rovision! t/at $ig/t lead to frustration of t/e real intention of t/e arties t/at &ould &arrant annul$ent. Art. 1775. */ere is violence &/en in order to &rest consent! serious or irresistible force is e$loyed. */ere is inti$idation &/en one of t/e contracting arties is co$elled by a reasonable and &ellgrounded fear of an i$$inent and grave evil uon /is erson or roerty! or uon t/e erson or roerty of /is souse! descendants or ascendants! to give /is consent. *o deter$ine t/e degree of inti$idation! t/e age! se< and condition of t/e erson s/all be borne in $ind. A t/reat to enforce oneMs clai$ t/roug/ co$etent aut/ority! if t/e clai$ is 4ust or legal! does not vitiate consent. (>26"a *euisites for ;iolence to ;itiate Consent a %$loy$ent of serious or irresistible force. b 9t $ust /ave been t/e efficient cause &/y t/e contract &as entered into.

$


*euisites for &ntimidation to ;itiate Consent a +easonable and &ellgrounded fear b Of an i$$inent and grave evil c on /is erson! roerty or uon t/e erson or roerty of /is souse! descendants or ascendants3 d %fficient cause of t/e e26K Art. 177. */ere is undue influence &/en a erson ta)es i$roer advantage of /is o&er over t/e &ill of anot/er! deriving t/e latter of a reasonable freedo$ of c/oice. */e follo&ing circu$stances s/all be considered:  t/e confidential! fa$ily! siritual and ot/er relations bet&een t/e arties! or  t/e fact t/at t/e erson alleged to /ave been unduly influenced &as suffering fro$ $ental &ea)ness! or  &as ignorant or  in financial distress. (n Art. 177/. */ere is fraud &/en! t/roug/ insidious &ords or $ac/inations of one of t/e contracting arties! t/e ot/er is induced to enter into a contract &/ic/! &it/out t/e$! /e &ould not /ave agreed to. (>26 inds of raud A. raud in t/e Celebration of Contract a #olo Causante  &ere it not for t/e fraud! t/e ot/er arty &ould not /ave consentedt/e contract is voidable b #olo 9ncidente  even &=o t/e fraud! t/e arties &ould /ave still agreed! fraud is incidentalContract is valid but da$ages $ay be recovered.

. raud in Eerfor$ance of Obligations stiulated in t/e Contract *euisites of (olo Causante a raud $ust be $aterial and serious3 induced t/e ot/er to consent3 b raud $ust /ave been e$loyed by only one of t/e contracting arties! because if bot/ co$$itted fraud! t/e contract &ould re$ain valid. c */ere $ust be a deliberate intent to deceive or to induce t/erefore $isreresentation in good fait/ is not fraud. d */e ot/er arty $ust /ave relied on t/e untrue state$ent and $ust /i$self not be guilty of negligence in ascertaining t/e trut/. 177/: */ere is fraud &/en! t/roug/ insidouse &ords or $ac/inations! t/e ot/er arty &as induced. And it $ust not be e$loyed on a coarty. 9t $ust be e$loyed against t/e ot/er contracting arties. And if bot/ arties e$loyed fraud! t/e courts &ill leave t/e$ &/ere t/ey are. 9t is as if t/ey &ere in good fait/ because of t/e fact t/at t/ey are in ari delicto. -o&! t/e fraud /ere is fraud at t/e ti$e of t/e incetion of t/e contract! not t/e fraud at t/e ti$e of t/e fulfill$ent of t/e contract. ecause if it &ere t/e latter! t/at belongs to >>">! and it cannot result to t/e nullity or annul$ent of t/e contract but &ill only be a ground for da$ages. ut if it &ere fraud under >@@K! it can be a ground for nullity or annul$ent of t/e contract lus da$ages. ut t/e fraud /ere $ust be one t/at is causal. (dolo causante. ecause if it &ere $erely dolo incidente! no annul$ent! $erely da$ages. And t/e fraud alleged by t/e ot/er arty see)ing annul$ent $ust be clearly and convincingly establis/ed by sufficient and clear evidence! not by $ere reonderance. So! re;uisites of fraud: >. 9t $ust /ave been e$loyed by one contracting arty uon t/e ot/er contracting arty! not against a coarty. 2. 9t $ust /ave induced t/e ot/er arty to enter into t/e contract3 e
)


s$o)er! and t/ere is a ;uestion t/ere do you s$o)e and /o& $any ac)s! you ans&er no! i donMt s$o)e. And you &ere aroved. */is is an e00!000. */e agent no& &as able to sell it at 200!000. 9s t/e agent bound to disclose to t/e rincial t/is fact Jes! because of t/e confidential relation bet&een t/e$. ailure to do so constitutes fraud. Art. 179. */e usual e
Art. 1799. &n order t2at fraud may maBe a contract voidable, it s2ould be serious and s2ould not 2ave been employed by bot2 contracting parties. &ncidental fraud only obliges t2e person employing it to pay damages. D1E raud s/ould not be e$loyed by a arty against a coarty! i.e. bet&een t&o artners. */is &ill not annul t/e contract. *euisites for -raud to ;itiate Consent a raud $ust be serious b */e arties $ust not be in ari delicto3 ot/er&ise t/ere can be no annul$ent. 

9ncidental raud  not a cause for annul$ent! only da$ages can be recovered.

Art. 1795. #imulation of a contract may be absolute or relative. T2e former taBes place >2en t2e parties do not intend to be bound at allF t2e latter, >2en t2e parties conceal t2eir true agreement. DnE imulation of Contract  rocess of intentionally deceiving ot/ers by roducing t/e aearance of a contract t/at really does not e
c'

*/e urose is to deceive @ rd ersons.

Effect3 9f Absolute si$ulation! t/e contract is void. */e arties did not intend to be bound by t/e agree$ent. ut if it &ere relative si$ulation! t/en it s/all bind t/e arties rovided t/at no t/ird erson s/all be re4udiced by suc/ relative si$ulation.

)1


Art. 1796. An absolutely simulated or fictitious contract is void. A relative simulation, >2en it does not prejudice a t2ird person and is not intended for any purpose contrary to la>, morals, good customs, public order or public policy binds t2e parties to t2eir real agreement. DnE =inds of #imulated Contracts A.

Absolutely imulated 0simulados, fictitious contracts3  Earties do not intend to be bound3  %%C*: Contract is 'oid.

.

+elatively imulated 0disimulados, disguised contracts:  Earties conceal t/eir true agree$ent  %%C*: Earties are bound to t/e real or true contract=agree$ent e
Accdg. to *olentino: 9f t/e absolute si$ulation does not /ave an illicit urose! t/e arties to t/e contract $a rove t/e si$ulation in order to recover &/atever $ay /ave been given under suc/ si$ulated act. ut if t/e si$ulated contract /as an illegal ob4ect! t/e rovisions of Art. >1>> and >1>2 &ill aly. A%#$"T! #&"AT&$N >. 9$lies t/at t/ere is no e
-*A("!NT A"&!NAT&$N >. ,eans t/ere is a true and e
OB.ECTS O CONTRACTS Art. 179. All t2ings >2ic2 are not outside t2e commerce of men, including future t2ings, may be t2e object of a contract. All rig2ts >2ic2 are not intransmissible may also be t2e object of contracts. No contract may be entered into upon future in2eritance e?cept in cases e?pressly aut2oriGed by la>. All services >2ic2 are not contrary to la>, morals, good customs, public order or public policy may liBe>ise be t2e object of a contract. D11aE +e2uisites of *bject of a Contract a b c d e

*/e t/ing or service $ust be &=in t/e co$$erce of $an3 ,ust be trans$issible3 ,ust not be contrary to la&! $orals! good custo$s! ublic order or olicy3 ,ust not be i$ossible3 ,ust be deter$inate as to its )ind or deter$inable &=o need of a ne& contract or agree$ent.

-otes: >. */ere can be sale of future t/ings or ob4ects /aving otential e $arriage settle$ents. Souses are allo&ed to donate to eac/ ot/er future roerties rovided t/at t/ey co$ly &it/ t/e for$s of &ill3 (2artition of t/e roerty during t/e lifeti$e of t/e testator. (@ 5/en oneFs rig/t over t/e roerty is not as an /eir but as a creditor. Jour rig/ts to t/e credit are subordinated to t/e deat/ of t/e debtor. So! in t/at case t/at is not &it/in t/e $eaning of future in/eritance. %<:  borro&s $oney fro$ J! and J says 9 &ill ay you &/en 9 die. So in t/at case!  can enter into a contract involving t/at credit but subordinated to t/e deat/ of J. Art. 179/.

&mpossible t2ings or services cannot be t2e object of contracts. D1E

)2


Nature of &mpossibility a -ature of transaction or because of la& b Absolute (ob4ectively i$ossible  7nobody can do it8 c +elative (sub4ectively i$ossible  7articular debtor cannot co$ly8 -ote: */e i$ossibility $ust eit2out t2e need of a ne> contract bet>een t2e parties. D17E  

Ob4ect $ust be deter$inate deter$inable (&=out need of a ne& agree$ent3 ot/er&ise t/e contract is void for &ant of an essential re;uisite  t/e ob4ect of contract. #ifficulty of erfor$ance  A s/o&ing of $ere inconvenience! une<ected i$edi$ents! or increased e<enses is not enoug/ to relieve a debtor fro$ t/e obligation %;uity cannot relieve fro$ bad bargains si$ly because t/ey are suc/. */e debtor &/o does not erfor$ in suc/ cases $ust be /eld liable for da$ages.

CA/SE O CONTRACTS 9t is t/e essential and i$elling reason &/y a arty assu$es! an obligation. 9t is t/e restation to be erfor$ed by t/e ot/er contracting arty. Art. 175. &n onerous contracts t2e cause is understood to be, for eac2 contracting party, t2e prestation or promise of a t2ing or service by t2e ot2erF in remuneratory ones, t2e service or benefit >2ic2 is remuneratedF and in contracts of pure beneficence, t2e mere liberality of t2e benefactor. D19E Classification of Contracts As to Cause

a' b' c'

$nerous  t/e cause is for eac/ contracting arty! t/e restation=ro$ise of t/ing=service. *emuneratory  t/e ast service=benefit &=c by itself is a recoverable debt. 'ratuitous or contracts of ure beneficence t/e cause is t/e $ere liberality of t/e benefactor.   

