Obligatio Ns and Contract S: Expanded Course Outline Professor E. A. Labitag

OBLIGATIO NS AND CONTRACT S
Expanded Course Outline Professor E. A. Labita

!ari"#i Santos $ %P La& B'()'
OBLIGATIONS * CONTRACTS $ Prof. Labita + A., . '((-.'((/ !ari"#i E. Santos $ %P La& B'()'
Pa e 2 of 113
University of the Philippines College of Law
OBLIGATION
AN! CONT"ACT
Professor #$ A$ La%itag 'nd Se0ester+ A, '((-.'((/
Title I$ OBLIGATION
Chapter I$ General Provisions
CONC#PT O& OBLIGATION
!efinition Art ))12 Obli ation is a juridical necessity to i3e+ to do or not to do. OBLIGATOR, RELATION IN ITS TOTALIT,4 T#e 5uridi"al relation+ "reated b6 3irtue of "ertain fa"ts+ bet&een t&o or 0ore persons+ &#ereb6 t#e 're(itor or obligee+ 0a6 de0and of t#e (e%tor or obligor+ a definite prestation. on PASSI7E SIDE4 8#ere t#ere is a ri #t or po&er to de0and+ t#ere is a "orrelati3e obli ation or an i0position upon a person of a definite "ondu"t. Criti'is) of (efinition* It is one sided+ refle"ts onl6 t#e debtor9s side of t#e a ree0ent : San"#e; Ro0an #le)ents of O%ligation
). A"ti3e sub5e"t : po&er to de0and t#e prestation <obli ee="reditor> Personal '. Passi3e sub5e"t : bound to perfor0 t#e prestation <obli or=debtor> ele0ents
Te0porar6 indefiniteness of a sub5e"t e. . ne otiable instru0ent pa6able to bearer or a pro0ise of a pri;e or a re&ard for an6one perfor0in a "ertain a"t
?. Prestation or Ob5e"t : not a t#in but a parti"ular "ondu"t of t#e debtor+ but al&a6s a prestation
KINDS OF PRESTATION a. TO GI7E : "onsists in t#e deli3er6 of a 0o3able or an i00o3able t#in + in order to "reate a real ri #t or for t#e use of t#e re"ipient or for its si0ple possession or in order to return to its o&ner b. TO DO : all @inds of &or@ or ser3i"es+ &#et#er 0ental or p#6si"al ". NOT TO DO : "onsists in abstainin fro0 so0e a"t+ in"ludes Anot to i3e+B bot# bein ne ati3e obli ations REQUISITES OF PRESTATION a. P#6si"all6 and 5uridi"all6 possible b. Deter0inate or at least deter0inable a""ordin to pre.establis#ed ele0ents or "riteria ". Possible eCui3alent in 0one6 Pe"uniar6 interest need not be for one of t#e parties+ it 0a6be for t#e benefit of ?rd person=s distin"t fro0 t#e parties to t#e "ontra"t Prestation need not be of e"ono0i" "#ara"ter to #a3e pe"uniar6 3alue+ if it does not #a3e 3alue t#e la& attributes to it e"ono0i" 3alue e. . 0oral and no0inal da0a es
D. Effi"ient "ause or 5uridi"al tie or vinculum juris : relation bet&een obli or and obli e &#i"# is
establis#ed4 : B6 la& <e. . relation of #usband and &ife i3in rise to t#e obli ation to support>
Pa e 3 of 113
: :
B6 bilateral a"ts <e. . "ontra"ts i3in rise to t#e obli ations stipulated t#erein> B6 unilateral a"ts <e. . "ri0es and Cuasi.deli"ts>
1. Form in which he oblig! ion is m!ni"es e# $ "annot be "onsidered essential

!istin'tion %etween Nat+ral an( Civil O%ligation
As to enfor"eabilit6 As to basis NATU"AL Not b6 "ourt a"tions+ but b6 ood "ons"ien"e of debtor ECuit6 and natural 5usti"e CI,IL Court a"tion or t#e "oer"i3e po&er of publi" aut#orit6 Positi3e la&
OU"C#
O& OBLIGATION
A. LA- EEx.Le eF
Art ))1- Obli ations deri3ed fro0 la& are NOT PRESU%ED. Onl6 t#ose expressl6 deter0ined in his &o#e or in s'eci!l l!ws are de0andable+ and s#all be re ulated b6 t#e 'rece' s o" he l!w &#i"# establis#es t#e0G and as to wh! h!s no been "oreseen+ b6 t#e pro3isions of t#is boo@. : :
Go3erned b6 t#e la& itself A ree0ent of t#e parties is not ne"essar6 e. . tax "olle"tion+ Art DD- and Art D-Not presu0ed+ onl6 t#ose expressl6 pro3ided are enfor"eable
B. CONT"ACT EEx.Contra"tu+ Culpa Contra"tualF

Art ))1/ Obli ations arisin fro0 con r!c s h!ve he "orce o" l!w bet&een t#e "ontra"tin parties and s#ould be com'lie# wi h in goo# "!i h. Expresses prin"iple of !u onom( o" will+ presupposes t#at "ontra"t is 3alid and enfor"eable : PRE)&ONTRA&TUA* O+*I,ATION4 Da0a es "an be re"o3ered &#en "ontra"t is not perfe"ted if4 Offers is "lear and definite + leadin offeree in ood fait# to in"ur expenses in expe"tation of enterin into a "ontra"t 8it#dra&al of t#e offer 0ust be &it#out an6 ille iti0ate "ause. If offeror4 ,uil ( o" "!ul or negligence+ liabilit6 &ould be based on Art ')H2 No "!ul or negligence+ &it#dra&al &as in abuse of ri #t+ liabilit6 &ould be based on Art )/ e. . brea"# of pro0ise to 0arr6
Art )?(1 A "ontra"t is a 0eetin of 0inds bet&een t&o persons &#ereb6 one binds #i0self+ &it# respe"t to t#e ot#er+ to i3e so0et#in or to render so0e ser3i"e.
C. .UA I/CONT"ACT or !#LICT EIuasi Ex.Contra"tuF

Art ))2( Obli ations deri3ed fro0 Cuasi."ontra"ts s#all be sub5e"t to t#e pro3isions of C#apter )+ Title J7II. Art ')D' Certain la&ful+ 3oluntar6 and unilateral a"ts i3e rise to t#e 5uridi"al relation of Cuasi. "ontra"t to t#e end t#at no one s#all be un5ustl6 enri"#ed or benefited at t#e expense of anot#er.
:
E. .
: Kuridi"al relation &#i"# arises fro0 "ertain a"ts t#at are4 *A-FU* <a ainst "ri0e>+ .O*UNTAR/ <a ainst Cuasi.deli"t : based on ne li en"e or 0ere la"@ of foresi #t> UNI*ATERA* <a ainst "ontra"t in &#i"# t#ere are t&o parties> Art ')DD Art ')1( Art ')1D Art ')2D Art ')2H Art ')2Art ')HD Art ')H1
0in(s of .+asi/'ontra'ts
Pa e 1 of 113
). Negotiorum gestio <offi"ious 0ana e0ent>

Art ')DD 8#oe3er 3oluntaril6 ta@es "#ar e of t#e a en"6 or 0ana e0ent of t#e business or propert6 of anot#er+ &it#out an6 po&er fro0 t#e latter+ is o%lige( to 'ontin+e the sa)e until t#e ter0ination of t#e affair and its in"idents+ or to reCuire t#e person "on"erned to substitute #i0+ if t#e o&ner is in a position to do so. T#is 5uridi"al relation DOES NOT arise in eit#er of t#ese instan"es4 )> 8#en t#e propert6 or business is no neglec e# or !b!n#one# '> If in fa"t t#e 0ana er #as been !ci l( !u hori0e# b( he owner
'. Solutio indebiti <pa60ent not due>

Art ')1D If so0et#in is re"ei3ed &#en t#ere is no righ hrough mis !1e+ t#e o%ligation to ret+rn it arises. o #em!n# i + and it &as un#ul( #elivere#
?. Ot#er Cuasi."ontra"ts <support i3en b6 stran ers and ot#er AGood Sa0aritansB>
Art ')2D Art ')21 Art ')22
8#en+ &it#out t#e @no&led e of t#e person obli ed to i3e support+ it is i3en b6 a stran er+ t#e latter s#all #a3e a righ o cl!im t#e sa0e fro0 t#e for0er+ %NLESS it appears t#at #e a3e it ou o" 'ie ( and wi hou in en ion of bein repaid. 8#en funeral expenses are borne b6 a t#ird person+ &it#out t#e @no&led e of t#ose relati3es &#o &ere obli ed to i3e support to t#e de"eased+ said relati3es s#all reimburse he hir# 'erson+ s#ould t#e latter "lai0 rei0burse0ent. 8#en t#e person obli ed to support an orp#an+ or an insane or ot#er indi ent person un5ustl6 refuses to i3e support to t#e latter+ an6 t#ird person 0a6 furnis# support to t#e need6 indi3idual+ &it# ri #t of rei0burse0ent fro0 t#e person obli ed to i3e support. T#e pro3isions of t#is arti"le appl6 &#en t#e fat#er or 0ot#er of a "#ild under ei #teen 6ears of a e un5ustl6 refuses to support #i0. 8#en t#rou # an a""ident or ot#er "ause a person is in5ured or be"o0es seriousl6 ill+ and #e is treated or #elped &#ile #e is not in a "ondition to i3e "onsent to a "ontra"t+ #e s#all be li!ble o '!( "or he services o" he 'h(sici!n or ot#er person aidin #i0+ UN*ESS t#e ser3i"e #as been rendered out of pure enerosit6. 8#en durin a fire+ flood+ stor0+ or ot#er "ala0it6+ propert6 is sa3ed fro0 destru"tion b6 anot#er person &it#out t#e @no&led e of t#e o&ner+ t#e latter is boun# o '!( he "ormer jus com'ens! ion. 8#en t#e governmen + upon t#e failure of an6 person to "o0pl6 &it# #ealt# or safet6 re ulations "on"ernin propert6+ underta@es to do t#e ne"essar6 &or@+ e3en o3er #is ob5e"tion+ #e s#all be li!ble o '!( he e2'enses. 8#en b6 a""ident or ot#er fortuitous e3ent+ 0o3ables separatel6 pertainin "o00in led or "onfused+ t#e rules on co)ownershi' s#all be appli"able. to t&o or 0ore persons are
Art ')2H
Art ')2-
Art ')2/
Art ')H(
Art ')H) Art ')H'
T#e ri #ts and obli ations of t#e "in#er o" los 'erson!l 'ro'er ( s#all be o3erned b6 Arti"les H)/ and H'(. T#e ri #t of e3er6 'ossessor in goo# "!i h to rei0burse0ent for ne"essar6 and useful expenses is b6 Arti"le 1D2. o3erned
Art ')H?
8#en a t#ird person+ &it#out t#e @no&led e of t#e debtor+ pa6s t#e debt+ t#e ri #ts of t#e for0er are o3erned b6 Arti"les )'?2 <re"o3er &#at #as been benefi"ial to debtor> and )'?H <"annot "o0pel "reditor to subro ate pa6or in #is ri #ts>. 8#en in a s0all "o00unit6 a nationalit6 of t#e in#abitants of a e de"ide upon a 0easure for prote"tion a ainst la&lessness+ fire+ flood+ stor0 or ot#er "ala0it6+ an6 one &#o ob5e"ts to t#e plan and refuses to "ontribute to t#e expenses but is benefited b6 t#e pro5e"t as exe"uted s#all be li!ble o '!( his sh!re o" s!i# e2'enses. An6 person &#o is "onstrained to pa6 t#e taxes of anot#er s#all be en i le# o reimbursemen fro0 t#e latter.
Art ')HD
Art ')H1
D. ACT or O2I
ION
PUNI 3#! B4 LA- EEx.Deli"tu+ Ex.Lalefi"io+ Culpa Cri0inalF
Pa e 5 of 113
Art ))2) Ci3il obli ations arisin fro0 "ri0inal offense s#all be o3erned b6 t#e penal la&s+ sub5e"t to t#e pro3isions of Art ')HH+ and of t#e pertinent pro3isions of C#apter '+ Preli0inar6 Title on Mu0an Relations and of Title J7III of t#is Boo@+ re ulatin da0a es. Art )((+ RPC E3er6 person "ri0inall6 liable for a felon6 is also "i3ill6 liable.
GENERAL R%LE4 Ci3il liabilit6 is a ne"essar6 "onseCuen"e of "i3il liabilit6

Reason4 Co00ission of "ri0e "auses not onl6 0oral e3il but also 0aterial da0a e. Art )'+ RPC Exe0ptin "ir"u0stan"esG do not in"ur liabilit6 but are NOT E3E%PT fro0 "i3il liabilit6 ). I0be"ile or insane person+ unless a"tin in a lu"id inter3al '. Person under / 6ears of a e ?. Person o3er / 6ears of a e and under )1+ unless a"tin &it# dis"ern0ent D. A"tin under "o0pulsion of an irresistible for"e 1. A"tin under i0pulse of an un"ontrollable fear of an eCual or reater in5ur6 EJCEPTION <"ri0es &it#out "i3il liabilit6> Cri0inal "onte0pt Ga0blin Traffi" 3iolations
+%si(iary Lia%ility for Cri)e ). Inn@eepers+ ta3ern @eepers and an6 ot#er persons or "orporations s#all be civill( li!ble for "ri0es "o00itted in t#eir establis#0ent+ in all "ases &#ere a 3iolation of 0uni"ipal ordinan"es or so0e eneral or spe"ial poli"e re ulation s#all #a3e been "o00itted b6 t#e0 or t#eir e0plo6ees. '. Also appli"able to e0plo6ers+ tea"#ers+ persons and "orporations en a ed in an6 @ind of industr6 for felonies "o00itted b6 t#eir ser3ants+ pupils+ apprenti"es or e0plo6ees in dis"#ar e of t#eir duties. : To #old e0plo6ers s+%si(iarily lia%le for C"I2# of an e0plo6ee4 "o00itted in t#e perfor0an"e of t#e fun"tions or duties of t#e e0plo6ee. : But if a"tion is %ase( on CONT"ACT+ and not upon pre3ious "on3i"tion of e0plo6ee for a "ri0e4 e0plo6er9s liabilit6 is PRILAR, and INDEPENDENT+ not 0erel6 subsidiar6. Civil lia%ility arising fro) Cri)e Art ))2) Ci3il obli ations arisin fro0 "ri0inal offenses s#all be governed by the penal laws+ sub5e"t to t#e pro3isions of Arti"le ')HH+ and of t#e pertinent pro3isions of C#apter '+ Preli0inar6 Title+ on Mu0an Relations+ and of Title J7III of t#is Boo@+ re ulatin da0a es. Rules on Cri0inal Pro"edure Rule ))) 8#en a "ri0inal a"tion is instituted+ t#e "i3il a"tion for t#e re"o3er6 of "i3il liabilit6 arisin fro0 t#e offense "#ar ed s#all be #eeme# ins i u e# wi h he crimin!l !c ion UN*ESS t#e offended part6 &ai3es he civil !c ion+ reserves he righ o ins i u e i se'!r! el( or institutes t#e "i3il a"tion 'rior to t#e "ri0inal a"tion. #6tent of Civil Lia%ility Art )(D+ RPC 8#at is in"luded in "i3il liabilit6 ). "estit+tion : t#in itself is restored <Art )(1+ RPC> '. "eparation of (a)age 'a+se( : "ourt deter0ines a0ount of da0a e <Art )(2+ RPC> ?. In(e)nifi'ation for 'onse7+ential (a)ages : not onl6 "aused t#e ?rd part6 but also t#ose suffered b6 #is fa0il6 or b6 a ?rd person b6 reason of t#e "ri0e <Art )(H+ RPC> Ci3il liabilit6 for "ri0es is extin uis#ed t#e sa0e "auses pro3ided in t#e CC for t#e extin uis#0ent of ot#er obli ations. GENERAL R%LE4 Cri0inal a"tion bars "i3il a"tion for t#e sa0e offense Ci3il a"tion for re"o3er6 of "i3il liabilit6 arisin fro0 t#e offense is im'lie#l( ins i u e# &it# t#e "ri0inal a"tion EJCEPTIONS4 Offended part6 reserves he righ to institute it separatel6
Pa e 8 of 113
T#e la& pro3ides for an independent "i3il a"tion <i.e. "i3il a"tion 0a6 pro"eed to final 5ud 0ent irrespe"ti3e of result of t#e "ri0inal a"tion and filin of t#e "ri0inal a"tion does not suspend t#e "i3il a"tion> obli ations arisin fro0 t#e a"t or o0ission "lai0ed to be "ri0inal <Art ?)> 3iolations of "onstitutional ri #ts and liberties of indi3iduals <Art ?'> defa0ation+ fraud or p#6si"al in5uries <Art ??> refusal or failure of 0e0bers of poli"e for"e to render prote"tion to life or propert6 <Art ?D>
E. .UA I/!#LICT EIuasi Ex.Deli"to+ Iuasi Ex.Lalefi"io+ Culpa ACuilana+ Tort <"o00on la&>F
Art ))2' Obli ations deri3ed fro0 Cuasi.deli"ts s#all be o3erned b6 t#e pro3isions of C#apter '+ Title J7II of t#is Boo@ and b6 spe"ial la&s. Art ')H2 8#oe3er b6 a"t or o0ission "auses da0a e to anot#er+ t#ere bein fault or ne li en"e+ is obli ed to pa6 for t#e da0a e done. Su"# fault or ne li en"e &#en t#ere is no pre.existin "ontra"tual relation bet&een t#e parties+ is "alled 4u!si)#elic and is o3erned b6 t#e pro3isions of t#is C#apter. BASIS4 %ndisputable 'rinci'le o" e4ui (G fault or ne li en"e "annot pre5udi"e an6one else besides its !u hor and in no "ase s#ould its "onseCuen"es be borne b( him who su""ers t#e #ar0 produ"ed b6 su"# fault or ne li en"e. : Lan is responsible not onl6 for #is 3oluntar6 &illful a"ts+ exe"uted "ons"iousl6 and intentionall6 but also for t#ose a"ts perfor0ed &it# la"@ of foresi #t+ "are and dili en"e+ &#i"# "ause 0aterial #ar0 to so"iet6 or to ot#er indi3iduals. NE8 SO%RCES ON OBLIGATION : enerall6 re"o ni;ed b6 la& alt#ou # not in"luded in t#e "ode ). %n5ust enri"#0ent <CC "ate ori;ed under Cuasi."ontra"t> '. %nilateral de"laration of &ill ?. Abuse of ri #ts <CC "ate ori;ed under Cuasi.deli"t> Test of Negligen'e* 8ould a prudent 0an+ in t#e position of t#e person to &#o0 ne li en"e is attributed+ foresee #ar0 to t#e person in5ured as a reasonable "onseCuen"e of t#e "ourse about to be pursuedO E*E%ENTS OF NE,*I,EN&E a> dut6 on t#e part of t#e defendant to prote"t t#e plaintiff fro0 in5ur6 of &#i"# t#e latter "o0plains b> failure to perfor0 su"# dut6 "> an in5ur6 to t#e plaintiff t#rou # su"# failure KINDS OF NE,*I,EN&E ). &ul'! !4uil!n! : or "ulpa extra."ontra"tualG ne li en"e as a sour"e of obli ation+ a 4u!si)#elic '. &ul'! con r!c u!l : ne li en"e in t#e perfor0an"e of a "ontra"t ?. &ul'! crimin!l : "ri0inal ne li en"e !istin'tion %etween C+lpa A7+ilana an( C+lpa Contra't+al
CULPA A.UILANA 9'+lpa e6tra/'ontra't+al: Go3erned b6 Art ')H2 to ')/D Ne li en"e as a sour"e of obli ation Nault or ne li en"e &#i"# "onstitutes an independent sour"e of obli ation bet&een parties not pre3iousl6 bound Ne li en"e of defendant s#ould be t#e proxi0ate "ause of da0a e if liabilit6 is to atta"# CULPA CONT"ACTUAL Go3erned b6 Art ))H/ e se4uel Ne li en"e in t#e perfor0an"e of a "ontra"t Nault or ne li en"e of t#e debtor as an in"ident in t#e fulfill0ent of an existin obli ation
Pa e ; of 113
!istin'tion %etween .+asi/(eli'ts an( Cri)es

A TO< Nature of ri #t 3iolatedG .UA I/!#LICT Pri3ate ri #tsG &ron a ainst t#e indi3idual C"I2# Publi" ri #tG &ron a ainst t#e state
An obli ati on "an arise fro0 bot# "ri0e and Cuasi. deli"t at t#e sa0e ti0e <e. . p#6si" al in5uries > B%T "an onl6 re"o3er da0a e on"e and not t&i"e
Condition of 0ind
Le al basis of liabilit6
Cri0inal intent is not ne"essar6. Possible t#at t#ere is not "ri0inal "#ar e but onl6 "i3il liabilit6 for da0a es arisin fro0 Cuasi.deli"t A"tionable in an6 a"t or o0ission &#erein fault or ne li en"e inter3enes Liabilit6 for da0a es to t#e in5ured part6
Cri0inal intent is ne"essar6 for t#e existen"e of liabilit6+ &it#out it+ t#ere "an be no "ri0e Not as broad as Cuasi.deli"t+ "an be punis#ed onl6 &#en t#ere is a penal la& "learl6 penali;in it Certain "ri0es do not #a3e "i3il liabilit6 e. . "onte0pt+ a0blin + 3iolations of ordinan"es and traffi" re ulations &#en nobod6 is in5ured Nine <a""ruin to t#e publi" treasur6>+ i0prison0ent or bot# punis#0ent Be6ond reasonable doubt Can ne3er be "o0pro0ised
Liabilit6 for da0a es
Nor0s of redress
A0ount of e3iden"e Co0pro0ise
Reparation of t#e in5ur6 suffered b6 t#e in5ured part6 "o0pensation+ inde0nifi"ation Preponderan"e of e3iden"e Can be "o0pro0ised as an6 ot#er "i3il liabilit6
"e7+isites of Lia%ility +n(er .+asi/!eli'ts ). T#ere exists a wrong"ul !c or omission i0putable to t#e defendant b6 reason of #is fault or negligence '. T#ere exists a damage or injury ?. Direct causal connection or relation of "ause and effe"t bet&een t#e fault or ne li en"e and t#e da0a e or in5ur6 OR t#at t#e fault or ne li en"e be t#e "ause of da0a e or in5ur6 DOCTRINE ON PROJILATE CA%SE4 su"# adeCuate and effi"ient "ause as+ in t#e natural order of e3ents+ and under t#e parti"ular "ir"u0stan"e surroundin t#e "ause+ &ould ne"essaril6 produ"e t#e e3ent
Pa e = of 113
NAT%RAL AND PROBABLE CA%SE4 eit#er &#en it a"ts dire"tl6 produ"in t#e in5ur6+ or sets in 0otion ot#er "auses so produ"in it and for0in a "ontinuous "#ain in natural seCuen"e do&n to t#e in5ur6 CONC%RRENT CA%SE4 if t&o "auses operate at t#e sa0e ti0e to produ"e a result &#i"# 0i #t be produ"ed b6 eit#er independentl6 of t#e ot#er+ ea"# of t#e0 is a proxi0ate "ause 8#en t#e plaintiff9s own negligen'e &as t#e i00ediate and proxi0ate "ause of #is in5ur6+ #e c!nno recover #!m!ges. B%T if ne li en"e is only 'ontri%+tory+ t#e i00ediate and proxi0ate "ause of t#e in5ur6 is defendant9s la"@ of due "are+ t#e plaintiff m!( recover #!m!ges+ t#e "ourts s#all 0iti ate t#e da0a es to be a&arded <Art ')H/>
Lia%ility for fa+lt of others / Obli ation arisin fro0 Cuasi.deli"t is de0andable not onl6 for one9s o&n a"ts or o0issions+ but also for hose o" 'ersons "or whom one is res'onsible.
Art ')-( T#e obli ation i0posed b6 Arti"le ')H2 is de0andable not onl6 for onePs o&n a"ts or o0issions+ but also for t#ose of persons for &#o0 one is responsible. T#e fat#er and+ in "ase of #is deat# or in"apa"it6+ t#e 0ot#er+ are responsible for t#e da0a es "aused b6 t#e 0inor "#ildren &#o li3e in t#eir "o0pan6. Guardians are liable for da0a es "aused b6 t#e 0inors or in"apa"itated persons &#o are under t#eir aut#orit6 and li3e in t#eir "o0pan6. T#e o&ners and 0ana ers of an establis#0ent or enterprise are li@e&ise responsible for da0a es "aused b6 t#eir e0plo6ees in t#e ser3i"e of t#e bran"#es in &#i"# t#e latter are e0plo6ed or on t#e o""asion of t#eir fun"tions. E0plo6ers s#all be liable for t#e da0a es "aused b6 t#eir e0plo6ees and #ouse#old #elpers a"tin &it#in t#e s"ope of t#eir assi ned tas@s+ e3en t#ou # t#e for0er are not en a ed in an6 business or industr6. T#e State is responsible in li@e 0anner &#en it a"ts t#rou # a spe"ial a entG but not &#en t#e da0a e #as been "aused b6 t#e offi"ial to &#o0 t#e tas@ done properl6 pertains+ in &#i"# "ase &#at is pro3ided in Arti"le ')H2 s#all be appli"able. Lastl6+ tea"#ers or #eads of establis#0ents of arts and trades s#all be liable for da0a es "aused b6 t#eir pupils and students or apprenti"es+ so lon as t#e6 re0ain in t#eir "ustod6. T#e responsibilit6 treated of in t#is arti"le s#all "ease &#en t#e persons #erein 0entioned pro3e t#at t#e6 obser3ed all t#e dili en"e of a ood fat#er of a fa0il6 to pre3ent da0a e. Art ')-+ NC T#e s"#ool+ its ad0inistrators and tea"#ers+ or t#e indi3idual+ entit6 or institution en a ed in "#ild are s#all #a3e spe"ial parental aut#orit6 and responsibilit6 o3er t#e 0inor "#ild &#ile under t#eir super3ision+ instru"tion or "ustod6. Aut#orit6 and responsibilit6 s#all appl6 to all aut#ori;ed a"ti3ities &#et#er inside or outside t#e pre0ises of t#e s"#ool+ entit6 or institution. Art ')/+ NC T#ose i3en t#e aut#orit6 and responsibilit6 under t#e pre"edin Arti"le s#all be prin"ipall6 and solidaril6 liable for da0a es "aused b6 t#e a"ts or o0issions of t#e une0an"ipated 0inor. T#e parents+ 5udi"ial uardians or t#e persons exer"isin substitute parental aut#orit6 o3er said 0inor s#all be subsidiaril6 liable. T#e respe"ti3e liabilities of t#ose referred to in t#e pre"edin para rap# s#all not appl6 if it is pro3ed t#at t#e6 exer"ised t#e proper dili en"e reCuired under t#e parti"ular "ir"u0stan"es. All ot#er "ases not "o3ered b6 t#is and t#e pre"edin arti"les s#all be o3erned b6 t#e pro3isions of t#e Ci3il Code on Cuasi. deli"ts.
!iligen'e of #)ployers > An e0plo6er 0a6 be #eld "i3ill6 liable for t#e Cuasi.deli"t or "ri0e of #is e0plo6ee.
LIABILIT, ON ELPLO,ERS NOR ELPLO,EES9 .UA I/!#LICT 9Art 21=?@ CC: Pri0ar6+ "an be sued #irec l( b6 t#e in5ured part6 and after #e #as paid t#e da0a es to su"# in5ured part6+ #e "an recover "rom his em'lo(ee a0ount paid b6 #i0 E0plo6er "an a3oid liabilit6 b6 pro3in t#at #e exer"ised t#e #iligence o" ! goo# "! her of a fa0il6 to pre3ent da0a e LIABILIT, ON ELPLO,ERS NOR ELPLO,EES9 C"I2# 9Art 1?3@ "PC: Subsidiar6+ e0plo6ee 0ust #a3e first been "on3i"ted and senten"ed to pa6 "i3il inde0nit6 and it 0ust be s#o&n t#at #e is insolven in order t#at e0plo6ee 0a6 be liable Liabilit6 is absolute and c!nno !v!il o" he #e"ense b6 proof of su"# dili en"e
Pa e A of 113
All e0plo6ers+ &#et#er t#e6 are en a ed in so0e enterprise or not+ are liable for t#e a"ts of t#eir e0plo6ees in"ludin #ouse #elpers
E0plo6er is liable onl6 &#en #e is en a ed in so0e @ind of business or industr6 <durin perfor0an"e of dut6>
Pa e 1? of 113
CLA
I&ICATION
O& OBLIGATION
A. Pri)ary Classifi'ation +n(er the Civil Co(e ). 8MEN4 Pure and Conditional <Art ))H/.))/'> ti0e of enfor'ea%ility P%RE4 de0andable at on"e CONDITIONAL4 fulfill0ent or extin uis#0ent depends upon a future and un"ertain e3ent '. 8MEN4 8it# a period or ter0 <Art ))/?.))/-> ti0e of (e)an(a%ility PERIOD4 its fulfill0ent or extin uis#0ent depends upon a future and "ertain e3ent ?. 8MAT4 Alternati3e and Na"ultati3e <Art ))//.)'(2> 0ultiple o%Be'ts ALTERNATI7E4 0ultiple prestations but debtor &ill perfor0 one or some bu no !ll+ dependin
on &#ose "#oi"e it is NAC%LTATI7E4 0ultiple prestations &it# a 'rinci'!l oblig! ion !n# subs i u e 'res ! ions+ "#oi"e is enerall6 i3en to t#e DEBTOR
D. 8MO4 Koint and Solidar6 <Art )'(H.)'''> 0ultiple s+%Be'ts+ fo"uses on t#e tie t#at bonds t#e
parties KOINT4 ea"# "an be 0ade to pa6 onl( his sh!re in t#e obli ation SOLIDAR,4 one "an be 0ade to '!( "or he whole oblig! ion sub5e"t to rei0burse0ent
1. MO84 Di3isible and Indi3isible <Art )''?.)''1>
perfor)an'e of t#e prestation+ not to t#e t#in &#i"# is ob5e"t t#ereof+ &#et#er it "an be fulfilled in parts or not "ase of brea"#
2. 8it# a penal "lause <Art )''2.)'?(> a''essory underta@in to assu0e reater liabilit6 in
B$ e'on(ary Classifi'ation
). Le al <Art ))1-> fro0 la&

Con3entional <Art ))1/> fro0 "ontra"ts Penal <Art ))2)> fro0 "o00ission of a "ri0e
'. <As to sub5e"t 0atter> Real <to i3e> and Personal <to do or not to do> ?. <As to sub5e"t 0atter of obli ation> Deter0inate and Generi" D. Positi3e <to i3e+ to do> and Ne ati3e <not to i3e+ not to do> 1. %nilateral : onl6 one part6 bound to perfor0 obli ation+ one debtor and one "reditor <e. . si0ple
and re0unerator6 donation+ to i3e support> Bilateral : OR s6nalla 0ati" "ontra"ts+ e0ptio 3enditoG t&o parties are re"ipro"all6 bound t#us debtor and "reditor of ea"# ot#er <e. . pur"#ase and sale+ ease>
2. Indi3idual : onl6 one sub5e"t

Colle"ti3e : se3eral sub5e"t
H. A""essor6 : depends on t#e prin"ipal obli ation e. . pled e+ 0ort a e

Prin"ipal : 0ain obli ation -. As to ob5e"t or prestation a. Si0ple : onl6 one prestation
Pa e 11 of 113
b. Lultiple : t&o or 0ore prestation i. Con5un"ti3e : all 0ust be perfor0ed ii.Distributi3e : one or so0e 0ust be perfor0ed
a. Alternati3e : 0ore t#an one prestation but one part6 0a6 "#oose &#i"# oneG se3eral are due but onl6 one 0ust be fulfilled at t#e ele"tion of t#e debtor b. Na"ultati3e : 0ain prestation and a substitute prestation and it is t#e debtor &#o "#oosesG onl6 one t#in is due but t#e debtor #as reser3ed t#e ri #t to substitute it &it# anot#er
/. Possible : "apable of bein perfor0ed+ eit#er p#6si"all6 or le all6

I0possible : p#6si"all6 or le all6 in"apable of bein done
Chapter II$ Nat+re an( #ffe'ts of O%ligations

0IN! O& P"# TATION
A. O%ligation TO GI,#
P#CI&IC T3ING 9(eter)inate: One t#at is indi3iduali;ed and "an be identified or distin uis#ed fro0 ot#ers of its @ind G#N#"IC T3ING 9in(eter)inate: Indi"ated onl6 b6 its @ind+ &it#out bein desi nated and distin uis#ed fro0 ot#ers of t#e sa0e @ind Ob5e"t due be"o0es deter0inable fro0 0o0ent of deli3er6
S'eci"ic hing 5#e ermin! e6

DUTIES OF T7E O+*I,OR <Letters B.D are t#e a""essor6=in"idental obli ations> a$ to (eliver thing itself Art )'DD Par ) T#e debtor of a t#in cannot compel t#e "reditor to receive a different one+ alt#ou # t#e latter 0a6 be of t#e sa0e 3alue as+ or 0ore 3aluable t#an &#i"# is due. : T#ou # u'on !greemen or consen o" he cre#i or+ t#e debtor 0a6 deli3er a different t#in or perfor0 a different prestation in lieu of t#at stipulated DATION in pa60ent <Art )'D1> or OBKECTI7E NO7ATION <Art )'/)> : Defe"ts of t#e t#in 0a6 be &ai3ed b6 t#e "reditor IN Expressl6 de"lares 8it# @no&led e t#ereof+ #e a""epts t#e t#in &it#out protest or disposes or "onsu0es it A&ai3er of defe"tB
b. to preserve thing with (+e 'are

Art ))2? E3er6 person obli ed to i3e so0et#in is also obliged to take care of it &it# t#e proper diligence of a good father of a family+ UN*ESS t#e la& or t#e stipulation of t#e parties reCuires anot#er standard of "are. : 8#64 t#e obli ation to deli3er6 &ould be illusor6. : 8#at @ind of dili en"e4 DILIGENCE ON GOOD NATMER ON NALIL,G elaborated in Art ))H? Nailure to preser3e t#e t#in Liabilit6 for da0a es B%T if due to NORT%ITO%S E7ENTS or NORCE LAKE%RE Exe0pted fro0 responsibilit6
'$ to (eliver the a''essions an( a''essories Art ))22 Obli ation to i3e a deter0inate t#in in"ludes t#at of delivering all its accessions and accessories+ e3en t#ou # t#e6 0a6 not #a3e been 0entioned. : La6 be Cualified b6 "ontrar6 intentions of t#e parties+ e. . ex"lude deli3er6 of a""ession or a""essor6 of t#e t#in .
Pa e 12 of 113
ACC# ION In"ludes e3er6t#in &#i"# is produ"ed b6 a t#in + or &#i"# is in"orporated or atta"#ed t#ereto+ eit#er naturall6 or artifi"iall6. Does not in"lude fruits be"ause Art ))2D 0entioned it alread6 A""esion "ontinua &#i"# in"ludes4
ACC# O"I# T#ose t#in s &#i"#+ destined for e0bellis#0ent+ use or preser3ation of anot#er t#in or 0ore i0portant+ #a3e for t#eir ob5e"t t#e "o0pletion of t#e latter for &#i"# t#e6 are indispensable or "on3enient.
). Accesion n! ur!l: e. . allu3ion '. Accesion in#us ri!l : e. . buildin + plantin +

so&in
($ to (eliver the fr+its Art ))2D Par ) T#e "reditor #as a right to the fr+its of t#e t#in fro0 t#e time the obligation to deliver it arises. Mo&e3er+ t#ere is no real right until t#e sa0e #as been deli3ered to #i0. : Non nu#is '!c is8 se# r!#i ione #omin! rerum r!s"eren ur t#e o&ners#ip of t#in s is transferred not onl6 b6 0ere a ree0ents but b6 deli3er6 REA* RI,7T : po&er belon in to a person o3er a spe"ifi" t#in + &it#out a passi3e sub5e"t indi3iduall6 deter0ined+ a ainst &#o0 su"# ri #t 0a6 be personall6 exer"ised : Gi3es to a person a dire"t and i00ediate po&er o3er a t#in + &#i"# is sus"eptible of bein exer"ised+ not onl6 a ainst a deter0inate person but a ainst t#e &#ole &orld : E. . ri #ts of o&ners#ip and possession PERSONA* RI,7T : po&er belon in to one person to de0and of anot#er+ as a definite passi3e sub5e"t+ t#e fulfill0ent of a prestation to i3e+ to do or not to do &ORRE*ATI.E RI,7TS OF T7E O+*I,EE9&REDITOR <fro0 Sir Labita 9s dia ra00ati"al outline> ). Ri #t to "o0pel deli3er6 a. Nruits <bot# industrial and natural fro0 t#e ti0e obli ation to deli3er arises>+ a""essions and a""essories b. No real ri #t until deli3er6 personal a"tion a ainst debtor+ no ri #t a ainst t#e &orld '. Ri #t to res"ission or resolution ?. Ri #t to da0a es a. Nailure to deli3er Le al ex"use for brea"# of obli ation or dela64 NORT%ITO%S E7ENT unless t#ere is La& e. . possession in bad fait# <Art 11'> Stipulation to t#e "ontrar6 Nature of obli ation reCuires assu0ption of ris@ NE APPLICABLE TO4 Nonperfor0an"e Dela6 Loss=deterioration of spe"ifi" t#in Art ))-/ Before #appenin of suspensi3e "ondition Art ))/( Before #appenin of resolutor6 "ondition Debtor still liable despite NE4 Expressl6 spe"ified b6 la& Art )/D' Bailee liable for loss <"o00odatu0> Art '(() A"t of a t#ief Art ')DH Ne otioru0 estio Art )//? Loss of deposit Stipulation e. . debtor be"o0es AinsurerB of t#e obli ation Assu0ption of ris@ Nraud or 0ali"e <bad fait#> Art ))21 Par ? Deli3ers to t&o or 0ore persons #a3in different interest Debtor in dela6 alread6 &#en NE #appened <Art ))21 Par ?> Debtor uilt6 of "on"urrent ne li en"e in t#is "ase+ no lon NE
Pa e 13 of 113
b. ". d. e.
Liabilit6 arises fro0 "ri0inal a"t ex"ept if debtor tenders t#in and "reditor un5ustifiabl6 refuses to re"ei3e <Art )'2->
Nraud Ne li en"e in perfor0an"e Dela6 or default An6 0anner in "ontra3ention of t#e tenor of obli ation
,eneric hing 5in#e ermin! e6

Art )'D2 8#en t#e obli ation "onsists in t#e delivery of an indeterminate or generic thing+ &#ose 7+ality an( 'ir'+)stan'es have not %een state(+ t#e "reditor "annot de0and a t#in of su'erior 4u!li (. Neit#er "an t#e debtor deli3er a t#in of in"erior 4u!li (. T#e purpose of t#e obli ation and ot#er "ir"u0stan"es s#all be ta@en into "onsideration. Creditor 0a6 as@ for "o0plian"e b( :r# 'erson ! #eb or;s e2'enseG a"tion for substituted perfor0an"e <Art ))21> *I%ITED ,ENERI& T7IN, : eneri" ob5e"ts "onfined to a parti"ular "lass+ t#e "lass is "onsidered in itself a deter0inate ob5e"t &ORRE*ATI.E RI,7TS OF T7E O+*I,EE9&REDITOR <fro0 Sir Labita 9s dia ra00ati"al outline> ). Ri #t to as@ for res"ission or da0a es '. Ri #t to da0a es a. Nailure to deli3er b. Nraud <0ali"e or bad fait#> ". Ne li en"e d. Dela6 e. An6 0atter "ontra3ene t#e tenor of obli ation RI,7TS OF A &REDITOR <fro0 BarOps Re3ie&er '((->
P#CI&IC To "o0pel spe"ifi" perfor0an"e To re"o3er da0a es+ in "ase of brea"# of t#e obli ation+ ex"lusi3e or in addition to spe"ifi" perfor0an"e Entitle0ent to fruits+ interests fro0 t#e ti0e obli ation to deli3er arises G#N#"IC To as@ for t#e perfor0an"e of t#e obli ation To as@ t#at t#e obli ation be "o0plied &it# at t#e expense of t#e debtor To re"o3er da0a es in "ase of brea"# of obli ation
B. O%ligation TO !O
Art )'DD Par ' In o%ligations to (o or not to (o+ an a"t or forbearan"e cannot be substituted b6 anot#er a"t or forbearan"e !g!ins he obligee;s will. : Ex"eption4 NAC%LTATI7E OBLIGATION &#erein t#e #eb or reserves he righ o subs i u e anot#er prestation Art ))2H If a person is obli ed to do so0et#in fails to do it+ t#e sa0e s#all be e2ecu e# ! his cos . T#e sa0e rule 0a6 be obser3ed if #e does it in con r!ven ion o" he enor o" he oblig! ion. Nurt#er0ore+ it 0a6 be de"reed t#at wh! h!s been 'oorl( #one be un#one. DUTIES OF O+*I,OR <fro0 BarOps Re3ie&er '((-> ). To do it <Art ))2H> '. To s#oulder t#e "ost if so0eone else does it <Art ))2H> ?. To undo &#at #as been poorl6 done <Art ))2H> D. To pa6 da0a es <Art ))H(.))H'+ ''().''('> No a"tion for "o0plian"e be"ause t#at &ould be in3oluntar6 ser3itude &#i"# is pro#ibited b6 t#e "onstitution.
C. O%ligation NOT TO !O
Pa e 11 of 113
Art )'DD Par ' In obli ations to do or not to do+ an a"t or forbearan"e c!nno be subs i u e# b6 anot#er a"t or forbearan"e a ainst t#e obli ee9s &ill. : Perfor0an"e "annot be b6 a dele ate or an a ent : No le al a""essor6 obli ations arise <as "o0pared to obli ation to i3e> Art )'2- 8#en t#e obli ation "onsists in not doin + and t#e obli or does &#at #as been forbidden #i0+ it s#all also be un#one ! his e2'ense. DUTIES OF O+*I,OR <fro0 BarOps Re3ie&er '((-> ). Not to do &#at s#ould not be done '. To s#ould t#e "ost to undo &#at s#ould not #a3e been done <Art ))2-> ?. To pa6 da0a es <Art ))H(+ ''().''('>
Pa e 15 of 113
B"#AC3 O& OBLIGATION

CONC#PT ,OLUNTA"4 arises fro0 t#e modes pro3ided in Art 1170 IN,OLUNTA"4 arises be"ause of fortuitous events !istin'tion %etween UB TANTIAL an( CA UALC LIG3T %rea'h
CA UAL Partial A part is perfor0ed Gi3es rise to liabilit6 for da0a es
UB TANTIAL Total A0ounts to non.perfor0an"e Basis for res"ission and pa60ent of da0a es
GENERAL R%LE4 Res"ission &ill not be per0itted for a sli #t or "asual brea"# of t#e "ontra"t+ but onl6 for su"# brea"#es as are so substantial and fundamental as to defeat t#e ob5e"t of t#e parties in 0a@in t#e a ree0ent. 2O!# O& B"#AC3 Art ))H( T#ose &#o in the performance of t#eir obli ations are uilt6 of FRAUD+ NE,*I,EN&E+ or DE*A/ and t#ose &#o in an6 0anner &ONTRA.ENE T7E TENOR t#ereof+ are liable for da0a es.
1 &"AU! 5Dolo6
Con'ept Nraud is t#e voluntary e ecution of a wrongful act+ or a &illful o0ission+ @no&in and intendin t#e effe"ts &#i"# naturall6 and ne"essaril6 arise fro0 su"# a"t or o0ission. : Deliberate and intentional e3asion of t#e nor0al fulfill0ent of obli ations : An6 3oluntar6 and &illful a"t or o0ission &#i"# pre3ents t#e nor0al reali;ation of t#e prestation+ @no&in and intendin t#e effe"ts &#i"# naturall6 and ne"essaril6 arise fro0 su"# a"t : Nraud in t#e performanceof a pre!e isting obligation : Cannot "o3er 0ista@e and errors of 5ud 0ent 0ade in ood fait#+ er o s6non60ous to bad fait# <dis#onest purpose or so0e 0oral obliCuit6 and "ons"ious doin of &ron > : T#e ele0ent of INTENT and NOT t#e #ar0 done is t#e test KINDS OF FRAUD ). Nraud in t#e perfor)an'e <Art ))H)> '. Nraud in t#e e6e'+tionC'reationC%irth of t#e "ontra"t a. Dolo c!us!n e <Art )?DD> b. Dolo inci#en e <Art )??->
&"AU! 9Art 11;1: 8MEN PRESENT P%RPOSE Durin t#e perfor0an"e of a pre.existin obli ation E3ade t#e nor0al fulfill0ent of obli ation !OLO CAU ANT# 9Art 133=: Durin t#e perfe"tion of a "ontra"t Se"ure t#e "onsent of anot#er to enter into "ontra"t !OLO INCI!#NT# 9Art 1311: Durin t#e perfe"tion of a "ontra"t Se"ure t#e "onsent of anot#er to enter into "ontra"t B%T fraud &as not t#e prin"ipal indu"e0ent in 0a@in t#e "ontra"t Does not result in t#e 3itiation of "onsent Gi3es rise to a ri #t of t#e inno"ent part6 to "lai0 for da0a es
RES%LTS IN GI7ES RISE TO
Brea"# of t#e obli ation Ri #t in fa3or of "reditor to re"o3er da0a es
7itiation of "onsentG 7oidable "ontra"t Ri #t of t#e inno"ent part6 to annul t#e "ontra"t
Pa e 18 of 113
Non/waiver of &+t+re &ra+( Art ))H) Responsibilit6 arisin fro0 fraud is de0andable in ALL OBLIGATIONS. An6 &ai3er of a"tion for future fraud is 7OID. : To per0it su"# ad3an"e renun"iations &ould pra"ti"all6 lea3e t#e obli ation &it#out effe"t. : T#e la& does not pro#ibit t#e renun"iation of t#e a"tion for da0a es on t#e round of fraud alread6 "o00itted. #ffe'ts of &ra+( / Liabilit6 for da0a es+ a "ri0e or a Cuasi.deli"t <Art ))H(>
2 N#GLIG#NC# 5&ul'! con r!c u!l6

Art ))H' Responsibilit6 arisin fro0 ne li en"e in t#e perfor0an"e of E7ER, !IND ON OBLIGATION is also de0andable+ but su"# liabilit6 0a6 be RE,U*ATED +/ &OURTS+ a""ordin to t#e circums !nces. Con'ept : absen"e of due dili en"e Art ))H? Par ) T#e fault or ne li en"e of t#e obli or "onsists in t#e omission of that diligence &#i"# is reCuired b6 t#e n! ure of obli ation and "orresponds &it# t#e circums !nces of t#e persons+ of t#e ti0e and t#e pla"e. 8#en ne li en"e s#o&s "AD #A$%&+ t#e pro3isions of Art ))H) <responsibilit6 arisin fro0 fraud> and Art ''() Par ' <responsible for all da0a es reasonabl6 attributed to non. perfor0an"e> s#all appl6. Art ''() Par ' In "ase of fraud+ bad fait#+ 0ali"e or &anton attitude+ t#e obli or s#all be responsible for all damages &#i"# 0a6 be REASONABL, ATTRIB%TED to t#e non. perfor0an"e of obli ation. !istin'tion %etween C+lpa an( !olo
CULPA 9Negligen'e: Lere &ant of "are or dili en"e+ not t#e 3oluntariness of a"t or o0ission Liabilit6 0a6 be 0iti ated b6 "ourts 8ai3er for future ne li en"e 3alid if sim'le 3oid if gross !OLO 9&ra+(: 8illfulness or deliberate intent to "ause da0a e or in5ur6 to anot#er Liabilit6 "annot be 0iti ated b6 "ourts 8ai3er for future fraud is 3oid
!istin'tion %etween C+lpa A7+ilana an( C+lpa Contra't+al Different pro3isions t#at appl6 to t#e t&o "on"epts+ #en"e different le al effe"ts
CULPA A.UILANA 9C+lpa #6tra/'ontra't+al: Go3erned b6 Art ')H2 to ')/D Ne li en"e as a sour"e of obli ation Nault or ne li en"e &#i"# "onstitutes an independent sour"e of obli ation bet&een parties not pre3iousl6 bound CULPA CONT"ACTUAL Go3erned b6 Art ))H/ e se4uel Ne li en"e in t#e perfor0an"e of a "ontra"t Nault or ne li en"e of t#e debtor as an in"ident in t#e fulfill0ent of an existin obli ation
Ne li en"e of defendant s#ould be t#e proxi0ate "ause of da0a e if liabilit6 is to atta"#.
tan(ar( of 'are re7+ire( Art ))H? Par ' If la& or "ontra"t does not state dili en"e &#i"# is to be obser3ed in t#e perfor0an"e+ t#at &#i"# is expe"ted of a GOOD NATMER ON NALIL, is reCuired. Extra.ordinar6 dili en"e reCuired in4 Art )H?? Co00on "arriers Art )HDD Lesser t#an extraordinar6 Art )//-.'((' Inn @eepers+ #otel @eepers E2em' ion "rom *i!bili ( "or Negligence
Pa e 1; of 113
). INS%RANCE4 A part6 to a "ontra"t is relie3ed fro0 t#e effe"ts of #is fault or ne li en"e b6 a ?rd
person '. Part6 to a "ontra"t renoun"es in ad3an"e t#e ri #t to enfor"e liabilit6 arisin fro0 t#e fault or ne li en"e of t#e ot#er a. 7OID if ross ne li en"e Stipulations exe0ptin fro0 liabilit6 for t#at a0ount to a fraud b. 7ALID if si0ple ne li en"e onl6 #ffe'ts of Negligen'e ). Da0a es are de0andable+ &#i"# t#e "ourts 0a6 re ulate a""ordin to "ir"u0stan"es '. In3alidates defense of fortuitous e3ent
3 !#LA4 5mor!6
Con'ept : non.fulfill0ent of obli ation &it# respe"t to ti0e Art ))2/ T#ose o%lige( to !#LI,#" or to !O so0et#in incur in delay fro0 t#e ti0e t#e O+*I,EE <UDI&IA**/ OR E3TRA<UDI&IA**/ D'(ANDS fro0 t#e0 t#e fulfill0ent of t#eir obli ations. Mo&e3er+ t#e DELAND b6 t#e "reditor s#all NOT %e ne'essary in order t#at dela6 0a6 exist4 ). 8#en t#e OBLIGATION or LA- e2'ressl( so de"lares '. 8#en fro0 t#e n! ure and t#e circums !nces of t#e obli ation it appears t#at t#e DESIGNATION ON TME TI2# &#en t#e t#in to be deli3ered or t#e ser3i"e is to be rendered &as a con rolling mo ive for t#e establis#0ent of t#e "ontra"t ?. 8#en de0and &ould be U #L# + as &#en t#e obli or #as ren#ere# i be(on# his 'ower o 'er"orm In re'ipro'al o%ligations+ neit#er part6 in"urs in dela6 if t#e ot#er DOES NOT COLPL, or is NOT READ, to "o0pl6 in a proper 0anner &it# &#at is in"u0bent upon #i0. Nro0 t#e 0o0ent )N' of the parties fulfills his obligation+ dela6 b6 t#e ot#er be ins.
T#ere "an onl6 be dela6 in positive obligations <to i3e and to do> and not in ne ati3e obli ations <not to i3e and not to do>.
0in(s of 2ora a. (ora solvendi : default on t#e part of t#e debtor EJ RE referrin to obli ations to i3e EJ PERSONA referrin to obli ations to do REQUISITES OF %ORA SO*.ENDI ). PRESTATION is (e)an(a%le and alread6 li7+i(ate( : T#ere "an be no dela6 if t#e obli ation is not 6et due. T#ere is no 0ora in natural obli ations be"ause perfor0an"e is optional and 3oluntar6 '. T#at t#e debtor (elays perfor)an'e : Effe"ts of 0ora onl6 arise &#en t#e dela6 is due to t#e c!uses im'u !ble o he #eb orG #en"e t#ere is le all6 no dela6 if t#is is "aused b6 fa"tors not i0putable to t#e debtor <e. . fortuitous e3ents> ?. T#at t#e "reditor reCuires or (e)an(s t#e perfor0an"e e6traB+(i'ially or B+(i'ially : Lere re0inder is not a de0and be"ause it 0ust appear t#at t#e bene3olen"e and toleran"e of t#e "reditor #as ended. GENERAL R%LE4 Creditor s#ould 0a@e de0and before debtor in"urs dela6 Default be ins fro0 t#e 0o0ent "reditor de0ands t#e perfor0an"e of obli ation. If extra5udi"ial4 date of de0and If un"ertain4 date of filin of "o0plaint <for purposes of "o0putin pa60ent of interests or da0a es>
Pa e 1= of 113
De0and 0a6 be in an6 for0+ pro3ided it "an be pro3ed. It is also enerall6 ne"essar6 e3en if a period #as been fixed in t#e obli ation. Burden of proof of de0and on t#e "reditor. De0and 0ust refer to t#e prestation t#at is due and not anot#er. But e3en if &it#out de0and+ debtor in"urs in dela6 if #e !c1nowle#ges his #el!(. ReCuest for extension of ti0e for pa60ent is not suffi"ient t#ou #+ t#e a"@no&led e0ent 0ust be express.
E3&EPTION= -hen #em!n# is no re4uire# ). Express stipulation : Insertion of t#e "lause >wi hou "ur her no ice? '. La& so pro3ides . Not enou # to 0erel6 fix date for perfor0an"e+ but also t#at default &ill "o00en"e after t#e period lapses ?. Period is t#e "ontrollin 0oti3e or t#e prin"ipal indu"e0ent for t#e "reation of t#e obli ation : in "ases &#ere it appears t#at t#e obli ation &ould not #a3e been "reated for a date ot#er t#an t#at fixed 5Abell! v@ Fr!ncisco6 D. De0and &ould be useless : perfor0an"e #as be"o0e i0possible a. Caused b6 so0e a"t or fault of t#e debtor+ e. . #idin or disposed of t#e t#in to be deli3ered b. I0possibilit6 "aused b6 fortuitous e3ent but debtor bound #i0self liable in "ases of su"# e3ents b. (ora accipiendi : default on t#e part of t#e "reditor Dela6 in t#e perfor0an"e based on t#e o0ission b6 t#e "reditor of t#e ne"essar6 "ooperation+ espe"iall6 a""eptan"e on #is part. Generall6+ debtor "an perfor0 ! !n( ime after t#e obli ation #as been "reated+ e3en before t#e date of 0aturit6. It is ne"essar6 #o&e3er t#at it be la&ful for t#e debtor to perfor0+ and t#at #e "an perfor0 <e. . &#en t#e period is establis#ed for t#e benefit of t#e "reditor or bot# of t#e parties>. REQUISITES OF %ORA A&&IPIENDI ). Offer of perfor0an"e b6 t#e debtor &#o #as t#e re7+ire( 'apa'ity '. Offer 0ust be to 'o)ply &it# t#e prestation as it s#ould be perfor0ed ?. Creditor ref+ses t#e perfor0an"e wi hou jus c!use
See !lso Art )'2- 8#en t#e debt of a t#in "ertain and deter0inate pro'ee(s fro) a 'ri)inal offense+ t#e debtor s#all not be exe0pted fro0 t#e pa60ent of its pri"e+ &#ate3er 0a6 be t#e "ause for t#e loss+ UN*ESS t#e t#in #a3in been offered b6 #i0 to t#e person &#o s#ould re"ei3e it+ t#e latter ref+se( witho+t B+stifi'ation to a""ept it.
". *ompensatio morae : parties in a bilateral "ontra"t "an re ulate t#e order in &#i"# t#e6 s#all "o0pl6 &it# t#eir re"ipro"al prestations. Ot#er&ise+ t#e fulfill0ent 0ust be SIL%LTANEO%S and RECIPROCAL GENERAL R%LE4 Nulfill0ent of parties s#ould be si0ultaneous EJCEPTION4 Contrar6 stipulation <e. . install0ent plans> #ffe'ts of 2ora
A. %or! solven#i ). 8#en it #as for its ob5e"t a deter0inate t#in + t#e dela6 pla"es t#e ris@ of t#e t#in on t#e '. Debtor be"o0es liable for da0a es of t#e dela6 B. %or! !cci'ien#i ). Responsibilit6 of t#e debtor for t#e t#in is redu"ed and li0ited to fraud and ross '. Debtor is exe0pted fro0 t#e ris@s of loss of t#in + &#i"# auto0ati"all6 pass to t#e "reditor ?. All expenses in"urred b6 t#e debtor for t#e preser3ation of t#e t#in after t#e 0ora s#all be
"#ar eable to t#e "reditor ne li en"e debtor
Pa e 1A of 113
D. If t#e obli ation bears interest+ t#e debtor does not #a3e to pa6 it fro0 t#e 0o0ent of t#e
0ora
1. T#e "reditor be"o0es liable for da0a es 2. T#e debtor 0a6 relie3e #i0self of t#e obli ation b6 t#e "onsi nation of t#e t#in C. &om'ens! ion mor!e ). E2ce' io non !#em'le i con r!c us $ one is not "o0pelled to perfor0 #is prestation &#en t#e
ot#er "ontra"tin part6 is not 6et prepared to perfor0 #is prestationG default of one "o0pensates t#e default of t#e ot#er Cessation of effe'ts of )ora ). Renun"iation b6 t#e "reditor a. Express b. I0plied4 &#en after dela6 #as been in"urred+ t#e "reditor gr!n s !n e2 ension o" ime to t#e debtor or a rees to a nov! ion of t#e obli ation '. Pres"ription
1 CONT"A,#NTION O& T#NO" : an6 illi"it a"t &#i"# i0pairs t#e stri"t and fait#ful fulfill0ent of t#e
obli ation or e3er6 @ind of defe"ti3e perfor0an"e Lali"ious or ne li ent viol! ion o" he erms !n# con#i ions stipulated in t#e obli ation Lust not be due to fortuitous e3en or for"e 0a5eure+ ot#er&ise t#ere &ould be no liabilit6 I00aterial &#et#er or not t#e a"tor is in b!# "!i h or negligen + &#at is reCuired is t#at it is #is fault or t#e a"t done "ontra3enes t#eir a ree0ent
5 AB OLUT# NON/P#"&O"2ANC#
"#2#!I# O& C"#!ITO" IN CA # O& B"#AC3
A"tion for perfor0an"e <spe"ifi" perfor0an"e or obtain "o0plian"e> A"tion for res"ission A"tion for da0a es <ex"lusi3el6 OR in addition to eit#er of t#e first a"tions> A$ ACTION &O" P#"&O"2ANC#
). A"tion for spe'ifi' perfor)an'e

<in obli ation to i3e spe"ifi" t#in > Art ))21 Par ) 8#en &#at is to be deli3ered is a deter0inate t#in + t#e "reditor+ in addition to t#e ri #t ranted #i0 b6 Art ))H( <inde0nifi"ation for da0a es>+ 0a6 "o0pel t#e debtor to make the delivery. ROC ?/+ Se" )( Exe"ution+ satisfa"tion and effe"t of 5ud 0ent. I0plies t#at t#e basis is a "ontra"tual relation bet&een plaintiff and defendants.
'. A"tion for s+%stit+te( perfor)an'e

<in obli ation to i3e eneri" t#in > Art ))21 Par ' If t#e t#in is indeter0inate or eneri"+ #e 0a6 as@ t#at t#e obli ation be complied with at t#e expense of t#e debtor.
Deli3er6 of an6t#in belon in to t#e spe"ies stipulated &ill be suffi"ient. Debtor "annot a3oid obli ation b6 pa6in da0a es if t#e "reditor insists on t#e perfor0an"e.
?. A"tion for s+%stit+te( perfor)an'e or +n(oing of poor worD

<in obli ation to do> Art ))2H If a person obli ed to do so0et#in "!ils o #o i + t#e sa0e s#all be e ecuted at his cost. T#is sa0e rule s#all be obser3ed if #e does it in contravention of the tenor of the obligation. Nurt#er0ore+ it 0a6 be de"reed t#at what has been done poorly be undone.
Pa e 2? of 113
T#e "ourt #as no dis"retion to 0erel6 a&ard da0a es to t#e "reditor &#en t#e a"t "an be done in spite of t#e refusal or failure of debtor to do so. EJCEPTION4 I0position of personal for"e or "oer"ion upon t#e debtor to "o0pl6 &it# #is obli ation tanta0ount to in3oluntar6 ser3itude and i0prison0ent for debt <in obli ation not to do> Art ))2- 8#en t#e obli ation "onsists in not doin + and t#e obli or does &#at #as been forbidden #i0+ it s#all also be undone at his e pense.
D. A"tion for +n(oing
EJCEPTION4 8#en t#e onl6 feasible re0ed6 is in#emni"ic! ion "or he #!m!ges "aused4 If #as be"o0e i0possible to undo t#e t#in p#6si"all6 or le all6 If t#e a"t is definite and &ill not "ease e3en if undone
B$ ACTION &O" !A2AG# Art ))H( Re"o3erable da0a es in"lude !n( !n# !ll #!m!ges t#at a #u0an bein 0a6 suffer. Responsibilit6 for da0a es is in#ivisible. C$ ACTION &O" "# CI ION Art ))/) T#e power to res'in( o%ligation is im'lie# in reci'roc!l ones+ in "ase one of t#e obli ors s#ould not com'l( &it# &#at is in"u0bent upon #i0. T#e in5ured part6 0a6 "#oose bet&een &UL&ILL2#NT and t#e "# CI ION of t#e obli ation+ &it# t#e pay)ent of (a)ages in eit#er "ase. Me 0a6 also see@ res"ission+ even !" er he h!s chosen "ul"illmen + if t#e latter s#ould be"o0e I2PO IBL#. T#e "ourt s#all de"ree t#e res"ission "lai0ed %NLESS t#ere be a jus c!use !u hori0ing he fi ing of a period. T#is is understood to be wi hou 'reju#ice o he righ s o" hir# 'ersons &#o #a3e a"Cuired t#e t#in + in a""ordan"e &it# Arti"les )?-1 and )?-- and t#e Lort a e La&. Art ))/' In "ase %oth parties have 'o))itte( %rea'h of o%ligation+ t#e liabilit6 of t#e first infra"tor s#all be e4ui !bl( em'ere# b6 t#e "ourts. If it "annot be deter0ined &#i"# of t#e parties first 3iolated t#e "ontra"t+ t#e sa0e s#all be e2 inguishe# and e!ch sh!ll be!r his own #!m!ges.
T#e re0ed6 is alternative. Part6 see@in res"ission "an onl6 ele"t one bet&een fulfill0ent and res"ission. T#ere "an be no partial perfor0an"e and partial res"ission. Onl6 applies to re"ipro"al obli ations+ &#ere t#ere is Are"ipro"it6B bet&een t#e parties i.e. "reditor debtor relations arise fro0 t#e sa0e "ause or Aidentit6 of "auseB Re"ipro"al obli ations #a3e a ATA&IT RESO*UTOR/ &ONDITION.B +ower to rescind4 Pertains to t#e in5ured part6+ part6 &#o did not perfor0 not entitled to insist upon t#e perfor0an"e of t#e "ontra"t b6 t#e defendant or re"o3er da0a es b6 reason of #is o&n brea"# Ri #ts of in5ured part6 subordinated to t#e ri #ts of a ?rd person to &#o0 bad fait# is not i0putable Not absolute+ not per0itted in "asual=sli #t brea"#+ 0a6 onl6 be "lai0ed in substantial brea"# 5Song Fo v@ 7!w!ii!n Phili''ines6 Res"ission reCuires ju#ici!l !''rov!l o 'ro#uce leg!l e""ec EJCEPTION4 ob5e"t is not 6et deli3ered AND obli ation #as not 6et been perfor0ed If t#e obli ation #as not 6et been perfor0ed4 extra5udi"ial de"laration of part6 &illin to perfor0 &ould suffi"eG "an refuse to perfor0 if t#e ot#er part6 is not 6et read6 to "o0pl6 If t#e in5ured part6 #as alread6 perfor0ed4 "annot extra5udi"iall6 res"ind IN t#e ot#er part6 opposes t#e res"ission <ot#er&ise+ res"ission produ"es le al effe"t>. In t#e "ase t#e ot#er part6 i0pu ns res"ission+ t#e "ourt "o0es in eit#er to4 a. De"lare t#e res"ission as properl6 0ade b. Gi3e a period to t#e debtor in &#i"# to perfor0
Pa e 21 of 113
#ffe'ts of "es'ission ). Extin uis#es obli ator6 relation as if it #ad ne3er been "reated+ extin"tion #as a retroa"ti3e effe"t. ECui3alent to in3alidate t#e 5uridi"al tie+ lea3in t#in s in t#eir status before t#e "elebration of t#e "ontra"t '. Lutual restitution
E3PRESS RESO*UTOR/ &ONDITION4 auto0ati" resolution if one of t#e parties does not "o0pl6 &it# #is obli ation. Often found in insuran"e "ontra"ts. Its nature is a Afa"ultati3e resolutor6 "onditionB 5T!(lor v U( Tieng>
UB I!IA"4 "#2#!I#
O& C"#!ITO"
1 Accion Subrogatoria 9s+%rogatory a'tion:

Art ))HH T#e "reditors !" er #a3in pursued t#e propert6 in possession of t#e debtor to s! is"( heir cl!ims+ 0a6 e6er'ise all the rights and %ring all the a'tions of t#e latter for t#e sa0e purpose+ sa3e t#ose &#i"# are inheren in his 'ersonG t#e6 0a6 also i)p+gn the a'ts &#i"# t#e debtor 0a6 #a3e done to defraud t#e0. Con'ept A"tion &#i"# t#e "reditor 0a6 exer"ise in pla"e of t#e ne li ent debtor in order to preser3e or re"o3er for t#e patri0on6 of t#e debtor t#e produ"t of su"# a"tion+ and t#en obtain t#erefro0 t#e satisfa"tion of #is o&n "redit. Pre3ious appro3al of "ourt is not ne"essar6 EJTENT4 Plaintiff entitled onl6 to so 0u"# as is needed to satisf6 #is "redit+ an6 balan"e s#all pertain to t#e debtor Patri0on6 of t#e debtor <in"ludes bot# present and future propert6> is liable for t#e obli ations #e 0a6 "ontra"t b6 bein a le al uarant6 in fa3or of #is "reditors. Men"e+ #e "annot 0ali"iousl6 redu"e su"# uarant6. Double fun"tion4 Conser3in t#e patri0on6 of t#e debtor b6 brin in into it propert6 !b!n#one# or neglec e# b6 #i0 La@in exe"ution on su"# propert6 t#ereafter Righ s o" &re#i ors ). Le36 b6 atta"#0ent and exe"ution upon all t#e propert6 of t#e debtor+ ex"ept su"# as exe0pt b6 la& fro0 exe"ution '. Exer"ise all t#e ri #ts and a"tions of t#e debtor+ ex"ept su"# as are in#erentl6 personal to #i0 ?. To as@ for res"ission of t#e "ontra"ts 0ade b6 t#e debtor in fraud of t#eir ri #ts "#.UI IT# O& ACCION UB"OGATO"IA ). Creditor #as an interest in t#e ri #t or a"tion not onl6 be"ause of #is "redit but be"ause of insol3en"6 of t#e debtor '. Lali"ious or ne li ent ina"tion of t#e debtor in t#e exer"ise of #is ri #t or a"tion of su"# seriousness as to endan er t#e "lai0 of t#e "reditor ?. T#e "redit of t#e debtor a ainst a t#ird person is "ertain+ de0andable and liCuidated It is not essential t#at t#e "reditor9s "lai0 be prior to t#e a"Cuisition of t#e ri #t b6 t#e debtor D. T#e debtor9s ri #t a ainst ?rd person 0ust be patri0onial+ or sus"eptible of bein transfor0ed to patri0onial 3alue for t#e benefit of t#e "reditor #EC#PTION TO ACCION UB"OGATO"IA ). In#erent ri #ts of debtor a. Ri #t to existen"e+ exe0ptin fro0 t#e rea"# of "reditors &#ate3er #e 0a6 be re"ei3in as support b. Ri #ts or relations of a publi" "#ara"ter ". Ri #ts of an #onorar6 "#ara"ter d. Ri #ts "onsistin of po&ers &#i"# #a3e not been used
Pa e 22 of 113
i. Po&er to ad0inister e. . debtor fails to #a3e so0e propert6 leased t#e "reditor "annot i3e it in lease for #i0 ii.Po&er to "arr6 out an a en"6 or deposit be"ause purel6 personal a"ts iii.Po&er to a""ept an offer for a "ontra"t e. Non.patri0onial ri #ts e. . a"tion to establis# t#e "reditor9s status as a le iti0ate or natural "#ild+ a"tion for le al separation or annul0ent of 0arria e+ and ot#er ri #ts arisin fro0 fa0il6 relations f. Patri0onial ri #ts not sub5e"t to exe"ution e. . ri #t to a o3ern0ent ratuit6 or pension . Patri0onial ri #ts in#erent in t#e persons of t#e debtor e. . ri #t to re3o@e a donation b6 reason fo in ratitude+ ri #t to de0and t#e ex"lusion of an un&ort#6 #eir '. Art HH' Onl6 t#ose &#o at t#e ti0e of t#e donorPs deat# #a3e a ri #t to t#e le iti0e and t#eir #eirs and su""essors in interest 0a6 as@ for t#e redu"tion or inoffi"ious donations. T#ose referred to in t#e pre"edin para rap# "annot renoun"e t#eir ri #t durin t#e lifeti0e of t#e donor+ eit#er b6 express de"laration+ or b6 "onsentin to t#e donation. T#e donees+ de3isees and le atees+ &#o are not entitled to t#e le iti0e and t#e "reditors of t#e de"eased "an neit#er as@ for t#e redu"tion nor a3ail t#e0sel3es t#ereof. ?. Se" )?+ Rule ?/+ Rules of Court
2 Accion +auliana
Art ))HH AQt#e6 0a6 also i)p+gn the a'ts &#i"# t#e debtor 0a6 #a3e done to #e"r!u# t#e0B Art )?-) Par ? T#ose underta@en in fraud of "reditors &#en t#e latter "annot in an6 ot#er 0anner "olle"t t#e "lai0s due t#e0. <Nound under Res"issible Contra"ts> Con'ept Creditors #a3e t#e ri #t to set aside or re3o@e a"ts &#i"# t#e debtor 0a6 #a3e done to defraud t#e0. All a"ts of t#e debtor &#i"# redu"e #is patri0on6 in fraud of #is "reditors+ &#et#er b6 ratuitous or onerous title+ "an be re3o@ed b6 t#is a"tion. Pa60ents of 're)e2is ing oblig! ions !lre!#( #ue+ &#et#er natural or "i3il+ "annot be i0pu ned b6 an a""ion pauliana. "#.UI IT# O& ACCION PAULIANA ). Plaintiff as@in for res"ission <subsidiar6 a"tion> #as a "redit prior to t#e alienation+ alt#ou # de0andable later '. Debtor #as 0ade subseCuent "ontra"t+ i3in ad3anta e to a ?rd person ?. Creditor #as no ot#er re0ed6 but to res"ind t#e debtor9s "ontra"t to t#e ?rd person <last resort> D. A"t bein i0pu ned is fraudulent Presu0ption of fraud 0a6 be found in Art )?-H < ratuitous transfer &it#out lea3in suffi"ient funds for obli ations OR ratuitous transfers b6 a 5ud 0ent debtor> Lore details in pa e RR 1. ?rd person &#o re"ei3ed t#e propert6 is an a""o0pli"e in t#e fraud See Res"issible Contra"ts for 0ore detail dis"ussion on t#e effe"ts of ood fait# and bad fait# of t#e t#ird part6 transferee <Pa e -'> !istin'tion %etween accion subrogatoria an( accion pauliana
ACCION UB"OGATO"IA Not essential t#at "redit is prior to t#e a"Cuisition of debtor9s ri #t Intent to defraud "reditors is not reCuired No period of pres"ription ACCION PAULIANA Credit 0ust exist before fraudulent a"t If "ontra"ts res"inded is onerous+ t#ere 0ust be fraudulent intent A"tion pres"ribes &it#in D 6ears of t#e dis"o3er6 of t#e fraud
3 Other spe'ifi' re)e(ies 9Accion Derecta:

Art Art Art Art )21' )H'/ )2()-/? Lessor 3s. sub.lessee Laborers 3s. o&ner 7endee a retro 3s. 3endee a retro9s transferee Prin"ipal 3s. substitution appropriated b6 prin"ip
Pa e 23 of 113
#ETINGUI 32#NT O& LIABILIT4 IN CA # O& B"#AC3 !U# TO &O"TUITOU
#,#NT
Art ))HD Ex"ept in "ases expressl6 spe"ified b6 l!w+ or &#en it is ot#er&ise de"lared b6 s i'ul! ion+ or &#en t#e nature of obli ation reCuires t#e !ssum' ion o" ris1+ no person shall be responsible for t#ose e3ents &#i"# "ould not be foreseen or &#i"#+ t#ou # foreseen+ &ere inse3itable. Con'ept of &ort+ito+s #vent EForce %!jeure8 Fuer0! %!(or8 &!so For ui oF A. A"t of God : b6 nature e. . eart#Cua@es+ stor0s+ floods+ epide0i"s+ fires+ et"G all #u0an a en"ies ex"luded B. A"t of Lan : b6 a"ts of 0an+ e. ar0ed in3asion+ atta"@ b6 bandits+ o3ern0ental pro#ibitions+ robber6+ et"G for as lon as t#at t#e6 #a3e a for"e of an i0position &#i"# t#e debtor "ould not #a3e resisted
In"ludes una3oidable a""idents+ e3en if t#ere #as been inter3ention of #u0an ele0ent+ pro3ided t#at t#e "!ul or negligence c!nno be im'u e# o he #eb or
"e7+isites of &ort+ito+s #vent ). Cause of t#e unforeseen and unexpe"ted o""urren"e or t#e failure of t#e debtor to "o0pl6 &it# #is obli ation 0ust be in(epen(ent of h+)an will '. I0possible to foresee t#e e3ent &#i"# "onstitute t#e "aso fortuito <ordinar6> OR if it "an be foreseen+ 0ust be i0possible to a3oid <extraordinar6> ?. O""urren"e 0ust be su"# as to render it i)possi%le for t#e debtor to "ul"ill his oblig! ion in ! norm!l m!nner D. Obli or 0ust be free fro) any parti'ipation in t#e a ra3ation of t#e in5ur6 resultin to t#e "reditor <no "on"urrent ne li en"e> #ffe't of CONCU""#NT &AULT of the !e%tor 8#en t#e ne li en"e of a person "on"urs &it# an a"t of God in produ"in a loss+ su"# person is no e2em' "rom li!bili ( b6 s#o&in t#at t#e i00ediate "ause of t#e da0a e &as t#e a"t of God. If #e cre! es ! #!ngerous con#i ion or ne li en"e alt#ou # t#e a"t of God &as t#e i00ediate "ause+ #e "annot es"ape liabilit6 for t#e natural and probable "onseCuen"e t#ereof. T#ere 0ust be NO "r!u#+ negligence8 #el!( or viol! ion9con r!ven ion in !n( m!nner o" he enor of t#e obli ation. 8#en t#e effe"t is found to be partly resultin fro0 t#e parti"ipation of 0an+ &#et#er due to #is a"ti3e inter3ention or ne le"t or failure to a"t+ t#e &#ole o""urren"e is t#en hum!ni0e# and re0o3ed fro0 t#e rules appli"able to t#e a"ts of God 5NP& v &A : t#e "ase of 8el0in and t#e explodin da0> #6ting+ish)ent of Lia%ility GENERAL R%LE4 No liabilit6 if t#ere fortuitous e3ents inter3ene SPECINIC APPLICATION4 Non perfor0an"e Dela6 Loss and deterioration of a s'eci"ic hing Art ))-/ Loss &it#out t#e fault of debtor in sus'ensive "ondition Art ))/( Loss &it#out t#e fault of debtor in resolu or( "ondition Art ))/D Loss &it#out t#e fault of t#e debtor in sus'ensive period Art )'(D Loss of all alternati3e prestations Art )'(1 In alternati3e obli ations+ in "ase of loss of one alternati3e+ "reditor "#ooses fro0 re0ainder EJCEPTIONS4 a. Cases spe"ified b6 law Art 11' Par ' Possessor in bad fait# Art ))21 Debtor9s dela6 Art )/D' Obli ation of bailee in "o00odatu0 Art )'2- Pro"eeds in a "ri0inal offense
Pa e 21 of 113
Art )/H/ * Art )//? Depositar6 Art ))/- Loss of benefit to 0a@e use period b. Art '(() A"t of a t#ief ". Express stip+lation b6 t#e parties Art ')DH Offi"ious 0ana e0ent Art ')D- Ne otioru0 estio d. Ass+)ption of risD Art ')1/ A""epts undue pa60ent in bad fait# : T#e prin"iple is based on so"ial 5usti"e+ an et#i"o.e"ono0i" sensibilit6 of 0odern so"iet6 &#i"# #as noted t#e in5usti"es &#i"# industrial "i3ili;ation #as "reated : Applies to all @inds of publi" ser3i"es but li0ited to ris@s and e3ents t#at are t6pi"al of t#e business "on"erned
U U"IOU
T"AN ACTION
Art ))H1 %surious transa"tions s#all be o3erned b6 spe"ial la&s. Art )D)? Interest paid in ex"ess of t#e interest allo&ed b6 t#e usur6 la&s 0a6 be re"o3ered b6 t#e debtor+ &it# interest t#ereon fro0 t#e date of t#e pa60ent. Art )/2) %surious "ontra"ts s#all be o3erned b6 t#e %sur6 La& and ot#er spe"ial la&s+ so far as t#e6 are not in"onsistent &it# t#is Code. INTEREST : t#e in"o0e produ"ed b6 0one6 in relation to its a0ount and to t#e ti0e t#at it "annot be utili;ed b6 its o&ner. It "an eit#er be 0orator6 or "o0pensator6. %ORATOR/ : paid in "ontra"tual obli ations to pa6 a su0 of 0one6+ eit#er as pri"e for t#e use of t#e 0one6 OR as stipulated ad3an"ed deter0ination of t#e da0a es due to t#e dela6 in t#e fulfill0ent of t#e obli ation. Amor! B #el!( &O%PENSATOR/ : interests on obli ations &#i"# #a3e an extra."ontra"tual or deli"tual ori in USUR/ : "ontra"tin for or re"ei3in so0et#in in ex"ess of t#e a0ount allo&ed b6 t#e la& for t#e loan or forbearan"e of 0one6+ ood or "#attels. It is also ta@in 0ore interest for t#e use of 0one6+ oods or "#attels or "redits t#an t#e la& allo&s. T-O CONC#PT ON PA42#NT O& INT#"# T <fro0 Sir Labita 9s #andout>
A. $nterest for the use or loan or forbearance of money, goods or credit

No interest for use or forbearan"e If no stipulation re4 pa60ent of interest4 If t#ere is express stipulation <&#i"# 0ust be in &ritin to be 3alid> for pa60ent of interests+ but no r! e men ione# If t#ere is stipulation in &ritin and r! e o" in eres is !gree# u'on <in"ludin "o00issions+ pre0iu0s+ fees and ot#er "#ar es>
S No interest s#all be due unless it #as been expressl6 stipulated in &ritin <Art )/12>
Interest s#all be 12F per ann+) <Se". '+ Lonetar6 Board Cir"ular /(1+ )( De" )/-'> Su"# interest s#all not %e s+%Be't to 'eiling pres"ribed under t#e %sur6 La& <Se". )+ Lonetar6 Board Cir"ular /(1+ )( De" )/-'>>
B. $nterest as damages for breach or default in payment of loan or forbearance of money,

goods, credit
In "ase of !#&AULT+ loan or forbearan"e s#all earn le al interest+ at rate of 12F per ann+) fro) date of judicial or e trajudicial demand+ sub5e"t to Art ))2/ <dela6=0ora> Loan U stipulated interest+ s#all earn 12F per ann+) "rom #! e o" ju#ici!l #em!n#
S Interest due s#all earn le al interest fro0 t#e ti0e it is 5udi"iall6 de0anded+ alt#ou # t#e obli ation 0a6 be silent upon t#is point <Art '')'>
No stipulation as to interest for use of 0one6
If rate of interest stipulated+ e. . 'DT per annu0
Pa e 25 of 113
C. $f obligation N)% consisting of a loan or forbearance of money, goods or credit is

breached, e-g- obligation to give, to do, not to do
Interest 0a6 be i0posed at the (is'retion of 'o+rt at t#e rate of 8F per ann+). No interest ad5ud ed on +nli7+i(ate( 'lai)s or (a)ages+ until de0and "an be establis#ed &it# re!son!ble cer !in (. After t#us establis#ed &it# reasonable "ertaint6+ interest of 8F per ann+) s#all be in to run fro0 t#e (ate of B+(i'ial or e6traB+(i'ial (e)an(. But if obli ation "annot be establis#ed &it# reasonable "ertaint6 ! ime o" #em!n#+ 8F per ann+) interest s#all be in to run onl6 fro) (ate of B+(g)ent : on !moun "in!ll( !#ju#ge# b( cour .
D. 8#en B+(g)ent of "ourt a&ardin 0one6 be"o0es final an( e6e'+tory+ 0one6 5ud 0ent is A+ B
and C <abo3e> s#all earn 12F per ann+) fro) finality of B+(g)ent +ntil f+ll pay)ent : 0one6 5ud 0ent s#all be "onsidered as "orbe!r!nce o" cre#i <E!s ern Shi''ing *ines vs@ &A+ )//D> 2onetary Boar( Cir'+lar G A?5 lifting the interest rate 'eiling vs$ Art 22?A LB /(1 Interest "an no& be "#ar ed as lender and borro&er 0a6 a ree upon. It s#all not be subject to any ceiling pres"ribed under or pursuant to t#e %sur6 La& as a0ended. Art ''(/ If t#e obli ation "onsists in t#e payment of a sum of money+ and t#e debtor in"urs in D'.A/+ t#e in(e)nity for (a)ages+ t#ere bein no stipulation to t#e "ontrar6+ s#all be t#e pa60ent of t#e interest a reed upon+ and in t#e absen"e of stipulation+ t#e le al interest+ &#i"# is si6 per 'ent per ann+).
&UL&ILL2#NT O& OBLIGATION

See *hapter 01 +ayment Pres+)ptions in pay)ent of interests an( install)ents Art ))H2 T#e re"eipt of t#e prin"ipal b6 t#e "reditor+ &it#out reser3ation &it# respe"t to t#e interest+ s#all i3e rise to t#e pres+)ption t#at interest has been paid. T#e re"eipt of a later install0ent of a debt &it#out reser3ation as to prior install0ents+ s#all li@e&ise raise t#e pres+)ption t#at su"# installments have been paid. GENERAL R%LE4 If t#e debt produ"es interests+ pa60ent of t#e prin"ipal s#all not be dee0ed to #a3e been 0ade unless t#e interests #a3e been "o3ered. PRES%LPTIONS are rebuttable b6 e3iden"e
T"AN 2I
IBILIT4 O& "IG3T
Art ))H- Sub5e"t to t#e la&s+ all ri #ts a"Cuired in 3irtue of an obli ation are transmissible+ if t#ere #as been no stipulation to t#e "ontrar6. EJCEPTIONS4 ). Not trans0issible b6 t#eir 3er6 nat+re e. . purel6 personal ri #ts '. T#ere is a stip+lation of t#e parties t#at t#e6 are not trans0issible not be easil6 i0plied but "learl6 establis#ed or at t#e 3er6 least+ "learl6 inferable ?. Not trans0issible b6 law
Chapter III$ !ifferent 0in(s of Civil O%ligations

I. P+re an( Con(itional o%ligations
Pa e 28 of 113
A$ PU"# OBLIGATION Art ))H/ Par ) E3er6 obli ation &#ose perfor0an"e !O# NOT depend upon a "u ure or uncer !in even OR upon a '!s even un1nown to t#e parties is demandable at once. Contains no ter0 or "ondition &#ate3er upon &#i"# depends t#e fulfill0ent of t#e obli ation "ontra"ted b6 t#e debtor. I00ediatel6 de0andable and not#in &ould exe0pt t#at debtor fro0 "o0plian"e t#ere&it#. B$ CON!ITIONAL OBLIGATION Art ))-) In "onditional obli ations+ t#e !c4uisi ion of ri #ts+ as &ell as e2 inguishmen or loss of t#ose alread6 a"Cuired+ s#all depend upon the happening of t#e e3ent &#i"# "onstitutes t#e "ondition. &ONDITION e3er6 future and un"ertain e3ent upon &#i"# an obli ation or pro3ision is 0ade to depend e3en t#ou # un"ertain+ it s#ould be possible 0ust be i0posed b6 t#e &ill of a part6 and NOT a ne"essar6 le al reCuisite of t#e a"t e. . pro0ise to i3e donation 'ro' er nu' i!s if a person ets 0arried is not "onditional <DPN presupposes 0arria e> Apast e3entB "annot be a "ondition be"ause it is not a future and un"ertain e3ent+ 0ore properl6 "alled as AbasisBG alt#ou # proof of a past e3ent 0a6 be a "ondition TER% : not un"ertain but 0ust ne"essaril6 #appen e. . deat# of a person
CON!ITION Deter0ines e2is ence of an obli ation P#"IO!CT#"2 Deter0ines #em!n#!bili ( of an obli ation
0in(s of Con(itions ). As to effe't on o%ligation

Art ))-) >Ac4uisi ion o" righ s? and >e2 inguishmen or loss o" hose !lre!#( !c4uire#?
8#en "ondition fulfilled 8#en "ondition not fulfilled %ntil it ta@es pla"e U P#N I,# Obli ation arises T#e 5uridi"al or le al tie does not appear Obli ation is a 0ere #ope "# OLUTO"4 Obli ation is extin uis#ed Tie of la& is "onsolidated+ be"o0es absolute T#e effe"t flo&+ but o3er it #o3ers possibilit6 of ter0ination li@e S&ord of Da0o"les Extin uis#0ent or loss of t#ose alread6 a"Cuired Condition subseCuent
Effe"t Also @no&n as
A"Cuisition of ri #ts Condition pre"edent=ante"edent
S2S+'NS$3' <"ondition pre"edent=ante"edent> t#e obli ation arises+ but if t#e "ondition does not #appen+ obli ation does not "o0e into existen"e "etroa'tive effe't when Hs+spensiveI 'on(ition is f+lfille( / T#e bindin tie of "onditional obli ation is produ"ed fro0 t#e ti0e of perfe"tion+ not #appenin of "ondition. Can also be seen as ARi #ts of "reditor and debtor after fulfill0ent of t#e "onditionB Art ))-H T#e effe"ts of a "onditional o%ligation to give+ on"e t#e "ondition #as been fulfilled s#all retroact to the day of the constitution of t#e obli ation. Ne3ert#eless+ &#en t#e obli ation i0poses reciprocal prestations upon t#e parties+ t#e fruits and interests durin t#e penden"6 of t#e "ondition s#all be dee0ed to #a3e been 0utuall6 "o0pensated. If t#e obli ation is unilateral+ t#e debtor s#all appropriate t#e fruits and interests re"ei3ed+ %NLESS fro0 t#e nature and "ir"u0stan"es of t#e obli ation it s#ould be inferred t#at t#e intention of t#e person "onstitutin t#e sa0e &as different. In o%ligations to (o or not to (o+ t#e courts shall determine+ in ea"# "ase+ t#e retroa"ti3e effe"t of "ondition t#at #as been "o0plied &it#.
Pa e 2; of 113
OBLIGATION TO GI,# +il! er!l <re"ipro"al obli ation> : dee0ed to #a3e been 0utuall6 "o0pensated
OBLIGATION TO !O or NOT TO !O Courts s#all deter0ine t#e retroa"ti3e effe"t of t#e "ondition
Unil! er!l : debtor s#all appropriate fruits and interests re"ei3ed+ %NLESS t#ere &as a different intention
%ntil t#e fulfill0ent of suspensi3e "ondition+ "reditor "annot enfor"e t#e obli ation as #is ri #t t#en &as merel( !n e2'ec !nc(. Mo&e3er+ upon #appenin + t#e debtor "an be "o0pelled to perfor0. REASON NOR RETROACTI7IT,4 Condition is onl6 a""idental and not an essential ele0ent of t#e obli ation. T#e obli ation is "onstituted &#en t#e essential ele0ents &#i"# i3e rise t#ere to "on"ur. Contra"ts entered into PENDENTE &ONDITIONE <before #appenin of suspensi3e "ondition> CREDITOR transfers #is ri #ts prior to #appenin of "ondition e. . 0ort a e o3er t#e propert6 to be deli3ered to #i0 Effe"t4 "onsolidate or 0a@es effe"ti3e t#e a"t perfor0ed. DEBTOR4 "annot alienate or dispose t#e t#in + if #e does so+ all su"# "ontra"ts are abro ated and "ease to #a3e an6 effe"t upon #appenin of t#e suspensi3e "ondition. But be"ause deli3er6 transfers real ri #t o3er t#e t#in 4 ?rd person in ood fait# retains o&ners#ipG debtor be"o0es liable to "reditor for da0a es. ?rd person is in bad fait# #e 0a6 be "o0pelled to deli3er t#e t#in to t#e "reditor. LILITATIONS ON RETROACTI7IT, <as di"tated b6 5usti"e and reCuired b6 pra"ti"abilit6 or "on3enien"e>4 b6 fortuitous e3ent+ debtor suffers t#e loss be"ause #e is still t#e o&ner !c s o" !#minis r! ion before fulfill0ent not affe"ted b6 retroa"ti3it6G #o&e3er abuse of ri #ts in uise of ad0inistration are not allo&ed to defeat ri #ts of "reditor usu"ruc u!r( righ s not &it#in t#e prin"iple of retroa"ti3it6 of "onditional obli ations "ights of 're(itor an( (e%tor %efore f+lfill)ent of 'on(ition Art ))-- T#e "reditor+ 0a6 be"ore he "ul"illmen o" he oblig! ion+ brin t#e appropriate a"tion for t#e preservation of #is ri #t. T#e debtor 0a6 re'over &#at durin t#e sa0e ti0e #e #as pai( %y )istaDe in "ase of a suspensi3e "ondition.
No preferen"e of "redit is ranted to t#e "reditor but onl6 allo&s #i0 to brin proper a"tion for t#e preser3ation of #is ri #ts. PA,LENT BENORE MAPPENING ON CONDITION4 Debtor 0a6 onl6 re"o3er &#at #e paid b6 0ista@e be"ore h!''ening of suspensi3e "ondition+ #en"e if "ondition #as been fulfilled+ #e "an no lon er "lai0 be"ause of retroa"ti3it6 of t#e "ondition. : If t#e pa60ent &as for a deter0inate t#in 4 !ccion reivin#ic! ori! <for inexistent "ontra"ts> : Ot#er&ise <not a deter0inate t#in >4 solu io in#ebi i : If t#e pa60ent &as &it# @no&led e of "ondition4 i0plied &ai3er of "ondition and "annot re"o3er : If t#e pa60ent &as &it# @no&led e but t#e "ondition did not #appen4 debtor "an re"o3er lest t#e "reditor &ill be un5ustl6 enri"#ed. : T#e la& is silent as to &#et#er fruits 0a6 be re"o3ered li@e in Art ))/1+ but Tolentino sa6s &e "an appl6 prin"iple of solutio indebiti+ espe"iall6 if "reditor is in bad fait# <@ne& t#at t#e debtor is pa6in before t#e suspensi3e "ondition #as #appened>. Sir *!bi !g s!(s (es8 hough@ I "ollows he s!me rules@
4'S).2%)4/ <"ondition subseCuent> extin uis#es ri #ts and obli ations alread6 existin
Pa e 2= of 113
'. As to 'a+se or origin

Art ))-' 8#en t#e f+lfill)ent of the 'on(ition depends upon t#e sole will o" he #eb or t#e "onditional obli ation s#all be 7OID. If it depends upon ch!nce or upon t#e will o" ! :r# 'erson+ t#e obli ation s#all TA!E ENNECT in "onfor0it6 &it# t#e pro3isions of t#is Code. +)%'S%A%$3' > One &#i"# depends upon t#e &ill of one of t#e "ontra"tin partiesG in t#e po&er of one of t#e parties to reali;e or pre3ent KINDS OF POTESTATI.E &ONDITION ). i)ple potestative : presupposes not onl6 a 0anifestation of &ill but also t#e reali;ation of an external a"t : On t#e part of t#e debtor4 Does not pre3ent for0ation of 3alid obli ation be"ause in part depends on "ontin en"ies o3er &#i"# #e #as no "ontrol '. P+rely potestative : depends solel6 and ex"lusi3el6 upon t#e &ill : Destro6s t#e effi"a"6 of t#e le al tie : #ffe't if f+lfill)ent of 'on(ition (epen(s solely on the will of the (e%tor 7OID be"ause it is a dire"t "ontra3ention of Art )?(- on 0utualit6 of "ontra"ts and to do so is to san"tion illusor6 "onditions : If depends ex"lusi3el6 on t#e &ill of "reditor 7ALID : Appli"able onl6 to S%SPENSI7E and NOT to RESOL%TOR, : Men"e+ resolutor6 potestati3e <fa"ultati3e> "onditions are perfe"tl6 3alid+ e3en if 0ade to depend upon t#e obli or=debtor+ sin"e t#e obli ation is alread6 in for"e !e%torJs pro)ise to pay when he 'an is not a 'on(itional o%ligation Art ))-( 8#en t#e debtor binds #i0self to pa6 8MEN #is 0eans per0it #i0 to do so+ t#e obli ation s#all be dee0ed to be one &it# a period sub5e"t to t#e "onditions of Art ))/H <period &as intended>. : Creditor &ill #a3e to as@ t#e "ourt to fix a period be"ause an i00ediate a"tion to enfor"e t#e obli ation &ould be pre0ature. *AS2A. > depends ex"lusi3el6 upon "#an"e+ &ill of a t#ird person or ot#er fa"tors+ and not upon t#e &ill of t#e "ontra"tin parties ($5'D : depends upon t#e &ill of one of t#e "ontra"tin parties and ot#er "ir"u0stan"es+ in"ludin t#e &ill of t#ird persons
?. As to possi%ility
Art ))-? ILPOSSIBLE CONDITIONS+ t#ose "ontrar6 to ood "usto0s or publi" poli"6 and t#ose pro#ibited b6 la& s#all annul the obligation &#i"# depends upon t#e0. If t#e obli ation is DI7ISIBLE+ t#at part t#ereof &#i"# is no !""ec e# b( he im'ossible or unl!w"ul con#i ion s#all be valid. T#e "ondition not to (o an i)possi%le thing s#all be "onsidered as no h!ving been !gree# u'on. $(+)SS$".' : 0a6 eit#er be physi'al <"ontrar6 to t#e la& of nature> or B+ri(i'al <"ontrar6 to la&+ 0orals+ ood "usto0s+ and publi" poli"6AND restri"ts "ertain ri #ts &#i"# are ne"essar6 for t#e free de3elop0ent of #u0an a"ti3it6 i.e. politi"al ri #ts+ fa0il6 ri #ts and "onstitutional ri #ts and liberties e. . "ondition not to "#an e do0i"ile+ reli ion or "ontra"t 0arria e> I**I&IT &7ARA&TER : deter0ined not b6 t#e fa"ts but b6 t#e effe"t upon one of t#e parties. T#us+ t#e "riterion is sub5e"ti3e. Not t#e a"t but t#e intention and its effe"t t#at deter0ine t#e illi"it "#ara"ter of t#e "ondition. : 8#6O I0possibilit6 of fulfill0ent i0plies #e #oes no in en# o be boun#+ t#us t#e nullit6 of t#e pro0ise #ffe't of I)possi%le Con(itions
Pa e 2A of 113
Annuls onl6 obli ations &#i"# are POSITI7E and S%SPENSI7E. In t#e "ase of a neg! ive im'ossible con#i ion+ it9s "onsidered as not &ritten and t#e obli ation is "on3erted to a pure and si0ple one. Applies onl6 to "ontra"ts and not to si0ple and testa0entar6 donations and to testa0entar6 dispositions I0possibilit6 of "ondition 0ust exist at t#e ti0e of t#e "reation of t#e obli ation <not existen"e of a 3alid obli ation subseCuentl6 rendered i0possible under Art )'22 on AsubseCuent i0possibilit6B> DI7ISIBLE OBLIGATION4 part not affe"ted b6 t#e i0possible "ondition s#all re0ain 3alid
GENERAL R%LE4 I0possible "ondition annuls t#e obli ation dependent upon t#e0 EJCEPTIONS4 Pre.existin obli ation Di3isible obli ation Si0ple or re0unerator6 obli ation Testa0entar6 disposition Ne ati3e i0possible t#in s
D. As to )o(e
+)S$%$3' 9s+spensive: Art ))-D T#e "ondition t#at so0e e3ent happen at a (eter)inate ti)e s#all EJTING%ISM t#e obli ation as soon as t#e ime e2'ires OR if it #as become in#ubi !ble h! he even will no !1e 'l!ce. If t#ere is no period fixed+ t#e rule in Par ' of Art ))-1 is appli"able. Intention of t#e parties is "ontrollin + and t#e ti0e s#all be t#at &#i"# t#e parties 0a6 #a3e probabl6 "onte0plated+ ta@in into a""ount t#e nature of t#e obli ation.
N'6A%$3' 9s+spensive: Art ))-1 T#e "onditions t#at so0e e3ent &ill not happen at a (eter)inate ti)e s#all render t#e obli ation ENNECTI7E fro0 t#e 0o0ent t#e ime in#ic! e# h!s el!'se# OR if it #as become evi#en h! he even c!nno occur. If no ime h!s been "i2e#+ t#e "ondition s#all be (ee)e( f+lfille( at su"# ti0e as 0a6 #a3e probabl6 been "onte0plated+ bearin in 0ind t#e nature of obli ation.
LO
@ !#T#"IO"ATION or I2P"O,#2#NT pending happening of the condition
Art ))-/ 8#en t#e "onditions #a3e been i0posed &it# t#e intention of U P#N!ING t#e effi"a"6 of an o%ligation to give+ t#e follo&in rules s#all be obser3ed in "ase of t#e i0pro3e0ent+ loss or deterioration of t#e t#in durin t#e penden"6 of t#e "ondition4 ). Loss &it#out fault of debtor4 obli ation extin uis#ed '. Loss t#rou # t#e fault of debtor4 obli ed to pa6 da0a es. A t#in is loss &#en it4 a. Peris#es b. Goes out t#e "o00er"e of 0an ". Disappears in su"# a &a6 t#at its existen"e is un@no&n or it "annot be re"o3ered ?. Deteriorates &it#out fault of t#e debtor4 i0pair0ent to be borne b6 t#e "reditor D. Deteriorates t#rou # t#e fault of debtor4 "reditor 0a6 "#oose bet&een t#e res"ission of t#e obli ation and its fulfill0ent &it# inde0nit6 for da0a es in eit#er "ase 1. I0pro3ed b6 its nature+ ti0e4 inure to t#e "reditor 2. I0pro3ed at t#e expense of t#e debtor4 no ot#er ri #t t#an t#at ranted to t#e usufru"tuar6 Appli"able onl6 to obli ations to deli3er a deter0inate or spe"ifi" t#in . NO appli"ation to eneri" ob5e"ts < enus ne3er peris#es>. Appl6 onl6 in "ase sus'ensive con#i ion is "ul"ille#.
Pa e 3? of 113
Art ))/( 8#en t#e "onditions #a3e for t#eir purpose t#e #ETINGUI 32#NT of an o%ligation to give+ t#e parties+ upon t#e fulfill0ent of t#e said "onditions+ s#all return to ea"# ot#er &#at t#e6 #a3e re"ei3ed. In "ase of t#e loss+ deterioration+ or i0pro3e0ent of t#e t#in + t#e pro3isions &#i"# &it# respe"t to t#e debtor+ are laid do&n in t#e pre"edin arti"le s#all be applie( to the party who is %o+n( to ret+rn. As for o%ligations to (o or not to (o+ t#e pro3isions of 'nd par of Art ))-H <cour s sh!ll #e ermine> s#all be obser3ed as re ards t#e effe"t of t#e extin uis#0ent of obli ation.
LO ). Peris#es '. Goes out of t#e "o00er"e of 0an ?. Disappears in su"# a &a6 t#at its existen"e is un@no&n or it "annot be re"o3ered An6 redu"tion or i0pair0ent in t#e substan"e or 3alue of a t#in &#i"# does not a0ount to a loss. T#e t#in still exists at t#e ti0e t#e "ondition is fulfilled+ but it is no lon er inta"t+ OR is less t#an &#at it &as &#en t#e obli ation &as "onstituted. An6t#in added to+ in"orporated in+ or atta"#ed to t#e t#in t#at is due.
!#T#"IO"ATION
I2P"O,#2#NT
#ffe't of loss or (eterioration