Contract of guaranty is gratuitous unless t/ere is stiulation to t/e contrary. Cause in Accessory Contracts Li)e ,ortgage N Eledge  t/e sa$e as t/e cause for rincial contract of loan. ,oral obligation $ay be t/e cause of civil obligation  if it does not e
B: 9s t/e cause t/e sa$e as t/e $otive of t/e contract -o. -o $atter /o& illegal t/e $otive is for as long as t/e cause is legal and la&ful! it does not affect t/e validity of t/e contract. %? year old girl. ecause of LoeDM desire and lust for t/e body of Conc/ita! /e told t/e arents and Conc/ita t/at /e &ill be donating a arcel of coconut land if you agree to co/abit &it/ $e. */e arents and Conc/ita consented and t/ey lived and /ad se
)3


desire of ,r. LoeD. ut because t/e donor cannot invo)e /is o&n i$$orality! t/en t/e $ore reasons t/at t/e /eirs are barred in ;uestioning t/e validity of t/e donation. */erefore Conc/ita is entitled to t/e land. 9n t/e ,+ filed by t/e /eirs! according to IL +eyes! t/e ari delicto rule cannot aly in t/e case. +e$e$ber t/at Conc/ita is a $inor! t/e guilt of t/e $inor cannot be 4udged &it/ e;ual severity &it/ t/e guilt of an adult. ,inors occuy a rivilege osition before t/e la&.



$T&;! ,ay vary alt/oug/ /e enters into sa$e contract3 ,aybe un)no&n to t/e ot/er3 9ts resence cannot cure t/e absence of cause



9LL%GAL CAS% $a)es a contract void! 9LL%GAL ,O*9'% not necessarily renders t/e contract void.

 

CA#!  

*/e sa$e Al&ays )no&n

Art. 175. Contracts >it2out cause, or >it2 unla>ful cause, produce no effect >2atever. T2e cause is unla>ful if it is contrary to la>, morals, good customs, public order or public policy. D15aE *euisites for Cause a 9t $ust be resent  no cause! contract is void b 9t $ust be true  if cause is false! contract is void unless so$e ot/er cause &=c is la&fully really e
-rom transcription: */ere &as t/is case:  is an e$loyee of a business establis/$ent! and it &as found out t/at s/e &as stealing $oney fro$ t/e business establis/$ent. 5/en s/e &as about to be rosecuted for &/at s/e did! t/e fat/er and t/e /usband of  eere founded upon anot2er cause >2ic2 is true and la>ful. D16E 

alse cause does not necessarily $ean t/at contract is void3 t/e arties are given a c/ance to s/o& t/at a cause really e
Art. 1759. Alt2oug2 t2e cause is not stated in t2e contract, it is presumed t2at it e?ists and is la>ful, unless t2e debtor proves t2e contrary. D1E  Cause $ust e, and /eMs only selling it for >00! and t/e buyer is t/e son or daug/ter! t/en t/at is not an absolutely si$ulated contract but only a relatively si$ulated one! and t/e arties bound to it unless t/ird ersons are re4udiced by suc/ si$ulation. Art. 1755. !?cept in cases specified by la>, lesion or inadeuacy of cause s2all not invalidate a contract, unless t2ere 2as been fraud, mistaBe or undue influence. DnE L%S9O-  inade;uacy of cause  (eg. 9nsufficient rice of a t/ing sold

0ules on *esion

)/


'en. *ule: Lesion=inade;uacy of rice does not invalidate a contract. !?ceptions: a. 5/en toget/er &it/ lesion t/ere /as been i. raud3 ii. ,ista)e3 or iii. ndue 9nfluence b. 9n cases e<ressly rovided by la&.

-$*# $- C$NT*ACT# */e general rincile is t/at t/e la& loo)s $ore into t/e sirit! rat/er t/an in for$. nderlying rincile t/at in t/e interretation and=or construction of t/e la&! &e $ust interret not by t/e letter t/at )illet/! but by t/e sirit t/at givet/ life. */at is /o& one s/ould construct or interret t/e la&. ut in contracts! t/ere are certain e10@! aragra/ 2! it $ust be in &riting or in so$e $e$orandu$ or note! subscribed by t/e arties. (Statute of raud. So t/ose are only t/e e2"Ka G%-. +L%:  

-O O+, 9S +%B9+%# 9- CO-S%-SAL CO-*+AC*S or$al Contracts  re;uires for$ ( eg. #onation +eal Contracts  re;uires delivery

4!N -$* &# &)$*TANT a or validity b %nforceability (Statute of rauds3 $ay be &aived by accetance of benefits (artial or by failure to ob4ect to resentation of oral or arol evidence. c or convenience 1756 is t/e siritual syste$ of a contract! &/ic/ $eans t/at! contracts are obligatory in &/atever for$ t/ey $ay /ave been entered into! rovided t/at all t/e essential re;uisites for its validity are resent. ut t/e siritual syste$ of contract

)$


cannot be adoted in un;ualified $anner. Ot/er&ise! oral agree$ents &ould often lead to fraud in t/e fulfill$ent of t/e obligation. ecause t/e faintest in) is better t/an t/e s/arest $e$ory. ecause if &orse co$es to &orst! you file a case in court and &/at is your roof 9t &as orally ad$itted. 5/o &ere t/ere &/en you entered into t/e agree$ent */ere &ere only t&o of us! t/en t/at is /ig/ly debatable. So! &/et/er a certain for$ is re;uired or not! better ut it into &riting. -o&! t/ere is t/is case of HernaeD vs. #elos Angeles. HernaeD &as a star of E/iliine Cine$a. And /er services &ere engaged by one of t/e roducers. S/e &as aid but t/ere &as a balance. So after rendering service! ,s. HernaeD no& de$anded for t/e ay$ent of t/e balance. */e $ovie co$any refused to /onor t/e agree$ent stating t/at t/e agree$ent is dee$ed void because it &as not in &riting! and t/e balance e@?6! all contracts are valid regardless of for$! t/ere are only t&o e@?K are binding and enforceable by action desite t/e absence of &riting because t/e Article no&/ere rovides t/at t/e absence of &ritten for$ &ill $a)e t/e agree$ent invalid or unenforceable. Art. 175. 9f t/e la& re;uires a docu$ent or ot/er secial for$! as in t/e acts and contracts enu$erated in t/e follo&ing article! t/e contracting arties $ay co$el eac/ ot/er to observe t/at for$! once t/e contract /as been erfected. */is rig/t $ay be e@?K! t/e contracting arties $ay co$el eac/ ot/er to observe t/at for$! once t/e contract /as been erfected. */is rig/t $ay be e Acts and contracts &/ic/ /ave for t/eir ob4ect t/e creation! trans$ission! $odification or e10@! -o. 2! and >10?3 (2 */e cession! reudiation or renunciation of /ereditary rig/ts or of t/ose of t/e con4ugal artners/i of gains3 (@ */e o&er to ad$inister roerty! or any ot/er o&er &/ic/ /as for its ob4ect an act aearing or &/ic/ s/ould aear in a ublic docu$ent! or s/ould re4udice a t/ird erson3 (1 */e cession of actions or rig/ts roceeding fro$ an act aearing in a ublic docu$ent. All ot/er contracts &/ere t/e a$ount involved e10@! -o. 2 and >10?. 175/: 9s t/e re;uire$ent t/at it $ust be in a ublic docu$ent for t/e urose of validity -o. Only for uroses of affecting t/ird ersons! or for efficacy against t/ird ersons. So! t/ose enu$erated under >@?K! even if not in a ublic docu are valid. */e reason &/y t/ere is t/is re;uire$ent t/at it $ust be in a ublic docu$ent! is t/at it is to enforce against t/ird erson. ecause by itself! it is already valid. -o& &/at are t/ose contracts >. Acts and contracts &/ic/ /ave for t/eir ob4ect t/e creation! trans$ission! $odification or e of >@?KV 2. */e cession! reudiation! or renuncitation of /ereditary rig/ts! or of t/ose if t/e con4ugal artners/i of gains. Jou renounce your rig/t over t/e in/eritance t/at /as already beco$e vested in favor of your siblings3 @. */e o&ers to ad$inister roerty! or any ot/er o&er &/ic/ /as for its ob4ect an act aearing or &/ic/ s/ould aear in a ublic docu$ent! or s/ould re4udice a t/ird erson 9n your fa$ily code! &/en one souse desires to transfer ad$inistration over /is co$$unal or ara/ernal roerty to t/e ot/er souse! t/e transfer $ust be in a ublic docu$ent. */e reason is to infor$ @rd ersons t/at t/e ad$inistration /as been transferred. 1. */e cession of actions or rig/ts roceeding fro$ an act aearing in a ublic docu$ent Ue10@. -o&/ere does it say t/at if it is not in &riting! t/e contract is void. */atMs t/e essence of t/e HernaeD case. *!-$*AT&$N *!-$*AT&$N $- &N#T*!NT# DnE  +e$edy in e;uity by $eans of &=c a &ritten instru$ent is $ade or construed so as to e<ress or confor$ to t/e real intention of t/e arties &/en so$e error or $ista)e /as been co$$itted.

))


Art. 1750. 5/en! t/ere /aving been a $eeting of t/e $inds of t/e arties to a contract! t/eir true intention is not e<ressed in t/e instru$ent urorting to e$body t/e agree$ent! by reason of $ista)e! fraud! ine;uitable conduct or accident! one of t/e arties $ay as) for t/e refor$ation of t/e instru$ent to t/e end t/at suc/ true intention $ay be e<ressed. 9f $ista)e! fraud! ine;uitable conduct! or accident /as revented a $eeting of t/e $inds of t/e arties! t/e roer re$edy is not refor$ation of t/e instru$ent but annul$ent of t/e contract. *euisites for Action for *eformation >. */ere $ust be $eeting of t/e $inds 2. *rue intention is not e<ressed in t/e instru$ent @. */ere $ust be clear and convincing roof t/ereof 1. 9t $ust be broug/t &=in t/e roer rescritive eriod. ?. #ocu$ent $ust not refer to a si$le unconditional donation inter vivos or to &ills or to a contract &/ere real agree$ent is void. Art. 176. */e rinciles of t/e general la& on t/e refor$ation of instru$ents are /ereby adoted insofar as t/ey are not in conflict &it/ t/e rovisions of t/is Code. 5/y is t/ere a need to refor$ instru$ents 9nstru$ents are refor$ed in order t/at t/e true intention of t/e arties is e<ressed. ut all t/e essential re;uisites are resent. Only t/at &/en t/e arties reduced t/e agree$ent into &riting! t/e &riting failed to )ee t/e true intention. y reason of &/at raud! $ista)e! ine;uitable conduct or accident! one of t/e arties $ay as) for t/e refor$ation of t/e instru$ent to t/e end t/at suc/ true intention $ay be e<ressed. ut if any of t/e vices of consent /ave revented t/e $eeting of t/e $inds of t/e arties! t/en t/ere is no refor$ation but rat/er annul$ent. So /ere is t/ere &as failure on t/e art of t/e arties to e<ress t/eir true intention. y reason of raud! $ista)e! ine;uitable conduct or accident. ut if it revented t/e $eeting of t/e $inds! t/en no refor$ation but annul$ent. 5/at are t/e re;uisites in order t/at refor$ation is roer >. */ere $ust /ave been a $eeting of t/e $inds uon t/e contract3 2. */e instru$ent or docu$ent evidencing t/e contract does not e<ress t/e true agree$ent bet&een t/e arties3 @. t/e failure of t/e instru$ent to e<ress t/e agree$ent $ust be due to $ista)e! fraud! ine;uitable conduct or accident. Art. 1761. 5/en a $utual $ista)e of t/e arties causes t/e failure of t/e instru$ent to disclose t/eir real agree$ent! said instru$ent $ay be refor$ed. +e;uisites: >. ,ista)e $ust be $utual 2. ,ista)e $ay be unilateral under t/e conditions set fort/ in Art. >@62 and >@6@. @. ,ista)e $ust be of fact. 1761: */e error is t/ru $ista)e but all t/e essential re;uisites are resent Art. 176. 9f one arty &as $ista)en and t/e ot/er acted fraudulently or ine;uitably in suc/ a &ay t/at t/e instru$ent does not s/o& t/eir true intention! t/e for$er $ay as) for t/e refor$ation of t/e instru$ent. 176: -o&! t/ere &as t/is case of Ong vs. Car (! involving a Saniard and a C/inese. -o& t/e C/inese does not )no& /o& to read or sea) %nglis/. So t/e Saniard &as interested to buy t/e roerty of t/e C/inese. -o& t/e C/inese said t/e agree$ent s/ould be a acto de retro. */e Saniard said! o). 5/en t/e docu$ent &as already reared! t/e C/inese as)e if /e included t/e condition t/at t/e sale s/ould be one &it/ a rig/t to reurc/ase. */e Sanis/ said yes &/en in trut/ t/e Saniard o$itted t/at it &as a sale of acto de retro because /e intended to $ortgage t/e roerty. -o& in t/at case! t/ere /as been an agree$ent. */ere &as already a $eeting of t/e $ind &it/ resect to ob4ect and t/e cause! and t/e arties /ave consented. 5/at &as only o$itted &as t/e rig/t of t/e buyer to reurc/ase! t/roug/ t/e fraudulent acts of t/e ot/er. Art. 1767. 5/en one arty &as $ista)en and t/e ot/er )ne& or believed t/at t/e instru$ent did not state t/eir real agree$ent! but concealed t/at fact fro$ t/e for$er! t/e instru$ent $ay be refor$ed. Art. 1769. 5/en t/roug/ t/e ignorance! lac) of s)ill! negligence or bad fait/ on t/e art of t/e erson drafting t/e instru$ent or of t/e cler) or tyist! t/e instru$ent does not e<ress t/e true intention of t/e arties! t/e courts $ay order t/at t/e instru$ent be refor$ed. 1769: */is is very co$$on in la& fir$s! because la&yers trust t/eir secretaries. (tyogra/ical error Art. 1765. 9f t&o arties agree uon t/e $ortgage or ledge of real or ersonal roerty! but t/e instru$ent states t/at t/e roerty is sold absolutely or &it/ a rig/t of reurc/ase! refor$ation of t/e instru$ent is roer.

)


1765: -o& t/ere are $oney lenders &/o &ould! instead of /aving e. */e seller re$ains in ossession of t/e roerty3 2. t/e buyer retains a ortion of t/e urc/ase rice. */at ortion reresent actually t/e interest. @. */e seller! aside fro$ /e re$ains in ossession of t/e roerty! continues to ay t/e ta?02 Art. 1766. */ere s/all be no refor$ation in t/e follo&ing cases: (> Si$le donations inter vivos &/erein no condition is i$osed3 (2 5ills3 (@ 5/en t/e real agree$ent is void. 1766: > and 2 are contracts based urely on t/e liberality of t/e testator! and being gratuitous you cannot ;uestion t/e intention of t/e erson giving or donating t/e t/ing=roerty. @! being void! /o& can you refor$ it. -o legal effect s/all co$e fro$ a void contract. */ere is no force or effect t/at arise fro$ a void contract. 9n fact! in a void contract! arties do not intend to be bound by t/eir agree$ent. Art. 176. 5/en one of t/e arties /as broug/t an action to enforce t/e instru$ent! /e cannot subse;uently as) for its refor$ation. (estoel! &aiver or ratification 176: Jou cannot as) for refor$ation and at t/e sa$e ti$e as) for enforce$ent. One is inconsistent &it/ t/e ot/er. 9f you say t/at it does not e<ress t/e true intention of t/e arties! yet at t/e sa$e ti$e you are as)ing for erfor$ance. So! t/ose are contrary to eac/ ot/er. Art. 176/. +efor$ation $ay be ordered at t/e instance of eit/er arty or /is successors in interest! if t/e $ista)e &as $utual3 ot/er&ise! uon etition of t/e in4ured arty! or /is /eirs and assigns. Erescritive eriod for refor$ation of contracts is >0 years Art. 1760. */e rocedure for t/e refor$ation of instru$ent s/all be governed by rules of court to be ro$ulgated by t/e Sure$e Court.

&NT!*)*!TAT&$N $- C$NT*ACT#: Art. 17. 9f t/e ter$s of a contract are clear and leave no doubt uon t/e intention of t/e contracting arties! t/e literal $eaning of its stiulations s/all control. 9f t/e &ords aear to be contrary to t/e evident intention of t/e arties! t/e latter s/all revail over t/e for$er. So! /o& do you interret contracts 9f t/e stiulations of t/e contract are clear and leave no roo$ for doubt! literal interretation. -o&! t/e i$ortant tas) of contract interretation is to al&ays ascertain t/e intention of t/e contracting arties. And guided by t/e rincile again t/at &e s/ould interret not by t/e letter t/at )illet/! but by t/e sirit t/at givet/ life. Ho&ever! t/at &ill not find any alication if t/e stiulation of t/e arties are clear and una$biguous &/ic/ leaves no roo$ for interretation. */en &e $ust interret t/e la& as it is &ritten. 9ta Scrita Le<. So! if t/e &ords aear contrary to t/e intention of t/e arties! t/en t/e intention s/all revail. (17 9f t/e &ritten instru$ent is different fro$ &/at /as been verbally agreed uon +efor$ation because it does not e<ress t/e true agree$ent. So! if you say t/e sale of land &it/ all t/e i$rove$ents t/ereon! &/at are included %veryt/ing t/at is incororated &it/ t/e land. Art. 171. 9n order to 4udge t/e intention of t/e contracting arties! t/eir conte$oraneous and subse;uent acts s/all be rincially considered. 171: So going bac) to t/e e
)0


Art. 177. 9f so$e stiulation of any contract s/ould ad$it of several $eanings! it s/all be understood as bearing t/at i$ort &/ic/ is $ost ade;uate to render it effectual. (>2K1 */e various stiulations of a contract s/all be interreted toget/er! attributing to t/e doubtful ones t/at sense Art. 179. &/ic/ $ay result fro$ all of t/e$ ta)en 4ointly. 179: (Allied an) Har$oniniDe t/e rovisions. 9f it cannot be /ar$oniDed! re$ove t/ose &/ic/ are inco$atible. */en you ascertain t/e intention of t/e arties. */e various stiulations of a contract s/all be interreted toget/er! attributing to t/e doubtful ones t/at sense &/ic/ $ay result fro$ all of t/e$ ta)en 4ointly. So for instance it is a acto de retro sale. ut uon de$and! t/e rice varies. Anong resu$tion dyan */e difference in t/e ay$ent actually refers to t/e ay$ent of interest. Art. 175. 5ords &/ic/ $ay /ave different significations s/all be understood in t/at &/ic/ is $ost in )eeing &it/ t/e nature and ob4ect of t/e contract. 175: 9f you are aointed as an ad$inistrator! it does not involve acts of do$inion or acts of o&ners/i. Art. 176. */e usage or custo$ of t/e lace s/all be borne in $ind in t/e interretation of t/e a$biguities of a contract! and s/all fill t/e o$ission of stiulations &/ic/ are ordinarily establis/ed. (>2K" Art. 17. obscurity.

*/e interretation of obscure &ords or stiulations in a contract s/all not favor t/e arty &/o caused t/e

17: 'ery co$$on in contracts of ad/esion. Art. 17/. 5/en it is absolutely i$ossible to settle doubts by t/e rules establis/ed in t/e receding articles! and t/e doubts refer to incidental circu$stances of a gratuitous contract! t/e least trans$ission of rig/ts and interests s/all revail. 9f t/e contract is onerous! t/e doubt s/all be settled in favor of t/e greatest recirocity of interests. 9f t/e doubts are cast uon t/e rincial ob4ect of t/e contract in suc/ a &ay t/at it cannot be )no&n &/at $ay /ave been t/e intention or &ill of t/e arties! t/e contract s/all be null and void. 17/: So bet&een a co$$odatu$ and donation! &/ic/ /as t/e least trans$ission of rig/ts Co$$odatu$! &/y ecause t/ere is no transfer of o&ners/i in co$$odatu$. 5/ereas if it &ere a donation! t/e roerty /as left t/e atri$ony of t/e donor forever. sufruct or t/e donation sufruct! because t/e usufructuary is under obligation to return t/e roerty. (2nd sentence -o&! &/at if t/e contract is onerous */e doubt s/all be resolved in favor of t/e greatest recirocity of interest. So a erson giving a ring to t/e ot/er erson! and t/e ot/er erson gives $oney. 5/at is t/e resu$tion Eledge! because t/at &ould fall under t/e greatest recirocity of interest. et&een ledge or $ortgage 9f t/ere is doubt! $ortgage. 5/y ecause t/ere is no transfer of ossession! but t/e creditor still en4oys t/e interest on t/e $oney t/at &as loaned. et&een antic/resis and $ortgage ,ortgage arin. (Last aragra/ Lac) of ob4ect &/ic/ $a)es t/e contract void because t/e intention of t/e arties cannot be ascertained. Art. 170. */e rinciles of interretation stated in +ule >2@ of t/e +ules of Court s/all li)e&ise be observed in t/e construction of contracts. *!#C&##&%"! C$NT*ACT# 9 =inds of (efective Contracts >. +escissible  contract &=c is valid until rescinded3 e>>! &/en &e sea) of rescission! t/ere is no breac/ of fait/ in t/e erfor$ance but rat/er t/e ground of rescission is $ore on t/e econo$ic in4ury suffered by t/e arties or a t/ird erson. Art. 17/.