8it#out debtor9s fault LO Extin uis#ed+ unless t#ere is a stipulation to t#e "ontrar6. Lode of extin uis#0ent Art )'2' Par ) Liable to da0a es upon fulfill0ent of "ondition !#T#"IO"ATION Not liable for da0a e+ "reditor 0ust a""ept t#e t#in in i0paired "ondition La6 de0and t#e t#in OR as@ for res"ission+ in eit#er "ase+ "reditor 0a6 re"o3er da0a es
8it# debtor9s fault
#ffe't of i)prove)ent
2O!# B6 nature or ti0e At debtor9s expense Inures to t#e benefit of t#e "reditor b6 3irtue of prin"iple of retroa"ti3it6 of "onditional obli ations Onl6 usufru"tuar6 ri #tsG Go3erned b6 Art 1H/ <useful i0pro3e0ents or for 0ere pleasure+ re0o3e if possible to re0o3e &it#out da0a e to propert6> and Art 1-( <set off t#e i0pro3e0ents #e 0a6 #a3e 0ade a ainst an6 da0a e>
#ffe't of prevention of the f+lfill)ent of the 'on(ition %y the o%ligor Art ))-2 T#e "ondition s#all be deemed fulfilled &#en t#e obli or 3oluntaril6 pre3ents fulfill0ent. &ONSTRU&TI.E FU*FI**%ENT : a "ondition &#i"# alt#ou # not ex"lusi3el6 &it#in t#e &ill of t#e debtor+ 0a6 in so0e &a6 be pre3ented b6 t#e debtor fro0 #appenin . REI%ISITES4 a. Intent of t#e obli or to pre3ent t#e fulfill0ent of t#e "ondition ESSENTIALV b. A"tual pre3ention of t#e "o0plian"e
8#6O Part6 to a "ontra"t 0a6 not be ex"used fro0 perfor0in #is pro0ise b6 t#e non. o""urren"e of t#e e3ent &#i"# #e #i0self pre3ented. Also appli"able to 'rovoc! ion o" resolu or( con#i ions
C$ "#CIP"OCAL OBLIGATION Art ))/) T#e po&er to res"ind obli ation is i)plie( in re'ipro'al ones+ in "ase one of t#e obli ors s#ould not "o0pl6 &it# &#at is in"u0bent upon #i0. T#e in5ured part6 0a6 "#oose bet&een #2.#$..('N% and t#e 4'S*$SS$)N of t#e obli ation+ &it# t#e pa60ent of da0a es in eit#er "ase. Me 0a6 also see@ res"ission+ e3en after #e #as "#osen fulfill0ent+ if t#e latter s#ould be"o0e ILPOSSIBLE.
Pa e 31 of 113
T#e "ourt s#all de"ree t#e res"ission "lai0ed %NLESS t#ere be a jus c!use !u hori0ing he "i2ing o" ! 'erio#. T#is is understood to be wi hou 'reju#ice o he righ s o" hir# 'ersons &#o #a3e a"Cuired t#e t#in + in a""ordan"e &it# Arti"les )?-1 and )?-- and t#e Lort a e La&. Art ))/' In "ase %oth parties have 'o))itte( %rea'h of obli ation+ t#e liabilit6 of t#e first infra"tor s#all be eCuitabl6 te0pered b6 t#e "ourts. If it "annot be deter0ined &#i"# of t#e parties first 3iolated t#e "ontra"t+ t#e sa0e s#all be e tinguished and each shall bear his own damages. Con'ept RE&IPRO&IT/ arises fro0 identit6 of "ause and ne"essaril6+ t&o obli ations are "reated at t#e sa0e ti0e. Ea"# part6 is a "reditor and debtor of t#e ot#er and t#e6 are to perfor0 si0ultaneousl6. Re"o ni;ed Ai0plied or ta"it resolutor6 "onditionB i0posed ex"lusi3el6 b6 la&+ e3en if t#ere is no "orrespondin a ree0ent bet&een parties it9s also "alled RESO*UTION Po&er to res"ind is i3en to t#e in5ured part6 Alternative re)e(ies of inB+re( party in 'ase of %rea'h in5ured part6 s#ould "#oose onl6 one+ "annot as@ for partial res"ission and partial fulfill0ent a. A"tion for Nulfill0ent 8#en fulfill0ent no lon er possible+ res"ission ta@es pla"e b. A"tion for Res"ission "e7+isites for res'ission a. One of t#e "reditors faile( to 'o)ply &it# &#at is in"u0bent upon #i0 b. Obli or &#o perfor0ed "#ose res"ission o3er fulfill0ent or perfor0an"e is i)possi%le ". T#e brea"# is s+%stantial so as to defeat t#e ob5e"t of t#e parties in 0a@in t#e a ree0ent : it &ill not be ranted in sli #t or "asual brea"# 3ow )a(e : Res"ission reCuires 5udi"ial appro3al to produ"e le al effe"t EJCEPTION4 ob5e"t is not 6et deli3ered AND obli ation #as not 6et been perfor0ed If t#e obli ation #as not 6et been perfor0ed4 extra5udi"ial de"laration of part6 &illin to perfor0 &ould suffi"eG "an refuse to perfor0 if t#e ot#er part6 is not 6et read6 to "o0pl6 If t#e in5ured part6 #as alread6 perfor0ed4 "annot extra5udi"iall6 res"ind IN t#e ot#er part6 opposes t#e res"ission <ot#er&ise+ res"ission produ"es le al effe"t>. In t#e "ase t#e ot#er part6 i0pu ns res"ission+ t#e "ourt "o0es in eit#er to4 a. De"lare t#e res"ission as properl6 0ade b. Gi3e a period to t#e debtor in &#i"# to perfor0 #ffe'ts of "es'ission ). Extin uis#es obli ator6 relation as if it #ad ne3er been "reated ECui3alent to in3alidate t#e 5uridi"al tie+ lea3in t#in s in t#eir status before t#e "elebration of t#e "ontra"t '. Lutual restitution "es'ission Art 13=? !isting+ishe( fro) "esol+tion Art 11A1
Si0ilarities Art 11A1 "esol+tion Art 13=? "es'ission Presuppose "ontra"ts 3alidl6 entered into and existin Res"ission 3. Annul0ent4 t#e latter t#ere is a defe"t &#i"# 3itiates=in3alidates t#e "ontra"t '. Lutual restitution &#en de"lared proper Onl6 b6 a part6 to t#e "ontra"t Part6 to t#e "ontra"t sufferin lesion ). Non.perfor0an"e <i0plied ta"it "ondition in re"ipro"al obli ation> Court deter0ines suffi"ien"6 of reason to 5ustif6 extension of ti0e to perfor0 obli ation <&#et#er sli #t or "asual brea"#> Onl6 to re"ipro"al T#ird parties pre5udi"ed b6 t#e "ontra"t 7arious reasons of eCuit6 pro3ided b6 t#e rounds+ 0ainl6 e"ono0i" in5ur6 or lesions Suffi"ien"6 of reason does not affe"t ri #t to as@ for res"ission <"annot be refused if all t#e reCuisites are satisfied> %nilateral+ re"ipro"al
8#o 0a6 de0and Grounds S"ope of 5udi"ial "ontrol !ind of obli
Pa e 32 of 113
appli"able to C#ara"ter
Prin"ipal Re0ed6
E3en &#en "ontra"t is full6 fulfilled Se"ondar6=Subsidiar6
II. O%ligation with a Perio(

Art ))/? Obli ations &#ose fulfill0ent a day certain #as been fixed+ s#all be de0andable onl6 &#en t#at da6 "o0es. Obli ations &it# a resol+tory perio( ta@e effe"t at on"e but ter0inate upon arri3al of t#e da6 "ertain. A Ada6 "ertainB is understood to be t#at &#i"# must necessarily come+ alt#ou # it 0a6 not be known when. If t#e un"ertaint6 "onsists in whether the (ay will 'o)e or not+ t#e obli ation is &ONDITIONA*+ and it s#all be re ulated b6 t#e rules of t#e pre"edin Se"tion. Art ))-( 8#en t#e debtor binds #i0self to pay -3#N his )eans per)it #i0 to do so+ t#e obli ation s#all be deemed to be one with a period+ sub5e"t to t#e pro3isions of Art ))/H. Con'ept A spa"e of ti0e &#i"#+ exertin an influen"e on obli ations a s a "onseCuen"e of a 5uridi"al a"t+ sus'en#s heir #em!n#!bili ( or #e ermines heir e2 inguishmen . Re4uisi es o" Perio# ). Nuture '. Certain ?. Possible Perio(CTer) vs$ Con(ition
A TO Nulfill0ent T#"2CP#"IO! E3ent 0ust ne"essaril6 "o0e+ &#et#er @no&n before #and OR at a ti0e &#i"# "annot be predeter0ined No effe"t on t#e existen"e+ but onl6 on t#eir de0andabilit6 or perfor0an"e+ MENCE+ #oes no "arr6 &it# it an6 retroa"ti3e effe"t Al&a6s to t#e future If dependent on &ill of debtor+ 0erel6 e0po&ers "ourt to fix su"# period CON!ITION E3ent is un"ertain
Influen"e on t#e obli ation Ti0e 8ill of t#e debtor
Gi3es rise to an obli ation or extin uis#es one alread6 existin La6 refer to past e3ent not @no& to t#e parties If dependent on &ill of debtor+ ANN%L
0in(s of Perio(CTer)
). As to effe't
S2S+'NS$3' <Ex die> Art ))/? Par ) Obli ations &#ose "ul"illmen ! #!( cer !in h!s been "i2e#+ s#all be demandable only &#en t#at da6 "o0es. Lust lapse before t#e perfor0an"e of t#e obli ation "an be de0anded T#in@4 in"ubatin period T#e obli or #as t#e burden of pro3in an6 extension of t#e period b6 satisfa"tor6 e3iden"e S%SPENSION ON PERIOD4 If a fortuitous e3ent super3enes+ t#e obli or is 0erel6 relie3ed of t#e obli ation to fulfill at t#at ti0e+ and does not stop t#e runnin of t#e period be"ause in effe"t t#at &ould be an extension of t#e ter0 of t#e "ontra"t. Nor"e 0a5eure "annot be dedu"ted fro0 t#e period stipulated. LORATORI%L LA8S4 postpone0ent of t#e fulfill0ent of an obli ation+ an extension of t#e period for t#e perfor0an"e of t#e obli ation+ de"reed b6 t#e statute. Mo&e3er+ to 0eet "onstitutional reCuire0ents4 T#e suspension s#ould be #e"ini e and re!son!ble. 4'S).2%)4/ <In die0> Art ))/? Par ' Obli ations &it# a resol+tory perio( ta@e effe"t at on"e but terminate upon arri3al of t#e da6 "ertain. Period after &#i"# t#e perfor0an"e 0ust ter0inate
Pa e 33 of 113
T#in@4 expir6 date
'. As to e6pression
'5+4'SS : &#en spe"ifi"all6 stated $(+.$'D : &#en parties Aintended a periodB E. . Art ))/H Par ? <period #as been "onte0plated b6 t#e parties>+ Art ))-( <pro0ise to pa6 &#en able>+ or &#en a person underta@es to do so0e &or@ &#i"# "an be done onl6 durin a parti"ular season
?. As to (efiniteness
D'#$N$%' : refers to a fixed @no&n date or ti0e $ND'#$N$%'N'SS : e3ent &#i"# &ill ne"essaril6 #appen but t#e date of its #appenin is un@no&n T#e un"ertaint6 of t#e date of o""urren"e in indeter0inate period DOES NOT "on3ert it into a "ondition+ so lon as t#ere is no uncer !in ( !s whe her i will h!''en or no . E. . deat# of a person+ 0o3able reli ious #olida6s <Mol6 8ee@>+ e3ents in "i3il or politi"al life <a e of 0a5orit6 or be"o0in a Cualified 3oter> Debtor pro0ises to Apa6 &#en ableB or Alittle b6 littleB or Aas soon as possibleB Two steps in (ealing with an in(efinite perio( 9fro) ir La%itagJs le't+re: ). La@e t#e indefinite period definite b6 as@in for pa60ent or 0a@in an extra5udi"ial de0and '. La@e 5udi"ial de0and+ t#en as@ t#e "ourts to fix t#e period No need to file to a"tions+ 5ust as@ for t&o pra6ers to a3oid 0ultipli"it6 of suits4 <)> fix period and <'> reCuire t#e debtor to "o0pl6 on t#e fixed period <a"tion for spe"ifi" perfor0an"e> T#e '.in.) a"tion dis"ussed b6 Sir Labita is a"tuall6 "ontradi"tor6 &it# Tolentino9s "o00entar6.
D. As to so+r'e
*)N3'N%$)NA.73).2N%A4/ : stipulated b6 t#e parties .'6A. : period fixed b6 la&G spread in t#e CC e. . Art )2-' lease of rural land and Art )2-H lease of urban landG Nran"#ise a ree0ent in t#e Constitution <for '1 6ears> 82D$*$A. : set b6 t#e "ourts in "ase of i0plied and indefinite periods 5See= -hen cour s m!( "i2 'erio#6 "+les in 'ase of loss@ (eterioration or i)prove)ent %efore arrival of perio( Art ))/D In "ase of loss+ deterioration or i0pro3e0ent of t#e t#in before t#e arri3al of t#e da6 "ertain+ t#e rules in Art ))-/ s#all be obser3ed. S!me !s Ar CCDE #ffe't of loss or (eterioration
8it#out debtor9s fault LO Extin uis#ed+ unless t#ere is a stipulation to t#e "ontrar6. Lode of extin uis#0ent Art )'2' Par ) Liable to da0a es upon fulfill0ent of "ondition !#T#"IO"ATION Not liable for da0a e+ "reditor 0ust a""ept t#e t#in in i0paired "ondition La6 de0and t#e t#in OR as@ for res"ission+ in eit#er "ase+ "reditor 0a6 re"o3er da0a es
8it# debtor9s fault
#ffe't of i)prove)ent
2O!# B6 nature or ti0e At debtor9s expense Inures to t#e benefit of t#e "reditor b6 3irtue of prin"iple of retroa"ti3it6 of "onditional obli ations Onl6 usufru"tuar6 ri #tsG Go3erned b6 Art 1H/ <useful i0pro3e0ents or for 0ere
Pa e 31 of 113
pleasure+ re0o3e if possible to re0o3e &it#out da0a e to propert6> and Art 1-( <set off t#e i0pro3e0ents #e 0a6 #a3e 0ade a ainst an6 da0a e>
#ffe't of pay)ent in a(van'e Art ))/1 An6t#in paid or deli3ered before t#e arri3al period+ t#e obli or bein una&are of t#e period OR belie3in t#at t#e obli ation #as be"o0e due and de0andable+ 0a6 be 4'*)3'4'D+ wi h he "rui s !n# in eres s@ Onl6 applies to o%ligations to give T#e a"tion onl6 lies before t#e arri3al of t#e da6 "ertain+ &#en t#e da6 "ertain "o0es "annot re"o3er If t#e "reditor refuses+ debtor &ill #a3e to o to t#e "ourt+ but &#en 5ud 0ent "o0es+ t#e da6 "ertain #as alread6 arri3ed. Poor #i0. <Sir Labita > Lanresa4 ood fait#=bad fait# of t#e "reditor in a""eptin t#e pre0ature pa60ent is i00aterial Tolentino4 In a""ordan"e &it# solu io in#ebi i+ ood fait# of "reditor 0a@es #i0 liable to restore t#e fruits and interests insofar as it benefited #i0. T#e sa0e prin"iple as re ards fruits and interest is true for pa60ent before #appenin of s+spensive 'on(ition in Art ))-- Par ' Nruits and interests not re"o3erable in t#ese "ases4 Re"ipro"al obli ation and t#ere #as been a pre0ature perfor0an"e on bot# sides 8#en t#e obli ation is a loan on &#i"# t#e debtor is bound to pa6 interest 8#en t#e period is ex"lusi3el6 for t#e benefit of t#e "reditor+ be"ause t#e debtor &#o pa6s in ad3an"e loses not#in If pa60ent &as &it# @no&led e of t#e ter0+ it "annot be re"o3ered be"ause it is "onsidered as ta"it &ai3er of t#e benefit of t#e ter0 <not onl6 fruits and interest+ but also prin"ipal> No e Art ))/H Par ? In e3er6 "ase+ t#e "ourt s#all determine such period as 0a6 under t#e "ir"u0stan"es #a3e been pro%a%ly 'onte)plate( %y the parties. Once "i2e# b( he cour s8 t#e 'erio# c!nno be ch!nge# b( hem. Benefit of Perio(
). &or whose %enefit an( its effe'ts

Cre(it or !e%tor Both La6 de0and perfor0an"e an6ti0e+ but not "o0pelled to a""ept before period expires E. . pa60ent of interest+ &ants to @eep #is 0one6 safel6 in3ested instead of #a3in it in #is #ands+ prote"ts #i0self fro0 sudden de"line in pur"#asin po&er of t#e "urren"6 loaned La6 oppose a pre0ature de0and+ but 0a6 3alidl6 pa6 an6 ti0e before period expires E. . ti0e to raise 0one6 Presu0ption in absen"e of stipulation or in "ase of doubt Creditor 0ust i3e "onsent first before debtor 0a6 pa6 in ad3an"e espe"iall6 &#en "reditor re"ei3es ot#er benefits b6 reason of t#e ter0
'. Pres+)ption
for t#e benefit of BOTM t#e "reditor and debtor Art ))/2 8#ene3er in an obli ation a period is desi nated+ it is 'resume# to #a3e been establis#ed for t#e benefit of ")%& "reditor and debtor+ UN*ESS fro0 t#e enor of t#e sa0e or o her circums !nces it s#ould appear t#at t#e period #as been establis#ed in fa3or of one or t#e ot#er. Art ))/- T#e debtor s#all lose e3er6 ri #t to 0a@e use of t#e period4 )> 8#en after t#e obli ation #as been "ontra"ted+ #e be"o0es insolvent UN*ESS #e i3es a uarant6 or se"urit6 for t#e debt do3etail &it# !ccion '!uli!n! <prior "redit alt#ou # de0andable later> '> 8#en #e does not furnis# to t#e "reditor t#e g+aranties or se'+rities whi'h he has pro)ise(
?. -hen (e%tor loses right to )aDe +se of perio(
Pa e 35 of 113
?> 8#en b6 #is own !c s #e #as i)paire( sai( g+aranties or se"urities after t#eir
establis#0ent+ and &#en t#rou # a "or ui ous even t#e6 disappear+ UN*ESS #e i00ediatel6 i3es ne& ones eCuall6 satisfa"tor6 D> 8#en t#e debtor violates any +n(ertaDing in "onsideration of &#i"# t#e "reditor a reed to t#e period 1> 8#en t#e debtor atte0pts to a%s'on( s#o&s bad fait# Par )4 Ainsol3en"6B need not be de"lared in an insol3en"6 pro"eedin + enou # t#at #e is in a state of finan"ial diffi"ult6 t#at #e is unable to pa6 #is debts Par ?4 Ai0pairedB need not be totalG Adisappear t#rou # fortuitous e3entB total+ used in t#e sense of AlossB Obli ation be"o0es i00ediatel6 due and de0andable e3en if period #as not 6et expiredG "on3erted to a pure obli ation Does not appl6 to extension of period fixed b6 0oratoriu0 statutes
-hen 'o+rt )ay fi6 perio( Art ))/H If t#e obli ation does not fix a period+ but fro0 its nature and "ir"u0stan"e it "an be inferre( that a perio( was inten(e(+ t#e "ourts 0a6 fix t#e duration t#ereof. Par ' T#e "ourts s#all also fix t#e duration of t#e period &#en it depends upon the will of the debtor. Par ? T#e "ourts s#all deter0ine &#i"# period as 0a6 under t#e "ir"u0stan"es #a3e been pro%a%ly 'onte)plate( b6 t#e parties. Once "i2e# b( he cour s8 he 'erio# c!nno be ch!nge# b( hem@
). Period is i0plied
a period &as intendedG also INDEFINITE PERIOD '. Period depends solel6 on &ill of debtor If it &ere 'on(ition4 3oid
III. Alternative o%ligations > pluralit6 of ob5e"ts

Con'ept ). ConB+n'tive : all prestations 0ust be perfor0ed to extin uis# obli ation '. !isB+n'tive : one or so0e prestations 0ust be perfor0ed to extin uis# obli ation a. Alternative : Debtor 0ust perfor0 one of se3eral alternati3es+ "#oi"e belon s to debtor %NLESS expressl6 i3en to "reditor b. &a'+ltative : One prin"ipal prestation but one or 0ore substitutes+ "#oi"e belon s to DEBTOR ONL,
Absent indi"ation t#at it is fa"ultati3e+ t#e pres+)ption is that it is ALT#"NATI,# be"ause "reditor &ould be at a disad3anta e if fa"ultati3e. Na"ultati3e is ne3er presu0ed.
Art ))// A person alternati3el6 bound b6 different prestations s#all "o0pletel6 perfor0 one of t#e0. Par ' T#e "reditor "annot be "o0pelled to re"ei3e part of one and part of t#e ot#er underta@in . "ight of 'hoi'e debtor unless expressl6 ranted to "reditor Art )'(( T#e ri #t of "#oi"e belon s to t#e (e%tor+ UN*ESS it #as been e2'ressl( gr!n e# to t#e "reditor. Par ' T#e debtor s#all #a3e no ri #t to "#oose t#ose prestations &#i"# are i0possible+ unla&ful or &#i"# "ould not #a3e been t#e ob5e"t of t#e obli ation Grant to "reditor "annot be i0plied C#oi"e 0a6 also be entrusted b6 t#e parties to a t#ird person LILITATIONS ON RIGMT ON CMOICE Ri #t to "#oose is indi3isible <"annot "#oose part of one and part of t#e ot#er> Cannot "#oose prestations &#i"# are i0possible+ unla&ful or "ould not #a3e been t#e ob5e"t of t#e obli ation <Art )'((+ Par '> #ffe't of noti'e of 'hoi'e
Pa e 38 of 113
T#e effe"t of noti"e of "#oi"e is to li)it the o%ligation to the o%Be't or prestation sele'te(+ &it# all t#e "onseCuen"es &#i"# t#e la& pro3ides. T#e obli ation is 'onverte( to a si)ple o%ligation to perfor0 t#e prestation "#osen. On"e t#e sele"tion #as been "o00uni"ated+ it be"o0es irrevo'a%le.
-hen noti'e pro(+'es effe't Art )'() T#e "#oi"e s#all produ"e no effe"t ex"ept fro0 t#e time it has been communicated. Noti"e of sele"tion="#oi"e 0a6 be in an6 for0 pro3ided it is suffi"ient to m!1e he o her '!r ( 1now h! elec ion h!s been m!#e. Orall6 In &ritin Ta"itl6 !ci #ecl!r! ion o" he selec ion 0a6 be done4 perfor)an'e b6 t#e debtor &#o #as t#e ri #t to "#oose or in t#e a''eptan'e of a prestation b6 t#e "reditor &#en #e #as t#e ri #t of sele"tion &#en t#e "reditor s+es for the perfor)an'e of one of t#e prestation An6 ot#er uneCui3o"al ter0s La& does not reCuire t#e ot#er part6 to "onsent to t#e "#oi"e 0ade b6 t#e part6 entitled to "#oose. A 0ere de"laration of t#e "#oi"e+ "o00uni"ated to t#e ot#er part6 is suffi"ient unilateral de"laration of &ill Onl6 possible EJCEPTION4 Debtor #as "#osen a prestation &#i"# "ould not #a3e been t#e ob5e"t of t#e obli ationG "reditor9s "onsent t#ereto &ould brin about a no3ation of t#e obli ation PL%RALIT, ON S%BKECT Koint4 "#oi"e 0ust be "onsented b6 all+ as none of t#e0 "an extin uis# t#e obli ation alone Solidar64 "#oi"e b6 one &ill be bindin personall6 upon #i0+ but not as to ot#er <ba@eeetOV> Ri #t to "#oose is not lost b6 t#e 0ere fa"t t#at t#e part6 entitled to "#oose dela6s in 0a@in #is sele"tion. Sir Labita 4 +%stit+te( perfor)an'e &#en t#e debtor does not &ant to 0a@e a "#oi"e+ "reditor "an as@ t#e "ourt for a ?rd part6 e. . "ler@ of "ourt+ s#eriff+ or an6 ot#er @no&led eable ?rd person to "#oose #ffe't of loss or i)possi%ility of one or all prestations Art )'(' T#e debtor s#all lose t#e ri #t of "#oi"e+ &#en a0on t#e prestations &#ereb6 #e is alternati3el6 bound+ onl6 one is pra"ti"able.
Con3erted to a sim'le !n# 'ure oblig! ionG T#e i0possibilit6 of t#e a"t 0ust not be due to Creditor "annot "lai0 da0a es+ be"ause it9s t#e debtor9s "all
Art )'(? If t#rou # t#e creditor9s act+ t#e debtor cannot make a choice a""ordin to t#e ter0s of t#e obli ation+ t#e latter 0a6 res'in( t#e "ontra"t with (a)ages. I0possibilit6 due to "reditor Art )'(D T#e cre#i or s#all #a3e a ri #t to in#emni ( "or #!m!ges &#en+ t#rou # t#e fault of the debtor+ a. ALL TME TMINGS &#i"# are alternati3el6 t#e ob5e"t of t#e obli ation #a3e been .)S% or b. COLPLIANCE of t#e obli ation #as be"o0e $(+)SS$".'. Par ' T#e in#emni ( s#all be fixed ta@in as a basis t#e 3A.2' of t#e l!s hing which #is!''e!re# OR t#at of t#e service which l!s bec!me im'ossible. Par ? Da0a es ot#er t#an t#e 3alue of t#e last t#in or ser3i"e 0a6 also be a&arded. cre#i or;s !c &#ere Art )D(? s#all appl6.
Applies to "ases &#ere t#e (e%tor has the right to 'hoose If onl6 so0e of t#e prestations are lost=i0possible+ not liable for da0a es be"ause #e "an still LOSS TMRO%GM NORT%ITO%S E7ENTS4 obli ation is extin uis#ed+ debtor not liable for da0a es
"o0pl6 b6 perfor0in t#e re0ainin prestations e3en if t#ere is onl6 one <Art )'('>
Pa e 3; of 113
Art )'(1 8#en t#e 'hoi'e has %een e6pressly given to the 're(itor+ t#e obli ation s#all ce!se o be !l ern! ive fro0 t#e da6 &#en t#e selection has been communicated to t#e debtor. Par ' %ntil t#en+ t#e responsibilit6 of t#e debtor s#all be o3erned b6 t#e follo&in rules4 ). If ONE of t#e t#in is LO T t#rou # fortuitous event+ #e s#all perfor0 t#e obli ation b6 deli3erin t#at &#i"# t#e "reditor s#ould "#oose fro0 t#e re0ainder+ or t#at &#i"# re0ains if onl6 one subsists. '. If t#e LO of ONE of t#e t#in s o""urs t#rou # t#e fault of the debtor+ t#e "reditor 0a6 "lai0 an6 of t#ose subsistin + or t#e pri"e of t#at &#i"#+ t#rou # t#e fault of t#e debtor #as disappear+ &it# a ri #t to da0a es. ?. If A** t#e t#in s are LO T t#rou # t#e fault of the debtor+ t#e "#oi"e b6 t#e "reditor s#all fall upon t#e pri"e of an6 of t#e0+ also &it# inde0nit6 for da0a es. Par ? t#e sa0e rules s#all be applied to o%ligations to (o or not to (o+ in "ase ONE8 OR SO%E OR A** of t#e prestations s#ould be"o0e I2PO IBL#.
&ACULTATI,# OBLIGATION
Art )'(2 8#en onl( one 'res ! ion h!s been !gree# u'on8 bu he obligor m!( ren#er !no her in subs i u ion+ t#e obli ation is "alled facultative. Par ' T#e LO T or !#T#"IO"ATION of t#e hing in en#e# !s ! subs i u e t#rou # t#e negligence of t#e obli or+ does not render #i0 liable. B%T on"e t#e substitution #as been 0ade+ t#e obli or is lia%le for t#e loss of t#e substitute on a""ount of #is delay+ negligence or fraud. Con'ept Onl6 one prestation is due+ but t#e obli or reser3ed t#e ri #t to render anot#er in substitution !isting+ishe( fro) Alternative O%ligation
A TO Contents of t#e obli ation Nullit6of prestation ALT#"NATI,# 7arious prestations all of &#i"# "onstitute parts of t#e obli ation Nullit6 of one prestation does not in3alidate t#e obli ation &#i"# is still in for"e &it# respe"t to t#ose &#i"# #a3e no 3i"e Creditor "an "#oose fro0 t#e re0ainder C#oi"e Effe"t of Loss <fortuitous e3ent> Ri #t to "#oose 0a6 be i3en to t#e "reditor Onl6 t#e ILPOSSIBILIT, ON ALL t#e prestations due wi hou "!ul of t#e debtor extin uis#es t#e obli ation &ACULTATI,# Onl6 t#e prin"ipal "onstitutes t#e obli ation + t#e a""essor6 bein onl6 a 0eans to fa"ilitate pa60ent Nullit6 of t#e prin"ipal prestation <e. . &#en t#e ob5e"t is unla&ful or outside t#e "o00er"e of 0an> in3alidates t#e obli ation. Creditor "annot de0and t#e substitute e3en &#en t#is is 3alid. Onl6 t#e debtor "an "#oose t#e substitute prestation I0possibilit6 of t#e prin"ipal prestation is suffi"ient to extin uis# t#e obli ation+ e3en if t#e substitute is possible. Loss of substitute does not 0a@e debtor liable+ unless substitution #as been 0ade Debtor is liable Loss of t#e substitute before substation does not render debtor liable
Effe"t of Loss <t#rou # fault>
Debtor not liable if ot#er prestation still a3ailable If "#oi"e belon s to "reditor+ loss of one alternati3e i3es rise to liabilit6
#ffe'ts of +%stit+tion Before t#e substitution is effe"ted+ t#e substitute is not t#e prestation t#at is due. IN t#e substitute prestation be"o0es i0possible due to t#e fault or ne li en"e of t#e debtor obli ation is not affe"ted+ and #e "annot be #eld for da0a es+ e3en if #e a"ts &it# bad fait# in renderin t#e substitute i0possible. Nro0 t#e ti0e t#e debtor "o00uni"ates to t#e "reditor t#at #e ele"ts to perfor0 t#e substitute prestation+ substitution is effe"ti3e.
Pa e 3= of 113
I7. Koint an(
oli(ary o%ligation > pluralit6 of sub5e"ts+ t#e 5uridi"al tie t#at binds t#e0
8)$N% )".$6A%$)NS
Con'ept Ea"# of t#e debtors is liable onl6 for a proportionate part of t#e debt+ and ea"# "reditor is entitled onl6 to a proportionate part of t#e "redit. Ea"# "reditor "an re"o3er onl6 #is s#are of t#e obli ation and ea"# debtor "an be 0ade to pa6 onl6 #is part. Sir Labita des"ribes it as a At#in plasti" rope or strin B t#at binds t#e parties. "e7+isites of Koint O%ligations ). Pluralit6 of sub5e"ts '. Deter0ination of t#e s#ares in t#e de0andabilit6 of t#e fulfill0ent of t#e obli ation -or(s +se( to in(i'ate Boint o%ligations Lan"o0unada Lan"o0unada Si0ple Pro rata A8e pro0ise to pa6QB used b6 t&o or 0ore si ners Pres+)ptions in Koint O%ligations Art )'(H T#e "on"urren"e of t&o or 0ore "reditors or of t&o or 0ore debtors in one and t#e sa0e obli ation does not imply t#at ea"# one of t#e for0er #as a ri #t to de0and+ OR t#at ea"# one of t#e latter is bound to render entire "o0plian"e &it# t#e prestations. T#ere is a OLI!A"4 LIABILIT4 onl6 &#en t#e obli ation e2'ressl( so s ! es OR &#en t#e l!w OR t#e n! ure of t#e obli ation re4uires solidarit6. Art )'(- If fro0 t#e la&+ or t#e nature or t#e &ordin of t#e obli ations to &#i"# t#e pre"edin arti"le refers t#e "ontrar6 does not appear+ t#e "redit or debit s#all be presumed to be divided as many e:ual shares as t#ere are "reditors or debtors+ t#e "redits or debts bein "onsidered distin"t fro0 one anot#er+ sub5e"t to t#e Rules of Court o3ernin t#e 0ultipli"it6 of suits. Koint "#ara"ter is presu0ed ECual s#ares #ffe'ts of Koint O%ligation
a. Extent of liabilit6 of debtor

).Onl6 &it# respe"t to #is parti"ular s#are in t#e debt '.7i"es of ea"# obli ation arisin fro0 t#e personal defe"t of a parti"ular debtor or "reditor does not affe"t t#e obli ation or ri #ts of t#e ot#ers ?.T#e insol3en"6 of a debtor does not in"rease t#e responsibilit6 of #is "o.debtors nor does it aut#ori;e a "reditor de0and an6t#in fro0 #is "o."reditors D.KOINT DI7ISIBLE OBLIGATION4 defense of res ju#ic! ! is not extended fro0 one debtor to anot#er b. Extent of ri #t of "reditor ).De0and b6 one "reditor upon one debtor produ"es t#e effe"ts of default onl6 &it# respe"t to t#e "reditor &#o de0anded and t#e debtor on &#o0 t#e de0and &as 0ade+ but not &it# respe"t to ot#ers '.Interruption of pres"ription b6 t#e 5udi"ial de0and of one "reditor upon a debtor does not benefit t#e ot#er "reditors nor interrupt t#e pres"ription as to ot#er debtors
". In "ase of4 Nov! ion= Affe"ts onl6 t#e s#are of t#e 5oint "o.debtor in &#o0 t#e no3ation is "reated &om'ens! ion4 Affe"ts onl6 t#e s#are of t#e 5oint "o.debtor in &#o0 t#e "o0pensation ta@es
pla"e &on"usion4 Art )'HH Confusion does not e tinguish a 5oint obli ation ex"ept as re ards t#e s#are "orrespondin to t#e "reditor or debtor in &#o0 t#e t&o "#ara"ters "on"ur.
Pa e 3A of 113
Remission4 Benefits onl6 t#e 5oint "o.debtor in &#o0 t#e re0ission is ranted+ obli ation extin uis#ed
S).$DA4/ )".$6A%$)NS
Con'ept Ea"# of t#e debtors is liable for t#e entire obli ation+ and ea"# "reditor is entitled to de0and t#e &#ole obli ation. Ea"# "reditor 0a6 enfor"e t#e entire obli ation and ea"# debtor 0a6 be obli ed to pa6 it in full. Sir Labita des"ribes it as a Asolid steel "ableB t#at binds t#e parties. Solidar6 obli ations exist onl6 b64 Stipulation of t#e parties La& Nature of obli ation C#ar e of "ondition is i0posed upon le atees or #eirs I0puted b6 final 5ud 0ent upon se3eral defendants "e7+isites of Koint O%ligations ). Pluralit6 of sub5e"ts '. Deter0ination of t#e s#ares in t#e de0andabilit6 of t#e fulfill0ent of t#e obli ation -or(s +se( to in(i'ate Boint o%ligations Lan"o0unada solidaria Koint and se3eral In solidu0 AI pro0ise to pa6QB follo&ed b6 t#e si nature of t&o or 0ore persons AIndi3iduall and "olle"ti3el6B ir La%itagJs )agi' short'+t for)+la <appli"able onl6 to Boint lia%ility on %oth si(es> W of debtors x W of "reditors X di3isor of t#e total a0ount of obli ation 0IN! O& OLI!A"4 OBLIGATION
a. As to so+r'e
Art )'(- Nro0 la&+ or t#e nature or t#e &ordin of t#e obli ationQ .'6A. Art )/)1 T&o or 0ore prin"ipals appointed an a ent for "o00on transa"tion+ solidaril6 liable to a ent Art )/D1 T&o or 0ore bailees to &#o0 a t#in is loaned in t#e sa0e "ontra"ts <"o00odatu0> Art ')/D Koint tortfeasors Art ')D2 Koint offi"ious 0ana e0ent+ t&o or 0ore 0ana ers Art ')1H Koint pa6ees in solutio indebiti <pa60ent is not due> Art ))/+ RPC *)N3'N%$)NA. b6 stipulation of parties 4'A. nature of t#e obli ation reCuires
b. As to parties %o+n(
A*%$3' ; solidarit6 of 're(itorsG ea"# #as ri #t to "olle"t t#e &#ole of t#e prestation fro0 t#e "o00on debtor Lutual representation Ea"# "reditors represents t#e ot#er in t#e a"t of re"ei3in t#e pa60ent and in all ot#er a"ts &#i"# tend to se"ure t#e "redit or 0a@e it 0ore ad3anta eous Deat# of solidar6 "reditor does not trans0it t#e solidrit6 to ea"# of #is #eirs but all of t#e0 ta@en to et#er T#e "redit and its benefit are di3ided eCuall6 a0on t#e "reditors %NLESS t#ere is an a ree0ent a0on t#e0 to di3ide differentl6 +ASS$3' ; solidarit6 of (e%torsG ea"# is liable to pa6 t#e &#ole to t#e "o00on "reditor Lutual uarant6
Pa e 1? of 113
($5'D ; si0ultaneousl6 a"ti3e and passi3e
". As to +nifor)ity
2N$#)4( ; sa0e ter0s and "ondition for all 3A4$'D7N)N!2N$#)4( Art )')) Solidarit6 0a6 exist alt#ou # t#e "reditors and t#e debtors 0a6 not be bound in t#e sa0e 0anner and b6 t#e sa0e periods and "onditions. #ffe'ts of non/+nifor) soli(ary lia%ility onl6 t#e portion due at t#e ti0e of t#e de0and is "olle"tible fro0 an6 of t#e debtors or b6 an6one of t#e "reditors #&&#CT O& OLI!A"4 OBLIGATION
a.
OLI!A"4 C"#!ITO" in relation to4
i. Co))on (e%tor
Righ
o #em!n# Debtor 0a6 pa6 to an6 solidar6 "reditor+ but if a 5udi"ial de0and is 0ade a ainst #i0+ #e 0ust pa6 onl6 to t#e plaintiff. <Art )')D> Kudi"ial de0and re3o@es t#e ta"it 0utual representation of "o."reditors+ t#ou # not perpetuall64 onl6 until su"# ti0e t#e a"tion exists. Pa60ent to "reditor &#o did not sue is a pa60ent to ?rd person. Sa0e effe"t ranted to extra5udi"ial de0and. DELAND B, SE7ERAL CREDITORS4 Pa6 t#e one &#o notified #i0 first. If si0ultaneous+ debtor reser3es t#e ri #t to "#oose. Does not appl6 to LIJED SOLIDARIT,4 solidar6 "o.debtor 0a6 pa6 in be#alf of t#e one to &#o0 de0and #as been 0ade AND to an6 of t#e solidar6 "reditors T#e "reditor 0a6 pro"eed a ainst AN4 ON# of t#e solidar6 debtors or O2# or ALL of t#e0 simultaneously. 5Quiombing v &A6 T#e de0and m!#e !g!ins one of t#e0 s#all no be !n obs !cle to t#ose &#i"# 0a6 be subse4uen l( be #irec e# !g!ins o hers+ so lon as t#e (e%t has not %een f+lly 'olle'te(. <Art )')2> Pa60ent 0ade b6 one of t#e solidar6 debtors extin uis#es t#e obli ation. If two or )ore soli(ary (e%tors offer to pay@ the 're(itor )ay 'hoose whi'h to a''ept. <Art )')H+ Par )> Ea"# "reditor 0a6 renoun"e #is ri #t e3en a ainst t#e &ill of t#e debtor+ and t#e latter need not t#ereafter pa6 t#e obli ation to t#e for0er.
In c!se o" nov! ion8 com'ens! ion8 con"usion8 remission b( ! cre#i or No3ation+ "o0pensation+ "onfusion or re0ission of t#e debt+ 0ade %y any of t#e solidar6 "reditors OR with any of t#e solidar6 debtors+ s#all e tinguish t#e obli ation+ &it#out pre5udi"e to t#e pro3isions of Art )')/ i.e. responsibilit6 of a solidar6 "o.debtor &it# respe"t to rei0burse0ent prior to #is re0ission <Art )')1 Par )>
ii. oli(ary 'o/'re(itorCs

In c!se o" nov! ion8 com'ens! ion8 con"usion8 remission T#e "reditor &#o 0a6 #a3e exe"uted an6 of t#ese a"ts+ as &ell as #e &#o "olle"ts t#e debt+ s#all be liable to others for the share in t#e obli ation "orrespondin to t#e0 <Art )')1 Par '> Re0ission done b6 se3eral but not all of t#e "reditors4 t#ose &#o 0ade it do not #a3e a"tion a ainst ea"# ot#er+ but all of t#e0 liable for t#e s#are of one &#o does not re0it Preju#ici!l !c s 'rohibi e#
Pa e 11 of 113
Ea"# one of t#e solidar6 "reditors 0a6 do &#ate3er is useful to t#e ot#ers+ but not an6t#in &#i"# 0a6 be pre5udi"ial to t#e latter. <Art )')'> E. . re0ission+ no3ation+ "o0pensation and 0er er="onfusion Ta@e note t#at t#e sa0e a"t is per0itted b6 Art )')1+ &#erefore Tolentino "on"ludes t#at t#e pro3ision is Aun#appil6 ina""urateB. To #ar0oni;e &it# Art )')14 T#e pre5udi"ial a"ts are 3alid as to t#e debtor+ but not &it# respe"t to t#e "o."reditors &#ose ri #ts subsists and "an be enfor"ed a ainst t#e "reditor &#o perfor0ed pre5udi"ial a"ts
Assignmen o" righ s no !llowe# Solidar6 "reditor "annot assi n #is ri #ts &it#out t#e "onsent of ot#ers <Art )')?> 8#6O As a solidar6 "reditor+ #e is an a ent of ot#ers+ "annot assi n t#at a en"6 &it#out t#e "onsent of #is prin"ipals. I0plies 0utual "onfiden"e 0a6 ta@e into a""ount t#e personal Cualifi"ation of ea"# "reditor. Assi n0ent of ri #ts allo&ed as to "o."reditor
b.
OLI!A"4 !#BTO" in relation to4
i. Co))on 're(itor
Oblig! ion o 'er"orm Ea"# one of t#e solidar6 "o.debtor is bound to render entire 'o)plian'e &it# t#e prestations <Art )'(H> In c!se o" nov! ion8 com'ens! ion8 con"usion8 remission b( ! cre#i or #6ting+ishes the o%ligation &it#out pre5udi"e to t#e responsibilit6 of a solidar6 "o.debtor &it# respe"t to rei0burse0ent prior to #is re0ission <Art )')1 Par )>
ii. oli(ary 'o/(e%tor

In c!se o" '!(men b( ! co)#eb or Pa60ent b6 one of t#e solidar6 "o.debtors extin uis#es t#e obli ation. <Art )')H+ Par )> Solidar6 "o.debtor &#o paid 0a6 rei0burse fro0 #is "o.debtors onl6 t#e s#are &#i"# "orresponds to ea"#+ &it# t#e interest for t#e pa60ent alread6 0ade+ but if t#e pa60ent is 0ade before debt is due+ no interest for t#e inter3enin period 0a6 be de0anded. <Art )')H+ Par ?> Con3erted into a Koint Obli ation as to "o.debtors+ but no real "ase of subro ation be"ause t#e old one is extin uis#ed and t#e ne& one is "reated Partial pa60ent4 0a6 re"o3er onl6 insofar as t#e pa60ent ex"eeded #is s#are of t#e obli ation 8#en one of t#e solidar6 debtors is insol3ent and "annot rei0burse+ #is s#are &ill be borne b6 all #is "o.debtors in proportion to t#e debt of ea"#. <Art )')H+ Par ?> Pa60ent b6 "o.debtor does not entitle #i0 to rei0burse fro0 "o.debtors if su"# pa60ent is 0ade after t#e obli ation #as pres"ribed or be"o0e ille al. <Art )')-> Also applies to prior total re0ission in fa3or of one debtor T#e re0ission 0ade b6 t#e "reditor of t#e s#are &#i"# affe"ts one of t#e solidar6 debtors does not release t#e latter fro0 #is responsibilit6 to&ards t#e "o.debtors+ in "ase debt #ad been totall6 paid b6 an6one of t#e0 before re0ission &as effe"ted. <Art )')/> Applies &#en one of t#e debtors #as alread6 paid t#e obli ation in full <in su"# a "ase+ t#e obli ation as to t#e "reditor is alread6 extin uis#ed and not#in 0ore to re0it e3en partiall6> Relations#ip of t#e "reditor &it# t#e solidar6 debtor does not extend to t#e relations#ip a0on solidar6 "o.debtors T#e re0ission of t#e &#ole obli ation+ obtained b6 one of t#e solidar6 debtors+ does not entitle #i0 to rei0burse0ent fro0 #is "o.debtors. <Art )''(>
Pa e 12 of 113
In c!se o" "or ui ous even If t#e t#in #as been LOST OR if t#e prestation #as be"o0e ILPOSSIBLE without the fault of t#e solidar6 debtors+ t#e obli ation s#all be e6ting+ishe( <Art )'')+ Par )> If t#ere &as fault on t#e part of an6 one of t#e0+ ALL s#all be responsible to t#e "reditor+ for t#e pri"e and pa60ent of da0a es and interests+ &it#out pre5udi"e to t#eir a"tion a ainst t#e uilt6 or ne li ent debtor. <Art )'')+ Par '> Guilt6 "reditor &#o pa6s inde0nit6 "annot re"o3er fro0 #is "o.debtors. Ot#er "o.debtors &#o pa6 t#e inde0nit6 "an re"o3er t#e "ull !moun fro0 t#e uilt6 "o.debtor. If t#rou # a fortuitous event+ t#e t#in is LOST or t#e perfor0an"e of t#e prestation #as be"o0e ILPOSSIBLE after one of t#e solidar6 debtors #as incurred in delayt#rou # t#e 5udi"ial or extra.5udi"ial de0and upon #i0 b6 "reditor+ t#e pro3isions of t#e pre"edin para rap# s#all appl6. <Art )'')+ Par ?>
LOST or ILPOSSIBLE &it#out fault = fortuitous e3ent LOST or ILPOSSIBLE &it# fault of an6 one LOST or ILPOSSIBLE &it#out fault = fortuitous e3ent but after an6 one incurred in delay Obli ation is extin uis#ed All liable for da0a debtors #a3e ri #t All liable for da0a debtors #a3e ri #t es and interest+ but "o. a ainst uilt6 debtor es and interest+ but "o. a ainst uilt6 debtor
!#&#N # A,AILABL# TO A OLI!A"4 !#BTO" AGAIN T T3# C"#!ITO" Art )''' A solidar6 debtor 0a6+ in a"tions filed b6 t#e "reditor+ a3ail #i0self of all defense &#i"# are of fo+r types4 ). T#ose deri3ed fro0 t#e nature of t#e obli ation Conne"ted &it# t#e obli ation and deri3ed fro0 its nature Constitutes a total (efense E. . non.existen"e of t#e obli ation be"ause of illi"it "ause+ ob5e"t or absolute si0ulation+ nullit6 due to defe"t in "apa"it6 or "onsent of all t#e debtors <0inorit6+ fraud or 3iolen"e>+ unenfor"eabilit6 be"ause of la"@ of proper proof under t#e Statute of Nraud+ non.perfor0an"e of suspensi3e "ondition or non.arri3al of period affe"tin t#e entire obli ation+ extin uis#0ent of t#e obli ation su"# as b6 pa60ent and re0ission+ all ot#er 0eans of defense &#i"# 0a6 in3alidate t#e ori inal "ontra"t Sir Labita 4 Loo@ for t#ese t#in s be"ause it &ill i3e 6ou a total defense4 i. 7i"es of "onsent ii.Cause of a"tion #as pres"ribed iii.Entire obli ation is 3oid i3.7oidable at t#e instan"e of Aall of t#e0B+ B%T if 5ust one+ 6ou "an use t#e defense as &ell '. Personal defenses Total (efense e. . 0inorit6+ insanit6+ fraud+ 3iolen"e+ inti0idation <suffi"ient "auses to annul "onsent> Partial (efense e. . spe"ial ter0s or "onditions affe"tin #is part of t#e obli ation ?. Defenses pertainin to #is s#are Partial (efense E. . 0a6 s#are is not 6et due+ so 6ou "an onl6 "o0pel 0e to i3e t#e s#are of t#e "o.debtors D. T#ose personall6 belon in to t#e ot#er "o.debtors a3ail #i0self t#ereof onl6 as re ards t#at part of t#e debt for &#i"# t#e latter are responsible Partial (efense onl6 for t#e debtor.defendant E. . t#e "o.debtor9s s#are is not 6et due+ so 6ou "an onl6 "o0pel 0e to i3e 06 s#are #&&#CT O& T3# !#&#N # ). If deri3ed fro0 t#e nature4 all t#e solidar6 "o.debtors are benefited '. If personal one4 onl6 #i0 benefited <ex"lusi3el6> ?. If personall6 to t#e "o.debtor4 partial defense
Pa e 13 of 113
KOINT IN!I,I IBL# OBLIGATION

Con'ept T#eir tie is 5oint+ but t#e perfor0an"e is indi3isible. One in &#i"# t#e ob5e"t of t#e ob5e"t or prestation is indi3isible+ not sus"eptible of di3isionG &#ile t#e tie bet&een t#e parties is 5oint+ t#at is liable onl6 to a proportionate s#are. <Art )'(/> Se3eral "reditors or debtors but t#e prestation is indi3isible+ obli ation is 5oint unless solidar6 #as been stipulated Lid&a6 bet&een joint <no "reditor "an do pre5udi"ial a"ts to ot#ers+ no debtor "an be 0ade to ans&er for t#e ot#ers> and solidarity <fulfill0ent reCuires t#e "on"urren"e of all t#e debtors+ "olle"ti3e a"tion is expressl6 reCuired for pre5udi"ial a"ts> Sir Labita 9s exa0ple4 obli ation to asse0ble a 5eepne6 bet&een t#ree different spe"ialist4 0e"#ani"+ &elder+ up#olsterer or "ar painter. In(ivisi%ility (isting+ishe( fro) soli(arity Art )')( T#e indi3isibilit6 of an obli ation does not ne"essaril6 i3e rise to solidarit6. Nor does solidarit6 of itself i0pl6 indi3isibilit6.
IN!I,I IBILIT4 Ea"# "reditor "annot de0and 0ore t#an #is s#are and ea"# debtor is not liable for 0ore t#an #is s#are Indi3isibilit6 refers to t#e prestation t#at is not "apable of '!r i!l 'er"orm!nce Onl6 t#e debtor uilt6 of brea"# of obli ation is liable for da0a es+ t#ereb6 ter0inatin t#e a en"6 Can exist e3en if t#ere is onl6 one debtor or onl6 one "reditor T#e ot#er debtors are not liable in "ase of insol3en"6 of one debtor OLI!A"IT4 Ea"# "reditor 0a6 de0and t#e full prestation and ea"# debtor #as t#e dut6 to "o0pl6 &it# t#e entire prestation Solidarit6 refers to t#e leg!l ie or vinculum definin t#e extent of liabilit6 All of t#e debtors is liable for t#e brea"# of obli ation "o00itted b6 an6 one of t#e debtors Can onl6 exist &#en t#ere is at least "reditor or debtors <reCuires pluralit6 of sub5e"ts> T#e ot#er debtors are proportionatel6 liable in "ase of insol3en"6 of one debtor
#ffe'ts of Koint In(ivisi%le O%ligation Art )'(/ If t#e di3ision is i0possible+ t#e ri #t of t#e "reditors 0a6 be pre5udi"ed onl6 b6 t#eir "olle"ti3e a"ts ). Creditors pre5udi"ed onl6 b6 t#eir "olle"ti3e a"ts '. Co.debtors not liable for t#e s#are of t#e insol3ent debtor ?. Creditor 0ust pro"eed a ainst all t#e 5oint debtors+ be"ause t#e "o0plian"e of t#e obli ation is possible onl6 if all t#e 5oint debtors &ould a"t to et#er. D. If one of t#e debtors "annot "o0pl6+ t#e obli ation is "on3erted into 0onetar6 "onsideration <liabilit6 for losses and da0a es>. One &#o is read6 and &illin to "o0pl6 &ill pa6 #is proportionate s#are plus da0a es &#en #is finan"ial "ondition i0pro3es. 1. Debtor 0ust deli3er to all t#e "reditors. If #e deli3ers to onl6 one+ liable for non.perfor0an"e as to ot#er "reditors. Da0a es are di3isible and ea"# "reditor "an re"o3er separatel6 #is proportionate s#are. Lia%ility for (a)ages in 'ase of %rea'h Art )''D A 5oint indi3isible obli ation i3es rise to inde0nit6 for da0a es fro0 t#e ti0e anyone of the (e%tors (oes not 'o)ply with his +n(ertaDing. T#e debtors &#o 0a6 #a3e been re!#( o "ul"ill t#eir pro0ises s#all not contribute to the indemnity be6ond t#e "orrespondin portion of t#e pri"e of t#e t#in or of t#e 3alue of t#e ser3i"e &#i"# t#e obli ation "onsists.
). Gi3es rise to inde0nit6 for da0a es+ non."o0plian"e &it# underta@in

'. Debtors read6 to fulfill s#all not be liable
7. !I,I IBL# AN! IN!I,I IBL# OBLIGATION : perfor0an"e of t#e prestation and not to t#e t#in &#i"# is t#e ob5e"t t#ereof
D$3$S$".' )".$6A%$)NS
Pa e 11 of 113
Con'ept One &#i"# is sus"eptible of partial perfor)an'eG debtor "an le all6 perfor0 t#e obli ation b6 parts and t#e "reditor "annot de0and a sin le perfor0an"e of t#e entire obli ation. DI7ISIBILIT, ON TMINGS different fro0 DI7ISIBILIT, ON OBLIGATIONS Divisible Thing4 8#en ea"# one of t#e parts into &#i"# it is di3ided for0s a #o0o enous and analo ous ob5e"t to t#e ot#er parts as &ell as to t#e t#in itself In#ivisible Thing4 8#en if di3ided into parts+ its 3alue is di0inis#ed disproportionatel6 Tes o" Divisibili ( ). 8ill or intention of t#e parties '. Ob5e"ti3e or purpose of t#e stipulated prestation ?. Nature of t#e t#in D. Pro3isions of la& affe"tin t#e prestation #ffe'ts of !ivisi%le O%ligations ). Art )''? T#e di3isibilit6 or indi3isibilit6 of t#e t#in s t#at are t#e ob5e"t of obli ations in &#i"# t#ere is onl( one #eb or !n# onl( one cre#i or does not alter or modify t#e pro3isions of C#apter ' of t#is Title <Nature and Effe"t of Obli ations>. '. Art )'?? A debt s#all not be understood to #a3e been paid unless t#e t#in or ser3i"e in &#i"# t#e obli ation "onsists #as been completely delivered or rendered as t#e "ase 0a6 be.
$ND$3$S$".' )".$6A%$)NS
Con'ept 8#ate3er 0a6 be t#e nature of t#e t#in &#i"# is t#e ob5e"t t#ereof+ &#en it "annot be 3alidl6 perfor0ed in parts. !isting+ishe( fro) oli(ary O%ligations
OLI!A"IT4 Ea"# "reditor 0a6 de0and t#e full prestation and ea"# debtor #as t#e dut6 to "o0pl6 &it# t#e entire prestation Solidarit6 refers to t#e leg!l ie or vinculum definin t#e extent of liabilit6 All of t#e debtors is liable for t#e brea"# of obli ation "o00itted b6 an6 one of t#e debtors Can onl6 exist &#en t#ere is at least "reditor or debtors <reCuires pluralit6 of sub5e"ts> T#e ot#er debtors are proportionatel6 liable in "ase of insol3en"6 of one debtor
IN!I,I IBILIT4 Ea"# "reditor "annot de0and 0ore t#an #is s#are and ea"# debtor is not liable for 0ore t#an #is s#are Indi3isibilit6 refers to t#e prestation t#at is not "apable of '!r i!l 'er"orm!nce Onl6 t#e debtor uilt6 of brea"# of obli ation is liable for da0a es+ t#ereb6 ter0inatin t#e a en"6 Can exist e3en if t#ere is onl6 one debtor or onl6 one "reditor T#e ot#er debtors are not liable in "ase of insol3en"6 of one debtor
0in(s of In(ivisi%le O%ligations NA%24A. Art )''1 Par ) Nor t#e purposes of t#e pre"edin arti"les+ o%ligations to give (efinite things and t#ose &#i"# are not s+s'epti%le of partial perfor)an'es#all be dee0ed to be indi3isible. ).Obli ation to i3e definite t#in s '.Not sus"eptible of partial perfor0an"e .'6A. Art )''1 Par ? Mo&e3er+ e3en t#ou # t#e ob5e"t or ser3i"e 0a6 be p#6si"all6 di3isible+ an obli ation is indi3isible if so provided by law or intended b6 parties. *)N3'N%$)NA. Art )''1 Par ? Mo&e3er+ e3en t#ou # t#e ob5e"t or ser3i"e 0a6 be p#6si"all6 di3isible+ an obli ation is indi3isible if so pro3ided b6 la& or intended by parties. Pres+)ptions in In(ivisi%le O%ligations )# $ND$3$S$"$.$%/
Pa e 15 of 113
Art )''1 Par ) Nor t#e purposes of t#e pre"edin arti"les+ o%ligations to give (efinite things and t#ose &#i"# are not s+s'epti%le of partial perfor)an'e s#all be dee0ed to be in(ivisi%le. Presu0ption of indi3isibilit6 also applies in obli ations to do )# D$3$S$"$.$%/ Art )''1 Par ' 8#en t#e obli ation #as for its ob5e"t t#e exe"ution of "ertain nu0ber of da6s of &or@+ t#e a""o0plis#0ent of &or@ b6 0etri"al units or analo ous t#in s &#i"# b6 t#eir nature are s+s'epti%le of partial perfor)an'e+ s#all be (ivisi%le. !ivisi%ility an( in(ivisi%ility in o%ligations not to (o Art )''1 Par D In obli ations not to do+ di3isibilit6 or indi3isibilit6 s#all be deter0ined b6 t#e character of the prestation in ea"# parti"ular "ase. #ffe'ts of In(ivisi%le O%ligations ). Art )''? T#e di3isibilit6 or indi3isibilit6 of t#e t#in s t#at are t#e ob5e"t of obli ations in &#i"# t#ere is onl( one #eb or !n# onl( one cre#i or does not alter or modify t#e pro3isions of C#apter ' of t#is Title <Nature and Effe"t of Obli ations>. '. Art )'?? A debt s#all not be understood to #a3e been paid unless t#e t#in or ser3i"e in &#i"# t#e obli ation "onsists #as been completely delivered or rendered as t#e "ase 0a6 be. a. EJCEPTIONS4 a. Obli ation #as been substantiall6 perfor0ed in ood fait# <Art )'?D> b. 8#en t#e "reditor a""epts perfor0an"e+ @no&in its "o0pleteness+ and &it#out protest+ t#e obli ation is dee0ed full6 perfor0ed <Art )'?1> ?. Art )''D A 5oint indi3isible obli ation i3es rise to in#emni ( "or #!m!ges fro0 t#e ti0e anyone of the (e%tors (oes not 'o)ply with his +n(ertaDing. T#e debtors &#o 0a6 #a3e been read6 to fulfill t#eir pro0ises s#all not contribute to the indemnity be6ond t#e "orrespondin portion of t#e pri"e of t#e t#in or of t#e 3alue of t#e ser3i"e &#i"# t#e obli ation "onsists. D. See <oin In#ivisible Oblig! ions Cessation of In(ivisi%ility a> N! ur!l In#ivisibili (4 "on3ersion of t#e obli ation to pa6 da0a es b> &onven ion!l9*eg!l In#ivisibili (4 no3ation+ deat# of "reditor <di3ision a0on #eirs> En ire !n# Sever!ble &on r!c s : depends upon t#e consideration to be paid+ not upon its ob5e"t Not in t#e s6llabus but Sir 0entioned in passin durin le"ture ENTIRE : "onsideration is entire and sin leG e. . Sir Labita 4 6earl6 subs"ription to Merald Tribune SE7ERABLE : "onsideration is expressl6 or b6 i0pli"ation apportionedG e. . part to be perfor0ed b6 one part6 "onsists in se3eral distin"t and separate ite0s+ and t#e pri"e is apportioned to ea"# of t#e0
,I$ OBLIGATION
-IT3 A P#NAL CLAU #
Con'ept An a""essor6 underta@in to assu0e reater responsibilit6 in "ase of brea"#. Atta"#ed to an obli ation to insure perfor0an"e. AAd terrore0 "lauseB Generall6 a su0 of 0one6+ but "an be an6 ot#er t#in stipulated b6 t#e parties+ in"ludin an a"t or abstention Double fun"tion4 <)> pro3ide for liCuidated da0a es and <'> stren t#en t#e "oer"i3e for"e of t#e obli ation b6 t#e treat of reater responsibilit6 in t#e e3ent of brea"# Lere non.perfor0an"e of t#e prin"ipal obli ation i3es rise to da0a es PENAL CLA%SE "onstitutes an ex"eption to t#e eneral rules on t#e re"o3er6 of losses and da0a es.
P"INCIPAL OBLIGATION Can stand alone+ independent of ot#er obli ations ACC# O"4 OBLIGATION Atta"#ed to t#e prin"ipal in order to "o0plete it or ta@e t#eir pla"e in "ase of brea"#
Pa e 18 of 113
OBLIGATION -IT3 A P#NAL CLAU # T#ere is alread6 an existin obli ation <t#e prin"ipal> fro0 t#e 3er6 be innin A""essor6 obli ation <penalt6> is dependent upon non. perfor0an"e of t#e prin"ipal obli ation OBLIGATION -IT3 A P#NAL CLAU # Onl6 one prestation and it is onl6 &#en t#is is not perfor0ed t#at t#e penal "lause is enfor"eable I0possibilit6 of t#e prin"ipal obli ation also extin uis#es t#e penalt6 Me "annot "#oose to pa6 t#e penalt6 to relie3e #i0self of t#e prin"ipal obli ation+ unless t#at ri #t is expressl6 ranted to #i0 OBLIGATION -IT3 A P#NAL CLAU # Pa60ent of t#e penalt6 in lieu of t#e prin"ipal "an be 0ade onl6 b6 express stipulation Creditor 0a6 de0and bot# prestation as lon as su"# ri #t is ranted to #i0 <i.e. "o0ple0entar6 penalt6> OBLIGATION -IT3 A P#NAL CLAU #
CON!ITIONAL OBLIGATION No obli ation before t#e suspensi3e "ondition #appens+ it is t#e fulfill0ent of t#e "ondition t#at i3es rise to t#e obli ation Prin"ipal obli ation itself is dependent upon an un"ertain e3ent ALT#"NATI,# OBLIGATION T&o or 0ore obli ations are due+ but fulfill0ent of one of t#e0 is suffi"ient I0possibilit6 of one of t#e obli ations+ &it#out t#e fault of t#e debtor+ still lea3es t#e ot#er subsistin T#e debtor an "#oose &#i"# prestation to fulfill
&ACULTATI,# OBLIGATION Po&er of t#e debtor to 0a@e substitution is absolute Creditor "an ne3er de0and bot# prestations
GUA"ANT4 Contra"t b6 3irtue of &#i"# a person+ "alled t#e uarantor+ binds #i0self to fulfill t#e obli ation of t#e prin"ipal debtor in "ase t#e latter s#ould fail to do so.
I2ILA"ITI# ). T#e6 are bot# intended to insure t#e perfor0an"e of t#e prin"ipal obli ation. '. T#e6 are bot# a""essor6 and subsidiar6 obli ations. ?. Can be bot# assu0ed b6 a t#ird person. To pa6 t#e penalt6 is different fro0 t#e prin"ipal T#e ob5e"t of t#e obli ations of t#e prin"ipal debtor and obli ation t#e uarantor is t#e sa0e. Prin"ipal obli ation and t#e penalt6 "an be assu0ed b6 Prin"ipal debtor "annot be t#e uarantor of t#e sa0e t#e sa0e person. obli ation Penalt6 is extin uis#ed b6 t#e nullit6 of t#e prin"ipal Guarant6 subsists e3en &#en t#e prin"ipal obli ation is obli ation+ ex"ept &#en t#e penal "lause is assu0ed b6 3oidable or unenfor"eable or is a natural one. Mo&e3er+ a t#ird person if t#e penal "lause is assu0ed b6 a t#ird person+ t#e sa0e prin"iple &ill appl6 as in t#e "ase of a uarant6.
0in(s of Penal Cla+se
). As to effe't
S2"S$D$A4/ : onl6 t#e penalt6 0a6 be enfor"ed Presu0ed in Art )''H4 >&!nno #em!n# he "ul"illmen o" he oblig! ion !n# he s! is"!c ion o" he 'en!l ( ! he s!me ime? *)(+.'('N%A4/ : bot# prin"ipal obli ation and penalt6 0a6 be enfor"ed Onl6 o""urs b6 express stipulation of t#e parties
'. As to so+r'e
*)N3'N%$)NA. : b6 express stipulation of t#e parties .'6A. : b6 la&
?. As to p+rpose
+2N$%$3' : t#e ri #t to da0a es+ besides t#e penalt6 subsistsG t#e Cuestion of inde0nit6 for da0a e is not resol3ed+ but re0ains subsistin
Pa e 1; of 113
Onl6 o""urs b6 express stipulation of t#e parties Sir Labita 4 3alue of t#e penal "lause is 0u"# 0ore t#an t#e 3alue of t#e prin"ipal+ it9s purpose is to blud eon t#e debtor into perfor0in t#e obli ation T#e Courts are aut#ori;ed to redu"e t#e da0a es if4 T#e6 find t#at t#e brea"# &as not one t#at is &anton <noodles> or done in "allous disre ard for t#e ri #ts of t#e "reditor Treble da0a es
4'+A4A%)4/ : substitutes t#e da0a es suffered b6 "reditorG t#e 0atter of da0a es is enerall6 resol3ed+ and it represents t#e esti0ate of t#e da0a es t#at a part6 0i #t suffer fro0 non.perfor0an"e of t#e obli ation+ t#ereb6 a3oidin t#e diffi"ulties of pro3in su"# da0a es Presu0ption in Art )''2+ Par )4 >Sh!ll subs i u e he in#emni ( "or #!m!ges !n# he '!(men o" in eres s in c!se o" non)com'li!nce? Sir Labita 4 pre.a reed 0easure prior to t#e brea"# Cases &#en (a)ages an( interest )ay %e re'overe( in a((ition to the penalty ). T#ere is an express pro3ision to t#at effe"t '. Debtor refuses to pa6 t#e penalt6 ?. Debtor is uilt6 of fraud in t#e non.fulfill0ent of t#e obli ation
!e)an(a%ility of penalty Art )''2 Par 'T#e penalt6 0a6 be enfor"ed onl6 &#en it is de0andable in a""ordan"e &it# t#e pro3isions of Code. a. Onl6 &#en t#e non.perfor0an"e is due to t#e fault or fraud of t#e debtor b. Non.perfor0an"e i3es rise to t#e presu0ption of fault "reditor does not need to pro3e t#e fault of t#e debtor. Burden of proof for t#e ex"use on t#e debtor. <Art )''-> ". 8#en "reditor ele"ted fulfill0ent but t#e sa0e #as be"o0e i0possible <Art )''H> MO8E7ER+ penalty not enfor'ea%le when the prin'ipal o%ligation %e'o)es I2PO IBL#* Due to fortuitous e3ent Be"ause t#e "reditor pre3ents t#e debtor fro0 perfor0in t#e prin"ipal obli ation #ffe'ts of penal 'la+se
).
+%stit+te for inde0nit6 for da0a es and pa60ent of interest <Art )''2> EJCEPTION4 %nless t#ere is a stipulation to t#e "ontrar6 e. . be"o0es a fa"ultati3e obli ation Art )''H T#e debtor "annot exe0pt #i0self fro0 t#e perfor0an"e of t#e obli ation b6 pa6in t#e penalt6 EJCEPTION4 8#ere t#is ri #t to substitute penalt6 #as been expressl6 reser3ed for #i0
'. Not e6e)pt debtor fro0 perfor0an"e : penalt6 is not a defense for lea3in obli ation unfulfilled
?. Creditor 'annot (e)an( %oth perfor0an"e and penalt6 at t#e sa0e ti0e
Art )''H Neit#er "an t#e "reditor de0and t#e fulfill0ent of t#e obli ation and t#e satisfa"tion of t#e penalt6 at t#e sa0e ti0eB EJCEPTION4 %nless t#is ri #t #as been "learl6 ranted #i0
D. Creditor "annot 'olle't other (a)ages in addition to penalt6

Art )''2 Substitute t#e inde0nit6 for da0a es and t#e pa60ent of interest in "ase of non. fulfill0ent S EJCEPTIONS4 ). T#ere is an express pro3ision to t#at effe"t '. Debtor refuses to pa6 t#e penalt6 ?. Debtor is uilt6 of fraud in t#e non.fulfill0ent of t#e obli ation -hen penalty shall %y e7+ita%ly re(+'e(
Pa e 1= of 113
Art )''/ T#e 5ud e s#all eCuitabl6 redu"e t#e penalt6 &#en t#e prin"ipal obli ation #as been partly or irreg+larly 'o)plie( &it# b6 t#e debtor. E3en if t#ere is no perfor)an'e+ t#e penalt6 0a6 also be redu"ed b6 t#e "ourts if it is ini4ui ous or unconscion!ble. >P!r i!l? : Cuantit6 or extent of fulfill0ent >Irregul!r? : for0 of fulfill0ent Onl6 applies to penalties pres"ribed in "ontra"ts and not to "olle"tion of t#e sur"#ar e on taxes t#at are due+ &#i"# is 0andator6 on t#e "olle"tor #ffe'ts of N+llity of Prin'ipal O%ligation or Penal Cla+se Art )'?( T#e nulli ( o" he 'en!l cl!use does not "arr6 &it# it t#at of t#e prin"ipal obli ation. T#e nulli ( o" he 'rinci'!l oblig! ion "arries &it# it t#at of t#e penal "lause. GENERAL R%LES4
). N+llity of prin'ipal o%ligation Also n+llifies the penal 'la+se EJCEPTIONS4 Penal "lause 0a6 subsist e3en if t#e prin"ipal obli ation "annot be enfor"ed 8#en t#e penalt6 is un#er !1en b( ! :r# 'erson pre"isel6 for an obli ation &#i"# is unenfor"eable+ natural or 3oidable assu0es a for0 of uarant6 &#i"# is 3alid under Art '(1' Nulli ( o" 'rinci'!l oblig! ion i sel" i3es rise to liabilit6 of debtor for da0a es e. . 3endor @ne& t#at t#e t#in &as inexistent at t#e ti0e of t#e "ontra"t+ 3endor be"o0es liable for t#e da0a es alt#ou # "ontra"t itself is 3oid '. N+llity of penal 'la+se !oes not affe't the prin'ipal o%ligation In t#e "ase of non/perfor)an'e+ da0a es s#all be deter0ined b6 t#e sa0e rules as if no
penalt6 #ad been stipulated Penal "lause 0a6 be 3oid be"ause it is "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order or publi" poli"6 Rationale4 Penalt6 is 0erel6 an a""essor6 to t#e prin"ipal obli ation
Chapter I,$ #6ting+ish)ent of O%ligations

I. 2o(es of #6ting+ish)ent
Art )'?) Obli ations are extin uis#ed4 A. Pa60ent or perfor0an"e : 0ost natural &a6 of extin uis#in obli ation B. Loss of t#e t#in due or I0possibilit6 of perfor0an"e C. Condonation or Re0ission of t#e debt D. Confusion or Ler er of t#e ri #ts of t#e "reditor and debtor E. Co0pensation N. No3ation G. Ot#er "auses of extin uis#0ent of obli ations : Annul0ent : Res"ission : Nulfill0ent of resolutor6 "ondition : Pros"ription onal 0is"ellaneous "auses fro0 Sir Labita and Tolentino : Arri3al of resolutor6 period : Co0pro0ise : %u u!l #issen <opposite of 0utual a ree0ent> : F De! h : extin uis#es obli ations &#i"# are of a purel6 personal "#ara"ter+ apart fro0 its extin"ti3e effe"t in so0e "ontra"ts su"# as partners#ip and a en"6 : Renun"iation b6 t#e "reditor : Abandon0ent e. . Art 22' <abandon0ent of interest in a part6 &all> and abandon0ent of a 3essel under t#e "ode of "o00er"e
Pa e 1A of 113
Insol3en"6 : does not extin uis# obli ation unless 5udi"iall6 de"lared and a dis"#ar e &as i3en #i0.
II$ Pay)ent or perfor)an'e

CONC#PT Nulfill0ent of t#e prestation due+ a fulfill0ent t#at extin uis#es t#e obli ation b6 t#e reali;ation of t#e purposes for &#i"# it &as "onstituted. Kuridi"al a"t &#i"# is 7OL%NTAR,+ LICIT+ and LADE 8ITM TME INTENT TO EJTING%ISM TME OBLIGATION "e7+isites of a ,ali( Pay)ent ). Person &#o pa6s '. Person to &#o0 pa60ent is 0ade ?. T#in to be paid D. Lanner+ ti0e and pla"e of pa60ent 0in(s of Pay)ent a. Nor)al debtor 3oluntaril6 perfor0s t#e prestation stipulated b. A%nor)al &#en debtor is for"ed b6 0eans of 5udi"ial pro"eedin + eit#er to "o0pl6 &it# t#e prestation or pa6 inde0nit6 -hy (o yo+ payL Bi er "onseCuen"es if 6ou don9t pa6+ t#e "reditor &ill file a"tion for "olle"tion t#en t#e s#eriff &ill le36 upon 6our ot#er properties -hat are the ele)entsC'hara'teristi's of a vali( pay)entL ). $dentity : &#at is to be paid+ pa60ent s#ould be t#e 3er6 sa0e obli ation=prestation pro0ised to be perfor0ed=not perfor0ed '. $ntegrity : #o& pa60ent s#ould be 0ade+ it s#ould be "o0plete <not onl6 spe"ifi" t#in but all of its a""essions and a""essories> Can any%o(y payL ,ES+ as lon as #is pa60ent #as inte rit6 and identit6 and t#e "reditor a""epts it as a 3alid tender of pa60ent
1- <ho can pay a. $n general <"reditor "annot refuse 3alid tender of pa60ent>
). Debtor '. An6one a"tin on #is be#alf a. Dul6 aut#ori;ed a ent or representati3es b. Meirs <0eans t#at debtor is dead+ if ali3e+ t#e6 &ould be t#ird persons interested in obli ation> ". Su""essors in interest and assi nees
b. %hird person who is an $N%'4'S%'D +A4%/ <"reditor "annot refuse 3alid tender of pa60ent>
Leanin of INTERESTED PART/ : interested in t#e extin uis#0ent of t#e obli ations su"# as Co.debtors Sureties Guarantors O&ners of 0ort a ed propert6 or pled e Art )?(' <?> 8#en e3en wi hou he 1nowle#ge o" he #eb or+ a person interested in the fulfillment of t#e obli ation pa6s+ &it#out pre5udi"e to t#e effe"ts of "onfusion as to t#e latter9s s#are. E""ec s o" P!(men b( :r# Person $ In eres e# ). 7alid pa60entG obli ation extin uis#ed '. Debtor to rei0burse full6 ?rd person interested ?. ?rd person subro ated to t#e ri #ts of t#e "reditor
". %hird person who is N)% AN $N%'4'S%'D +A4%/ but <$%& *)NS'N% of debtor
Pa e 5? of 113
Art )?(' <'> 8#en a t#ird person+ not interested in t#e obli ations+ pa6s &it# t#e express or ta"it appro3al of t#e "reditor. Art )'?2 Par ) T#e creditor is not bound to accept pa60ent or perfor0an"e b6 a t#ird person &#o #as no interest in t#e fulfill0ent of t#e obli ation+ unless t#ere is a stipulation to t#e "ontrar6. E""ec s o" P!(men b( :r# Person $ No In eres e# $ -i h Deb or;s &onsen ). ?rd person is entitled to full rei0burse0ent De0and fro0 t#e debtor &#at #e #as paid '. Le al subro ation <no3ation> : ?rd person is subro ated=steps into t#e s#oes of "reditor Pa6or "an exer"ise all t#e ri #ts of t#e "reditor arisin fro0 t#e 3er6 obli ation itself+ &#et#er a ainst t#e debtor or t#ird person ?. Creditor 0a6 refuse to a""ept pa60ent
d. %hird person who is N)% AN $N%'4'S%'D +A4%/ and <$%&)2% %&' =N)<.'D6' )4
A6A$NS% %&' <$.. )# %&' D'"%)4 Art )'?2 Par ) T#e creditor is not bound to accept pa60ent or perfor0an"e b6 a t#ird person &#o #as no interest in t#e fulfill0ent of t#e obli ation+ unless t#ere is a stipulation to t#e "ontrar6. Art )'?2 Par ' 8#oe3er pa6s for anot#er 0a6 de0and fro0 t#e debtor &#at #e #as paid+ ex"ept t#at if #e paid &it#out t#e @no&led e or a ainst t#e &ill of t#e debtor+ #e "an recover only insofar as the payment has been beneficial to the debtor. Art )'?H 8#oe3er pa6s on be#alf of t#e debtor wi hou he 1nowle#ge or !g!ins he will o" he l! er+ "annot compel the creditor to subrogate him in his rights+ su"# as t#ose arisin fro0 a 0ort a e+ uarant6 or penalt6. E""ec s o" P!(men b( :r# Person $ No In eres e# $ -i hou Knowle#ge or Ag!ins he -ill ). ?rd person "an onl6 be rei0bursed insofar as pa60ent #as been benefi"ial to debtor Burden of proof of pa60ent on t#e ?rd person Benefit to t#e "reditor need not be proved in t#e follo&in "ases4 a. If after t#e pa60ent+ t#e t#ird person a'7+ires the 're(itorJs right b. If t#e "reditor ratifies t#e pa60ent to t#e t#ird person ". If b6 t#e 're(itorJs 'on(+'t+ t#e debtor #as been led to belie3e t#at t#e t#ird person #ad aut#orit6 to re"ei3e t#e pa60ent d. Assi n0ent of "redit &it#out noti"e to debtor <Art )2'2> '. ?rd person "annot "o0pel "reditor to subro ate #i0 in t#e latter9s ri #ts
e. %hird person who does N)% $N%'ND %) "' 4'$("24S'D !#BTO" 2U T GI,#
CON #NT Art )'?- Pa60ent b6 t#ird person &#o does not intend to be rei0bursed b6 t#e debtor is deemed to be a donation+ &#i"# re4uires he #eb or;s consen . But t#e pa60ent is in an6 "ase valid as to the creditor &#o #as a""epted it. E""ec s o" P!(men b( :r# 'erson $ In eres e# or no $ Does no in en# o be reimburse# ). Pa60ent is dee0ed as a donation=offer of donation '. Donation 0ust be in proper for0 <i.e. if abo3e P1! it 0ust be in &ritin >
f.
$n obligation to give Art )'?/ In obli ation to i3e+ pa60ent 0ade b6 one &#o (oes not have free (isposal of t#e t#in due and "apa"it6 to alienate it s#all not be valid+ &it#out pre5udi"e to t#e pro3isions of Art )D'H under Title on Natural Obli ations. Art )D'H 8#en a 0inor )-.') entered into a "ontra"t &it#out t#e "onsent of t#e parent or uardian+ 3oluntaril6 '!(s ! sum o" mone( or #elivers ! "ungible hing in fulfill0ent of an obli ation+ t#ere s#all be no right to recover t#e sa0e fro0 t#e obli e &#o #as s'en or consume# i in goo# "!i h. E""ec o" Inc!'!ci ( o" he '!(or
Pa e 51 of 113
). No free disposal and no "apa"it6 to alienate Pa60ent is in3alid+ but &it#out pre5udi"e to natural obli ations
'. Linor &#o entered "ontra"t &it#out "onsent of parent= uardian No ri #t to re"o3er fun ible t#in deli3ered to t#e "reditor &#o spent or "onsu0ed it in ood fait#
. $n case of active solidarity

Art )')DT#e debtor 0a6 pa6 an6 one of t#e solidar6 "reditors+ but if an6 de0and+ 5udi"ial or extra5udi"ial #as been 0ade b6 one of t#e0+ pa60ent s#ould be 0ade to #i0.
>- %o whom payment can be made a. $n general

Art )'D( Pa60ent s#all be 0ade to t#e person in whose favor t#e obli ation #as been "onstituted+ or #is successor in interest+ or an6 person authori?ed to re"ei3e it. ). Creditor=person in &#ose fa3or obli ation &as "onstituted '. Mis su""essor in interest ?. An6 person aut#ori;ed to re"ei3e it +ayment to a wrong third party GENERAL R%LE4 Not 3alid+ obli ation is not extin uis#ed+ e3en if in ood fait# of t#e debtor EJCEPTION4 ). Extin uis#ed if t#e 0ista@e is i0putable to t#e fault or ne li en"e of t#e "reditor 5PA* v &A6 '. Pa60ent in ood fait# to person in possession of "redit <Art )'D'> $ncapacitated person Art )'D) Par ) Pa60ent to a t#ird person in"apa"itated to ad0inister #is propert6 s#all be 3alid if #e #as @ept t#e t#in deli3ered or insofar as t#e pa60ent #as been benefi"ial to #i0. GENERAL R%LE4 Pa60ent not 3alid EJCEPTION . 8#en pay)ent to an in'apa'itate( person is vali(4 a> If "reditor #as @ept t#e t#in deli3ered b> Insofar as pa60ent benefited "reditor "enefit to the creditor need not be proved in t#e follo&in "ases4 e. If after t#e pa60ent+ t#e t#ird person a'7+ires the 're(itorJs right f. If t#e "reditor ratifies t#e pa60ent to t#e t#ird person . If b6 t#e 're(itorJs 'on(+'t+ t#e debtor #as been led to belie3e t#at t#e t#ird person #ad aut#orit6 to re"ei3e t#e pa60ent #. Assi n0ent of "redit &it#out noti"e to debtor <Art )2'2>
b. %hird person
Art )'D) Par ' Pa60ent to a t#ird person s#all also be 3alid insofar as it #as redounded to t#e benefit of t#e "reditor. GENERAL R%LE4 7ALID if t#ird person pro3es t#at it redounded to "reditor9s benefitG ot#er&ise 7OID EJCEPTIONG <hen proof of benefit not re:uired also appli"able to INCAPACITATED PERSONS Art )'D) Par ? Su"# benefit to t#e "reditor need not be pro3ed in t#e follo&in "ases4 ). If after t#e pa60ent+ t#e t#ird person a'7+ires the 're(itorJs right '. If t#e "reditor ratifies t#e pa60ent to t#e t#ird person ?. If b6 t#e 're(itorJs 'on(+'t+ t#e debtor #as been led to belie3e t#at t#e t#ird person #ad aut#orit6 to re"ei3e t#e pa60ent D. Assi n0ent of "redit &it#out noti"e to debtor <Art )2'2>
Pa e 52 of 113
1. Pa60ent in ood fait# to an6 person in possession of the credit s#all release t#e
debtor <Art )'D'> ENNECT4 Debtor is released Art )'D? Debtor pa6s "reditor after bein 5udi"iall6 ordered to retain debt ENNECT4 Pa60ent not 3alid if t#e propert6 is atta"#ed or arnis#ed
". $n case of active solidarity

Art )')DT#e debtor 0a6 pa6 an6 one of t#e solidar6 "reditors+ but if an6 de0and+ 5udi"ial or extra5udi"ial #as been 0ade b6 one of t#e0+ pa60ent s#ould be 0ade to #i0. If no de0and is 0ade+ debtor 0a6 pa6 to an6 of t#e solidar6 "reditors If an6 5udi"ial=extra5udi"ial de0and is 0ade b6 an6 of t#e "reditors &#o 0ade t#e de0and
@- <hat is to be paid ABidentityCD a. $n general

T#e 3er6 prestation <t#in or ser3i"e> due
b. $n obligations toQ
. GI,# a spe'ifi' thing Art )'DD Par ) T#e debtor of a t#in "annot "o0pel t#e "reditor to re"ei3e a different one+ alt#ou # t#e latter 0a6 be of t#e sa0e 3alue as+ or 0ore 3aluable t#an &#i"# is due. ). Gi3e spe"ifi" t#in s itself '. A""essions and a""essories ?. If &it# loss+ i0pro3e0ents+ deterioration Appl6 Art ))-/ . GI,# a generi' thing Art )'D2 8#en t#e obli ation "onsists in t#e deli3er6 of an indeter0inate or eneri" t#in + &#ose Cualit6 and "ir"u0stan"es #a3e not been stated+ t#e "reditor "annot de0and a t#in of superior Cualit6. Neit#er "an t#e debtor deli3er a t#in of inferior Cualit6. T#e purpose of obli ation and ot#er "ir"u0stan"es s#all be ta@en into "onsideration. GENERAL R%LE4 Creditor "annot de0and a superior Cualit6G Debtor "annot deli3er a t#in of inferior Cualit6 EJCEPTION4 %nless Cualit6 and "ir"u0stan"es #a3e been stated+ purpose and ot#er "ir"u0stan"es of obli ation "onsidered. / Pay )oney Art )'D/ T#e pa60ent of debts in 0one6 s#all be 0ade in t#e "urren"6 stipulated+ and if it is not possible to deli3er su"# "urren"6+ t#en in t#e "urren"6 &#i"# is t#e le al tender in t#e P#ilippines. T#e deli3er6 of pro0issor6 notes pa6able to order+ or bills of ex"#an e or ot#er 0er"antile do"u0ents s#all produ"e effe't of pay)ent onl6 &#en t#e6 #a3e been cashed+ or &#en through the fault of the creditor they have been impaired. In t#e 0eanti0e+ t#e a"tion deri3ed fro0 t#e ori inal obli ation s#all be #eld in abe6an"e. EJCEPTIONG RA D)((+ RA -)-?4 Norei n "urren"6 if a reed to b6 parties Art )'1( In "ase of an e6traor(inary inflation or (eflation of t#e "urren"6 stipulated s#ould super3ene+ t#e 3alue of t#e "urren"6 at the time of the establishment of the obligation s#all be t#e basis of t#e pa60ent+ unless t#ere is an a ree0ent to t#e "ontrar6. RA 1'/ RA D)(( / !O or NOT TO !O Art )'DD Par ' In obli ations to do or not to do+ an a"t or forbearan"e "annot be substituted b6 anot#er a"t or forbearan"e a ainst t#e obli ee9s &ill.
Pa e 53 of 113
Substitution "annot be done a ainst t#e &ill of "reditor
". +ayment of interest

Art )/12 No interest s#all be due unless it #as been expressl6 stipulated in &ritin . Art )'1? Interest 0ust be satisfied first before "apital
0- &ow is payment to be made ABintegrityCD a. $n general

Art )'?? A debt s#all not be understood to #a3e been paid unless t#e t#in or ser3i"e in &#i"# t#e obli ation "onsists #as been completely delivered or rendered as t#e "ase 0a6 be. GENERAL R%LE4 Partial pa60ent is not allo&ed Creditor "annot be "o0pelled to re"ei3e partial prestationsG Debtor "annot be "o0pelled to i3e partial pa60ents EJCEPTIONS4 ). Contrar6 stipulation
Art )'D- Par ) %nless t#ere is an e press stipulation to that effect+ t#e "reditor "annot be "o0pelled partiall6 to re"ei3e t#e prestations+ in &#i"# t#e obli ation "onsists. Neit#er 0a6 t#e debtor be reCuired to 0a@e partial pa60ents.
'. Debt is partl6 liCuidated and partl6 unliCuidated Art )'D- Par ' Mo&e3er+ &#en t#e debt is in part li:uidated and in part unli:uidated+ t#e "reditor 0a6
?. 8#en t#ere are se3eral sub5e"ts=parties are bound under different ter0s and "onditions D. Co0pensation
de0and and t#e debtor 0a6 effe"t t#e pa60ent of t#e for0er &it#out &aitin for t#e liCuidation of t#e latter.
b. Substantial performance in good faith

Art )'?D If t#e obli ation #as been substantiall6 perfor0ed in ood fait#+ t#e obli or may recover as though there had been a strict and complete fulfillment+ less da0a es suffered b6 t#e obli e. Re4uisi es o" Subs !n i!l Per"orm!nce ). Atte0pt in ood fait# to perfor0+ &it#out an6 &illful or intentional departure '. De3iation fro0 t#e obli ation 0ust be sli #t ?. O0ission or defe"t is uni0portant and te"#ni"al D. Lust not be so 0aterial t#at intention of t#e parties is not attained c- 'stoppel Art )'?1 8#en obli e !cce' s he 'er"orm!nce+ @no&in its in"o0pleteness or irre ularit6+ and wi hou e2'ressing !n( 'ro es or objec ion+ t#e obli ation is dee0ed fully complied with. : Constitutes a A&ai3er of defe"t in perfor0an"eB t#ere 0ust #o&e3er be an intentional relinCuis#0ent of a @no&n ri #t. 8ai3er &ill not result fro0 0ere failure to assert a "lai0 for defe"ti3e perfor0an"e &#en t#e t#in or &or@ is re"ei3ed : Applies onl6 &#en #e @no&s t#e in"o0pleteness or irre ularit6 of t#e pa60ent+ obli ation is dee0ed extin uis#ed. Estopped fro0 "o0plainin
d. +resumptions in payment of interests and installments

$N%'4'S% Art ))H2 T#e re"eipt of t#e prin"ipal b6 t#e "reditor+ &it#out reser3ation &it# respe"t to t#e interest+ s#all i3e rise to t#e presu0ption t#at said interest #as been paid. Art )'1? If t#e debt produ"es interest+ pay)ent of the prin'ipal s#all no be #eeme# o h!ve been m!#e until t#e interests have been covered. If prin"ipal a0ount is re"ei3ed &it#out reser3ation as to interest interest is presu0ed to #a3e been paid $NS%A..('N%S
Pa e 51 of 113
Art ))H2 Par ' T#e re"eipt of a later install0ent of debt+ &it#out reser3ation as to prior install0ents s#all li@e&ise raise t#e presu0ption t#at su"# install0ents #a3e been paid. If a latter install0ent is re"ei3ed &it#out reser3ation to prior install0ents prior install0ents are presu0ed to #a3e been paid
E- <hen is payment to be made 8#en obli ation is due and de0andable but debtor 0a6 pa6 before due date if period is for t#e
benefit of debtor. If for t#e benefit of bot# t#e debtor and "reditor+ debtor 0a6 onl6 prior to t#e due date if "reditor "onsents t#ereto.
a. $n general
Art ))2/ Debtor in"urs in dela6 fro0 t#e ti0e "reditor judicially or e trajudicially demands fulfill0ent of t#e obli ation
b. See *hapter >1 Delay F- <here payment is to be made a. In t#e designated place in t#e obli ation <Art )'1) Par )> b. If no place is e pressly designated
Art )'1) Par ' T#ere bein no e2'ress s i'ul! ion and if t#e underta@in is to #eliver ! #e ermin! e hing t#e pa60ent s#all be 0ade wherever the thing might be at the moment the obligation was constituted. Art )'1) Par ? In !n( o her c!se <not to deli3er a deter0inate t#in >+ t#e pla"e of pa60ent s#all be at t#e domicile of the debtor. Art )'1) Par D If t#e debtor ch!nges his #omicile in b!# "!i h+ or !" er he h!s incurre# in #el!(+ t#e additional e2'enses sh!ll be borne by him. <Absent su"# "ir"u0stan"es+ it &ill be borne b6 t#e "reditor>
7- ' penses of making payment

Art )'DH %nless it is ot#er&ise stipulated+ t#e e2 r!)ju#ici!l e2'enses re4uire# b( he '!(men s#all be for t#e a""ount of t#e debtor &it# re ard to t#e 5udi"ial "osts+ t#e Rules of Court s#all o3ern.
P#CIAL &O"2
O& PA42#NT
APPLICATION O& PA42#NT

Art )'1' Me &#o #as vario+s (e%ts of t#e sa)e Din( in fa3or of one an( the sa)e 're(itor+ 0a6 de"lare at t#e ti0e of 0a@in t#e pa60ent+ to &#i"# of t#e0 t#e sa0e 0ust be applied. UN*ESS t#e parties so s i'ul! e+ or &#en t#e !''lic! ion o" '!(men is m!#e b( he '!r ( "or whose bene"i he erm h!s been cons i u e#+ appli"ation s#all not be made as to debts that are not yet due. If t#e #eb or !cce' s "rom he cre#i or a re"eipt in &#i"# an application of the payment is made+ t#e for0er 'annot 'o)plain of the sa)e+ UN*ESS t#ere is a "ause for in3alidatin t#e "onsent. Con'ept Desi nation of t#e debt &#i"# is bein paid b6 a debtor &#o #as SE.ERA* O+*I,ATIONS OF T7E SA%E KIND+ in fa3or of one creditor to &#o0 pa60ent is bein 0ade "e7+isites for Appli'ation of Pay)ent ). Sa0e debtor '. Sa0e "reditor ?. 7arious debts are of sa0e @ind+ enerall6 0onetar6 "#ara"ter
Pa e 55 of 113
Cannot appl6 to prestation to i3e spe"ifi" t#in Can appl6 to prestation to i3e eneri" t#in obli ations 0ust be due EJCEPTIONS4 Lutual a ree0ent of parties upon "onsent of t#e part6 in &#ose fa3or t#e ter0 &as establis#ed 1. Pa60ent is not enou # to extin uis# all debts 2. Debtor #as preferential ri #t to "#oose t#e debt &#i"# #is pa60ent is to be applied Not absoluteG LILITATIONS4 Cannot 0a@e partial pa60ents Cannot appl6 to unliCuidated debts Cannot "#oose a debt &#ose period is for t#e benefit of t#e "reditor+ and period #as not 6et arri3ed Ri #t to appl6 debts 0ust be exer"ised at t#e ti0e &#en debt is paid D. All "+les in Appli'ation of Pay)ent ). Ri #t to appl6 0ust be exer"ised at t#e ti0e of t#e pa60ent <Art )'1'> '. Creditor 0a6 underta@e appli"ation+ sub5e"t to t#e debtor9s appro3al. On"e t#e latter a""epts re"eipt of appli"ation+ #e "annot "o0plain %NLESS t#ere is a "ause for in3alidatin t#e "ontra"t. <Art )'1'> ?. Appl6 to interest first. BOTM <)> interest stipulated and <'> interest due be"ause of debtor9s dela6 Art )'1? If debt produ"es interest+ pa60ent of t#e prin"ipal s#all not be dee0ed to #a3e been 0ade un il he in eres !re covere#. If r+les are inappli'a%le an( appli'ation 'annot %e inferre( Art )'1D 8#en pa60ent c!nno be !''lie# in !ccor#!nce wi h 'rece#ing rules+ or if !''lic! ion c!n no be in"erre# "rom o her circums !nces+ t#e debt &#i"# is ()S% )N'4)2S %) %&' D'"%)4 a0on t#ose due+ s#all be dee0ed to #a3e been satisfied. If t#e debts are of t#e s!me n! ure !n# bur#en8 t#e pa60ent s#all be applie( to all of the) proportionately. Leanin of >%OST ONEROUS TO DE+TOR? Nunda0entall6 a Cuestion of a"t+ &#i"# "ourts 0ust deter0ine on t#e basis of "ir"u0stan"es of ea"# "ase e . Co.debtor <espe"iall6 if solidar6> 3s. sole debtor Sa0e a0ount+ 6oun er 3s. older Se"ured 3s. unse"ured
PA42#NT B4 C#
ION
Art )'11 T#e debtor 0a6 "ede or assi n #is propert6 to #is "reditors in pa60ent of #is debts. T#is "ession+ %NLESS t#ere is stipulation to t#e "ontrar6+ s#all onl6 release t#e debtor fro0 responsibilit6 for t#e net proceeds of the thing assi ned. T#e a ree0ents &#i"# on t#e effe"t of t#e "ession+ are 0ade bet&een t#e debtor and #is "reditors s#all be o3erned b6 la&. Con'ept Abandon0ent of t#e uni3ersalit6 of t#e propert6 of t#e debtor for t#e benefit of #is "reditors+ in order t#at su"# propert6 0a6 be applied to t#e pa60ent of #is "redits. Debtor transfers all t#e properties not sub5e"t to exe"ution in fa3or of "reditors t#at t#e latter 0a6 sell t#e0 and t#us appl6 t#e pro"eeds to t#eir "redits Initiati3e "o0es fro0 t#e debtor but 0ust be a""epted b6 t#e "reditors in order to be"o0e effe"ti3e %suall6 done b6 debtors in state of insol3en"6 "e7+isites for Pay)ent %y Cession ). Pluralit6 of debts '. Pluralit6 of "reditors ?. Co0plete or partial insol3en"6 of t#e debtor D. Abandon0ent of all debtor9s propert6 not sub5e"t to exe"ution
Pa e 58 of 113
1. A""eptan"e or "onsent on t#e part of t#e "reditors #ffe'ts of Pay)ent %y Cession ). Creditors do not be"o0e t#e o&nerG t#e6 are 0erel6 assignees &it# aut#orit6 to sell '. Debtor is released up to t#e a0ount of t#e net pro"eeds of t#e sale+ unless t#ere is a stipulation to t#e "ontrar6 not total extin uis#0ent ?. Creditor &ill "olle"t "redits in t#e order of preferen"e a reed upon+ or in default of a ree0ent+ in order ordinaril6 establis#ed b6 la&.
!ATION IN PA42#NT 5D!cion en P!go6

Art )'D1 Dation in pa60ent+ &#ereb6 propert6 is alienated to t#e "reditor in satisfa"tion of a debt in 0one6+ s#all be o3erned b6 la& of sales. Con'ept Deli3er6 and trans0ission of o&ners#ip of a t#in b6 t#e debtor and to t#e "reditor as an accepted e:uivalent of the performance of the obligation. An onerous "ontra"t of alienation be"ause ob5e"t is i3en in ex"#an e of "redit Spe"ial for0 of pa60ent be"ause one ele0ent of pa60ent is 0issin 4 Aidentit6B !isting+ishe( fro) pay)ent %y 'ession
!ATION IN PA42#NT Transfers t#e o&ners#ip o3er t#e t#in alienated to t#e "reditor PA42#NT B4 C# ION Onl6 t#e possession and ad0inistration <not t#e o&ners#ip> are transferred to t#e "reditors+ &it# an aut#ori;ation to convert the property into cash &it# &#i"# t#e debts s#all be paid Onl6 extin uis#es t#e "redits to t#e extent of t#e a0ount reali;ed fro0 t#e properties assi ned+ unless ot#er&ise a reed upon In3ol3es ALL t#e propert6 of t#e debtor T#ere are 3arious+ pluralit6 of "reditors
La6 totall6 extin uis# t#e obli ation and release t#e debtor Cession of onl6 so0e spe"ifi" t#in Transfer is onl6 in fa3or of one "reditor to satisf6 a debt Bot# are substituted perfor0an"es of obli ations
"e7+isites for !ation in Pay)ent ). Consent of "reditor sale presupposes t#e "onsent of bot# parties '. Da"ion &ill not pre5udi"e of ot#er "reditors ?. Debtor is not de"lared 5udi"iall6 insol3ent D. Not a '!c um commissorium <a stipulation entitlin t#e "reditor to appropriate auto0ati"all6 t#e t#in i3en as se"urit6 in "ase debtor fails to pa6> #ffe'ts of !ation in Pay)ent ). Extin uis#es pa60ent to t#e extent of t#e 3alue at t#e t#in to be deli3ered+ eit#er as a reed upon b6 t#e parties+ or as 0a6 be pro3ed+ unless t#e parties b6 a ree0ent expressl6 or i0pliedl6 or b6 t#eir silen"e+ "onsider t#e t#in as eCui3alent to t#e obli ation in &#i"# "ase t#e obli ation is totall6 extin uis#ed. '. If propert6 deli3ered to t#e "reditor assu0ption t#at it is a PLEDGE+ as it in3ol3es less trans0ission of ri #ts unless it is "learl6 t#e intention of parties
T#N!#" O& PA42#NT AN! CON IGNATION