Contracts validly agreed uon $ay be rescinded in t/e cases establis/ed by la&. (>20

+e;uisites for +escission >. */ere $ust be at t/e beginning eit/er a valid or a voidable contract. 2. */ere is an econo$ic or financial re4udice to so$eone ( a arty or a t/ird erson @. +e;uires $utual restitution.

)


+%SC9SS9O- (>@K0  ased on lesion or fraud uon creditors3









*/e action is instituted by eit/er of t/e arties or by t/ird arties3 Courts cannot grant a eriod or ter$ &=in &=c to co$ly -onerfor$ance by ot/er arty is i$$aterial.

+%SC9SS9O- (>>> on non  ased erfor$ance or non fulfill$ent of t/e obligation.  Action $ay be instituted only by t/e in4ured arty to t/e contract3 

9n so$e cases! t/e courts $ay grant a ter$.



-onerfor$ance of t/e arty is i$ortant.

ictitious contract cannot be rescinded since it is null and void. 5/at rescission resuoses is a valid contract.

+escission under >@K> is a subsidiary re$edy! esecially if it is found in nu$ber @ of >@K>. Jou /ave to rove before t/e court t/at you /ave e@K> rovides t/ose cases. Art. 17/1. */e follo&ing contracts are rescissible: (> */ose &/ic/ are entered into by guardians &/enever t/e &ards &/o$ t/ey reresent suffer lesion by $ore t/an one fourt/ of t/e value of t/e t/ings &/ic/ are t/e ob4ect t/ereof3 (2 */ose agreed uon in reresentation of absentees! if t/e latter suffer t/e lesion stated in t/e receding nu$ber3 (@ */ose underta)en in fraud of creditors &/en t/e latter cannot in any ot/er $anner collect t/e clai$s due t/e$3 (1 */ose &/ic/ refer to t/ings under litigation if t/ey /ave been entered into by t/e defendant &it/out t/e )no&ledge and aroval of t/e litigants or of co$etent 4udicial aut/ority3 (? All ot/er contracts secially declared by la& to be sub4ect to rescission. L%S9O-  disarity bet&een rice and t/e value. $ere inade;uacy of rice! unless s/oc)ing to t/e conscience is not a sufficient ground for setting aside a sale! if t/ere is no s/o&ing t/at! in t/e event of a resale! a better rice can be obtained. %%C* O CO-*+AC*S %-*%+%# 9- %HAL O 5A+# (> (2



9f an act o&ners/i! Court aroval is re;uired ot/er&ise it is unenforceable &/et/er t/ere is lesion or not. 9f act of ad$inistration i. 5it/ Court aroval  valid regardless of lesion ii. 5=out Court aroval  rescissible! if lesion is $ore t/an W contract $ay be rescinded on t/e ground of lesion is a artition of in/eritance.

(@ Accion Eauliana  action to rescind $ade in fraud of creditors. +e;uisites a. */ere $ust be a creditor &/o beca$e suc/ Erior to t/e contract soug/t to be rescinded  (a erson as)ing for a rescission is a 4udg$ent creditor  i$$aterial b. */ere $ust be an alienation $ade subse;uent to suc/ credit. c. */e arty alienating $ust be in bad fait/ (/e )ne& t/at da$ages &ould be caused d. */ere $ust be no ot/er re$edy for t/e re4udiced creditor  7inability to collect to t/e clai$s due t/e$.8 

(1 -

Action to rescind $ay be broug/t even if debtor /as not been 4udicially declared insolvent and even if t/e creditor /as not yet broug/t an action to collect. *H9-GS 9- L9*9GA*9O- (eg. A sues  for recovery of ring  endente ite!  sells ring to C  sale to C is rescissible Eroerty is in litigation after defendant received service of su$$ons.

17/1: > and 2: */e guardian &it/ resect to t/e &ard! and t/e reresentative &it/ resect to t/e absentee are only given t/e o&ers of ad$inistration. */e o&ers $entioned in >@K> are o&ers of ad$inistration and t/e reresentative or t/e guardian entered into a contract and t/e ob4ect of t/e contract resulted to t/e econo$ic in4ury of eit/er t/e &ard or t/e absentee. y $ore t/an >=1 of value of t/e ob4ect t/ereof.




So e=1 of t/e value of t/e ob4ect &/ic/ is t/e tractor. ut! even if it e=1! but t/e ad$inistrator obtained 4udicial aut/oriDation! t/en t/ere can be no rescission. Only in cases &/ere t/ere /as been no 4udicial aut/oriDation obtained by t/e reresentative or t/e guardian. ut &/at if t/e guardian or t/e reresentative sea)s of getting $oney in order to develo t/e roerty. He no& $ortgaged t/e roerty. 5/at )ind of a contract is t/at nenforceable contract! beyond /is aut/ority. -o&! if you re$e$ber in your a$ily Code! &/en can you consider a erson an absentee for uroses of ad$inistration 2 years if &it/out ad$inistrator! and ? years if t/ere is an ad$inistrator. 9n t/ose cases t/ere is a need for 4udicial declaration as an absentee. And nor$ally t/e souse is given riority. So t/e souseM aut/ority only includes o&ers of ad$inistration! it does not include acts of o&ners/i. ecause if you corelate t/at &it/ t/e rovisions of t/e a$ily Code and t/ere is a need to encu$ber or disose a ortion of t/e roerty of t/e absentee! &/at &ill you do or uroses of suorting t/e fa$ily Jou gain 4udicial aut/ority in a su$$ary roceeding! ot/er&ise t/at act of t/e ot/er souse is void but it is a continuing offer bet&een t/e souse &/o did not give consent and t/e offeree unless earlier revo)ed. Eag t/ird erson ang $agbenta! ano nenforceable. 9f t/e reresentative is a t/ird erson! unenforceable. ut if it &ere t/e souse! void yan.

summary: */is only refers to acts of ad$inistration! and not acts of o&ners/i  if t/e guardian or reresentative &ould e@K>! it $ust e=1 of t/e value of t/e ob4ect of t/e contract.  ut even if it e and 2 is 4udicial aut/oriDation! no rescission if &it/ court aroval! even if t/e &ife or t/e absentee suffers lesion by $ore t/an one fourt/. @. Those undertaken in fraud of creditors when teh latter cannot in any other manner collect the claim due them. -o& t/e creditor cannot as) for annul$ent recisely because /e is not a arty to t/e contract. He can only as) for rescission. */e court cannot 4ust grant rescission since t/ere are certain re;uisites t/at $ust be co$lied &it/. 9n order t/at rescission &ill lie. 9t &ill be found in t/e cases t/at iMve assigned. -o& if t/e transfer is onerous! &e /ave to ta)e into account t/e good fait/ or bad fait/ of t/e transferee. So t/e est transferee &/o acted in bad fait/! to t/e second transferee &/o acted in bad fait/! to t/e t/ird transferee &/o still acted in bad fait/ and t/e fourt/ transferee &/o acted in good fait/. */en it ends no& to t/e fourt/ transferee regardless of t/e bad fait/ of t/e subse;uent transferee because it ended &it/ t/e erson &/o acted in good fait/! &/en /e received t/e t/ing transferred. */en t/ere can be da$ages! not rescission because t/ere /as been good fait/ of t/e last transferee. So all t/e of t/e transferee &ill be liable! fro$ t/e first transferee to t/e t/ird transferee. -o& &/at if t/e transfer is gratuitous #o &e also follo& t/e sa$e rincile -o. */e good fait/ or bad fait/ of t/e transferee is i$$aterial. +egardless of t/e good fait/ or bad fait/ of t/e receiver! t/e contract /as to be rescinded. 5/y */ere is no consideration given by t/e transferee! so /e cannot be re4udiced by t/e rescission.

1


-o&! 9n Oria vs. ,ani)il (! t/ere are also &/at &e call as t/e badges of fraud &it/ resect to alienation in order to defraud creditors. -o& &/at are t/e badges of fraud: >. the fact that the consideration of the conveyance is inadequate 2. a transfer made by the debtor after suit has been begun and while it is pending against him. $eaning t/ere is already a case filed against /i$ involving collection or $oney clai$! t/en t/e debtor no& &ould start to disose or encu$ber t/e roerties t/at $ig/t ans&er for t/e 4udg$ent a&ard t/at $ay be rendered by t/e court against /i$. @. a sale upon credity by an insolvent debtor  So if you are insolvent! &/y &ill you sell your roerty on credit &/en you are actually in need of $oney. 1. %vidence of large indebtedness or complete insolvency . Jour assets cannot $eet your obligations. Obligations e=1 of t/e value &/ic/ /e is suosed to receive. Ot/ers &ould be t/ose falling under t/e La& on Sales! >?21! >?26! and >?2 Art. 17/. Eay$ents $ade in a state of insolvency for obligations to &/ose fulfill$ent t/e debtor could not be co$elled at t/e ti$e t/ey &ere effected! are also rescissible. (>22 *euisites (> */e #ebtorayer $ust /ave been insolvent (no 4udicial declaration needed (2 #ebt &as not yet due and de$andable. -o& anot/er act &/ic/ can be t/e sub4ect of rescission can be found in >@K2: obligations not yet due. */at is &/at is $eant by to &/o$ fulfill$ent t/e debtor could not be co$elled at t/e ti$e t/ey &ere effected! are also rescissible. So it refers to obligations not yet due! yet desite t/e fact t/at t/e debtor is insolvent ays t/e obligation! so t/ere can also be rescission. And t/at is &/y &e said t/at t/e action for rescission is subsidiary! t/e erson &/o &ill be re4udiced by suc/ $ust s/o& roof before court t/at /e /ad already e@K@ And /e cannot as) for $ore t/an &/at is due /i$. He can only as) to t/e e@K1 Art. >@K@. */e action for rescission is subsidiary3 it cannot be instituted e21 Art. 17/9. +escission s/all be only to t/e e
2