1$ T#N!#" O& PA42#NT Con'ept T#e a"t of offerin t#e "reditor &#at is due #i0 to et#er &it# a de0and t#at t#e "reditor a""ept t#e sa0e 8#en "reditor refuses &it#out 5ust "ause to a""ept pa60ent+ #e is in mor! !cci'ien#i and debtor is released fro0 responsibilit6 if #e "onsi ns t#e t#in due Lanifestation 0ade b6 debtor to "reditor of desire to "o0pl6 &it# obli ation
Pa e 5; of 113
Preparator6 a"t to "onsi nationG does not "ause extin uis#0ent of obli ation unless "o0pleted b6 "onsi nation ReCuired ONL, &#en t#e creditor refuses without just cause to accept payment 8#at are t#e exa0ples of +nB+st 'a+se for ref+sal ). T#ere&as a pre3ious tender of pa60ent+ &it#out &#i"# t#e "onsi nation is ineffe"ti3e '. Tender of pa60ent &as of t#e 3er6 t#in due+ or in "ase of 0one6 obli ations+ t#at t#e le al tender "urren"6 &as offered ?. Tender of pa60ent &as un"onditional D. Creditor refused to a""ept pa60ent &it#out 5ust "ause 8#at are t#e exa0ples of B+st 'a+se for ref+sal ). Debt is not 6et due and t#e period is for t#e benefit of t#e "reditor '. Pa60ent b6 t#ird persons not interested in t#e fulfill0ent of t#e obli ation be"ause to be in &it#+ tender presupposes "apa"it6 of t#e pa6or :@ A""rual of interest &ill be suspended fro0 t#e date of su"# tender if i00ediatel6 deposited &it# t#e "ourt "e7+isites of a ,ali( Ten(er of Pay)ent ). Lade in la&ful "urren"6 '. S#ould in"lude interest due ?. Lust be un"onditionalG but t#e "reditor "annot 3ar6 t#e ter0s of a tender a""epted b6 #i0 D. %na""epted offer in &ritin to pa6 is eCui3alent to a"tual produ"tion and tender of 0one6 or propert6 2$ CON IGNATION Con'ept T#e a"t of depositin t#e t#in due &it# t#e "ourt or 5udi"ial aut#orities &#ene3er t#e "reditor "annot a""ept or refuses to a""ept pa60ent. Generall6 reCuires prior tender of pa60ent Lade b6 depositin t#e t#in s due at t#e disposal of 5udi"ial aut#orit6 <in"ludes s#eriff> P+rpose A3oid perfor0an"e of an obli ation be"o0in 0ore onerous to t#e debtor b6 reasons not i0putable to #i0 Dut6 of attendin indefinitel6 to its preser3ation+ &it#out re0ed6 to be relie3ed fro0 t#e debt "e7+isites of Consignation ). T#ere is a (e%t (+e '. T#e "onsi nation of t#e obli ation &as 0ade be"ause of so0e legal 'a+se Pre3ious 3alid tender &as un5ustl6 refused Ot#er "ir"u0stan"es 0a@in pre3ious tender exe0pt ?. Prior noti'e of "onsi nation #ad been i3en to t#e person interested in t#e obli ation <)st noti"e> D. A't+al (eposit="onsi nation &it# proper 5udi"ial aut#orit6 1. +%se7+ent noti'e of "onsi nation <'nd noti"e> La6 be "o0plied &it# b6 t#e ser3i"e of su00ons upon t#e defendant "reditor to et#er &it# a "op6 of t#e "o0plaint Gi3en to all interested in t#e perfor0an"e of obli ations4 '!ssive <"o.debtors+ uarantors+ sureties> or !c ive <solidar6 "o."reditors+ possible liti ants> a$ -hen ten(er an( ref+sal not re7+ire( Art )'12 Par ' Consi nation alone s#all produ"e t#e sa0e effe"t in t#e follo&in "ases4 ). Creditor is absent or un@no&n or does not appear at pla"e of pa60ent '. In"apa"itated to re"ei3e pa60ent at t#e ti0e it is due need not be le all6 de"lared ?. 8it#out 5ust "ase+ #e refuses to i3e a re"eipt D. T&o or 0ore persons "lai0 t#e sa0e ri #t to "olle"t 1. Title of t#e obli ation #as been lost
Pa e 5= of 113
%$ Two noti'e re7+ire)ent NIRST NOTICE4 Art )'1H Par ) In order t#at t#e "onsi nation of t#e t#in due 0a6 release t#e obli or+ it 0ust #$4S% be announced to the persons interested in t#e fulfill0ent of t#e obli ation. 8#6O SECOND NOTICE4 Art )'1- Par ' T#e consignation having been made+ t#e interested parties s#all also be notified t#ereof. 8#6O #ffe'ts of non/'o)plian'e Art )'1H Par ' T#e "onsi nation s#all be ineffe't+al if it is not made strictly in consonance &it# t#e pro3isions &#i"# re ulate pa60ent. 5Soco v %ili !n e6
". #ffe'ts of Consignation &#en properl6 0ade+ "#ar e a ainst t#e "reditor
Art )'2( Par ) On"e t#e "onsi nation #as been dul6 0ade+ t#e debtor 0a6 as@ t#e 5ud e to order t#e "an"ellation of t#e obli ation. ). T#e debtor is release( in the sa)e )anner as if he ha( perfor)e( the o%ligation at t#e ti0e of "onsi nation+ be"ause t#is produ"es t#e effe"t of a 3alid pa60ent. '. T#e a''r+al of interest on t#e obli ation is s+spen(e( fro0 t#e 0o0ent of t#e "onsi nation. ?. T#e deteriorations or loss of a t#in or a0ount "onsi ned o""urrin &it#out fault of t#e debtor 0ust be borne b6 t#e "reditor+ be"ause t#e ris@s of t#e t#in are transferred to t#e "reditor fro0 t#e 0o0ent of deposit. D. An6 in"re0ent or in"rease in 3alue of t#e t#in after t#e "onsi nation inures to t#e benefit of t#e "reditor.
d. -ith(rawal %y (e%tor "'#)4' a''eptan'e %y 're(itor O" approval %y the Co+rt : Before t#e "onsi nation is effe"ted+ t#e debtor is still t#e o&ner and #e 0a6 &it#dra& it.
5T*, v Flores6 Art )'2( Par ' Before t#e "reditor #as a""epted t#e "onsi nation+ or before a 5udi"ial de"laration t#at t#e "onsi nation #as been properl6 0ade+ t#e debtor may withdraw the thing or sum deposited allo&in t#e o%ligation to re)ain in for'e. #ffe'ts of with(rawal %efore 'onsignation is final ). Obli ation re0ains in for"e '. Debtor bears all t#e expenses in"urred be"ause of t#e "onsi nation
e. -ith(rawal %y (e%tor A#%'4 proper 'onsignation

Art )'2) If t#e 'onsignation having %een )a(e+ t#e "reditor s#ould a+thoriMe the (e%tor to with(raw t#e sa0e+ #e s#all lose every preference which he may have over the thing. T#e "o.debtors+ uarantors+ and sureties s#all be released. > > f$ -ith 're(itorJs approval #&&#CT * re3i3al of t#e obli ation and relations#ip bet&een "reditor and debtor is restored to t#e "ondition in &#i"# it &as before t#e "onsi nation -itho+t 're(itorJs approval #&&#CT 4
#6penses of 'onsignation
Art )'1/ T#e expenses of "onsi nation+ &#en properl6 0ade+ s#all be "#ar ed against the creditor.
Pa e 5A of 113
Consi nation is properl6 0ade &#en4 After t#e t#in #as been deposited in t#e "ourt+ t#e "reditor a""epts t#e "onsi nation &it#out ob5e"tion and &it#out reser3ation of #is ri #t to "ontest it be"ause of failure to "o0pl6 &it# an6 of t#e reCuisites for "onsi nation 8#en t#e "reditor ob5e"ts to t#e "onsi nation but t#e "ourt+ after #earin de"lares t#at t#e "onsi nation #as been 3alidl6 0ade.
III. Loss or I)possi%ility
.)SS )# %&' %&$N6 D2'

Con'ept Not li0ited to obli ations to i3e but extends to t#ose &#i"# are personal+ e0bra"in t#erefore all "auses &#i"# 0a6 render i0possible perfor0an"e of t#e prestation. Generall6 applies to deter0inate t#in s Lust be subseCuent to t#e exe"ution of t#e "ontra"t in order to extin uis# t#e obli ation If i0possibilit6 alread6 existed &#en t#e "ontra"t &as 0ade+ t#e result is not extin uis#0ent but ineffi"a"6 of t#e obli ation under Art )?D- <i0possible t#in s or ser3i"es "annot be ob5e"t of "ontra"ts> and Art )D/? <SalesG loss ob5e"t of "ontra"t+ "ontra"t &it#out an6 effe"t>. Art ))-/ <'> If t#e t#in is lost t#rou # t#e fault of t#e debtor+ #e s#all be obli ed to pa6 da0a esG it is understood t#at t#e t#in is loss &#en it4 a. Peris#es b. Goes out of t#e "o00er"e of 0an ". Disappears in su"# a &a6 t#at its existen"e is un@no&n or it "annot be re"o3ered 0in(s of Loss a. As to e6tent TOTA* PARTIA* "e7+isites of Loss of the Thing !+e Art )'2' In order to extin uis# obli ation4 ). Loss or destro6ed &it#out t#e fault of t#e debtor '. Before t#e debtor in"urs in dela6 ?. After t#e obli ation is "onstituted Pres+)ption in Loss of the Thing !+e Art )'21 8#ene3er t#e t#in is lost in the possession of the (e%tor+ it s#all be presumed that the loss was D2' %) &$S #A2.%+ %NLESS t#ere is proof to t#e "ontrar6+ and &it#out pre5udi"e to t#e pro3isions of Art ))21. Burden of explainin t#e loss of t#e t#in in t#e possession of t#e debtor+ rest upon #i0. Art ))21 A"tion for spe"ifi" perfor0an"e or substituted perfor0an"e 8#en not appli"able In "ase of e!r h4u!1e+ "loo#+ s orm or o her n! ur!l c!l!mi (. #ffe'ts of Loss of the Thing !+e
a. $n obligation to give a specific thing

Art )'2' Loss or destru"tion of deter0inate t#in wi hou "!ul o" #eb or AND be"ore he incurs in #el!( '5%$N62$S&'S )".$6A%$)N Art )'2- 8#en t#e debt of a t#in "ertain and deter0inate pro'ee(s fro) a 'ri)inal offense+ t#e debtor s#all N)% "' '5'(+%'D fro0 t#e pa60ent of its pri"e+ whatever may be the cause for the loss+ UN*ESS t#e t#in #a3in been offered b6 #i0 to t#e person &#o s#ould re"ei3e it+ t#e latter refused &it#out 5ustifi"ation to a""ept it. E3&EPTIONS= ). Debtor is at fa+lt i.e. in bad fait#+ ne li en"e+ dela6
Pa e 8? of 113
'. Debtor is 0ade lia%le for fort+ito+s e3ent b6 la&+ "ontra"tual stipulation or nature of
obli ation reCuires assu0ption of ris@ on part of debtor
b. $n obligation to give a generic thing not extin uis#ed

Art )'2? In an obli ation to deli3er a eneri" t#in + t#e loss or destru"tion of an6t#in of t#e sa0e @ind does not e tinguish t#e obli ation. ,enus nun4u!m 'eri or AT#e enus ne3er peris#esB Sir Labita 4 Nalla"6V T#e enus 0a6 be le all6 lossV E3&EPTIONS= ). Deli0ited eneri" t#in s4 li0itation of t#e eneri" ob5e"t to a parti"ular existin 0ass or a parti"ular roup of t#in sG be"o0e deter0inate ob5e"ts &#ose loss extin uis#es t#e obli ation '. Generi" t#in #as been se re ated ?. Lonetar6 obli ation
". $n case of partial loss

Art )'2D T#e "ourts s#all deter0ine &#et#er+ under t#e "ir"u0stan"es+ t#e partial loss of t#e ob5e"t of t#e obli ation is so important as to e tinguish the obligation. Pro3ided t#at partial loss is not i0putable to t#e fault or ne li en"e of t#e debtor but to fortuitous e3ents or "ir"u0stan"es Intention of t#e parties is t#e "ontrollin fa"tor in t#e solution of ea"# "ase of partial loss E. . b6 Sir4 8#en T6son bit off Mol6field9s ear &#i"# did not under0ine t#e latter9s boxin pro&ess #e#e
d. Action against third persons

Art )'2/ T#e obligation having been e tinguished by the loss of the thing+ t#e "reditor s#all #a3e all righ s o" !c ion &#i"# t#e #eb or m!( h!ve !g!ins hir# 'erson b6 reason of the loss. Refers not onl6 to t#e ri #ts and a"tions &#i"# t#e debtor 0a6 #a3e a ainst t#ird persons but also to an6 inde0nit6 &#i"# t#e debtor 0a6 #a3e alread6 re"ei3ed. E. . 0one6 paid to t#e debtor upon expropriation of t#e propert6 &#i"# is t#e ob5e"t of obli ationG insuran"e re"ei3ed b6 o&ner of "o0pan6 &it# respe"t to 3i"ti0s of sun@ 3essel
$(+)SS$"$.$%/ )# +'4#)4(AN*'
Con'ept Art )'22 T#e debtor in o%ligations to (o s#all also be released &#en t#e prestation be"o0es legally or physi'ally i)possi%le wi hou he "!ul o" he obligor. Refers to ASU+SEQUENT I%POSSI+I*IT/? arises ANTER t#e obli ation #as been "onstituted. If existin BENORE+ t#e obli ation "onstituted is under 7OID "ontra"ts Art )'2H 8#en t#e ser3i"e #as be"o0e so (iffi'+lt as to be m!ni"es l( be(on# he con em'l! ion o" he '!r ies+ t#e obli or 0a6 also be released t#erefro0+ in &#ole or in part. Do"trine of unforeseen e3ents+ Arebus si" stantibusB 4 t#e parties stipulate in t#e li #t of "ertain pre3ailin "onditions+ and on"e t#ese "onditions "ease to exist+ t#e "ontra"t also "eases to exist. Re4uisi es "or !''lic! ion o" Ar CGHI
). '. ?. E3ent or "#an e in "ir"u0stan"es "ould not #a3e been foreseen at t#e ti0e of t#e exe"ution of t#e "ontra"t La@es t#e perfor0an"e of t#e "ontra"t extre0el6 diffi"ult but not i0possible E3ent 0ust not be due to t#e a"t of an6 of t#e parties
Pa e 81 of 113
D.
Contra"t is for a future prestation
0in(s of I)possi%ility
). As to e6tent
TOTA* PARTIA* : si nifi"ant in Art )'2D <extin uis#0ent due to partial loss sub5e"t to t#e "ourt9s deter0ination>
'. As to so+r'e
*E,A* a. Dire"t : pro#ibited b6 la& b. Indire"t : pre3ented b6 super3enin le al dut6 su"# as 0ilitar6 ser3i"e P7/SI&A* $ B6 reason of its nature+ "annot be a""o0plis#ed "e7+isites of I)possi%ility Art )'22 ). Obli ation used to be possible at t#e "onstitution of obli ation '. SubseCuent i0possibilit6 ?. 8it#out t#e fault of t#e debtor #ffe'ts of I)possi%ility
a. In obli ations to do
Art )'22 releases debtor fro0 obli ation if prestations #as be"o0e le all6 or p#6si"all6 i0possible Art )'2H releases debtor if perfor0an"e #as be"o0e so diffi"ult to be so 0anifestl6 be6ond t#e "onte0plation of t#e parties Art )'2' Par ' <b6 analo 6> I0possibilit6 due to fortuitous e3ents does not e tinguish obli ation if4 B6 la& B6 stipulation Nature of t#e obli ation reCuires assu0ption of ris@
In "ase of partial perfor)an'e %y the (e%tor4 "reditor 0ust pa6 t#e part done so lon as #e
benefits fro0 su"# partial "o0plian"e.
If debtor re"ei3ed an6t#in fro0 "reditor prior to loss or i0possibilit64 return an6t#in in ex"ess
of &#at "orresponds to t#e part alread6 perfor0ed &#en t#e i0possibilit6 super3ened. I)possi%ility vs$ !iffi'+lty Lanifest diseCuilibriu0 in t#e prestations+ su"# t#at one part6 &ould be pla"ed at a disad3anta e b6 t#e unforeseen e3ent.
b. In "ase of partial i0possibilit6

Art )'2D T#e "ourts s#all deter0ine &#et#er+ under t#e "ir"u0stan"es+ t#e partial loss of t#e ob5e"t of t#e obli ation is so important as to e tinguish the obligation.
I7. Con(onation or "e)ission

Con'ept An !c o" liber!li ( b6 3irtue of &#i"#+ wi hou receiving !n( e4uiv!len + t#e "reditor reno+n'es the enfor'e)ent of o%ligation+ &#i"# is extin uis#ed in its entiret6 or in t#at part or aspe"t of t#e sa0e to &#i"# t#e re0ission refers. It is an essential "#ara"teristi" of re0ission t#at it be gratuitous + t#at t#ere is no eCui3alent re"ei3ed for t#e benefit i3enG on"e su"# eCui3alent exists+ t#e nature of t#e a"t "#an es Dation in pa60ent : re"ei3e a t#in different fro0 t#at stipulated No3ation : ob5e"t or prin"ipal "onditions of t#e obli ation s#ould be "#an ed
Pa e 82 of 113
0in(s of Con(onation
Co0pro0ise : &#en t#e 0atter renoun"ed is in liti ation or dispute and in ex"#an e of so0e "on"ession &#i"# t#e "reditor re"ei3es
). As to e6tent
TOTA* PARTIA* : refer to t#e !moun o" in#eb e#ness+ or to an !ccessor( oblig! ion <su"# as pled e or interest> or to some o her !s'ec o" he oblig! ion <su"# as solidarit6>
'. As to for)
Art )'H( Par ) Condonation or re0ission is essentiall6 ratuitous+ and reCuires t#e a""eptan"e b6 t#e obli or. It 0a6 be e6pressly or i)plie(ly. E3PRESS : &#en 0ade for0all6+ a""ordan"e &it# t#e for0s of ordinar6 donations I%P*IED : inferred fro0 t#e a"ts of parties "e7+isites of Con(onation ). Debts 0ust be existin and de0andable at t#e ti0e re0ission is 0ade '. T#e renun"iation of t#e debt 0ust be ratuitous or &it#out an6 eCui3alent or "onsideration ?. Debtor 0ust a""ept t#e re0ission %nilateral renun"iation is possible under Art 2 and not#in pre3ents #i0 fro0 abandonin #is ri #ts Parties 0ust be "apa"itated and 0ust "onsentG reCuires a""eptan"e b6 t#e obli or+ i0plied in mor is c!us! <effe"ti3e upon t#e deat# of t#e "reditor> and express in er vivos <effe"ti3e durin t#e lifeti0e of t#e "reditor> -hen for)alities re7+ire( Art )'H( Par ' One and ot#er @ind s#all be sub5e"t to t#e rules &#i"# o3ern inofficious donation. E3PRESS "ondonation+ s#all furt#er0ore+ "o0pl6 &it# t#e forms of donation. Bilateral a"ts &#i"# reCuires a""eptan"e b6 t#e debtor Sub5e"t to t#e rules on donations &it# respe"t to a""eptan"e+ a0ount and re3o"ation Nor0alities of a donation are reCuired in t#e "ase of an express re0ission Re3o"able : sub5e"t to t#e rule on inoffi"ious donation <ex"essi3e+ le iti0e is i0paired>+ in ratitude and "ondition not follo&ed Pres+)ptions in Con(onation
). Art )'H) T#e D'.$3'4/ of a private document evidencing a credit+ 0ade 3oluntaril6
b6 a "reditor to t#e debtor+ $(+.$'S the ren+n'iation of the a'tion &#i"# t#e for0er #ad a ainst t#e latter. Not appli"able to publi" do"u0ents be"ause t#ere is al&a6s a "op6 in t#e ar"#i3es &#i"# "an be used to pro3e t#e "redit. Surrender of &eapon of enfor"e0ent of #is ri #ts '. Art )'H' 8#ene3er t#e 'riv! e #ocumen in which he #eb !''e!rs is found in t#e +)SS'SS$)N of the debtor+ it s#all be pres+)e( t#at t#e 're(itor (elivere( it vol+ntarily+ unless t#e "ontrar6 is pro3ed. Onl6 pri0a fa"ie and 0a6 be o3er"o0e b6 "ontrar6 e3iden"e to s#o& t#at not&it#standin t#e possession b6 t#e debtor of t#e pri3ate do"u0ent of "redit+ it #as not been paid.
?. Art )'HD It is pres+)e( t#at t#e !ccessor( oblig! ions o" 'le#ge #as been 4'($%%'D &#en t#e
t#in pled ed8 !" er i s #eliver( o he cre#i or+ is found in the possession of the debtor+ or a third person who owns the thing. #ffe'ts of Con(onation ). In eneral extin uis#es eit#er totall6 or partiall6
Pa e 83 of 113
'. In "ase of 5oint or solidar6 obli ations affe"ts t#e s#are "orrespondin to t#e debtor in &#ose
benefit t#e re0ission &as i3en Governing "+les in Con(onation Art )'H( Rules in inoffi"ious donations #ffe'ts of "en+n'iation of Prin'ipal or A''essory O%ligation Art )'H? T#e renun"iation of t#e 'rinci'!l debt s#all e6ting+ish the accessory o%ligationsG but t#e w!iver o" he l! er s#all le!ve he "ormer in "orce. 8#6O A""essor6 0erel6 follo&s prin"ipal
7. Conf+sion or 2erger of "ights

Con'ept Ler er or "onfusion is t#e 0eetin in one person of t#e Cualities of t#e "reditor and t#e debtor &it# respe"t to t#e sa0e obli ation. Erases t#e pluralit6 of sub5e"ts of t#e obli ation and extin uis#es t#e obli ation be"ause it is absurd t#at a person s#ould enfor"e an obli ation a ainst #i0self. La6 be re3o@ed+ as a result of &#i"# t#e obli ation is re"reated in t#e sa0e "ondition t#at it #ad &#en 0er er too@ pla"e CA%SE ON LERGER4 An6t#in t#at brin s about su""ession to t#e "redit e. . debtor in#erits "redit fro0 t#e "reditor. Mo&e3er+ "annot be t#e ot#er &a6 around be"ause under t#e present la&+ #eirs do not in#erit t#e debts of t#eir prede"essors. "e7+isites for Conf+sion ). Lust ta@e pla"e %etween the 're(itor an( the prin'ipal (e%tor <Art )'H2> '. 7er6 sa)e o%ligation 0ust be in3ol3ed+ for if t#e debtor a"Cuires ri #ts fro0 t#e "reditor+ but not parti"ular obli ation in Cuestion+ t#ere &ill be no 0er er ?. Confusion 0ust be total or as re ards t#e entire obli ation #ffe'ts of Conf+sion ). In eneral extin uis# t#e obli ation '. In "ase of <oin oblig! ions . Art )'HH Confusion (oes not e6ting+ish a Boint o%ligation E3&EPT as re ards t#e s#are "orrespondin to t#e "reditor or debtor in whom the two characters concur. Soli#!r( oblig! ions : Art )')1 AQ "onfusionQ 0ade b6 an6 of t#e solidar6 "reditors or &it# an6 of t#e solidar6 debtors shall e6ting+ish the o%ligation+ &it#out pre5udi"e to t#e pro3isions of Art )')/.B <Solidar6 "o.debtor &#o #as been re0itted is still liable to "o. debtors if one of t#e #ad paid t#e obli ation in full prior t#e re0ission> Conf+sion in Prin'ipal or A''essory O%ligation Art )'H2 Ler er &#i"# ta@es pla"e in t#e person of t#e prin"ipal debtor or "reditor %enefits the g+arantors. Confusion &#i"# ta@es pla"e in the person of any of the latter (oes not e6ting+ish the o%ligation. Ler er releases t#e uarantor be"ause t#e6 are 0erel6 a""essor6 obli ations Guarantor a"Cuires t#e "redit+ #is obli ation as uarantor is extin uis#ed+ but t#e prin"ipal obli ation subsists &#i"# #e "an enfor"e a ainst t#e debtor and ot#er "o. uarantors. 8#en 0ort a ed propert6 belon s to a t#ird person+ 0ort a ee a"Cuires a part of t#e propert6+ t#e sa0e is released fro0 t#e en"u0bran"e. T#e obli ation 0erel6 be"o0es a partl6 <if t#e a"Cuisition is not total> unse"ured obli ation.
,I$ Co)pensation
Con'ept It is a 0ode of extin uis#in t#e obli ation to t#e "on"urrent a0ount+ t#e obli ations of t#ose persons &#o in t#eir o&n ri #t are re"ipro"all6 debtors and "reditors of ea"# ot#er. Abbre3iated pa60ent Offsettin of t&o obli ations &#i"# are re"ipro"all6 extin uis#ed if t#e6 are of e4u!l v!lue or extin uis#ed to t#e "on"urrent a0ount if of #i""eren v!lues.
Pa e 81 of 113
Balan"in bet&een t&o obli ations+ in3ol3es a fi urati3e operation of &ei #in t&o obli ations
si0ultaneousl6 in order to extin uis# t#e0 to t#e extent in &#i"# t#e a0ount of one is "o3ered b6 t#e ot#er. Pa60ent is si0plified and assured bet&een persons &#o are indebted to ea"# ot#er. Alt#ou # it ta@es pla"e b6 operation of la&+ it 0ust be alle ed and pro3ed b6 t#e debtor &#o "lai0s its benefits. On"e pro3ed+ its effe"t retroa"ts to t#e 0o0ent &#en t#e reCuisites pro3ided b6 la& "on"ur. !isting+ishe( fro) pay)ents
PA42#NT Capa"it6 to dispose of t#e t#in paid and "apa"it6 to re"ei3e are reCuired for debtor and "reditor Perfor0an"e 0ust be "o0plete CO2P#N ATION Su"# "apa"it6 is not ne"essar6+ be"ause it ta@es pla"e b6 operation of la& and not b6 t#e a"ts of parties T#ere 0a6 be partial extin uis#0ent of an obli ation
A(vantage of Co)pensation over Pay)ent ). Si0ple+ ta@in effe"t &it#out a"tion b6 eit#er part6 to extin uis# t#eir respe"ti3e obli ations '. Lore uarant6 in 0a@in t#e "redit effe"ti3e+ be"ause t#ere is less ris@ of loss b6 t#e "reditor due to insol3en"6 or fraud of t#e "reditor Art )'H- Co0pensation s#all ta@e pla"e &#en t&o persons+ in t#eir o&n ri #t are "reditors and debtors of ea"# ot#er. !isting+ishe( fro) Conf+sion
CON&U ION In3ol3es onl6 one obli ation T#ere is onl6 one person in &#o0 t#e "#ara"ters of "reditor and debtor 0eet CO2P#N ATION T#ere 0ust al&a6s be t&o obli ations T&o persons &#o are 0utuall6 debtors and "reditors of ea"# ot#er in t&o separate obli ations+ ea"# arisin fro0 a different "ause
0in(s of Co)pensation
). As to e6tent
%)%A. : &#en t&o obli ations are of t#e sa0e a0ount +A4%$A. : &#en t#e a0ounts are not eCual
'. As to origin
.'6A. : ta@es pla"e b6 operation of la& be"ause all t#e reCuisites are present 3).2N%A4/7*)N3'N%$)NA. : &#en t#e parties a ree to "o0pensate t#eir 0utual obli ations e3en if so0e reCuisite is la"@in + su"# as t#at pro3ided in Art )'-' Art )'H/ ReCuisites of le al "o0pensation is inappli"able Art )'-' T#e parties 0a6 a ree upon t#e "o0pensation of debts &#i"# are not 6et due. "e7+isites of ,ol+ntary Co)pensation ). Ea"# of t#e parties "an dispose of t#e "redit #e see@s to "o0pensate '. T#e6 a ree to t#e 0utual extin uis#0ent of t#eir "redits 82D$*$A. : &#en de"reed b6 t#e "ourt in a "ase &#ere t#ere is a "ounter"lai0 e. . defendant is t#e "reditor of t#e plaintiff for an unliCuidated a0ount+ sets up #is "redit as a "ounter"lai0 a ainst t#e plaintiff and #is "redit is liCuidated b6 5ud 0ent+ t#ereb6 "o0pensatin it &it# t#e "redit of t#e plaintiff. Le al "o0pensation is not possible be"ause t#e "lai0 is unliCuidated Art )'-? If one of t#e parties to a suit o3er an obli ation #as a "lai0 for da0a es a ainst t#e ot#er+ t#e for0er 0a6 set it off b6 pro3in #is ri #t to said da0a es and t#e a0ount t#ereof.
Pa e 85 of 113
#A*2.%A%$3' : &#en it "an be "lai0ed b6 one of t#e parties &#o+ #o&e3er+ #as t#e right to o%Be't to it+ su"# as &#en one of t#e obli ations #as a period for t#e benefit of one part6 alone and &#o renoun"es t#at period so as to 0a@e t#e obli ation due 8#en le al "o0pensation "annot ta@e pla"e for &ant of so0e le al reCuisites As "o0pared &it# "on3entional4 fa"ultati3e is unilateral+ &#ile "on3entional depends upon a ree0ent of bot# parties
.'6A. *)(+'NSA%$)N
"e7+isites for Legal Co)pensation Art )'H/ In order t#at "o0pensation 0a6 be proper it is ne"essar6 t#at4
). Ea"# one of t#e obli ors be %o+n( prin'ipally and t#at at t#e sa0e ti0e a prin'ipal 're(itor
of t#e ot#er APrin"ipalsB not appli"able if onl6 a uarantor Solidar6 debtor "annot set up t#e obli ation of t#e "reditor in fa3or of a "o.debtor+ ex"ept as re ards t#e s#are of t#e latter T#at bot# debts "onsists in a s+) of )oney+ or if t#e t#in s due are "onsu0able+ t#e6 be of t#e sa)e Din( and also of t#e sa)e 7+ality if t#e latter #as been stated T#at t#e t&o debts are (+e T#at t#e6 be li7+i(ate( an( (e)an(a%le ALiCuidated debtsB : &#en its existen"e and a0ount are deter0ined ADe0andableB . enfor"eable in "ourt 8#at are not sub5e"t to "o0pensation Period &#i"# #as not 6et arri3ed Suspensi3e "ondition #as not 6et #appened Obli ation "annot be sued upon e. . natural obli ation T#at o3er neit#er of t#e0 t#ere be any retention or 'ontroversy+ "o00en"ed b6 t#ird persons and "o00uni"ated in due ti0e to t#e debtor Not appli"able to fa"ultati3e obli ations+ but appli"able to t#ose &it# penal "lause
'. ?. D.

1.
Art )'-( Not&it#standin t#e pro3isions of t#e pre"edin arti"le+ t#e guarantor 0a6 se u' com'ens! ion !s reg!r#s wh! he cre#i or m!( owe he 'rinci'!l #eb or. Liabilit6 of t#e uarantor is onl6 subsidiar6G it is a""essor6 to t#e prin"ipal obli ation of t#e debtor If debtor9s obli ation is "o0pensated+ it &ould 0ean t#e extin uis#0ent of t#e uaranteed debt and benefits t#e uarantor #ffe'ts of Legal Co)pensation ). Bot# debts are extin uis#ed to t#e "on"urrent a0ount <Art )'/(> '. Interests stop a""ruin on t#e extin uis#ed obli ations or t#e part extin uis#ed ?. Period of pres"ription stops &it# respe"t to t#e obli ation or part extin uis#ed D. All a""essor6 obli ations of t#e prin"ipal &#i"# #as been extin uis#ed are also extin uis#ed 1. If a person s#ould #a3e a ainst #i0 sever!l #eb s which !re susce' ible o" com'ens! ion+ t#e r+les on appli'ation of pay)ents s#all appl6 to t#e or#er o" he com'ens! ion. <Art )'-/> -hen 'o)pensation is not allowe( ). Depositu0 <Art )'-H> '. Co00odatu0 <Art )'-H> ?. Support due ratuitous title <Art )'-H> D. Ci3il liabilit6 arisin fro0 a penal offense <Art )'--> Art )'-H Co0pensation s#all not be proper &#en one of t#e debts arises fro0 a depositum or fro0 t#e obli ations of a depositar6 or of a bailee in a commodatum.
Pa e 88 of 113
Neit#er "an "o0pensation be set up a ainst a "reditor &#o #as a "lai0 for support due by gratuitous title+ &it#out pre5udi"e to t#e pro3isions of Art ?() <support in arrears "an be "o0pensated>. 8#6O A deposit is 0ade or a commo#! um is i3en on t#e basis of "onfiden"e of t#e o&ner. It is t#erefore+ 5ust t#at t#e depositar6 or borro&er s#ould in fa"t perfor0 #is obli ationG ot#er&ise t#e trust of t#e depositor or lender &ould be 3iolated. Art )'-- Neit#er s#all t#ere be "o0pensation if one of t#e debts "onsists in "i3il liabilit6 arisin fro0 a penal offense. 8#6O Satisfa"tion of su"# obli ation is i0perati3e No 'o)pensation )ay o''+r even when all the re7+isites 'on'+r4 ). 8#en t#ere is renun"iation of t#e effe"ts of "o0pensation b6 a part6 rests upon a potestati3e ri #t and unilateral de"laration of renun"iation is suffi"ient '. 8#en t#e la& pro#ibits "o0pensation a. Art )'-H b. Art )'-Co)pensation of (e%ts paya%le in (ifferent pla'es Art )'-2 Co0pensation ta@es pla"e %y operation of law+ e3en t#ou # t#e debts 0a6 be paya%le at (ifferent pla'es+ but t#ere s#all be an inde0nit6 for expenses of ex"#an e or transportation to t#e pla"e of pa60ent. Applies to le al "o0pensation but not to 3oluntar6 "o0pensation #ffe'ts of N+llity of (e%ts to %e 'o)pensate( Art )'-D 8#en one or bot# debts are rescissible or voi#!ble+ t#e6 0a6 be compensated against each other "'#)4' t#e6 are ju#ici!ll( rescin#e# or !voi#e#. #ffe'ts of Assign)ent of Cre(it
A. Lade AFTER "o0pensation too@ pla"e4 no effe"tG "o0pensation alread6 perfe"ted+ not#in to assi n
at all : Assi nee is left &it# an a"tion for e3i"tion or for da0a es for fraud a ainst assi nor
B. Lade +EFORE "o0pensation too@ pla"e ). -ith 'onsent of (e%tor

"annot set up a ainst assi nee %NLESS debtor reser3ed #is ri #t to "o0pensation &#en #e a3e #is "onsent
Art )'-1 Par ) T#e debtor &#o #as consented to t#e assi n0ent of ri #ts 0ade b6 a "reditor in fa3or of a t#ird person+ 'annot set +p against the assignee t#e "o0pensation &#i"# &ould pertain to #i0 a ainst t#e assi nor+ UN*ESS t#e !ssignor w!s no i"ie# b6 t#e debtor ! he ime he g!ve his consen + t#at #e reserve( #is ri #t to t#e "o0pensation.
'. -ith Dnowle(ge %+t witho+t 'onsent of (e%tor onl6 debts 'rior o !ssignmen + not
subseCuent
Art )'-1 Par ' If t#e "reditor "o00uni"ated t#e "ession to #i0 but t#e debtor did not consent t#ereto+ t#e latter 0a6 set up t#e "o0pensation of (e%ts previo+s to the 'ession+ but not of subseCuent ones.
?. -itho+t the Dnowle(ge of (e%tor
all debts 0aturin 'rior o his 1nowle#ge
Art )'-1 Par ? If t#e assi n0ent is 0ade without the knowledge of t#e debtor+ #e 0a6 set up t#e "o0pensation of all "redits prior to the sa)e an( also later ones +ntil he ha( Dnowle(ge of t#e assi n0ent.
"ationale4 As far as t#e debtor is "on"erned+ t#e assi n0ent does not ta@e effe"t ex"ept fro0 t#e ti0e #e is notified t#ereof.
,II$Novation
Pa e 8; of 113
Con'ept T#e extin uis#0ent of an obli ation b6 t#e substitution or "#an e of t#e obli ation b6 a subseCuent one &#i"# extin uis#es or 0odifies t#e first eit#er b64 ). C#an in t#e ob5e"t or prin"ipal "onditions '. Substitutin t#e person of t#e debtor ?. Subro atin a t#ird person in t#e ri #ts of t#e "reditor %nli@e ot#er a"ts of extin uis#in obli ation+ no3ation is a B+ri(i'al a't of (+al f+n'tion in t#at at t#e ti0e it e2 inguishes !n oblig! ion+ it cre! es ! new one in lieu o" he ol#. Does not operate as absolute but onl6 as a relati3e extin"tion. Art )'/) Obli ations 0a6 be 0odified b64 ). C#an in t#e ob5e"t or prin"ipal "onditions '. Substitutin t#e person of t#e debtor ?. Subro atin a t#ird person in t#e ri #ts of t#e "reditor 0in(s of Novation
). As to for)
'5+4'SS : parties de"lare t#at t#e old obli ation is extin uis#ed and substituted b6 t#e ne& obli ation $(+.$'D : in"o0patibilit6 bet&een t#e old and t#e ne& obli ations t#at t#e6 "annot stand to et#er
'. As to origin
*)N3'N%$)NA. : b6 express stipulation of t#e parties .'6A. : b6 operation of la&
?. As to o%Be't
)"8'*%$3'74'A. : "#an e in t#e "ause+ ob5e"t or prin"ipal S2"8'*%$3'7+'4S)NA. : 0odifi"ation of obli ation b6 t#e "#an e of t#e sub5e"t passi3e . substitution of debtor a"ti3e . subro ation of a t#ird person in t#e ri #ts of t#e "reditor ($5'D > bot# ob5e"ti3e and sub5e"ti3e no3ation
D. As to effe't
+A4%$A. : onl6 a 0odifi"ation or "#an e in so0e prin"ipal "onditions of t#e obli ation %)%A. : obli ation is "o0pletel6 extin uis#ed Art )'/' In order t#at obli ation 0a6 be extin uis#ed b6 anot#er &#i"# substitutes t#e sa0e+ it is i0perati3e t#at ). It be so de"lared in uneCui3o"al ter0s <express> '. Old and t#e ne& obli ations be on e3er6 point in"o0patible &it# ea"# ot#er <i0plied> No3ation is not presu0ed Express no3ation4 expressl6 dis"lose t#at t#eir ob5e"t in 0a@in t#e ne& "ontra"t is to extin uis# t#e old "ontra"t I0plied no3ation4 no spe"ifi" for0 is reCuired+ all t#at is needed is in"o0patibilit6 bet&een ori inal and subseCuent "ontra"ts Test of in"o0patibilit64 If t#e t&o "ontra"ts "an stand to et#er and ea"# one #a3in independent existen"e T#e "#an e 0ust refer to t#e ob5e"t+ t#e "ause or t#e prin"ipal "onditions of t#e obli ations. A""idental "#an es do not produ"e no3ation. "e7+isites of Novation ). Pre3ious 3alid obli ation
Pa e 8= of 113
'. T#e a ree0ent of all parties to t#e ne& "ontra"t ?. Extin uis#0ent of t#e old "ontra"t D. 7alidit6 of t#e ne& one 1. Animus nov!n#i or intent to no3ate <espe"iall6 for im'lie# nov! ion and subs i u ion o" #eb ors> #ffe'ts of Novation ). In eneral extin uis#0ent of t#e ori inal obli ation and "reation of a ne& one '. 8#en a""essor6 obli ation 0a6 subsist onl6 insofar as t#e6 0a6 benefit t#ird person &#o did not i3e t#e "onsent to t#e no3ation 8#6O Lort a e+ pled e+ uarant6 &as i3en to an6 for a parti"ular obli ation or for t#e insol3en"6 of a parti"ular debtorG an6 "#an e in eit#er of t#is (estroys the %asis of the 'onsent of t#e 0ort a or+ pled or+ suret6 or uarant6 #ffe't of the tat+s of the Original or the New O%ligation
). N+llity of t#e ori inal obli ation ne& obli ation is 7OID One of t#e reCuisites of no3ation is a 'revious v!li# oblig! ion
Also applies to 3oidable t#at are alread6 annulled=extin uis#ed ,oi(a%ility of t#e ori inal obli ation ne& obli ation is 7ALID if r! i"ie# be"ore nov! ion ne& obli ation is 7ALID e3en if no r! i"ie#+ but 3oidable ! he ins !nce o" he #eb or Consent of debtor "onstitutes i0plied &ai3er of t#e a"tion for nullit6 Defe"t is not "o0pletel6 "ured in e6pro)ision &#erein debtor #as not inter3ened or "onsented
Art )'/- T#e no3ation is 3oid if t#e ori inal obli ation &as 3oid+ ex"ept &#en annul0ent 0a6 be "lai0ed onl6 b6 t#e debtor+ or &#en ratifi"ation 3alidates a"ts &#i"# are 3oidable.
'. N+llity of t#e ne& obli ation

an6 e3ent
ori inal
UB I T + UN*ESS intends extin uis#0ent of for0er in
,oi(a%ility of t#e ne& obli ation ne& obli ation is 7ALID B%T if ne& obli ation is annulled and set aside+ ori inal UB I T
Art )'/H If t#e ne& obli ation is 3oid+ t#e ori inal one s#all subsist+ unless t#e parties intended t#at t#e for0er one s#all be extin uis#ed in an6 e3ent.
?. Suspensi3e or resolutor6 'on(ition of ori inal obli ation
Ne& is p+re If intention is 0erel6 to suppress t#e "ondition+ no novation If intention is extin uis# t#e ori inal obli ation itself b6 t#e "reation of a ne& obli ation+ t#e novation does not arise ex"ept fro0 fulfill0ent of t#e "ondition fro0 ori inal obli ation. 8#ere t#e ori inal obli ation is "onditional+ no3ation itself 0ust be #eld to be "onditional also and its effi"a"6 depends upon &#et#er t#e "ondition &#i"# affe"ts t#e for0er is "o0plied &it# or not Suspensi3e "ondition of t#e ori inal not perfor0ed+ obli ation does not "o0e into existen"e+ "ause for t#e ne& obli ation is &antin Resolutor6 "ondition+ sa0e "ate or6 as 3oid obli ation or one &#i"# #as been extin uis#ed
Ori inal obli ation is p+re Ne& obli ation is 'on(itional If t#e intention is 0erel6 to atta"# t#e "ondition to t#e ori inal obli ation+ t#ere is no novation. If t#e ne& "onditional obli ation is intended to substitute t#e ori inal and pure obli ation+ novation 9an( 'onse7+ent e6ting+ish)ent of the original: is s+%Be't to the 'on(ition$
Pa e 8A of 113
Pendin t#e #appenin of t#e "ondition+ t#e old obli ation is enfor"eable
Art )'// If t#e ori inal obli ation &as sub5e"t to a suspensi3e or resolutor6 "ondition+ t#e ne& obli ation s#all be under t#e sa0e "ondition+ unless it is ot#er&ise stipulated.
OBK#CTI,# NO,ATION : "#an e in t#e ob5e"t of prestations Leanin of >PRIN&IPA* &ONDITIONS? . prin"ipal "onditions or ter0s <e. . 0a@in t#e debt absolute instead of "onditional and 3i"e.3ersa> Sir Labita le"ture notes : D!cion en '!go is an ob5e"ti3e no3ation : In"rease in a0ount and 6ou "an pro3e t#at t#e intention to no3ate+ t#en it &ill be an i0plied no3ation+ but usuall6+ it9s not a no3ation if 6ou "#an e t#e a0ount. : Extension of ti0e does not i0pl6 no3ation. But if t#e ti0e situation is re3ersed <s#ortenin of t#e period>+ t#at is a no3ation. E. . /nch!us i v /ulo : Con3ertion of an obli ation to so0e ot#er obli ation e. . obli ation for "ontra"t of deposit for one of loan+ or a "ontra"t of deposit to one of "o00odatu0. UBK#CTI,# NO,ATION In all @inds of sub5e"ti3e no3ation+ t#e "onsent of t#e "reditor is reCuired. 1$ By 'hange of (e%tor CONSENT ON TME TMIRD PART, AL8A,S REI%IRED. 8#6O Be"ause #e assu0es t#e obli ation CONSENT ON TME CREDITOR IS LI!E8ISE INDISPENSABLE. 8#6O Substitution of one debtor for anot#er 0a6 dela6 or pre3ent t#e fulfill0ent of t#e obli ation b6 reason of t#e inabilit6 or insol3en"6 of t#e ne& debtor Consent 0a6 be i0plied or express as lon as it is i3en. Mo&e3er+ it "annot be presu0ed fro0 #is a""eptan"e of pa60ents b6 a ?rd part6 for t#e benefit of t#e debtor &it#out furt#er a"tsG no no3ation be"ause no "onsent to t#e transfer of t#e debt itself It is not enou # to extend t#e 5uridi"al relation to a ?rd person+ it is ne"essar6 t#at t#e old debtor be released fro0 t#e obli ation and t#e ?rd person or ne& debtor ta@es #is pla"e. 8it#out t#e release+ t#ere is no no3ation+ t#e person &#o assu0ed t#e obli ation of t#e debtor 0erel6 be"o0es a "o.debtor or a suret6 No a ree0ent to solidarit6+ t#e first and t#e ne& debtor are "onsidered obli ated 5ointl6. a- '5+4)($S$)N : La6 be done at t#e instan"e of t#e "reditor or t#e t#ird part6 #i0self "e7+isites of #6pro)ision ). Consent of t&o parties <ne& debtor and "reditor> '. !no&led e or "onsent of t#e debtor is not reCuired Art )'/? No3ation &#i"# "onsists in substituting a new debtor in t#e pla"e of t#e ori inal one+ 0a6 be 0ade e3en wi hou he 1nowle#ge or !g!ins he will of t#e ori inal debtor+ but not witho+t the 'onsent of the 're(itor. Pa60ent b6 t#e ne& debtor i3es #i0 t#e ri #ts 0entioned in Art )'?2 and Art )'?H.
Art )'?2 Par ' 8#oe3er pa6s for anot#er may demand from the debtor what he has paid+ ex"ept t#at if #e paid &it#out t#e @no&led e or a ainst t#e &ill of t#e debtor+ #e "an re"o3er onl6 insofar as t#e pa60ent #as been benefi"ial to t#e debtor. Art )'?H 8#oe3er pa6s on be#alf of t#e debtor wi hou he 1nowle#ge or !g!ins he will of t#e latter+ 'annot 'o)pel the 're(itor to s+%rogate hi) in his rights+ su"# as t#ose arisin fro0 a 0ort a e+ uarant6+ or penalt6.
#ffe'ts of #6pro)ision ). T#e debtor is released fro0 obli ation '. Creditor enerall6 "annot re"ourse fro0 t#e old debtor if t#e ne& debtor is insol3ent ?. If substitution is &it#out #is @no&led e or "onsent
Pa e ;? of 113
a. Old debtor is not liable for t#e insol3en"6 or non.fulfill0ent of t#e ne& debtor <Art
)'/D>
b. T#e ne& debtor "an onl6 "o0pel old debtor to rei0burse inas0u"# as t#e
pa60ent #as been benefi"ial to #i0 No subro ation ta@es pla"e <Art )'?H> D. If substitution is &it# @no&led e and "onsent a. Ne& debtor is entitled to full rei0burse0ent of t#e a0ount paid and subro ation Art )'/D If t#e substitution is wi hou he 1nowle#ge or !g!ins he will of t#e debtor+ t#e new (e%torJs insolven'y or non/f+lfill)ent of t#e obli ation s#all NOT i3e rise to an6 liabilit6 on t#e part of t#e debtor.
b. D'.'6A*$)N Debtor offers and t#e "reditor a""epts a t#ird person &#o "onsents to t#e substitution
so t#at t#e consent of the three is ne"essar6 Deleg!n e <old debtor>+ #eleg! !rio <"reditor> and #eleg!#o <t#ird person ne& debtor>
"e7+isites of !elega'ion <3s. Art 12A3> ). Initiati3e for substitution 0ust e0anate fro0 t#e old debtor '. Consent of t#e ne& debtor ?. A""eptan"e b6 t#e "reditor #ffe'ts of !elega'ion ). Ori inal debtor is released fro0 t#e obli ation '. T#e ne& debtor is subro ated in t#e ri #ts of t#e "reditor. Me 0a6 de0and fro0 t#e old debtor t#e entire a0ount of &#at #e #as paid for t#e obli ation. <Art )?(' Par '> ?. GENERAL R%LE4 Old debtor is not liable for t#e insol3en"6 or non.fulfill0ent of t#e ne& debtor <Art )'/1> EJCEPTION4 i. Me is a&are of t#e insol3en"6 at t#e ti0e #e dele ated #is debt <Art )'/1> ii.At t#e ti0e of t#e dele ation+ t#e ne& debtor9s insol3en"6 is alread6 existin and of publi" @no&led e <Art )'/1>
Art )'/1 T#e insolven'y of the new (e%tor who h!s been 'ro'ose# b( he origin!l #eb or and !cce' e# b( he cre#i or s#all N)% 4'3$3' t#e a"tion of t#e latter a ainst t#e ori inal obli or+ E3&EPT &#en said insol3en"6 &as alrea(y e6isting an( of p+%li' Dnowle(ge OR Dnown to the (e%tor when he (elegate( his (e%t.
2$ By 'hange of 're(itor* s+%rogation of a thir( person in the rights of the 're(itor Art )?(( Subro ation of a t#ird person in t#e ri #ts of a "reditor is eit#er le al or "on3entional. T#e for0er is not presu0ed+ ex"ept in "ases expressl6 0entioned in t#is CodeG t#e latter 0ust be "learl6 establis#ed in order t#at it 0a6 ta@e effe"t. T#e transfer of all t#e ri #ts of t#e "reditor to a t#ird person &#o substitutes #i0 in all #is ri #ts. a- *)N3'N%$)NA. S2"4)6A%$)N : Ta@es pla"e b6 a ree0ent of t#e parties "e7+isites of Conventional +%rogation <Art )?()> ). Consent of t#e old "reditor be"ause #is ri #t is extin uis#ed '. Consent of t#e debtor old is extin uis#ed and #e be"o0es liable to a ne& obli ation ?. Consent of t#e t#ird person ne& "reditor be"o0es a part6 to t#e ne& relation !isting+ishe( fro) Assign)ent of Cre(its
CON,#NTIONAL UB"OGATION Debtor9s "onsent is ne"essar6 Extin uis#es t#e old obli ation and i3es rise to a ne& one T#e nullit6 of an old obli ation 0a6 be "ured b6 A IGN2#NT O& C"#!IT Debtor9s "onsent not reCuired Refers to t#e sa0e ri #t &#i"# passes fro0 one person to anot#er Nullit6 of an obli ation is not re0edied b6 t#e
Pa e ;1 of 113
subro ation su"# t#at t#e ne& obli ation &ill be perfe"tl6 3alid
assi n0ent of t#e "reditor9s ri #t to anot#er
#ffe'ts of Conventional
+%rogation
). Art )?(? Subro ation transfers to the person subrogated t#e "redit &it# all the rights
t#ereto appertainin + eit#er !g!ins he cre#i or or !g!ins hir# 'ersons+ be t#e6 uarantors or possessors of 0ort a es+ sub5e"t to stipulation in a "on3entional subro ation. If suspensi3e "ondition is atta"#ed+ t#at "ondition 0ust be fulfilled first in order t#e ne& "reditor 0a6 exer"ise #is ri #ts.
'. Art )?(D A "reditor+ to &#o0 partial payment #as been 0ade+ 0a6 exer"ise #is right for the
remainder and #e s#all be preferred to the person who has been subrogated in #is pla"e in 3irtue of t#e partial pa60ent of t#e sa0e "redit. b- .'6A. S2"4)6A%$)N : Ta@es pla"e &it#out a ree0ent but b6 operation of la& be"ause of "ertain a"ts : GENERAL R%LE4 Not presu0ed+ EJCEPTION4 Art )?(' : T#e t#ird person is "alled >leg!l subrogee? "e7+isites of Legal +%rogation
-hen is Legal +%rogation pres+)e( Art )?(' It is presu0ed t#at t#ere is le al subro ation4 ). 8#en a "reditor pa6s anot#er "reditor &#o is preferre(+ e3en &it#out t#e debtor9s @no&led e Refers to #ierar"#6 of "redits &#i"# &ill be tau #t next se0 #e#e Debtor "an still use an6 defenses #e 0a6 #a3e a ainst t#e ori inal "reditor su"# as "o0pensation '. 8#en a ?rd person+ no in eres e# in he oblig! ion+ pa6s &it# t#e e6pressCta'it approval of t#e debtor ?. 8#en+ e3en &it#out t#e @no&led e of t#e debtor+ a person intereste( in the f+lfill)ent of the o%ligation pa6s+ &it#out pre5udi"e to t#e effe"ts of con"usion as to t#e latter9s s#are Solidar6 "o.debtor 0a6 rei0burse to t#e extent of t#e debtor9s s#are Guarantors+ 0ort a ors and sureties #ffe'ts of Legal +%rogation
). Art )?(? Subro ation transfers to the person subrogated t#e "redit &it# all the rights
t#ereto appertainin + eit#er !g!ins he cre#i or or !g!ins hir# 'ersons+ be t#e6 uarantors or possessors of 0ort a es+ sub5e"t to stipulation in a "on3entional subro ation. If suspensi3e "ondition is atta"#ed+ t#at "ondition 0ust be fulfilled first in order t#e ne& "reditor 0a6 exer"ise #is ri #ts.
'. Art )?(D A "reditor+ to &#o0 partial payment #as been 0ade+ 0a6 exer"ise #is right for the
remainder and #e s#all be preferred to the person who has been subrogated in #is pla"e in 3irtue of t#e partial pa60ent of t#e sa0e "redit.
Pa e ;2 of 113
Title II$ CONT"ACT

Chapter I$ General Provisions
A$ !#&INITION Art )?(1 A 'ontra't is a 0eetin of 0inds bet&een t&o persons &#ereb6 one binds #i0self+ &it# respe"t to t#e ot#er+ to i3e so0et#in or to render so0e ser3i"e. : San"#e; Ro0an4 Aa 5uridi"al "on3ention 0anifested in le al for0+ b6 3irtue of &#i"# one or 0ore persons bind t#e0sel3es in fa3or of anot#er or ot#ers+ or re"ipro"all6+ to t#e fulfill0ent of a prestation to i3e+ to do or not to do.B : Li0ited to t#at &#i"# produ"es '! rimoni!l li!bili ies : Bindin effe"t of "ontra"t based on t#e follo&in prin"iples Obli ations arisin fro0 t#e "ontra"t #a3e t#e for"e of la& bet&een t#e "ontra"tin parties T#ere 0ust be 0utualit6 bet&een t#e parties based on t#eir essential eCualit6+ to &#i"# is repu nant to #a3e one part6 bound b6 t#e "ontra"t lea3in t#e ot#er free t#erefro0
B. #L#2#NT O& A CONT"ACT ). 'ssential elements <C#apter II+ in"r!> : &it#out &#i"# t#ere "an be no "ontra"t
a. Consent b. Ob5e"t ". Cause '. Natural elements : exist as part of t#e "ontra"t e3en if t#e parties do not pro3ide for t#e0+ be"ause t#e la&+ as suppletor6 to t#e "ontra"t+ "reates t#e0. E. . &arrant6 a ainst #idden defe"ts or e3i"tion in t#e "ontra"t of pur"#ase and sale ?. Accidental elements : a reed upon b6 t#e parties and &#i"# "annot exist &it#out bein stipulated e. . 0ort a e+ uarant6+ bond
C. C3A"ACT#"I TIC O& A CONT"ACT ). )bligatory force : "onstitutes t#e la& as bet&een t#e parties
Art )?(- T#e "ontra"ts 0ust bind both contracting partiesG its 3alidit6 or "o0plian"e "annot be left to t#e &ill of one of t#e0.
'. (utuality : 3alidit6 and perfor0an"e "annot be left to t#e &ill of onl6 one of t#e parties Purpose is to render 3oid a "ontra"t "ontainin a "ondition &#i"# 0a@es
fulfill0ent dependent ex"lusi3el6 upon t#e un"ontrolled &ill of t#e one of t#e "ontra"tin parties. Art )?(- T#e "ontra"ts 0ust bind bot# "ontra"tin partiesG its validity or compliance 'annot be le" o he will o" one o" hem. Art )?(/ T#e deter0ination of t#e perfor0an"e m!( be le" o ! hir# 'erson+ &#ose de"ision s#all no be bin#ing until it #as been made known to both contracting parties. Art )?)( T#e deter0ination s#all not be obli ator6 if it is evidently ine:uitable. In su"# "ase+ t#e cour s sh!ll #eci#e &#at is eCuitable under t#e "ir"u0stan"es. Art )DH? T#e fixin of t#e pri"e can never be left to the discretion of one of the contracting parties. Mo&e3er+ if t#e pri"e fixed b6 one of t#e parties is a""epted b6 t#e ot#er+ t#e sale is perfe"ted. &ONTRA&T OF AD7ESION4 A "ontra"t in &#i"# one part6 #as alread6 prepared a for0 of a "ontra"t "ontainin stipulations desired b6 #i0 and #e si0pl6 as@s t#e ot#er part6 to a ree to t#e0 if #e &ants to enter into t#e "ontra"t.
Pa e ;3 of 113
?. 4elativity : bindin onl6 upon t#e parties and t#eir su""essors a. Contra"ts ta@e effe"t onl6 bet&een t#e '!r ies+ t#eir !ssignmen s and heirs
Art )?)) Par ) Contra"ts ta@e effe"t onl6 bet&een t#e parties+ assi ns and #eirs EJCEPT in "ase &#ere t#e ri #ts and obli ations arisin fro0 t#e "ontra"t are no trans0issible b6 t#eir nature or b6 stipulation or b6 pro3ision of la&. T#e #eir is not liable be6ond t#e 3alue of propert6 #e re"ei3ed fro0 t#e de"edent. INTRANS%ISSI+*E &ONTRA&TS= a. Purel6 personal e. . partners#ip and a en"6 b. 7er6 nature of obli ation t#at reCuires spe"ial personal Cualifi"ations of t#e obli or ". Pa60ent of 0one6 debts not trans0itted to t#e #eirs but to t#e estate
b. No one 0a6 "ontra"t in t#e n!me o" !no her

Art )?)H No one 0a6 "ontra"t in t#e na0e of anot#er &it#out bein aut#ori;ed b6 t#e latter or unless #e #as b6 la& a ri #t to represent #i0. %nenfor"eable unless ratified expressl6 or i0pliedl6 <Unen"orce!ble &on r!c s+ Art )?(' Par )> Two more gener!l 'rinci'les o" con r!c s h! were no inclu#e# in (our boo19s(ll!bus 0- *onsensuality 1. #reedom : enterin into "ontra"ts is a uaranteed ri #t of t#e "iti;ens. T#e6 are free to do so as lon as it9s not "ontrar6 to la&+ ood 0orals+ "usto0s+ publi" order and publi" poli"6.
D. PA"TI# IN A CONT"ACT ). Auto/contracts Ne"essar6 for t#e existen"e of a "ontra"t t#at t&o distin"t persons enter into it No eneral pro#ibitions+ onl6 spe"ial pro#ibitions su"# as Art )D/) <Persons &#o
"annot a"Cuire b6 pur"#ase+ e3en at a publi" or 5udi"ial au"tion> Auto."ontra"ts are enerall6 7ALID Existen"e of a "ontra"t is not deter0ined b6 t#e nu0ber of persons &#o inter3ene in it+ but b6 t#e nu0ber of parties. Not b6 t#e nu0ber of indi3idual &ills but b6 t#e nu0ber of de"larations of &ill. As lon as t#ere are t&o distin"t patri0onies+ e3en if t#e6 are represented b6 t#e sa0e person.
'. #reedom to contract

Art )?(2 T#e "ontra"tin parties 0a6 establis# su"# stipulations+ "lauses+ ter0s and "onditions as t#e6 0a6 dee0 "on3enient+ pro3ided t#e6 are not "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order and publi" poli"6. pe'ial (is7+alifi'ations4 Art -H+ NC in er vivos donation bet&een spouses Art )D/( #usband and &ife enerall6 "annot sell propert6 to ea"# ot#er+ sub5e"t to ex"eptions Art )D/) spe"ial pro#ibition as to &#o "annot a"Cuire b6 pur"#ase Art )H-' persons pro#ibited fro0 i3in ea"# ot#er an6 donation or ad3anta e+ "annot enter into uni3ersal partners#ip
?. <hat they may not stipulate

Art )?(2 AQ "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order and publi" poli"6B A "ontra"t is to be 5ud ed b6 its "#ara"ter+ "ourts &ill loo@ into t#e substan"e and not to t#e 0ere for0 of t#e transa"tion
Pa e ;1 of 113
a$ Contrary to law La&s a "ontra"t 0ust not inter3ene4 ). Expressl6 de"lare t#eir obli ator6 "#ara"ter '. Pro#ibiti3e ?. Express funda0ental prin"iples of 5usti"e &#i"# "annot be o3erloo@ed b6 t#e "ontra"tin parties D. I0pose essential reCuisites &it#out &#i"# t#e "ontra"t "annot exist
i.
P!c um commissorium : auto0ati" fore"losure Art '(-- T#e "reditor "annot appropriate t#e t#in s i3en b6 &a6 of pled e or 0ort a e+ or dispose of t#e0. An6 stipulation to t#e "ontrar6 is null and 3oid. Art )H// A stipulation in"ludin one or 0ore parties fro0 an6 s#are in t#e profits or losses is 3oid
ii. P!c um leonin! : one part6 bears t#e lion9s s#are of t#e ris@
iii. P!c um #e non !lien!#o : not to alienate

Art ')?( A stipulation forbiddin t#e o&ner fro0 alienatin t#e i00o3able 0ort a ed s#all be 3oid %$ Contrary to )orals Lan9s innate sense or notion of &#at is ri #t and &ron . Lore or less uni3ersal. '$ Contrary to goo( '+sto)s Custo0 pertains to "ertain pre"epts t#at "annot be uni3ersall6 re"o ni;ed as 0oral+ so0eti0es t#e6 onl6 appl6 to "ertain "o00unities or lo"alities E. . *igue0 v &A ($ Contrary to p+%li' or(er Consideration of t#e publi" ood+ &ill or &eal <&elfare>+ pea"e and safet6 of t#e publi" and #ealt# of t#e "o00unit6 e$ Contrary to p+%li' poli'y Court 0ust find t#at t#e "ontra"t "ontra3enes so0e establis#ed interest of t#e so"iet6 E. . Ferr!00ini v ,sel . stipulation not to en a e in "o0petiti3e enterprise after lea3in t#e e0plo60ent. T#ose stipulation 0ust be li0ited to ime8 'l!ce !n# e2 en
E. CLA
I&ICATION O& CONT"ACT
). A""ordin to s+%Be't )atter

a. T#in s b. Ser3i"es
'. A""ordin to na)e a. N)($NA%' : #a3e t#eir o&n indi3idualit6 <na0es> and are re ulated b6 spe"ial pro3isions of
la&+
b. $NN)($NA%' : &it#out parti"ular na0es

Art )?(H Inno0inate "ontra"t s#all be re ulated b6 t#e stipulations of t#e parties+ b6 t#e pro3isions of Titles I and II of t#is Boo@+ b6 t#e rules o3ernin t#e most analogous nominate "ontra"ts and b6 customs of the place.
i. Do u #es ii.Do u "!ci!s
I i3e+ 6ou i3e I i3e+ 6ou do
Pa e ;5 of 113
iii.F!cio u "!ci!s i3.F!cio u #es ?. A""ordin to perfe'tion
I do+ 6ou do I do+ 6ou i3e
a. B6 ('4' *)NS'N% <"onsensual> : e. . pur"#ase and sale

Art )?)1 Contra"ts are perfected by mere consent+ and fro0 t#at 0o0ent+ t#e parties are bound not onl6 to fulfill0ent of &#at #as been expressl6 stipulated but also to all t#e "onseCuen"es &#i"#+ a""ordin to t#eir nature+ 0a6 be in @eepin &it# ood fait#+ usa e and la&. b. B6 D'.$3'4/ )# %&' )"8'*% <real> : commo#! um Art )?)2 Real "ontra"ts su"# as deposit+ pled e and commo#! um+ are not perfe"ted until t#e deli3er6 of t#e ob5e"t of obli ation.
D. A""ordin to its relation to other 'ontra'ts@ (egree of (epen(en'e a. Preparator6 : e. . a en"6 b. Prin"ipal : e. . lease or sale ". A""essor6 : e. . pled e+ 0ort a e or suret6s#ip 1. A""ordin to for) a. Co00on or infor0al : e. . loan b. Spe"ial or for0al : e. . donations and 0ort a es of i00o3able propert6 2. A""ordin to p+rpose a. Transfer of o&ners#ip : e. . sale or barter b. Con3e6an"e of use : e. . "o00odatu0 ". Rendition of ser3i"es : e. . a en"6 H. A""ordin to t#e nat+re of the vin'+l+) pro(+'e(@ nat+re of o%ligation pro(+'e( a. %nilateral . e. . "o00odatu0 or ratuitous deposit b. Bilateral or sinala 0ati"o : e. . pur"#ase and sale
". Re"ipro"al
-. A""ordin to 'a+se
a. Onerous b. Gratuitous or lu"rati3e
/. A""ordin to risD
a. Co00utati3e b. Aleator6
N.
TAG# O& CONT"ACT a. +reparation : period of ne otiation and bar ainin + endin at t#e 0o0ent of a ree0ent of t#e parties b. +erfection : 0o0ent &#en t#e parties "o0e to a ree on t#e ter0s of t#e "ontra"t ". *onsummation or deat# : fulfill0ent or t#e perfor0an"e of t#e ter0s a reed upon in t#e "ontra"t ApolicitationD
CONT"ACT Establis#es and deter0ines t#e obli ation arisin t#erefro0 P#"&#CT#! P"O2I # Tends onl6 to assure and pa3e t#e &a6 for t#e "elebration of a "ontra"t in t#e futureG until t#e "ontra"t is a"tuall6 0ade+ t#e ri #ts and obli ations are not 6et I2P#"&#CT P"O2I # Lere una""epted offer
G. A !I TINGUI 3#! &"O2 A P#"&#CT#! P"O2I # AN! AN I2P#"&#CT P"O2I #
Pa e ;8 of 113
deter0ined
3$ -IT3 "# P#CT TO T3I"! P#" ON
). Stipulations in favor of third persons <stipulation 'our !u rui>

pro3ided t#e a""eptan"e is 0ade prior to re3o"ation
0a6 de0and its fulfill0ent
Art )?)) Par ' If a "ontra"t s#ould "ontain so0e stipulation in fa3or of a t#ird person+ #e 0a6 demand its fulfillment 'rovi#e# #e 'o))+ni'ate( his a''eptan'e to the o%ligor be"ore i s revoc! ion@ A 0ere in"idental interest or benefit of a person is not suffi"ient. T#e "ontra"tin parties 0ust #a3e clearly and deliberately conferred favorupon t#ird person. Test of %enefi'ial stip+lation / A 0ere in"idental interest of a ?rd person is not &it#in t#e do"trineG it 0ust be t#e purpose and intent of t#e stipulatin parties to benefit t#e t#ird person Re4uisi es o" s i'ul!cion 'our !u rui Stipulation in fa3or of t#ird person is a part@ not the whole of t#e "ontra"t Na3orable stipulation not 'on(itione( or 'o)pensate( b6 an6 @ind of obli ation &#ate3er Neit#er of t#e "ontra"tin parties bear t#e legal representation or a+thoriMation of t#e t#ird part6 Benefit to t#e ?rd person &as "learl6 and deliberatel6 "onferred to b6 parties T#ird person "o00uni"ated #is a""eptan"e to t#e obli or before t#e latter re3o@es t#e sa0e
a. b. ". d.
e.
'. +ossession of the object of contract by third persons onl6 for real ri #ts
Art )?)' In "ontra"ts "reatin real rights+ t#ird persons &#o "o0e into possession of t#e ob5e"t of t#e "ontra"t are %o+n( t#ereb6+ sub5e"t to #e pro3isions of t#e Lort a e La& and t#e Land Re istration la&s.
?. *reditors of the contracting parties

Art )?)? Creditors are prote"ted in "ases of "ontra"ts intended to defraud t#e0. Art )?-H . in res"issible "ontra"ts+ presu0ption of fraudulent alienation &#en debtor does lea3e suffi"ient propert6 to "o3er #is obli ations Creditor 0a6 as@ for res"ission : Art ))HH <a""ion subro atoria> and Art )?-) <a""ion pauliana>
D. $nterference by third persons

Art )?)D An6 t#ird person &#o induces another to violate #is "ontra"t s#all be liable for damages to t#e ot#er "ontra"tin part6. Liabilit6 for da0a es4 t#ird person9s liabilit6 "annot be 0ore t#an t#e part6 #e indu"ed 5D!(w!l v Recole os> "e7+isites of Interferen'e -ith Contra't+al "elation %y Thir( Person a. Existen"e of a 3alid "ontra"t b. !no&led e b6 a t#ird person of t#e existen"e of a "ontra"t ". Interferen"e b6 t#e t#ird person in t#e "ontra"tual relation witho+t legal B+stifi'ation
Chapter II$ #ssential "e7+isites of Contra'ts CON #NT

Art )?)/ Consent is 0anifested b6 t#e (''%$N6 of t#e offer and t#e a''eptan'e upon he hing !n# he c!use &#i"# are to "onstitute t#e "ontra"t. T#e offer 0ust be "ertain and t#e a""eptan"e absolute. A 7+alifie( a''eptan'e "onstitutes a "ounter.offer.
Pa e ;; of 113
A""eptan"e 0ade b6 letter or tele ra0 (oes not %in( the offerer ex"ept from the time it came to his knowledge. T#e "ontra"t+ in su"# a "ase+ is P"# U2#! to #a3e been entered into in t#e place where the offer was made. "#.UI IT# O& ). '. ?. CON #NT Pluralit6 of sub5e"ts Capa"it6 Intelli ent and free &ill D. Express or ta"it 0anifestation of &ill 1. Confor0it6 of t#e internal &ill and its 0anifestation
). Lust be LANINESTED b6 t#e 'on'+rren'e of the offer an( a''eptan'e &it# respe"t to o%Be't
and 'a+se O&&#" : unilateral proposition &#i"# one part6 0a@es to t#e ot#er for t#e "elebration of t#e "ontra"t. It 0ust be4
a. Lust be 'ertain <Art )?)/> DEFINITE : so t#at upon a""eptan"e an a ree0ent "an be rea"#ed on t#e &#ole "ontra"tG not
definite if ob5e"t is not deter0inate &O%P*ETE : indi"atin &it# suffi"ient "learness t#e @ind of "ontra"t intended and definitel6 statin t#e essential "onditions of t#e proposed "ontra"t+ as &ell as t#e non.essential ones desired b6 t#e offeror INTENTIONA* : s#ould be serious and not 0ade for fun or in 5est
b. 8#at 0a6 be fi6e( %y the offeror ti0e+ pla"e and 0anner of a""eptan"e
Art )?') T#e person 0a@in t#e offer 0a6 fix t#e time, place and manner of a""eptan"e+ all of &#i"# 0ust be "o0plied &it#. A""eptan"e not 0ade in t#e 0anner pro3ided b6 t#e offeror is ineffe"ti3e.
". 8#en 0ade t#rou # t#e agent a""epted fro0 t#e ti0e a""eptan"e "o00uni"ated to t#e
a ent Art )?'' An offer 0ade t#rou # an a ent is a""epted fro0 t#e ti0e a""eptan"e is "o00uni"ated to #i0.
d. Cir"u0stan"es &#en offer %e'o)es (efe'tive
deat#+ "i3il interdi"tion+ insanit6 or insol3en"6 Art )?'? An offer be"o0es ineffe"ti3e upon t#e death, civil interdiction, insanity or insolvency of eit#er part6 before acceptance is "on3e6ed. not definite offers Art )?'1 %nless it appears ot#er&ise+ business ad3ertise0ents of t#in s for sale are not definite offers+ but mere invitation to make an offer. Ad3ertise0ent for %i((ers Art )?'2 Ad3ertise0ents for bidders are simply invitations to make proposals+ and t#e ad3ertiser is not %o+n( to a''ept t#e #i #est of lo&est bidder+ UN*ESS t#e "ontrar6 appears. Not appli"able to 5udi"ial sale &#erein t#e #i #est bid 0ust ne"essaril6 be a""epted
e. B+siness a(vertise)ents of t#in s for sale
f.
ACC#PTANC# > an una""epted offer does not i3e rise to "onsent Contra"t is perfe"t &#en t#e offeror or "ounter.offeror learns about t#e a""eptan"eV
a. Lust be a%sol+te <Art )?)/> b. 0in(s of a""eptan"e

E3PRESS <Art )?'(>
Pa e ;= of 113
I%P*IED <Art )?'(> arise fro0 a"ts or fa"ts &#i"# re3eal t#e intent to a""ept su"# as t#e "onsu0ption of t#in s sent to t#e offeree+ or t#e fa"t of i00ediatel6 "arr6in out t#e "ontra"t offered QUA*IFIED <Art )?)/> not an a""eptan"e but "onstitutes a "ounter.offer
". If 0ade b6 letter or telegra)

Art )?)/ Par ' A""eptan"e 0ade b6 letter or tele ra0 (oes not %in( t#e offerer ex"ept from the time it came to his knowledge. &o+r theories on when the 'ontra't is perfe'te( ). Lanifestation t#eor6 : "ounterofferee 0anifest #is a""eptan"e '. Expedition T#eor6 : sendin of t#e letter+ 0ailin if b6 letter ?. Re"eption T#eor6 : re"eipt of t#e 0essa e of a""eptan"e D. Co nition T#eor6 : @no&led e of offeror of t#e a""eptan"e Art )?)/ Par ' >J e2ce' "rom he ime o" his 1nowle#ge?
d. Perio( of a''eptan'e
Art )?'D A8#en t#e offerer #as allo&ed t#e offeree a 'ertain perio( to a''eptQB Offeree 0a6 a""ept an6 ti0e until su"# period expires. A""eptan"e be6ond t#e ti0e fixed is not le all6 an a""eptan"e but "onstitutes a ne& offer. A""eptan"e not 0ade in t#e 0anner pro3ided b6 t#e offeror is ineffe"ti3e. If offeror #as not fixed t#e period+ t#e offeree 0ust a""ept i00ediatel6 &it#in a re!son!ble !ci 'erio#. Offer i0plies an obli ation on t#e part of t#e offeror to 0aintain it for su"# a len t# of ti0e as to per0it t#e offeree to de"ide &#et#er to a""ept it or not. #6ting+ish)ent or ann+l)ent of offer 8it#dra&al b6 t#e offeror Lapse of t#e ti0e for option period Le all6 in"apa"itated to a"t Offeree 0a@es "ounter.offer Contra"t be"o0es ille al
e. Contra't of option
Art )?'D AQ t#e offer may be withdrawn at any time before acceptance b6 "o00uni"atin su"# &it#dra&al+ E3&EPT &#en t#e option is founded upon a consideration+ as so0et#in paid or pro0ised.B Preparator6 "ontra"t in &#i"# one part6 rants to t#e ot#er+ for a fixed period and under spe"ified "onditions+ t#e po&er to de"ide &#et#er or not to enter into a prin"ipal "ontra"t Lust be supported b6 an independent "onsideration and t#e rant 0ust be ex"lusi3e If t#e option is not supported b6 an independent "onsideration+ offeror "an &it#dra& t#e pri3ile e at an6 ti0e b6 "o00uni"atin t#e &it#dra&al to t#e ot#er part6+ e3en if t#e AoptionB #ad alread6 been a""epted.
'. Ne"essar6 L#GAL CAPACITI# of t#e parties

-ho 'annot give 'onsent Art )?'H T#e follo&in "annot i3e "onsent to a "ontra"t4 ). %ne0an"ipated 0inors '. Insane or de0ented persons ?. Deaf.0utes &#o do not @no& #o& to &rite -hen offer an(Cor a''eptan'e is )a(e Durin a lu"id inter3al 7ALID In a state of drun@enness 7OIDABLE utter &ant of understandin Durin a #6pnoti" spell 7OIDABLE utter &ant of understandin
Pa e ;A of 113
?. T#e "onsent 0ust be INT#LLIG#NT@ &"##@ PONTAN#OU and "#AL

Art )??( A "ontra"t &#ere "onsent is i3en t#rou # 0ista@e+ 3iolen"e+ inti0idation+ undue influen"e+ or fraud is ,OI!ABL#. Lista@e and 3iolen"e : spontaneous and intelli en"e #ffe't of !efe'ts of -ill* Contra't is ,OI!ABL# <Art )??(>
,IC#
O& CON #NT
a. 2istaDe or #rror > a &ron or false notion about su"# 0atter+ a belief in t#e existen"e of so0e
"ir"u0stan"e+ fa"t or e3ent &#i"# in realit6 does not exist. Art )??) In order t#at 2I TA0# 0a6 in3alidate "onsent+ it s#ould refer to t#e substance of the thing &#i"# is t#e o%Be't of t#e "ontra"t+ or to t#ose 'on(itions &#i"# #a3e principally moved one or bot# parties to enter into t#e "ontra"t. 2istaDe as to the i(entity or 7+alifi'ations of one of t#e parties &ill 3itiate "onsent onl6 &#en su"# identit6 or Cualifi"ations #a3e been t#e principal cause of the contract. A si)ple )istaDe of a''o+nt s#all i3e rise to its correc ion. 0IN! O& 2I TA0#
). Lista@e of fa"t . enerall6 not a round for annul0ent of "ontra"ts Ground of 0ista@e based on error is limited to "ases in &#i"# it 0a6 reasonabl6 be said t#at
&it#out su"# error t#e "onsent &ould not #a3e been i3en Effe"t of 0ista@e is deter0ined b6 &#et#er t#e parties &ould still #a3e entered into t#e "ontra"t despite @no&led e of true fa"t Ainfluen"e upon part6B
a. As to s+%stan'e of
o%Be't
Invali(ates 'onsent if refers to t#e substan"e of t#e t#in
But if 0ista@e in lot nu0ber for instan"e+ re0ed6 is

onl6 refor0ation of t#e "ontra"t Invali(ates 'onsent
b. As to prin'ipal ".
'on(itions <essential or substantial in "#ara"ter> As to i(entity or 7+alifi'ations of one of t#e parties
Nor identit6=error as to person . generally not+ ex"ept &#en t#e Cualifi"ation is t#e prin"ipal "ause of t#e "ontra"t espe"iall6 in ratuitous "ontra"ts Nor Cualifi"ations : Invali(ates 'onsent
d. As to 7+antity+ as
distin uis#ed fro0 si0ple 0ista@e of a""ount
Sol3en"6 of t#e part6 : not a "ause of nullit6 Error of a""ount is a 0ista@e in "o0putation 0a@e proper "orre"tion Error as to Cuantit6 : 0a6 3itiate a "ontra"t if t#e pri0ar6 "onsideration is t#e Cuantit6 e. . par"el of land &as a"tuall6 onl6 )( #a and not ?( #a
%is !1es h! #o no !""ec he v!li#i ( o" he con r!c a. Error &it# respe"t to a""idental Cualities of t#e ob5e"t of t#e "ontra"t b. Error in t#e 3alue of t#in ". Error &#i"# refers not to "onditions of t#e t#in + but to a""essor6 0atters in t#e "ontra"t+ forei n to t#e deter0ination of t#e ob5e"ts
'. Error of la& : 0ista@e as to t#e existen"e of a le al pro3ision or as to its interpretation or

appli"ation
Pa e =? of 113
G#N#"AL "UL#* $gnorantia legis neminem e cusat Art ? I noran"e of t#e la& ex"uses no one fro0 "o0plian"e t#ere&it#. #EC#PTION* 2+t+al error of law Art )??D %u u!l error as to t#e le al effe"t of an a ree0ent &#en t#e re!l 'ur'ose o" he '!r ies is "rus r! e#+ may vitiate consent. Re4uisi es "or mu u!l error o" l!w a. Error 0ust be as to t#e le al effe"t of an a ree0ent in"ludes ri #ts and obli ations of t#e parties+ not as stipulated in t#e "ontra"t but as pro3ided b6 al& b. Lust be 0utual ". Real purpose of t#e parties is frustrated -hen one of the parties is +na%le to rea( and fraud is alle ed burden of proof on part6 enfor"in t#e "ontra"t Art )??' 8#en one of t#e parties is un!ble o re!#+ or if t#e con r!c is in ! l!ngu!ge no un#ers oo# b( him+ and mis !1e or "r!u# is !llege#+ t#e person enfor"in t#e "ontra"t 0ust s#o& t#at t#e ter0s t#ereof have been fully e plained to the former. Ine6'+sa%le )istaDe @ne& t#e doubt+ "ontin en"6 or ris@ Art )??? T#ere is no 0ista@e if t#e part6 alle in it knew the doubt, contingency or risk affe"tin t#e ob5e"t of t#e "ontra"t. Part6 "annot alle ed error &#i"# refers to a fa"t @no&n to #i0 or &#i"# #e s#ould #a3e @no&n b6 ordinar6 dili ent exa0ination of t#e fa"ts Courts "onsider not onl6 t#e ob5e"ti3e aspe"t of t#e "ase but also t#e sub5e"ti3e e. . intelle"tual "apa"it6 of t#e person &#o 0ade t#e 0ista@e E. . Caused b6 0anifest ne li en"e
b. ,iolen'e an( Inti)i(ation

Art )??1 T#ere is ,IOL#NC# &#en in order to &rest "onsent+ serious or irresistible force is e0plo6ed. T#ere is INTI2I!ATION &#en one of t#e "ontra"tin parties is compelled by a reasonable and well!grounded fear of an imminent and grave evil upon #is 'erson or 'ro'er (+ or upon t#e 'erson or 'ro'er ( o" his s'ouse8 #escen#!n s or !scen#!n s+ to i3e #is "onsent. To deter0ine t#e de ree of inti0idation+ t#e age@ se6 an( 'on(ition of t#e person s#all be borne in 0ind. A hre! o en"orce oneKs cl!im hrough com'e en !u hori (8 if t#e "lai0 is jus or leg!l+ does NOT 3itiate "onsent.
!U"#
4 de ree of "onstraint or dan er eit#er a"tuall6 infli"ted <violen'e> or t#reatened and i0pendin <inti)i(ation> suffi"ient to o3er"o0e t#e 0ind and &ill of a person of ordinar6 fir0ness Seriousness of t#e e3il or &ron 0easured bot# objectively <de ree of #ar0 t#at t#e e3il in itself is li@el6 to produ"e> and subjectively <deter0inin t#e effe"t of t#e t#reat upon t#e 0ind of t#e 3i"ti0 in 3ie& of #is personal "ir"u0stan"es and #is relation to t#e aut#or of t#e inti0idation> ,IOL#NC# P#6si"al for"e or "o0pulsion External and enerall6 ser3e to pre3ent an a"t fro0 bein done Re4uisi es o" .iolence ). P#6si"al for"e e0plo6ed 0ust be irresistible or of su"# a de ree t#at t#e 3i"ti0 #as no ot#er "ourse+ under t#e "ir"u0stan"es+ but to sub0it '. T#at su"# for"e is t#e deter0inin "ause in i3in t#e "onsent to t#e "ontra"t INTI2I!ATION Loral for"e or "o0pulsion
Pa e =1 of 113
).
'. ?.
D.
Internal operatin upon t#e &ill and indu"es t#e perfor0an"e of an a"t Influen"es t#e 0ind to "#oose bet&een t&o e3ils+ bet&een t#e "ontra"t and t#e i00inent in5ur6 Re4uisi es o" In imi#! ion Inti0idation 0ust be t#e deter0inin "ause of t#e "ontra"t+ or 0ust #a3e "aused t#e "onsent to be i3en T#at t#e t#reatened a"t be un5ust or unla&ful T#at t#e t#reat be real and serious+ t#ere bein an e3ident disproportion bet&een t#e e3il and t#e resistan"e &#i"# all 0en "an offer+ leadin to t#e "#oi"e of t#e "ontra"t as t#e lesser e3il T#at it produ"es a reasonable and &ell. rounded fear fro0 t#e fa"t t#at t#e person fro0 &#o0 it "o0e #as t#e ne"essar6 0eans or abilit6 to infli"t t#e t#reatened in5ur6
HPersonI not li0ited to life and p#6si"al inte rit6 but also in"ludes libert6 ad #onor+ "o3ers all in5uries &#i"# are not patri0onial in nature H"easona%le fearI fear o""asioned b6 t#e t#reat 0ust be reasonable and &ell. roundedG it 0ust be "o00ensurate &it# t#e t#reat #ffe't of ,iolen'e an( Inti)i(ation Art )??2 7iolen"e or inti0idation s#all ANN2. t#e obli ation+ alt#ou # it 0a6 #a3e been employed by a third person &#o did not ta@e part in t#e "ontra"t.
". Un(+e Infl+en'e > an6 0eans e0plo6ed upon a part6 &#i"#+ under t#e "ir"u0stan"es+ #e "ould
not &ell resist+ and &#i"# "ontrolled #is 3olition and indu"ed #i0 to i3e #is "onsent to t#e "ontra"t &#i"# ot#er&ise #e &ould not #a3e entered into. Art )??H T#ere is UN!U# IN&LU#NC# &#en a person takes improper advantage of his power o3er t#e &ill of anot#er+ depri3in t#e latter of a re!son!ble "ree#om o" choice. T#e follo&in "ir"u0stan"es s#all be "onsidered4 t#e 'onfi(ential@ fa)ily@ spirit+al an( other relations bet&een t#e parties+ or t#e fa"t t#at t#e person alle ed to #a3e been undul6 influen"ed &as s+ffering fro) )ental weaDness+ or &as ignorant or in finan'ial (istress.
In so0e 0easure destro6 t#e free a en"6 of a part6 and interfere &it# t#e exer"ise of t#at
independent dis"retion &#i"# is ne"essar6 for deter0inin t#e ad3anta es and disad3anta es of a "ontra"t. !isting+ishe( fro) inti)i(ation
UN!U# IN&LU#NC# T#ere need not be an un5ust or unla&ful a"t INTI2I!ATION %nla&ful or un5ust a"t &#i"# is t#reatened and &#i"# "auses "onsent to be i3en Loral "oer"ion
B6 analo 6+ undue influen"e b6 a t#ird person 0a6 also 3itiate "onsent <Art )??2> d. &ra+( or !olo > e3er6 @ind of de"eption &#et#er in t#e for0 of insidious 0a"#ination+
0anipulations "on"eal0ents+ 0isrepresentation+ for t#e purpose of leadin a part6 into error and t#us exe"ute a parti"ular a"t. Lust #a3e a deter0inin influen"e on t#e "onsent of t#e 3i"ti0 Co0pared &it# error
#""O" 7itiate t#e "onsent onl6 &#en it refers to t#e 0atters 0entioned in Art )??) &"AU! Lista@e indu"ed b6 fraud &ill al&a6s 3itiate "onsent &#en fraud #as a de"isi3e influen"e on su"# "onsent
Re4uisi es o" Fr!u#
Pa e =2 of 113
). Lust #a3e been e0plo6ed b6 one "ontra"tin part6 upon t#e ot#er <Art )?D' and Art
)?DD> If bot# part6+ t#e6 "annot #a3e a"tion a ainst ea"# ot#er+ fraud is "o0pensated '. Indu"ed t#e ot#er part6 to enter into a "ontra"t <Art )??-> ?. Lust #a3e been serious <Art )?DD> D. Lust #a3e resulted in da0a e or in5ur6 to t#e part6 see@in annul0ent Art )??- T#ere is &"AU! &#en+ t#rou # insidious words or machinations of one of the contracting parties+ t#e ot#er is in#uce# o en er in o ! con r!c &#i"#+ &it#out t#e0+ #e would not have agreed to. HInsi(io+s wor(s an( )a'hinationsI "onstitutin de"eitin"ludes false pro0ises+ exa eration of #opes or benefits+ abuse of "onfiden"e+ fi"titious na0es+ Cualifi"ations or aut#orit6+ all t#e t#ousand and one for0s of de"eption &#i"# 0a6 influen"e t#e "onsent of a "ontra"tin part6+ &it#out ne"essaril6 "onstitutin estafa or so0e offense under t#e penal la&s. KINDS OF FRAUD
). Dolo c!us!n e : deter0ines or is t#e essential "ause of t#e "onsentG round for annul0ent of
"ontra"t Art )??- AQ&it#out t#e0+ #e would not have agreed to.B
'. Dolo inci#en e : does not #a3e su"# a de"isi3e influen"e and b6 itself "annot "ause t#e i3in of
"onsent+ but onl6 refers to so0e parti"ular or a""ident of t#e obli ationG onl6 i3es rise to a"tion for da0a es
Art )?DD Par ' In"idental fraud onl6 obli es t#e person e0plo6in it to pay damages$
&ail+re to (is'lose fa'tsN (+ty to reveal the) NRA%D Art )??/ Nailure to dis"lose fa"ts+ &#en t#ere is a duty to reveal them+ as &#en t#e parties are bound b6 con"i#en i!l rel! ions+ "onstitutes &"AU!. GENERAL R%LE4 Silen"e or "on"eal0ent does not "onstitute a fraud EJCEPTIONS4 ). T#ere is a spe"ial dut6 to dis"lose "ertain fa"ts '. A""ordin to ood fait# and usa es of "o00er"e t#e "o00uni"ation s#ould #a3e been 0ade Us+al e6aggeration in tra(eN opport+nity to Dnow the fa'ts NOT NRA%D Art )?D( T#e usual exa erations in trade+ &#en t#e ot#er part6 #ad an opportunity to know the facts+ are NOT in t#e0sel3es fraudulent A@a Atolerated fraudB or la&ful 0isrepresentation <#olus bonus> as lon as t#e6 do not o to t#e extent of 0ali"e or bad fait# su"# as "#an in t#e appearan"e of t#e t#in b6 false de3i"es and of pre3entin all 3erifi"ation or dis"o3er6 of trut# b6 t#e ot#er part6 Ca3eat e0ptorV Do not i3e rise a"tion for da0a es be"ause of t#eir insi nifi"an"e OR be"ause t#e stupidit6 of t#e 3i"ti0 is t#e real "ause of #is loss. i0port of Aopportunit6 to @no& fa"tsB 2ere e6pression of an opinion NOT NRA%D+ unless 0ade b6 an expert and relied upon b6 t#e plaintiff
Art )?D) A 0ere expression of an opinion !O# #as relied on t#e for0erPs spe"ial @no&led e.
NOT si nif6 fraud+ unless 0ade b6 an expert and t#e ot#er part6
#ffe'ts of &ra+( ). Nullit6 of t#e "ontra"t '. Inde0nifi"ation for da0a es Art )?DD In order t#at fraud 0a6 0a@e a "ontra"t 3oidable+ it s#ould be serious and s#ould not #a3e been e0plo6ed b6 ")%& "ontra"tin parties. In'i(ental fra+( onl6 obli es t#e person e0plo6in it to pay damages.
Pa e =3 of 113
e$ 2isrepresentation
). B6 a t#ird person Art )?D' 2isrepresentation %y a thir( person does NOT 3itiate "onsent+ unless su"# 0isrepresentation #as "reated subs !n i!l mis !1e and t#e sa0e is mu u!l. GENERAL R%LE4 Nraud b6 t#ird person does not 3itiate t#e "ontra"t EJCEPTIONS4 a. If ?rd person is in "ollusion &it# one of t#e parties+ #e is "onsidered an a""o0pli"e to t#e fraud and "ontra"t be"o0es 7OIDABLE b. If ?rd person not in "onni3an"e &it# an6 of t#e parties but leads t#e0 bot# into error <0utual error>+ t#e "onsent is 3itiated+ "ontra"t is 7OIDABLE. 7IOLENCE AND INTILIDATION B, ?RD PERSON4 annuls t#e "ontra"t NRA%D B, ?RD PERSON4 does not annul unless it produ"es substantial 0ista@e on t#e part of bot# parties K%STINICATION NOR TME DINNERENCE4 Part6 #as not#in to do &it# fraud b6 a t#ird person and "annot be bla0ed for it Inti0idation "an be 0ore easil6 resisted t#an fraud
'. Lade in goo( faith not fraudulent but 0a6 "onstitute error
Art )?D? Lisrepresentation 0ade in ood fait# is not fraudulent but 0a6 "onstitute error. ?. A"ti3e=passi3e Appli"able to le al "apa"it6 espe"iall6 a e
f.
i)+lation of Contra'ts : de"laration of a fi"titious &ill+ deliberatel6 0ade b6 a ree0ent of t#e parties in order to produ"e+ for t#e purposes of de"eption t#e appearan"e of a 5uridi"al a"t &#i"# does not exist or is different fro0 t#at &#i"# &as reall6 exe"uted.
i)+late( Contra'ts
0in(s of
Art )?D1 Si0ulation of a "ontra"t 0a6 be AB OLUT# or "#LATI,#. T#e for0er ta@es pla"e &#en t#e parties do not intend to be bound at allG t#e latter+ &#en t#e parties "on"eal t#eir true a ree0ent. #ffe'ts of si)+lation of 'ontra'ts Art )?D2 An absolutel6 si0ulated or fi"titious "ontra"t is 3oid. A relati3e si0ulation+ &#en it does not pre5udi"e a t#ird person and is not intended for an6 purpose "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order or publi" poli"6 binds t#e parties to t#eir real a ree0ent.
AB OLUT# AsimuladosD Color of "ontra"t+ &it#out an6 substan"e t#ereof+ t#e parties not #a3in intention to be bound 7OID . Does not le all6 exist. Illusor6+ 0ere p#anto0+ in5urin ?rd persons+ enerall6 fraudulent "#LATI,# AdisimuladosD Parties #a3e an a ree0ent &#i"# t#e6 "on"eal under t#e uise of anot#er "ontra"t 7ALID ex"ept &#en it pre5udi"es ?rd persons or #as an illi"it purpose
). Ostensi%le a'ts : apparent or fi"titiousG

"ontra"t t#at t#e parties pretend to #a3e exe"uted
'. 3i((en a't : realG true a ree0ent bet&een

t#e parties
Recover( un#er simul! e# con r!c in !bsolu e simul! ion ). If does not #a3e illi"it purpose : pro3e si0ulation to re"o3er &#at 0a6 #a3e been i3en '. If si0ulated #as ille al ob5e"t : IN PARI DELICTO rules appl6
OBK#CT O& CONT"ACT
Pa e =1 of 113
T#in + ri #t or ser3i"e &#i"# is t#e sub5e"t.0atter of t#e obli ation arisin fro0 t#e "ontra"t Ob5e"t of t#e "ontra"t and ob5e"t of t#e obli ation "reated t#ereb6 are identi"al -hat )ay %e the O%Be't of Contra'ts Art )?DH All t#in s &#i"# are not outside the commerce of men+ in"ludin future t#in s+ 0a6 be t#e ob5e"t of a "ontra"t. All ri #ts &#i"# are not intransmissible 0a6 also be t#e ob5e"t of "ontra"ts. No "ontra"t 0a6 be entered into upon future inheritance ex"ept in "ases expressl6 aut#ori;ed b6 la&. All ser3i"es &#i"# are not contrary to la&+ 0orals+ ood "usto0s+ publi" order or publi" poli"6 0a6 li@e&ise be t#e ob5e"t of a "ontra"t. ). All t#in s not outside t#e "o00er"e of 0an In"ludin Af+t+re thingsB do not belon to t#e obli or at t#e ti0e t#e "ontra"t is 0adeG t#e6 0a6 be 0ade+ raised or a"Cuired b6 t#e obli or after t#e perfe"tion of t#e "ontra"t Conditional : sub5e"t to t#e "o0in into existen"e of t#e t#in Aleator6 : one of t#e parties bears t#e ris@ of t#e t#in ne3er "o0in into existen"e HO+tsi(e the 'o))er'e of )anI : all @inds of t#in s and interests &#ose alienation or free ex"#an e is restri"ted b6 la& or stipulation+ &#i"# parties "annot 0odif6 at &ill Ser3i"es &#i"# i0pl6 an absolute sub0ission b6 t#ose &#o render t#e0+ sa"rifi"in t#eir libert6+ independen"e or o&n beliefs or disre ardin in an6 0anner t#e eCualit6 and di nit6 of persons e. . perpetual ser3itude or sla3er6 Personal ri #ts e. . patria postestas+ 0arital aut#orit6+ status+ "apa"it6 of persons+ #onorar6 titles Publi" offi"es+ in#erent attributes of t#e publi" aut#orit6+ politi"al ri #ts of indi3iduals e. . ri #t of suffra e Propert6 &#ile t#e6 pertain to t#e publi" do0inion Sa"red t#in s e. . air and sea '. All ri #ts not intrans0issible ?. All ser3i"es not "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order or publi" poli"6 "e7+isite of O%Be't of Contra'ts ). 8it#in t#e "o00er"e of 0an <Art )?DH> '. Li"it+ not "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" poli"6 or publi" order <Art )?DH> ?. Possible <Art )?D-> D. Deter0inate as to its @ind
Art )?D/ T#e ob5e"t of e3er6 "ontra"t 0ust be determinate as to its kind. T#e fa"t t#at t#e Cuantit6 is not deter0inate s#all not be an obsta"le to t#e existen"e of t#e "ontra"t+ pro3ided it is 'ossible o #e ermine he s!me+ wi hou he nee# o" ! new con r!c bet&een t#e parties.
-hat )ay N)% %e the O%Be'ts of Contra'ts ). Contrar6 to la&+ 0orals+ ood "usto0s+ publi" poli"6 or publi" order '. Indeter0inable as to t#eir @ind ?. Outside t#e "o00er"e of 0an D. Intrans0issible ri #ts 1. Nuture in#eritan"e+ ex"ept &#en aut#ori;ed b6 la&
la&.
Art )?DH Par ' No "ontra"t 0a6 be entered into upon future in#eritan"e ex"ept in "ases expressl6 aut#ori;ed b6
T#e su""ession 0ust not #a3e been opened at t#e ti0e of t#e "ontra"t Ex"eption to Afuture t#in sB 2. I0possible t#in s or ser3i"es
Art )?D- I0possible t#in s or ser3i"es "annot be t#e ob5e"t of "ontra"ts.
E. . of i0possible t#in s4 Not sus"eptible of existin Outside t#e "o00er"e of 0an Be6ond t#e ordinar6 stren t# of po&er of 0an Liabilit6 for da0a es Debtor @ne& of i0possibilit6 : liable for da0a es
Pa e =5 of 113
Debtor is i norant of i0possibilit6 and i noran"e is 5ustifiable : no liabilit6 for da0a es Bot# parties #a3e @no&led e of i0possibilit6 : no liabilit6 for da0a es I0possibilit6 0ust be a"tual and "onte0poraneous &it# t#e 0a@in of t#e "ontra"t and not subseCuent ABSOL%TE or ob5e"ti3e4 nobod6 "an perfor0 it RELATI7E or sub5e"ti3e4 due to t#e spe"ial "onditions or Cualifi"ation of t#e debtor it "annot be perfor0ed TELPORAR, : does not nullif6 t#e "ontra"t PERLANENT : nullifies t#e "ontra"t
CAU # O& CONT"ACT

2eaning of B*A2S'C 8#6 of a "ontra"tG t#e i00ediate and 0ost proxi0ate purpose of t#e "ontra"t+ t#e essential reason &#i"# i0pels t#e "ontra"tin parties to enter into it and &#i"# explains and 5ustifies t#e "reation of t#e obli ation t#rou # su"# "ontra"t Essential reason t#at 0o3es t#e parties to enter into a "ontra"t "e7+isites of Ca+se ). Exist '. True ?. Li"it As (isting+ishe( fro) o%Be't Ob5e"t is t#e startin point of a ree0ent+ &it#out &#i"# t#e ne otiations or bar ainin bet&een t#e parties &ould ne3er #a3e be un Ob5e"t 0a6 be t#e sa0e for bot# of t#e parties Cause is different &it# respe"t to ea"# part6 As (isting+ishe( fro) 'onsi(eration CONSIDERATION Y CA%SE
CON I!#"ATION Reason or 0oti3e or indu"e0ent b6 &#i"# a 0an is 0o3ed into bind #i0self b6 a ree0ent ReCuires a le al detri0ent to t#e pro0isee 0ore t#an a 0oral duet6 CAU # 8#6 of "ontra"tsG essential reason t#at "o0pels "ontra"tin parties to "elebrate t#e "ontra"t Ne3er re5e"ts an6 "ause as insuffi"ientG need not be 0aterial at all and 0a6 "onsist in 0oral satisfa"tion for t#e pro0issor6
Art )?1( In onero+s 'ontra'ts t#e "ause is understood to be+ for ea"# "ontra"tin part6+ t#e 'res ! ion or 'romise o" ! hing or service b( he o herG in re)+neratory ones+ t#e service or bene"i &#i"# is re0uneratedG and in "ontra"ts of p+re %enefi'en'e+ t#e mere liber!li ( of t#e benefa"tor.
a$ Onero+s Contra'ts Prestation or pro0ise of a t#in or ser3i"e b6 t#e ot#er Need not be adeCuate or an exa"t eCui3alent in point of a"tual 3alue espe"iall6 in dealin &it# ob5e"ts &#i"# #a3e rapidl6 flu"tuatin pri"e %$ "e)+neratory Contra'ts One &#ere a part6 i3es so0et#in to anot#er be"ause of so0e ser3i"e or benefit i3en or rendered b6 t#e latter to t#e for0er &#ere su"# ser3i"e or benefit &as not due as a le al obli ation E. . bonuses
". Contra'ts of p+re %enefi'en'e 9Grat+ito+s:

Essentiall6 a ree0ents to i3e donations As (isting+ishe( fro) )otive
CAU #
Art )?1) T#e parti"ular 0oti3es of t#e parties in enterin into a "ontra"t are different fro0 t#e "ause t#ereof. 2OTI,#
Pa e =8 of 113
Ob5e"ti3e+ intrinsi" and 5uridi"al reason for t#e existen"e of t#e "ontra"t itself Essential reason for t#e "ontra"t
Ob5e"ti3e of a part6 in enterin into t#e "ontra"t Al&a6s t#e sa0e for bot# parties
Ps6"#olo i"al+ indi3idual or personal purpose of a part6 to t#e "ontra"t Parti"ular reason for a "ontra"tin part6+ &#i"# does not affe"t t#e ot#er and &#i"# does not i0pede t#e existen"e of a true distin"t "ause Person9s reason for &antin to et su"# ob5e"ti3e Differs &it# ea"# person
GENERAL R%LE4 Loti3e does not affe"t t#e 3alidit6 of t#e "ontra"t. EJCEPTIONS4 ). 8#en t#e 0oti3e of a debtor in alienatin propert6 is to defraud #is "reditors+ alienation is res"issible '. 8#en t#e 0oti3e of a person in i3in #is "onsent is to a3oid a t#reatened in5ur6+ in "ase of inti0idation t#e "ontra"t is 3oidable. ?. 8#en t#e 0oti3e of a person indu"ed #i0 to a"t on t#e basis of fraud or 0isrepresentation b6 t#e ot#er part6+ t#e "ontra"t is li@e&ise 3oidable. !efe'tive 'a+ses an( their effe'ts
a. A%sen'e of 'a+se an( +nlawf+l 'a+se produ"es no effe"t &#ate3er

Art )?1' Contra"ts &it#out "ause+ or &it# unla&ful "ause+ produce no effect whatever. T#e "ause is unlawful if it is "ontrar6 to la&+ 0orals+ ood "usto0s+ publi" order or publi" poli"6. E. . si0ulated "ontra"ts
b.
tate)ent of a false 'a+se in the 'ontra't 7OID if t#ere is no ot#er true and la&ful "ause Art )?1? T#e state0ent of a false cause in "ontra"ts s#all render t#e0 ,OI!+ if it s#ould not be pro3ed t#at t#e6 &ere founded upon anot#er "ause &#i"# is true and la&ful. Art )?11 Ex"ept in "ases spe"ified b6 la&+ lesion or inadeCua"6 of "ause s#all not invalidate a contract+ UN*ESS t#ere #as been "r!u#8 mis !1e or un#ue in"luence. Gross inadeCua"6 su est fraud and is e3iden"e t#ereof
". Lesion or ina(e7+a'y of 'a+se 7ALID unless fraud+ 0ista@e or undue influen"e is present
Pres+)ption of the e6isten'e an( lawf+lness of a 'a+se@ tho+gh it is not state( in the 'ontra't Art )?1D Alt#ou # t#e "ause is not stated in the contract+ it is presumed that it e ists and is lawful+ unless t#e debtor pro3es t#e "ontrar6.
Chapter III$ &or) of Contra'ts

A. GENERAL R%LE4 Contra"ts s#all be o%ligatory+ in wh! ever "orm t#e6 0a6 #a3e been entered into+
pro3ided all essential re7+isites for t#eir 3alidit6 are present. <ASpiritual s6ste0B of t#e Spanis# Code>
Art )?12 Contra"ts s#all be obli ator6+ in &#ate3er for0 t#e6 0a6 #a3e been entered into+ pro3ided all t#e essential reCuisites for t#eir 3alidit6 are present.
B. EJCEPTION4 8#en t#e law re7+ires t#at a "ontra"t be in so0e for0 in order t#at it 0a6 be ,ALI!
or #N&O"C#ABL# <An lo.A0eri"an prin"iple in Statutes of Nraud> indispensable and absoluteG parties
Art )?12 Mo&e3er+ &#en t#e la& reCuires t#at a "ontra"t be in so0e for0 in order t#at it 0a6 be 3alid or enfor"eable+ or t#at a "ontra"t be pro3ed in a "ertain &a6+ t#at reCuire0ent is absolute and indispensable. In su"# "ases+ t#e ri #t of t#e parties stated in t#e follo&in arti"le "annot be exer"ised.
C. !INDS ON NORLALITIES REI%IRED B, LA8
). A# esen i!8 !# solemni ! em T#ose reCuired for t#e vali(ity of 'ontra'ts+ su"# as t#ose
referred to in
Pa e =; of 113
<Sir refers to t#ese as "orm!l con r!c s> Art HDDonation of 0o3able Art HD/ Donation of i00o3able Art )-HD Sale of pie"e of land t#rou # an a ent Art ')?D Contra"t of anti"#resisG a0ount of prin"ipal and of t#e interst Art )HH) Partners#ipG i00o3able propert6 or real ri #ts are "ontributed Art )HH? Partners#ipG in3entor6 of i00o3able propert6 "ontributed Art )/12 Interest for usin so0eone else9s 0one6 Art ')D( C#attel 0ort a e
'. T#ose reCuired+ not for t#e 3alidit6+ but to )aDe the 'ontra't effe'tive as against thir(
persons+ su"# as t#ose "o3ered b6 Art )?1H <if la& reCuires a spe"ial for0+ parties 0a6 "o0pel ea"# ot#er to obser3e t#at for0 upon perfe"tion of t#e "ontra"t> and Art )?1- <do"u0ents &#i"# 0ust appear in a publi" do"u0entG it also "onstitutes "onstru"ti3e delli3er6>
<)> A"ts and "ontra"ts &#i"# #a3e for t#eir o%Be't the 'reation@ trans)ission@ )o(ifi'ation or e6ting+ish)ent of real rights o3er i00o3able propert6G sales of real propert6 or of an interest t#erein a o3erned b6 Arti"les )D(?+ No. '+ and )D(1G <'> T#e 'ession@ rep+(iation or ren+n'iation of #ereditar6 ri #ts or of t#ose of t#e "on5u al partners#ip of ainsG <?> T#e power to a()inister property+ or an6 ot#er po&er &#i"# #as for its ob5e"t an a"t appearin or &#i"# s#ould appear in a publi" do"u0ent+ or s#ould pre5udi"e a t#ird personG <D> T#e 'ession of a'tions or rights pro"eedin fro0 an a"t appearin in a publi" do"u0ent. All ot#er "ontra"ts &#ere t#e a0ount in3ol3ed e6'ee(s five h+n(re( pesos 0ust appear in &ritin + even a private one. But sales of oods+ "#attels or t#in s in a"tion are o3erned b6 Arti"les+ )D(?+ No. ' and )D(1.
?. A# 'rob! ionem
T#ose reCuired for t#e purpose of pro3in t#e existen"e of t#e "ontra"t+ su"# as t#ose under t#e Statute of Nrauds in Art )D(?
Chapter I,$ "efor)ation of Instr+)ents

Art )?1/ 8#en+ t#ere #a3in been a meeting of the minds of t#e parties to a "ontra"t+ t#eir true intention is not e pressed in t#e instru0ent purportin to e0bod6 t#e a ree0ent+ b6 reason of )istaDe@ fra+(@ ine7+ita%le 'on(+'t or a''i(ent+ one o" he '!r ies 0a6 as@ for t#e refor0ation of t#e instru0ent to t#e end t#at su"# true intention 0a6 be expressed. If )istaDe@ fra+(@ ine7+ita%le 'on(+'t@ or a''i(ent #as pre3ented a 0eetin of t#e 0inds of t#e parties+ t#e proper re0ed6 is not reformation of the instrument but annulment of the contract. "eason for "efor)ation of Instr+)ents ECuit6 di"tates t#e refor0ation of instru0ent in order t#at t#e true intention of t#e "ontra"tin parties 0a6 be expressed. %n5ust and uneCuitable to allo& t#e enfor"e0ent of a &ritten instru0ent &#i"# does not refle"t or dis"lose t#e real 0eetin of t#e 0inds of t#e parties Court do not atte0pt to 0a@e a ne& "ontra"t for t#e parties+ but onl6 to 0a@e t#e instru0ent express t#eir real a ree0ent Statute of Nrauds is no i0pedi0ent to t#e refor0ation of an instru0ent !isting+ishe( fro) Ann+l)ent
"#&O"2ATION A"tion presupposes a 3alid existin "ontra"t bet&een t#e parties and onl6 t#e do"u0ent or instru0ent &#i"# &as dra&n up and si ned b6 t#e0 does not "orre"tl6 express t#e ter0s of a ree0ent Gi3es life to t#e "ontra"t upon "ertain "orre"tions ANNUL2#NT No 0eetin of t#e 0inds or t#e "onsent of eit#er one &as 3itiated b6 0ista@e or fraud
In3ol3es a "o0plete nullifi"ation of "ontra"ts
"e7+isites for "efor)ation of Instr+)ents ). Leetin of t#e 0inds upon t#e "ontra"t '. T#e true intention of t#e parties is not expressed in t#e instru0ent ?. T#e failure of t#e instru0ent to express t#e true a ree0ent is due to 0ista@e+ fraud+ ineCuitable "ondu"t or a""ident
Pa e == of 113
Ca+ses for "efor)ation ). Lutual : instru0ent in"ludes so0et#in &#i"# s#ould not be t#ere or o0it &#at s#ould be t#ere a. Lutual b. Lista@e of fa"t ". Clear and "on3in"in proof d. Causes failure of instru0ent to express true intention '. %nilateral a. One part6 &as 0ista@en b. Ot#er eit#er a"ted fraudulentl6 or ineCuitabl6 or @ne& but "on"ealed ". Part6 in ood fait# 0a6 as@ for refor0ation ?. Lista@e b6 ?rd persons : due to i noran"e+ la"@ of s@ill+ ne li en"e+ bad fait# of drafter+ "ler@ or t6pist D. Ot#ers spe"ified b6 la& : to a3oid frustration of true intent #6a)ple of 'ases where refor)ation is allowe( ). Art )?2) 8#en a )+t+al )istaDe of t#e parties "auses t#e failure of t#e instru0ent to dis"lose t#eir real a ree0ent+ said instru0ent 0a6 be refor0ed. '. Art )?2? 8#en one party was )istaDen and t#e other Dnew or %elieve( that the instr+)ent (i( not state t#eir real a ree0ent+ but conce!le# t#at fa"t fro0 t#e for0er+ t#e instru0ent 0a6 be refor0ed. ?. Art )?2D 8#en t#rou # t#e i noran"e+ la"@ of s@ill+ ne li en"e or bad fait# on t#e part of t#e person (rafting the instr+)ent or of the 'lerD or typist + t#e instru0ent does not express t#e true intention of t#e parties+ t#e "ourts 0a6 order t#at t#e instru0ent be refor0ed. Cases where no refor)ation is allowe( ). Oral "ontra"ts : t#ere9s not#in to refor0 at allV '. Art )?22 T#ere s#all be no refor0ation in t#e follo&in "ases4 <)> Si0ple donations in er vivos &#erein no "ondition is i0posedG <'> 8illsG <?> 8#en t#e real a ree0ent is 3oid. I)plie( ratifi'ation Art )?2H 8#en one of t#e parties #as brou #t an a'tion to enfor'e the instr+)ent+ #e cannot subse:uently ask for its refor0ation. T#ere #as been ele"tion bet&een t&o in"onsistent re0edies+ one in affir0an"e+ t#e ot#er in disaffir0an"e -ho )ay asD for refor)ation L%T%AL LISTA!E4 eit#er part6 or su""essor in interest LISTA!E B, ONE4 in5ured part6+ #eirs or assi ns ). Art )?2- Refor0ation 0a6 be ordered at t#e instan"e of eit#er party or #is s+''essors in interest+ if t#e 0ista@e &as mutualG otherwise+ upon petition of t#e inB+re( party+ or his heirs an( assigns. '. Art )?2' If one party was )istaDen and t#e ot#er a"ted fraudulentl6 or ineCuitabl6 in su"# a &a6 t#at t#e instru0ent does not s#o& t#eir true intention+ t#e for)er 0a6 as@ for t#e refor0ation of t#e instru0ent. Pro'e(+re of refor)ation Art )?2/ T#e pro"edure for t#e refor0ation of instru0ent s#all be o3erned b6 ROC to be pro0ul ated b6 t#e Supre0e Court.
Chapter ,$ Interpretation of Contra'ts

<Co0pare &it# Rules on Statutor6 Constru"tion> Pri)a'y of intention >.erb! in en ione non e con r!#eben inserv!re? . &ords ou #t to be subser3ient to t#e intent+ not t#e intent to t#e &ord
Pa e =A of 113
Loo@ for t#e "ontra"tual intent Art )?H( If t#e ter0s of a "ontra"t are 'lear an( leave no (o+%t upon t#e intention of t#e "ontra"tin parties+ t#e literal meaning of its stipulations s#all "ontrol. Art )?H' Mo&e3er general t#e ter0s of a "ontra"t 0a6 be+ t#e6 s#all not be understood to "o0pre#end t#in s t#at are distinct and "ases t#at are different fro0 t#ose upon &#i"# t#e parties intended to agree. A,ener!li! verb! sun gener!li er in elligenci!B eneral t#in s are to understood in a eneral sense 3ow to (eter)ine intention Art )?H) In order to 5ud e t#e intention of t#e "ontra"tin parties+ t#eir contemporaneous and subse:uent acts s#all be prin"ipall6 "onsidered. Also ta@e note of t#e usa e and "usto0s of t#e pla"e 3ow to interpret a 'ontra't
). 8#en it "ontains stipulations t#at ad0it of se3eral 0eanin s

Art )?H? If so0e stipulation of an6 "ontra"t s#ould ad0it of se3eral 0eanin s+ it s#all be understood as bearin t#at i0port &#i"# is 0ost adeCuate to render it effectual.
'. 8#en it "ontains 3arious stipulations+ so0e of &#i"# are doubtful

Art )?HD T#e 3arious stipulations of a "ontra"t s#all be interpreted to et#er+ attributin to t#e doubtful ones t#at sense &#i"# 0a6 result from all of them taken jointly. ?. 8#en it "ontains &ords t#at #a3e different si nifi"ations Art )?H1 8ords &#i"# 0a6 #a3e different si nifi"ations s#all be understood in t#at &#i"# is most in keeping with the nature and object of the contract. D. 8#en it "ontains a0bi uities and o0ission of stipulations Art )?H2 T#e usage or custom of the place s#all be borne in 0ind in t#e interpretation of t#e a0bi uities of a "ontra"t+ and s#all fill t#e o0ission of stipulations &#i"# are ordinaril6 establis#ed. 1. 8it# respe"t to t#e part6 &#o "aused t#e obs"urit6 Art )?HH T#e interpretation of obs"ure &ords or stipulations in a "ontra"t shall not favor the party who caused the obscurity. Contra"ts of ad#esion : resol3ed a ainst t#e part6 &#o prepared t#e "ontra"t and in fa3or of t#e one &#o 0erel6 ad#ered to it 2. 8#en it is absolutel6 i0possible to settle doubts b6 t#e rules abo3e Art )?H- Par ) 8#en it is absolutel6 i0possible to settle doubts b6 t#e rules establis#ed in t#e pre"edin arti"les+ and t#e doubts refer to in'i(ental 'ir'+)stan'es of a grat+ito+s 'ontra't+ t#e least transmission of rights and interests s#all pre3ail. If t#e "ontra"t is onero+s+ t#e doubt s#all be settled in fa3or of t#e greatest reciprocity of interests.
a. In ratuitous "ontra"ts+ in"idental "ir"u0stan"es least trans0ission of ri #ts and

interests b. In onerous "ontra"ts reatest re"ipro"it6 of interests
H. 8#en t#e doubts are "ast upon t#e prin"ipal ob5e"ts so t#at t#e intention "annot be @no&n Art )?H- Par ' If t#e doubts are "ast upon t#e prin"ipal ob5e"t of t#e "ontra"t in su"# a &a6 t#at it "annot be @no&n &#at 0a6 #a3e been t#e intention or &ill of t#e parties+ t#e "ontra"t s#all be null and void. Appli'a%ility of "+le 12@ "+les of Co+rt <no& Se"s. )(.)/+ Rule )?(>
Pa e A? of 113
Art )?H/ T#e prin"iples of interpretation stated in Rule )'? of t#e Rules of Court s#all li@e&ise be obser3ed in t#e "onstru"tion of "ontra"ts. La& in e3iden"eG interpretation of do"u0ents> In bet&een 7ALID and DENECTI7E "ontra"ts is "#LATI,#L4 IN#&&#CTI,# : ineffe"ti3el6 onl6 &it# respe"t to "ertain parties+ but are effe"ti3e as to ot#er persons. A ainst 3oidable "ontra"t4 ineffe"ti3eness is produ"ed ipso 5ure 7oid or inexistent "ontra"t4 "an be 0ade "o0pletel6 effe"ti3e b6 t#e "onsent of t#e person as to &#o0 it is effe"ti3e or b6 t#e "essation of t#e i0pedi0ent &#i"# pre3ents its "o0plete ineffe"ti3eness <)> assi n0ent of t#e lease b6 t#e lessee &it#out t#e "onsent of t#e lessor is ineffe"ti3e onl6 as re ards t#e lessor+ <'> transfer of a debt b6 t#e debtor to anot#er+ &it#out t#e "onsent of t#e "reditor is ineffe"ti3e as to t#e "reditor+ <?> t#e pa60ent b6 a debtor to #is "reditor after t#e "redit #as been arnis#ed or atta"#ed b6 a t#ird person is ineffe"ti3e to t#e latter
!#&#CTI,# CONT"ACT
). "# CI
IBL# > "ontra"t t#at #as "aused a parti"ular da0a e to one of t#e parties or to a t#ird person and &#i"# for EI%ITABLE REASONS 0a6 be set aside e3en if 3alid '. ,OI!ABL# O" ANNULLABL# Acontrato nuloD : "ontra"t in &#i"# CONSENT of one of t#e parties is defe"ti3e+ eit#er be"ause of 8ANT ON CAPACIT, or be"ause it is 7ITIATED + but &#i"# "ontra"t is 7ALID until K%DICIALL, set aside ?. UN#N&O"C#ABL# : "ontra"t t#at for so0e reason CANNOT BE ENNORCED+ UN*ESS RATINIED in t#e 0anner PRO7IDED B, LA8 D. ,OI! AN! NON/#EI T#NT Acontrato ine istenteD : "ontra"t &#i"# is an ABSOL%TE N%LLIT, and produ"es NO ENNECT+ as if it #ad ne3er been exe"uted or entered into
Chapter ,I$ "es'issi%le Contra'ts

0in(s of "es'issi%le Contra'ts Art )?-) T#e follo&in are res"issible "ontra"ts4
). Entered into b6 guardians &#ene3er t#e &ards suffer lesion b6 0ore t#an Z of 3alue of t#in s
ob5e"t Guardian4 aut#ori;ed onl6 to A0ana eB &ard9s propert6+ no po&er to dispose &it#out prior appro3al of "ourt. Onl6 in"ludes t#ose &#i"# are Aordinar6 "ourseB of 0ana e0ent of estate of t#e &ard+ be"ause if sale+ 0ort a e and ot#er en"u0bran"e AND not appro3ed b6 "ourt+ it be"o0es unenfor"eable. Sir Labita 4 At#in band of "ontra"tsB
'. A reed upon in representation of absentee+ suffer lesion b6 0ore t#an Z of t#e 3alue of t#in s
ob5e"t Sa0e prin"iple in relation to "ontra"ts b6 uardians
?. In fraud of creditors &#o "annot "olle"t "lai0s due t#e0
Re4uisi es o" Accion P!uli!n! ). Plaintiff as@in for res"ission <subsidiar6 a"tion> #as a "redit prior to t#e alienation '. Debtor #as 0ade subseCuent "ontra"t+ i3in ad3anta e to a ?rd person ?. Creditor #as no ot#er re0ed6 but to res"ind t#e debtor9s "ontra"t to t#e ?rd person <last resort> D. A"t bein i0pu ned is fraudulent 1. ?rd person &#o re"ei3ed t#e propert6 is an a""o0pli"e in t#e fraud
Pa e A1 of 113
Credit 0ust be e2is ing at t#e ime o" he "r!u#ulen !lien! ion+ alt#ou # not 6et due. But at t#e ti0e of !ccion '!uli!n!+ t#e "redit 0ust alread6 be due be"ause it presupposes a judgment and unsatisfied e ecution &#i"# "annot exist &#en t#e debt is not 6et de0andable at t#e ti0e t#e res"issor6 a"tion is brou #t. GENERAL R%LE4 Credit is prior to t#e alienation EJCEPTION4 Credit is after alienation but entitled to !ccion '!uli!n! be"ause of so0e prior ri #t ). Clai0s &ere a"@no&led ed b6 t#e debtor after alienation+ but ori in of &#i"# antedated t#e alienation '. T#ose &#o be"o0e subro ated+ after t#e alienation+ in t#e ri #ts of a "reditor &#ose "redits &ere prior to t#e alienation E3en se"ured "reditors are entitled to AP Con3e6an"e &as intentionall6 fraudulent &#i"# 0a6 be establis#ed b6 t#e presu0ption in Art )?-H TEST ON NRA%D4 8#et#er t#e "on3e6an"e &as a bona fide transa"tion or a tri"@ and "ontri3an"e to defeat "reditors or &#et#er it "onser3es to t#e debtor a spe"ial ri #tG founded on ood "onsideration or is 0ade &it# bona fide intent. !oes it preB+(i'e the right of 're(itorsLL Good "onsideration4 "reditor is not pre5udi"ed be"o0es t#e propert6 &as 0erel6 repla"ed or substituted Bad es of fraud appli"able
D. T#in s under litigation+ &it#out @no&led e and appro3al of liti ant or of "o0petent 5udi"ial
aut#orit6 To se"ure t#e possible effe"ti3it6 of a "lai0 Transferee of propert6 in ood fait# &#o a"Cuires propert6 for 3aluable "onsideration+ &it#out @no&led e of t#e liti ation or "lai0 of t#e plaintiff+ "annot be depri3ed of propert6.
1. Specially declared by law to be sub5e"t of res"ission

Chara'teristi's of "es'issi%le Contra'ts
). T#eir defe"t "onsist in injury or damage eit#er to one of t#e "ontra"tin parties or to t#ird
persons *ESION4 in5ur6 &#i"# one of t#e parties suffers b6 3irtue of "ontra"t t#at is disad3anta eous to #i0G 0ust be @no&n or "ould #a3e been @no&n at t#e birt# of "ontra"t and not due to subseCuent t#ereto or un@no&n to t#e parties E. . Art )(/- Partition+ 5udi"ial and extra.5udi"ial 0a6 be res"inded on a""ount of lesion Art )1?/ Sale of real estate of inferior t#in Art )1D' Sale of real estate 0ade for a lu0p su0 T#e6 are v!li# be"ore rescission T#e6 "an be ! !c1e# #irec l( onl(8 no coll! er!ll( T#e6 "an be atta"@ed onl6 eit#er b6 a con r!c ing '!r (+ or b6 a hir# 'erson who is injure# or #e"r!u#e# T#e6 "an be conv!li#! e# onl( b( 'rescri' ion and no b( r! i"ic! ion
'. ?. D. 1.
"# CI ION Art )?-( Contra"ts 3alidl6 a reed upon 0a6 be res"inded in t#e "ases establis#ed b6 la& !efinition Re0ed6 ranted b6 la& to t#e "ontra"tin parties and e3en to t#ird persons+ to se"ure t#e reparation of da0a es "aused to t#e0 b6 a "ontra"t+ e3en if t#is s#ould be 3alid+ b6 0eans of t#e restoration of t#in s to t#eir "ondition at t#e 0o0ent prior to t#e "elebration of said "ontra"t.
Pa e A2 of 113
Relief for t#e prote"tion of one of t#e "ontra"tin parties AND t#ird persons fro0 all in5ur6 and
da0a es t#e "ontra"t 0a6 "ause OR prote"t so0e in"o0patible and preferent ri #t "reated b6 t#e "ontra"t I0plies a "ontra"t &#i"#+ e3en if initiall6 3alid+ produ"es a lesion or pe"uniar6 da0a e to so0eone Set asides t#e a"t or "ontra"t for 5ustifiable reasons of eCuit6 Grounds for res"ission "an onl6 be for le al "ause 7oidable "ontra"ts 0a6 also be res"inded Sir Labita 4 Res"issible "ontra"ts are in bet&een 3alid and 3oid
"es'ission Art 13=? !isting+ishe( fro) "esol+tion Art 11A1

Si0ilarities Art 11A1 "esol+tion Art 13=? "es'ission Presuppose "ontra"ts 3alidl6 entered into and existin Res"ission 3. Annul0ent4 t#e latter t#ere is a defe"t &#i"# 3itiates=in3alidates t#e "ontra"t '. Lutual restitution &#en de"lared proper Onl6 b6 a part6 to t#e "ontra"t Part6 to t#e "ontra"t sufferin lesion ). Non.perfor0an"e <i0plied ta"it "ondition in re"ipro"al obli ation> Court deter0ines suffi"ien"6 of reason to 5ustif6 extension of ti0e to perfor0 obli ation <&#et#er sli #t or "asual brea"#> Onl6 to re"ipro"al Prin"ipal Re0ed6 T#ird parties pre5udi"ed b6 t#e "ontra"t 7arious reasons of eCuit6 pro3ided b6 t#e rounds+ 0ainl6 e"ono0i" in5ur6 or lesions Suffi"ien"6 of reason does not affe"t ri #t to as@ for res"ission <"annot be refused if all t#e reCuisites are satisfied> %nilateral+ re"ipro"al E3en &#en "ontra"t is full6 fulfilled Se"ondar6=Subsidiar6
8#o 0a6 de0and Grounds S"ope of 5udi"ial "ontrol !ind of obli appli"able to C#ara"ter
L%T%AL DISSENT not t#e sa0e &it# res"ission+ be"ause 0utual dissent is tanta0ount to a si0ple "reation of ne& "ontra"t for t#e dissolution of t#e pre3ious one. In order for res"ission to ta@e pla"e+ t#e reCuisites 0ust first be satisfied4 "e7+isites for "es'ission
). T#e "ontra"t is rescissible

Art )?-) !inds of res"issible "ontra"ts Art )?-' Pa60ents made in a state of insolvency for obli ations to &#ose fulfill0ent t#e debtor "ould not be "o0pelled at t#e ti0e <#as not 6et 0atured> t#e6 &ere effe"ted+ are also res"issible.
'. T#e part6 as@in for res"ission #as no o her leg!l me!ns to obtain reparation
Art )?-? T#e a"tion for res"ission is subsidiaryG it "annot be instituted ex"ept &#en t#e part6 sufferin da0a e #as no ot#er le al 0eans to obtain reparation for t#e sa0e.
?. Me is !ble o re urn &#ate3er #e 0a6 be obli ed to restore if res"ission is ranted

Art )?-1 ARes"ission "reates t#e obligation to return the things &#i"# &ere t#e ob5e"t of t#e "ontra"t+ to et#er &it# t#eir fruits+ and t#e pri"e &it# its interestQB
D. T#e ob5e"t of t#e "ontra"t #as no '!sse# leg!ll( to t#e possession of a t#ird person a"tin in
ood fait# Art )?-1 AQ"onseCuentl6+ it "an be "arried out onl6 &#en #e &#o de0ands res"ission can return &#ate3er #e 0a6 be obli ed to restore.B Art )?-1 Par ? Neit#er s#all res"ission ta@e pla"e &#en t#e t#in s &#i"# are t#e ob5e"t of t#e "ontra"t are legally in the possession of third persons who did not act in bad faith.
1. T#e a"tion for res"ission is brou #t &it#in t#e 'rescri' ive 'erio# o" "our (e!rs
Art )?-/ T#e a"tion to "lai0 res"ission 0ust be "o00en"ed within four years-
Pa e A3 of 113
Nor persons under uardians#ip and for absentees+ t#e period of four 6ears s#all not be in until t#e ter0ination of t#e for0er9s in"apa"it6 or until t#e do0i"ile of t#e latter is @no&n. Period "o00en"es on t#e ter0ination of t#e &ard9s in"apa"it6 or absentee9s do0i"ile is @no&n #ffe't of "es'ission If in fraud of t#e "reditors4 Propert6 alienated re3erts to t#e patri0on6 of t#e debtor and be"o0es liable to "reditor &#o sou #t res"ission+ under its ori inal liabilit6 as a uarant6 of t#e debtor9s obli ation Art )?-1 Res"ission "reates t#e obli ation to return the things which were the object of the contract+ to et#er &it# t#eir fruits+ and t#e pri"e &it# its interestG "onseCuentl6+ it "an be "arried out onl6 &#en #e &#o de0ands res"ission "an return &#ate3er #e 0a6 be obli ed to restore. -ith respe't to thir( persons who a'7+ire( the thing in goo( faith Transferee of propert6 in ood fait# &#o a"Cuires propert6 for 3aluable "onsideration+ &it#out @no&led e of t#e liti ation or "lai0 of t#e plaintiff+ "annot be depri3ed of propert6. Art )?-1 Par ' Neit#er s#all res"ission ta@e pla"e &#en t#e t#in s &#i"# are t#e ob5e"t of t#e "ontra"t are legally in the possession of third persons who did not act in bad faith. Art )?-1 Par ? In t#is "ase+ inde0nit6 for da0a es 0a6 be de0anded fro0 t#e person "ausin t#e loss. "ight of transferee to retain alienation* Nature of transfer ONERO%S Good fait# : no res"ission Bad fait# : res"issible be"ause of #is "o0pli"it6 in t#e fraud not entitled for rei0burse0ent be"ause in '!ri #elic oG if not possible to return+ inde0nif6 t#e plaintiffG GRAT%ITO%S Good fait# : does not prote"t #i0 be"ause #e a3e not#in G res"issible+ t#ou # not reCuired to restore t#e fruits Bad fait# : res"issible be"ause of #is "o0pli"it6 in t#e fraudG if not possible to return+ inde0nif6 t#e plaintiff -ho )ay %ring ). '. ?. a'tion for res'ission Creditor in5ured Meirs of "reditor in5ured Creditors of "reditor in5ured <b6 3irtue of a""ion subro atoria>
#6tent of "es'ission Art )?-D Res"ission s#all be only to the e tent necessary to "o3er t#e da0a es "aused. As to t#e ex"ess+ alienation is 0aintained e3en if transferee is in bad fait# Benefits onl6 t#e plaintiff "reditor+ not e3er6one B%T if transferee is &illin to pa6+ no res"ission Pres+)ptions of &ra+( Art )?-H All "ontra"ts b6 3irtue of &#i"# t#e debtor alienates propert6 b6 grat+ito+s title are presumed to have been entered into in fraud of creditors+ &#en t#e donor (i( not reserve s+ffi'ient property to pa6 all debts "ontra"ted before t#e donation. Alienations b6 onero+s title are also presumed fraudulent &#en 0ade b6 persons a ainst &#o0 so)e B+(g)ent has %een iss+e(. T#e de"ision or atta"#0ent need not refer to t#e propert6 alienated+ and need not #a3e been obtained b6 t#e part6 see@in t#e res"ission. In addition to t#ese presu0ptions+ t#e desi n to defraud "reditors 0a6 be pro3ed in any other manner recogni?ed by the law of evidence. Rebuttal b6 e3iden"e t#at "on3e6an"e &as 0ade4 In ood fait# Nor a suffi"ient "ause
Pa e A1 of 113
Effe"t of Nraud4 Does not ne"essaril6 0a@e t#e alienation res"issible. It is onl6 one of t#e
reCuisites for a""ion pauliana. Can be o3erruled b6 a transferee in ood fait# and for 3aluable "onsideration Ba(ges of &ra+( 9in(i'ia of fra+(: : rules b6 &#i"# fraudlent "#ara"ter of transa"tion 0a6 be deter0ined ). Ni"titious=insuffi"ient "onsideration '. Con3e6an"e is after suit is filed and &#ile it is pendin ?. Sale on "redit b6 insol3ent debtor D. E3iden"e of insol3en"6 or lar e indebtedness 1. Transfer of All or nearl6 all of debtor9s propert6 2. Transfer is bet&een fat#er and son &#en so0e of abo3e is present H. Nailure of 3endee to ta@e ex"lusi3e possession of t#e propert6 Lia%ility for a'7+iring in %a( faith the things alienate( in fra+( of 're(itors Art )?-- 8#oe3er a"Cuires in bad fait# t#e t#in s alienated in fraud of "reditors+ s#all indemnify the latter for damages suffered by them on account of the alienation + &#ene3er+ due to an6 "ause+ it s#ould be impossible for him to return t#e0. If t#ere are t&o or 0ore alienations+ t#e first ac:uirer shall be liable first, and so on successively.
Chapter ,II$ ,oi(a%le or Ann+lla%le Contra'ts

0in(s of ,oi(a%leCAnn+lla%le Contra'ts Art )?/( Alt#ou # no da0a e to "ontra"tin parties4 ). 8ant of "apa"it6 '. 7itiated "onsent Chara'teristi's of ,oi(a%leCAnn+lla%le Contra'ts ). T#eir defe"t "onsists in t#e vi i! ion o" consen of one of t#e "ontra"tin parties '. T#e6 are bin#ing until t#e6 are annulled b6 a "o0petent "ourt ?. T#e6 are sus"eptible of conv!li#! ion b6 ratifi"ation or b6 pres"ription ANNUL2#NT Ann+l)ent (isting+ishe( fro) "es'ission
NULLIT4 9,oi(a%le: De"lares ineffi"ien"6 &#i"# "ontra"t alread6 "arries in itself <intrinsi" defe"t> "# CI ION 9"es'issi%le: Lerel6 produ"es ineffi"ien"6+ &#i"# did not exist essentiall6 in t#e "ontra"t <external defe"t i.e. pe"uniar6 da0a es or pre5udi"e to one of t#e "ontra"tin parties or ?rd persons> Needs no ratifi"ation to be effe"ti3e Co0patible &it# t#e perfe"t 3alidit6 of t#e "ontra"t Res"ission is a re0ed6 based on eCuit6 De0anded e3en b6 t#ird parties affe"ted b6 it Pri3ate interest predo0inates
ReCuires a"t of ratifi"ation to be "ured Based on a 3i"e of t#e "ontra"t &#i"# in3alidates it Annul0ent is a san"tion based on la& De0anded onl6 b6 t#e parties to t#e "ontra"t Publi" interest predo0inates
Gro+n(s for Ann+l)ent Art )?/( ). In"apa"it6 to "onsent Not a reCuisite sine 4u! non of t#e "ontra"tG &ant is onl6 a round for annul0ent '. 7i"es of "onsent4 3iolen"e+ inti0idation+ undue influen"e+ 0ista@e or fraud -ho )ay an( )ay not instit+te an A'tion for Ann+l)ent Art )?/H A. (A/4 All &#o are obli ed prin"ipall6 or subsidiaril6 Art )?/14 a"tion does not reCuire "onfor0it6 of t#e ot#er part6 &#o #as no ri #t to brin a"tion for annul0ent ReCuisites4
Pa e A5 of 113
a. Interest in t#e "ontra"t : t#ere 0ust be le al "apa"it6 b6 bein bound to t#e "ontra"t eit#er prin"ipall6 or subsidiaril6 b. 7i"ti0 and not t#e part6 responsible for t#e defe"t : #e &#o "o0es to t#e "ourt 0ust "o0e &it# "lean #ands <so not appli"able to t#e su""essor in interest of one &#o #as "ontra"ted &it# a 0inor> B. (A/ N)%* ). Capable parties "annot alle e t#e in"apa"it6 of t#ose &it# &#o0 t#e6 "ontra"ted '. Parties &#o exerted inti0idation+ 3iolen"e or undue influen"e or e0plo6ed fraud or "aused 0ista@e ?. T#ird person &#o is a stran er to t#e "ontra"t. UN*ESS #e "an pro3e t#at t#e "ontra"t pre5udi"ed #is ri #ts &it# respe"t to one of t#e "ontra"tin parties+ #e 0a6 as@ for annul0ent e. . uarantors and sureties 5Singsong v@ Is!bel! S!wmill6 Pres'ription of A'tion for Ann+l)ent > after pres"ription+ "ontra"t "an no lon er be set aside Art )?/) . 8it#in D 6ears Period s#all be in4 ). Inti0idation+ 3iolen"e or undue influen"e4 fro0 t#e ti0e "onsensual #e"ec ce!ses '. Lista@e or fraud4 fro0 t#e ti0e of #iscover( of t#e sa0e ?. In"apa"it64 fro0 t#e ti0e gu!r#i!nshi' ce!ses S Extin"ti3e pres"ription applies not onl6 to !c ion "or !nnulmen + but also to t#e #e"ense o" nulli ( S Applies to t#e parties of to t#e "ontra"t+ but NOT to t#ird persons #ffe'ts of Ann+l)ent> "leanses t#e "ontra"t fro0 all its defe"t fro0 t#e 0o0ent it &as "onstituted <retroa"ti3e effe"t>+ but does not pre5udi"e ri #ts of ?rd persons a"Cuire before t#e ratifi"ation Art )?/2
a. (2%2A. 4'S%$%2%$)N Art )?/- Restore to ea"# ot#er t#in s &#i"# #a3e been t#e sub5e"t 0atter
of t#e "ontra"t+ to et#er &it# fruits and t#e pri"e &it# interest+ E3&EPT in "ases pro3ided b6 la& <prin"iple of un5ust enri"#0ent>4 "o0pensation+ ser3i"es rendered in "ontra"ts of ser3i"e E*I%INATES A-ARD FOR DA%A,ES@ But &#en t#ere is loss or suffered da0a es+ in5ured part6 0a6 be entitled to re"o3er inde0nit6 for da0a es.
b. Art )D(' as lon as one #oes no res ore &#at #e is bound to return+ t#e ot#er c!nno be com'elle#
to return LOSS TMRO%GM PLAINTINN9S <part6 entitled to brin a"tion> NA%LT or NRA%D4 A"tion is extin uis#ed+ e3en if at t#e ti0e of t#e loss t#e plaintiff is still a 0inor or insane <Art )D()> LOSS TMRO%GM NORT%ITO%S E7ENT+ B%T PLAINTINN 8ILLING TO PA,4 Appl6 Art )D((+ defendant s#ould return but not in"ludin t#e interest be"ause loss not due to #is fault. LOSS ON NR%ITS AND ACCESSIONS4 Appl6 Art )D((+ pa6 3alue if "annot return <bot# plaintiff and defendant>
). 8#en one of t#e parties is inc!'!ci ! e#

Art )?// not obli ed to 0a@e an6 restitution EJCEPT insofar as #e #as been benefited b6 t#e pri"e=t#in re"ei3ed Benefit not ne"essaril6 a 0aterial and per0anent in"rease in fortune Proof of benefit in"u0bent upon t#e defendant+ in t#e absen"e of su"# proof+ t#e presu0ption is t#ere is no benefit=profit to t#e in"apa"itated person If still in t#e patri0on6 at t#e ti0e in"apa"it6 "eases+ dee0ed to #a3e been benefited. If #e as@s for annul0ent+ #e 0ust return it to t#e ot#er part6. If #e sCuanders+ it is ratifi"ation.
'. 8#en t#e t#in is los t#rou # t#e "!ul o" he '!r ( oblige# o re urn t#e sa0e <i.e. defendant>
Art )D(( return t#e fruits re"ei3ed AND t#e 3alue of t#in at t#e ti0e of loss+ &it# interest fro0 sa0e date LOSS TMRO%GM NORT%ITO%S E7ENT4 pa6 t#e 3alue of t#e t#in lost but not fruits and interests #6ting+ish)ent of the A'tion
Pa e A8 of 113
a. Art )?/' B6 r! i"ic! ion

Confir0ation=ratifi"ation4 "ures a defe"t of nullit6 A"@no&led 0ent4 re0edies defi"ien"6 of proof b. Art )D() 8#en t#e t#in is los t#rou # t#e "!ul o" he 'erson who h!s he righ o "ile t#e a"tion LOSS NOT TMRO%GM TME NA%LT+ e. . fortuitous e3ent4 not extin uis#ed be"ause extin uis#0ent li0ited onl6 to t#e loss b6 fault of plaintiff. %n5ust enri"#0ent if t#e loss is returned for t#e defendant to bear. Men"e+ t#e defendant "annot be obli ed to 0a@e restitution to t#e plaintiff be"ause of Art )D(' <"annot "o0pelled to return if t#e ot#er part6 does not return> Cannot extin uis# a"tion for annul0ent b6 an6 e3ent not i0putable to t#e fault or fraud of t#e plaintiff "ATI&ICATION "e7+isites of "atifi'ation a. Contra"t is voi#!ble9!nnull!ble <i.e. "onsent of one part6 is defe"ti3e> b. Ratifi"ation is 0ade wi h he 1nowle#ge o" he c!use for nullit6 ". At t#e ti0e of t#e ratifi"ation+ t#e "ause of nullit6 #as !lre!#( ce!se# to exist &or)s of "atifi'ation a. Art )?/? Express or ta"it4 exe"ute an a"t &#i"# ne"essaril6 i0plies an intention to &ai3e #is ri #ts E. . of E3PRESS4 an6 oral or &ritten 0anifestation of t#e person entitled to as@ for annul0ent t#at #e a rees to be bound b6 t#e "ontra"t or t#at #e &ill not see@ its annul0ent E. . of I%P*IED4 silen"e or a"Cuies"en"e a"ts s#o&in appro3al or adoption of t#e "ontra"t a""eptan"e and retention of benefits flo&in t#erefro0 b. Art )?/D B6 t#e parties t#e0sel3es or b6 t#e uardian in be#alf of an in"apa"itated part6 : Durin t#e existen"e of in"apa"it6 : Ri #t to ratif6 is trans0itted to t#e #eirs of t#e part6 entitled to su"# ri #t. #ffe'ts of "atifi'ation a. Art )?/' A"tion to annul is extin uis#ed b. Art )?/2 T#e "ontra"t is "leansed retroa"ti3el6 fro0 all its defe"ts fro0 t#e ti0e it &as "onstituted EJCEPTION4 Ri #t of ?rd persons prior to ratifi"ation
Chapter ,III$ Unenfor'ea%le Contra'ts

Chara'teristi's of Unenfor'ea%le Contra'ts ). T#e6 c!nno be en"orce# b6 a proper a"tion in "ourt '. T#e6 are sus"eptible of r! i"ic! ion ?. T#e6 c!nno be assailed b( hir# 'ersons Art )D(Unenfor'ea%le (isting+ishe( fro) "es'issi%le an( Ann+lla%le
UN#N&O"C#ABL# Produ"es NO le al effe"t unless r! i"ie# b6 "o0petent "ourt "# CI IBL# AN! ANNULLABL# Produ"e le al effe"ts unless se !si#e b6 "o0petent "ourt
0in(s of Unenfor'ea%le Contra'ts ). Entered into in t#e na0e of anot#er person b6 one &#o #as no aut#orit6 or no le al representation OR a"ted be6ond #is po&ers '. Do not "o0pl6 &it# Statute of Nrauds+ &#i"# are a ree0ents unenfor"eable unless in &ritten 0e0orandu0 and subs"ribed b6 t#e part6 "#ar ed a. Not to be perfor0ed within 1 year fro0 t#e 0a@in If no ti0e is fixed and not#in to s#o& t#at it "annot be perfor0ed &it#in a 6ear+ t#en not &it#in SoNG Partial perfor0an"e also ta@es it out of SON
Pa e A; of 113
b. Spe"ial pro0ise to answer for the (e%t@ (efa+lt or )is'arriage of anot#er De"!ul or
%isc!rri!ge in"lude liabilit6 for tort and are not to be restri"ted to defaults and 0is"arria es arisin out of "ontra"tsG Lust be coll! er!l onl6 and not pri0aril6 liable for t#e debt ". A ree0ent 0ade in 'onsi(eration of )arriage ot#er t#an A0utualB pro0ise to 0arr6 not li0ited to 0arr6in parties but also to pro0ises b6 a t#ird person to one of t#e parties "onte0platin t#e 0arria e d. ale of goo(s@ 'hattels or things in a'tion+ pri"ed [ P1(( unless bu6er a""ept and re"ei3e part of su"# oods and "#attels or t#e e3iden"es or so0e of t#e0 or pa6 at t#e ti0e so0e part of t#e pur"#ase 0one6. EJCEPTION4 sale is b6 au"tion and entr6 is 0ade b6 au"tioneer in #is sales boo@ <be"ause it "onstitutes suffi"ient 0e0orandu0> e. Leasing for period lon er t#an one 6ear OR sale of real property or of an interest t#erein f. "epresentation to the 're(it of a ?rd person ?. Bot# parties are in"apable of i3in "onsent to "ontra"t Art 11?3 Par 14 %naut#ori;ed "ontra"ts Governing r+les in Una+thoriMe( Contra'ts* Art )D(D Go3erned b6 Art )?)H <no one 0a6 "ontra"t in t#e na0e of t#e ot#er &it#out bein aut#ori;ed or unless #e #as b6 la& a ri #t to represent #i0G representation &it#out aut#orit6 or le al representation 0a@es t#e "ontra"t unenfor"eable> and prin"iples of A en"6 in Title J of t#is Boo@ : Does not #a3in bindin effe"t on t#e prin"ipal+ UN*ESS prin"ipal r! i"ies it &#i"# "ures t#e unaut#ori;ed "ontra"t. : A ent &#o binds #is prin"ipal &it#out aut#orit6 to do so is liable to ?rd persons. Art 11?3 Par 2* Contra"ts "o3ered b6 t#e Statute of Nrauds tat+te of &ra+(s* des"ripti3e of statutes &#i"# reCuires "ertain "lasses of "ontra"ts to be in &ritin . Lerel6 re ulates t#e for0alities of t#e "ontra"t ne"essar6 to render it enfor"eable. NOT APPLICABLE TO4 <)>A"tion for spe"ifi" perfor0an"e+ <'> 7iolation of t#e "ontra"t APPLICABLE TO4 E2ecu or( and not to "o0plete or exe"uted "ontra"ts intention of t#e parties be"o0e apparent b6 t#eir exe"ution. Mo&e3er+ partial perfor0an"e 0ust also be pro3en. Ex"lusi3e list of a ree0ents="ontra"ts enu0eratedG Rule of ex"lusion A personal defense <#en"e "annot be raised b6 ?rd persons> and t#e sa0e 0a6 be &ai3ed Does not deter0ine "redibilit6 or &ei #t of t#e e3iden"e+ 0erel6 "on"erned &it# t#e !#missibili ( t#ereof P+rpose of tat+te* Pre3ent <and not to en"oura e it> fraud and per5ur6 in t#e enfor"e0ent of obli ations dependin for t#eir e3iden"e upon t#e unassisted 0e0or6 of &itnesses+ b6 reCuirin "ertain enu0erated "ontra"ts and transa"tions to be e3iden"ed b6 a &ritin si ned b6 t#e part6 to be "#ar ed. : Pro3ides for t#e 0anner &#i"# "ontra"ts under it s#all be pro3ed : Does not atte0pt to 0a@e "ontra"ts in3alid if not exe"uted in &ritin + onl6 0a@es ine""ec ive t#e !c ion "or s'eci"ic 'er"orm!nce : Prin"ipal ai0s4 <)> pre3ent "o00ission of in5usti"e due to fault6 0e0or6+ <'> dis"oura in intentional 0isrepresentations <4$%%'N ('()4AND2( )4 N)%' e3iden"e of t#e a ree0ent and is used to s#o& t#e intention of t#e parties Lini0u0 reCuire0ent for &ritten 0e0orandu04 ). Na0es of t#e parties '. Ter0s and "onditions of t#e a ree0ent ?. Des"ription of t#e sub5e"t 0atter suffi"ient to render it "apable of identifi"ation D. Date and pla"e of t#e 0a@in of t#e a ree0ent 1. Si nature of t#e part6 assu0in t#e obli ation 3ow to ratify 'ontra'ts +n(er tat+te of &ra+(sL Art )D(1 ). Nailure to ob5e"t to t#e presentation of oral=parole e3iden"e to pro3e t#e sa0e '. A""eptan"e of benefits under t#e0 SoN "annot be in3o@ed &#en t#e "ontra"t #as been partl6 exe"uted
Pa e A= of 113
Ri #t of t#e parties &#en a "ontra"t is #N&O"C#ABL# +UT a publi" do"u0ent is NECESSAR, for its re istration Art )D(2 0a6 a3ail of t#eir ri #ts under Art )?1H <parties 0a6 "o0pel ea"# ot#er to obser3e t#e ne"essar6 for0 on"e t#e "ontra"t #as been perfe"ted> Art 11?3 Par 3* Contra"ts exe"uted b6 parties &#o are bot# in"apable of i3in "onsent to a "ontra"t Art )D(H a. Effe"t of ratifi"ation b6 t#e parent or uardian of one of t#e parties4 <express or i0plied> Con3erts t#e "ontra"t into a voi#!ble con r!c + at t#e option of t#e part6 &#o #as not ratified. T#e non.ratif6in part6 0a64 enfor"e t#e "ontra"t OR as@ for t#e annul0ent b. Effe"t of ratifi"ation b6 t#e parents or uardians of bot# parties4 3alidated fro0 t#e in"eption
Chapter IE$ ,oi( or Ine6istent Contra'ts