-eit/er s/all rescission ta)e lace &/en t/e t/ings &/ic/ are t/e ob4ect of t/e contract are legally in t/e ossession of t/ird ersons &/o did not act in bad fait/. 9n t/is case! inde$nity for da$ages $ay be de$anded fro$ t/e erson causing t/e loss. (>2?  ,utual restitution *euisites before *escission can be %roug2t a

b' c d

Generally! laintiff $ust be able to return &/at /as been received by virtue of rescissible contract. %
17/5: So &/at $ust be returned */e ob4ect of t/e contract! t/e fruits! t/e rice and t/e interest. And if you cannot return t/is t/en you cannot as) for rescission. 9t can be carried out only &/en /e &/o de$ands rescission can return &/atever /e &ill be obliged to return. So 4ust li)e >>>! t/ere is $utual restitution. And you cannot as) for rescission unless you can return &/at you /ave received fro$ t/e ot/er arty. -eit/er s/all rescission ta)e lace &/en t/e t/ings &/ic/ are t/e ob4ect of /te contract are legally in t/e ossession of t/ird ersons &/o did not act in bad fait/. 9n t/is case! inde$nity for da$ages $ay be de$anded fro$ t/e erson causing t/e loss. -o&! if t/e transfer is gratuitous and you acted in good fait/! you received t/e roerty believing in good fait/ t/at t/e transfer gratuitously is legal and valid! are you also obliged to return t/e t/ing! t/e fruits! t/e rice and t/e interest 9f you are a transferee in good fait/! your obligations are to return t/e t/ing but not to ay for t/e fruits already received. Second! if you /ave incurred necessary e<enses! t/en you can as) for rei$burse$ent. */ird! you return t/e t/ing in t/e condition t/at it is found. ,eaning if t/ere /as already been deterioration! t/en you return t/e t/ing in t/at state. nless! if t/e deterioration is caused by your negligence or t/roug/ fraud after receiving t/e su$$ons for rescission. ut if it &as due to a fortuitous event and before you /ave received t/e su$$ons! t/en you &ill not be liable for t/e deterioration of t/e t/ing &/ic/ is t/e sub4ect $atter for rescission. -o&! restoration or restoration alies only to &/at under Art. >@K> > and 2 and @! e and 2 of article >@K> s/all not ta)e lace &it/ resect to contracts aroved by t/e courts. 17/6: +escission referred to in -os. > and @ of >@K> s/all not ta)e lace &it/ resect to contracts aroved by t/e courts Art. 17/. All contracts by virtue of &/ic/ t/e debtor alienates roerty by gratuitous title are resu$ed to /ave been entered into in fraud of creditors! &/en t/e donor did not reserve sufficient roerty to ay all debts contracted before t/e donation. Alienations by onerous title are also resu$ed fraudulent &/en $ade by ersons against &/o$ so$e 4udg$ent /as been issued. */e decision or attac/$ent need not refer to t/e roerty alienated! and need not /ave been obtained by t/e arty see)ing t/e rescission. 9n addition to t/ese resu$tions! t/e design to defraud creditors $ay be roved in any ot/er $anner recogniDed by t/e la& of evidence. (>2"a E+%S,E*9O-S O +A# 'ratuitous Alienations  contracted 7before8 t/e donation.

resu$ed fraudulent: &/en debtor did not reserve sufficient roerty to ay all debts

$nerous Alienations  Eresu$ed fraudulent  &/en $ade by ersons: >. Against &/o$ so$e 4udg$ent /as been rendered in any instances (even if not final3 or 2. Against &/o$ so$e &rit of attac/$ent /as been issued. A#G%S O +A# (circu$stances t/at a certain alienation /as been $ade in fraud of creditors >. */e fact t/at consideration of t/e conveyance is fictitious or inade;uate3 2. A transfer $ade by a debtor after suit /as been began and &/ile it is ending against /i$3 @. A sale uon credit by an insolvent debtor3 1. */e transfer of all or nearly all of /is roerty by a debtor! esecially &/en /e is insolvent or greatly e$barrassed financially3

3


?. 6. ".

%vidence of large indebtedness or co$lete insolvency3 */e fact t/at t/e transfer is $ade bet&een fat/er and son3 */e failure of vendee to ta)e e
A gratuitous conveyance or donation! validly e: 9t is absolutely necessary &/en you reare a deed of donation for t/e donor to state t/at /e /as reserved sufficient roerty for /i$self to ans&er for /is suort as &ell as t/e obligations t/at /e /as incurred rior to t/is donation. Ot/er&ise! if t/at is not found t/en t/e resu$tion is t/at you intend to defraud your creditors. Ear. 2: So t/e first is t/at! even if it is by onerous title! >. t/ere is already an on going case filed against you for collection of $oney! or 2. t/ere is a &rit of attac/$ent ( a &rit of attac/$ent is issued during t/e endency of t/e case as)ed by t/e co$lainant uon t/e court t/at t/e defendant is about to disose nearly all /is roerty and &/ic/ if 4udg$ent s/all be rendered by t/e court in favor of t/e co$lainant! t/e &rit of e2Ka  

7due to any cause8 includes fortuitous event. +escission is $erely a secondary re$edy  only if debtor cannot ay.

Transfers 9f transferee is in good fait/3 good= bad fait/ of ne2 5HO CA- +9-G AC*9O- >. */e in4ured arty (or defrauded creditor 2. His /eir or successorininterest @. Creditors of (a and (b by virtue of Art. >>"" of C.C 17/0 -o& &/en do you institute t/e action for rescission ,ust be co$$enced &it/in four years. or ersons under guardians/i and for absentees! t/e four years s/all not begin until t/e ter$ination of t/e for$erMs incaacity! or until t/e do$icile of t/e latter is )no&n. -o& suose it does not fall under nu$bers > and 2. 5/en s/all you start counting t/e four year eriod */at &as ans&ered in t/e case of C/eng vs. CA. ;$&(A%"! C$NT*ACT# Art. 170. */e follo&ing contracts are voidable or annullable! even t/oug/ t/ere $ay /ave been no da$age to t/e contracting arties: (> */ose &/ere one of t/e arties is incaable of giving consent to a contract3 (2 */ose &/ere t/e consent is vitiated by $ista)e! violence! inti$idation! undue influence or fraud. */ese contracts are binding! unless t/ey are annulled by a roer action in court. */ey are suscetible of ratification. (n



*!#C&##&$N asis is lesion (da$age

-

ANN"!NT asis is vitiated consent or

/


#efect is e
-

Action is subsidiary  A re$edy Erivate interest  governs  %;uity redo$inates  Elaintiff $ay be arty or @rd erson

-





-



*/ere is da$age

-



9f laintiff is inde$nified3 rescission &ill not roser Co$atible &= erfect validity *o revent rescission! ratification is not re;uired.

-

 

-

incaacity to consent #efect is internal=intrinsic (in t/e $eeting of $ind Action is rincial A sanction Eublic interest governs La& redo$inates Elaintiff $ust be a arty to t/e contract #a$age is i$$aterial 9nde$nity is not a bar to t/e action

#efect is resuosed *o revent annul$ent! ratification is re;uired.

*/ere are only t&o )inds of voidable contracts! and t/ese can be annulled by t/e court even if t/ere $ay /ave been no da$age to t/e contracting arties. So one &ould be &/en one of t/e arties is incaable of giving consent to a contract! 2. &/ere any of /te vices of consent is e$loyed in order to obtain t/e consent by one of t/e contracting arties. */ese contracts are binding! unless t/ere are annulled by a roer action in court. */ey are suscetible of ratification. And voidable or annullable contracts cannot be attac)ed collaterally. Jou $ust institute a direct roceeding as)ing t/at t/e contract be annulled. 5/at do you $ean by collateral attac) Jou say! Ty t/e &ay! t/e contract is voidable because one of t/e arties is a $inorT. 5/en you say direct! you insitute an action as)ing t/e court as)ing t/e court to annul t/e contract on t/e ground of > or 2. Or you can state it in t/e counterclai$ if you are a defendant. And &/en &ill you bring t/e action for annul$ent our years! and t/e eriod s/all begin >. 9f it &ere inti$idation! violence or undue influence! for$ t/e ti$e t/e defect of t/e consent ceases3 2. 9n cases of $ista)e or fraud! fro$ t/e ti$e of t/e discovery of t/e sa$e3 @. and &/en t/e action refers to contracts entered into by $inors or ot/er incaacitated ersons! fro$ t/e ti$e t/e guardians/i ceases. ,ay t/e guardian bring also an action for annul$ent of course. ut if it &ere t/e $inor! t/en uon reac/ing t/e age of $a4ority! if t/e incaacitated! t/en fro$ t/e ti$e of t/e cessation of guardians/i. 5/at /aens if t/ere is ratification +atification cleanses t/e contract of its defects! and it s/all retroact to t/e day of t/e incetion of t/e contract. 9t /as retroactive effect! and it cleanses t/e contract of &/atever defects it creates. So it beco$es a valid contract. -o& ratification $ay be e<ress or tacit. 9t is understood as tacit if &it/ )no&ledge of t/e reason &/ic/ renders t/e contract voidable and suc/ reason /aving ceased! t/e erson &/o /as a rig/t to invo)e it s/ould e
$


Art. 1701. */e action for annul$ent s/all be broug/t &it/in four years. */is eriod s/all begin: 9n cases of inti$idation! violence or undue influence! fro$ t/e ti$e t/e defect of t/e consent ceases. 9n case of $ista)e or fraud! fro$ t/e ti$e of t/e discovery of t/e sa$e. And &/en t/e action refers to contracts entered into by $inors or ot/er incaacitated ersons! fro$ t/e ti$e t/e guardians/i ceases. (>@0>a Art. 170.

+atification e@0a

*euisites of *atification >. Contract is voidable 2. Eerson ratifying $ust )no& t/e reason for t/e contract being voidable (cause is )no&n @. Cause $ust not e@>>a Art. 1709.

+atification $ay be effected by t/e guardian of t/e incaacitated erson. (n

Art. 1705. annul$ent.

+atification does not re;uire t/e confor$ity of t/e contracting arty &/o /as no rig/t to bring t/e action for

1705: +atification does not re;uire t/e confor$ity of t/e contracting arty &/o /as no rig/t to bring t/e action for annul$ent. +atification does not re;uire t/e consent of t/e arty &/o /as no rig/t to institute t/e action for annul$ent. So &/o can as) for annul$ent */ose &/o $ay be obliged eit/er rincially or subsidiarily (guarantors! sureties! $ortgagors. Ho&ever! ersons &/o are caable cannot allege t/e incaacity of t/ose &it/ &/o$ t/ey contracted3 nor can t/ose &/o eK and 9 /ave a cedula to s/o& youT but t/e cedula is doctored. Art. 1706.

+atification cleanses t/e contract fro$ all its defects fro$ t/e $o$ent it &as constituted. (>@>@

*etroactive !ffect of *atification Once ratified! annul$ent based on original defect cannot roser.

-

+ig/ts of innocent @rd ersons $ust not be re4udiced.

Art. 170. */e action for t/e annul$ent of contracts $ay be instituted by all &/o are t/ereby obliged rincially or subsidiarily. Ho&ever! ersons &/o are caable cannot allege t/e incaacity of t/ose &it/ &/o$ t/ey contracted3 nor can t/ose &/o e@02a 5HO ,AJ AS O+ A--L,%-*: */e victi$ (rincial or subsidiary arty o %C%E*: 9f erson not obliged rincially= subsidiarily in a contract $ay e
Art. 170/. An obligation /aving been annulled! t/e contracting arties s/all restore to eac/ ot/er t/e t/ings &/ic/ /ave been t/e sub4ect $atter of t/e contract! &it/ t/eir fruits! and t/e rice &it/ its interest! e@0@a %ffects of Annul$ent >. 9f contract is not co$lied &=! arties are e
)


a. b.  