Chara'teristi's of ,oi(CIne6istent Contra'ts ). 7oid "rom he beginning '. Produ"es no e""ec &#atsoe3er nullit6 exist ipso 5ure+ 5ud 0ent of nullit6 is 0erel6 de"larator6 ?. Cannot be "onfir0ed or 3alidated <b6 pres"ription OR ratifi"ation>+ neit#er "an t#e ri #t to set up t#e defense of ille alit6 be &ai3ed Art )D(/ A**$)N 4'$3$ND$*A%)4$A : an6 person 0a6 in3o@e t#e inexisten"e of t#e "ontra"t &#ene3er 5uridi"al effe"ts founded t#ereon are asserted a ainst #i0 A'tion to !e'lare N+llity : ne"essar6 be"ause nobod6 "an ta@e t#e la& into #is o&n #ands : if t#e 3oid "ontra"t is still e ecutory+ no part6 need to brin an a"tionG but if one part6 brin s a"tion to enforce it+ nullit6 "an be set up as defense ,oi(Cine6istent 'ontra'ts (isting+ishe( fro) other (efe'tive 'ontra'ts
,OI! Defe"t is in#erent in t#e "ontra"t itself "# CI IBL# Defe"t is in t#eir effe"ts+ eit#er to one of t#e parties or to a ?rd part6 Based on eCuit6 and 0ore a 0atter of pri3ate interest No a"tion+ re0ains 3alid and produ"es all its effe"ts A"tion to res"ind pres"ribes in D 6ears
Latter of la& and publi" interest No le al effe"ts e3en if no a"tion is ta@en to set it aside A"tion to de"lare nullit6 of 3oid "ontra"ts ne3er pres"ribes ,OI! UN#N&O"C#ABL# Cannot be t#e basis of a"tions to enfor"e "o0plian"e Can ne3er be ratified and be"o0e enfor"eable Can be ratified and t#ereafter enfor"ed T#ere is no "ontra"t at all T#ere is a "ontra"t &#i"#+ #o&e3er+ "annot be enfor"ed unless properl6 ratified ,OI! ,OI!ABL# One of t#ose essential reCuisites is &antin + eit#er in Essential reCuisites for 3alidit6 is present+ B%T "onsent fa"t or in la& or is de"lared 3oid b6 statute is 3itiated No "ontra"t+ but onl6 appearan"e of one+ produ"es no 7alid until set aside+ 3alidit6 0a6 onl6 be assailed effe"t e3en if not set aside b6 dire"t a"tion <"ollateral dire"tl6+ ne3er b6 a ?rd person atta"@ allo&ed> Not sus"eptible of ratifi"ation La6 be rendered perfe"tl6 3alid b6 ratifi"ation A"tion to de"lare nullit6 does not pres"ribe+ per0anent+ A"tion for annul0ent pres"ribes in D 6ears e3en if t#e "ause of nullit6 "eased to exist
0in(s of ,oi(CIne6istent Contra'ts Art )D(/
*ontracts that are 3)$D

Art
). T#ose &#ose "ause+ ob5e"t or purpose is "ontrar6 to la&+ 0orals+ ood "usto0s+
Pa e AA of 113
)D(/ Par )
publi" order+ or publi" poli"6
a. Art )D)) 8#en t#e a"t "onstitutes a 'ri)inal offense <ille alit6 of "ause or ob5e"t>
IN PARI DE*I&TO R%LE ). BOTM are in '!ri #elic o No a"tion a ainst ea"# ot#er BOTM &ill be prose"uted RPC pro3ision relati3e to t#e disposal of effe"ts=instru0ents of a "ri0e s#all appl6 '. ONL, ONE is uilt6 INNOCENT PART, 0a6 "lai0 &#at #e #as i3en INNOCENT PART, not bound to "o0pl6 &it# #is pro0ise
b. Art )D)' 8#en t#e a"t is +nlawf+l but does not 'ri)inal offense
IN PARI DE*I&TO R%LE ). BOTM parties at fault Neit#er part6 0a6 re"o3er &#at #e #as i3en b6 3irtue of t#e "ontra"t Neit#er part6 0a6 de0and t#e perfor0an"e of t#e ot#er9s underta@in '. ONL, ONE is uilt6 INNOCENT PART, 0a6 de0and t#e return of &#at #e #as i3en &it#out obli ation to "o0pl6 &it# #is pro0ise PART, AT NA%LT "annot re"o3er &#at #e #as i3en b6 reason of t#e "ontra"t PART, AT NA%LT "annot as@ for t#e fulfill0ent of &#at #as been pro0ised to #i0
Not appli"able to fi'titio+s 'ontra'ts be"ause t#e6 refer to "ontra"ts &it# an ille al "ause or
sub5e"t.0atter <"ri0inal offense OR onl6 ille al>+ OR to "ontra"ts t#at are null and 3oid ab initio. Ni"titious or si0ulated "ontra"ts don9t #a3e "ause. E3&EPTIONS TO T7E IN PARI DE*I&TO RU*E General State0ent of t#e Ex"eption <Art )D)2>4 A ree0ent is not ille al 'er se+ but 0erel6 pro#ibited Pro#ibition is desi ned for t#e prote"tion of t#e plaintiff Plaintiff 0a6 re"o3er &#at #e paid or deli3ered if publi" poli"6 is en#an"ed I**E,A* PER SE : one t#at b6 uni3ersall6 re"o ni;ed standards is in#erentl6 or b6 its 3er6 nature bad+ i0proper+ i00oral or "ontrar6 to ood "ons"ien"e.
OT7ER SPE&IFI& E3&EPTIONS
". Art )D)D 8#en t#e P%RPOSE is illeg!l and 0one6 is paid or propert6 deli3ered t#erefore 0a6be
repudiated b6 one of t#e parties %efore the p+rpose has %een a''o)plishe( OR %efore any (a)age has %een 'a+se( to a 3r( person. Courts 0a6 allo& t#e part6 repudiatin t#e "ontra"t to re"o3er t#e 0one6 or propert6+ if t#e publi" interest &ill t#us be subser3ed.
d. Art )D)1 8#en t#e CONTRACT is illeg!l and one of t#e parties is INCAPABLE of i3in "onsent
"ourts 0a6 allo& re"o3er6 of 0one6=propert6 deli3ered b6 t#e in"apa"itated person+ if interest of 5usti"e so de0ands
e. Art )D)H 8#en t#e a0ount paid e2cee#s he m!2imum "i2e# b( l!w
of t#e 0axi0u0 pri"e 0a6 re"o3er su"# ex"ess
an6 person pa6in in ex"ess
f.
Art )D)- 8#en b6 3irtue of "ontra"t a laborer underta@es to &or@ longer h!n he m!2imum number o" hours of &or@ fixed b6 la& &or@ed 0a6 de0and additional "o0pensation for ser3i"e rendered be6ond t#e li0it
Pa e 1?? of 113
. Art )D)/ 8#en a laborer a rees to a""ept a lower w!ge t#an t#at set b6 la& entitled to re"o3er
defi"ien"6
#. Art )D'( 8#en t#e "ontra"t is #ivisible
if ille al ter0s "an be separated fro0 le al ones+ enfor"e latter In "ase of doubt+ "ontra"t is "onsidered as di3isible or separable. EJCEPTIONS4 ). Nature of "ontra"t reCuires indi3isibilit6 e. . "ontra"t of "o0pro0ise '. Intention of t#e parties is t#at t#e "ontra"t be entire e. . if &#at is 3oid be t#e essential part+ 3oid t#e entire "ontra"t. Di3isibilit6 &ill onl6 be follo&ed &#en t#e nullit6 affe"ts onl6 t#e se"ondar6 or a""essor6 obli ations. Art )D'' 8#en t#e "ontra"t is t#e DIRECT RES%LT of a 'revious illeg!l "ontra"t inexistent also 3oid and
i.
Art )D(/ Par D Art )D(/ Par 1 Art )D(/ Par 2 Art )D(/ Par H
'. T#ose &#ose ob5e"t is outside t#e "o00er"e of 0an ?. T#ose &#i"# "onte0plate an i0possible ser3i"e D. T#ose &#ere t#e intention of t#e parties relati3e to t#e prin"ipal ob5e"t of t#e "ontra"t
"annot be as"ertained
1. T#ose expressl6 pro#ibited are de"lared 3oid b6 la&
*ontracts that are $N'5$S%'N%

Art )D(/ Par '
). T#ose &#i"# are absolutel6 si0ulated or fi"titious
Art )?D1 Si0ulation of "ontra"ts 0a6 be ABSOL%TE <parties do not intend to be bound at all> or RELATI7E <parties "on"eal t#eir true a ree0ent>
Art )D(/ Par ?
Art )?D2 A%sol+te or &i'titio+s* 3oid '. T#ose &#ose "ause or ob5e"t did not exist at t#e ti0e of t#e transa"tion
"ight to set +p (efense of illegality 'annot %e waive( Art )D(/ The a'tion or (efense for the (e'laration of the ine6isten'e of a 'ontra't ). Art )D)( Does not pres"ribe+ defe"t is per0anent and in"urable '. Art )D') Is NOT a3ailable to :r# 'ersons &#ose interest is not #irec l( !""ec e# S Ratifi"ation 0a6 ta@e t#e for0 of a ne& "ontra"t+ in &#i"# "ase its 3alidit6 s#all be deter0ined onl6 b6 t#e "ir"u0stan"es at t#e ti0e of t#e exe"ution of t#e ne& "ontra"t. Mo&e3er+ t#e sa0e does not retroa"t to t#e "onstitution of t#e first "ontra"t. See T!ble o" De"ec ive &on r!c s in he ne2 '!ge@
Pa e 1?1 of 113
!#&#CTI,# CONT"ACT
Professor E. A. Labita
!#&#CTI,# CONT"ACT A TO NATU"# O& !#&#CT #&&#CT ON CONT"ACT A AILABL#L 3O-L -3O CAN A AILL -3#N TO A AILL CU"ABL#L 3O-L -3O CAN CU"#L -3#N TO CU"#L
Pa e 1?2 of 113
"# CI
IBL#
<Arts )?-) : )?-/> E"ono0i" pre5udi"e or da0a e to4 . o&ner . ?rd person . liti ant Can enerall6 be ASSAILED and C%RED b64 In5ured Part6 ENNECTS4 Lutual restitution
Contra"ts of g+ar(ians <a"ts of ad0inistration> &#en &ards t#e6 represent suffer lesion of 0ore t#an '1T of t#e 3alue of t#in Contra"ts in representation of a%sentees &#en latter suffers lesion of 0ore t#an '1T of 3alue of t#in
7ALID until res"inded
,ES but onl6 t#rou # DIRECT a'tion for res'ission No res"ission if4 a. plaintiff #as ot#er le al 0eans to obtain reparation <subsidiar6> b. plaintiff "annot return &#at 0ust be restored ". ob5e"t in t#e #ands of ?rd persons in ood fait# d. Contra"t appro3ed b6 "ourt <Art )?-2>
B6 &ard Or b6 uardian !# li em of &ard durin in"apa"it6 of &ard in a"tion a ainst ori inal uardian 8it#in D 6ears fro0 ainin <0inor> or re ainin <insane> "apa"it6 ,ES B6 ratifi"ation <Confir0ation b6 t#e &ard> B6 &ard 8it#in D 6ears fro0 <re> ainin "apa"it6
B6 absentee
8it#in D 6ears fro0 @no&led e of do0i"ile of absentee
,ES B6 pres"ription
B6 absentee
8it#in D 6ears fro0 @no&led e of do0i"ile or @no&led e of fraudulent "ontra"t
Contra"ts entered into b6 debtor &#o is a state of insol3en"6+ i.e. "ontra"ts entered into in fra+( of 're(itors 5Accion
P!uli!n!6
Contra"ts &#i"# refer to things in litigation &it#out t#e @no&led e and appro3al of liti ants or "o0petent 5udi"ial aut#orit6 All ot#er "ontra"ts (e'lare( %y law to be sub5e"t of res"ission E. . Art )(/- Partition
,ES but onl6 t#rou # DIRECT a'tion for res'ission No res"ission if4 a. plaintiff #as ot#er le al 0eans to obtain reparation <subsidiar6> b. plaintiff "annot return &#at 0ust be restored ". ob5e"t in t#e #ands of ?rd persons in ood fait#
B6 plaintiff."reditor B6 #eirs of "reditor B, "reditors of "reditors in5ured

5!ccion subrog! ori!6
B6 ot#er t#ird parties pre5udi"ed b6 t#e "ontra"t
8it#in D 6ears fro0 @no&led e of fraudulent "ontra"t
,ES B6 pres"ription
B6 "reditor
B6 part6 liti ant
,ES B6 pres"ription
B6 part6 liti ant
!#&#CTI,# CONT"ACT
TO NATU"# O& !#&#CT
#&&#CT ON CONT"ACT
AILABL#L 3O-L
-3O CAN A AILL
-3#N TO A AILL
CU"ABL#L 3O-L
-3O CAN CU"#L
-3#N TO CU"#L
Pa e 1?3 of 113
,OI!ABL#
<Arts )?/( : )D('> 7itiated "onsent ENNECT4 Cleanses defe"t of "ontra"t Does not pre5udi"e ri #t of ?P prior to ratifi"ation Lutual restitution
8ant of "apa"it6 .a e . insanit6 ,ES. Bot# t#rou # dire"t and "ollateral atta"@s. A"tion for annul0ent
All &#o are obli ed prin"ipall6 or subsidiaril6 <i.e. uarantors and sureties> In"apa"itated part6G not t#e part6 &it# "apa"it6 7i"ti0G not t#e part6 &#o "ause t#e defe"t
8it#in D 6ears fro0 "essation of <re> ainin "apa"it6 8it#in D 6ears fro04 . "essation of inti0idation+ 3iolen"e+ undue influen"e <"onsensual defe"t> . dis"o3er6 of 0ista@e or fraud
Consent is 3itiated b64

. 0ista@e or error . 3iolen"e and inti0idation <duress> . undue influen"e . fraud+ 0isrepresentation
7ALID until annulled b6 "ourt a"tion
,ES B6 ratifi"ation B6 pres"ription ,ES ) B6 ratifi"ation . Express . I0plied

<silen"e or a"Cuies"en"e+ a"ts s#o&in appro3al or adoption of "ontra"t+ a""eptan"e and retention of benefits>
8it#in D 6ears fro0 "essation of <re> ainin "apa"it6 B6 parties t#e0sel3es B6 uardian in be#alf of an in"apa"itated part6 durin existen"e of in"apa"it6 8it#in D 6ears fro04 . "essation of inti0idation+ 3iolen"e+ undue influen"e <"onsensual defe"t> . dis"o3er6 of 0ista@e or fraud
' B6 pres"ription Contra"t entere( into na)e of another &it#out aut#orit6 or in ex"ess of aut#orit6 7ALID but "annot be ENNORCED b6 a proper a"tion in "ourt ,ES. Not b6 dire"t a"tion but b6 !#&#N # of unenfor"eabilit6 of "ontra"t t#rou # )otion to (is)iss 'o)plaint on t#e round t#at "ontra"t is unenfor"eable ,ES. Not b6 dire"t a"tion but b6 !#&#N # of unenfor"eabilit6 of "ontra"t eit#er t#rou #4 ). )otion to (is)iss 'o)plaint on t#e round t#at "ontra"t is unenfor"eable '. ob5e"tion to presentation of oral evi(en'e to pro3e "ontra"t B6 o&ner of propert6 At an6 ti0e one part6 atte0pts to enfor"e "ontra"t a ainst t#e ot#er t#rou # a "ourt a"tion B6 ratifi"ation Person in &#ose na0e t#e "ontra"t &as entered into
UN#N&O"C#ABL #
<Arts )D(? : )D(->
Contra"ts "o3ered b6 tat+te of &ra+(s and not "o0pl6in &it# reCuire0ent of a &ritten 0e0o
7ALID but "annot be ENNORCED b6 a proper a"tion in "ourt
B6 ot#er part6 B6 #is pri3ies <#eirs+ representati3es and assi ns>
At an6 ti0e one part6 atte0pts to enfor"e "ontra"t a ainst t#e ot#er t#rou # a "ourt a"tion
B6 a"@no&led e0ent B6 perfor0an"e of oral "ontra"t B6 failure to ob5e"t seasonabl6 to presentation of oral e3iden"e B6 a""eptan"e of benefits under t#e "ontra"t
B6 part6 a ainst &#o0 t#e "ontra"t is bein enfor"ed
Pa e 1?1 of 113
Both parties are le all6 in'apa'itate( to a"t
7ALID but "annot be ENNORCED b6 a proper a"tion in "ourt
,ES. Not b6 dire"t a"tion but b6 !#&#N # of unenfor"eabilit6 of "ontra"t t#rou # )otion to (is)iss 'o)plaint on t#e round t#at "ontra"t is unenfor"eable ,ES. B6 an a'tion for (e'laration for n+llity B6 (efense of n+llity
B6 ot#er part6 B6 #is pri3ies <#eirs+ representati3es and assi ns> B6 uardian At an6 ti0e one part6 atte0pts to enfor"e "ontra"t a ainst t#e ot#er t#rou # a "ourt a"tion
B6 parents or uardians of bot# parties B6 "onfir0ation Bot# parties after <re> ainin "apa"it6 to a"t
,OI! or IN#EI T#NT <Arts )D(/ : )D''>
Cause+ ob5e"t or purpose of "ontra"t "ontrar6 to la&+ ood "usto0s+ 0orals+ publi" order or publi" poli"6 <Art )D()+ Par )>
DOES NOT CREATE RIGMTS AND CANNOT ILPOSE OBLIGATION
B6 inno"ent part6 B6 ?rd persons &#ose interest are dire"tl6 affe"ted <If in '!ri #elic o+ neit#er #as an a"tion a ainst ea"# ot#er> B6 an6 of t#e "ontra"tin parties B6 ?rd persons &#ose interests are dire"tl6 affe"ted
I0pres"riptible
Cannot be "ured
..
..
One or so)e of essential re7+isites of 3alid "ontra"t la"@in in fa"t or in la& a. Absolut el6 si0ulated b. T#ose &#ose "ause or ob5e"t did not exist ". Ob5e"t outside t#e "o00er"e of 0an d. Conte0 plate an i0possible ser3i"e e. 8#ere intention of parties re4 prin"ipal ob5e"t of "ontra"t "annot be as"ertained
,ES. B6 an a'tion for (e'laration for n+llity B6 (efense of n+llity
I0pres"riptible
Cannot be "ured
..
..
Pa e 1?5 of 113
<Art )D(' Pars ' to 2>
Contra"ts expressl6 pro#ibited b6 la& <Art )D(/ Par H>
,ES. B6 an a'tion for (e'laration for n+llity B6 (efense of n+llity
B6 part6 &#ose prote"tion t#e pro#ibition of t#e la& is desi ned B6 ?rd part6 &#ose interests are dire"tl6 affe"ted
I0pres"riptible
Cannot be "ured
..
..
Pa e 1?8 of 113
Title III$ NATU"AL OBLIGATION

&o+r types of o%ligations in B+ri(i'al s'ien'e redu"ed to t&o b6 5urispruden"e ). Loral obli ations : duties of "ons"ien"e "o0pletel6 outside t#e field of la& '. Natural obli ations : duties not san"tioned b6 an6 a"tion but #a3e a relati3e 5udi"ial effe"t ?. Ci3il obli ations : 5uridi"al obli ations t#at are in "onfor0it6 &it# positi3e la& but are "ontrar6 to 5uridi"al prin"iples and sus"eptible of bein annulledG enfor"eable b6 a"tion D. Lixed obli ations : full 5uridi"al effe"tG falls under "i3il obli ations !efinition Art )D'? Not bein based on positi3e la& but on eCuit6 and natural la&+ do not rant a ri #t of a"tion to enfor"e t#eir perfor0an"e+ but after 3oluntar6 fulfill0ent b6 t#e obli or+ t#e6 aut#ori;e t#e retention of &#at #as been deli3ered or rendered b6 reason t#ereof. Lid&a6 bet&een "i3il and t#e purel6 0oral obli ation. AObli ation &it#out a san"tion+B sus"eptible of 3oluntar6 perfor0an"e+ but not t#rou # "o0pulsion b6 le al 0eans. Real obli ation &#i"# la& denies a"tion+ but &#i"# t#e debtor 0a6 perfor0 3oluntaril6. Patri0onial and presupposes a prestation. "e7+isites of Nat+ral O%ligation ). Kuridi"al tie bet&een t&o persons. '. Tie is not i3en effe"t b6 la& but instead b6 t#e conscience o" m!n distin uis#es it fro0 "i3il obli ations. As (isting+ishe( fro) Civil O%ligations
As to enfor"eabilit6 As to basis NATU"AL Not b6 "ourt a"tions+ but b6 ood "ons"ien"e of debtor ECuit6 and natural 5usti"e CI,IL Court a"tion or t#e "oer"i3e po&er of publi" aut#orit6 Positi3e la&
As (isting+ishe( fro) 2oral O%ligations

NATU"AL T#ere is a 5uridi"al tie Perfor0an"e b6 t#e debtor is a le al fulfill0ent of t#e obli ation A true obli ation &it# a le al tie bet&een debtor and "reditor PU"#L4 2O"AL T#ere is no 5uridi"al tie A"t is purel6 liberalit6 Latter is entirel6 &it#in t#e do0ain of 0orals
Conversion to Civil O%ligation GENERAL R%LE4 Partial pa60ent of a natural obli ation does not 0a@e it "i3ilG t#e part paid "annot be re"o3ered but t#e pa60ent of t#e balan"e "annot be enfor"ed. appli"able onl6 to natural obli ation be"ause of pres"ription or la"@ of for0alities <nullit6 due to for0 e. . Art )D?(> and NOT to natural obli ation sub5e"t to ratifi"ation or "onfir0ation. Pa60ent b6 0ista@e is not 3oluntar6 and 0a6 be re"o3ered. Pa60ent is 3oluntar6 &#en t#e debtor @ne& t#at t#e obli ation is a natural one. One &#o pa6s a natural obli ation+ belie3in it to be "i3il+ does not t#ereb6 re"o ni;e t#e natural obli ationG and t#ere bein no "i3il obli ation eit#er+ #e "an re"o3er &#at #e #as paid. T#e debtor #o&e3er #as t#e burden of pro3in t#e 0ista@e. ). B6 no3ation '. B6 "onfir0ation or ratifi"ation #6a)ples
Art )D'D 8#en t#e ri #t to sue upon a "i3il obli ation #as lapsed b6 extin"ti3e pres"ription+ t#e obli or &#o 3oluntaril6 perfor0s t#e "ontra"t "annot re"o3er &#at #e #as deli3ered or t#e 3alue of t#e ser3i"e #e
Pa e 1?; of 113
#as rendered. Art )D'1 8#en &it#out t#e @no&led e OR a ainst t#e &ill of t#e debtor+ a ?rd person pa6s a debt &#i"# t#e obli or is not le all6 bound to pa6 be"ause t#e a"tion t#ereon #as pres"ribed+ but t#e debtor later 3oluntaril6 rei0burses t#e t#ird peson t#e obli or "annot re"o3er &#at #e #as paid. 8#en a 0inor )-.') entered into a "ontra"t &it#out t#e "onsent of t#e parent or uardian+ after t#e annul0ent of t#e "ontra"t+ 3oluntaril6 returns t#e &#ole t#in or pri"e re"ei3ed+ not&it#standin t#at #e #as not been benefited t#ereb6+ t#ere is no ri #t to de0and t#e t#in or pri"e t#us returned. 8#en a 0inor )-.') entered into a "ontra"t &it#out t#e "onsent of t#e parent or uardian+ 3oluntaril6 pa6s a su0 of 0one6 or deli3ers a fun ible t#in in fulfill0ent of an obli ation+ t#ere s#all be no ri #t to re"o3er t#e sa0e fro0 t#e obli e &#o #as spent or "onsu0ed it in ood fait#. : : : : : Not t#e 3oluntar6 pa60ent t#at pre3ents re"o3er6+ but t#e "onsu0ption or spendin of t#e t#in or 0one6 in ood fait#. T#is arti"le "reates an ex"eption to t#e rule of 0utual restitution. Linor &ould #a3e been reCuired to return &#ate3er #e re"ei3ed upon annul0ent of "ontra"t. Good fait#4 belief t#at debtor #as "apa"it6 to deli3er t#e ob5e"t of "ontra"t Nun ible t#in 4 "onsu0able Non."onsu00able4 debtor "annot re"o3er if no lon er in t#e possession of t#e "reditor+ be"ause t#e ri #t to re"o3er presupposes existen"e of t#in .
Art )D'2
Art )D'H
Art )D'-
8#en after an a"tion to enfor"e a "i3il obli ation #as failed+ t#e defendant 3oluntaril6 perfor0s t#e obli ation+ #e "annot de0and t#e return of &#at #e #as deli3ered or t#e pa60ent of t#e 3alue of t#e ser3i"e #e #as rendered. 8#en a testate or intestate #eir 3oluntaril6 pa6s a debt of a de"edent ex"eedin t#e 3alue of t#e propert6 &#i"# #e re"ei3ed b6 &ill or b6 t#e la& of testa"6 fro0 t#e estate of t#e de"eased+ t#e pa60ent is 3alid and "annot be res"inded b6 t#e pa6er. 8#en a &ill is de"lared 3oid be"ause it #as not been exe"uted in a""ordan"e &it# t#e for0alities reCuired b6 la&+ but one of t#e intestate #eirs+ after t#e settle0ent of t#e debts of t#e de"eased+ pa6s a le a"6 in "o0plian"e &it# a "lause in t#e defe"ti3e &ill+ t#e pa60ent is effe"ti3e and irre3o"able.
Art )D'/
Art )D?(
Pa e 1?= of 113
Title I,$ # TOPP#L

!efinition Art )D?) Ad0ission or representation is rendered "on"lusi3e upon t#e person 0a@in it+ and "annot be denied or dispro3ed as a ainst t#e person rel6in t#ereon. : Bar &#i"# pre"ludes a person fro0 den6in or assertin an6t#in to t#e "ontrar6 of t#at &#i"# in #as+ in "onte0plation of la&+ been establis#ed as t#e trut#+ eit#er b6 t#e a"ts of 5udi"ial or le islati3e offi"ers or b6 #is o&n deed or representation+ eit#er express or i0plied. : Con"ludes t#e trut# in order to pre3ent false#ood and fraud+ and i0poses silen"e on t#e part6 onl6 &#en in "ons"ien"e and #onest6 #e s#ould not be allo&ed to spea@. : Ori in is in eCuit6 and is t#erefore based on 0oral ri #t and natural 5usti"e : Cannot be predi"ated on an ille al a"t
#.UITABL# # TOPP#L La6 arise e3en &#en t#ere is no intention on t#e part of t#e person estopped to relinCuis# an6 existin ri #t NreCuentl6 "arries i0pli"ation of fraud In3ol3es t#e "ondu"t of bot# parties -AI,#" 7oluntar6 and intentional abandon0ent or relinCuis#0ent of a @no&n ri #t No i0pli"ation of fraud In3ol3es t#e a"t or "ondu"t of onl6 one of t#e parties "ATI&ICATION Bound be"ause #e intended to be
# TOPP#L Bound not&it#standin t#e fa"t t#at t#ere &as no su"# intention+ be"ause t#e ot#er part6 &ill be pre5udi"ed and defrauded b6 #is "ondu"t unless t#e la& treats #i0 as le all6 bound
0in(s of #stoppel > Art )D??4 Estoppel 0a6 be in pais or %y (ee( A. TECMNICAL ESTOPPEL ). B6 re"ord : pre"lusion to den6 t#e trut# of 0atters set fort# in a re"ord+ &#et#er 5udi"ial or le islati3e+ and also to den6 t#e fa"ts ad5udi"ated b6 a "ourt of "o0petent 5urisdi"tion i. E. . "on"lusi3eness of 5ud 0ent <estoppel b6 5ud 0ent> on t#e parties to a "ase+ &#i"# a""ordin to Sir is broader t#an res ju#ic! ! '. B6 deed : bar &#i"# pre"ludes on part6 to a deed and #is pri3ies fro0 assertin as a ainst t#e ot#er part6 and #is pri3ies an6 ri #t or title in dero ation of t#e deed+ or fro0 den6in t#e trut# of an6 0aterial fa"ts asserted in it usuall6 &ritten do"u0ents
B. EI%ITABLE ESTOPPEL <estoppel in '!is> : be"ause of so0et#in &#i"# #e #as done or o0itted to do+
a part6 is denied t#e ri #t to plead or pro3e an ot#er&ise i0portant a"t Essential ele0ents of estoppel in pais in relation to t#e part6 sou #t to be estopped4 ). Condu"t a0ountin to false representation or "on"eal0ent of 0aterial fa"ts+ or at least "al"ulated to "on3e6 t#e i0pression t#at t#e fa"ts are ot#er&ise t#an and in"onsistent &it#+ t#ose &#i"# t#e part6 subseCuentl6 atte0pts to assert '. Intent+ or at least expe"tation t#at t#is "ondu"t s#all be a"ted upon b6 or at least influen"e+ t#e ot#er part6 ?. !no&led e+ a"tual or "onstru"ti3e+ of t#e real fa"ts Essential ele0ents of estoppel in pais in relation to t#e part6 "lai0in t#e estoppel4 ). La"@ of @no&led e or of t#e 0eans of @no&led e of t#e trut# as to t#e fa"ts in Cuestion '. Relian"e+ in ood fait#+ upon t#e "ondu"t or state0ents of t#e part6 to be estopped ?. A"tion or ina"tion based t#ereon of su"# "#ara"ter as to "#an e t#e position or status of t#e part6 "lai0in t#e estoppel+ to #is in5ur6+ detri0ent or pre5udi"e POSITI.E ESTOPPE* IN PAIS
Pa e 1?A of 113
). Estoppel b6 representation or misrepresentation <Art )D?H or estoppel a ainst o&ners>

8#en a "ontra"t bet&een ?rd persons "on"ernin i00o3able propert6+ one of t#e0 is 0isled b6 a person &it# respe"t to t#e o&ners#ip or real ri #t o3er real estate+ t#e latter is pre"luded fro0 assertin #is le al title or interest t#erein+ pro3ided all t#ese reCuisites are present4 ). Nraudulent representation or &ron ful "on"eal0ent of fa"ts @no&n to t#e part6 estopped '. Part6 pre"luded 0ust intent t#at t#e ot#er s#ould a"t upon t#e fa"ts as 0isrepresented ?. Part6 0isled 0ust #a3e been una&are of t#e true fa"ts D. Part6 defrauded 0ust #a3e a"ted in a""ordan"e &it# t#e 0isrepresentation
'. Estoppel b6 acceptance of benefits <Art )D?- or estoppel fro0 benefits> One &#o #as
allo&ed anot#er to assu0e apparent o&ners#ip of personal propert6 for t#e purpose of 0a@in an6 transfer of it+ "annot+ if #e re"ei3ed t#e su0 for &#i"# a pled e #as been "onstituted+ set up #is o&n title to defeat t#e pled e of t#e propert6+ 0ade b6 t#e ot#er to a pled e &#o re"ei3ed t#e sa0e in ood fait# and for 3alue.
?. +romissory estoppel An estoppel 0a6 arise fro0 0a@in of a pro0ise+ e3en t#ou # &it#out
"onsideration+ if it &as intended t#at t#e pro0ise s#ould be relied upon and in fa"t it &as relied upon+ and if a refusal to enfor"e it &ould be 3irtuall6 to san"tion t#e perpetuation of fraud or &ould result in ot#er in5usti"e. b. A pro0ise "annot be t#e basis of an estoppel if an6 ot#er essential ele0ent is la"@in . ". <us i"i!ble reli!nce or irre'!r!ble #e rimen to t#e pro0ise are reCuisite fa"tors. d. Ca0e fro0 An lo.A0eri"an La&+ b6 3irtue of Art )D?' &#i"# adopts prin"iple of estoppel NE,ATI.E ESTOPPE* IN PAIS ). 'stoppel by laches : failure or ne le"t+ for an unreasonable and unexplained len t# of ti0e+ to do t#at &#i"#+ b6 exer"isin due dili en"e+ "ould or s#ould #a3e been done earlier. Publi" poli"6 reCuires for t#e pea"e of so"iet6+ dis"oura e0ent of stale "lai0s and la"#es+ unli@e statute of li0itations+ is not a 0ere Cuestion of ti0e but prin"ipall6 a Cuestion of ineCuit6 or unfairness of per0ittin a ri #t or "lai0 to be enfor"ed or asserted. Dis"retionar6 on t#e part of t#e "ourt. ReCuisites of la"#es4 a. Condu"t on part of t#e defendant+ or one under &#o0 #e "lai0s+ i3in rise to t#e situation "o0plained of b. Dela6 in assertin "o0plainant9s ri #t after #e #ad @no&led e of t#e defendant9s "ondu"t and after #e #as #ad an opportunit6 to sue ". La"@ of @no&led e or noti"e on t#e part of t#e defendant t#at t#e "o0plainant &ould assert t#e ri #t on &#i"# #e bases #is suit d. In5ur6 or pre5udi"e to t#e defendant in t#e e3ent relief is a""orded to t#e "o0plainant !isting+ishe( fro) pres'ription
LAC3# Con"erned &it# e""ec of dela6 Prin"ipall6 Cuestion of ineCuit6 of per0ittin a "lai0 Not based on statute but on eCuit6 Not based on fixed ti0e P"# C"IPTION Con"erned &it# "!c of dela6 Latter of ti0e Statutor6 Nixed ti0e
'. 'stoppel by silence . AOne &#o is silent &#en #e ou #t to spea@ &ill not be #eard to spea@
&#en #e ou #t to be silent.B Lere inno"ent silen"e &ill not &or@ an estoppel+ t#ere 0ust also be so0e ele0ent of turpitude or ne li en"e "onne"ted &it t#e silen"e b6 &#i"# anot#er is 0isled to #is in5ur6. Closel6 "onne"ted to ESTOPPE* +/ A&QUIES&EN&E4 a person is pre3ented fro0 0aintainin a position in"onsistent &it# one in &#i"# #e #as a"Cuies"ed. Persons %o+n( Art )D?/ Effe"ti3e onl6 as bet&een t#e parties t#ereto or t#eir su""essors in interest <pri3ies in blood li@e #eirs+ and in estate li@e rantees>.
Pa e 11? of 113
8#6O Lutualit6 is an essential ele0ent of an estoppel+ an estoppel 0ust bind bot# parties or neit#er is bound. No es o''el !g!ins governmen . It is not estopped b6 0ista@e or error on t#e part of its offi"ials or a ents+ t#e erroneous appli"ation and enfor"e0ent of t#e la& b6 publi" offi"ers does not pre3ent a subseCuent "orre"t appli"ation of t#e statute.
Cases where estoppels applies

Art )D?D SubseCuen t a"Cuisition of title Art )D?1 8#en a person &#o is not t#e o&ner of a t#in sells or alienates and deli3ers it+ and later t#e seller or rantor a"Cuires title t#ereto+ su"# title passes b6 operation of la& to t#e bu6er or rantee.
If a person in representation of anot#er sells or alienates a t#in + t#e for0er "annot subseCuentl6 set up #is o&n title as a ainst t#e bu6er or rantee. A lessee or a bailee is estopped fro0 assertin title to t#e t#in leased or re"ei3ed+ as a ainst t#e lessor or bailor.
Art )D?2 Tenant Art )D?H Estoppel a ainst o&ner
8#en a "ontra"t bet&een ?rd persons "on"ernin i00o3able propert6+ one of t#e0 is 0isled b6 a person &it# respe"t to t#e o&ners#ip or real ri #t o3er real estate+ t#e latter is pre"luded fro0 assertin #is le al title or interest t#erein+ pro3ided all t#ese reCuisites are present4 ). '. ?. D. Nraudulent representation or &ron ful "on"eal0ent of fa"ts @no&n to t#e part6 estopped Part6 pre"luded 0ust intent t#at t#e ot#er s#ould a"t upon t#e fa"ts as 0isrepresented Part6 0isled 0ust #a3e been una&are of t#e true fa"ts Part6 defrauded 0ust #a3e a"ted in a""ordan"e &it# t#e 0isrepresentation
Art )D?Estoppel fro0 benefits
One &#o #as allo&ed anot#er to assu0e apparent o&ners#ip of personal propert6 for t#e purpose of 0a@in an6 transfer of it+ "annot+ if #e re"ei3ed t#e su0 for &#i"# a pled e #as been "onstituted+ set up #is o&n title to defeat t#e pled e of t#e propert6+ 0ade b6 t#e ot#er to a pled e &#o re"ei3ed t#e sa0e in ood fait# and for 3alue.
Pa e 111 of 113
Title ,$ T"U T
!efinition Trust is t#e le al relations#ip bet&een one person #a3in an EI%ITABLE O8NERSMIP in propert6 and anot#er person O8NING TME LEGAL TITLE to su"# propert6+ t#e eCuitable o&ners#ip of t#e for0er entitlin #i0 to t#e perfor0an"e of "ertain duties and t#e exer"ise of "ertain po&ers b6 t#e latter. Chara'teristi' of Tr+st ). It is a relations#ip '. A relations#ip of fidu"iar6 "#ara"ter ?. A relations#ip &it# respe"t to propert6+ not one in3ol3in 0erel6 personal duties D. It in3ol3es t#e existen"e of eCuita#ble duties i0posed upon t#e #older of t#e title to t#e propert6 to deal &it# it for t#e benefit of anot#er 1. It arises as a result of a 0anifestation of intention to "reate t#e relations#ip Governing r+les in Tr+st Art )DD' Prin"iples of t#e eneral la& of trusts are transplanted to t#e P#ilippine soil Parties in a Tr+st Art )DD( A person &#o establis#es a trust is "alled t#e trustorG one in &#o0 "onfiden"e is reposed as re ards propert6 for t#e benefit of anot#er person is @no&n as t#e trusteeG and t#e person for &#ose benefit t#e trust #as been "reated is referred to as t#e benefi"iar6. TR%STOR : Establis#es a trust TR%STEE : One in &#o0 "onfiden"e is reposed as re ards propert6 for t#e benefit of anot#er person BENENICIAR, or ces ui 4ue rus : Person for &#ose benefit t#e trust #as been "reated
Liabilit6 of trustee &#o 3iolates trust is personal. T#e a"tion <nature of a eneral de0and for da0a es> "an be 0aintained b6 ces ui 4ue rus or persons "lai0in under #i0 or b6 "reator of t#e trust onl6 a ainst t#e trustee. Cestui Cue trust4 Not al&a6s ne"essar6 t#at s#ould be na0ed+ or e3en be in existen"e at t#e ti0e t#e trust is "reated in #is fa3or.
0in(s of Tr+st Art )DD) Trusts are eit#er express or i0plied. EJPRESS trusts are "reated b6 t#e in en ion of t#e trustor or of t#e parties. ILPLIED trusts "o0e into bein b6 o'er! ion o" l!w.
). #EP"#
T"U T "an "o0e into existen"e ONL, b6 t#e 0anifestation of an intention <0anifested b6 "ondu"t or b6 &ords> to "reate it b6 t#e one #a3in le al and eCuitable do0inion o3er t#e propert6 0ade sub5e"t to it. Disables t#e trustee fro0 a"Cuirin for #is o&n benefit t#e propert6 "o00itted to #is 0ana e0ent or "ustod6+ at least &#ile #e does not openl6 repudiate t#e trust and 0a@e su"# repudiation @no&n to t#e benefi"iar6.
Proof re7+ire( for #6press Tr+st Art )DD? No express trust "on"ernin an i00o3able or an6 interest t#erein 0a6 be proved by parol evidence.
8ritin ne"essar6 to 'rove itG not for t#e 3alidit6 but for t#e p+rposes of proof
it is in t#e nature of a Statute of Nraud EJCEPTION4 If propert6 sub5e"t to trust is not real estate or an interest t#erein+ it 0a6 be pro3ed b6 an6 "o0petent e3iden"e in"ludin parol e3iden"e "e7+isites of #6press Tr+st ). Co0petent trustor '. Co0petent trustee ?. As"ertainable trust res
Pa e 112 of 113
D. Suffi"ientl6 "ertain benefi"iaries &or) of an #6press Tr+st Art )DDD No parti"ular &ords are reCuired for t#e "reation of an express trust+ it bein suffi"ient t#at a trust is clearly intended-ant of Tr+stee Art )DD1 No trust s#all fail be"ause t#e trustee appointed #eclines he #esign! ion+ %NLESS t#e "ontrar6 s#ould appear in t#e instru0ent "onstitutin t#e trust. 8#ere a trustee dies+ resi ns+ suffers an6 le al in"apa"it6+ t#e trust does not fail but a ne& trustee &ill be appointed+ &#i"# &ill be 0ade b6 t#e proper "ourt %NLESS b6 t#e ter0s of t#e trust+ ot#er pro3ision is 0ade for t#e appoint0ent of su""essor trustee. 8#6O To per0it it to fail for t#is reason &ould be "ontrar6 to t#e intention of t#e trustor in "reatin a trust &#o is pri0aril6 interested in t#e disposition of t#e benefi"ial interest in t#e propert6+ and t#e 0atter of its ad0inistration is a subsidiar6 "onsideration. A''eptan'e %y %enefi'iary Art )DD2 A""eptan"e b6 t#e benefi"iar6 is ne"essar6. Ne3ert#eless+ if t#e trust i0poses no onerous "ondition upon t#e benefi"iar6+ #is a""eptan"e s#all be PRES%LED+ if t#ere is no proof to t#e "ontrar6.
'. I2PLI#! T"U T "o0e into existen"e eit#er t#rou # i0pli"ation of an intention to "reate a trust as
a 0atter of la& or t#rou # t#e i0position of t#e trust irrespe"ti3e of and e3en "ontrar6 to an6+ su"# intention. 3ow to esta%lish I)plie( Tr+sts Art )DD) Trusts are eit#er e press or implied. Express trusts are "reated b6 t#e intention of t#e trustor or of t#e parties. I0plied trusts "o0e into bein b6 operation of la&.
a. RES%LTING : arises &#ere a person 0a@es or "auses to be 0ade a disposition of propert6 under
"ir"u0stan"es &#i"# raise an inferen"e t#at #e does not intend t#at t#e person ta@in or #oldin t#e propert6 s#ould #a3e benefi"ial interest in t#e propert6 Sir Labita 4 effe"t of failure to "reate an express trust+ did not "o0pl6 &it# t#e proper for0alit6
b. CONSTR%CTI7E : i0posed &#ere a person #oldin title to propert6 is sub5e"t to an eCuitable dut6 to
"on3e6 it to anot#er on t#e round t#at #e &ould be un5ustl6 enri"#ed if #e &ere per0itted to retain it. T#e dut6 to "on3e6 t#e propert6 arises be"ause it &as a"Cuired t#rou # fraud+ duress+ undue influen"e+ or 0ista@e or t#rou # brea"# of fidu"iar6 dut6 or t#rou # t#e &ron ful disposition of anot#er9s part6. Sir Labita 4 T#e trustee ne3er intended to be a trustee+ per#aps #e intended to be t#e o&ner. T#e la& i0posed on #i0 t#e obli ation of t#e trustee be"ause t#e real o&ner &ill be pre5udi"ed <or &ill suffer irreparable da0a e> if no i0plied trust is "reated b6 la& 3ow to prove i)plie( tr+st Art )D1H An i0plied trust 0a6 be proved by oral evidence. #6a)ples of i)plie( tr+st
Art )DDTrust fro0 pa60ent Resul ing EJCEPTIONS4 T#ere is an i0plied trust &#en propert6 is sold+ and t#e le al estate is ranted to one part6 but t#e pri"e is paid b6 anot#er for t#e purpose of #a3in t#e benefi"ial interest of t#e propert6. T#e for0er is a trustee+ &#ile t#e latter is t#e benefi"iar6. Mo&e3er if t#e person to &#o0 t#e title is "on3e6ed is a "#ild+ le iti0ate or ille iti0ate+ of t#e one pa6in t#e pri"e of t#e sale+ no trust is i0plied b6 la&+ it bein disputabl6 presu0ed t#at t#ere is a ift in fa3or of t#e "#ild.
). Last part of t#e arti"le <in lo"o parentis>
Pa e 113 of 113
Art )DD/ Resul ing
'. A"tual "ontrar6 intention is pro3ed e. . fraudulent transfers T#ere is also an i0plied trust &#en a donation is 0ade to a person but it appears t#at alt#ou # t#e le al estate is trans0itted to t#e done+ #e ne3ert#eless is eit#er to #a3e no benefi"ial interest or onl6 a part t#ereof. E. . So0ebod6 else is t#e true benefi"iar6 li@e an infant son If t#e pri"e of a sale of propert6 is loaned or paid b6 one person for t#e benefit of anot#er and t#e "on3e6an"e is 0ade to lender or pa6or to se"ure t#e pa60ent of t#e debt+ a trust arises b6 operation of la& in fa3or of t#e person to &#o t#e 0one6 is loaned or for &#o0 it is paid. T#e latter 0a6 redee0 t#e propert6 and "o0pel a "on3e6an"e t#ereof to #i0. E. . Na@pil 3s. 7alde; in Le Prof 8#en land passes b6 su""ession to an6 person and #e "auses t#e le al title to be put in t#e na0e of anot#er+ a trust is establis#ed b6 i0pli"ation of la& for t#e benefit of t#e true o&ner. If t&o or 0ore persons a ree to pur"#ase propert6 and b6 "o00on "onsent t#e le al title is ta@en in t#e na0e of one of t#e0 for t#e benefit of all+ a trust is "reated b6 for"e of la& in fa3or of t#e ot#ers in proportion to t#e interest of ea"#.
Art )D1( Resul ing
Art )D1)
Art )D1' Title in one "o. o&ner Resul ing Art )D1? Resul ing Art )D1D
Art )D11 &ons ruc ive in "!vor o" he owner Art )D12
8#en propert6 is "on3e6ed to a person in relian"e upon #is de"lared intention to #old it for+ or transfer it to anot#er or t#e rantor+ t#ere is an i0plied trust in fa3or of t#e person &#ose benefit is "onte0plated. If an absolute "on3e6an"e of propert6 is 0ade in order to se"ure t#e perfor0an"e of an obli ation of t#e rantor to&ard t#e rantee+ a trust b6 3irtue of la& is establis#ed. If t#e fulfill0ent of t#e obli ation is offered b6 t#e rantor &#en it be"o0es due+ #e 0a6 de0and re"on3e6an"e of t#e propert6 to #i0. 8#en an6 trustee+ uardian or ot#er person #oldin a fidu"iar6 relations#ip uses trust funds for t#e pur"#ase of propert6 and "auses t#e "on3e6an"e to be 0ade for #i0 or to a t#ird person+ a trust is establis#ed b6 operation of la& in fa3or of t#e person to &#o0 t#e funds belon .
If propert6 is a"Cuired t#rou # 0ista@e or fraud+ t#e person obtainin it is+ b6 for"e of la&+ "onsidered a trustee of an i0plied trust for t#e benefit of t#e person fro0 &#o0 t#e propert6 "o0es.

Obligatio Ns and Contract S: Expanded Course Outline Professor E. A. Labitag

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Obligatio Ns and Contract S: Expanded Course Outline Professor E. A. Labitag

Uploaded by

Copyright:

Available Formats

OBLIGATIO NS AND CONTRACT S

Expanded Course Outline Professor E. A. Labita

University of the Philippines College of Law

Professor #$ A$ La%itag 'nd Se0ester+ A, '((-.'((/

1. Form in which he oblig! ion is m!ni"es e# $ "annot be "onsidered essential

B. CONT"ACT EEx.Contra"tu+ Culpa Contra"tualF

C. .UA I/CONT"ACT or !#LICT EIuasi Ex.Contra"tuF

). Negotiorum gestio <offi"ious 0ana e0ent>

'. Solutio indebiti <pa60ent not due>

Art ')H) Art ')H'

PUNI 3#! B4 LA- EEx.Deli"tu+ Ex.Lalefi"io+ Culpa Cri0inalF

GENERAL R%LE4 Ci3il liabilit6 is a ne"essar6 "onseCuen"e of "i3il liabilit6

!istin'tion %etween .+asi/(eli'ts an( Cri)es

Liabilit6 for da0a es

A0ount of e3iden"e Co0pro0ise

1. MO84 Di3isible and Indi3isible <Art )''?.)''1>

). Le al <Art ))1-> fro0 la&

2. Indi3idual : onl6 one sub5e"t

H. A""essor6 : depends on t#e prin"ipal obli ation e. . pled e+ 0ort a e

/. Possible : "apable of bein perfor0ed+ eit#er p#6si"all6 or le all6

Chapter II$ Nat+re an( #ffe'ts of O%ligations

S'eci"ic hing 5#e ermin! e6

b. to preserve thing with (+e 'are

). Accesion n! ur!l: e. . allu3ion '. Accesion in#us ri!l : e. . buildin + plantin +

,eneric hing 5in#e ermin! e6

B"#AC3 O& OBLIGATION

RES%LTS IN GI7ES RISE TO

Brea"# of t#e obli ation Ri #t in fa3or of "reditor to re"o3er da0a es

2 N#GLIG#NC# 5&ul'! con r!c u!l6

Ne li en"e of defendant s#ould be t#e proxi0ate "ause of da0a e if liabilit6 is to atta"#.

). A"tion for spe'ifi' perfor)an'e

'. A"tion for s+%stit+te( perfor)an'e

?. A"tion for s+%stit+te( perfor)an'e or +n(oing of poor worD

D. A"tion for +n(oing

1 Accion Subrogatoria 9s+%rogatory a'tion:

3 Other spe'ifi' re)e(ies 9Accion Derecta:

#ETINGUI 32#NT O& LIABILIT4 IN CA # O& B"#AC3 !U# TO &O"TUITOU

A. $nterest for the use or loan or forbearance of money, goods or credit

B. $nterest as damages for breach or default in payment of loan or forbearance of money,

No stipulation as to interest for use of 0one6

If rate of interest stipulated+ e. . 'DT per annu0

C. $f obligation N)% consisting of a loan or forbearance of money, goods or credit is

&UL&ILL2#NT O& OBLIGATION

IBILIT4 O& "IG3T

Chapter III$ !ifferent 0in(s of Civil O%ligations

0in(s of Con(itions ). As to effe't on o%ligation

Effe"t Also @no&n as

A"Cuisition of ri #ts Condition pre"edent=ante"edent

'. As to 'a+se or origin

@ !#T#"IO"ATION or I2P"O,#2#NT pending happening of the condition

#ffe't of loss or (eterioration

8it# debtor9s fault

8#o 0a6 de0and Grounds S"ope of 5udi"ial "ontrol !ind of obli

E3en &#en "ontra"t is full6 fulfilled Se"ondar6=Subsidiar6

II. O%ligation with a Perio(

Influen"e on t#e obli ation Ti0e 8ill of t#e debtor

T#in@4 expir6 date

8it# debtor9s fault

). &or whose %enefit an( its effe'ts

?. -hen (e%tor loses right to )aDe +se of perio(

III. Alternative o%ligations > pluralit6 of ob5e"ts

Effe"t of Loss <t#rou # fault>

I7. Koint an(