*/e t/ing &it/ fruits3 */e rice &it/ interest.

Cannot be availed of by strangers to contract and innocent t/ird arties cannot be obliged to restore. Husband cannot barter a&ay /is &ifeFs ara/ernal roerties e
170/: 9f t/ere is annul$ent! &/at &ill be t/e obligation of t/e arties! again! $utual restitution. And &/at s/all it consist */e sub4ect $atter! t/e fruits! t/e rice &it/ its interest. ut t/is &ill only aly to contracts falling under -u$ber 2. (e$loy$ent of any of t/e vices of consent Art. 1700. 5/en t/e defect of t/e contract consists in t/e incaacity of one of t/e arties! t/e incaacitated erson is not obliged to $a)e any restitution e. He is only obliged to restore in so far as /e /as been benefited by t/e t/ing or rice received by /i$. 9n relation to t/at >21>! if /e /as )et t/e t/ing delivered! or if /e /as disosed t/e t/ing and t/e disosal &as to /is benefit! t/ose are t/e e10> says t/at if t/e t/ing is lost t/roug/ t/e fault of t/e erson &/o /as t/e rig/t to institute t/e action! t/en t/e etition for annul$ent is e@0"a Art. 191. */e action for annul$ent of contracts s/all be e10>! it s/all not be an obstacle to t/e action! unless t/e loss is t/roug/ t/e fault or fraud of t/e incaacitated. -o& &/at if t/e defendant loss t/e ob4ect of t/e contract t/roug/ a fortuitous event and a etition for annul$ent is filed by t/e arty &/o /as t/e rig/t to institute t/e action 9s /e still obliged to ay t/e value! interest and fruits -o. ecause /e is in good fait/! and t/e loss is not due to /is fault! t/en /e is only obliged to ay t/e value no longer t/e interest. Art. 19. As long as one of t/e contracting arties does not restore &/at in virtue of t/e decree of annul$ent /e is bound to return! t/e ot/er cannot be co$elled to co$ly &it/ &/at is incu$bent uon /i$. (>@0K  Erincile of $utual r estitution 19: As long as one of t/e contracting arties doesn not restore &/at in virtue of t/e decree of annul$ent /e is bound to return! t/e ot/er cannot be co$elled to co$ly &it/ &/at is incu$bent uon /i$. */ere is t/at $utual obligation to restore. And if t/e t/ing is lost! and t/e arty &/o lost it /as t/e rig/t to institute t/e action! and it is lost t/roug/ fortuitous event! /e can still co$el if /e offers to ay t/e value of t/e ob4ect of &/at /e is bound to return. 9f t/e t/ing is lost t/roug/ t/e fault or negligence of t/e defendant or t/e caacitated or t/e erson &/o e



CA)T!* / N!N-$*C!A%"! C$NT*ACT# DnE  Contracts t/at cannot be sued uon or enforced unless +A*99%#  no effect yet. 9-#S O -%-O+C%AL% CO-*+AC*S a naut/oriDed contracts b */ose t/at fail to co$ly &it/ t/e Statute of rauds c */ose &/ere bot/ arties are incaable of giving consent to a contract. Art. 197. */e follo&ing contracts are unenforceable! unless t/ey are ratified: (> */ose entered into in t/e na$e of anot/er erson by one &/o /as been given no aut/ority or legal reresentation! or &/o /as acted beyond /is o&ers3 (2 */ose t/at do not co$ly &it/ t/e Statute of rauds as set fort/ in t/is nu$ber. 9n t/e follo&ing cases an agree$ent /ereafter $ade s/all be unenforceable by action! unless t/e sa$e! or so$e note or $e$orandu$! t/ereof! be in &riting! and subscribed by t/e arty c/arged! or by /is agent3 evidence! t/erefore! of t/e agree$ent cannot be received &it/out t/e &riting! or a secondary evidence of its contents: (a An agree$ent t/at by its ter$s is not to be erfor$ed &it/in a year fro$ t/e $a)ing t/ereof3 (b A secial ro$ise to ans&er for t/e debt! default! or $iscarriage of anot/er3 (c An agree$ent $ade in consideration of $arriage! ot/er t/an a $utual ro$ise to $arry3 (d An agree$ent for t/e sale of goods! c/attels or t/ings in action! at a rice not less t/an five /undred esos! unless t/e buyer accet and receive art of suc/ goods and c/attels! or t/e evidences! or so$e of t/e$! of suc/ t/ings in action or ay at t/e ti$e so$e art of t/e urc/ase $oney3 but &/en a sale is $ade by auction and entry is $ade by t/e auctioneer in /is sales boo)! at t/e ti$e of t/e sale! of t/e a$ount and )ind of roerty sold! ter$s of sale! rice! na$es of t/e urc/asers and erson on &/ose account t/e sale is $ade! it is a sufficient $e$orandu$3 (e An agree$ent of t/e leasing for a longer eriod t/an one year! or for t/e sale of real roerty or of an interest t/erein3 (f A reresentation as to t/e credit of a t/ird erson. (@ */ose &/ere bot/ arties are incaable of giving consent to a contract.  ,ere lase of ti$e! no $atter /o& long! is not t/e ratification re;uired by la&.  5=out ratification! t/e 7agent8 assu$es ersonal liability. S*A**% O +A#S Eurose: 

to revent fraud3 t/us so$e agree$ent are re;uired to be in &riting. 5aivable (defense

 Eersonal defense! cannot be assailed by @ rd ersons  

#oes not aly to contracts fully or artially erfor$ed. #oes not aly to contract of loan.

 4ays to 4aive T2is (efense (> *i$ely failure to ob4ect to resentation of oral evidence to rove t/e oral agree$ent. (2 Accetance of benefits under t/e$ (as &/ere contract is totally or artially erfor$ed Art. >10@32 (b  secial ro$ise refers to a subsidiary=collateral ro$ise to ay li)e contract of guaranty. 2(c  agree$ents in consideration of $arriage  $arriage settle$ent3 donations roter nutias S*A**% O +A#S  la&s! statutes or rovisions &=c re;uire certain agree$ents to be in &riting before t/ey can be enforced in a 4udicial action. statutes are alicable only to e
N!N-$*C!A%"! C$NT*ACT */ere are t/ree )inds of unenforceable contracts. nenforceable contracts cannot be enforced t/roug/ court action! unless first ratified. */e first t&o are enforceable t/ru court action. */ere can be co$ulsion t/roug/ secific erfor$ance. Here secific erfor$ance &ill not lie! unless t/e unenforceable contract is ratified. -o&! unenforceable contracts are valid contracts only t/at because t/ey are still in t/e stage &/ere t/ere is no erfor$ance yet by eit/er of t/e arties! t/ere can be no action t/at can be $aintained before t/e court recisely because t/e agree$ent is in its e
0


offer and t/ere is an un;ualified accetance. So t/ere is a erfected contract only t/at t/ere is no e>>>! t/is is already a sufficient note or $e$orandu$. So in t/at case! if  c/anges /is $ind! A no& can co$el  to ay t/e urc/ase rice! t/ere is no& a erfection of t/e contract and t/e roof is t/e note. 9t does not /ave to be a ublic docu$ent. nenforceable contracts are not curable by any lase of ti$e. nli)e voidable &/ic/ rescribe in 1 years! if you do not institute t/e action! and t/e lase of four years &ill be dee$ed a &aiver of your rig/t to ;uestion t/e voidability of t/e contract. Anot/er &ould be! in rescissible contract! t/e rescritive eriod is also 1 years. ut /ere t/ere is no rescrition. 9t gives rise to a defense against its enforce$ent. Jou cannot enforce it t/ru court action recisely because it is a urely e10@ >. */ose entered into in t/e na$e of anot/er erson by one &/o /as been given no aut/ority or legal reresentaion or &/o /as acted beyond /is o&ers. 9f you re$e$ber! &e discussed t/is already under >@>". */e agent is given t/e aut/ority to rent! but not t/e aut/ority to sell. */en in t/at case if /e sells! t/en t/e aut/ority is in eit2in a year from t2e maBing t2ereof . So t/e agree$ent $ust not be erfor$ed &it/in a year fro$ t/e ti$e of its constitution. 9t &ill not aly if art of it &ill be erfor$ed &it/in t/e year alt/oug/ t/e co$letion of it &ill ta)e five years. -o art of it s/all be erfor$ed &it/in t/e entire > year eriod. Or even if on your art it is to be erfor$ed &it/in one year but t/e ot/er arty /as already erfor$ed /is art! even artially. */at is no longer covered. b. A special promise to ans>er for t2e debt, default or miscarriage of anot2er. An e



intention of t/e arties. 9f t/e intention is t/at it s/ould be ta)en as a &/ole! t/en it $ust be in &riting! subscribed and s&orn by t/e erson c/arged to be enforceable. e. an agreement for t2e leasing for a longer period t2an one yaer, of for t2e sale of real property or of an interest t2erein3 contract of lease for $ore t/an one year $ust be in &riting to be enforceable. *a)e note of t/e sale of real roerty t/at is &/y in >@?K! sale of real roerty is definitely e
naut/oriDed contracts are governed by article >@>" and t/e rinciles of agency in *itle  of t/is oo).

Art. 195. Contracts infringing t/e Statute of rauds! referred to in -o. 2 of article >10@! are ratified by t/e failure to ob4ect to t/e resentation of oral evidence to rove t/e sa$e! or by t/e accetance of benefit under t/e$. So 195 is t/e e@?". */is rig/t is given only &/en contract is bot/ valid and enforceable. 196: +e$e$ber t/e case of ,artineD vs. CA. */e ublic docu$ent is only necessary for t/e registration &it/ t/e +egistry of #eeds and you can co$el t/e ot/er contracting arty to observe t/e re;uired for$! and not for uroses of validity or enforceability. ut for uroses of registration. Art. 19. 9n a contract &/ere bot/ arties are incaable of giving consent! e<ress or i$lied ratification by t/e arent! or guardian! as t/e case $ay be! of one of t/e contracting arties s/all give t/e contract t/e sa$e effect as if only one of t/e$ &ere incaacitated. 9f ratification is $ade by t/e arents or guardians! as t/e case $ay be! of bot/ contracting arties! t/e contract s/all be validated fro$ t/e incetion. 19: 9 /ave discussed t/is already. Art. 19/: nenforceable contracts cannot be assailed by t/ird ersons. Only t/e arties because t/e defense of Statute of raud is ersonal to t/e contracting arties.

CA)T!* 0 ;$&( AN( &N!&#T!NT C$NT*ACT#

  

;$&(A%"! ,ay be ratified Eroduces effect until annulled #efect: incaacity= vitiated consent

-



'alid until annulled

-



,ay be cured by rescrition #efense $ay be

-



-

;$&( Cannot be ratified -o effect #efect is ordinarily against ublic olicy 'oid fro$ t/e very beginning3 no action is re;uired to set aside! -L%SS contract /as been erfor$ed Cannot be cured by rescrition Available

to

0




invo)ed only by arties or t/eir successorsin interest +eferred to as relative= conditional nullity

N!N-$*C!A%"! >. $ay be ratified 2. t/ere is contract but it is unenforceable3 @. cannot be assailed by t/ird arties

-

anybody  @rd ersons rovided t/at t/eir interests are affected Absolute nullity.

-

;$&( Cannot be ratified -o contract at all

-

Can be assailed by anybody directly affected.

Art. 190. */e follo&ing contracts are ine */ose &/ose cause! ob4ect or urose is contrary to la&! $orals! good custo$s! ublic order or ublic olicy3 (2 */ose &/ic/ are absolutely si$ulated or fictitious3 (@ */ose &/ose cause or ob4ect did not e. 9ne. Absolute  void for lac) of consent 2. +elative  /idden=intended contract is binding CHA+A*%+9S*9CS O 'O9# CO-*+AC*S a. +ig/t to set u t/e defense of illegality cannot be &aived3 aealable even if not raised in trial court. b. Action=defense for declaration as ine10. *a)e note t/at it is void or ine
01


court if t/e contract is still urely e
*/e action or defense for t/e declaration of t/e ine
So t/e rig/t $ig/t be lost by t/e unreasonable assage of ti$e and not by rescrition. (>1>0 191: */e action of defense for t/e declaration of te/ ine@0? Art. 191. 9f t/e act in &/ic/ t/e unla&ful or forbidden cause consists does not constitute a cri$inal offense! t/e follo&ing rules s/all be observed: (> 5/en t/e fault is on t/e art of bot/ contracting arties! neit/er $ay recover &/at /e /as given by virtue of t/e contract! or de$and t/e erfor$ance of t/e ot/erMs underta)ing3 (2 5/en only one of t/e contracting arties is at fault! /e cannot recover &/at /e /as given by reason of t/e contract! or as) for t/e fulfill$ent of &/at /as been ro$ised /i$. */e ot/er! &/o is not at fault! $ay de$and t/e return of &/at /e /as given &it/out any obligation to co$ly /is ro$ise. 1911and 191: 1911 referst to a contract t/at is void because it roceeds fro$ t/e illegality of t/e cause or ob4ect and t/e act constitutes a cri$inal offense. %it/er bot/ arties are in ari delicto! or only one of t/e arties is guilty. So &/at &ould be t/e rules if bot/ arties are in bad fait/ or in ari delicto */ey s/all /ave no action against eac/ ot/er and bot/ s/all be rosecuted. And if you re$e$ber your rovisions in t/e +EC! &/at &ould be t/e general rule &it/ resect to t/e effects of a cri$e or its instru$ents 9t s/all be seiDed by t/e State. An e1>> sea)s of an act &/ic/ /as an illegal cause and t/e act constitutes a cri$inal offense. 191 is also a void contract but t/e unla&ful or forbidden cause does not constitute a cri$inal offense but nevert/eless it is unla&ful or forbidden. 5/en t/e fault is on t/e art of bot/ contracting arties! again neit/er $ay recover &/at /e /as given by virtue of t/e contract! or de$and t/e erfor$ance of t/e ot/erMs underta)ing. 5/en only one of t/e contracting arties is at fault! /e cannot recover &/at /e /as given by reason of t/e contract! or as) for t/e fulfill$ent of &/at /as been ro$ised by /i$. */e ot/er! &/o is not at fault! $ay de$and t/e return of &/at /e /as given &it/out any obligation to co$ly &it/ /is ro$ise. T2at is t2e distinction bet>een 1911 and 191. One is t/at! >1>> refers to a contract &/ic/ /as an illegal cause &/ic/ act roceeds fro$ a cri$inal offense! &/ereas >1>2! it is unla&ful or forbidden but it does not constitute a cri$inal offense. -o& &/at &ould be an unla&ful or forbidden cause but does not constitute a cri$inal offense 9s a contract involving a sale of land to a foreigner valid -o. 9s t/at a cri$inal offense -o. So if t/e State &ill find t/at out! &/at /aens Iust li)e &/en you are a benificiary of CA+E! you are ro/ibited to sell! transfer! encu$ber t/e roerty you ac;uired by reason of t/e i$le$entation of CA+E &it/in >0 years! and if you violate t/at underta)ing! t/e govern$ent &ill ta)e bac) &/at /as been given to you. And if you &ere t/e one &/o boug/t it! you could no longer get t/e $oney bac) as a for$ of unis/$ent because t/ere is really t/at ro/ibition. So ta)e note of >1>> and >1>2. -o&! &ould t/at aly to ine1>> and >1>2! no. 9f you /ave read t/e case of ,odina vs. CA and Guan vs. Ong. */at &ill not fall under /ere because &/at /as been entered into by t/e arties are &/at &e call as absolutely si$ulated contracts. -o& &e no longer /ave t/e sury La&. */e la&s on usury /ave been reealed! and arties can agree &it/ resect to t/e rate of interest! rovided t/at t/e rate of interest agreed uon is not unconscionable and ine;uitous &/ic/ is for t/e court to be deter$ine. ,oreover! regardless of &/et/er t/e rate of interest is unconscionable or ine;uitous! your utang s/all subsist. 9t does not $ean t/at t/e obligation is dee$ed e
02


Art. 1917. 9nterest aid in e00 to )ill Gloria. -o& suose /e later on /as a c/ange of /eart and tells Buirubin lease do not roceed &it/ our lan. 9n t/at case if ,iranda &ould decide to reudiate t/e lan and /as a c/ange of /eart! t/en /e can no& get bac) &/at /e /as earlier given to Buerubin before t/e urose /as been acco$lis/ed! and &/en ublic interest &ill be subserved! t/en t/e ot/er can recover &/at /e /as given eit/er $oney or roerty. Art. 1915. 5/ere one of t/e arties to an illegal contract is incaable of giving consent! t/e courts $ay! if t/e interest of 4ustice so de$ands allo& recovery of $oney or roerty delivered by t/e incaacitated erson. 1915: Suose a $inor buys a gra$ of s/abu. +e$e$ber t/e enalty for illegal ossession of drugs /as been reealed and is no& $ade to deend on t/e a$ount of t/e drugs. ut if it &ere t/e incaacitated or t/e $inor! t/en definitely t/e la& &ill treat t/e$ differently. 9f you re$e$ber t/e LigueD case (! Conc/ita &as allo&ed to get &/at &as ro$ised to /er because according to t/e court! being a $inor! s/e occuies a rivileged osition under our la&. And if you also notice $ost of t/e rovisions in t/e +EC regarding $inors &ould al&ays lean to t/e rotection of t/e $inor Art. 1916. 5/en t/e agree$ent is not illegal er se but is $erely ro/ibited! and t/e ro/ibition by t/e la& is designated for t/e rotection of t/e laintiff! /e $ay! if ublic olicy is t/ereby en/anced! recover &/at /e /as aid or delivered. Contracts: (> 9llegal er se  forbidden for it is against ublic interest. (2 And $erely ro/ibited contracts  forbidden because of rivate interest 

recovery is er$itted rovided t/at:   

contract is not illegal er se ro/ibition is for rotection of laintiff3 ublic olicy is en/anced.

1916: %
03


Art. 19. enforced.  

9n case of a divisible contract! if t/e illegal ter$s can be searated fro$ t/e legal ones! t/e latter $ay be 9f indivisible! t/e &/ole contract is void. 9f divisible! t/e legal ter$s $ay be enforced if t/ey can be searated fro$ illegal ter$s.

19: 9n case of a divisible contract! if t/e illegal ter$s can be searated fro$ t/e legal ones! t/e latter $ay be enforced. So an e12>.

*/e defense of illegality of contract is not available to t/ird ersons &/ose interests are not directly affected.

191: So t/ird ersons can invo)e as a defense t/e illegality of t/e contract for as long as t/ey &ill be affected by suc/ an illegal contract. Art. >122.

A contract &/ic/ is t/e direct result of a revious illegal contract! is also void and ine
19: A contract &/ic/ is t/e direct result of a reviouis illegal contract! is also void and ine.? , as a co$ro$ise but it &as ;uestioned &it/ resect to t/e co$ro$ise and it &ent to SC. SC said t/e co$ro$ise agree$ent is void because it is a derivative of a void contract. Title &&&. 3 NAT*A" $%"&'AT&$N#

Art. 197. Obligations are civil or natural. Civil obligations give a rig/t of action to co$el t/eir erfor$ance. -atural obligations! not being based on ositive la& but on e;uity and natural la&! do not grant a rig/t of action to enforce t/eir erfor$ance! but after voluntary fulfill$ent by t/e obligor! t/ey aut/oriDe t/e retention of &/at /as been delivered or rendered by reason t/ereof. So$e natural obligations are set fort/ in t/e follo&ing articles. 'oluntary ulfill$ent  debtor co$lies &it/ t/e sa$e even if /e )no&s t/at /e could not /ave been legally forced to do so.  9n case of artial voluntary fulfill$ent! t/e balance cannot be recovered since on said balance! no legal obligation /as yet been created. &n case of )rescription  9f rescrition is un)no&n! t/ere can be recovery.  9f it is )no&n! no recovery! for t/is is a case of natural obligation. !?ample of Natural $bligation (> Obligation to ay interest for use of $oney! even if not agreed uon in &riting. (2 #uty to suort natural or surious c/ildren. (@ Giving of $aterial and financial assistance to c/ildren uon t/eir $arriage. 

,oral obligation /as no 4uridical tie3 t/oug/ it $ay be converted into civil obligation. (e.g. ac)no&ledg$ent of a rescribed debt

-A*+AL OL9GA*9O-S our )inds of obligations according to 4uridical science: $oral obligations! t/ese are obligations &/ic/ are urely based on conscience or &/at &e call as duty. -atural obligations are obligations not sanctioned by any action (court action. Civil obligations &/ic/ are obligations enforceable in court! e
0/


are not based on ositive la& but on e;uity and natural la& and being suc/ t/ey do not grant a rig/t of action to enforce t/eir erfor$ance! but after voluntary fulfill$ent by t/e obligor! t/ey aut/oriDe t/e retention of &/at /as been delivered and rendered by reason t/ereof. So if t/ere /as been voluntary erfor$ance t/en t/e erson &/o /as erfor$ed can no longer recover or de$and for t/e return or t/e ay$ent of &/at /e /as delivered or rendered. Art. 199. 5/en a rig/t to sue uon a civil obligation /as lased by e121. So in all instances t/e erfor$ance $ust be acco$anied by voluntary because if t/ere is no voluntariness in t/e erfor$ance! t/en t/e erson &/o erfor$ can de$and t/e restoration or t/e ay$ent of &/atever /as been delivered or rendered. So t/ere is al&ays t/at voluntariness on t/e art of t/e erson &/o erfor$s t/e obligation. Here is t/e civil obligation /as already rescribed! so a debt /as already rescribed because no de$and &as $ade &it/in t/e eriod of >0 years and t/erefore t/e creditos could no longer sue t/e debtor for t/e non ay$ent. ut t/e obligor is conscience stric)en! /e voluntarily delivers. So in t/at case /e can no longer de$and for t/e return of &/at /as been delivered. Art. 195. 5/en &it/out t/e )no&ledge or against t/e &ill of t/e debtor! a t/ird erson ays a debt &/ic/ t/e obligor is not legally bound to ay because t/e action t/ereon /as rescribed! but t/e debtor later voluntarily rei$burses t/e t/ird erson! t/e obligor cannot recover &/at /e /as aid. Anot/er e2@6 and >2@". ecause t/e action t/e /as already rescribed! but t/e debtor later voluntarily rei$burses t/e t/ird erson! t/e obligor cannot recover &/at /e /as aid. He is not under obligation under t/e la& to rei$burse t/e t/ird erson because t/e ay$ent did not redound to /is benefit. Art. 196. 5/en a $inor bet&een eig/teen and t&entyone years of age &/o /as entered into a contract &it/out t/e consent of t/e arent or guardian! after t/e annul$ent of t/e contract voluntarily returns t/e &/ole t/ing or rice received! not&it/standing t/e fact t/e /e /as not been benefited t/ereby! t/ere is no rig/t to de$and t/e t/ing or rice t/us returned. 196. (>? years old to >" +e$e$ber >21>: t/e $inor is not obliged to restore. He is only obliged to restore if /e /as )et t/e t/ing or if it /as redounded to /is benefit. Art. 19. 5/en a $inor bet&een eig/teen and t&entyone years of age! &/o /as entered into a contract &it/out t/e consent of t/e arent or guardian! voluntarily ays a su$ of $oney or delivers a fungible t/ing in fulfill$ent of t/e obligation! t/ere s/all be no rig/t to recover t/e sa$e fro$ t/e obligee &/o /as sent or consu$ed it in good fait/. 19 no longer alies to >K2>! but by analogy it alies to t/ose belo& >K. Correlate to >2@: delivers a su$ of $oney a su$ of $oney or a fungible t/ing in fulfill$ent of an obligation t/ere s/all be no rig/t to recover t/e sa$e fro$ t/e obligee &/o /as sent or consu$ed it in good fait/. */is &as $entioned in >2@! you re$e$ber t/at. Art. 19/. 5/en! after an action to enforce a civil obligation /as failed t/e defendant voluntarily erfor$s t/e obligation! /e cannot de$and t/e return of &/at /e /as delivered or t/e ay$ent of t/e value of t/e service /e /as rendered. 19/: */is ti$e suose A files a case against . ut t/e court decided in favor of ! t/erefore t/e co$laint of A against  did not roser so &/atever /e /as rayed for in t/at co$laint could no longer be recovered fro$  since t/ere &as an unfavorable 4udg$ent against A. Ho&ever! if  decides to /onor &/at /as been &ritten in t/e co$laint and delivers voluntarily /e could no longer as)s for t/e return of &/at /e /as delivered or ay$ent for t/e service /e /as rendered. Art. 190. 5/en a testate or intestate /eir voluntarily ays a debt of t/e decedent e@>>t/at t/e /eirs is not liable beyond t/e value of &/at /e /as received! so /e is not liable for t/e debts of t/e decedent &/ic/ e
0$


#esite t/e fact! t/e /eirs c/ose to /onor t/e legacy stated in t/e &ill. A! ! C as /eirs of .  already died! t/e &ill of  contains a stiulation in favor of # &/ic/ &as a legacy. */e court declared t/e &ill void because one of t/e ages &as not signed by t/e testator. ut  and C no& c/ose to /onor t/e legacy! A did not &ant to. ut /e &as forced by  and C! so t/ere &as force e$loyed uon /i$! t/erefore consent &as vitiated. -o& A died a year later! t/e /eirs of A! J and + filed no& a etition for rescission because t/e consent of A &as vitiated by force. eing t/e /eirs of A &ill t/e action for annul$ent roser -o. ecause &/ile it $ay be true t/at t/ey are successors in interest! t/e vice t/at &as e$loyed uon A is ersonal uon A and $oreover! t/ey $erely /ave an inc/oate rig/t over t/e t/ing t/at &as delivered to # as a legacy at t/e ti$e of t/e delivery. So t/e action is true &it/ A but not &it/ J and +. -atural obligations &ill only roduce a binding effect if t/e erfor$ance is couled &it/ voluntariness. 9f t/ere is no voluntarines on t/e erfor$ance! t/en t/e erson &/o erfor$ed it can de$and for t/e return of &/atever /e /as delivered or ay$ent for t/e service /e /as rendered. Ot/er&ise! in t/e absence of voluntariness! it ceases to be a natural obligation. *itle 9'.  %S*OEE%L (n 

A bar &=c recludes a erson fro$ asserting or denying anyt/ing contrary to t/at &=c /as been! in conte$lation of la&! establis/ed as t/e trut/! eit/er by acts of 4udicial=legislative officers! by /is o&n deedX

Art. 1971. */roug/ estoel an ad$ission or reresentation is rendered conclusive uon t/e erson $a)ing it! and cannot be denied or disroved as against t/e erson relying t/ereon. Art. 197. */e rinciles of estoel are /ereby adoted insofar as t/ey are not in conflict &it/ t/e rovisions of t/is Code! t/e Code of Co$$erce! t/e +ules of Court and secial la&s. Art. 1977. (> a. b. c. d. e.

%stoel $ay in ais or by deed. %stoel in Eais (%;uitable estoel y conduct or by accetance of benefits3 y reresentation or conceal$ent3 y silence3 y o$ission3 y lac/es (unreasonable delay in suing

(2 %stoel by #eed ( *ec/nical estoel a. Eroer (&ritten instru$ent $ay also be in t/e for$ of a bond=$ortgage b. %stoel by 4udg$ent as a Court record  &/en court is in res 4udicata.  Erevents t/e arties fro$ raising ;uestions t/at could /ave been ut in issue and decided in revious case. !stoppel in )ais  Arises &/en one! by /is acts! reresentations or ad$issions or by /is silence &/en /e oug/t to sea) out! intentionally or t/ru culable negligence! induces anot/er to believe certain facts to e
0)


dog bit t/e neig/bor. */e neig/bor &ent to t/e erson and as)ed for rei$burse$ent and t/e erson said it is not $y dog but a friend of $ineMs. 9 4ust &al)ed t/e dog. 5ell! t/at is estoel. He cannot assert so$et/ing different fro$ &/at /e /as reresented earlier. %stoel by silence or inaction. */is is so$eti$es referred to as estole by standing by or lac/es. */e rincile be/ind t/at is one &/o is silent &/en /e oug/t to sea) cannot be /eard later on to sea) &/en /e oug/t to be silent. 9f t/ere is a need to rebutt or affir$! t/en rebutt or affir$ it ot/er&ise you &ill be estoed later on fro$ denying or affir$ing it. 1971: So estoel &or)s against t/e erson reresenting t/at /e is t/is tye of erson and later on /e &ould say t/at it &as 4ust a 4o)e if t/e ot/er erson /as relied on your state$ent or reresentation. -o& t/ere is also &/at &e call as estoel by ac;uiesence. ut estoel is different fro$ lac/es &/ic/ is t/e failure to institute t/e action &it/in t/e reasonable eriod of ti$e. 9t is not based on ositive la& unli)e rescrition. %stoel cannot be also redicated on an illegal act. ,eaning t/e erson &/o /as acted on a articular illegal act! cannot be estoed. or e
A lessee or a bailee is estoed fro$ asserting title to t/e t/ing leased or received! as against t/e lessor or Eresu$tion does not aly if alleged tenant does not ad$it e<ressly or i$liedly t/e e
1979: Here! t/e erson is nt t/e o&ner of t/e t/ing alienated but /e sold it. Later on /o&ever /e ac;uired o&ners/i of t/e t/ing. /e cannot be /eard later on t/at at t/e ti$e of t/e alienation! /e &as not actually t/e o&ner but $erely a reresentative. >1@? is t/e e1@1. ut a tenant &ill not be /eard to disute t/e title of t/e landlord. And t/e resu$tion is conclusive. 9t is not a disutable resu$tion. -eit/er can a bailee disute t/e title of t/e bailor. Art. 197. 5/en in a contract bet&een t/ird ersons concerning i$$ovable roerty! one of t/e$ is $isled by a erson &it/ resect to t/e o&ners/i or real rig/t over t/e real estate! t/e latter is recluded fro$ asserting /is legal title or interest t/erein! rovided all t/ese re;uisites are resent: (> */ere $ust be fraudulent reresentation or &rongful conceal$ent of facts )no&n to t/e arty estoed3 (2 */e arty recluded $ust intend t/at t/e ot/er s/ould act uon t/e facts as $isreresented3 (@ */e arty $isled $ust /ave been una&are of t/e true facts3 and (1 */e arty defrauded $ust /ave acted in accordance &it/ t/e $isreresentation. 197 alies to an i$$ovable roerty and a t/ird erson is $isled by a erson &it/ resect to t/e o&ners/i or real rig/t over t/e i$$ovable. */e latter is recluded fro$ asserting /is legal title or interest rovided all t/e re;uisites are resent. >. */ere $ust be fraudulent reresentation or &rongful conceal$ent of facts )no&n to t/e arty estoed3 2. t/e art recluded $ust intend t/at t/e ot/er s/ould act uon t/e facts as $isreresented3 @. t/e arty $isled $ust /ave been una&are of t/e true facts3 1. */e arty defrauded $ust /ave acted in accordance &it/ t/e $isreresentation. */is alies to an i$$ovable. 9f it &ere a $ovable! you aly >1@? and >1@6.

0

ObliCon-Reviewer-Tolentino.pdf

Recommend Documents